New York State attorney General Eric Schneiderman and Steve Linick, the inspector general supervising Fannie and Freddie and the Federal Housing Finance Agency (FHFA) have joined forces giving the NY AG access to documents and depositions taken by the FHFA Office of Inspector General as part of its investigation into mortgage and securities fraud perpetrated against Fannie and Freddie. As Yves Smith at naked capitalism points out this is a “well deserved slap in the case to the Department of Justice”:

I’m not certain of the precise scope of powers of the FHFA inspector general. But typically, federal inspector generals have limited scope of action. They can only subpoena documents and cannot subpoena witnesses. And, of course, they are not prosecutors and cannot launch cases. The theory of IGs is that if they uncover something unsavory, they’ll hand it off to the Department of Justice. But as a former IG has pointed out, the DoJ does not take case leads from the IGs unless they are fully fleshed out, and that is well nigh impossible to do in the absence of speaking to witnesses.

The Department of Justice has AWOL on the mortgage and banking beat, no doubt to avoid ruffling powerful possible Obama donors. Inspectors general are in theory independent, and on top of that, the FHFA is an independent agency and is not running the Administration playbook (I’ve been told by people involved in bank regulation that Geithner has tried pressuring FHFA acting chief DeMarco to no avail).

So what does the FHFA inspector general do, certain that Eric Holder will ignore any misdeeds he finds? Turn to another prosecutor who can bring cases that can bring cases that are national in scope.

According to Shahien Nasiripour writing for the Financial Times this alliance could “make it easier for authorities to bring fraud charges against Wall Street companies”.:

Investigators will be able to share documents and findings, and pool resources, according to people familiar with the co-operation agreement. It was signed in recent weeks by Eric Schneiderman, New York attorney-general, and Steve Linick, the inspector general supervising Fannie and Freddie as well as the Federal Housing Finance Agency , the regulator responsible for the two taxpayer-owned home loan financiers.

The collaboration escalates Mr Schneiderman’s probe of about a dozen banks and mortgage insurers as part of a broad investigation into whether banks properly bundled hundreds of billions of dollars worth of home loans into now-soured securities sold to investors.

The New York attorney-general is armed with the state’s Martin Act, considered one of the most powerful prosecutorial tools in the country. The law allows Mr Schneiderman to investigate anyone doing business in New York and to bring cases without having to show that the accused intended to commit fraud. State prosecutors need only prove that a fraud was committed, which state courts have defined as “all deceitful practices contrary to the plain rules of common honesty”.

The law allows Mr Schneiderman to pursue civil and criminal probes, and to seek felony criminal convictions. The Martin Act confers broader powers than federal securities laws used by agencies like the US Securities and Exchange Commission, which must show intent when bringing fraud cases. Previous New York prosecutors such as Eliot Spitzer have wielded the law to extract billions of dollars from Wall Street firms for alleged wrongdoing.

In conjunction with with lawsuits from Delaware’s Beau Biden, Massachusetts’ Martha Coakley and Nevada’s Catherine Cortez Masto, this is really great news. As David Dayen at FDL says “this is an end run around the justice department”:

Recall that Linick has recently come out with some explosive reports, including a report that the GSEs know about foreclosure fraud back in 2003. So that’s a wealth of knowledge from which to draw, and the IG can compel some more of it, though as said above they are somewhat limited. If Schneiderman sought these documents and depositions by himself, federal regulators could have overruled him. Now he can just use Linick as a conduit.

The FHFA, over which Linick monitors, sued 17 banks for securities fraud earlier this year. So you’re almost seeing a consolidation of lawsuits and actions between Schneiderman and a rogue independent housing agency. It’s really nice to see.

Another step in getting justice for homeowners.

Who knew? Presidential candidate for the GOP nomination, Newt Gingrich is like the family’s crazy uncle that gets let out for family gatherings and then gets sent back to is room. His recent emergence as the “favorite” for the nomination has met with some harsh criticism and not just from the left. Many of the right wing punditry are not happy with Newt Gingrich’s surge in the polls for the nomination. During Newt’s interview on Face The Nation with Bob Schieffer, he said he would have “activist judges” (translation: judges who disagree with Newt) hauled before Congress to answer for their decisions, if necessary arresting them:

   SCHIEFFER: One of the things you say is that if you don’t like what a court has done, that Congress should subpoena the judge and bring him before Congress and hold a Congressional hearing… how would you enforce that? Would you send the Capitol Police down to arrest him?

   GINGRICH: Sure. If you had to. Or you’d instruct the Justice Department to send a U.S. Marshal.

I have no idea how Schieffer didn’t react with disbelieving “what?” much like Barbara Walters’ response when Herman Cain said he would want to be Secretary of Defense.

Obviously Newt is off the rails and a couple of former Republican Attorney Generals with some questionable constitutional decisions under their belts think so, too. Former attorney generals Alberto Gonzalez and Michael Mukasey, also a former judge, weighed in on Newt’s judicial lunacy to defy the Supreme Court and, if necessary according to Newt, eliminate the courts that disagree with him all together. In appearances on Fox News they called Newt’s ideas “ridiculous,” “irresponsible,” “outrageous,” and “dangerous”:

   KELLY: He wants to see the Ninth Circuit Court of Appeals entirely abolished, your thoughts on that?

   MUKASEY: Ridiculous. . . . to say that you’re going to undo and entire court simply because you don’t like some of their decisions, when there are thousands of cases before that court, is totally irresponsible. It’s outrageous because it essentially does away with the notion that when courts decide cases the proper way to have them reviewed is to go to a higher court. It’s dangerous because, even from the standpoint of the people who put it forward, you have no guarantee that you’ll have a permanent majority. . . . It would end with having a Democratic majority that then decides to abolish the Fourth Circuit and the Eleventh Circuit. And you go on and on and on. And I guess they could then reconstitute another court. It would reduce the entire judicial system to a spectacle.

Former Attorney General Alberto Gonzales had a similar reaction:

   GONZALES: The notion or the specter of bringing judges before the Congress, like a schoolchild being brought before the principal is, to me, a little bit troubling . . . . I cannot support and I would not support efforts that appear to be intimidation or retaliation against judges.

Keep in mind that these two men, supported some if the most unconstitutionally egregious of George W. Bush’s policies, including torture.

But poor Newt, he’s even slipping in the polls. According to Public Policy Polling, Rep. Ron Paul has now taken the lead in Iowa:

Newt Gingrich’s campaign is rapidly imploding, and Ron Paul has now taken the lead in Iowa.  He’s at 23% to 20% for Mitt Romney, 14% for Gingrich, 10% each for Rick Santorum, Michele Bachmann, and Rick Perry, 4% for Jon Huntsman, and 2% for Gary Johnson.

Gingrich has now seen a big drop in his Iowa standing two weeks in a row.  His share of the vote has gone from 27% to 22% to 14%.  And there’s been a large drop in his personal favorability numbers as well from +31 (62/31) to +12 (52/40) to now -1 (46/47). Negative ads over the last few weeks have really chipped away at Gingrich’s image as being a strong conservative, now only 36% of voters believe that he has ‘strong principles,’ while 43% think he does not.

Paul’s ascendancy is a sign that perhaps campaigns do matter at least a little, in a year where there has been a lot of discussion about whether they still do in Iowa.  22% of voters think he’s run the best campaign in the state compared to only 8% for Gingrich and 5% for Romney. The only other candidate to hit double digits on that question is Bachmann at 19%. Paul also leads Romney 26-5 (with Gingrich at 13%) with the 22% of voters who say it’s ‘very important’ that a candidate spends a lot of time in Iowa.  Finally Paul leads Romney 29-19 among the 26% of likely voters who have seen one of the candidates in person.

Iowa is no predictor of who will get the nomination and the caucuses are an undemocratic form of voting with no absentee ballots and very low voter turn out but Iowa is a predictor for early primary states. However, the recent harsh criticism from right wing politicians and pundits may keep Newt out of the Oval Office. Poor crazy Newt. Back to your room.

“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: A Fraction of a Tax Cut

If you looked quickly at what the Senate did on Saturday, it seemed as if it agreed to President Obama’s proposal for short-term middle-class relief by extending the payroll tax cut and unemployment insurance. In fact, that’s not quite what happened.

The two programs were approved in a severely diminished form. Because Republicans rejected a millionaire’s tax surcharge to pay for the extension, negotiators could not reach agreement on a full year’s offset, and instead settled for a measly two more months.

In exchange for those eight short weeks of stimulus, Republicans won a provision that forces the president to make a decision on the Keystone XL oil pipeline from Canada in the next 60 days, instead of waiting until after the election. In a sense, the provision liberates Mr. Obama to do the right thing and immediately reject the pipeline, an environmentally treacherous proposal that would create few jobs. The State Department will not have enough information to approve the pipeline in such a short period.

Paul Krugman: Will China Break?

Consider the following picture: Recent growth has relied on a huge construction boom fueled by surging real estate prices, and exhibiting all the classic signs of a bubble. There was rapid growth in credit – with much of that growth taking place not through traditional banking but rather through unregulated “shadow banking” neither subject to government supervision nor backed by government guarantees. Now the bubble is bursting – and there are real reasons to fear financial and economic crisis.

Am I describing Japan at the end of the 1980s? Or am I describing America in 2007? I could be. But right now I’m talking about China, which is emerging as another danger spot in a world economy that really, really doesn’t need this right now.

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.

On this day in 1776, Thomas Paine publishes The American Crisis.

These are the times that try men’s souls; the summer soldier and the sunshine patriot will, in this crisis, shrink from the service of his country; but he that stands it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph.

When these phrases appeared in the pages of the Pennsylvania Journal for the first time, General George Washington’s troops were encamped at McKonkey’s Ferry on the Delaware River opposite Trenton, New Jersey. In August, they had suffered humiliating defeats and lost New York City to British troops. Between September and December, 11,000 American volunteers gave up the fight and returned to their families. General Washington could foresee the destiny of a rebellion without an army if the rest of his men returned home when their service contracts expired on December 31. He knew that without an upswing in morale and a significant victory, the American Revolution would come to a swift and humiliating end.

Thomas Paine was similarly astute. His Common Sense was the clarion call that began the revolution. As Washington’s troops retreated from New York through New Jersey, Paine again rose to the challenge of literary warfare. With American Crisis, he delivered the words that would salvage the revolution.

The American Crisis was a series of pamphlets published from 1776 to 1783 during the American Revolution by eighteenth century Enlightenment philosopher and author Thomas Paine. Thirteen numbered pamphlets were published between 1776-1777 with three additional pamphlets released between 1777-1783. The writings were contemporaneous with the early parts of the American Revolution, during the times that colonists needed inspiring.

They were written in a language the common man could manage and are indicative of Paine’s liberal philosophies. Paine signed them with one of his many pseudonyms “Common Sense”. The writings bolstered the morale of the American colonists, appealed to the English people’s consideration of the war with America, clarified the issues at stake in the war and denounced the advocates of a negotiated peace.

“Duck House”:

I sit on the floor of the Duck House with thirty others, brainstorming for the January action. Neither men nor women dominate the group. We are young, and surprisingly old. Counter-culture and conservatively clad. We question whether it is nobler to seek permits or just show up unannounced. We speak of banners, flyers and street theater-anything to educate the public about our goal.

Even when I still lived in Arizona, I had heard of this place. Democracy Unlimited Humboldt County (DUHC) or “Duck” was on the forefront of the war against corporate power. In 1998, they helped pass a ballot initiative establishing the Democracy and Corporations standing committee in Arcata’s city council here in California.

The Committee’s primary functions are: to research and present to the Council options for controlling the growth of “pattern restaurants” in the community; to cooperate with other communities working on socially responsible investing and procurement policies; to make recommendations to the Council, and/or with the Council’s approval, provide educational opportunities to promote “fair trade”; to inform citizens of corporations with negative social and environmental impact; and to provide advice on ways to foster sustained locally-owned businesses, publicly or locally owned services and worker-owned cooperatives and collectives.–City of Arcata

The committee was hailed by Howard Zinn, Noam Chomsky, and Jim Hightower. Ralph Nader commented, “I look forward to Arcata being a luminous star in the rising crescendo of democracy in our country.”

Embolden by this success, they passed Measure T in 2004. It forbid nonlocal corporations from contributing to local political campaigns. Two corporations immediately challenged the initiative as unconstitutional. Before the case could be decided by the courts, Humboldt’s Board of Supervisors succumbed to corporate pressure and declared this popularly elected law nullified.

DUHC learned from this experience. They won’t be going it alone, this time. They are but one small seed of democracy, but they are amassing with others to change the political landscape in America. They have joined Move to Amend in a miliary campaign, and this time their aim is not a city ordinance in some far off town on the edge of America, but changing the highest law in the land.

No holiday vacation for you, Mr. President.

Speaker John A. Boehner, who had urged his members on Saturday to support the legislation, did what appeared to be an about-face on Sunday when he said that he and other House Republicans were opposed to the temporary extension, part of a $33 billion package of bills that the Senate easily passed Saturday. In addition to extending the payroll tax cut for millions of American workers, the legislation extended unemployment benefits and avoided cuts in payments to doctors who accept Medicare. The measure would be effective through February.

In an interview with NBC’s “Meet The Press” , Mr. Boehner said the two-month extension would be “just kicking the can down the road.”

“It’s time to just stop, do our work, resolve the differences and extend this for one year,” Mr. Boehner said. “How can you have tax policy for two months?”

He said that Republicans wanted to extend the payroll cut for a year, but that it would have to be financed with cuts in the existing budget. When Congressional aides announced the deal on Friday, they said the items it contained were fully paid for.

If you can stand to watch the Orange Man, from Meet the Press (I’ll spare you the entire 15 minutes):

   Boehner: Well, it’s pretty clear that I, and our members, oppose the senate bill. … How can you do tax policy for two months? So, we really do believe it’s time for the Senate to work with the House, to complete our business for the year. We’ve got two weeks to get this done. let’s do it the right way.

   Gregory: So your suggesting start over, make this a one year extension. Should the Senate start from scratch?

   Boehner: No, what I’m suggesting is this. The House has passed its bill, the Senate has passed its bill. Under the Constitution, when we have these disagreements, there could be a formal conference between both chambers to resolve the differences.

Speaker Boehner is reneging on a bipartisan deal the was negotiated with the Senate and passed with a large majority of 89 votes that included 39 Republicans. The Senate has adjourned until after the holidays, so the likelihood of a conference committee at this point is not happening.

Senate Majority Leader Harry Reid has said that he won’t call the Senate back to negotiate on Mr. Boehner’s demand to negotiate an extended payroll tax cut, unemployment insurance and a doctor’s fix on Medicare reimbursement rates until after the House passes the two month stop gap bill. David Dayen at FDL has this statement from Reid’s office::

Senator Reid has been trying to negotiate a yearlong extension of the payroll tax credit with Republicans for weeks. He is happy to continue negotiating a yearlong extension as soon as the House passes the Senate’s short-term, bipartisan compromise to make sure middle class families will not be hit by a thousand-dollar tax hike on January 1.

It’s not like this bill was negotiated in a vacuum, Mr. Boehner was part of the discussion with both Reid and Senate Minority Leader Mitch McConnell and he had asked for a compromise:

The Senate majority leader, Harry Reid, Democrat of Nevada, said that Mr. Boehner had asked him and the minority leader, Senator Mitch McConnell, Republican of Kentucky, to work out a compromise on the tax cut and that it had been agreed to by both political parties.

“Neither side got everything they wanted, but we forged a middle ground that passed the Senate by an overwhelming bipartisan majority,” Mr. Reid said in a statement. “If Speaker Boehner refuses to vote on the bipartisan compromise that passed the Senate with 89 votes, Republicans will be forcing a thousand-dollar tax increase on middle-class families on Jan. 1.”

If the House leadership thinks that this tactic is going to help the GOP chances of holding the House and taking back the Senate and White House from the Democrats, I have a couple bridges I’d like to sell him.

The popular TeeVee show NCIS purports to use science to solve most of the difficult bits of its cases, almost always murders.  Since this is about a TeeVee show, I was torn betwixt posting this piece here or on Popular Culture, but chose here because it will get a little geeky.

Before I continue, let me tell you that I like the program very much, not so much for the science but for excellent script writing and character development.  I think that it is important to recognize a well crafted program.  Since most viewers are not technically proficient, the science is not a problem for them.

But it is for me.  I am reminded of another popular TeeVee show from years, the Jack Klugman one called Quincy, M. E., that relied heavily on fictionalized scientific methods.  I had a boss at one time who coined a phrase that I shall reveal later.