Month: April 2009

Faith and Pecora

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Nancy Pelosi is now proposing a bipartisan commission to investigate the cases and abuses that have led to the current banking crisis.

It would be modeled after the Pecora Commission, which looked into the 1929 crash.

This ignores both recent, and less recent history, with the history of the Iran-Contra commission being that the Republicans would use it to obstruct any real investigation of Reagan’s arms for hostages swap, and the Pecora Commission itself, which really did not do much until the Dems took control of Congress, and unleashed their cheif counsel, Ferdinand Pecora.

The Republicans are far more venal and partisan than they were in 1987, and infinitely more so than in 1932, and the idea that they can be trusted even as spectators is a pipe dream.

Connecticut Treasurer Calls for BofA CEO Lewis to Be Removed from Board

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CT state treasurer Denise Nappier, who is responsible for managing the state pension funds, which hold a significant stake in Bank of America, is calling for the CEO Ken Lewis to be kicked off the board, along with, “lead director O. Temple Sloan and chairman of the governance committee Tom Ryan.”

She is not calling for his removal, but rather separation of the rolls of chief executive and chairman of the board of directors, and other significant shareholders are in agreement.

There is a shareholder meeting in 8 days, so this should get interesting.

Pass the popcorn.

BTW, doesn’t Mr. Lewis take an awful picture? He looks mean, spiteful, selfish, and egotistical all at once.

He seems to look that way in all of his pictures….Maybe that’s the real him.

The New York Times Calls for Jay Bybee’s Impeachment

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Read the whole editorial, it’s brutal, and calls for a thorough investigation of everyone who conspired on this, and the penultimate ‘graph calls for the Congress to remove Jay Bybee as a federal court judge:

These memos make it clear that Mr. Bybee is unfit for a job that requires legal judgment and a respect for the Constitution. Congress should impeach him. And if the administration will not conduct a thorough investigation of these issues, then Congress has a constitutional duty to hold the executive branch accountable. If that means putting Donald Rumsfeld and Alberto Gonzales on the stand, even Dick Cheney, we are sure Americans can handle it.

(emphasis mine)

Somehow, I do not expect Mr. Bybee to go quietly though.

Hopefully, he’ll rat on his fellow conspirators, but I would not expect that either.

Economics Update

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Scare Pic of the Day, Courtesy of The Big Picture

So, Timothy “Eddie Haskell” Genthner spoke before Congress, and said that most banks are adequately capitalized.

I guess that all depends on the definition of “banks”, “most”, and “adequately capitalized.”

At the same time, the inspector general charged with investigating the TARP says that there is a lack of transparency and safeguards in the program.

Once again, it looks like the only folks who are doing their job for the tax payers are the FDIC who are in discussions with Citi about firing CEO Vikram Pandit.

In energy, oil is up, but we are dealing with the switch over to June delivery contracts, and the dollar was mixed on unexpectedly high business sentiment in Germany.

On a note unrelated to economics, but related to the the article on Geithner, there was following picture, where you see the Code Pink protesters in the background.

These people piss me off. They seem to be dedicated to nothing more than mutual intellectual masturbation as guerrilla theater, and they do nothing but to convince decision makers that anyone who has less Wall Street friendly ideas is a DFH who does not deserve to be listened to.

These folks are playing to lose, but we all lose when they do so.

Miscellaneous Thoughts on Jane Harman

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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.

Treasury Formally Denies Right Wing Racist Nut Job Blog Post

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White supremacist wing nut Hal Turner has posted on his blog (no link to him, ever) that he has an advance copy of the Treasury’s bank stress tests, and that it shows that 16 out of the top 19 banks are already insolvent.

Were it from anyone else, I might be inclined to believe it, as it jibes with my sense of the state of the banking industry, but from him, I’d just as soon ignore it.

Only, I’m posting about it, which begs the question, “Why are you reading this?”

The answer is that I’m posting because a Treasury Department Spokesman formally denied Turner’s claims:

A U.S. Treasury spokesman said there’s no basis to a blog posting that buffeted financial stocks by saying that most of the nation’s largest banks are insolvent.

Andrew Williams, a Treasury spokesman, dismissed the report from Hal Turner of North Bergen, New Jersey, “particularly given we don’t have stress test results yet.” Turner has advocated violence against blacks, Jews and immigrants on his Web site and Internet radio show, according to the Anti- Defamation League, created in 1913 to monitor anti-Semitism.

Why is the US Department of the Treasury responding to what amounts to semi-literate scrawls on the wall of a bathroom stall?

I see three possibilities, in no particular order:

  • Turner has a friend in the Treasury, who thought that an official denial would get him some air play.
  • He actually has preliminary stress test documents.
  • The Treasury has come to the conclusion that its credibility, and that of the US banking industry is so pathetically low that they have no choice but to respond.

Honestly, none of these alternatives are particularly good ones, and if I had to place a bet, it would be on the last one, which would indicate that in less than 100 days, Mssrs. Geithner & Summers have completely pissed away their credibility, and they know it.

I Want What They Are Smoking

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IHS Global Insight is saying that the nation’s housing market is undervalued:

A new report released today by IHS Global Insight and PNC Financial Services Group revealed that the nation’s housing market as a whole is “slightly undervalued,” but said there was no sign of a bottom.

The so-called “House Prices in America” fourth quarter update found that home prices had fallen a collective 9.9 percent from their 2007 peak, although much more in sand states like California and Florida.

About the only thing that I can figure is that they are thinking that the dollar figures are Zimbabwean dollars of something.

Housing is still well above historical trends in terms of absolute price, rent/own ratio, and relative to wages.

Park Dae-sun Acquitted

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He is a prominent Korean economic blogger who was was brought up on charges for making dire predictions:

Mr. Park, an unemployed 31-year-old, gained an almost prophet-like status among many South Koreans after he correctly predicted the collapse of the U.S. investment bank Lehman Brothers, the crash of the South Korean currency — the won — and the effects on South Korea of the U.S. subprime mortgage crisis.

It appears that he also published some data in error, such as when he, “wrote that the government had banned financial firms and major companies from buying dollars in an effort to arrest the fall of the Korean won,” and the government charged him with, “spreading false data in public with a harmful intent,” and faced up to 5 years in prison. (!)

Considering my accuracy, I’d be facing life without parole.

Indian Air Force says Rafale Remains in MMRCA Competition

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Remember when I said over the weekend that the Dassault Rafale had been dropped from the Indian MMRCA competition?

Well, it appears that the reports of the French Fighter’s demise have been exaggerated.

The Indian Air Force has denied reports that the Dassault Rafale has been eliminated from the country’s medium multi-role combat aircraft competition.

“We have not ruled anyone out yet in the MMRCA competition,” says an IAF spokesman, who confirmed that the service is responsible for evaluating the contenders. “All of the tests have not been completed. The technical evaluations are only just over and we are scheduled to begin the flight tests next month. Everyone is still in the competition.”

Last week, several Indian newspapers reported that the Rafale was eliminated after failing the technical evaluation. …..

No clue as to what is going on here, or why.

Prosecution of Torture Architects Has Evolved in Just 2 Days

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I started collecting links on Sunday, and it appears that the the news has developed in a rather interesting manner, with strong statements that there would be no prosecutions, followed by a retreat by the Obama administration following push back from multiple quarters.

On Sunday, we have appearances by administration officials saying that there will be no prosecutions of anyone involved in torture

I asked Emanuel: “The president has ruled out prosecution for CIA officials who believed they were following the law. Does he believe that the officials who devised the policies should be immune from prosecution?”

“He believes that, look, as you saw in that statement he wrote, let’s just take a step back. He came up with this and worked on this for about four weeks. Wrote that statement Wednesday night after he had made his decision and dictated what he wanted to see. And Thursday morning I saw him in the office, he was still editing it. He believes that people in good faith were operating with the guidance they were provided,” Emanuel said.

What about those who devised the policy, I asked?

“Yeah, but those who devised the policy, he believes that they were, should not be prosecuted either,” Emanuel said.

“And it’s not the place that we go, and as he said in that letter, and I would really recommend people look at the full statement, not the letter, the statement, and that second paragraph: “This is not a time for retribution. It’s a time for reflection. It’s not a time to use our energy and our time in looking back and in a sense of anger and retribution.’ We have a lot to do to protect America. But what people need to know? This practice and technique, we don’t use anymore. We banned it.”

(emphasis mine)

Then the pressure mounted to not bury everything, and Obama is now saying that investigating the people who crafted the policy is up to the Department of Justice, and Michael Isikoff and Evan Thomas reporting that, “Attorney General Eric Holder Jr. has discussed naming a senior prosecutor or outside counsel to review whether CIA interrogators exceeded legal boundaries–and whether Bush administration officials broke the law by giving the CIA permission to torture in the first place.

Once again, showing that, when absolutely forced to by the weight of public opinion, the Obama administration can come around on this.

This is a good thing, because whoever was involved in waterboarding Khalid Sheikh Mohammed 183 times in one month, about 6 times a day, was not following even the Orwellian rules of Bush and His Evil Minions™.

Whiskey Tango Foxtrot??? They Wanted to Wiretap a Congressman Without a Warrant?

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Well, we are seeing new revelations about the NSA warrantless spying program, and this one is a doozy:

While the N.S.A.’s operations in recent months have come under examination, new details are also emerging about earlier domestic-surveillance activities, including the agency’s attempt to wiretap a member of Congress, without court approval, on an overseas trip, current and former intelligence officials said.

(emphasis mine)

Great googly moogly!

This is why it needs to be pursued, and people need to be prosecuted, because this was not some sort of intelligence gathering operation, it was one of Dick Cheney’s moles trying to wiretap someone for political advantage.

The people who did this need to be rooted out, and have their clearances stripped, and senior folks who authorized this need to go to jail.

Not Enough Bullets: AIG AND Goldman Sachs

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Gee, it appears that the trustees that were appointed to keep the government from “interfering” in the affairs of AIG when they were taken over managed to select a man who owned over $3 million in stock in Goldman Sachs.

This might explain why AIG CEO Edward Liddy was so eager to pay back Goldman Sachs at 100¢ on those bogus AIG credit default swaps (CDS).

Seriously, just how much corruption and self dealing is Obama/Geithner/Summers going to tolerate before they start looking at criminality?

This is a lot worse than a, “$6000 gold-and-burgundy floral patterned shower curtain,” and the idea that the taxpayer can’t place conditions on aid, because the CEOs will choose their own pay over the well being of the taxpayer is the active and open looting of these companies by senior management.

It should be viewed as a criminal act.

I’m not saying that senior management cannot quit, but I am saying that if they are unwilling to act in the best interest of the shareholders, they should be fired.

Indian Drops Rafale from MMRCA Trials

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Unofficial reports from a “senior Indian Defence Ministry” are that, “Dassault was unable to give full technical bid requirements, but this is obviously a rather vague and uninformative.

I find this very odd. Dassault and India have a long and established relationship, with India owning and operating Mirage 2000s, and at one point, offered to transfer the whole Mirage 2000 line to India.

The idea that they did not cross their “I”s and dot their “T”s, and thus was dropped from the Medium Multi Role Combat Aircraft (MMRCA) competition is curious.

In any case, it appears that the Official MMRCA trials in August, with the, Boeing F/A-18, Lockheed Martin F-16, Eurofighter Typhoon, RSK MiG-35 and Saab Gripen.

Elections Make a Difference

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Case in point, the EPA has not declared greenhouse gasses a threat to public health, opening the door for regulation of these gasses.

What’s more, it puts a pin in the Congress to put something in legislation, because the EPA can institute regulations that are far more expansive, without the opportunity for bribery campaign contributions.

While I am regularly (OK, constantly) criticizing the Obama administration for their mishandling of the banking crisis and the banking system and their avoidance of any real investigation of crimes against humanity and corruption by Bush and His Evil Minions&trade, this is real change, and beneficial.

We will now be returning to the regularly scheduled broadcast.

Picking Industry Insiders for their “Experience” is Such a Good Idea

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Because the corporate raider that Barack Obama has put in charge of the auto industry bailout has now been tied to a kickback scheme involving the New York state pension fund:

The man leading the Obama administration’s efforts to restructure the auto industry has been described in Securities and Exchange Commission documents as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business.

Although he is not named in the documents, a person with knowledge of the inquiry said the investment executive is Steven Rattner, co-founder of the Quadrangle Group, the prominent private equity firm

Gee….Hoocoodanode that a man who is a corporate chop shop might be ethically challenged.

This is why expertise does not trump ethics and philosophy. Summers, Geithner, Rattner, etc. are all either wrong doers, or were until recently in the pay or wrong doers, and are largely responsible for the problem.

It’s like making an arsonist for hire your fire department chief.

Another Geithner/Summers Epic Fail for Consumers in the Works

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So, now that the economy has turned down, and there is a real possibility that legislation limiting abusive credit card practices might pass Congress, the White House economic team is finally meeting with credit card issuers in order to address the issue:

A Capital One spokeswoman confirmed the meeting.

“We have been invited to the White House and look forward to a constructive dialogue,” she said.

On the eve of the White House meeting, the House Financial Services Committee is planning to consider credit card legislation aimed at reforming the industry, which is facing massive pressure to lessen debt burdens on cardholders, one source said.

Treasury Secretary Timothy Geithner, National Economic Council Director Lawrence Summers and other officials are planning to attend the meeting, but U.S. President Barack Obama is not, the sources said.

(emphasis mine)

Color me skeptical. Between Tim “Eddie Haskell” Geithner, who has been the big bank’s bitch since birth, and Larry Summers, who has taken millions just last year from hedge funds, I can’t see this as anything but an attempt to minimize reforms in the credit card industry.

Obama isn’t there because he wants plausible deniability when they come out with an “agreement” that is far weaker than anything going around Congress.

If it were otherwise, then they would be talking with Congress, not the credit card industry.