Year: 2013

More Judges Criticize Bankster’s Get Out of Jail Free Cards

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First, it was federal Judge Jed Rakoff, who has refused to accept “no harm, no fowl” deals with the SEC, and now U.S. District Judge Sidney Stein is questioning the fairness of a settlement of shareholder lawsuit:

A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup Inc’s proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets.

U.S. District Judge Sidney Stein asked lawyers for the bank and its shareholders to address several issues at an April 8 fairness hearing, including requested legal fees and expenses of roughly $100 million, and the absence of payments by former Citigroup executives.

………

Stein joined other judges in recent years to question the fairness of large legal settlements in the financial industry.

Citigroup awaits a decision from the federal appeals court in New York on whether Stein’s colleague Jed Rakoff properly rejected a $285 million settlement with the U.S. Securities and Exchange Commission over the alleged defrauding of investors.

On Thursday, U.S. District Judge Victor Marrero in Manhattan cited that case in delaying a decision to approve the SEC’s $602 million insider trading settlement with a unit of Steven Cohen’s hedge fund SAC Capital Advisors LP.

………

According to court papers, the shareholder settlement also resolved claims against several former top Citigroup officials, including Chief Executive Charles Prince and senior adviser Robert Rubin. Stein asked whether this was proper.

“Does the absence of any payments from the individual defendants render the settlement unfair to class members who still hold the Citigroup stock they purchased during the class period?” he asked both sides to address.

More of this, please.

Can We Throw His Ass in Jail for Civil Rights Violations?

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We now have a report that New York City Police Commissioner Ray Kelly deliberately target people to be terrorized by the police on the basis of race:

Ever since the New York City Police Department initiated its reviled stop-and-frisk technique, the force’s laughable refrain has been that its officers are not engaging in racial profiling. It may not look like racial profiling to Mayor Michael Bloomberg or NYPD Commissioner Ray Kelly, who oversee stop and frisk, but to the millions of blacks and Latinos harassed by the NYPD over the years it is a blatant campaign against dark skin.

Today, a New York legislator testifying in a class-action suit against stop and frisk confirmed that those suspicious of the program’s racial motivations are correct. Doubling down on an accusation he made in 2011, New York State Senator Eric Adams said on the record that he heard Commissioner Kelly tell then-Governor David Paterson and a room of other lawmakers that stop and frisk targets minorities because “he wanted to instill fear in them that any time they leave their homes they could be targeted by police.”

What Ray Kelly is alleged to have said here is exactly the same as burning a cross on a hill overlooking a minority neighborhood: Instilling fear in minorities on the basis of their ancestry.

This is Bull Connor sh%$, and it’s illegal.  It’s detention and harassment on the basis of race.

If the FBI is not on the case, someone needs to get their head out of their ass, and do their f%$#ing job.

This is Not a Surprise

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What a surprise, New York State Senator Malcom Smith was caught bribing Republican officials in an attempt to secure the GOP nomination for New York City mayor:

The two men sat in the state senator’s parked car in suburban Rockland County, but New York City was at the front of their minds and the focus of their conversation.

What the senator, Malcolm A. Smith, wanted to do, the other man explained, was going to cost “a pretty penny.”

“But it’s worth it,” replied Senator Smith, a Democrat, according to a transcript of the January meeting. “Because you know how big a deal it is.”

His plan, described by federal prosecutors in a criminal complaint unsealed on Tuesday, was as ambitious as it was audacious. Mr. Smith was going to bribe his way onto the ballot to run for mayor of New York.

But he needed help, from a disparate cast of characters, including a Republican City Council member from Queens, Daniel J. Halloran III, and two Republican leaders from Queens and the Bronx, Vincent Tabone and Joseph J. Savino. And he needed the help of the other man in the car, who, unbeknown to Mr. Smith, was a cooperating witness for the Federal Bureau of Investigation and was recording the whole conversation.

Instead of appearing on the ballot, Mr. Smith’s name has landed in a marquee spot on the criminal complaint. On Tuesday, he, Councilman Halloran and the Republican Party leaders were charged with wire fraud and bribery. The senator was also charged with extortion.

This is not surprising, because he is also one of the Benedict Arnold Democrats who colluded with Republicans in the state to wrest control from the Democrats who actually won most of the seats:

New York Republicans joined forces with a group of dissident Democrats on Tuesday to form what they called a “bipartisan governing coalition” to run the State Senate, preventing the Democratic Party from taking control even after it appeared to have won a majority of Senate seats in elections last month.

The announcement was the latest twist in a state capital that has had more than its share in recent years, with a string of leadership squabbles, corruption investigations and sex scandals that at times crippled the government and made Albany a laughingstock.

The power-sharing deal announced Tuesday was a victory for New York Republicans, who are outnumbered 2-to-1 in the state’s electorate and who fared unexpectedly poorly in a series of Senate races last month. The exact outcome of the election remains unclear, because ballots in two close races are still being counted, but the consensus in Albany is that the Democrats won more seats than the Republicans.

But shortly after the elections, one Democrat said he would align himself with the Republicans, and on Tuesday five others said they would join with the Republicans to control the Senate. Many of the remaining Senate Democrats were furious, accusing the Republicans and the breakaway Democrats of orchestrating a coup to steal control.

As part of the deal, the Senate majority leader, Dean G. Skelos, a Long Island Republican, agreed to share authority over the chamber with Senator Jeffrey D. Klein, a Bronx Democrat who was the No. 2 official in his caucus before defecting nearly two years ago to form the Independent Democratic Conference.

The obvious question here is, “Why did he think that he could bribe Republicans into nominating him for Mayor?”

The simplest answer (see Occam’s Razor) as to why he might believe this is is pretty clear here:  The Republicans bribed him to jump over the aisle, and so Senator Smith expected them to be similarly receptive to bribes.

I have no evidence of this, but it seems to me that some sort of payoff had to be involved in the “Independent Democratic Conference” knifing their fellow Dems in the back.

The only question is whether it was limited to legal things, like committee chairmanships, or there was something more remunerative involved.

Considering the fact that this is Albany, I’ll take the door behind the piles of unmarked bills.

H/t Ed Kilgore.

Obamacare Hiccup ……… Is this the Shape of Things to Come

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The healthcare market for small business medical insurance mandated under the PPACA will be delayed:

Unable to meet tight deadlines in the new health care law, the Obama administration is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees — a major selling point for the health care legislation.

The law calls for a new insurance marketplace specifically for small businesses, starting next year. But in most states, employers will not be able to get what Congress intended: the option to provide workers with a choice of health plans. They will instead be limited to a single plan.

The choice option, already available to many big businesses, was supposed to become available to small employers in January. But administration officials said they would delay it until 2015 in the 33 states where the federal government will be running insurance markets known as exchanges. And they will delay the requirement for other states as well.

The promise of affordable health insurance for small businesses was portrayed as a major advantage of the new health care law, mentioned often by White House officials and Democratic leaders in Congress as they fought opponents of the legislation.

Supporters of the law said they were disappointed by the turn of events.

………

D. Michael Roach, who owns a women’s clothing store in Portland, Ore., said the delay was “a real mistake.”

“It will limit the attractiveness of exchanges to small business,” he said. “We would like to see different insurance carriers available to each of our 12 employees, who range in age from 21 to 62. You would have more competition, more downward pressure on rates, and employees would be more likely to get exactly what they wanted.”

John C. Arensmeyer, the chief executive of Small Business Majority, an advocacy group, said that the delay of “employee choice” was “a major letdown for small business owners and their employees.”

Gee, the delay shafts small businesses, and favors the big players in the FIRE (Finance, Insurance, and Real Estate) sector.

Gee, that’s a surprise ……… Not.

The Obama administration doesn’t work hard for anything that does not have a payoff for the banksters and their ilk.

Manufacturing Slows

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The Institute for Supply Management’s manufacturing survey shows factory activity growth slowing:

Factory activity grew at the slowest rate in three months in March, suggesting the economy lost some momentum at the end of the first quarter as the effects of tighter fiscal policy started kicking in.

Data so far this year had shown little sign that higher taxes, and the $85 billion in across-the-board government spending cuts that took effect March 1 known as the “sequester,” had weighed on economic activity.

“It suggests the economy was probably starting to slow at the end of the quarter, possibly reflecting the impact of the fiscal headwinds coming from sequestration and higher taxes,” said Millan Mulraine, a senior economist at TD Securities in New York.

So not surprising.

Weak demand, nut-jobs who want to crash the economy in the house to reinforce their 2014 electoral prospects.

I would not be inclined to ramp up anything either.

India Rejects Evergreening Pharmaceuticals

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The Indian Supreme Court has rejected a patent for a slightly modified drug, on the basis that it was not a significant change.

The drug companies do this all the time, in order to extend their patents on drugs nearly indefinitely:

People in developing countries worldwide will continue to have access to low-cost copycat versions of drugs for diseases like H.I.V. and cancer, at least for a while.

Production of the generic drugs in India, the world’s biggest provider of cheap medicines, was ensured on Monday in a ruling by the Indian Supreme Court.

The debate over global drug pricing is one of the most contentious issues between developed countries and the developing world. While poorer nations maintain they have a moral obligation to make cheaper, generic drugs available to their populations — by limiting patents in some cases — the brand name pharmaceutical companies contend the profits they reap are essential to their ability to develop and manufacture innovative medicines.

Specifically, the decision allows Indian makers of generic drugs to continue making copycat versions of the drug Gleevec, which is made by Novartis. It is spelled Glivec in Europe and elsewhere. The drug provides such effective treatment for some forms of leukemia that the Food and Drug Administration approved the medicine in the United States in 2001 in record time. The ruling will also help India maintain its role as the world’s most important provider of inexpensive medicines, which is critical in the global fight against deadly diseases. Gleevec, for example, can cost as much as $70,000 a year, while Indian generic versions cost about $2,500 a year.

The ruling comes at a challenging time for the pharmaceutical industry, which is increasingly looking to emerging markets to compensate for lackluster drug sales in the United States and Europe. At the same time, it is facing other challenges to its patent protections in countries like Argentina, the Philippines, Thailand and Brazil.

“I think other countries will now be looking at India and saying, ‘Well, hold on a minute — India stuck to its guns,’ ” said Tahir Amin, a director of the Initiative for Medicines, Access and Knowledge, a group based in New York that works on patent cases to foster access to drugs.

………

In Monday’s decision, India’s Supreme Court ruled that the patent that Novartis sought for Gleevec did not represent a true invention. The ruling is something of an anomaly. Passed under international pressure, India’s 2005 patent law for the first time allowed for patents on medicines, but only for drugs discovered after 1995. In 1993, Novartis patented a version of Gleevec that it later abandoned in development, but the Indian judges ruled that the early and later versions were not different enough for the later one to merit a separate patent.

Leena Menghaney, a patient advocate at Doctors Without Borders, said that the ruling was a reprieve from more expensive medicines, but only for a while.

“The great thing about this ruling is that we don’t have to worry about the drugs we’re currently using,” Ms. Menghaney said. “But the million-dollar question is what is going to happen for new drugs that have not yet come out.”

Others decried the ruling, saying it was further evidence that India does not respect the intellectual property rights of pharmaceutical companies. Last year, India granted what is known as a compulsory license to a generic drug manufacturer to begin making copies of Bayer’s cancer drug Nexavar, and revoked Pfizer’s patent for another cancer drug, Sutent. Both companies have appealed the decisions.

First, evergreening does not serve to create new products, it encourages minor, non-functional, changes to existing products to maintain a monopoly.

Second, compulsory licensing is specifically allowed for under all major international IP and trade regimes.

Unfortunately, when you look at intellectual protections (IP) as property it means that the holder of that monopoly has a God given right to extract unreasonable rents forever.

There is no place where our patent system is more broken than in the evergreening of pharmceuticals, and that is saying a lot.

It’s April First

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So I guess that I should make a joke.

I considered announcing that, because of gay marriage, my wife and I were getting divorced, but it seemed sort of cliched.

Then I considered reporting a prank in Pisa, Italy, where some mischievous supporters of Beppe Grillo’s party used large Mylar mirrors to create the illusion that the Leaning Tower vertical, thereby setting a prank withing a prank, but I’ve decided that one day, I will go to Italy, and actually do this.

So, no jokes, just news ……… At least as I can best determine.

The difference between reality and The Onion is sometimes quite subtle.

Expect a Major Fruit and Nut Shortage

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Because we are killing the bees necessary for these crops in unprecedented numbers:

A mysterious malady that has been killing honeybees en masse for several years appears to have expanded drastically in the last year, commercial beekeepers say, wiping out 40 percent or even 50 percent of the hives needed to pollinate many of the nation’s fruits and vegetables.

A conclusive explanation so far has escaped scientists studying the ailment, colony collapse disorder, since it first surfaced around 2005. But beekeepers and some researchers say there is growing evidence that a powerful new class of pesticides known as neonicotinoids, incorporated into the plants themselves, could be an important factor.

The pesticide industry disputes that. But its representatives also say they are open to further studies to clarify what, if anything, is happening.

“They looked so healthy last spring,” said Bill Dahle, 50, who owns Big Sky Honey in Fairview, Mont. “We were so proud of them. Then, about the first of September, they started to fall on their face, to die like crazy. We’ve been doing this 30 years, and we’ve never experienced this kind of loss before.”

In a show of concern, the Environmental Protection Agency recently sent its acting assistant administrator for chemical safety and two top chemical experts here, to the San Joaquin Valley of California, for discussions.

In the valley, where 1.6 million hives of bees just finished pollinating an endless expanse of almond groves, commercial beekeepers who only recently were losing a third of their bees to the disorder say the past year has brought far greater losses.

They talked to a bee keeper who was planning to take 13,000 hives to California for the almond season, but only had 3000 because of hive losses.

The long-persistence neonicotinoids are being fingered as the likely cause, but given the mode of both the EPA and the Department of agriculture will demand definitive proof of harm, rather than requiring proof of safety, particularly when big Ag, like the seed suppliers who have taken to using said pesticides to pre-treat the seeds (Monsanto and their ilk), we are in for a bumpy ride.

Horny Man Says That He Won’t Cum In Your Mouth

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My bad, it’s actually a German banker saying that Euro Zone deposits are safe:

German Finance Minister Wolfgang Schaeuble has said savings accounts in the euro zone are safe, adding that Cyprus is a “special case” and not a template for future rescues.

 In an interview with Bild newspaper published on Saturday, Schaeuble distanced himself from comments on Monday by Eurogroup chairman Jeroen Dijsselbloem, who said the rescue programme agreed for Cyprus – the first to impose a levy on bank deposits – would serve as a model for future crises.

 “Cyprus is and will remain a special one-off case,” Schaeuble said.

 “The savings accounts in Europe are safe.”

If you believe a German Finance minister right now, I have a bridge in Brooklyn that I want to sell you.

Just a “special case.”  Yeah…Sure.

I Want to be an Icelander

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Because they indict their banksters:

Public frustration has been mounting over the lack of high-profile criminal prosecutions in the wake of the financial crisis here in the U.S. But the same cannot be said abroad.

Several news outlets reported that Iceland’s special prosecutor, hired in 2009 to investigate suspicious activities at several major banks, indicted fifteen bankers — including two chief executives — earlier this month over illegal activity tied to the meltdown of the country’s banking system in the fall of 2008. The bankers are accused of stock-price manipulation and securities fraud.

“These are quite big cases by any measurement, they’re my biggest cases so far,” Olafur Thor Hauksson, the prosecutor, told the Wall Street Journal last Friday, adding that the charged could face up to six years in prison if convicted.

Some blogs reacted to the news with the observation that Iceland’s actions are in contrast to the lack of prosecutions in the U.S.

Gee, you think it’s a contrast?

Our it is a mark of our corruption that not one of the big banksters has even been seriously investigated for crimes.

Henry Ford Knew This 99 Years Ago

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When he doubled the pay of his workers to reduce turnover and increase productivity.

It turns out that Wal-Mart has not realized how this works, and as a result, it is losing customers who are facing empty shelves:

Margaret Hancock has long considered the local Wal-Mart Stores Inc. superstore her one- stop shopping destination. No longer.

 During recent visits, the retired accountant from Newark, Delaware, says she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics.

 The cosmetics section “looked like someone raided it,” said Hancock, 63.

 Wal-Mart’s loss was a gain for Kohl’s Corp., Safeway Inc., Target Corp., and Walgreen Co. — the chains Hancock hit for the items she couldn’t find at Wal-Mart.

 “If it’s not on the shelf, I can’t buy it,” she said. “You hate to see a company self-destruct, but there are other places to go.”

 It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers. In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart stores, a 13 percent increase, according to filings and the company’s website. In the same period, its total U.S. workforce, which includes Sam’s Club employees, dropped by about 20,000, or 1.4 percent. Wal-Mart employs about 1.4 million U.S. workers.

 Disorganized Stores

 A thinly spread workforce has other consequences: Longer check-out lines, less help with electronics and jewelry and more disorganized stores, according to Hancock, other shoppers and store workers. Last month, Wal-Mart placed last among department and discount stores in the American Customer Satisfaction Index, the sixth year in a row the company had either tied or taken the last spot. The dwindling level of customer service comes as Wal- Mart has touted its in-store experience to lure shoppers and counter rival Amazon.com Inc.

Yes, they want to tout their in-store experience.

As a part of that experience, they want their customers to deliver their packages for them for free:

Wal-Mart Stores Inc is considering a radical plan to have store customers deliver packages to online buyers, a new twist on speedier delivery services that the company hopes will enable it to better compete with Amazon.com Inc.

Tapping customers to deliver goods would put the world’s largest retailer squarely in middle of a new phenomenon sometimes known as “crowd-sourcing,” or the “sharing economy.”

A plethora of start-ups now help people make money by renting out a spare room, a car, or even a cocktail dress, and Wal-Mart would in effect be inviting people to rent out space in their vehicle and their willingness to deliver packages to others.

Such an effort would, however, face numerous legal, regulatory and privacy obstacles, and Wal-Mart executives said it was at an early planning stage.

Wal-Mart is making a big push to ship online orders directly from stores, hoping to cut transportation costs and gain an edge over Amazon and other online retailers, which have no physical store locations. Wal-Mart does this at 25 stores currently, but plans to double that to 50 this year and could expand the program to hundreds of stores in the future.

Wal-Mart currently uses carriers like FedEx Corp for delivery from stores – or, in the case of a same-day delivery service called Walmart To Go that is being tested in five metro areas, its own delivery trucks.

“I see a path to where this is crowd-sourced,” Joel Anderson, chief executive of Walmart.com in the United States, said in a recent interview with Reuters.

This is brilliant.

Let’s see, we have:

  • Honest, I left the big screen TV at their front door?
  • When I was driving to deliver the box, I was rear-ended, and now I have whiplash.
  • The package was fine when it left the store, the damage isn’t our problem.

And that is what I came up in about 3 minutes.

Why is this group of fools the largest corporation in the world?

Pass the Popcorn

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The high powered DC law firm Williams & Connolly has sued the OCC to get information about how they selected consulting firms to review the foreclosure settlement. Considering the half-assed job done by the consultants, and the indications that there were ties between the banks and the consultancies, this should get interesting”

A top Washington law firm is suing regulators to hand over information about how it selected consulting firms to participate in a multibillion-dollar review of banks’ past foreclosures.

The reviews, mandated by regulators in 2011 after widespread foreclosure shortcuts came to light, proved slow and expensive, and earlier this year 13 banks agreed to pay $9.3 billion to end them and compensate foreclosed borrowers.

But in a lawsuit in federal court in Washington, D.C., the law firm Williams & Connolly revisited the original reviews.

It is seeking documents explaining how the Office of the Comptroller of the Currency defined “independent” in its requirements for mortgage servicers to hire “independent consultants” to conduct the reviews.

The law firm declined to identify the client on behalf of which it filed the complaint.

It is possible that a consulting firm that lost out on the review contracts is behind the suit.

An OCC spokesman declined comment.

………

In the new lawsuit, Williams & Connolly said it had sought through a Freedom of Information Act request to the OCC any documents or records about the independence requirements for the consultants, and any documents about OCC standards for independence within the context of the foreclosure reviews.

The OCC initially denied the law firm’s request, then provided limited information on a redacted basis, the law firm said. The firm said in its filing that it went to court to obtain all of the information.

David Aufhauser, the Williams & Connolly lawyer who filed the action, and who is a former general counsel of the Treasury Department and of investment bank UBS, declined to comment on the case.

At least one of the consultancy firms was suspended, and if you follow Naked Capitalism you can get a full picture.

While one can generally be certain that any deal for the banks will be a corrupt bailout, when the Office of the Comptroller of the Currency is involved, you can be sure that it’s well over the line of what normal people will call corrupt self dealing.

I am looking forward to hearing more about this.

Another Triumph of Defense Procurement

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The Litoral Combat Ship may lack sufficient firepower to do its job:

The U.S. Navy’s troubled Littoral Combat Ship, a vessel intended to be small and speedy for use in shallow waters close to shore, lacks the firepower it needs, a top U.S. navy commander said in a classified memo.

Vice Admiral Tom Copeman, the commander of naval surface forces, called on the Navy to consider a ship with more offensive capability after the first 24 vessels are built, according to a Navy official who asked not to be identified discussing the confidential document.

………

Producing a ship that can accommodate larger guns or Harpoon anti-ship missiles “would be a major redesign,” Polmar said in an interview. “It will be real work to put major weapons on the ship.”

Replacing the 57mm popgun with something larger might not even possible for the Independence class trimaran, because of the extremely narrow forward central hull.

The ship is a failure.

The modular nature of the ship does not work, because you have to return the ship to a US base, or you need to fly a  team out to a foreign port in order to swap out the modules, and the modular nature of the ship results in a hull that is much larger for a set of capabilities.

The savings in crewing has proved to be illusory, the current crew levels result in an overworked and ineffective crew, so they are adding berths.

The primary offensive system, the NLOS-LS, was canceled, and replaced with a system which has about 80% less range and a smaller warhead.

And that’s ignoring the (probably fixable) facts that there are issues with hull cracks, corrosion, and leaking.

It’s dead, Jim.

The entire concept was flawed.

Another Study Proves that Jenny McCarthy is a Dangerous Loon

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We have another study showing that there is no connection between vaccines and autism:

There is no link between receiving a number of vaccines early in life and autism, researchers said on Friday.

In a study slated to appear in The Journal of Pediatrics, researchers said there is no association between receiving “too many vaccines too soon” and autism, despite some fears among parents around the number of vaccines given both on a single day and over the first 2 years of life.

As many as one in 50 U.S. school-age children have been diagnosed with autism, up 72 percent since 2007.

………

Researchers from the Centers for Disease Control and Prevention and Abt Associates analyzed data from children with and without autism spectrum disorder (ASD), according to a statement from the journal.

Researchers examined each child’s cumulative exposure to antigens, the substances in vaccines that cause the body’s immune system to produce antibodies to fight disease, and the maximum number of antigens each child received in a single day of vaccination, the journal’s statement said.

The antigen totals were the same for children with and without ASD, researchers found.

Not surprising.

In the normal course of growing up, a child is exposed to hundreds, possibly thousands, of new antigens a day, the idea that adding a dozen or so to that would be received through a series of vaccinations would “cause” autism is ludicrous.

Of course, the antediluvian thinking of the anti-vax crowd has real consequences: we have seen increases in outbreaks of previously nearly vanished childhood diseases resulting from a loss of herd immunity.

It Works, and It Saves the Taxpayer Money, So Let’s Make it Illegal

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I am referring to the state-owned bank of North Dakota, which will be made illegal by the Trans-Pacific Partnership (TPP):

Clearly, from Wall Street’s perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street’s stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent the U.S. financial services industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The biggest banks also want the treaty to eliminate “non-tariff” barriers including regulations that create “unfair” competition with state-owned financial enterprises.

 Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because “foreign bankers could claim the BND stops them from lending to commercial banks throughout the state,” according to an analysis by Sam Knight in Truthout. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.

The nickel tour on BND is that it is a state-owned wholesale bank (it only makes loans to other banks), and the state keeps its money in an account there.

It generates significant savings, and significant savings for the taxpayer, and its senior executives are paid less than the President of the United States.  (The most highly paid executive is paid about ½ that of POTUS.)

Also, the bank provides a financing alternative to bond sales managed by Wall Street firms.

Considering the Obama administrations neoliberal philosophies, along with its predilections toward direct and indirect government subsidies for the TBTF banks, I’m inclined to believe it.  Particularly since that is what the Obama Administration’s point person is explicitly saying the trade agreement:

Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) – the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn’t fare as well). It has also brought a small fortune to the state’s treasury – $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model – state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. [Chief TPP Negotiator for the Office of the US Trade Representative Barbara] Weisel said that State Owned Enterprises (SOE) are routinely “competing directly with private enterprises, and often in a way that is considered unfair.”

 “Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing,” Weisel said. “Those are things that wouldn’t be provided to private companies – preferential provision of goods and services provided by a government.”

 She said that “State Owned Enterprises – which in some cases can comprise a significant percentage of an economy – can be used to undermine what we’re otherwise trying to gain from this free trade agreement.”

What they are “trying to gain” with this agreement is to replace democracy with unregulated markets (aka looting).

Call your Congresscritter and tell him that you are absolutely opposed to the TPP.

You Phone Company is Refusing to Complete Rural Calls, and Deceiving Us About It

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Telcom law maven Harold Feld shows how FCC Loopholes resulting from VOIP exceptions are destroying one of the central requirements of voice calls:

Increasing numbers of rural communities are reporting problems with incoming phone calls. Outgoing calls work fine, but when someone tries to call one of these rural communities from an urban area, the connection doesn’t go through.

Though the phone never rings in the rural community, the urban caller might hear a “false ringback” in his earpiece, inserted so he will think there’s simply no answer and won’t complain about the lack of service.

This “rural call completion” problem, which also includes connections with very bad sound quality, is getting scrutiny from the Federal Communications Commission.
The problem “causes rural businesses to lose customers, cuts families off from their relatives in rural areas, and creates potential for dangerous delays in public safety communications in rural areas,” according to the FCC.

………

In the last several years, businesses called “least cost routing” companies have sprung up. These companies promise phone networks to find the least expensive way to route their phone calls. The phone companies themselves don’t know how the least cost routing companies are routing the phone calls. They just trust them to do it.

Since completing calls to rural areas is expensive, least cost routers generally try to find long, complicated routes that will minimize the termination fees and other charges by making the call look like it comes from someplace with lower fees. This introduces something called “latency.” The lengthy routes mess up the IP-based phone call, causing long breaks in the signal that the traditional phone network (operated by a rural phone company) interprets as dead air or a disconnect.

………

The FCC refuses to classify IP-based services as “telephone” services (although it has the authority to do so). As a result, it can only regulate IP-providers indirectly with something called “ancillary authority.” Whether “ancillary authority” allows the FCC to regulate IP-based providers, such as least cost routers, remains to be seen.

The problem here is one of philosophy: the Washington consensus that deregulation always leads to innovation is a dangerous delusion.

We need only to compare the performance of our lightly regulated telcos to those of more highly regulated places like, Japan, France, or Korea, to see that consumers pay more, and get less, both in terms of performance and reliability.

Deregulation makes it easier to collect monopoly rents, and it is easier, and more lucrative to seek those rents than it is to succeed for innovation or evolutionary product improvement.

Every one gets screwed but the incumbent phone and cable companies, and it strangles real innovation.

Yes

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Did Steve Cohen Buy Off the U.S. Government?

Seriously. If the SEC is settling for a payment of $616 million dollars, with no admission of wrongdoing, when the case against for insider trading is very strong, and it is a a f%$#ing slam dunk on Sarbanes-Oxley violation.

He got to walk because he’s rich and powerful:

Most scandals involving the cozy relationship between Wall Street and its regulators play out behind closed doors. Others happen in plain view, and this is one of the latter. In a Manhattan courtroom Thursday, a federal judge held a hearing on whether to approve a legal settlement in which Steven A. Cohen, one of the richest and most publicity-shy men in the country, appears to be buying off the U.S. government, which for years has been investigating wrongdoing in and around his hedge fund, SAC Capital Advisers.

 Unless the judge, Victor Marrero, rejects the settlement between the Securities and Exchange Commission and SAC, which was announced a couple of weeks ago, Cohen will be free to go about his business, which has long been clouded by suspicions of insider trading, once he writes a check of six hundred and sixteen million dollars to the Securities and Exchange Commission. There will be no further sanctions and no admission of wrongdoing. And in fact, Cohen already appears to be celebrating. ………

 To his credit, Judge Marrero has, at least for now, refused to go along with this travesty. Reserving judgement on the case, he asked why the settlement didn’t include an admission of wrongdoing on the part of SAC and Cohen. “There is something counterintuitive and incongruous about settling for six hundred million dollars if it truly did nothing wrong,” the judge said. ………

 ………

 Exactly how Cohen pulled off this feat is something of a mystery. The details of the dealings between his lawyers and the government haven’t been revealed, and most likely won’t be. What we do know is this: until the settlement with the S.E.C. was announced, things were looking increasingly grim for Cohen and his firm, which is based in Greenwich, Connecticut.

 During the past several years, investigators from the S.E.C. and the U.S. Attorney’s office in Manhattan have been carrying on a wide-ranging investigation of SAC, which manages about fifteen billion dollars in assets. As a result of this probe, no fewer than nine current or former employees of SAC have been tied to insider dealing while working at the firm, and four of them have pleaded guilty. The investigation started out with lowly former employees. Over time, though, it moved closer and closer to Cohen, the firm’s founder, until, finally, it enveloped him.

 Last November, Preet Bharara, the U.S. Attorney for the Southern District of New York, held a press conference to announce the indictment of Matthew Martoma, a former SAC trader, for what Bharara said was “the most lucrative insider-trading scheme ever charged.” According to the complaint, the 2008 trades at the center of the case involved Cohen directly. After receiving at tip-off from an inside informant about a drug trial that had turned out badly, Martoma spoke for twenty minutes with Cohen—identified as “Portfolio Manager A”—and then started unloading shares that SAC owned in the two drug companies involved, Elan and Wyeth, the complaint said. Once the results of the drug trial became public, the stock prices of the drug companies fell sharply. The government said that Martoma’s trades netted SAC as much as two hundred and seventy-six million dollars.

 ………

It’s a farce, and it’s not getting any funnier. The SAC settlement marks the first time, to my knowledge, that the S.E.C. has accorded such deference to a hedge fund, and it also raises the question of whether the Justice Department is now ducking bringing criminal charges against Cohen himself. Some folks who know how the system works from the inside think that that’s what it looks like. “I read the Martoma complaint,” Bradley Simon, a prominent white-collar criminal defense attorney and former federal prosecutor, told me. “It seems like there’s evidence there for them to charge Cohen, but they don’t want to do it.

………

A second possibility is that, despite the Martoma complaint, there simply isn’t sufficient evidence to convict Cohen, and the prosecutors have reluctantly accepted this fact. Insider-trading cases are tricky. We don’t know what Cohen said to Martoma during their conversation, or whether Martoma would be willing to testify against him. In the insider-trading cases of Raj Rajaratnam, who ran the Galleon hedge fund, and Rajat Gupta, the former head of McKinsey, the government relied heavily on wiretap evidence. According to the Wall Street Journal, the government obtained a warrant to tap Cohen’s home phone in 2008, but it isn’t known what, if anything, these intercepts yielded.

(emphasis mine)

They have f%$#ing wiretaps, and they are doing nothing.

Even if they don’t they have a slam dunk on the insider training, they do have a prima facie case that he violated SarBox when he certified that his company had sufficient internal controls, which would get him banned from management of a publicly traded company for life.

This is bullsh%$, and I am pining for Mmme. la Guillotine.

A Solution to Our Energy Needs Forever

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Just attach generators to the Obama administration’s revolving door. Problem solved:

Coming off a grueling four-year stint at the Justice Department, Lanny A. Breuer is poised to make a soft landing in the private sector.

Covington & Burling, a prominent law firm, plans to announce on Thursday that Mr. Breuer will be its vice chairman. The firm created the role especially for Mr. Breuer, a Washington insider who most recently led the Justice Department’s investigation into the financial crisis.

For Mr. Breuer, who will now shift to defending large corporations, Covington is familiar turf. He previously spent nearly two decades there.

………

“We’re proud to welcome him home,” said Timothy C. Hester, Covington’s chairman.

FWIW, I think that “welcome” is spelled “Ka-Ching.”

He did his job, and now Mr. Breuer is going to be paid for, “not bringing cases against the banks and executives at the center of the crisis.”

Torture, and Get a Promotion

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This is what “Looking forward, not backward,” as Obama says, is such a bad idea.

It means that deeply evil people are given the more power over the rest of us:

Today’s Washington Post has a front-page article on the impending promotion of an official involved in running the Central Intelligence Agency’s (CIA) torture program to head the CIA clandestine service. According to WaPo, the officer

helped run the CIA’s detention and interrogation program after the Sept. 11, 2001, attacks and signed off on the 2005 decision to destroy videotapes of prisoners being subjected to treatment critics have called torture.

WaPo reports that newly-confirmed CIA director John Brennan (who was also involved in the CIA’s torture program and has since moved on to writing an assassination-without-due-process “playbook”) has tapped three former senior officials to oversee the appointment of the former chief of staff to brazen torture apologist Jose Rodriguez to head the CIA’s clandestine service. The group consists of John McLaughlin (CIA deputy director during the CIA’s torture heyday), Stephen Kappes (another rendition, torture, and interrogation (RDI) supervisor – read about his covering up a prisoner’s death here) and Mary Margaret Graham (whose problematic professional history you can read about in Steve Coll’s recent New Yorker piece on CIA whistleblower John Kiriakou). Does anyone not see the problem with RDI daddy Brennan assigning RDI supervisors to promote the RDI queenpin?

BTW, she is hip deep on the coverup of torture:

When the head of the Counterterrorism Center, Jose Rodriguez, was promoted to head of the clandestine service in 2004, he took the female officer along as his chief of staff. According to former officials, the two repeatedly sought permission to have the tapes destroyed but were denied.

In 2005, instructions to get rid of the recordings went out anyway. Former officials said the order carried just two names: Rodriguez and his chief of staff.

Not only should this woman not be promoted, this woman should never hold a security clearance ever again.