Category: White House

Is Dick Cheney Working the Phones to Blackmail Obama?

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That’s my guess as to why Senate Republicans are threatening the nominationsof Dawn Johnsen as head of the Office of Legal Counsel in the Department of Justice and Harold Koh as the State Department legal counsel if more torture memos are released.

It has been reported that they have told the administration that they will filibuster/place a hold on the nominations unless Obama covers up the torture memos

The people directly involved in this, and hence the ones most likely to face legal or disciplinary action, Alberto “Abu” Gonzalez, John Yoo, David Addington, etc., have no reputation or political pull to get the ‘Phant Senators to do this.

So, it has to be someone who:

  • Is implicated in the memos.
  • Has political pull with the base.
  • Has some sort of rapport with Republican members of the Senate, possibly from their days in Congress.

Sounds like Cheney, and as his latest appearances on the Sunday gas bag circuit, it is clear that he is worried that one of his stalwart supporters of torture will roll on him if they are facing real jeopardy.

Obama’s Bank Plan Worse Than Thought

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Jeffrey Sachs has looked at the plan, and his assessment is that it is far worse than previously believed, noting that, “Insiders can easily game the system created by Geithner and Summers to cost up to a trillion dollars or more to the taxpayers.”

Basically, it means that the banks can set up off the balance sheet subsidiaries to over pay for the assets, and when they go bankrupt, the federal government is left holding the bag:

Citibank thereby receives $1 million for the worthless asset, while the CPPIF ends up with an utterly worthless asset against $850K in debt to the FDIC. The CPPIF therefore quietly declares bankruptcy, while Citibank walks away with a cool $1 million. Citibank’s net profit on the transaction is $925K (remember that the bank invested $75K in the CPPIF) and the taxpayers lose $925K. Since the total of toxic assets in the banking system exceeds $1 trillion, and perhaps reaches $2-3 trillion, the amount of potential rip-off in the Geithner-Summers plan is unconscionably large.

This is so stupid and corrupt that Larry Summers has to be the guy who came up with this.

More on Larry Summers Corruption

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It looks like the New York Times is now covering the sweetheart deal he got working for a hedge fund, and we now know that not only was it a part time job that got him paid $5.2 million, but he worked there just 1 day a week!

Truth be told, he may have done more work, as he, “routinely made himself available for private consultations with Shaw’s clients, an attractive perk for investing with the firm, as one client put it.”

What this really means is that in 2008, it was clear that he would be a senior official if either Obama or Clinton became President, and clients were attracted by the potential of that access, and he got special treatment as a result:

When investors rushed en masse to withdraw their money from hedge funds last year, Shaw asserted its right to block redemptions from its fund. An exception was made for Mr. Summers, however, because the White House job he was taking required him to divest.

This is deeply corrupt, if not in law, then in fact.

He didn’t “have” to divest. He could have placed it in a blind trust.

Patience My Ass…..

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You know, for some time, it seems that any time someone complains that Obama’s economic team is too close to the banks, the answer is that we are seeing some sort of chess game, and it’s just that the White House is 3 steps ahead of everyone else.

I don’t buy it. I think that Larry Summers just jumped the shark into accepting bribes, as this Wall Street Journal analysis of his 2008 disclosure forms shows.

Among other things, he got $5.2 million from hedge fund D.E. Shaw for his thoroughly part time (he was a full time professor at Harvard) position, and he got $2.7 million for speaking, with his fees ranging from, “$10,000 for a Yale University speech to $135,000 for an appearance paid for by Goldman Sachs & Co.”

So we know that the market rate for his speeches is about $10K, but Wall Street investment firms were paying more than 10 times that in a year in which the Democrats were favored, and he was likely to be on the team of either Democratic nominee.

A Tiny Revolution went through his disclosure form (PDF) and came up with the following, with Merrill-Lynch being a week after the election, and Charles River Ventures being the day before:

  • GIANT BAILOUT SECTOR
    • Goldman Sachs: $202,500 (two speeches)
    • Citigroup: $99,000 (two speeches)
    • JP Morgan: $67,500
    • Merrill Lynch: $45,000 (donated to charity)
  • DOMESTIC FINANCIAL SECTOR
    • Investec Bank: $157,500
    • State Street Corporation: $112,500
    • Pricewaterhouse Coopers LLC: $67,500
    • Lehman Brothers: $67,500
    • American Express: $67,500
    • Siguler Guff & Company (private equity): $67,500
    • TA Associates (private equity): $67,500
    • Charles River Ventures (Venture Capital): $67,500
  • FOREIGN FINANCIAL SECTOR
    • Skagen Funds (Scandinavian mutual fund): $180,000 (three speeches)
    • Centro de Liderazgo y Gestion (the Center for Leadership and Management, in Colombia): $112,500
    • Association of Mexican Bankers: $90,000
  • OTHER
    • Securities Industry & Financial Markets Association: $33,750
    • Pension Real Estate Association: $67,500
    • Hudson Institute: $10,000

It should be noted that the Hudson institute is a very right wing “think” tank which has consistently been dogged by accusations of racism and Islamophobia, and it’s at the same “market rate” as Yale.

I can’t see this as anything but bribe taking, with the various financial institutions paying forward to get favorable treatment.

What sort of treatment were the looking for? Well, there was probably not a specific request, a quid pro quo, if you will, but something like the White House coming up with phony entities to act as intermediaries in order to skirt Congressional limitations on executive compensation:

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

You know, the threat of being frog marched out of their workplace in handcuffs would work better.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.

The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.

…

Enough is enough.

This is more than being too close to the financial sector, this is corruption, and it pervades Obama’s economic team.

Larry Summers, and possibly Timothy Geithner, need to spend more time with their families.

Kenneth Lewis Dead Pool

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I’ve kind of thought that the Obama administration’s ouster of Rick Wagoner was primarily a political ploy, but it has created a new question, with people asking why him, and not people like Bank of America’s CEO Kenneth Lewis, whose purchases of Countrywide and Merrill Lynch seem to be ample reason for his firing.

I’m hoping that someone in the White House actually intended this effect.

I don’t generally subscribe to the “Barack Obama has a plan, but it’s too subtle for us to see right now,” thing, but it does seem to me that, intentionally or not, the stage has been set for the firing of a bank president at one of the 5 or so banking giants out there.

It would be the a good thing to do, it would put the fear of God in these “masters of the universe.”

The reason that I am fingering Kenneth Lewis is that the other likely bank to be so target is Citi, but CEO Charles Prince was already forced out and replaced by Vikram Pandit, and BoA is the next sickest bank on the list.

Additionally, Lewis has been unrepentant in his attitude, continuing to (over) use the private jet, and chafing at the TARP restrictions, all while maintaining that he will send back the money “real soon now.”

The final reason for my suggesting that he might be forced out, in addition to my visceral dislike of him, is that he, and his bank, have aggressively lobbied against the EFCA (card check) legislation, and now directly calling for his ouster, which means that Obama picks up some labor credibility without having to go to the mat for the EFCA.

Big 3 (Big 2½) Update

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So, the White House does not like GM’s or Chrysler’s reorganization plans, and has given GM 60 days, and Chrysler 30 days to come up with a better plan.

What’s more, they demanded, and got General Motors’ CEO Rick Wagoner’s resignation, and pretty much demanded some sort of alliance deal between Fiat and Chrysler.

The obvious question here is, “Why is the government insisting on Wagoner’s resignation, and not Bank of America’s Kenneth Lewis’s resignation?

In terms of Chrysler-Fiat, it appears that they have come to an agreement on a “framework” for their deal.

One wonders if this deal involves a haircut for Cerberus, which it should.

White House “Happy” that EFCA is Dead?

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I would offer the the caveat that one of the contributors to MSNBC’s “First Read” is Chuck Todd, who can be one of the stupidest muthf%$#ers in the White House press room,* but there is a report that the White House is “happy to have this debate out of the way” because, “sticking a finger in business’ eye wasn’t something the White House was looking forward to.”

This is about the most politically opportune time to do this, with the public attitude toward businesses being rather low, AIG is a symptom, not the trend.

I cannot for the life of me think of anyone in the White House who would even hold this opinion, except for economic adviser, and poster child for sex without partners, Lawrence Summers, who is on record saying that unions cause unemployment,† but even he isn’t stupid enough to mouth off to a reporter, or for that matter a co-worker, about this.

I’ll call bullsh%$ on this for now.

*Cases in point were his questions at the first two press conferences, would Obama veto something that doesn’t get any Republican votes in the interest of bipartisanship, and how Americans should sacrifice to address the financial meltdown (like millions of people out of work and losing their homes isn’t enough) because he does not understand the difference between a foreign war and a domestic economic downturn.
†Yeah, I know, with “Democrats” like him, who needs Republicans.

Because Timothy Geithner is a Loser

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So, Annette Nazareth and Caroline Atkinson, have withdrawn their names from consideration for positions working in the department of the Treasury, and we have blame placed on Senate delays, and the Obama Administration’s thoroughly anal retentive vetting process.

I have no doubt that both of these issues figure prominently in some of the difficulties in staffing, though Obama is actually well ahead of the pace of recent transitions, but I think that there is another factor.

I think that a number of people out there believe that Timothy Geithner, and be extension, Lawrence Summers, simply don’t get it with the banking crisis, and that they are wrong, and that they will continue to refuse to recognize the reality that a number of the gargantuan banks in the US are simply insolvent, and so they are refusing to do the sane thing, and put them in receivership. (or pre-privatization, nationalization, or whatever the frack you want to call it)

Simply put, they recognize that in the next 6-18 months, there is a real possibility that working with Timothy Geithner on their resume will look like working with Hank Paulson, and in any case, they want no part of a policy that they see as an train wreck.

Obama Health Care Plan: No Single Payer

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So, Obama sets up a summit on health care reform, and invites everyone but advocates for single payer, and finally, when the screaming gets too loud, relents, and invites a hand full of them.

This does not bode will for his plan.

First, if he is not more ambitious in his initial proposal than his basic desires, it will be cut down to nothing in Congress, and second, the insurance companies are evil, and any plan that makes supporting their business model a central tenet is doomed to fail.

My Thoughts on Obama’s Iraq “Withdrawal”

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I think that he got played by the military. There are likely to be over 100K troops until year’s end, because General Ray Odierno wants them there for elections, and over 50K for a stabilization force until the 2nd half of 2010.

I think that Obama did not want to deal with the “death by 1000 leaks,” that Clinton saw on gays in the military, and felt that some senior army officials, particularly Ordierno, who have already pretty much said that they would ignore the status of forces agreement.

This should have been fixed in 1993, by Bill Clinton firing Colin Powell for insubordination, and could be fixed now by firing Ordierno if he steps out of line.

Truman’s precedent with MacArthur stands, and should be enforced.

In the short run, Obama needs to start pulling out the extensive infrastructure at the “superbases,” such as maintenance and communications, so as to reduce the military utility of these facilities for use outside of Iraq, as quickly as possible.

Levin and McCain Look to Give Nunn-McCurdy a Steroid Injection

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They are proposing the Weapon Systems Acquisition Reform Act, which is intended to add some teeth to the 1983 Nunn–McCurdy Amendment.

Nunn–McCurdy requires congressional notice when a program goes 15% over budget, and termination when it goes 25% over budget, unless the DoD certifies it as “essential to the national security,” but this has come to mean very little, as evidenced by the F-22, DDG-1000, FCS, JSF, EFV, LCS, etc.

According to Senator Carl Levin, the measure includes:

  • Address problems with unreasonable performance requirements by requiring DOD to reestablish systems engineering organizations and developmental testing capabilities; make trade-offs between cost, schedule and performance early in the program cycle; and conduct preliminary design reviews before giving approval to new acquisition programs;

  • Address problems with unreasonable cost and schedule estimates by establishing a new, independent director of cost assessment to ensure that unbiased data is available for senior DOD managers;

  • Address problems with the use of immature technologies by requiring the Director of Defense Research and Engineering (DDR&E) to periodically review and assess the maturity of critical technologies and by directing the Department to make greater use of prototypes, including competitive prototypes, to prove that new technologies work before trying to produce them; and,

  • Address problems with costly changes in the middle of a program by tightening the so-called “Nunn–McCurdy” requirements for underperforming programs.

What is interesting here is that this is juxtaposed with the appointment of Ashton B. Carter as Undersecretary of Defense for Acquisition.

Carter is a Harvard professor, and has no ties to the defense industry. His career has largely involved criticizing the defense industry while at Harvard’s Kennedy School of Government, and he served as Assistant Secretary of Defense for International Security Policy under Clinton.

The Iron Triangle types do not like him, which means that I do, though I hope that he has the bureaucratic chops to make this work.

Obama Budget Plan

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It’s a decent plan, though once again, it appears to not go quite far enough.

  • He’s rolling back the Bush tax cuts at the top tax brackets, though I think that the max marginal rate should made far higher, something like the 70% we had pre-Reagan for income above $5 million/year or so.
  • He’s spending $634 billion on expanding healthcare access, which is good, but the real need exceeds $1 trillion.
  • Closes some of the more egregious tax loopholes.
  • Cuts farm aid to big farms

He is also estimating a decent bit of revenue from a carbon cap-and-trade system, which I think is in error. He underestimates the costs of enforcement, speculative pressures, and evasion, which is why I favor a straight carbon tax.