Category: Corruption

This Entire John Ensign Affair Thing Has Taken a Sinister Turn

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The blockbuster here appears to be that another Senator, Tom Coburn of Oklahoma, was present at at least some of the discussions on this matter between Ensign and his former staffer, though it also appears that there is the suggestion that Ensign was stalking Ms. Hampton after the relationship ended.

Well, it appears that Senator Ensign was slowly backing away from the allegations of extortion over the past few days, and law enforcement has said that there have been no allegations of such.

What is interesting is that Doug Hampton, the cuckolded husband seems to have felt threatened about something, because he sent a letter to Fox News about claiming that he was threatened about 5 days before Ensign went public, and while Fox denies having tipped him off, they now admit having received the letter.

It appears that someone there tipped off the Senator to this, and now that the contents of the letter have been leaked, we’re hearing rumblings of potential extortion again, only Ensign’s office is suggesting that it was his council, who they have not named.

So, murmurings of extortion, but no names, for now, I am betting that this is Bullsh&%.

My guess is that the sequence of events is as follows:

  1. Affair occurs. (agreed to by all sides)
  2. His colleagues in the Senate confront him about the affair in February of 2008
  3. Stalking or a vendetta by Ensign.
  4. Letter to Fox News.
  5. Fox sits on the letter.
  6. Fox tips off Ensign.
  7. Ensign goes public, and starts spreading rumors about extortion.
  8. Ensign’s office starts floating an extortion smear.
  9. Reporters start checking with law enforcement, find no evidence of extortion.
  10. Ensign’s office backs off extortion smear.
  11. Las Vegas Sun gets a copy of the letter, which makes Ensign look like Kathy Bates’ character Annie Wilkes from the movie Misery.
  12. We start hearing the extortion smack again.

Pass the popcorn

Text of Doug Hampton’s letter to Fox News:

Thursday, June 11, 2009
Fox News- Corporate Office
1211 Avenue of the America’s (sic)
New York, New York 10036

Megyn Kelly,

More than any time in my life I understand why people take matters into their own hands. I am disheartened! I have sought wise counsel, tried to do the right thing and continue to run into road blocks (sic) in dealing with a very terrible circumstance and injustice that lives in my life. I am hoping you and Fox News can help.

My name is Doug Hampton. I am a former employee of US (sic) Senator John Ensign. I worked for Senator Ensign in his official government office on Capitol Hill from November 2006 to April 2008. My responsibilities were the oversight of his personnel in Washington as well as the state of Nevada. Duties included budgets, policy and public speaking on behalf of the Senator and his initiatives.

Here is my story. In December of 2007 in the midst of some very difficult personal issues that deeply impacted my family and marriage, Senator Ensign pursued and engaged in a relationship with my wife. Our families were lifelong friends, our children attend school together to this day, and our homes are in neighborhoods across from each other. My wife was the Senator’s campaign treasurer.

There is a tremendous amount (sic) of details and critical facts associated with this story and their relationship that will not be addressed in this letter but are very important and need to be further explored if you choose to meet with me. The purpose of this letter is to establish the framework for discussion and provide enough information to warrant a meeting with you and Fox News. This is the only letter of its kind and no other news stations have been contacted with this information. I have great respect and affection for Fox News and many of your collages (sic). I’m sending this to you because you have a legal back ground (sic) and this story has several legal elements.

The unethical behavior and immoral choice of Senator Ensign has been confronted by me and others on a number of occasions over this past year. In fact one of the confrontations took place in February 2008 at his home in Washington DC (sic) with a group of his peers. One of the attendee’s (sic) was Senator Tom Coburn from Oklahoma as well as several other men who are close to the Senator. Senator Ensign’s conduct and relentless pursuit of my wife led to our dismissal in April of 2008. I would like to say he stopped his heinous conduct and pursuit upon our leaving, but that was not the case and his actions did not subside until August of 2008.

The actions of Senator Ensign have ruined our lives and careers and left my family in shambles. We have lost significant income, suffered indescribable pain and emotional suffering. We find ourselves today with an overwhelming loss of relationships, career opportunities and hope for recovery. Our pursuit of justice continues to place me and my family in harm’s way as we fear for our well being (sic).

Today, Senator Ensign’s responsibility and stature have increased within the US (sic) Senate. His is currently the head of “Policy” for the Republican Party, the number four position within the Parties (sic) leadership team. We on the other hand are completely ruined and left to deal with the aftermath of very evil and completely unjustifiable acts by one of our countries (sic) top leaders.

It appears there may be nothing the law can do to correct and bring justice and restitution to (sic) this terrible wrong that has been done to us. I have sought a number of lawyers who are having difficulty finding charges that may hold up in court. There are either technicalities that exist due to the time period in which I have sought help, or other nuances that quite frankly make no sense to me given the egregious acts and blatant abuse of power by Senator Ensign. From my perspective this whole nightmare is terribly wrong and completely unacceptable and should not be tolerated.

I clearly understand this story is difficult to believe for anyone reading (sic) for the first time. I too would have difficulty believing it, if someone brought me this story. However I assure you it is true and there are facts, a paper trail, phone records and personal witnesses to testify to its truth. It is my belief we are dealing with a very powerful person and an institution in the US (sic) Senate that only the media can pierce to expose the wrong and bring light and focus to what needs to be done? (sic)

Please help me! This should not be how the leadership of our country should be allowed to behave. I need justice, help and restitution for what Senator Ensign has done to me and my family. Regardless of technicalities, regardless of position, regardless of power this cannot and should not be tolerated in our country from our trusted leaders. Will you help? Will you consider a meeting with me to further discuss this story and what can be done to bring justice and correction to this situation?

I love this country and considered it a great privilege to work in the US (sic) Senate. I am bringing this to you and Fox News to address this professionally and correctly. I could have sought the most liberal, Republican hating media to expose this story, but there are people’s lives at stake and justice is about proper process as well as outcome. Senator Ensign has no business serving in the US (sic) Senate anymore! I will send you and (sic) email as well as leave you and your staff messages in an attempt to meet you and your team as soon as possible. I live and work in Nevada but can be in New York within hours, I look forward to your help.

Sincerely,
Doug Hampton

And yes, I am feeling a bit of Schadenfreude about this, pass the popcorn.

Obama Not Just Cheney in Drag, but Cheney’s Guardian Angel

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Great googly moogly, their latest brief in court is even more absurd than their DOMA brief.

Hell, it’s more absurd than the Twinkie Defense, it’s the Jon Stewart Defense:

A federal judge yesterday sharply questioned an assertion by the Obama administration that former Vice President Richard B. Cheney’s statements to a special prosecutor about the Valerie Plame case must be kept secret, partly so they do not become fodder for Cheney’s political enemies or late-night commentary on “The Daily Show.”

…

….He told the judge that if Cheney’s remarks were published, then a future vice president asked to provide candid information during a criminal probe might refuse to do so out of concern “that it’s going to get on ‘The Daily Show’ ” or somehow be used as a political weapon.

Gee, I wish that I could tell police investigating a crime to go pound sand because somehow it might be embarrassing.

Making this even more absurd is that this argument was first put forward by Bush’s now disgraced acting head of the Office of Legal Counsel Stephen Bradbury. (See also here and here)

Financial Innovation, Financial Schminovation

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Just look at an instrument called the reverse convertible.

James Kwak has a hard time wrapping his head around this until he realizes that it’s nothing more than a way for bankers and brokers to screw their customers.

It’s so corrupt that it boggles his mind:

In a reverse convertible, you give $100 to a bank for some period, like a year; it pays you a relatively high rate of interest, say 10%. The $100 is virtually invested (no one actually has to buy the stock) in some underlying stock, like Apple. If at the end of the period the stock is above a threshold, like $80, you get your $100 back; if it is below the threshold, you get the stock instead. (The terms can depend on whether the stock ever went below the threshold and where it is at the end of the period, which makes the deal worse for the investor, but that’s the basic idea.)

The simplest thing to compare this to is just buying the stock. Compared to buying the stock, there are three outcomes:

  1. The stock ends up below $80: In this case, the reverse convertible is slightly better, because you got the$10 in interest, which is probably more than the dividends you gave up.
  2. The stock ends up between $80 and $110: Again, the reverse convertible is better, because you got $110 (your principal plus interest); it’s a little better if the stock ends up close to $110, a lot better if the stock ends up at $81.*
  3. The stock ends up above $110: Here, you do anywhere from a little worse (if the stock ends at $111) to much, much, much worse (if the stock goes over $200).

And then he asks, with no small justification, “What the hell is the point of this product?”

This is why I think that a financial regime needs to be established with the idea that that which is not explicitly approved is prohibited, because the current regime, even under Obama’s updates, gives us this toxic waste.

Reviews are Coming in On Obama Regulation Plan

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And there is a lot of skepticism, particularly about expanding the Federal Reserve’s regulatory role, because, as Alan “Bubbles” demonstrated, you could end up with an incompetent lunatic running the most opaque organization in Washington, see here, here, here

They should be concerned. While insulation from oversight and public input might be a good thing when one manages the monetary system and has to create a recession to reign in inflation, it is not when you are talking about regulating agencies.

I think that this is something that Lawrence Summers wanted, because he believes that Obama will appoint him to succeed “Helicopter” Ben Bernanke, and he wants more authority at what he sees as his future position.

One thing that does concern me is that one of the biggest failures in this of failures, the corruption in the way ratings agencies like S&P and Moody’s operate, is largely untouched.

I’m unimpressed, but I agree with Paul Krugman when he says, “One thing I was concerned about was whether this consumer financial protection agency would be toothless , but the opposition of [a bank lobby group] makes me believe that it’s not such a bad idea after all,” when he talks about moving the regulation of consumer loans out of the Federal Reserve and move it to a dedicated consumer credit protection agency.

It’s too little, too timid, and too friendly to the forces that created this in the first place.

Tom Daschle Would Suck Off a Corpse for a Cheeseburger

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To quote great Matt Taibbi, and there is no better evidence of this than his eagerness hook up with Viagra pitchman Bob Dole to kill the public option in healthcare reform, because, after all, his job is to lobby for, among other unsavory paracites, health insurance companies:

“While I feel very strongly that consumers should have the choice of a national, Medicare-like plan, my colleagues do not. . . But we were concerned that the ongoing health reform debate is beginning to show signs of fracture on the public plan issue, so in order to advance the process of developing bipartisan legislation and to move it forward, it’s time to find consensus here,” Daschle said.

So, Daschle’s solution is to have no real healthcare reform, but tho throw billions (trillions?) at his clients in the insurance industry and placing a mandate on the rest of the country.

Tom Daschle makes me happy that Harry Reid is now Senate Majority Leader….I can’t believe that I just said that.

Banks Burnt on “Sure Fire” Credit Default Swaps

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The Wall Street Journal has the story of how a bunch of the large investment banks got burned investing in “sure fire” credit default swaps. (paid subscription required)

You get a copy of the article here.

This kind of crap is why naked credit default swaps should be banned.

This ain’t nothing but a bunco game, straight out of the Mel Brooks movie, and Broadway musical, The Producers.

Some quotes from the article, and my comments:

The trade, by Amherst Holdings of Austin, Texas, was particularly galling to the big banks because it turned what they believed was a sure-fire profit into a loss.

(all emphasis in quotes mine)

If the profit is “sure fire” it means that someone is engaging in deceptive activity.

Privately held Amherst says it acted in good faith trying to limit losses for clients, who had sold credit-default swaps on the securities. “We wouldn’t jeopardize our business and reputation by entering into an opportunistic trade knowing what the outcome would be,” said Amherst’s chief executive, Sean Dobson.

This is a shot across the bow of the banks on the other side, since this is exactly what the big investment banks intended.

So far the latest dust-up has been all words, in part, bankers say, because they are wary of attracting more regulatory scrutiny at a time when lawmakers are planning major reforms in the largely unregulated derivatives markets, long lucrative for banks. While the banks’ combined losses from the trade were in the tens of millions of dollars — modest by recent standards — they are the buzz of Wall Street as firms try to prevent a repeat of the episode.

Ban naked CDS contracts, and it will not repeat.

Traders can buy credit-default swaps on securities they don’t own. At one point, at least $130 million of bets had been made on the performance of around $27 million in securities, according to a person familiar with the matter.

This is the part where credit default swaps, called a “naked” CDS in industry parlance, become a 3 card Monte game, and not insurance.

This kind of shit happens, and when things fall apart, you end up with AIG owing 40 or 50 times the value of the asset in insurance payouts.

This is why, 263 years ago, parliament passed the Marine Insurance Act of 1746, which required that anyone wanting an insurance payout demonstrate an interest in the continued existence of the property.

We have known for over 2½ centuries, since the South Sea Bubble, that this sort of insurance is dangerous and does nothing but create opportunities to game the system.

The frightening part here is that this scam is completely legal

Here is how it works:

  1. Amherst Holdings sells credit default swaps on a bunch of bonds to J.P. Morgan Chase & Co.
  2. Amherst Holdings sells credit default swaps on a bunch of bonds to Royal Amherst Holdings sells credit default swaps on a bunch of bonds to Bank of Scotland Group PLC
  3. Amherst Holdings sells credit default swaps on a bunch of bonds to Goldman Sachs
  4. Amherst Holdings sells credit default swaps on a bunch of bonds to UBS
  5. Amherst Holdings sells credit default swaps on a bunch of Bank of America Corp.
  6. Amherst Holdings sells credit default swaps on a bunch of bonds to a bunch of other banks
  7. Premiums exceed the face value of the bonds by many times.
  8. Amherst Holdings takes some of the premiums, and gives this to Aurora Loan Services with instructions to buy and retire the bonds.
  9. The CDS contracts are now worthless, and Amherst Holdings has taken way more in premiums than it spent on the bonds.
  10. Collect underpants.
  11. Profit!

OK, it doesn’t actually involve underpants, but still.

Leon Panetta Says that We Intend to Keep Torturing

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So, Barack Obama and His Evil Minions,™ are still arguing in court that there is no crime by Bush Cheney that they will not cover up:

The forced disclosure of such material to the American Civil Liberties Union “could be expected to result in exceptionally grave damage to the national security by informing our enemies of what we knew about them, and when, and in some instances, how we obtained the intelligence we possessed,” Panetta argued.

….

The “disclosure of explicit details of specific interrogations” would provide al-Qaeda “with propaganda it could use to recruit and raise funds,” Panetta said, describing the information at issue as “ready-made ammunition.” He also submitted a classified statement to the court that he said explains why detainees could use the contents to evade questions in the future, even though Obama has promised that the United States will not use the harsh interrogation techniques again.

(emphasis mine)

If you aren’t torturing any more, the information is no longer sensitive.

I cannot see any reason to make this argument unless the Gulags are still in place, and they intend to keep using them, or are still using them.

Poster Child for Regulatory Capture

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So, it seems that after much in the way of government bailout money, and the fact that much of their voting equity is now government owned, the FDIC is looking at ousting Citi CEO Vikram Pandit.

There is one problem though, evidence of excessive spending on his lavish offices, his pay, and his bonuses is not enough to convince Timothy “Eddie Haskell” Geithner that a management change is justified, so he’s digging his heels in to keep Pandit as running, and mismanaging, Citigroup.

The first reform we need is to make sure that senior political officials who make policy aren’t just the big bank’s towel boys, and this ain’t happening.

Here’s a Surprise

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And in my own backyard, no less.

We now have confirmation that a number of banks, most notably Wells Fargo, specifically and disproportionately targeted blacks for high interest subprime mortgages:

As she describes it, Beth Jacobson and her fellow loan officers at Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages.

These loans, Baltimore officials have claimed in a federal lawsuit against Wells Fargo, tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.

Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to subprime lending as “ghetto loans.”

I don’t know what bothers me more, that this happened, or that I am so unsurprised that this happened.

And it ain’t just Wells.

The Conservative Wing of the Supreme Court Supports Bribery

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In a 5-4 decision, with Justice Kennedy being the swing vote, the Supreme Court ruled that state and local judges receiving huge campaign donations from political interest groups must recuse themselves:

Judges must disqualify themselves in some cases involving their top campaign contributors, the U.S. Supreme Court said, ruling for the first time that judicial elections can create a risk of bias that violates the Constitution.

The case, Caperton v. Massey, involves a fraud case against Massey Energy, in which a jury awarded $50 million to the small coal companies that they drove out of business.

Massey’s CEO, Don L. Blankenship then spent $3 million to defeat a state supreme court justice, and replace him with a more pliable fellow, one Brent Benjamin, who then refused to recuse himself.

Of interest here is that Blankenship only donated $1000 to Benjamin’s campaign, the rest he independently spent on ads against the incumbent, Warren McGraw, so this does not just apply to campaign donations, but independent expenditures too, at least in a case where the donations are “extraordinary” and “extreme”.

In this case, the donations were so outrageous that John Grisham made a novel out of them.

Of course $3 million for a state supreme court justice in West Virginia fits that bill, it probably would in California too, but for a local Justice of the Peace position, that number would be much lower, probably sub 6 figures, and the courts now have to hash that out.

Of course the simple solution for any is recusal, which would be done when there is the mere appearance of impropriety.

Unsurprisingly, Roberts, Scalia, Alito, and Thomas came out in favor of corruption.

Part of Geithner’s PPIP is Dropped

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Specifically, the so called “legacy loan program” has been “indefinitely postponed”.

Remember that in Treasury-speak, “legacy” is the word for toxic, and the program, which was to be run by the FDIC, could not get the banks to sell the loans.

According to FDIC chairman Sheila Bair, “Banks have been able to raise capital without having to sell bad assets through the L.L.P., which reflects renewed investor confidence in our banking system,” which actually makes no sense.

If they can sell the assets at a higher price because of federal guarantees, and the federal guarantees amounted to a subsidy of over 50%, which meant much higher prices than they would get otherwise, they would, except for one little thing:

Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses. Even though the government was prepared to prop up prices by offering cheap financing to investors, the prices that banks were demanding have remained far higher than the prices that investors were willing to pay.

(emphasis mine)

The translation here is that if they sold their pieces of the big sh%$ pile, even with the government subsidy, they would lose so much water that it would be impossible not to recognize that the institutions were insolvent.

Basically, because of the dishonestly optimistic “stress tests,” and the banks strong-arming a change in mark to market rules by the Federal Accounting Standards Board, they can now, once again, hold this on their books at fictitious values, and so can pretend to be solvent, and go back to overpaying their incompetent senior executives.

Heck of a job, Timmy.

The “Tanned One” Charged with Securities Fraud

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Here’s hoping that you get a really ugly cell mate, dude!

The Securities and Exchange Comission has charged the former CEO of Countrywide Mortgage, Angelo Mozilo, with securities fraud for insider trading.

Basically, he, former COO, David Sambol, and former CFO, Eric Sieracki, are accused of misleading investors about how crappy their lending standards were until they dumped their own stock.

This is not a criminal proceeding, but one hopes that it moves to that.

Reports that Larry Summers Took Semi-Legal Bribes

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Mark Ames notes that it looks like the banks, knowing that he would be in a position to exert significant authority over them after a new administration came in, bought him off ahead of time by investing in start-up companies where he was on the board only because of his expected future political clout.

This has been his history during his entire career, and the revolving door keeps turning.

The Worst Person in Brooklyn

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Brooklyn Bishop Nicholas DiMarzio, who has threatened to close churches in the districts of state legislature if they vote to extend the statute of limitations on child sexual abuse:

Brooklyn Bishop Nicholas DiMarzio threatened state lawmakers by vowing to close churches in their districts — and blame them for the closures — if they dared support a bill making it easier for people who were sexually assaulted as kids to sue, legislators told The Post.

I guess it’s because that, you know, it might be expensive for the church.

Here’s an idea, how about Not Letting Your Priests Rape Children!

That would save even more money.

One note is that it appears that the good Bishop’s attempts at blackmail backfired, and a number of legislators are seriously looking at supporting the bill now.

Political Prosecution Against Cyril Wecht to be Dropped

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This was a case of a blatantly political US literally making a federal case out of things like using the office fax machine, and now, because most of the evidence has been excluded, political hack Mary Beth Buchanan has been forced to drop the case.

I know that Barack Obama does not want to dismiss US attorneys until he has replacements, but Buchanan is a cancer on the Department of Justice.

Background here.