Tuesday, February 26, 2013

Wall Street wins again - Salon.com

Wall Street wins again - Salon.com:

Wall Street wins again

The secret truth: There never was a “task force” dedicated to ferreting out mortgage fraud

Wall Street wins againJPMorgan Chase CEO Jamie Dimon (Credit: Reuters/Yuri Gripas)
A year ago, President Obama gestured toward the first lady’s box at the State of the Union address at Eric Schneiderman, the attorney general of New York.  Schneiderman had just agreed to co-chair the Residential Mortgage-Backed Securities working group, an initiative between state and federal law enforcement officials and bank regulators, designed to investigate and prosecute fraudulent Wall Street activity that led to both the creation of the housing bubble and its collapse. In exchange, Schneiderman dropped his objections to a settlement over some of the banks’ fraudulent post-crash activity, particularly around fraud in foreclosure processing.
Recent profiles of this event have called last night’s State of the Union the “anniversary” of the formation of the working group.  But you can’t really have an anniversary of something that never existed in the first place.  There never was a Residential Mortgage-Backed Securities working group, never a so-called task force dedicated to ferreting out Wall Street fraud — the deceptive origination of mortgage loans, sale of worthless mortgage-backed securities for huge sums, and subsequent unloading of toxic debt to unsuspecting buyers. The working group fails to exist as a tangible entity to this day.  What does exist is the same years-old Financial Fraud Enforcement Group that serves as a conduit for press releases about investigative actions already in progress.
Schneiderman’s “task force” (a generous appellation) was merely a politically motivated shell organization grafted onto that public relations strategy.  This was evident almost from the moment of the announcement, but the coalition of self-proclaimed bank accountability advocates, who had backed the administration into a corner over the lack of prosecutions, decided to align with Schneiderman and his kabuki task force, losing whatever leverage they may have had.  If those same groups who feel “betrayed” and “lied to” had stayed on the outside and shamed those in power into action, we would probably have more accountability today.
Within a few months of the State of the Union announcement, a hearing in the House Financial Services Committee confirmed the essentially invisible nature of the task force.  Maxine Waters, then a senior member of the committee and now the Democratic ranking member, asked Robert Khuzami, then the head of enforcement for the Securities and Exchange Commission, whether the entity had sufficient resources to investigate.  Khuzami replied that the agencies involved – the SEC, the New York AG’s office and the Department of Justice – were supplying the resources.  No new dollars were dedicated to the effort.  When Waters asked when the task force would hire an executive director, Khuzami said they hired a “coordinator” to facilitate inter-agency activity.  Specifically, he uttered this incriminating evidence: “We hired a coordinator, but most of the investigative work being done here is not really being done by a staff that belongs to the task force, it’s being done by the individual investigative groups that make up the task force.”
This is the key point.  There are no offices, no phones and no staff dedicated to the non-task force.  Two of the five co-chairs have left government.  What “investigators” there are from the task force are nothing more than liaisons to the independent agencies doing their own independent investigations.  In the rare event that these agencies file an actual lawsuit or enforcement action, the un-task force merely puts out a statement taking credit for it.  Take a look at this in action at the website for the Financial Fraud Enforcement Task Force, the federal umbrella group “investigating” financial fraud.  It’s little more than a press release factory, and no indictment, conviction or settlement is too small.  The site takes credit for cracking down on Ponzi schemes, insider trading, tax evasion, racketeering, violations of the Americans With Disabilities Act (!) and a host of other crimes that have precisely nothing to do with the financial crisis.  To call this a publicity stunt is an insult to publicity stunts.
Consider the first of the few major cases to specifically come out under the aegis of the RMBS working group.  New York A.G. Schneiderman brought a suit against JPMorgan Chase over Bear Stearns’ fraudulent misrepresentations of mortgage-backed securities to investors.  The case, filed nine months from the start of the non-task force (but, strategically, one month before the presidential election), borrowed liberally from private litigation brought against Bear Stearns two years ago by the mortgage bond insurer Ambac.  The lawyer who authored that case, Karla Sanchez, left Ambac’s law firm, Patterson Bellknap Webb and Tyler, and went to work as an executive deputy attorney general for one Eric Schneiderman.  In other words, the big case from the vaunted “task force” was basically written two years earlier, by a lawyer working in Schneiderman’s office, with virtually no new information added to the claims.  Schneiderman could have filed this case any day over the last two years, without a scintilla of outside participation.  Subsequent cases also appear cribbed from either private litigation or existing investigations, and include little that’s new or noteworthy.
This P.R. effort served the interests of everyone involved except the interests of justice.  The Obama administration desperately wanted to complete the settlement with the biggest banks over the ongoing activity of foreclosure fraud, and wanted to get a growing outcry for holding bank fraud accountable under control before the election.  Schneiderman wanted the president’s seal of approval, and to project a positive image among progressives for “going after” the banks.  The banks wanted to settle as much of their liability as possible, protecting their profits and keeping executives out of jail.  They all got what they wanted.
The progressive groups who paid lip service to seeking bank accountability didn’t get what they claimed to want.  But they should have thought of that before jumping in with Schneiderman and offering unreserved praise for the un-task force before it even began to reveal itself as a fake.  The day of the announcement, the Campaign for America’s Future, MoveOn.org, the New Bottom Line, the AFL-CIO, the Campaign for a Fair Settlement and more all sent out glowing press releases touting the president’s leadership and the tremendous opportunity presented by the task force.  MoveOn called it “the biggest victory yet for the 99%.”  This was farcical.  The announcement collapsed the unified front against the foreclosure fraud settlement, which has delivered little meaningful relief to families and no accountability to Wall Street.  The task force never even got started.  These groups are now justifying their misjudgment by claimingSchneiderman “got played.”  Schneiderman doesn’t see it that way; he said definitively that he would leave the task force if he found it unworkable, and yet he’s not only sticking around but approvingly speaking of its efforts.  Someone got played, but it wasn’t Eric Schneiderman.
Maybe these groups who claim to be interested in accountability should have recognized the value of what pressured the White House to set up the diversionary tactic of a task force in the first place: public shaming.  Last month’s Frontline documentary “The Untouchables” has had arguably more of an impact on reviving moribund financial fraud cases than anything else.  Within a couple of weeks of its premiere, the head of the criminal enforcement division, Lanny Breuer, announced he would step down.  Then, DoJ suddenly decided to sue credit rating agency Standard and Poor’s over its conflict of interest in rating clearly fraudulent securities as safe assets, a case it had been investigating for two years.  You can view this as an accident of timing; it seems more like a direct response.  Shaming has done far more than a pretend task force, though that’s admittedly a low bar.  You would think outside pressure groups would have recognized the virtue of outside pressure instead of trying to play an inside game.
President Obama didn’t mention the task force in this year’s State of the Union, though he did say that homeowners now “enjoy stronger protections than ever before.”  He also made reference to a Burmese man, who, in reference to a presidential visit to Rangoon, reportedly said, “There is justice and law in the United States. I want our country to be like that.”  Hopefully they don’t get news about the “task force” in Rangoon; I wouldn’t want to burst the man’s dreams.
David Dayen is a freelance writer based in Los Angeles, CA. Follow him on Twitter at @ddayen

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Thursday, February 21, 2013

Rachel Maddow: Cutting government jobs wrong remedy for recovery

Rachel Maddow: Cutting government jobs wrong remedy for recovery:
(Republicans have cut Govt. jobs 720,000 in current near depression, since 2009. ) Never before have this path been taken during recovery - not during Reagan era, Bush I era, Bush II era nor Clinton era)
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Sunday, February 10, 2013

US Fiscal Debate Could Learn From Norway

US Fiscal Debate Could Learn From Norway:

US Fiscal Debate Could Learn From Norway

Friday, 08 February 2013 10:40By Mark ProvostThe Progressive Press | Op-Ed
If Washington sincerely wants to reduce the budget deficit and national debt while protecting the broader economy, it should learn from other nations which have succeeded. One country stands out: Norway.
Norway has the largest budget surpluses in the developed world, no net national debt, citizens enjoy a robust safety net, and unemployment is below 3%. (1) (2)
What is Norway’s secret, other than refusing to join the European Union?
Before the discovery of off-shore oil in the late 60s, Norway’s lackluster economy earned the nickname ‘Europe’s ugly duckling’. But Norway’s subsequent success has as much to do with public policy as their fortuitous location near petroleum reserves.
Norway’s overall tax as a share of GDP is among the highest in the OECD–for corporations, it is the highest. Norway’s corporate tax revenue as a share of GDP is above eight percent—the highest in the world and four times higher than the US. (3) By comparison, the US is the third lowest taxed country and the second lowest for corporations. (4) In other words, if a US company sought lower tax rates by relocating to another country, as they regularly threaten, there is only one country in the world they could go: Iceland. (5) Contrary to the myth of job creators, high rates have not crippled Norwegian entrepreneurs. In fact, Norway produces more successful business start-ups than the US. (6)
By far the largest source of Norway’s tax revenues is from off-shore oil and gas development. In addition to the 28 percent corporate rate, the government collects 50 percent surtax on oil and gas profits for a combined tax of 78 percent. (7) The majority of oil revenue is saved in a sovereign wealth account estimated at $640 billion—the largest in the world. (8) Norway limits the amount of oil revenue that can be spent on the annual budget to no more than 4 percent of the fund’s returns, although the government broke the rule during the global recession to prevent a collapse in spending.
The US also possesses one of the largest oil and gas deposits in the world, but profits from its development accrue in the accounts of Exxon and BP rather than the public ledger.
Numerous polls show Americans want their representatives to focus on jobs and the economy. Americans strongly oppose cuts to Social Security, Medicare, and Medicaid. Two of the most popular proposals for reducing the debt, aside from deep cuts in military spending, are raising taxes on corporations, as well as a windfall profits tax on oil companies. Fortunately, the solutions which are the most politically popular are also the most economically effective and morally defensible.
Norway’s economic miracle proves that responsible fiscal management starts with protecting the safety net and asking the people who have benefited the most to pay their fair share—the opposite of what the apostles of austerity tell us.
  1. Norway’s budget surplus largest in OECD
  2. Norway’s net national surplus
  3. Norway: highest corporate taxes
  4. US third lowest tax rate in OECD
  5. US corporate tax, second lowest
  6. Norway’s entrepreneurs love socialism
  7. Norway’s 78% oil tax
  8. Sovereign wealth fund

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Saturday, February 9, 2013

How the GOP Plans to Subvert, Buy and Obstruct the Vote in 2016

How the GOP Plans to Subvert, Buy and Obstruct the Vote in 2016:

How the GOP Plans to Subvert, Buy and Obstruct the Vote in 2016

Friday, 08 February 2013 09:31By Richard LongCampaign for America's Future | Op-Ed
GOP Controlling Washington.(Image: Lance Page / Truthout; Adapted:Terry FeuerbornGregory Hauenstein / Flickr)If you are reading this, you already know the national score from the November election.  The Democrats won the presidency, added two seats in the Senate, and won eight seats in the House by over 500,000 votes – while remaining in the minority.
But 2012 is old news.  Now, in Washington, focus is on the next opportunity, the next election.  In 2014, the goal for the GOP is the Senate. Republicans need six seats to overtake the current Democratic majority.  But the true prize is the presidency, coming in 2016.
Last year, Republicans tried to take back the White House and Senate by gaming the system. They failed, in their terms, because their candidate “too moderate” and several Senate candidates had “little slips of the tongue.” (Although to be fair, some very prominent voices said just the opposite; that the Republicans made “offensive remarks” and were being “the stupid party”). The voter suppression, er, registration laws that were supposed to turn states “red” for Romney were struck down before the election, or suspended until after this election.
However, progressives cannot rest on our laurels, and think that just because the GOP failed this time, they won’t try to manipulate their way back on top in 2014 and in 2016.  Already, lawmakers in GOP-controlled states that went blue in 2012 are talking of “hope” and “change.”  As in, “I hope we can compete in 2016 by changingthe way the president is elected.”  They will attempt to do this in several ways, as outlined “from the inside” superbly in a “memo” from the Democratic Strategist:
  • Change the electoral vote allocation system
  • Learn why their massive donation advantage failed them, and use funds more effectively
  • Continue efforts to lock out voters from the American political system
Subvert
The call for this change came from on high.   Reince Priebus wants Republican-controlled blue states to change the current winner-take-all electoral system, currently in place in 48 states, to a district-by-district or proportional system.  The truly maddening point of the district-by-district plan is that the two votes that come from the statewide seats would come from not the overall winner in the states, but whoever won more gerrymandered, GOP-favorable districts.
In Virginia, state Republicans voted to change this on the day they were sure to have a one vote majority; when a Democratic state senator and Civil Rights activist left Richmond on Martin Luther King Jr, Day to celebrate Barack Obama’s second inauguration. Other states considering this change include Florida, Pennsylvania, Ohio, Wisconsin, and Michigan. Notice that there are currently 30 states with Republican-control legislatures, but only six of these are being asked to change the way that they allocate electoral votes.
These proposals were met with immediate criticism from both left and right.  Obviously the Democrats would not stand for it, but Republican Virginia governor Bob McDonnell and GOP Vice Presidential candidate Paul Ryan have come out against the proposals. (Perhaps both with an eye on 2016.)  While the attempts to change the electoral allocation system seem to be at a standstill (except inPennsylvania, where it is very much alive), there are still other ways that Republicans could subvert majority rule.
Buy
It should surprise no one that Republicans can raise more private money than Democrats.  While both sides have big donors, in last election season the heavy-hitters were on the Republican side (despite the fact that many of these billionaires still made money hand over fist during Obama’s first term).  Unless Citizens United is overturned, this advantage will persist.
The 2012 election was the first post-Citizens United presidential election. Thus, it was the first time that Republicans got to try out their new toy — unlimited campaign contributions to buy elections.  Ultimately this effort failed, though the reasons why they failed are uncertain.  Karl Rove and the leaders of other GOP super PACs must be asking themselves: “Why didn’t it work this time?”, “Where could we have spent money more effectively?”, and “How can make that money to work for us better in 2016?”
That last question that should have progressives worried.  If Democrats didn’t have a well-oiled machine like Obama for America in 2012, or a candidate who drew voters from all demographics as the president did, Mitt Romney would probably be in the Oval Office today.  I am not sure another candidate like Barack Obama exists in the Democratic Party right now, or any other party for that matter.
To compete with the money that will be thrown around in 2016, Democrats must keep the internal structure of OFA alive to raise similar funds from the smaller donors as we did in 2012. Small donations from many donors did the trick in 2008 and 2012. It must continue if Democrats are to remain victorious in 2016.
Obstruct
Another fun way that Republicans tried to change the Presidential election and elections in general, was to introduce and pass restrictive voter registration laws. The measures were designed to prevent “voter fraud” — such a big problem that a grand total of 633 cases have been prosecuted since 2000, out of approximately 350 million votes cast.  That’s 0.0000018% of votes.  It’s a small number, to be sure, but that did not stop Republicans from trying to enact these laws.
On the surface, it is perfectly reasonable that we make sure everyone who votes is registered and voting in the right district.  However, these laws did target groups that tend to vote Democratic.  Signs bearing helpful reminders such as “Voter fraud is a felony!” popped up in heavily Democratic neighborhoods.
The Brennan Center compiled a rundown of all the states that considered restrictive voting laws,  and those that passed them.  Several of these laws were overturned or blunted, limiting their effectiveness in 2012. But some will still be on the books in 2016.  This means that Democrats need to either get these laws overturned, or (failing that) run campaigns to help their voters get IDs.
How to Keep on Rocking the Vote in 2016
The Republicans message after November’s shellacking was “If at first you don’t succeed, change the rules of the game so you can win the next time.”  These changes could be devastating in the absence of a candidate like Obama.  However, the Democrats still have a major advantage that’s for the American public to see:  The majority of Americans support the progressive message, and Democrats who ran on the progressive message won big in 2012.
The benefit for Democrats in continuing on this path, appealing to the majority by embracing progressive positions, seems obvious. These are also positions that the GOP cannot and will not take.
Democrats must preach a progressive message of pushing forward, whatever the circumstances.  The on the right will always try to halt that progress. This gave me pause as I watched the Inauguration. Even as the president publicly embraced progressive goals, some of those on the podium were already looking to undermine him and his party.
Voter suppression laws and the lack of big funders did not impede democracy this time around, but allowing the Republicans to change the rules in the middle of the game will.  For all Mitch McConnell’s whining over the potential changes to the filibuster, this is truly a nuclear option.
The GOP knows that they cannot compete unless they change. But instead of trying to compete, they’re trying to change. Change the rules of the game, that is.  This is more than a threat to Democrats or progressives. It is a threat to democracy itself.  At every turn, patriots believe in the vision our founding fathers passed down to us must defend that vision against these internal threats to our democracy.
This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

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