January 2011 archive

Wall Street Appears To Have Violated Federal Securities Law, Crisis Panel Finds

Shaihien Nasiripour, The Huffington Post

01/27/11 10:28 PM

Wall Street firms that sold mortgage-backed securities appear to have violated federal securities laws by misleading investors on the quality of the underlying mortgages, a bipartisan panel created by Congress to investigate the root causes of the financial crisis concluded.

…

In September, the crisis commission heard testimony from Keith Johnson, former president of Clayton Holdings, one of the nation’s biggest mortgage research companies. Johnson testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm on behalf of Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added.

Last April, the commission heard from Richard Bowen, a whistleblower and former chief underwriter for Citigroup’s consumer-lending unit. Bowen told the panel that in the middle of 2006, he discovered more than 60 percent of the mortgages the bank had purchased from other firms and then sold to investors were “defective,” meaning they did not satisfy the bank’s own lending criteria. On November 3, 2007, Bowen sent an e-mail to top Citi officials, including Robert Rubin, a former Treasury Secretary. Bowen’s warnings appear to have been ignored.

In Panel’s Report, Stern Warning on Repeating Financial Crisis

By SEWELL CHAN, The New York Times

Published: January 27, 2011

WASHINGTON – Behind closed doors, Ben S. Bernanke, the Federal Reserve chairman, called it “the worst financial crisis in global history, including the Great Depression.”

He said that 12 of the country’s 13 most important financial institutions, including Goldman Sachs, had been on the verge of collapse “within a week or two.” (The apparent exception: JPMorgan Chase.)

…

Enabling those developments, the panel found, were a bias toward deregulation by government officials, and mismanagement by financiers who failed to perceive the risks.

Goldman Sachs Got Billions From AIG For Its Own Account, Crisis Panel Finds

Shaihien Nasiripour, The Huffington Post

01/26/11 10:23 PM

Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the final report of an investigative panel appointed by Congress.

The fact that a significant slice of the proceeds secured by Goldman through the AIG bailout landed in its own account–as opposed to those of its clients or business partners– has not been previously disclosed. These details about the workings of the controversial AIG bailout, which eventually swelled to $182 billion, are among the more eye-catching revelations in the report to be released Thursday by the bipartisan Financial Crisis Inquiry Commission.

…

At a hearing on July 1, 2010–two weeks before Goldman sent the e-mail acknowledging how $2.9 billion in AIG funds wound up in its own account–the crisis panel questioned Goldman’s chief financial officer, David A. Viniar and managing director David Lehman. Both said they knew nothing about AIG funds landing in the bank’s private coffers, according to a transcript of the hearing.

The report concludes that Goldman collected the $2.9 billion as payment for so-called proprietary trades made for its own account–essentially successful bets on large pools of financial instruments.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

January 28 is the 28th day of the year in the Gregorian calendar. There are 337 days remaining until the end of the year (338 in leap years).

On this day in 1916, President Woodrow Wilson nominates Louis Brandeis to the Supreme Court. After a bitterly contested confirmation, Brandeis became the first Jewish judge on the Supreme Court.

A graduate of Harvard Law School, Brandeis quickly earned a reputation in Boston as the people’s attorney for taking on cases pro bono. Brandeis advocated progressive legal reform to combat the social and economic ills caused in America by industrialization. He met Woodrow Wilson, who was impressed by Brandeis’ efforts to hold business and political leaders accountable to the public, during Wilson’s 1912 campaign against Theodore Roosevelt. Brandeis’ early legal achievements included the establishment of savings-bank life insurance in Massachusetts and securing minimum wages for women workers. He also devised what became known as the Brandeis Brief, an appellate report that analyzed cases on economic and social evidence rather than relying solely on legal precedents.

Louis Dembitz Brandeis (November 13, 1856 – October 5, 1941) was an Associate Justice on the Supreme Court of the United States from 1916 to 1939. He was born in Louisville, Kentucky, to Jewish parents who had emigrated from Europe. He enrolled at Harvard Law School, graduating at the age of twenty with the highest grade average in the college’s history.

Brandeis settled in Boston where he became a recognized lawyer through his work on social causes that would benefit society. He helped develop the “right to privacy” concept by writing a Harvard Law Review article of that title, and was thereby credited by legal scholar Roscoe Pound as having accomplished “nothing less than adding a chapter to our law”. Years later, a book he published, entitled Other People’s Money, suggested ways of curbing the power of large banks and money trusts, which partly explains why he later fought against powerful corporations, monopolies, public corruption, and mass consumerism, all of which he felt were detrimental to American values and culture. He also became active in the Zionist movement, seeing it as a solution to the “Jewish problem” of antisemitism in Europe and Russia, while at the same time being a way to “revive the Jewish spirit.”

When his family’s finances became secure, he began devoting most of his time to public causes and was later dubbed the “People’s Lawyer.” He insisted on serving on cases without pay so that he would be free to address the wider issues involved. The Economist magazine calls him “A Robin Hood of the law.” Among his notable early cases were actions fighting railroad monopolies; defending workplace and labor laws; helping create the Federal Reserve System; and presenting ideas for the new Federal Trade Commission (FTC). He achieved recognition by submitting a case brief, later called the “Brandeis Brief,” which relied on expert testimony from people in other professions to support his case, thereby setting a new precedent in evidence presentation.

In 1916, President Woodrow Wilson nominated Brandeis to become a member of the U.S. Supreme Court. However, his nomination was bitterly contested, partly because, as Justice William O. Douglas wrote, “Brandeis was a militant crusader for social justice whoever his opponent might be. He was dangerous not only because of his brilliance, his arithmetic, his courage. He was dangerous because he was incorruptible. . . [and] the fears of the Establishment were greater because Brandeis was the first Jew to be named to the Court.” He was eventually confirmed by the Senate by a vote of 47 to 22 on June 1, 1916, and became one of the most famous and influential figures ever to serve on the high court. His opinions were, according to legal scholars, some of the “greatest defenses” of freedom of speech and the right to privacy ever written by a member of the high court.

Seizing a Moment, Al Jazeera Taps Arab Anger  

The protests rocking the Arab world this week have one thread uniting them: Al Jazeera, the Qatar-based satellite channel whose aggressive coverage has helped propel insurgent emotions from one capital to the next.

Al Jazeera has been widely hailed for helping enable the revolt in Tunisia with its galvanizing early reports, even as Western-aligned political factions in Lebanon and the West Bank attacked and burned the channel’s offices and vans this week, accusing it of incitement against them.

Live Blog Of Egyptian Protests Here  

Some premiers.  Meh.

I like to watch.

• ABC Family– Practical Magic
• AMC– Mrs. Doubtfire x 2
• Animal Planet– Planet Earth marathon
• Bravo– Real Housewives marathon (with premier)
• Disney– The Incredibles
• Discovery– Survival Mashup (premier)
• ESPN– College Hoopies, Michigan @ Michigan State, Winter X Games
• ESPN2– College Hoopies, Vanderbilt @ Mississippi State, UCLA @ Arizona
• Food– Ace of Cakes (premier)
• FX– Archer (premier)
• History– Conspiracy Theories! (premier)
• Lifetime– The Memory Keeper’s Daughter
• Sci Fi– Ghost Ship, Identity
• TBS– Rush Hour 3
• Turner Classic– Man in a Cocked Hat, Being There (Peter Sellers night)
• TNT– Heat @ Knicks, Celtics @ Blazers
• Travel– Man v. Food marathon (thank goodness)
• USA– Royal Pains, Fairly Legal (premiers)
• VH1– SNL marathon

When they tortured you. Did you talk?

Ah, oh, no… well, I don’t think they wanted me to talk really. I don’t think they wanted me to say anything. It was just their way of having a bit of fun.

Later-

• ESPN2– College Hoopies, St. Mary’s @ Gonzaga
• FX– Me, Myself & Irene
• Sci Fi– Toolbox Murders (not the good 1978 version)
• Turner Classic– Dr. Strangelove Or: How I Learned to Stop Worrying and Love the Bomb, Lolita (more Sellers)

Dave in repeats from 12/17.  Jon has T. Boone Pickens (ugh), Stephen Brian Greene.  Conan hosts Jane Lynch, Joe Buck, and Ghost of a Saber Tooth Tiger.

But this is absolute madness, Ambassador! Why should you *build* such a thing?

There were those of us who fought against it, but in the end we could not keep up with the expense involved in the arms race, the space race, and the peace race. At the same time our people grumbled for more nylons and washing machines. Our doomsday scheme cost us just a small fraction of what we had been spending on defense in a single year. The deciding factor was when we learned that your country was working along similar lines, and we were afraid of a doomsday gap.

This is preposterous. I’ve never approved of anything like that.

Our source was the New York Times.

Evening Edition is an Open Thread

Now with 61 Top Stories.

1 Uganda gay rights activist murdered

by Ben Simon, AFP

10 mins ago

In case you missed it because the American MSM mostly buried it, Tunisia had a revolution overthrowing it’s US backed dictator, Zine el-Abidine Ben Ali, who fled to Saudi Arabia with most of his family. The upheaval arouse from the streets out of the frustrations of a well educated public that is suffering with high unemployment and skyrocketing prices for basics. The streets protesters were joined by the police and the military. The “revolution” is spreading across Africa to Egypt with major protests in the streets condemning the rule of ailing President Hosni Mubarak and his hand pick successor, his businessman son. Inspired by the Tunisian revolution, Egypt poverty stricken youths have taken to the streets demanding the end of Mubarak’s 30 year rule.

For decades, Egypt’s authoritarian president, Hosni Mubarak, played a clever game with his political opponents.  

He tolerated a tiny and toothless opposition of liberal intellectuals whose vain electoral campaigns created the facade of a democratic process. And he demonized the outlawed Muslim Brotherhood as a group of violent extremists who posed a threat that he used to justify his police state.

But this enduring and, many here say, all too comfortable relationship was upended this week by the emergence of an unpredictable third force, the leaderless tens of thousands of young Egyptians who turned out to demand an end to Mr. Mubarak’s 30-year rule.

Now the older opponents are rushing to catch up.

“It was the young people who took the initiative and set the date and decided to go,” Mohamed ElBaradei, the former head of the International Atomic Energy Agency, said Wednesday with some surprise during a telephone interview from his office in Vienna, shortly before rushing home to Cairo to join the revolt.

ElBaradei, who has been targeted for assassination by Mubarak supporters, is returning to Egypt today. in his  statement issued prior to his departure, ElBaradei has some disparaging comments about Secretary Of State Hillary Clinton:

   When Egypt had parliamentary elections only two months ago, they were completely rigged. The party of President Hosni Mubarak left the opposition with only 3 percent of the seats. Imagine that. And the American government said that it was “dismayed.” Well, frankly, I was dismayed that all it could say is that it was dismayed. The word was hardly adequate to express the way the Egyptian people felt.

   Then, as protests built in the streets of Egypt following the overthrow of Tunisia’s dictator, I heard Secretary of State Hillary Clinton’s assessment that the government in Egypt is “stable” and “looking for ways to respond to the legitimate needs and interests of the Egyptian people”. I was flabbergasted-and I was puzzled. What did she mean by stable, and at what price? Is it the stability of 29 years of “emergency” laws, a president with imperial power for 30 years, a parliament that is almost a mockery, a judiciary that is not independent? Is that what you call stability? I am sure not. And I am positive that it is not the standard you apply to other countries. What we see in Egypt is pseudo-stability, because real stability only comes with a democratically elected government..

   If you would like to know why the United States does not have credibility in the Middle East, that is precisely the answer…

(emphasis mine)

Now, it has spread to one of the poorest Mideastern countries, Yemen, as their youth take to the streets to protest their government.

BEIRUT, Lebanon – Yemen, one of the Middle East’s most impoverished countries and a haven for Al Qaeda militants, became the latest Arab state to witness mass protests on Thursday, as thousands of Yemenis took to the streets in the capital and other regions to demand a change in government. . . . . .

The demonstrations on Thursday followed several days of smaller protests by students and opposition groups calling for the removal of President Ali Abdallah Saleh, a strongman who has ruled this fractured country for more than 30 years and is a key ally of the United States in the fight against the Yemeni branch of Al Qaeda. . . . . .

Yemen’s fragile stability has been of increasing concern to the United States. Secretary of State Hillary Rodham Clinton, in a visit to Sana earlier this month, urged Mr. Saleh to open a dialogue with the opposition, saying it would help to stabilize the country. His current term expires in two years, but proposed constitutional changes could allow him to hold onto power for longer.

How many despotic regimes will the US continue to bolster? For how long? US policy in the region has been on the wrong track for decades. Time to reassess is coming fast.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Robert Reich: The President Ignored the Elephant in the Room

The president’s new emphasis on the importance of investing in education, infrastructure, and basic research in order to build the nation’s long-term competitive capacities is appropriate. For the last three decades the federal government’s spending on these three essentials has declined as a percentage of its total spending, arguably threatening America’s technological and economic leadership.

But the president’s failure to address the decoupling of American corporate profits from American jobs, and explain specifically what he’ll do to get jobs back, not only risks making his grand plans for reviving the nation’s “competitiveness” seem somewhat beside the point but also cedes to Republicans the dominant narrative.

Robert Sheer: Hogwash, Mr. President

What is the state of the union? You certainly couldn’t tell from that platitudinous hogwash that the president dished out Tuesday evening. I had expected Barack Obama to be his eloquent self, appealing to our better nature, but instead he was mealy-mouthed in avoiding the tough choices that a leader should delineate in a time of trouble. He embraced clean air and a faster Internet while ignoring the depth of our economic pain and the Wall Street scoundrels who were responsible-understandably so, since they so prominently populate the highest reaches of his administration. He had the effrontery to condemn “a parade of lobbyists” for rigging government after he appointed the top Washington representative of JPMorgan Chase to be his new chief of staff.

The speech was a distraction from what seriously ails us: an unabated mortgage crisis, stubbornly high unemployment and a debt that spiraled out of control while the government wasted trillions making the bankers whole. Instead the president conveyed the insular optimism of his fat-cat associates: “We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.” How convenient to ignore the fact that this bubble of prosperity, which has failed the tens of millions losing their homes and jobs, was floated by enormous government indebtedness now forcing deep cuts in social services including state financial aid for those better-educated students the president claims to be so concerned about.

Laura Flanders: Protests in Cairo Forgotten by Obama

In the State of the Union speech, Barack Obama did get applause for saying that the United States stands with the people of Tunisia. Now, he didn’t mention the two decades of support the US had given the dictatorship.

The president did not have anything to say about Egypt-where thousands of people, inspired by Tunisia, were taking to the streets to protest their own repressive government-another one the United States has backed for years. Secretary of State Clinton’s official word is that the Egyptian government was “stable.” Aha. She said it’s “looking for ways to respond to the legitimate needs and interests” of its people. And she urged “restraint” as they suppressed protesters.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

January 27 is the 27th day of the year in the Gregorian calendar. There are 338 days remaining until the end of the year (339 in leap years)

On this day in 1888, the National Geographic Society is founded in Washington, D.C., for “the increase and diffusion of geographical knowledge.”

The 33 men who originally met and formed the National Geographic Society were a diverse group of geographers, explorers, teachers, lawyers, cartographers, military officers and financiers. All shared an interest in scientific and geographical knowledge, as well as an opinion that in a time of discovery, invention, change and mass communication, Americans were becoming more curious about the world around them. With this in mind, the men drafted a constitution and elected as the Society’s president a lawyer and philanthropist named Gardiner Greene Hubbard. Neither a scientist nor a geographer, Hubbard represented the Society’s desire to reach out to the layman.

History

The National Geographic Society began as a club for an elite group of academics and wealthy patrons interested in travel. On January 13, 1888, 33 explorers and scientists gathered at the Cosmos Club, a private club then located on Lafayette Square in Washington, D.C., to organize “a society for the increase and diffusion of geographical knowledge.” After preparing a constitution and a plan of organization, the National Geographic Society was incorporated two weeks later on January 27. Gardiner Greene Hubbard became its first president and his son-in-law, Alexander Graham Bell, eventually succeeded him in 1897 following his death. In 1899 Bell’s son-in-law Gilbert Hovey Grosvenor was named the first full-time editor of National Geographic Magazine and served the organization for fifty-five years (1954), and members of the Grosvenor family have played important roles in the organization since.

Bell and his son-in-law, Grosvenor, devised the successful marketing notion of Society membership and the first major use of photographs to tell stories in magazines. The current Chairman of the Board of Trustees of National Geographic is Gilbert Melville Grosvenor, who received the Presidential Medal of Freedom in 2005 for the Society’s leadership for Geography education. In 2004, the National Geographic Headquarters in Washington, D.C. was one of the first buildings to receive a “Green” certification from Global Green USA The National Geographic received the prestigious Prince of Asturias Award for Communications and Humanity in October 2006 in Oviedo, Spain.

They’re Number1 In Guns And The NRA Likes It That Way Number2? Yemen  

Amid gun lobby criticism, assault weapons reporting rule delayed



The White House, facing fierce criticism from the gun lobby, has delayed approval of a proposed rule that federal law enforcement officials say could help them stanch the flow of U.S. assault rifles and other high-powered weapons to Mexico’s drug cartels.

The proposed rule, announced by Alcohol, Tobacco and Firearms acting director Kenneth Melson on Dec. 20,  would require U.S. firearms dealers in four southwest border states to report multiple sales of long guns, such as semi-automatic assault rifles which are frequently purchased by so-called “straw buyers” for the cartels. Melson had said he expected the proposed “emergency rule” would receive approval in early January 2011.

Double barrel Nova (it means won’t go in Spanish).  Unmemorable “reality” TV.

Now, would you like to learn to shoot?

I can already.

Oh, I saw. Very American. Fire enough bullets and hope to hit the target.

• AMC– The Chronicles of Riddick, The League of Extraordinary Gentlemen
• Discovery– Howe & Howe (premier), Sons of Guns, Desert Car Kings (Series Premiers)
• ESPN– College Hoopies, Texas @ Oklahoma State; Hoopies, Spurs @ Jazz
• ESPN2– College Hoopies, North Carolina @ Miami, Australian Open
• Food– Throwdown, Restaurant: Impossible (premiers), Worst (last week’s)
• FX– The Incredible Hulk, Hancock (again and again)
• History– Aliens!
• Lifetime– Murder by Numbers
• Oxygen– Kiss the Girls x 2
• Sci Fi– Face Off (Series Premier)
• Turner Classic– Lucky Jordan, The Snows of Kilimanjaro
• TLC– Toddlers & Tiaras (premier)
• TNT– Bones marathon
• Travel– Man v. Food marathon (thank goodness), The Traveler’s Guide to Life (Series Premier and premier)
• TV Land- Hot in Cleveland, Retired at 35 x 3 (premiers and Instapeats)
• USA– NCIS marathon
• Vs.– Devils @ Red Wings

Later-

• Turner Classic– Phantom Lady, Love Me Tonight
• USA– Fairly Legal (Series Premier repeat)

Dave in repeats from 1/11.  Jon has Jonathan Alter (ugh), Stephen Michael Waldman.  Conan hosts Nick Thune, Jon Cryer, and Motorhead.

Zap2it TV Listings, Yahoo TV Listings