Category: Corruption

Dude, What Did You Expect, an Education

Sam Keller, a former quarterback for Arizona State University, is suing Electronic Arts and the NCAA over their licensing his image for their college sports game:

Electronic Arts Inc. and the National Collegiate Athletic Association were sued by a former college football player who claims athletes’ images are used in video games without their permission and in violation of NCAA rules.

Electronic Arts, the second-largest video-game publisher, circumvents the rules by allowing customers to upload player names directly into games and creating images that closely resemble student athletes to increase sales and NCAA royalties, according to the complaint filed by Sam Keller, a former quarterback for Arizona State University.

Normally, I fall on the side of rather open use of such things, and in the case of statistics for things like fantasy, I would do so anyway, but the fact that thee NCAA is a revolting organization does color my view here.

The equation here, at the top levels of sport anyway, is that the schools will pretend to provide an education, and in exchange the athletes will provide their services for free, and have no part in the billions that the schools rake in for the privilege.

When people complain about things like the lack of a playoff system in college football, they ignore the slave labor upon which this system is built.

Are You Wondering Just How Corrupt the Stress Tests Were

Well, wonder no more. Treasury negotiated the results of the tests with the banks.

Of course if you were a student, and attempted to browbeat your teacher into improving your grade, they would just laugh in your face or demand a bribe, but if you are Ben Bernanke and Timothy “Eddie Haskell” Geithner, they can do it for you for free, or as Joe Btfsplk wrote in the comments section of this story, “Maybe next time, they could give the banksters multiple choice tests,” because they certainly failed the true-false test:

The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation’s biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.

Bargaining?

This is supposed to be a test administered by the Treasury and Federal Reserve, not a negotiation.

The banks are in hock to the Treasury and FDIC for hundreds of billions of dollars, and to the Federal Reserve for Trillions, and they negotiated with the banks?

Whiskey Tango Foxtrot?

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

Again, this is not grading on a curve, this is is everyone getting a gold star.

Yes, Wells threatened a lawsuit, but that was an empty threat, because of the response of the market to their suing the FDIC, Treasury, and Federal reserve would have turned their shares into penny stocks.

L’Affaire Harman and L’Affaire Pelosi

Zachary Roth at TPMMuckraker uncovered this little gem from Newsweek in 2004:

Until a few weeks ago, Patrick Murray was just another ambitious Capitol Hill staffer. As a top aide to Rep. Porter Goss, the Republican chairman of the House intelligence committee, Murray had a reputation as a sharp-tongued partisan lawyer. When Democrats on the committee asked the CIA for information, Murray would cut them off, reminding the agency that only requests backed by the Republican majority should be honored. “He was just impossible,” says one staffer who dealt with him. “He was sarcastic, snide and had this uncanny ability to push people’s buttons.” One former CIA official told NEWSWEEK that Murray leaned on him more than once to declassify information so he could use it to “embarrass the Democrats.” Murray was irritated when the agency declined. He regarded much of the CIA as a nest of obstructionist bureaucrats, time-servers who had schemed to undermine the administration’s policies–especially in Iraq.

(Emphasis mine)

It is best to remember that Bush and His Evil Minions had 8 years to politicize the state security apparatus, driving out all but hardcore loyalists who would use the levers of the state in pursuit of their own political, partisan, and personal gain.

They have done their level best to poison the bureaucracy.

As such it is best to wait until a report is fully vetted and final before taking it at face value.

So then, what do we make of the reports that she was briefed in 2002 on the use of torture enhanced interrogation techniques in 2002 (here and here)

NOT ON THE TABLE! NOT ON THE TABLE!

After Pelosi’s non-performance regarding even considering impeachment investigations after the Dems took Congress in 2006 (see pic), I’m not generally inclined to give her the benefit of the doubt, but in this case, with a document that Leon Panetta felt compelled to include a cover letter noting that this is very preliminary.

Additionally, as Emptywheel (link above) notes, this “report” almost instantly hit both the mainstream and wingnut press (HumanEvents dot com).

Additionally, Greg Sargent notices that while there might have been a discussion of torture techniques, it is not clear in the document as to whether the Congress critters were told that the techniques were being used.

I do rather believe that Pelosi knew what was going on, and I would guess that it is at least even money that she was specifically briefed about it being done in an ongoing manner: It would explain her recalcitrance on impeachment, because the scandal could pull her down too.

I would also note that involving members of Congress in torture in this manner, so that they would be inclined to oppose any investigation or punitive action, sounds like SOP for Bush/Cheney.

Corruption, Business as Usual in the Financial Markets

Some times you notice something, and think, “I’m gonna have to post about it later,” and by the time you do, the story has changed.

This is particularly true in corruption cases, where things move rather quickly.

Case in point, the corrupt, self dealing Chairman of the Federal Reserve Bank of New York, Stephen Friedman, who, “bought shares in Goldman Sachs in December, profiting to the tune of $1.7 million.

Ordinarily not a problem, since the Federal Reserve does not regulate investment banks, but for a little fact, that in September, the Federal Reserve allowed Goldman Sachs to become a bank holding company, and hence was regulated by the Federal Reserve, and most particularly was regulated by, you guessed it, the Federal Reserve Bank of New York.

But of course, as Yves Smith so eloquently notes, “A Conflict of Interest is Not a Conflict of Interest If It Involves Goldman,” or as he said to the Wall Street Journal:

Last week, following questions from The Wall Street Journal, Mr. Friedman, 71 years old, disclosed he would step down from the New York Fed at year end. In an interview, he said he made the decision because the waiver letting him own Goldman stock and be a Goldman director expires at the end of the year. He added: “I see no conflict whatsoever in owning shares.”

Except of course, as Ms. Smith notes, he bought shares in a company that he was regulating, and he did so before the waiver was approved.

This is insider trading, pure and simple.

Of course, today we see have justice, Wall Street style, as Mr Friedman has resigned, effectively immediately, from the NY Fed.

That’s it. He gets to walk way and keep his money, there will almost certainly be no criminal investigation.

This is business as usual, and, yet again, all roads on corruption lead back to Goldman Sachs, the BCCI of Wall Street.

Taking these racketeers down them down must be a government priority.

Just So You Know, There Are No Grown-Ups In Charge

Alan Grayson (D-FL) questioning the Inspector General for the Federal Reserve, and it appears that no one is in the process of reviewing any Federal Reserve activities.

Un-dirtyword believable.

The Federal Reserve needs to be reformed and made more transparent.

I don’t know of any specific allegations of corruption, but when you are seeing 9 trillion in transactions, and not even the attempt to see what is going on, I cannot imagine that someone out there is not lining their own pockets.

More Evidence that the Fix Was In on the Stree Tests

As Peter Boockvar observes, they can raise the capital through a simple accounting trick

Considering that they’ve already received $45b in preferred stock from the US taxpayer, an accounting maneuver of converting that to common can, Voila, cure their capital needs without raising a penny of new money, a move that even the magician David Copperfield would be in awe of.

Just delightful.

Everyone gets a gold star, and all the test takers are cheating.

It’s Official, the “Stress Test” Was Just Theater

We are getting reports now of what Timothy “Eddie Haskell” Geithner’s stress test has determined, and it’s clearly not reality.

Bank Needs
Capitalization
Amount
Bank of America Yes $34 B
Wells Fargo Yes $15B
Citigroup Yes $5B
Morgan Stanley Yes $1-2B
Goldman No

MetLife No

JP Morgan Chase No

Bank of NY Mellon No

American Express No

Capital One No

BB&T No

This is a damn joke.

You have one “oh my God” number, for Bank of America, and it’s about 50% of their market cap, but Citi, which is clearly in much worse shape is somehow better capitalized by a factor of 6.

This is simply not true, even after BoA’s disastrous acquisition of Merrill Lynch and Countrywide.

Also note this joint statement from the Treasury Department, Federal Reserve, FDIC, and Office of the Comptroller of the Currency, which, to my untutored eye, appears to say that they are going to go with their cockamamie scheme to claim that capital is increased by swapping preferred for common stock.

It’s an accounting trick, and what’s more, it’s one where the taxpayer has just taken a second haircut.

They are making great theater by pretending to talk tough and giving a month for the banks that need to to present a plan to raise capital, and 6 months to have this plan in action, but it’s all a lie, since the plan may very well be, “suck on this, taxpaying rubes”.

I disagree with former IMF chief economist Simon Johnson’s analysis, which is that they are selectively leaking to create confusion in order to keep people from looking at whether the test was too hard on the banks.

I think that his analysis is incomplete. The “stress test” begins and ends with public relations. It’s a sham, and it has always been a sham, intended to show that the government was serious about reigning in the big banks, without actually engaging in the necessary actions, like seizure of insolvent institutions that would actually be required for it to work.

It Ain’t the Crime, It’s the Coverup

Barack Obama promised that the people who engaged in torture at the CIA would not be subject to prosecution, but it appears that this guarantee will not apply to people who actively destroyed evidence of torture:

When president Obama decided to release the Bush-era Justice Department’s interrogation memos last month, he tried to calm an anxious CIA by publicly declaring that operatives who “reasonably” relied on them would not face criminal prosecution. But agency officials still have plenty to worry about. Despite Obama’s assurances, a Justice Department special counsel is quietly ratcheting up his probe into a closely related subject: the CIA’s destruction of hundreds of hours of videotape showing the waterboarding of two high-value Qaeda suspects. At the same time, a Senate panel is planning the first public hearing dealing with CIA interrogations, including testimony from a star witness: Ali Soufan, the former FBI agent who vigorously protested the questioning of one of the detainees, terror suspect Abu Zubaydah.

….

You can see my old post on this here.

Interestingly, these tapes were destroyed when both Congressional investigators, and a Federal Court Judge were demanding information of this sort.

While no one may go to jail for the torture, it is likely that some people, Michael Hayden, Porter Goss, and Jose Rodriguez who was the director of the CIA’s operations directorate.

In a way, this might be better, because their defense against torture is protected by the OLC memos, as flawed (garbage really) as they are, but they did not receive an OLC memo to obstruct justice and destroy evidence.

L’Affaire Harman: In Which a Journalist Accuses the Bush Administration of Law Abiding

I’ve been following this for some time, and now we have a credible explanation from Laura Rosen as to why a further investigation might have been quashed by Alberto Gonzales, that you did not break the law until Dick Cheney and His Evil Minions told you to break the law:

3. Did Goss no longer have authority to certify the FISA Warrant when the call in question happened? The Time 2006 magazine piece on Harman coming on the radar in the Aipac case says that the tapped conversaation in question in which the possible alleged-by-some quid pro quo occurred was in “mid 2005.” A former intelligence official familiar with the matter told me that Goss had certified a FISA warrant to target Harman based on that intercepted communication, but didn’t know exactly what time it had occurred.

But a former intelligence community source tells me that DCI Goss no longer legally had the authority to certify FISA warrants at all beginning January 1, 2005 when the law creating the Office of the Director of National Intelligence went into effect. So if Goss did try to certify a FISA warrant to target Harman in 2005, sources tell me that would be unkosher at best, and legally suspect. That authority was no longer in the Director of Central Intelligence’s hands and had gone to the Director of National Intelligence.

(Emphasis original)

The idea that the Bush White House was paranoid about various players pursuing their own agendas is not hard to believe, since both paranoia and ignoring the law was SOP for them, and they would naturally assume that everyone else would do the same.

On a note regarding the coverage of the coverage, it gets more interesting.

BTD at Talk Left notices that Jeff Stein who broke the Harman wiretap story for CQ, threw a hissy fit over suggestions that he was spoon fed self-serving leaks from Porter Goss’s staffers when he was in Congress and the CIA, aka the “Gosslings”.

Of note is that he complains about Ron Kampeas at JTA, and Laura Rosen at Foreign Policy magazine, but studiously ignores Zachary Roth at TPMMuckraker, who actually lists the most prominent “Gosslings”:

  • Patrick Murray
  • Jay Jakub
  • Michael Kostiw
  • Merrell Moorhead

Who are a veritable rogues gallery of weirdness, as Roth makes clear when he notes that, “It says something about this crew that perhaps the best-regarded of them [Michael Kostiw] had his career derailed for shoplifting pork products.”

Stein does not deny that they are his sources in his rant, and given his studious avoidance of the article that names the “Gosslings” even while not outing them, it certainly reasonable to conclude that one of his major sources, and more likely most of his major sources for his initial story, are these “Gosslings”.

That being said, the problem with what appears to be ass covering and political vendettas is that there appears to be no way that they can all lose.

As Atrios notes when he rightly excoriates Harman for her new found discovery of the potential for abuse of surveillance, there are no good guys here:

The absurdity is obvious. Dirty f@#$ing hippies like me were horrified at the illegal warrantless wiretapping program and general expansion of the surveillance state in part because of the potential for political abuse (frankly, given the rubber stamp FISA court and rubber stamp Congress what other point would there be?). Jane Harman and her pal Joe Klein heaped scorn on dirty f@#$ing hippies for such crazy views. Harman gets caught up in what appears to be a perfectly legal wiretap not aimed directly at her, though the release of the details of it might be evidence of the kind of political abuse possible in any surveillance program. Suddenly Harman is a staunch defender the right of People Like Jane Harman to not be wiretapped.

(@#$ mine)

Not Enough Bullets: UK Edition

Of course, because of their strict gun laws, we may have to implant the bullets manually:

City bankers are to reap nearly £7bn in bonuses this spring even though the government has been forced to pump tens of billions into the banks to prevent them collapsing.

The good news is that this is down from its £14.1 billion peak in 2007.

The bad news is that these folks still say that they need this with a straight face.

As my British friend would say, “Fecken bollocks Numpty wankers!!”

The Big Banks Own the Senate

And they do their master’s bidding and kill a cram down amendment, which would allowed bankruptcy judges to adjust mortgage principal for primary homes much in the same way they do for vacation homes and commercial property.

15 Democrats, including newly minted Dem Arlen Specter, voted for banks, and against American families.

The house passed a bill with cramdown, and Pelosi has been insistent that it be included, and conference reports, and this will now go to a conference committee as the bills are different, are not filabusterable.

Here’s hoping that ordinary people win.

Zimbabwe Update

Not a whole bunch of movement, just updates such as the fact that the Zimbabwe Central Bank (RBZ) took money from private bank accounts, and that Finance Minister Tendai ordered parliament members who received cars from the RBZ to return them immediately.

It’s probably a prelude to the bank chief’s firing.

There is some relatively bright economic news with gold mining companies restarting operations after the government said that they could sell gold directly on the world market, which cuts off an avenue for Mugabe to pay off his associates, and the UK has pledged $21 million in humanitarian aid, and its African neighbors have pledged $400 million in credit lines.

Now For the Criminal Investigation

Neel “Cash and Carry” Kashkari is finally leaving as head of the TARP.

I have no knowledge of whether or not he actually broke any laws, though describing the management of the program as “criminal,” is certainly appropriate, but I do think that the DoJ and SEC should investigate because it smells bad.

I do not think that it is at the level of a grand jury investigation….Yet….But you won’t know what’s under the rocks until you turn them over.

Certainly, the program was an example of corruption and regulatory capture though.

The Fix is In on the Stress Tests

It appears that the stress test results will say that only one bank will need additional capital.

This is bullsh@#. The result that only one bank has issues, and they are small was pre-ordained from the start.

Because they don’t want to say that banks are insolvent, and if they said that no banks had issues, the fix would be obvious, so they went with only 1 bank.

It looks like the good doctor (Roubini) agrees. He is saying that the stress tests are not “serious”.

Teck of a job, Timmy.

Expect the Stock Market Rally to End Soon

Because stock sales by executives and other insiders at firms has hit the highest level since 2007.

They know that the earnings for this quarter are not sustainable, and they are getting out of their own companies’ stocks and into cash:

Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

What we have been seeing is a bear rally or dead cat bounce.

Congress Threatens Subpoena Over BoA Threats

Now that Bank of America CEO Ken Lewis’ testimony before NY State Attorney General Andrew Cuomo has been released, members of Congress want the documents to investigate, and are threatening a subpoena if they don’t get them.

Representatives Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, and Dennis Kucinich (D-OH), who the Domestic Policy subpanel, are demanding that all relevant documents be turned over to them, and they are threatening a subpoena:

The implications of Mr. Lewis’ testimony, if accurate, are extremely serious. Under these circumstances failure to comply with the Subcommittee’s request raises the prospect that we will be forced to consider compulsory means to achieve compliance with our request. However, we would prefer your voluntary compliance.

(emphasis mine)

As I’ve said before, it sounds to me like Paulson and Bernanke broke the law, and a full investigation would be a very good idea.

Hell an indictment would be a very good idea.

Ken Lewis Says that Paulson and Bernanke Threatened Him to Keep Mum on Merrill Lynch IMploding

It looks like the former Treasure Secretary, and the current Chairman of the Federal Reserve pressured Lewis to ignore the normal disclosure requirements to the SEC and his shareholders:.

Bank of America Chief Executive Kenneth Lewis told the New York attorney general he believed former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank’s acquisition of Merrill Lynch, according to testimony reviewed by The Wall Street Journal.

This is actually a big deal, and while I still think that Lewis is an idiot who should be fired for buying Countrywide Financial, it casts a far more sinister light of the involvement of the people who were then two most senior finance officials in the US.

I would note that Paulson has denied this, though the circumstances seem fairly clear:

The Journal said in Thursday’s edition that Lewis doesn’t say in the transcript that he was told specifically to remain silent about Merrill’s burgeoning losses. But the paper quotes Lewis as testifying that disclosing that information “wasn’t up to me,” and that he was warned by Paulson and Bernanke that failing to complete Merrill’s takeover would “impose a big risk to the financial system.”

Citing a person familiar with the matter, the newspaper said Paulson told the NY AG’s office last month that Lewis may have misread some remarks about Treasury’s disclosure requirements as instead pertaining to his bank’s obligations.

The “person familiar with the matter,” is Hank Paulson or one of His Evil Minions, and, “he misheard me,” is awfully week tea by way of a denial.

As the the Bloomberg article notes:

The allegations in Cuomo’s letter suggest Paulson and other policymakers may have resorted to breaking securities laws in order to protect a fragile financial system, according to Peter Sorrentino, a senior portfolio manager at Cincinnati-based Huntington Asset Advisors, which has about $13.3 billion under management and doesn’t own Bank of America Corp. stock.

It’s actually more than that. Just by instructing Lewis to keep his mouth shut, Bernanke and Paulson engaged in a criminal conspiracy, and possibly, because of the power that they held in their positions, racketeering and abuse of power.

The Wall Street Journal has released selected transcripts, and if Lewis’ allegations are true, we have a criminal Chairing the Fed:

Mr. Lewis: I remember, for some reason, we wanted to follow up and see if any progress — as I recall, we actually, had not agreed to call a MAC after the conversation that we had, and so I tried to get in touch with Hank, and, as I recall, I got a number that was somebody at the Treasury kind of guard-like thing. He had a number for Hank, and Hank was out, I think, on his bike, and he — this is vague; I won’t get the words exactly right — and he said, “I’m going to be very blunt, we’re very supportive of Bank of America and we want to be of help, but” — I recall him saying “the government,” but that may or may not be the case — “does not feel it’s in your best interest for you to call a MAC, and that we feel strongly,” — I can’t recall if he said “we would remove the board and management if you called it” or if he said “we would do it if you intended to.” I don’t remember which one it was, before or after, and I said, “Hank, let’s deescalate this for a while. Let me talk to our board.” And the board’s reaction was one of “That threat, okay, do it. That would be systemic risk.”

Q: Why do you say it wasn’t up to you? Were you instructed not to tell your shareholders what the transaction was going to be?

Mr. Lewis: I was instructed that “We do not want a public disclosure.”

Q: Who said that to you?

Mr. Lewis: Paulson.

Seriously, this sounds like gangsters making threats, and I would suggest that a criminal investigation is in order.

Enough Schadenfreude for the Whole Month


I’m shocked, shocked to find that gambling is going on here!

Two articles on how the rich investment bankers are so upset about people thinking that they are overpaid scumbags, The Wail of the 1%, about how they all feel unjustly vilified, after creating the financial crisis, and still demanding 7 figure bonuses and 7 figure life styles, and Confessions of a Bailout CEO Wife, whose content is pretty much obvious from the title.

It should be noted that the Gawker has an absolutely devastating summary of the latter article. The final lines of which are prize:

Sounds awful. If only there were some good news too. Oh, what, there is? “The good news is that Americans have short attention spans. Before long, some other group will come along to absorb all the frustration and anger.”

Such as: Rich wives.

(emphasis mine)

I’m not an empathic guy, and I don’t feel your pain, I just go Nelson Muntz.

With children going hungry, and ordinary folks who actually work for a living having lost their jobs and their medical coverage, the idea that you are wailing about not being as overpaid to mismanage people’s money fills me with nothing but contempt.

How about you do some real work, physical labor, even if it’s something as simple repaving a road, and then ask yourself: just how onerous is your work, and why do you need to be paid so much to do it?

Miscellaneous Thoughts on Jane Harman

Let me start by saying that I’ve always thought that she was an anti-civil rights scumbag, so that colors my view of her, but this news is really big.

You can go to CQ politics for Jeff Klein’s story, but the short version is that Jane Harman wanted to be the chairman of the House Intelligence Committee, and in the process of lobbying various folks to get that position, which ultimately went to Silvestre Reyes, she talked to some member of the Israel lobby who was under a court authorized wiretap because they were under suspicion of being an Israeli intelligence operative, and she said that she would “waddle into” the AIPAC prosecution, and that she wanted them to intercede with Nancy Pelosi on her behalf regarding the Intel committee post.

According to sources who saw the transcript, she finished the discussion with the phrase, “This conversation doesn’t exist.”

Certainly, the implication of “interceding with Pelosi,” is that campaign donations were involved, though the article does not make a specific claim of campaign donations for Harman’s action.

This gets more complex because Alberto Gonzalez quashed the investigation of Harman because he wanted her support of the Bush Administration’s illegal wiretap program, she had always been supportive of the program, and the New York Times was finally getting ready to release the story, and they wanted a Vichy Dem to speak for them.

Let’s be clear, there was no indication of a quid pro quo between Abu Gonzalez and Harman, but neither did there need to be one. She was always in the tank on this issue.

I would also note that while Klein suggests that Harman interceded to get the story spiked at the Times in 2004, the editors there have categorically denied this.

I’m not sure whether there was a crime or not. Law enforcement officials seem to think so, but law enforcement officials always think that, as the other Matt notes, “….how many politicians’ reputations could really stand up to serious surveillance? ….. we have a political system that’s substantially powered by a kind of systematic, quasi-legalized bribery.”

He also has the bigger point, which is that politics is messy business, and if you were to wire tap any political figure, you would end up with stuff that is just plain sleazy, because that is how political “sausage” is made.

His best point, however is this:

Thinking about that further reinforces the point that selective, unaccountable surveillance is very dangerous. A president could do a great deal to gin up pretexts to wiretap members of congress and blackmail them even without the members doing anything unusually egregious.

Which really is the big point on why we should all object to the surveillance society.

Meanwhile a friend of John Aravosis thinks that this is all a tempest in a teapot, noting, accurately, that the AIPAC “spies” are not charged with espionage, i.e. acting as an agent for a foreign power, but rather acquiring sensitive government data under the (never used in this circumstance in the past 90 years) 1919 Espionage act:

The heart of the CQ story is incorrect…because Harman wasn’t acting on behalf of Israel. Rosen and Weissman aren’t being accused for spying on behalf of Israel. The CQ story is trying to depict Rosen and Weissman as convicted spy Jonathan Pollard. What Rosen and Weiss did is nothing like what Pollard was convicted of. Rosen and Weissman met with the State Department official on their behalf, not at the behest of Israel or AIPAC. To suggest so is wrong and that’s what stinks about this story. The fact that Stein’s title of CQ’s “Spy Talk Columnist” shows the inherent bias of this story and shows that it is teetering on pure fantasy.

In any case, it’s clear that if she had a normal security clearance, it would be yanked pending an investigation, and that she should never be chairman of the Intel committee, and it appears that Pelosi was aware of this episode, and it may have contributed to her passing over Harman for the position.