Personally, I think that some of these CEO's who ran their companies into the ground, then got bailed out... belong in jail.

If you need to understand why Citigroup demands from Congress, then go ask the senators and representatives who voted to loan them the money.

Nancy Pelosi must have an excellent economic analysis that explains why she has to service Citigroup requests, she is the leader, she advocated that we make the loan. Your Congress is in business with the bank, your congress is a large investor, they are in the banking business.

I hope Nancy know what she is doing, because few of us trust congress with our money in any event, and we certainly would be unlikely to trust a bank run by congress. By the way, does Nancy have any banking experience?

Who gives a sh*t what Citibank wants? Piss on'em.

If the dickless wimps in congress did their fucking jobs it wouldn't matter what the assholes at Citibank think or what they want. Why should Citibank have any more influence over what Congress does than you and me? No reason? CORRECTO.

The entire congress remains a festering boil on the face of democratic process. They should all be in jail except for Feingold and Kucinich. PERIOD.

This is the same bunch of jokers who enacted "bankruptcy reform" - that being a euphemism for "We'll drain the last drop of blood out of you and then put you on the street anyway." That the same "bankruptcy reform" did nothing about usurious credit card rates and made no exceptions for catastrophic illnesses is a measure of just how deeply our Congress is into the pockets of the banking industry. The same banks whose investment strategy appears to have been a cross between a Ponzi scheme and roulette were so chagrined at having to take 350 billion of our dollars that they waited until now to present their list of demands.
No one was fired, part of our money is being paid out in stock dividends and corporate bonuses. The failure of the banks was said to be a Very Bad Thing. So is their continued existence.

"But there are no powerful representatives of people with mortgages; and the Congress, who allegedly represent us all, depend on rich people and lobbyists for campaign contributions."

Isn't this the cycle that Obama has just broken? With his millions of small donors he now represents the mortgage holders against the big corporations to whom he is not beholden.

I'll be fascinated to see how he plans to keep this new channel alive and working. If he can expand his 'contract' with America's middle class, his $20 donors, the the pendulum will start to swing. Assuming, of course, that the denizens of big-business funded Capitol Hill don't overcome it.

Oh my! The institutional fix is not more baling twine and pliers, but comprehensive public financing of elections. The leverage these institutions - aka as the financial services industry, the LARGEST source of all campaign contributions - wield over Schumer et al are their donations. The NYT had an extensive analysis of Schumer's link to the financial services industry a few weeks back. It is not pretty. This is not ideological, but purely transactional.

hilzoy

I was so angry when I started ready this. But you are so right. What right does Citibank or Chase or any of them have to make demands? They have the right because they have bought off our congress. These people, democrat or republican, are in the belly of the bankers. And the unions were our only hope and they are squelching them as fast as possible.

@DaveInOz

You really are in Oz. Buy a lottery ticket to the million doller inauguration. I got an "invitation". Sure you did too. I gave my five dollars to a family in my really poor community that needed food. (or clothes, heat, education, blah, blah, blah. Get it!

This is the real political dynamic that needs examining...i.e. the balance of power between corporations and individual citizens.

And it's not just the financial aspect the needs examining...look at how corporate contracts make it almost impossible for a customer to receive redress for being wronged.

Why on earth shouldn't future mortgage holders have the same protections existing mortgage holders do? So Citi can do the same thing all over again???

[...]if someone can explain to me why Citi, after taking some $40 billion of our money, is in a position to make "demands" on the US Senate, I'd be fascinated. -- Hilzoy

They (the banks) know they have the Senate (with Schumer leading the posse) on a short rein/in their pocket? The money is showered over them in Zeus-like golden glory but they hope we won't notice, since it's taken from us in small increments? The past 8yrs have desensitized everyone to the fact that, in every aspect of our lives, the fox is "guarding" the hen house? All of the above?

Matt Young, @ 20:25,

You seem not to be aware that "the Congress" is composed of two elements -- the House of Representatives and the Senate. And that Nancy Pelosi is in the first, while it's the misbegotten *Senate* which is singing the praises of Citi for its "graciousness"...

I suspect Citigroup is supporting the mortgage bankruptcy reform measure in the stimulus package as a trade-off for the big tax break it is getting in the proposed stimulus package. The tax break serves no stimulus purpose, but would enable Citigroup to offset 2008 losses against all income it earned over the last five years and recover tax payments on income going back for five years. It's not even trickle down.

I absolutely agree that Senators negotiate with bankers on the law. However, I have to note that the Senator doing the negotiation happens to be Schumer. He's the guy who ignored Cox when Cox (Cox!!!) said there had to be some regulation of the ratings agencies.

Personally, I think step 1 should be a very loud NY Sen primary challenge. Schumer will be re-elected, but if he has to spend some of the money bankers used to buy him off in the primary, because people are disgusted at being un-represented by Schumer (D-Finance Industry) then his calculations will change a bit.

"...if someone can explain to me why Citi, after taking some $40 billion of our money, is in a position to make "demands" on the US Senate, I'd be fascinated." --Hilzoy

"They (the banks) know they have the Senate (with Schumer leading the posse) on a short rein/in their pocket?" --exlibra

Let's flesh this out a little. Citigroup, Inc. was the top contributor to a full one third of all US Senators during the 2008 cycle. Overall, it spent a total of about $4 million in campaign contributions at the federal level this time around. If that kind of scratch doesn't buy you a seat at the table come policy negotiation time, nothing will.

Meanwhile, Citi didn't take anything from us. The $40 billion it received in TARP money is merely the return on a rather prudent investment. This, boys and girls, is how capitalism--and democracy--works in the real world.

Hilzoy, I'm no happier about this than you are, but bear in mind the *vailing* powers are pretty goddamn strong.

"Nice little economy you've got there -- wouldn't want anything to happen to it, would you?"

Am I comparing financial institutions to mobsters?

Hell, no; there's really not much comparison.

Financial institutions can get away with far more thievery than mobsters can.

And best of all (for them, if not for us), it's all legal, because our duly-elected enforcers and makers of the law are working with them.

Yippee.

There is a solution. Complete public financing of all federal elections. A ban on all private campaign contributions, and treating all pecuniary consideration flowing from any private party to any elected official or candidate for federal office as prima facie evidence of bribery.

That oughta fix it.

I saw their press conference on C-Span and it was hard to believe how tickled they were with themselves.

Then one of these democrats stood up and mentioned an inconvenient detail: the law will only apply to past loans. Any loans made after the legislation is signed will not qualify.

THAT MEANS: the new loans that will replace the old defaulted loans don't qualify, and anyone refinancing into a lower fixed rate mortgage will give up any ability to use use the new provision if they get into trouble.

Maybe they just want to stop people from refinancing if they think the economy will get worse and they may lose their job.

But it is hard for me to understand why if the ability to use bankruptcy is good this year, why does it get bad next year?

Which makes me wonder how much Citi and other banks are still giving out in campaign contributions. Would I be the only one irate if Congress voted to give money to Citi which Citi then returns in part?

Ah, "we own the bank, so let's run it badly" argument. That's why State run banks so frequently end up in catastrophic situations. Running the bank into a second bankruptcy to satisfy political urges on mortgages hardly makes decent policy, as such management should indeed lobby for the business interests of the bank. In this case, they properly are changing their tune, but the argument for the business interest of the banks is a useful function (of course the fleece the rich faction will bleat on, but no matter what they will do so).

Kevin Drum surmises that Senate Dems are getting the support of Citigroup (and hopefully other banks) to cut off protests by Senate Republicans. That makes sense: http://www.motherjones.com/kevin-drum/2009/01/pay_no_attention_to_the_party_behind_the_curtain.html

Ah, yes, Lounsbury, as opposed to Killiger at Washington Mutual, eh? His very Golden Parachute is still floating aloft, as WaMu cuts more and more employees and the stockholders will never be able to recoup.

That said, if someone can explain to me why Citi, after taking some $40 billion of our money, is in a position to make "demands" on the US Senate, I'd be fascinated.

Um, Citibank got $40 billion of our money because they are able to effectively make demands of federal officials in both the executive and legislative branches.

From Kevin Drum...
"Most of the reaction to this announcement has been dismay that Congress had to "negotiate" with Citigroup in order to pass this legislation, but it's important to get clear what's actually going on here. The negotiation wasn't really with Citigroup, it was with Senate Republicans, who have almost unanimously opposed this legislation in the past. With Citigroup on board, Durbin and Dodd and Schumer hope that other banks will hop on board too, and once the banks are on board then maybe a few of those legendary "moderate" Republicans will also see the light and do the right thing."
Sounds right to me.

I suspect they realize their sugar daddy Paulson at Treasury is going to be gone very soon, so they'd better make the best deal they can while they can.

Dems negotiated with them because banks are integral to our economic system and if they fold up the whole economy does too. Nobody, and I mean nobody, wants that.

Now, if we could only get them loaning money without so much restraint. We've gotta get the mortgages fixed. Once that's done banks will be able to put a better value on other bank's mortgage-backed securities. That's how they know whether it's safe to loan money to those banks.

Gotta make the money move.