Blog on the Run: Reloaded

Wednesday, May 29, 2019 7:29 pm

Mueller to U.S. House: Saddle the hell up

Robert Mueller all but begs Congress to impeach Donald Trump and implicitly tears a deserving news media a big new orifice in the process.

Outgoing special counsel Robert Mueller made several critical points today in his roughly eight-minute statement at the Department of Justice.

First (and I’m not necessarily going in chronological order here), he emphasized at both the beginning and the end of his statement that the evidence is crystal clear that Russian military intelligence sought to interfere with the 2016 presidential election for the benefit of Donald Trump and that they are continuing to try to interfere with U.S. elections even today.

Second, he emphasized that the Mueller report speaks for itself, which was a polite way of saying that if the people whose jobs it was to tell us what was in the report had done their jobs and read the damned report, we wouldn’t be nearly so confused about the way forward and we wouldn’t have wasted the past two months. Instead, he implicitly pointed out, journalists covered what people (i.e., Attorney General William Barr) SAID about the report, rather than what the report itself said, to the detriment of the American public. As The Atlantic’s Adam Serwer put it, “Mueller’s statement is an indictment of a press that focused more on what people had to say about the report than what the report said, because the former was easier to cover. No one has learned anything.” (The first three rules of investigative reporting are “Follow the money,” “follow the money,” and “follow the money,” but Rule 4 is, “Always read the documents” and Rule 5 is “Always do the math.”)

Third, he said that he did not seek charges against Trump because Justice Department policy, while authorizing investigations of a sitting president “while memories are fresh and documents are available,” forbade charging a sitting president. (For what it’s worth, George Washington University law professor Jonathan Turley went on CBS immediately after the statement to say that, constitutionally speaking, Mueller was “dead wrong,” that Trump indeed could have been indicted.) Mueller clearly implied that had Trump been anyone but the sitting president, he would have been indicted.

Fourth, he fleshed out that point by observing that, contrary to what Donald Trump and Barr have said, the report is not an exoneration. Indeed, he said, “As set forth in our report, after that investigation, if we had confidence that the president clearly did not commit a crime, we would have said that.”

Fifth, he emphasized that that obstruction definitely had hampered his campaign: “When a subject of an investigation obstructs that investigation or lies to investigators, it strikes at the core of their government’s effort to find the truth and hold wrongdoers accountable.” The implication, though it is only that, might explain why he failed to find enough evidence to indict people on the conspiracy charge. Because while Vol. 1 of the report said Mueller’s team found insufficient evidence to indict Trump on a conspiracy charge, notwithstanding Trump’s lies, you can’t swing a dead cat in it without running across multiple instances of collusion, a concept that has real-world meanings but no legal significance.

Fifth, he re-emphasized that in his view and given Justice Department policy, it was not for Justice to accuse a sitting president of wrongdoing; rather, that responsibility fell to Congress. Combined with the documentation in Vol. 2 of the Mueller report of up to 10 instances of obstruction of justice on Trump’s part, he seemed to be practically begging the House to begin impeachment hearings.

He said a few other noteworthy things, such as that even if he were to appear before Congress to testify, he would not go beyond what’s already in the report. Legally and constitutionally, that’s a dubious claim, particularly if the House opens impeachment hearings. If the House subpoenas him and asks him questions and he refuses to answer, he can be held in contempt and spend up to a year in jail. Moreover, as Esquire’s Charles Pierce observed:

He has no excuse left. He is a private citizen now. And if he only repeats what’s in the report, on television, in front of the country, it will contribute mightily to the political momentum behind the demands that Congress do its damn job or shirk its duty entirely. He still needs to testify. He still needs to take questions. He’s only a citizen like the rest of us now, and he has a duty to do the right thing. We all do.

And Mueller said that our ongoing election-security weaknesses “deserve the attention of every American.” That assertion must be weighed against Republicans’ outright hostility, and particularly that of Mitch McConnell, to taking the slightest action to make elections more secure, such as, oh, I don’t know, even holding a vote on H.R. 1.

But his main points make clear what I and many others, from Laurence Tribe of Harvard Law School to Rep. Justin Amash, Republican of Michigan, already have been saying: It is past time for the House to begin formal impeachment hearings. House Speaker Nancy Pelosi and her second-in-command, Steny Hoyer, publicly have been reluctant to acknowledge that the need exists. But House Judiciary Chairman Jerry Nadler, whose committee would be the one to hold such hearings, said today:

Although Department of Justice policy prevented the Special Counsel from bringing criminal charges against the President, the Special Counsel has clearly demonstrated that the President is lying about the Special Counsel’s findings, lying about the testimony of key witnesses in the Special Counsel’s report, and is lying in saying that the Special Counsel found no obstruction and no collusion. Given that Special Counsel Mueller was unable to pursue criminal charges against the president, it falls to Congress to respond to the crimes, lies, and other wrongdoing of President Trump — and we will do so. No one, not even the President of the United States, is above the law.

Democrats have talked tough before only to fold, and there’s no guarantee they won’t fold again. But I believe at this point that whether or not Democrats actually pull the trigger on impeachment hearings, they at least have heard and understood that that is what the outgoing special counsel is asking, if not begging, them to do. I won’t reiterate the many reasons why I think it’s important to do so, except to say this: Thanks in large part to our mealy-mouthed news media, Trump has been able to spend the past two months lying with impunity about the findings of the Mueller investigation. Anyone who saw and heard Mueller speak today now knows that Trump has been gaslighting the American public — and that televised impeachment hearings aren’t just a constitutional necessity but also a necessary news and public relations corrective to Trump’s gaslighting. I hope and trust that Nadler and other House committee chairs, currently on Memorial Day recess, will make this happen soon.

Advertisements

Friday, June 17, 2011 7:00 pm

Numbers don’t lie, but the numbers guys do

Filed under: I want my money back. — Lex @ 7:00 pm
Tags: , ,

Back in the early 1990s, when I was first applying database analysis to newspaper reporting (I mean when I was starting to do it; lots of other people did it before me), I attempted to tackle the question of whether bids for milk contracts between dairies and N.C. public school systems were being rigged, as we were hearing. I gathered contract data from as many years as I could from as many school systems as I could — at least three and sometimes seven or eight years’ worth of data for almost every system in the state, in fact — and looked at what the numbers showed.

To my untrained eye, they appeared to show home-town favoritism, exclusive long-term relationships and a number of other things that you wouldn’t expect in a competitive market. Moreover, although transportation costs were the second biggest factor in the price of milk after the cost of the raw milk itself, contract prices tended to go up a lot more quickly and down a lot more slowly than did fuel costs.

But, having only an untrained eye, I sent my data to an agricultural economist at a large research university in another state and then called (this was in the immediate pre-email era for most Americans) and asked him whether what I thought I was seeing was actually what I was seeing. I pretty much expected him to say that there were, in fact, logical explanations for what I was seeing in the data, significant drivers of milk prices that I had overlooked,  subtleties of the school-milk marketplace that contract numbers didn’t account for, and so on and so forth.

Instead, what he said was, “Oh, yeah. If I was a DA, I could have a lot of fun with this.”

As it happens, the United States government has the equivalent of a DA for investment bankers, the United States Attorney for the Southern District of New York, in Manhattan, where most American investment banks are based. That individual could have a lot of fun with this:

Mark Abrahamson, Tim Jenkinson, and Howard Jones, of Oxford University, have an utterly compelling paper out proving that there’s collusion among investment banks in the US — it doesn’t matter whether they’re European or American banks — to keep IPO proceeds set at 7%. Using a very high-quality new dataset, they compare US and European IPOs, and get the following result:

ipo.tiff

This chart just shows IPO fees for deals between $25 million and $100 million (in 2007 dollars). But the pattern is universal:

Between 1998 and 2007, 95.4% of U.S. IPOs between $25m and $100m had gross spreads of exactly 7%. The comparable figure between 1989 and 199… While Chen and Ritter showed virtually no IPOs over $150m with a 7% gross spread, we find that 77% of all offerings between $100 and $250m charge exactly 7%. (Note from Lex: The visual fooled me at first. That solid black line at 7% isn’t just an illustrative line. It’s that solid and that black because THOSE ARE ALL THE DATA POINTS.)

European IPO fees do not cluster, and only 1% of offerings raising $25m or more experience gross spreads as high as 7%. Within the $25m-$100m range, fees for European IPOs average just over 4%. Indeed, European IPOs are always cheaper: we find that there is a “3% wedge” between European and U.S. IPOs after controlling for size, issue characteristics, syndicate structure and time or country effects. Fourth, whilst gross spreads are lower for the larger offerings in both regions, our multivariate analysis indicates that fees for the larger U.S. IPOs have tended to increase in our sample period, while European IPOs have been getting cheaper.

The paper runs down a list of possible reasons why US IPOs might be so much more expensive than their European counterparts, and finds none of them convincing; their conclusion — the correct conclusion, I think — is that there’s an implicit cartel in the US, devoted to keeping IPO fees artificially high. (The term of art is “strategic pricing”: although it might be in any bank’s short-term interest to compete on price for any given deal, it’s in all of their long-term interest not to ever do so.)

The cost to issuers of this collusion is huge:

Our best estimates suggest that had these IPOs been conducted at European fee levels the savings to U.S. issuers over the period would have totaled $11.4 billion – or over $1 billion per year.

The moral of the story, first told to me when I worked in PR for investment banks in New York in the early 1980s, is that no one makes money on IPOs except investment banks. (That’s why I didn’t try to get in on the Netscape IPO even though, unlike most Americans, I’d actually tried the product at the time and KNEW it would be popular.) What’s different about this is that now we know why. What’s not different is that they’re going to keep getting away with it just as they have with everything else.

UPDATE: Hedge-fund manager John Thomas reminds us that because the seller of any security likely knows a lot more about it than you do, any explanation regarding why a company is going public usually translates to, “The insiders are getting out at the top.”

Create a free website or blog at WordPress.com.

%d bloggers like this: