Category: Corruption

Reinventing Government Initiative is Inherently Corrupt

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The WaPo has a story about how Countrywide Mortgage went regulator shopping to find a more compliant agency, they ended up going with the Office of Thrift Supervision, who wooed the now disgraced mortgage lender. Why?

Winning Countrywide was important for OTS, which is funded by assessments on the roughly 750 banks it regulates, with the largest firms paying much of the freight. Washington Mutual paid 13 percent of the agency’s budget in the fiscal year ended Sept. 30, according to OTS figures. Countrywide provided 5 percent. Individual firms tend to make a larger difference to OTS finances than other bank regulators because the agency oversees fewer companies with fewer assets.

Yes, let’s make sure that regulators are paid by the industries that they regulate.

Let’s make sure that regulators are forced to compete for who they regulate.

That way, they won’t regulate at all.

The Citi Bailout

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No details, but considering that it’s George W. Bush and Hank Paulson and Their Evil Minions™, mu guess is that it:

  • Will be a givaway.
  • Won’t address the underlying problem (fire Bob Rubin).
  • Won’t be adequate under even those terms.

As details come in, and as I read stuff from people who actually have a clue about this crap, I’ll update.

The Arbitration Industry is Hopelessly Corrupt

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Normally, this is the sort of crap I don’t give a damn about, specifically Dov Charney, CEO of American Apparrel, and his raft of sexual harassment lawsuits, but the machinations of this specific case show just how unbelievably corrupt this system is.

You see, Mr. Charney settled with one of his victims, and part of the agreement was that in addition to the money and a non disclosure agreement, that they enter into a “special” arbitration:

Los Angeles’ 2nd District Court of Appeal revealed in an unpublished ruling Oct. 28 that attorneys for Charney, CEO of American Apparel Inc., a public company known for its racy ads, had conspired with lawyers for former sales manager Mary Nelson. Both sides had agreed, the ruling says, to enter into an arbitration whose outcome was preordained to favor Charney, and agreed to a press release stating that Charney “never sexualized, propositioned or made any sexual advances of any nature whatsoever toward Mary Nelson.” Nelson, in turn, would get $1.3 million if she kept the settlement secret, according to the ruling.

The 2nd District, in an opinion authored by Justice Paul Turner, said that settlement — which never went through — would have raised “considerations of illegality, injustice and fraud.” The court also held that the purpose of the proposed press release “was to mislead journalists and the public.”

Of course this raises the obvious question:

The attempted under-the-table agreement raised some questions about whether JAMS Inc. arbitrator Daniel Weinstein — a retired San Francisco Superior Court judge and co-founder of the 20-year-old JAMS — had gone along with the ruse.

The answer is that it would have been impossible for him not to have known, of course, because of the precedent that they wanted used:

The appellate decision lays out the sham arbitration of the settlement. It stipulated that the arbitrator would absolve Charney of the sexual harassment claims based solely on his consideration of a California case, Lyle v. Warner Brothers Television Productions.

In that case, the California Supreme Court in 2006 reversed a lower court’s finding that a writer’s assistant on the television show Friends did not come up with enough evidence for a “hostile work environment claim” by contending that the writer used sexually explicit language during the writing of the show.

Any arbitrator, particularly one who is a retired Superior Court Judge, would look at the filings and think that one side was deliberately throwing the case. At that point, they would be required by legal ethics to notify the bar.

Not Enough Bullets

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This time, it’s longtime CEO and founder of South Financial Group, who moved up his retirement date to preserve an $18 million dollar severance:

Meanwhile, corporate governance analyst Hodgson said that Whittle’s deal — nominally a retirement, but treated as a severance — is all too typical of golden parachutes: “If you and I decided to retire, we might get what’s left of our 401(k). But for some reason the rules seem to be different for executives. They get severance even though they’re retiring. There’s no logic to it at all.”

These guys need to be tattooed with verses insulting Mohammad, and parachuted into a Taliban camp.

Un-Dirtyword-Believable

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It looks like the Dutch insurance company Aegon is looking to buy a small US thrift so that they can score some TARP Money from Hank Paulson and His Evil Minions&trade.

They really don’t need it, but since it is being given away for free, they consider the purchase of a thrift, most likely Suburban Federal Savings Bank headquartered in Maryland.

Companies are doing backflips to get into this program, which is a good indicator that it is too generous.

Paulson is doing the US taxpayer like a 2 dollar whore.

Speaking of Insubordination

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How about Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, who is now dissing the Iraqi status of forces agreement even before the ink is dry:

The withdrawal of US forces from Iraq, set to be completed by the end of 2011 under a proposed deal between Baghdad and Washington, should depend on the situation on the ground, US military chief Admiral Michael Mullen said on Monday.

“I do think it is important that this be conditions-based,” Mullen told reporters, referring to the eventual withdrawal of US forces from Iraq.

We have an agreement negotiated by the civilian leaders of both countries, and just now approved by the Iraqi cabinet, and he is already saying that he is opposed to the central feature of that agreement.

This is largely an artifact of the fact that Bush and His Evil Minions&trade politicized the military, and that Bill Clinton did not fire Colin Powell when he should have, which has emboldened his successors.

I Believe That This is Called Insubordination

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Well, we now have this report that the Pentagon is doing its level best to subvert the decision making capabilities of the incoming administration:

The uniformed services are trying to lock in the next administration by creating a political cost for holding the line on defense spending. Conservative groups are hoping to ramp up defense spending as a tool to limit options for a Democratic Congress and president to pass new, and potentially costly, social programs, including health care reform.

While it is the right of conservatives to weigh in on the defense budget, the actions of the, “Uniformed Services” appears to be a direct challenge to the idea of civilian control of the military.

Douglas MacArthur was fired for simply saying in a letter to a Congressman that he disagreed with the President’s policy, and these folks are trying to gaslight Obama.

This Will Only Hurt a Bit, Now Bend Over

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Well, it looks like public pressure is working, because that’s about the only reason that the seven top executives at Goldman Sachs would send a memo to the board of directors asking for no bonuses this year.

Hopefully, this will spread across the industry.

It’s also happening in Europe, where UBS will not pay bonuses to top staff in 2008.

In fact, it’s going further, to change the incentives for a quick buck:

Starting from 2009, top managers’ bonuses will be blocked for at least three years instead of being paid immediately and executives will receive variable pay if UBS results warrant.

Which means that the quest for a quick buck for a quick bonus has just become more difficult.

Paulson Won’t Ask For the Second $350B

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There is only 10 weeks left in the (mis)rule of Bush and Paulson and their Evil Minions™, and now they are saying that they do not want the 2nd half of the bailout package.

So Obama, and whoever is his SecTreas will get to make the decision on that chunk of change.

I can’t figure this one out. They are passing up an opportunity to reward friends, and to fiscally constrain the incoming administration.

My guess is that given the incompetence, opacity, and general corruption of Paulson, he realizes that the Congress will attach strings to the second half that will get his ass thrown in jail over what he did with the first $350 billion.

Not Enough Bullets: AIG, the Gift That Keeps on Giving Edition

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AIG is paying $503 million in deferred compensation to its top employees, because it needs to, “keep valuable workers from exiting the troubled insurance giant.”

Let’s see, the company in bankrupt. It’s sucked up hundreds of billions of dollars from the federal government, and it still needs more.

Could someone please explain to me how getting a company this deep in a hole makes senior management “valuable”?

Whiskey Tango Foxtrot: The Don Siegelman Case

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Well, it now appears that in addition to the fact that Leura G. Canary, the U.S. Attorney in Montgomery, was having regular contacts with the prosecutors, despite having “recused” herself from the prosecution, it now appears that prosecutors had ex-parte communications with the jurors:

Next month in Atlanta, a federal court will hear the high-profile appeal of former Alabama governor Don E. Siegelman, whose conviction on corruption charges in 2006 became one of the most publicly debated cases to emerge from eight years of controversy at the Bush Justice Department. Now new documents highlight alleged misconduct by the Bush-appointed U.S. attorney and other prosecutors in the case, including what appears to be extensive and unusual contact between the prosecution and the jury.

(emphasis mine)

It does not get any more unethical and illegal in a case than this. There were contacts, which are generally unethical, and they went unreported to the judge and the defense, which is illegal.

We need to to reform our drug laws in order to make space for Bush and His Evil Minions&trade, because they all need to go to prison, and not a country club prison, but, to quote Office Space, a, “Pound me in the Ass.” prison.

The End of Wall Street’s Boom

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Go read the whole thing, it’s an inventory of how corruption, self dealing, stupidity, and lack of moral created the Wall Street debacle.

Upton Sinclair put it best when he said, “It is difficult to get a man to understand something when his salary depends upon his not understanding it, though in the case of Wall Street, it is more the year end bonuses than the straight salary.

Here is a typical quote:

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with sh$#ty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

People should be going to jail.

Lots and lots of people should be gong to jail.

The Exiled on Larry Summers

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In addition to the War Nerd, pretty much everything from The Exiled Online is pretty amaxing stuff, and I highly recommend it.

Case in point, Mark Ames review of the life and times of Lawrence Summers:

  • In 1991 he authored a memo calling Africa “Under Pulluted.”
  • 1n 1982 he worked on Reagan’s council of economic advisers helping to deregulate banking.
  • In 1990, his policies for economic shock therapy in Lithuania literally had citizens of the Baltic republic killing themselves at twice the rate of other recently liberalized nations, which had the Lithuanians voting the Communists back into power in 1992.
  • His role in corruption, along with protege Andrei Schleifer, in the “liberalization” of the Russian economy.

Let’s be clear here, in any sane place, and Washington, DC is apparently not a sane place, not only would this man not be considered for a public position, but just on the basis of his calling Africa, “Under Polluted”, he would be shunned from polite society.

The man is a corrupt and incompetent ideologue, and the idea that he is being considered as Secretary of the Treasure, and that he was Secretary of the Treasury, leaves me stunned.

Why Cap and Trade Sucks

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Because at the end of the day, it’s a tax, and it’s not just a tax, it’s a hard to regulate and administrate one, which means that folks like Goldman Sachs are going to look for ways to game the market to line their own pockets, and the money that they make will come out of taxpayer’s, or consumer’s pockets.

Case in point, Goldman Sachs, “Recently bought pieces of two carbon-offset companies, in the latest sign of investment banks’ interest in the area.”

The idea that somehow or other allowing mini-Wall Streets will create innovation and make things better is simply wrong. Look at what they did to home mortgages.

What this is really about is Ivy League alumni politicians and bureaucrats deciding on policies based on the best interests of their Ivy League alumni friends on Wall Street.

It is senseless and destructive tribalism, and no different than Sunni-Shia in Iraq, or Hutu-Tutsi in Rwanda.