02/15/2013 archive

Heads up folks, there’s a new sheriff in town and she’s not ready to make nice. Freshman Senator Elizabeth Warren (D-MA) made her debut on the Senate Banking Committee making it very clear to the bank regulators from the alphabet soup of agencies sitting before her, that she was not pleased:

The Democratic senator from Massachusetts had a straightforward question for them: When was the last time you took a Wall Street bank to trial? It was a harder question than it seemed.

“We do not have to bring people to trial,” Thomas Curry, head of the Office of the Comptroller of the Currency, assured Warren, declaring that his agency had secured a large number of “consent orders,” or settlements.

“I appreciate that you say you don’t have to bring them to trial. My question is, when did you bring them to trial?” she responded.

“We have not had to do it as a practical matter to achieve our supervisory goals,” Curry offered. [..]

The financial regulators can blame, at least in part, Wall Street lobbyists (along with outgoing Treasury Secretary Tim Geithner and Senate Republicans) for their embarrassing turn at the hearing. Warren would have been on the panel herself representing the Consumer Financial Protection Bureau, instead of a sitting senator, if her nomination to head the agency hadn’t been thwarted in 2011.

After getting the essentially the same answer from the others at the table, Sen. Warren, who was a friend and admirer of the late Internet activist Aaron Swartz who all too briefly was her constituent, alluded to his suicide chastised the lack of any criminal prosecutions:

“There are district attorneys and United States attorneys out there every day squeezing ordinary citizens on sometimes very thin grounds and taking them to trial in order to make an example, as they put it. I’m really concerned that ‘too big to fail’ has become ‘too big for trial.”

Sen. Warren is part of the “new breed” of Senate Democrats who are not going to sit quietly in the background, as digby said, “for at least four years before they were allowed to assert themselves in even the tiniest ways.” But is she rally that “awesome?”

At naked capitalism, Yves Smith is more reserved in her assessment and believes that Sen. Warren is hamstrung by the time constraints for questions and answers that “produce “sound-bites, grand-standing, and run-out-the-clock obfuscation rather than meaningful interaction:”

So while Warren fans are happy with her debut, these star turns are useful for signaling, but they are not how she will make a difference, if she can make a difference. The Senate gives her ready media access, but the convention in the Senate is for newbies keep a low profile for the first six months. Warren might be allowed some liberties on banking issues, given her expertise in this arena. Notice how she breezily overstepped her time limits in the video clip. But expect her to hew to convention elsewhere, otherwise she could undermine her ability to get things done. Remember, Hillary Clinton had to bring fellow Senators coffee as a freshman to prove she didn’t have airs.

That also means we are likely to remain in the dark about where Warren stands on other issues that affect middle class families, like social insurance programs and the progressivity of taxes, until after the deficit pact is done (Warren will be expected to fall in with the party position), unless we have another kick-the-can deal in March and real fights take place when she is in a position to operate a bit more freely.

So the early signs of how tough-minded Warren intends to be will come through the letters, speeches, and positions she takes on banking matters outside the formal Committee sessions. Her early talk is promising, but we need to see how she follows up with action.**

Meanwhile, the lack of clear, simple regulation that was the hallmark of the Glass – Steagall Act has Wall Steet manipulating Dodd – Frank to “bypass new regulations aimed at limiting reckless speculation, enhancing the prospect of another derivatives crisis, warn some market participants.”

Under the Dodd-Frank financial reform law adopted by Congress in 2010, investors are required to set aside significant sums of cash to cover losses on their derivatives trades — money they could otherwise plow into additional investments. That policy came in response to the financial crisis that began in 2007, when major financial institutions found themselves unable to cover hundreds of billions of dollars in shortfalls on derivatives trades.

But traders have recently forged a path around these so-called margin requirements in order to allow them to harvest larger profits via larger bets: They are repackaging some derivatives known as swaps into another financial product known as futures. Futures are less stringently regulated, meaning investors can stake out larger positions while reserving smaller amounts of cash.

I don’t expect that President Obama’s nominee for Treasury Secretary, Jack Lew, will be any better the Tim Geithner since he has been a steady defender of deregulation and repeatedly said that he didn’t “believe that deregulation was the proximate cause” of the banking crisis. As President Bill Clinton’s head of OMB, Mr. Lew organized the gutting of Glass-Steagall protections against banker adventurism.

It seems that Sen. Warren has struck a nerve when she said:

At one point, Warren asked why big banks’ book value was lower, when most corporations trade above book value, saying there could be only two reasons for it.

“One would be because nobody believes that the banks’ books are honest. Second, would be that nobody believes that the banks are really manageable. That is, if they are too complex either for their own institutions to manage them or for the regulators to manage them” {..}

That set off angry responses to Politico’s Morning Money. “While Senator Warren had every right to ask pointed questions at today’s Senate Banking Committee hearing, her claim that ‘nobody believes’ that bank books are honest is just plain wrong,” emailed a “top executive” to the financial newsletter. ” Perhaps someone ought to remind the Senator that the campaign is over and she should act accordingly if she wants to be taken seriously.” [..]

In an email, a GOP bank lobbyist said, “Republicans also would like to know why the Democratic donor base has avoided trial. Maybe she should subpoena the DSCC and Obama’s super PAC to answer her question.”

Consumer Bankers Association CEO Richard Hunt was slightly more diplomatic. “We have been through more tests and thorough exams than any college student over the past four years, including many conducted by the CFPB. The results of the Hamilton Partners Financial Index and the testimony of OCC Comptroller [Thomas] Curry were very clear: the United States banking system is safe and sound, supported by historic and permanent capital ratios. We are working every day to fulfill the financial needs of the American consumer and small business and will continue to work with any and all lawmakers who seek to assist in this extremely important process.”

Awww, she hurt their feelings.

Sen. Warren has a Mt. Everest size hill to climb. We wish her luck.

“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”.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial: A Defense Secretary, Blocked by Politics

For the last four years, Senate Republicans have used the power of the filibuster to block legislation, bottle up nominees to courts and government departments, and strangle federal agencies, even though they are in the minority. On Thursday, they hit a new low. They successfully filibustered Chuck Hagel, President Obama’s nominee for defense secretary, the first time a cabinet nominee for this post has been prevented from receiving an up-or-down vote.

The Constitution says the Senate must give or withhold its consent to presidential nominees; it does not give minority blocs the power to determine the outcome. The Senate could have restored the power of a majority last month if Mr. Reid had agreed to a proposal to reduce this abuse, but he did not. Though Republicans are determined to turn cabinet nominations into tortuous ordeals, Democrats gave them the power to do so.

Paul Krugman: Rubio and the Zombies

The State of the Union address was not, I’m sorry to say, very interesting. True, the president offered many good ideas. But we already know that almost none of those ideas will make it past a hostile House of Representatives.

On the other hand, the G.O.P. reply, delivered by Senator Marco Rubio of Florida, was both interesting and revelatory. And I mean that in the worst way. For Mr. Rubio is a rising star, to such an extent that Time magazine put him on its cover, calling him “The Republican Savior.” What we learned Tuesday, however, was that zombie economic ideas have eaten his brain.

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 15 is the 46th day of the year in the Gregorian calendar. There are 319 days remaining until the end of the year (320 in leap years).

On this day in 1903, toy store owner and inventor Morris Michtom places two stuffed bears in his shop window, advertising them as Teddy bears. Michtom had earlier petitioned President Theodore Roosevelt for permission to use his nickname, Teddy. The president agreed and, before long, other toy manufacturers began turning out copies of Michtom’s stuffed bears, which soon became a national childhood institution.

The name Teddy Bear comes from former United States President Theodore Roosevelt, whose nickname was “Teddy”. The name originated from an incident on a bear-hunting trip in Mississippi in November 1902, to which Roosevelt was invited by Mississippi Governor Andrew H. Longino. There were several other hunters competing, and most of them had already killed an animal. A suite of Roosevelt’s attendants, led by Holt Collier, cornered, clubbed, and tied an American Black Bear to a willow tree after a long exhausting chase with hounds. They called Roosevelt to the site and suggested that he should shoot it. He refused to shoot the bear himself, deeming this unsportsmanlike, but instructed that the bear be killed to put it out of its misery, and it became the topic of a political cartoon by Clifford Berryman in The Washington Post on November 16, 1902. While the initial cartoon of an adult black bear lassoed by a white handler and a disgusted Roosevelt had symbolic overtones, later issues of that and other Berryman cartoons made the bear smaller and cuter.

Morris Michtom saw the drawing of Roosevelt and the bear cub and was inspired to create a new toy. He created a little stuffed bear cub and put it in his shop window with a sign that read “Teddy’s bear,” after sending a bear to Roosevelt and receiving permission to use his name. The toys were an immediate success and Michtom founded the Ideal Novelty and Toy Co.

At the same time in Germany, the Steiff firm, unaware of Michtom’s bear, produced a stuffed bear from Richard Steiff‘s designs. They exhibited the toy at the Leipzig Toy Fair in March 1903 and exported 3,000 to the United States.

By 1906 manufacturers other than Michtom and Steiff had joined in and the craze for “Roosevelt Bears” was such that ladies carried them everywhere, children were photographed with them, and Roosevelt used one as a mascot in his bid for re-election.

American educator Seymour Eaton wrote the children’s book series The Roosevelt Bears, while composer John Bratton wrote “The Teddy Bear Two Step” which, with the addition of Jimmy Kennedy‘s lyrics, became the song “The Teddy Bears’ Picnic”.

Early teddy bears were made to look like real bears, with extended snouts and beady eyes. Today’s teddy bears tend to have larger eyes and foreheads and smaller noses, babylike features that make them more attractive to buyers because they enhance the toy’s cuteness, and may even be pre-dressed.

I think the Obama administration has lost its collective mind and thinks that we are all too stupid to notice, but this is beyond absurd.

Obama DOJ again refuses to tell a court whether CIA drone program even exists

by Glenn Greenwald, The Guardian

As the nation spent the week debating the CIA assassination program, Obama lawyers exploit secrecy to shield it from all review

It is not news that the US government systematically abuses its secrecy powers to shield its actions from public scrutiny, democratic accountability, and judicial review. But sometimes that abuse is so extreme, so glaring, that it is worth taking note of, as it reveals its purported concern over national security to be a complete sham.

Such is the case with the Obama DOJ’s behavior in the lawsuit brought by the ACLU (pdf) against the CIA to compel a response to the ACLU’s Freedom of Information Act (FOIA) request about Obama’s CIA assassination program. That FOIA request seeks nothing sensitive, but rather only the most basic and benign information about the “targeted killing” program: such as “the putative legal basis for carrying out targeted killings; any restrictions on those who may be targeted; any civilian casualties; any geographic limits on the program; the number of targeted killings that the agency has carried out.”

Everyone in the world knows that the CIA has a targeted killing program whereby it uses drones to bomb and shoot missiles at those it wants dead, including US citizens. This is all openly discussed in every media outlet.

Key Obama officials, including the president himself, not only make selective disclosures about this program but openly boast about its alleged successes. Leon Panetta, then the CIA Director, publicly said all the way back in 2009 when asked about the CIA drone program: “I think it does suffice to say that these operations have been very effective because they have been very precise.” In 2010, Panetta, speaking to the Washington Post, hailed the CIA drone program in Pakistan as “the most aggressive operation that CIA has been involved in in our history”. This is just a partial sample of Obama official boasts about this very program (for more, see pages 15 to 28 here).

Despite all that, the Obama DOJ from the start has refused not only to provide the requested documents about the CIA drone program, but they refuse to say whether such documents even exist. They do so by insisting that whether there even exists such a thing as a “CIA drone program” is itself classified, and therefore, they can neither admit nor deny whether they possess any of the documents sought by the FOIA request: “the very fact of the existence or nonexistence of such documents is itself classified,” repeats the Obama DOJ over and over like some hypnotic Kafkaesque mantra.

Obama’s Reverse Imaginary Friend, the Assassination Robot

bt Marcy Wheeler, emptywheel

The Obama Administration is getting more and more like that crazy old man in the park talking to an imaginary friend. Only it works in reverse. It sends out real people to engage in hours of conversations with other real people about a real topic and then pretends both were pretend.

It sends John Brennan to the Senate for 3.5 hours where he has conversations about drones over and over with people, never once claiming not to understand what they mean when they discuss drones and/or targeted killing. [..]

And yet in spite of the fact that Brennan talks about lethal strikes over and over, the government maintains (pdf) that none of these conversations – none of these mentions of lethal strikes – amounts to an admission that the government is, in fact, conducting lethal strikes.

   Plaintiffs also cite the transcript of the confirmation hearing of John Brennan, the nominee for Director of Central Intelligence. They assert that “the nominee . . . and members of the committee extensively discussed various aspects of the CIA’s targeted killing program . . . .” However, plaintiffs identify no statement in which Mr. Brennan allegedly confirms purported CIA involvement in the use of unmanned aerial vehicles for “targeted killing.” Rather, plaintiffs cite instances in which members of Congress mentioned “targeted killing,” and general discussions of “targeted killing” that do not address the involvement of any particular agency.

Well, fine. If John Brennan believes these to be imaginary conversations with an imaginary oversight committee, then it’s clear he is mentally ill-equipped to deal with the stress of running the CIA. [..]

What’s most interesting, however, is that this apparently batshit crazy man talking to ghosts, John Brennan, is going to have to deal with a woman, Dianne Feinstein, who said this, as one of his primary overseers.

   FEINSTEIN: I have been calling and others have been calling the rank – the vice chairman and I on the use of target – for increased transparency on the use of targeted force for over a year, including the circumstances in which such force is directed against U.S. citizens and noncitizens alike.

   I’ve also been attempting to speak publicly about the very low number of civilian casualties that result from such strikes. I have been limited in my ability to do so. But for the past several years, this committee has done significant oversight of the government’s conduct of targeted strikes and the figures we have obtained from the executive branch which we have done our utmost to verify, confirm that the number of civilian casualties that have resulted from such strikes each year has typically been in the single digits. When I asked to give out the actual numbers, I’m told, “you can’t”, and I say, “why not?” “Because it’s classified. It’s a covert program. For the public, it doesn’t exist.” Well, I think rationale, Mr. Brennan, is long gone and I’m going to talk to you and my questions a little bit about that because I think it’s very important that we share this data with people.

This apparently batshit crazy person (according to the Administration, not me) is telling the Chair of the Committee that oversees the CIA that she’s delusional, the programs she’s talking about don’t exist.

There’s a lot of crazy old people talking on benches in DC, I guess.

And what abou those seven memos that the Senate Intelligence Committee requested before they vote on Brennan’s confirmation are imaginary, too?

What is even more incongruous is that Tea Party crazy Senator from Kentucky, Rand Paul asked some very serious questions in two letters that no one else asked

Do you believe that the president has the power to authorize lethal force, such as a drone strike, against a U.S. citizen on U.S. soil? What about the use of lethal force against a non-U.S. person on U.S. soil?

Do you believe that the prohibition on CIA participation in domestic law enforcement, first established by the National Security Act of 1947, would apply to the use of lethal force, especially lethal force directed at an individual on a targeting list, if a U.S. citizen on a targeting list was found to be operating on U.S. soil? What if the individual on the targeting list was a non-U.S. person but found to be operating on U.S. soil? Do you consider such an operation to be domestic law enforcement, or would it only be subject to the president’s wartime powers?

Do you believe that the Posse Comitatus Act, or any other prohibition on the use of the military in domestic law enforcement, would prohibit the use of military hardware and/or personnel in pursuing terrorism suspects-especially those on a targeting list-found to be operating on U.S. soil? If not, would you support the use of such assets in pursuit of either U.S. citizen or non-U.S. persons on U.S. soil suspected of terrorist activity?

What role did you play in approving the drone strike that led to the death of the underage, U.S. citizen son of Anwar al-Awlaki? Unlike his father, he had not renounced his U.S. citizenship. Was the younger al-Awlaki the intended target of the U.S. drone strike which took his life? Further, do you reject the subsequent claim, apparently originating from anonymous U.S. government sources, that the young man had actually been a “military age male” of 20 years or more of age, something that was later proven false by the release of his birth certificate?

Is the U.S. drone strike strategy exclusively focused on targeting al Qaeda, or is it also conducting counterinsurgency operations against militants seeking to further undermine their government, such as in Yemen?

Do you support the Attorney General’s 2012 guidance to the NCTC that it may deliberately collect, store, and “continually assess” massive amounts of data on all U.S. citizens for potential correlations to terrorism, even if the U.S. citizens targeted have no known ties to terrorism?

And you thought Bush was stupid? This is too surreal.