February 2012 archive

President Barack Obama has announced the appointment of Jeremiah Norton, a JP Morgan Chase & Co. executive, to the five-member board of the Federal Deposit Insurance Corp. once again putting an insider in  a position to protect the banks at the expense of tax payers. The announcement was made late Friday in the usual news dump but this is not new except that Norton is now the “official” nominee.

Jeremiah O. Norton, 34, who is an executive director in the bank’s JPMorgan Securities unit, previously served as a policy adviser in the U.S. Treasury Department during the administration of President George W. Bush. Before that, he was an aide to a Republican congressman, Edward Royce of California.

Norton joins two Democrats and a fellow Republican whose confirmations to FDIC leadership posts have been delayed by Senate Republicans who have complained that Obama used a recess appointment to install Richard Cordray, a former Ohio attorney general, as director of the Consumer Financial Protection Bureau without formal Senate approval. Cordray, in his role as consumer bureau director, also has a seat on the five-member FDIC board.

His name was mentioned back in late December in an article from the American Banker. In an article by bmaz at emptywheel

Oh, and in case you had any question on what side of the 1%/99% divide Barack Obama and his Administration are on, yet another answer was given today with the announcement of their proposed selection for the critical “independent” seat on the Federal Deposit Insurance Corporation (FDIC):

   The Obama administration is considering nominating Jeremiah Norton, an executive director for JPMorgan Chase’s investment bank, to sit on the FDIC’s board of directors.

Who is Jeremiah Norton? Well, as this quote states, he executive director of the investment banking shop and one of Obama’s buddy, Jamie Dimon’s, right hand men. Oh, and before that, Norton was former Goldman Sachs honcho Henry Paulson’s right hand man in the Bush Treasury Department and assisted Paulson in getting Goldman Sachs a backdoor bailout through AIG.

Norton was one of the chief architects of TARP who helped convince Paulson that the banks were “Too Big To Fail” and “helped craft the takeover of Fannie and Freddie” and he isn’t without opposition form the right:

Norton himself had initial doubts about the plan. “This is crazy,” he reportedly said at the time. But ultimately he and Jester sold Paulson on TARP, (Andrew Ross) Sorkin explains. “Based on the work of Jester, Norton, and assistant secretary for financial institutions David] Nason, [Paulson] wanted to forge ahead and invest $250 billion of the TARP funds into the banking system,” Sorkin wrote. Norton contributed similarly to the government takeover of Fannie and Freddie. “It was a difficult decision, the secretary didn’t want to be here, to go into the firms,” Norton [told C-SPAN in 2008. But, he concluded, “this action was necessary to prevent systemic risk that would harm the broader economy.”

Norton still might encounter some objections from the right, as both TARP and the government conservatorship of Fannie and Freddie have come under growing fire from the tea party wing of the GOP. What’s more, the Congressional Budget Office recently raised the cost of TARP in 2012, and the government control of Fannie and Freddie has extended well beyond the 15-month “timeout” that Norton, Paulson and others had originally envisioned.

This is the second time that the White House has taken the Senate GOP leadership’s advice on FDIC leadership, having already followed Senate Minority Leader Mitch McConnell’s (R-KY) recommendation to pick Thomas Hoenig for another key FDIC post whose nomination brings ant- TBTF positions to the table:

Hoenig is a vocal critic of large banks, technically known as “systemically important financial institutions,” or SIFI, under the recent Dodd-Frank regulatory reform of the financial system. Of course, they’re more popularly known as the “too big to fail” banks that are a focus of the Occupy Wall Street protests.

Under Dodd-Frank, the FDIC will be responsible for unwinding failing big banks.

In a June speech, Hoenig — who headed the Federal Reserve Bank of Kansas City — called those institutions “fundamentally inconsistent with capitalism.”

“They are inherently destabilizing to global markets and detrimental to world growth,” he said. “So long as the concept of a SIFI exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril.” [..]

Hoenig’s criticism of Fed policy made him a favorite among Congressional Republicans. Last fall, as Republicans prepared to assume control of the House after their midterm win, Hoenig was invited to speak to Republican members of Congress behind closed doors.

He also testified earlier this year before the House subcommittee on monetary policy chaired by Ron Paul, a noted Fed critic and presidential candidate, who would like to abolish the central bank altogether.

Republicans’ previous praise for Hoenig may make it difficult for them to block his confirmation, even if they oppose his views on the Volcker rule and bank regulation, said Boston University law professor Cornelius Hurley, a former counsel to the Fed Board of Governors.

“A brilliant political step, Hoenig’s nomination puts Senate Republicans in a very difficult spot in voting on his vice-chairmanship,” said Hurley. “His experience and point of view on systemic risk may foretell a pivot away from the failing policies of (Treasury Secretary)Timothy Geithner and (and former Obama adviser) Larry Summers toward more meaningful structural reform of our financial system.”

Obama keeps trying to make “deals with the devil” that will only continue toprotect the banks and harm the economy.  

“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”.

Paul Krugman: Things Are Not O.K.

In a better world – specifically, a world with a better policy elite – a good jobs report would be cause for unalloyed celebration. In the world we actually inhabit, however, every silver lining comes with a cloud. Friday’s report was, in fact, much better than expected, and has made many people, myself included, more optimistic. But there’s a real danger that this optimism will be self-defeating, because it will encourage and empower the purge-and-liquidate crowd. [..]

And every time we get a bit of good news, the purge-and-liquidate types pop up, saying that it’s time to stop focusing on job creation.

Sure enough, no sooner were the new numbers out than James Bullard, the president of the St. Louis Fed, declared that the new numbers make further Fed action to promote growth unnecessary. And the sad truth is that the good jobs numbers have definitely made it less likely that the Fed will take the expansionary action it should.

So here’s what needs to be said about the latest numbers: yes, we’re doing a bit better, but no, things are not O.K. – not remotely O.K. This is still a terrible economy, and policy makers should be doing much more than they are to make it better.

New York Times Editorail: Shall We Call It the ‘Bronze Standard’?

President Obama usually deserves high marks for his efforts to curb the spread of dangerous nuclear technology. But his administration’s decision not to insist on an important nonproliferation provision in nuclear cooperation agreements is a serious retreat.

Under American law, countries are required to negotiate detailed agreements before they are allowed to buy American nuclear reactors, fuel and services. The United States has signed many of them and many more are expected as additional countries pursue nuclear power.

The Obama administration set a rigorous new standard in 2009. It signed an agreement with the United Arab Emirates in which the U.A.E promised, in exchange for access to American technology, to forswear uranium enrichment and plutonium reprocessing. Those are the processes for making nuclear fuel for reactors – or weapons.

There was a deluge of news about banking and foreclosure fraud over the weekend much of it going unnoticed because of the Super Bowl. There was the revelation that Fannie Mae has known about mortgage and foreclosure fraud for 10 years, knew it was fraud but did nothing to stop it. This morning there was another surge with the news about the state attorneys general agreement. It looks like two of the biggest holdouts, New York and California, may sign the agreement even though public details are still very vague. I suspect that the secrecy about the final agreement may be because it let the banks off the hook for the biggest fraud ever perpetrated on investors, robosigning.

Here’s what we know:

New York AG Eric Schneiderman filed a law suit in NY State Court in Brooklyn on Friday charging them with deceptive and fraudulent practices that harmed homeowners and undermined the judicial foreclosure process. David Dayen at FDL thinks this is a “carve out” that paved the way for other state AG’s to do the same and still be able to sign onto the federally negotiated agreement:

The answer is, according to what I’ve learned, is that it’s a carve-out. Schneiderman can pursue this case and also theoretically join a settlement. This may or may not be true of other cases with other AGs. The timing of Illinois’ lawsuit against Nationwide Title Clearing yesterday seems significant in that regard; perhaps Lisa Madigan also secured a carve-out for her case. It’s plausible to think that AGs are being told to get out their lawsuits now, prior to a settlement, and they would be allowed in the event of a settlement. Schneiderman still hasn’t agreed to the settlement, but in the event that he does, the case dropped today would be able to go forward. [..]

Like me, Dayen doesn’t see the advantage for the banks to sign off on the agreement if they can’t stop suits like Schneiderman’s and others in Illinois, Massachusetts and Nevada. There are a lot of questions.

Late last night, during the Super Bowl, the story broke in the New York Times that the deal with the states was about to be closed:

The biggest remaining holdout, California, has returned to the negotiating table after a four-month absence, a change of heart that could increase the pot for mortgage relief nationwide to $25 billion from $19 billion.

Another important potential backer, Attorney General Eric T. Schneiderman of New York, has also signaled that he sees progress on provisions that prevented him from supporting it in the past.

The potential support from California and New York comes in exchange for tightening provisions of the settlement to preserve the right to investigate past misdeeds by banks, and stepping up oversight to ensure that the financial institutions live up to the deal and distribute the money to the hardest-hit homeowners.

The settlement would require banks to provide billions of dollars in aid to homeowners who have lost their homes to foreclosure or who are still at risk, after years of failed attempts by the White House and other government officials to alter the behavior of the biggest banks.

Yves Smith at naked capitalism was not surprised and expressed her doubts about Schneiderman’s ability to beat the Obama administration’s protectionism:

Kamala Harris, the California AG, was widely seen as “political” and therefore was not seen as a solid holdout. I remain disappointed by the conduct of our attorney general Eric Schneiderman, who is also now participating in the talks. His decision to join a Federal task force undermined the opposition to the settlement and looks to have cleared the way for the Administration to craft a win on this deal (note it is still possible it will not get done, but the odds were low as of last week and appear to be sinking further).

Assuming a deal is inked, Schneiderman and new partners in the Administration will no doubt contend that his involvement in the negotiations resulted in an improvement in terms for homeowners and states. I’m also told that he sincerely believes he can get a serious investigation underway and take advantage of Federal statutes with longer statutes of limitations than most state level ones.

Schneiderman may think he can beat the Administration at its own game, and if he can, more power to him, but I would not bet on him coming out on top.

It is too late (it was probably too late when Schneiderman sat in Michelle Obama’s box during the State of the Union address) but if you are in California or New York, you might as well call or e-mail your AG and give them a piece of your mind. Keeping the pressure on Schneiderman and Harris, and supporting AGs like Beau Biden of Delaware, Catherine Cortez Masto of Nevada, and Martha Coakley of Massachusetts, are the best hope we have at this point.

For New York, call 800 771-7755, 212 416-8000 or 518 474-5481 use the web form here or at his fundraising office. For Kamala Harris, call 916 445-9555 or this web form.

There are also questions about who will actually pay for this bank bailout which in actuality amounts to only $5 billion in cash and the rest in mortgage modifications. It does nothing to correct or compensate homeowners who have already been foreclosed on or who are so underwater that they don’t qualify for modification. Again Yves Smith explains the role of second liens in this bank bailout

To give a brief recap of the post: both a small group discussion with Shaun Donovan (reported by Dave Dayen of Firedoglake and separately by Shahien Nasirpour of the Financial Times) and the Schneiderman MERS lawsuit on Friday confirm our previously-stated hypothesis that the settlement is really a transfer from mortgage investors to banks. That is why the banks remain willing to participate as the release has been whittled down to appease the formerly dissenting attorneys general (remember, the old reason for the banks to go along was that it was a cash for release deal: the banks were willing to pay hard money to get a significant waiver of liability).

The reason this settlement amounts to a transfer is the banks will be given credit towards the total reported value of the settlement for modifying mortgages that they do not own, meaning that economic loss will be borne by investors. Servicers have an obvious incentive to shift losses onto other parties whenever possible, and so the only principal mods they are likely to do of loans they own are one they would have done anyhow.

In addition, default rates are higher among borrowers with second liens, and second liens are almost entirely held on bank balance sheets. Which banks? Oh, the ones that happen to be the four biggest servicers: Bank of America, Citigroup, JP Morgan, and Wells. And those second lien holdings are collectively in the hundreds of billions. Were they written down to the degree that some mortgage investors argue is warranted, it would reveal that these banks were seriously undercapitalized.

As we stressed, this plan is a serious violation of property rights (not that that should be any surprise at this point). The creditor hierarchy is clear: second liens should be written off in their entirety before first liens are touched. Yet we also linked to evidence in the post from top mortgage analyst Laurie Goodman that servicers were already doing everything they could to favor their second liens over firsts. This settlement would give official sanction to this practice.

I also want to flag, a second time, an appalling throwaway comment in a New York Times update tonight:

  The settlement, if all states participate, will also include $3 billion to lower the rates of mortgage holders who are current.

In other words, the agreement bails out homeowners that don’t need it while throwing those who are in the deepest trouble  because of that second lien (mortgage) to the sharks. Those second liens are a big problem, as Yves notes:

   As leading mortgage analyst Laurie Goodman pointed out in a late 2010 presentation, just over half of the private label (non Fannie/Freddie) securitizations have second liens behind them (overwhelmingly home equity lines of credit). Moreover, homes with first liens only have far lower delinquency rates than homes with both first and second liens. Separately, various studies have found that defaults are also correlated with how far underwater a borrower is. If a borrower is too far in negative equity territory, it makes less sense for them to struggle to stay current, no matter how much they love their home […]

   [Banks] also have been modifying first liens to preserve their second liens. If you reduce the payments on the first mortgage, the borrower has more money left to pay the second lien. From the transcript of Goodman’s 2010 presentation:

   “Clearly there’s a differential standard of managing second liens and securitizations versus second liens in bank portfolios. It’s very clear banks are doing all they can to get the, to keep, to get the first lien modified in order to keep the second intact, and that is just a huge conflict of interest.”

   Legally, the hierarchy of payment OUGHT to be clear: a second should be wiped out before a first lien is touched. That’s how it works in a foreclosure or a bankruptcy: only after the first lien was paid in full would a second lien get anything. But that isn’t what is happening now.

Homeowners with second liens are in far more trouble. Which brings us to this revelation that Fannie Mae knew all about the wide spread mortgage abuses for 10 years and ignored it:

YEARS before the housing bust – before all those home loans turned sour and millions of Americans faced foreclosure – a wealthy businessman in Florida set out to blow the whistle on the mortgage game. [..]

What Fannie Mae knew about abusive foreclosure practices, and when it knew it, are crucial questions as Congress and the Obama administration weigh the future of the company and its cousin, Freddie Mac. These giants eventually blew themselves apart and, so far, they have cost taxpayers $150 billion. But before that, their size and reach – not only through their own businesses, but also through the vast amount of work they farm out to law firms and loan servicers – meant that Fannie and Freddie shaped the standards for the entire mortgage industry.

Almost all of the abuses that Mr.(Nye) Lavalle began identifying in 2003 have since come to widespread attention. The revelations have roiled the mortgage industry and left Fannie, Freddie and big banks with potentially enormous legal liabilities. More worrying is that the kinds of problems that Mr. Lavalle flagged so long ago, and that Fannie apparently ignored, have evicted people from their homes through improper or fraudulent foreclosures.

This is a huge financial problem that will still loom over the economy, especially if the banks, Fannie and Freddie are not being held legally and financially responsible for setting this all in motion. The likelihood that Schneiderman will have any success in prosecuting or obtaining a satisfactory restitution for the victims of this massive fraud against an administration that has protected the perpetrators is slim to none. I wish him luck but I will be truly disappointed if he signs this agreement.

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.

February 6 is the 37th day of the year in the Gregorian calendar. There are 328 days remaining until the end of the year (329 in leap years).

On this day in 1952, Elizabeth II becomes the first Queen regnant of the United Kingdom and several other realms since Queen Victoria, upon the death of her father, George VI. At the exact moment of succession, she was in a treehouse at the Treetops Hotel in Kenya.

Elizabeth II (Elizabeth Alexandra Mary, born 21 April 1926) is the Queen regnant of 16 independent sovereign states known as the Commonwealth realms: the United Kingdom, Canada, Australia, New Zealand, Jamaica, Barbados, the Bahamas, Grenada, Papua New Guinea, the Solomon Islands, Tuvalu, Saint Lucia, Saint Vincent and the Grenadines, Belize, Antigua and Barbuda, and Saint Kitts and Nevis. In addition, as Head of the Commonwealth, she is the figurehead of the 54-member Commonwealth of Nations and, as the British monarch, she is the Supreme Governor of the Church of England.

Elizabeth was educated privately at home. Her father, George VI, became King-Emperor of the British Empire in 1936. She began to undertake public duties during the Second World War, in which she served in the Auxiliary Territorial Service. After the war and Indian independence George VI’s title of Emperor of India was abandoned, and the evolution of the Empire into the Commonwealth accelerated. In 1947, Elizabeth made the first of many tours around the Commonwealth, and married Prince Philip, Duke of Edinburgh. They have four children: Charles, Anne, Andrew, and Edward.

In 1949, George VI became the first Head of the Commonwealth, a symbol of the free association of the independent countries comprising the Commonwealth of Nations. On his death in 1952, Elizabeth became Head of the Commonwealth, and constitutional monarch of seven independent Commonwealth countries: the United Kingdom, Canada, Australia, New Zealand, South Africa, Pakistan, and Ceylon. Her coronation in 1953 was the first to be televised. During her reign, which at 58 years is one of the longest for a British monarch, she became queen of 25 other countries within the Commonwealth as they gained independence. Between 1956 and 1992, half of her realms, including South Africa, Pakistan, and Ceylon (renamed Sri Lanka), became republics.

In 1992, which Elizabeth termed her annus horribilis (“horrible year”), two of her sons separated from their wives, her daughter divorced, and a severe fire destroyed part of Windsor Castle. Revelations on the state of her eldest son Charles’s marriage continued, and he divorced in 1996. The following year, her former daughter-in-law Diana, Princess of Wales, died in a car crash in Paris. The media criticised the royal family for remaining in seclusion in the days before Diana’s funeral, but Elizabeth’s personal popularity rebounded once she had appeared in public and has since remained high. Her Silver and Golden Jubilees were celebrated in 1977 and 2002 respectively, and planning for her Diamond Jubilee in 2012 is underway.

NMR (Nuclear Magnetic Resonance) spectrometry is one of the big guns in organic chemistry and biochemistry for determining how atoms are strung together in molecules.  There are many different kinds, but the two of greatest utility to chemists are proton NMR and carbon-13 NMR.  A friend of mine asked me for some help for his daughter who is studying the subject in Organic Chemistry right now, so I thought that I might as well use it as a topic for this series.

Before we get deep into the subject, note that some authors refer to NMR spectrometry and others to NMR spectroscopy.  I prefer the former term because the connotation of spectroscopy, to me at least, has to do with lenses, prisms, and diffraction gratings, making it an optical method.  There are no analogous devices in NMR, so I prefer spectrometry.

All NMR has some features in common, so we might as well cover the basics first.  By the way, this has nothing to do with nuclear energy, and the only radiation present is in the radiofrequency range, so it will not fry you.

This is heavily connected with quantum mechanics, but I shall try to use analogies that are more easily visualized than a bunch of equations.  I do not intend for this to be a graduate level abstract.

No complaining or explaining, we’ll get right to my prediction.  Giants win because they have defense and the Patsies don’t.

Other opinions

• NFL Talkboard: Super Bowl 2012
• The predictions from the Guardian’s team
• NYT’s Mike Tanier’s preview
• How the teams line up

Ads

• Ten Superbowl Ads To Watch For During The Big Game

Because it’s the American way!

In fact Super Bowl Ads are lengthening to tell a 60 second story that they can chop up and reinforce after the game.

• Preview of this year’s Super Bowl ads
• Super Bowl 2012: the new TV ads
• Rate them

Louise Ciccone

Super Bowl XLVI: Madonna’s dream halftime-show set

Tris McCall/The Star-Ledger

Published: Friday, February 03, 2012, 7:00 AM

There it is. No need for frippery or distraction, no room for collaboration or audience participation. Madonna has never been about those things and it would be awkward for her to start now. Instead, she could re-establish herself as a star who can control the party, wherever it may be. Even if it happens to be at the Super Bowl.

You know, back when I started doing this in 2009, Puppy Bowl was hardly the cultural phenomenon it has grown into today.

Puppy Bowl VIII preps: Game day analysis for fans and fantasy players

By Kerri Lendo, Austin Culture Map

02.04.12, 09:00 am

Football’s biggest event of the year is almost upon us. Puppy Bowl VIII airs this Sunday at 3 p.m. ET/PT on Animal Planet. Saying this year’s bowl is going to be huge would be an understatement after last year’s incredible final seconds.

Of course, the kitty halftime show is back with twenty of the country’s top kitten cheerleaders taking the stage. The Piggy Pep Squad will make their debut along with Meep the bird who will be live tweeting all the action. Plus, most importantly, the nation’s top puppy athletes will be vying for the championship in Animal Planet Stadium.

As for getting the ball to the end zone, that’s hardly the point.

• Your Starting Line Up
• Top Ten Moments
• Puppy Bowl Video
• Your Picture Archive

Streaming Video is purportedly here, but you can’t trust Google.

Even Pravda (or is it Isvestia?  There is no news in truth and no truth in news.) has finally gotten hip.  ESPN too from whom we learn the Bissell Kitty Halftime Show has been little more than an afterthought up until now.

Of course for Phineas and Ferb fans there is only one canonical chronicle of Meap–

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.

February 5 is the 36th day of the year in the Gregorian calendar. There are 329 days remaining until the end of the year (330 in leap years).

On this day in 1917, with more than a two-thirds majority, Congress overrides President Woodrow Wilson’s veto of the previous week and passes the Immigration Act.. The law required a literacy test for immigrants and barred Asiatic laborers, except for those from countries with special treaties or agreements with the United States, such as the Philippines.

The Immigration Act of 1917, also known as the Asiatic Barred Zone Act, added to the number of undesirables banned from entering the country, including but not limited to “idiots”, “feeble-minded persons”, “criminals”, “epileptics”, “insane persons”, alcoholics, “professional beggars”, all persons “mentally or physically defective”, polygamists, and anarchists. Furthermore, it barred all immigrants over the age of sixteen who were illiterate. The most controversial part of the law was the section that designated an “Asiatic Barred Zone”, a region that included much of eastern Asia and the Pacific Islands from which people could not immigrate. Previously, only the Chinese had been excluded from admission to the country. Attempts at introducing literacy tests had been vetoed by Grover Cleveland in 1897 and William Taft in 1913. Wilson also objected to this clause in the Immigration Act but it was still passed by Congress on the fourth attempt.

Anxiety in the United States about immigration has often been directed toward immigrants from China and Japan. The Chinese Exclusion Act of 1882 barred Chinese from entering the U.S. The Gentlemen’s Agreement of 1907 was made with Japan to regulate Japanese immigration to the U.S. The Immigration Act of 1917 is one of many immigration acts during this time period which arose from nativist and xenophobic sentiment. These immigration laws were intentional efforts to control the composition of immigrant flow into the United States.

Had it with the hype?  The Hypnotoad has hours of counter-programming goodness.  Instant scheduling gratification at Zap2it.

“Television is a vast wasteland”

Special mention to actual Football on Faux, Manchester United at Chelsea at 10:30 am.  This edition covers from noon to midnight.