Today, Interim Assistant Secretary for Financial Stability Neel Kashkari — who is responsible for administering the $700 Troubled Assets Relief Program (TARP) — appeared before the House Financial Services Committee to testifyabout concerns that the TARP has insufficient oversight.
During the hearing, Rep. Brad Sherman (D-CA) pressed Kashkari regarding “appropriate standards of executive compensation,” which is one of the provisions that banks must accept before they can access TARP funds. Sherman pointedly asked Kashkari, “as to $30 million, is that appropriate or inappropriate, or you have no opinion?” Kashkari replied that he’s “not in a position to opine on a specific number, if it’s appropriate or not.” Watch it:
Kashkari’s hesitancy to condemn $30 million bonuses for bailed out bank executives is troubling, because “chief executive officers of the firms most responsible for causing the crisis collected hundreds of millions of dollars in pay last year.” And while many — like Wachovia CEO Robert Steel — have chosen to forgo this year’s bonus, some still think that they deserve the money.
AIG, though, has not seen the light, and has “offered cash awards to another 38 executives…with payments of as much as $4 million.” AIG’s defense is that it “would be doing a disservice to the taxpayer — and would place AIG’s asset divestiture plan at risk — if we did not act decisively to ensure that our key employees remain.”
Kashkari’s answer, meanwhile, shows that the Treasury is simply unwilling to do anything to curb this kind of behavior, even though companies like AIG are operating thanks to TARP dollars, and Treasury has the explicit ability — granted by the TARP legislation — to “require that [a] financial institution meet appropriate standards for executive compensation.”
Today, a congressional oversight panel, led by Harvard law professor Elizabeth Warren, released a report which noted that “Treasury cannot simply trust that the financial institutions will act in the desired ways; it must verify.” Thus far, it’s clear that Treasury has not verified much of anything.
President-elect Barack Obama’s reported selection of Dr. Steven Chu as Secretary of Energy is a bold stroke to set the nation on the path to a clean energy economy. Chu, a Nobel Prize-winning physicist, is the sixth director of the Lawrence Berkeley National Laboratory, a Department of Energy-funded basic science research institution managed by the University of California. After moving to Berkeley Lab from Stanford University in 2004, Chu “has emerged internationally to champion science as society’s best defense against climate catastrophe.” As director, Chu has steered the direction of Berkeley Lab to addressing the climate crisis, pushing for breakthrough research in energy efficiency, solar energy, and biofuels technology.
At Berkeley Lab, Chu has won broad praise as an effective and inspirational leader. “When he was first here, he started giving talks about energy and production of energy,” Bob Jacobsen, a senior scientist at the Lawrence Berkeley Lab, told the San Francisco Chronicle in 2007. “He didn’t just present a problem. He told us what we could do. It was an energizing thing to see. He’s not a manager, he’s a leader.” In an interview with the Wonk Room, David Roland-Holst, an economist at the Center for Energy, Resources and Economic Sustainability at UC Berkeley, described Chu as a “very distinguished researcher” and “an extremely effective manager of cutting edge technology initiatives.” Roland-Holst praised Chu’s work at Lawrence Berkeley, saying “he has succeeded in reconfiguring it for a new generation of sustainable technology R&D, combining world class mainstream science with the latest initiatives in renewable energy and climate adaptation.”
The reality of past threats was apparent to everyone whereas the threat of global climate change is not so immediately apparent. Nonetheless, this threat has just got to be solved. We can’t fail. The fact that we have so many brilliant people working on the problem gives me great hope.
Chu’s leadership extends beyond this nation’s boundaries. As one of the 30 members of the Copenhagen Climate Council, Chu is part of an effort to spur the international community to have the “urgency to establish a global treaty by 2012 which is fit for the purpose of limiting global warming to 2ºC,” whose elements “must be agreed” at the Copenhagen summit in December, 2009.
Last year, Dr. Chu co-chaired a report on “the scientific consensus framework for directing global energy development” for the United Nations’ InterAcademy Council. Lighting the Way describes how developing nations can “‘leapfrog’ past the wasteful energy trajectory followed by today’s industrialized nations” by emphasizing energy efficiency and renewable energy.
It’s hard to decide if the selection of Dr. Chu is more remarkable for who he is — a Nobel laureate physicist and experienced public-sector administrator — or for who is not. Unlike previous secretaries of energy, he is neither a politician, oil man, military officer, lawyer, nor utility executive. His corporate ties are not to major industrial polluters but to advanced technology corporations like AT&T (where he began his Nobel-winning research) and Silicon Valley innovator Nvidia (where he sits on the board of directors). Chu is a man for the moment, and will be a singular addition to Obama’s Cabinet.
Daniel Weiss, a Senior Fellow and the Director of Climate Strategy at the Center for American Progress Action Fund, remarks:
The Secretary of Energy is one of the most challenging jobs in the U.S. Government. He will oversee the national energy labs, nuclear triggers on our missiles, clean up of contaminated nuclear sites, and research on fossil fuels and clean renewable energy. DOE oversees nuclear nonproliferation efforts as well as the disposal of nuclear waste. The next Energy Secretary will play a critical role in the design, adoption and implementation of any program to reduce global warming pollution.
Dr. Steven Chu has a unique set of qualifications to oversee the unruly Department of Energy –- physicist, energy lab manager, energy efficiency expert. What a contrast compared to President Bush’s first Secretary of Energy, Spencer Abraham, who was appointed even though he advocated eliminating DOE just a few years earlier. He will bring a scientific rigor to President-elect Obama’s clean energy and global warming agenda. Following on the heels of the anti-science Bush administration, its like going to Mensa after spending eight years in the flat earth society.
,In a presentation at this summer’s National Clean Energy Summit convened by the University of Nevada Las Vegas, Sen. Harry Reid (D-NV), and the Center for American Progress Action Fund, Dr. Chu described why he is dedicated to fighting global warming:
,Climate Progress’s Joe Romm weighs in: “Chu would be a great choice. And since he is a hardcore science and cleantech guy, he would be a perfect complement for the new point person at the White House on energy and climate — Carol Browner.”
The Washington Post’s Al Kamen has the scoop that Carol Browner, the Clinton administration’s Environmental Protection Agency Administrator, has been tapped for a new position “as head of environmental, energy, climate and related matters” in President-elect Barack Obama’s White House. She may be heading a new National Energy Council, recommended in the the Center for American Progress Action Fund’s Change For America blueprint for the new administration, to drive “both policy and strategic options with respect to energy and climate change.”
On December 1, CAPAF hosted Browner, New York Times columnist Tom Friedman, and Gov. Ed Rendell (D-PA) for a lively discussion on the future of energy and environmental policy. In the question-and-answer period, Browner explained her view that government can spur economic growth by raising standards:
As a former regulator — and I can cite you any number of stories — when the government steps up and says there’s a requirement, that we’re going to have to take sulfur out of diesel fuel, you’re going to have to get rid of CFCs (chlorofluorocarbons) by a date certain, what the government is doing is creating a market opportunity.
American innovation and American ingenuity time and time again has risen to that challenge, and inevitably more quickly and at less cost than was anticipated.
And so, while the governor has been talking very importantly about how we need to make investments, those investments, when they are partnered with a government requirement — a regulation that we’re going to reduce greenhouse gas emissions, that we’re going to reduce this climate pollutant — the upside is phenomenal, more than we can possibly imagine in this room.
Browner’s view that higher standards build economic growth has proven to be true. A study of California’s green economy found that its “energy-efficiency policies created nearly 1.5 million jobs from 1977 to 2007″ and grew the economy by $45 billion without any growth in per-capita electricity use. Writing in favor of strong global warming standards, Hank Ryan, chair of the California Small Business Association, explains that energy regulations have given “California small businesses a competitive edge over their counterparts in other states because while they’re wasting money on inefficiency, we’re spending it on employees, building a better product, advertising, and capital improvements.”
The Wonk Room and ThinkProgress have been documenting the many last-minute regulatory changes that President Bush’s administration is pushing through as his term winds to a close. White House spokesman Tony Fratto’s assertions aside, the changes weaken health care, workers rights, and expose the environment to further pollution and irresponsible behavior.
But the Bush administration is also making sure to wreck the tax system on its way out the door. Today, Time’s Stephen Gandel reported that, in the last year, the Internal Revenue Service has been “unusually aggressive in doing what it can to lower corporate taxes, going above and beyond what has been allowed in the past”:
The IRS this year has issued 113 notices, many of which will lower the taxes companies will pay this year and in the future. That breaks the previous record of 111 in 2006, and is nearly double the 65 issued in the last year of Bill Clinton’s presidency.
One of the more egregious examples of Bush’s various gifts to big business was a change to the tax code — enacted in the midst of the $700 billion bailout debate — which gave “American banks a windfall of as much as $140 billion.” Gandel notes that Wells Fargo will receive a $5 billion tax break from this change, while Capital One will receive a $500 million windfall.
Perhaps the largest windfall though, will come from a proposed change stating “companies that lose money in any given year are entitled to a rebate on money they have paid in taxes for the prior two years“:
For instance, in 2008 there are projected to be 107 companies in the S&P 1500 that will lose money, as much as $80 billion. About half of those companies were profitable in 2007, making nearly $30 billion as a group. That means, based on an average corporate tax rate of about 30%, those companies could receive as much as $10 billion in tax rebates from last year alone.