Daily Archive: 11/28/2011

Nov 28 2011

NY Judge Rejects SEC/Citibank Mortgage Fraud Fine

Bloomberg News is reporting that a NY Federal Judge has rejected the $285 million settlement that Citibank had negotiated with the SEC over $1 billion in mortgage securities fraud that would also have exonerated the bank of guilt. Citibank Citibank had led investors to believe that the mortgage investments were safer than they actually were, leading to a financial loss of around $700 million.

U.S. District Judge Jed Rakoff rejected the settlement in an opinion released today. The judge has criticized the agreement for permitting New York-based Citigroup to settle without admitting or denying liability in the matter. [..]

“In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth,” Rakoff wrote in the opinion.

Rakoff consolidated the case with another SEC suit involving former Citigroup employee Brian Stoker and scheduled the combined case for trial on July 16, 2012. The parties may try to reach a revised settlement, which must be approved by Rakoff to take effect.

From Think Progress:

The “judge wrote that there is an overriding public interest in knowing the truth about the financial markets. He set a July 16 trial date for the case.”

The SEC should have fined them twice the losses, not that it would have deterred Citibank from doing it again.  

Nov 28 2011

Punting the Pundits

“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”.

New York Times Editorial: The Price of Intolerance

It’s early yet for a full accounting of the economic damage Alabama has done to itself with its radical new immigration law.

Farmers can tally the cost of crops left to rot as workers flee. Governments can calculate the loss of revenues when taxpayers flee. It’s harder to measure the price of a ruined business reputation or the value of investments lost or productivity lost as Alabamians stand in line for hours to prove their citizenship in any transaction with the government. Or what the state will ultimately spend fighting off an onslaught of lawsuits, or training and deploying police officers in the widening immigrant dragnet, or paying the cost of diverting scarce resources away from fighting real crimes.

A growing number of Alabamians say the price will be too high, and there is compelling evidence that they are right. Alabama is already at the low end of states in employment and economic vitality. It has long struggled to lure good jobs and shed a history of racial intolerance.

E. J. Dionne, Jr.: Will Moderates Defeat Moderation?

The deficit that should most worry us is a deficit of reasonableness. The problems the United States confronts are large but not insoluble. Yet sensible solutions that are broadly popular can’t be enacted.

Why? Because an ideological bloc that sees every crisis as an opportunity to reduce the size of government holds enough power in Congress to stop us from doing what needs to be done.

Some of my middle-of-the-road columnist friends keep ascribing our difficulties to structural problems in our politics. A few call for a centrist third party. But the problem we face isn’t about structures or the party system. It’s about ideology-specifically a right-wing ideology that has temporarily taken over the Republican Party and needs to be defeated before we can have a reasonable debate between moderate conservatives and moderate progressives about our country’s future.

Leonard Pitts, Jr.: UC Davis Pepper-Spray Video Shows Importance of Civilian Oversight of Police

The video of the UC Davis police officer pepper-spraying Occupy Davis protesters not only shows a trampling of First Amendment rights

As we grapple with this vandalism of the First Amendment, we should ask ourselves this: What if there had been no cameras on hand? What if we had only the word of the protesters and their sympathizers that this happened versus the word of authority figures that it did not? Is it so hard to imagine the students’ claims being dismissed, the media attention being a fraction of what it is, the public’s outrage falling along predictable ideological lines and these cops getting a walk?

That’s worth keeping in mind as legislators and law officers around the country move to criminalize the act of videotaping police in the performance of their duties.

David Sirota: Cities, the new hydrofracking victims

Despite devastating health risks, both parties are pushing to allow more drilling near urban areas

On the relatively rare occasions that city folk and suburbanites previously had to think about oil and gas drilling, many probably conjured images of grasshopper-esque rigs dotting remote landscapes like Wyoming’s mountain range, Alaska’s tundra or Oklahoma’s wind-swept plains. Most probably didn’t equate drilling with the bright lights of their big city, but they should have because urban America is fast becoming ground zero for the same fights over energy that have long threatened the great wide open.

With our nation’s still unquenchable (and still highly subsidized) thirst for fossil fuels, the false comfort of NIMBY-ism and the fairy-tale notions of “safety in numbers” is quickly vanishing in our cities, as controversial oil and gas exploration projects creep into metropolitan areas. Incredibly, this geographic trend is accelerating just as new drilling techniques are evoking serious concerns about excessive air pollution and about adverse effects on limited water supplies – problems that have plagued rural energy-producing regions for decades, but are sure to be even worse as they hit densely populated areas.

Mark LeVine: Not exactly deja vu all over again

As protesters continue to occupy Tahrir square, and the military continues the crackdown with impunity, divisions erupt.

As Egypt prepares for elections, Tahrir Square is a similacrum of its old self.

The world’s largest experiment in the effects of long term exposure to toxic tear gas seems, for the moment, to be winding down, as Egyptians prepare to vote for the first post-Mubarak cabinet. The SCAF and its political allies and bedfellows clearly hope that, as the smoke clears, enough Egyptians outside of Tahrir and other centres of protest will ignore the often grotesque violence visited on pro-democracy protesters and vote in a government that will reinforce – or at least not challenge – the decades-old patrimonial system.

That is surely what is behind this cruel experiment, with the Brotherhood leadership deciding it’s better to be an observer rather than a test subject.

But in the square, the effects of constant tear gas exposure on test subjects can now be documented, and while it’s produced a lot of injuries, strange flus and sheer exhaustion, it has only hardened attitudes against the SCAF and increasingly towards any political group that is perceived as having sold out the protesters.

Eugene Robinson: Romney Still Waiting for GOP Love

Moderator Wolf Blitzer opened Tuesday’s Republican debate by introducing himself and adding, for some reason, “Yes, that’s my real name.” A few moments later, the party’s most plausible nominee for president said the following: “I’m Mitt Romney, and yes, Wolf, that’s also my first name.”

But it’s not. Mitt is the candidate’s middle name. His first name is Willard.

And people wonder why this guy has an authenticity problem?

The debate, held at Washington’s historic DAR Constitution Hall, was focused on foreign policy. The subject matter seemed to offer Newt Gingrich, a former speaker of the House, the opportunity to highlight his experience and perhaps begin consolidating his sudden front-runner status. But if he expected to dance rings around the others in the minefields of international politics, he was mistaken.

Michael Winship: DC as ATM: Newt, the Ultimate Beltway Swindler

You maybe should think twice when even Jack Abramoff thinks you’re beneath contempt. Not that Newt Gingrich cares.

Abramoff, America’s favorite convicted influence peddler, told NBC’s David Gregory that presidential candidate and former Speaker of the House Gingrich is one of those “people who came to Washington, who had public service, and they cash in on it. They use their public service and access to make money.”

Newt, he continued, is “engaged in the exact kind of corruption that America disdains. The very things that anger the Tea Party movement and the Occupy Wall Street movement and everybody who is not in a movement and watches Washington and says why are these guys getting all this money, why do they go become so rich, why do they have these advantages?”

Why indeed? Granted, Abramoff’s in the middle of his promotion tour of confession and attempted redemption, a pot obscenely eager to call his kettle and former mentor black — especially if it sells books. But Casino Jack does have a point.

Nov 28 2011

Surprise: The Banks, The Treasury Department And The Federal Reserve Lied

As if we didn’t know that they were all lying through their teeth on the extent of the bank bail out in late 2008, we’ve just never been sure of the price tag of all those lies. Now due to the dogged diligence of Bloomberg News, we have a better picture if what was handed out to the banks with no strings, $7.77 TRILLION. TARP, a mere $750 billion, was just 2% of that and who could forget the squawking from Congress that went on about that paltry sum.

Meantime the Federal Reserve has been fighting to keep the details of the largest bank bailout in US history buried from the public:

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. [..]

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

As expected, Obama’s Treasury Secretary, Timothy Geithner, one of the chief architects of this hand out, fought limiting the size of banks. David Dayen at FDL points this out from the article:

   On May 4, 2010, Geithner visited (former Sen. Ted) Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission.

   At the meeting with Kaufman, Geithner argued that the issue of limiting bank size (Kaufman and Brown were working on a simple bill to cap bank size) was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman.

Not only have the banks and the regulators lied, they continue to lie. From Yves Smith at naked capitalism:

I get really offended by the bogus accounting, such as the “banks paid back the TARP” or “the Fed lost no money on its lending facilities,” which this story annoyingly has to repeat out of adherence to journalistic convention. This is all three card Monte. So what if the banks paid back loans when the central bank has goosed asset prices vis super low interest rates? That’s a massive tax on savers. And we have the hidden subsidy of underpriced bank rescue insurance. Ed Kane estimates that’s worth $300 billion a year for US banks; Andrew Haldane of the Bank of England has pencilled the annual cost as exceeding the market cap of big banks (and that was in 2010, when their stock prices were higher than now).

The Fed is most assuredly going to have losses. It hoovered up a ton of Treasuries and MBS to shore up asset prices at time when interest rates were already low. The central bank intends to sell them when interest rates rise, to soak up liquidity. Buying when interest rates are low and selling when rates are high guarantees losses. As an old Wall Street saying goes, it’s easy to manipulate markets, but hard to make money from it.

This would not have happened if Glass-Steagall had still been in place. If these details had been known, they would have gone a long way into reinstitution of that law which, for most of the last century, separated customer deposits from the riskier practices of investment banking.

It is long past time that both Ben Bernanke and Timothy Geithner resign. If they don’t do so voluntarily, President Obama should demand they do. I won’t hold my breath.

BTW, so far this morning, not a peep from the traditional MSM about this revelation.

Nov 28 2011

Viral Bank Fraud

$7.7 Trillion in unsecured loans to the Too Big To Fail Accounting Fraud Banks on which they generated $13 Billion profit from the float between their .01% (free) interest borrowing costs and the usurious amounts they charged their customers.

Which they promptly paid out in bonuses and dividends and didn’t use to deleverage the toxic waste they are still carrying on their books as assets at full fictional value instead of marking to market at the 50% discount it deserves.

Umm, this is not news.  It’s been blog reported for months now but perhaps this piece from Bloomberg with it’s fancy interactive graph will finally get it the attention it deserves.  I’ll note their headline is designed to minimize the amounts involved and point out the total-

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

Some reports from around the web-

Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported.

“Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?”

In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.

Nov 28 2011

On This Day In History November 28

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.

November 28 is the 332nd day of the year (333rd in leap years) in the Gregorian calendar. There are 33 days remaining until the end of the year.

On this day in 1970, George Harrison’s “My Sweet Lord” is released.

Nov 28 2011

Air Force Academy Opens Space For Pagans

Color me shocked. After the sexual harassment allegations and aggressive proselytizing toward non-Christians, the US Air Force Academy has decided that part of its duty in educating future officers is the teach them to defend the Constitution and that includes the First Amendment clause guaranteeing freedom of religion.

Air Force Academy adapts to pagans, druids, witches and Wiccans

Cadets gather for the dedication ceremony of the Air Force Academy’s Cadet Chapel Falcon Circle worship center this spring. The center serves cadets whose religions fall under the broad category of “Earth-based.” (Jerilee Bennett / The Gazette / May 3, 2011)

Officials say an $80,000 Stonehenge-like worship center underscores a commitment to embrace all religions.

Reporting from Colorado Springs, Colo.-

In the still of a cold November evening, a small gathering of pagans, led by two witches, begins preparations for the coming winter solstice. But these are not just any pagans, and this is not just any setting. They are future officers of the United States Air Force practicing their faith in the basement of the Air Force Academy’s cadet chapel.

Their ranks are slim. According to the academy’s enrollment records, only three of 4,300 cadets identified themselves as pagans, followers of an ancient religion that generally does not worship a single god and considers all things in nature interconnected. [..]

Witches in the Air Force? Chaplain Maj. Darren Duncan, branch chief of cadet faith communities at the academy, sighs. A punch line waiting to happen, and he’s heard all the broom jokes. [..]

“We’re here to accommodate all religions, period,” Duncan says. The building of the Cadet Chapel Falcon Circle on the hilltop, he says, is no different from the past conversion of chapel rooms into worship spaces that serve this year’s 11 Muslim, 16 Buddhist and 10 Hindu cadets. There are also 43 self-identified atheist cadets whose beliefs, or lack of them, Duncan says are also to be respected.

“It is very nice to have our own space,” says Cadet 1st Class Nicole Johnson, a 21-year-old senior from Florida who became a pagan after entering the academy. [..]

In addition to providing worship space, new policy dictates that all cadets take courses in understanding the religions of those who may someday fall under their command. Recently he’s fielded calls from West Point and Annapolis about replicating the Air Force’s efforts. [..]

Back at the solstice preparations, with glue guns drawn and takeout pizza within easy reach, the pagan cadets decorated yule logs with bits of ribbon and glitter. Yule logs, whose ritual burning symbolizes faith in the reappearance of the sun, will be displayed alongside the Christmas trees and menorahs in next month’s crowded religious calendar at the academy.

And though Johnson acknowledges that her beliefs are often misunderstood, she says she has taken no serious grief from other cadets, save occasional questions about whether pagans dance naked (she doesn’t) or whether she can cast a spell on commanding officers (she wouldn’t even if she could).

Do as you will, but harm no one. Wiccan Rede

Nov 28 2011

AG Harris Still Standing Up For CA Homeowners

While Iowa Attorney General Tom Miller and his merry band of AG sell outs push for an agreement to settle the mortgage fraud, it looks like California Attorney General, Kamala Harris, is sticking to her plan to hold the worst of the abusers feet to the fire.

The Miller agreement, which is also being backed by US Attorney General Eric Holder, could result in an even smaller settlement than the $25 million and would still leave the banks open to legal claims in the states that do not sign on to the agreement. While California is the state with the largest number of foreclosures, not signing onto the agreement would mean that homeowners would have to wait longer for relief but, as AG Harris has stated, it “would allow too few California homeowners to stay in their homes…. After much consideration, I have concluded that this is not the deal California homeowners have been looking for.”

Ms. Harris has been under considerable pressure from the Obama administration, who has considered her a replacement for Eric Holder should Obama be reelected. However. many community organizations, unions and liberal groups have urged to her not to sign on to the Miller agreement unless there is a larger monetary settlement or, that failing, the states are allowed to prosecute the banks for crimes they may have committed. Neither of those two stipulations appears to have happened, nor are they likely.

Along with New York’s Eric Schneiderman, Delaware’s Beau Biden, Nevada’s Catherine Cortez Masto and a couple of other state attorney generals, Ms. Harris’s position is good policy for the state, as well as, good politics for her. She has stood by the people who put her in office, the people she will need to support her should she run for governor or the US Senate. We could use a few like her in that body.

Nov 28 2011

Pique the Geek 20111127: Chemical Bonds and Electronegativity

The way that atoms bond together to form molecules has been a question asked since scientists came to the consensus that atoms do indeed exist.  Work progressed rapidly after the turn of the 20th century from both theoretical and experimental breakthroughs.  To keep the discussion easy to visualize, we shall consider only diatomic molecules, but the concepts are good for any number of atoms.  One of the great advances was the development of the idea that chemical bonds can either be covalent, where each atom shares bonding electrons equally, or ionic, where one atom donates an electron to another atom entirely.

Actually, pure ionic bonds do not exist because all bonds have at least a little bit of covalent character.  Pure covalent bonds are common, common examples being the nitrogen and oxygen of the atmosphere.  There is a very cool way to predict where a particular bond falls in the covalent to ionic spectrum, and that is to use electronegativity values.