Category: Corruption

Why a Carbon Tax is Superior to Cap and Trade

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In either case, the consumer pays for it, but a carbon tax can go to things like government programs (Or, if you are of that ilk, per person rebates that favor the less well off), while carbon trading enriches polluters, the Vampire Squids of the world, and people who game the system for personal profit:

The European Commission suspended trading in greenhouse gas emissions permits on Wednesday for at least a week after the theft of permits worth millions of euros via online attacks.

The Emissions Trading System was a target of “recurring security breaches” over the last two months, the commission, the executive agency of the European Union, announced on its Web site Wednesday.

The commission said it needed to shut the system down until at least Jan. 26 because “incidents over the last weeks have underlined the urgent need” for enhanced security measures.

The attacks raised new questions about the viability of Europe’s main tool to combat a rise in greenhouse gases in the atmosphere.

The stolen permits are part of Europe’s effort to cap the amount of carbon dioxide, the main greenhouse gas, that companies may emit each year. Europe’s system is the world’s largest market for greenhouse gas emissions credits.

The only advantage to carbon trading is that it gives politicians the ability to give another revenue stream to their classmates from Ivy League/Oxbridge/Sorbonne/Etc. who work in investment banks.

It’s a giveaway to the investment banker, and an invitation to fraud, the case of hydroelectric plants in China without transmission lines to accumulate credits being just one such example.

What the F$#@ is Wrong With Barry?

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He just penned an OP/ED in the Wall Street Journal, saying that the big problem in our economy is too much regulation:

From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Well, at least he is not talking about repealing the Clean Air Act or child labor laws, Yet,, but when juxtaposed with his executive order calling for our regulations to become even more friendly to companies that rob us and pollute our environment. (full text after break)

I guess we had better be the change that we are looking for, because Barack H. Obama is way too interested in sucking up to the people who wrecked this country, like Goldman Sachs and JP Morgan.

I am not looking forward to his State of the Union Address, because you can be sure that he will have some sort of initiative that further betray the people who voted for him.

The White House
Office of the Press Secretary
For Immediate Release                                               January 18, 2011
Improving Regulation and Regulatory Review – Executive Order

By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to improve regulation and regulatory review, it is hereby ordered as follows:

Section 1. General Principles of Regulation. (a) Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation. It must be based on the best available science. It must allow for public participation and an open exchange of ideas. It must promote predictability and reduce uncertainty. It must identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends. It must take into account benefits and costs, both quantitative and qualitative. It must ensure that regulations are accessible, consistent, written in plain language, and easy to understand. It must measure, and seek to improve, the actual results of regulatory requirements.

(b) This order is supplemental to and reaffirms the principles, structures, and definitions governing contemporary regulatory review that were established in Executive Order 12866 of September 30, 1993. As stated in that Executive Order and to the extent permitted by law, each agency must, among other things: (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

(c) In applying these principles, each agency is directed to use the best available techniques to quantify anticipated

present and future benefits and costs as accurately as possible. Where appropriate and permitted by law, each agency may consider (and discuss qualitatively) values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.

Sec. 2. Public Participation. (a) Regulations shall be adopted through a process that involves public participation. To that end, regulations shall be based, to the extent feasible and consistent with law, on the open exchange of information and perspectives among State, local, and tribal officials, experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole.

(b) To promote that open exchange, each agency, consistent with Executive Order 12866 and other applicable legal requirements, shall endeavor to provide the public with an opportunity to participate in the regulatory process. To the extent feasible and permitted by law, each agency shall afford the public a meaningful opportunity to comment through the Internet on any proposed regulation, with a comment period that should generally be at least 60 days. To the extent feasible and permitted by law, each agency shall also provide, for both proposed and final rules, timely online access to the rulemaking docket on regulations.gov, including relevant scientific and technical findings, in an open format that can be easily searched and downloaded. For proposed rules, such access shall include, to the extent feasible and permitted by law, an opportunity for public comment on all pertinent parts of the rulemaking docket, including relevant scientific and technical findings.

(c) Before issuing a notice of proposed rulemaking, each agency, where feasible and appropriate, shall seek the views of those who are likely to be affected, including those who are likely to benefit from and those who are potentially subject to such rulemaking.

Sec. 3. Integration and Innovation. Some sectors and industries face a significant number of regulatory requirements, some of which may be redundant, inconsistent, or overlapping. Greater coordination across agencies could reduce these requirements, thus reducing costs and simplifying and harmonizing rules. In developing regulatory actions and identifying appropriate approaches, each agency shall attempt to promote such coordination, simplification, and harmonization. Each agency shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation.

Sec. 4. Flexible Approaches. Where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, each agency shall identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. These approaches include warnings, appropriate default rules, and disclosure requirements as well as provision of information to the public in a form that is clear and intelligible.

Sec. 5. Science. Consistent with the President’s Memorandum for the Heads of Executive Departments and Agencies,

“Scientific Integrity” (March 9, 2009), and its implementing guidance, each agency shall ensure the objectivity of any scientific and technological information and processes used to support the agency’s regulatory actions.

Sec. 6. Retrospective Analyses of Existing Rules. (a) To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned. Such retrospective analyses, including supporting data, should be released online whenever possible.

(b) Within 120 days of the date of this order, each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome in achieving the regulatory objectives.

Sec. 7. General Provisions. (a) For purposes of this order, “agency” shall have the meaning set forth in section 3(b) of Executive Order 12866.

(b) Nothing in this order shall be construed to impair or otherwise affect:

(i) authority granted by law to a department or agency, or the head thereof; or

(ii) functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(c) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

BARACK OBAMA

THE WHITE HOUSE,
January 18, 2011.

Delay Sentenced to 3 Years in the Slam

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Schadenfreude, sweet schadenfreude!

And 10 years probation on money laundering and conspiracy charges.

The only cloud to this silver lining is that his active work on behalf of human traffickers in the Northern Marianas, creating what was for all intents and purpose a consequence free zone for slavery and forced prostitution, is not a part of this sentence.

I may be a bad person for doing a happy dance about this, but then I am a bad person, because I am doing a happy dance.

The desire for retributive justice is something that is a nearly universal human characteristic, and it is only through conquering our baser animal instincts through the application of higher order thought, and empathy, but I guess that I am simply not so evolved.

Needless to say, the fact that I am unevolved will come as no surprise to those who know me well.

Jenny McCarthy Can Kiss My Shiny Metal Ass*

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Steven Wakefield’s now discredited paper in Lancet claiming a tie between autism and vaccines is now more than just a zealot doing bad science.

Brian Deer of the British Medical Journal reveals that it was outright fraud:

In the first part of a special BMJ series, Brian Deer exposes the bogus data behind claims that launched a worldwide scare over the measles, mumps, and rubella vaccine, and reveals how the appearance of a link with autism was manufactured at a London medical school.

………

Unknown to Mr 11, Wakefield was working on a lawsuit, for which he sought a bowel-brain “syndrome” as its centrepiece. Claiming an undisclosed £150 (€180, $230) an hour through a Norfolk solicitor named Richard Barr, he had been confidentially 8 put on the payroll two years before the paper was published, eventually grossing him £435 643, plus expenses.

(emphasis original)

Now the question is when he goes to jail for fraud, though if I were the prosecutor, I would add felony murder to the bill of indictment as well.

*Jenny McCarthy is a big antivaxxer.

Facebook to Buy Time-Warner in a Multibillion Dollar Stock Deal

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Not really, but the obvious parallels between the dot-bomb mania of the late 1990s, and this bit of Vampire Squid* inspired pump and dump, Goldman Sachs is investing money in, and creating a (completely fictitious) market cap for Facebook of around $50 billion.

Karl Denninger says that it’s a scam, and that whoever invests in after Goldman will be left holding the bag, while William Cohan at the New York Times runs the numbers:

Despite the high price of its investment, Goldman sees in Facebook a business bonanza, a nearly perfect nugget of investment-banking opportunities. First, Goldman’s cost of capital is close to zero — as a bank holding company, it can borrow from the Federal Reserve at negligible interest rates — so any capital gain it makes on its venture in Facebook will be sheer profit. Second, Goldman has almost certainly locked up the role of lead manager of the inevitable Facebook initial public offering.

Fees for underwriting public offerings are generally about 7 percent of the value of the stock sold. Facebook could easily sell $2 billion of stock or more, generating fees to Goldman and the other underwriters of at least $140 million. The other benefit for Goldman in leading the public offering — aside from major bragging rights — is that it can use its marketing, sales and distribution muscle to make sure the value of Facebook at the time of the offering exceeds the $50 billion valuation at which Goldman invested.

Goldman has also won from Facebook the right to offer an additional $1.5 billion of the company’s stock to its private-wealth clients. According to The Times, Goldman will be creating a “special purpose vehicle” to sell the stock to its wealthy clients and then will charge them a 4 percent initial fee plus 5 percent of any profits. While on paper it seems that these high rollers would be foolish to invest in Facebook at such a lofty valuation, they will still most certainly feel increased loyalty to Goldman for making such an exclusive opportunity available to them. On top of it all, there is the increased likelihood that Goldman will get to manage a good portion of the $12 billion fortune belonging to Mark Zuckerberg, Facebook’s founder, for yet more fees.

Seriously, we bailed out those contemptible f%$#s for this?!?!?

By way of perspective, DC at the by invitation only Stellar Parthenon BBS noted:

  • Facebook is worth more than, Starbucks ($25 billion market cap)
  • Facebook is worth more than United, American, Delta, JetBlue, and Southwest Airlines combined (About $32 billion combined market cap)
  • Facebook is worth about 25 times more than the New York Times Company
  • Facebook is bigger than Target’s market cap ($43 billion)
  • Facebook is worth about twice as much as Dell ($26.5 billion market cap)
  • Facebook is worth more than Viacom, which owns MTV and Comedy Central ($28 billion market cap)
  • Facebook is worth more than Campbell Soup and General Mills combined ($34.4 billion combined market cap)
  • Facebook is worth more than Boeing ($48.7 billion market cap)
  • Facebook is worth five times more than Netflix, the stock darling of 2010 ($9.3 billion market cap)
  • Facebook is worth more than Nokia, the world’s biggest cellphone company ($39.5 billion market cap)

All this for a company that doesn’t really sell anything, and has a revenue stream that is rather opaque.

Facebook is still privately held, which implies that they really don’t want people to look under the hood until someone really stupid hands them a lot of money.

*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.

Gee, You Think?!?!?!

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After it was revealed that something like ½ of the top flight academic economists have taken hundreds of thousands of dollars from Wall Street, and then enthusiastically endorsed the policies of deregulation and “financial innovation” which lined their patron’s pockets, it now appears that the members of the American Economic Association are considering adopting a code of ethics.

Let’s see

  • Stanford Business Prof. Darrell Duffie wrote a book on Wall Street regulations without mentioning that is on the board of Moody’s
  • Laura D’Andrea Tyson, Bill Clinton and Barack Obama, business school UC Berkeley, is a director of Morgan Stanley.
  • Richard H. Clarida, Columbia: executive vice president at the bond behemoth Pimco
  • R. Glenn Hubbard, dean of Columbia Business School: director of MetLife
  • Frederic S. Mishkin, Columbia Business School: high priced consultant to Wall Street Firms
  • Martin S. Feldstein, George F. Baker Professor of Economics at Harvard University: former board member, American International Group
  • Larry Summers
  • Larry Summers
  • Larry Summers
  • Larry Summers

Why would anyone think that economists might need a small dose of ethics?

Not Enough Bullets … No Consequences for the Rich Edition

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The New York Times has an article on real estate developers who repeatedly fail and default, but continue to attract other people’s money to their schemes:

Larry Gluck, the apartment building king whose company defaulted on loans in New York, San Francisco, Los Angeles and Washington, recently bought the Windermere Hotel in Manhattan and Tivoli Towers, a subsidized housing complex in Brooklyn.

Ian Bruce Eichner, who lost two major New York skyscrapers to foreclosure in the early 1990s and defaulted on a $760 million loan for a Las Vegas casino resort in 2008, is working on a plan to rescue One Madison Park, a troubled 50-story condominium project.

Even Harry Macklowe, whose $7 billion gamble on seven Midtown skyscrapers at the top of the market almost cost him his entire empire, is out looking for new deals.

Industry lore has it that New York is one of the toughest, most unforgiving real estate markets in the world. The costs are so high, the unions so ornery, the politicians so demanding and the rivalries so fierce, that one false move invites financial disaster.

But the truth is that there have been surprisingly few career fatalities among New York developers, even though they have lost billions of investor dollars on overpriced real estate and have littered the city with unfinished apartment buildings. While a homeowner who lost a house to foreclosure would find it difficult to borrow for years, developers who defaulted on enormous loans have still been able to attract money.

The reasons, experts say, are that there is still plenty of money floating around and that the market has a very short memory.

“You can always find an investor who’ll put up equity with a guy, unless he’s Attila the Hun,” said Daniel Alpert, managing partner at Westwood Capital, a real estate investment bank.

………

This is the very definition of moral hazard, and when someone does this repeatedly, it is not incompetence, it is fraud.

Time to end the bailouts and start prosecuting.

Cover-up

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Seriously, you have a prosecution of an international prostitution ring, and the prosecution is prohibiting the defense from examining parts of the “little black book” that they seized, but not others:

Federal prosecutors are refusing to reveal customers from Oakland County and the 248 area code who hired hookers from a high-priced escort service but are willing to out clients from Detroit, according to federal court records.

The legal tactic was unveiled in records filed Tuesday in U.S. District Court in Detroit involving the Miami Companions escort service.

………

Paul DeCailly, the attorney for Miami Companions co-owner Greg Carr, flew to Detroit last week to review the black book. He wanted to see the names of clients from Michigan and Ohio, but the U.S. Attorney’s Office said he could see only the names from the 313 and 734 area codes, he said.

“There must be something there they don’t want anybody to see,” DeCailly said Tuesday. “In the 248 area code, a lot of influential people live there: musicians, Detroit’s sports elite, politicians. … It’s the center of a lot of activity in the business community.”

Yep, that’s pretty much what is going on here.

Would that we lived in a less blatantly corrupt nation.

H/t Atrios.

I Think That This is Corruption, Not Stupidity

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One of the more puzzling aspects of the financial meltdown is the complete lack of prosecutions of high level bankers, and Bill Black of New Deal 2.0 explains why:

What has gone so catastrophically wrong with DOJ, and why has it continued so long? The fundamental flaw is that DOJ’s senior leadership cannot conceive of elite bankers as criminals. On Huffington Post, David Heath writes:

Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. An investor in loans who documents fraud can force a bank to buy the loan back. But convincing a jury that executives intended to make fraudulent loans, and thus should be held criminally responsible, may be too difficult of a hurdle for prosecutors. ‘It doesn’t make any sense to me that they would be deliberately defrauding themselves,’ Wagner said.”

(emphasis original)

What is going on here is that the prosecutors are assuming that the agents of the financial institutions are perfect agents of those institutions, and that they would never act in their own personal benefit if it were detrimental to their employer in the long term.

This has a number of names, most commonly, it is called the principal agent problem, and the (now unconstitutional) theory of the theft of honest services prosecutions was based on this.

The facts here, though not necessarily the law, are clear:  Various high level agents at financial institutions engaged in activities that were likely to blow up in the long term, but were unlikely to do so before these agents profited from them.

The only question is whether this behavior was merely stupid or negligent, in which case, a life-time ban from the financial industry is warranted, or fraudulent, in which case, incarceration is warranted.

The calculus here is not rocket science, and the fact that prosecutors are sticking to such a transparently false theory is to my mind more of an indication of corruption than it is of stupidity or wrong headedness.

Without jail time, we will see the behavior repeated.

Hell, we are seeing it repeated right now, that’s why the bonuses are so big this year.

Not a Witch, Is a Crook

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Everyone’s favorite witchcraft denying loony toon Senate candidate, Christine O’Donnell, is being investigated for diverting campaign funds for her personal use, specifically, though not limited to, having her campaign pay the rent on her town house.

The interesting thing here is that her misdeeds, which will likely result in nothing more than fines, were unnecessary, because federal campaigns are allowed to pay their candidates up to an amount equal to the wages of the office that they are running for.

That innovation was given us by Maryland’s own nut job, Alan Keyes.

Brought to You by Leonard Pinth-Garnell

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Adventures in bad corporate damage control.

Specifically, because Wikileaks has said that they have a document dump from a Bank of Bank of America, Bank of America has started to buy up hundreds of nasty domain names in the hope of preventing the airing of criticism:

Bank of America has snapped up hundreds of abusive domain names for its senior executives and board members in what is being perceived as a defensive strategy against the future publication of damaging insider info from whistleblowing Website WikiLeaks.

According to Domain Name Wire, the US bank has been aggressively registering domain names including its board of Directors’ and senior executives’ names followed by “sucks” and “blows”.

For example, the company registered a number of domains for CEO Brian Moynihan: BrianMoynihanBlows.com, BrianMoynihanSucks.com, BrianTMoynihanBlows.com, and BrianTMoynihanSucks.com.

You know, I REALLY don’t think that this is going to help when people realize that you were smoking cigars lit from the original notes of mortgages that you have foreclosed on, and that you used homeless orphans as ash trays.

More seriously, if Wikileaks has your documents, then people will go there, or to one of its legion of mirrors, to get that information.

Just When You Thought that Mortgage Servicers Could Not Get Any More Evil…

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Now we have reports of them sending in crews to break into houses and change locks when they have not foreclosed on the property, in one case stealing electronics, wine, and beer, and in another, throwing out the ashes of the homeowner’s husband. (surprise, there is now a lawsuit)

It’s clear that something needs to be done about the criminal (breaking and entering and theft) activities of the mortgage services, but it appears that if you are the Federal Reserve, what needs to be done is to fight the rest of the government to protect the people who are breaking the law:

Top policymakers at the Federal Reserve are fighting efforts to rein in widely reported bank abuses, sparking an inter-agency feud with the FDIC and the Treasury Department. The Fed, along with the more bank-friendly Office of the Comptroller of the Currency, is resisting moves to craft rules cracking down on banks that charge illegal fees and carry out improper foreclosures. The FDIC supports such rules, according to an FDIC official involved in the dispute.

The new regulations would rein in debt collection, loan modification and foreclosure proceedings at bank divisions called “mortgage servicers.” Servicers have committed widespread fraud in the foreclosure process. While the recent robo-signing of fraudulent documents has received the most attention, consumer advocates have complained about improper fees and servicer mistakes that lead to foreclosure for years.

This is what happens when you put an organization that is chartered to protect and support banks in charge of regulating them.

Instead of reigning in excesses, they validate those excesses, so the Fed is attempting to throw away something like 300 years of established property law so that the banksters can take you house for no reason at all.

Meet the New Boss, Same as the Old Boss

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Barack Obama and His Evil Minions™ are drawing up plans for the indefinite detention of alleged terrorists at Guantanamo Bay:

The White House is preparing an Executive Order on indefinite detention that will provide periodic reviews of evidence against dozens of prisoners held at Guantanamo Bay, according to several administration officials.

The draft order, a version of which was first considered nearly 18 months ago, is expected to be signed by President Obama early in the New Year. The order allows for the possibility that detainees from countries like Yemen might be released if circumstances there change.

But the order establishes indefinite detention as a long-term Obama administration policy and makes clear that the White House alone will manage a review process for those it chooses to hold without charge or trial.

The law here is clear.

If we are at war, and I understand the argument that the authorization for the use of force might constitute this, then you can detain people without access to the legal process, as prisoners of war, with all the rights pertaining to that status.

This is not about prisoners of war.  This is about the king throwing people in jail on nothing but his word, and it is antithetical to American founding principles, which should be obvious to everyone, except perhaps for the worst constitutional law professor ever.

Things Get Interesting in New Jersey

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The chief justice of the New Jersey Supreme Court has set up a hearing on January 19 demanding that the mortgage servicers show cause as to why foreclosures should not be suspended state wide.

It appears that slack mortgage procedures and documentation have reached the notice of judicial authorities in the Garden State.

This is, as the Vice President is wont to say, a big f%$#ing deal.

Not only is there the prospect of an indeterminate foreclosure moratorium in a populous state with expensive real estate, but the judge has explicitly placed the burden of proof on the banksters.

As Harold Feld says, “Stay Tuned”.

Cuomo Files Suit Against Ernst and Young Over Lehman Collapse

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Matt Taibbi is all over this, and while the suit is civil and not criminal, and so a loss would not put the accounting firm in the same position as Arthur Anderson, which was shut down as a result of a criminal conviction stemming from the collapse of Enron. (Since reversed, but they are still dead)

Basically, it comes down to a way that Lehman used an arcane financial instrument called a “Repo 105″ to conceal its debt, and his example is spot on”

These Repo 105 transactions are just loans that Ernst and Young and Lehman Brothers conspired to book as revenue from sales. If I go to you and I ask you to lend me a hundred bucks to pay for Knicks tickets, that’s a loan, and you and I and the SEC and every investor on Wall Street all know I’m in debt to you, that I owe you a hundred bucks.

Here’s how Lehman Brothers paid for their Knicks tickets: a week before the game, they went to you and offered to you “sell” you their worthless puke-stained lava lamp for a hundred bucks, with the understanding that two days after the Knicks game, it would come back and “buy” the lamp back for the same $100 (plus a small commission for your trouble). And when Lehman pocketed that $100 from the initial transaction, they decided to call that not borrowing but a true sale, i.e. they booked that hundred bucks as revenue from an honest sale of a worthless piece-of-sh%$ lava lamp.

In 2007 and 2008 Lehman would do this before the end of every quarter. They would “sell” billions of dollars of assets, typically bonds, to various companies, and use that money to pay down debt before the quarter’s end, so that they didn’t look so flat-ass broke to investors. Then, a week or so after the end of the quarter, they would go out and borrow more money, and then “buy” the assets back. The reasons they did this were myriad, but in most cases the assets they were “selling” were depressed in value at the time and could not have been sold at anything like face value had they really gone out on the market and tried. So instead of really “selling” these items on their balance sheet, they worked together with other companies to jury-rig these “repurchase” agreements that looked like sales but were actually loans.

(%$ mine)

There are two possibilities here for Ernst & Young:  Either they were negligent, and hence they owe damages, or they complicit, in which case they are criminally liable, and could suffer the same fate as Anderson .

My hope is that the accounting firm will turn on former Lehman executives, most notably Dick Fuld, to get out from under, and we may see our first big banker criminal case as a result.

My fear is that this will be another 8 figure fine with no criminal prosecutions.

Just In Case You Wondered How Repugnant Obama’s People Are

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Peter Orzag, in his last column for the New York Times before accepting his bribe from starting his new job with Citigroup, calls for gutting disability insurance because the problem is that people are just lazy malingerers:

Finally, the disability insurance program itself must be reformed. Program administrators understand the need to encourage beneficiaries to return to work, and they have experimented with various incentives. Such initiatives have generally been ineffective, though, because they reach beneficiaries too late, after they have already become dependent on the program and lost their attachment to the work force.

A better approach has been suggested by David Autor of M.I.T. and Mark Duggan of the University of Maryland. In a paper released last week from the Center for American Progress and the Hamilton Project, these economists argue that employers should be required to offer their workers private disability insurance. Such coverage would provide people who have a work-limiting disability with vocational assistance, workplace accommodation and limited wage replacement. All of these benefits would kick in within 90 days of the onset of disability, to avoid the problems with delayed assistance that have plagued efforts to reform public disability insurance. Private employers would have an incentive to prevent their workers from having to file disability applications, because their insurance premiums would rise in response to higher disability rates.

Disabled workers could remain on this privately financed insurance for two years, and then be eligible for the existing public program. The goal would be to minimize long-term dependency, and re-orient the federal disability insurance program toward assisting those who are truly unable to work.

(emphasis mine)

If you do not believe that Barack Obama and His Evil Minions™ want to privatize Social Security, you are a fool, because one of his closest confidants is suggesting privatizing disability insurance.

Think about this, with unemployment at a generational high, and new entrants to the work force unable to find jobs, Orzag wants something akin to insurance recission teams, the people who kicked cancer patients out of health insurance programs, to hound people who are on disability.

Basically, every person who is on disability is someone who is not competing with a kid fresh out of high school or college looking for their first job.

That’s what, having “incentive to prevent their workers from having to file disability applications,” means. It means allowing employers to use coercion to intimidate sick people so that they do not file claims.

This is how Peter Orzag rolls, and this is how Timmy Geithner rolls, and this is how Lawrence Summers rolls.

This is not a mistake.  These are people who the President chose to execute his agenda, and the agenda is seriously right wing by any sane standard.  (Note here that “sane standard” and “Republican Party” had a messy divorce in the 1990s.)