Author: Matthew G. Saroff

So, Now Your Credibility is Shot, and the Judge Hates You

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Shellie Zimmerman, George Zimmerman’s wife, has been arrested for perjury:

Shellie Zimmerman, wife of George Zimmerman, charged with murdering Trayvon Martin, was arrested Tuesday on one count of perjury, the Seminole County, Fla., Sheriff’s Department said.

………

George Zimmerman, 28, was charged with second-degree murder in the Feb. 26 shooting of Martin. He pleaded not guilty. Police say that he claimed on the night of the shooting that he acted in self-defense.

………

His $150,000 bond was revoked after allegations that during an April 20 bail hearing he and Shellie Zimmerman misled the court about their finances, neglecting to disclose they had raised at least $135,000 in a PayPal account.

The order issued Tuesday by Assistant State Attorney John Guy charged Shellie Zimmerman with knowingly making false statements during the April hearing.

George Zimmerman’s attorney, Mark O’Mara, said Tuesday evening outside his office that he had just returned from two days in court and had not heard previously of Shellie Zimmerman’s arrest. He would not comment further.

Today, I think that George Zimmerman’s lawyer has the worst job in the world.

IRS Yanks 501(c)4 from Phony Charity

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About f%$#ing time:

An Internal Revenue Service decision revoking the tax-exempt status of a small political nonprofit organization may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election.

At risk would be the groups’ nonprofit status, which lets them collect millions of dollars from individuals and corporations while keeping donors anonymous.

…………

The IRS decision released last month involved a so-called campaign school in which a partisan group trained candidates.

“You are not operated primarily to promote social welfare because your activities are conducted primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole,” said the IRS letter telling the group it was losing its exempt status.

Unfortunately, it looks like there won’t be major action this year.

H/t Susie Madrak.http://www.bloomberg.com/news/2012-06-08/irs-denial-of-tax-exemption-to-u-s-political-group-spurs-alarms.html

Big Robosigning Case

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Yves Smith at Naked Capitalism is once again, all over the details.  The nickel tour is that there are forged documents, (not really news) and the trusts set up to securitize the loans are illegal under New York law (they’ve pretty much all been done under New York Law), which means that there are significant tax and ownership implications:

In a unanimous decision, the Alabama Court of Civil Appeals reversed a lower court decision on a foreclosure case, U.S. Bank v. Congress and remanded the case to trial court.

We’d flagged this case as important because to our knowledge, it was the first to argue what we call the New York trust theory, namely, that the election to use New York law in the overwhelming majority of mortgage securitizations meant that the parties to the securitization could operate only as stipulated in the pooling and servicing agreement that created that particular deal. Over 100 years of precedents in New York have produced well settled case law that deems actions outside what the trustee is specifically authorized to do as “void acts” having no legal force. The rigidity of New York trust has serious implications for mortgage securitizations. The PSAs required that the notes (the borrower IOUs) be transferred to the trust in a very specific fashion (endorsed with wet ink signatures through a particular set of parties) before a cut-off date, which typically was no later than 90 days after the trust closing. The problem is, as we’ve described in numerous posts, that there appears to have been massive disregard in the securitization for complying with the contractual requirements that they established and appear to have complied with, at least in the early years of the securitization industry. It’s difficult to know when the breakdown occurred, but it appears that well before 2004-2005, many subprime originators quit bothering with the nerdy task of endorsing notes and completing assignments as the PSAs required; they seemed to take the position they could do that right before foreclosure. Indeed, that’s kosher if the note has not been securitized, but as indicated above, it is a no-go with a New York trust. There is no legal way to remedy the problem after the fact.

The solution in the Congress case appears to have been a practice that has since become troublingly become common: a fabricated allonge. An allonge is an attachment to a note that is so firmly affixed that it can’t travel separately. The fact that a note was submitted to the court in the Congress case and an allonge that fixed all the problems appeared magically, on the eve of trial, looked highly sus. The allonge also contained signatures that looked less than legitimate: they were digitized (remember, signatures as supposed to be wet ink) and some were shrunk to fit signature lines. These issues were raised at trial by Congress’s attorneys, but the fact that the magic allonge appeared the Thursday evening before Memorial Day weekend 2011 when the trial was set for Tuesday morning meant, among other things, that defense counsel was put on the back foot (for instance, how do you find and engage a signature expert on such short notice? Answer, you can’t).

………

The lower court (in Alabama, what a surprise) ruled against the homeowner, but on appeal, it was remanded with instructions to use a more appropriate standard of evidence, and to better address her claims.

Go read the whole thing. It’s worth it.

If anyone ever decides to enforce the law, this whole corrupt mess implodes.

My take away is that something north of 50% of the home owners in the US probably do not have clear title on their homes.

China Mandates Compulsory Licensing of Pharmaceuticals

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China has proposed compulsory licensing of drugs:

China has overhauled parts of its intellectual property laws to allow its drug makers to make cheap copies of medicines still under patent protection in an initiative likely to unnerve foreign pharmaceutical companies.

The Chinese move, outlined in documents posted on its patent law office website, comes within months of a similar move by India to effectively end the monopoly on an expensive cancer drug made by Bayer AG by issuing its first so-called “compulsory license”.

The action by China will ring alarm bells in Big Pharma, since the country is a vital growth market at a time when sales in Western countries are flagging.

The amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.

For “reasons of public health”, eligible drug makers can also ask to export these medicines to other countries, including members of the World Trade Organisation.

Compulsory licenses are available to nations to issue under WTO rules in certain cases where life-saving treatments are unaffordable.

“The revised version of Measures for the Compulsory Licensing for Patent Implementation came into effect from May 1, 2012,” China’s State Intellectual Property Office said in a faxed statement to Reuters.

The changes can be found on the website of China’s State Intellectual Property Office at http://link.reuters.com/tus68s

Here is the Google Translate link.

Number one on the compulsory licensing hit parade will apparently be the AIDS anti-viral tenofovir.

One significant part of this is that compulsory licensing is not covered by the ban on drug re-importation, because they weren’t exported from the US.

WTO rules would seem to indicate that, absent an extension of the law to cover compulsory licenses, that they would be legal in the US.

Then again, the phrase, “Drugs made in China,” gives me less confidence than, for example, French manners or British cooking,.

H/t Naked Capitalism.

It’s On Girl!

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So, now both the ACLU and the Department of Justice are suing Florida over Governor Rick Scott’s voter purge, and Florida is suing DHS for access to their immigration database:

The American Civil Liberties Union sued Florida on Friday to stop its controversial program designed to purge noncitizen voters from the rolls.

The ACLU says the program, which overwhelmingly targets minorities, needs approval from the federal government under the 1965 Voting Rights Act — a claim already made last week by the U.S. Department of Justice when it ordered Florida to cease the purge.

Florida Secretary of State Ken Detzner, who is named as a defendant, has said Florida already received permission years ago to clean the voter rolls of noncitizens.

But the ACLU argues that the specific processes for the noncitizen-voter program — a new effort by the state — never received federal approval.

What’s more, the program is too much of a burden on, and too much of a threat to, lawful voters, who could risk being removed from the rolls due to government error, the ACLU says.

“The state of Florida is violating federal law by subjecting citizens to this new and unnecessary requirement in order to exercise their right to vote,” Julie Ebenstein, an ACLU Florida staff attorney, said in a written statement. “We are asking the court to protect the right to vote and stop this unlawful, targeted voting purge.”

Detzner’s office couldn’t immediately respond to all aspects of the suit, which was filed late Friday afternoon. But it insisted the program is fair and needed.

The program is needed of course, because, after all, it would chaos if they let sp**s and n*****s vote.

Here’s a paraphrase of Jeff Foxworthy, “If you think that people who will likely vote against you should be prevent from voting, you might not be a real American.”

It would be nice if someone went to jail over this crap.

And Now It’s Spain

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It looks like Spain is going to be getting a bailout for its banks:

Responding to increasingly urgent calls from across Europe and the United States, Spain on Saturday agreed to accept a bailout for its cash-starved banks as European finance ministers offered an aid package of up to $125 billion.

European leaders hope the promise of such a large package, made in an emergency conference call with Spain, will quell rising financial turmoil ahead of elections in Greece that they fear could further shake world markets.

The decision made Spain the fourth and largest European country to agree to accept emergency assistance as part of the continuing debt crisis. The aid offered by countries that use the euro was nearly three times the $46 billion in extra capital the International Monetary Fund said was the minimum that the wobbly Spanish banking sector needed to guard against a deepening of the country’s economic crisis.

On Sunday, Prime Minister Mariano Rajoy tried to deflect criticism for his government’s decision to seek assistance for Spain’s ailing bank. The winners, he said, were “the credibility of the European project, the future of the euro, the solidity of our financial system and the possibility that credit will flow again.”

What is interesting here is that this is a bailout for the banks, and not a bailout for the Spanish government.

What is even more interesting is that it appears that the bank bondholders will be at the back of the queue:

Investors holding bonds issued by Spain and its banks will probably rank behind official creditors in the queue for payment after the nation asked for a bailout of as much as 100 billion euros ($125 billion).

The funds will be channeled through the state-run FROB bank-rescue fund and Spain will “retain the full responsibility of the financial assistance and will sign” the agreement with the other partners, according to the statement issued June 9. The document did not make clear whether the European Stability Mechanism, the region’s permanent support fund, which is likely to start operating in July, or the temporary European Financial Stability Facility, will make the loan.

“This is state financing, and the risks of an equity injection into the banks will stay with Spain,” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc in London. “Spain needs a systematic restructuring of its banking system, which could entail haircuts to subordinated bank debt. Official lenders on the other hand are likely to demand seniority.”

Spanish Prime Minister Mariano Rajoy has been forced to abandon his attempt to recapitalize the nation’s banks without outside help as the country’s descent into recession obliged lenders to own up to spiraling losses. While Rajoy said yesterday the agreement was “the opening of a credit line,” rather than a bailout such as those received by Greece, Ireland and Portugal, and the conditions of the loan affected the financial industry, the sovereign is ultimately responsible.

Spain needs to insist on major haircuts for the bond holders.  The banks are insolvent, and like the chicken said, they knew the job was dangerous when they took it.

Florida County Clerks to Rick Scott: Drop Dead

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It looks like they are rejecting his plan for a little Jim Crow:

Florida’s noncitizen voter purge looks like it’s all but over.

The 67 county elections supervisors — who have final say over voter purges —are not moving forward with the purge for now because nearly all of them don’t trust the accuracy of a list of nearly 2,700 potential noncitizens identified by the state’s elections office.The U.S. Department of Justice has ordered the state to stop the purge.

“We’re just not going to do this,” said Leon County’s elections supervisor, Ion Sancho, one of the most outspoken of his peers. “I’ve talked to many of the other supervisors and they agree. The list is bad. And this is illegal.”

It is explicitly illegal.

You are not allowed to scrub voter rolls less than 90 days before an election under federal law, and the non-presidential Florida primaries are in August.

Additionally, for Florida, this has to be pre-cleared by the DoJ.

The party of Lincoln is not the party of Jim Crow.

Shop JC Penny

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And I should not that I have received no benefit or promise of benefit from them.

You see, the hate group known as One Million Mom’s was threatening a boycott because they had Ellen DeGeneris as a spokesperson, and JC Penney told those contemptible homopobes to go pound sand by putting two gay fathers in their latest Fathers day ad:

The anti-gay hate group One Million Moms has issued a boycott calling for JC Penney to fire spokeswoman Ellen DeGeneres due to her sexual orientation. JC Penney responded with this fabulous Father’s Day ad — featuring two gay dads for the first time in JC Penney history.

This is absolutely the right response.

When bigots threaten you, your response should be “F%$# You”.

On a deeper note, the fact that a major corporation has decided to do this indicates taht there is a major, and rather rapid, shift in attitude going on.

Yesterday was Busy for the FDIC

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As is shown in this episode of the (routinely late) Bank Failure Friday.

Nothing for 3 weeks, and now 4 banks in a week.

For whatever reason, it appears that we have a sort of a punctuated thing going on.  Nothing for few weeks, and then a big week.

  1. First Capital Bank, Kingfisher, OK
  2. Carolina Federal Savings Bank, Charleston, SC
  3. Farmers’ and Traders’ State Bank, Shabbona, IL
  4. Waccamaw Bank, Whiteville, NC

Full FDIC list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

Damn

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Click and Clack are retiring:

For years now, after their broadcasts, Tom and Ray Magliozzi, the hosts of the public-radio hit “Car Talk,” have been ranking the listener calls they receive on a scale from five to one, with five being the most entertaining.

It’s an archival system that will soon be put to use.
After 35 years of weekly broadcasts and some 12,500 calls, the wisecracking brothers announced on Friday that they are retiring. “As of October, we’re not going to be recording any more new shows,” Tom, 74, wrote in a CarTalk.com column written with Ray, 63, who added, “We’ve decided that it’s time to stop and smell the cappuccino.”
NPR, formerly called National Public Radio, will keep the show going by cobbling together the best of the old segments — the “fives,” so to speak. The producers think that most listeners won’t notice or care that the show is dated. Nonetheless, the announcement on Friday saddened fans of the pair, also known as Click and Clack, the Tappet Brothers, whose freewheeling chat show — ostensibly about cars — has been a weekend tradition for decades.

I’m bumming.

The Aqua Buddha Running Mate

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I know that my track record sucks, but I am not predicting that Rand Paul will be Mitt Romney’s running mate:

A day after endorsing Mitt Romney, Sen. Rand Paul said it would be an honor to run alongside the presumptive GOP presidential nominee.

“A year, year and a half ago, I was a physician in a small town,” Paul, the junior Republican senator from Kentucky, told CNN’s Don Lemon. “And it would be a great honor to be considered as a vice president for the Republican Party. I think that would be something that anybody who said otherwise would not be being truthful.”

Paul, who on Thursday came out in support of Romney, said on CNN he had not discussed with the candidate the prospect of joining the GOP ticket.

Paul, a tea party favorite and son of presidential candidate Ron Paul, said his father “has always been my first choice,” but that the nominating process favored Romney.

Rand Paul has said that he would have run this year had his dad, Ron Paul not run, and he is clearly very receptive to the idea of being Mitt’s running mate.

Additionally, he has serious teabagger cred.

I would not call him a slam dunk, but to my mind, he is the most likely selection right now.

Finally

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Harry Reid has explicitly stated that Republicans are sabotaging the economy for political gain:

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday accused House Majority Leader Eric Cantor (R-Va.) of deliberately trying to sabotage the U.S. economy.

Republicans immediately fired back, with Speaker John Boehner’s (R-Ohio) spokesman using an eight-letter word to rebuke the Senate leader.

“That’s bull—-,” said Boehner spokesman Michael Steel. “House Republicans are united in our desire to get a sensible, reform-minded transportation bill done, including job-creating energy initiatives like Keystone.”

Reid has grown frustrated by House Republicans’ reluctance to pass a multiyear transportation authorization bill, which Democrats say would create hundreds of thousands of jobs.

House Republicans have threatened to pull out of conference talks with Senate negotiators, according to one media report, which could scuttle any prospects for a deal. A senior House GOP aide, however, disputed the report.

They should have been saying this for at least two years.

It’s Jobless Thursday

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And initial jobless claim have fallen for the first time in over a month, by 12K to a still crappy 377K, but the 4-week moving average rose, as did continuing claims, though extended claims fell.  (It should be noted that extended claims are being impacted by people running out their strings, so the drop is not necessarily good news).

I would note that we also have a slightly wonkish bit data point, where the yield curve has inverted, indicating that the markets think that the markets are expecting a deflationary environment:

One could argue that this is a positive development for the US consumer because it could mean price stability. However this move in TIPS certainly raises the risk of near-term deflation, driven by weak demand growth. And deflation is notoriously difficult to get under control. This feels (though only in the near term) a bit like Japan, a nation quite familiar with zero to negative inflation expectations.

Normally, the longer a bond, the higher the rate, because there is a cost to having your money locked up for long periods, but under certain conditions,  like investors desperate for a safe haven, the rates drop as the term lengthens (up to a point).

In a not entirely not unrelated note, the Chinese central bank has unexpectedly cut its benchmark rate in response to their economy slows.

Not a good economic news day.