New Hampshire Court Tramples on Constitution, Reporter's Privilege, Section 230, What Have You
April 8th, 2009
by Sam Bayard
A reader recently tipped us off to a troubling ruling from a trial court in New Hampshire:
The Mortgage Specialists, Inc. v. Implode-Explode Heavy Industries, Inc., No. 08-E-0572 (N.H. Super. Ct. Mar. 11, 2009).
In the decision, Justice McHugh of the Superior Court for Rockingham County ordered the publishers of the popular mortgage industry watchdog site, The Mortgage Lender Implode-O-Meter ("ML-Implode"), to turn over the identity of an anonymous source who provided ML-Implode with a copy of a financial document prepared by The Mortgage Specialists, Inc. for submission to the New Hampshire Banking Department. The court also ordered ML-Implode to reveal the identity of an anonymous commenter who allegedly posted defamatory statements about the company and enjoined the website from re-posting the financial document or the allegedly defamatory comments.
Background
ML-Implode, founded by computer scientist and mathematician Aaron Krowne in 2007, tracks the financial health of mortgage lending companies. Krowne and ML-Implode were way ahead of the curve in recognizing the then-impending-now-catastrophic crisis in the housing market and mortgage industry. As Louise Story of the New York Times wrote in an article about the website last summer, these days "[t]he misery in the housing market is registering on the Implode-O-Meter." Without question, the website provides original reporting on one of the most critical issues facing the country today:
With the economy struggling, more financial companies, even well-known ones, are finding themselves on [ML-Implode's] fated list. When parts of Bear Stearns’s residential mortgage unit were sold to private equity investors, for instance, the Implode-O-Meter recorded the sale. And E*Trade Financial could not remove the link on its site to its mortgage division or change the recording on its mortgage division’s 1-800 number without the site chiming in.
The tips usually come anonymously from employees at the troubled mortgage companies. Critics of the site say some of the tips have been more gossip than reality. But the Implode-O-Meter often posts the phone recordings and company e-mail to back up the bad news coming out of places like Merrill Lynch, which in March fired nearly everyone at First Franklin Financial, a business it purchased in 2006. (Source)
The Mortgage Specialists, Inc. ("MSI") is one of the companies on ML-Implode's "Ailing/Watch List." In August 2008, ML-Implode reported that the New Hampshire and Massachusetts Banking Departments had issued temporary cease-and-desist orders against MSI in July. As part of this article, ML-Implode posted a copy of something MSI calls the "2007 Loan Chart," a document showing the number and monetary value of the company's 2007 loan transactions. ML-Implode says that the chart was "sent in by an informant and placed online by the Implode-O-Meter staff."
Additionally, in October 2008 a ML-Implode user going by the handle "Brianbattersby" posted comments on one of the site's forums, allegedly stating that the president of MSI "was caught for FRAUD in 2002 FOR SIGNING BORROWERS NAMES and bought his way out." Days later, "Brianbattersby" posted another negative comment about the company.
Counsel for MSI then contacted ML-Implode requesting that ML-Implode take down the 2007 Loan Chart and forum comments, and that it identify its anonymous source for the Loan Chart and the identity of the commenter. ML-Implode agreed to temporarily remove the Loan Chart and the forum comments, but refused to reveal its source or unmask "Brianbattersby." MSI then filed a petition for injunctive relief in New Hampshire state court, seeking to compel ML-Implode to permanently remove the materials and to disclose the identifying information it previously requested...
Citizen Media Law Project and Cyberlaw Clinic Urge New Hampshire Supreme Court to Defend First Amendment Rights of Mortgage Website
Cambridge, MA
June 23, 2009
The Citizen Media Law Project (CMLP), assisted by Harvard Law School’s Cyberlaw Clinic, urged the New Hampshire Supreme Court to defend the First Amendment rights of a website that covers mortgage industry news.
The CMLP, in conjunction with the Reporters Committee for Freedom of the Press (RCFP) and with the assistance of local counsel Paul Apple of Drummond Woodsum & MacMahon in Portsmouth, NH, submitted an amicus curiae brief in the case of The Mortgage Specialists, Inc. v. Implode-Explode Heavy Industries, Inc. The case involves Implode-Explode Heavy Industries, Inc., which runs a mortgage industry website that posted a New Hampshire Banking Department document...That document described certain business practices of the Mortgage Specialists, Inc., a lending company under investigation in New Hampshire and Massachusetts.
After the mortgage company discovered the disclosure, it sued the website, demanding that the document be removed and that the anonymous source be identified.
The Rockingham County Superior Court granted these requests, and the case is presently on appeal.
In their brief, the amici focused on a series of cases in which courts permitted the publication of confidential or controversial documents – from the U.S. Supreme Court in the famed Pentagon Papers case through recent cases involving recorded cell phone conversations and videos of police searches posted online...
The amici urged the New Hampshire Supreme Court to carefully consider the harm the Superior Court’s ruling would have on freedom of the press, noting in their brief that the publication of this document “is not unlawful in New Hampshire, and, even if it were, would nevertheless be fully protected speech under the First Amendment.”...
The CMLP was represented on the brief by the Cyberlaw Clinic. The CMLP and the Cyberlaw Clinic are both based at Harvard University’s Berkman Center for Internet & Society, an organization dedicated to studying the development of cyberspace...
About the Citizen Media Law Project
The Citizen Media Law Project, which is jointly affiliated with the Berkman Center for Internet & Society at Harvard University and the Center for Citizen Media, provides legal assistance, training, research, and other resources for individuals and organizations involved in online and citizen media. The CMLP endeavors to serve as a catalyst for creative thinking about the intersection of law and journalism on the Internet. Through the project’s website, www.citmedialaw.org, the active engagement of lawyers and scholars, and occasional sponsored conferences, project staff are working to build a community of lawyers, academics, and others who are interested in facilitating citizen participation in online media and protecting the legal rights of those engaged in speech on the Internet.
Tuesday, June 23, 2009
Monday, June 22, 2009
Gillian Tett studied J. P. Morgan and predicted financial meltdown
Gillian Tett is an assistant editor of the Financial Times.'Fool's Gold': The Banking World's Responsibility (listen to radio interview)
Fresh Air from WHYY
May 14, 2009
Journalist Gillian Tett warned about the problems in the financial industry long before many of her colleagues. In her new book, Fool's Gold, Tett examines the global economic meltdown and the role J.P. Morgan played in creating and marketing risky and complex financial products.
A reporter with Financial Times since 1993, Tett was named British Business Journalist of the Year in 2008, and Journalist of the Year in March by the British Press Awards.
http://www.npr.org/templates/story/story.php?storyId=104130944
Excerpt: 'Fool's Gold'
Fools Gold
Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe
By Gillian Tett
Hardcover, 304 pages
Free Press
List Price: $26.66
On half a mile of immaculate private beach, along Florida's fabled Gold Coast, sits the sugar-pink Boca Raton Hotel..
On one summer's weekend back in June 1994, a quite different clientele descended: several dozen young bankers from the offices of J.P. Morgan in New York, London, and Tokyo. They were there for an off-site meeting, called to discuss how the bank could grow its derivatives business in the next year... "It was in Boca where we started talking seriously about credit derivatives," recalls Peter Hancock, the British-born leader of the group...
They worked for the "swaps" department—a particular corner of the derivatives universe—which was one of the hottest, fastest-growing areas of finance. In the early 1980s, J.P. Morgan, along with several other venerable banks, had jumped into the newfangled derivatives field, and activity in the arcane business had exploded. By 1994, the total notional value of derivatives contracts on J.P. -Morgan's books was estimated to be $1.7 trillion, and derivatives activity was generating half of the -bank's trading revenue. In 1992-one year when J.P. Morgan broke out the number for public consumption-the total was $512 million.
More startling than those numbers was the fact that most members of the banking and wider investing world had absolutely no idea how derivatives were producing such phenomenal sums, let alone what so-called swaps groups actually did. Those who worked in the area tended to revel in its air of mystery.
By the time of the Boca meeting, most of the J.P. Morgan group were still under thirty years old; some had just left college...On Friday afternoon, they greeted each other with wild merriment and headed for the bars. Many had flown down from New York; a few had come from Tokyo; and a large contingent had flown over from London. Within minutes, drinking games got under way...Bill Winters, a jovial American who, at just thirty-one, was the second most senior official of them.
...The derivatives group was one of the most unruly but also most tightly knit teams. "We had real fun-there was a great spirit in the group back then," Winters would later recall with a wistful grin. When he and the rest of that little band looked back on those wild times, many said they were the happiest days of their lives.
[They had a good time ruining lives and melting down economies.]
One reason for that was the man running the team, Peter Hancock. At the age of thirty-five, he was only slightly older than many of the group, but he was their intellectual godfather. A large man, with thinning hair and clumsy, hairy hands, he exuded the genial air of a family doctor or university professor. Unlike many of those who came to dominate the complex finance world, Hancock sported no advanced degree in mathematics or science. Like most of the J.P. Morgan staff, he had joined the bank straight from getting his undergraduate degree... he especially loved developing elaborate theories about how to push money around the world in a more efficient manner...
The J.P. Morgan derivatives team was engaged in the banking equivalent of space travel. Computing power and high-order mathematics were taking finance far from its traditional bounds, and this small group of brilliant minds was charting the outer reaches of cyberfinance. Like scientists cracking the DNA code or splitting the atom, the J.P. Morgan swaps team believed their experiments in what bankers refer to as "innovation" — meaning the invention of bold new ways of generating returns — were solving the most foundational riddles of their discipline...
That stemmed in part from Hancock's intense focus on the science of people management. He was almost as fascinated by how to manage people for optimal performance as by financial flows.
The moment he was appointed head of the derivatives group, Hancock had started experimenting with his staff. One of his first missions was to overhaul how his sales team and the traders interacted. Against all tradition, he decided to give the sales force the authority to quote prices for complex deals, instead of relying on the traders...He then started inventing new systems of remuneration designed to discourage taking excessive risks or hugging brilliant projects too close to the vest. He wanted to encourage collaboration and longer-term thinking, rather than self-interested pursuit of short-term gains...
In later years, Hancock pushed his experimentation to unusual extremes. He hired a social anthropologist to study the corporate dynamics at the bank. He conducted firm-wide polls to ascertain which employees interacted most effectively with those from other departments, and he then used that data as a benchmark for assessing employee compensation, plotting it on complex, color-coded computer models. He was convinced that departments needed to interact closely with each other, so that they could swap ideas and monitor each other's risks. Silos, or fragmented departments, he believed, were lethal. At one stage he half-jokingly floated the idea of tracking employee emails, to measure the level of cross-departmental interaction in a scientific manner. The suggestion was blocked. "The human resources department thought I was barking mad!" he later recalled. "But if you want to create the conditions for innovation, people have to feel free to share ideas. You cannot have that if everyone is always fighting!"
One of Hancock's boldest experiments focused on the core group within the swaps team known as Investor Derivatives Marketing. The bankers attached to this team sat around a long desk under low ceilings on the third floor of the J.P. Morgan headquarters, and the group was somewhat anomalous in its responsibilities. Though some marketing of products to clients was done, the group acted more like an incubator for ideas that had no other obvious departmental home and handled a ragbag of products, including structured finance schemes linked to the insurance world and tax-minimizing products.
A few months before the meeting in Boca Raton, Hancock had approached Bill Demchak, an ambitious young banker with a good reputation around the bank, to run the IDM group. Determined to drive innovation, Hancock told him, "You will have to make at least half your revenues each year from a product which did not exist before!" By Wall Street standards, that was a truly peculiar mandate...
Demchak happily accepted the daunting mandate...
Demchak's razor-sharp mind dissected problems at lightning speed. A particular talent was lateral thought, pulling in ideas from other areas of banking...
Hancock installed another ambitious and driven banker in the London office of the team. Bill Winters, who had taken the breaking of his nose with such good cheer, also came from a relatively modest background by comparison to the Ivy League pedigrees of so many of the banking elite. He had studied at Colgate University in New York State, and joined the bank in the mid-1980s. He was blessed with good looks — female colleagues thought Winters looked a little like the actor George Clooney — but he preferred to stay out of the limelight...
Hancock first noticed Winters in the late 1980s, when he was working in the area of commodities derivatives.
"We sent him down to Mexico and somehow — I still don't know how — he persuaded the government to hedge half of its oil production and interest-rate exposure with us," Hancock recalled...Hancock appointed him to run the European side of the derivatives team with the expectation that the "two Bills," as their colleagues dubbed them, would work well together in tossing innovative ideas back and forth across the Atlantic.
Central to the swaps -team's quest now was to take the newfangled breed of financial products called derivatives into new terrain.
From FOOL'S GOLD by Gillian Tett. Copyright (c) 2009 by Gillian Tett. Reprinted by permission of Free Press, a Division of Simon & Schuster, Inc, NY.
Thursday, June 18, 2009
If these guys are so talented, how come they presided over system failure without a squawk?
This sounds like keeping the same old players in control. Why? Personal loyalty and loyalty to the group, which is another name for self-protection.
BofA paying big bonuses to retain bankers: report
Jun 18, 2009
Reuters
Bank of America Corp has been paying millions in bonuses in order to lure talent and retain investment bankers the company views as vital, the New York Post reported, citing sources.
Among those who are said to have received payouts are two former Merrill Lynch bankers, Fares Noujaim, recently appointed BofA's vice chairman of investment banking, and Harry McMahon, the paper said.
Both were offered guarantees not to leave, the paper said.
Noujaim, a former Bear Stearns banker who joined Merrill last year, is said to have received about $15 million over two years, according to the paper.
Sources told the paper Noujaim was offered a vice-chairman role, and may have been offered at least $5 million more to stay. His earlier employment contract was nullified once Merrill merged with BofA earlier this year, according to the paper's sources.
"Competitive recruiting in investment banking and capital markets continues to be very intense and we're taking the steps necessary to retain key talent in response to competitive pressures," BofA spokeswoman Jessica Oppenheim told the paper.
She also said any reference to specific associate's compensation in the report was "inaccurate."
Bank of America could not be immediately reached for comment.
(Reporting by Chakradhar Adusumilli in Bangalore; Editing by Dan Lalor)
BofA paying big bonuses to retain bankers: report
Jun 18, 2009
Reuters
Bank of America Corp has been paying millions in bonuses in order to lure talent and retain investment bankers the company views as vital, the New York Post reported, citing sources.
Among those who are said to have received payouts are two former Merrill Lynch bankers, Fares Noujaim, recently appointed BofA's vice chairman of investment banking, and Harry McMahon, the paper said.
Both were offered guarantees not to leave, the paper said.
Noujaim, a former Bear Stearns banker who joined Merrill last year, is said to have received about $15 million over two years, according to the paper.
Sources told the paper Noujaim was offered a vice-chairman role, and may have been offered at least $5 million more to stay. His earlier employment contract was nullified once Merrill merged with BofA earlier this year, according to the paper's sources.
"Competitive recruiting in investment banking and capital markets continues to be very intense and we're taking the steps necessary to retain key talent in response to competitive pressures," BofA spokeswoman Jessica Oppenheim told the paper.
She also said any reference to specific associate's compensation in the report was "inaccurate."
Bank of America could not be immediately reached for comment.
(Reporting by Chakradhar Adusumilli in Bangalore; Editing by Dan Lalor)
Saturday, March 21, 2009
Mr. Rangel is just one of many lawmakers who looked the other way when AIG and others needed regulations
For Rangel, a Complicated Relationship With A.I.G.
New York Times
By DAVID KOCIENIEWSKI
March 20, 2009
As Congress moved this week to levy a 90 percent tax on the $165 million in bonuses paid to executives of the American International Group, one of the more conspicuous expressions of outrage came from Representative Charles B. Rangel.
Charles B. Rangel once tried to woo A.I.G. to donate $10 million to a school to be named in his honor.
As public anger over the bonuses surged, Mr. Rangel on Wednesday introduced a bill that would seize most of the bonuses paid to A.I.G., which received billions in taxpayer bailout funds.
“Dreams have been shattered and homes have been lost because a small group of executives were motivated by greed rather than preserving a system that America and the world depend upon,” said Mr. Rangel, a Harlem Democrat and chairman of the powerful House Ways and Means Committee.
After the measure passed the House overwhelmingly the next day, Mr. Rangel congratulated his colleagues on their bold action, saying that A.I.G. executives “have gotten away with murder in what they’ve done to our communities.”
But Mr. Rangel’s indignation was a reversal of his position earlier in the week, when he opposed heavily taxing the bonuses and warned his colleagues to restrain themselves from allowing the public outcry to warp their judgment.
What is more, the congressman’s relationship with A.I.G. is a complicated one; as recently as last year, he was trying to woo the company to donate $10 million to a school to be named in his honor. And while A.I.G. officials mulled the request, Mr. Rangel supported a provision in a tax bill that saved the company millions of dollars.
For decades, Mr. Rangel has been a close friend of Maurice R. Greenberg, the chief executive of A.I.G. until 2005, and until recently one of the company’s biggest shareholders. Mr. Greenberg has sponsored fund-raisers on Mr. Rangel’s behalf, and in 2007, a foundation controlled by Mr. Greenberg gave $5 million to the school, the Charles B. Rangel Center for Public Service at the City College of New York.
City College records show that the effort by Mr. Rangel and college officials to persuade A.I.G. to donate to the school went on for two years. In a 2007 e-mail message obtained by The New York Times, City College’s director of development, Rachelle Butler, wrote that Mr. Rangel suggested in early 2006 that fund-raisers concentrate on A.I.G. for a contribution. Two years later — on April 21, 2008 — Mr. Rangel attended a meeting at A.I.G. to ask the company to support the school, without specifically discussing a donation.
A month later, as A.I.G. was still considering a financial contribution, the top executive who had attended the fund-raising meeting wrote a letter to Mr. Rangel, urging him to support a provision of a tax bill that would save A.I.G. millions of dollars a year.
Mr. Rangel dropped his opposition to the tax measure, which eventually became law. But he has said that City College’s request for the $10 million, and the letter from A.I.G., played no part in his decision. A colleague in the New York delegation, Representative Joseph Crowley, said that he was responsible for persuading Mr. Rangel to support the tax change. A.I.G. has never donated to the Rangel Center.
But with Mr. Rangel’s personal finances and fund-raising for City College now the subject of an ethics investigation, some Republicans questioned whether Mr. Rangel’s public protestations about the bonuses were designed to eclipse his connections to the company over the years.
Representative John Carter, a Republican of Texas, described Mr. Rangel, who had received $110,000 in campaign donations from A.I.G, as one of several Democrats who had “exchanged legislative favors” with the company...
New York Times
By DAVID KOCIENIEWSKI
March 20, 2009
As Congress moved this week to levy a 90 percent tax on the $165 million in bonuses paid to executives of the American International Group, one of the more conspicuous expressions of outrage came from Representative Charles B. Rangel.
Charles B. Rangel once tried to woo A.I.G. to donate $10 million to a school to be named in his honor.
As public anger over the bonuses surged, Mr. Rangel on Wednesday introduced a bill that would seize most of the bonuses paid to A.I.G., which received billions in taxpayer bailout funds.
“Dreams have been shattered and homes have been lost because a small group of executives were motivated by greed rather than preserving a system that America and the world depend upon,” said Mr. Rangel, a Harlem Democrat and chairman of the powerful House Ways and Means Committee.
After the measure passed the House overwhelmingly the next day, Mr. Rangel congratulated his colleagues on their bold action, saying that A.I.G. executives “have gotten away with murder in what they’ve done to our communities.”
But Mr. Rangel’s indignation was a reversal of his position earlier in the week, when he opposed heavily taxing the bonuses and warned his colleagues to restrain themselves from allowing the public outcry to warp their judgment.
What is more, the congressman’s relationship with A.I.G. is a complicated one; as recently as last year, he was trying to woo the company to donate $10 million to a school to be named in his honor. And while A.I.G. officials mulled the request, Mr. Rangel supported a provision in a tax bill that saved the company millions of dollars.
For decades, Mr. Rangel has been a close friend of Maurice R. Greenberg, the chief executive of A.I.G. until 2005, and until recently one of the company’s biggest shareholders. Mr. Greenberg has sponsored fund-raisers on Mr. Rangel’s behalf, and in 2007, a foundation controlled by Mr. Greenberg gave $5 million to the school, the Charles B. Rangel Center for Public Service at the City College of New York.
City College records show that the effort by Mr. Rangel and college officials to persuade A.I.G. to donate to the school went on for two years. In a 2007 e-mail message obtained by The New York Times, City College’s director of development, Rachelle Butler, wrote that Mr. Rangel suggested in early 2006 that fund-raisers concentrate on A.I.G. for a contribution. Two years later — on April 21, 2008 — Mr. Rangel attended a meeting at A.I.G. to ask the company to support the school, without specifically discussing a donation.
A month later, as A.I.G. was still considering a financial contribution, the top executive who had attended the fund-raising meeting wrote a letter to Mr. Rangel, urging him to support a provision of a tax bill that would save A.I.G. millions of dollars a year.
Mr. Rangel dropped his opposition to the tax measure, which eventually became law. But he has said that City College’s request for the $10 million, and the letter from A.I.G., played no part in his decision. A colleague in the New York delegation, Representative Joseph Crowley, said that he was responsible for persuading Mr. Rangel to support the tax change. A.I.G. has never donated to the Rangel Center.
But with Mr. Rangel’s personal finances and fund-raising for City College now the subject of an ethics investigation, some Republicans questioned whether Mr. Rangel’s public protestations about the bonuses were designed to eclipse his connections to the company over the years.
Representative John Carter, a Republican of Texas, described Mr. Rangel, who had received $110,000 in campaign donations from A.I.G, as one of several Democrats who had “exchanged legislative favors” with the company...
Friday, March 20, 2009
New York state official Indicted in Alleged $30 Million 'Pay-to-Play' Scheme
New York Democrats Indicted in Alleged $30 Million 'Pay-to-Play' Scheme
A Democratic consultant and state official were indicted Thursday for allegedly receiving $30 million in kickbacks, as New York's attorney general accused them of using the state's pension fund investments as a "piggy bank."
FOXNews.com
Friday, March 20, 2009
Democratic political consultant Hank Morris and a top lieutenant to disgraced former New York Comptroller Alan Hevesi were indicted Thursday in a scheme to trade lucrative investments in the state pension fund for more than $30 million in kickbacks, gifts and campaign contributions, the New York Post reported.
The 123-count indictment against Morris and former state pension-fund manager David Loglisci stems from a two-year pay-to-play probe by state Attorney General Andrew Cuomo.
"Morris used the fund as his own piggy bank," Cuomo said in announcing the bombshell indictment. "The indictment charges crimes that go beyond the grossest manifestations of pay-to-play."
The indictment charges that Morris used his access to the Comptroller's Office to direct more than $4 billion from the pension fund to private equity firms, venture-capital funds and businesses in exchange for bogus "placement fees" and other payoffs.
In exchange for signing off on the dirty deals, the indictment charges Loglisci received hundreds of thousands of dollars in payoffs, including some $290,000 to help his brother film and distribute a poorly received comedy, "Chooch," about two Italian-Americans.
"You couldn't make this up," Cuomo said.
A Democratic consultant and state official were indicted Thursday for allegedly receiving $30 million in kickbacks, as New York's attorney general accused them of using the state's pension fund investments as a "piggy bank."
FOXNews.com
Friday, March 20, 2009
Democratic political consultant Hank Morris and a top lieutenant to disgraced former New York Comptroller Alan Hevesi were indicted Thursday in a scheme to trade lucrative investments in the state pension fund for more than $30 million in kickbacks, gifts and campaign contributions, the New York Post reported.
The 123-count indictment against Morris and former state pension-fund manager David Loglisci stems from a two-year pay-to-play probe by state Attorney General Andrew Cuomo.
"Morris used the fund as his own piggy bank," Cuomo said in announcing the bombshell indictment. "The indictment charges crimes that go beyond the grossest manifestations of pay-to-play."
The indictment charges that Morris used his access to the Comptroller's Office to direct more than $4 billion from the pension fund to private equity firms, venture-capital funds and businesses in exchange for bogus "placement fees" and other payoffs.
In exchange for signing off on the dirty deals, the indictment charges Loglisci received hundreds of thousands of dollars in payoffs, including some $290,000 to help his brother film and distribute a poorly received comedy, "Chooch," about two Italian-Americans.
"You couldn't make this up," Cuomo said.
Thursday, March 19, 2009
Election fraud in Kentucky
Ky. officials accused of election-rigging scheme
By JOE BIESK
AP
March 19, 2009
FRANKFORT, Ky. (AP) — A judge, school superintendent and county clerk in southeastern Kentucky have been indicted on charges they extorted money from political candidates so they could bribe voters in a scheme to rig several elections, authorities said Thursday.
The U.S. Attorney's office said charges include racketeering, bribery, extortion and voter fraud against Clay County Circuit Court Judge Russell Cletus Maricle, school superintendent Douglas C. Adams, Clay County Clerk Freddy Thompson and others.
The investigation began after voting irregularities were reported during the 2006 elections. A statement from the federal prosecutor's office claims the officials tried to rig federal, state and local elections in 2002, 2004 and 2006 in Clay County, about 170 miles southeast of Louisville.
Prosecutors claim a group led by Maricle and Adams, who were essentially "political bosses," recruited a slate of candidates to run for certain offices and then tried to rig elections in their favor. They also tried to recruit members of the local elections board so they might avoid an investigation.
It was unclear how much money was involved in the alleged scheme, and exactly how long it may have been going on.
According to the indictment, Democratic election commissioner Charles Wayne Jones and election officer William E. Stivers helped extort money from candidates. In some cases, candidates were apparently asked to pool money so votes could be bought.
Thompson, the county clerk, allegedly provided money for election officers to buy votes. Thompson also told election officers how to change votes at the machines, according to the indictment...
By JOE BIESK
AP
March 19, 2009
FRANKFORT, Ky. (AP) — A judge, school superintendent and county clerk in southeastern Kentucky have been indicted on charges they extorted money from political candidates so they could bribe voters in a scheme to rig several elections, authorities said Thursday.
The U.S. Attorney's office said charges include racketeering, bribery, extortion and voter fraud against Clay County Circuit Court Judge Russell Cletus Maricle, school superintendent Douglas C. Adams, Clay County Clerk Freddy Thompson and others.
The investigation began after voting irregularities were reported during the 2006 elections. A statement from the federal prosecutor's office claims the officials tried to rig federal, state and local elections in 2002, 2004 and 2006 in Clay County, about 170 miles southeast of Louisville.
Prosecutors claim a group led by Maricle and Adams, who were essentially "political bosses," recruited a slate of candidates to run for certain offices and then tried to rig elections in their favor. They also tried to recruit members of the local elections board so they might avoid an investigation.
It was unclear how much money was involved in the alleged scheme, and exactly how long it may have been going on.
According to the indictment, Democratic election commissioner Charles Wayne Jones and election officer William E. Stivers helped extort money from candidates. In some cases, candidates were apparently asked to pool money so votes could be bought.
Thompson, the county clerk, allegedly provided money for election officers to buy votes. Thompson also told election officers how to change votes at the machines, according to the indictment...
Monday, March 16, 2009
AIG Discloses $75 Billion in Bailout Payments
Insurer Reveals List of Taxpayer Funds Doled Out to Settle Debts With Companies, Municipalities
By Brady Dennis
Washington Post
March 16, 2009
In the six months since the government's bailout of insurance giant American International Group, a rescue that has become increasingly costly and contentious, one question has loomed above all others: Where did the money go?
The answer became a little clearer yesterday when AIG unexpectedly released the names of dozens of trading partners it has paid using billions in taxpayer dollars. The disclosure, which the company said was made after consulting the Federal Reserve, revealed that AIG paid more than $75 billion in the final months of 2008 to numerous domestic and foreign banks, as well as to various U.S. municipalities.
The funds were paid from the government's initial $85 billion emergency loan in September and included major firms such as Goldman Sachs, Societe Generale, Deutsche Bank, Merrill Lynch, Morgan Stanley, Bank of America and Barclays.
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The payments were made between Sept. 16 -- the date that government assistance began -- and Dec. 31.
More than $34 billion of the money went to trading partners of AIG Financial Products, the small subsidiary whose exotic derivatives brought AIG to the edge of collapse. In recent years, the firm had written massive numbers of credit-default swaps, insurance-like contracts that other companies bought as protection against the default of mortgage-backed securities. When the housing boom began to go bust, banks that had purchased the swaps demanded collateral from AIG, burying the company under a tidal wave of debt. Federal officials, wanting to keep the company from failing because they feared it was too intertwined with the global economy, stepped in to help.
In the last months of 2008, AIG Financial Products paid more than $22 billion in taxpayer money to satisfy debts caused by its swap contracts. Another $12 billion went to pay off municipalities in dozens of states for whom the firm had created complex investment agreements.
Nearly $44 billion went to pay debts that AIG incurred under its "securities lending" program, according to the company. In those instances, various companies borrowed securities from AIG in exchange for cash. In turn, AIG invested much of the money in mortgage-backed assets that plummeted in value, leaving the insurer on the hook for billions.
Yesterday's disclosure was an about-face for AIG and the Fed. In recent weeks, public outrage and pressure from lawmakers demanding to know who benefited from the AIG bailout has reached a crescendo. But until yesterday, AIG executives and federal officials had repeatedly refused to release such details, arguing that trading partners had a right to privacy and that any disclosure could harm their businesses.
"These are extraordinary times," AIG spokeswoman Christina Pretto said yesterday in explaining the company's decision. "And we and our partners at the Fed thought this was right thing to do."
Fed spokeswoman Michelle Smith agreed, saying, "We commend the company for finding a balance between its concerns with confidentiality and the concerns of the public interest."
AIG's disclosure came on the same day that President Obama's top economic adviser berated the firm for its plans to dole out hundreds of millions of dollars in employee bonuses and retention pay, despite posting a record $62 billion loss in the fourth quarter of 2008.
"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Lawrence H. Summers, chairman of the White House National Economic Council, said yesterday during an appearance on ABC's "This Week." "What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous."
Summers was but one in a chorus of administration officials and lawmakers who took to the airwaves yesterday to excoriate AIG, whose rescue package from the federal government stands at an estimated $170 billion.
"This is an example of people at the commanding heights of the economy misbehaving, abusing the system," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
Their anger stemmed in large part from AIG's decision to move forward with retention bonuses for executives at the troubled Financial Products unit. In early 2008, before the government rescue, the firm's employees had been promised more than $400 million in retention pay this year and next. Lawyers for the government and AIG have agreed that most of those payments, however unsavory, are legally binding.
"We are a country of laws. There are contracts," Summers said yesterday. "The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system."
In addition, AIG is in the process of paying $121 million in previously scheduled corporate bonuses and hundreds of millions more in retention payments to more than 6,000 employees throughout the company's global insurance units.
The bonuses and other payments have infuriated the public and government officials. After a contentious call on Wednesday between Treasury Secretary Timothy F. Geithner and AIG chairman Edward M. Liddy, first reported by The Washington Post, Liddy agreed to alter the terms of some executive bonuses and make future payments contingent on the company's progress with its restructuring and paying back taxpayers.
But in a letter that followed, Liddy said he had "grave concerns" about the impact on the firm's ability to retain talented staff "if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."
Speaking on CBS's "60 Minutes" last night, Fed Chairman Ben S. Bernanke once again expressed frustration with the bad will that AIG has wrought.
"I understand why the American people are angry," he said. "It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but to stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy."
Staff writer Neil Irwin contributed to this report.
AIG's Counterparties (PDF)
Special Report: AIG
By Brady Dennis
Washington Post
March 16, 2009
In the six months since the government's bailout of insurance giant American International Group, a rescue that has become increasingly costly and contentious, one question has loomed above all others: Where did the money go?
The answer became a little clearer yesterday when AIG unexpectedly released the names of dozens of trading partners it has paid using billions in taxpayer dollars. The disclosure, which the company said was made after consulting the Federal Reserve, revealed that AIG paid more than $75 billion in the final months of 2008 to numerous domestic and foreign banks, as well as to various U.S. municipalities.
The funds were paid from the government's initial $85 billion emergency loan in September and included major firms such as Goldman Sachs, Societe Generale, Deutsche Bank, Merrill Lynch, Morgan Stanley, Bank of America and Barclays.
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The payments were made between Sept. 16 -- the date that government assistance began -- and Dec. 31.
More than $34 billion of the money went to trading partners of AIG Financial Products, the small subsidiary whose exotic derivatives brought AIG to the edge of collapse. In recent years, the firm had written massive numbers of credit-default swaps, insurance-like contracts that other companies bought as protection against the default of mortgage-backed securities. When the housing boom began to go bust, banks that had purchased the swaps demanded collateral from AIG, burying the company under a tidal wave of debt. Federal officials, wanting to keep the company from failing because they feared it was too intertwined with the global economy, stepped in to help.
In the last months of 2008, AIG Financial Products paid more than $22 billion in taxpayer money to satisfy debts caused by its swap contracts. Another $12 billion went to pay off municipalities in dozens of states for whom the firm had created complex investment agreements.
Nearly $44 billion went to pay debts that AIG incurred under its "securities lending" program, according to the company. In those instances, various companies borrowed securities from AIG in exchange for cash. In turn, AIG invested much of the money in mortgage-backed assets that plummeted in value, leaving the insurer on the hook for billions.
Yesterday's disclosure was an about-face for AIG and the Fed. In recent weeks, public outrage and pressure from lawmakers demanding to know who benefited from the AIG bailout has reached a crescendo. But until yesterday, AIG executives and federal officials had repeatedly refused to release such details, arguing that trading partners had a right to privacy and that any disclosure could harm their businesses.
"These are extraordinary times," AIG spokeswoman Christina Pretto said yesterday in explaining the company's decision. "And we and our partners at the Fed thought this was right thing to do."
Fed spokeswoman Michelle Smith agreed, saying, "We commend the company for finding a balance between its concerns with confidentiality and the concerns of the public interest."
AIG's disclosure came on the same day that President Obama's top economic adviser berated the firm for its plans to dole out hundreds of millions of dollars in employee bonuses and retention pay, despite posting a record $62 billion loss in the fourth quarter of 2008.
"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Lawrence H. Summers, chairman of the White House National Economic Council, said yesterday during an appearance on ABC's "This Week." "What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous."
Summers was but one in a chorus of administration officials and lawmakers who took to the airwaves yesterday to excoriate AIG, whose rescue package from the federal government stands at an estimated $170 billion.
"This is an example of people at the commanding heights of the economy misbehaving, abusing the system," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
Their anger stemmed in large part from AIG's decision to move forward with retention bonuses for executives at the troubled Financial Products unit. In early 2008, before the government rescue, the firm's employees had been promised more than $400 million in retention pay this year and next. Lawyers for the government and AIG have agreed that most of those payments, however unsavory, are legally binding.
"We are a country of laws. There are contracts," Summers said yesterday. "The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system."
In addition, AIG is in the process of paying $121 million in previously scheduled corporate bonuses and hundreds of millions more in retention payments to more than 6,000 employees throughout the company's global insurance units.
The bonuses and other payments have infuriated the public and government officials. After a contentious call on Wednesday between Treasury Secretary Timothy F. Geithner and AIG chairman Edward M. Liddy, first reported by The Washington Post, Liddy agreed to alter the terms of some executive bonuses and make future payments contingent on the company's progress with its restructuring and paying back taxpayers.
But in a letter that followed, Liddy said he had "grave concerns" about the impact on the firm's ability to retain talented staff "if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."
Speaking on CBS's "60 Minutes" last night, Fed Chairman Ben S. Bernanke once again expressed frustration with the bad will that AIG has wrought.
"I understand why the American people are angry," he said. "It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but to stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy."
Staff writer Neil Irwin contributed to this report.
AIG's Counterparties (PDF)
Special Report: AIG
AIG gets $173 billion, sends $93 to Wall St. and Europe; $165 billion in bonuses
AIG massive payments to banks stoke bailout rage
Mon Mar 16, 2009
By John O'Callaghan and Lilla Zuill
Reuters
Goldman Sachs Group Inc and a parade of European banks were the major beneficiaries of $93 billion in payments from AIG -- more than half of the U.S. taxpayer money spent to rescue the massive insurer.
The revelation on Sunday by American International Group Inc was another potential public relations nightmare, coming on the same weekend that the Obama administration expressed outrage over AIG's plan to pay massive bonuses to the people in the very division that destroyed the company by issuing billions of dollars in derivatives insuring risky assets.
The size of the payments also illustrates how seriously a potential collapse of AIG was viewed by the regulatory authorities. U.S. Federal Reserve Chairman Ben Bernanke said in an interview with CBS news magazine "60 Minutes" that the failure of AIG would have brought down the financial system.
AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.
As part of those efforts, Obama will announce steps on Monday to make it easier for small business owners to borrow money, officials said.
But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs -- one of Wall Street's most politically connected firms -- and to European banks including Deutsche Bank, France's Societe Generale and the UK's Barclays could stoke further outrage at the entire U.S. bank bailout.
FINANCIAL SYSTEM AT STAKE?
The fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary...
Mon Mar 16, 2009
By John O'Callaghan and Lilla Zuill
Reuters
Goldman Sachs Group Inc and a parade of European banks were the major beneficiaries of $93 billion in payments from AIG -- more than half of the U.S. taxpayer money spent to rescue the massive insurer.
The revelation on Sunday by American International Group Inc was another potential public relations nightmare, coming on the same weekend that the Obama administration expressed outrage over AIG's plan to pay massive bonuses to the people in the very division that destroyed the company by issuing billions of dollars in derivatives insuring risky assets.
The size of the payments also illustrates how seriously a potential collapse of AIG was viewed by the regulatory authorities. U.S. Federal Reserve Chairman Ben Bernanke said in an interview with CBS news magazine "60 Minutes" that the failure of AIG would have brought down the financial system.
AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.
As part of those efforts, Obama will announce steps on Monday to make it easier for small business owners to borrow money, officials said.
But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs -- one of Wall Street's most politically connected firms -- and to European banks including Deutsche Bank, France's Societe Generale and the UK's Barclays could stoke further outrage at the entire U.S. bank bailout.
FINANCIAL SYSTEM AT STAKE?
The fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary...
Sunday, March 15, 2009
Is the CEO cartel the enemy of capitalism?
Uplift, Deep Cheating, and the CEO Cartel
David Brin
Salon.com
MARCH 14, 2009
..."So long as risk is effectively concealed from borrowers and lenders or actually shifted to others, risk-taking will be excessive. The initial phase of excessive risk-taking will manifest itself as an economic boom, but eventually, when actual losses begin to change the perceptions of borrowers and lenders and begin to impinge upon unsuspecting others, the boom will give way to a bust....[A] market system whose credit markets involve risks that are partially concealed from the lender and partially shifted to others will be biased in the direction of excessive risk-taking. And excessive risks are converted in time into excessive losses." --Roger Garrison
“Neither the U.S. government nor anybody else is capable of estimating the ultimate cost of bailing out such corporate giants as Citigroup, AIG, General Motors, Fannie Mae, and Freddie Mac (and the list goes on). There are two reasons for this. First, on a stand-alone basis, these companies are opaque and indecipherable entities. Financial innovation left transparency in the dust. Wall Street devoted much of its intellectual and political capital to concealing the risks it was creating. This concealment was deliberate; products needed to be priced inefficiently to produce profits.” - Michael Lewitt
Ironies abound. Though I consider myself something of an open market libertarian, I have long warned that we've been slipping into a putsch-coup by a conspiratorial oligarchy. There is, of course, no contradiction. The patron deity of capitalism, Adam Smith, declared that the very worst enemies of markets (far worse than socialism), are conniving aristocrats and top lords of finance.
Smith made clear (as I'll reiterate) that capitalism and top capitalists are often NOT the same thing. Indeed, the latter can often be lethal to the former...
David Brin
Salon.com
MARCH 14, 2009
..."So long as risk is effectively concealed from borrowers and lenders or actually shifted to others, risk-taking will be excessive. The initial phase of excessive risk-taking will manifest itself as an economic boom, but eventually, when actual losses begin to change the perceptions of borrowers and lenders and begin to impinge upon unsuspecting others, the boom will give way to a bust....[A] market system whose credit markets involve risks that are partially concealed from the lender and partially shifted to others will be biased in the direction of excessive risk-taking. And excessive risks are converted in time into excessive losses." --Roger Garrison
“Neither the U.S. government nor anybody else is capable of estimating the ultimate cost of bailing out such corporate giants as Citigroup, AIG, General Motors, Fannie Mae, and Freddie Mac (and the list goes on). There are two reasons for this. First, on a stand-alone basis, these companies are opaque and indecipherable entities. Financial innovation left transparency in the dust. Wall Street devoted much of its intellectual and political capital to concealing the risks it was creating. This concealment was deliberate; products needed to be priced inefficiently to produce profits.” - Michael Lewitt
Ironies abound. Though I consider myself something of an open market libertarian, I have long warned that we've been slipping into a putsch-coup by a conspiratorial oligarchy. There is, of course, no contradiction. The patron deity of capitalism, Adam Smith, declared that the very worst enemies of markets (far worse than socialism), are conniving aristocrats and top lords of finance.
Smith made clear (as I'll reiterate) that capitalism and top capitalists are often NOT the same thing. Indeed, the latter can often be lethal to the former...
Saturday, March 7, 2009
Welfare for the Rich: Bank of America interferes with probe of Merrill Lynch CEO bonuses
Merrill Probe Stymied by Bank of America, New York’s Cuomo Says
By David Mildenberg and Karen Freifeld
March 7, 2009
Bloomberg
Bank of America Corp. is still interfering in his investigation into bonuses given to Merrill Lynch & Co. employees, New York Attorney General Andrew Cuomo told a New York Supreme Court judge.
“We respectfully request that the court reject Bank of America’s continued efforts to stymie the attorney general’s investigation,” Cuomo said in his letter yesterday.
Cuomo is probing a decision by Merrill, which lost $15.8 billion in the fourth quarter, to award $3.6 billion in bonuses in late December, days before Bank of America bought the firm on Jan. 1. Former Merrill Chief Executive Officer John Thain and Bank of America CEO Kenneth Lewis have already testified to Cuomo, and Cuomo has subpoenaed seven of the bonus recipients, a person familiar with the matter said.
Bank of America, the largest U.S. bank by assets, said it offered information on individual Merrill bonuses that Cuomo is seeking. Bank of America won’t comply with Cuomo’s request, even under an agreement to keep it confidential at least temporarily, according to Cuomo.
“Bank of America does not believe the attorney general needs the freedom to place private, personal information in the news media in order to conduct his investigation,” Scott Silvestri, a spokesman for the Charlotte, North Carolina-based bank, said in an e-mail.
Trading ‘Irregularity’ Found
The dispute with Cuomo widened as Merrill said it uncovered an “irregularity” during a review of its trading operations in London. The New York Times said risk officers discovered three weeks ago that a London currency trader who had recorded a trading profit of $120 million for the fourth quarter may instead have lost a large amount.
The newspaper identified the trader as Alexis Stenfors, 38, and said he described the matter as a “misunderstanding.” Calls from Bloomberg News to his office in London and a mobile phone weren’t answered.
Stenfors previously worked at Calyon, the investment-banking unit of France’s Credit Agricole SA, according to the U.K. Financial Services Authority’s register. He joined Merrill Lynch in 2005, and is listed as being “inactive” since Feb. 25. A spokeswoman for Calyon couldn’t immediately comment.
In the Cuomo probe, Bank of America is seeking to expand a temporary confidentiality order on Thain’s testimony to include all witnesses in the investigation, including Greg Fleming, Merrill’s former head of investment banking, Cuomo said. Fleming, who left the bank in early January to take a post at Yale University, testified this week, the attorney general said in the letter.
Not ‘Commercial Litigation’
“Bank of America is treating this matter as a commercial litigation between private parties. It is not,” Cuomo said. “Bank of America is seeking to prevent witnesses from testifying and is seeking to require advance notice of the attorney general’s investigative steps, which it is not entitled to do.”
The Wall Street Journal on Wednesday published the names of a number of the top executives and their 2008 earnings, citing documents and people familiar with Merrill’s compensation. Eleven top executives were paid more than $10 million in cash and stock last year, the Journal said. The newspaper identified the seven bonus recipients as Andrea Orcel, David Sobotka, Peter Kraus, Thomas Montag, David Gu, David Goodman and Fares Noujaim.
A person familiar with Cuomo’s investigation said that seven bonus recipients were subpoenaed in connection with the probe. The person identified the people as Orcel, Sobotka, Kraus, Montag, Gu, Goodman and Noujaim.
‘Road Map’
The information Cuomo seeks would provide a “road map” showing which business lines Bank of America considers most valuable and to assist rivals seeking to poach talented staff, the bank said in its court filings.
Cuomo’s letter said House Financial Services Committee Chairman Barney Frank will soon demand Bank of America make individual bonus information public. The bank has received $45 billion from the Treasury’s bank recapitalization program.
Cuomo said in a Feb. 10 letter that Merrill “secretly and prematurely” awarded the bonuses with Bank of America’s “apparent complicity.” After the top four recipients received a total of $121 million, the next four received a combined $62 million and the next six a combined $66 million, Cuomo said.
By David Mildenberg and Karen Freifeld
March 7, 2009
Bloomberg
Bank of America Corp. is still interfering in his investigation into bonuses given to Merrill Lynch & Co. employees, New York Attorney General Andrew Cuomo told a New York Supreme Court judge.
“We respectfully request that the court reject Bank of America’s continued efforts to stymie the attorney general’s investigation,” Cuomo said in his letter yesterday.
Cuomo is probing a decision by Merrill, which lost $15.8 billion in the fourth quarter, to award $3.6 billion in bonuses in late December, days before Bank of America bought the firm on Jan. 1. Former Merrill Chief Executive Officer John Thain and Bank of America CEO Kenneth Lewis have already testified to Cuomo, and Cuomo has subpoenaed seven of the bonus recipients, a person familiar with the matter said.
Bank of America, the largest U.S. bank by assets, said it offered information on individual Merrill bonuses that Cuomo is seeking. Bank of America won’t comply with Cuomo’s request, even under an agreement to keep it confidential at least temporarily, according to Cuomo.
“Bank of America does not believe the attorney general needs the freedom to place private, personal information in the news media in order to conduct his investigation,” Scott Silvestri, a spokesman for the Charlotte, North Carolina-based bank, said in an e-mail.
Trading ‘Irregularity’ Found
The dispute with Cuomo widened as Merrill said it uncovered an “irregularity” during a review of its trading operations in London. The New York Times said risk officers discovered three weeks ago that a London currency trader who had recorded a trading profit of $120 million for the fourth quarter may instead have lost a large amount.
The newspaper identified the trader as Alexis Stenfors, 38, and said he described the matter as a “misunderstanding.” Calls from Bloomberg News to his office in London and a mobile phone weren’t answered.
Stenfors previously worked at Calyon, the investment-banking unit of France’s Credit Agricole SA, according to the U.K. Financial Services Authority’s register. He joined Merrill Lynch in 2005, and is listed as being “inactive” since Feb. 25. A spokeswoman for Calyon couldn’t immediately comment.
In the Cuomo probe, Bank of America is seeking to expand a temporary confidentiality order on Thain’s testimony to include all witnesses in the investigation, including Greg Fleming, Merrill’s former head of investment banking, Cuomo said. Fleming, who left the bank in early January to take a post at Yale University, testified this week, the attorney general said in the letter.
Not ‘Commercial Litigation’
“Bank of America is treating this matter as a commercial litigation between private parties. It is not,” Cuomo said. “Bank of America is seeking to prevent witnesses from testifying and is seeking to require advance notice of the attorney general’s investigative steps, which it is not entitled to do.”
The Wall Street Journal on Wednesday published the names of a number of the top executives and their 2008 earnings, citing documents and people familiar with Merrill’s compensation. Eleven top executives were paid more than $10 million in cash and stock last year, the Journal said. The newspaper identified the seven bonus recipients as Andrea Orcel, David Sobotka, Peter Kraus, Thomas Montag, David Gu, David Goodman and Fares Noujaim.
A person familiar with Cuomo’s investigation said that seven bonus recipients were subpoenaed in connection with the probe. The person identified the people as Orcel, Sobotka, Kraus, Montag, Gu, Goodman and Noujaim.
‘Road Map’
The information Cuomo seeks would provide a “road map” showing which business lines Bank of America considers most valuable and to assist rivals seeking to poach talented staff, the bank said in its court filings.
Cuomo’s letter said House Financial Services Committee Chairman Barney Frank will soon demand Bank of America make individual bonus information public. The bank has received $45 billion from the Treasury’s bank recapitalization program.
Cuomo said in a Feb. 10 letter that Merrill “secretly and prematurely” awarded the bonuses with Bank of America’s “apparent complicity.” After the top four recipients received a total of $121 million, the next four received a combined $62 million and the next six a combined $66 million, Cuomo said.
Monday, February 23, 2009
Taxpayer money was used to prevent regulation, destroy Freddie Mac
Freddie Mac investigating Freddie Mac
February 23, 2009
Associated Press
Lawyers hired by the federal mortgage giant Freddie Mac are quietly looking into the firm's own lobbying campaign, an effort that helped snuff out proposed new regulations before the housing market collapsed.
Freddie Mac was placed under direct government control because of its massive investment losses.
The inquiry follows stories by The Associated Press that some two million dollars were paid to a Washington lobby group which then targeted 17 Republican senators to defeat a 2005 bill that would have required the firm to sell its then-lucrative mortgage portfolios. Months later, their value had plummeted.
Also under review: six-figure payments to more than 50 outside lobbying firms and political consultants, including firms connected to former Senator Al D'Amato and former Speaker of the House Newt Gingrich.
And, the use of a Washington skybox seat belonging to the lobby group by a Freddie Mac executive.
February 23, 2009
Associated Press
Lawyers hired by the federal mortgage giant Freddie Mac are quietly looking into the firm's own lobbying campaign, an effort that helped snuff out proposed new regulations before the housing market collapsed.
Freddie Mac was placed under direct government control because of its massive investment losses.
The inquiry follows stories by The Associated Press that some two million dollars were paid to a Washington lobby group which then targeted 17 Republican senators to defeat a 2005 bill that would have required the firm to sell its then-lucrative mortgage portfolios. Months later, their value had plummeted.
Also under review: six-figure payments to more than 50 outside lobbying firms and political consultants, including firms connected to former Senator Al D'Amato and former Speaker of the House Newt Gingrich.
And, the use of a Washington skybox seat belonging to the lobby group by a Freddie Mac executive.
Sunday, February 15, 2009
The thinking behind bonuses for CEOs of failing companies
John Thain thinks he should be paid $10 million because he didn't make a BIGGER mess at Merrill Lynch. Hmmmm. Should we also reward gunslingers who tell us that more people would have been killed if they hadn't taken steps to limit the number of their victims?
The Huffington Post published the following:
From the Wall Street Journal:
"Merrill Lynch & Co. chief John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered securities firm's compensation committee is resisting his request, according to people familiar with the situation.
"The committee and full board are scheduled to meet Monday to hear Mr. Thain's formal bonus recommendations for himself and other senior executives of the New York company. No decision has been reached, and it isn't known what Mr. Thain will recommend, but the compensation committee is leaning toward denying the executives bonuses for this year, these people said."
Reuters points out that several other Wall Street firms, including Goldman Sachs, will not be giving out bonuses to top executives this year. Though Thain's company was sold to Bank of America after losing a net $11.67 billion this year, Thain argued that it could have been worse.
From the Reuters story:
Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, people familiar with his thinking told the WSJ.
Members of Merrill's compensation committee agree with Thain that the takeover is in shareholders' best interest, but believe it would be foolish to ignore strong public sentiment against large compensation packages, the paper said, citing people familiar with their thinking.
The Huffington Post published the following:
From the Wall Street Journal:
"Merrill Lynch & Co. chief John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered securities firm's compensation committee is resisting his request, according to people familiar with the situation.
"The committee and full board are scheduled to meet Monday to hear Mr. Thain's formal bonus recommendations for himself and other senior executives of the New York company. No decision has been reached, and it isn't known what Mr. Thain will recommend, but the compensation committee is leaning toward denying the executives bonuses for this year, these people said."
Reuters points out that several other Wall Street firms, including Goldman Sachs, will not be giving out bonuses to top executives this year. Though Thain's company was sold to Bank of America after losing a net $11.67 billion this year, Thain argued that it could have been worse.
From the Reuters story:
Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, people familiar with his thinking told the WSJ.
Members of Merrill's compensation committee agree with Thain that the takeover is in shareholders' best interest, but believe it would be foolish to ignore strong public sentiment against large compensation packages, the paper said, citing people familiar with their thinking.
Wednesday, January 7, 2009
Bernard Madoff investors should have invested in Kiva.org or Microplace.com
A little less greed would actually have benefited Bernard Maddoff's customers. They could have made the world a better place and kept their principal secure if they'd invested with Pierre Omidyar or Sequoia Captial, or the 40-or-so other microloan investors.
Small time investors like me can invest in microfinance efforts such as Kiva.org or Microplac.com.
Investing in People
E Magazine
Making a Difference, One Small Loan at a Time
By Rona Fried
© Elizabeth Prager
The world learned about microfinance in 2006 when Muhammad Yunus, founder of Grameen Bank, won the Nobel Peace Prize. For several decades, the bank had been helping people in Bangladesh rise from poverty by giving them tiny loans, most under $200. Now the Bank has $520 million in outstanding loans to small businesses in poor countries.
Microfinance—offering loans, savings accounts and other basic financial services to the poor—has proved to be a critical lever in helping people to help themselves. A woman might borrow $50 to buy chickens so she can sell eggs at the local market. She can sell more eggs as her chickens multiply, and soon she can sell the chicks. She shares knowledge with her neighbors, creates jobs and raises the standard of living for the community.
Women receive the most loans because studies have shown they are more likely to reinvest their earnings in the businesses and in their families. They also tend to take fewer risks with their business and are more careful to repay loans. Whereas only 4% of the poorest people in Bangladesh pulled themselves above the poverty line without credit services, 48% did so with loans from Grameen Bank over an eight-year period...
Small time investors like me can invest in microfinance efforts such as Kiva.org or Microplac.com.
Investing in People
E Magazine
Making a Difference, One Small Loan at a Time
By Rona Fried
© Elizabeth Prager
The world learned about microfinance in 2006 when Muhammad Yunus, founder of Grameen Bank, won the Nobel Peace Prize. For several decades, the bank had been helping people in Bangladesh rise from poverty by giving them tiny loans, most under $200. Now the Bank has $520 million in outstanding loans to small businesses in poor countries.
Microfinance—offering loans, savings accounts and other basic financial services to the poor—has proved to be a critical lever in helping people to help themselves. A woman might borrow $50 to buy chickens so she can sell eggs at the local market. She can sell more eggs as her chickens multiply, and soon she can sell the chicks. She shares knowledge with her neighbors, creates jobs and raises the standard of living for the community.
Women receive the most loans because studies have shown they are more likely to reinvest their earnings in the businesses and in their families. They also tend to take fewer risks with their business and are more careful to repay loans. Whereas only 4% of the poorest people in Bangladesh pulled themselves above the poverty line without credit services, 48% did so with loans from Grameen Bank over an eight-year period...
Tuesday, January 6, 2009
Bernard Madoff tries to squirrel away some valuable assets
Bid to Revoke Madoff’s Bail Cites His Gifts
By ALEX BERENSON
January 5, 2009
Contending that Bernard L. Madoff sent at least a million dollars worth of jewelry as gifts to family members and friends last month, federal prosecutors asked a judge on Monday to revoke his bail and send him to jail.
Mr. Madoff, who has been free after posting bail of $10 million when he was charged last month with securities fraud, remained free after the hearing pending a ruling by the magistrate judge, Ronald L. Ellis of United States District Court in Manhattan...
United States Attorney Marc O. Litt asked for revocation of Mr. Madoff’s bail, arguing that the gifts violated conditions that barred him from disposing of any of his assets.
The newly aggressive stance by prosecutors appeared to represent a serious deterioration in relations between the government and Mr. Madoff, who is said to have confessed to a huge Ponzi scheme last month and had seemed to be cooperating with investigators trying to unravel the fraud. In an interview on Monday evening, a lawyer for Mr. Madoff backed away from earlier statements that Mr. Madoff was helping investigators.
While Mr. Madoff faced the potential loss of his freedom in New York, the Securities and Exchange Commission came under heavy criticism from lawmakers in Washington.
At a hearing Monday afternoon, members of a House committee questioned why the agency had not uncovered Mr. Madoff’s fraud long before early December, when he is said to have confessed it to F.B.I. agents. The S.E.C.’s inspector general, H. David Kotz, promised a full investigation.
At the court hearing in New York, Mr. Litt told Judge Ellis that Mr. Madoff and his wife, Ruth, had mailed packages of valuables in late December to his sons, his brother and friends. Since mid-December, Mr. Madoff has been under house arrest at his luxury apartment on the Upper East Side of Manhattan, guarded by private security guards paid for by his wife.
By sending the packages, Mr. Madoff violated the terms of his bail agreement with the government, Mr. Litt said...
Monday, January 5, 2009
Let Big Oil pay for auto bailout
Ruben P. Hernandez of San Diego sent this suggestion to the San Diego Union Tribune:
Let Big Oil pay for auto bailout
January 5, 2009
In 1908, Henry Ford introduced the Model T, which got 25 miles to the gallon. Today, Ford makes an SUV that manages about 16 miles to the gallon. As a result, oil companies have made an outrageous amount of profits for 100 years. Instead of having the same chumps (taxpayers) bail them out, let the oil companies bail out the auto industry.
Let Big Oil pay for auto bailout
January 5, 2009
In 1908, Henry Ford introduced the Model T, which got 25 miles to the gallon. Today, Ford makes an SUV that manages about 16 miles to the gallon. As a result, oil companies have made an outrageous amount of profits for 100 years. Instead of having the same chumps (taxpayers) bail them out, let the oil companies bail out the auto industry.
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