08/10/2012 archive

I ran across this posting in Rolling Stone from a management-level whistleblower, who provided information about frauds which took place at Countrywide Home Loans and Bank of America.  The author has prevailed in a wrongful termination ruling from OSHA that requires Bank of America to reinstate her and pay significant damages.

The whistleblower writes:

In 2010, I was interviewed by the Financial Crisis Inquiry Commission (FCIC) and offered evidence of systemic fraud. Other whistleblowers have done the same. The Commission’s report concluded that fraudulent actions were systemic in certain financial institutions, and referred these practices to federal authorities. Not a single successful criminal prosecution has resulted.

President Obama’s DOJ claims that prosecutors can’t indict and convict financial executives just because they behaved badly; greed, they say, is not a crime. Together with other FCIC witnesses, however, I alleged fraud, not greed, and that is a crime. The DOJ needs to investigate our allegations, and prosecutors could start by contacting whistleblowers like me. We have a lot to say, but many of us are gagged by our former employers unless subpoenaed.

Today, millions of Americans are paying more on their mortgages than their homes are worth, and millions more are facing foreclosure. Meanwhile, those who cashed in while ordinary Americans lost their homes and their jobs remain at large, continuing both the crimes and the cover-up. Whistleblowers like me know who they are because we were there. We’re willing to talk. Why won’t the government listen?

There are people with knowledge of serious crimes that want to come forward and help the justice system to set things right.  But there is a piece missing:

The Obama administration plans to add thousands of investigators to enforce the health care reform law, but has added just 25 positions to investigate whistleblower claims.

The Obama administration does not seem interested in what whistleblowers are reporting, nor does it seem all that interested in protecting whistleblowers that can provide valuable information to prosecutors.

If the Obama administration was paying attention, they would find that public disappointment with the lack of significant and aggressive prosecutions of the serious frauds that caused our financial crisis has spread far beyond the Occupy movement and has now entered the jury pool.  In a recent SEC prosecution of a Citigroup employee, the jury had some interesting thoughts:

As Beau Brendler sat in the jury box listening to the government’s case against a former Citigroup midlevel executive, the same question kept entering his mind.

“I wanted to know why the bank’s C.E.O. wasn’t on trial,” said Mr. Brendler, who served as the jury’s foreman. “Citigroup’s behavior was appalling.”

So, despite the fact that the jury found that the SEC had failed to prove its case against the midlevel employee, in an unusual act for a jury, they issued a statement along with their verdict:

“This verdict should not deter the S.E.C. from continuing to investigate the financial industry, review current regulations and modify existing regulations as necessary.”

The jury foreman explained their reasoning this way:

“We were afraid that we would send a message to Wall Street that a jury made up of regular American folks could not understand their complicated transactions and so they could get away with their outrageous conduct,” Mr. Brendler said. “We also did not want to discourage the government from investigating and prosecuting financial crimes.”

There is a thirst for justice in the American public.  It is long past time for the Obama administration to demonstrate that they are on the side of regular Americans and do something.  

Let’s see, there’s big money on one side of this issue and votes on the other side.  What’s a politician to do?  

Originally posted at Voices on the Square, a new blog in the sphere featuring News, Information, and Fun!

Welcome to You’re Doing It Wrong, a weekly column taking the Powers That Be (PTB), especially the media and talking heads, to task for poor information and poor framing.

This week, I’m not going after the media and talking heads; instead, I’m going after the PTB for something that I don’t think is well thought through and could result in some rather negative unintended consequences.

As technology has developed, it has made many things in life a whole lot easier, which is awesome.  But sometimes that technology, even if it makes things easier, should not be widely available to just anyone.

Last week, the Obama campaign released a new app for the iphone that allows anyone to download a google map with addresses of voters, and includes name, address, age, gender, and party affiliation. They did this to make it easier for anyone to volunteer to go door to door to do GOTV canvassing. I can understand the want to expand this accessibility to a wider pool of grassroots volunteers, but is it really a good idea?

The recent shooting in the Sikh temple in Wisconsin that left six dead, the burning of a Mosque in Joplin, MO and the smearing of Huma Adedin, longtime aide to Secretary of State Hillary Clinton were all fueled by the Islamaphobia of crazed white supremacists and fear mongering from our elected representatives and high profile government officials with outrageous imaginary claims of links to terrorists. It is the job of those of us on the Internet and in the traditional MSM to denounce the hate and help right the wrongs that we can. This is how it’s done:

Glenn Greenwald: Combating Islamophobic violence

Helping a burned-to-the-ground Missouri mosque quickly re-build would make a powerful and constructive statement

Shortly after the Islamic Society of Joplin opened a mosque in 2007 in Joplin, a small town in Southwest Missouri, the sign in front was set on fire, an act determined to be arson. On the 4th of July of this year, someone who is undoubtedly a deeply patriotic person was filmed by a surveillance camera throwing a flaming object onto the roof of the mosque in an attempt to burn it down, causing some fire damage (see the video below); despite a $15,000 reward offered by the FBI for information leading to the arrest of those responsible and a clear shot of the attacker’s face, nobody has come forward to identify him.

On Monday of this week – the day after the Sikh temple shooting in Wisconsin – that same Joplin mosque burned to the ground, completely destroyed by a fire that began in the middle of the night. So powerful was the fire that “only remnants indicated a building had been there, including some stone pillars that were still standing and a few pieces of charred plywood loosely held up by a frame.” Although the cause has not yet been determined, investigators – for obvious reasons – have labeled the fire “suspicious” and are searching for signs of arson. As obviously ugly as these incidents are, they offer an opportunity to make an important statement.

In response to these events, a teenaged member of that mosque, Joplin high school student Laela Zaidi, began using social media such as Reddit to talk about what happened and to discuss the importance of the mosque to her community (it’s not only the town’s only mosque, but the only one within a 50-mile radius, leaving Joplin’s Muslim families with no place to gather for Ramadan); the results of Zaidi’s online efforts (including her defense of her community) are surprisingly moving. In Salon on Monday, Joplin native Susan Campbell described the abundant humanitarianism in the town when it was devastated by a horrendous tornado last year, and called upon residents to tap into those same sentiments now by turning the July 4 attacker into authorities. Local-area churches and synagogues have quickly united in a show of support for the mosque.

Most significantly, a little-publicized online campaign to raise the $250,000 needed to rebuild the mosque has produced extremely quick and impressive results. Yesterday, when Al Jazeera’s The Stream wrote about the then-hours-old campaign, it had already raised 1/5 of the money needed ($51,000). When the campaign was first brought to my attention last night and I tweeted a link to it, it had already raised $75,000. As of this morning, barely 24 hours after the campaign began, just over half of the money needed ($126,000) has been raised. Having this Southwest Missouri mosque be able to quickly raise the money needed to re-build – all from small donations of people on the Internet disgusted by these attacks – would be a powerful statement indeed, and I really encourage everyone who can do so to donate.

As of today (Friday), over $262,000 has been raised, exceeding the goal for rebuilding the Mosque. Don’t stop. Donate here

In Glenn’s article, he points out the ugly trend of hate crimes directed at the Muslim community that have reached epidemic levels and the complicity of some of our elected officials and the mainstream media:

This happens because overt expression of Islamophobia is, far and away, the most accepted form of bigotry in mainstream American precincts. Now and then, certain expressions of it are so extreme as to embarrass mainstream circles – Peter King’s Congressional investigation into The Enemy Within or the Michele Bachmann attacks on Hillary Clinton’s Muslim aide – and are thus roundly condemend, but more often than not, they are perfectly acceptable.

The Washington Post‘s Dana Milbank today suddenly realized that Andrew McCarthy – the former federal prosecutor and oft-quoted “legal expert” now writing obsessive anti-Muslim screeds for National Review – is a hatemongering crackpot with exactly the right last name. The NYPD is exposed for indiscriminately targeting innocent Muslims with mass surveillance and infiltration in their communities, and almost every mainstream state and city politician – led by Democratic Sen. Chuck Schumer and the Democratic mayoral front-runner Christine Quinn – cheers. When demands were made that an Islamic community center be moved away from Ground Zero in Manhattan – as though Muslims generally were to blame for the 9/11 attack – even some prominent liberal politicians supported that demand.

And a hearty thanks to Stephen Colbert for taking them to the woodshed with his humor:

“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”.

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Christian Neumeister: It’s Just Business: How Corporate America Made Slaves of the Young

Companies across the nation are gleefully denying interns fair wages for their work, in flagrant violation of long-standing labor law, and have the nerve to tell the world they are doing these people a favor.

Huge numbers of college students and recent graduates in a tight labor market are too scared to ask for compensation. Consequently, many interns must work for years in unpaid positions to build their résumés while depending on their parents for financial support. Not only do unpaid internships stop some from paying down a collectively exploding student debt, they compound the economical class differences between those who can afford to work for free and those who can’t.

This exploitative practice has evolved over the generations since the passage of the Fair Labor Standards Act in 1938 and a 1947 Supreme Court ruling about railroad trainees that officially defined unpaid internships; that ruling was mostly ignored by businesses, and today’s systemic abuse of interns eventually developed.

Mark Weisbot: UN Should Get Rid of Cholera Epidemic That It Brought to Haiti

Haitians have had a long and arduous struggle just to achieve the rights that most people in the rest of the hemisphere have enjoyed. From the revolution of Haitian slaves that won independence from the French in 1804, through the U.S. occupation (1915-1934), the Duvalier family dictatorship (1957-1986), and the last 20 years of devastating foreign intervention, the “international community” just hasn’t seen Haitians as having the same basic human rights as people in other countries. [..]

This is perhaps most clear in the failure of the United Nations to take responsibility for the additional devastation they have brought to Haiti with the deadly disease of cholera. Since the outbreak began in October 2010, more than 7,445 Haitians have died of the disease and more than 580,000 have been infected, and these official numbers are an underestimate. It is now firmly established, by a number of scientific studies, that UN troops brought cholera to Haiti by dumping their human waste into the country’s water supply. [..]

No wonder more than 70 percent of Haitians responding to a recent poll said they wanted MINUSTAH to leave within a year.  The UN can use the money currently wasted on this military force to rid the country of cholera.  Then, at least, they will have cleaned up one of their biggest crimes in the country.

Yves Smith at naked capitalism and Marcy Wheeler at emptywheel have been following the latest banking scandal with a certain amount of “glee” as New York Superintendent of Financial Services, Benjamin Lawsky, Federal regulators (mainly Treasury and the Federal Reserve) and Mr. Lawsky’s target, the British bank, Standard Charter, all do the “Rule of Law” waltz in the media.

The “dance” so far has resulted in a flurry of furious responses to Mr. Lawsky’s charges that the Standard Charter Bank (SCB) laundered billions of dollars for Iran hiding the transaction from federal investigators for 10 years.

These are the latest developments over the last few days since the story broke:

First from Yves where she confesses her enjoyment of the “dust up” and the latest counter by SCB to sue Mr. Lawsky:

The lead story in the Financial Times on SCB is so obviously barmy that I’m astonished that the pink paper would give it prominent play. The headline: StanChart seeks advice over countersuit. Even floating this as an course of action reeks either of desperation to create positive news hooks or delusion:

   The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although StanChart is conscious of the delicacy of taking an aggressive stance towards its regulators.

The whole “delicacy” part is code for this having odds of close to zero of happening, so this looks like yet more spin.

The damage was done by the threat to yank the license and access to dollar clearing services, not the “rogue institution” label in the order. And as we’ve written in earlier posts, despite the spinmeister’s efforts to contend otherwise, Lawsky has cited violations of New York law that appear to let him get there, in addition to the charge under the Federal laws on transfers to Iran.

Yves notes that the likelihood of this lawsuit going forward is “zero” since the risk of losing in a NY civil court and the exposure of any other damning evidence that the superintendent has would be a disaster for SCB.

She also highlighted a comment made by Frank Partnoy, former derivatives salesman, now law professor, who noted:

   Indeed, the order puts the bank’s senior attorneys and compliance officers at the heart of the wire stripping scheme, even when outside counsel advised otherwise. As early as 1995, soon after President Bill Clinton announced economic sanctions against Iran, the bank’s general counsel allegedly “embraced a framework for regulatory evasion”. He allegedly strategised about how to avoid scrutiny by the US Office of Foreign Assets Control, known as OFAC, and instructed employees that a memorandum describing the plan to avoid regulatory compliance was “highly confidential & MUST NOT be sent to the US”….

   As recent debacles at Barclays, HSBC and now Standard Chartered demonstrate, employees of big global banks increasingly lack a moral compass. Some general counsels and compliance officers do provide ethical guidance. But many are facilitators or loophole instructors, there to show employees the best way to avoid the law. Not even mafia lawyers go that far; unlike many bankers, mobsters understand the value of an impartial consigliere who will tell them when to stop.

If silly civil lawsuits weren’t enough, the original Reuters’ article, the source of Marcy Wheeler’s original post, was edited to exclude the orders of magnitude of the fraud:

The Reuters article was a pretty damning picture of how the Get Out of Jail Free industry works.

And then, the most damning parts of the article disappeared (Update from Briinhild: the full story is back up). As Yves discovered later in the day yesterday, Reuters pulled those paragraphs of the story that described this whole process.

Yves then posted that Reuters was running interference for elite corruption by scrubbing the article clean of the damning parts and posted original Reuters’ article:

Now I decided to go have a look myself. Being on the vampire shift, I didn’t go looking until mid afternoon. And guess what, the story that was now at that URL was not the same story. Yes, there was a story on Standard Chartered. But the version that Marcy worked from was apparently the original, released at 00:28 AM, titled “U.S. regulators irate at NY action against StanChart.” I’ve loaded that version in a Word and put it up at ScribD, and am embedding it below. It’s 1766 words. Be sure to download it if you are interested in this topic.

Apparently, as was pointed out by an emptywheel reader, Briinhild, Marcy and Yves must have embarrassed Reuters because they reposted the original article later that day.

The latest today from Yves, this “plot thickens” as Federal regulators try to “leash and collar” Superintendent Lawsky:

Today, the Wall Street Journal reported that, “Regulators Seek Unity in U.K. Bank Talks.”

If you read the article, a more accurate headline would be “Federal regulators desperate to get in front of Lawsky mob and call it a parade.” All the article says is the mucho unhappy and very much outflanked Federal regulators have gotten a meeting with Lawsky. Just look at the disconnect between the PR in the first paragraph and the actual state of play in the second:

   U.S. authorities are forming a group with New York’s top financial regulator to negotiate a settlement with Standard Chartered over allegations it illegally hid financial dealings with Iran.

   The U.S. Treasury Department, Federal Reserve, U.S. Department of Justice and Manhattan district attorney’s office are scrambling to reach an understanding with the New York State Department of Financial Services over the ground rules for negotiations with the U.K.’s fifth-largest bank by assets, according to people familiar with the talks.

This is hysterical. “Ground rules for negotiations”? Lawsky does not need the permission of Geithner et. al. to negotiate with Standard Chartered. As long as Lawsky has Cuomo’s backing, he has all the leverage here. And three independent sources told me as of today that Cuomo was fully behind Lawsky. That means he is likely to remain free to operate as he sees fit. It’s a given that if the White House had any real sway over Cuomo and saw fit to intervene, they would have done so by now. There is no downside to Lawsky in going through the motions of seeing if there is a way for him to proceed and have the Feds save a bit of face.

Let me stress again: Lawsky has all the cards, and he must know that.

Yves also cites this article from Bloomberg:

   New York’s financial-services regulator has grounds to shut Standard Chartered Plc (STAN) in the state even if he accepts the firm’s argument that it illegally laundered only a fraction of the $250 billion he claims.

   As the state’s top banking regulator, Benjamin Lawsky has power to act in his discretion against any financial institution he deems untrustworthy, according to the charter of his year-old department.

   Penalties he could impose include fines and the revocation of the bank’s license to operate in the state…

   Even if Standard Chartered’s position is legally sound, the order’s disclosure of internal e-mails suggesting a conspiracy to hide the identity of Iranian clients from regulators has given Lawsky grounds to act when the two sides face off at an administrative hearing Aug. 15, according to experts on both sides of the Atlantic.

   “I don’t care whether it is a half of one percent that weren’t right,” said Arthur Levitt, former chairman of the Securities and Exchange Commission,…

   “There are going to be more that weren’t right…The e-mails are really outrageous. I think Lawsky has uncovered something that probably has a much deeper depth.”…

   Neil Barofsky, who oversaw the U.S. Troubled Asset Relief Program and criticized the U.S. Treasury Department in his book, Bailout, objected to the criticism heaped on Lawsky.

   “This is not Lawsky getting ahead of other regulators,” said Barofsky. “This is Lawsky doing his job.”…

   “Willful non-compliance is very serious,” said Tariq Mirza, a former Federal Deposit Insurance Corp. official now with Grant Thornton. “If those allegations can be substantiated, regulators throw the book at institutions.”

Another article from the International Business Times that speculates what SBC’s sentence would be if it were an individual found guilty of these crimes:

Under New York state statutes against those two crimes, a defendant found guilty could be sentenced to a penalty of between eight-and-one-third and 25 years. The attorney noted that “it seems likely that a maximum sentence would be given because of the extent of criminality alleged in this case.” And if the judge really wanted to throw the book at them, the attorney explained, they could consider every instance where Standard Chartered Bank engaged in alleged illegal conduct, no doubt hundreds of them, as a “discrete act of criminality” rather than “one criminal transaction.”

Federal involvement would make the possible prison term even stiffer, with the appropriate federal money-laundering statute carrying a penalty of “roughly 15 to 19 years,” and a racketeering conviction “punishable by up to 20 years” in Club Fed.

(emphasis mine)

Wouldn’t that be a delightful sight?

As Yves notes in her discussion of these news articles, there is a lot of spin or, as with the case of a New York Times article, misinformation:

There is also an article at the New York Times on Lawsky which comes close to being a hatchet job. It does not look as if the Times made any effort to get to anyone in Lawsky’s camp (by contrast, I know of at least one reporter working on a profile who says everyone who Lawsky has worked with him is extremely complimentary). It also has sources that are spinning (one might say misrepresenting) the genesis. It acknowledges that Lawsky discussed his findings and theories, so it undermines the “blindsided claim. We were told three months ago, with the Fed; the article says April, so this is pretty close to the same time frame and sounds like the same meeting. [..]

(emphasis mine)

The traditional MSM is going to do a lot of the work for federal regulators by sniping at Mr. Lawsky and painting him as a “rogue” and “over-stepping his authority”. It’s bloggers like Marcy Wheeler and Yves Smith that sort out the facts from the hype and innuendo. The ladies rock.

As Yves requested, if you live in New York and support what Mr. Lawsky is doing, especially since the New York Times is taking shots at him now, drop him a note using this form.

Thanks and a h/t to naked capitalism reader Bryan Sean McKown for the title.

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.

Click on images to enlarge

August 10 is the 222nd day of the year (223rd in leap years) in the Gregorian calendar. There are 143 days remaining until the end of the year.

The term ‘the 10th of August’ is widely used by historians as a shorthand for the Storming of the Tuileries Palace on the 10th of August, 1792, the effective end of the French monarchy until it is restored in 1814.

On this day in  1846, Smithsonian Institution was created. After a decade of debate about how best to spend a bequest left to America from an obscure English scientist, President James K. Polk signs the Smithsonian Institution Act into law.

In 1829, James Smithson died in Italy, leaving behind a will with a peculiar footnote. In the event that his only nephew died without any heirs, Smithson decreed that the whole of his estate would go to “the United States of America, to found at Washington, under the name of the Smithsonian Institution, an Establishment for the increase and diffusion of knowledge.” Smithson’s curious bequest to a country that he had never visited aroused significant attention on both sides of the Atlantic.

After the nephew died without heirs in 1835, President Andrew Jackson informed Congress of the bequest, which amounted to 104,960 gold sovereigns, or US$500,000 ($10,100,997 in 2008 U.S. dollars after inflation). The money, however, was invested in shaky state bonds that quickly defaulted. After heated debate in Congress, former President John Quincy Adams successfully argued to restore the lost funds with interest.  Congress also debated whether the federal government had the authority to accept the gift. Congress ultimately accepted the legacy bequeathed to the nation and pledged the faith of the United States to the charitable trust July 1, 1836.

Eight years later, Congress passed an act establishing the Smithsonian Institution, a hybrid public/private partnership, and the act was signed into law on August 10, 1846 by James Polk. (See 20 U.S.C. § 41 (Ch. 178, Sec. 1, 9 Stat. 102).) The bill was drafted by Indiana Democratic Congressman Robert Dale Owen, a Socialist and son of Robert Owen, the father of the cooperative movement.

Gold in Women’s Water Polo and Football, UConn gets a scare.

Women power U.S. Olympic team

Aubrey Cohen, Seattle Post Intelligencer

August 9, 2012

U.S. victories Thursday in the women’s soccer and water polo finals followed a notable trend at this year’s Summer Olympics: American women are winning most of the country’s medals.

American women have hauled in more than one-third more medals than U.S. men, including twice as many gold medals. And that’s despite the fact that 10 percent fewer women’s medals have been awarded so far.

My memories of Flint are as a fairly substantial urban center with lots of Arenas and Halls put up by the Manufacturers and Unions and a ring of Factories (all GM).  Some dense housing but mostly 1 story brick ranches with barely a basement for storms.  Now of course Rabbits for Pets or Meat post-apocalyptic Road Warrior.  It is also flat, dry, and dusty.

Broadcast Schedule

All this is sourced through the NBC Olympics broadcast schedule.  Competition starts again at 8 am tomorrow.  

Competitions designated by (Medal) will award winners that day.  ‘all’ means not specified.  Sometimes NBC especially does mashups and doesn’t include event or competitor information.  Elimination means no round robin, one and done.

These schedules are a place for you to make sure you don’t miss a sport you like and share your observations.  Have fun today!