In Memory of Joseph Barnaba

Over the past week three deaths have had a great impact on me, so that it has taken awhile to write about them without letting all those things death does to you overcome your ability to write coherently.

The Minneapolis Bridge Disaster Report

The first one that hit me was not a single death but many and it hit me particularly hard because it came not in the form of death but in a long-overdue report. An independent team made the report for the Minnesota Legislature on the Minneapolis bridge collapse. The report found that financial considerations played a role in postponing maintenance decisions. Robert Stein, who oversaw the report prepared by the Gray Plant and Mooty law firm, told the Minneapolis StarTribune:

“Financial considerations, we believe, did play a part in the decision-making” regarding fixing the bridge. “Sometimes it’s easier just to take the least expensive alternative or just commission another study.”

The most damning sentence in the report stated:

There does not appear to have been any direct link between the observations reflected in the fracture critical inspection reports on the Bridge and maintenance and repair activities.

As readers of this blog know, I have issued two in-depth reports on the disaster criticizing flaws in the inspection methods, the decisions of the Pawlenty Administration, and infrastructure funding by the Bush Administration. Here is what I wrote:

In a report on the bridge collapse, Minnesota Public Radio pointed out:

In the legislative session that ended in May, Gov. Pawlenty vetoed a transportation funding package that included a seven-and-a-half-cent-a-gallon gas tax increase to pay for new road and road construction as well as for the maintenance of the current infrastructure.

In essence the GOP sold us the equivalent of the Titanic and now the Titanic has hit an iceberg–for the second time if you count Katrina. That is why I am angry. Those deaths did not have to happen. I am even more angry because they happened for the basest of reasons–greed. Billionaires received their tax cuts and we got Katrina and bridges falling into the river. Tax cuts don’t fix levees or bridges.

Now I am even angrier. Our state has featured a governor who has signed a pledge not to raise taxes. As a result, schools are facing financial ruin and our roads and bridges are not receiving the maintenance they need. As noted above the governor vetoed a bill that could have fixed that bridge.

With the issue of the report it is now clear that the deaths that occurred because of the bridge collapse were preventable. Had our governor not been so concerned with pinching pennies and more concerned with saving lives those people would be alive today. He will have to answer for those deaths, if not with the people of Minnesota, then with the higher power he so frequently evokes.

That report dooms his chances of becoming John McCain’s Vice-Presidential nominee. He had apparently been on McCain’s short list. Now he is on a different short list.

Murderdelphia

The death toll in Philadelphia continues to mount and no one pays much attention to it anymore as long as the gunplay stays in “that” part of town and no white folks show up in the ER or the morgue with slugs in their guts. Whenever I talk with people about this the answer usually is that they don’t know what to do. Limousine liberals may talk about the need to cure poverty and provide jobs, but folks in that part of town have been waiting for two generations for them to follow through on those ideas.

Meanwhile a provocative article in the New York Times Magazine caught my eye. It caught my eye because a couple of friends of mine, who will go nameless because I don’t want to dump a spam attack on them, and I had talked about viewing the violence from a similar perspective. In essence the article says violence is like an infection, a culture of retaliation spreads from shooter to victim whose friends avenge the shooting in what systems people term a negative reinforcing loop.

According to the Times here is what that epidemic has cost:

For 25 years, murder has been the leading cause of death among African-American men between the ages of 15 and 34, according to the Centers for Disease Control and Prevention, which has analyzed data up to 2005. And the past few years have seen an uptick in homicides in many cities. Since 2004, for instance, they are up 19 percent in Philadelphia and Milwaukee, 29 percent in Houston and 54 percent in Oakland. Just two weekends ago in Chicago, with the first warm weather, 36 people were shot, 7 of them fatally. The Chicago Sun-Times called it the “weekend of rage.”

According to fellow blogger Field Negro, the murder total in Murderdelphia is now 122. There were four killings this past weekend.

The most intriguing part of the Times piece was the infection model. I won’t bore you with too much System Dynamics talk; rather just remind you how an infection works. Take your standard school flu outbreak. It multiplies quickly: one person infects another, each of us then infects two more and so on. This doubling can soon shut down an entire school if someone doesn’t stop it. Other system behaviors such as rumors also follow what systems people refer to as an infection model. I tell a rumor to you, we each tell someone else and pretty soon the rumor is all over school unless someone stops it.

Gary Slutkin, is an epidemiologist and a physician who for 10 years battled infectious disease in Africa, is the founder of CeaseFire and the centerpiece of the Times article:

He says that violence directly mimics infections like tuberculosis and AIDS, and so, he suggests, the treatment ought to mimic the regimen applied to these diseases: go after the most infected, and stop the infection at its source…Slutkin wants to shift how we think about violence from a moral issue (good and bad people) to a public health one (healthful and unhealthful behavior).

White Americans of a certain stripe who see Murderdelphia as an “inner city,” “gang,” or “black” problem forget that the infection model has also broken out among white America, perhaps the most notable example being the infamous lawless violence of the Western frontier or the infamous feuds of Appalachia where a similar revenge mentality prevailed.

CeaseFire’s answer is a controversial one of employing “violence interrupters,” all of whom have intimate familiarity with the ways of the street. Their task is to interrupt the cycle of revenge that fuels so many killings. If someone is shot, they will go to the hospital to talk with the victim, family and friends to dissuade them from taking revenge. But like the code of the Old West, the code of the streets can be strong: victims or their friends are expected to exact retribution.

The interrupters face a tough job that puts them in harms way every time they try to break the cycle. One interrupter portrayed in the article had six stitches over his left eye where someone cracked a beer bottle when he tried to intervene in a dispute. His fellow interrupters applauded him for not taking his own revenge. For this the interrupters make $15 an hour.

To test out Slutkin’s theory I ran an infection model put together by my two friends around rumors. The model has sliders that allow you to set how many people the rumormonger tells, how long it takes to pass on the rumor, and how easy it is to convince people that the rumor is false. I set the number of people the rumormonger tells at 1, the time at one day, and how easy it was to change the rumor at a neutral 5. No problem stopping the “infection” because you convinced the one person who had heard the rumor that it was false.

In other words, if the interrupter can get to the violent person and has a 50/50 chance of stopping further violence, he has a good chance of succeeding. However, if the rumormonger talks to two people and not one–in other words if the interrupter has more than one person to deal with–the number of people “infected” by the rumor or the violence becomes over 1,000 in just eight days!

What connects CeaseFire with the Minneapolis bridge disaster is that despite Slutkin’s success, the state of Illinois cut CeaseFire’s funding by $6 million, forcing it to cut the number of interrupters from 45 to 17. If you buy the infection model that means that the potential for infections doesn’t just triple it goes up exponentially. Assuming one interrupter cannot prevent one revenge killing and the model I ran is right, the chances for further violence increase a thousand-fold!

So we have two tales of death and two stories of budget cutting that is directly responsible for deaths that did not need to happen.

The Death of Joseph Barnaba

The last death is the hardest to write about. Field wrote a post about losing his brother-in-law Joseph Barnaba, an Iraq War vet, to suicide. I don’t know how Field could write at all but what he wrote was so eloquent it needs to be quoted:

Joseph Barnaba was found dead in his home last week. A deadly combination of pills in his system was blamed for his demise. But I think Joseph died long before last week. Joseph, like so many young men before him, came home from a war that he had no right being involved with in the first place. And sadly, it took its toll on him, his family, and all the people he touched.

Readers of this blog also know that Iraq War suicide is one of my causes. As part of my most recent essay on this I posted the following chart from MHAT-V, the latest report on the psychological toll the Iraq War has taken on our troops.

One thing about such graphs and about the statistics in essays like I wrote and even about the essays themselves is that they do not tell you much about the individual human beings behind those numbers. Joseph Barnaba was one of those people. I did not know him, but that does not matter because I could have and so could you. In this way he is my brother and he is yours, for the call Field received–that call where you wish you had not picked up the phone–could be received by any of us who have friends and relatives in Iraq.

One of my son’s best friends served there. That call might have been about him. And then come the whys and the what-ifs and that numb sleepwalking through all those things that have to be done and that you do just to keep some small part of you in the real world. And all of this multiplied by the youth of the deceased and the circumstances that will always leave a hole in your life that nothing can fill up.

Like the falling of that bridge, those Iraq War suicides could be prevented. As I wrote about MHAT-V:

If troops suffer more mental health problems from multiple deployments doesn’t that make those who produced that policy decision guilty of endangering the mental health of our soldiers? If the multiple deployments were not a political decision based on the Bush Administration’s unwillingness to call for a draft to fight the war, the answer might be a bit different.

I don’t know if Joseph Barnaba was one of those on multiple deployments, but that does not diminish what happened. Unfortunately it is not just multiple deployments that are resulting in unnecessary suicides, a recent email surfaced asking VA doctors to keep costs down by giving a diagnosis of adjustment disorder instead of Post Traumatic Stress Disorder. Brandon Friedman, vice chair of VoteVets.org, one of the advocacy groups stated:

We hear anecdotal evidence all the time that VA is trying to cut costs by not diagnosing PTSD.

On top of that are the budget cuts the Bush Administration has made to the VA and veterans. In February Bradley Barton, national commander of Disabled American Veterans said what he thought of this policy:

Because of chronic funding shortfalls, many veterans wait longer for medical appointments, and VA hospitals are prevented from hiring additional nurses and other health care professionals to meet the growing demand for services and are forced to ration care.

The Meaning of These Deaths
The theme that runs through all these deaths is the cheapness of human life, cheapness in the sense that apparently the Republican Counterrevolution believes more in tax cuts for the rich than in saving lives. The Minnesota bridge collapse, the cuts to CeaseFire and the cuts to the VA were all made because of the cry not to raise taxes, even the taxes of the super rich.

That bridge fell into the Mississippi River in Minneapolis because Minnesota’s governor refused to raise taxes on millionaires. Ditto for all those other programs. So bridges fall, violence continues, and veterans do not get the care they need so some Wall Street wiz can have his yacht or some other toy.

At some point this country needs to ask what is wrong with this picture.

Death has the meaning we give it, because we are the living. We decide what meaning someone’s death deserves. In these cases I ask that all of you find your own way to make these deaths meaningful and find ways to make sure they do not happen to someone else.

Tagged with: death • flu outbreak • frontier • gunplay • infection • Iraq War • Iraq War suicide • John Mcain • leading cause of death • Minneapolis bridge • Minneapolis bridge inspection report • Minneapolis_bridge_collapse • Pawlenty • Philadelphia • Philadelphia murder rate • Post Traumatic Stress Disorder • systems thinking • tax cuts • VA • VA budget cuts

Photo: Justin Lane, New York Times
Bill Clinton Signs the Gramm-Leach-Bliley Financial Services Act

It used to be that to find the records of a Congressional debate you had to travel to one of the designated regional federal records repositories, and then wander down long, deserted rows of bound volumes until you found the right one. For me, the movies were not far off the mark in their lending an element of suspense to this lonely walk, as if you were entering a dark, unknown alley at night. After lugging the hefty book back to your seat, you then leafed through often dusty pages that gave off the smell of history.

Rather than finding it funereal, I always felt that smell was full of promise, for although the voices in those pages might be long dead, they carried with them the possibility of rebirth. When the past comes alive, it has the power to not only alter the present, but also the future as it shatters the very foundations we stand upon.

The House debate over the repeal of Glass-Steagall has that power. Reading it, you understand the high drama surrounding the issue, why people at the time felt so strongly about it, and why their rhetorical eloquence deserves to be remembered today. By citing some of the most important opposition statements, I hope to give rebirth to those voices, who although in the minority surely rate a place alongside their colleagues in John Kennedy’s Profiles in Courage, which tells the story of those whose principled stands were vindicated by history.

THE DEBATE OVER THE REPEAL OF GLASS-STEAGALL

What follows are the words of those who spoke in opposition to the repeal of Glass-Steagall. The complete debate can be found in the online pages of the Congressional Record.

Edward Markey, Mass

No one should vote for this bill. It is a fatally flawed bill. We should be able to deal with this issue simultaneously with letting the big boys get all they need. We should take care of what ordinary people
need for their families as well.

David Obey, Wis

Madam Speaker, this bill is consumer fraud masquerading as financial reform. There is nothing wrong with modernizing financial institutions. It is nice to see that my colleagues are going to try to
set up one-stop shopping services for financial services. But returning 1999 to 1929 is not reform in my book.
.

Maxine Waters, California

Madam Speaker, I have spent hours on this bill. I served on the conference committee. I am the ranking member of the Subcommittee on Domestic and International Monetary Policy of the Committee on Banking and Financial Services. I have spent hours on this bill, and I am absolutely surprised that the Members of this House can support a bill that would do what this bill is about to do to working people and poor people.

This is a one-man vendetta that took place on the conference committee. We should never have negotiated with them, but the negotiations took place in the back room, not in public.

Carrie Meek, Florida

Madam Speaker, I am sure that those of my colleagues who have come to the floor and applauded this bill have tunnel vision, and their vision is directed toward the large banking institutions. Because their blindness does not let them see to the right and left of them, they do not really see the people that are being affected by this bill most. I am opposed to this bill, that this bill brings in a strong element of discrimination, particularly in fair housing.

Marcy. Kaptur, Ohio

This bill is pro megabank and it is against consumers. And I would say to the people listening tonight, Are you tired of calling banks and getting lost in the automated phone system, never locating a breathing human being? This bill will make it worse.

Are you fed up with rising ATM fees and service fees that now average over $200 a year per account holder? This bill will make it worse.

Are you skeptical about banks that used to be dedicated to safety and soundness and savings but are now switching to pushing stocks and insurance and debt? This bill will make it worse.

Are you tired of the megafinancial conglomerates and mergers that have made your community a branch economy of financial centers located far away, whose officers you never know, who never come to your community? This bill will make it worse.

Maurice Hinchey, NY

We have 1 hour to debate the most comprehensive change in financial services legislation in the Nation in the last 65 years. This is one of the most important bills to come before this Congress in decades, and we are going to spend 1 hour this evening debating here on the floor of the House of Representatives.

And that 1 hour is divided thusly: two-thirds of that hour go to the people who are for the bill; only one-third of the hour goes to the people who are opposed to it. That is wholly consistent with the objectivity and fairness contained within the bill itself.

This is a farce, it is a mistake, it is a day that we will rue. We are constructing here an apparatus that will come back and bite us severely.

THE FINAL TALLY

The final vote was 339 for, 79 against, and 20 not voting. The “nays” include names well-known today: Dennis Kucinich, John Dingell, Nancy Pelosi, and John Lewis. Kucinich spoke only briefly to enter an article against the bill into the record. Dingell, Pelosi and Lewis did not speak.

Current Presidential candidates who voted “yea” are John Edwards and Joe Biden. As the top Democrat on the Senate Banking Committee, Chris Dodd did not vote on the bill, but you can see him in the signing picture above. The article Kucinich entered into the record particularly singled out Dodd’s campaign contributors.

Two significant observations need to be made about the debate. First, it is noteworthy that women and people of color were among the strongest speakers in opposition. A major theme in the book The Strange Death of Liberal America is how women and people of color raised objections when Liberal America’s belief in the level playing field came under fire from both parties.

Second, as one commenter has noted, there were enough votes to override a veto. But we need to remember that party members usually support their President. Had Clinton opposed the bill and threatened to veto it, the outcome might have been different. But “what-ifs” don’t matter. Moral courage does. As Gandhi said:

In human society, all violence can be traced back to these seven recurrent blunders: wealth without work, pleasure without conscience, knowledge without character, commerce without morality, science without humanity, worship without sacrifice, and politics without principles.

The final paragraph of the article by Robert Scheer that Dennis Kucinich entered into the record reads:

The leading presidential candidates in both parties–Democrats Al Gore and Bill Bradley and Republican George W. Bush–all have obtained massive contributions from the financial industry. This issue is the best litmus test of whether any of them can muster the gumption to bite the hand that feeds them. If they can’t, when it comes to the most decisive consumer issues, it doesn’t really matter which one becomes president.

When Scheer wrote his article, no one could have predicted 9/11 and the Iraq War, yet reading his words as we find ourselves in the third Presidential contest since he wrote them and Representative Hinchey’s warning echoes through our current financial crisis, somehow Scheer’s point seems even more relevant now than then. Maybe it’s because of that one phrase:

This issue is the best litmus test of whether any of them can muster the gumption to bite the hand that feeds them.

We are still waiting for an answer.

Tagged with: Al_Gore • banking_regulation • Barbara_Boxer • Bill_Clinton • byron_dorgan • campaign_contributors • campaign_issue • Carter_Glass • Chris_Dodd • Democratic_Presidential_candidates • Democrats • Dennis_Kucinich • federal_reserve_system • George_Bush • Glass_Steagall_Act • Great_Depression • John_Dingell • John_Edwards • John_Kennedy • John_Lewis • Joseph_Biden • low_income_families • mortgage_foreclosure • mortgage_foreclosures • Nancy_Pelosi • New_York_Times • Paul_Wellstone • Sanford_Weill

This essay appeared in slightly different form last year, but by popular request, I again publish the first Memorial Day proclamation for this weekend. In its words lie the essence of what people used to call Decoration Day, and, by implication, those values this nation holds in common. Memorial Day is about what unites us, not what divides us.

The historical origins of Memorial Day date back to the days after the Civil War when towns decorated the graves of soldiers who had died in that conflict. Hence the other name for this holiday, “Decoration Day.” Waterloo, New, York was officially recognized by Congress as the first city to officially hold a Decoration Day, which it celebrated on May 5, 1866.

It is generally agreed that the first national celebration began with the Grand Army of the Republic, an organization of Union veterans. An unknown veteran wrote to GAR Adjutant-General N.P. Chipman who took the idea to GAR Commander-in-Chief General John Logan who issued the proclamation that appears below. In 1887, Congress finally recognized Memorial Day as a legal holiday for all government employees.

The South, however, held their own separate holiday for Confederate dead until after World War I when Memorial Day was changed to honor dead from all wars. So in a large sense, this holiday acknowledges not only the sacrifices of our service men and women but also the coming together of the nation.

This weekend, above all, marks what we Americans hold in common not our differences. There is no better statement of that than what Abraham Lincoln said at Gettysburg:

Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

“Dedicated to the Proposition that all men are created equal.” That belief in equity, in the level playing field, is what has distinguished this nation. As I wrote in the first chapter of The Strange Death of Liberal America:

The experience of the American people since [the Revolution]–and in many ways the key theme of American history–has been that each succeeding generation applied this principle to dealing with the latest attempt by the Haves to stomp on the Have-nots…

What these people share with communities like Lincoln, Big Meadow and countless others stems not merely from an intellectual or even emotional attachment to egalitarianism, but something elemental to the very meaning of the human condition: hope. Farmers dripping sweat on red clay, nervous families juggling monthly bill payments, and workers fearing a layoff notice still live under pinched horizons where hope can seem elusive. For them as for all of us what we proudly call the American Dream represents not merely a balance sheet of our material accounting, but more importantly a moral tally of the ideal that everyone can achieve the promise of their talents and character.

General Logan recognized this in his proclamation, writing:

Let us in this solemn presence renew our pledges to aid and assist those whom they have left among us as sacred charges upon the Nation’s gratitude.

I write this as a disabled American with a laptop computer lying in bed, a first generation American whose family fled political tyranny, and offer humble thanks to all those who gave their lives to assure the playing field continued to remain level.

No. 11
Headquarters, Grand Army of the Republic
Washington, D.C., May 5, 1868

I. The 30th day of May, 1868, is designated for the purpose of strewing with flowers or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion, and whose bodies now lie in almost every city, village, and hamlet churchyard in the land. In this observance no form or ceremony is prescribed, but posts and comrades will in their own way arrange such fitting services and testimonials of respect as circumstances may permit.We are organized, comrades, as our regulations tell us, for the purpose, among other things, “of preserving and strengthening those kind and fraternal feelings which have bound together the soldiers, sailors, and marines who united to suppress the late rebellion.” What can aid more to assure this result than by cherishing tenderly the memory of our heroic dead, who made their breasts a barricade between our country and its foe? Their soldier lives were the reveille of freedom to a race in chains, and their death a tattoo of rebellious tyranny in arms. We should guard their graves with sacred vigilance. All that the consecrated wealth and taste of the Nation can add to their adornment and security is but a fitting tribute to the memory of her slain defenders. Let no wanton foot tread rudely on such hallowed grounds. Let pleasant paths invite the coming and going of reverent visitors and found mourners. Let no vandalism of avarice or neglect, no ravages of time, testify to the present or to the coming generations that we have forgotten, as a people, the cost of free and undivided republic.If other eyes grow dull and other hands slack, and other hearts cold in the solemn trust, ours shall keep it well as long as the light and warmth of life remain in us.

Let us, then, at the time appointed, gather around their sacred remains and garland the passionless mounds above them with choicest flowers of springtime; let us raise above them the dear old flag they saved from dishonor; let us in this solemn presence renew our pledges to aid and assist those whom they have left among us as sacred charges upon the Nation’s gratitude,—the soldier’s and sailor’s widow and orphan.

II. It is the purpose of the Commander-in-Chief to inaugurate this observance with the hope it will be kept up from year to year, while a survivor of the war remains to honor the memory of his departed comrades. He earnestly desires the public press to call attention to this Order, and lend its friendly aid in bringing it to the notice of comrades in all parts of the country in time for simultaneous compliance therewith.

III. Department commanders will use every effort to make this order effective.

By command of:

JOHN A. LOGAN,
Commander-in-Chief.

N. P. CHIPMAN,
Adjutant-General.

Tagged with: Abraham Lincoln • adjutant general • America • American history • celebration • chief general • Chief General John Logan • chipman • Confederate • Congress • D.C. • decoration day • equity • four score and seven years • General Logan • Gettysburg • government • government employees • grand army of the republic • have-nots • haves • holiday decoration • john logan • level playing field • Lincoln • Memorial • memorial day date • memorial day proclamation • national celebration • origins of memorial day • press • principle • proclamation • service men • South • strange death • union • union veterans • values • veteran • Washington • waterloo new york • women • York

Bill Clinton Signs Repeal of Glass-Steagall

The banking and financial industry complained about the Banking Act of 1933 even as Congress debated it. As the Act worked its way through Congress, banks vigorously opposed it, causing some doubts about whether it would pass, especially with the provisions Carter Glass advocated that prevented banks from entering into the stock market.

Initial Banking Opposition to Glass-Steagall

The centerpiece of the debate over Glass-Steagall was a three-week filibuster by Louisiana Senator Huey Long, which would stand as the longest filibuster in Congressional History until Strom Thurmond’s filibuster of the Civil Rights Bill. This so incensed Glass that he accused Long of being in the pockets of the banks.

The American Banking Association opposed the bill. According to a paper by Jill M. Hendrickson:

in 1932, 36 percent of national bank profits came from their investment affiliates (Wall Street Journal 1933b, p. 1).

Glass, in his typical style, made this point more forcefully:

Nobody can conceive of the damage done by these affiliates. They literally loaded the portfolios of interior banks with foreign securities approved by this abominable State Department. [New York Times, December 6, 1933]

Many believe the key moment that changed opposition to Glass-Steagall came with the release of the text of investigative hearings held by New York Senator Ferdinand Pecora. His investigation into banking practices uncovered abuses including:

Reputable investment houses that pushed on unsuspecting investors the securities of a company in which they were closely associated; speculation on the stock exchange; and evasion of income taxes on huge earnings by investment bankers. These questionable activities were aided by the commercial banks as they advised their depositors to use their affiliates’ security salesmen for investment advice.

The hardball tactics by Pecora’s committee seem to come from an America and a Democratic Party the exist only in dim memory, but the Committee’s findings aroused such an outcry that newly-elected President Franklin Roosevelt knew something had to be done. Hendrickson adds that perhaps as instrumental was the impact of the stock market crash itself which made investing in securities less attractive to banks.

Whatever the reason, Glass-Stegall survived Long’s filibuster and became law. Ever since the Act has been a thorn in the side of American financial industry which like the proverbial lion has howled about the thorn in its paw.

Investment Company v Camp

The most notable moment in the attempts to scuttle Glass-Steagall came with the 1971 Supreme Court decision Investment Company Institute v. Camp. In that complex case the Court issued one of the most ringing and unequivocal defenses of Glass-Steagall:

Congress was concerned that commercial banks in general and member banks of the Federal Reserve System in particular had both aggravated and been damaged by stock market decline partly because of their direct and indirect involvement in the trading and ownership of speculative securities.

The legislative history of the Glass-Steagall Act shows that Congress also had in mind and repeatedly focused on the more subtle hazards that arise when a commercial bank goes beyond the business of acting as fiduciary or managing agent and enters the investment banking business either directly or by establishing an affiliate to hold and sell particular investments.

Many arguments the Supreme Court advanced in support of Glass-Steagall, would prove prophetic three decades later.

Rising Opposition

As the Republican Counterrevolution gained power, the GOP began nibbling away at Glass-Steagall. These challenges had both symbolic and legal implications. The two pieces of New Deal legislation the have most irked the Counterrevolution have been Glass-Steagall and Social Security. One dared assert that the government in the interests of the greater good had the right to regulate the nation’s financial industry and the other established the principal that the government had a duty to help the less fortunate to insure a level playing field.

It would take too long to recite all the actions that chipped away at Glass-Steagall but a few highlights stand out. In the mid-1980s a Federal Reserve Board stocked with Reagan-Bush appointees began reinterpreting Glass-Steagall in a series of actions that slowly expanded the ability of banks to engage in other financial operations.

In 1990, the Fed, under former J.P. Morgan director Alan Greenspan, permitted guess who–J.P. Morgan–to become the first bank allowed to underwrite securities. It is noteworthy that if William Jennings Bryan had had his way about the Federal Reserve Act, Greenspan would have never ascended to the position that allowed him to weaken the act named for the father of the Federal Reserve System.

Four legislative attempts were made to weaken or repeal parts of Glass-Steagall from 1988-1996. One reason they failed is because smaller banks feared that opening the doors to allow banks to trade in securities would lead to the domination of larger banks–a fate that has come to pass.

The biggest change came in 1996 when Alan Greenspan issued a ruling allowing bank investment affiliates to have up to a quarter of their business in investments.

The Rise of Sandy Weill

In the up-tempo financial atmosphere in the years surrounding the Greenspan ruling, all sorts of financial innovations took place, some ingenious and some illicit. Of the latter the most notorious was Enron. In this go-go market it was all but inevitable that mortgages should be drawn into this activity. For most Americans prior to the 1990s, subprime mortgage lenders had a reputation not far removed from pawnshops and slum landlords. Like them most subprime lenders preyed on people who had no alternative and like them subprime lenders often operated on that narrow line separating the shady and the illegal.

In 1986 a young man named Sanford Weill grew bored with Wall Street and purchased one of these subprime lenders, Commercial Credit, a loan company based in Baltimore. In his paper “Banking on Misery Citigroup, Wall Street, and the Fleecing of the South,” Michael Hudson notes Weill drove employees to sell more. He quotes employee Frank Smith:

Over a period of time, it went from a family, employee-oriented company—doing the right thing, trying to help its customers—to this cutthroat thing of anything that will get us more business.

They need the money or by God they wouldn’t be at the finance company. They’d be at a bank.

This kind of practice resulted in multiple lawsuits that surfaced in the late 1990s and early 2000s. Hudson cites one example:

Jackson, Miss., attorney Chris Coffer says, he obtained confidential settlements for about 800 clients with claims against Commercial Credit or its successor, CitiFinancial.

Starting with Commercial, Weill began wheeling and dealing until a little over a decade later he would head the largest financial institution in the world.

The Repeal of Glass Steagall

In the background of the go-go economy, the feeling grew among some economists and the financial community that Glass-Steagall hampered America’s financial competitiveness. Among the many voices favoring this was Alan Greenspan along with former Goldman Sachs partner Robert Rubin, Bill Clinton’s Treasury Secretary. In a 1995 speech and testimony to Congress Rubin signaled the Clinton Administration was ready to repeal Glass-Steagall:

“The banking industry is fundamentally different from what it was two decades ago, let alone in 1933.” He said the industry has been transformed into a global business of facilitating capital formation through diverse new products, services and markets. “U.S. banks generally engage in a broader range of securities activities abroad than is permitted domestically,” said the Treasury secretary. “Even domestically, the separation of investment banking and commercial banking envisioned by Glass-Steagall has eroded significantly.”

Anyone who thinks the repeal of Glass-Steagall was forced on an unwilling Bill Clinton need only read Rubin’s testimony. A year later Sandy Weill set in motion the forces that would finally end Glass-Steagall.

Weill proposed the most audacious financial merger of in American history: he would merge one of the largest insurance companies (Travelers), one of the largest investment banks (Salomon Smith Barney), and the largest commercial banks (Citibank) in America. The problem was the merger was illegal in terms of Glass-Steagall. Independent Community Bankers of America CEO Kenneth Guenther captured the audacity of the deal in an interview with Frontline:

Here you have the leadership — Sandy Weill of Travelers and John Reed of Citicorp — saying, “Look, the Congress isn’t moving fast enough. Let’s do it on our own. To heck with the Congress. Let us effect this.” And so they move towards effecting it, and they get the blessing of the chairman of the Federal Reserve system in early April, when legislation is pending.

I mean, this is hubris in the worst sense of the word. Who do they think they are? Other people, firms, cannot act like this. … Citicorp and Travelers were so big that they were able to pull this off. They were able to pull off the largest financial conglomeration — the largest financial coming together of banking, insurance, and securities — when legislation was still on the books saying this was illegal. And they pulled this off with the blessings of the president of the United States, President Clinton; the chairman of the Federal Reserve system, Alan Greenspan; and the secretary of the treasury, Robert Rubin.

And then, when it’s all over, what happens? The secretary of the treasury becomes the vice chairman of the emerging Citigroup.

Weill convinced Greenspan, Robert Rubin and Clinton to sign off on a merger that was illegal at the time, with the expectation that Congress would repeal Glass-Steagall. Charles Geisst, a professor of finance at Manhattan College adds in a Frontline Interview:

Part of [Weill's] deal with the Federal Reserve was to get rid of all Glass-Steagall violations in the new Citigroup within two years. Otherwise, he would have been faced with a divestiture of a company which had just been put together, because of an old law which is still on the books. So it clearly behooved him, and many other people in the financial services industry who wanted to accomplish essentially the same sort of thing in the future, to push to get Glass-Steagall repealed.

So they pushed hard?

Pushed very hard. … They pushed so hard that the legislation, HR10, House Resolution 10, which became the Financial Services Modernization Act, was referred to as “the Citi-Travelers Act” on Capitol Hill. ..

The Gramm-Leach Bliley Act

The ” Citi-Travelers Act” went under the benign-sounding name of the Financial Services Modernization Act of 1999 and, like Glass-Steagall it has become known for the key sponsors of the bill as the Gramm-Leach-Bliley Act, for Republican Senate Banking Committee Chair Phil Gramm, House Banking Committee chair James Leach, and Virginia Representative Thomas Bliley.

As the bill took form in Congress, the financial industry, particularly Citibank and Sandy Weill increased the pressure. Charles Geisst notes:

In the year previous to the Financial Services Modernization Act, the thing that overruled Glass-Steagall, Citibank spent $100 million on lobbying and public relations, which is a good indication.

Yes. They spent a small fortune, a king’s ransom, if you will, getting rid of Glass-Steagall. In fact, when thrown in with other financial firms’ lobbying, it was closer to $200 million over the short period of time.

To give you some idea of the magnitude of this effort, the Center for Public Integrity reports:

The pharmaceutical and health products industry has spent more than $800 million in federal lobbying and campaign donations at the federal and state levels in the past seven years, a Center for Public Integrity investigation has found. Its lobbying operation, on which it reports spending more than $675 million, is the biggest in the nation. No other industry has spent more money to sway public policy in that period. Its combined political outlays on lobbying and campaign contributions is topped only by the insurance industry.

In other words, in one year Sandy Weill and his buddies spent 1/4 of what the next biggest lobbying effort on record spent in 8 years! In a paper on the repeal of Glass-Stegall in the American Journal of Economics and Sociology Jill Hendrickson wrote:

The Industry’s efforts to jump-start progress on the [Senate] bill is a case study in how a well-heeled and well-organized interest group can swiftly prod Congress to move, even on an issue about which most people outside Washington and New York have little knowledge.

Nor is it surprising, according to both political science and economic literature, that the interest groups played a vital role in the timing of the 1999 deregulation. Without persistent lobbying by commercial and investment interests it is unlikely that reform would have taken place in this century.

GLB repealed Sections 20 and 32 of the Glass-Steagall Act:

• Section 20 - prohibited any member bank from affiliating in specific ways with an investment bank;
• Section 32 - prohibited investment bank directors, officers, employees, or principals from serving in those capacities at a commercial member bank of the Federal Reserve System.

There was only one problem: the bill had to reconcile differences between the House and Senate versions. The House version differed in two important ways: 1) It took regulatory authority from the Federal Reserve and gave it to the Secretary of the Treasury and 2) it refused to extend to insurance companies obligations under the Community Re-investment Act to provide information about their patterns of mortgage lending.

Democrat Barney Frank was among those who especially opposed the second, telling the BBC:

We can we try to do a little bit for those who are being left behind. This is an inappropriate continuation of a pattern of helping those who need a benefit but ignoring those who are left behind.

It was the Community Reinvestment Act provision in particular that threatened to derail the conference committee. Here is the now oft-quoted Frontline description of what happened:

On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill’s effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.

Frontline’s pregnant pause says it all.

What Happened That Night

So why did Well call Clinton, and what did Clinton do? One take comes from a National Housing Institute article by Malcolm Bush and Katy Jacob.

In an unusual move, the three key Republican Chairmen bypassed the usual conference committee debates by writing a “final compromise” themselves. That bill’s CRA provisions resembled the original Senate bill. (House Banking Committee Chairman Jim Leach had fought in the House for a bipartisan bill with no anti-CRA measures while Senate Banking Chair Phil Gramm had insisted on the Senate’s anti-CRA provisions.) At this point, tremendous pressure was exerted on the Clinton Administration, which had earlier threatened to veto the Senate version, to sign the legislation, and intense negotiations continued over community reinvestment and consumer privacy provisions.

The Community Reinvestment Act required regulated banks and thrifts to offer loans and banking services throughout their service areas, including lower-income communities. But here is the wrinkle–the CRA essentially served to protect low and moderate income communities from predatory lending–such as subprime mortgages. In 1999, shortly after passage of GLB, National Community Reinvestment Coalition president John Taylor wrote:

We must step up our efforts to identify and eradicate predatory lending. Horror stories abound of minority and low- and moderate-income families losing their homes and wealth due to unfair and deceptive tactics. On a national level, the banking industry increased their subprime mortgage lending from less than 1 percent of all conventional mortgage loans in 1993 to 6 percent in 1998. Our efforts will be to support and promote state and/or federal legislation, similar to that recently passed in North Carolina, that curbs abusive lending.

So we know that the topic of that late night phone call between Bill Clinton and Sandy Weill, the man whose career began in the subprime mortgage business, was the Community Reinvestment Act. We know that Phil Gramm, who was the one most strongly pushing for gutting CRA (Leach actually supported it) threatened to torpedo the legislation if the White House did not reach an agreement.

By the way, Phil Gramm is also currently co-chair of John McCain’s Presidential campaign and one of his chief economic advisors. So if you are thinking about voting Republican because of Bill Clinton’s role in the repeal of Glass-Steagall, remember that the man whose name is on the bill will probably be in John McCain’s cabinet, possibly as Treasury Secretary. Gramm still remains unrepentant about repealing Glass-Steagall. In March Gramm told U.S. News:

I see no evidence whatsoever that the subprime problem was in any way caused by making our financial structure more competitive by allowing banks and securities companies and insurance companies to compete against each other. I have seen no evidence whatsoever to substantiate that claim.

So why did Clinton go along? His writings are silent on the subject. He seemingly held the trump card with the threat to veto any legislation that did not meet his approval. And why is it Sandy Weill who makes the phone call to Clinton? Woodward and Bernstein where are you when we need you?

At this point not enough evidence is available to finally connect the dots, but whatever it is, it cannot possibly benefit Bill Clinton. Were the fingers of the leaders of both parties not all over this bill, you would hope a contemporary version of Senator Pecora might investigate the entire matter, but that will probably never happen. For those who believe Wall Street now calls the tune in this country, the story of the repeal of Glass-Steagall certainly fuels their paranoia.

Troubling Sections of GLB

The most troubling aspect of GLB is not only did it repeal Glass-Steagall but it did so in an especially aggressive way that purposely weakened many enforcement provisions, some of them so obscure most of the public is not aware of them. For example:

Governance of the Federal Home Loan Banks is decentralized from the Federal Housing Finance Board to the individual Federal Home Loan Banks. Changes include the election of chairperson and vice chairperson of each Federal Home Loan Bank by its directors rather than the Finance Board, and a statutory limit on Federal Home Loan Bank directors’ compensation.

Other provisions:

Provide for a “jump ball” rulemaking and resolution process between the SEC and the Federal Reserve regarding new hybrid products.

Grants regulatory relief regarding the frequency of CRA exams to small banks and savings and loans (those with no more than $250 million in assets). Small institutions having received an outstanding rating at their most recent CRA exam shall not receive a routine CRA exam more often than once each 5 years. Small institutions having received a satisfactory rating at their most recent CRA exam shall not receive a routine CRA exam more often than once each 4 years.

The most troubling section, though, is Section 108, titled USE OF SUBORDINATED DEBT TO PROTECT FINANCIAL SYSTEM AND DEPOSIT FUNDS FROM ‘‘TOO BIG TO FAIL’’ INSTITUTIONS. It provides for a study of:

The feasibility and appropriateness of establishing a requirement that, with respect to large insured depository institutions and depository institution holding companies the failure of which could have serious adverse effects on economic conditions or financial stability, such institutions and holding companies maintain some portion of their capital in the form of subordinated debt in order to bring market forces and market discipline to bear on the operation of, and the assessment of the viability of, such institutions and companies and reduce the risk to economic conditions, financial stability, and any deposit insurance fund.

Note the language of this section. For the first time in the history of the American economy certain financial institutions are being judged “too big to fail.” Think about the implication of that. A company now has such power and influence that the government cannot allow it to fail. This is corporate welfare at its worst. If a company gets to a certain size we will designate it “too big to fail.” How would you like your home to be designated too big to fail or your job? This language as much as any other speaks of the end of the ideals that powered the new Deal.

After GLB

After the passage of GLB, the subprime market took off as if someone had attached a booster rocket to it. If anyone has doubts about Sandy Weill’s connections between GLB and the subprime market, just a year after the passage of the bill repealing Glass-Steagall, Citigroup had become the number one subprime lender in the country. Its vehicle for this was the newly formed CitiFinancial.

Although he now was one of the wealthiest people in the world, some things had not changed for Sandy Weill since he bought Commercial Credit. CitiFinancial continued many of his original firm’s aggressive practices. Michael Hudson notes:

In 1999, the company agreed to pay as much as $2 million to settle a lawsuit accusing Commercial and American Health & Life of overcharging tens of thousands of Alabamans on insurance.

Beasley, Allen, claim[ed] nearly 1,500 clients in Alabama, Mississippi, and Tennessee who had Commercial Credit or CitiFinancial loans.

Hudson notes Weill was especially enthused about the possibilities the repeal of Glass-Steagall had created:

Weill enthused about blending diverse units and creating opportunities for “cross selling,” which allows affiliates to market each other’s products. Primerica boasts more than 100,000 agents who can not only sell life insurance but also steer loan applicants to the parent’s subprime operations. In Weill’s vision, he’d created “a walking, talking bank.”

Not long after Hudson wrote his article and Weill made that statement, the subprime crisis hit America. While there are too many theories to go into here, one notable explanation comes from the Federal Reserve System itself. In a paper for the St. Louis Federal Reserve System, Souphala Chomsisengphet and Anthony Pennington-Cross point out:

The growth of subprime lending in the past decade has been quite dramatic. Using data reported by the magazine Inside B&C Lending, Table 3 reports that total subprime or B&C originations (loans) have grown from $65 billion in 1995 to $332 billion in 2003.

The structure of the market also changed dramatically through the 1990s and early 2000s…For example, the market share of the top 25 firms making subprime loans grew from 39.3 percent in 1995 to over 90 percent in 2003. Many firms that started the subprime industry either have failed or were purchased by larger institutions.

Meanwhile a few voices began to openly wonder if the repeal of Glass-Steagall had fueled the crisis. Thomas Kostigen of Marketwatch wrote:

Glass-Steagall would have at least provided what the first of its names portends: transparency. And that is best accomplished when outsiders are peering in.

Glass-Steagall forced separation. Something like it, where conflicts and losses can be mitigated, should be considered again.

Financial Week headlined, “Glass-Steagall Wasn’t Such a Bad Idea After All.” The article stated:

The credit crisis now afflicting the corporate debt and stock markets suggests Congress should revisit the work it did in 1999 that is at the root of much of today’s troubles. That’s right: It’s time to rethink the Gramm-Leach-Bliley Act, otherwise known as “Sandy’s Law” (after then-Citigroup chief executive Sanford “Sandy” Weill), which nailed shut the coffin of the Glass-Steagall Act of 1933.

Did the Repeal Contribute to the Mortgage Crisis?

So are these sources right? From an obvious, common-sense point of view they are. Had Glass-Steagall been in place Citigroup could not have formed CitiFinancial and Bear Stearns would not have needed a bailout. Many in the financial community believe the repeal of Glass-Steagall did contribute to the financial mess we are in.

Scott-Cleland, founder and CEO of the Precursor Group, a research boutique for institutional investors, told Frontline:

The repeal of Glass-Steagall was an important contributor to the bubble.

Well, it added to the frenzy. It added to the investment banking fervor. It added to the amount of money that was staked on this. Essentially, you had a bigger shoulder pushing that rock up the hill.

Former SEC Chair Arthur Levitt is another who worried about the repeal of Glass-Seagall:

The merger of investment bank and commercial bank interests has created conflicts of interest that clearly hurt the public investor. Only extraordinary activity by both the banking and security regulators can begin to address [the] issue.

But what about Gramm-Leach-Bliley helped to fuel the crisis, for it is easy to say that if banks had not been involved in securities we would not be facing the mess we are in. Curiously one of those converts is none other than Robert Rubin who has stated:

If Wall Street companies can count on being rescued like banks, then they need to be regulated like banks.

Since it was Rubin who played a major role in the deregulation this statement is nothing short of incredulous.

As the record shows, Rubin had a great deal to regret. When the mortgage crisis began to unravel, several of the changes in Gloass-Steagall and several of the new provision in GLB came into play.

First, because of changes in the Community Reinvestment Act, banks no longer were examined closely. Had bank examinations continued in the fashion they had before GLB, they might have provided a warning of the crisis.

Second, in what is called the “sunlight provision” that was added to the CRA portion of GLB, 501c3 organizations that had worked as watchdogs to insure that banks followed the law were put under more scrutiny than the banks themselves.

Third, Section 20 of Glass-Steagall was gutted by Alan Greenspan’s ruling. GLB buried it for good. Bill Clinton could have confronted Greenspan over his order or opposed the repeal of Section 20, but chose not to. The repeal of Section 20 enabled big players like Citi to gobble up the smaller banks covered by CRA. Depending on how the acquisition was structured, those newly-acquired smaller banks now came under the new liberal examination rules of GLB.

Fourth, in emphasizing the impact of the repeal of Glass-Steagall it is important to note that GLB repealed TWO of Carter Glass’ four sections: Section 20 and section 32. Much emphasis has been placed on Section 20, but Section 32 may be equally or more important in the current crisis because it forbid interlocking directorships. The repeal of Section 32 allowed interlocking directorships that made policing and unraveling the crisis like untangling a fishing reel backlash.

Fifth, the “Too Big to Fail” section of GLB–an idea that both William Jennings Bryan and Carter Glass would have found reprehensible–changed the business playing field in America for good. For all their worship of “the market,” the Republican Counterrevolutionaries had in one stroke of a pen made the market irrelevant for the likes of Bear Stearns.

Sixth, Glass-Steagall required member banks to keep a percentage of their deposits in reserve to cover a bank run. That percentage was sustantially changed in GLB so in the event of a crisis like Bear Stearns, the funds to cover the disaster were inadequate.

The Key to it All

GLB created a financial Brave New World where institutions have become “too big to fail,” even if they skirted or even violated regulations and the financial entanglements of banks, investment companies and insurers have become difficult to sort out and virtually impossible to regulate. The reason TBTF has placed the United States economy at risk is perhaps best stated by Ed Mierzwinski at the U.S. Pirg Consumer Blog:

The reason for the bailout, from the regulator point-of-view is simple: everything is now connected to everything else.

Regulators thought that the interconnected economy would absorb and diffuse risks. Instead, these interconnections and use of exotic financial instruments no one understands — coupled with the moral hazard created by the repeal of Glass-Steagall, which allows would-be lords of the universe on Wall Street (their term, not mine) to play with taxpayer-insured deposits at commercial banks — has force-multiplied local or individual financial problems into world-wide financial crises.

So now we find outselves in the midst of a Presidential campaign in which the chief financial advisor to one candidate authored the bill that repealed Glass-Steagall and another candidate’s husband acquiesced in the deal. The third candidate has already stated he would not reinstate Glass-Steagall. When asked if he would restore Glass-Steagall Barack Obama notes:

Well, no. The argument is not to go back to the regulatory framework of the 1930’s because, as I said, the financial markets have changed substantially.

I would be remiss by not adding four of Obama’s top six contributors include Goldman Sachs, J.P. Morgan and–guess who–Citigroup.

None of this promise the next four years will be any easier on the American consumer. And meanwhile I am still waiting after six months for some reporter to ask Hillary Clinton what she thinks of her husband’s repeal of Glass-Steagall and whether she would favor rolling it back.  The reason for the silence may be that for the Clintons the repeal of Glass-Steagall may prove far more embarrassing in the long run than Monica Lewinsky.

Tagged with: alan greenspan • banking industry • Bill Clinton • Carter Glass • Citigroup • Clinton Administration • Federal Reserve • glass steagall banking act • Glass-Steagall Act • Investment Company v. Camp • Reagan-Bush • Robert Rubin • Sanford Weill • social security • Supreme-Court • william jennings bryan

John Gress-Reuters

Tonight’s two primaries highlight the contrasts that have been playing all season between Hillary Clinton and Barack Obama. As I write this Clinton has already won Kentucky by an impressive margin more than doubling Obama/s total: 69%-30%. Meanwhile projections show Obama will achieve a big victory in Oregon, although not by as impressive a margin.

Kentucky

The results and exit polls are in for Kentucky. Here is what our chart shows. The data at the top come from the Census Bureau; the exit poll data from CNN.

The Kentucky data show no surprises. This was expected to be a Clinton state due to the demographics and it has not disappointed. For Obama supporters the one discouraging sign is that the turnout of black voters has not been very impressive. Usually Obama has managed to turnout substantially more black voters than their percentage of population, but tonight that has not been the case. He also failed to turn out the younger voters that have been part of his base.

As in her past victories, Hillary Clinton has successfully mobilized her base of older voters and women. More impressive is the fact that Hillary Clinton won 67% of the female vote and an astounding 77% of the voters over 60.

But there are some disturbing data coming from Kentucky. A total of 48% of Kentucky Democrats said they would be satisfied if only if Hillary Clinton wins the nomination. An additional 8% say they would be dissatisfied with both. In other words, a majority of those voting in the Democratic primary would be dissatisfied with an Obama win. Whether this is just temporary or permanent could decide the results in November.

Another disturbing statistic is that race continues to play a role in Clinton’s wins. Seventy-eight percent of Clinton supporters said race was one of the important factors that determined their vote. Seven percent said it was THE most important factor.

This may account for the statistic that shows 32%–or almost a third–of Clinton’s supporters say she does not share their values. This leads to the question of whether Clinton’s win was not so much a vote of confidence in her as a vote against Obama. Added to this is the statistic that 19% of Clinton voters said they would not be satisfied if she wins the nomination. In contrast, only 3% of Obama voters would not be satisfied if he wins the nomination.

The final disconcerting statistic is that 13% of Kentucky voters said neither candidate shares their values. Maybe this should be no surprise considering 6% identified themselves as Republicans and an astounding 32% of those voting in the DEMOCRATIC Kentucky primary said they would vote for John McCain in November.

In the end Hillary Clinton’s victory appears somewhat tainted. With a third of the voters self-identified as McCain supporters and the much-discussed GOP attempt to try to prolong the Democratic contest, you can deduct half or more of Clinton’s 30% win. Also troubling is the data that show voters did not vote so much for her as against Obama.

This would appear to negate Clinton’s argument that she will be a better candidate because she can win. Her recent wins have come about largely through Republican cross-overs and those for whom race is a major issue. This is not a coalition to build a victory in November.

Oregon

The Oregon data will be late. Currently the Real Clear Politics composite poll has Obama leading by 12%. The largest margin is 20% and the smallest 4%. So much for the accuracy of preliminary polling data. Someone is going to look pretty silly on this one.

Here is the preliminary spreadsheet for Oregon:

You will note I have added Kentucky’s demographics at the bottom. Age and gender are virtually the same for the two states. Union membership is higher in Oregon. The differences are in race, education and income. Oregon is almost totally white while Kentucky is poorer and less-educated. On the surface, you would think the older voters and women in Oregon along with the lack of black voters would give Clinton a chance. So it will be interesting to see the exit polls.

As expected the networks called Oregon just time for the 10:00 news here in the Midwest. Surprise!

Here are the data as CNN has them right now:

I have inserted the Kentucky data below the Oregon data in blue. The line marked “ken poll” shows the exit polling data from Kentucky so you can see it side by side with Oregon. The turnout among women in Oregon was slightly lower as was that of lower income voters. The less-educated and older voter turnout was much lower in Oregon.

This leaves an intriguing question: could Clinton have made the race closer in Oregon if she had made a more concerted attempt to turn out her base? The answer is no. She won less than half the female vote and only 51% of those 60 and older, with many votes yet to be counted.

The race card did not play in Oregon the way it did it Kentucky with only 10% of voters saying race was one of several important issues.

Oregon also did not display the negativity of Kentucky with only 16% saying they would be satisfied only if Clinton wins.

Two Conclusions

These two races present a glass half-empty/half-full analogy for both Clinton and Obama supporters. I’m sure you can write the spin by now.

But for the Democratic Party there is also a similar dilemma. Clearly Clinton has both stirred up and/or uncovered some strong negatives about Obama that have played well in the states she has won. The resistance of older voters to Obama’s candidacy may be the most troubling. Women may be angry if Hillary Clinton does not win the nomination but it seems hard to believe they would support a Republican candidate who will put someone on the Supreme Court who will overturn Roe v. Wade.

Another troubling statistic for both candidates has been their inability to mobilize low income and less educated voters. Neither candidate appears to be evoking themes that resonate with them, following the misguided strategy that has cost the Democrats the last two elections by aiming their campaigns at the middle class while ignoring these two critical Democratic constituencies. In both Oregon and Kentucky the less educated make up more than a third of the electorate. Those making less than $15,000 range from 15-22% in both states. If these voters stay home as they did in these two primaries, you can write John McCain’s address a year from now as 1600 Pennsylvania Avenue.

Then there is the race issue. The Kentucky data and those from other states Clinton has won where it has been a factor raise more questions than answers. I would love to see some cross-tabulations and correlations. One theory is that they are the same people who say they are going to vote for McCain anyway. In other words, they are not true Democrats. If that theory is true then the issue becomes less troubling.

Finally, anyone writing about this contest must ask the question: are Republicans purposely helping to keep Hillary Clinton in this race? If I were the Democratic National Committee I would be doing some polling data on this and if it did show GOP influence it would be time for some tough talk with Hillary Clinton. If I were a superdelegat