Month: November 2009

More Ass Covering by the Fed

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So, under political pressure from the Ron Paul audit bill and the Chris Dodd bill, which strips regulatory authority from the Federal Reserve, the Federal Reserve Board has announced final rules prohibiting the charging of “overdraft protection” for ATM and debit cards unless the consumer specifically opts in.

There is a reason that I emphasize political pressure: It is because it is clear that the Fed is under pressure, and it is clear that the only reason that it is finally taking consumer friendly steps is because they they feel this pressure.

The effect of insulating a bank regulator from public pressure is to have them favor the banks.

Full press release after break:

Press Release


Federal Reserve Press Release

Release Date: November 12, 2009
For immediate release

The Federal Reserve Board on Thursday announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

Before opting in, the consumer must be provided a notice that explains the financial institution’s overdraft services, including the fees associated with the service, and the consumer’s choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act.

“The final overdraft rules represent an important step forward in consumer protection,” said Federal Reserve Chairman Ben S. Bernanke. “Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service.”

The Board’s consumer testing shows that most consumers prefer not to be enrolled in overdraft services for ATM and one-time debit card transactions unless they affirmatively consent, or opt in. At the same time, testing shows that most consumers want overdraft services to cover important bills, such as checks they use to pay rent, utilities, and telephone bills.

To ensure that consumers have a meaningful choice, the final rules prohibit financial institutions from discriminating against consumers who do not opt in. The final rules require institutions to provide consumers who do not opt in with the same account terms, conditions, and features (including pricing) that they provide to consumers who do opt in. For consumers who do not opt in, the institution would be prohibited from charging overdraft fees for any overdrafts it pays on ATM and one-time debit card transactions.

“Overdraft fees can be costly,” said Governor Elizabeth A. Duke, the chair of the Board’s Committee on Consumer and Community Affairs. “Our rule will help consumers better understand the terms and conditions of overdraft services and will give them an opportunity to avoid fees when these services do not meet their needs.”

The Federal Register notice is attached. The final rules are effective July 1, 2010.

A Clarification and an Apology

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In my earlier post on the Taliban severing ties to al Qaeda, I said the following:

Al Qaeda was never particularly popular in Afghanistan, where the people are, after all not Arabs, and they have about as much love for rich Arabs as we in the United States do.

Bin Laden was there because the Taliban wanted his money, not him.

When they were in control of Afghanistan, not only were they not fierce protectors of him, but they were trying to find a way for help the US make him dead in a way that gave them some plausible deniability.

As Sortition notes (In the comments of the previous post. BTW, read his blog, Pro Bono Statistics), this could be construed as an endorsement of bigotry against Arabs. This is not my intent.

To the degree that some people in Afghanistan or the West dislike “Arabs”, it is an indictment of those people, who are exhibiting bigotry toward Arabs.

Arabs are people like everyone else, and they love their families, just like everyone else, and while there are shortcomings in the governance of most Arab states, these are issues of complaints against the ruling elites.

So, a criticism of the House of Saud (or Mubarak in Egypt, or Qaddafi in Libya, or the Al-Sabah’s of Kuwait, or the Zayed’s of the UAE, the Assads of Syria, al Bashir in Sudan, King Mohammed of Morocco, etc.), or its policies is no more a criticism of the Arab people than criticism of the rulers of America, Goldman Sachs, would be a criticism of the American people.

Remember My Earlier Post on Judges Taking Kickbacks to Send Children to Jail

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The post, from February, is here.

In any case, a judge, the aptly named Arthur Grim, has reviewed the case files, and come away shocked:

The judge who studied Luzerne County’s “cash-for-kids” scheme said yesterday that children’s constitutional rights had been denied and justice perverted “in ways that I would never have dreamed possible.”

 Judge Arthur E. Grim of Berks County, who reviewed transcripts of about 100 cases of juveniles caught up in the scheme, said the scandal grew out of “unfettered power, greed, opportunity, and intimidation.”

here is the kicker though:

Lawyers, court employees, and school officials knew of the scheme, but winked at it for convenience or self-preservation, Grim testified.

This isn’t just a couple of bad judges. Pretty much every lawyer, and every school administrator in Luzerne County ad to know about it.

What’s more, the school administrators used it for their petty vendettas:

He said many school officials supported Ciavarella’s “zero-tolerance” policies toward teenagers no matter how minor the offense.

“When a misbehaving kid was brought to school authorities, they immediately picked up the phone and called the police,” Grim testified. “They did this because they knew that if they did, that child would go before Judge Ciavarella and would be out of their hair as a problem.”

When Hillary Transue was sent before the judge by a vice-principal who pressed charges of harassment about a spoof Facebook page that had her [the vice-principal] collecting Johnny Depp’s used underwear, this person, educator is not the right word, and whoever in the DA’s office who decided to continue with this, knew, that this was going to get a girl thrown in jail because the judge was taking bribes.

The Judge Grim notes:

“We know the people in this community did not consciously choose to stand on the side of injustice at the expense of children. But what was it that made it so hard to do the right thing? Were people afraid? Were they intimidated? By whom? What protections would they have wanted? Where would they have wanted to take the information they had?”

The judge has it wrong. People wanted this. This is what “tough on crime” and “zero tolerance” means. It means disproportionate, destructive, evil application of the law, and judges Mark Ciavarella Jr. and Michael Conahan could do this because this is what the people of Luzerne County wanted.

The prosecution loves a “hanging judge”. The principals wanted judges would make problem children go away. The voters wanted “tough on crime” and “zero tolerance“.

They all wanted to hurt children, so long as it was someone else’s child.

Atrios calls them, “Really awful people.” I’m not sure if he means just the judges, or the DA’s office, or perhaps also the school administrators.

Me, I mean everyone in that whole damn county.

If that vice-principal is still working for the school district, the good people of Luzerne county, both of them, should organize an angry mob.

Another Economic Indicator

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One of those friends that I’ve never met in meat space, Bill Volk of the mobile device software company Playscreen was at the AdTech converence in New York city. His ovservation (along with his pic on the right):

The AdTech conference in NYC is JAMMED. The line to get badges for pre-registered attendees was over 1000 people long with a one hour wait.

Advertising can be a leading indicator.

He lives in California, and noted that he had the first real bagel since the last time he was in NYC.

You can get them here, in Baltimore, Goldbergs Bakery, where you can sometimes watch them boil the bagels before baking.

Anyone know where real bagels can be found in Southern California?

God Bless the Onion

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Luis Miguel Salvador Aguila Dominguez, alias “Lou Dobbs,” is escorted by DHS agents to the airport to be sent back to Mexico.

Brilliant!

U.S. Deports Lou Dobbs

WANTAGE, NJ—Acting on anonymous tips from within the Hispanic-American community, U.S. Customs and Border Protection officials on Wednesday deported Luis Miguel Salvador Aguila Dominguez, who for the last 48 years had been living illegally in the United States under the name Lou Dobbs.

According to the Department of Homeland Security, federal agents stormed the undocumented immigrant’s home in an evening raid just hours after the 64-year-old newscaster suddenly announced that he was resigning from CNN, and immediately placed him on an Aeromexico flight departing from Newark Liberty Airport.

Just go and read the whole thing.

Economics Update

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Unemployment, H/t Calculated Risk

Today is Jobless Thursday, and new jobless claims fell to 503,000, down from 514,000 (revised from 512K_) the lowest since January, with the 4 week moving average falling to 519,750 from last week’s 524,250, and continuing claims fell to 5.63 million.

This is good news, but we need to be down to about 400K a week to be in jobless recovery, as opposed to “job-loss recovery”, mode, (see graph pr0n, right) so there is still a way to go.

I would note that the metrics that involve moving physical objects, like port and truck traffic, and this week’s report on rail traffic from the AAR are still week. with traffic in October down 15.3% from a year ago, and down 0.3% from September.

It looks like bad news for the monoliner bond insurers is heating up, with French bond insurer CIFG is on a path to an insolvency filing.

In real estate, mortgage applications hit a 9-year low, despite the fact that the 30-year fixed mortgage fell again.

Additionally, we have dueling headlines, with CNBC saying, “Foreclosures Fall Again,” (true, though the call the improvement “fleeting”) but Bloomberg saying that, “U.S. Foreclosure Filings Surpass 300,000 for 8th Straight Month.” (also true.

Your call as to hed is the right one.

Meanwhile, there was an auction for 30 year Treasuries, and prices fell, because….Hell, I don’t know why they fell….Maybe inflation concerns, since the 3 and 10-year auctions were fairly well received.

Then we have our last bit, energy and currency, and oil fell, largely on an unexpectedly high inventory numbers, and the dollar rose, as investors looked for a safe haven.

Pushback on Supporting Karzai

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It’s beginning to look like Obama has a problem in Afghanistan.

On one side, he has the military, which is pushing for an escalation, because too many of the senior officers are too invested in their theories of irregular warfare, and have lost sight of the regional goal, and so are looking for “victory” (McChrystal, Petraeus).

On the other side, which also includes military personnel, you have people see the real goals of Afghanistan as simply insuring that al Qaeda does not create another safe-haven there, and this side includes much of the state department, most of our European allies, and now, it appears, Karl Eikenberry, the US ambassador to Afghanistan, who has sent memos saying that an escalation would make things worse.

Note that Eikenberry is a retired general, and he commanded US forces there in 2007 and 2007, but until now he has scrupulously avoided comment on the military end of things:

Although Eikenberry’s extensive military experience and previous command in Afghanistan were the key reasons Obama chose him for the top diplomatic job there, the former general had been reluctant as ambassador to weigh in on military issues. Some officials who favor an increase in troops said they were surprised by the last-minute nature of his strongly worded cables.

In these and other communications with Washington, Eikenberry has expressed deep reservations about Karzai’s erratic behavior and corruption within his government, said U.S. officials familiar with the cables. Since Karzai was officially declared reelected last week, U.S. diplomats have seen little sign that the Afghan president plans to address the problems they have raised repeatedly with him.

When I made comparisons to the mistakes made following the assassination of Diem in Vietnam, I had no idea that people who have Obama’s ear were of like mind.

Karzai is there because the US installed him, and could only gain legitimacy through the quality of his governance, hence he has no legitimacy in Afghanistan.

With all that is going on, and there are now official statements from the White House saying that, “Our commitment is not open-ended,” which implies people are starting to get a clue, and aren’t being hawkish because they think that it will help in 2012.

Coda on Kelo

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You remember Kelo v. City of New London? That’s where the city of New London took people’s homes in order to build a business park for Pfizer.

Well, following it’s purchase of Wyeth, they are closing their facility there, (also here) leaving the city with a big honking hole, and Pfizer looking to sell the land, for which it paid nearly nothing, and building.

You know, when you give free sh$# to contemptible greed-heads, this is what they do: They f@#$ you over when it’s convenient.

Needless to say, the plaintiffs in Kelo are as unamused as anyone in this development.

When Do We Prosecute This?

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Yet another example of the fabulous “innovations” that our modern financial industry have given us.

It turns out that when Atlanta had a bond issue, they went to a consultant to review the bids, and this consultant, David Rubin, ruled out the winning bid, costing the City $58,000 by going with the runner up Bank of America.

The problem was that David Rubin had a piece of that Bank of America action, and was not working to the best interests of the city:

Only after the Internal Revenue Service investigated five years later did local officials learn that Rubin’s firm, CDR Financial Products Inc., had entered into a secret side agreement with the Charlotte, North Carolina-based bank. CDR’s share would be worth as much as $340,000, based on city and federal records.

“IRS believes that CDR, Bank of America and possibly others may have colluded to fix pricing,” an unidentified Atlanta employee wrote in an undated internal memorandum after city authorities met with IRS investigators in September 2005.

This is a theft of honest services, a felony, and likely a RICO violation too, and it looks like Mr. Rubin is going to jail.

The real problem here is that municipalities are entering into agreements which are too complex for them to evaluate, and so their taxpayers are getting done like a drunk sorority girl on prom night.

Uh-Oh, Another Wall Street Journal Cartoon Illustrating Finance

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I’ve said it before, and I’ll say it again: When the Wall Street Journal Describes Finance With Cartoons, it Means that Someone will Get Boned, and it ain’t the “Bankers, Lawyers, and Other Advisers.”

Which means that taxpayers are about to get boned again, without lube.

Once again, regulators have allowed banks to slice and dice loans in order to improve appearances on their bottom line:

In an interview, Joe Exnicios, chief risk officer of Whitney’s Whitney National Bank unit, of New Orleans, cited a hypothetical example in which a developer borrows money to develop a small retail center and gets a drugstore chain to sign a lease for one store. If the developer can’t sell the other sites, he would be unable to repay the loan. Under the new guidelines, the bank could create a healthy, performing loan supported by the drugstore lease and a nonperforming loan from the rest of the loan. “It may make a difference on whether you need to have additional capital and take additional reserves,” he said.
Critics agree that regulatory flexibility might help some banks avoid failure. But the troubled loans remaining on their books will discourage them from lending, reminiscent of Japan’s “lost decade” in the 1990s.
A better solution, critics said, would be similar to the approach regulators took during the commercial real-estate crash of the early 1990s.
“Back then, regulators moved aggressively to force banks to take write-offs and sell off their troubled loans, and the market recovered faster,” said Mark Edelstein, head of the real-estate group at law firm Morrison & Foerster LLP.

(emphasis mine)

I will note that Mike “Mish” Shedlock, with whom I frequently disagree,* gets it right in his hed, “New Rules and More Lies Hide Cancerous Commercial Real Estate Loans.

The problem here is that Barack Obama and His Stupid Minions™ are asking the wrong question. Instead of asking, “How do we get capital flows moving again,” they are asking, “How do we save the banks.”

These two things are orthogonal.

*Like he gives a damn. I’m just a loud mouth with a blog.

An Interesting Take on the Possibility as Tony Blair as EU President

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George Monbiot, at The Grauniad* says it all when he states that, “Making this ruthless liar EU president is a crazy plan. But I’ll be backing Blair.”

He is backing Blair because if he becomes EU President, he must necessarily work from his office in Brussels, and Belgium has acceded to the jurisdiction of the International Criminal Court (ICC), which means that, unlike in the US and the UK, they can indict him, arrest him, and ship him off to the Hague for trial:

Within the UK, there is no means of prosecuting Blair. In 2006 the law lords decided that the international crime of aggression has not been incorporated into domestic law. But, elsewhere in the world, it has been. In 2006 the professor of international law Philippe Sands warned that “Margaret Thatcher avoids certain countries as a result of the sinking of the Belgrano, and Blair would be advised to do likewise”.

I’m beginning to think that Bush, Cheney, and Rumsfeld should be made EU President too.

*According to the Wiki, The Guardian, formerly the Manchester Guardian in the UK. It’s nicknamed the Grauniad because of its penchant for typographical errors, “The nickname The Grauniad for the paper originated with the satirical magazine Private Eye. It came about because of its reputation for frequent and sometimes unintentionally amusing typographical errors, hence the popular myth that the paper once misspelled its own name on the page one masthead as The Gaurdian, though many recall the more inventive The Grauniad.”

I Was Expecting This

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ACORN has filed suit in Federal Court against the Defund ACORN Act, claiming that it is an unconstitutional bill of attainder.

Well, duh, it is an unconstitutional bill of attainder, as it says clearly in the bill:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Defund ACORN Act’.

I figure that any judge with two braincells strike this struck down in about 15 minutes.

Of course, both Bushes and Reagan appointed a lot of folks who lacked the requisite two brain cells, so we will see how it goes.

About F@#$ing Time

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It looks like the IRS has set up a new unit in the organization to go after the tax dodges of the wealthy:

A new Internal Revenue Service enforcement unit targeting the very wealthy will help the tax agency decode partnerships, offshore trusts and other complex techniques used to hide income, IRS Commissioner Doug Shulman said Monday.

Dubbed the Global High Wealth Industry group, the unit will launch “a small number” of audits of individuals with assets or income in the tens of millions of dollars, Mr. Shulman told an accountants’ trade group. An IRS official said the group would begin work on these initial audits in the next month.

The high-wealth group, housed in the IRS’s large- and medium-sized business division, marks a sharpening of the IRS approach to auditing the very wealthy. Its creation is a response to the complex web of entities and transactions many high-net-worth individuals use to manage their financial affairs.

This is good for a number of reasons:

  • The wealthy are, as Willie Sutton didn’t say, “where the money is.”
  • The tax dodges that they have used have become increasingly more sophisticated, and need a dedicated team with the forensic skills in order to pursue these tax cheats.
  • Allowing rich people to evade taxes is corrosive to society, tax collection, and budget decisions, and create an environment where politicians say that you can’t raise taxes on the rich, because they will just weasel out of them. (see Bush, George W.)
  • If everyone believes that the rich do not pay their share, they will be less inclined to pay their share too, and the cooperation of the taxpayer is crucial to our system working.

Now what they need to do is go go criminal prosecution, with jail time, on the some of the worst offenders.

Hannity Admits that He is Jon Stewart’s Bitch

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It appears that Jon Stewart is a super-being who is capable of doing things that violate the basic laws of this world, because he just forced Sean Hannity to admit that they were lying with the videos that he posted. (earlier post on this)

Sparta!!!!!!

H/t Pressing Issues

[Title changed after publication when I came up with a better one]

[Youtube taken down, replaced with a new one. Fox is apparently going after liberals who post clips from Fox with takedown notices.]

Time to Go Long on Fig Newtons

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The American Medical Association has decided to reclassify marijuana.

It is currently a schedule 1 controlled substance, meaning dangerous, with no medical use, and the AMA, bowing to reality, has decided that it should be legal to at least test the stuff:

The American Medical Assn. on Tuesday urged the federal government to reconsider its classification of marijuana as a dangerous drug with no accepted medical use, a significant shift that puts the prestigious group behind calls for more research.

The nation’s largest physicians organization, with about 250,000 member doctors, the AMA has maintained since 1997 that marijuana should remain a Schedule I controlled substance, the most restrictive category, which also includes heroin and LSD.

In changing its policy, the group said its goal was to clear the way to conduct clinical research, develop cannabis-based medicines and devise alternative ways to deliver the drug.

Hopefully, the progress towards sanity involving THC will continue, and perhaps, I could then go back to one of the activities of my college days.

This is Not a Surprise

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It appears that the Taliban is in the process of severing its ties with al Qaeda:

Such positions may put Omar’s Taliban at odds with al-Qaeda’s extremist Sunni agenda of overthrowing what it sees as corrupt Muslim governments and targeting Shiites. Analysts said that Omar, who leads a council of Taliban commanders based in or around the Pakistani city of Quetta, wants such countries as Saudi Arabia, the United Arab Emirates and Pakistan to recognize the Taliban as a legitimate government if it regains power and that he has little interest in fomenting war elsewhere.

“We assure all countries that the Islamic Emirate of Afghanistan, as a responsible force, will not extend its hand to cause jeopardy to others,” Omar said in a written statement in September.

The messages from the Taliban leadership since the spring amount to something of a “revolution,” said Wahid Mujda, a political analyst who was a Foreign Ministry official under the Taliban government. “Al-Qaeda’s path is now different from the Taliban’s path, and they are growing more separated.”

This ain’t a revolution.

Al Qaeda was never particularly popular in Afghanistan, where the people are, after all not Arabs, and they have about as much love for rich Arabs as we in the United States do.

Bin Laden was there because the Taliban wanted his money, not him.

When they were in control of Afghanistan, not only were they not fierce protectors of him, but they were trying to find a way for help the US make him dead in a way that gave them some plausible deniability.

People to Whom You Should Consider Giving Money To

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The following congressmen, Ann Kirkpatrick, Harry Mitchell, Gabrielle Giffords, Dennis Moore, John Hall, Alan Grayson, Mark Schauer, Mike Arcuri, Steve Kagen, Jerry McNerney, Melissa Bean, Debbie Halvorson, Bill Foster, Tim Walz, Bill Owens, Carol Shea-Porter, Tim Bishop, Dina Titus, Mary Jo Kilroy, and Kurt Schrader all voted for healthcare reform and against the Stupak amendment, and they all have districts that imply a close election.

See this ActBlue link.

You can donate to them all at once at the link, or separately, as, for example, Grayson has already raised over $400,000 on act blue, and Melissa Bean is way too friendly with the banking industry, though she is good on other things.

Colsulting Services for Really Stupid People

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As Dave Barry would say, I am not making this up.

It appears that former Bush Secretary of State Condoleeza Rice and former National Security Council Advisor Stephen Hadley have decided to open up a consulting firm .

Their specialty, “Strategic consulting,” since, I guess the strategy in Iraq worked so tremendously well.

In any case, attempting to look at RiceHadley.com gets the following, which, given the record of both Rice and Hadley, and of Bush’s Evil Minions™ generally, seems to be me to be a remarkably apropos statement.