Suit Revives Goldman Conflict Issue

By SUSANNE CRAIG and JESSICA SILVER-GREENBERG, The New York Times

October 10, 2013, 2:43 pm

At a March 2012 meeting, a group of examiners at the Federal Reserve Bank of New York agreed that Goldman Sachs had inadequate procedures to guard against conflicts of interest – guidelines aimed at stopping firms from putting their pursuit of profit ahead of their clients’ best interests.

The examiners voted to downgrade a confidential rating assigned by the New York Fed that could have spurred costly enforcement actions and other regulatory penalties. It is not known whether the vote in fact led to a rating change. The former examiner who pushed for a downgrade, Carmen M. Segarra, now contends in a lawsuit filed on Thursday that just weeks after the vote, her superiors asked her to change her findings on Goldman and fired her after she refused.

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After Ms. Segarra joined the New York Fed, she said she examined several potentially controversial Goldman deals. For instance, in 2012 Goldman advised El Paso, an energy company, on its decision to sell itself to Kinder Morgan. Goldman owned a big stake in Kinder Morgan, which angered a number of El Paso shareholders, who argued this gave Goldman an incentive to undervalue El Paso. Goldman maintained that it had properly managed the conflicts but was later admonished by a judge, who noted the “disturbing behavior” that led to the deal.

As the deal was coming together, the lawsuit said, Ms. Segarra urged Goldman to provide her with its firmwide conflict-of-interest policy. But Goldman, the lawsuit said, told her that it had no such policy.

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Such concerns, the lawsuit said, prompted Ms. Segarra to raise the issue with Mr. Silva, her boss, in a meeting in early December 2011. He seemed to agree. Mr. Silva “expressed concern that Goldman would suffer significant financial harm if consumers and clients learned the extent of Goldman’s noncompliance with the rules on conflict of interest,” according to the lawsuit.

Soon, though, Ms. Segarra was looking at another deal, involving Banco Santander, the largest bank in Spain, and Qatar Holding. As part of her review, Ms. Segarra asked Goldman to provide documentation that it had performed an anti-money-laundering analysis.

According to the lawsuit, Goldman executives told Ms. Segarra that it had done the analysis, but the bank later backpedaled, admitting that no such work had been performed.

Ms. Segarra took her concerns about the transaction to her bosses, who confronted Goldman. She contends that Michael S. Koh, another senior staff member at the New York Fed and a defendant in the lawsuit, told her that Goldman admitted to the misconduct but then he dismissed her concerns. Further efforts to raise the issue were also stymied and her bosses prohibited her from asking Goldman more questions about the deal – a decision that prevented her from finishing her report.

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In March 2012, Ms. Segarra got her chance to voice her concerns to the New York Fed’s legal and compliance risk team. At the meeting, the group, roughly 20 people, agreed that the issues with Goldman’s conflict-of-interest procedures warranted a warning, known-as a “matter requiring attention,” or M.R.A., according to the lawsuit. As a result, the team approved a downgrade of Goldman’s annual rating from a 2, indicating satisfactory to a 3, indicating fair, according to a confidential document reviewed by The Times. The rating involving policies and procedures is one of several measurements that make up Goldman’s overall score, which is confidential.

You know, I spent a summer in Boston studying Journalism.  I could be considered a semi-pro since I’ve won awards from the Columbia School and worked as a production assistant on a local weekly (don’t get too excited, among my duties were picking up the ad copy, maintaining the archive and back issues, and newsstand sales).

I brought my own Olivetti multi-font correcting type-writer to class and drove everyone nuts with the constant clatter of the cooling fan while they toiled at their noiseless Remingtons.  “Wave of the future”, said I.

Heh.

In truth I spent almost all of my time playing Dungeons and Dragons, being stalked by an out of control LARP Whovian I made the mistake of being nice to, and watching Art Films at Hole-In-The-Wall cinemas.

Oh, and I watched a couple of ball games.

What impresses you most about Fenway is how small it is (some would say intimate, but let’s call a spade (&spade;) a card symbol that looks like a shovel if you turn it upside down).  Thus the ‘Green Monster’.  The other side is a street and without the height it’s just too damn easy to knock one out of the park.  The only intimidation is in your mind as a batter and as a fielder you get used to playing it like a jai-lai backstop.

The Great God Citgo looms over all and even by drunken triangulation with the Pru(dential Tower) gives you a rough idea if you’re puking above or below Kenmore Square or are even on the right side of the Charles.

Thanks for holding my hair.

Now you may think the Sox are limping into this, but nothing could be further from the truth.  Other than the Game 1 bobble (1 – 0 Detroit) they’ve won 2 of 3 away and are the highest scoring team left in the hunt.  All the Sox victories are 1 run squeakers which gives the Tigers some hope, but Detroit will have to win 2 straight on the road in this quirky band box.

At Comerica the Sox started with 3 in the 2nd.  A Solo Shot, an error, a Double, an RBI Double, and an RBI Single.  They added on in the 3rd, a Double and a Wild Pitch.  Game Over Dude.  In the 5th the Tigers clawed back one on a Single, a Sacrifice, and an RBI Single.  They got back another in the 6th with a Leadoff Walk, a Single, and an RBI Single, and finally added another in the 7th on a Single, a Single, and a Sacrifice.  Boston 4 – 3, lead 3 – 2 in the Series.

Tonight the Tigers start Max Scherzer (21 – 3, 2.90 ERA R).  He looks like a killer but in 7 innings pitched in the Junior League Championship he’s allowed 2 hits for 1 run and an ERA of 1.29 no decision.  Overall post-season he’s 2 wins, 8 hits, 4 runs and an ERA of 2.25.  Boston counters with Clay Buchholz (12 – 1, 1.74 ERA R) who has no decisions at all post-season in 16 and 2 3rds innings with 15 hits and 8 runs and an ERA of 6.17.

On paper, no contest at all.  If you are a Sox fan I suggest you light some petroleum as an offering the The Great God.

After a day of travel the Dodgers face 2 must win games away from Chavez Ravine.  Hanley Ramirez will not start and perhaps it’s just as well, he’s never recovered from his HBP.

Jon Jay of the Cardinals won’t start because he sucks.

In Game 5 the LaLas staved off elimination behind Greinke scoring early and often (most often on empty base Home Runs), 2nd inning 2 On 1 Out RBI Single.  Sacrifice and Greinke RBI Singles to help himself.  Top 3rd the Cardinals tie it up, Single, RBI Triple, RBI Double.  In the Bottom of the frame Dodgers go ahead again on a Solo Shot.  They add in the 5th with another Solo Shot and again in the 7th and 8th.  The Cards fall short in the 9th with a Leadoff Double, RBI Single, and 2 more Singles, the last an RBI.  Dodgers 6 – 4, Cards lead Series 3 – 2.

Now in Red Bird land the Cards will start Michael Wacha (4 – 1, 2.78 ERA R).  He’s never lost (2 Ws, 1 DCS, 1 LCS) in the post-season with 6 hits and 1 run in 14 innings for an ERA of 0.61.  That’s stunningly low.  The Dodgers will counter with Clayton Kershaw (16 – 9, 1.83 ERA L).  He lost Game 2 in this same matchup due to the incredibly arcane rules regarding winners and losers with 2 hits and a run scored even though his ERA was 0.00.  Overall in the post-season Kershaw has split, 1 – 1 and allowed 8 hits and 4 runs in 19 innings for an ERA of 0.47.

Not too shabby.  Did I mention he’s a lefty?  That means his move to first is exceptionally good because he can see the base as he delivers.

On paper Kershaw wins it, but they don’t play games on paper.  Thus the L.

Source Watch: Fix the Debt

Exortionist Fellow-Travelers

Paul Krugman, The New York Times

October 17, 2013, 12:04 pm

Fix the Debt didn’t just help create a climate of crisis with its fearmongering over the deficit; the fiscal scolds actively cheered GOP hostage-taking in 2011, and were still lending support to hostage tactics this time around.

Furthermore, neutrality is not an option here. If one political party attempts to defy due process and extract concessions from the other party by threatening financial and economic catastrophe, and your response is to condemn partisanship in the abstract and suggest that both sides are equally to blame, you are in effect lending cover to the hostage-takers.

In other words, Fix the Debt isn’t just ineffectual in its pursuit of a Grand Bargain, it’s an actively malign force in our politics, in effect acting as an ally of the extortionists.

Senate moving toward vote on budget deal

By BURGESS EVERETT, JAKE SHERMAN and MANU RAJU, Politico

10/16/13 9:30 AM EDT Updated: 10/16/13 2:28 PM EDT

The bill will barely scathe Obamacare and putting it on the floor will mark a huge concession by the House after sparking a prolonged government shutdown over insistence that the health care law be defunded or delayed as a condition to keep the government open. Dozens of conservatives in the House will be disappointed by the proposal.

The plan includes a proposal offered by McConnell in the 2011 debt ceiling crisis that allows Congress to disapprove of the debt ceiling increase, which means lawmakers will formally vote on whether to reject a debt ceiling increase until Feb. 7. Obama can veto that legislation if it passes. If Congress fails as expected to gather a two-thirds majority to override the veto, the debt ceiling would be raised.

The deal would also deliver back pay to furloughed federal workers, require income verification for people seeking health-insurance subsidies under the Affordable Care Act and also allow the Treasury Department to use extraordinary measures to pay the nation’s bills if Congress doesn’t raise the debt ceiling by Feb. 7.

McConnell was pushing hard to include language to give federal agencies more flexibility to implement the sequester, something Reid was objecting to Wednesday morning, sources say. Democrats argue that provision would make it harder to eliminate the sequester in the future and it was not included in the final package. A new round of sequester cuts will be enacted in January without further congressional action, mostly hitting the defense side of spending.

A Big Political and Procedural Victory for Democrats, But Not a Policy Win

By: Jon Walker, Firedog Lake

Wednesday October 16, 2013 8:19 am

After weeks of a needless shutdown the Republican party has folded. It sounds like the bill that will go before the House soon is a complete and total surrender from their original position on defunding Obamacare. There is no other way to frame it. The only “concession” they got from the actual shutdown was beefed up income verification on the exchanges. Basically, they shut down the government to ask President Obama to enforce and implement Obamacare more quickly.

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This is not though a policy win for Democrats or progressives. This is a bad bill to end a bad month. The shutdown itself did real and needless damage to the American people. The government will also be funded at sequester levels, which is terrible for the economy but something Democrats already agreed to weeks before the shutdown started.

The irony is if Republican didn’t overplay their hand they could have been celebrating a real policy win on spending levels. Instead they come away looking crazy, incompetent, and weak.

Knotted at two.  Some idiots are opining that Boston should feel totally intimidated by last night’s loss and might as well pack up and go home.

Folks, they are going home, to the friendly confines of Fenway and the Green Monster under the watchful eye of The Great God Citgo.  The team that has to win tonight is Detroit otherwise we have almost surely seen the last of Comerica (and good riddance to all Ballparks named for a corporate sponsor and yes, I do include Citi Field unless they spell it with a “Y”.  Now, about what is and isn’t a “Stadium”…).  In any event if the Tigers drop 2 of 3 at home, they are in deep trouble and the Red Sox already have their split.

Not that last night wasn’t exciting.  Just the kind of game I like.  It was a desperation line up that worked for once.

Fans of the Tigers didn’t have to wait long.  They scored 5 in the 2nd from a Leadoff Single, and 2 Walks to load up with No Out.  After a Pop Fly the Sox Walked in a Run and Scored on a Sacrifice.  Corners 2 Out.  2 RBI Double and an RBI single and they were 5 up.  Not that they weren’t 5 up in Game 2 which they lost.

In the 4th the Tigers went for the kill with a Leadoff Double, an RBI Single, a Steal, a Sacrifice, and another RBI Single.  Seven unanswered, but Detroit was through for the night.

The Sox got on the board in the 6th, 3 straight 1 Out Singles, the last an RBI.  They struck again in the 7th with a Leadoff Single and an RBI Double.  They wasted the 8th and in the 9th, down 5, threatened another one of those Game 2 comebacks.  Leadoff Double, RBI Triple, KO, KO, and then Ortiz, mighty Ortiz at the bat-

Well, actually it was a fly to Center, but you get the picture.

So tonight Detroit is sending out Anibal Sanchez (14 – 8, 2.75 ERA R).  This post-season he has won 1 and lost 1 with a 4.35 ERA based on 10 and a 3rd innings allowing 8 hits and 6 runs all against Oakland.  Boston will counter with Jon Lester (15 – 8, 3.75 ERA L), 1 – 1 post-season  with an ERA of 1.84 based on 9 hits and 3 runs in 14 innings including a loss to the Tigers.

On paper a great matchup.

Boston barely eeked out a victory over Detroit yesterday with a Solo Shot in the 7th.

That’s it.  That’s all there was.  The most interesting part of the game was the 17 minute power outage.  Red Sox 1 – 0, lead Series 2 – 1.

In the process the Tigers wasted Verlander, we’ll not see him again unless they play in the World Series.

Tonight Detroit will send Doug Fister (14 – 9, 3.67 ERA R) who’s had 6 innings, 7 hits and 3 earned runs this post-season for an ERA of 4.50 while the Sox counter with Jake Peavy (12 – 5, 4.17 ERA R), 5 and 2/3rds innings, 5 hits, 1 run and an ERA of 1.59.

You have to give the edge to Peavy.

The Tigers are in no danger of elimination tonight but I imagine they’d rather head back to Fenway tied at 2 than facing a 3 – 1 Series deficit.

The good news for the Dodgers is that shortstop Hanley Ramirez will be playing today despite a busted rib that happened in Game 2 when he was Hit By Pitch.  The bad news is that despite his willingness to play injured he was entirely ineffective in Game 4, striking out 3 times.

Other than that and the fact they kept it reasonably close in Game 4 there’s not much good news at all.  The Cardinals scored first in the 3rd inning off a Single, a Sacrifice, an RBI Double, another Sacrifice, and a 2 Run Homer.  It would turn out to be all the scoring they needed.  The Dodgers pulled within 1 on the 4th with a Leadoff Double, a Walk, an RBI Single, a Sacrifice and another RBI single. Nolasco was pulled for a Pinch Hitter, but that never works.  Things stayed quiet until the 7th when the Cards added an insurance run from a Solo Shot by Robinson, wait for it, Pinch Hitting for Maness.  St. Louis 4 – 2, lead Series 3 – 1.

I’m not always right.

The Dodgers are up against it now.  They face elimination at home tonight and then twice in Busch Stadium.  They’ll be counting on the arm of Zack Greinke (15 – 4, 2.63 ERA R) who’s currently pitching even better than that against Joe Kelly (10 – 5, 2.69 ERA R) who is not.  If the Series extends you’ll see Kershaw and Ryu again who’ve proven no slouches in the post-season.

What they really need is offense in a Series that hasn’t shown much with the Dodgers scoring 7 times in 4 games against St. Louis’ 8.

So Dodgers fans, it hasn’t been a blow out by any means.  I wish you good luck.

Sell outs?  Nope, bought and paid for.

Transcript

“An honest politician is one who, when he is bought, will stay bought.”- Simon Cameron (1799-1889)

The great neoliberal dream-

Will China’s Gambit to Undermine the Trans-Pacific Partnership Succeed?

Yves Smith, Naked Capitalism

Thursday, October 10, 2013

While eyes in the US have remained focused on the budget cliffhanger in Washington, in Bali, two sets of meetings were taking place. The first was the latest set of Trans-Pacific Partnership negotiations. The US, led by John Kerry (Obama was supposed to make an appearance but the budget drama kept him away) met with representatives of the 12 nations it is pressing to agree to this deliberately mis-branded “trade deal”. The reason the label is misleading is that trade is already substantially liberalized; the real point of the TPP and its cousin, the pending EU-US trade agreement, is to weaken the power of nations to regulate, which will allow multinationals to lead a race to the bottom on product and environmental safety.

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he second meeting in Bali this week was for Asia-Pacific Economic Cooperation (APEC). And the two intersected in intriguing ways. Remember, the terms of the TPP are shrouded in secrecy that is utterly inconsistent with the notion of democratic rule. Draft chapters have not been released. In the US, the US Trade Representative has given briefings on the general terms of the pact’s chapters, but as anyone who has worked on contracts or legislation, reading the detailed terms is critical to understanding an agreement, and those are being kept firmly secret.

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Not only has the US been pushing remarkably hard on the secrecy front, it’s being remarkably aggressive on timing. It got a commitment from the prospective signatories in Bali for the pact to be finalized by year end, when a State Department briefing immediately afterward met with skeptical questions (if you have time, you really should read the session in full. The obstinacy and disingenuousness of the State Department mouthpiece is way too obvious).

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In fairness, the Forbes article points out that one set of issues that was seen as a major stumbling block for Japan, that of five types of agricultural products it wanted held out of the deal, may not be such a problem after all because the Japanese Prime Minister Abe, who talked up the deal this week, looks to be able to play the sellout of domestic farmers so as to disadvantage an LDP rival.

However, the US has been ruffling the potential signatories.

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And the State Department Q&A also indicated that Indonesia, which was also hosting the APEC leaders’ meeting, had the US trying to upstage that session.

Now bruised official egos are likely not enough in and of themselves to derail a trade deal. But the Asian nations are also playing a careful balancing act between the current hegemon, the US, and its presumed successor, at least in the region, if not globally, China. Now remember, the whole point of the TPP is that it is an “everybody but China” deal. So what did China do at the APEC summit when Obama was detained in Washington? Step up its efforts to undermine the TPP.

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It’s not clear that China’s efforts to throw sand in the TPP gears will work. But the year end timetable looks like a bizarre Administration fantasy (why push for an empty commitment to a deadline that clearly can’t be met?). And the parallel ASEAN trade talks could give countries that wanted to drag their feet on the TPP an excuse to do so (note that one country being reluctant is likely to be insufficient to derail the deal, but two or three could change the equation. Reporters in the State Department briefing were making comparisons to the failed Doha round).

A final factor that could work against the TPP is a continuation of a destabilizing budget battle. As we’ll discuss in our accompanying post today, there was progress of sorts Wednesday, in at least the two sides have agreed to talk. But they aren’t even at the stage of discussing terms, beyond a vague idea of putting the debt ceiling on hold while the two parties work out a bigger budget deal, with deficit cutting measures included. The problem is given the failure to reach a Grand Bargain Great Betrayal last year, I don’t see why there is any reason to believe a six week delay will pave the way for a deal coming together, given the increased hostility between the two camps and the hard core Republican right insisting on throwing Obamacare into the talks. The longer Washington is in disarray, the weaker its position in pushing for a trade deal. As we’ve said before, that may be the one silver lining of the damaging Federal shutdown.

(Yves is running a fundraiser and while things are going well she would certainly appreciate a token of your support.  ek)