Month: March 2012

Once Again, Obama Punts on Gay Marriage

It looks like the DNC is scrambling to find a way not to deal with marriage equality:

In recent weeks, a debate has been raging between leading Dems and gay rights advocates over whether the Democratic Party will make full marriage equality a plank in the party platform at the upcoming convention. Antonio Villaraigosa, the chair of the convention, recently stoked the fires when he said having such a plank would be “basic to who we are.”

But now The Huffington Post reports that Democratic National Committee officials have been privately pleading with advocates for patience on the issue, because it’s still viewed by top party officials as “politically sensitive” and potentially alienating to culturally conservative swing state Dems. HuffPo reports the DNC worries that “sweeping platform language would put the president in an awkward bind,” since President Obama is still “evolving” on gay marriage.

If Obama wanted this, it would be in there without a fight.  The DNC does wipe its ass without checking with the White House.  (As should be the case with a sitting President)

The tragedy here is that public opinion on this is moving blisteringly fast, and there are very few people on the wrong side of this issue who would vote Democrat.

They are dissing the base in order to pander to an electoral lost cause.

Dammit, No Warp Drive

It looks like those Neutrinos were not traveling faster than light:

New experimental evidence is helping disprove last year’s highly surprising finding of neutrinos breaking established physics laws by traveling faster than light.

The finding involved clocking the neutrinos–tiny, nearly massless subatomic particles–as they traveled from the CERN particle accelerator near Geneva to the Gran Sasso National Laboratory in Italy, about 730km away. An experiment called Opera found the neutrinos taking less time to arrive than light would, but now another Gran Sasso experiment, Icarus, showed neutrinos making the journey at a more sedate pace under light speed, CERN said.

That finding comes after news in February that a fiber-optic connection problem could have shown too short a neutrino time of flight, though another factor could mean the timing was wrong the other way.

I’m not surprised, but I am a bit disappointed.

I Unreservedly Support This Union

It looks like the slaves student athletes are looking to unionize again:

With college basketball’s March Madness approaching, commentators will soon regale us with tales of underdogs, upsets and last second heroics. But few will mention the moment, 17 years ago, when a group of players planned to stop the games.

Rigo Núñez, a reserve on the 1995 University of Massachusetts basketball team, says more than 20 players from several teams attempted to organize an action to halt March Madness. The plan was that the players would show up on the court, in full uniform, and refuse to play ball. The goal, says Núñez, was to “paralyze the whole NCAA.” William Friday, who co-chaired the Knight Commission on College Athletics at the time, recalled to the Atlantic the time he was warned about a planned March Madness strike.

Those plans fell apart. Friday says the plan he was warned about centered on a certain team, and that team lost prior to reaching the Final Four. Núñez says the culprit was fear of retaliation. “The fear of being blackballed overcame the ‘rah rah’ emotion … No one went on to actually pull the trigger.”

But in the 17 years since that strike plan fizzled, there’s been little change in the conditions that fueled players’ unrest. And, with the backing of a major union, there are still players organizing to do something about it.

It’s about time.

At the top tier schools, in the big money sports, the fiction of student athletes is a disservice to the athletes, and the schools as institutes of higher learning.

Payback is Sometimes a Bastard Too

There was a sex scandal in Minnesota, where the leader of the state Senate (a Republican, hoocoodanode) was found to have slept with an aide.

The aide was fired, and the (married) Senate Leader resigned.

The twist was that the leader who  resigned was one Amy Koch.  It was a woman.

In any case, the staffer who was fired has now filed suit, and he is threatening to out other state lawmakers who are f%$#ing around:

The saga continues over former Minnesota Senate Majority Leader Amy Koch’s (R) “inappropriate relationship” with a subordinate staffer. Michael Brodkorb, who served as Koch’s executive assistant and communications director, claims that he was fired after the relationship was discovered because of his gender. He also says he has proof that other female staffers who had relationships with legislators were allowed to keep their jobs.

Brodkorb is now preparing to sue the Minnesota Senate, alleging wrongful termination and discrimination. Documents outlining the basis of the case confirm the relationship between Brodkorb and Koch. Rumors swirled in December that Koch’s “inappropriate relationship” was with him, but it wasn’t confirmed at the time. It continues:

“Brodkorb has evidence that similarly situated female legislative employees, from both political parties, were not terminated from their employment positions despite intimate relationships with male legislators. It is clear that Mr. Brodkorb was terminated based on his gender. He intends to depose all of the female legislative staff employees who participated in intimate relationships, as well as the legislators who were party to those intimate relationships, in support of his claims of gender discrimination.”


Please, call his bluff. I want him to spill the beans.

What is the Last Place You Would Expect to Hear Someone Calling for an Indictment of Jon Corzine?

Well, you know, the OP/ED page of the New York Times is close to the top of that list, but Joe Nocera just called for prosecutions in the MF Global matter:

It’s sure starting to look as if Jon Corzine is going to get away with it.

By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business. Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.

Let’s not mince words here. These executives committed a crime. Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. Customer money is supposed to be sacrosanct. If a broker-dealer goes bankrupt, the segregated accounts are supposed to remain safe, a little like the way bank deposits remain protected if a bank goes under. Indeed, customers need to be able to trust the fact that their money is segregated and protected at all times. Otherwise, the markets can’t function.

Yet, a few weeks ago, Azam Ahmed and Ben Protess, who have done a remarkable job covering the MF Global bankruptcy for The Times, wrote an article suggesting that prosecutors were having trouble putting together a criminal case against anyone at MF Global. So far, wrote Ahmed and Protess, they’d been “unable to find a smoking gun.” In fact, they continued, “a number of federal prosecutors have expressed doubts” that MF Global “intentionally misused customer money.” Apparently, the current theory is that it was all just a big accident, the chaos of those final days causing the firm’s executives to tap into customer funds without realizing it.

Excuse me while I roll my eyes. Of course there isn’t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, “Hey, we’re desperate. Let’s break into the customer accounts!” And, of course, they are always going to say it was unintentional. They are saying it already, starting with Corzine, who told Congress last year that “there was no intention to violate segregation rules.”

He’s right.

He’s also right that the failure to prosecute is an assault on the idea of the rule of law.

It’s not a particularly surprising conclusion to draw, but the fact that it’s appearing in the New York times is a big deal.

Don’t Crush That Dwarf, Hand Me The Pliers

Peter Bergman, the founder of Firesign Theater, has died at the age of 72.

I’ve enjoyed their albums, but I always found it odd that while I had about a dozen friends with the album, not one of them bought it new.

I always had this sneaking suspicion that they had a marketing strategy which involved taking the albums out of their shrink wrap, and distributing them through used record stores and garage sales.

Karazai Wants Foreign Troops to Stand Down

You know, this whole withdrawing from this clusterf%$# with honor does NOT seem to be working:

President Hamid Karzai insisted Thursday that the United States confine its troops to major bases in Afghanistan by next year as the Taliban announced that they were suspending peace talks with the Americans, both of which served to complicate the Obama administration’s plans for an orderly exit from the country.

Mr. Karzai’s abrupt planning shift was at odds with a pledge offered just hours earlier by President Obama to stick to a 2014 withdrawal schedule for troops in Afghanistan. It also ran up against the Pentagon’s stark assessment that Afghan security forces were not yet ready to take over control of the country.

Mr. Karzai’s surprise announcement, which would confine American troops to their bases a year earlier than Mr. Obama proposed, was initially made at a Thursday meeting with Defense Secretary Leon E. Panetta, who spent a fraught two days here apologizing in person to the Afghan president for the massacre of civilians by an American soldier last Sunday at a village in Kandahar Province. Upon Mr. Panetta’s arrival, an Afghan interpreter working for coalition forces crashed a stolen pickup truck near his plane.

Further fraying the United States’ efforts to preserve some degree of control over its exit strategy from Afghanistan, Taliban insurgents announced Thursday that they had broken off preliminary peace talks with the Americans. While the move may have been coincidental, it imperiled another crucial element of the American exit strategy in Afghanistan — brokering peace talks between insurgents and the government.

This is like Vietnam all over again. We know we have to leave, but we have to do it slowly, because we cannot afford to look like we were beaten … again.

We’ve been beaten.  Get the f%$# out of Dodge.

5 lined skink

I know that I don’t normally blog about work, but I had a bit of an adventure today.

I was sitting at my desk, when out of my drawers (let me rephrase that, my cabinet) jumped a 5 lined skink.

People have gotten glimpses of it for the past few days, and it jumped out (down actually) onto my desk.

I yelped (OK, maybe it was a shriek) but manged to corner it, and we got it into a cup, and one of my co-workers has taken it home for his kid to keep as a pet.

Certainly got the blood  moving.

It Aint Just Mortgages that the Banksters are F%$#ing UP

Once again, the banks sold bad paper, in this case, credit card debts that they knew were not accurate and, and once again, Matt Taibbi has a distills the essence of the matter:

In a story that should be getting lots of attention, American Banker has released an excellent and disturbing exposé of J.P. Morgan Chase’s credit card services division, relying on multiple current and former Chase employees. One of them, Linda Almonte, is a whistleblower whom I’ve known since last September; I’m working on a recount of her story for my next book.


The Cliff’s Notes version of the story goes something like this: Late in 2009, Chase’s credit card services division sold a parcel of nearly $200 million worth of credit card judgments to a debt collector at a discount. This common practice in the credit-card industry is a little like a bookie selling the outstanding debts of his delinquent gamblers to a leg-breaker for 25 cents on the dollar. If the leg-breaker gets half the delinquents to pay, the deal works out for both sides — the bookie gets 25 percent of money he wasn’t going to collect, and the leg-breaker makes a 100 percent profit.

Only they did not do even the barest due diligence:

Linda [Almonte] subsequently found an enormous range of errors. Some judgments, she told me, were not judgments at all. In some cases, she said, Chase actually owed the customer money.

When she brought these concerns to her superiors, what do you think their response was? They told her and others to shut up and just sell the stuff anyway. Her boss, Jason Lazinbat, allegedly told her “she had better go along with the plan to sell the misrepresented asset.”
Think of the consequences of this: because Chase was so anxious to make money off this debt sale, countless credit card borrowers would now have collection agents chasing them for money they did not owe. The debt-buyer, too, was victimized by being sold accounts it could not collect on. It is almost impossible to estimate how many man-hours of pointless court proceedings would be lost because of this decision.

You know, this sounds familiar. Just like the foreclosure fraud.

In fact, it sounds like a pattern, a, “pattern of racketeering,” as in RICO, and the burden of proof in RICO, particularly for asset forfeiture, is not that high.

How about it, Barack?

It’s something that you can do in your 2nd term, and you don’t need Congressional approval to do this.

Full Disclosure, I Served in the UMass SGA Senate With Him

They are finally getting around to sentencing Tony Rudy, one of the final defendants in the Abramoff matter, 6 years after he pled guilty.

The weird thing is that the prosecution and defense have agreed to have the agreed upon facts sealed for national security reasons:

Nearly six years after he pleaded guilty in the Jack Abramoff scandal, a former aide to House Majority Leader Tom DeLay will likely be sentenced in the near future. But because of a joint motion granted by the federal judge hearing the case against Tony Rudy, the public wouldn’t see the filing listing agreed upon facts in the case.

The reason? National security.

The feds and Rudy’s defense team wrote that the disclosure of “sensitive information related to national security matters” likely “would compromise and negatively impact ongoing intelligence efforts.” They said the sensitive information had “no relationship to the Department of Justice’s investigation of Jack Abramoff or related persons.”

The folks at TPM got a comment from Abramoff about this, and he was pretty stunned by this.

My guess is that he probably did some work for a Persian Gulf monarchy, and the State Department wants it buried, but we’re likely to find out through a leak in the next few months.

Rats Leaving the Sinking Vampire Squid

So, Greg Smith, who ran equity derivatives business in Europe, the Middle East and Africa for Goldman Sachs, has resigned today.

Normally, this would not be particularly newsworthy, except for the fact that he published his separation letter on the OP/ED page of the New York Times:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

Truth be told, I’m not impressed.

This guy as been a Vampire Squidling for over a decade, so I see this as kind of self serving.

If he were claiming law breaking, it would mean something, but he is mostly complaining how the brokers trash talk:

You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

He’s not claiming any law breaking (Yeah, right), just that there is a insane macho culture at Goldman that sees the clients more as marks than as partners in success.

How the f%$# can you work at a f%$#ing brokerage for ten f%$#ing years, and not f%$#ing realize that it’s a f%$#ing testosterone f%$#ing hormone filled f%$#ing cesspool after being there two f%$#ing weeks hours.

Seriously, just f%$#!

Whoever wrote, “Why I am leaving the Empire, by Darth Vader,” got the crux of the matter.

I will issue a correction if this guy does something like working for a regulator, but my guess is that this is all about providing himself plausible deniability, or possibly pimping a book, or maybe he’s hanging out his own shingle.

Here’s a thousand years on what I’m seeing:

Why I am leaving the Empire, by Darth Vader

H/t FT/Alphavill for the Pic

[update]Matt Taibbi thinks that this guy is for real, so if you want want an opposing opinion, and I think that it is well argued, go read.

Cue Inspector Renault

I’m shocked, shocked to find that gambling is going on here!

I am shocked, shocked I tell you, that we are now seeing reports that senior managers actively directed their subordinates to robosign and falsify records:

Employees at major banks who churned out fraudulent foreclosure documents, forged signatures, made up fake job titles and falsely notarized paperwork often did so at the behest of their superiors, according to a federal investigation released Tuesday.

It’s well documented that the nation’s biggest banks routinely “robo-signed” legal papers to keep up with the wave of foreclosures brought on by the housing bust. But the new report from the inspector general of the Department of Housing and Urban Development reveals that those shoddy practices often came at the direction of managers at the banks, and that employees in some cases were judged by how fast they could get new foreclosure filings out the door.

“I believe the reports we just released will leave the reader asking one question: How could so many people have participated in this misconduct?” David Montoya, HUD inspector general, said in a statement. “The answer: simple greed.”

HUD investigators launched their inquiries soon after news of the banks’ practices caused a national uproar in late 2010, and government officials used their findings as they negotiated a recent landmark $25 billion settlement with the banks.

HUD reviewed foreclosure practices at all five banks involved in the recent settlement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. They issued subpoenas, pored over personnel files, conducted interviews with scores of employees and examined the quality control measures — or lack thereof — at the banks’ mortgage servicing units.

Repeatedly, according to the report, investigators were hampered by poor record-keeping at the banks, sluggish responses to requests for documents and an unwillingness to make employees available for interviews or to allow them to answer detailed questions at the virtual foreclosure factories where they worked.

Nevertheless, investigators pieced together a picture of a deeply flawed system riddled with errors, where employees often had little or no training, where managers encouraged wrongdoing and where haste trumped all else.

You know, maybe the banks had poor record-keeping, and responded sluggishly to requests for documents because, you know, they knew that they were aggressively breaking the law.

Stop the looting, and start prosecuting!

So, There Were Primaries Tonight

Pass the Popcorn

It looks like Santorum won in both Alabama and Mississippi, so the freak show continues, for a while, at least.

That being said, I would say that upon examination of the Mississippi and Alabama Republican primary electorate, a large plurality believe that Obama is a secret Muslim, I would have to say that it should be a positive thing that Romney could not win with those folks.

Seriously, it’s like these states are an open air asylum.

The Krauts Don’t Practice What They Preach

It looks like the Germans are going to miss their austerity goals this year:

European countries are expected to implement tough austerity measures amid the debt crisis. But Germany isn’t setting a very good example. SPIEGEL has learned that Berlin failed to reach its own austerity goals in 2011. And despite pressuring its neighbors to save, Germany is behind this year too.

As she travels from one European Union summit to the next, Angela Merkel’s constant mantra in recent months has been austerity, austerity, austerity. But apparently the German chancellor hasn’t been quite as strict when it comes to her own country’s budget.

SPIEGEL reports this week that the German government didn’t reach even half of its planned savings in the federal budget. Only 42 percent of the spending cuts named by Merkel’s coalition government, comprised of the conservative Christian Democrats and the business-friendly Free Democratic Party, were actually not implemented.

Calculations made by the influential Cologne Institute for Economic Research indicate that only €4.7 billion ($6.16 billion) of the €11.2 billion in austerity measures stipulated by the savings package actually took shape in 2011.

You know, maybe, just maybe, Merkel and allies are a bigger part of the problem than people imagine.

Quote of the Day

I’ll say what Joe didn’t: The prosecutors need to cut a deal with one of the small fish in order to catch a big (or bigger) fish. Perhaps with MFG’s Treasurer or Comptroller. If it were me, I’d let the Defense bar know that we have 3 potential immunity deals that go to the first takers (with several hi profile exceptions).

This is just like prosecuting drug dealers — you pick up the dime bag seller, roll them to the mid-level guy, repeat. Keep doing that until you reach as close to the top as you can get.

Works for pot, crack, robo-signing, and segregated account theft . . .

Barry Ritholtz on how to prosecute MF Global executives for stealing customer funds