Category: Corruption

Shorter Court Filing: Socialize Our Losses, and Privatize Our Gains

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Various players in companies rescued by the US Treasury have taken to filing lawsuits in an attempt to get a share of the profits after the bailouts:

Fannie Mae and Freddie Mac (FMCC) plunged in New York trading after investors including Bruce Berkowitz’s Fairholme Capital Management LLC lost a legal bid yesterday to force the bailed-out companies to share profits with private shareholders.

Fannie Mae fell 29 percent to $1.92 at 11:10 a.m. Freddie Mac dropped 26 percent. Their preferred shares, which drew investments from private-equity and hedge funds, also tumbled, with one series plummeting 54 percent. The mortgage giants had surged for more than two years on speculation that shareholder rights to the earnings could be restored.

The investors sued for breach of contract over allegedly promised dividends and liquidation preferences, and what they called an illegal “taking” under the U.S. Constitution. U.S. District Judge Royce Lamberth rejected their claims, finding that the government is allowed under a 2012 amendment to the companies’ bailout agreements to sweep “nearly all” profits from Fannie Mae and Freddie Mac to the U.S. Treasury.

Here is the crux of what they were looking for:

Fannie Mae and Freddie Mac each surged more than 1,000 percent in 2013 on speculation that courts or lawmakers would allow private investors to share in the companies’ profits, which have rebounded along with the housing recovery. The mortgage-finance firms extended their rally through July, then lost their gains for the year in September, when they each fell more than 30 percent.

There you have it.

The vultures figured that they could buy worthless shares, and convince the Congress of the courts to give them free money at the taxpayer’s expense.

Lamberth just told them to go pound sand.

BTW, it ain’t just these parasites trying to do this.

Like a bad penny, Maurice “Hank” Greenberg is back:

The government today entered its third day of trial defending its $182 billion rescue of American International Group Inc. in another Washington federal court. Maurice “Hank” Greenberg’s Starr International Co., the insurer’s biggest shareholder when the financial crisis struck, claims the assumption of 80 percent of AIG stock by the U.S. in September 2008 in exchange for an $85 billion loan amounted to an unconstitutional taking of private property.

The timeline here is pretty clear:

  • Hank Greenberg runs AIG.
  • Hank Greenberg is kicked out of AIG for dodgy accounting.
  • AIG implodes, in large part as a result of the sh%$ Greenberg did.
  • AIG is bailed out. (More accurately, the counter-parties are bailed out, but that’s another story)
  • Greenberg files a lawsuit to get money for the company that he had a hand in destroying.

Seriously.  This sort of sh%$ is why Eric “Place” Holder will be remembered by history for his refusal to prosecute the banksters.

This will happen, because the people who wrecked the world still don’t feel that they have done anything wrong.

The great charter school rip-off: Finally, the truth catches up to education “reform” phonies – Salon.com

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Bill Clinton weighed in on the debate over charter schools this week, warning that the publicly funded yet autonomous schools must keep their “original bargain” if they want support as alternatives to traditional public schools.

The Huffington Post reports that in remarks before a dinner hosted by the Clinton Global Initiative on Tuesday, the former president hailed the potential of charter schools, even as he called on them to be held to high standards. Clinton cited New Orleans, whose post-Katrina public schools are 100 percent charter. While casting New Orleans’ experience with charters as a success story, he added an important caveat. Charter schools aren’t worth supporting, Clinton suggested, unless they perform better than traditional public schools.

“They still haven’t done what no state has really done adequately,” Clinton told the group, “which is to set up a review system to keep the original bargain of charter schools, which was if they weren’t outperforming the public model, they weren’t supposed to get their charter renewed.”

Clinton’s statement is stunning once you consider its implications. Research shows that the vast majority of charter schools in the U.S. haven’t cleared that hurdle. A study at Stanford University last year found that only 25 percent of charter schools fare better than traditional schools in reading. In math, only 29 percent of charters do better. Nineteen percent of charters actually did worse in reading, while 31 percent were worse in math; the rest weren’t significantly different from traditional public schools.

While Democratic Party centrists in Clinton’s mold have been some of the most enthusiastic cheerleaders for charter schools, Clinton’s comments come as many within the Democratic Party are pushing back against so-called education reformers who want to dismantle teacher protections and increase the number of charter schools. In response to the rise of such groups as Campbell Brown’s Partnership for Educational Justice (chaired by Democratic trial lawyer David Boies) and Democrats for Education Reform, Democrats including operative Donna Brazile, former Ohio Gov. Ted Strickland and former Michigan Gov. Jennifer Granholm this summer formed Democrats for Public Education. The group’s launch underscored that while many of the party’s financial backers support an anti-union, pro-charter agenda, the “reform” movement’s actions are starting to trigger a powerful reaction within the party.

Let’s be clear here. This isn’t about Bill Clinton having an epiphanies.

Bill Clinton isn’t the sort of guy who has epiphanies.

He is a very smart guy who surveys the terrain, and chooses a path, and chooses the best possible path forward for him.

What’s more, Clinton has a record of being just far enough ahead of the curve on these sort of trends to win politically.

My guess, (hope) is that the increasingly dubious claims of the charter school industry, will gain currency in the next year or so, and this is what Clinton has picked up on:

But the word is out, and resistance to charter takeovers is stiffening in more places than York. In school systems such as Philadelphia, Bridgeport, Pittsburgh, and Chicago, where charter schools are major providers, parents and local officials have increasingly opposed charter takeovers of their neighborhood schools. A recent poll in Michigan, where the majority of charter operations are for-profit, found that 73 percent of voters want a moratorium on opening any new charter schools until the state department of education and the state legislature conduct a full review of the charter school system.

I so hope that I’m not being a Pollyanna here,

Student Athletes, My Ass. It’s Legalized Slavery

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In the middle of the rout of the University of Michigan football team by the University of Minnesota football team, the coach, Brady Hoke not only declined to pull a student who was clearly concussed, but he put him back in the game after pulling him:

But, by the third quarter against Minnesota, things were slipping through Hoke’s fingers. Once again, Michigan’s offense was discombobulated, this time with quarterback Shane Morris rather than Devin Gardner, and the Wolverines looked to be in serious trouble when two turnovers in a span of less than two minutes propelled the Gophers to increase their lead from 10-7 to 27-7. At this point, I finally caved and believed that there was little chance for Hoke to save his job, but I still thought he should finish out the season.

And then this happened:





2:05 – 3:58
Morris remains in the game, and then something happens that we never want to see as college football fans. Morris drops back to pass and rolls to his left. As Morris flings the football, Minnesota defensive end Theiren Cockran closes in at full speed, drops his helmet, and unleashes a dirty and ejectionable helmet-to-helmet hit on Morris. Morris’ pass is overthrown and incomplete, but, when the ESPN cameras come back to Morris after the play, we see him walk around dazed for a few seconds and then this:

………

Morris clearly wobbles and tries to prop his head on Ben Braden’s right arm to remain upright. Braden recognizes this and uses both arms to catch Morris and prevent him from falling to the ground. Braden then keeps his right arm wrapped around Morris’ back to keep him standing. Khalid Hill then walks over and says something to Morris, which prompts Morris to look to the Michigan sideline and wave off a substitution.

………

But, not only does Morris remain in the game for another snap, Michigan allows him to drop back for a pass, which could lead to him being on the receiving end of another bone-crushing hit delivered by Minnesota’s pass rush. Absolutely abhorrent. Thankfully, Morris releases his pass before any Gophers can get in the vicinity to do so.

After the play, the ESPN cameras get a shot of Morris staring at the Michigan sideline, and anyone and everyone with a brain can see that Morris is completely dazed and confused. As Morris drops his head, Hoke and the Michigan staff finally realize that Morris is in no condition to be on a football field and motions for Gardner to replace him.

One play too late, though.

 ………

5:05 – 6:33
At the end of Gardner’s third play on the field, during which he scrambled, his helmet was ripped off by a Minnesota defender. Accordingly, by rule, Gardner must sit out the following snap unless a timeout is called by either team.
The decision here for Hoke should be pretty simple: (1) send out third-string quarterback Russell Bellomy for the next play; or (2) use one of Michigan’s remaining two timeouts and keep Gardner in the game.
But that is not what happens, and what does happen next is a fireable offense.
As Bellomy removes his headset and begins scrambling to find his helmet, Morris, who had finally taken off his helmet, starts walking towards the field of play, puts back on his helmet, and jogs onto the field. No Michigan coach, including Hoke, or any member of Michigan’s training staff stop him. At this point, Bellomy retrieves a helmet — one I do not believe is actually his — and starts to sprint onto the field before halting when he sees Morris is already in the huddle.

 ………

For starters, Morris never should have been in this huddle. But look at the play clock in the graphic above. THERE ARE A FULL 25 SECONDS ON THE PLAY CLOCK. That is plenty of time for Hoke to either: (1) call Morris back to the sideline and sub in Bellomy, who now has a helmet; (2) call a timeout, which still remains an option every second until the ball is snapped; or (3) PUT IN ANY PLAYER — WILTON SPEIGHT, BRIAN CLEARY, ALEX SWIECA, LINEBACKER JAKE RYAN, DEFENSIVE TACKLE WILLIE HENRY, ETC. — THAT IS NOT CONCUSSED.

Even the umpire looks over to Michigan’s sideline and asks Hoke if he wants to take a timeout, to which Hoke declines, before starting the play clock.

Disgusting. Reprehensible. Despicable. Atrocious. Disturbing. None of these adjectives can truly describe just how horrifying it is that Hoke had absolutely no problem reinserting Morris back into this game. None.

(all emphasis original)

People are upset that coach Hoke did this.

I’m appalled that Hoke, and the athletic director David Brandon, whose tenure as a Domino’s Pizza CEO and as a Republican political apparatchik (but I repeat myself) presaged his aggressively capitalist management of his “student athletes”, have not been fired yet.

This is not a just a failing of U. Mich, it symptomatic of the fundamentally abusive nature of top tier collegiate athletics.

It’s not education, it’s not athletics, it’s human trafficking.

If it were anything else, everyone involved in this debacle would already be suspended pending termination.

I hope that the QB, Shane Morris, is talking to a lawyer.

Nope, No Partisan Politics Here

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In another 5-4 decision split along ideological lines, the Supreme Court has blocked early voting in Ohio, at least until an appeals court rules:

With just sixteen hours before polling stations were to open in Ohio, the Supreme Court on Monday afternoon blocked voters from beginning tomorrow to cast their ballots in this year’s general election. By a vote of five to four, the Justices put on hold a federal judge’s order providing new opportunities for voting before election day, beyond what state leaders wanted.

The order will remain in effect until the Court acts on an appeal by state officials. If that is denied, then the order lapses. It is unclear when that scenario will unfold. The state’s petition has not yet been filed formally.

The practical effect of the order will mean that, at the least, early voting will not be allowed this week — a period that supporters of early balloting have called “Golden Week.” That permits voters to register and cast their ballots on the same day.

Depending upon the timing of the state’s filing of a petition for review and the Court’s action on it, Monday’s order may also mean that early voting will not be permitted on most Sundays between now and election day, November 4, and will not be permitted during evening hours — that is, after 5 p.m.

I will make a note here any suggestion that Justice Kennedy is anything but a partisan hack has been thoroughly debunked.

Then again, we knew that after his vote in Bush v. Gore in 2000.

For the Past two Decades or so, not Having a Substantive Conflict of Interest Policy has been Goldman’s Business Model

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In looking at the recent ProPublica and This American Life coverage of the capture of the Federal Reserve regulators by the Vampire Squid (Goldman Sachs) it’s important to note that they miss a basic point, which is that, as
Justin Fox so ably points out in the Harvard Business Review, Goldman Sachs has been using conflicts of interest as a mechanism to generate much, if not most of their profits.

I recommend that you read the ProPublica story, and then listen to the This American Life podcast, but Mr. Fox does make a legitimate complaint about the coverage.

Specifically one of the big reveals is that a Goldman executive said that consumer protection laws do not apply to rich clients.

This is in fact true under US law:

In the first, Carmen Segarra, the former Fed bank examiner who made the tapes, tells of a Goldman Sachs executive saying in a meeting that “once clients were wealthy enough, certain consumer laws didn’t apply to them.”  Far from being a shocking admission, this is actually a pretty fair summary of American securities law. According to the Securities and Exchange Commission’s “accredited investor” guidelines, an individual with a net worth of more than $1 million or an income of more than $200,000 is exempt from many of the investor-protection rules that apply to people with less money. That’s why rich people can invest in hedge funds while, for the most part, regular folks can’t. Maybe there were some incriminating details behind the Goldman executive’s statement that alarmed Segarra and were left out of the story, but on the face of it there’s nothing to see here.

The theory here is that the very rich, by virtue of having a lot of money, are assumed to be knowledgeable investors, and so are more able to protect themselves.

Simply put, they are saying that they are not the general public, because they either have, or can hire, financial knowledge.

In highlighting this, they underplay the 2nd reveal of the story, and what is clearly the reason for Ms. Segarra’s unjustified termination, the fact that Goldman Sachs never had a meaningful conflict of interest policy:

The other smoking gun is that Segarra pushed for a tough Fed line on Goldman’s lack of a substantive conflict of interest policy, and was rebuffed by her boss. This is a big deal, and for much more than the legal/compliance reasons discussed in the piece. That’s because, for the past two decades or so, not having a substantive conflict of interest policy has been Goldman’s business model. Representing both sides in mergers, betting alongside and against clients, and exploiting its informational edge wherever possible is simply how the firm makes its money. Forcing it to sharply reduce these conflicts would be potentially devastating.

(emphasis mine)

Mr. Fox makes another interesting point, that any organization that is responsible for the stability and the viability of the banks, such as the Federal Reserve, have an inherent interest in ensuring that those organizations are profitable, because profitable banks are more stable than unprofitable.

Carmen Segarra, in pushing for Goldman having a conflict of interest policy, was attacking the attacking the viability of a bank.

This raises a larger question, whether we really want to have an organization for which has unethical behavior at the core of both its culture and profits to remain viable.

This was the question that no one has asked about Wall Street in general, and Goldman Sachs in particular.

It needs to be asked.

Damn. No Jail Time

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Conservative author and filmmaker Dinesh D’Souza avoided prison on Tuesday when a U.S. judge sentenced him to serve eight months in a community confinement center after he pleaded guilty to violating campaign finance law.

D’Souza, 53, was ordered by U.S. District Judge Richard Berman in Manhattan to live in a center, which would allow him to leave during non-residential hours for employment, for the first eight months of a five-year probationary period.

Berman also ordered D’Souza to perform one day of community service a week during probation, undergo weekly therapy and pay a $30,000 fine.

This is a guy whose wife wrote a letter to the judge that condemned him for forging her signature and being abusive:

During the sentencing hearing, Berman read from a blistering letter submitted to the court by D’Souza’s estranged wife. In the missive, Dixie D’Souza alleged that her ex-spouse forged her signature on one campaign contribution form, and that he had an “abusive nature.”

D’Souza, who was married to the defendant for 20 years, wrote, “In one instance, it was my husband who physically abused me in April 2012 when he, using his purple belt karate skills, kicked me in the head and shoulder, knocking me to the ground and creating injuries that pain me to this day.” Click here to download a PDF of Dixie D’Souza’s five-page letter to Berman.

Seriously.  What does a Republican have do to get thrown in jail these days?

Finally!

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The FTC is suing brand name drug makers over their payments to generic drug manufacturers to delay their production:

For the first time since the U.S. Supreme Court ruled last year that so-called pay-to-delay deals may be subject to greater antitrust scrutiny, the U.S. Federal Trade Commission has filed a lawsuit charging drug makers with violating anti-trust laws and hurting consumers in their collective pocketbooks.

Specifically, the agency charged several drug makers – including AbbVie ; Abbott Laboratories , which spun off AbbVie, and Teva Pharmaceuticals – for striking deals that delayed the availability of the widely promoted AndroGel testosterone replacement therapy, a $1 billion seller.

“We believe the defendants’ anticompetitive conduct has forced consumers to overpay hundreds of millions of dollars for this medication,” FTC chairwoman Edith Ramirez told the media in a briefing, in which she noted the agency hopes to force the drug makers to disgorge “their ill-gotten gains.”

In these deals, a brand-name drug maker settles with a generic rival in exchange for ending patent litigation and launching a copycat medicine at a future date. The pharmaceutical industry contends the deals are not only legal, but actually allow drugs to reach consumers faster than if litigation continued.

Also known as reverse payment settlements, the deals emerged as an unintended consequence of the Hatch-Waxman Act that was designed to accelerate access to lower-cost generics. An FTC report in 2012 found there 40 potential pay-to-deals, up from 28 the year before.

The Supreme Court ruling, which reviewed a lawsuit brought by the FTC against Actavis, was a boost to the agency, because it supported the contention that pay-to-delay deals may violate antitrust laws and, effectively, allowed the FTC to pursue lawsuits against drug makers.

………

In its lawsuit, the FTC charges that AbbVie, Abbott and Bevins Healthcare filed “sham” patent litigation against potential generic rivals, including Teva, and then entered into an allegedly illegal patent settlement in order to thwart competition.

I’ve said it before (like the post just before this one):  Our current model of capitalism is a harmful and corrupt system that resembles nothing more than the book Lord of the Flies.

Not Enough Bullets………

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Disgraceful

Various regulators tell us that there is no t need to send the banksters to jail, because the fines are deterrence enough.

Guess what? Those same regulators end up never collecting those fines:

On a plane earlier this week, I watched The Wolf of Wall Street. The film’s outsized antics—public masturbation, the tossing of little people, lots and lots of Quaaludes—seemed too big for a seatback screen, or, for that matter, reality. As despicable as some of Jordan Belfort’s behavior was, I was able to occasionally laugh at Leonardo DiCaprio’s version of him knowing that, by now, more than 10 years after his real-life sentencing, Belfort has been sufficiently punished.

But in fact, that’s hardly the case: After pleading guilty to fraud and money laundering, Belfort was ordered in 2003 to pay out about $110 million to those he wronged. Since then, he’s only paid $11.8 million. He was also sentenced to four years in federal prison, but he only ended up serving just shy of two years.

………

Belfort’s relatively consequence-free story is only one of the more prominent ones in a parade of aggravating numbers reported on earlier this week by The Wall Street Journal. There’s still $97 billion out there in penalties that the Justice Department has failed to recover, and between September 2012 and September 2013, the department collected only 22 percent of penalties doled out. One particularly demoralizing figure was that the Commodity Futures Trading Commission had collected about a tenth of a percent of the $3.7 billion owed to wronged investors.

So how do convicted felons go about avoiding their payments? Take the case of Paul Bilzerian, who owed the Securities and Exchange Commission $62 million and paid only $3.7 million over the course of 25 years. (The Journal reported a few days ago that the SEC was officially giving up on getting any more money from him, after having spent $8.6 million to get the meager amount that they did obtain.)

Bilzerian has systematically thwarted federal prosecutors by building a web of trusts, partnerships, and corporations established in sketchy tropical locales. He has passed on cash and assets to his sons. He delayed prosecutors for years with a bankruptcy filing. And he has transferred ownership of his 28,000 square-foot home to trusts that were owned by, at various times, his in-laws and his neighbor’s mom. “Do you think I’d be stupid enough to have a bank account?” Bilzerian told a Journal reporter.

So, someone gets caught selling a dime bag, they take everything through asset forfeiture, but this guy is living in the lap of luxury.

You know, these guys are economic terrorists.

Why can’t we drone them?

My Mom Once Threatened This

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Only it was the threat to hand out a Marxist tract on Atheism, not Church of Satan children’s activity book:

The Satanic Temple has responded to an Orange County, Florida decision to disseminate religious materials in public school by creating complementary materials that espouse the philosophy and practice of Satanism.

Last month, a Florida judge ruled that if the Orange County school district allowed Christian groups to disseminate Bibles and Christian-oriented religious materials in its schools, it would also have to allow atheist groups to do the same.

David Williamson of the Central Florida Free Thought Community — who recently fought against Brevard County’s attempt to ban atheists from offering invocations at public meetings — sued the district over its initial unwillingness to allow atheist literature with titles like “Jesus Is Dead” and “Why I Am Not a Muslim” in the schools.

A judge dismissed that case after the school board decided to allow the materials.

The Satanic Temple took advantage of this decision, deciding to flood Orange County schools with a pamphlet entitled The Satanic Children’s Big Book of Activities [as an aside, it is far less interesting than I had hoped] that contains kid-friendly Satanic lessons.

My mom had a similar experience dealing with the Charlottesville school system, when my little big brother refused to take a bible, he was called a “Heathen,” my mom complained, and was told that recent court decisions allowed this.

My mom replied that this would require similar access to hand out the aforementioned Marxist tracts, and superintendent decided that, in the future, no one should hand out religious literature at school.

More Feet of Clay from the American “Educational Reform” Establishment

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What a surprise, the favorite project of corporate schooling advocate, and Secretary of Education, Arne Duncan, is an abject failure:

The Obama administration’s signature $4 billion Race to the Top initiative, designed to spur far-reaching education reforms across the country and raise student achievement, is largely a failure, an analysis released Thursday concludes.

Most winning states made what the Broader, Bolder Approach to Education labeled “unrealistic and impossible” promises to boost student achievement in exchange for prizes that were ultimately paltry in comparison with their pledges.

But three years in, Race to the Top hasn’t spurred states to address what really is behind students’ poor academic performance: poverty and the associated lack of opportunities that accompany it, said Elaine Weiss, national coordinator of the Broader, Bolder Approach to Education. Her group advocates for a more targeted focus on poverty over the current slate of education reforms involving testing and accountability.

The Department of Education rejected the report’s conclusions, saying it’s seeing promising signs of improvement in student achievement in Race to the Top states and warning that it’s too early to draw sweeping conclusions. Some state officials also said they are finding the competition useful.

Of course, this assumes that the real goal of the corporate driven education reform is actually to improve education, and not simply an excuse to allow Wall Street to asset strip yet another segment of our society.

I do not share the optimism of  Broader, Bolder Approach to Education.  I have concluded that it is about private profits, and not an honest desire to improve American education.

Air Force TaliBaptist Leadership Caves Over Oath

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After spending nearly a month threatening people who refused to swear to God to reinlist, the USAF has reversed itself:

The Air Force has withdrawn a requirement that all airmen who take the oath of enlistment and officer appointment conclude with “so help me God,” the service announced Wednesday.

 The Air Force previously allowed airmen to omit those words, but removed that option in October based on its interpretation of 10 U.S.C. 502, 5 U.S.C. 3331 and Title 32, which contain the oaths of office. The Navy, Army and Marine Corps allow their service members to omit “so help me God,” spokesmen for all three services told Air Force Times last week.

 The Air Force sought a legal review of the rule by the Defense Department’s General Counsel on Sept. 9, five days after the American Humanist Association announced it was representing an unnamed atheist airman, stationed at Creech Air Force Base in Nevada, who was denied reenlistment for refusing to say, or sign a form, stating “so help me God.”

 Monica Miller, an attorney with the AHA’s Appignani Humanist Legal Center said the association would give the Air Force until Sept. 19 to reverse course.

 On Tuesday, Air Force Secretary Deborah Lee James said the service was “making the appropriate adjustments to ensure our Airmen’s rights are protected.”

“We take any instance in which Airmen report concerns regarding religious freedom seriously,” James said in the release announcing the change, which is effective immediately.

Translation: We never thought that anyone would notice our attempt to go all Taliban on the Air Force, and we are very sorry that we got caught.

Whichever General Officer signed off on this abomination should be fired, as in no pension.

Kansas Supreme Court Slaps Down Kris Korbach’s Election Shenanigans

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The court ruled unanimously that Democrat Chad Taylor’s name has to be dropped from the ballot as he requested:

The Kansas Supreme Court on Thursday sided with the Democratic candidate for Senate in his attempt to drop off the November ballot, creating a tougher contest for the Republican incumbent, Pat Roberts, in a race with a strong independent candidate.

But the Kansas secretary of state, Kris Kobach, a Republican who had fought the withdrawal, said afterward that Democrats would have to pick another candidate, adding to the uncertainty about whose names would appear on the ballot.

Noticed the last bit?

Where Korbach is now insisting that the Democrats will have to nominate a replacement, something he never brought up during arguments?

I understand the electoral dynamics. 

The current polls show that Pat Roberts wins in a 3-way race,  and gets demolished in a 2-way race, but this is not an excuse for the secretary of state to be so blatantly corrupt.

Here is hoping that Kris Korbach ends up like disgraced former Kansas AG Phill Kline, who was disbarred.

Bullsh%$

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Eric holder is now saying that the DoJ will finally start prosecuting bankers:

The Justice Department has launched criminal fraud investigations of individuals at Wall Street firms, with the hopes of filing formal charges in the coming months, Attorney General Eric H. Holder Jr. said Wednesday.

“We are making good progress in these cases, which involve conduct that has undermined the integrity of our markets,” Holder said at New York University Law School.

The nation’s top prosecutor did not go into detail about the inquiries, but people familiar with the cases say the probes involve the possible manipulation of the $5.3 trillion global foreign-exchange markets.

At least seven banks, including JPMorgan Chase, Citigroup and Barclays, disclosed in regulatory filings last year that “various government authorities” had requested information about their trading activities. Bank employees have turned over information to U.S. authorities about the trading scheme, according to people who were not authorized to speak publicly about the ongoing investigations.

If any person is criminally prosecuted, it will be the little fish, and any settlement will be small enough to be dismissed as a cost of doing business, and any admission will be minor enough that no bank will lose their dollar clearing privileges.

This is theater.

Lucy will pull away the football, again.

If Eric “Place” Holder or Barack Obama were interested in prosecuting law breakers on Wall Street, they would already have done it.

There is no interest in this administration in prosecuting the general criminality that is the US financial industry.

H/t CT at the Stellar Parthenon BBS.

The Prosecutor for the Ferguson Shooting is Throwing the Grand Jury Investigation

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It has become patently transparent that even inside the beltway know-nothing Dana Milbank feels compelled to call this out:

What happened in Ferguson, Mo., last month was a tragedy. What’s on course to happen there next month will be a farce.

October is when a grand jury is expected to decide whether to indict the white police officer, Darren Wilson, who killed an unarmed black teenager by firing at least six bullets into him. It’s a good bet the grand jurors won’t charge him, because all signs indicate that the St. Louis County prosecutor, Robert McCulloch, doesn’t want them to.

The latest evidence that the fix is in came this week from The Post’s Kimberly Kindy and Carol Leonnig, who discovered that McCulloch’s office has declined so far to recommend any charges to the grand jury. Instead, McCulloch’s prosecutors handling the case are taking the highly unusual course of dumping all evidence on the jurors and leaving them to make sense of it.

McCulloch’s office claims that this is a way to give more authority to the grand jurors, but it looks more like a way to avoid charging Wilson at all — and to use the grand jury as cover for the outrage that will ensue. It is often said that a grand jury will indict a ham sandwich if a prosecutor asks it to. But the opposite is also true. A grand jury is less likely to deliver an indictment — even a much deserved one — if a prosecutor doesn’t ask for it.

McCulloch has done this before:

……… During his tenure, there have been at least a dozen fatal shootings by police in his jurisdiction (the roughly 90 municipalities in the county other than St. Louis itself), and probably many more than that, but McCulloch’s office has not prosecuted a single police shooting in all those years. At least four times he presented evidence to a grand jury but — wouldn’t you know it? — didn’t get an indictment.

This is rather unsurprising.

DA’s don’t want to prosecute cops in the first place, they have to work with them, and McCulloch has a particularly bad record in terms of prosecuting police misconduct .

The fix is in.

Kraptacular Kris Korbach Kaves Kravenly

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I don’t know who got pictures having sex with a billie goat, but the Kansas secretary of state has capitulated on the withdrawal of the Democratic candidate for Senate, and will send out absentee ballots without a Dem in that race:

In an apparent reversal, Kansas Secretary of State Kris Kobach’s office is instructing election officials in the state to send out overseas military ballots without Democratic Senate nominee Chad Taylor or any other Democratic Senate candidate listed.

Kobach spokeswoman Samantha Poetter confirmed to TPM that the ballots would be sent out by Saturday, the deadline under state and federal law.

“Our ballots are going out without Chad Taylor (or any Democratic candidate) for U.S. Senate,” Poetter said. “They’ve been ordered to send them out as soon as possible.”

TPM obtained a copy of the official order sent to local election officials.

“The list does NOT contain the name of a Democratic nominee for United States Senate,” the order said. “There are three candidates, Randall Batson, Libertarian, Greg Orman, independent, Pat Roberts, Republican.”

They will be going out with some sort of disclaimer about the courts possibly ordering a new ballot, but this I really don’t see this particularly likely.

Here is hoping that this entire mishugas will serve to turn off the voters, Korbach is up for reelection, and the race is close.

It Ain’t the Salt in the Pasta Water, and it Ain’t the Bread Sticks, It’s the Looting

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Have you read the story about the hedge fund that criticized the Olive Garden restaurants for how they boiled their pasta and complained that they served too many bread sticks?

Read further, past the cute suggestions about food prep, and it becomes clear that the Starboard Value hedge fund was interested in srtip mining the real casual dining chain and leaving nothing behind but its bleached bones:

Last week, you may have noticed a kooky story about a hedge fund named Starboard Value chastising Olive Garden for handing out too many unlimited breadsticks at a time, and failing to salt its pasta water. The snarky 294-page presentation highlighted everything wrong with Olive Garden, along with recommendations to fix it. And there was much laughter.

………

 Except Starboard Value does not spend its time crusading for better mid-market Italian meals for no reason. It owns a bunch of shares in Olive Garden’s parent company, Darden Restaurants, and wants to take control of the company’s board. The scheme it’s concocted to increase its share price has little to do with breadsticks and pasta water. It really wants to steal Olive Garden’s real estate, and make a billion dollars in the process.

Starboard Value doesn’t try to hide this. Right in the executive summary, it talks up Darden’s real estate holdings the way a starving man sizes up a steak. Darden, owner of LongHorn Steakhouse, Capital Grille and other chains, “has the largest real estate portfolio in the casual dining industry, owning both the land and buildings on nearly 600 stores and the buildings on another 670,” Starboard Value writes. “We believe that a real estate separation could create approximately $1 billion in shareholder value.” Here’s the actual slide:

This is a more common technique than you might realize. Private equity firms often buy businesses with lots of real estate assets, like nursing homes, restaurants or retail outlets. They then split the company in two: one owns all the real estate, and one manages the rest of the business. The operating company now has to lease back the real estate from the property company, paying rent on what it used to own. The private equity firm, meanwhile, can take profits from the lease payments or by selling the entire real estate portfolio, making back its initial investment. The more expensive the leases, the more the private equity firm makes.

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 A sale-leaseback arrangement may make sense for a company with lots of real estate holdings, if it needs quick cash to make investments and cannot access a loan. Think of it like a company making a reverse mortgage. But Eileen Appelbaum of the Center for Economics and Policy Research, co-author of a recent book called “Private Equity at Work: When Wall Street Manages Main Street,” explains the key difference. “If the company does this themselves, they get to keep the money from the sale,” Appelbaum told Salon. “And they get to spend it to make improvements. In this case and the private equity case, the shareholders see the value.” Basically, Starboard Value wants to strip Darden’s assets, the Wall Street equivalent of pocketing the silverware.

 Starboard Value has a history of asset-stripping. Earlier this year, it forced Wausau Paper to change CEOs and consolidate mills, moving out of the century-old headquarters that gave the company its name. Starboard Value demanded the company use some of those savings from laying off workers to pay Starboard a dividend.

 In May, Starboard Value forced Darden to sell another of its chains, Red Lobster, to private equity fund Golden Gate Capital for $2.1 billion. The same day, Golden Gate sold the real estate of 500 Red Lobster locations to a real estate investment trust (REIT) for $1.5 billion. Darden used proceeds of the sale to give dividend payments to shareholders like Starboard Value. And Golden Gate made back most of the investment in a blink with the real estate sale. But Red Lobster now has to pay exorbitant rents on its restaurants. “The sale-leaseback will cut their net earnings roughly in half,” Eileen Appelbaum estimated.

 If Olive Garden has to cut its earnings in half to pay rent on properties it previously owned, you can forget about upgrading the menu or making any of the other improvements Starboard Value suggests. The restaurants will barely be able to keep afloat. But Olive Garden’s continued existence is of minimal importance to Starboard Value. “These are shareholders, they don’t really care what happens once they make their money,” said Eileen Appelbaum.

Note here that the ratf%$S who want to dismantle the chain, and sell it for parts, much like an chop shop for stolen cars.

This is what tools like Timothy Geithner call financial innovations. It’s not. It’s a pernicious form of parasitism.

As the old saying goes, “The best way to rob a bank is to own one.”

While a modern economy need a way to get capital from people who have it to people who need it, this has nothing to do with that.

I’m not sure what the whole solution is, but a Tobin Tax on financial transactions would be a good start.

Locking up some of these crooks would be nice too.

And While We are On the Subject of how Hedge Funds are F%$#ing the Pension Funds

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Mission Accomplished:
First, you get money to your cronies, and 2nd you f%$# public servants and pub lic sector unions.

Sometimes, it is not just over-priced under-performance, sometimes, it’s corruption. Case in point, the  disastrous decision by Chris Cristie to move a significant portion of New Jersey’s pension funds to Christie cronies on Wall Street:

New Jersey investment officials have directed increasingly large slices of state pension money into riskier investments, such as hedge funds, touting their strategy as a means of limiting exposure to a volatile stock market. They’ve argued that their approach would maximize overall returns and justify the higher fees paid to Wall Street money managers.

But in seven of the eight years since the state began shifting pension funds into so-called alternative investments, returns have fallen well short of the broader stock market, an analysis of state financial records shows. In those seven years, New Jersey’s alternative investment portfolio has produced gains of just more than half of the S&P 500, the widely watched index seen as a proxy for shares of large corporations.

Since Gov. Chris Christie took office, he has nearly tripled the amount of retiree cash invested in alternative investment firms — many of whose employees have made financial contributions to political groups backing Christie’s election campaigns. In that time, the gap between New Jersey’s alternative portfolio and the broader market has rapidly expanded, costing taxpayers billions in unrealized returns and threatening the financial stability of the $78 billion pension system. The state’s pension funding shortfalls — which have been exacerbated by Christie’s market-trailing investment strategy — were one of the factors cited by Fitch Ratings in its decision last week to downgrade the state’s bond rating for the second time.

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“The idea that hedge funds, private equity funds and other alternative investments beat stock-index funds over the long haul is an urban myth like the tooth fairy,” said Jeff Hooke, a former Lehman Brothers investment banker who in 2012 published a study showing that higher alternative investment fees correlated to lower pension returns. “The managers of these big state pension funds are drinking the Wall Street Kool-Aid. The problem with these alternative investments is that they have a tough time beating the low-fee index funds because the fees for alternatives are so big.”

Even without considering fees, cheap (a 90% lower expense ratio) index funds outperform the aggressively managed money.

When you add in the rapacious fees charged, it’s not even close.

This lack of performance, and his refusal to make necessary pension payments earned him a downgrade from S&P as well:

In a significant blow to Gov. Chris Christie, Standard & Poor’s on Wednesday said it is downgrading New Jersey’s credit rating. The announcement said Christie’s management of New Jersey’s $78 billion pension system has “significant negative implications” for the state’s finances. S&P also cited the state’s below-expected tax revenues as a factor that “put additional pressure on future budgets.” The downgrade comes as Christie aides have been publicly suggesting that the governor’s fiscal-management record would be a boon should he decide to run for president in 2016.

Bloomberg News notes this is the eighth downgrade during Christie’s tenure and the Washington Post reports that “New Jersey’s credit rating has been downgraded more under Chris Christie than any other governor” in the United States.

Neither Christie’s office nor the New Jersey Department of Treasury responded to emails from International Business Times requesting comment about the S&P downgrade.

Citing Christie’s decision to not make actuarially required pension payments that he had previously agreed to, S&P’s downgrade announcement says New Jersey has “demonstrated [a] lack of commitment when it comes to funding its annual contributions.” S&P says it expects the pension system’s finances “to decline much more significantly” in the coming years.

BTW, there has been a formal ethics complaint fired on his pension policies:

New Jersey’s biggest labor union today plans to file a complaint with the State Ethics Commission against a key adviser to Gov. Chris Christie who is in charge of the agency that oversees pension investments.

In an 11-page letter to the ethics commission, New Jersey AFL-CIO President Charles Wowkanech said that the chair of the State Investment Council, Robert Grady, “has violated the Division’s own rules barring politics in the selection and retention of such funds and investments, and has further created an appearance of impropriety.”

At issue is the state’s investment of hundreds of millions of dollars of pension money with Wall Street firms, including hedge funds and other types of “alternative investments” that charge higher fees than more traditional types of investments — a practice that started before Christie was governor but has increased under him.

Some “key executives” of the firms donated to state and national Republican organizations that helped Christie, according to Wowkanech, who said those donations potentially broke state pay-to-play laws, and at the least violated the state officials’ code of ethics. Wowkanech wants an investigation.

And on top of all this, it now appears that the Christie administration is using fuzzy math to goose their return on investment.

It’s clear that Christie has moved from bombast to damage control in this matter:

The New Jersey Division of Investments has quietly sold its stake in a venture capital fund managed by General Catalyst Partners, following allegations of impropriety related to a political contribution from General Catalyst “executive-in-residence” and current Massachusetts gubernatorial candidate Charlie Baker.

Fortune has learned that the sale agreement was inked back in August, and closed within the past several weeks. It may be publicly disclosed tomorrow during an open State Investment Council meeting, and was discussed during an investment policy committee call last week. No word yet on the buyer, although a source says that the sale price was around 1.5x of cost.

I so hope that this guy runs for President.

The scrutiny he’ll get will destroy any future for him in politics.

And I Would Have Gotten Away With it Too, If it Weren’t For Your Meddling N***ers!

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First we have Georgia State Senator Fran Millar objecting to get out the vote efforts in black ares then following this up by saying explicitly that he it is the black voter voter bit:

The Georgia state senator who ranted about excessive black voting and vowed to fight a move to expand early voting in DeKalb County defended his remarks on Facebook, saying that he would rather have more educated voters than an increase in the total number of voters.

 The Republican state senator, Fran Millar (pictured), wrote that in a comment responding to others on his post where he vowed to end Sunday balloting in DeKalb County because that area is “dominated by African American shoppers” and has “large African American mega churches.”

 “I do agree with Galloway and I never claimed to be nonpartisan,” Millar wrote. “I would prefer more educated voters than a greater increase in the number of voters. If you don’t believe this is an efort [sic] to maximize Democratic votes pure and simple, then you are not a realist. This is a partisan stunt and I hope it can be stopped. Furthermore I don’t control where people are allowed to vote but am glad Brookhaven has been added for the last week.”

This is followed up by the Georgia Secretary of State, whose job is to protect the franchise, starts a bogus investigation of a GOTV group, and then is caught on tape calling increased black votes a problem:

The audio, posted on YouTube by Better Georgia, features a man identified as Georgia Secretary of State Brian Kemp telling fellow Republicans at a July 12, 2014 event in Gwinnett County:

In closing I just wanted to tell you real quick, after we get through this runoff, you know the Democrats are working hard, and all these stories about them, you know, registering all these minority voters that are out there and others that are sitting on the sidelines, if they can do that, they can win these elections in November. But we’ve got to do the exact same thing. I would encourage all of you, if you have an Android or an Apple device, to download that app, and maybe your goal is to register one new Republican voter.

Clearly the Supreme Court was either smoking some very good weed, or were a bunch of contemptible corrupt partisans, when they gutted the Voting Rights Act.

My money is on the latter.

Ha-Ha!

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Dinesh D’Sousa pled guilty in May for laundering political donations, and now we are getting to the sentencing, and it appears that the prosecutors are not amused by his constant bleatings claiming that it was a politically motivated prosecution:

The U.S. government wants conservative author and filmmaker Dinesh D’Souza to be sentenced to as much as 16 months in prison, following his guilty plea to a campaign finance law violation.

In a Wednesday court filing, federal prosecutors rejected defense arguments that D’Souza was “ashamed and contrite” about his crime, had “unequivocally accepted responsibility,” and deserved a sentence of probation with community service.

D’Souza, 53, admitted in May to illegally reimbursing two “straw donors” who donated $10,000 each to the unsuccessful 2012 U.S. Senate campaign in New York of Wendy Long, a Republican he had known since attending Dartmouth College in the early 1980s.

The government said a 10- to 16-month prison sentence was appropriate for D’Souza, and necessary to deter others from abusing the election process, including “well-heeled individuals who are tempted to use their money to help other candidates.”

It also said D’Souza waited to “the last possible moment” prior to trial before admitting guilt, and then went on TV shows and the Internet to complain about being “selectively” targeted for prosecution, and having little choice but to plead guilty.

“Based on the defendant’s own post-plea statements, the court should reject the defendant’s claims of contrition on the eve of sentencing,” prosecutors led by U.S. Attorney Preet Bharara in Manhattan said in the filing.

Arrogance is as arrogance does, I guess.

I’m hoping for jail time. 

Not only will it do the rest of us some good, but it might provide an opportunity for him to learn penitence (in the penitentiary).

Seriously, this guy is starting to sound like the David Koresh of movement conservatism and needs a serious dose of reality.

This is the Least Surprising News of the Day

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I haven’t had a whole lot to say about Ray Rice beating his fiancee (now wife).

It’s pretty straightforward: You do not hit hit your significant other, ever.*  That is all that needs to be said.

But the burgeoning scandal erupting from the months long coverup by the NFL requires a bit more analysis:

A law enforcement official says he sent a video of Ray Rice punching his then-fiancée to an NFL executive five months ago, while league executives have insisted they didn’t see the violent images until this week.

The official played The Associated Press a 12-second voicemail from an NFL office number on April 9 confirming the video arrived. A female voice expresses thanks and says: “You’re right. It’s terrible.”

“We are not aware of anyone in our office who possessed or saw the video before it was made public on Monday. We will look into it.

”- NFL spokesman Brian McCarthy

Hours after the report Wednesday, Goodell announced former FBI director Robert S. Mueller III will conduct a probe into how the league pursued and handled evidence as it investigated claims against Rice.

NFL spokesman Greg Aiello said in a statement that the investigation will be overseen by owners John Mara of the New York Giants and Art Rooney of the Pittsburgh Steelers. Goodell said that Mueller will have access to all NFL records and will have full cooperation from league personnel.

The law enforcement official, speaking to the AP on condition of anonymity because of the ongoing investigation, says he had no further communication with any NFL employee and can’t confirm anyone watched the video. He said he was unauthorized to release the video but shared it unsolicited because he wanted the NFL to have it before deciding on Rice’s punishment.

The NFL has repeatedly said it asked for but could not obtain the video of Rice hitting Janay Palmer — who is now his wife — at an Atlantic City casino in February.

Just as an FYI, John Mara and Art Rooney, the guys running this “independent” investigation, are Goodell’s biggest boosters among the owners, and have many social and business connections.

I am so completely unsurprised by this.

For all their faux piety about the integrity of the sport,  it’s all about protecting them and theirs.

One wonders what low level functionary that they will find to throw under the proverbial bus.

*Various sporting activities, and certain forms of private entertainment by mutual consent (hopefully with a safe word) are excepted from this.