Biden's steady hand.
March 14, 2023
[No audio in this edition due to family commitments.]
At 9:00 AM on Monday, President Biden assured Americans that the banking system was sound and that their deposits were safe. It was the right thing to do in the moment, but the wrong thing to do in the long run. Of course, Biden is not to blame for the long-term consequences of Donald Trump's 2018 repeal of federal legislation that would have otherwise required Silicon Valley Bank (and hundreds of others) to submit to more stringent testing and oversight. Dealt a bad hand, Biden addressed the crisis in a responsible, calm manner intended to reassure nervous Americans and the financial markets.
In 2018, “smaller” banks like SVB successfully argued that their failure would not present a “systemic” risk and, accordingly, they should be freed from stress testing applicable to “larger” banks. That notion was falsified over the weekend as the failure of a single bank whose assets were concentrated in a single industry caused near panic in the community banking system nationwide. Even with Biden’s assurances on Monday, stocks of “smaller” banks were hammered as investors worried about a spillover effect from the SVB failure. See CNBC News, Regional bank stocks struggle amid fears of Silicon Valley Bank contagion.
Senator Elizabeth Warren published an op-ed in the NYTimes on Monday titled, Silicon Valley Bank Is Gone. We Know Who Is Responsible. Warren wrote,
Greg Becker, the chief executive of Silicon Valley Bank, was one of the many high-powered executives who lobbied Congress to weaken the [Dodd-Frank] law. In 2018, the big banks won. With support from both parties, President Donald Trump signed a law to roll back critical parts of Dodd-Frank. Regulators, including the Federal Reserve chair Jerome Powell, then made a bad situation worse, letting financial institutions load up on risk.
Banks like S.V.B.—which had become the 16th largest bank in the country before regulators shut it down on Friday—got relief from stringent requirements, basing their claim on the laughable assertion that banks like them weren’t actually “big” and therefore didn’t need strong oversight.
The actions of the Federal Reserve Bank and Treasury on Monday protected hundreds of community banks, not just SVB. The Federal Reserve offered broader protection by creating a special line of credit that will allow community banks to weather spikes in withdrawal demands of the type that caused SVB to collapse. See Federal Reserve Board, Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
The Fed’s special line of credit protects depositors who seek to make withdrawals. It does not protect shareholders, who remain at risk they will lose some or all of their equity investment in banks that fail.
It appears that Biden averted a nationwide threat to community banks. Let’s hope he did. And let’s hope that he is able to honor his promise to reinstitute the regulatory oversight provisions eliminated by Trump.
Get ready for Dobbs 2.0, a decision that will far exceed the damage done by the Supreme Court in Dobbs v. Jackson’s Women’s Health.
In Dobbs v. Jackson’s Women’s Health, the radical majority on the Supreme Court ruled that there is no constitutional right to privacy that protects reproductive liberty. As a result, the debate over regulation of abortion was returned to the states. Or so we thought.
It is likely that a single federal judge in Texas will issue a nationwide ban on Mifepristone, a drug approved by the FDA for more than two decades to induce therapeutic abortions. The ruling, if made, will effectively outlaw or deny access to abortions across vast swaths of the nation—even in states where legislation or the state constitution protects the right of reproductive liberty.
We have reached this sorry state of affairs because ultra-conservative federal judges in Texas have rigged the system to ensure that all challenges to reproductive liberty and LGBTQ rights are funneled to a single judge with extreme religious views. The situation is explained by Dennis Aftergut and Laurence Tribe in Slate, The Texas-Sized Loophole That Brought the Abortion Pill to the Brink of Doom.
Aftergut and Tribe write,
The problem here goes beyond a single hearing, or even this single case. The real issue is systemic. Far-right groups have created a judicial pipeline to predictable triumph in one culture war battle after another: from Kacsmaryk in the plains of the Texas panhandle, to the hyperconservative U.S. Court of Appeals for the 5th Circuit, to the radically stacked majority on the Trump-packed U.S. Supreme Court. One Amarillo-based judge with carte blanche, virtually certain his extreme views will prevail on appeal, is apparently planning to curtail abortion access across the country.
[Here, there is] a coordinated national strategy, enabled by a district court federal bench, to bring right-wing legal causes into a single courtroom where a favorable result is a sure thing and where fair-minded appellate review has also been hijacked.
There is a simple—albeit difficult to achieve—solution. We need only elect a Congress and president willing to enact legislation to reform the federal judiciary. That will require (in my view) a carve-out of the filibuster, an expansion of the Supreme Court, curbs on the ability of a single federal judge to issue nationwide injunctions, restrictions on the ability of the Supreme Court to issue merits-based decisions on its “shadow docket,” and enactment of an enforceable code of ethics on the Supreme Court (among many other reforms).
At some point, the imposition of an extreme religious ideology on all Americans by a new class of judicial aristocrats—or “juristocrats” as described by Aftergut and Tribe—should cause Americans to reclaim their constitutional birthright. We have been too complacent in the face of a concerted assault over the last decade. Perhaps Dobbs 2.0 will be the decision that finally causes Americans to understand that the reactionary judges aren’t going stop until they have effectively codified their religious beliefs in federal law. The coming decision will hurt. Let’s turn our outrage into action.
North Carolina Supreme Court to reconsider case underlying Moore v. Harper.
On Tuesday, March 14, the North Carolina Supreme Court will hold a hearing to reconsider its ruling in the case underlying Moore v. Harper, currently on appeal before the US Supreme Court. You may recall that Moore v. Harper raises the question of whether the Independent State Legislature theory insulates the NC state legislature from judicial oversight.
Last year, the North Carolina Supreme Court overturned congressional district boundaries drawn by the state legislature. When the partisan composition of the NC Supreme Court flipped from Democratic to Republican, the new Republican majority on the court agreed to reconsider its ruling—for no good reason other than that it could.
Chances are good that the NC Supreme Court will reverse its prior ruling, thereby mooting the appeal to the US Supreme Court. The complicated procedural background and possible outcomes are explained by Democracy Docket, North Carolina Supreme Court To Rehear State-Level Redistricting Case Underlying Moore v. Harper - Democracy Docket.
Like the rogue federal judges in the Fifth Circuit, the Republican judges on the NC Supreme Court are making nakedly partisan rulings because they can. Like the solution for the federal judiciary, the solution in North Carolina is through the ballot box.
Field Team 6 Event.
The Register Democrats Summit 2023 times for Thursday are Pacific. So, my comments will be at 12:00 Noon Pacific on Thursday, March 16th.
Markers for Democracy Event.
On Tuesday I will be moderating a discussion between Bill Kristol and Simon Rosenberg sponsored by Markers for Democracy on March 14, 2023 from 7:30 PM to 9:00 PM EDT. The topic will be The Rise of a Pro-Democracy Coalition. You can register for this event, here: The Rise of a Pro-Democracy Coalition Tickets, Tue, Mar 14, 2023 at 7:30 PM
Concluding Thoughts.
Many of our current difficulties stem from the fact that the American electorate is evenly divided. When a half-dozen states and fifty-thousand votes decide elections in which 150 million Americans vote, we are vulnerable to fringe candidates and extreme ideologies. If Democrats can increase their margins by a few percentage points in six states, that would radically change the power dynamic in the electorate. The difference between a 0.5% win and a 4% win is huge.
But is it possible for Democrats to increase their margins of victory by 4 to 5% percentage points? It won’t be easy, but it is possible—as explained by Simon Rosenberg in one of his first Substack blogs, Memo: Get to 55, Expanding Our Coalition, The Youth Opportunity. The post is longer than most because it is a detailed explanation of how Democrats can win 55% of the electorate in national elections and in swing states. The key, according to Rosenberg, is the youth vote.
I don’t have the space or time to cover the details of Rosenberg’s plan, but having a plan is good. And there are undoubtedly multiple ways that we can achieve that goal. I was more hopeful about our prospects for getting to a “governing margin” after reading Rosenberg’s essay. It won’t be easy, but it is possible. That is all that matters. The rest is up to us.
Talk to you tomorrow!
It's the vote, or, rather, voter turn-out. If 50% of independents and 50% of Democrats would just show up, most of these hard right mis-decisions would be avoided. We all read what we want to read or listen to what we want to listen to and so the great left/right blue/red divides are pretty healthily sustained within their own new ecosystems. But if the independents who don't really like either side (evidently) would just turn out and vote their consciences, we'd really start making progress.
"There is a simple—albeit difficult to achieve—solution. We need only elect a Congress and president willing to enact legislation to reform the federal judiciary. That will require (in my view) a carve-out of the filibuster, an expansion of the Supreme Court, curbs on the ability of a single federal judge to issue nationwide injunctions, restrictions on the ability of the Supreme Court to issue merits-based decisions on its “shadow docket,” and enactment of an enforceable code of ethics on the Supreme Court (among many other reforms)."
This will happen after the Earth reverses the direction of its rotation and there is regular commuter service via starship to the suburbs on Alpha Centauri. (I wish I was wrong)