Dr.Norm Matloff writes to his email list:
I'm in the midst of reading Sheila Bair's excellent account of her frustrations—but eventual vindication—during her tenure as head of the FDIC in the years leading to and following the 2008 financial crash. I'm finding some remarkable parallels with the current H-1B situation.
As many of you know, by 2007 the wheels were already starting to come off of the subprime mortgage mania, "derivatives squared" craziness bus in the real estate and financial markets leading up to the 2008 implosion. Yet Bair shows how both the legislative and executive branches ignored the dire warning signs and were pushing full speed ahead with policies aimed to please the big financial institutions, relaxing capital requirements (reserves needed if, e.g. a lot of loans suddenly go bad).
To begin with, Senator Schumer enters the picture, behaving in as strong a pro-banking industry manner as he is now in his pro-tech industry stance. He pushes the same mantras too, with phrasing like "our outdated policies" and the need for the U.S. to be "competitive" with other nations, just like we see with H-1B. The McKinsey consulting firm is brought it to bolster his arguments—he doesn't mention that McKinsey would stand to gain from a loosening of capital requirements policy—just like McKinsey has been used to justify H-1B and offshoring.
And Bair finds it ironic that when she meets with Schumer, it is at the headquarters of the Democratic Senate Campaign Committee, which Schumer then chaired. This is reminiscent of Rep. Tom Davis' openly stating that legislation to expand H-1B was being passed "because the CEOs want it, and they're the ones who give us the money"—while HE chaired the Republican Congressional Campaign Committee.
On the executive branch side, Bair then discusses policy proposals drafted by Comptroller of the Currency John Dugan that appear to tighten up on capital requirements, the key word here being "appear." Bair writes, "...I respected John for trying to tighten regulatory standards...[but] I came to realize that...[the policy] had been drafted in a way that would not have much impact on the big national banks...Rather, the primary impact would fall on the small community banks..." This too is parallel to what we see with H-1B, in which Schumer et al want to have the appearance of cleaning up H-1B abuse but in actuality want to punish the Indian firms while the deep pockets guys like Microsoft go scot free.
What we need now is a Sheila Bair heading some H-1B-related government agency.
The Sheila Bair book he's talking about is Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself .