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

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

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?

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

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?

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

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

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.