Author: Matthew G. Saroff

Federal Reserve and FCIC Reject TBTF Banks’ “Living Will”

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To (mis)quote Bette Davis, “Fasten your seat belts. It’s going to be a bumpy ride,” because the regulators are claiming that the big banks contingency plans are worthless and leave the taxpayers on the hook:

Congress’s overhaul of the financial system aims to reshape large banks so that if they get into trouble they can descend into an orderly bankruptcy that does not set off a wider panic.

 But on Tuesday, two regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, sharply criticized the plans that the banks have prepared for winding themselves down in a controlled fashion. The F.D.I.C. said that it had determined that the so-called living wills were “not credible.”

 The agencies have sent letters to 11 banks, including JPMorgan Chase and Goldman Sachs, pointing out perceived shortcomings in the resolution plans that they submitted in 2013. The agencies demanded that the banks make improvements in living wills they submit for 2015.

 “Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn’t require unrealistic assumptions and direct or indirect public support,” Thomas M. Hoenig, the vice chairman of the F.D.I.C., said in a statement.

I am so not surprised by this.

The banksters aren’t providing meaningful “Living Wills” because it is in their interest not to do so.

Having a meaningful bankruptcy wind down plan means that, if something goes wrong, their stock options becomes worthless, and they probably lose their jobs, but if Uncle Sam is forced to bail them out, there is a pretty good chance that they get to keep their jobs and their hefty pay packages.

After all, that is what happened last time around.

The regulators should get tough with the banks:

If the banks do not make satisfactory changes, the regulators could take action, including requiring banks to sell units to shrink and simplify their corporate structures if they failed to comply with other orders, officials of the agencies said.

The regulators should give a reasonable amount of time (I would suggest 4 weeks, so that Congress won’t be back in session), and if they do not see a complete and meaningful plan, they should start breaking them up.

BTW, the big problem here is what Warren Buffet calls, “Financial weapons of mass destruction,” derivatives:

In suggesting areas the banks need to focus on, the regulators highlighted derivatives, which played a central and destabilizing role in the 2008 crisis. Derivatives can complicate bank resolutions because they may require collapsing banks to make payments to derivatives holders before other clients and creditors.

Unfortunately, derivatives allows financial institution to increase their leverage while technically staying properly capitalized.

They aren’t properly capitalized, of course, which is why the US government had to bail out AIG so that it could pay their insurance claims at 100 cents on the dollar.

It’s going to happen again, and no one is going to jail, again.

It sucks.

The right thing to do is for the Federal Reserve and the FDIC to break up the banks, as it always has been, but the banks own Washington, so it ain’t going to happen.

H/t Naked Capitalism.

We Just Lost a Two-Star in AFghanistan

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Maj Gen Harold Greene was shot and killed by an Afghan soldier while visiting the Marshal Fahim National Defense University (military academy):

An Afghan soldier opened fire at a British-run military academy outside Kabul on Tuesday, killing a US major general and wounding at least 15 other troops including a German brigadier general.

The US two-star general was identified by a US official to the Associated Press as Maj Gen Harold Greene, who becomes the highest-ranking American officer killed in nearly 13 years of war in Afghanistan. The Pentagon’s press secretary said he believed the officer was the highest ranking US military casualty since 9/11.

………

Germany’s military said 15 Nato soldiers were wounded, in an assault launched “probably by internal attackers”. Kirby said the daylight incident occurred during a “routine site visit” by US officers. The wounded included a German brigadier general, who the German military said was receiving medical treatment and was “not in a life-threatening condition.”

Needless to say, this is a very big deal, and is yet another sign that we should be getting the f%$# out.

We Are Unbelievably Screwed

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If the report of massive plums of methane developing is both true, and a new phenomena driven by anthropogenic climate change, then we are already on the far side of of this disaster, and we have gone from prevention to mitigation:

This week, scientists made a disturbing discovery in the Arctic Ocean: They saw “vast methane plumes escaping from the seafloor,” as the Stockholm University put it in a release disclosing the observations. The plume of methane—a potent greenhouse gas that traps heat more powerfully than carbon dioxide, the chief driver of climate change—was unsettling to the scientists.

But it was even more unnerving to Dr. Jason Box, a widely published climatologist who had been following the expedition. As I was digging into the new development, I stumbled upon his tweet, which, coming from a scientist, was downright chilling:

If even a small fraction of Arctic sea floor carbon is released to the atmosphere, we’re f’d.
— Jason Box (@climate_ice) July 29, 2014


Box, who is currently a professor of glaciology at the Geological Survey of Denmark and Greenland, has been studying the Arctic for decades. His accolade-packed Wikipedia page notes that he’s made some 20 expeditions to the Arctic since 1994, and served as the lead author on the Greenland section of NOAA’s State of the Climate report from 2008-2012. He also runs the Dark Snow project and writes about the latest findings in the field at his blog, Meltfactor.

………

“We are ‘sniffing’ methane,” Ulf Hedman, the science coordinator of the Swedish Polar Research Secretariat, wrote in a post highlighted by Climate Change SOS. “We see the bubbles on video from the camera mounted on the CTD or the Multicorer. All analysis tells the signs. We are in a Mega flare. We see it in the water column, we read it above the surface, and we follow it up high into the sky with radars and lasers. We see it mixed in the air and carried away with the winds. Methane in the air.”

“Methane is more than 20 times more potent than CO2 in trapping infrared as part of the natural greenhouse effect,” Box said. “Methane getting to the surface—that’s potent stuff.”

It’s especially worrying because the Arctic is warming faster than nearly anywhere else on Earth. Now, along with melting sea ice and thawing permafrost, we have to add to our list of ‘feedback loop’ concerns that warming Arctic oceans may be releasing fonts of methane. That is, the warmer the ocean gets, the more methane gets spewed out of those stores on the continental shelf, and the warmer the ocean gets, ad infinitum.

We need to get beyond the denials being driven by people who hate Al Gore and people who are making too much money on fossil fuels to allow for meaningful action to be taken, and we need to do it now.

H/t Crooks and Liars.

Another Reason to Vote Against Andrew Cuomo

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As I have noted before, Zephyr Teachout is challenging Andrew Cuomo in the Democratic Party primary for governor of New York.

What I did not know was that her running mate, Tim Wu, aka the father of net neutrality:

Tim Wu, an academic known for his work on net neutrality, is campaigning to become the Democratic nominee for the lieutenant governor of New York.

 He’s an unlikely politician. Cerebral, soft spoken, and willing to speak freely, conversation with Wu is a far cry from the stilted, shrill dialogue that makes up most of our modern political discourse.

 As next month’s primary election approaches, Wu faces a lawsuit aimed at unseating his candidacy, along with the candidacy of his running mate Zephyr Teachout.

 Robert Duffy, the current lieutenant governor of the state, is not seeking another term, pitting Wu against a fellow non-incumbent for the nomination. Teachout hopes to become the Democratic nominee for governor.

This is all kinds of awesome.

This is the Typical Result of Libertarian Bullsh%$ Like Bitcoin

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You remember the Mt. Gox bitcoin exchange?

People nearly ½ a billion dollars in Bitcoin, and now we discover that the head of the exchange was convicted of fraud in France, and had been sentenced to jail:

While Mt. Gox owner Mark Karpeles was growing what would become the world’s largest Bitcoin exchange, he should have been serving time in his home country of France. He was sentenced to a year in custody in 2010 on fraud accusations.

A newly obtained French court document shows that Karpeles has a civil and non-civil judgment pending where, in addition to custody, he also owes €45,000 ($60,000). The document is being published jointly for the first time by Ars Technica and the French publication Le Monde. (Read the French original here and an English translation here.)

The case was brought by a former employer who accused Karpeles of stealing customer user names, customer passwords, and a domain name, among other grievances. Under French law, Karpeles is not considered a criminal but rather “un délinquant,” a delinquent offender. It’s a lesser label than “criminal,” because that word is reserved only for very serious crimes within the country.

The 2010 decision shows that Karpeles lost by default, and he was found liable of “fraudulent access to an automated data processing system” and “fraudulent changes to data contained in an automated data processing system.” The document also states that Karpeles admitted to French authorities that he had “pirated” a server.

At the time, Karpeles was living in Japan. But a year after the judgment, he’d taken over Mt. Gox, well before the exchange and digital currency had become a household name. The French court documents acknowledge that he was never notified of the case and did not defend himself—hence, he lost by default. Karpeles’ own blog states he moved to Japan in 2009, and it appears he hasn’t returned to France since.

“To be honest, I was not even aware of this,” he told Ars in May regarding the sentence. “I’ll investigate and see what has to be done.” Karpeles has not responded to numerous attempts for further comment since then.

Yeah. He, “Wasn’t aware of this.”

He was questioned by police, admitted wrongdoing, got out France when the getting was good, but he “Wasn’t aware of this.”

When you take a supporting role in a libertarian wet dream, you are painting a target on your back.

Happy 9th of Av*

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Not a day to get breaking news.

Case in point, a guy who had recently been in West Africa just walked into a New York City Hospital and there are concerns that he is throwing symptoms of Ebola:

Heightened concern about the Ebola virus has led to alarms being raised at three hospitals in New York City. But so far, no Ebola cases have turned up.

The latest episode involved a man who had recently been to West Africa, and who went to the emergency room at Mount Sinai Hospital in Manhattan late Sunday with a high fever and gastrointestinal problems, the hospital reported on Monday.

He is being kept in isolation at the hospital while tests are being done for Ebola, a deadly disease, but also for other illnesses that could have caused his symptoms.

Yeah, it would be the 9th of Av.

Remind me not to eat any bat soup.

*It is Tisha B’Av, the 9th day of the Hebrew month Av, and a small subset of the nasty bits of Jewish history follows:

  1. The report of the spies from Canaan, resulting in the people of Israel spending 40 Years in the Desert.
  2. The destruction of the 1st Temple.
  3. The destruction of the 2nd Temple.
  4. The Romans razed Betar, killing 100,000 Jews.
  5. The Romans plowed the temple mount.
  6. The start of the 1st Crusade.  (You see it as a coming together of Christendom.  I see it as a pogrom with years of murder and rape.)
  7. The expulsion of Jews from England.
  8. The expulsion of Jews from France.
  9. The expulsion of Jews from Spain.
  10. Germany entered the WW I. (Can be legitimately claimed to have directly led to the Shoah)
  11. Formal approval of the “Final Solution” by the Nazis in 1941.
  12. Deportations to Treblinka from the Warsaw Ghetto begin in 1942.

Excuse me while I find something sturdy to cover my head with.

    This is Too Awesome for Words

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    Some cops in the UK were on their way to a fancy dress party (in the US we call them a costume party), and they encounter, and apprehended a man threatening people’s lives at a super market while dressed as a zebra and a monkey:

    A pair of off-duty police officers who made an arrest while dressed as a zebra and a monkey have been commended for their bravery.

    PCs Tracy Griffin and Terri Cave were on their way to a fancy dress party when they came across a man yelling threatening abuse in a supermarket in Coventry in March 2014.

    The pair, dressed in zebra and monkey onesies, wrestled the man to the ground as he left the Co-op store and told one of the staff to ring 999.

    The man was arrested and taken into police custody on suspicion of public order offences, said West Midlands police. The PCs, who are based in Solihull, spent the rest of their evening filing reports at the police station rather than heading to the party.

    On hearing the news of the arrest, colleagues tweeted from @SolihullPolice: “Man threatening to kill people didn’t expect to be wrestled to the ground by our off-duty officer in a zebra onesie. We go that extra mile.”

    This is so awesome on so many levels.

    H/t the PBS news/comedy show Wait, Wait Don’t Tell Me.

    Something is Wrong on the Internet

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    As you are no doubt aware, the film Guardians of the Galaxy opened this weekend.

    As the archetypal summer blockbuster, it got a lot of reviews, and one, at the Village Voice, Stephanie Zacharek, was less than charitable, which resulted in a torrent of sexist abuse directed her way:

    “She’s just pissed because she lives in the Village full of gay men and no one wants any of her old, dried out pie.”

    ………

     “We live in a world where 1000s of people are being beheaded and murdered throughout the world each and every day and this harlot has the nerve to knock it because it’s too fun?”

    Harlot? Seriously?

    “She should stick to reviewing chick flicks only.”

    What is wrong with these people?

    You can castigate a movie critic, or for that matter any critic for being unfair.

    In fact the (sometimes delightfully and sometimes tediously) bitchy Rex Reed has made a career out of being this.

    But simply posting misogynist rants sucks wet farts from dead pigeons, or, as Guardians of the Galaxy writer* Brian Michael Bendis observes, ” You love Captain America? Well, you know what Captain America would never do? Go online anonymously and sh$# on a girl for having an opinion.” (%$ mine)

    H/t xkcd for the top comic.

    *To be clear, Bendis writes for the comic book, he did not do the screenplay.†
    †Not that there’s anything wrong with that.

    Of Course Obama Expresses Confidence in John Brennan

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    Because Barack Obama has made it quite clear that spying on Congress and shilling for torturers is no big deal:

    President Obama said on Friday that he has “full confidence” in John Brennan, the director of the C.I.A., despite Mr. Brennan’s admission this week that his agency improperly searched the computers of the congressional committee that is preparing to release a report on the use of torture in the fight against terror.

    ………

    Asked about the upcoming release of a report that documents American interrogation techniques, Mr. Obama said the C.I.A. exercised “very poor judgment” in its handling of the report. But he said that Mr. Brennan had apologized for the incident to Senator Dianne Feinstein, the chairwoman of the Senate Intelligence Committee.

    “I have full confidence in John Brennan,” Mr. Obama said, noting an inspector general’s conclusions about the C.I.A. spying on the committee. “It’s clear from the I.G. report that some very poor judgment was shown in how that was handled. Keep in mind that John Brennan was the one who called for the I.G. report.”

    Let us be clear: The CIA did not exercise, “poor judgement,” people exercised poor judgement.

    People spied on Congress.

    People broke cyber crime laws.

    People showed contempt for the Constitutional separation of powers.

    People, in this case John Brennan specifically, went on the Sunday shows and explicitly lied about this.

    People were responsible, and people should be fired, prosecuted, etc. over all of this.

    Barack Obama Just Admitting to Covering Up Crimes Against Humanity, Which is a Crime Against Humanity

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    Barack Obama has blithely stated that, “We tortured some folks,” but continues to insist that there will not be any sort of accountability for this:

    In startlingly blunt phrasing, President Obama on Friday acknowledged the CIA’s use of brutal interrogation tactics in the years after the Sept. 11 attack, even as he defended the agency’s top spy, who is a veteran of the era.

     “We tortured some folks,” Obama said to reporters during a news conference Friday. “We did some things that were contrary to our values.”

     ………

     He sought to put the interrogation program in context, recalling Americans’ fear after the Sept. 11 attacks and the “enormous pressure” on law enforcement to prevent more attacks.

     “You know, it is important for us not to feel too sanctimonious in retrospect about the tough job that those folks had,” Obama said. “And a lot of those folks were working hard under enormous pressure and are real patriots.”

    No, they weren’t patriots, they were “Good Germans”.

    He also further makes it clear that not only will there be no prosecution of torturers, there won’t even be a real investigation of who gave the orders.

    As Richard Nixon’s head in a jar might attest to, sometimes it’s the cover up that constitutes a crime, and Obama has thrown his lot in with the coverup.

    Whoever performed, authorized, or ordered torture, at a very minimum, should be stripped of their security clearances and fired.  (I would argue that the same should apply to those who did not report torture through the chain of command)

    He was forced to make this statement, since the Senate report on this reveals that the torture was more common and more brutal than was reported to Congress of the public, as well as the fact that it never produced meaningful actionable intelligence.

    It is also important to note that many of the people tortured were guilty of nothing, and had just been swept up in a panic driven dragnet and bounty program.

    Finally, it should be noted that torture comes home.  National guardsman who observe or participate in torture, and then come home to work in civilian law enforcement, are more likely to engage in torture themselves.

    Prosecution, and public shaming, are essential to stopping this.

    India Stands Firm, and the Rest of Us Benefit

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    The latest round of WTO talks have collapsed over the issue of allowing Wall Street to loot food supplies:

    The World Trade Organization failed Thursday to ratify an agreement designed to streamline the global trade system, frustrating a late push by U.S. officials to convince India to reach a compromise that would have secured a deal.

    “I do not have the necessary elements that would lead to me to conclude that a breakthrough is possible,” WTO Director General Roberto Azevedo said. “We got closer—significantly closer—but not quite there.”

    The WTO reached an agreement in December on the Indonesian resort island of Bali to streamline customs procedures. The deadline to ratify that agreement was Thursday, but India declined to do so without a parallel agreement allowing developing countries more freedom to subsidize and stockpile food.

    Some economists have estimated that the Bali agreement, which seeks to standardize customs practices and remove red tape, could save WTO members more than $1 trillion eventually.

    Failure to achieve a consensus before the WTO’s own deadline deals a severe blow to the Geneva-based body’s credibility, already tenuous after years of stalled talks on tariff reductions. The trade-easing deal was viewed as a way to create some momentum.

    As a raft of regional trade deals moves ahead, the WTO’s ability to act as a catalyst for global trade liberalization is in doubt.

    India had insisted for weeks that it wouldn’t sign off on the Bali pact unless the group comes to a faster accord on exempting food-subsidy and stockpiling programs like India’s from current WTO rules that limit them.

    Remember when international food prices spiked a few years ago because of aggressive market manipulation by Wall Street in the US and the City in London?

    The “subsidies” in question are providing sub-market price food to poor people in those countries, and stockpiles to mitigate market manipulation by the banksters.

    India wants a permanent solution to this, they (correctly) consider it a matter of national security, but what they got was non-binding language that would render any attempt to protect their citizens from the vicissitudes of the market inoperative by 2017.

    I approve.

    Fabulous!

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    The Uganda constitutional court has ruled their Kill the Gays (lite) bill unconstitutional:

    Gay rights campaigners in Uganda and around the world are celebrating a decision by the country’s constitutional court to strike down a widely condemned anti-gay law on a legal technicality.

    Activists in the courtroom cheered after a panel of five judges ruled on Friday that the speaker of parliament acted illegally when she allowed a vote on the measure despite at least three objections that not enough MPs were in attendance.

    “The speaker was obliged to ensure that there was quorum,” the court said in its ruling. “We come to the conclusion that she acted illegally.”

    While celebrating the ruling, activists warned that homosexuality remained a criminal offence in the east African country under colonial-era laws.

    While much of the blame for this rests on the politicians of Uganda, who are, after all, human beings with their own capability of agency, but I really do think that we should be investigating members of “The Family” in the United States for conspiracy to commit genocide.  (Click the link, the Family is a scary bunch of people)

    It’s nice that Uganda cannot throw people convicted of “aggravated homosexuality” into jail for life, but it would be nicer still if they were to repeal the colonial-era laws.

    Burning Political Question of the Day

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    Why can’t we Nickelback Sarah Palin?

    Seriously, why do pop bands seem to have a sell-by date, where they go from beloved to loathed (I was unaware of Nickelback until people started hating in them, because I am, well, square), but figures in the political media complex don’t.   (See also, “Blowfish, Hootie and the”)

    I burn for the day that I can place the beast from Wasilla  on my list of They Who Must Not Be Named. 

    If We Can’t Jail John Brennan, Can We Please Fire Him?

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    Remember when Congressional staffers accused the CIA?

    Remember when John Brennan went on the Sunday shows and categorically denied it?

    Rather unsurprisingly, John Brennan was lying through his teeth:

    I don’t want to understate how seriously wrong it is that the CIA searched Senate computers. Our constitutional order is seriously out of whack when the executive branch acts with that kind of impunity — to its overseers, no less.

    But given everything else that’s been going on lately, the single biggest — and arguably most constructive — thing to focus on is how outrageously CIA Director John Brennan lied to everyone about it.

    “As far as the allegations of the CIA hacking into Senate computers, nothing could be further from the truth,” Brennan told NBC’s Andrea Mitchell in March. “We wouldn’t do that. I mean, that’s just beyond the, you know, the scope of reason in terms of what we do.”

    Earlier, he had castigated “some members of the Senate” for making “spurious allegations about CIA actions that are wholly unsupported by the facts.” He called for an end to “outbursts that do a disservice to the important relationship that needs to be maintained between intelligence officials and Congressional overseers.”

    And what compelled Senate intelligence committee chairwoman Dianne Feinstein to make a dramatic floor speech in the first place, bringing everything out in the open, was that Brennan had responded to her initial concerns not by acknowledging the CIA’s misconduct — but by firing back with an allegation of criminal activity by her own staff.

    Not coincidentally, the document the CIA was hunting for, that Senate staffers were accused of purloining, and that Brennan was now lying about, was a big deal precisely because it exposed more lies.

    Senator Mark UDall has called for Brennan’s resignation, but seeing as how DNI James Clapper lied under oath to Congress without consequence, I believe that Brennan’s current gig is secure.

    As I have noted before, “The Cossacks work for the Czar.”

    The fish rots from the head.

    The Republicans Have Completely Screwed the Pooch

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    Here’s a Blast from the Past

    Because John Boehner could not put an child refugees bill that a single Democrat could vote for, and because cannot count Republican votes, he had to pull the bill from the floor, and delay the Congressional recess:

    House Republicans are poised to delay their August recess by one day, as they frantically scramble to pass a border security bill.

    After a chaotic afternoon, which saw the GOP leadership suddenly pull their legislation from the House floor because of flagging support, lawmakers planned a Friday morning meeting at 9 a.m. to try to plot a path forward. Plans are in flux, and subject to change at any minute, aides and lawmakers warned.

    In a Thursday afternoon meeting, Speaker John Boehner, Majority Leader Kevin McCarthy (R-Calif.) and Majority Whip Steve Scalise (R-La.) heard from a number of Republicans who did not want to leave Washington until a package passed the House — a sentiment reflected by nearly every lawmaker who emerged after the meeting ended.

    Last time a Republican politician shortened a vacation, it was W coming back early from vacation to sign the Terry Sciavo bill, (see Vid) and we all know how the politics on all of that played out.

    Needless to say, this clusterf%$# does not bode well for the Republicans.

    To paraphrase Napoleon, never stop your enemy when is busy stepping on his own dick.

    I am still worried a bit  about the collateral damage to the rest of us though.