Category: Corruption

What a Crybaby

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David Prosser is now claiming that the judicial investigation of his choking of a fellow justice is an infringement of his speech rights:

State Supreme Court Justice David Prosser said Monday that the Wisconsin Judicial Commission’s investigation into his alleged ethical violations is itself a violation of his constitutional rights, according to a court filing.

Prosser, the subject of an ethics complaint filed in March with the Supreme Court, said in his response to the complaint Monday that the commission “may not investigate or prosecute protected speech, advocacy and etiquette of Wisconsin Supreme Court justices when they are deliberating in confidential closed conferences.”

The three alleged ethics violations stem from a June 13 incident in which Prosser acknowledges putting his hands around the neck of Justice Ann Walsh Bradley “to protect himself” and a February 2010 incident in which he admits calling Chief Justice Shirley Abrahamson “a total bitch.”

First, it wasn’t a closed conference, it was a discussion in Bradley’s office, and he was asked to leave, and he is alleged to have assaulted her.

Beating up on a woman is not, “deliberating in confidential closed conferences.”

As an aside, anyone want to bet that this isn’t the first time that he’s been “alleged” to have assaulted a woman?

Still???

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The SEC still hasn’t finished its investigation of Lehman?

It’s been 4 years, and we’ve not seen anything:

The U.S. Securities and Exchange Commission is still probing Lehman Brothers more than three years after the investment bank collapsed during the global financial crisis, agency chairman Mary Schapiro said on Wednesday.

Schapiro told lawmakers it would be inappropriate to comment on a matter that “remains under investigation,” but assured lawmakers that the SEC has conducted interviews with management at the highest levels and has reviewed millions of pages of documents.

“It is still under review,” she said at an SEC oversight hearing before a House Financial Services subcommittee.

Schapiro’s comments come after “60 Minutes” on Sunday aired a segment revisiting the March 2010 findings by Lehman Brothers Holdings Inc’s court-appointed examiner, Anton Valukas.

Valukas’ report said that Lehman used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008.

But we haven’t even seen administrative actions.

Nobody has been banned from the securities industry, no prosecutions, no fines, no nothing.

The fix is in.

What Has Happened to America?

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It appears that one of the consequences of privatizing prisons is that these private companies are renting out prison labor for a profit:

Sweatshop labor is back with a vengeance. It can be found across broad stretches of the American economy and around the world. Penitentiaries have become a niche market for such work. The privatization of prisons in recent years has meant the creation of a small army of workers too coerced and right-less to complain.

Prisoners, whose ranks increasingly consist of those for whom the legitimate economy has found no use, now make up a virtual brigade within the reserve army of the unemployed whose ranks have ballooned along with the U.S. incarceration rate. The Corrections Corporation of America and GEO, two prison privatizers, along with a third smaller operator, G4S (formerly Wackenhut), sell inmate labor at subminimum wages to Fortune 500 corporations like Chevron, Bank of America, AT&T, and IBM.

These companies can, in most states, lease factories in prisons or prisoners to work on the outside. All told, nearly a million prisoners are now making office furniture, working in call centers, fabricating body armor, taking hotel reservations, working in slaughterhouses, or manufacturing textiles, shoes, and clothing, while getting paid somewhere between 93 cents and $4.73 per day.

Seriously, our country is becoming something profoundly disturbing.

Not Enough Bullets

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The banksters have discovered another way to pay their obscene levels of executive pay, they push poor customers to high fee products:

An increasing number of the nation’s large banks — U.S. Bank, Regions Financial and Wells Fargo among them — are aggressively courting low-income customers like Mr. Wegner with alternative products that can carry high fees. They are rapidly expanding these offerings partly because the products were largely untouched by recent financial regulations, and also to recoup the billions in lost income from recent limits on debit and credit card fees.

Banks say that they are offering a valuable service for customers who might not otherwise have access to traditional banking and that they can offer these products at competitive prices. The Consumer Financial Protection Bureau, a new federal agency, said it was examining whether banks ran afoul of consumer protection laws in the marketing of these products.

In the push for these customers, banks often have an advantage over payday loan companies and other storefront lenders because, even though banks are regulated, they typically are not subject to interest rate limits on payday loans and other alternative products.

Some federal regulators and consumer advocates are concerned that banks may also be steering people at the lowest end of the economic ladder into relatively expensive products when lower-cost options exist at the banks or elsewhere.

“It is a disquieting development for poor customers,” said Mark T. Williams, a former Federal Reserve Bank examiner. “They are getting pushed into high-fee options.”

“We look at alternative financial products offered by both banks and nonbanks through the same lens — what is the risk posed to consumers?” said Richard Cordray, director of the bureau. “Practices that make it hard for consumers to anticipate and avoid costly fees would be cause for concern.”

Seriously, we should have tarred and feathered these f%$#s, not bailed them out.

Here’s hoping that the CFPB takes a look at this.

The “Educational Reformers” in a Nutshell

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Doug Lynch, University of Pennsylvania’s vice dean of its Graduate School of Education was found to have been lying about having a PhD, and nothing happened, until the Inky found out, at which point he was first put on leave and then he resigned.

It appears that the university wasn’t going to do anything meaningful until it became public:

Earlier Wednesday, Penn officials said they became aware of the misrepresentation a couple of months ago, taking unspecified “appropriate sanctions” but deciding to leave Lynch in his leadership role.

That changed after The Inquirer placed a call to Penn president Amy Gutmann for comment. The university then issued a one-sentence statement from Stephen J. MacCarthy, vice president for university communications.

“Doug Lynch has been placed on administrative leave pending the outcome of an ongoing investigation,” MacCarthy’s statement said.

As to why he was kept on, it was because he was so in tune with the educational reform “crap on teachers” orthodoxy:

Since joining Penn, Lynch has become a lightning rod for controversy. He has pushed entrepreneurial methods and supported programs such as Teach for America, which puts bright college graduates who lack education degrees in some of the nation’s toughest public schools for a two-year commitment.

A February 2011 feature on him in Penn’s alumni magazine said: “What happens when you unleash an entrepreneurship evangelist on an education school? Meet Doug Lynch, the vice dean bent on making Penn GSE a hub for social entrepreneurs, venture capitalists, and next-generation educational reform.”

Because bringing in the private sector will allow Wall Street to do to our schools what they did to our retirement savings.

It appears that everyone in the educational reform is a fraud on some level.

H/t Atrios.

So Not a Surprise

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Michelle Rhee is speaking at a conference of for profit colleges, which, considering their record of taking students’ (actually our, through the student loan program) money without providing any, you know, education:

Republic Report previously reported that former President George W. Bush will be speaking at the annual meeting of APSCU, the leading association of for-profit colleges, on June 22 at the Mandalay Bay Hotel & Casino in Las Vegas. For-profit colleges get $32 billion in student aid from your tax dollars every year, but many are marked by deceptive recruiting, low-quality programs, sky-high prices, and high dropout rates.

………

Finally, some really depressing news: APSCU has announced the conference’s “additional speaker,” and it’s former District of Columbia Public Schools chancellor Michelle Rhee, now the CEO of education advocacy group Students First. If you’ve been on the fence about Rhee, not sure if she’s a sincere reformer with real results or a union-busting elitist aimed at replacing public education with charters, private schools, and online learning companies, you may find cause to jump off the fence now. By speaking at the annual meeting of the most cynical group of “educators” ever assembled — Wall-Street owned businesses that enrich their CEOs and ruin students’ lives at taxpayer expense and then hire armies of lobbyists to protect their privileges — Rhee has made her preferences very clear. (It’s always possible that she agreed to speak with the intent of telling the for-profits to clean up their act, but I doubt it.) Rhee staked her career on the concept of shutting down underperforming, bad schools. And now she will address a room full of them.

(emphasis mine)

For this, she will get a 50 grand speakers fee, but Michelle Rhee has always been a fervent devotee of pump and dump education, as evidenced by increasing evidence of her tolerance for fraud to create the illusion of success.

Considering the record of for-profit colleges, they are a perfect match.

Another Shareholder Revolt

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Unfortunately, it was unsuccessful, but the attempt by GE shareholders to exert greater control over management was pretty damn close:

Shareholders in General Electric have come close to winning a vote that would have given them more direct control over the the largest US industrial group by market capitalisation against the wishes of its board.

In the latest sign of rising shareholder activism in the US, a proposal at GE’s annual meeting in Detroit on Wednesday to allow shareholders to make decisions about the company “by written consent” won the support of some 47.5 per cent of the votes cast.

This would have meant that shareholders would not have had to call a special meeting to push through corporate change. The motion was backed by Institutional Shareholder Services and Glass Lewis, the corporate governance advisory firms.

There was also a significant vote for appointing an independent chairman of the board, which was backed by 22 per cent of the votes cast, although that was lower than the 35 per cent support the proposal won last year.

I think that shareholders are beginning to understand that management will keep them in the dark, and then f%$# them like a drunk school girl if they don’t make changes.

You gotta love the American MBA culture.

Oh Yeah, There Were Primaries Yesterday

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Actually there were 5, and Romney won them all.

What is interesting however were 2 Congressional races in Pennsylvania:

U.S. Rep. Tim Holden, Pennsylvania’s longest-serving congressman, lost his re-election bid in the Democratic primary, while Rep. Mark Critz beat fellow Democratic incumbent Rep. Jason Altmire in another contest that shook up the state’s House delegation.

Newly-configured congressional district lines put in place by the Republican-controlled state Legislature affected the dynamics in each closely-watched race.

Holden, who was elected to Congress in 1992 and was one of its conservative, so-called Blue Dog Democrats, lost Tuesday to personal injury attorney Matt Cartwright, who spent nearly $400,000 in the race.

Asked to assess his victory, Cartwright said “It’s a combination of things, number one, the redistricting, and number two, my own core political beliefs are a much better fit for the new district.”

The only bad news in these two elections is that Critz and Altmire could not both lose.

Still Critz is a bit less bad than Altmire.

BTW, as an aside, if you are considering supporting Democratic Congressional candidates this cycle, take Howie Klein’s advice, and don’t take a DCCC endorsement for granted, particularly since its head this cycle is former Blue Dog Steve Israel.  (You can see examples of their hacktacular calls at the link)

We need fewer of these right wing pukes in congress, not more, and most of the DCCC’s red to blue targets are faux Dems.

What a Surprise

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Obama announces a DoJ investigative task force to investigate foreclosure fraud, in order to bring the state Attorney Generals, most notably NY’s Eric Schneidermann, and they are not staffing it:

Three months ago, in his State of the Union speech, President Obama announced a new task force to investigate mortgage fraud and bring some measure of relief to the 12 million American families who are either losing their homes or in danger of losing them.

The new Residential Mortgage-Backed Securities Working Group would be co-chaired by New York State Attorney General Eric Schneiderman, U.S. Attorney John Walsh of Colorado and three Washington insiders from the Justice Department and the Securities and Exchange Commission.

Obama said, “This new unit will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans.”

Whether or not the President, attorney general and others intend to get around to this task someday, “speed” was a terrible word to choose. Because 85 days after that speech, there is no sign of any activity.

………

Yes, for a few days, there seemed to be a renewed sense of purpose and focus from the administration. U.S. Attorney General Eric Holder held his own news conference and announced that at least 55 Justice Department lawyers, agents, analysts and investigators would be assigned to the effort. A news release promised 30 staffers would be joining efforts “in the coming weeks.”

………

On March 9 — 45 days after the speech and 30 days after the announcement — we met with Schneiderman in New York City and asked him for an update. He had just returned from Washington, where he had been personally looking for office space. As of that date, he had no office, no phones, no staff and no executive director. None of the 55 staff members promised by Holder had materialized. On April 2, we bumped into Schneiderman on a train leaving Washington for New York and learned that the situation was the same.

Tuesday, calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”

The promises of the President have led to little or no concrete action.

In fact, the new Residential Mortgage-Backed Securities Working Group was the sixth such entity formed since the start of the financial crisis in 2009. The grand total of staff working for all of the previous five groups was one, according to a surprised Schneiderman. In Washington, where staffs grow like cherry blossoms, this is a remarkable occurrence.

Schneidermann got punked.

There were over 1000 FBI agents assigned to the Savings and Loan crisis, so 55 is a joke, but they aren’t even staffing that.

If there was any question as to whether the banksters owned Obama, it’s been answered.

And on the other side is Mitt, who is a bankster.

What a choice.

Another Reason Banksters Walk

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Because there are a lot of people who make a lot of money by finding the scammers and betting on the damage that they do, like this short seller:

But then he came to the nub of the issue. The easiest scammer to find is a repeat offender. We actively seek out people who promote dodgy stocks and who who are repeatedly involved in dodgy companies. The slogan is “once a scumbag, always a scumbag”. That slogan is probably not strictly accurate – but we only need to be right 90 percent of the time to be fantastic at this business – and the recidivism amongst scammers is surprisingly high.

………

So, says my son asks you like nasty people to steal from poor investors, mutual funds (and he did not say pension funds for school teachers) so that you can join them in taking the loot by being a short-seller – and you don’t want the regulators to do anything about it because there are more opportunities for you?

Sheepishly I confess yes.

And he says with a mixture of admiration and horror: “daddy you are more evil than I thought”.

As shocking as the outright law breaking on Wall Street it, what is legal is even scarier.

I’m surely not the first one to observe this, but the incentives in our financial system are seriously whack.

Well Duh!

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Gee, as a result of Bill Clinton’s “Reinventing Governmnent” initiative, basic functions of government were outsourced, things like supervising contractors.

The common sense descrption of this is letting the fox run the henhouse.

Case in point, the FAA :

The U.S. Federal Aviation Administration isn’t properly monitoring costs and potential ethical violations in contracts related to improvements in the nation’s air-traffic systems, an audit found.

Practices for selecting and overseeing contracts awarded since 2010 for work related to the so-called NextGen project are “not sufficient,” the Department of Transportation’s Inspector General said in a report released today.

The seven contracts examined, awarded to companies including Boeing Co., CSSI Inc., ITT Corp. and General Dynamics Corp., are valued at as much as $7.3 billion, the largest cumulative award in FAA history, according to the report. The contracts are for technical and professional support of new systems to let the FAA track aircraft using satellite navigation instead of radar.

The agency didn’t verify labor rates charged in five of seven contracts, according to the report. The FAA overestimated the labor hours required, the auditors found.

Basically, if you use contractors, and you don’t watch them like a hawk, they will do whatever they legally can to maximize profits.

The you can call this “capitalism”, or you can call it “maximizing shareholder value”, but it’s what managers are supposed to do.

The Obvious Answer is Because They Don’t Care

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Annie Lowrey of the New York Times looks at the parts of the TARP that were intended to help ordinary homeowners, and it ain’t pretty:

A fund to support homeowners in the communities hit hardest by the collapse of the housing bubble has disbursed just 3 percent of its budget and aided only 30,640 homeowners in the two years since its creation, according to a report released on Thursday by a federal watchdog office.

The Hardest Hit Fund, which was created in the spring of 2010, grants money to state housing finance agencies for efforts to help families that are facing foreclosure. It has “experienced significant delay” because of “a lack of comprehensive planning” by the Treasury Department and limited participation by Fannie Mae, Freddie Mac and the large mortgage servicers, said the report by the special inspector general for the Troubled Asset Relief Program.

“TARP wasn’t supposed to be just a bank bailout,” said Christy L. Romero, the special inspector general for TARP, in an interview. “It was specifically designed with the goal of helping homeowners, and our concern is that that goal may not be met.”

As of the end of 2011, the Hardest Hit Fund had spent $217.4 million out of its $7.6 billion budget, the report found. The program is intended to reach homeowners who are unemployed, or living in areas with high unemployment rates or steeply falling home values.

The report is just the latest to criticize the Obama administration’s efforts to relieve homeowners battered by the nationwide drop in housing prices and the broader recession. The office of the special inspector general has repeatedly criticized Treasury’s management of the Home Affordable Modification Program, Washington’s main initiative to prevent foreclosures.

By this point, they were supposed to have helped 2-3 million, so they are low by a factor of almost 100.

Think about it.  They had $7.6 billion to spend, without any meaningful oversight, but they couldn’t be bothered to spend it.

This was not just an economic opportunity, it was a political one, because when they saved people, they would most likely get their votes, but it just didn’t matter.

This is going on because the Obama administration in the person of Timothy Geithner, the last man standing of Obama’s original economic team, simply don’t care.

The Treasury has already admitted that the homeowner protection programs was primarily about allowing banks to buy time, and extract fees, from desperate homeowners before they wrote down the loans.

Helping homeowners was in the TARP because they needed it to get the votes, but if it ain’t protecting the big banks and big banking, Geithner/Obama ain’t interested.

So, JP Morgan Is Being Hit Up for the Money it Stole from MF Global Customers

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They are, “in negotiations:

JPMorgan Chase is in talks with the authorities to turn over customer money that disappeared from MF Global when the firm went bankrupt last year.

The development, announced this week by the trustee tasked with returning money to MF Global customers, suggests that a substantial sum of client funds is still sitting at JMorgan. The statement from the trustee, James W. Giddens, said that he and JPMorgan “are presently engaged in substantive discussions regarding the resolution of claims.”

What is going on here is that JP Morgan took money from MF Global for margin calls that came from customer accounts.

The reason that they are negotiating is because they knew that the money was dirty, because they knew that MF Global had no other source of liquidity, it’s why they made the margin call in the first place.

They did something similar in the collapse of Lehman as well.

Yes

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Does the Supreme Court Have It In for the Democratic Party?

This has been another episode of simple answers to simple questions.

Kevin Drum is wondering whether the Supreme Court, or more accurately its 5 conservative justices, are acting out of a desire to gain political advantage for the Republican Party, rather than just conservative judicial philosophy:

When it comes to judicial activism, conservatives claim that we liberals have nothing to complain about. The Warren Court was famously activist in a liberal direction, after all, and we lefties thought that was just fine. But there’s a real difference here. The famous Warren Court decisions — ending school segregation, expanding the right to counsel, enforcing one-man-one vote, banning organized school prayer — were obviously decisions that conservatives didn’t like. But there was nothing in them that was especially damaging to the interests of the Republican Party.

But things are different this time around.

Indeed.

Undoubtedly.

The tell was in 2001, when they wrote an opinion that amounted to a coup d’etat and said that it could never be used as precedent in Bush v. Gore.

When a judge says you can’t use a ruling as precedent, it’s kind of like a banker telling you that it would they don’t want you purchasing in high commission financial products from them, you had better literally be naked in bed with them, because like it or not, someone is getting f%$#ed.

Quote of the Day

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A few months ago, I was standing in a crowded elevator when Jamie Dimon, the chief executive of JPMorgan Chase, stepped in. When he saw me, he said in a voice loud enough for everyone to hear: “Why does The New York Times hate the banks?”

It’s not The New York Times, Mr. Dimon. It really isn’t. It’s the country that hates the banks these days. If you want to understand why, I would direct your attention to the bible of your industry, The American Banker. On Monday, it published the third part in its depressing — and infuriating — series on credit card debt collection practices.

—Joe Nocera

(emphasis mine)

As an aside, while I still have issues with him, Nocera is not a totally useless NYT Columnist.  (See Friedman, Thomas)