Year: 2013

I Was Not Expecting This

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After she quickly signed onto the mortgage deal, I had pretty much written off California AG Kamala Harris as doing anything useful in consumer protection.

I may have been premature in my judgement:

California Attorney General Kamala Harris is on a roll. There’s been a fair bit of media coverage about abusive debt collection practices, particularly in credit cards, but at least until Harris filed a suit on Thursday against bank miscreant JP Morgan (hat tip Deontos), surprisingly little action.

 Because the amounts are usually much smaller than in mortgages, banks have incentives to play fast and loose if they think they can wring some extra blood out of the turnip of an overextended consumer. But the result often goes well beyond just improperly submitting information to the court. JP Morgan and other banks have been accused of trying to collect on debt where they have the amounts wrong, where the debt was discharged in bankruptcy, or where the consumer was never notified an action was underway. And when the debt is sold to debt collectors, the same problems with inaccuracy of information, invalidity of the debt, and abuse of the legal system multiply.

………

Harris mentions over 100,000 dubious lawsuits filed between January 2008 and April 2011 and contends that the illegal conduct extends from “pre-lawsuit correspondence” to the validation and papering up of debt sold to third parties.

 The interesting bit is how the suit is framed. The defendants are the JP Morgan holding company plus two business units, as well as an unnamed “DOES 1 through 100, inclusive” where the AG intends to obtain their names and capacities. This raises the specter that she intends not only to sue other firms (such as the law firms that were Chase’s arms and legs) but individuals at Chase and its agents. And this is where it gets fun (click to enlarge):

Each defendant for each violation. We have 100,000+ violations at Chase, with at least three entities involved, each a separate defendant. And if she can get the individuals who were supervising the robosigning operations (better yet, the C level execs ultimately responsible) and the complicit law firms, she might bankrupt some well placed people. This could be extremely entertaining.

Well, it could be entertaining for a few months, but I’m not getting my hopes up.

Still, this is more than I expected from Harris when she rushed to sign onto the mortgage sellout.

Obamacare Seems to be Working in Oregon

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In Oregon, they have up exchanges that allow people to easily compare standard insurance policies, and as a result, premiums are falling:

This is what competition looks like: One health insurer wants to charge $169 a month next year to cover a 40-year-old Portland-area non-smoker. Another wants $422 a month for the same standard plan.

The new health insurance marketplace envisioned by federal health reforms doesn’t formally kick in until fall. But it already is taking shape – and consumers for the first time can compare, premium by premium, identical plans by different insurers.

Soon they’ll be able to compare benefit-by-benefit as well.

On Thursday, a comparison of proposed 2014 health premiums became public online, causing two insurers to request do-overs to lower their rates even before the state determines whether they’re justified.

The unusual development was sparked by a comparison that used to be impossible because plan benefits varied so widely. But under the federal reforms that take effect Jan. 1, health insurance is mandated and every insurer must offer certain standard plans.

Good, but somehow, I do not think that it’s going to last.

Expect to see an orgy of mergers and acquisitions, and inventive ways to collude to follow.

H/t John Aravosis.

Pakistani Court Makes Ruling Our Court Should Make

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Beginning to think that we are the bad guys

It has ruled that US drone strikes are ‘War Crimes,’ and ‘Absolutely Illegal’:

A high court in Pakistan has found that United States drone strikes carried out in Pakistan by the CIA are war crimes, which are “absolutely illegal” and a “blatant violation” of Pakistan’s state sovereignty.

 The decision comes in a lawsuit filed by the Foundation for Fundamental Rights (FFR), a legal charity in Islamabad, which sued the Pakistan government for failing to protect its own citizens from US drone strikes. The suit was filed in May 2012 on behalf of victims of a drone attack that occurred in North Waziristan and killed more than fifty people.

Of course, it won’t effect the actions of our government.

Laws are for the little countries, don’t you know, so we don’t care.

Signs of the Apocalypse

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It’s a start

Fox News Host Megyn Kelly noted that people on her show were tilting too much toward Republicans:

Fox News host Megyn Kelly admitted on Wednesday that the conservative network’s coverage of that day’s Benghazi hearings had been a “little lopsided” after Democratic lawmakers were repeatedly cut off for commercial breaks.

Following opening statements, Fox News aired all of the questions House Oversight Committee Chair Darrel Issa (R-CA) had for the witnesses he had called, but the network cut to former United Nations Ambassador John Bolton for reaction when Rep. Elijah Cummings (D-MA) began presenting his questions.

Will wonders never cease.

This Is Corrupt

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It may not be enough for a review of his tenure, but the fact that, “Senior associate dean for executive programs and a professor in the practice of management at the Yale School of Management,” Jeffrey Sonnenfeld is calling criticism of JP Morgan CEO Jamie Dimon a witch hunt without revealing that he was a paid consultant for JP Morgan. (See his Yale bio here, I was pointed to it by a commenter on his OP/ED.)

I wonder what the extend of his pecuniary interest is here.

Even if it’s a small fee, it would certainly help with his consulting sideline to shill for a CEO. Look at the list on his bio. It’s more than 30 big-name clients.

Maybe this is why he calls shareholder objections to Dimon’s performance a “lynch mob.”

My guess is that he is angling to get a gig at HP, because he also gushed about, “Meg Whitman to continue executing a brilliant turnaround strategy.”  (Gag me with a spoon)

When someone suggests that business management schools can manage their own ethics education, have them explain to you why, given the repeated undisclosed conflicts of interest in the field (and in economics departments as well), that we can trust them to get this right.

Props to Gawker for This Trenchant Analysis

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Neetzan Zimmerman at Gawker wonders why, “CNN Can’t Stop Giving Jon Stewart Stuff to Make Fun Of.” Honestly, so do I:

Standing in the parking lot outside the courthouse, Ashleigh Banfield and Nancy Grace appeared on a split-screen via satellite to discuss the proceedings.

But, as their backdrop soon revealed, the two talking heads were actually in the very same parking lot, six whole parking spots away from each other, according to an Atlantic Wire analysis.

Well, either that, or as Stewart suggested, viewers were witnessing Arizona’s fabled “seven-mile long Bus Ness Monster.”

………
Stewart has every reason to complain about CNN’s lack of professionalism, but if they ever did get their sh%$ together, his show would be half as long.

I think that this is a bit strong.  While CNN makes Jon Stewart job easier, I think that his show would still work without them.

Oops

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Following the latest Benghazi wankfest, the ranking member of the Senate Foreign Relations Committee has said that he is OK with the administration’s response:

Senate Foreign Relations Committee Ranking Member Bob Corker (R-TN) said Wednesday that he’s “fairly satisfied” with the Obama administration’s account of events that led to the deaths of American diplomats in Benghazi last year.

 “We need to know were these people culpable or not. If they were, why are they still on the payroll? Other than that, I’ve been able to read all the cables. I’ve seen the films,” Corker told MSNBC. “I feel like I know what happened in Benghazi. I’m fairly satisfied.”

Someone is not sticking to the script.

I wonder when Rush is going to take him to the Woodshed.

I’m Matthew Saroff, and I Approve of this Grandstanding

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Elizabeth Warren has proposed a bill that would set student loan rates at the same percentage as what the Federal Reserve offers to the too big to fail banks:

Students taking out government loans to help pay for college should pay the same rock-bottom interest rate that the Federal Reserve charges big banks, Sen. Elizabeth Warren (D-Mass.) proposed Wednesday.

With the interest rate on federal student loans set to double to 6.8% this summer, Warren said it’s unfair that big banks can borrow money at 0.75% from the central bank’s discount window.

“In other words, the federal government’s going to charge interest rates nine times higher than the rates they charge the biggest banks — the same banks that destroyed millions of jobs and nearly broke the economy,” Warren said in introducing her first stand-alone bill since taking office in January.

“That isn’t right,” she said.

………

Warren acknowledged that the Fed’s policy, which also includes a near-0% federal funds rate, is designed to help boost the economy by providing cheap credit.

But, she said, “our students are just as important to the economic recovery as our banks.”

“Let’s face it: Banks get a great deal when they borrow money from the Fed,” she said. “In effect, the American taxpayer is investing in those banks. “

“We should make the same kind of investment in our young people who are trying to get an education,” Warren said.

This is cheap pandering.

Even worse, it’s never gonna see the floor of the Senate.

That being said, someone needed to ask the question why the rest of us do not get the deal the banksters do.

Funny of the Day

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By Jonathan Chait, of all people, comments on the Hobson’s choice for Virginia Governor between batsh%$ insane wingnut Ken Cuccinelli and poster child for money driven soulless hack Terry McAuliffe, and he makes a pretty good funny:

The most depressing election in America is unfolding in Virginia, where voters will trudge to the polls this fall to choose either Republican nutjob Ken Cuccinelli or soulless Democratic hack Terry McAuliffe as their next governor. We know why Republicans picked Cuccinelli — he’s crazy, they’re crazy, it’s the sort of perfect match that regularly produces nominees like Todd “legitimate rape” Akin and Richard Mourdock.

Just how McAuliffe managed to clear the field is harder to explain. McAuliffe is a House of Cards character, only less articulate. Unlike most soulless hacks, he did not obtain his position through years of greasy pole climbing — he’s a novice in electoral politics whose only real power base is Beltway insiders. McAuliffe is the Democrat Democrats have been dying to vote against, except they can’t, because he’s running against a falling-off-the-right-edge-of-the-map Republican. (It’s a testament to McAuliffe’s visceral loathsomeness that he’s starting off with a ten-point deficit against Crazy Ken Cuccinelli, in a state Barack Obama won twice.)

He then goes to list 5 worse choices.

I won’t spoil it, I’ll just tell you number 5 on his list: Godzilla vs. Mothra.

Just read it.

Wankitude from Bloomberg

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Yes, they are reporting about the panic in Japan because the aggressive action by their central bank has caused mortgage rates to skyrocket:

Bank of Japan Governor Haruhiko Kuroda’s stimulus policies are backfiring in the housing market, where mortgage rates are rising even as the central bank floods the financial system with cash.

While 35-year home-loan costs rose one basis point to 1.81 percent this month from an all-time low of 1.8 percent in April, any increase will be undesirable for the BOJ, according to Mizuho Securities Co. Federal Reserve Chairman Ben S. Bernanke’s monetary easing almost halved 30-year U.S. mortgage rates since 2008 to 3.35 percent on May 2.

Yes, one whole basis point (0.01%), and government debt rose by 4.5 basis points (0.045%).

Obviously, Abenomics, the idea of explicitly targeting increased inflation to attempt to defeat a decades long deflationary spiral, is a complete failure, after only 5 months, because interest rates rose by one basis point.

Anyone have a sense that this news organization has been determined to write this story since December, and used this as an excuse to push their agenda?

H/t Tim Duy’s Fed Watch.

Crap.

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Just heard that Mark Sanford defeated Elizabeth Colbert Busch in the special election for SC-1.

Looks to be somewhere around a 7-10% margin.

If I were living in the South Carolina’s 1st Congressional district, I would be embarrassed.

Whiny Bitches

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Senate Democrats who are upset because some incumbent are catching heat because they completely caved on gun control:

Senate Majority Leader Harry Reid’s aides met recently with staffers of New York Mayor Michael Bloomberg to warn them: Targeting vulnerable Democrats like Arkansas’s Mark Pryor on gun control could backfire on the party, several sources told POLITICO.

It didn’t work.

Ads from the Bloomberg-funded Mayors Against Illegal Guns are going up soon in Alaska, Arkansas and North Dakota — three states with Democratic senators who broke with the White House on last month’s background checks vote.

The group is also moving as many as 60 field organizers into about a dozen states where senators — Democrats and Republicans — voted against bill, with the goal of building infrastructure and countering gun rights groups like the National Rifle Association.

………

Bloomberg’s group has made its choice: Its radio spots in Arkansas will target the state’s African-American community, “without which Mark Pryor doesn’t have a prayer of getting reelected,” said Mark Glaze, director of Mayors Against Illegal Guns.

………

Pryor, first elected to the Senate in 2002, claimed he’s not worried about his poor poll numbers or possible challengers, including GOP Rep. Tom Cotton, or whether MAIG or other progressive groups dump money into the race.

Shades of the contemptible Blanche Lincoln in the final graph.

When progressives decided to go after Lincoln, she already was polling lower than a case of the Clap, but somehow the primary challenge is why she lost by 20 points.

To quote Harry S Truman, “Given a choice between a fake Republican and a real one, the public will choose the real Republican every time,”and that is what happened to Lincoln, and is likely to happen to Pryor.

It’s always the same refrain in the DC incumbent protection racket, “He’s a ratf%$#, but the Republicans are scary, so we need to waste resources on a politician who wouldn’t be worth it if he were polling well.”

We know why Pryor voted the way he did, because he was running scared, and the voters of Arkansas know that too, which is why they will not be inclined to vote for him.  The pander is too blatant.

Yes, I hang up on both the DSCC and the DCCC, because I do not trust them to support candidates who support Democratic Party values, and because they spend their money stupidly.

This is Perhaps the Most Egregious Example of Control Fraud This Far

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Gretchen Morgenson of the New York Times relates to us the tale of CommonWealth REIT, which has a long history of aggressive acquisitions at excessive prices.

Their profits have suffered, and their share price has suffered.

In fact the only thing that seems to get a decent return on investment is the management company that the founders set up to conduct their operations.

They make lots of fees, and they get a fee for every misguided acquisition:

The annals of business history abound with stories of entrenched corporate executives building fortifications to maintain their plush status quo. But recent maneuvers by the board of the CommonWealth real estate investment trust put the company in a class by itself. CommonWealth REIT owns office buildings in and around major metropolitan areas in the United States. Founded in 1986 and based in Newton, Mass., CommonWealth, like many REITs, is not taxed on its income, which it distributes to shareholders. Its hefty payouts — 4.75 percent based on its share price of $21.04 — have made it a favorite among individual investors looking for income.

But CommonWealth, with $7.8 billion in buildings from Hoboken to San Diego, is unlike most other real estate investment trusts in one crucial way: its structure creates a significant conflict of interest. What sets CommonWealth apart is that it employs an outside management company, known as REIT Management and Research, to run the company’s operations and acquire properties. Many REITs were set up this way in the 1980s because they were small, but external managers are an anomaly among today’s much larger REITs.

To make matters more interesting, the outside management company is run by Barry M. Portnoy, CommonWealth’s founder, and his son Adam. Both father and son, moreover, serve on CommonWealth’s five-member board.

REIT Management and Research is paid an advisory fee based on the size of CommonWealth’s assets, rather than on how the investments perform. This is a stark incentive to simply expand the company through acquisitions and, in fact, since March 2010 CommonWealth has issued 88 million new shares to acquire new properties. The number of new shares is almost triple the stock outstanding before the sales. Such issuance dilutes existing shareholders’ stake because it increases the number of investors that share in the company’s income and payouts.

The incentive structure also encourages the management company to pay top dollar for properties. As noted in a recent report from Green Street Advisors, a research firm specializing in REIT analysis, “Selling equity and buying assets, without management rigorously asking ‘At what price?,’ can bleed shareholder value over the long term.”

Sure enough, since 2005, CommonWealth has underperformed the index of commercial office building REITs. In 2012, CommonWealth’s shares fell 7 percent. It cut its dividend last fall.

But because the assets have increased, the management company run by the Portnoys has been raking it in, earning $118 million in advisory fees in the last three years.

This might not be a concern if CommonWealth’s outside managers owned a sizable investment in its shares, aligning themselves with the company’s owners. They do not; the management firm’s executives and trustees on the board own 0.33 percent of CommonWealth stock.

The founders have adopted a series of increasingly extreme poison pills to stay in control.

Ms. Morgenson casts this as a shareholder rights fight, but I think that it is more than that.

This is management, who have almost no equity stake, are simply looting the company.

Oskar Lafontaine Realizes the Error of His Ways

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The former German Finance Minister, who shepherded the implementation of Euro, has now declared that has declared that it is a truly bad idea:

“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said.

 “The Germans have not yet realised that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, blaming much of the crisis on Germany’s wage squeeze to gain export share.

 Mr Lafontaine said on the parliamentary website of Germany’s Left Party that Chancellor Angela Merkel will “awake from her self-righteous slumber” once the countries in trouble unite to force a change in crisis policy at Germany’s expense.

………

 Mr Lafontaine said he backed EMU but no longer believes it is sustainable. “Hopes that the creation of the euro would force rational economic behaviour on all sides were in vain,” he said, adding that the policy of forcing Spain, Portugal, and Greece to carry out internal devaluations was a “catastrophe”.

 Mr Lafontaine was labelled “Europe’s Most Dangerous Man” by The Sun after he called for a “united Europe” and the “end of the nation state” in 1998. The euro was launched on January 1 1999, with bank notes following three years later. He later left the Social Democrats to found the Left Party.

You will note that his critique is not the standard political wisdom in Germany, which turns economics into a nativist morality play about the respective national virtues of different nations.

Seriously, we know what happens Germans base their policies on a vision of their own superior national virtue, there are still people who remember the last time, and it is not pretty.

This is Seriously Weird

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Carla del Ponte, a former war crimes prosecutor, and a member of the UN commission investigating possible war crimes in the Syrian civil war, has given an interview stating that there was evidence that the Syrian rebels may have used chemical weapons.

Yes, you heard right, she has suggested that the rebels, not the government, might have been using chemical weapons:

A leading member of a United Nations investigatory commission says there are “strong concrete suspicions but not yet incontrovertible proof” that Syrian rebels have used the nerve agent sarin.

 Carla del Ponte, a former prosecutor for U.N. tribunals investigating war crimes in the former Yugoslavia and Rwanda, made the comment in an interview Sunday with a Swiss television channel, the BBC reported.

 The U.N. panel, known as the Independent International Commission of Inquiry on Syria, emphasized in a statement Monday that it had reached no conclusions about the possible use of chemical weapons in Syria’s civil war.

“I was a little bit stupefied by the first indications we got … about the use of nerve gas by the opposition,” Del Ponte told Swiss Italian broadcaster RSI.

 She said the evidence emerged from interviews conducted by investigators with victims, physicians and others in neighboring countries.

Del Ponte did not rule out the possibility that President Bashar Assad’s government may also have used chemical agents on the battlefield.

The official response from the UN was to deny this:

U.N. war crimes investigators have reached no conclusions on whether any side in the Syrian war has used chemical weapons, the inquiry commission said on Monday, playing down a suggestion from one of the team that rebel forces had done so.

 Investigator Carla Del Ponte caught U.N. officials by surprise on Sunday when she said the commission had gathered testimony from casualties and medical staff indicating that rebel forces had used the banned nerve agent sarin.

 “The independent international Commission of Inquiry on the Syrian Arab Republic wishes to clarify that it has not reached conclusive findings as to the use of chemical weapons in Syria by any parties to the conflict,” it said in a statement.

It seems to me that something odd is going on.

Certainly, it is not outside of the realm of possibility for the rebels to have deployed Sarin, after all, a significant portion of their arsenal used to be the Syrian government’s arsenal.

Why someone like Carla del Ponte would make a public statement like this is not clear to me, particularly since since, by her own admission, the evidence is sketchy.

I’m wondering if this is push-back against pressure to make a definitive statement against the Assad government.

Certainly commiseration’s response to her statement would indicate that if there was any move to early judgement, there isn’t now.

Maybe it’s an honest mistake, but I sounds like some weird sort of wheels within wheels stuff.