08/29/2013 archive

You know, like dialysis and bridges that don’t fall down and paved roads and streetlights.

Little things.

U.S. spy network’s successes, failures and objectives detailed in ‘black budget’ summary

By Barton Gellman and Greg Miller, Washington Post

Updated: Thursday, August 29, 1:02 PM

U.S. spy agencies have built an intelligence-gathering colossus since the attacks of Sept. 11, 2001, but remain unable to provide critical information to the president on a range of national security threats, according to the government’s top secret budget.

The $52.6 billion “black budget” for fiscal 2013, obtained by The Washington Post from former intelligence contractor Edward Snowden, maps a bureaucratic and operational landscape that has never been subject to public scrutiny. Although the government has annually released its overall level of intelligence spending since 2007, it has not divulged how it uses those funds or how it performs against the goals set by the president and Congress.

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Among the notable revelations in the budget summary:

•Spending by the CIA has surged past that of every other spy agency, with $14.7 billion in requested funding for 2013. The figure vastly exceeds outside estimates and is nearly 50 percent above that of the National Security Agency, which conducts eavesdropping operations and has long been considered the behemoth of the community.

•The CIA and NSA have launched aggressive new efforts to hack into foreign computer networks to steal information or sabotage enemy systems, embracing what the budget refers to as “offensive cyber operations.”

•The NSA planned to investigate at least 4,000 possible insider threats in 2013, cases in which the agency suspected sensitive information may have been compromised by one of its own. The budget documents show that the U.S. intelligence community worried long before Snowden’s leaks about “anomalous behavior” by personnel with access to highly classified material.

•U.S. intelligence officials take an active interest in foes as well as friends. Pakistan is described in detail as an “intractable target,” and counterintelligence operations “are strategically focused against [the] priority targets of China, Russia, Iran, Cuba and Israel.”

•In words, deeds and dollars, intelligence agencies remain fixed on terrorism as the gravest threat to national security, which is listed first among five “mission objectives.” Counterterrorism programs employ one in four members of the intelligence workforce and account for one-third of all spending.

•The governments of Iran, China and Russia are difficult to penetrate, but North Korea’s may be the most opaque. There are five “critical” gaps in U.S. intelligence about Pyongyang’s nuclear and missile programs, and analysts know virtually nothing about the intentions of North Korean leader Kim Jong Un.

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In an introduction, (Director of National Intelligence James R.) Clapper said the threats now facing the United States “virtually defy rank-ordering.” He warned of “hard choices” as the intelligence community – sometimes referred to as the “IC” – seeks to rein in spending after a decade of often double-digit budget increases.

This year’s budget proposal envisions that spending will remain roughly level through 2017 and amounts to a case against substantial cuts.

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The summary provides a detailed look at how the U.S. intelligence community has been reconfigured by the massive infusion of resources that followed the Sept. 11 attacks. The United States has spent more than $500 billion on intelligence during that period, an outlay that U.S. officials say has succeeded in its main objective: preventing another catastrophic terrorist attack in the United States.

The result is an espionage empire with resources and reach beyond those of any adversary, sustained even now by spending that rivals or exceeds the levels reached at the height of the Cold War.

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Historical data on U.S. intelligence spending is largely nonexistent. Through extrapolation, experts have estimated that Cold War spending likely peaked in the late 1980s at an amount that would be the equivalent of $71 billion today.

Spending in the most recent cycle surpassed that amount based on the $52.6 billion detailed in documents obtained by The Post, plus a separate $23 billion devoted to intelligence programs that more directly support the U.S. military.

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Despite the vast outlays, the budget blueprint catalogs persistent and in some cases critical blind spots.

Throughout the document, U.S. spy agencies attempt to rate their efforts in tables akin to report cards, generally citing progress but often acknowledging that only a fraction of their questions could be answered – even on the community’s foremost priority, counter-terrorism.

In 2011, the budget assessment says intelligence agencies made at least “moderate progress” on 38 of their 50 top counterterrorism gaps, the term used to describe blind spots. Several concern Lebanon’s Hezbollah movement, an enemy of Israel that has not attacked U.S. interests directly since the 1990s.

Other blank spots include questions about the security of Pakistan’s nuclear components when they are being transported, the capabilities of China’s next generation fighter aircraft, and how Russia’s government leaders are likely to respond “to potentially destabilizing events in Moscow, such as large protests and terrorist attacks.”

A chart outlining efforts to address key questions on biological and chemical weapons is particularly bleak. U.S. agencies set themselves annual goals of making progress in at least five categories of intelligence collection related to these weapons. In 2011, the agencies made headway on just two gaps; a year earlier the mark was zero.

The documents describe expanded efforts to “collect on Russian chemical warfare countermeasures” and assess the security of biological and chemical laboratories in Pakistan.

A table of “critical” gaps listed five for North Korea, more than for any other country that has or is pursuing a nuclear bomb.

The intelligence community seems particularly daunted by the emergence of “home grown” terrorists who plan attacks in the United States without direct support or instruction from abroad, a threat realized this year, after the budget was submitted, in twin bombings at the Boston Marathon.

The National Counterterrorism Center has convened dozens of analysts from other agencies in attempts to identify “indicators” that could help law enforcement understand the path from religious extremism to violence. The FBI was in line for funding to increase the number of agents surreptitiously tracking activity on jihadist Web sites.

But a year before the bombings in Boston the search for meaningful insight into the stages of radicalization was described as one of “the more challenging intelligence gaps.”

That’s right, Ed Snowden.  Who’s the traitor now?

It was announced last week that The Guardian and The New York Times had formed a partnership to report on the documents the were leaked by Edward Snowden in relationship to the involvement of the UK’s GCHQ. The arrangement came after the British government demanded that The Guardian hand over the NSA files in their possession. Instead, The Guardian choose to destroy the records that were in their UK offices.

Journalists in America are protected by the first amendment which guarantees free speech and in practice prevents the state seeking pre-publication injunctions or “prior restraint”.

It is intended that the collaboration with the New York Times will allow the Guardian to continue exposing mass surveillance by putting the Snowden documents on GCHQ beyond government reach. Snowden is aware of the arrangement.

The collaboration echoes that of the partnership forged in 2010 between the Guardian, the New York Times and Der Spiegel in relation to WikiLeaks’s release of US military and diplomatic documents.

In a more quiet arrangement, ProPublica, a unique nonprofit investigative reporting group of former journalists, has also partnered with The Guardian but it is not yet known on they will focus. ProPublica has won two Pulitzer Prizes for its reporting on national and investigative reporting.

Charles Pierce, at Esquire’s Politics Blog has been following the NSA story and the unique poutrage over Snowden and The Guardian‘s journalist Glenn Greenwald that ignited a laughable mini blog war. He offered a couple of amusingly precise observations on the Snowden effect:

The current state of play seems to be centered on the new family fun game, How Much Of A Dick Is Glenn Greenwald Anyway? I decline to play. It is a stupid, wasteful exercise because, frankly, the vessel doesn’t matter to me. The information that it carries is the only thing that matters. What has Edward Snowden, International Man Of Luggage, revealed that isn’t true? I don’t want to hear that we all knew it already. I don’t want quibbling about how the data sweeps work, and how they might not be as horrible as they’re being made out to be because I don’t trust the people making that argument. I don’t to hear about how the fudging of the details of David Miranda’s arrest somehow lessens the credibility of what we now know. I don’t want to hear how it may have inconvenienced our all-too-human-mistake-prone heroes in the NSA, who are they all, all honorable men. What do we know now because of the revelations that is not true? The fact remains that we do not know any of this without Snowden’s revelations to Greenwald and, thereby, to the world. The national conversation is not even happening. The NSA is not owning up to its all-too-human mistakes. The FISA Court isn’t retroactively flexing to prove it isn’t the intelligence community’s poodle. The authoritarian impulse has not even been given the brief pause we currently enjoy. None of this happens without Snowden and Greenwald and, as a citizen, I could care less that people think Glenn Greenwald is full of himself. Don’t invite him to dinner.

Charles then jogs the memories of those who care to have forgotten how Iran/Contra began:

For the benefit of anyone for whom reading is perhaps not fundamental, Glenn Greenwald’s personality, and the peripatetic globe-trotting of Edward Snowden, are not the story here. If you decide to make them the story, then you are taking yourself off the real story, and that’s your fault, not Greenwald’s or Snowden’s. Unless, of course, you think the Times, and now ProPublica, are acting the way Lyndon LaRouche’s people did. I remind folks who get caught up in the vessel and miss what’s inside that, on November 3, 1986, there was an oddball story in an obscure Lebanese weekly newspaper called al-Shiraa about arms transfers in the Middle East. This story was flatly denied by everyone in this country — including President Ronald Reagan — and al Shiraa was treated as though it was being put out by two guys with a mimeograph machine in their mother’s basement. This, boys and girls, was how the Iran-Contra scandal began. The government “hit back.” It didn’t matter. The story remained the story. And, it could be argued, the country never really caught up with what al Shiraa reported.

The country and the world have Snowden and Greenwald to thank for holding the current administration to its promise of transparency, their personal lives and beliefs are irrelevant.  

“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.

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New York Times Editorial Board: More Answers Needed on Syria

Despite the pumped-up threats and quickening military preparations, President Obama has yet to make a convincing legal or strategic case for military action against Syria. While there should be some kind of international response to the chemical weapons attack that killed hundreds of civilians last week, Mr. Obama has yet to spell out how that response would effectively deter further use of chemical weapons.

For starters, where is the proof that President Bashar al-Assad of Syria carried out the attack? American, British, French and Turkish officials have been unequivocal in blaming Mr. Assad for the attack, which seems likely since there has been no indication that his regime has lost control of its chemical weapons arsenal or that the opposition has the capability to deliver such a weapon. Still, no evidence to support this claim has been released.

Robert Fisk: Does Obama Know He’s Fighting on al-Qa’ida’s Side?

‘All for one and one for all’ should be the battle cry if the West goes to war against Assad’s Syrian regime

If Barack Obama decides to attack the Syrian regime, he has ensured – for the very first time in history – that the United States will be on the same side as al-Qa’ida.

Quite an alliance! Was it not the Three Musketeers who shouted “All for one and one for all” each time they sought combat? This really should be the new battle cry if – or when – the statesmen of the Western world go to war against Bashar al-Assad.

The men who destroyed so many thousands on 9/11 will then be fighting alongside the very nation whose innocents they so cruelly murdered almost exactly 12 years ago. Quite an achievement for Obama, Cameron, Hollande and the rest of the miniature warlords.

These cases don’t have much in common, but they do illustrate the arrogance of our Moron Masters of the Universe.

JPMorgan Bribe Probe Said to Expand in Asia as Spreadsheet Is Found

By Dawn Kopecki, Bloomberg News

Aug 28, 2013 11:51 PM ET

A probe of JPMorgan Chase & Co.’s (JPM) hiring practices in China has uncovered red flags across Asia, including an internal spreadsheet that linked appointments to specific deals pursued by the bank, people with knowledge of the matter said.

The Justice Department has joined the Securities and Exchange Commission in examining whether JPMorgan hired people so that their family members in government and elsewhere would steer business to the firm, possibly violating bribery laws, said one of the people, all of whom asked to not be named because the inquiry isn’t public. The bank has opened an internal investigation that has flagged more than 200 hires for review, said two people with knowledge of the examination, results of which JPMorgan is sharing with regulators.

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The spreadsheet, which links some hiring decisions to specific transactions pursued by the bank, may be viewed by regulators as evidence that JPMorgan added people in exchange for business, according to one person with knowledge of the review.

Merrill Lynch in Big Payout for Bias Case

By PATRICK MCGEEHAN, The New York Times

August 27, 2013, 9:02 pm

Merrill Lynch, one of the biggest brokerage firms on Wall Street, has agreed to pay $160 million to settle a racial bias lawsuit that wound through the federal courts for eight years, including two appeals to the United States Supreme Court.

The payout in the suit, which was filed on behalf of 700 black brokers who worked for Merrill, would be the largest sum ever distributed to plaintiffs in a racial discrimination suit against an American employer.

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Among the many twists in the case was the admission in a deposition by Merrill’s first black chief executive, E. Stanley O’Neal, that black brokers might have a harder time because most of the firm’s prospective clients were white and might not trust their wealth to brokers who were not.

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Class actions are the only way around the custom on Wall Street of making all employees agree to resolve any disputes through arbitration. But to persuade a court to certify a class, the plaintiffs must prove that a sufficient number of workers are in a similar situation.

Mr. McReynolds and his lawyers gradually persuaded more brokers to sign on as representatives of the class. Early on, as the accusations in the case drew attention from the news media, Merrill executives rushed to hire more blacks into the firm’s training program and met with the plaintiffs to try to reach a settlement.

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Three years ago, a judge in Chicago denied their motion to be certified as a class. They appealed to the United States Court of Appeals for the Seventh Circuit, but were denied. That could have been the end of the road, especially after the United States Supreme Court ruled in 2011 against female employees of Wal-Mart who tried to sue the retailer for sex-discrimination as a large class.

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Even though the Wal-Mart decision was considered a serious setback for class actions like the McReynolds case, Ms. Friedman went back to the Seventh Circuit last year.

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In a decision that surprised many observers, an appellate panel accepted that argument and reversed the lower court’s denial of class certification. Merrill appealed that decision to the Supreme Court but was denied a hearing. A trial date was set for January 2014, but Merrill decided to settle rather than drag the fight on any longer.

Goldman Sachs’ Jason Lee Indicted on Rape Charge

By Chris Dolmetsch, Bloomberg News

Aug 28, 2013 6:07 PM ET

Goldman Sachs Group Inc. (GS) managing director Jason Lee was indicted by a grand jury on a rape charge stemming from the alleged assault on a 20-year-old woman at a Long Island, New York, home, court records show.

Lee, 37, was arrested and charged with first-degree rape on Aug. 21 in the town of East Hampton after police went to his Clover Leaf Lane vacation home and learned that a woman had been sexually assaulted inside the residence, where several people had gathered, according to a police statement.

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The alleged assault occurred at a home of the defendant, police said. A description of a 4-bedroom, 3-bathroom 2,700-square-foot house on the street where Lee was arrested, posted on the website of Douglas Elliman Real Estate, said it was available from Aug. 1 until Labor Day for $33,000.

U.S. Bank Legal Bills Exceed $100 Billion

By Donal Griffin & Dakin Campbell, Bloomberg News

Aug 28, 2013 12:02 PM ET

That’s the amount allotted to lawyers and litigation, as well as for settling claims about shoddy mortgages and foreclosures, according to data compiled by Bloomberg. The sum, equivalent to spending $51 million a day, is enough to erase everything the banks earned for 2012.

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Legal fees and litigation costs accounted for $56 billion of Bloomberg’s $103 billion tally, with $7.2 billion incurred just for the first six months of this year. The rest, $47 billion, was for payments to mortgage investors.

Bank of America, led by Chief Executive Officer Brian T. Moynihan, 53, increased its legal costs by $3.3 billion in the first half to a total of $19.1 billion. JPMorgan added $1.5 billion in the period. The other four lenders added about $2.4 billion combined in the six months.

Jamie Dimon, 57, JPMorgan’s CEO, is contending with criminal probes into his New York-based bank’s energy-trading and mortgage-backed securities operations while grappling with investigations into anti-money-laundering safeguards, foreclosures, credit-card collections, and the $6.2 billion London Whale trading loss last year.

A U.S. housing regulator is seeking at least $6 billion to settle claims JPMorgan sold bad mortgage bonds to government-backed finance companies Fannie Mae (FNMA) and Freddie Mac, a person briefed on the matter said this week. The bank is fighting the request, the person said.

Penalties in the London Whale episode, named for a U.K. trader whose big bets moved markets, may reach $600 million, the Wall Street Journal reported yesterday. Regulators also are preparing enforcement actions against JPMorgan for its treatment of consumers during the recession that could result in fines of about $80 million, the New York Times reported, citing people briefed on the matter.

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The totals would be billions of dollars higher if U.S. cases involving the biggest European banks were counted. HSBC Holdings Plc, Europe’s largest lender, agreed last year to pay $1.92 billion to settle U.S. money-laundering probes. UBS AG, the largest lender in Switzerland, said in July it would pay $885 million to Fannie Mae and Freddie Mac (FMCC) on claims that it improperly sold them mortgage-backed securities.

Barclays Plc, UBS and Royal Bank of Scotland Group Plc were fined a combined $2.5 billion to settle allegations by regulators in the U.S. and elsewhere that that they helped rig the benchmark London interbank offered rate.

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Citigroup, the third-biggest U.S. bank, added $1.4 billion in legal expenses so far this year, almost double its costs for the first half of 2012. The New York-based lender is facing “legacy issues” tied to mortgage products, Chief Financial Officer John Gerspach said last month.

The bank also boosted its estimate for possible future legal losses not covered by reserves to $5 billion as of June from $4 billion a year earlier. JPMorgan raised the upper end of its estimate to $6.8 billion from $5.3 billion. Bank of America reduced its figure to $2.8 billion from $4.1 billion after settling some of its biggest pending cases.

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The top four banks added $1.4 billion to their reserves in the first half to cover repurchases of bad home loans, filings show. These cases typically involve demands for refunds from investors who bought mortgages or mortgage-backed securities and later uncovered flaws in the paperwork, such as incorrect data about the borrowers and properties. Banks typically sell the mortgages with a promise to buy them back if such defects arise.

Bank of America has set aside $28.6 billion for repurchases since 2008, more than half of the total for the four lenders, according to filings. When added to legal costs, the firm’s combined tally is about $48 billion.

Those reserves probably aren’t enough to cover more recent cases, according to Peabody, the Portales analyst. Bank of America is facing a multibillion-dollar settlement with the Federal Housing Finance Agency tied to mortgage-backed securities, he wrote in an Aug. 6 note that recommended “aggressively” selling Bank of America shares.

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“It’s likely the financial institutions don’t yet know of some of these lawsuits,” said Walter J. Mix III, head of financial-institutions consulting at Berkeley Research Group LLC and a former commissioner of the California Department of Financial Institutions. “The litigation can go on for 10 years or more.”

This is your morning Open Thread. Pour a cup of your favorite morning beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

August 29 is the 241st day of the year (242nd in leap years) in the Gregorian calendar. There are 124 days remaining until the end of the year.

On this day in 1533, the 300 year old Inca civilization ended when Francisco Pizarro’s conquistadors strangled the last Inca Emperor, Atahuallpa.

High in the Andes Mountains of Peru, the Inca built a dazzling empire that governed a population of 12 million people. Although they had no writing system, they had an elaborate government, great public works, and a brilliant agricultural system. In the five years before the Spanish arrival, a devastating war of succession gripped the empire. In 1532, Atahuallpa’s army defeated the forces of his half-brother HuÁscar in a battle near Cuzco. Atahuallpa was consolidating his rule when Pizarro and his 180 soldiers appeared.

In 1531, Pizarro sailed down to Peru, landing at Tumbes. He led his army up the Andes Mountains and on November 15, 1532, reached the Inca town of Cajamarca, where Atahuallpa was enjoying the hot springs in preparation for his march on Cuzco, the capital of his brother’s kingdom. Pizarro invited Atahuallpa to attend a feast in his honor, and the emperor accepted. Having just won one of the largest battles in Inca history, and with an army of 30,000 men at his disposal, Atahuallpa thought he had nothing to fear from the bearded white stranger and his 180 men. Pizarro, however, planned an ambush, setting up his artillery at the square of Cajamarca.

On November 16, Atahuallpa arrived at the meeting place with an escort of several thousand men, all apparently unarmed. Pizarro sent out a priest to exhort the emperor to accept the sovereignty of Christianity and Emperor Charles V., and Atahuallpa refused, flinging a Bible handed to him to the ground in disgust. Pizarro immediately ordered an attack. Buckling under an assault by the terrifying Spanish artillery, guns, and cavalry (all of which were alien to the Incas), thousands of Incas were slaughtered, and the emperor was captured.

Atahuallpa offered to fill a room with treasure as ransom for his release, and Pizarro accepted. Eventually, some 24 tons of gold and silver were brought to the Spanish from throughout the Inca empire. Although Atahuallpa had provided the richest ransom in the history of the world, Pizarro treacherously put him on trial for plotting to overthrow the Spanish, for having his half-brother HuÁscar murdered, and for several other lesser charges. A Spanish tribunal convicted Atahuallpa and sentenced him to die. On August 29, 1533, the emperor was tied to a stake and offered the choice of being burned alive or strangled by garrote if he converted to Christianity. In the hope of preserving his body for mummification, Atahuallpa chose the latter, and an iron collar was tightened around his neck until he died.