First you have this story on the failures of the regulators to manage the Fail Whale trades at JPMorgan Chase while they were happening, despite having access inside the bank.

Scores of federal regulators are stationed inside JPMorgan Chase’s Manhattan headquarters, but none of them were assigned to the powerful unit that recently disclosed a multibillion trading loss.

Roughly 40 examiners from the Federal Reserve Bank of New York and 70 staff members from the Office of the Comptroller of the Currency are embedded in the nation’s largest bank. They are typically assigned to the departments undertaking the greatest risks, like the structured products trading desk. Even as the chief investment office swelled in size and made increasingly large bets, regulators did not put any examiners in the unit’s offices in London or New York, according to current and former regulators who spoke only on condition of anonymity.

Senior JPMorgan executives assured the bank’s watchdogs after the financial crisis that the chief investment office, with hundreds of billions in investments, was not taking risks that would be a cause for concern, people briefed on the matter said. Just weeks before the trading losses became public, bank officials also dismissed the worry of a senior New York Fed examiner about the mounting size of the bets, according to current Fed officials.

In other words, the bank told their regulators not to worry about this little side office where hundreds of billions of dollars were being funneled for casino gambling, and the regulators happily obliged.

But wait, you say. We’re talking about the OCC and the Federal Reserve and the New York Fed – you know, the one where JPMorgan Chase CEO Jamie Dimon sits on the board of directors – traditionally the most compliant banking regulators in the government. They’re not part of the RMBS working group investigation. That includes law enforcement personnel, the Securities and Exchange Commission, etc. So it’s apples and oranges.

OK, let’s go to the apples, then. The bankruptcy of ResCap, the mortgage unit for Ally Financial, shed some more light on the pattern of abuse by the servicer against their customers. The Federal Reserve released a letter related to the bankruptcy, detailing an accounting of mortgage servicing abuses that came out of a 2011 consent decree with Ally, which was previously known as GMAC. Take a look at these numbers, based on a sampling of the loan files:

GMAC started foreclosure proceedings on 1,270 borrowers who were in some stage of the bankruptcy process, and thus should have been protected from foreclosure.

GMAC carried out foreclosure sales on 1,577 borrowers who were awaiting a decision about a loan modification. This is known as “dual tracking” and is one of the biggest complaints of homeowners and their advocates.

The mortgage servicer hired a law firm that was subsequently “delisted” to process 30,235 foreclosures. The names of the firms are redacted, but presumably include several of those accused of forging documents as part of the robo-signing scandal.

The mortgage servicer denied 50,030 borrowers for a government-run Home Affordable Modification Program, and then offered no alternative modification.

This review covered roughly 230,000 borrowers who were in some stage of foreclosure in 2009 or 2010. The overlap in these numbers is not revealed here, but you’re talking about a significant number of borrowers dealt with harshly by the system.

These numbers formed the OCC-led “foreclosure review” process, which has thus far exacted absolutely no price on the banks – the fines were literally folded into the larger foreclosure fraud settlement. In February of this year, with pretty much the same information in hand, most of the federal regulators working on the task force, primarily the Justice Department and state Attorneys General, came to the above-mentioned generous settlement with the five leading banks, the details of which I’ve gone over on multiple occasions.

So I would say that the banks can rest easy, turn over documents – as Wells Fargo did recently – and maybe even play hardball with their own lawyers on their salaries. Because the regulators have been sufficiently de-fanged that the banks are in little danger of accountability.

❖Things are still hopping in Montreal, with protestors arrested now numbering 2,500, bogging down the judicial process. Originally, the protests were about huge tuition hikes, but the government response of imposing very restrictive measures on the protests, and huge fines for violating them, has further inflamed the situation.

❖Occupy Homes MN has saved one family from being evicted from their home after PNC Bank foreclosed because the bank itself “failed to withdraw a monthly payment, then demanded two months’ late payment for their own mistake”.

❖If you want to know what percentage of houses in your ZIP are underwater, just go here.

❖”A leading economist says Congress needs to act fast on refinancing legislation to help the most homeowners and give the improving housing market a boost.” That would be Mark Zandi who pointed out the pending legislation extend help to those who are underwater but keeping their payments current.

❖Simon Johnson has a very interesting article up, complete with link to a petition, exploring in some detail the–ahem–appropriateness of the certain connections of one Jamie Dimon to the Federal Reserve.

❖Morgan Stanley says it will refund Facebook investors who overpaid for Facebook stock last Friday, though how they know how much anybody overpaid was not revealed.

❖”Wall Street giant Goldman Sachs plans to invest $40 billion into projects linked to renewable energy over the next decade . . ..”

❖Leonie Industries, a defense contractor, became so upset with USA Today journalists who reported that the firm “owed at least $4 million in federal taxes”, that they launched a campaign against them. Fake Twitter and Facebook accounts and websites were set up in the reporters’ names, negative comments about them were made on a host of internet sites, etc. DOD is reviewing the matter and will take appropriate action.

❖”I would rather say nothing otherwise I would only have ugly things to say,” said former Vatican Bank Chief Chairman Ettore Gotti Tedeschi after he was fired by the Board of Directors. In 2010, Italian prosecutors seized $29 million “from a Rome bank account registered to the [Vatican Bank] amid suspicions of money-laundering . . ..

❖A US drone hit a mosque in North Waziristan on Thursday, killing at least 10 people, following a drone hit on a house in North Waziristan a day earlier which killed four. Such attacks don’t bode well for “reconciliation” between the US and Pakistan following the November NATO air raids that killed border patrols.

❖UN nuclear inspectors in Iran “have found uranium enriched beyond the previously reported levels of 20 percent in samplings taken [in February] from [Iran's] new underground fuel enrichment plant . . ..” Currently, six world powers are embroiled in tough negotiations about Iran’s nuclear program, so it’ll be interesting to see what impact the newly announced UN findings will have.

❖“Crosshair” stickers appeared outside the offices of Democratic lawmakers in the MO capital in January but legislation introduced to install security cameras in the state capital building’s hallways failed to pass. Meanwhile, the Missouri House Clerk authorized spending $1100 “on a security camera to keep watch over a new bronze bust of . . . Rush Limbaugh. UPDATE: Reaction to news of the Limbaugh security camera has been so swift and strong that plans for the thing have been scrapped.

❖Wisconsin Democratic candidate for lieutenant governor, Mahlon Mitchell, rallied a crowd of about 110 gathered at a community center and together they all marched to City Hall and voted.

❖FL has stringent requirements that the unemployed must meet before they can receive unemployment benefits. “The National Employment Law Project and Florida Legal Services want the U.S. Labor Department to investigate and overturn the regulations” which they say are the toughest in the country. In 2011, 17% of Florida’s unemployed received benefits compared to 27% nationally.

❖FL Gov Rick Scott (R-of course) continues on his crusade to purge the state’s voter rolls. One example includes the 60-year old owner of a small business who’s lived and voted in FL for 40 years, but who has received notice that she was not born in the US (she was, in Ohio) and therefore is no longer eligible to vote in FL. Remember Katherine Harris who managed to purge 7,000 FL voters in 2000?

❖A NLRB administrative law judge has ordered a new union election at a Long Island Target story. The June 2011 election was contested by The United Food and Commercial Workers Union Local 1500, arguing that “Target illegally intimidated workers for months leading up to the vote” (137-85 against unionization).

❖Detroit will be “eliminating almost half its streetlights.” Although several towns across the country have cut back on the number of streetlights, Detroit’s action will cover “more area than Boston, Buffalo and San Francisco combined.”

❖Why can’t we get this right? “A multibillion-dollar federal initiative to move low-income elderly and disabled people from long-term care facilities into the community has fallen far short of its goals . . ..”

❖Or this? Increasingly, ordinances are being used (or new ones issued) to essentially outlaw being homeless. In Madison, WI, police are now issuing $180 tickets to homeless persons who ask passers-by for a cigarette.

❖And this? The US “is one of three [countries] that does not offer paid maternity leave” to women. The Family & Medical Leave Act provides for 12 weeks of unpaid leave, but only 11% of private and 17% of public employees report they had access to such leave.

❖”A second federal judge in California has struck down a law denying benefits to partners in a gay marriage.”

❖The FBI is now responding to break-ins and arson at Atlanta-area women’s health clinics and offices of doctors who spoke out against the state’s new law tightly restricting late-term abortions.

❖One of “the disappeared” during Argentina’s Dirty War has been identified. His body washed ashore in 1976, indicating he was one of many thrown alive from aircraft into the sea. DNA evidence has linked him to his daughter, who was only days old when her parents were disappeared. She was adopted by a military family. Her mother has never been found.

❖Although it is one of the poorer Latin American countries, Bolivia is investing in its future. It has received a $20 million International Development Bank loan to “promote cognitive development, socio-emotional and physical development of children under 4 years old”, aimed at 25,000 of its children.

❖Methane gas has been found in “three residential water wells and two streams” in PA, in an area about “half a mile from a Chesapeake Energy hydraulic fracturing drilling pad.”

❖Costs of photovoltaic modules have dropped “nearly 75% in the past three years . . . to the point where solar power is now competitive with daytime retail power prices in a number of countries.” That’s according to a new study which urges policy-makers, planners and home owners others to pay more attention to the benefits of solar power into future planning.

❖CA’s Public Utilities Commission just raised “the maximum total capacity for all rooftop solar systems . . . to about 5,200 megawatts from 2,400 megawatts”. This move was not without its detractors, however, and studies have been ordered to address their concerns.

❖Australia Antarctic Division “scientists estimate there has been as much as a 60 per cent reduction in the volume of Antarctic Bottom Water, the cold dense water that drives global ocean currents.”

❖Also from Australia, we learn “DNA evidence shows that marine reserves help to sustain fisheries“. 2.5 billion people get 20% of their average animal protein intake from fish, and in many parts of the world “fish protein is absolutely essential . . ..” Overfishing has led to depletion of many types of fish and others are in danger.

❖Yesterday we covered Romney’s positions on public schools, including classroom sizes. Obama’s folks have been riding hard on Romney’s intent to expand classroom sizes. Problem is, “the president’s own education secretary [Arne Duncan] has taken a similar position.”

❖Paul Krugman will be on Bill Maher tonight. Also appearing will be Art Laffer, creator of the famous curve. Should be quite interesting, if you have the time and a tee-vee.

❖”The Happiest Countries in the World.

❖Delightful, brief history of “Street Vending in New York City“.

❖The missing JPMorgan Chase money has been found! And other absurd news.

❖And this is something you don’t want to miss, for sure. Peace out.

The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots.

What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years.

Somehow, I don’t think that being President of the American Museum of Natural History in New York, while being a nice job and all, qualifies you to oversee risk at a megabank.

The fact that all of the other big banks at least have someone with knowledge of the industry on their risk committees shows how JPMorgan Chase really didn’t take it seriously. They had wonder boy Jamie Dimon, and they knew how to be careful with their risk. And then the Fail Whale trades came.

Of course, it’s not like the risk oversight committee that is the House Committee on Financial Services in Congress does much of a better job. The banking industry is lousy with Potemkin villages when it comes to oversight and regulation.

Despite the charred landscape that is the current housing market, despite the suffering borne by families all over the country, the last few years have provided a glimmer of hope that people of like circumstances have not turned their backs on each other, that they are working together for progress. And sometimes, they make it.

Out of one of the most tragic stories of the foreclosure crisis, the suicide of Norman Rousseau, has come a determination to never let this happen to anyone else again. The Rousseaus eventually lost their home despite never missing a payment, a victim of the soul-crushing bureaucracy at Wells Fargo. The bank lost the family’s payment, kicking off a three-year ordeal that ended in foreclosure. Now Oriane Rousseau is suing Wells Fargo, and she’s getting support from a group of community activists in California. The Alliance of Californians for Community Empowerment, or ACCE, has set up a fund for Rousseau to defray funeral expenses and relocation costs. And Rousseau is bravely using her family’s tragic story as a spur to California to pass restrictions on banks who prey on homeowners and kick them out of their homes without proper documentation. “I wouldn’t wish this ordeal on my worst enemy, but I hope that some good can come from this,” Rousseau said. “We need some protection from the awful deeds and the greed of these banks and I hope that our elected officials will actually do something for the millions of other families that have been treated this way. It won’t bring my husband back, but if my story can help other families it will be blessing.”

On a much happier note, the Occupy Our Homes movement has been highlighting illegal foreclosures across the country, and on occasion winning victims their homes back. One such victory just occurred in Los Angeles. Dirma Rodriquez had her home fraudulently foreclosed and sold by Bank of America, despite making payments on a loan modification for over a year. Before the eviction, the group Occupy Fights Foreclosures took direct action against the bank. They audited the documents related to Rodriquez’ loan and found that the date on the Notice of Trustee Sale had expired by the time the home was sold. They found Rodriquez an attorney, and yesterday Bank of America rescinded the sale and the foreclosure, returning the title back to the homeowner’s name. This story gained some national attention because Rodriquez has a daughter with severe cerebral palsy and the home was specially designed to deal with her affliction.

This is from the press release:

“We are entirely elated to tell Dirma and her family that they can sleep well at night, knowing there won’t be another knock on the door telling them they need to get out,” said Carlos Marroquin, activist with OFF. “One family has control of their own property once again. But we also know there are 10,000 more Dirmas facing this exact situation every single day. Dirma’s case is typical. We need a moratorium on foreclosures — we call for Representatives to sign on to HR4848, a moratorium bill now in Congress.” [...]

“The only ones who’ve been breaking any laws here are the banks, and I don’t see the police breaking down their doors in the middle of the night,” said Suzanne O’Keeffe, writer and OFF activist.

The victories for homeowners have been few and far between over the past several years. But I am inspired by those who continue to battle, who come to the rescue of their friends and neighbors, and who provide hope.

In countries with already sick banks, especially Spain, which had a housing bubble leading to a toxic asset problem, this means that potential bailouts are just growing:

Standard & Poor’s slashed its ratings on the creditworthiness of five Spanish banks on Friday, just as one of them — Bankia, the nation’s largest real estate lender — requested an additional 19 billion euros in rescue funds from the country, far beyond initial government estimates.

Earlier Friday, the Spanish stock market regulator suspended trading in Bankia shares amid expectations that the nationalized bank would be asking for more money. Bankia already had been granted a 4.5 billion euro emergency loan from Spain.

Bankia, battered by its exposure to the collapse of Spanish real estate market, also will be restating its 2011 results to show a big loss.

Bankia was partially nationalized, but the recession and the inability for the country to control their own monetary policy has constrained the amount of support Spain can give. Basically, they might not be able to finance the bailout. And the toxic assets, along with the “bank jog” and fears of contagion from Greece, complicate the problem further. I don’t think the nationalization debate in Spain and the one we had in the US in 2009 are really comparable (although I do agree that if a meltdown of the banking system is what we are to fear from a Eurozone breakup, then we’re almost already there; so Greece and Spain and the rest might as well get their monetary policy back under their control).

Regardless, this is turning into a real problem for Spain, and the rest of Europe. Gillian Tett writes today that bankers have already begun to act as if the Eurozone has broken up, ordering their assets and liabilities by country rather than through the Eurozone as a whole. And that’s pretty much where things are headed. We may not have to wait until the Greek elections on June 17 to see the results.

The Guardian has the best rundown of the results:

5.00pm: Here’s a summary of the situation as it stands at the moment in Egypt’s presidential election:

• With the vast majority of votes counted, it’s almost certain that the two most divisive candidates, former prime minister Ahmed Shafiq and Mohammed Morsi of the Muslim Brotherhood will face each other in a run-off next month.

• Turnout is said to have been just under 42% – lower than in the recently parliamentary elections.

A spokesman for Shafiq, the former Prime Minster, said “the revolution has ended,” in reaction to the news. And if this holds, that would be true in a very real sense. During the Mubarak era, the battle in Egypt was always between Islamist forces and the secular group in control of the military. During the revolution, millions in Tahrir Square and across the country rejected that as a false choice. Now, that could be the choice again. Shafiq campaigned on security and reining in protests and lawlessness in the streets. His accession would almost certainly spark a new round of demonstrations.

Morsi, on the other hand, would put the Presidency in the control of the same party, the Muslim Brotherhood, that dominates Parliament, and many fear that would lead to a crackdown on secularism in all forms in Egypt.

There is a small possibility that Hamdeen Sabahi, a leftist Nasserite candidate, will pass Shafiq and make it into the runoff. Some reports have shown a late surge for Sabahi, especially in the cities, and key districts in Cairo and elsewhere have not fully reported their numbers. However, the most recent tallies show Sabahi about 700,000 votes behind.

Juan Cole wrote earlier today that a Morsi-Shafiq runoff would be a disaster:

If Egyptians have to decide between Mursi and Shafiq, they’ll have a stark choice. They could give the Muslim Brotherhood two of the major branches of civilian government and risk a swift move to Islamic law and one-party dominance. They could split the ticket and support the secular Shafiq, who is very much a creature of the old regime and of the Egyptian military. In some ways he would resurrect Mubarak’s policies but will face new limitations in presidential rule by fiat. He speaks warmly of Mubarak, and would be a highly polarizing figure who would certainly provoke a whole new round of big demonstrations on the part of the New Left youth and perhaps also Muslim fundamentalists. He has ominously promised to crack down hard on “destructive demonstrations.” Although the Western politicians and business classes might favor Shafiq for surface reasons, in fact they’d be buying a whole lot of trouble if they backed him.

A Mursi-Shafiq contest would certainly result in riots and fistfights all over the country, and if Shafiq won it would likely throw the country into substantial instability (an ironic outcome since the people voting for Shafiq in the big cities and the countryside are looking for a law and order candidate who can fight a slight rise in crime). It seems to me that the resulting demonstrations and unrest would risk further damaging Egypt’s economy.

Cole added that a Mursi-Sabahi runoff would represent a real choice for Egyptian voters between pluralism and secularism, or dominance by the Muslim Brotherhood. But it doesn’t look like we’ll get that.

Egyptian blogger Zeinobia is crestfallen:

My only condolences that from 90 million Egyptians only 50% of the eligible voters in the country “50 million” participated in this election so we are speaking about 25 million voters only, the historical elections that reminds me with the Six Days war defeat.

I do not have any words , it is like choosing between two hells : The Muslim brotherood or Shafiq !!!

We are all to blame especially the #Jan25 Revolutionaries who set back in bubbly Cairo ‘that voted for Shafiq’ and in their closed social networks realms. We are responsible for this without doubt.

The results will probably be announced Monday.

House Republican leaders on Friday unveiled a legislative calendar for the summer, revealing plans to hammer President Obama and Democrats on the economy, energy, taxes and other divisive issues in the months leading up to November’s elections.

The schedule includes a July vote to extend the Bush-era tax rates for all taxpayers – a move dismissing Democratic calls for separate votes on tax cuts for different income levels.

Most of the votes this summer are message votes, designed to play to the November elections rather than substantively pass legislation. I couldn’t help but noticed that Ron Paul’s bill to administer a more sweeping audit of the Federal Reserve is on the agenda and will get a vote in the House this July. Other than that, it’s a narrow set of ideological measures.

And that includes the Bush tax cuts. In his memo to the caucus, Cantor writes that “Very little of what we do this summer will be able to offset the harm to small businesses if the largest tax increase in American history is allowed to go into effect on January 1, 2013. In fact, the Congressional Budget Office (CBO) warned us earlier this week that this massive tax increase will likely contribute to what would ‘probably be judged to be a recession.’”

This is a bit comical in that Republicans have begun to return to some Keynesian roots. What they are basically saying is that they agree with the CBO’s assessment that tightening fiscal policy in the middle of a fragile economy will turn us back to recession. Just because they focus on tax cuts for the rich and defense spending to the avoidance of all else doesn’t mean that the same principle doesn’t exist. In the end, they are saying that a smaller budget deficit will harm the economy at this time. In some cases they’re saying this explicitly. I happily agree. And it does represent an opportunity on the left to concur, though the Democratic establishment is currently too busy proving that they believe in austerity.

It appears that the extension of the Bush tax cuts will not be permanent. Cantor alludes to Rep. Dave Camp and the House Ways and Means Committee working on “pro-growth tax reform,” so the extension is just a temporary step to get us to that point. However, it’s pretty obvious that this “pro-growth” reform will at best be revenue-neutral relative to the Bush-era tax code, and at worst both cut taxes more and shift the burden from the rich to the poor.

The Democratic side is more muddled, with Chuck Schumer and now Nancy Pelosi drawing the line on the Bush tax cuts at $1 million in annual income, describing anything lower than that as “middle-class tax cuts.” This has kicked up some dust on the left, with Americans for Tax Fairness launching to prod on the original number, the one in the Obama budget, of $250,000 a year, as the dividing line for allowing the tax cuts to expire. This also is an artificial distinction. But there is the near-term prospect of tightening fiscal policy to the degree that it hurts the economy. So there’s a balance to be struck here.

With Democrats needing cover and Republicans adamant, the possibility does exist for gridlock, leading to the expiration of all the Bush tax cuts. That could be a preferable scenario, because it leads to the opportunity to rethink the tax code rather than being lashed to an insufficient and unequal system put in place by George W. Bush.

Any objective look at the Wisconsin recall right now, with a little over a week to go, would suggest that Scott Walker’s in a good position, and that Tom Barrett and the forces that engineered the recall are in trouble. Walker and his allied outside groups are outspending Barrett and his allies by 3:1 on TV ads, and by who knows how much on mailers and other campaign work. The DNC has solicited funds from their supporters in an email blast, but has yet to put their own money on the line, which has angered labor officials (it should be noted that the Democratic Governor’s Association has spent $3 million in Wisconsin on the recall, though this is half as much as the $6 million from the Republican Governor’s Association). Practically every big-name conservative governor has come to Wisconsin in recent days to rallies with Walker, including Chris Christie, Nikki Haley, Bobby Jindal and Bob McDonnell. Barrett, meanwhile, has had pretty much no high-profile surrogates campaign with him; his campaign says that’s a deliberate strategy to keep things local.

And of course, there’s the polling, almost all of which shows Walker in the lead that measures anywhere between 5 and 8 points. Only one poll, however, has Walker above 50%, and it looks like an outlier. The race is expected to be close and may come down to turnout and excitement, but it’s hard to say that Walker is not the favorite.

Garin/Hart/Yang, Barrett’s pollster, has issued new internal polling today that shows the race to be a dead heat.

In a survey of 935 likely recall voters, conducted by the Garin Hart Yang Research Group from May 22 to 24, Walker led Barrett by 49.89 to 48.62 percent. With the poll’s margin of error at plus or minus 3.3 percent, that means the race is essentially tied.

Wisconsin Democrats have been hammering Walker in recent days over the “John Doe” investigation of his time as Milwaukee county executive, which has already ensnared several former staffers. The probe by the Milwaukee County district attorney’s office is reportedly focusing on whether staffers who worked for Walker did political work on the taxpayers’ dime. In March, Walker set up a legal defense fund.

Likely voters in the Yang survey were asked, “Have you heard or read anything about the John Doe investigation that has led to charges against several former aides or associates of Scott Walker, while he was Milwaukee county executive?” This question came well after the question about which candidate they preferred.

Voters who had heard about the John Doe probe preferred Barrett by 52 to 46 percent. Public awareness of the criminal investigation is also increasing: 25 percent of respondents on Wednesday night said they had heard “a lot” about it, while 37 percent said the same on Thursday night.

This poll is the second internal Dem poll to be put out this week. I should note that both of them show Walker with a small lead, albeit one within the margin of error. Internal polling that we hear about usually shows favorable results to the individual who paid for it; otherwise, it would get buried.

There are opportunities for a change in the dynamic. There are debates scheduled, one tonight and the other next Thursday. And late in the game, Democrats appear to be making the money race a little more equitable. It’s unclear whether the John Doe investigation will provide the lift needed. Of course, Democrats have had several narratives on Walker, including ones on the state’s poor job performance and, of course, the assault on collective bargaining. So picking a narrative and going with it is probably necessary.

UPDATE: Another Dem poll, for the Democratic Governor’s Association, shows Walker leading, but by 49-46, with Barrett gaining ground as his TV ads reach a saturation point.

FACT CHECK: Romney off on Obama’s relationship with teachers’ unions; it’s anything but cozy: http://wapo.st/Lu0nYZ

The link takes you to a story at the Washington Post with the same name as what Cutter quoted approvingly. And I can’t say that anything in the Post’s fact-check is wrong. It makes the case that President Obama has promoted ideas and instituted policies that teachers’ unions oppose, and that’s true.

Obama has promoted initiatives that encourage districts to tie teacher evaluations to student performance and to expand the number of charter schools — actions the teacher unions have long been against, and which Romney himself promoted Wednesday in a speech in Washington outlining his education platform [...]

At its annual meeting last year, the National Education Association, the country’s largest teachers union, sent a message to Obama that it was “appalled” with Education Secretary Arne Duncan’s practice of focusing heavily on charter schools, supporting decisions to fire all staff and using high-stakes standardized test scores for teacher evaluations, along with 10 other policies mentioned.

“Obama has taken on teachers unions unlike any previous Democratic president,” said Tom Loveless of the Brookings Institution. “Because of that his support among union members, although it is still there, is rather tepid.”

Again, nothing you don’t know if you pay attention to Race to the Top and other education policies.

But the question becomes, why does Stephanie Cutter, Deputy Campaign Manager for Obama 2012, feel so strongly about needing to broadcast that teachers’ unions don’t like her candidate? Is this a typical approach for campaigns? Don’t you normally want to tout support rather than opposition?

Not when it comes to teachers’ unions, apparently. And who needs them, they only represent 3.2 million members in the National Education Association and 1.5 million in the American Federation of Teachers. And they only represent one out of ten delegates on the typical Democratic National Committee Convention floor. It makes perfect sense for the head of the party to display his independence from such a marginal group.

Education “reform” is a pretty contentious topic with a split in the Democratic coalition. But Obama has always lined up on the opposite side of the unions on the matter. Not only that, he boasts of it.

Of course this is a pattern. The previous tweet from Stephanie Cutter highlights the President’s commitment to austerity, proudly stating for the record that federal spending has slowed down under Obama to the largest degree since the Eisenhower Administration. So we’re going to have six months of the President’s allies stating the record, showing all of Obama’s conservative positions on a host of issues. You would think this would be the role of, say, a primary challenger to the President from the left. But no, it’s the President’s own campaign doing this.

UPDATE: Pressured about this, Cutter has responded: “Pres. fights for unions/teachers b/c he believes in them-Mitt dishonest about being beholden to them.” The link she approvingly cited before has nothing whatsoever about the President fighting for unions and teachers, just fighting with them. His education policies are generally disfavored by teachers’ unions, and I should add, disfavored by reality, because the data on charters and teacher evaluations is weak to the point of totally being debunked.

At the very least, the President was undoubtedly correct to ask whether the skills and motivations one would exhibit as a successful manager of leveraged buyouts are those we want to see in a President.  That issue has been hanging over Mitt Romney since his Massachusetts Senate campaign against Ted Kennedy, so its reemergence during the GOP primary debates was totally predictable.  The only surprise was how relentlessly enthusiastic and happy Romney’s GOP challengers were to raise it, but this is not Ronald Reagan’s 11th Commandment Party.

Since Obama made the issue prominent, there has been a concerted effort by the corporate wings of both parties and some in the media to get the President off this message.  The reasons aren’t hard to figure out.

The Romney camp, of course, understands that the question Obama is asking, and Romney’s obvious inability to answer it directly — as shown in his interview with Mark Halperin — can completely unravel the bogus claim Romney has been making that his success in business somehow entitles him to be President of the United States.  The claim was always preposterous, and it should have been obvious after the world’s financial elites — the people who, like Mitt and now Jamie Dimon, bragged they understood how the economy really works — tanked the financial system, had to be bailed out and nearly destroyed a dozen economies.

But Romney’s team was betting that Americans have been so conditioned after decades of propaganda to believe that what government needed was to operate like a successful business that few would seriously question Romney’s most important claim.  Halperin’s interview exposed Mitt as an empty suit.  After he posed Obama’s question directly, Romney ducked and switched from his prowess as a looter to his lifetime as a “leader.”   Bottom line: Romney can’t defend his central claim.

So his campaign’s diversion since then has been to charge that by talking about Bain, Barack Obama is now attacking capitalism and free enterprise itself.  That’s a nice dodge to pretend that what the LBO (leveraged buyout) boys do is somehow the essence of capitalism, but it’s still a dodge: the question, “how does this make you qualified to be President?”  is still awaiting an answer.

Because Romney hasn’t or can’t answer it, Obama’s question should be on every honest reporter’s list of things to probe when they interview or write about Mitt Romney.  And that’s why, as Rachel Maddow noticed recently, the Romney campaign has been trying to change the subject from what he did as a businessman to what he’d do as a President.  It’s safer to talk about a future that hasn’t happened than a past for which there’s a record and even a body count.

But it’s not just the Romney campaign that wants to change the subject.  Just as important, corporate Democrats are horrified that they’ve been exposed for the corporate hacks they are; Cory Booker may have destroyed his career, but the party is full of such hacks.

Meanwhile the Dem’s Very Serious pundits are shocked, shocked that Obama — who’s benefited as much as anyone from extracting campaign donations from the looters in exchange for never threatening their carried interest/capital gains tax preferences — would threaten these cash cows when Citizens United is about to unleash a tsunami of Rove-directed cash against any candidate not already bought.  Hmm.  Seems like an issue the public might want to know more about.

So if you’re an honest reporter, what are you looking at?  You’ve got an issue that exposes the gibberish Americans have been fed about how the financial Masters of the Universe deserved to extract your money, be in charge of the economy and still occupy the White House or Congress.  You’ve got a corporate looter who’s proven to be indifferent to human suffering, and thus a perfect example of this shameful mentality, running for President.    You’ve got an incumbent who quite eloquently frames the right question but then has to send Tim Geithner and Eric Holder in front of the cameras to explain how his Administration has translated Obama’s expressed concern for all of the people and their jobs into measures for bringing the banks and corporate looters to justice and addressing the massive inequality both parties have created at the behest of the looters.  And you’ve got both parties squealing that if you pull on this thread, the emperor’s clothes will collapse and scare the kids.

It’s extremely rare that the media emerges from the daily dreck fed to them and stumbles on a genuinely important issue, one that captures so much of what’s wrong and needs to be addressed by the people we elect to act for us.  But now we’ve got one and it’s a beaut.  Along with whether crazy people will be allowed to tank the economy again, it’s the most important domestic policy issue of our times, and it’s connected to just about everything else worth discussing.  All a good reporter has to do is keep pulling on that thread.

So do your jobs, ye good reporters, and we’ll tell our children to avert their eyes.