Tag: ek Politics

Why Does Refusing to Put Fraudulent Banks into Receivership Help the Economy?

by William Black, New Economic Perspectives

Posted on April 30, 2014

Conservative economists love “creative destruction.” They can’t wait to “get their Schumpeter on” when a business fails and thousands of workers lose their jobs. There is no more “creative destruction” conceivable than when we put a bank that has become a fraudulent enterprise into receivership, remove the controlling officers leading the fraud, and sell the bank through an FDIC-assisted acquisition. Indeed, the pinnacle of creative destruction would be doing this with a systemically dangerous institution (SDI) through a process that split the supposedly “too big to fail” bank into smaller components that (1) were no longer large enough to pose a systemic risk, (2) were more efficient than the bloated SDI, (3) no longer extorted a large (implicit) government subsidy that made real competition impossible, and (4) no longer had dominant political power via crony capitalism. Unlike the situation in which an SDI collapses suddenly in the midst of causing a global crisis when its frauds cause a liquidity crisis, it is vastly easier to put fraudulent SDIs in receivership in today’s circumstances. Unlike Arthur Anderson, the receivership power allows us to keep the enterprise alive and create more competitors rather than fewer.

As I often remarked, it is a testament to the financial and moral sophistication of our successors as financial regulators relative to our primitive era that they have realized that keeping fraudulent CEOs in charge of our largest banks – and virtually never putting such banks into receivership however massive and damaging their serial felonies – is the key to achieving financial stability. Their system, it must be admitted, has proven far superior. GDP losses are merely far more than 100X greater in the current crisis than in the savings and loan debacle. The jihad against effective regulation and prosecution of elite control frauds has been an enormous success. The primary question is whether to classify the resultant epidemics of accounting control fraud as “unintended consequences” of the three “de’s” (deregulation, desupervision, and de facto decriminalization) or as a very “intended consequences.”

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Lanny Breuer’s infamous “lamentations” speech (while head of DOJ’s Criminal Division) underscored how he fell hook, line, and sinker for the absurd claims of economists hired by today’s most elite fraudulent banksters that banks (and bankers!) should be “too big to prosecute.” By Breuer’s own bumbling admission, he lay awake at night for fear that his (always hypothetical) prosecutions of the major banks might “cause” a fraudulent bank to “fail.” This is, of course, heresy under the Schumpeterian creed of “creative destruction,” but theoclassical economists are very forgiving of their co-religionists who get rich by spreading heresy in the service of fraudulent elites.

Breuer was so bad that he obscured what we primitive regulators and white-collar criminologists had emphasized for decades. First, no banker is “too big to jail.” They are easily replaceable and removing a fraudulent bank CEO from power is the single most productive act that regulators and prosecutors can accomplish. Breuer and Attorney General Eric Holder were involved in a con when they claimed that their failure to prosecute the senior bank officers leading the frauds was in any way related to “too big to fail.” Hilariously, they even applied the “rationale” for non-prosecution to former bank officers – as if a bank would fail “because” its former officers were prosecuted. It is a testament to the weakness of the reportage that this claim was not treated with ridicule.

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The Bush and Obama administration have already allowed the statute of limitations to run on vast numbers of frauds led by the CEOs of mortgage bankers and the 10 year statute of limitations applicable to federally insured banks (which we obtained in response to the S&L debacle) is rapidly running. The recent DOJ IG report documented the hollow nature of the FBI investigations related to the crisis. Even when the statute of limitations has not run it becomes very difficult to try “old” cases because of the loss of documents and memory and the feeling of judges and juries that the matter cannot have been terribly grave if the FBI ignored it for eight years. Even if Holder had a “Road to Damascus” conversion today and tried to prosecute the elite bank frauds that drove the crisis he would be far too late. The DOJ will commit its greatest strategic failure to uphold the rule of law. That does not mean that it could not bring a dozen prosecutions against the most destructive and fraudulent bank CEOs during the waning years of the Obama administration, but there is no evidence that the FBI is even investigating those frauds.

Instead, Holder has given up on prosecuting the CEOs that led the frauds that caused our crisis. The new DOJ press leak indicates that DOJ may charge two foreign banks with committing frauds unrelated to the financial crisis. This is hardly a major accomplishment, but it is all that Holder can bring himself to do so it was ballyhooed in “Deal Book” under this sad title “2 Giant Banks, Seen as Immune, Become Targets.”

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Deal Book has written another article praising a moral and policy travesty. Read beyond the article’s propaganda and you will find that it actually contains admissions by senior DOJ officials confirming that our description of the disgraceful policies that we charged that DOJ and the anti-regulators were following was correct and confirming that our conclusion that such policies were deeply criminogenic had proved correct. Bharara admitted that the GBH Doctrine created a “gaping liability loophole that blameworthy [controlling bank officers] are only too willing to exploit.” Until we appoint regulators with the spines, integrity, brains, and courage to realize that our paramount function is to place banks led by frauds into receivership and end the CEO’s ability to lead a control fraud we will fail to have a sound banking system and we will fail to restore the rule of law.

Big Banks Erred Widely on Troubled Mortgages, U.S. Regulator Confirms

By MICHAEL CORKERY, The New York Times

April 30, 2014, 8:14 pm

The latest analysis found that at least 9 percent of the errors discovered in the review involved banks improperly denying loan modifications that would have prevented foreclosures. The report also found that more than half of the errors related to administrative flaws and improper fees charged to homeowners during the foreclosures process.

Last year, 15 financial institutions settled with banking regulators, making payments that totaled $3.9 billion to more than four million homeowners. The settlements ended the independent reviews, which had been costly and lengthy. As part of the deals, the banks agreed to pay the homeowners, regardless of whether they had been harmed.

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Bank of America, for example, had reviewed only 6 percent of its files, revealing a financial error rate of 8.9 percent. Wells Fargo had examined about 9.6 percent of its records, finding an error rate of 11.4 percent.

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Before the reviews, regulators discovered many problems with the way banks had handled foreclosures after the financial crisis, including bungled modifications and the practice of “robo-signing,” where reviewers signed off on mounds of foreclosure paperwork without verifying its accuracy. Other errors included wrongful foreclosures and improper fees charged to homeowners.

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In particular, the Government Accountability Office, an auditing arm of Congress, said this week that regulators had not demanded specific terms for $6 billion in foreclosure prevention measures that the banks agreed to undertake, in addition to the $3.9 billion in cash pay outs to homeowners.

It also said the decision to cut short the review left regulators with limited information about actual harm to borrowers when they negotiated the $10 billion settlement.

Regulators had calculated a preliminary error rate of 6.5 percent for all the banks when they negotiated the settlements last year, according to the G.A.O.

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It was one of the largest and most costly bank failures in American history. And the bank’s collapse could end up costing the F.D.I.C. even more money because of the Independent Foreclosure Review.

It is possible that the F.D.I.C. will have to cover at least some of the costs of the $8.5 million payouts, banking specialists said. Specifically, the F.D.I.C. could be responsible for any errors in the first three months of 2009 when the federal regulators owned IndyMac’s assets and ran its servicing operations, they said.

It’s Good – no – Great to be the CEO Running a Huge Criminal Bank

By William K. Black, New Economic Perspectives

April 29, 2014

Every day brings multiple new scandals.  At least they used to be scandals.  Now they’re simply news items strained of ethical content by business journalists who see no evil, hear no evil, and speak not about evil.  The Wall Street Journal, our principal U.S. financial journal ran two such stories today.  The first story deals with tax evasion, and begins with this cheery (and tellingly inaccurate) headline: “U.S. Banks to Help Authorities With Tax Evasion Probe.”  Here’s an alternative headline, drawn from the facts of the article: “Senior Officers of Goldman Sachs and Morgan Stanley Aided and Abetted Tax Fraud by Wealthiest Americans, Failed to Make Required Criminal Referrals, and Demanded Immunity from Prosecution for Themselves and the Banks before Complying with the U.S. Subpoenas: U.S. Department of Justice Caves in to Banker’s Demands Continuing its Practice of Effectively Immunizing Fraud by Most Financial Elites.”

Oh, and the feckless DOJ (again) did not require any officer who committed the felony of aiding and abetting tax fraud to resign or to repay the bonuses he “earned” through his crimes.  But not to worry, the banks – not the bankers – may have to pay fines as the cost of doing their felonious business.  The feckless regulators did not even require Goldman Sachs and Morgan Stanley to disclose to shareholders their participation in the program.

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The context of this WSJ story is the broader series of betrayals of homeowners by the regulators and prosecutors led initially by Treasury Secretary Timothy Geithner and his infamous “foam the runways” comment in which he admitted and urged that programs “sold” as benefitting distressed homeowners be used instead to aid the banks (more precisely, the bank CEOs) whose frauds caused the crisis.  The WSJ article deals with one of the several settlements with the banks that “service” home mortgages and foreclose on them.  Private attorneys first obtained the evidence that the servicers were engaged in massive foreclosure fraud involving knowingly filing hundreds of thousands of false affidavits under (non) penalty of perjury.  As a senior former AUSA said publicly at the INET conference a few weeks ago about these cases – they were slam dunk prosecutions.  But you know what happened; no senior banker or bank was prosecuted.  No banker was sued civilly by the government.  No banker had to pay back his bonus that he “earned” through fraud.

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Everyone involved in the faux foreclosure review – the “consultants” hired who to do the review, the mortgage servicers, the (non) regulators, and the GAO performed abysmally.  The “review” was an expensive farce.  The regulators did not conduct the review.  The servicers did not conduct the review.  The consultants were chosen by the servicers, which the regulators should never have allowed.  The consultants were allowed to have additional conflicts of interest such as having worked on the loan foreclosures they were reviewing.  The “design” of the (non) study was an embarrassment.  The (non) study collapsed almost immediately because it turned out that many of the servicers’ files were so pathetic that the study “design” could not be followed.  Rather than stop and reconsider the implications of those file defects for the likelihood that the servicers engaged in fraud in order to foreclose the regulators decided to continue.  The more severe the file defects the greater the incentive of servicers to engage in foreclosure fraud.

The consultants were soon hopelessly behind schedule and budget because of the severity of the loan file defects.  Eventually, the (non) regulators gave up and brought the (non) study to an end, not with a bang but with a whimper.  Real regulators would have had great negotiating leverage.  The servicers had agreed to conduct the study and failed.  It would cost the servicers more to complete the review than simply boost the payout by several billion dollars.  The two obvious answers were to continue the study and order interim payouts or to stop the study and in return for a significantly larger payout to homeowners.  Naturally, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve found a third, far worse choice.  They left the cash on the table that could have gone to the homeowners.  The GAO was no stronger.  They do agree that the OCC and the Fed left billions on the table but they also give them a pass, saying that the settlement is in the “range” that would emerge from the regulators assumed rate of bad foreclosures.  The problem, as the facts disclosed in the GAO’s report make clear, but GAO’s analysis ignores, is that the regulators’ assumed rate of bad foreclosures had no reliable basis and was proven to be far too low an estimate by the fact that the loan files were so incomplete that the consultants could not complete the study.  So, there is no reliable basis for GAO’s claim that there is any “range” of reasonableness for the payments to homeowners.

Two Giant Banks, Seen as Immune, Become Targets

By BEN PROTESS and JESSICA SILVER-GREENBERG, The New York Times

April 29, 2014, 8:40 pm

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.

In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fueled a public outcry over the perception that Wall Street giants are “too big to jail.”

…

The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France’s largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.

First, I’ll believe it when I see it.

Second, where are Bank of America, Citigroup, Goldman Sachs, JP Morgan, or Wells Fargo?  Is this just a protectionist assault of foriegn owned institutions?

Why Only One Top Banker Went to Jail for the Financial Crisis

By JESSE EISINGER, The New York Times Magazine

APRIL 30, 2014

American financial history has generally unfolded as a series of booms followed by busts followed by crackdowns. After the crash of 1929, the Pecora Hearings seized upon public outrage, and the head of the New York Stock Exchange landed in prison. After the savings-and-loan scandals of the 1980s, 1,100 people were prosecuted, including top executives at many of the largest failed banks. In the ’90s and early aughts, when the bursting of the Nasdaq bubble revealed widespread corporate accounting scandals, top executives from WorldCom, Enron, Qwest and Tyco, among others, went to prison.

Continue reading the main story

The credit crisis of 2008 dwarfed those busts, and it was only to be expected that a similar round of crackdowns would ensue. In 2009, the Obama administration appointed Lanny Breuer to lead the Justice Department’s criminal division. Breuer quickly focused on professionalizing the operation, introducing the rigor of a prestigious firm like Covington & Burling, where he had spent much of his career. He recruited elite lawyers from corporate firms and the Breu Crew, as they would later be known, were repeatedly urged by Breuer to “take it to the next level.”

But the crackdown never happened. Over the past year, I’ve interviewed Wall Street traders, bank executives, defense lawyers and dozens of current and former prosecutors to understand why the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker – one who happened to be several rungs from the corporate suite at a second-tier financial institution. Many assume that the federal authorities simply lacked the guts to go after powerful Wall Street bankers, but that obscures a far more complicated dynamic. During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms. By the time Serageldin committed his crime, Justice Department leadership, as well as prosecutors in integral United States attorney’s offices, were de-emphasizing complicated financial cases – even neglecting clues that suggested that Lehman executives knew more than they were letting on about their bank’s liquidity problem. In the mid-’90s, white-collar prosecutions represented an average of 17.6 percent of all federal cases. In the three years ending in 2012, the share was 9.4 percent.

Why Wall Streeters Don’t Go To Jail

Linette Lopez, Business Insider

4/30/2014

(H)ere are five things you need to know about what Eisinger found in his reporting.

1. There’s a pendulum swing thing going on here. The white-collar guys at the DOJ were inspired by their colleagues who took down the mob. That’s why when a man who had worked under Rudy Giuliani named Michael Chertoff became the criminal chief of the DOJ in 2001, the agency was ready for war.
2. When Chertoff went after Arthur Anderson hard for its role in disguising Enron’s fraud, there was a backlash. Corporate America, and even some prosecutors, thought Chertoff had overstepped his bounds.
3. Corporate attorneys started figuring out ways to protect their clients. They were trying to counter the ‘Thompson Memo’, a strategy written by then-Deputy Attorney General Larry Thompson. Basically he gave corporations carrots for rolling back the attorney client privileges that protected them. Because of the backlash, however, the memo has been all but rolled back, according to Eisinger.
4. In 2003 there was a turning point. The Fed stepped in while the DOJ was prosecuting PNC Financial Services, and asked for a meeting with Chertoff, where Chertoff told then-Fed official Herbert Biern that: “if the DOJ ‘can’t bring these cases because it may bring harm, then maybe these banks are too big.'” Sound familiar?
5. After that, they deferred and non-prosecution agreements started pouring out of the DOJ. There were 242 from 2004-2012. There had been 26 in the previous 12 years.

Two Giant Banks, Seen as Immune, Become Targets

By BEN PROTESS and JESSICA SILVER-GREENBERG, The New York Times

April 29, 2014, 8:40 pm

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.

In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fueled a public outcry over the perception that Wall Street giants are “too big to jail.”

…

The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France’s largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.

First, I’ll believe it when I see it.

Second, where are Bank of America, Citigroup, Goldman Sachs, JP Morgan, or Wells Fargo?  Is this just a protectionist assault of foriegn owned institutions?

Why Only One Top Banker Went to Jail for the Financial Crisis

By JESSE EISINGER, The New York Times Magazine

APRIL 30, 2014

American financial history has generally unfolded as a series of booms followed by busts followed by crackdowns. After the crash of 1929, the Pecora Hearings seized upon public outrage, and the head of the New York Stock Exchange landed in prison. After the savings-and-loan scandals of the 1980s, 1,100 people were prosecuted, including top executives at many of the largest failed banks. In the ’90s and early aughts, when the bursting of the Nasdaq bubble revealed widespread corporate accounting scandals, top executives from WorldCom, Enron, Qwest and Tyco, among others, went to prison.

Continue reading the main story

The credit crisis of 2008 dwarfed those busts, and it was only to be expected that a similar round of crackdowns would ensue. In 2009, the Obama administration appointed Lanny Breuer to lead the Justice Department’s criminal division. Breuer quickly focused on professionalizing the operation, introducing the rigor of a prestigious firm like Covington & Burling, where he had spent much of his career. He recruited elite lawyers from corporate firms and the Breu Crew, as they would later be known, were repeatedly urged by Breuer to “take it to the next level.”

But the crackdown never happened. Over the past year, I’ve interviewed Wall Street traders, bank executives, defense lawyers and dozens of current and former prosecutors to understand why the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker – one who happened to be several rungs from the corporate suite at a second-tier financial institution. Many assume that the federal authorities simply lacked the guts to go after powerful Wall Street bankers, but that obscures a far more complicated dynamic. During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms. By the time Serageldin committed his crime, Justice Department leadership, as well as prosecutors in integral United States attorney’s offices, were de-emphasizing complicated financial cases – even neglecting clues that suggested that Lehman executives knew more than they were letting on about their bank’s liquidity problem. In the mid-’90s, white-collar prosecutions represented an average of 17.6 percent of all federal cases. In the three years ending in 2012, the share was 9.4 percent.

Why Wall Streeters Don’t Go To Jail

Linette Lopez, Business Insider

4/30/2014

(H)ere are five things you need to know about what Eisinger found in his reporting.

1. There’s a pendulum swing thing going on here. The white-collar guys at the DOJ were inspired by their colleagues who took down the mob. That’s why when a man who had worked under Rudy Giuliani named Michael Chertoff became the criminal chief of the DOJ in 2001, the agency was ready for war.
2. When Chertoff went after Arthur Anderson hard for its role in disguising Enron’s fraud, there was a backlash. Corporate America, and even some prosecutors, thought Chertoff had overstepped his bounds.
3. Corporate attorneys started figuring out ways to protect their clients. They were trying to counter the ‘Thompson Memo’, a strategy written by then-Deputy Attorney General Larry Thompson. Basically he gave corporations carrots for rolling back the attorney client privileges that protected them. Because of the backlash, however, the memo has been all but rolled back, according to Eisinger.
4. In 2003 there was a turning point. The Fed stepped in while the DOJ was prosecuting PNC Financial Services, and asked for a meeting with Chertoff, where Chertoff told then-Fed official Herbert Biern that: “if the DOJ ‘can’t bring these cases because it may bring harm, then maybe these banks are too big.'” Sound familiar?
5. After that, they deferred and non-prosecution agreements started pouring out of the DOJ. There were 242 from 2004-2012. There had been 26 in the previous 12 years.

TPP Unraveling?

Real News Network

April 27, 14

President Obama returns from East Asia empty-handed after Japan rejects bilateral agreement – but if the TPP moves forward, will it be in the interest of most Americans?

President Obama’s smoking problem in Malaysia

By ERIC BRADNER, Politico

4/28/14 6:53 PM EDT

However, one thing neither leader talked specifically about during the media event was a brewing tension surrounding the negotiations: the way Malaysia’s health officials fear the deal might sabotage their country’s efforts to fight its smoking problem.

Malaysia worries that it will suffer the fate that Uruguay, Australia and Thailand did in other trade deals: dragged into an expensive, yearslong international legal fight over its right to block cigarette companies from advertising.

“The U.S. government’s proposal on tobacco does not go far enough. It is insufficient to protect the government’s sovereignty to do their utmost to protect public health,” said Mary Assunta, a senior policy adviser for the Southeast Asia Tobacco Control Alliance. “Tobacco companies should not interfere with this, nor challenge governments using the free-trade platform.”

Early in the deal’s negotiations, the United States was willing to give Malaysia something close to what it wanted, calling for a so-called safe harbor provision that protected anti-smoking rules. But under pressure from business groups and lawmakers, the Obama administration changed its mind in August.

However, the U.S. proposal doesn’t block tobacco companies from making such challenges in the first place – driving Malaysia’s worries that one of those companies could potentially persuade an independent dispute panel to order the elimination of the government’s prohibition against advertising cigarettes, just as those policies appear to be stopping the growth in the country’s number of smokers.

Obama trip stirs emotions over Asia trade pact

By DOUG PALMER, Politico

4/21/14 3:32 PM EDT

The trip gives the president a high-profile opportunity to ignite action in Congress on trade legislation that is stalled largely because of opposition from fellow Democrats. But even under the most optimistic scenario, that seems like a long shot.

“I basically think the White House knows this is over,” Rep. Louise Slaughter (D-N.Y.) recently told reporters, in regard to the stalled trade promotion authority bill, or “fast track,” that would allow Obama to submit the TPP agreement to Congress for a straight up-or-down vote without any amendments.

…

“If they have really good meetings with really good optics and strong commitments coming out of the Asia trip, that provides the incentives” for Congress to begin work on the trade bill, (Scott) Miller (a trade analyst at the Center for Strategic and International Studies) said. “But it’s not going to happen without a major lift from the executive branch.”

…

Meanwhile, Obama’s visit to South Korea draws attention to a trade deal that in its first two years has not delivered an expected increase in U.S. exports, putting the administration on the defensive as it makes the case to Congress for TPP and trade promotion authority.

…

In a call with reporters, they (Democratic critics) said past trade deals like the North American Free Trade Agreement and the more recent free-trade pact with South Korea have hurt the U.S. economy more than they’ve helped and warned that the TPP agreement would be more bad news for the United States.

“TPP would force Americans to compete against workers from Vietnam, where the minimum wage is $2.75 per day,” Rep. Rosa DeLauro (D-Conn.) said. “It threatens to roll back financial regulations, environmental standards and U.S laws that protect the safety of drugs and food and the toys we give our kids.”

Did Japan’s Prime Minister Abe Serve Obama Beefsteak-Flavored Revenge for US Trade Representative Froman’s TPP Rudeness?

Clive, Naked Capitalism

Posted on April 28, 2014

(A)ccording to the US playbook, Froman’s roughing up of Japan in public would be followed at the end of April by US President Obama’s visit to Japan where he would then be able to seal a TPP deal, have a photo op and declare his Asian visit a triumph.

What happened instead is that, according to credible reports, is it was the US which had to capitulate on rice and wheat tariffs. Japan is still holding out for the retention of tariffs on other agricultural products such as pork and beef. As Obama left Japan last week without a deal, an agreement seems as far away as ever.

…

Okay, who having got this far isn’t starting to think to themselves, hey, wait a minute, this doesn’t sound at all plausible. We’re supposed to have had the Japanese Prime Minister and two other key cabinet members dining in public in a Tokyo restaurant bad mouthing (albeit mildly) the US President…and this conversation just happens to have been overheard by some mysterious agent who just happened to blab to the press. Really? If you believe that, Iíd love to talk to you about a great deal I can offer you on the Akashi-Kaikyo Bridge… Much more likely of course is that the whole story was a plant by the Japanese government to make clear what it thinks of Obama.

…

From the Japanese Gendai Daily News-

Obamaís Just Left the Country…And Leaves Prime Minister Abe Bitchin’ about the State Visit

US Given the Brush-off at 500-bucks a Head Steakhouse

There’s even more to the steak angle of this story. Right now, Japan is the cause of the impasse in the TPP negotiations (which includes beef tariff elimination which Japan is resisting). But despite Obama’s known fondness for Kobe beef he wasn’t served any during his visit to Japan. On the first day of his trip, he was invited to a ritzy sushi place in Tokyo. And at the state banquet in the Imperial Palace on the second day, he was served steamed sheep leg.

But on the same day as Abe treated Obama to sushi (at a moderately upscale place in Tokyo charging about $300 a head, which is pricy but not exceptional by Tokyo’s famously over the top dining scene standards), he himself was enjoying beefsteak at the ultra-exclusive Kawamura restaurant charging a minimum of $500 per person before extras. Those in political circles commented “You can see how Obama might gripe that he didn’t get to enjoy such wonderful beefsteak because of Abe, due to a misunderstanding (of Abe’s actions)”

TPP Is Right Where We Want It: Going Nowhere

by Maira Sutton, Common Dreams

Tuesday, April 29, 2014

As negotiations continue to be shrouded in secrecy, the Pacific trade deal faces mass opposition both inside and outside of the U.S., and reports say little progress has been made for many months. State leaders and trade delegates have held dozens of closed-door meetings to discuss possible trade-offs and concessions over various tariffs and regulations, including some of the most controversial copyright enforcement provisions in the Intellectual Property chapter. Based upon the leaked text published by Wikileaks in November, several countries are resisting the extreme U.S. proposals on Digital Rights Management (DRM) and Internet Service Provider (ISP) liability.

Following massive blows to the Fast Track bill introduced in January, many Senators are maintaining their stiff opposition against handing over trade authority to the White House. Under Fast Track, also known as Trade Promotion Authority, lawmakers would be limited to an up-or-down vote, and shirk their responsibility to hold proper hearings on its provisions. Republican Senator Roger Wicker has openly stated that he “couldn’t be less optimistic” about any progress being achieved during Obama’s trip to Asia. In an op-ed published this week in the LA Times, three Democratic Representatives reiterated their strong criticism of the TPP, advising that no one should “blindly endorse” this agreement. In November, the New York Times had done precisely that, but they too have suddenly changed their tune-publishing an editorial this week that expressed their heavy doubts over TPP’s objectives. They correctly questioned the administration’s secrecy over the negotiations and wrote that the “Obama administration also needs to do much more to counter the demands of corporations with those of the public interest.”

…

As others have pointed out, the Obama administration only has itself to blame for this mess. By listening to corporate demands above all else, it has alienated itself from its own political party, public interest groups, and most of all, the people whose interests it is supposedly meant to represent. Unless the U.S. trade rep radically changes its approach to this agreement-to make the negotiations truly transparent and incorporate substantive input from the public, for starters-it seems the President is going to be stuck defending a bad deal and a bad process.

Bank of America Finds a Mistake: $4 Billion Less Capital

By PETER EAVIS and MICHAEL CORKERY, The New York Times

April 28, 2014, 9:18 am

The mistake, which had gone undetected for several years, led the bank to report recently that it had $4 billion more capital than it actually had. After Bank of America reported its error to the Federal Reserve, the regulator required the bank to suspend a share buyback and a planned increase in its quarterly dividend.

While regulators still believe Bank of America has sufficient capital, the disclosure of the accounting error will most likely add fuel to the debate over whether the nation’s largest banks are too big and complicated to manage.

The error also raises questions about the quality of Bank of America’s own accounting employees, who are supposed to present an accurate financial picture of the bank’s sprawling operations to the public and regulators each quarter. The audit committee of the bank’s board and PricewaterhouseCoopers, its external auditor, also allowed the error to slip by for so long.

…

Some of the spotlight may also fall on the Fed. Since the financial crisis of 2008, the government has focused its financial system overhaul on increasing capital, the part of a bank that absorbs losses and helps it weather storms. The Fed conducts so-called stress tests of big banks each year to assess whether they have enough capital to withstand shocks. Bank of America passed its test in March, paving the way for the increase in its shareholder payouts. It gained approval for a $4 billion share repurchase plan and a 4-cent increase in its quarterly dividend.

But after the accounting error, Bank of America will have to go back to the Fed to try and resolve the issue. If the Fed is satisfied with Bank of America’s explanations and remedies, it will probably be able to make some payouts, though the bank said on Monday that it expected the distributions to be less than originally announced.

Bank of America’s missteps could be resolved relatively quickly, unlike those of Citigroup, which failed the stress test last month after the Fed found potentially deep-seated problems with the bank’s financial projections, which could take several months to resolve.

…

(C)racks appeared in the comeback narrative in recent days. As part of its first-quarter earnings earlier this month, Bank of America announced $6 billion in new legal expenses related to defective mortgages, higher than many investors expected. Reports then came out indicating that the bank might later this year face more than $16 billion in penalties to settle claims with the Justice Department that it sold investors faulty mortgages.

…

Bank of America assumed bonds that Merrill had issued, including a $60 billion portfolio of so-called structured notes.

When Bank of America put the notes on its own balance sheet, it did so at a discount to their original value. Bank of America has since paid off many of the notes or bought them back from investors. When these payouts were higher than the value at which Bank of America assumed the notes, the bank booked a loss because it was paying out more money than its balance sheet said the bank owed.

Bank of America’s capital should have been reduced by these losses. But instead, and in error, the bank did not do that, which artificially lifted its capital over several years.

…

The size of the capital hole, and the length of time that it was overlooked, could also raise questions about the thoroughness of the Fed’s annual stress tests. In the tests, the banks are supposed to evaluate their own strength under difficult economic and market conditions, but the Fed is also meant to review the banks’ numbers, using its own examination to identify potential red flags. The Bank of America mistake is expected to prompt the Fed to look more closely at this area of capital calculation.

It looks like this-

Do NOT take Western Help for your “revolution”

Ian Welsh

2014 April 24

There is no point, if you are are unhappy with your domestic regime, in accepting Western aid to overthrow it at the moment, not unless you’ve got a plan to bite the hand that feeds you.  The reason is that the West is no longer exporting prosperity, and hasn’t been for some time.  Excepting (sort of, very sort of) China, the last countries to get prosperity from the West were a few Eastern European ones; before that, the Asian Tigers.*  Instead the sphere of prosperity based on the West is in contraction, just ask the South of Europe, or Ireland.  (The Chinese sphere is another matter, though they have problems too.)

Even if you win your revolution with foreign aid, a la Libya or the Western Ukraine,  you aren’t going to be offered a good deal: the Ukraine is still going to get shafted by the IMF to the tune of a 50% cut in pensions, a 50% increase in gas prices even before Russian price increases, government austerity and selling off the crown jewels of energy companies and arable land to foreigners.  Libya is a bloody mess: again, however bad Qaddafi was, he was better than the current situation.

There is no real money; no real resources, for prosperity to be spread to new nations by the West and its allies (like Japan).  The new money being created is heavily leveraged debt piled on the back of countries who already can’t pay, money they’d be better off without.

So, don’t play with the West.  Don’t take their money and aid in overthrowing your corrupt government, unless you know exactly what you’re doing and plan to to turn on them and align with someone else.  If you do, your country will be worse off.

Though, perhaps you should take their money.  Personally, I mean.  You can get rich yourself and then escape your country, if you’re a traitor.

Keystone decision delayed yet again

By ANDREW RESTUCCIA and DARREN GOODE, Politico

4/19/14 12:18 AM EDT

The State Department declined to specify how long the delay will last, saying only that it needs to extend its review because of an ongoing dispute in front of the Nebraska Supreme Court that could affect the project’s route inside the state. “We are moving ahead very diligently with all the other aspects that are necessary for the national interest determination,” a senior State Department official told reporters on a conference call.

…

“It’s disappointing President Obama doesn’t have the courage to reject Keystone XL right now, but this is clearly another win for pipeline opponents,” said Jamie Henn, spokesman for the climate activist group 350.org, which staged mass sit-ins outside the White House to protest the project. “We’re going to keep up the pressure on the President to make the right call.”

…

The latest delay stems from a ruling in February in which a Nebraska court, reacting to a suit by landowners, threw out a state law that had given Gov. Dave Heineman the right to approve the pipeline route.

If the Nebraska Supreme Court upholds that decision – and state lawmakers refuse to intervene – the route decision will fall into the hands of the state’s Public Service Commission. That elected body would have seven months to a year to decide after TransCanada files an application.