Category: regulation

Good Riddance

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In another Friday news dump, we discover that Cass Sunstein will be leaving his position as head of the Office of Information and Regulatory Affairs.

The man has been a train wreck if you are interested at all in the idea of regulation being a way to protect the public welfare:

“Cass Sunstein is the most well-connected and smartest guy who’s ever held the job,” said Rena Steinzor, president of the Center for Progressive Reform and a professor at the University of Maryland Carey School of Law. “But he’s also done untold damage.”

…

Few proposed rules escaped his gaze or his editor’s pen. Of the hundreds of regulations issued by the administration as of late last year, three-quarters were changed at OIRA, often at the urging of corporate interests, according to an analysis from the Center for Progressive Reform, a liberal-leaning group that monitors federal regulation. For rules from the Environmental Protection Agency, the figure was closer to 80 percent, the group found. In virtually every case, the rule was weakened, the group claimed.

Professor Steinzor cited Mr. Sunstein’s role in the killing of the E.P.A.’s proposed tightening of the standard for ozone pollution, the indefinite delay of rules governing coal ash disposal and the withdrawal earlier this year of a proposed update of child agricultural labor standards.

And here is the money quote:

Mr. Sunstein’s recommendations carry extraordinary weight, White House officials said, but the ultimate decisions in those cases were made by the president, his senior political advisers or cabinet officers.

We also have these comments:

“It’s a glorious day,” said Frank O’Donnell, of the group Clean Air Watch. “Sunstein has been a blot on the landscape.”

And from an Obama adversary:

“The Chamber has enjoyed a good working relationship with Cass Sunstein and we wish him well in his return to Harvard Law,” said a spokeswoman for the U.S. Chamber of Commerce. Despite its happiness with Sunstein, the agency has spent millions of dollars attacking the president’s policies.

I think that the fact that the US Chamber of Commerce liked him is the best evidence about how harmful he was to the basic idea of regulations that protect the public.

The US Chamber of Commerce is to the idea of good governance and reasonable regulation as Colonel Sanders was to the life span of chickens.

And important thing to remember though is that the Cossacks work for the Czar.

As to the greater meaning to his departure, my guess is that Obama is looking to appeal to the base for the election.

What a Surprise

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When another vote comes up on a bill to audit the Federal Reserve, the Democratic Leadership in the House whips against it:

Yesterday, on the House floor, there was a furious debate over the prospect for HR 541, Ron Paul’s bill to audit the Federal Reserve. The Republicans are by and large supportive of this bill, seeking to hamstring the ability of the Federal Reserve to act in secret. Democratic members, were they left to their own devices, would be split. But on votes on bills like this, party leaders can choose to endorse a position, or not endorse a position. Some votes are what’s called “whipped”, and some aren’t. There’s an intricate system of whips and assistant whips and staff networks who encourage members to vote a certain way, so when the party takes a position on an issue, it has a big impact on the final vote count. This is a whipped vote, which means that this is one of those times where the Democratic leadership – Steny Hoyer, Barney Frank and Nancy Pelosi – are putting their stamp on an issue. They have come out firmly for Fed secrecy.

Here’s the whip notice from Democratic leadership on the House side encouraging members to vote against transparency at the Fed.

………

UPDATE: The bill passed, 327-97. A bunch of Democrats flipped against an audit. Just glancing at the roll call, Louise Slaughter, Lynn Woolsey, Marcy Kaptur, Heath Shuler, and Donna Edwards (among others) cosponsored the bill either last Congress and/or this Congress, and then voted against it on the floor. Go Team Blue!

UPDATE, AGAIN: The Democratic leaders, despite whipping, barely got a majority of the caucus to vote no. This is a massive failure on their part, and shows how weak they are.

It won’t ever make it to the floor of the Senate, and if it passed there, Obama would veto it.

I am not a Ron Paul gold nut, but I do think that the Fed, with regard to its non-monetary activity in particular, should be more accountable, and I think that opposition to that idea is because they (they being the usual suspects) want to make sure that the Fed is free to bail them (them being the usual suspects) the next time that they (they being the usual suspects) drive themselves (they being the usual …… you get the point) off a cliff and need rescuing.

The ILECS Suck

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Yes, those relics of the Bell Telephone System, the incumbent local exchange carrier are a bunch of pig felching scum, and US telecommunications and data costs and performance will continue to lag behind the rest of the world until they are treated as rent seeking parasites, rather than valued participants in the process.

In the case of Verizon, it now appears that they are deliberately sabotaging its own DSL service and forcing its customers with which it colludes, with the hope that these people will be forced to move to (almost completely unregulated) wireless.

It has the additional “benefit” of moving their business from their unionized land line market to their non-unionized wireless division.

We also have AT&T reporting improved profits by deliberately and aggressively making their product worse:

AT&T reported their second quarter results today. According to this analysis, AT&T achieved better profitability by (a) dramatically limiting their broadband service; (b) discouraging consumers from upgrading their devices; and (c) figuring out new charges for consumers to enhance overall profit per customer.

I get that firms are supposed to maximize profit. But when every single incentive to profit maximization relies on providing less service for more money and discouraging people from using your service, something is seriously messed up. This is doubly true when usual trend in information technology is to drive prices down. And, more tellingly, it creates a real concern if we are relying on market incentives to ensure that providers do things like build out networks and provide us with better service and lower prices.

………

I’d be happy to concede the issue on metred pricing, except that there doesn’t seem to be any actual relationship between the price metering and the cost of provisioning. The idea of metering is that I want to provide you with more capacity because that way I make more profit. If this were bananas, I would have a fairly direct incentive to grow more bananas so I can sell more bananas. But AT&T doesn’t want to charge me for more bandwidth, which would arguably give it incentive to build better systems and sell me ever more capacity. It wants to sell me limited capacity and then stop, presumably so it can capture some imaginary and unspecified revenue on the the other side of the platform. That creates a fairly unfriendly incentive to create scarcity and avoid investment in the network.

It’s what economists call rent seeking behavior, where a company manipulates the social or political environment to extract money, as opposed to doing that icky, “out-competing the competition” thing.

It’s Bank Failure ……… What the F%$#?

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What the hell is going on with this ADHD bank failure sh%$?

There are five failures this week, tied for the most this year.

And here they are, ordered, and numbered for the year so far.

  1. The Royal Palm Bank of Florida, Naples, FL
  2. Georgia Trust Bank, Buford, GA
  3. First Cherokee State Bank, Woodstock, GA
  4. Heartland Bank, Leawood KS
  5. Second Federal Savings and Loan Association of Chicago, Chicago, IL

The FDIC has been wicked busy.

Full FDIC list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

CFPB Draws First Blood

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They just fined Capital One $210 million for misleading consumers on credit protection and protection monitoring programs:

Capital One Financial agreed to pay $210 million to resolve charges by banking regulators that its call-center representatives misled consumers into paying for extra credit card products.

The enforcement action, announced on Wednesday, is the first by the Consumer Financial Protection Bureau, which said it unearthed the activities through an examination of the bank.

The CFPB was created by the 2010 Dodd-Frank financial reform law and is nearing its one-year anniversary.

The government said $150 million of the sanctions will go to reimburse affected customers, while the remaining penalty will be split between the Office of the Comptroller of the Currency, which fined the bank $35 million, and the CFPB, which will collect $25 million.

“We are putting companies on notice that these deceptive practices are against the law and will not be tolerated,” said CFPB Director Richard Cordray.

The regulators alleged that employees at call centers used by Capital One pressured and misled consumers into paying for “add-on products” such as payment protection and credit monitoring when they activated their credit cards.

In a briefing with reporters, Cordray said he anticipated actions against other banks over similar tactics but declined to name any targets.

“We know these deceptive tactics are not unique to a single institution … we expect announcements about other institutions as our ongoing work continues to unfold,” Cordray said.

In a statement, the president of Capital One’s credit card business, Ryan Schneider, apologized to customers who were affected and said the bank is committed to “making it right.”

What’s in your wallet?

Most Transparent Administration Ever

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Have you heard the latest? The FDA spied on outside critics in an attempt to find out who were the whistleblowers.

The f%$#ing F f%$#ing D f%$#ing A was engaged in a f%$#ing witch hunt and coverup?

Un-f%$#ing-believable:

A wide-ranging surveillance operation by the Food and Drug Administration against a group of its own scientists used an enemies list of sorts as it secretly captured thousands of e-mails that the disgruntled scientists sent privately to members of Congress, lawyers, labor officials, journalists and even President Obama, previously undisclosed records show.
What began as a narrow investigation into the possible leaking of confidential agency information by five scientists quickly grew in mid-2010 into a much broader campaign to counter outside critics of the agency’s medical review process, according to the cache of more than 80,000 pages of computer documents generated by the surveillance effort.
Moving to quell what one memorandum called the “collaboration” of the F.D.A.’s opponents, the surveillance operation identified 21 agency employees, Congressional officials, outside medical researchers and journalists thought to be working together to put out negative and “defamatory” information about the agency.
F.D.A. officials defended the surveillance operation, saying that the computer monitoring was limited to the five scientists suspected of leaking confidential information about the safety and design of medical devices.
While they acknowledged that the surveillance tracked the communications that the scientists had with Congressional officials, journalists and others, they said it was never intended to impede those communications, but only to determine whether information was being improperly shared.
The agency, using so-called spy software designed to help employers monitor workers, captured screen images from the government laptops of the five scientists as they were being used at work or at home. The software tracked their keystrokes, intercepted their personal e-mails, copied the documents on their personal thumb drives and even followed their messages line by line as they were being drafted, the documents show.
The extraordinary surveillance effort grew out of a bitter dispute lasting years between the scientists and their bosses at the F.D.A. over the scientists’ claims that faulty review procedures at the agency had led to the approval of medical imaging devices for mammograms and colonoscopies that exposed patients to dangerous levels of radiation.
A confidential government review in May by the Office of Special Counsel, which deals with the grievances of government workers, found that the scientists’ medical claims were valid enough to warrant a full investigation into what it termed “a substantial and specific danger to public safety.”

There is a saying, “A fish rots from the head,” and this is completely in line with the Obama administration’s jihad against whistle blowers.

I Can Has Prosecushuns?

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The New York Bank of the Federal reserve has known since at least 2007, which means that current Treasury Secretary Timothy Geithner has known since at least 2007, that the banks were manipulating the LIBOR numbers:

The Federal Reserve Bank of New York may have known as early as August 2007 that the setting of global benchmark interest rates was flawed. Following an inquiry with British banking group Barclays Plc in the spring of 2008, it shared proposals for reform of the system with British authorities.

The role of the Fed is likely to raise questions about whether it and other authorities took enough action to address concerns they had about the way Libor rates were set, or whether their struggle to keep the banking system afloat through the financial crisis meant the issue took a backseat.

A New York Fed spokesperson said in a statement that “in the context of our market monitoring following the onset of the financial crisis in late 2007, involving thousands of calls and emails with market participants over a period of many months, we received occasional anecdotal reports from Barclays of problems with Libor.

“In the spring of 2008, following the failure of Bear Stearns and shortly before the first media report on the subject, we made further inquiry of Barclays as to how Libor submissions were being conducted. We subsequently shared our analysis and suggestions for reform of Libor with the relevant authorities in the UK.”

The Fed knew that any misstatement of LIBOR would have significant effects on Trillions of dollars of loans and derivatives, and that the manipulation of this rate would allow banks to steal money from their customers.

While the LIBOR is a matter for the British to regulate, it is, after all, the London Interbank Offered Rate, its use as a benchmark by American institutions in American markets, was a matter for the Federal Reserve.

The fact that the Fed did not even issue a warning about this is criminally negligent.

I so want to see Tim Geithner frog marched out of the White House in handcuffs.

Whiskey Tango Foxtrot??!!??!!??

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Wingnut Michigan Governor Rick Snyder, he of the “emergency manager” law intended to make sure that Black votes don’t count, has just vetoed the latest voter suppression bill to come out of the Michigan lege:

Gov. Rick Snyder vetoed election reform bills that sparked angry protests and cries of voter suppression during committee hearings.

Snyder, in one day doubling the number of bills vetoed during his tenure, nixed bills that aimed to prevent voting fraud by requiring a voter to reaffirm U.S. citizenship before receiving a ballot and requiring photo ID when picking up an absentee ballot from a city office.

He also rejected a bill that would have required training for people, companies and organizations participating in voter registration drives.

Snyder in a release said he appreciates the issue of ensuring voters are eligible and U.S. citizens, but believes the bills would have created voter confusion among absentee voters.

Snyder also said he supports the concept of training individuals involved in voter registration, but said the changes with the registration of third party voter registration organizations, and the timing and training of those entities, may cause confusion with ongoing voter registration efforts.

I’m having trouble wrapping my head around this.

He’s arguably one of the three biggest Teabagger governors in the country, and he just vetoed a Republican voter suppression effort.

Scotus Slaps Down FCC

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Roll George Carlin!

I agree with the outcome of the ruling, but it’s too limited for my taste:

The Supreme Court ruled Thursday that the Federal Communications Commission failed to give two television networks, FOX and ABC, advance notice of standards before punishing them for broadcasts in which outbursts of expletives and brief nudity were aired.

“The Commission failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found actionably indecent,” said Justice Anthony Kennedy, writing for the unanimous court.

The ruling does not affect the FCC’s policy banning indecency in TV broadcasting.

The court said that it did need not to address the First Amendment implications of the FCC’s indecency policy nor did it need to reconsider its prior indecency ruling in a 1978 decision regarding prolonged recitation of vulgar words.

The 1978 decision was bad, and vague, and they didn’t clear it up.

They took a very narrow ruling, and invalidated the fines because the FCC was arbitrary and capricious, and did not rule on the basic underlying issue. Ruth Bader Ginsberg felt the same way, and noted so in her concurring opinion.

The FOMC Talks, and Says, “Meh”

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It really doesn’t amount to much. Basically just some minor interest rate action:

In a pattern that has become familiar, the Federal Reserve said on Wednesday that the economy was growing more slowly than it had forecast, in part because its efforts to hasten recovery had proved insufficient.

With the economy stumbling into the summer months after the false promise of a relatively strong winter, the Fed announced a modest expansion of its efforts to stimulate growth.

The Fed said its senior officials now expected growth of 1.9 percent to 2.4 percent this year, half a percentage point lower than they forecast in April. They predicted the unemployment rate would not drop below 8 percent this year, and that inflation would not climb above 1.7 percent.

Those are the vital signs of a patient who will be ill for some time. And the Fed noted that the outlook could worsen if events in Europe unnerved financial markets or if politicians in Washington failed to resolve a stalemate over fiscal policy.

The central bank pledged to buy $267 billion in long-term Treasury securities over the next six months as part of a continuing campaign to reduce borrowing costs.

Like I said, Meh

Wrong Again, Matthew Saroff Edition.

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The Greek Democrats have formed a governing coalition including the 3rd place PASOK party:

A conservative-led government took power in Greece on Wednesday promising to negotiate softer terms on its harsh international bailout, help the people regain their dignity and steer the country through its biggest crisis for four decades.

The swearing-in of Antonis Samaras as prime minister after elections last Sunday ended weeks of uncertainty that rattled financial markets and threatened to push near-bankrupt Greece out of the euro zone.

Samaras, a Harvard-educated economist from a prominent Greek family, will head an alliance of his New Democracy party and Socialist PASOK rivals – the same discredited establishment parties which have dominated politics since 1974.

I said that it would not happen, and it did.  Oh, well.

BTW, the outgoing PASOK leader, George Papandreu, went to Harvard too (and Amherst, and the London School of Economics).

You know, I think that the value of a Harvard education might be overrated.

Another Busy Bank Failure Friday

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Three banks this week, four last week, following a three week lull.

Not a trend by any means, but definitely not reassuring.

Here they are, numbered for your amusement

  1. Putnam State Bank, Palataka, FL
  2. Security Exchange Bank, Marietta, GA
  3. The Farmers Bank of Lynchburg, Lynchburg, TN

Full FDIC list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

I’m not sure if the little uptick means anything at all.

So, When Do They Convict a White Guy?

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Still no big name white guys caught

So, Rajat Gupta has been convicted of insider trading:

Rajat K. Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, was found guilty on Friday of conspiracy and securities fraud. He is the most prominent business executive convicted in a wave of prosecutions that followed the government’s sweeping investigation into insider trading on Wall Street.

After a monthlong trial in Federal District Court in Manhattan, a jury took only two days to deliberate before reaching a verdict. It found Mr. Gupta guilty of leaking confidential information about Goldman to his former friend and business associate, the fallen hedge fund titan Raj Rajaratnam, on three different occasions in 2008. He was also convicted of conspiring in an insider trading scheme with Mr. Rajaratnam.

Mr. Gupta was found not guilty of two instances of tipping Mr. Rajaratnam, including an allegation that he divulged secret news about Procter & Gamble, where he also served on the board.

“Having fallen from respected insider to convicted inside trader, Mr. Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell,” Preet Bharara, the United States attorney in Manhattan said in a statement.

“Almost two years ago, we said that insider trading is rampant, and today’s conviction puts that claim into stark relief, ” he said.

I’ll believe that this is real when a Caucasian is put in the dock.

Until we start seeing pale people frog marched out of their offices in handcuffs, this isn’t real.

Well, He Does Look Kind of Dead

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Brains … Brains … Brains!!!!!

Florida Governor Rick Scott had to cast a provisional ballot in 2006 because the voter records said that he was dead:

Six years before he made national headlines, Gov. Rick Scott found himself being purged from voter rolls after local election officials thought he was dead.

Collier County election officials on Thursday confirmed that the governor was required to vote with a provisional ballot for the 2006 primary and general election after county officials mistook him for Richard E. Scott, who died in January 2006 and had the exact same birthday — 12/1/1952 — as Florida’s 45th governor.

Election officials said the governor was required to vote provisionally because local election officials had received a Social Security Death Index Death Record showing that Richard E. Scott died on Jan. 27, 2006.

The governor, whose full name is Richard Lynn Scott, recounted his voting difficulties in radio interviews on Thursday as the state tangles with the federal government over just that – how likely is it that elections officials might make a mistake and purge the wrong person from the voter rolls?

I’m not sure I believe him.

It’s very convenient for this story to come out now.

I’m just sayin’.

IRS Yanks 501(c)4 from Phony Charity

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About f%$#ing time:

An Internal Revenue Service decision revoking the tax-exempt status of a small political nonprofit organization may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election.

At risk would be the groups’ nonprofit status, which lets them collect millions of dollars from individuals and corporations while keeping donors anonymous.

…………

The IRS decision released last month involved a so-called campaign school in which a partisan group trained candidates.

“You are not operated primarily to promote social welfare because your activities are conducted primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole,” said the IRS letter telling the group it was losing its exempt status.

Unfortunately, it looks like there won’t be major action this year.

H/t Susie Madrak.http://www.bloomberg.com/news/2012-06-08/irs-denial-of-tax-exemption-to-u-s-political-group-spurs-alarms.html