Sneetches and Resistance
Nov. 13th, 2024 11:05 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
walkitoutGeisel (Dr. Seuss) published a story about the Sneetches before I was born.
https://en.wikipedia.org/wiki/The_Sneetches_and_Other_Stories#The_Sneetches
Kids These Days probably only know about the Sneetches from riding the Dr. Seuss ride at Universal Orlando:
https://www.universalorlando.com/web/en/us/things-to-do/rides-attractions/high-in-the-sky-seuss-trolley-train-ride
But I read the Sneetches as a kid, and if you have autism, and you read The Sneetches, It Explains a Lot. The ending is deus ex machina and overly optimistic (the Sneetches decide it really doesn’t matter whether you have stars or not, which, come on, you know perfectly well that never happens). But the general phenomena of Now One Thing and Then the Opposite is 100% a Thing.
In yesterday’s Matt Levine column, he writes about mergers and regulation, and how under Khan, the uncertainty around whether a merger would actually happen grew a lot, benefitting merger arb that focused on guessing correctly, but under the incoming administration, the expectation is that mergers will be rubberstamped, thus benefitting merger arb that focuses on collecting pennies in front of a steamroller (no steamroller, penny collection game is Awesome).
He also discusses regulation by the SEC regarding claims made by funds. Specifically, a lot of fine collection by the SEC from ESG funds that made statements about their ESG that were not true (or, in one case, statements about their Biblical investing that were not true). The world has changed, however, and we are now in a greenhushing world. Levine says:
“Gary Gensler’s SEC has a few months to bring its last greenwashing cases, but after that, I assume the next SEC will be bringing greenhushing cases? “Invesco said in its marketing materials that it does not boycott fossil fuels, but in fact it runs some ESG funds that own no fossil-fuel stocks, so it has to pay up.” Get them coming and going.”
This all feels very Sneetches to me.
There’s a lot in this column, tho, and it’s not all Sneetches suggestive. Some of it is substantially weirder. Levine has covered the question of Who Really Owns/Controls X from many perspectives over the year, teaching his readers about that Chinese stamp thing, for example. This time, he discusses the previous Trump administration, when there was a year plus long dispute over who was running the CFPB, and in which donuts played a role. This time, it’s probably going to be the larger question of whether or not Powell can be fired by the President. This is all playing out in quotes in news articles, with Powell and the rest of the Fed being quite emphatic on how Powell cannot be fired / such firing will not be recognized. Levine speculates that in the event Trump actually tries it:
“Yes if the rest of the Fed thinks you’re the Fed chair then that does kind of make you the Fed chair? What if there are two Fed chairs, though? Powell, with the support of the FOMC, saying “the Fed Funds rate is 4.75%,” and a Trump appointee saying “actually it’s 2%”? What would the short-term interest rate be? I feel like the plausible answers are “20%” and “0%.”2 It has to be something! It’s not like the CFPB; doing nothing, even for the Trump Fed, is not an option.”
We’re already seeing Powell reducing the Fed Funds rate and that having (minimal) impact on reducing mortgage rates.
Mike Lee (remember: Romney once of Bain Capital, really doesn’t like Mike Lee for a whole host of reasons) used this moment to advocate for EndtheFed. Levine provides a block quote about someone advocating for a shadow Fed chair a month ago, but walking it back now. Then he talks about Adam Levitin’s contribution to this discussion (I think https://www.law.georgetown.edu/faculty/adam-j-levitin/):
“Anyway at Credit Slips Adam Levitin argues that “realistically, if President Trump were to fire Powell for any reason, no matter how ridiculous (e.g., ‘I don't like his tie’), the effect would be to render Powell's position untenable,” but Powell has made it clear that “untenable” is not a problem for him, and it doesn’t seem to be a problem for Trump either.”
I’m no Powell fan, however, Resistance can happen for a lot of reasons, from a lot of sectors of the political universe. We are watching what happens when a Trump appointee doesn’t immediately do the bidding of the appointer. Levitin’s perspective may or may not be sincere. It could be sincere but Out of Date, reflective of an earlier political era in which collegiality operated in a very different way. It could also be very NOT sincere, and intended to serve as a wakeup call to the remaining people who haven’t fully grasped the ride we are now all strapping in for.
Elsewhere, at the LA Times (yeah, I unsubscribed, but I have vestigial access and Rorschach sent me a link to this article:
https://www.latimes.com/business/story/2024-11-12/column-molly-whites-message-for-journalists-going-freelance-be-ready-for-the-pitfalls
It’s mostly about Molly White, and the evolving landscape for independent journalists specifically dealing with legal threats. The one that caught my eye was the Coinbase threat, and the CFPB funding case that is referred to as potentially relevant.
https://www.supremecourt.gov/opinions/23pdf/22-448_o7jp.pdf
The question was regarding the funding of the CFPB and involved the definition of “appropriations”. Obviously, any conservative with more than two brain cells really needs “appropriations” to cover a lot of ground, otherwise a helluva lot of conservative funding streams Go Away and also the ability to generate a budget crisis by keeping appropriations separated from authorizing spending would presumably be affected as well.
From LA Times:
“In that case, the justices turned away a challenge to the funding of the Consumer Financial Protection Bureau, which derives from the Federal Reserve System. (The plaintiffs made an elaborately legalistic argument that such funding violates the “appropriations clause” of the Constitution and therefore the CFPB is unconstitutional.)
Thomas wrote that the plaintiffs had offered “no defensible argument” that the appropriations clause requires more than a congressional law authorizing “the disbursement of specified funds for identified purposes,” as was the funding for the CFPB.”
Thomas wrote the opinion, it’s a 7-2, and the dissenters are Alito and Gorsuch.
This isn’t going to stop anyone. The scrums will continue. And I think Levine’s onto something when he says that uncertainty around the composition of the Fed — or the continued existence of the Fed — would be very, very bad for anyone hoping to lower the cost of credit in part or all of our economy.
ETA:
But funnier for the folks popping popcorn and watching it all burn.
“It would be funnier to name, like, three shadow Fed chairs and have them going around making wildly different pronouncements about monetary policy, and then at the end pick the one who got the most attention.”
https://en.wikipedia.org/wiki/The_Sneetches_and_Other_Stories#The_Sneetches
Kids These Days probably only know about the Sneetches from riding the Dr. Seuss ride at Universal Orlando:
https://www.universalorlando.com/web/en/us/things-to-do/rides-attractions/high-in-the-sky-seuss-trolley-train-ride
But I read the Sneetches as a kid, and if you have autism, and you read The Sneetches, It Explains a Lot. The ending is deus ex machina and overly optimistic (the Sneetches decide it really doesn’t matter whether you have stars or not, which, come on, you know perfectly well that never happens). But the general phenomena of Now One Thing and Then the Opposite is 100% a Thing.
In yesterday’s Matt Levine column, he writes about mergers and regulation, and how under Khan, the uncertainty around whether a merger would actually happen grew a lot, benefitting merger arb that focused on guessing correctly, but under the incoming administration, the expectation is that mergers will be rubberstamped, thus benefitting merger arb that focuses on collecting pennies in front of a steamroller (no steamroller, penny collection game is Awesome).
He also discusses regulation by the SEC regarding claims made by funds. Specifically, a lot of fine collection by the SEC from ESG funds that made statements about their ESG that were not true (or, in one case, statements about their Biblical investing that were not true). The world has changed, however, and we are now in a greenhushing world. Levine says:
“Gary Gensler’s SEC has a few months to bring its last greenwashing cases, but after that, I assume the next SEC will be bringing greenhushing cases? “Invesco said in its marketing materials that it does not boycott fossil fuels, but in fact it runs some ESG funds that own no fossil-fuel stocks, so it has to pay up.” Get them coming and going.”
This all feels very Sneetches to me.
There’s a lot in this column, tho, and it’s not all Sneetches suggestive. Some of it is substantially weirder. Levine has covered the question of Who Really Owns/Controls X from many perspectives over the year, teaching his readers about that Chinese stamp thing, for example. This time, he discusses the previous Trump administration, when there was a year plus long dispute over who was running the CFPB, and in which donuts played a role. This time, it’s probably going to be the larger question of whether or not Powell can be fired by the President. This is all playing out in quotes in news articles, with Powell and the rest of the Fed being quite emphatic on how Powell cannot be fired / such firing will not be recognized. Levine speculates that in the event Trump actually tries it:
“Yes if the rest of the Fed thinks you’re the Fed chair then that does kind of make you the Fed chair? What if there are two Fed chairs, though? Powell, with the support of the FOMC, saying “the Fed Funds rate is 4.75%,” and a Trump appointee saying “actually it’s 2%”? What would the short-term interest rate be? I feel like the plausible answers are “20%” and “0%.”2 It has to be something! It’s not like the CFPB; doing nothing, even for the Trump Fed, is not an option.”
We’re already seeing Powell reducing the Fed Funds rate and that having (minimal) impact on reducing mortgage rates.
Mike Lee (remember: Romney once of Bain Capital, really doesn’t like Mike Lee for a whole host of reasons) used this moment to advocate for EndtheFed. Levine provides a block quote about someone advocating for a shadow Fed chair a month ago, but walking it back now. Then he talks about Adam Levitin’s contribution to this discussion (I think https://www.law.georgetown.edu/faculty/adam-j-levitin/):
“Anyway at Credit Slips Adam Levitin argues that “realistically, if President Trump were to fire Powell for any reason, no matter how ridiculous (e.g., ‘I don't like his tie’), the effect would be to render Powell's position untenable,” but Powell has made it clear that “untenable” is not a problem for him, and it doesn’t seem to be a problem for Trump either.”
I’m no Powell fan, however, Resistance can happen for a lot of reasons, from a lot of sectors of the political universe. We are watching what happens when a Trump appointee doesn’t immediately do the bidding of the appointer. Levitin’s perspective may or may not be sincere. It could be sincere but Out of Date, reflective of an earlier political era in which collegiality operated in a very different way. It could also be very NOT sincere, and intended to serve as a wakeup call to the remaining people who haven’t fully grasped the ride we are now all strapping in for.
Elsewhere, at the LA Times (yeah, I unsubscribed, but I have vestigial access and Rorschach sent me a link to this article:
https://www.latimes.com/business/story/2024-11-12/column-molly-whites-message-for-journalists-going-freelance-be-ready-for-the-pitfalls
It’s mostly about Molly White, and the evolving landscape for independent journalists specifically dealing with legal threats. The one that caught my eye was the Coinbase threat, and the CFPB funding case that is referred to as potentially relevant.
https://www.supremecourt.gov/opinions/23pdf/22-448_o7jp.pdf
The question was regarding the funding of the CFPB and involved the definition of “appropriations”. Obviously, any conservative with more than two brain cells really needs “appropriations” to cover a lot of ground, otherwise a helluva lot of conservative funding streams Go Away and also the ability to generate a budget crisis by keeping appropriations separated from authorizing spending would presumably be affected as well.
From LA Times:
“In that case, the justices turned away a challenge to the funding of the Consumer Financial Protection Bureau, which derives from the Federal Reserve System. (The plaintiffs made an elaborately legalistic argument that such funding violates the “appropriations clause” of the Constitution and therefore the CFPB is unconstitutional.)
Thomas wrote that the plaintiffs had offered “no defensible argument” that the appropriations clause requires more than a congressional law authorizing “the disbursement of specified funds for identified purposes,” as was the funding for the CFPB.”
Thomas wrote the opinion, it’s a 7-2, and the dissenters are Alito and Gorsuch.
This isn’t going to stop anyone. The scrums will continue. And I think Levine’s onto something when he says that uncertainty around the composition of the Fed — or the continued existence of the Fed — would be very, very bad for anyone hoping to lower the cost of credit in part or all of our economy.
ETA:
But funnier for the folks popping popcorn and watching it all burn.
“It would be funnier to name, like, three shadow Fed chairs and have them going around making wildly different pronouncements about monetary policy, and then at the end pick the one who got the most attention.”