Category: Corruption

Just When You Thought that Obama Could Not Get Any Worse………

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He is proposing to sell the Tennessee Valley Authority to Wall Street for some magic beans:

The headline issue, cutting Social Security benefits by changing the measurement of inflation (the “chained CPI”), is something that writers on Naked Capitalism have been predicting for a long time. What has come as a shocking (but not surprising) twist is a bombshell buried in Obama’s budget: the proposed privatization of the Tennessee Valley Association. At this point I think it’s important to quote a part of this section of the budget at length:

TVA is a self-financing Government corporation, funding operations through electricity sales and bond financing. In order to meet its future capacity needs, fulfill its environmental responsibilities, and modernize its aging generation system, TVA’s current capital investment plan includes more than $25 billion of expenditures over the next 10 years. However, TVA’s anticipated capital needs are likely to quickly exceed the agency’s $30 billion statutory cap on indebtedness. Reducing or eliminating the Federal Government’s role in programs such as TVA, which have achieved their original objectives and no longer require Federal participation, can help put the Nation on a sustainable fiscal path. Given TVA’s debt constraints and the impact to the Federal deficit of its increasing capital expenditures, the Administration intends to undertake a strategic review of options for addressing TVA’s financial situation, including the possible divestiture of TVA, in part or as a whole.

Notice how nonsensical the justification for the “divestiture of TVA” is. The authors clearly acknowledge that the Tennessee Valley Authority is a “self-financing Government corporation”. The TVA issues its own debt and also has income from electricity sales. Yet because its capital expenditures are counted as part of the federal deficit for accounting purposes, privatizing the TVA supposedly counts as a “spending cut”. This is the willful blindness of orthodox thought taken to extreme levels. Privatizing the TVA doesn’t shrink the amount of debt in the economy one cent; all it does is bring that debt onto private balance sheets. In fact, private investors will buy the Authority on mainly on credit, increasing the amount of private debt.

Note also whoever buys this will pay far less than market value, because that is how this sh%$ works, and since they get it on the cheap, their goal will be to suck the marrow out of it, and to raise rates on the people it serves as fast as it possibly can.

That’s more than 9 million people he wants to f%$# like a drunk sorority girl.

Thatcher was too smart to privatize Britrail, but John Major was not, and the result was crappy service and fatal accidents.

It is so bad that even the Tories have disavowed selling off rail.

You will see the same from privatizing the TVA.

So, he’s going after two of the remaining jewels in the crown of the New Deal, the TVA, and Social Security.

He’s doing it because he wants to, because, except for the appeals to racial bigotry and abortion criminalization, he’s well to the right of Ronald Reagan, and he hates the liberal wing of the Democrat Party in general, and the New Deal in particular.

I’m beginning to think that I should add the tag “Manchurian Democrat” to posts like this.

It is Called Fraud

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When lenders lose original loan documentation, and their response is to fabricate documents that have nothing to do with reality, it is not a business plan, it is criminal fraud:

It is hard to credit, but lenders routinely mislay the card and loan agreements their customers originally sign. But even more astonishingly, if there has been a dispute later on, the lenders have used computer software to ‘ recreate’ the original documents, sometimes with less than accurate results.

Being able to recreate agreements in this way helps banks pursue borrowers over debts, but there is growing evidence that when lenders ‘recreate’ contracts they often do not stick to the original terms.

The result is that borrowers who are often already in financial trouble are left in worse difficulties.

Document ‘recreation’ is in the spotlight after a court case last month involving a number of borrowers with credit cards issued by HBOS, Barclaycard, MBNA and HSBC. Part of the case, heard in the High Court in Manchester, was to assess the circumstances in which banks could ‘ reconstitute’ lost agreements.

Judge David Waksman concluded that in future, lenders would have to explain why they did not have the original agreements. He said they would have to prove that the recreated document was a true copy of the original contract.

This is in the UK, not the US, that this is happening in right now.

There should be arrests and criminal charges, but all they are getting is a slap on the wrist from the Office of Fair Trading guidelines.

The UK is like us in this way, and it is a pity.

High Tech Eutopianism Fail

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The fact that the Silicon Valley icon Michael Arrington’s behavior towards woman has been ignored and covered up for years puts the lie to the idea that somehow the culture of high tech will in and of itself to create a better world and a better workplace:

Everyone knows Silicon Valley is a boys’ club. The needs of women are often ignored when it comes to business, but the story developing around the alleged rape and brutalization of a girlfriend by a Silicon Valley hotshot indicates that lack of effort carries into the personal realm as well.

Michael Arrington, tech magnate and founder of TechCrunch, has long been known for temper tantrums. His former girlfriend, Jenn Allen — the CEO and founder of the start-up RTist.com — recently took to Facebook to accuse him of some nasty stuff. Allegedly, he was constantly violent, raped her and another woman, and threatened to “murder” her if she told a soul.

That is disturbing, yes. But what is most disturbing is that many people in Silicon Valley had heard about his alleged violent tendencies towards women for years and never said anything, fearing repercussions by the constantly angry man who controlled so much in the land of tech.

Arrington’s legendary temper and deep connections in Silicon Valley and the most powerful media outlets earned him the ability to do whatever he pleased with no fear of being confronted. While this apparent bully might have been stopped years ago, bystanders preferred their comfortable lives in Silicon Valley while others suffered terribly at Arrington’s hand.

This is not surprising.

The difference between the Silicon Valley and any other industry is simply the technology they use.

The underlying human aspects are the same as in any other industry.

Not Surprising News………

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Though it is surprising that it was former FBI director Louis Freeh who reported that Jon Corzine ran MF Global into the ground: (Thorough investigation is not what his consulting business is all about)

The “negligent conduct” of Jon Corzine and other officers of the MF Global Holdings Ltd brokerage contributed to the firm’s dramatic collapse in 2011, according to a report by the bankruptcy trustee.

The report by former FBI director Louis Freeh said the failure of MF Global’s officers contributed to losses of as much as $2.1 billion and adds to the growing number of reports and investigations pointing to their liability.

Freeh has prepared a lawsuit against former executives for breaches of fiduciary duty, but had not filed it pending the outcome of talks with a mediator appointed in a separate securities class action, according to the report.

Freeh’s 124-page document blamed the collapse on “the risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company’s inadequate systems.”

While the report was sharply critical of Corzine’s conduct, it did not focus on one of the biggest mysteries of the MF Global collapse: the misappropriation of funds from customer trading accounts.

What, you mean that Freeh was too busy looking for Monica Lewinski’s blue dress to figure out who stole the f%$#ing money?

Now, there’s a surprise.

When Freeh is on the case, it is not about finding wrong-doers, it’s about protecting the powerful and generating PR.

As if the Obama Administration Revolving Door Could not Spin Any Faster………

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Promontory Financial Group has hired Former SEC Chief Shapiro:

As regular readers may recall, Promontory Financial Group was one of the huge winners from the joke on the public otherwise known as the Independent Foreclosure Review. The only accurate word in that label, it turns out, was “foreclosure”.

As part of a series of consent orders issued to servicers in 2011, the OCC mandated that borrowers who had a foreclosure underway or completed in 2009 and 2010 could receive a review to determine if their foreclosure was handled improperly and caused financial harm. If so, they could receive as much as $125,000 in compensation.

Many observers, including yours truly, could see as soon as the reviews were announced that they were destined to be a sham, since the consultants hired to perform these assessments would be selected and pad by the banks, who would also be their immediate client. And after the reviews were hastily shut down, the revelations were even worse than even the cynics had predicted. Consultants like Promontory, who worked for three servicers, including Bank of America and Wells Fargo, ran up enormous tabs via being utterly incapable of organizing a process of this scale and complexity. Not that the bank cared, since they didn’t really want the work completed. Promontory racked up an estimated $1 billion in fees. Our whistleblowers say they completed only 4,800 borrower letters at Bank of America and may not have gotten through any at its smallest IFR client, PNC (in October of 2012, after over a year of work at PNC, Promontory said the work to dat needed to be scuttled since questions had been raised about the independence of the process. The reviews were shut down two months later).

So how is Promontory using all this lucre? Buying up even more former regulators to further its reputation as a connected insider. Mary Shapiro had barely left the SEC when she was nominated for a board seat at General Electric, which despite its image as a manufacturer, has for over two decades had nearly half its revenues coming from financial services. And now Shapiro has been signed by Promontory to help arm-twist regulators not to do their job.

This sort of incestuous corruption is a feature, not a bug.

Can We Throw His Ass in Jail for Civil Rights Violations?

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We now have a report that New York City Police Commissioner Ray Kelly deliberately target people to be terrorized by the police on the basis of race:

Ever since the New York City Police Department initiated its reviled stop-and-frisk technique, the force’s laughable refrain has been that its officers are not engaging in racial profiling. It may not look like racial profiling to Mayor Michael Bloomberg or NYPD Commissioner Ray Kelly, who oversee stop and frisk, but to the millions of blacks and Latinos harassed by the NYPD over the years it is a blatant campaign against dark skin.

Today, a New York legislator testifying in a class-action suit against stop and frisk confirmed that those suspicious of the program’s racial motivations are correct. Doubling down on an accusation he made in 2011, New York State Senator Eric Adams said on the record that he heard Commissioner Kelly tell then-Governor David Paterson and a room of other lawmakers that stop and frisk targets minorities because “he wanted to instill fear in them that any time they leave their homes they could be targeted by police.”

What Ray Kelly is alleged to have said here is exactly the same as burning a cross on a hill overlooking a minority neighborhood: Instilling fear in minorities on the basis of their ancestry.

This is Bull Connor sh%$, and it’s illegal.  It’s detention and harassment on the basis of race.

If the FBI is not on the case, someone needs to get their head out of their ass, and do their f%$#ing job.

This is Not a Surprise

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What a surprise, New York State Senator Malcom Smith was caught bribing Republican officials in an attempt to secure the GOP nomination for New York City mayor:

The two men sat in the state senator’s parked car in suburban Rockland County, but New York City was at the front of their minds and the focus of their conversation.

What the senator, Malcolm A. Smith, wanted to do, the other man explained, was going to cost “a pretty penny.”

“But it’s worth it,” replied Senator Smith, a Democrat, according to a transcript of the January meeting. “Because you know how big a deal it is.”

His plan, described by federal prosecutors in a criminal complaint unsealed on Tuesday, was as ambitious as it was audacious. Mr. Smith was going to bribe his way onto the ballot to run for mayor of New York.

But he needed help, from a disparate cast of characters, including a Republican City Council member from Queens, Daniel J. Halloran III, and two Republican leaders from Queens and the Bronx, Vincent Tabone and Joseph J. Savino. And he needed the help of the other man in the car, who, unbeknown to Mr. Smith, was a cooperating witness for the Federal Bureau of Investigation and was recording the whole conversation.

Instead of appearing on the ballot, Mr. Smith’s name has landed in a marquee spot on the criminal complaint. On Tuesday, he, Councilman Halloran and the Republican Party leaders were charged with wire fraud and bribery. The senator was also charged with extortion.

This is not surprising, because he is also one of the Benedict Arnold Democrats who colluded with Republicans in the state to wrest control from the Democrats who actually won most of the seats:

New York Republicans joined forces with a group of dissident Democrats on Tuesday to form what they called a “bipartisan governing coalition” to run the State Senate, preventing the Democratic Party from taking control even after it appeared to have won a majority of Senate seats in elections last month.

The announcement was the latest twist in a state capital that has had more than its share in recent years, with a string of leadership squabbles, corruption investigations and sex scandals that at times crippled the government and made Albany a laughingstock.

The power-sharing deal announced Tuesday was a victory for New York Republicans, who are outnumbered 2-to-1 in the state’s electorate and who fared unexpectedly poorly in a series of Senate races last month. The exact outcome of the election remains unclear, because ballots in two close races are still being counted, but the consensus in Albany is that the Democrats won more seats than the Republicans.

But shortly after the elections, one Democrat said he would align himself with the Republicans, and on Tuesday five others said they would join with the Republicans to control the Senate. Many of the remaining Senate Democrats were furious, accusing the Republicans and the breakaway Democrats of orchestrating a coup to steal control.

As part of the deal, the Senate majority leader, Dean G. Skelos, a Long Island Republican, agreed to share authority over the chamber with Senator Jeffrey D. Klein, a Bronx Democrat who was the No. 2 official in his caucus before defecting nearly two years ago to form the Independent Democratic Conference.

The obvious question here is, “Why did he think that he could bribe Republicans into nominating him for Mayor?”

The simplest answer (see Occam’s Razor) as to why he might believe this is is pretty clear here:  The Republicans bribed him to jump over the aisle, and so Senator Smith expected them to be similarly receptive to bribes.

I have no evidence of this, but it seems to me that some sort of payoff had to be involved in the “Independent Democratic Conference” knifing their fellow Dems in the back.

The only question is whether it was limited to legal things, like committee chairmanships, or there was something more remunerative involved.

Considering the fact that this is Albany, I’ll take the door behind the piles of unmarked bills.

H/t Ed Kilgore.

I Want to be an Icelander

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Because they indict their banksters:

Public frustration has been mounting over the lack of high-profile criminal prosecutions in the wake of the financial crisis here in the U.S. But the same cannot be said abroad.

Several news outlets reported that Iceland’s special prosecutor, hired in 2009 to investigate suspicious activities at several major banks, indicted fifteen bankers — including two chief executives — earlier this month over illegal activity tied to the meltdown of the country’s banking system in the fall of 2008. The bankers are accused of stock-price manipulation and securities fraud.

“These are quite big cases by any measurement, they’re my biggest cases so far,” Olafur Thor Hauksson, the prosecutor, told the Wall Street Journal last Friday, adding that the charged could face up to six years in prison if convicted.

Some blogs reacted to the news with the observation that Iceland’s actions are in contrast to the lack of prosecutions in the U.S.

Gee, you think it’s a contrast?

Our it is a mark of our corruption that not one of the big banksters has even been seriously investigated for crimes.

Pass the Popcorn

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The high powered DC law firm Williams & Connolly has sued the OCC to get information about how they selected consulting firms to review the foreclosure settlement. Considering the half-assed job done by the consultants, and the indications that there were ties between the banks and the consultancies, this should get interesting”

A top Washington law firm is suing regulators to hand over information about how it selected consulting firms to participate in a multibillion-dollar review of banks’ past foreclosures.

The reviews, mandated by regulators in 2011 after widespread foreclosure shortcuts came to light, proved slow and expensive, and earlier this year 13 banks agreed to pay $9.3 billion to end them and compensate foreclosed borrowers.

But in a lawsuit in federal court in Washington, D.C., the law firm Williams & Connolly revisited the original reviews.

It is seeking documents explaining how the Office of the Comptroller of the Currency defined “independent” in its requirements for mortgage servicers to hire “independent consultants” to conduct the reviews.

The law firm declined to identify the client on behalf of which it filed the complaint.

It is possible that a consulting firm that lost out on the review contracts is behind the suit.

An OCC spokesman declined comment.

………

In the new lawsuit, Williams & Connolly said it had sought through a Freedom of Information Act request to the OCC any documents or records about the independence requirements for the consultants, and any documents about OCC standards for independence within the context of the foreclosure reviews.

The OCC initially denied the law firm’s request, then provided limited information on a redacted basis, the law firm said. The firm said in its filing that it went to court to obtain all of the information.

David Aufhauser, the Williams & Connolly lawyer who filed the action, and who is a former general counsel of the Treasury Department and of investment bank UBS, declined to comment on the case.

At least one of the consultancy firms was suspended, and if you follow Naked Capitalism you can get a full picture.

While one can generally be certain that any deal for the banks will be a corrupt bailout, when the Office of the Comptroller of the Currency is involved, you can be sure that it’s well over the line of what normal people will call corrupt self dealing.

I am looking forward to hearing more about this.

Yes

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Did Steve Cohen Buy Off the U.S. Government?

Seriously. If the SEC is settling for a payment of $616 million dollars, with no admission of wrongdoing, when the case against for insider trading is very strong, and it is a a f%$#ing slam dunk on Sarbanes-Oxley violation.

He got to walk because he’s rich and powerful:

Most scandals involving the cozy relationship between Wall Street and its regulators play out behind closed doors. Others happen in plain view, and this is one of the latter. In a Manhattan courtroom Thursday, a federal judge held a hearing on whether to approve a legal settlement in which Steven A. Cohen, one of the richest and most publicity-shy men in the country, appears to be buying off the U.S. government, which for years has been investigating wrongdoing in and around his hedge fund, SAC Capital Advisers.

 Unless the judge, Victor Marrero, rejects the settlement between the Securities and Exchange Commission and SAC, which was announced a couple of weeks ago, Cohen will be free to go about his business, which has long been clouded by suspicions of insider trading, once he writes a check of six hundred and sixteen million dollars to the Securities and Exchange Commission. There will be no further sanctions and no admission of wrongdoing. And in fact, Cohen already appears to be celebrating. ………

 To his credit, Judge Marrero has, at least for now, refused to go along with this travesty. Reserving judgement on the case, he asked why the settlement didn’t include an admission of wrongdoing on the part of SAC and Cohen. “There is something counterintuitive and incongruous about settling for six hundred million dollars if it truly did nothing wrong,” the judge said. ………

 ………

 Exactly how Cohen pulled off this feat is something of a mystery. The details of the dealings between his lawyers and the government haven’t been revealed, and most likely won’t be. What we do know is this: until the settlement with the S.E.C. was announced, things were looking increasingly grim for Cohen and his firm, which is based in Greenwich, Connecticut.

 During the past several years, investigators from the S.E.C. and the U.S. Attorney’s office in Manhattan have been carrying on a wide-ranging investigation of SAC, which manages about fifteen billion dollars in assets. As a result of this probe, no fewer than nine current or former employees of SAC have been tied to insider dealing while working at the firm, and four of them have pleaded guilty. The investigation started out with lowly former employees. Over time, though, it moved closer and closer to Cohen, the firm’s founder, until, finally, it enveloped him.

 Last November, Preet Bharara, the U.S. Attorney for the Southern District of New York, held a press conference to announce the indictment of Matthew Martoma, a former SAC trader, for what Bharara said was “the most lucrative insider-trading scheme ever charged.” According to the complaint, the 2008 trades at the center of the case involved Cohen directly. After receiving at tip-off from an inside informant about a drug trial that had turned out badly, Martoma spoke for twenty minutes with Cohen—identified as “Portfolio Manager A”—and then started unloading shares that SAC owned in the two drug companies involved, Elan and Wyeth, the complaint said. Once the results of the drug trial became public, the stock prices of the drug companies fell sharply. The government said that Martoma’s trades netted SAC as much as two hundred and seventy-six million dollars.

 ………

It’s a farce, and it’s not getting any funnier. The SAC settlement marks the first time, to my knowledge, that the S.E.C. has accorded such deference to a hedge fund, and it also raises the question of whether the Justice Department is now ducking bringing criminal charges against Cohen himself. Some folks who know how the system works from the inside think that that’s what it looks like. “I read the Martoma complaint,” Bradley Simon, a prominent white-collar criminal defense attorney and former federal prosecutor, told me. “It seems like there’s evidence there for them to charge Cohen, but they don’t want to do it.

………

A second possibility is that, despite the Martoma complaint, there simply isn’t sufficient evidence to convict Cohen, and the prosecutors have reluctantly accepted this fact. Insider-trading cases are tricky. We don’t know what Cohen said to Martoma during their conversation, or whether Martoma would be willing to testify against him. In the insider-trading cases of Raj Rajaratnam, who ran the Galleon hedge fund, and Rajat Gupta, the former head of McKinsey, the government relied heavily on wiretap evidence. According to the Wall Street Journal, the government obtained a warrant to tap Cohen’s home phone in 2008, but it isn’t known what, if anything, these intercepts yielded.

(emphasis mine)

They have f%$#ing wiretaps, and they are doing nothing.

Even if they don’t they have a slam dunk on the insider training, they do have a prima facie case that he violated SarBox when he certified that his company had sufficient internal controls, which would get him banned from management of a publicly traded company for life.

This is bullsh%$, and I am pining for Mmme. la Guillotine.

A Solution to Our Energy Needs Forever

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Just attach generators to the Obama administration’s revolving door. Problem solved:

Coming off a grueling four-year stint at the Justice Department, Lanny A. Breuer is poised to make a soft landing in the private sector.

Covington & Burling, a prominent law firm, plans to announce on Thursday that Mr. Breuer will be its vice chairman. The firm created the role especially for Mr. Breuer, a Washington insider who most recently led the Justice Department’s investigation into the financial crisis.

For Mr. Breuer, who will now shift to defending large corporations, Covington is familiar turf. He previously spent nearly two decades there.

………

“We’re proud to welcome him home,” said Timothy C. Hester, Covington’s chairman.

FWIW, I think that “welcome” is spelled “Ka-Ching.”

He did his job, and now Mr. Breuer is going to be paid for, “not bringing cases against the banks and executives at the center of the crisis.”

Yes, Virginia, the Trans Pacific Partnership Sucks Wet Farts from Dead Pigeons

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It is a wet dream of Wall Street and IP holders.

The post is too long to summarize, but the Angry Bear goes through and summarizes the low points.

These are things like investors can sue in an extranational and secret courts for losses from:

  • Strikes.
  • Public protest.

The latter is the most serious.  If your protest can result in a multibillion dollar judgement against your county or state,  they will shut you down, constitution or no.

Tell your Congresscritter to vote no.

Oh Ho!

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The lawyer at the core of the whole “bribing prostitutes to lie about f%$#ing Senator Bob Menendez” is now saying that the Daily Caller was the one paying him to do this:

A top Dominican law enforcement official said Friday that a local lawyer has reported being paid by someone claiming to work for the conservative Web site the Daily Caller to find prostitutes who would lie and say they had sex for money with Sen. Robert Menendez (D-N.J.).

The lawyer told Dominican investigators that a foreign man, who identified himself as “Carlos,” had offered him $5,000 to find and pay women in the Caribbean nation willing to make the claims about Menendez, according to Jose Antonio Polanco, district attorney for the La Romana region, where the investigation is being conducted.

The Daily Caller issued a statement Friday saying that the information allegedly provided by the Dominican lawyer, Melanio Figueroa, was false.

The videotaped claims of two women, made with their faces obscured, were posted in the fall on the Daily Caller. The site reported that “the two women said they met Menendez around Easter at Casa de Campo, an expensive 7,000-acre resort in the Dominican Republic. . . . They claimed Menendez agreed to pay them $500 for sex acts, but in the end they each received only $100.”

In its statement Friday, the Daily Caller said: “At no point did any money change hands between The Daily Caller and any sources or individuals connected with this investigation, nor did anyone named Carlos travel to the Dominican Republic on behalf of The Daily Caller. As recently as two weeks ago, Figueroa was on record with another news outlet as saying the women he represented were telling the truth about their initial allegations against Senator Menendez.”

Tucker Carlson, who runs the Web site, said in a statement provided through his spokesman that the Daily Caller “never paid anyone, was never asked to pay anyone and of course never would pay anyone for this story.”

Yeah, sure. They somehow just got prostitutes to talk, on camera, ratting out an (as we now know falsely) alleged John out of the goodness of their hearts.

Please, don’t insult our intelligence, Tucker.

At Least the IMF Isn’t Being Run By Crooks ……… Ummmm ……… Nevermind

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Her apartment in France just got raided as a part of a corruption investigation:

Police have searched the Paris home of the head of the International Monetary Fund as part of a fraud investigation centred on a supporter of former president Nicolas Sarkozy.

Christine Lagarde’s flat was raided along with that of her office manager and the home of businessman Bernard Tapie, a former politician, actor, singer and television celebrity.

The IMF chief has been the subject of preliminary investigations for “complicity in the embezzlement of public funds”, since 2011, when Tapie was awarded €284m of public money in compensation in a financial dispute while she was economy minister.

The search came hours after the French government was rocked by a separate scandal after the budget minister Jérôme Cahuzac was put under criminal investigation amid claims he hid money from the French taxman in a secret Swiss bank account. Lagarde and Cahuzac have vehemently denied any wrongdoing.

………

The accusations against Lagarde centre on her role in what is known as the Tapie Affair, a row that has rumbled for two decades, which ended when she made a controversial decision to refer the businessman’s dispute with the public bank Crédit Lyonnais to arbitration. Critics say she abused her authority. Investigators are looking into whether Tapie was given a secret deal in return for supporting Sarkozy during his successful 2007 presidential election campaign.

Of course, a police raid does not imply guilt, but it does show just how corrupt the political elites are as a class, and why the idea of apolitical “technocrats” is a fraud.

New Zealand Decides Looks at the Mess that is Cyprus, and Decides that it Has a Purty Mouth

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When Troika (really, the Germans) decided that the solution to Cyprus’ problem with its banks was to take money from insured accounts, they had no idea the firestorm that it would unleash.

It appears that the Troika (really, the Germans) have found the limits of the authority, and hence the misery, that they can inflict, and so the Cypriot Parliament voted down the proposal to take money from depositor accounts:

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn (£5bn) from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped country will seek a funding lifeline from Russia.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.

Late on Tuesday night the eurozone governments said that despite the vote Cyprus would still need to raise the €5.8 bn – a third of the €17bn bailout.

There are limits to bailing out hedge funds and large European banks, I guess.

Unfortunately, the good folks in New Zealand, which, as Yves Smith observes is already a haven for fraudulent corporations, had decided to abandon the whole concept of insuring bank deposit:

Picture this: you check your bank balance and see that your $1000 lies safely in your savings account.

That night you switch on the evening news and find to your horror that your bank has failed.

It turns out that the Government has had to move quickly, and has placed your bank in statutory management.

The next day you check your bank balance and you find that you have taken what is referred to in the banking industry as a “haircut”.

In other words, part of your savings remain, let’s say 80 per cent, but 20 per cent of it has been frozen – perhaps forever – while the statutory manager sorts out the mess.

You have just entered the world of Open Bank Resolution (OBR).

It may come as a surprise that the Reserve Bank already has the power to freeze bank deposits. The problem for the central bank has been a lack of technical infrastructure to implement the policy, should the need arise. The bank said last week that it was in discussion with the banks on “pre-positioning” their systems for OBR.

Un f%$#ing believable

A press release from the a New Zealand Green Party MP follows after the break:

National planning Cyprus-style solution for New Zealand

Tuesday, 19 Mar 2013 | Press Release
Contact: Russel Norman MP
Tags: Banking & Finance, Smart Economics, Economics

The National Government is pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

What Gaius Said

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Donating to the DCCC means helping Dems who vote like Republicans:

The DCCC is the Democratic Congressional Campaign Committee, the group of congresspeople and staff supposedly responsible for electing House Democrats. It’s led by “ex”–Blue Dog and New Dem Steve Israel, Nancy Pelosi’s hand-picked choice for the job.

 We’ve written about Israel before. To the world his job is simply to elect Democrats, but to the moneymen and -women behind the corporate wing of the party, his job is to:

  • Elect corporate Democrats to the House
  • Keep progressives out of office
  • Make sure pro-corporate Republican leaders like Cantor and Paul Ryan never face credible challenges

Seriously.  So long as the national Democratic Congressional election infrastructure, and Congressional election fundraising is dominated by corporatocrats, don’t give to them.

Pick and choose your candidates. Don’t let these corporate ratf%$3s make that choice for you.

FWIW,  I would give similar advice to Republicans too. 

It’s really pretty basic, do your homework, and chose whom you support, don’t let the Beltway crowd make your choice.

I Have a New Rule for Finance and Fraud

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The first was coined by Eric Falkenstein:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend’s bar mitzvah.

The 2nd rule, which I call Saroff’s Rule:

If a financial transaction is complex enough to require that a news organization use a cartoon to explain it, its purpose is to deceive.

Well, now I have another rule, if your business plan requires an extraterritorial location not subject to any national law, it is because the principals involved intend to be lawless:

A company named Blueseed is a year away from offering entrepreneurs an inexpensive place, near Silicon Valley, in which to develop their products.

 “Blueseed will station a ship 12 nautical miles from the coast of San Francisco, in international waters. The location will allow startup entrepreneurs from anywhere in the world to start or grow their company near Silicon Valley, without the need for a U.S. work visa. The ship will be converted into a coworking and co-living space, and will have high-speed Internet access and daily transportation to the mainland via ferry boat. So far, over 1000 entrepreneurs from 60+ countries expressed interest in living on the ship.”

No Civil Rights Act, no Equal Employment Opportunity Commission, no Fair Labor Standards Act, no Securities Exchange Act, no RICO statute, no consumer protection laws, no laws against slavery or indentured servitude, and indeterminate tax jurisdiction.

If you get an offer from these people, run the other way.

H/t Naked Capitalism.

Priceless

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The Michigan state legislature, chock full of wingnuts, after losing an initiative on creating emergency managers for localities, promptly repassed the law with an attached appropriation to make it unchallengable.

And now they have appointed an emergency manager for Detroit, who has tax liens on his home in Maryland:

The man charged with fixing Detroit’s faltering finances has been hit with four liens in four years from the state of Maryland for unpaid taxes, records show.

 State records show Kevyn D. Orr, who was appointed emergency manager on Thursday, has two outstanding liens on his $1 million home in Chevy Chase, Md., for $16,000 in unemployment taxes in 2010 and 2011. Two other liens of more than $16,000 in unemployment and income taxes were satisfied in 2010 and 2011, records show.

 Orr said he didn’t know anything about the liens when shown records of them Friday morning by The Detroit News.

 “I don’t know what they are,” Orr said, as his new boss, Gov. Rick Snyder, sat next to him in The News’ offices. “That’s surprising to me, to be honest.”

 Late afternoon, a spokeswoman for Snyder — who appointed Orr to the $275,000 per year post Thursday — said Orr spent the day researching the issue and would pay “in full ASAP.” The Washington, D.C., bankruptcy attorney blamed the problems on an outside accountant hired to file his tax returns, said Sara Wurfel, a Snyder spokeswoman.

He had 4 liens filed on his home, and did not know about it. Yeah ……… right.

The emergency management process is a clown show for a reason, and it’s no accident that over half of the black voters in Michigan will be under emergency managers.

First they cut state aid to troubled municipalities, and then effectively abolish .

The motivation for this is two fold:

  • Modern movement (teabagger) conservatives visceral opposition to majority minority communities having meaningful self rule.
  • By eliminating self rule, they eliminate electoral possibilities for less senior politicians.
    • Basically, they are hoping to eliminate the “farm system” for a generation of politicians for political advantage.

That is why we are seeing this clown show.

They don’t care about governance, they just care about power. Everything is subverted to to that.

Un-Dirtyword-Believable

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The New York Police Department has established a policy to conduct criminal background checks on the victims of domestic abuse:

Women who report domestic violence are exposing themselves to arrest under a new NYPD directive that orders cops to run criminal checks on the accused and the accuser, The Post has learned.

The memo by Chief of Detectives Phil Pulaski requires detectives to look at open warrants, complaint histories and even the driving records of both parties.

“You have no choice but to lock them up” if the victims turn out to have warrants, including for minor offenses like unpaid tickets, a police source said.

“This is going to deter victims of domestic violence . . . They’re going to be scared to come forward.”

The directive tells detectives that when they are investigating cases of domestic violence, they should run a search that cross-references all NYPD databases.

Beside warrants, a person’s criminal record and history of making criminal complaints should be checked, the directive says.

I’m beginning to think that the NYPD needs another Knapp Commission a the reforms associated with such an endeavor.  (The whole racial profiling of Muslims thing, and the abuse of protestors comes to mind.)

There is a lot of rot in the force, and it this fish is rotting at the head.