Monthly Archives: April 2010

I Thought We Were “Looking Forward”

30 Friday Apr 2010

Posted by in Justice Department, Obama, Politics, torture, war on terror

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Wait a minute. I sense some inconsistency here. What happened to “look forward, not back?”:

“The Obama administration is seeking to compel a writer to testify about his confidential sources for a 2006 book about the Central Intelligence Agency, a rare step that was authorized by Attorney General Eric H. Holder Jr.

The author, James Risen, who is a reporter for The New York Times, received a subpoena on Monday requiring him to provide documents and to testify May 4 before a grand jury in Alexandria, Va., about his sources for a chapter of his book, “State of War: The Secret History of the C.I.A. and the Bush Administration.” The chapter largely focuses on problems with a covert C.I.A. effort to disrupt alleged Iranian nuclear weapons research.”

John Cole at Balloon Juice makes the call:

“It’s just a damned shame Risen didn’t torture anyone. I’m serious- can’t Risen just claim he tortured someone to get the information, but destroyed the tapes? Then mumble something about a few bad apples.

Doesn’t that get you a pass under the current rules?”

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Deeper Into the Afghanistan Quagmire

30 Friday Apr 2010

Posted by in Afghanistan, Politics

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Afghanistan has been off the national radar screen lately, but the fighting there goes on, and we get deeper and deeper into the quagmire. In spite of our escalation the Taliban’s strength and popularity among the civilian population is increasing, not diminishing. And the end is still not in sight.

Deeper and deeper:

“The Pentagon is sending 800 more American soldiers to Afghanistan in the coming weeks to work as trainers for the Afghan security forces. The contingent is needed because other NATO countries still haven’t fulfilled their pledges to send their own troops to train the Afghan army and police.

A battalion of the 82nd Airborne Division will be heading to Afghanistan soon. The soldiers will work as trainers for at least several months. The unit is beyond the 30,000 additional troops that President Obama already approved for Afghanistan this year.”

That doesn’t include private contractors:

“The latest Department of Defense numbers show there are more civilian contractors on the ground in Afghanistan than there are soldiers. The Pentagon reported 107,292 U.S.-hired civilian workers in Afghanistan as of February.”

The insurgency is getting stronger:

“A Pentagon report presented a sobering new assessment Wednesday of the Taliban-led insurgency in Afghanistan, saying that its abilities are expanding and its operations are increasing in sophistication, despite recent major offensives by U.S. forces in the militants’ heartland.

The report, requested by Congress, portrays an insurgency with deep roots and broad reach, able to withstand repeated U.S. onslaughts and to reestablish its influence, while discrediting and undermining the country’s Western-backed government.

The report concludes that Afghan people support or are sympathetic to the insurgency in 92 of 121 districts identified by the U.S. military as key terrain for stabilizing the country.”

The end is not in sight:

“British and other foreign troops deployed in Afghanistan face a “very tough” time ahead and can expect to be engaged in a combat role for three or four more years, NATO ‘s most senior civilian official in the country said today…Thereafter, they could be expected to remain in Afghanistan, training and mentoring local forces, for a further 10 to 15 years.”

Eric Martin at Obsidian Wings sums up:

“The only question that remains is just how much money will we blow through..and just how much blood will we spill in our stubborn refusal to acknowledge that America, like all foreign powers, is ill-equipped to impose a system of government on a foreign population. At least not within any reasonable measure of the costs and benefits in the current context.

[…]

This is not going well. This will not end well.  Our moral compass is severely off-kilter. We are sustaining significant damage to our fiscal soundness, military preparedness and overall standing…in the pursuit of a fool’s gambit that has become so vague and so ethereal that few can even articulate a realistic objective anymore.”

Incompetence and Regulatory Capture at Washington Mutual

29 Thursday Apr 2010

Posted by in bailout, Congress, Financial Crisis, financial reform, Politics, too big to fail, Wall Street

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Any questions about why financial reform legislation must have strict provisions for enforcement not left up to the discretion of the so-called “regulators” should be cleared up by David Heath’s extensive piece at the Huffington Post about incompetence, corruption, and regulatory capture at Washington Mutual:

“A recent Senate inquiry offered a rare peek into the secret world of bank examiners. What it revealed was that regulators had stopped regulating.

In the case of Washington Mutual, regulators found all sorts of trouble, from lax lending standards to high delinquency rates on loans, and yet failed to prevent the biggest bank failure in history.

Starting in 2003, examiners for the Office of Thrift Supervision found 545 problems at the bank. But the agency left it up to WaMu to track its own compliance with examiners’ recommendations, and took no formal action against the bank until it was too late.

[…]

A central lesson from the failure of Washington Mutual was that a system set up to prevent what happened utterly failed. For all the talk of reform, Congress isn’t addressing the problem of regulators who fail to do their job.

Regulators routinely deferred to bankers and market forces and engaged in petty squabbles over who had authority over the bank. So the question now is: Can Congress fix ineffective regulators themselves?

[…]

OTS’s own fortunes were heavily tied to Washington Mutual’s. The bank paid fees that amounted to 15 percent of OTS’s budget – more than any other financial institution under its watch. So it was in the OTS’s interest to make sure WaMu survived as a thrift, a bank that specializes in home mortgages.”

Can Congress fix it? Yes they can. Will they? Ay, there’s the rub.

TARP Inspector General Could Have Geithner In His Sights

29 Thursday Apr 2010

Posted by in AIG, bailout, economy, Financial Crisis, Goldman Sachs, Politics, too big to fail, Wall Street

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Timmy might have bigger problems than his inability to use Turbo Tax. Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, is looking into filing charges in the New York Fed’s handling of the AIG–Goldman Sachs monkey business. From Bloomberg:

“The TARP watchdog has…criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc. was saved from insolvency in 2008, when Geithner was head of the Federal Reserve Bank of New York.

The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

In Senate Finance Committee testimony on April 20, Barofsky said SIGTARP would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group Inc. that is at the center of a U.S. Securities and Exchange Commission lawsuit filed against the investment bank on April 16. “

All I want for Christmas (or Memorial Day, or the 4th of July, or Labor Day, or…) is a REAL Treasury Secretary, not a Wall Street lackey who is susceptible to whiplash every time Jamie Dimon or Lloyd Blankfein make a sudden move. Barofsky, make my wish come true.

Houston, We Have Bi-Partisanship…

29 Thursday Apr 2010

Posted by in bailout, Congress, economy, financial reform, financial regulation, Politics, too big to fail, Wall Street

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…at least on the need to audit the Fed:

“As unusual a coalition as can be crafted in the Senate plans to fight for an amendment to the Wall Street reform bill that would open the Federal Reserve to a serious audit by the Government Accountability Office. Sponsored by Sen. Bernie Sanders (I-Vt.), the language is modeled after an amendment that passed the House, sponsored by Reps. Alan Grayson (D-Fla.) and Ron Paul (R-Texas).

Sanders is joined by four Republicans of varying politics: John McCain (Ariz.), Jim DeMint (S.C.), David Vitter (La.) and Sam Brownback (Kan.). If Democrats in the Senate back the measure, it would have at least 63 votes…The chairman of the Judiciary Committee, Sen. Pat Leahy (D-Vt.), is also a cosponsor, as is Sen. Russ Feingold (D-Wisc.).”

A letter by Sen. Sanders reads, in part:

“The American people have a right to know who received over $2 Trillion in financial assistance from the Federal Reserve.

Since the beginning of the financial crisis, the Federal Reserve has provided over $2 trillion in taxpayer-backed loans and other financial assistance to some of the largest financial institutions and corporations in the world. Unfortunately, the Fed is still refusing to tell the American people or the Congress who received most of this assistance, how much they received or what they are doing with this money. This money does not belong to the Federal Reserve, it belongs to the American people, and the American people have a right to know where their taxpayer dollars are going.

[…]

While the Senate financial reform bill attempts to address the lack of transparency at the Fed, as currently drafted, much of the information regarding the details of who received this financial assistance could be kept secret forever.

As long as the Federal Reserve is allowed to keep the information on their loans secret, we may never know the true financial condition of the banking system. The lack of transparency at the Fed could lead to an even bigger crisis in the future.

[…]

For nearly nine decades, the GAO has a proven track record of conducting objective, fact-based, nonpartisan, non-ideological, fair, and balanced audits. Through these audits, the GAO helped save the American taxpayers $50 billion last year alone by rooting out waste, fraud, and abuse in the federal government.

Let’s not equate independence with secrecy. We cannot let the Fed operate in secrecy any longer. There is simply too much money at stake.”

Hear, hear.

The Growing Financial Sector and the Shrinking Middle-Class

28 Wednesday Apr 2010

Posted by in economy, Politics, Wall Street

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Arianna Huffington wrote an article at Huffington Post yesterday about the loss of our manufacturing base, the coinciding shrinking of the middle-class, and how the financial sector has become an increasingly disproportionate part of our economy. In her words, “the share of our economy devoted to making things of value is shrinking, while the share devoted to valuing made up things (credit swap derivatives, anyone?) is expanding.”

A few points from the article to consider:

“Since the recession began in late 2007, we’ve lost 8.4 million jobs. Over 2 million of those were manufacturing jobs, the kind of jobs that have traditionally delivered American families into the middle class — and kept them there. We lost 1.2 million manufacturing jobs in 2009 alone.

…In 1950, manufacturing accounted for more than 30 percent of non-farm employment. As of last year, it’s down to 10 percent. Indeed, one-third of all our manufacturing jobs have disappeared since 2000.

…between 1973 and 1985, the financial industry’s share of domestic corporate profits topped out at 16 percent. In the 1990s it spanned between 21 percent and 30 percent. Just before the financial crisis hit, it stood at 41 percent.

…One out of every six blue-collar workers has lost his or her job in the latest recession — a number commensurate to what happened during the Great Depression.

…it’s not just manufacturing and lower skilled service jobs that are disappearing. According to the Hackett Group, companies with revenues of $5 billion and over are expected to take an estimated 350,000 jobs offshore in the next two years alone — nearly half in IT, and the rest in finance, procurement and human resources.

…Accenture now employs more people in India than in America. And IBM is headed in the same direction.

And the horizon looks even darker. A Harvard Business School study found that up to 42 percent of U.S. jobs — more than 50 million of them — are vulnerable to being sent offshore.”

The conclusion is this:

“It’s not too late to change course. The financialization of our economy didn’t just happen. Decisions were made that made it possible — and decisions can be unmade. But first we need to decide, as a country, what kind of economy we want to have: one that’s good for middle class families or one that’s built to enrich Wall Street.

It’s time to start separating the real economy from the casino economy.”

Bobbing and Weaving at the Senate Hearings

28 Wednesday Apr 2010

Posted by in economy, financial reform, financial regulation, Goldman Sachs, Politics, Wall Street

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Former Goldman Sachs executive Daniel Sparks put on a demonstration of bobbing, weaving, ducking, and dodging yesterday in response to Sen. Carl Levin’s questioning about Goldman’s “shitty deal” the likes of which I haven’t seen since Muhammad Ali was in his prime. Take a look:

Kudos to Sen. Levin, but it can’t stop with the theatrics of a televised hearing. Refer this to the DOJ and let the indictments begin. Those responsible must be held accountable.

Blankfein Supports Financial Reform?

28 Wednesday Apr 2010

Posted by in economy, financial reform, financial regulation, Goldman Sachs, lobbyists, Politics, special interests, Wall Street

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OK, now I’m suspicious. Goldman CEO Lloyd Blankfein says Wall Street will be the “biggest beneficiary” of financial reform:

“A financial regulatory reform bill has at least one supporter outside of Congressional Democrats, Lloyd Blankfein, the head of investment bank Goldman Sachs. “I’m generally supportive,” Blankfein told the Senate Permanent Subcommittee on Investigations. Wall Street will benefit from the bill because it will make the market safer, Blankfein said.

“The biggest beneficiary of reform is Wall Street itself,” he said.

I think one of the commenters at The Hill has the right analogy. “Oh please don’t throw me in the briar patch, said Br’er Rabbit.”

Or it could be that Blankfein and his fellow banksters are anticipating a favorable return on their investment:

“For the first time since 2004, the biggest Wall Street firms are now giving most of their campaign donations to Republicans.

A Wall Street Journal analysis of 12 large financial services companies, including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. shows that they have collectively made $1.4 million in political donations, with 52% going to Republicans so far this year.”

The Orifice of Omaha and His Errand Boy Benny

27 Tuesday Apr 2010

Posted by in Congress, economy, financial reform, financial regulation, Politics, special interests, Wall Street

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“Financial weapons of mass destruction” eh, Warren? What’s up with this ? (emphasis added) :

“The Senate Agriculture Committee inserted language into its derivatives bill last week [a provision pushed by Warren Buffett’s Berkshire Hathaway Inc] at the request of Sen. Ben Nelson (D., Neb.) that would have exempted any existing derivatives contracts from new collateral requirements—the money set aside to cover potential losses…a change one analyst predicted could force the Nebraska company to set aside up to $8 billion.

Berkshire has $63 billion in derivatives contracts, and Mr. Buffett has boasted he holds very little collateral against these products.”

Then after that was taken out of the legislation, lo and behold Buffett’s boy Benny:

“…did an abrupt about-face and became the only Democrat to help filibuster legislation to revamp Wall Street regulations…”He was on board until today and the only thing that changed was the removal of that provision,” said one Democratic aide, who definitively said Nelson changed his vote because the Buffett carveout was removed.”

Yes boys and girls and sports fans everywhere, the Orifice of Omaha is just another member of the oligarchy, gaming the system for his own personal gain. And Benny Nelson is nothing more than his errand boy.