TPMMuckraker April 5, 2009 - April 11, 2009
James Inhofe
Inhofe Aide To Launch New Global Warming Denialist Website
Remember Marc Morano?
He's the staffer for Sen. James Inhofe (R-OK) who's turned himself into the go-to guy for climate change denialism, sending out an email barrage to activists, journalists, Hill aides and others, in which he aggregates every misleading and flat-out false piece of "evidence" he can find to support the notion that, despite what scientists say, global warming really isn't something to worry about.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)Topics: Global Warming, James Inhofe
Hot Topic Inc.
Is The Economy Turning America's Children "Goth"?
The degree to which Americans have stopped shopping is getting almost as scary as our over-consumption used to be. Yesterday we learned that men worldwide had stopped buying underwear, a disturbing development because former Fed Chairman Alan Greenspan had famously fixed upon the metric as one of the most consistent, recession-proof sales figures in retail.
But it turns out demand for men's underwear is more elastic than we thought (even if, heh, the elastic itself isn't so much anymore.) Sales are projected to drop 2.3 this year. And elsewhere in the shopping universe, the February retail sales released yesterday portended a veritable bloodbath of red ink for the nation's mall retailers. The worst pain was reserved for Nieman Marcus and Abercrombie & Fitch, whose affluent customers cut back their habits to the tune of 30 and 34%, respectively. And the four chains that managed to keep sales flat or modestly up from February 2008 were off-price or discount stores. With one exception...
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)Topics: Hot Topic Inc., economic indicators, retail sales
Barack Obama
Not Just State Secrets: Obama Continuing Bush's Stonewalling On Gitmo Cases, Lawyer Claims
Yesterday we told you about the Obama Justice Department's invocation of a sweeping state secrets privilege in a warrantless wiretapping case. But that may not be the only area in which the new administration's war on terror tactics recall the worst excesses of the Bush years.
Last year, the Supreme Court ruled that detainees at Guantanamo had the right to appeal their detentions in federal courts. But since then, only a few cases have been completed. And in an interview with TPMmuckraker, David Cynamon -- a lawyer for four Kuwaiti Gitmo detainees who are bringing habeas corpus claims against the government -- said that the Justice Department has been consistently dragging its heels in the case, denying detainees their basic due process rights and furthering what he called the "abandonment of the rule of law."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (27)Topics: Barack Obama, George Bush, Guantanamo, Justice Department
CNBC
Newly Unemployed CNBC Star Dylan Ratigan Joins Class Struggle
Has former CNBC anchor Dylan Ratigan joined the leftist alliance lobbying the right-leaning business network to send its staff to re-education camp?
It didn't exactly seem that way when he abruptly left the channel two weeks ago over what appeared to be his contention that he deserved more money than network execs wanted to pay. In fact, after a few days off the former Fast Money host seemed downright baffled that strangers would associate his grievances with those of Tom Frank and Jon Stewart. "Ever since this started," he told CBS Marketwatch columnist Jon Friedman, "people think I'm some kind of [swear word ending in -ing] Che Guevara!"
Well, welcome to the insurgency, Dylan! Today he tells Henry Blodget of a consciousness-raising moment he experienced during the crisis...
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: CNBC, Dylan Ratigan
Wall Street
Wells Fargo's Rise From The Dead Redeems Sins Of All Banks, Says TIME Columnist
"More Quickly Than It Began, The Banking Crisis Is Over" declares longtime financial journalist Douglas McIntyre in a column posted this morning on the TIME website. Well miracles of miracles! Noting yesterday's news from Wells Fargo that the bank made more than twice analysts' projections during the first quarter and the positive buzz about the progress of the Treasury Department "stress tests" being run to assess banks' abilities to withstand further economic downturns, he wonders why the heck they're bothering to run "stress tests" at all. Isn't it obvious we're out of the woods?
Oddly absent from the discussion of how well Wells Fargo did is why the government was in the midst of testing bank balance sheets at all. The experts at the Treasury had been thrown off the scent and consequently had missed the fact that there was not need to test what is already working well. The same holds true for the Geithner plan to take toxic assets off bank balance sheets. It is academic now. What banks are earning from the difference between the cost of capital and the income from lending is now great enough for the banking system to be self-sustaining again.Hallelujah, but: zombie banks don't rise from the dead every day. On CNBC this morning CEO Howard Atkins credited Wachovia, the bank it hastily acquired in the thick of the panic of '08, for bringing the good news. And indeed, an analyst tells Forbes the Wachovia deal has been much more auspicious than experts initially expected, when Wells told analysts it anticipated writing down $10 billion in bad and "non-performing" loans held by Wachovia; thus far, they've only had to write down $77 million.
There's probably a very good reason for that, according to mortgage blogger Ken Watson -- the Financial Accounting Standards Board just relaxed mark-to-market accounting restrictions, meaning Wells can value those loans a bit more creatively than before.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)Topics: Douglas McIntyre, Wall Street, Wells Fargo, stress tests
Karl Rove
J. Edgar Rove? Bush's Brain Claims He Kept Loyalty File On GOP Rep
Did Karl Rove compile a "loyalty file" on former GOP congressman Tom Feeney? That's what Rove himself has reportedly claimed.
Politico reports on a chance encounter at Charlie Palmer's Steak last night between Bush's brain and Jason Roe, a former chief of staff to Feeney, the Florida congressman who was defeated for reelection last fall*.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (21)Topics: Allen Stanford, Jack Abramoff, Karl Rove, Tom Feeney
CDR
The New Mexico Corruption Probe: CDOs, Swaps And "Inappropriate Clothing"
The SEC has stepped into the corruption probe in New Mexico that saved Gov. Bill Richardson the hassle of amending years of tax returns. The new angle involves one of those enticing "toxic derivatives" deals we can't stop reading about, although there's a sexual harassment component, too.
Frank Foy used to manage the state teachers' pension fund, and in 2007 he says he got a call from a guy from a Chicago investment adviser -- and soon-to-be Richardson donor -- named Vanderbilt Capital Advisors. He told the Santa Fe Reporter he was too swamped to meet with him:
"This guy calls me up and says, 'I want to talk to you about a CDO.' I said, 'Call me back in a month. I don't have time to screw with it, dude,'" Foy recalls. "He didn't like that answer."The investment was the lowest-rated slice of a collateralized debt obligation -- called the "equity tranche", presumably because like a stock its value can go all the way to zero. (Which it -- surprise! -- essentially did, after paying out about $4 million in interest payments to the fund, according to State Investment Officer Gary Bland.) Vanderbilt's CDO was the most toxic brand of the sort of "toxic" securities dragging down bank balance sheets right now; most banks, according to this handy primer on CDOs, didn't attempt to sell them to investors. But Livney, a former head trader of asset-backed securities at JP Morgan, nabbed a $90 million investment from the teachers' pension fund, despite what Foy claims were his strenuous objections. Malott, Foy says, told him the investment had been ordered by Bill Richardson's chief of staff. Shortly thereafter, a female employee accused Foy of sexually harassing her, and he was demoted. PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)Soon after, Foy told the Reporter, he got a call from [Foy's Richardson-appointed boss Bruce] Malott. "He said, 'You were very rude to Pat Livney. I think he has a good investment and you ought to talk to him.'...I'd never been called by the chairman before. I thought, 'This stinks.'"
Topics: Bill Richardson, CDR, Rod Blagojevich
Barack Obama
Feingold: "I Am Troubled" By Obama's State Secrets Claim
Add the name of Sen. Russ Feingold (D-WI) to the growing list of observers who are deeply concerned by the Obama administration's invocation of the state secrets privilege in the Jewel v. NSA case.
Statement of Sen. Russ Feingold on the Obama DOJ's brief in Jewel:I am troubled that once again the Obama administration has decided to invoke the state secrets privilege in a case challenging the previous administration's alleged misconduct. The Obama administration's action, on top of Congress's mistaken decision last year to give immunity to the telecommunications companies that allegedly participated in the warrantless wiretapping program, will make it even harder for courts to rule on the legality of that program. In February, I asked for a classified briefing so that I can understand the reasons for the Department's decision to invoke the privilege in another case, and I intend to seek information on this new case as well. I also encourage the greatest possible public accounting of the use of the state secrets privilege and welcome the Attorney General's statement that he hopes to share his review with the American people.
Beyond the particular case at issue here, it is clear that there is an urgent need for legislation to give better guidance to the courts on how to handle assertions of the state secrets privilege. The American people must be able to have confidence that the privilege is not being used to shield government misconduct. That is why I am working with Senators Leahy, Specter, and others to pass the State Secrets Protection Act as soon as possible.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)
Topics: Barack Obama, State Secrets, Wiretapping
Barack Obama
Justice: We Invoked State Secrets Only "After Careful Consideration"
We told you yesterday about the developing consensus in opposition to the Obama administration's state secrets claim in the Jewel v. NSA case, in which the government is being sued over the warrantless wiretapping program.
Here's the Justice Department's statement on the matter:
The administration recognizes that invoking the states secret privilege is a significant step that should be taken only when absolutely necessary. After careful consideration by senior intelligence and Department of Justice officials, it was clear that pursuing this case could unavoidably put at risk the disclosure of sensitive information that would harm national security.PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)An examination by the Director of National Intelligence and an internal review team established by the Attorney General determined that attempting to address the allegations in this case could require the disclosure of intelligence sources and methods that are used in a lawful manner to protect national security. The administration cannot risk the disclosure of information that could cause such exceptional harm to national security.
While the assertion of states secrets privilege is necessary to protect national security, the intelligence community's surveillance activities are designed and executed to comply fully with the laws protecting the privacy and civil liberties of Americans. There is a robust oversight system to ensure this compliance.
Topics: Barack Obama, George Bush, Justice Department, State Secrets, Wiretapping
Barack Obama
Obama Website Slams Secrecy Claim That Obama Now Invokes
A great catch from our old friend Greg Sargent over at the Plum Line...
Barack Obama's campaign website still cites the fact that "the Bush administration has ignored public disclosure rules and has invoked a legal tool known as the 'state secrets' privilege more than any other previous administration to get cases thrown out of civil court." The site declares: "Secrecy Dominates Government Actions."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (13)Topics: Barack Obama, George Bush, Justice Department, State Secrets, Wiretapping
The Daily Muck
The Daily Muck
A congressional investigation released Thursday into a 2004 NASA study, which interviewed 30,000 pilots and was allegedly shut down by the FAA, failed to elaborate on the pilots' statements. The FAA reportedly stopped the study, claiming that the pilots over-reported instances where they hit large flocks of birds in the air, which caused a US Airways jet to land in the Hudson River in January. The investigation came to light in 2007, when the AP reported that it was shut down to avoid harming the FAA's image and profits. Rep. Bart Gordon (D-TN) told the AP that the study failed partially because it "didn't have the support it needed from the primary customer - the FAA." (AP)
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (7)Topics: The Daily Muck
Barack Obama
Expert Consensus: Obama Mimics Bush On State Secrets
Is the Obama administration mimicking its predecessor on issues of secrecy and the war on terror?
During the presidential campaign, Obama criticized Bush for being too quick to invoke the state secrets claim. But last Friday, his Justice Department filed a motion in a warrantless wiretapping lawsuit, brought by the digital-rights group EFF. And the Obama-ites took a page out of the Bush DOJ's playbook by demanding that the suit, Jewel v. NSA, be dismissed entirely under the state secrets privilege, arguing that allowing it go forward would jeopardize national security.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (38)Topics: Barack Obama, George Bush, Justice Department, Wiretapping
Berkshire-Hathaway
Barney Frank Rousts Credit Rating Firm For...Being Too Negative?
Credit rating agencies are coming under fire from Congress again -- but this time it's for being too pessimistic. After Moody's issued an unprecedented across-the-board negative credit outlook on all American cities and towns yesterday, House Financial Services Committee Chairman Barney Frank issued his own negative assessment of Moody's, and scheduled a hearing to investigate:
I am troubled by the action of Moody's Investors Service to issue a negative outlook across the board on America's municipalities, which could raise the interest rates on cities and towns making it more expensive to borrow funds for infrastructure improvements.On the face of it, this seems like a perverse round of messenger shooting. But last March, as cities and towns across the country started getting flooded with demands for huge payouts rooted in arcane details of "swap" contracts they'd inked with banks that managed their bond offerings, Frank discovered something truly perverse: the public sector was being scammed on multiple fronts by the investment banks underwriting their bond offerings -- and the profits directly fed the disastrous trade of risky mortgage-linked credit default swaps that hastened the financial meltdown.
The scheme started at the credit ratings agencies, which keep two sets of standards for grading corporate and municipal bonds -- and municipalities are held to a much higher standard, as Frank explained in a hearing using Moody's own data:
I will be giving out this chart, sectoral breakdown of Moody's rated issuers and defaulters, 1970 to 2000, general obligation bonds, there it is. Number of issuers 14,775. Number of defaults, 0.PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)
Topics: AIG, AMBAC, Barney Frank, Berkshire-Hathaway, Mel Watt, Moody's Investors Service, Muncipal bonds, Municipal finance
Alaska
Who Are The Stevens Six?
Earlier this week, Judge Emmet Sullivan formally dropped the charges against former Alaska senator Ted Stevens, thanks to prosecutorial misconduct. And Sullivan also announced that he's appointed a special prosecutor of his own to investigate contempt charges against the six Justice Department lawyers whose string of missteps -- the most serious of which involved withholding key evidence -- doomed the case. That misconduct is also the subject of an internal DOJ probe.
Since then, there's been a tangle of competing claims from all sides. We've seen some critics of the Bush administration suggesting that Justice intentionally sabotaged the prosecution, in order to let Stevens, a Republican, off the hook. Meanwhile, some of the more paranoid figures on the right are arguing that the entire prosecution was an (ultimately successful) effort by liberal DOJ bureaucrats to use bogus charges to create a cloud of suspicion around Stevens and thereby win another Senate seat for Democrats.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)Topics: Alaska, Eric Holder, Justice Department, Ted Stevens
George Will
Robinson: Will "Cross[ed] the Line" With Climate Change Distortions
Add Eugene Robinson to the rapidly growing list of Washington Posties who are sick of George Will's efforts to mislead readers about global warming science.
Via Mathew Yglesias, Asked by MSNBC's Rachel Maddow about the increase in "made up stuff" in the news lately, Robinson brought up his fellow Post columnist's string of distortions on climate change.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (6)Topics: George Will, Global Warming, Media
Alaska
Alaska Lawmakers Want Government To Apologize To Stevens
The Ted Stevens pity party continues.
The Associated Press reports:
Alaska lawmakers want the U.S. government to apologize to former Sen. Ted Stevens, whose corruption conviction was dismissed this week by a federal judge.PERMALINK | COMMENTS | RECOMMEND RECOMMEND (7)...
The Alaska House passed a resolution Wednesday calling for the apology to Stevens.
Topics: Alaska, Justice Department, Sarah Palin, Ted Stevens
The Daily Muck
The Daily Muck
Rep. Jesse Jackson Jr. (D-IL) confirmed that the Office of Congressional Ethics is investigating all connections he had with former Illinois governor Rod Blagojevich. In a phone conversation that was recorded by prosecutors, Blago said that a staff person for Jackson approached him offering to pay $1 million in campaign contributions if he would appoint Jackson to Barack Obama's vacant senate seat. In an email statement released Wednesday, Jackson said that he is cooperating fully with the probe and added, "I have done nothing wrong and reject pay-to-play politics." The Office of Congressional Ethics has thirty days to investigate the connection, at which point it will refer information to the House Ethics Committee to determine outcomes. (ABC News)
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics: The Daily Muck
Ken Lewis
Bank of America CEO Ken Lewis: Truly The Worst?
Now that the Obama Administration has started sacking CEOs, MoveOn asking its 3.2 million members to petition Treasury Secretary Tim Geithner to issue Bank of America CEO Ken Lewis's pink slip next, in a move that appears to be related to the union pension fund-led proxy battle to get bank shareholders to vote him out at the annual meeting later this month. Yesterday Stephen Lerner, a division director of the Service Employees International Union, went on Ed Schultz's new MSNBC show to lambaste the $35 million in pay Lewis had taken home over the past two years when the average teller makes $21,000 a year.
But antipathy toward Lewis is bipartisan. Yesterday Jerry Finger, who manages a Houston-based pension fund and contributed more than $35,000 to Republicans last year, added his 1.1 million votes to the cause, along with a flashy red, white and blue website encouraging fellow shareholders to "vote for change."
But is Lewis really the worst? If any unforgivably reckless institution on the "too big to fail" list deserves more pushing around from the feds, it's Citigroup. And today the influential analyst Meredith Whitney, a relentless critic of the banking sector, praised Lewis and said he should keep his job.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)Topics: Ken Lewis
Eric Holder
Justice Official Who Probed US Attorney Firings Will Now Lead US Attorneys Office
The Justice Department's Office of Professional Responsibility -- which has lately been in a number of internal DOJ investigations into high-profile issues -- will soon have a new chief.
The Washington Post reports that Attorney General Eric Holder will name as the head of the office Mary Patrice Brown, a respected career prosecutor who currently leads the criminal division at the US Attorney's office for Washington DC. Brown will replace Marshall Jarrett, who has been there since 1998, and will shift over to lead the executive office of the US Attorneys.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics: DOJ Office of Professional Responsibility, Eric Holder, Justice Department, U.S. Attorneys
Bailout
Conflicted Sununu: The Real Problem Is That CEO Pay Limits Are Too Tough
Yesterday, the panel overseeing bailout spending on behalf of Congress issued its latest hard-hitting report, which criticized the Treasury Department's approach to the program and called for top execs at major banks to be fired.
But perhaps the most interesting thing about the report is the "alternative view" that accompanied it, from Republican panel member John Sununu.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)Topics: Bailout, Financial Crisis, John Sununu, Treasury Department, Wall Street
UBS
Rich People Sobbing In Fear As UBS Bars Swiss Bankers From Leaving The Country
Steven Michael Rubinstein, the Art Basel-going yacht builder's accountant from Boca Raton who last week became first American prosecuted in a sweeping probe of tax shelters since the Swiss government ordered the bank to hand over the names of some 300 of its clients to the IRS, was released today on $12 million bail, the latest development in the intensifying probe of tax shelters. But not everyone involved in the investigation of what UBS itself called a "scheme to defraud the American government" is enjoying freedom of movement: also today the Wall Street Journal reports the bank has barred its "client facing" bankers from traveling overseas -- a move "aimed at avoiding further trouble" of the sort UBS bankers like Brad Birkenfeld flirted in the good old days before the crackdown:
Brad Birkenfeld was a frequent trans-ÂAtlantic flier. He lived and worked in Switzerland, dividing his time between an apartment in Geneva and a house in Zermatt, an Alpine village at the base of the Matterhorn. But his biggest client was in California, and however grueling the trip through nine time zones was, it was worth it...He was willing to go the extra mile for his clients, so he didn't blink when one of them asked him to do something that was blatantly illegal by any country's standard: Buy diamonds with secret Swiss funds and bring them into the U.S. undeclared and undetected.To get them into the country, Birkenfeld had only one option. He had to smuggle them in...So Brad Birkenfeld, a banker at one of the most prestigious institutions in global finance, began jamming his clients' loose diamonds into a tube of toothpaste.PERMALINK | COMMENTS | RECOMMEND RECOMMEND (36)
Topics: Igor Olenicoff, Steven Michael Rubinstein, UBS
Alaska
Did Mukasey Ignore Evidence Of Misconduct In Stevens Case?
Buried in the news about charges against Ted Stevens being dropped, there's an additional serious indictment (as if more were needed) of the Bush Justice Department -- and specifically, of Attorney General Michael Mukasey.
Reporting from yesterday's hearing, at which Judge Emmet Sullivan formally announced that the charges would be dropped, the Washington Post notes:
When the judge heard that Stevens's attorneys sent three letters about prosecutorial misconduct to former Attorney General Michael Mukasey but received no response, he called it "shocking -- but not surprising."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (23)
Topics: Alaska, Eric Holder, Justice Department, Michael Mukasey, Ted Stevens
Morgan Keegan
"What The Hell Are Alabama Residents Doing Trading Swaptions?" Just Ask Tennessee...
A day after the credit rating agency Moody's issued an unprecedented blanket negative outlook report on the debt of all American cities and towns, a fascinating New York Times story today further illuminates the process by which so many small municipalities signed on to risky derivative securities contracts that exploded on them last year, in some cases quadrupling their interest payments.
The story focuses on Tennessee and the Memphis-based investment bank Morgan Keegan, which recently celebrated its rise to top underwriter status in the state and the south central U.S., managing a whopping 39% of Tennessee bond issuances last year.
Tennessee is one of few states with laws requiring public officials charged with approving derivatives deals to attend "swap school" to learn about the risks and complexities of the contracts. The state comptroller says he asked business professors to write the swap school textbooks, but when they declined the task was left to...Morgan Keegan, which had also been retained as an adviser to many of the state's towns.
In many corners of Tennessee, the first anyone heard of interest-rate swaps was from C. L. Overman, a vice president of Morgan Keegan who assured officials that the deals carried little risk, city and county officials said.Then a few months ago, according to the Times, Overman called to tell county officials they had a few weeks to refinance an $18 million bond or pay a quadrupled quarterly payment of $700,000. Perhaps unsurprisingly, Morgan's swap school curriculum understated such risks, and the Times has the textbook to prove it. The big risk factor they missed? It's a familiar one: PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)"He told us it would be a good thing and there wasn't much downside," said Mayor Duncan of Claiborne County.
Topics: CDR, Morgan Keegan, Municipal finance
George Will
WaPo's Anti-Will Uprising
Is there an anti-George-Will critical mass building at the Washington Post?
Just in the last few days, we've seen three separate efforts, from three separate sections of the paper, to push back against the bow-tied columnist's well-chronicled deceptions on global warming.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (14)Topics: George Will, Global Warming, Media
The Daily Muck
The Daily Muck
A Congressional ethics board opened an investigation last week into Rep. Jesse Jackson Jr. (D-IL) to probe the Congressman's role in the scandal of former Illinois governor Rod Blagojevich, who is accused of trying to sell Barack Obama's vacant senate seat. Investigators have asked parties related to the ex-governor to release documents showing correspondence with Jackson. The head of the Office of Congressional Ethics said that Jackson has not been accused of wrongdoing, and that the probe is only a fact-gathering entity that does not have subpoena power. (Chicago Sun-Times)
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)Topics: The Daily Muck
Sheila Bair
The Strange Campaign Against Sheila Bair And The FDIC
FDIC Chairman Sheila Bair has been under attack recently in various quarters of the crisis blogosphere in a campaign that culminated this morning in a critical New York Times column today by Andrew Ross "Let Those AIG 'Brainiacs' Keep Their Bonuses" Sorkin, who takes issue with her agency's agreement to guarantee all the non-recourse loans Treasury's toxic asset buyout plan is promising private investors to leverage their bets.
So how much does the F.D.I.C. think it might lose?So what's the problem here? It's not as if Bair is afraid to project a loss for her agency. The biggest concern about the plan is that it will enrich Wall Street at the expense of real prices -- especially if banks use the funds to bid up each other's bad loans as envisioned by this blogger we read on Felix Salmon's blog: PERMALINK | COMMENTS | RECOMMEND RECOMMEND (3)"We project no losses," Sheila Bair, the chairwoman, told me in an interview. Zero? Really? "Our accountants have signed off on no net losses," she said. (Well, that's one way to stay under the borrowing cap.)
By this logic, though, the F.D.I.C. appears to have determined it can lend an unlimited amount of money to anyone so long as it believes, at least at the moment, that it won't lose any money.
Here's the F.D.I.C.'s explanation: It says it plans to carefully vet every loan that gets made and it will receive fees and collateral in exchange. And then there's the safety net: If it loses money from insuring those investments, it will assess the financial industry a fee to pay the agency back.
Topics: Sheila Bair
AIG
Warren: Fire Top Management At AIG and Citi
We're late to this, but it looks like Elizabeth Warren, the Harvard Law professor who chairs the Congressional Oversight panel for the TARP funds, is upping the ante.
After several months of raising the alarm about the Treasury Department's failure to attach strings to the bailout funds, to little apparent effect, Warren will issue a hard-hitting report this week that broadly indicts the Obama administration's approach to the financial crisis, reported the British paper The Observer over the weekend.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (34)Topics: AIG, Bailout, Citigroup, Elizabeth Warren, Financial Crisis, Treasury Department, Wall Street
Global Warming
Will's Global Warming Distortions Called Out ... By Washington Post
It looks like some members of the Washington Post's news section are fighting back against George Will's efforts -- aided by the paper's editorial page -- to mislead readers about global warming.
Via Grist's Dave Roberts: Deep down in a story about the alarming thinning of Arctic sea ice, triggered by global warming, Washington Post reporters Juliet Eilperin and Mary Beth Sheridan write:
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (17)Topics: George Will, Global Warming, Media
Bailout
Congress To Probe Geithner's "Special Purpose" Plan To Skirt Pay Caps On Bankers
Yesterday we puzzled over the mixed messages we were hearing from Obama officials over the veracity of a Washington Post report that it was using Enron-style "special purpose vehicles" to undermine executive pay restrictions on bailed out banks: senior adviser David Axelrod sheepishly defended the strategy on one Sunday talk show, while Tim Geithner denied it altogether on another. But newly-promoted House Oversight Chairman Ed Towns is getting to the bottom of it, reports the Post today, in a story that sheds some much-needed light on the conflicting stories: the strategy began with the Treasury Department's $1 trillion consumer and business lending initiative, which is in part an expansion of the Federal Reserve's Term Asset-Backed Securities Loan Facility, which is open to the American subsidiaries of foreign banks, which Treasury presumably wants to participate in the programs without having to deal with the added diplomatic headache of subjecting foreign bankers to rules designed to satisfy American voters. Unsurprisingly, not everyone in Congress is opposed to that.
A senior House aide said he agreed with the Treasury's policy and that he believed a recent vote by the House on another piece of executive compensation legislation showed that Congress did not intend the restrictions to apply to firms that did not receive direct capital injections. The aide spoke on condition of anonymity because he was not authorized to comment.Oversight sees things differently, however. PERMALINK | COMMENTS | RECOMMEND RECOMMEND (4)
Topics: Bailout, David Axelrod, Edolphus Towns, Oversight Committee, Tim Geithner
PIMCO
PIMCO Manager On Being 'Fourth Branch' Of Government: Who, Us?
A mere fortnight ago Bill Gross, who manages the world's largest bond fund PIMCO, was singing the praises of the Treasury Department's newly-unveiled Public Private Investment Program in the media, which the media in turn credited for the stock market rally that immediately followed. But in any event, Gross's endorsement of the plan hardly a surprise, since 1. PIMCO holds more than $118 billion in mortgage-backed securities 2. including one fund that has lost 34% of its value since its 2007 inception and 3. oh yeah, the plan was in part Bill Gross's idea. By the time the week was out PIMCO was being dubbed the fourth branch of government.
Now PIMCO is not very subtly distancing itself from the PPIP, which has only gotten less popular as its details have emerged. This morning, on the heels of yesterday's stock market selloff that accompanied the Treasury Department announcement that it was extending the deadline for PPIP applications and clarifying that applicants would be considered "holistically" (i.e. that demonstrated ability to raise $500 million requirement is now more like a rule of thumb) PIMCO Chief Investment Officer Mohammed Al-Arian went on Squawk Box to talk markets with celebrated (by CNBC anyway) stock picker Mario Gabelli, who couldn't resist getting in a dig at PIMCO for the plan's self-defeating "competitive restraint." The fun starts about 7:54 in, transcript after the jump.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics: PIMCO
Alaska
Keying Off Stevens Decision, Siegelman Steps Up Push To Have His Own Charges Dropped
In the wake of the charges being dropped agaisnt Ted Stevens, is pressure building on the Justice Department to make a similar decision on behalf of Don Siegelman?
A lawyer for the former Alabama governor -- who last week told TPMmuckraker that the misconduct in his own case "dwarf[s]" that in Stevens' -- sent a letter Friday to Attorney General Eric Holder, asking that Holder review the evidence of "serious and pervasive" prosecutorial misconduct in Siegelman's case.
Topics: Alaska, Don Siegelman, Justice Department, Karl Rove, Ted Stevens, U.S. Attorneys
Alaska
Stevens Judge Seeking Contempt Charges
It looks like Judge Emmet Sullivan didn't just leave things at a few harsh words for those government prosecutors who botched the Ted Stevens case by failing to hand over evidence.
Politico reports that the judge will seek contempt charges against the six-person prosecution team for their misconduct. That team includes William Welch, the head of the Public Integrity Section, Brenda Morris, the lead prosecutor in the case, and trial lawyer Nicholas Marsh, all of whom were replaced earlier this year, as a result of the missteps.
Sullivan also appointed a lawyer, Henry Schulke, to investigate the Justice Department in relation to the contempt issue. DOJ has said that its Office of Professional Responsibility is conducting its own probe of the misconduct, but clearly Sullivan wants an independent inquiry.
This could get interesting...
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics: Alaska, Justice Department, Ted Stevens
Alaska
Dismissing Charges, Stevens Judge Slams Government Misconduct
The judge in the Ted Stevens case has granted the government's motion to drop the charges against the former Alaska senator -- but not before slamming the government prosecutors on the case.
"In nearly 25 years on the bench, I've never seen anything approaching the mishandling and misconduct that I've seen in this case," U.S. District Judge Emmet Sullivan said at a hearing on the government's motion, reports the Associated Press.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)Topics: Alaska, Justice Department, Ted Stevens
Bernard Madoff
Times Editor: Lack Of Disclosure On Merkin Op-Ed Is No Big Deal
Here's another one to add to the growing list of "newspapers acting badly"...
Late last month, the New York Times published an op-ed by Daphne Merkin, a contributing writer to the Times Magazine, on the Bernie Madoff mess. The curious premise of the piece seemed to be that Madoff's "victims" (the quote marks are Merkin's) aren't really blameless, since "no one was holding a gun to anyone's head, saying sign up with Mr. Madoff or else."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (37)Topics: Bernard Madoff, Financial Crisis, Media, Wall Street
The Daily Muck
The Daily Muck
Dawn Gibbons, the first lady of Nevada, has accused Republican Governor Jim Gibbons of infidelity with two women, including a former Playboy model, in divorce papers filed recently. Mrs. Gibbons also claims that the Governor sent 860 improper text messages to an aide, Kathy Karrasch, from a state cell phone. Gibbons repaid the state $130 for the text messages but says that they were not "love notes" and that he was consulting with Karrasch on state business. In court documents, Mrs. Gibbons said that this claim "is false, and is laughable." Gibbons has been accused of improper relations with women in the past, including Chrissy Mazzeo, a former cocktail waitress who is suing Gibbons for allegedly assaulting her in a Las Vegas parking lot. (LA Times)
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (11)Topics: The Daily Muck
CIA
Red Cross: CIA Interrogation Program Was "Inhuman"
The journalist Mark Danner has obtained the entire report on torture by the International Committee of the Red Cross, which he published excerpts from last month. The report has been posted on the website of the New York Review of Books. Danner's new writeup of it is here.
The major new revelation concerns the active participation of medical officers in the interrogation of terrorism suspects in CIA secret prisons. The report, written in 2007, concludes that these officers committed gross violations of medical ethics, and in some cases participated in torture. The report called the CIA program "inhuman."
Topics: CIA, George Bush, Intelligence, Torture
Allen Stanford
In Interview, Stanford Plays World's Smallest Violin
Texas billionaire Allen Stanford has given ABC News his first interview since being charged by the SEC with orchestrating a massive Ponzi scheme. And he doesn't offer a sympathetic portrait.
Amid protestations of innocence -- "I would die and go to hell if it's a Ponzi scheme," and "if it was a Ponzi scheme, why are they finding billions and billions of dollars all over the place?" -- Stanford revealed he expects to be indicted by a federal grand jury in the next two weeks. (A senior official at the Justice Department told ABC News the case is "moving along rapidly.")
Topics: Allen Stanford, Financial Crisis, Justice Department, Securities and Exchange Commission, Stanford Financial Group
Tim Geithner
Is The White House Helping Bailed Out Banks Skirt Pay Caps? Depends What Channel You're Watching
On Saturday the Washington Post reported that the administration was doling out federal bailout money via "special purpose vehicles" to help banks skirt restrictions on the funds imposed by Congress -- including, naturally, limitations on executive pay. In a move a former Justice Department attorney equated to "money laundering," the story further specified that the White House had concluded that the conditions ought not to apply in "at least three out of five initiatives funded by the rescue package."
The story quoted Treasury spokesman Andrew Williams defending the strategy, and on Sunday senior Obama adviser David Axelrod, despite his reported distaste for Treasury's lenience on the banks, went on Fox News Sunday and towed the Treasury line when Chris Wallace brought up the report.
But a bit later the same morning on Face the Nation the policy seemed to have changed -- if you believed Treasury Secretary Tim Geithner's unequivocal denial to CBS's Bob Schieffer that any such plan compensation-restriction avoidance plan existed:
Transcripts after the jump:
Topics: Bailout, David Axelrod, Tim Geithner
CDR
Blago's Risky Bet On Derivatives
The Rod Blagojevich pay-to-play scandal may seem like an anachronistically simple big city machine politics scandal next to the ever-widening web of inscrutably interrelated financial scams comprising the on-going financial crisis. But in brokering deals with public coffers, at least, Blago liked "exotic" derivatives as much as the next hedge fund guy.
In January 2004, the Illinois pension obligation program was $36 billion in the hole, the most indebted state pension program in the country. So Blago decided to refinance, taking advantage of the era's superlow interest rates to float $10 billion in "exotic" new bonds in the country's biggest pension bond offering on record. Bond Buyer named it the Midwest Deal of the Year at the time -- not just for its "complex" pricing but its use of derivatives, which had just been legalized by the state legislature the year earlier. It was the start of a new trend, the trade publication noted:
Since Gov. Rod Blagojevich took office in January 2003 faced with a nearly $5 billion budget deficit, his finance team - which includes former financial advisory professional John Filan and quantitative analyst and investment banker David Abel - has turned to more sophisticated techniques to manage state finances. Supporters have called them creative, while critics have labeled them dangerous.
The deal alone netted investment banks $35 million in fees, including $8 million for the lead underwriter Bear Stearns, which in turn delivered a $809,000 consulting fee to a firm called Springfield Consultants run by lobbyist Robert Kjellander. The fee caused much furor in the Illinois statehouse when Bear Stearns disclosed it in an SEC filing, especially after initial probes launched by the state Inspector General revealed the firm could not produce any evidence that Kjellander, a prominent GOP lobbyist and friend of Karl Rove, had done anything to earn the fee.
The investigation swung into high gear when a hospital president named Pamela Davis got an unsettling phone call at her house from a Bear Stearns executive:
Back in 2003, Davis was trying to get approval for a new medical office building from the Illinois Health Facilities Planning Board. A night or two before a hearing was to be held, Davis recalled, something strange happened. A business acquaintance of hers, Nicholas Hurtgen, then a managing director of the Chicago office of Bear Stearns, called her at home and told her that unless she agreed to use a certain contractor she should pull her building request, because it wasn't going to be approved.The FBI wouldn't confirm or deny Davis' story to the New Yorker, but she says she spent seven months secretly recording conversations with Hurtgen and his cronies, eventually filing a sealed federal whistleblower lawsuit alleging that Hurtgen, a former protege of former Wisconsin governor and Bush cabinet member Tommy Thompson, was part of a massive pay-to-play scheme that somehow linked the bond offering to the hospital.She ignored the warning and went off to the board hearing, where she was surprised to find that her request was denied. "I was humiliated," she said. "They were mean. So I walk off, and then a different guy comes up to me and he says, 'We told you to pull your project. Call me.' And right then I decided to call the F.B.I."
The details are still unclear, but some of that $809,000 allegedly made its way back to Tony Rezko, who in turn split the bounty with three friends -- one of whom was Blago, according to last week's indictment, which refers to Kjellander as a "lobbyist" according to the Chicago Tribune:
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)Topics: Bill Richardson, CDR, Rod Blagojevich
Allen Stanford
Lawyer: Stanford Number 2 Helping To Probe Billionaire's Money Trail
The walls around Allen Stanford appear to be closing in ever tighter.
David Finn, a lawyer for Jim Davis, the number 2 man at Stanford Financial, tells Bloomberg that Davis is helping investigators track Stanford's European assets, focusing on Swiss banks.
In addition to potentially helping to build a criminal case against Stanford, tracking the assets could help repay victims of Stanford's alleged fraud.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (7)Topics: Allen Stanford, Financial Crisis, Jim Davis, Securities and Exchange Commission, Stanford Financial Group
Bernard Madoff
Madoff Associate Who Ran Feeder Fund Is Charged With Fraud
The high-profile proprietor of a second feeder fund has been charged in connection with Bernie Madoff's multi-billion dollar Ponzi scheme.
A civil fraud lawsuit filed by New York Attorney General Andrew Cuomo charges Ezra Merkin, the former chairman of GMAC, and a prominent Madoff associate and New York philanthropist, with "betraying hundreds of investors" by placing billions with Madoff without their knowledge, reports the Wall Street Journal.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)Topics: Andrew Cuomo, Bernard Madoff, Financial Crisis, Wall Street
The Daily Muck
The Daily Muck
The State Department's decision to replace Blackwater Worldwide as its primary defense contractor in Iraq may be little more than a name change. Though Blackwater -- recently renamed "Xe" -- has been widely criticized and investigated on criminal charges for its role a 2007 firefight that left 17 Iraqi civilians dead, most of its security guards will return to Iraq next month wearing the uniform of the State Department's new contractor Triple Canopy. Susan Burke, an American lawyer representing Iraqi civilians in civil lawsuits against "Xe" told the New York Times, "They're really all still there, and it's back to business as usual." (New York Times)
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics: The Daily Muck
Eric Holder
Stevens Judge Weighing Sanctions Against Prosecutors
The charges against Ted Stevens may be about to be dropped -- but the fallout isn't over.
The judge in the case yesterday ordered the Justice Department to hand over documents relating to allegations of prosecutorial misconduct in the case, reports the Washington Post.
It was because of this misconduct that Attorney General Eric Holder last week decided to ask the judge, Emmet Sullivan, drop the charges against Stevens.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (7)Topics: Alaska, Eric Holder, FBI, Justice Department, Ted Stevens
Inside TPM
-
Latest
-
Most Popular
All
TPMMuckraker
TPMDC
TPMLiveWire
-
Has Obama Cornered Republicans On Contraception?
-
Tax Avoidance Questions Continue To Haunt Romney
-
Obama To Draw Contrast With GOP In Budget
-
McConnell: GOP Will Fight To Let ANY Employer Deny Birth Control Coverage
-
The Delicate Dance Of Disassociating Oneself From 'White Nationalist' Groups At CPAC
-
Judge Won't Toss Weapons Evidence In Schaeffer Cox Case
-
Women's Groups Broadly Support Birth Control Compromise
-
British Man Using 'Sovereign Citizen' Tactics To Get Out Of Weapons Smuggling Charges
-
White House Seeks To Mute Catholic Uproar Over Contraception Rule
-
The Conspiracy Videos In The Hutaree's Library
TPM Top News
© 2011 TPM Media LLC. All Rights Reserved.
