09/27/2013 archive

Grand Bargain Circus – Red Clowns Gone Wild!

Dogs and horses in usual circus act

Courtesy of the Boston Public Library, Leslie Jones Collection.

Step right up! Come one, come all to the continuing Grand Bargain Circus!  

Just as when last we checked, the red clowns are still refusing to get in the car and leave the ring until the Ringmaster makes an enticing offer.  Some of the red clowns have been imbibing in the fermented popcorn and their demands are becoming increasingly delusional.  Today the red clowns are going wild, making all of the outrageous demands that they can think of to force the Ringmaster to beat more concessions out of the audience.  

All the rage for the past couple of days has been the red clowns saying that they won’t get in the car if the Ringmaster reduces the number of those in the audience without health insurance to about 30 million and provides a sizable return to the Ringmaster’s donors in the health care sector rewards the insurance and pharmaceutical industries handsomely.

That simple demand which the Ringmaster refuses to countenance has festered into a raging torrent of demands, among them that the audience fork over more taxes to offset the tax liability of the rich and also acquiesce to more environmental destruction.

The drama here under the big top is growing as the demands rise…

Punting the Pundits

“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

Paul Krugman: Plutocrats Feeling Persecuted

Robert Benmosche, the chief executive of the American International Group, said something stupid the other day. And we should be glad, because his comments help highlight an important but rarely discussed cost of extreme income inequality – namely, the rise of a small but powerful group of what can only be called sociopaths. [.]]

So here’s what Mr. Benmosche did in an interview with The Wall Street Journal: He compared the uproar over bonuses to lynchings in the Deep South – the real kind, involving murder – and declared that the bonus backlash was “just as bad and just as wrong.” [..]

This is important. Sometimes the wealthy talk as if they were characters in “Atlas Shrugged,” demanding nothing more from society than that the moochers leave them alone. But these men were speaking for, not against, redistribution – redistribution from the 99 percent to people like them. This isn’t libertarianism; it’s a demand for special treatment. It’s not Ayn Rand; it’s ancien régime.

Vanessa Barbara: Have a Nice Day, N.S.A.

Like most Brazilians, I was annoyed to learn that the American government might have been gathering data from my computer and phone calls. But on the bright side, I am hoping that it has kept a backup of my files, since a few months ago I realized that I could no longer find an important video anywhere in my computer. (Mr. Obama, if you’re reading this, please send me the file “summer2012.wmv” as soon as you can.)  [..]

But for now, we citizens have our own plan. It has become something of a joke among my friends in Brazil to, whenever you write a personal e-mail, include a few polite lines addressed to the agents of the N.S.A., wishing them a good day or a Happy Thanksgiving. Sometimes I’ll add a few extra explanations and footnotes about the contents of the message, summarizing it and clarifying some of the Portuguese words that could be difficult to translate.

New York Times Editorial Board: A Republican Ransom Note

On Wednesday, Treasury Secretary Jacob Lew sent the House a very serious warning that, for the first time, the United States would be unable to pay its bills beginning on Oct. 17 if the debt ceiling is not lifted. House leaders responded on Thursday with one of the least serious negotiating proposals in modern Congressional history: a jaw-dropping list of ransom demands containing more than a dozen discredited Republican policy fantasies. [..]

But the absurdity of the list shows just how important it is that Mr. Obama ignore every demand and force the House extremists to decide whether they really want to be responsible for an economic catastrophe. He made a mistake by negotiating in 2011, hoping to reach a grand bargain; that produced the corrosive sequester cuts.

To prevent the House from making every debt-ceiling increase an opportunity to issue extortionist demands for rejected policies they can achieve in no other way, the president has to put an end to the routine creation of emergencies once and for all by simply saying no.

John Nichols: House GOP Debt-Ceiling Plan: Paul Ryan’s Losing Ideas From 2012

Was there a presidential election in 2012? Yes.

Who won? Barack Obama.

Who was elected vice president? Joe Biden.

Who lost for president? Mitt Romney.

Who lost for vice president? Paul Ryan.

Cool, just wanted to get that straight.

The latest scheme (pdf) from House Republicans might have confused folks.

House Speaker John Boehner, House Majority Leader Eric Cantor and House Budget Committee chairman Paul Ryan are not quite done threatening a government shutdown as part of the “Defund Obamacare” debacle. But they are already on to their next project: holding hostage any agreement to allow the debt-ceiling to rise.

Richard (RJ) Eskow: The Robots Are Coming – Now What?

A new study says that nearly half of all American jobs may soon be performed by robots. And the White House has just announced the formation of “the Advanced Manufacturing Partnership Steering Committee ‘2.0,’” which it describes as “part of a continuing effort to maintain U.S.leadership in the emerging technologies that will create high-quality manufacturing jobs and enhance America’s global competitiveness.”

That seems like a good idea, but it raises a number of questions. There is only one labor representative on the committee, as compared to eleven corporate CEOs, and it would be good to know why. What’s more, labor isn’t acknowledged in the President’s statement that “industry, academia, and government must work in partnership to revitalize our manufacturing sector.”

That’s unfortunate, because the working people of America should have a strong voice in designing the future of our manufacturing sector. In fact, that role is more important than ever, as a manufactured product – a range of devices commonly described as “robots” – may change the face of work in America.

Jill Filipovic: The way America eats is killing us. Something has to change

Another report confirms: we’re the United States of big meals, yet we do little to change our disastrous corporate food culture

It will shock no one to hear that Americans are remarkably unhealthy eaters. A new American Diet Report Card (pdf) confirms it: we eat far too much cheese, sugar, starch and red meat. We don’t eat enough fruits and vegetables. We consume almost 500 more calories per day than we did in the 1970s.

Our eating habits are poor, but it’s not because we’re a nation of lazy fools jonesing for our daily Big Mac fix, health be damned. It is because we are far too deferential to the interests of big companies, too invested in a corporate-serving narrative of personal responsibility with no parallel requirement of social responsibility, and too culturally wedded to a food model of quantity over quality. [..]

The message is getting through, but slowly: the way we’re eating is killing us. Something has to change.

On This Day In History September 27

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.

September 27 is the 270th day of the year (271st in leap years) in the Gregorian calendar. There are 95 days remaining until the end of the year.

On this day in 1922, Jean-François Champollion deciphered the hieroglyphs of the Rosetta Stone with the help of groundwork laid by his predecessors: Athanasius Kircher, Silvestre de Sacy, Johan David Akerblad, Thomas Young, and William John Bankes. Champollion translated parts of the Rosetta Stone, showing that the Egyptian writing system was a combination of phonetic and ideographic signs.

Thomas Young was one of the first to attempt decipherment of the Egyptian hieroglyphs, basing his own work on the investigations of Swedish diplomat Akerblad, who built up a demotic  alphabet of 29 letters (15 turned out to be correct) and translated all personal names and other words in the Demotic part of the Rosetta Stone  in 1802. Akerblad however, wrongly believed that demotic was entirely phonetic or alphabetic. Young thought the same, and by 1814 he had completely translated the enchorial (which Champollion labeled Demotic as it is called today) text of the Rosetta Stone (he had a list with 86 demotic words). Young then studied the hieroglyphic alphabet and made some progress but failed to recognise that demotic and hieroglyphic texts were paraphrases and not simple translations. In 1823 he published an Account of the Recent Discoveries in Hieroglyphic Literature and Egyptian Antiquities. Some of Young’s conclusions appeared in the famous article Egypt he wrote for the 1818 edition of the Encyclopædia Britannica.

When Champollion, in 1822, published his translation of the hieroglyphs and the key to the grammatical system, Young and all others praised this work. Young had indicated in a letter to Gurney that he wished to see Champollion acknowledge that he had made use of Young’s earlier work in assisting his eventual deciphering of hieroglyphics. Champollion was unwilling to share the credit even though initially he had not recognized that hieroglyphics were phonetic. Young corrected him on this, and Champollion attempted to have an early article withdrawn once he realized his mistake. Strongly motivated by the political tensions of that time, the British supported Young and the French Champollion. Champollion completely translated the hieroglyphic grammar based in part upon the earlier work of others including Young. However, Champollion maintained that he alone had deciphered the hieroglyphs. After 1826, he did offer Young access to demotic manuscripts in the Louvre, when he was a curator. Baron Georges Cuvier (1825) credited Champollion’s work as an important aid in dating the Dendera Zodiac.

Economic Populist: Consol Bonds are the Debt Ceiling Walk Off Home Run

cross-posted from Voices on the Square

The Debt Ceiling debate is Yet Another GOP Abuse of the System, but the entire debate runs under the pretense that the Treasury cannot sell new bonds if the Debt Ceiling is not raised.

Look at the history of the debt ceiling, and its easy to see where people get that idea. Way back when, the Treasury went to Congress for each and every new bond issue. Then in 1917, with war breaking out in Europe, Congress reformed the system to give the Treasury more freedom of action, establishing an overall ceiling within which it could issue bonds. It was like moving from a series of individually negotiated loans with a bank to obtaining an approved credit line with the bank.

From 1917 to 2010, the increase of the debt ceiling when required was a routine transaction. But after the radical reactionary wing of the Republican party ran under the successful “Tea Party” branding, a number of radical reactionary GOP Congressmen balked at this routine transaction, and took the full faith and credit of the US Government hostage. This resulted in the “sequester” debacle, in which spending cuts that were deliberately designed to punish the American people in case Congress could not agree on the insane policy of cutting spending in the middle of what is now a five year old Depression. Congress could not agree, and so the brain-dead punitive spending cuts were put in place instead.

After that experience, turning out as badly as progressive populist critics at the time said it would, now there are bold words from the White House demanding a clean debt ceiling vote, without any hostage taking.

The good news is that if the Treasury turns to Consol Bonds, they can win this fight no matter what the radical reactionary wing of the House Republicans decide to do.

Fail Whale

Once Again, Punishing the Bank but Not Its Top Executives

By PETER EAVIS, The New York Times

September 19, 2013, 3:48 pm

The government says there is wrongdoing at a large bank and makes it pay a fine. But senior executives who seemed to play a role in the missteps are not singled out for individual punishment.

It happened again on Thursday, when regulators in the United States and Britain hit JPMorgan Chase with nearly $1 billion in fines for the bank’s failure to properly handle a trading debacle last year.

The traders, based in JPMorgan’s London office, made wagers in complex financial instruments that saddled the bank with over $6 billion in losses. The bank’s problems became known as the London Whale affair, because the traders involved accumulated such large positions. In recent months, regulators have identified and gone after some of the employees who worked on the trades, saying that they had incorrectly valued the trades on JPMorgan’s books to make their losses look substantially smaller.

But not only did the agencies fail to take action against any of the executives, they did not even identify them (although it is clear who some of them are).

“JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses,” George S. Canellos, co-director of the S.E.C’s division of enforcement, said in a statement. “While grappling with how to fix its internal control breakdowns, JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors and regulators.”

Given language like that, those who favor stricter sanctions for bankers raised questions on Thursday about why the regulators did not take individual actions against the JPMorgan executives.

In JPMorgan Case, a Missed Opportunity to Charge Its Executives

By JESSE EISINGER, ProPublica, The New York Times

September 25, 2013, 12:30 pm

By cracking down on the bank for its faulty internal controls in the $6 billion London Whale trading loss, the S.E.C. can claim to be the ferocious regulator we have all been waiting for. JPMorgan and its chief executive, Jamie Dimon, got the best coverage they could have hoped for under the circumstances: the sense that the bank is beleaguered, surrounded by regulators, but at least it could put the trading loss behind it.

Yes, the S.E.C. wrung an admission of wrongdoing out of the bank, and the regulators scored a large settlement. It’s an improvement for a regulator to display the ferocity of a mealworm, rather than a banana slug, but let’s hold the celebrations until it reaches at least the level of a garter snake.

The admission was nice, but the S.E.C. did not charge any top executives with misleading disclosure. Why not?

Financial markets depend on true and accurate information. Disclosure isn’t some i-dotting, t-crossing regulatory nicety; it’s fundamental. And the Senate Permanent Subcommittee on Investigations, in its huge report on the trading loss, made a convincing case that the chief financial officer at the time, Douglas L. Braunstein, made several highly misleading statements in an April 13, 2012, conference call with shareholders and the public.

On that April 13 call, Mr. Braunstein made four statements that the Senate subcommittee found erroneous about the trades made by the bank’s chief investment office. He said the trading was “fully transparent to the regulators.” He said of the trading that “all of those positions are put on pursuant to the risk management at the firmwide level.” He said they were “made on a very long-term basis.” And most important, he emphasized that the traders were hedging.

It wasn’t only Mr. Braunstein. His comments mirrored talking points the bank had prepared days earlier. The Senate subcommittee report says the bank’s communications officer and chief investor liaison circulated talking points and met with reporters and analysts with the “primary objectives” to communicate that the chief investment office’s activities were ” ‘for hedging purposes’ and that the regulators were ‘fully aware’ ” of the trading. “Neither of which was true,” the Senate report says.

The trading wasn’t disclosed to regulators, the bank’s top risk managers had no window into it, and the traders were actively buying and selling. Most significant, it wasn’t hedging. The trading in the London group of the chief investment office was proprietary, intended to create profit for the bank. That’s the kind of activity that will presumably be banned under the interminably delayed Volcker Rule, should the regulators deign to finish it and not permit large exemptions.

“Given the information that bank executives possessed in advance of the bank’s public communications on April 10, April 13, and May 10, the written and verbal representations made by the bank were incomplete, contained numerous inaccuracies, and misinformed investors, regulators and the public,” the Senate report says.

The S.E.C. says it isn’t finished yet. The investigation has three parts: the case against the traders for mismarking the value of the trades, for which two have been charged criminally; the look into the company for internal controls, which was settled last week; and a third, against senior individuals for misrepresentations. The third continues. The agency may yet come down on top executives for their misleading statements.

I got a different sense from the company, however. The S.E.C. investigated the April 13 statements and the bank regards its senior executives to be in the clear, a person at JPMorgan told me. Mr. Dimon, for one, has been cleared, according to bank statements that were approved by the S.E.C.

The one unshakable talking point, repeated like a drumbeat, is the executives emphasizing their good faith.

The implications for the public are larger than this single case. One of the important aspects for the Volcker Rule, which aims to bar banks from speculating with money that is backed by taxpayers, will be how much disclosure regulators require.

Clear and complete disclosures would allow institutional investors, regulators, counterparties and financial experts to sort out whether the banks are complying with the law or not.

A slap for lesser sins darkens the future of the already enfeebled rule. Without serious disclosure and serious enforcement, the risk of another calamity rises.

You may think this represents the lamest sort of regulation.  Not so.

This is America’s worst regulator (and JPMorgan’s best pal)

By David Dayen, Salon

Wednesday, Sep 25, 2013 11:45 AM UTC

At times it doesn’t seem like JPMorgan Chase runs any legal businesses. The good news is that some in the federal government appear to be slowly catching up to their illicit enterprises. Unfortunately, there’s one regulator whose negligence is beyond problematic, and damaging the country. Meet Thomas Curry, head of the Office of the Comptroller of the Currency (OCC).

The OCC is the obscure yet powerful primary regulator for JPMorgan Chase and other national banks – and is frankly the reason why JPMorgan believes it can run multiple illegal businesses and get away with it. The OCC has been more of the mega-bank’s pal within the government, rather than a tough-minded regulator. And a settlement in yet another case of malfeasance at JPMorgan, released late last week, shows that nothing has changed.

The case involves litigation practices by JPMorgan in various collections, and a failure to comply with the Servicemembers Civil Relief Act (SCRA), a statute that protects members of the military in financial transactions. It turns out that JPMorgan conducted its credit card, auto and student loan collections in the same illegal fashion as it did its foreclosure operations: using affidavits where low-level employees testified to personal knowledge of the cases without actually knowing anything about them.

This is called “robo-signing,” and it means that fraudulent sworn documents were filed as evidence in court so JPMorgan could obtain judgments against borrowers. Often the sworn documents would have inaccurate financial information, so the bank was attempting to collect false sums from the borrowers. And it rarely complied with the SCRA, which sets maximum interest rates charged to service members and bans legal proceedings for service members in active duty in a war zone. JPMorgan couldn’t even manage that, suing soldiers while they served in Iraq or Afghanistan or elsewhere.

Unlike the SEC, the OCC agreed to a settlement without forcing JPMorgan Chase to admit or deny wrongdoing. Worse, they are giving the bank several months to design their own punishment, a fairly common but nonetheless appalling practice. It’s like arresting someone who knocked over a 7-Eleven and telling them they have 180 days to figure out how much of the money they stole they should have to give back. Needless to say, the criminal is an unreliable judge of the proper punishment.

The other federal agencies attempting to render judgment on JPMorgan Chase certainly aren’t doing enough. The Justice Department did indict two ex-traders of the bank after it admitted fault in hiding their London Whale derivatives trading loss from regulators and investors, but they are both living in Europe and don’t expect to get extradited, rendering ineffective any effort to pursue them or their superiors. Senior management has faced no punishment in the Whale case or any others, up to and including CEO Jamie Dimon, despite obvious culpability. The bank has been forced to sell their physical commodities business after questions about market manipulation, and Dimon has promised to further simplify JPMorgan’s lines of business, reflecting a cumulative effect of the constant fines and lawsuits to their reputation. They’ve suffered billions in litigation costs and plan to spend another $4 billion this year to comply with regulations (don’t cry for them; they make about $6.5 billion every quarter). That’s about the best you can say about this sorry attempt at taking down the biggest crook on Wall Street.

This negligence is particularly stark considering how many others are finally onto JPMorgan’s shenanigans. Just over the past week, it paid $920 million in fines and admitted fault in the aforementioned London Whale case; paid another $389 million in fines and reimbursements over charging credit card customers for services they never received; were informed of an imminent enforcement action over their manipulation of the commodities market; faced bribery investigations over hiring the children of well-connected Chinese politicians; faced another investigation from the state of Massachusetts over credit-card collection practices; were uncovered as the main beneficiary of ultra-cheap borrowing from the Federal Home Loan Banks, a program meant to help small community-based lenders; and just yesterday, learned of a civil lawsuit from the U.S. Justice Department over selling mortgage-backed securities to investors without informing them of the poor quality of the loans in the portfolio.