USA for Sale

State Assembly Bill Seeks to Disclose Political Ad Donors

2012-01-31T11:17:00.000-08:00

State Assembly Bill Seeks to Disclose Political Ad Donors
AB 1148, the California Disclose Act, goes before the state Assembly Tuesday.
Hollywood Patch
Jan. 31, 2012

Public interest groups are urging citizens to back a bill up for a vote Tuesday in the California Assembly that would require the disclosure of large donors to political ads seen by voters across the state.

Under AB 1148, also known as the California Disclose Act, the three largest donors to political advertising on TV and radio as well as those in mailers and Web sites would need to be named.

"This would be a huge win for democracy in California, allowing citizens to give proper weight to the different messages they hear and make informed decisions at the ballot box," said MapLight, a nonprofit that tracks the influence of money in politics, in an email message to supporters.

Other organizations that have registered their support of the bill include the California National Organization for Women, the California League of Women Voters, the Planning and Conservation League and the California Clean Money Campaign (which is sponsoring the bill), among others.

The California Chamber of Commerce has announced its opposition, saying the bill would place "significant and onerous changes" on the process and hurt protected speech. The Chamber's opposition dims the bill's prospects, the San Jose Mercury-News stated. The California Broadcasters Association also opposes the bill.

Heritage Foundation supports freedom of speech: comes out against SOPA (Stop Online Piracy Act)

2011-12-23T07:42:00.000-08:00

Pro-copyright group takes SOPA to task
by Declan McCullagh
December 21, 2011

The Heritage Foundation, probably the nation's most influential conservative advocacy group, has long been a reliable ally of large copyright holders. But not when it comes to the controversial Stop Online Piracy Act.

The venerable think tank, which enjoys close ties with the Republican Party and inspired President Reagan's missile defense program and the GOP's welfare reform effort, warned today that SOPA raises important security and free speech concerns.

"The concern with SOPA is that it enforces private property rights at the expense of other values, such as innovation on the Internet, security of the Internet, and freedom of communication," James Gattuso, Heritage's senior research fellow in regulatory policy, told CNET this evening. While SOPA addresses a "very real problem," he says, it's not necessarily the right solution.

Unlike some Washington advocacy groups that are predictably anti-copyright, Heritage has historically taken the opposite position. It called the Motion Picture Association of America's decision to sue peer-to-peer pirates a "wise choice," and suggested that disrupting P2P networks to curb piracy, an idea that some politicians actually proposed, is a step "in the right direction."

Heritage's criticism is important because SOPA author Lamar Smith of Texas, who has become Hollywood's favorite Republican, is almost certain to win committee approval in early 2012. Then the bill's fate will rest in the hands of the Republican House leadership--which could chose to delay a floor vote indefinitely if the GOP appears divided...

Republicans block Obama's nominee to head consumer watchdog agenc

2011-12-08T09:16:00.000-08:00

Senate Republicans block Obama's nominee to head consumer watchdog agency
Washington Post
Dec. 8, 2011

In a long-awaited vote Thursday morning, Senate Republicans blocked the confirmation of President Obama’s nominee to lead his signature consumer watchdog agency, a move that prevents it from exercising many of its broad new powers.

Republicans relied on a procedural vote to keep the Senate from even considering former Ohio attorney general Richard Cordray for the top job at the Consumer Financial Protection Bureau.

Though GOP lawmakers have praised Cordray’s qualifications for the job -- he currently serves as the CFPB’s director of enforcement -- they have pledged to prevent any candidate from being confirmed unless significant structural change are made to the bureau.

Read more at:
http://www.washingtonpost.com/blogs/2chambers/post/senate-republicans-block-cordray-as-obama-consumer-watchdog-nominee/2011/12/08/gIQA6j9BfO_blog.html

Citigroup and the people who brought the financial meltdown

2011-12-03T08:34:00.000-08:00

Citigroup to Pay Millions to Close Fraud Complaint
By EDWARD WYATT
New York Times
October 19, 2011

WASHINGTON — As the housing market began its collapse, Wall Street firms and sophisticated investors searched for ways to profit. Some of them found an easy method: Stuff a portfolio with risky mortgage-related investments, sell it to unsuspecting customers and bet against it.

Citigroup on Wednesday agreed to pay $285 million to settle a civil complaint by the Securities and Exchange Commission that it had defrauded investors who bought just such a deal. The transaction involved a $1 billion portfolio of mortgage-related investments, many of which were handpicked for the portfolio by Citigroup without telling investors of its role or that it had made bets that the investments would fall in value.

In the four years since the housing market began its steady descent, securities regulators have settled only two cases related to the financial crisis for a larger sum of money. This is also the third case brought by the S.E.C. accusing a major Wall Street institution of misleading customers about who was putting together a security and about their motive. Goldman Sachs and JPMorgan Chase & Company both settled similar cases last year.

The settlement will refund investors with interest and include a $95 million fine — a relative pittance for a giant like Citigroup. On Monday, the company reported that in the third quarter alone it earned profits of $3.8 billion on revenue of $20.8 billion. The settlement may also have trouble getting approval from Jed S. Rakoff, the federal district judge in New York who must ultimately sign off on the fine and who has taken a hard line on S.E.C. settlements.

Neither the S.E.C. nor the Justice Department would say whether the case raised questions about whether Citigroup had been involved in any criminal wrongdoing. But the case highlights a growing frustration felt by foreclosed homeowners, investors and Wall Street protesters alike that few, if any, senior banking executives have faced criminal charges for losses growing out of the financial crisis.

Citigroup has settled one case stemming from the crisis. Last year, it agreed to pay $75 million to settle federal claims that it hid from investors vast holdings of subprime mortgage investments that were losing value during the crisis and that ultimately prompted the federal government to rescue the bank.

“The securities laws demand that investors receive more care and candor than Citigroup provided” to investors in the security, said Robert Khuzami, director of the S.E.C.’s enforcement division, referring to Wednesday’s action. “Investors were not informed that Citigroup had decided to bet against them and had helped to choose the assets that would determine who won or lost.”

The complex amalgamation of investments known as Class V Funding III produced $126 million in profits for Citigroup’s brokerage subsidiary, and another $34 million in fees for putting it together. All of that, including interest and the $95 million fine, will now be going back to the investors; the government will not receive anything.

In a statement, Citigroup noted that the S.E.C. did not charge it with “intentional or reckless misconduct.” Rather, it settled charges that its actions were negligent and misleading to investors. Despite its profits on the current deal, over all Citigroup lost tens of billions of dollars on its holdings of mortgage-related investments.

“We are pleased to put this matter behind us and are focused on contributing to the economic recovery, serving our clients and growing responsibly,” the company said in a statement. “Since the crisis, we have bolstered our financial strength, overhauled the risk management function, significantly reduced risk on the balance sheet and returned to the basics of banking.”

The S.E.C. on Wednesday also brought a case against Credit Suisse, which played a smaller role in the transaction, and against one individual at each company. But those individuals were midlevel employees in each company’s investment and trading departments; no senior executives at either company were charged...

At last, the SEC shows more respect to Markopolos (terrific name, right?) than to Bernie Madoff

2011-11-11T10:37:00.000-08:00

Seven SEC employees disciplined on failure to stop Madoff fraud
By David S. Hilzenrath
November 11, 2011

The Securities and Exchange Commission, which failed to stop Bernard Madoff’s long-running investment fraud despite repeated warnings, has disciplined seven agency employees over their handling of the matter but did not fire anyone, a person familiar with the actions said.

An eighth employee resigned before disciplinary action was taken, the person said.

The SEC’s head of human resources had recommended that SEC Chairman Mary L. Schapiro fire one individual, according to a second person, an official involved in the process. The human resources head took that position after a law firm hired by the SEC to advise it on the disciplinary actions also recommended that the employee be fired, the official said.

The law firm, Fortney & Scott, “recommended formal disciplinary action, including removal from service,” for an assistant regional director at the SEC, the agency’s inspector general said in an August report.

The punishments given the employees varied and included suspensions, pay cuts and demotions, according to the first person familiar with the matter. An employee who received one of the most severe sanctions got a 30-day suspension and a demotion. Another was given a pay cut of about 6 percent. At the low end, one employee was suspended for seven days, another for three days and yet another was issued a “counseling memo,” which is a step below a reprimand.

The SEC’s disciplinary process with respect to the Madoff matter was concluded months ago, SEC spokesman John Nester said Friday. He had no other immediate comment.

When the law firm advising the SEC recommended that an employee be fired, it included a qualifier, the second person familiar with the matter said. If the SEC thought it was important to avoid losing that individual’s services, it could consider a different punishment.

The people who spoke about the disciplinary process did so on condition of anonymity. One cited the sensitivity of the information and the other was not authorized to discuss it.

Madoff’s fraud cost investors billions of dollars, shattered lives, and became perhaps the biggest embarrassment in the SEC’s history. After Madoff’s house of cards collapsed in 2008, a financial sleuth named Harry Markopolos became famous for having tried in vain to get SEC employees to see through the scam...

Darrell Issa’s personal Goldman rep arranged Elizabeth Warren perjury showdown

2011-08-27T09:36:00.000-07:00

Darrell Issa’s personal Goldman rep arranged Elizabeth Warren perjury showdown
Lucas O’Connor
Courage Campaing
August 26, 2011

There are more and more wrinkles in the troubling saga of the former Goldman Sachs VP hired by Issa to protect Goldman Sachs and other Wall Street firms from accountability on the Hill. It now looks as though he was also personally responsible for the scheduling disagreement between Elizabeth Warren and Rep. Patrick McHenry that quickly mushroomed into a debacle of McHenry twice accusing Warren of perjury.

Goldman Sachs has dropped millions on lobbying Congress and now it looks like they've gotten themselves a mole as well, courtesy of Darrell Issa. Issa and McHenry, of course, have themselves been the beneficiaries of generous campaign donations from giant financial firms throughout their careers.

~ While on that subject, the Goldman exec in question claimed last week that he had change his name to honor his family's Transylvanian heritage. Submitted with nothing but amazement, it appears that heritage is about service to an Hungarian fascit military dictator who was an early ally of Hitler's regime in Germany. So... there's that.

~ Some credit where it's due -- Issa has been ahead of the curve on government giving up. Back in January, he proposed not just ending the HAMP program designed to help struggling homeowners, but replacing it with nothing. His plan was to just spend the money instead on... well... nothing. Now it looks like $30 billion originally earmarked for foreclosure relief will be spent on nothing, because congressional Republicans aren't interested in rerouting the money.

~ New numbers show that in the last few years, private companies have seen record profits per employee, indicating that these businesses can but are not hiring. The profit rate has spiked 12% during the same period that Darrell Issa and others have continued insisting that supply-side economic policies of giving more money to private companies would spur job growth...

Darrell Issa (R-Goldman Sachs): Most of the time, when wealthy people are elected to office, they put their investments into a blind trust

2011-08-22T15:36:00.001-07:00

Darrell Issa (R-Goldman Sachs)
Courage Campaign
Rick Jacobs

Most of the time, when wealthy people are elected to office, they put their investments into a blind trust to avoid conflicts of interest.

But Rep. Darrell Issa -- one of the richest people in America -- didn't do that. He still personally manages hundreds of millions of dollars, and it seems to drive a lot of his official decisions.

Tell Issa to focus on his full time job as a congressman, not on managing his money. Put your money in a blind trust or resign from Congress.

A new report finds that Darrell Issa hired a Goldman Sachs Vice President to run interference on new Wall Street regulations... but only after he changed his name. It's the latest in Issa's long string of conflicts of interest and corporate favoritism, a list that's gotten so long that the New York Times put the problem on the front page this week.

We already know that Issa-as-Chairman is bad news. He asked corporate lobbyists and industry groups to set his committee's agenda, cancelled a hearing when facts didn't fit his narrative, and still won't disclose what lobbyists he meets with. He's steered earmarks to fund improvements around his investment properties, and he's a big fan of South Carolina's taxpayer-funded $900 million corporate handout -- in exchange for the corporation's promise to cut employee wages and benefits.

Stop insulting your constituents and America. Stop spending your spare time looking for personal investment opportunities in his laws and Oversight investigations. The credibility of his committee -- and Issa himself -- requires that he move his money to blind trust now.

Issa has spent his entire life trying to play by special rules, and that hasn't changed just because he has more power now. This week, we've seen once again that so long as Issa is trying to legislate and turn a profit at the same time, he just isn't able to keep them separate. And that's a huge problem.

It's high time that Darrell Issa get focused on responsible oversight and assure us that he isn't still trying to work angles for his own benefit.

Financial Crisis Panel Commissioners Leaked Confidential Information To Lobbyists, Report Alleges

2011-07-14T06:25:00.000-07:00

Financial Crisis Panel Commissioners Leaked Confidential Information To Lobbyists, Report Alleges
7/13/11
Shahien Nasiripour
Huffpost

Republican commissioners on the panel created by Congress to probe the roots of the financial crisis leaked documents to partisan allies and shared confidential information with influence peddlers, according to a Wednesday report by Democrats on a Congressional oversight committee.

The House Oversight and Government Reform Committee, led by Republican Rep. Darrell Issa of California, sought to investigate allegations that the bipartisan Financial Crisis Inquiry Commission was mismanaged by its Democratic majority, misused taxpayer funds, was compromised by conflicts of interest and colluded with Democrats in Congress as they sought to pass a financial reform bill.

Instead, the 400,000 emails and documents obtained by the investigative committee show that Republican commissioner Peter Wallison broke confidentiality rules by leaking documents to Ed Pinto, a colleague of his at the American Enterprise Institute, a prominent right-leaning Washington-based research and policy organization.

The misconduct did not stop there, according to the report. The assistant of Bill Thomas, the panel's vice chairman and another of the four Republican commissioners, shared information about the commission's hearings, targets and investigative direction with one of Thomas's colleagues at law firm Buchanan, Ingersoll, and Rooney, one of Washington's top lobbying shops. In one case, Thomas's colleague, Alex Brill, asked Thomas's assistant in a March 31, 2010, email about an upcoming hearing on Citigroup for his "friend who represents Citi." The bank was concerned it would be unfairly singled out at its hearing, wrote Brill, who is also the chief executive of economic and political consulting firm Matrix Global Advisors.

The partisan bent of the report, its findings and the investigation that led to it lends credence to the central criticisms that have long dogged the panel: A commission led by former politicians rather than prosecutors and economists would never get to the bottom of the financial crisis, and its findings would inevitably be viewed as a political report rather than as an objective look at the companies, policies and practices that caused the most punishing downturn since the Great Depression.

The House oversight committee was to hold a hearing Wednesday on the crisis commission. It was postponed to a future undetermined date, the crisis commission's former chairman, Phil Angelides, said in an email. Thomas and Brill did not immediately respond to requests seeking comment.

Wallison violated the commission's ethics rules by leaking confidential information to Pinto on "several" occasions, the report alleges.

In one case, the crisis commission's general counsel concluded that Wallison violated the ethics code by sharing a confidential staff memo with Pinto that used private housing data provided by the Federal Reserve under a confidentiality agreement between the commission and the Fed. Wallison and Pinto both pointed to government housing policies as the primary cause of the financial crisis, a position rejected by the broader committee.

Wallison acknowledged that he supplied Pinto with the confidential staff memo, but said he didn't know it was confidential at the time.

He also said that Pinto deserved to see the memo anyway, as the data its conclusions were based on directly challenged Pinto's data and his claim that the crisis was largely caused by government homeowners policies and subprime lending by mortgage giants Fannie Mae and Freddie Mac.

"I get this memo criticizing Pinto's data -- what was I supposed to do?" Wallison said. "Pinto should be the one to respond to criticism of his data."

Pinto said Wallison sent him the FCIC memo with a simple question: "What do you think?"

Both men maintain that Fannie and Freddie's subprime mortgage activities directly led to the crisis, despite an avalanche of data that has led government and university economists to conclude otherwise.

Perhaps more distressing to the House oversight committee's Democratic staff was the unauthorized disclosure of information about the crisis commission's investigations to Brill, a Washington influence peddler who once worked as a senior adviser to Thomas when he led the House Ways and Means Committee.

Thomas's assistant, who wasn't named in the Democratic report, shared with Brill internal draft reports; information about internal commission deliberations; plans to investigate foreign banks; and the commission planned treatment of certain companies under investigation, according to internal emails obtained by the House oversight committee.

The committee noted that it could not find any record of Brill working for the crisis commission in an official or advisory capacity. The committee also could not find any record of Brill signing a confidentiality agreement, a requirement of commission employment.

In one instance, Thomas's assistant emailed Brill a draft of a then-confidential staff report on Wells Fargo's 2008 acquisition of Wachovia, a teetering, giant bank that was being battered by turmoil in the financial markets. The assistant also shared information about the crisis commission's possible witness list for its hearing on the issue.

In a response, Brill made a number of suggestions he hoped the assistant would share with Thomas.

In another instance, Brill asked the assistant about the commission's plans to probe foreign banks.

Thomas's assistant not only said the commission was going to investigate these institutions in his reply, but he named them as well, identifying Deutsche Bank, UBS, BNP Paribas, RBS and Lazard Freres as institutions the commission was probing "for various purposes."

In March 2010, Brill asked the assistant about the crisis commission's plans for its upcoming hearing on Citigroup. Brill states on his firm's website that he's helped a "Wall Street investment bank" navigate policy matters in Washington.

"Fyi, just heard from my friend who represents Citi," Brill wrote in an email. "I guess Citi feels afraid that they will be painted as one of the worst offenders of subprime when really they think that they only dabbled in subprime. I don't know the truth in any of this but I guess the titles of the panels make this look like citi is the subprime devil while WMT [Thomas] was explaining to me that Citi is a great target to study because they did a bit of everything and that is more true for Citi than for anyone else. Any thoughts?"

Later that same day, Thomas's assistant replied to Brill, explaining how the commission would likely treat Citigroup officials during their hearing.

"They aren't going to be painted as a particularly bad offender of subprime origination, because they weren't a bad offender in that area," the assistant wrote. "However, they ended up taking $55B in losses associated with subprime and then got $45B in TARP and a government guarantee on $300B of assets. And their risk management re: their subprime exposure was, by any account, pretty awful. And, it is true that they are a good example because they did a little of everything, which means that we can discuss the entire subprime-universe during their hearing. So, while I don't think they will come across as the person who as ripping off the American public, I think they may come across as a pretty poorly managed company."

It's unclear whether Brill passed on this information to any clients or Citigroup representatives, the House oversight report notes.

In an Aug 2010 email to Angelides, the crisis panel's general counsel explained how such unauthorized disclosures could impede the commission's investigation, and open it up to legal liability.

"Disclosure of commission confidential information will gravely impair the commission's ability to conduct its business in the future by making it hard to secure the cooperation of other information providers in accessing their confidential information," he wrote. "And could expose the commission to damage claims for the improper release thereof."

Duncan Hunter Aide Protected by Firm Formerly Known as Blackwater

2011-07-02T10:20:00.000-07:00

Duncan Hunter Aide Protected by Firm Formerly Known as Blackwater
By Matt Potter
San Diego Reader
June 29, 2011

A top aide to GOP congressman Duncan Hunter headed for Africa this spring on a trip paid for by the International Republican Institute, whose board, chairehttp://www.blogger.com/img/blank.gifd by Arizona senator John McCain, includes such other Republican stalwarts as Senator Lindsey Graham and Brent Scowcroft, a key national security advisor in the administrations of Nixon, Ford, and both Bushes. Victoria Middleton, Hunter’s chief of staff, received travel expenses of $7999.98, including business class airfare, lodging of $901.21, and meals of $340.55, to be an election observer in Lagos and Abuja, Nigeria, from April 11 through April 18.

According to Middleton’s travel report, the institute “has observed every election in Nigeria since they ended military rule.” Her observation team was housed at the Transcorp Hilton Abuja at a rate of “$376 per night or less.” One reason for choosing the Hilton, the report says, is that “It has very few instances of food poisoning and otherwise meets international health standards.”

The government-funded institute, closely linked to the Republican Party, is controversial in some quarters for its ties to the Central Intelligence Agency and Blackwater USA (now known as Xe). According to an account last year in Norfolk’s Virginian-Pilot, Blackwater had a five-year, no-bid contract to protect the institute’s operations in Iraq. Internal Revenue Service filings by the institute showed that it paid Blackwater $50 million, more than a fifth of the institute’s budget, over a three-year period between October 2005 and September 2008, according to the paper. Eight “democracy building” grants from the State Department to the institute have totaled $131 million since 2004, the paper added.

According to Middleton’s itinerary, upon its arrival in Abuja her delegation received a “Security Overview” from Greystone, which the New York Times reported last September was among 30 “shell companies” that Blackwater set up after the firm ran into controversy in Iraq.

Comments

I am a spokesperson for the International Republican Institute. IRI has no ties to the CIA. Those are conspiracy theories made-up by dictators who will do anything to hold on to power and others who are threatened by real democracy. IRI takes seriously the security of its staff and the volunteers who travel with the Institute. I can’t imagine the outcry if IRI abdicated its responsibility for security and as a result a volunteer was killed. You can learn about IRI at www.iri.org.>

By lgates 9:21 a.m., Jun 29, 2011

I'd feel a lot better if the "International Republican Institute" were more connected to the Central Intelligence Agency than to Blackwater, Xe or Greystone -- those now-notorious private firms made up of unaccountable soldiers of fortune who shoot up Iraqi civilians and answer to no civil authority.

Throw Clarence Thomas Off the Bench:The Supreme Court justice broke the law by not disclosing his wife's $700K

2011-06-28T08:04:00.000-07:00

Throw Clarence Thomas Off the Bench
The Supreme Court justice broke the law by not disclosing his wife's $700K think-tank payday. Paul Campos on Clarence Thomas' "preposterous" defense and why he likely won't be punished.
March 3, 2011
http://www.blogger.com/img/blank.gif
The criminal-law scholar George Fletcher once quipped that the maxim "ignorance of the law is no excuse" is one of the few fundamental principles of law that most people actually know. As harsh as this principle may sometimes be when applied to ordinary citizens, applying it to justices of the Supreme Court seems only reasonable.
campos-thomas_164100

Clarence Thomas. Credit: Dennis Brack / Getty Images

Thus it's difficult to feel sympathy for Clarence Thomas, as he finds himself embroiled in a controversy over his failure to reveal the sources of his wife's non-investment income (or indeed that she even had any such income). The 1978 Ethics in Government Act requires all federal judges to fill out annual financial-disclosure forms. The relevant question on the disclosure form isn't complicated: Even if Justice Thomas wasn't a lawyer, he shouldn't have needed to hire one to explain to him that the box marked NONE next to the phrase "Spouse's Non-Investment Income" should only be checked if his spouse had no non-investment income.

In fact Ginni Thomas was paid nearly $700,000 by the Heritage Foundation, a "conservative think tank," between 2003 and 2007, as well as an undisclosed amount by another lobbying group in 2009. Justice Thomas' false statements regarding his wife's income certainly constitute a misdemeanor, and quite probably a felony, under federal law. (They would be felonies if he were prosecuted under 18. U.S.C. 1001, which criminalizes knowingly making false statements of material fact to a federal agency. This is the law Martha Stewart was convicted of breaking by lying to investigators.)

Thomas' defense is that he didn't knowingly violate the law, because he " misunderstood" the filing requirements. This is preposterous on its face. Bill Clinton was impeached—and subsequently disbarred—for defending his false statements about his affair with Monica Lewinsky with an excuse that wasn't as incredible as the one Thomas is now employing.

Even in an era of budget cuts, these government programs won’t die

2011-04-22T09:38:00.000-07:00

I think scholarships are a reasonable use of government funds. Young people deserve good educations. But the farm subsidies are another story.

Even in an era of budget cuts, these government programs won’t die
THE WASHINGTON POST
By David A. Fahrenthold
April 20, 2011

The programs sound innocuous enough: One spends federal money to store cotton bales. Another offers scholars a chance to study Asian-American relations. Two others pay to market U.S. oranges in Asia and clean up abandoned coal mines.

But in Washington’s wonkier circles, these are the federal budget’s equivalent of Jason Voorhees, the hockey-masked movie villain who could take an ax in the skull and come back for the sequel.

They are the Line Items That Won’t Die.

In recent years, leaders in both parties — including, in some cases, presidents from both parties — have singled out these four programs, worth a total of about $337 million, to either be eliminated or lose millions in funding. But they have survived, again and again, thanks to powerful lobbies or high-placed patrons in Congress. Even this year, after Congress cut $38 billion from the budget, they live on.

Now, in the lull before the next budget battle, watchdog groups say these often-criticized programs show the difficulty of the task ahead.

“This is why Ronald Reagan said that a government program is the closest thing to eternal life that we’ve ever seen on Earth,” said Brian Riedl of the conservative Heritage Foundation. “If lawmakers can’t cut programs that cost a few million, how are they going to cut deficits that are going to be in the trillions?”

Among the survivors this year was the East-West Center, a Honolulu nonprofit that has long been one of the budget’s great immortals.

The center runs exchange programs for U.S. and Asian journalists and young professionals, conducts research and offers scholarships to study at the University of Hawaii. For 2010, President Obama’s budget proposed reducing its federal funding from $21 million to $12 million, arguing that this would encourage the center to seek other sources for money.

That went nowhere.

The center has a powerful ally in Congress: Sen. Daniel K. Inouye (D-Hawaii), the chairman of the Senate Appropriations Committee. Instead of shrinking by millions, the center’s subsidy went up by $2 million...

Buy American, overseas

At the Agriculture Department, the budget deal spared another untouchable: the Market Access Program.

The program costs about $200 million a year and pays to promote U.S. agricultural products in foreign markets. That could mean holding something as simple as a taste test in the aisles of Asian supermarkets, pitting California pistachios against Iranian ones.

In past years, this was one of the rare things that united Obama and the ultra-conservative Republican Study Committee.

The program’s “economic impact is unclear,” Obama’s 2011 budget said. It recommended a 20 percent cut.

“Taxpayers should not be forced to pick up the tab for this kind of corporate welfare,” said the GOP committee, whose members include 175 of 241 House Republicans. It recommended eliminating the whole thing.

But the program has powerful supporters: the U.S. farm lobby.

“It’s the government’s responsibility to help us counter the heavy subsidization enjoyed by our competitors,” said Michael Wootton, a senior vice president at Sunkist Growers and chairman of a coalition that has lobbied to keep the Market Access Program.

Sunkist, a nonprofit group of citrus growers that took in $1 billion in gross sales in fiscal 2010, got $4 million from the government through the program. Wootton said that advertising helps offset the benefits that foreign growers get from government subsidies and tariffs. “With that brand, and that identity, we’re able to effectively overcome the price differential” with cheaper foreign-produced products, Wootton said.

This year, Rep. Scott Garrett (R-N.J.) proposed a budget amendment that would have cut off the money for the program’s staff.

It never came up for a vote.

Quietly surviving

Other often-criticized programs have also survived without much debate. One of them, intended to clean up abandoned coal mines, sends millions every year to states that are finished cleaning up their highest-priority sites.

The Republican Study Committee has called for cutting this program. So did the bipartisan debt commission. So did Obama, starting in 2009.

“We cut $115 million from a program that pays states to clean up mines that have already been cleaned up,” Obama said the next year, as he laid out the reductions he planned in his budget.

It didn’t happen then. And it didn’t happen this year. The program, which state governments say they still need, was not altered by Congress.

Also unchanged: a program that pays cotton and peanut farmers to store their bales and bushels in warehouses. The idea is to let farmers keep their crop off the market while prices are low. The federal government will still budget $2 million a year, despite criticism from Obama and before him George W. Bush.

Not all of the budget’s immortals escaped serious cuts this year.

Congress eliminated $42 million for the Robert C. Byrd Honors Scholarship Program, named for the longtime senator from West Virginia. It cut $10 million from the National Drug Intelligence Center, a facility in Johnstown, Pa., promoted by House titan John P. Murtha (D-Pa.). And it took more than half the federal funds from the Denali Commission, an agency created by long-serving senator Ted Stevens (R-Alaska).

All three programs share one trait. Their champions in Congress — Byrd, Murtha and Stevens — all recently died.

Advisor to ex-NY comptroller gets prison sentence

2011-02-17T09:43:00.000-08:00

Advisor to ex-NY comptroller gets prison sentence
Feb 17, 2011
Reuters

Henry "Hank" Morris, the chief political advisor to New York state's former comptroller, has been sentenced to one-and-a-third to four years in prison for "orchestrating" a pension kickback scheme, New York Attorney General Eric Schneiderman said on Thursday.

This is the maximum sentence under the law, Schneiderman said of the wide-ranging corruption probe into how Morris exploited his ties to Democratic Comptroller Alan Hevesi to reap millions of dollars in fees paid by firms seeking to invest the state's $132.8 billion pension fund.

"Today's sentencing decision by the Court sends a strong message to New Yorkers that those who abuse positions of power to line their own pockets will be held accountable by this office, Schneiderman, who inherited the probe when he took up his current post in January, said in a statement.

Last November, Morris plead guilty to a felony, forfeited $19 million of the fees he was paid by investment firms and money managers, and was permanently banned from New York's securities industry. This is the first sentencing decision resulting from the investigation.

Andrew Cuomo, a Democrat who was the attorney general before he became governor in January, led the probe and netted eight guilty pleas...

Workers toppled a dictator in Egypt, but might be silenced in Wisconsin

2011-02-16T14:19:00.000-08:00

Workers toppled a dictator in Egypt, but might be silenced in Wisconsin
By Harold Meyerson
Washington Post
February 16, 2011

In Egypt, workers are having a revolutionary February. In the United States, by contrast, February is shaping up as the cruelest month workers have known in decades.

...But even as workers were helping topple the regime in Cairo, one state government in particular was moving to topple workers' organizations here in the United States. Last Friday, Scott Walker, Wisconsin's new Republican governor, proposed taking away most collective bargaining rights of public employees. Under his legislation, which has moved so swiftly through the newly Republican state legislature that it might come to a vote Thursday, the unions representing teachers, sanitation workers, doctors and nurses at public hospitals, and a host of other public employees, would lose the right to bargain over health coverage, pensions and other benefits. (To make his proposal more politically palatable, the governor exempted from his hit list the unions representing firefighters and police.) The only thing all other public-sector workers could bargain over would be their base wages, and given the fiscal restraints plaguing the states, that's hardly anything to bargain over at all.
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You might think that Walker came to this extreme measure after negotiations with public-sector unions had reached an impasse. In fact, he hasn't held such discussions. "I don't have anything to negotiate," Walker told the Milwaukee Journal Sentinel last week. To underscore just how accompli he considered his fait, he vowed to call in the National Guard if protesting workers walked off the job or disrupted state services...

Fresh conviction in Abramoff scandal: aide traded favors for World Series trip

2011-02-10T17:28:00.000-08:00

Fresh conviction in Abramoff scandal: aide traded favors for World Series trip
Christian Science Monitor
By Warren Richey
February 10, 2011

A former congressional staff member was convicted on Thursday of charges that he accepted an all-expenses paid trip to the 2003 World Series in exchange for inserting amendments favorable to a company into the Federal Highway Bill.

Fraser Verrusio was found guilty of all three counts in his indictment following a 10-day trial in federal court in Washington, D.C.

The case is a spinoff from the investigation of former lobbyist Jack Abramoff. Mr. Verrusio’s conviction brings to 20 the number of lobbyists and public officials who have pleaded guilty or been convicted in the Abramoff scandal.

In addition to conspiring to accept an illegal gratuity and accepting that gratuity, Mr. Verrusio was convicted of failing to report the gifts on his financial disclosure statement...

72 super PACs spent $83.7 million on election, financial disclosure reports show

2011-01-22T12:41:00.000-08:00

Industry giving to GOP House leadership
Washington Post
Jan. 21, 2011
The new House committee chairmen have in many cases received campaign donations from the industries their panels oversee.

72 super PACs spent $83.7 million on election, financial disclosure reports show
By T.W. Farnam
Washington Post
December 3, 2010

The newly created independent political groups known as super PACs, which raised and spent millions of dollars on last month's elections, drew much of their funding from private-equity partners and others in the financial industry, according to new financial disclosure reports.

The 72 super PACs, all formed this year, together spent $83.7 million on the election. The figures provide the best indication yet of the impact of recent Supreme Court decisions that opened the door for wealthy individuals and corporations to give unlimited contributions.

The financial disclosure reports also underscore the extent to which the flow of corporate money will be tied to political goals. Private-equity partners and hedge fund managers, for example, have a substantial stake in several issues before Congress, primarily the taxes they pay on their earnings.
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"Super PACs provide a means for the super wealthy to have even more influence and an even greater voice in the political process," said Meredith McGehee, a lobbyist for the Campaign Legal Center, which advocates for tighter regulation of money in politics.

American Crossroads, a conservative super PAC that outspent its peers, pulled in six- and seven-figure donations from the financial industry. That included $500,000 from Anne Dias-Griffin, founder of the Aragon Global Management hedge fund, and her husband, Kenneth Griffin, founder of the Citadel Investment Group hedge fund.

Crossroads, which was founded with the support of Bush administration adviser Karl Rove, raised $70 million, much of it used to support 10 Republican Senate candidates and 30 Republican House candidates...

Corporate contributions have surged for new Republican leaders in House
By Dan Eggen and T.W. Farnam
Washington Post
January 22, 2011

The new Republican leaders in the House have received millions of dollars in contributions from banks, health insurers and other major business interests, which are pressing for broad reversals of Democratic policies that affect corporations, according to disclosure records and interviews.

72 super PACs spent $83.7 million on election, financial disclosure reports show
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New Republican lawmakers are hiring lobbyists, despite campaign rhetoric
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Incoming GOP freshmen rapidly embracing big-money fundraisers
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Campaign cash: Who's spending where in 2010

Much of that money flowed to the GOP chairmen overseeing banking, energy and other key committees - leaders who will play a central role in setting the House agenda over the next two years.

The impetus behind such largess is simple: Many companies and industry groups hope House Speaker John A. Boehner (Ohio) and other Republicans will succeed in rolling back Democratic policies they find objectionable, including environmental and Wall Street regulations.

GOP lawmakers took their first step in that direction Wednesday by voting to repeal President Obama's health-care overhaul law. Major health-care firms and their employees gave Republican leaders at least $5 million over the past two years, including well over $2 million to Boehner and Majority Leader Eric Cantor (Va.), according to a Washington Post analysis of contribution data...

Petty Bickering Trumps Jobs Need as Republicans Vote to Repeal Health Care Reform
by Mike Hall
Jan 19, 2011

What do Republicans do with their first big chance as the U.S. House majority? Address the economy, create jobs? Nope. They vote to repeal health care reform. AFL-CIO President Richard Trumka says the action “signals that they won’t let go of old grudges to do the work of the people.”

The nation is in its 20th straight month with unemployment above 9 percent. The electorate in November told lawmakers to “focus less on petty partisan bickering and more on jobs, jobs, jobs,” says AFL-CIO President Richard Trumka.

But in their first significant action since taking majority control of the U.S. House, Republicans chose bickering instead of jobs and threw a huge hunk of red meat to their right-wing backers today by voting (245-189) to repeal the Affordable Care Act.

The action came, although repeal has no chance of succeeding—the Senate will not take the measure up and President Obama has said he would not sign it...

Will New Hampshire Supreme Court defend the 1st amendment or the mortgage company?

2009-06-23T16:21:00.000-07:00

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.

Gillian Tett studied J. P. Morgan and predicted financial meltdown

2009-06-22T14:43:00.000-07:00

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.

If these guys are so talented, how come they presided over system failure without a squawk?

2009-06-18T13:29:00.000-07:00

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)

Mr. Rangel is just one of many lawmakers who looked the other way when AIG and others needed regulations

2009-03-21T21:30:00.000-07:00

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 state official Indicted in Alleged $30 Million 'Pay-to-Play' Scheme

2009-03-20T12:09:00.000-07:00

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.

Election fraud in Kentucky

2009-03-19T20:31:00.000-07:00

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...

AIG Discloses $75 Billion in Bailout Payments

2009-03-16T16:01:00.000-07:00

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

AIG gets $173 billion, sends $93 to Wall St. and Europe; $165 billion in bonuses

2009-03-16T15:51:00.001-07:00

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...

Is the CEO cartel the enemy of capitalism?

2009-03-15T12:39:00.000-07:00

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...

Welfare for the Rich: Bank of America interferes with probe of Merrill Lynch CEO bonuses

2009-03-07T18:50:00.000-08:00

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.

Taxpayer money was used to prevent regulation, destroy Freddie Mac

2009-02-23T16:55:00.000-08:00

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.

The thinking behind bonuses for CEOs of failing companies

2009-02-15T18:15:00.000-08:00

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.

Bernard Madoff investors should have invested in Kiva.org or Microplace.com

2009-01-07T10:33:00.000-08:00

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...

Bernard Madoff tries to squirrel away some valuable assets

2009-01-06T14:06:00.000-08:00

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...

Let Big Oil pay for auto bailout

2009-01-05T11:45:00.000-08:00

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.

US is going after offshore tax evaders at UBS AG bank

2008-11-24T08:50:00.000-08:00

The real welfare queens are finally turning up in the sights of law enforcement.

UBS clients seek amnesty on U.S. taxes
Mon Nov 24, 2008
Reuters
Some wealthy clients of UBS AG are coming forward to make amends with U.S. tax authorities after a former UBS private banker was indicted, a sign that U.S. efforts to battle offshore tax evasion are having the desired effect, the Wall Street Journal reported on its website...

The UBS clients are hiring tax lawyers and pursuing amnesty through an Internal Revenue Service (IRS) voluntary disclosure program, the paper said.

Under the program, U.S. citizens would be allowed to avoid criminal prosecution if they acknowledge evasion and agree to pay taxes and penalties, the paper said...

Blind woman threatened with loss of home over 1-cent bill

2008-11-19T13:17:00.000-08:00

I'm wondering what percentage of human beings who work for public entities are so rigid that they would threaten someone with a $48 penalty for not paying a 1-cent bill.

Why wouldn't the worker simply pay the penny and then, if the worker felt this was an unacceptable financial loss, simply reimburse himself/herself the next time he/she passed by the spare-pennies container sitting out on the counter of a 7-11?

I doubt that the worker knew that the target of the threat was a 74-year-old blind woman. So that's not the point. The point is that it cost more to send the letter than to pay the bill, and it was gratuitously harmful to a citizen.

Mass. woman 1 cent debt to city paid by former city councilor she does not know
Associated Press
November 19, 2008
ATTLEBORO, Mass.

A 74-year-old blind woman's 1 cent debt to a Massachusetts city has been settled.

People from across the country called Attleboro City Hall on Tuesday offering to pay the 1 cent balance owed by Eileen Wilbur for an overdue water and sewer bill.

Antonio Viveiros, a former city councilor who does not know Wilbur, wrote a check for one penny. He says he was "irked" by the fact that the federal government can spend billions for bailouts, yet a senior citizen was threatened with a lien on her home over 1 cent.

Wilbur's daughter first noticed the letter that warned of a lien and a $48 penalty if the overdue bill was not paid by Dec. 10.

Mayor Kevin Dumas says the whole situation was blown out of proportion.

CEO bonuses: Will the people who caused the meltdown be rewarded in the bailout?

2008-11-01T18:06:00.000-07:00

Ten percent of $700 rescue package may go to bonuses
Bloggingstocks
Oct 19th 2008
by Douglas McIntyre

Wall Street walked into the path of its own oncoming stupidity. Of the $700 billion in Treasury rescue money, as much as $70 billion could go to bank and brokerage bonuses.

According to The Guardian, "Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year." The paper goes on to say that the Morgan Stanley (NYSE: MS) pool is large enough to buy the entire company when its stock was at a recent low.

Although this information get filed under "things you can't make up," it will probably have such a severe backlash that Congress will run hearings until the bankers have exhausted the extra money they are making on legal fees.

The contrary argument to punishing the firms is that some of the people getting big pay-outs work in departments that actually contributed huge sums of money to their parents.

If the management at these firms has any sense at all, they will pay nothing to the staff who worked in operations that lost money and file with the SEC to show the amount of operating income made from the operations where people are getting an extra check...

From AOL Money and Finance

A Goldman Hotshot Doles Out the Money

Neel Kashkari, a 35-year-old former Goldman Sachs whiz kid who believes in free markets, is getting the job at the Treasury Department of dispersing the government's $700 billion rescue. Is he really the right person for the job? Lots of observers have wondered if a seasoned vet with a little more political experience might be a better fit for the task at hand.

MA state senator Dianne Wilkerson accepted $23,500 in bribes

2008-10-29T10:00:00.000-07:00

Politician Allegedly Stuffed Bribes in Bra
By GLEN JOHNSON and DENISE LAVOIE
AP
Oct. 29, 2008

A state senator who lost the Democratic primary last month was arrested by the FBI on Tuesday and charged with accepting $23,500 in bribes from undercover agents she believed were local businessmen.

Sen. Dianne Wilkerson was charged with attempted extortion as a public official and theft of honest services as a state senator. She did not enter a plea during an initial court appearance Tuesday.

On the Take?

Massachusetts state Sen. Dianne Wilkerson was charged Tuesday with taking $23,500 in bribes from undercover FBI agents. This image made from video, which was included in an affidavit filed by the FBI, allegedly shows Wilkerson stuffing cash under her sweater and inside her bra on June 18, 2007.(Note: Please disable your pop-up blocker)

She faces up to 20 years in prison and $250,000 in fines on each count.
Wilkerson, 53, lost the Democratic primary in September to former teacher Sonia Chang-Diaz despite support from Mayor Thomas Menino and Gov. Deval Patrick. She is running a write-in campaign for the Nov. 4 election, in hopes of retaining the seat she has held since 1993.

Wilkerson was ordered Tuesday to have no contact with witnesses and retain any documents related to the extortion case or to her personal finances.

In asking for those conditions, Assistant U.S. Attorney John McNeil said Wilkerson has a "long history of acting as if she is above the law."

Code Pink rescues mother of Iraq casualty from foreclosure

2008-10-21T11:32:00.000-07:00

How a Victim of the Housing Crisis Was Saved from the Brink of Eviction

By Linda Milazzo
AlterNet
October 20, 2008
video

Code Pink, American News Project, and community organizers worked together to save a woman's home from the auction block.

Jocelyn Voltaire is an émigré from Haiti who has lived in this country for 45 years. She's a United States citizen, a college graduate, and the mother of four. She recently suffered the unbearable loss of her eldest son -- a Marine who had served in the Gulf. Atop the unthinkable pain of losing a child, Jocelyne's Queens, New York home of twenty years was set to be auctioned on Friday (October 17th), due to a predatory lender scam.

But miracles do happen! Thanks to the brilliant work of independent media, American News Project (ANP), which captured Jocelyn's story in the video below, and Codepink Women For Peace, who after seeing ANP's video launched an appeal for funds to stop the auction, Jocelyn's home was saved. Miraculously, in one day, Codepink raised $30,000 from 650 patriots who stepped up to "spread their wealth." Below is the incredible video produced by American News Project that captured the "heart" of Codepink and inspired Jocelyne's patriotic "angels."

Needless to say, corporate media was much too busy camped out at the home of plumber Joe to pay Jocelyne Voltaire any mind. It took the efforts of independent media heroes ANP, generous spread-the-wealth patriots, and the inspired community organizing of Codepink to let humanity prevail. As Codepink says,

While our government has taken billions of our tax dollars to bail out the wealthy, we came together to bail out a desperate mother We modeled exactly what we want our government to do -- bail out families facing personal disaster, not financiers...

But wasn't this exactly why Palin used Yahoo for state business in the first place?

2008-10-10T17:17:00.000-07:00

There is some concern that vice-presidential candidate Sarah Palin's emails might have been erased, since she was using Yahoo email to conduct state business. This problem will have to be added to a long list of concerns about disappearing public records, since the George Bush White House has seen tens of thousands of emails disappear even though government email accounts were used.

AOL News
October 10, 2008

"...Palin has occasionally used private e-mail accounts to conduct state business, and her Yahoo accounts were hacked last month. The hacking of Palin's private account was significant because it showed that using private e-mail accounts to conduct state business would be vulnerable to being exposed.

"It wasn't widely known that the governor and her staff were using private e-mail accounts until McLeod filed the first of several open records requests earlier this year that yielded some of the e-mail traffic — much of it redacted for what were deemed privacy reasons.

"'The judge ordered the attorney general to contact Yahoo and other private carriers to preserve any e-mails sent and received on those accounts. If the e-mails were destroyed when the accounts were deactivated, he directed state officials to have the companies attempt to resurrect the e-mails.

"'We shouldn't be in a position where public records have been lost because the governor didn't do what every other state employee knows to do, which is to use an official, secure state e-mail account to conduct state business," McLeod said after the 90-minute hearing.

"'It's a dereliction of the governor and her duties," she said."

Sarah Palin collected per diem allowance at home

2008-09-10T10:17:00.000-07:00

Palin Collected Money For Staying Home
By Tommy Christopher
Sep 9th 2008 10:59AM
Filed Under:eRepublicans, Featured Stories, 2008 President, Sarah Palin

By Tommy Christopher
Sept. 9, 2008

"...[T]he former governor was moose hunting and could not be reached to comment," the Washington Post is reporting today...

Alaska Gov. Sarah Palin has billed taxpayers for 312 nights spent in her own home during her first 19 months in office, charging a "per diem" allowance intended to cover meals and incidental expenses while traveling on state business.

The report goes on to say that the expense is within the applicable rules, but are these the actions of a lean, mean crusader against government waste?

On the other hand, the $16,9551.00 in per diem expenses she collected while staying at home could have been a lot more.

I understand she used Expedia to find the lowest fare from her living room to her kitchen...

Does Sarah Palin believe in reproductive privacy?

2008-09-07T11:22:00.000-07:00

Sandy Kerner of La Mesa, California wrote this letter to the San Diego Union Tribune:

"As soon as Sarah Palin allows me the freedom to choose how my family handles reproductive issues, I'll allow her privacy in how she handles hers.

"Until then, it's a fair topic of conversation."

Mat Wahlstrom of San Diego had this to say:

"...[Palin's] 17-year-old daughter... is the same teen they've been making take care of the candidate's own special-needs newborn..."

Blogger's note: I think some teens become pregnant as a cry for help without realizing that having a child is a serious matter. I hope Palin will get some help for her pregnant daughter, who missed five to eight months of school last year due to a case of mononucleosis.

Bristol is clearly not as tough as her mom, who flew in April from Texas to Alaksa, and then drove for several hours more, while being in labor all the while! Apparently Palin's water broke soon after giving a speech in the Longhorn state. It seems Palin didn't trust the obstetricians in Texas, or the ones in Anchorage. She believed she was better off in an airplane, and then a car!

In the light of personal experience, I hope Palin will rethink her stand on abstinence-only sex education and her big budget cuts to funds to support pregnant teens. If we have abstinence-only sex education, we need MORE support for pregnant teens.

Palin isn't ready for an interview, but she's ready to be a heartbeat away from presidency

2008-09-07T10:59:00.000-07:00

John McCain says his running mate Sarah Palin will be ready for an interview with the press "in a few days."

Maybe Paula Taylor of San Diego was right when she wrote to the San Diego Union Tribune:

"It appears that Sen. John McCain has entered the Internet age by using Match.com or eHarmony to find a running mate."

Will the media will treat scandalous donations to Bush's library as a big story? No, our standards have changed in 8 years.

2008-07-13T21:54:00.000-07:00

George Bush has made a mess of the world, and earned a reputation for lying about things like weapsons of mass destruction.

Bill Clinton made a mess of his sex life, and earned a reputation for lying about things like exactly where the line is drawn between playing around and intercourse. Also, there was a scandal about donations to his library.

I don't think that the questionable donations to Bush's library will become much of a scandal.

Somehow, the issue has faded in importance over the last eight years.

Chicago Tribune
Washington Bureau
"The Swamp"

Lobbyist: $200K gift to Bush library helps
The library rejects any discussion of money in exchange for any meetings
July 13, 2008

by Mark Silva

"Stephen Payne, a significant fundraiser for President Bush's election and reelection campaigns, certainly didn't know he was being videotaped when he suggested that he could arrange some meetings with Vice President Dick Cheney and others in the Bush administration with a big donation to the Bush presidential library.

"And Payne, a Houston-based lobbyist and longtime Bush-backer who has served as a volunteer travel-advance planner for White House trips abroad, later told the Sunday Times of London, which today reported on the videotaped meeting between Payne and a Kazakh exile in London purportedly seeking some high-level contact with the Bush administration for a friend back home, that he certainly intended no 'quid pro quo.''"

Dick Cheney hides health effects of climate change

2008-07-08T18:56:00.000-07:00

We knew his office was involved in hiding the truth about Iraq. It turns out Cheney doesn't want Americans to know about climate change, either.

Cheney's Office Pushed Purge Of Climate Change Testimony
By SIOBHAN HUGHES
July 8, 2008

WASHINGTON -- U.S. Vice President Dick Cheney's office was behind a push to censor congressional testimony that global warming poses a danger to the public, a former Environmental Protection Agency official told Congress.

The director of the Centers for Disease Control testified to a U.S. Senate panel last year about the public health effects of climate change in testimony that was heavily edited by the White House's Office of Management and Budget. Until now, Mr. Cheney's office hadn't been publicly linked to the efforts to keep information about climate change out of the public eye.

"The Council on Environmental Quality and the Office of the Vice President were seeking deletions to the CDC testimony," Jason Burnett, formerly an EPA associate deputy administrator, wrote in a letter dated July 6...

Is the Master of the Universe allowed to talk about Vaporware?

2008-06-28T10:32:00.000-07:00

Time Magazine INTERVIEW
By Philip Elmer-DeWitt, David S. Jackson
[Redmond, Wash., June 5, 1995]

Bill Gates displayed his well-known combativeness last month when TIME questioned him about Microsoft’s controversial business practices. These are excerpts from a two-hour interview with TIME technology editor Philip Elmer-DeWitt and San Francisco bureau chief David S. Jackson

...TIME: We’d like to ask you about some of the charges that have come out in court.

Gates: This is old, old stuff.

TIME: We’d like to have it on the record, if you wouldn’t mind.

Gates: Are you, like, a historical publication or a newsmagazine?

TIME: Just last January, according to Apple, you threatened to stop developing for the Macintosh. Is this true?

Gates: We at no time, in any way, have ever threatened to stop developing for the Macintosh. I don’t even understand what it would mean. It’s the most bizarre thing in the world. What would we get out of that? It’s a big revenue source. It’s a profitable business.

TIME: Borland [another Microsoft competitor] charges that you used vaporware [the preannouncement of a nonexistent product] to screw up the development of Turbo BASIC. Which you did, right?

Gates: No! If you’re accusing me of competition, then yes. You have to decide. Are we optimized to help competitors, or are we optimized to help customers? Should we be open about our plans?

Do you understand what is being said here? The question is, are you allowed to tell people what your products are in advance?

TIME: Isn’t the point that if you’re a small player and you pre-announce a product, it has no effect, but that when a large player preannounces, it can freeze out the competition?

Gates: I’d say that’s pretty nonsensical. Let’s say you take a market, like the cigarette market, and you ban advertising. Who benefits?

TIME: The manufacturer with the largest installed base.

Gates: Installed market share, totally. So let’s have an absolute ban. You may never talk about new products in advance. But people do talk about their plans. You know, it’s this damn free-speech thing. It’s well established that communications is valuable for the efficiency of marketplaces. That’s all procompetitive stuff. This assumes that you like capitalism.

TIME: We don’t live under free, unfettered capitalism. Isn’t that why we have antitrust laws?

Gates: When did antitrust come up in the discussion? Antitrust is the way that the government promotes markets when there are market failures. It has nothing to do with the idea of free information.

TIME: I guess in Judge [Stanley] Sporkin’s mind it does. He’s saying vaporware is an issue.

Gates: You have to laugh. I mean, this is a judge who goes off and intentionally reads a book [a biography critical of Gates called Hard Drive] in advance and asks about some of it. It’s minor. I mean, you’re either here to talk to me about Microsoft or talk to me about that stuff. This lawsuit has nothing to do with Microsoft. Nothing.

TIME: Are we supposed to ignore the fact that there is a complaint that has Microsoft’s name on it?

Gates: There are probably 60 cases with Microsoft’s name on them. There will be at all times. Period...

Republicans Block New Tax on Oil Profits

2008-06-10T10:49:00.000-07:00

Republicans are loyally protecting oil companies from the greed of the American consumer, proving that a large enough campaign donation in America is worth its weight in oil.

Republicans Block New Tax on Oil Profits
By H. JOSEF HEBERT,AP
2008-06-10

"Senate Republicans blocked a proposal Tuesday to tax the windfall profits of the largest oil companies, despite pleas by Democratic leaders to use the measure to address America's anger over $4 a gallon gasoline..."

Who's telling the truth, the prosecutors or the defense?

2008-04-29T12:33:00.000-07:00

"With all the witnesses that came forth that had immunity, you would have thought there'd be somebody that would have dropped a bomb or had the smoking gun..."

That's what a juror named Bruce said. He might not have as much experience as I do with perjury committed by the people you'd least expect it from. What good is immunity when you could still lose your job if you tell the truth? And be harmed in other, more subtle ways?

Whistleblowers are fired all the time, even though it's against the law.

On the other hand, it's clear (the Don Seligman case, for example) that US prosecutors go after innocent people for political reasons.

Why doesn't the legal profession care about the disreputable state of the American justice system?

Could the reason be money?

Here's a story from WTAE TV

Most Wecht Jurors Wanted To Acquit, Don't Favor 2nd Trial
'I'd Do Anything' To Stop A New Trial, Says One Jury Member

April 29, 2008

PITTSBURGH -- Five jurors in the federal mistrial of former Allegheny County Coroner Cyril Wecht said the jury favored acquitting Wecht on the majority of the 41 fraud and theft counts against him.

"With all the witnesses that came forth that had immunity, you would have thought there'd be somebody that would have dropped a bomb or had the smoking gun," said a juror identified only as Bruce.

Video: Wecht Jurors Speak Out

The 11-member jury deadlocked in federal court in Pittsburgh earlier this month, and U.S. District Judge Arthur Schwab scheduled a new trial on the same charges to begin May 27.

At a news conference Monday in the city's Summer Hill section, five of the jurors said they had been unable to find any criminal intent or scheme and they do not believe Wecht should be retried.

"I definitely feel it's a waste of taxpayers' money," said the jury foreman, identified as Bob. "I don't understand how they can find a juror that would convict him, to have 12 people be unanimous."

At one point, the jury was unanimous for a not guilty verdict on three counts of mail fraud for allegedly overbilling area district attorneys for mileage expenses, the jurors said.

By the time they deadlocked, the jury favored acquitting Wecht 8-3 on those counts and 24 more wire fraud charges.

The jurors said they favored convicting Wecht, 6-5, on 14 wire fraud and theft counts -- but that count would have been 6-6 if not for one member of their panel being excused for illness.

"I felt strongly that the prosecution did not present a strong enough case that there was a plan or a scheme or intent to defraud," a juror named Kimberly said.

Wecht is charged with mostly mail and wire fraud counts for allegedly having his county employees send invoices and other correspondence relating to his private practice from the coroner's office on county time.

Some jurors said they think the prosecution of Wecht is politically driven -- a claim his defense team has repeatedly made in public.

"I feel that there definitely could be some political motivations behind what's happening with Dr. Wecht," Kimberly said.

"Definitely politics, now that it's all said and done," Bob said. "Not so much that I thought that during the trial, but especially after you think about how quickly (prosecutor Gene) Stallings got up and said, 'We're retrying him' -- how quickly they had a date set."

"I don't know if it's politically motivated or not, but it seemed to me that the motivations were certainly less than pure. There was something behind it other than seeking justice," a juror named Linda said.

Jurors were also surprised that the government pressed ahead with announcing a second trial before hearing from them.

"I would do anything that it took if I could have an effect on there not being a future trial," Linda said. "I just feel that it would be punitive, that there's not a chance that another jury would find differently than we did."

The jurors said they're speaking out because they don't think the government will ever get the unanimous vote necessary to convict Wecht.

"We truly did try," said a juror named Dawn. "We went though count by count by count, just went through that barrage of paper, and it just was not there."

Wecht's defense team is asking to have Schwab removed from this case, alleging he's biased for the prosecution.

"The defense was not able to get a lot of information out to us," Dawn said. "A lot of it was stopped, and I just feel that he somewhat sided with the government."

U.S. Attorney Mary Beth Buchanan's office declined to comment on the jurors' remarks Monday.

http://www.thepittsburghchannel.com/news/16036614/detail.html

How did artificial blood get approved by the FDA?

2008-04-29T10:05:00.000-07:00

By Rob Stein
Washington Post
April 29, 2008

A new analysis concludes that the Food and Drug Administration approved experiments with artificial blood substitutes even after studies showed that the controversial products posed a clear risk of causing heart attacks and death.

SUBSTITUTES CALLED TOO RISKY: FDA Faulted for Approving Studies of Artificial Blood
BENEFITS, DANGERS
The review of combined data from more than 3,711 patients who participated in 16 studies testing five different types of artificial blood, released yesterday, found that the products nearly tripled the risk of heart attacks and boosted the chances of dying by 30 percent.

Based on the findings, the researchers questioned why the FDA allowed additional testing of the products to go forward and why the agency is considering letting yet another study proceed.

"It's hard to understand," said Charles Natanson, a senior investigator at the National Institutes of Health who led the analysis, which was released early by the Journal of the American Medical Association so the data could be presented at an FDA meeting on the subject. "They already had data that these products could cause heart attacks and evidence that they could kill."

An FDA official defended the agency, saying it had carefully weighed the risks and benefits of each study individually and had convened this week's two-day meeting to address the very concerns raised by the analysis.

"FDA independently was aware of essentially the same concerns that have been raised, and indeed that is the reason we have convened this scientific workshop and is the reason why we have made careful decisions about allowing some studies to proceed and others not to proceed," said Jay S. Epstein, director of the Office of Blood Research and Review. "Our point of view is that FDA has been highly vigilant in its oversight."

An artificial blood substitute that has a long shelf life and does not need refrigeration could save untold lives by providing an alternative to trauma patients in emergencies, especially in rural areas and in combat settings.

But attempts to develop such products have been marred by repeated failures and fraught with controversy, in part because some products have been studied under rules allowing researchers to administer them without obtaining consent from individual patients. Such trials were permitted based on the argument that there was no alternative because trauma patients are often unconscious and time is often too limited to obtain consent from a family member.

Natanson conducted the analysis after becoming concerned about the consistent risks emerging from studies of various versions of products known as hemoglobin-based blood substitutes. After the Washington-based consumer group Public Citizen sued the FDA to gain access to data submitted to the agency, Natanson and colleagues at NIH and Public Citizen pooled data from studies conducted between 1998 and 2007.

"It didn't matter what type of patient you studied. There was no one product that was responsible for this. It was similar regardless of the patient population studied, the company that manufactured the product, whether the study was published or unpublished, or the chemical characteristics of the individual products," Natanson said. "The effect was robust."

Based on the available data, Natanson and his colleagues said, the FDA could have been aware of the risk as early as 2000.

"Since this time they did five more trials," he said, including a 2004 study involving 714 patients in which 11 patients receiving an artificial blood had heart attacks and 47 patients died.

The earlier findings should have been disclosed so that doctors at hospitals considering whether to participate in the studies would be better informed about the potential risks.

"Keeping data from being public represents real risks to patients," Natanson said. "If secret science is allowed, other companies can't build on the successes and failures and [outside reviewers] won't be able to fully assess the risk."

But Epstein said the FDA did block some studies from proceeding and allowed them to proceed only when officials were satisfied that the potential benefits outweighed the risks.

"We have viewed each product in its own right. We have needed to consider the extent to which different products and different clinical circumstances warranted an independent assessment of the relative risks and benefits. We have done that in every case," Epstein said.

Although none of the products have been approved in the United States, at least one has been approved in South Africa. Five studies are ongoing in eight other countries, and the FDA is considering a request by the Navy to conduct another study of Hemopure, an artificial blood product made by Biopure Corp. of Cambridge, Mass., on 334 trauma patients.

Biopure condemned the analysis as fundamentally flawed.

"There are vast differences among these products that make any pooling of data flawed, especially across different clinical experiences," A.G. Greenburg, the company's vice president of medical affairs, said in an e-mail. "Moreover, the analysis of Biopure's experience, based on pooling of heterogeneous trials, we believe to be significantly flawed as it fails to meet the homogeneity criteria of meta-analysis, thus invalidating the conclusions."

But a former Biopure official said yesterday that he agreed with the analysis.

"The risk appears to be a class risk. It appears to be present for all products," said William D. Hoffman, director of the cardiac intensive-care unit at Massachusetts General Hospital in Boston, who was Biopure's medical director and chief medical officer from 1998 to 2000. "They should all be on hold until they figure out what is causing the toxicity."

Hoffman said he tried to get the company to halt an earlier study when he became concerned about the product's safety.

"I went to the leadership at the company at the time and was outvoted," he said.

http://www.washingtonpost.com/wp-dyn/content/story/2008/04/28/ST2008042802318.html