Blog on the Run: Reloaded

Sunday, February 7, 2010 12:27 am

Odds and ends for 2/6

New York’s attorney general comes down hard on Ken Lewis and Joseph Price in a civil lawsuit, alleging that the Bank of America CEO and CFO misled not only the bank’s shareholders but also their own board, the company’s lawyers and the public as to the amount of water Merrill Lynch was taking on when BAC acquired it — an amount sufficient to have taken BAC down too without a taxpayer bailout. While we wonder why Lewis and Price remain unindicted comes news that Lewis’s attorneys intend to call Hank Paulson and Ben Bernanke to testify in his defense. If my 401k and kids’ college funds weren’t so devastated, I’d be buying popcorn.

The United States attorney general comes down hard on Mitch “WATB” McConnell and other Republicans who think there’s any sort of basis in fact or law for trying the Underpants Bomber anywhere but U.S. District Court. Read the whole thing; it is full of Win.

If he legally changed his name to “Enormous Genitals,”* do you think it would help?: Pakistani career diplomat Akbar Zeb has been rejected by Saudi Arabia as ambassador to that country because his name translates into Arabic as “biggest d**k.” You laugh, but the United Arab Emirates rejected him earlier for the same reason. (h/t: Fred)

*Movie reference:

UPDATE: Fred says we missed a chance by not including this, and I agree:

Shredding the Constitution. Again: The U.S. government was surveilling an American citizen, Anwar al-Awlaki, for months and months and never came up with any basis for indicting him. And yet, somehow, he ends up on an assassination list, in apparent violation of at least three different amendments to the Constitution. Someone want to explain to me how this works?

Fritz Kraemer: the biggest warmonger you’ve never heard of.

How good are you at assessing risk — in particular the risk that what you think about a particular subject might be wrong? You can take a test here to find out. The higher your score (perfect is 100), the more willing you are to consider the possibility that what you think you know is actually wrong. I scored 93, which probably comes as a surprise to everyone who considers me dogmatic. It doesn’t surprise me for two reasons: 1) In 25 years of journalism, you learn to do your homework. So on stuff that I was confident I was right on, I was confident for a reason, and I didn’t hedge my bets, so to speak, during the test. 2) In 25 years of journalism, you also learn not to lean too hard on stuff of which you’re not confident, because the consequences can be much worse than just getting a fact wrong. They can include getting fired and sued. So on questions where I wasn’t certain, particularly those containing multiple factual assertions, I usually chose the “just have no freakin’ idea” option and didn’t feel any shame about doing it.

Tom Tancredo thinks we need a “civic literacy test” that people must pass to be able to vote. So Eli says, OK, fine, let’s get some answers to these questions.

Obama’s ugly budget would look even uglier if Fannie Mae and Freddie Mac liabilities — which, since Christmas Eve, have been potentially unlimited — had been on budget. But, in a trick Bloomberg calls “worthy of Enron,” they were left off.

Multiple personalities; or, IOKIYAR: Rep. Pete Hoekstra, who went all “Pulp Fiction” on Nancy Pelosi months ago for accusing the CIA of lying to Congress, is accusing the CIA of lying to Congress.

What is the Obama Justice Department hiding, and why are Senate Democrats helping them?: Dawn Johnsen’s nomination to head Justice’s Office of Legal Counsel should have been approved months ago; instead, it’s “hung up.” Again. For reasons that make sense only if you believe that Obama doesn’t really want her but also doesn’t want to take the PR hit for pulling her nomination. Memo: Dumping all over your friends is a real good way to get your base fired up to turn out in a challenging midterm election. Not.

How Republicans are trying to recruit more women: “Women sometimes need a little more handholding, or they need their friends to help them make a decision,” Republican National Committee co-chair Jan Larimer said. Ooooo-kay.

Given how often someone tries to repeal important parts of the Bill of Rights, I’m not entirely certain that such Senate traditions as filibusters and the hold should end. But I think we can safely say that when one senator — in this case, Richard Shelby of Alabama, whom no one will ever accuse of sentience — can put at least 70 presidential nominations on hold just because he’s not getting the pork he wants, it really is time to rethink some things. It’s also worth remembering that 1) the pork Shelby is seeking is 10x as much as Ben Nelson got for signing on to the health-care reform bill and 2) Shelby tried to kill GM and Chrystler bailouts because foreign auto makers have plants in his state. This isn’t about the good of the nation; this is about Shelby doing things because he can. But the national media appear to agree that IOKIYAR.

In light of the impending Super Bowl, a few words on the football players about whom almost nothing good is ever said. One reason I like Dan Dierdorff as a football announcer is that, having been an O-lineman, he’s conscious of what they do and how often it makes a big, big difference that most announcers never even pick up on.

Republicans can’t work with Democrats because they want Obama impeached, believe he’s a socialist, think he was born outside the U.S. and therefore is ineligible to be president, aren’t sure if he wants the terrorists to win, think it’s at least possible ACORN stole the 2008 election, consider Sarah Palin more qualified to be president than Obama, don’t want sex education taught in public schools and do want Biblical creationism taught in public schools. But the media think our biggest political problem is that Democrats aren’t sufficiently bipartisan. Sigh.

I’m beginning to understand why Tennessee fans hate Lane Kiffin: He has secured a verbal commitment from a quarterback who’s currently in seventh grade.

Former HP CEO and current Senate candidate Carly Fiorina has unleashed sheer madness in the form of a campaign ad that runs for 3.5 minutes and includes everything from a totally bass-ackwards metaphor to some poor schlub crawling on all fours in a sheep suit. I know it’s California, but still:

One of Jason Linkins’ commenters tips us to the artistic inspiration for the ad:

I want to see this movie. The California election, not so much.

Monday, January 18, 2010 8:53 pm

Odds and ends for 1/18

Memo from the NY Times to the Financial Crisis Inquiry Commission: Public hearings are good, but subpoenaing documents is better. Yup. Banksters committed fraud on a massive scale. This commission isn’t a law-enforcement agency, but what it finds can help Justice and SEC investigators do their jobs. In fact, it may force them to do their jobs, which a mere sense of duty has not, so far, sufficed to do.

More from the FCIC: The head securities regulator for the state of Texas testifies about how the feds have kneecapped state investigators/investigations, not because they would do a better job but to protect the very people they’re supposed to be regulating. Biggest. Fraud. In. History.

Memo to right-wing nuts (and anyone else, although I suspect only the wingnuts would be stupid enough to try this): Do not invite journalists into your home, sit for an interview and then demand their tapes at gunpoint, because your ass will go to prison and your wallet will go to the journalists. Having once covered the Klan, I’m taking particular satisfaction in the outcome of this case.

The Fed elides oversight and political meddling because it thinks you and I are too stupid to know the difference. Stupid Fed.

Darrell Issa wants Ben Bernanke and Hank Paulson to testify about the AIG bailout. So do I, but Issa has a little more leverage than I do. Uh, Democrats, that slamming sound you hear is Issa walking out the back door with your populist mandate for 2010.

More fraud uncovered: This time, short-sale fraud. And wonder of wonders, it’s CNBC that has uncovered it. Memo to Mary Schapiro: When CNBC looks both more honest and more industrious than the SEC, then you are officially Teh Suck.

For once, J.P. Morgan outperforms Goldman Sachs … if, by “outperform,” you mean, “directs an even more inexcusably large percentage of its total revenues to banker bonuses”64 percent of revenues. Not of profits, of revenues. Remember, Morgan, like the other 37 banks reviewed by the WSJ, has significant amounts of crap disguised as assets on its balance sheets, and even more crap off the sheets that soon will have to be moved onto the sheets. And are the banks setting aside capital to cover the inevitable write-downs? No, they’re buying helicopters and Hamptons houses.

If voters could vote on Obama’s financial appointments they way they can vote on Chris Dodd, Obama would be paging a lot of empty offices. For good reason.

Liberal academia? Yes — because conservatives choose disproportionately not to become college professors. These findings, albeit not yet published, are consistent with some earlier research.

Who killed Pat Robertson? Why, it was Lily Coyle, in the Minneapolis Star-Tribune (2nd letter down), with a clue.

Freedom’s just another word for no one left to screw: Retiring Sen. Chris Dodd could be scrapping the proposed Consumer Financial Protection Agency before he goes.

Well, it’s a step: The U.S. releases the names of 645 detainees at Bagram. Good. But some  of those people have been held for years without even being told why. Not good.

PhrMA theatens to blow up health-care reform. A friend of mine has proposed that any attempt to make a profit off health care should be made a crime. I think that’s extreme, but when stuff like this happens, I understand the anger that gives rise to such suggestions.

Dawn Johnsen might say torture is illegal. Therefore, she cannot possibly be allowed to run Justice’s Office of Legal Counsel, or else the terrorists win.

Memo to special prosecutor John Durham: In the marathon investigation of the destruction of CIA torture videos, the DFHs are eating your lunch. Bet they aren’t charging the government as much as you, too.

All of a sudden, “conservatives” are in favor of privacy. And it’s interesting how the kind of privacy they favor dovetails neatly with protecting them from being held accountable for their actions. Just a coincidence, I’m sure.

If you’re following Perez v. Schwarzenegger and it sounds awfully like Dover v. Kitzmiller, well,  there’s a reason for that: In both cases, science is/was under siege. Science won in Dover. Let’s see what happens in Perez.

Republicans, having fed off the productive among us for so long, are now simply outraged that one of their own is doing it to them. More specifically, their cynical selection of Michael Steele as national chairman to try to appeal to African American voters now means that even though he needs firing and is daring them to fire him, they can’t do it.

Why does Rush Limbaugh hate the troops? And why do the troops continue to air him on Armed Forces Radio when he hates them?

More map pr0n! Geocurrents has created a map blog tied to news events.

Thought for the day: Requiring drug tests for welfare recipients makes sense only if we also drug-test recipients of federal earthquake relief, tax credits and bank bailouts. Despite what you may have been told, your odds of getting into Heaven do NOT increase in direct proportion to the number of times you kick poor people.

“Never (annoy) a walrus.” Because if you do, the bucket is the least of your problems.

Wednesday, October 21, 2009 10:46 pm

More odds and ends

  • The Galleon insider-trading case, in which billionaire Raj Rajaratnam was charged and the securities-rating firm Moody’s was implicated? Has been assigned to Judge Jed Rakoff. Yeah, this Jed Rakoff. (I hope the judge is taking extremely good care of his health, if you know what I mean, because he is making life intolerable for some very, very wealthy and powerful people.)
  • Former Fed Chairman Paul Volcker, who got us both into and out of the ’81-’82 recession, thinks we need to kind of restore the Glass-Steagall Act, which kept commercial banks from doing investments (and being dragged under when those investments went south) before its 1999 repeal. But he’s having trouble selling that idea to all the Goldman Sachs alumni on Team Obama.
  • If this hearing in fact happens tomorrow — I read or heard somewhere it could get delayed — it could get real ugly real fast for Fed Chairman Ben Bernanke and former Treasury Secretary Hank Paulson. Hell, it might even get ugly for current Treasury Secretary Tim Geithner. I’d be OK with any and/or all suffering some consequences, because you don’t have to be a Harvard MBA to know Bank of America shareholders got screwed.
  • Speaking of Hank Paulson, turns out that while he was still secretary, he met in Moscow with the board of Goldman Sachs. But nothing improper happened. Really. Move along; nothing to see here. These are not the droids banksters you’re looking for.
  • Dana Perino, concern troll. Memo: advice on how to conduct yourself from a PR standpoint from someone who used to take money to call people traitors and supporters of terrorists is probably not worth what you’re paying for it.
  • Shorter Congressman Jeb Hanserling (R-Texas): I’m here to protect banks; screw the consumers.
  • Another Republican, this time John McCain, thinks another earmark, this one $325,000 for earthquake study in Memphis, is a waste of money, and once again is wrong. Three words: New Madrid Fault.
  • Shorter Timothy Noah: Whatever happened to, you know, reporting?; or, The public option was always popular, you morons — you just pretended otherwise or weren’t paying attention.
  • More Noah, because this is just so good and so true: “Political reporters are momentum junkies, forever plotting out momentary trends to infinity. If they were meteorologists, they’d interpret 90-degree temperatures in July to predict 160-degree temperatures in December.”
  • John Cole righteously dopeslaps neocon pinhead Pete Wehner.
  • Sure, Sarah Palin’s $29 book can become a bestseller — when you sell it for $9 or give it away with a magazine subscription.
  • The Bush and Obama administrations actually threatened not to share intelligence with the U.K. if it released evidence of our torture of a guy named Binyam Mohammed. (Yeah, let’s stop sharing info with our oldest and most trusted ally. Genius.) Fortunately, Britain’s highest court is calling their bluff.
  • The maker of Tasers, which has long claimed that Tasers aren’t lethal, now concedes that they might be, potentially, well, a little bit, um, lethal. I’m guessing someone finally talked to their lawyer and figured that just maybe they might want to do a little butt-covering.
  • Socialism … and its potential benefits.
  • OTOH, let’s foster competition and innovation, not hinder it.

Finally, a bit of a health-care roundup:

  • The House Judiciary Committee voted 20-9 today to strip the health-insurance industry of its federal antitrust exemption. This is such a good idea that three Republicans even went along with it. I dearly hope my own representative, Howard Coble, was one of them. (thomas.loc.gov hasn’t been updated yet so I don’t know.)
  • You can too get a hip replacement under the Canadian health-care system even if you’re of retirement age. Ignore the urban legends/propaganda.
  • Sen. Richard Burr’s health-care reform plan: fail. Not epic fail, not actual sabotage of what the bill purports to support, but also not enough recognition of certain economic and financial realities.
  • Expand Medicare to include — well, anyone who wants in? That’s a public option even some Blue Dogs can believe in.
  • And even if we choose a real public option, the Congressional Budget Office says it won’t cost as much as opponents have been claiming.
  • Apparently, U.S. Sen. Arlen Specter had no idea that some people were unable to start their own businesses, or stuck in jobs they hate or aren’t suited for, because they can’t afford the health insurance costs they’d have to pay if they made those moves. I mean, c’mon, how imaginative do you have to be before that possibility occurs to you?
  • Last but not least, Al Franken humbles a Hudson Institute hack on health-care finance:


Senator Al Franken: I think we disagree on whether or not the healthcare reform we’re talking about now in Congress should pass. And you said that, kind of the way we’re going will increase bankruptcies. I want to ask you, how many bankruptcies because of medical crises were there last year in Switzerland?

Diana Furchtgott-Roth: I don’t have that number in front of me but I could find out and get back to you.

Franken: I can tell you how many it was. It’s zero. Do you know how many medical bankruptcies there were last year in France?

Furchtgott-Roth: I don’t have that number but I can get back to you if you like.

Franken: The number is zero.
…

Tuesday, June 9, 2009 9:20 pm

Well, if, by “national hero,” you mean “self-dealing jerkwad who got us into this mess in the first place” … and, by the way, does your mom know you’re smoking all that crack?

There actually is someone in the world, a guy named Evan Newmark at the Wall Street Journal, who considers former Treasury Secretary Hank Paulson a national hero who has saved the economy.

I’ll wait a minute while you stop laughing.

OK. No, really:

I said it last October and I’m sticking by it. And now, there’s actual evidence to back me up. The TARP bailout worked. The Wall Street crisis is over.

At least, the market thinks so. At around 30, the VIX, the market’s volatility barometer, is trading at less than half the average level of last autumn. A share of Morgan Stanley is trading more than 400% higher than its October low.

And by this coming Sept. 15, the first anniversary of the fall of Lehman Brothers, five of the original eight TARP banks will have repaid the American taxpayer $50 billion plus interest.

Don’t get me wrong. The economy is still in crummy shape. But, at least it’s functioning. Not too long ago, we fretted over TARP banks collapsing. Now, we worry about getting full value for our warrants in the same banks.

In an excellent piece published today, my WSJ colleague Peter Eavis grumbles about the measly 5.6% returns earned by taxpayers off their investment in the top 16 TARP banks.

But Paulson’s intent for TARP wasn’t just to make money for the taxpayer. It was to stabilize the credit markets and save the banks at the lowest possible cost.

And that’s exactly what TARP has done. Who can doubt the amazing recovery of the credit markets? The best performing asset class so far in 2009 has been distressed debt, up by nearly 40%.

And the banking system? Investors are now throwing money at it. In May, $85 billion of fresh capital was raised by TARP banks. Bank of America alone has raised $33 billion in capital since the start of the year. …

Of course, everybody in Washington and on Wall Street, got all excited when Obama came to town. The collective wisdom was that both Paulson and his TARP were failures. And the incoming Treasury Secretary duly promised all sorts of new-fangled programs like the PPIP.

But what did Geithner end up doing?

Basically, what Paulson had done before. The TARP. Yes, the Treasury dressed the TARP up with the rigor of the “stress tests,” but at its core Geithner’s primary policy is the TARP.

Nothing wrong with that. If something works, it works. Just give credit where it’s due. And that would be with Hank Paulson, national hero.

Good God, where to start. Well, how ’bout with this: The fact that Geithner is doing the same thing Paulson is doing does not automatically mean that what Paulson was doing was right.

Second, the banks in general are not nearly as healthy as has been reported; they simply were able to game the system to make it look that way:

Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.

(Then there’s the strong possibility that we could be seeing a new wave of residential foreclosures later this year when another big round of ARMS resets. And that doesn’t even get into the commercial real-estate market, which no one even seems to be talking about.)

Third, we knew even at the time that the stress tests were nowhere near as rigorous as they needed to be. They presumed, for one thing, a worst-case unemployment scenario in 2009 of 8.4 percent. And what was May’s unemployment figure? 9.4 percent. Whoops!

Fourth, yeah, banks are able to raise capital now, but only because investors are confident that if the banks run into any more trouble the feds will just bail them out again instead of nationalizing them, fixing them and selling them off again like they should. (Also, there’s reason to believe that at least in the specific case of Bank of America, that raising of capital wasn’t necessarily completely clean, although I’ll grant I’m not sure how relevant that is to the larger issue.)

Fifth, there’s the role of Paulson himself. Take it away, Matt Taibbi:

Exactly what part of Paulson’s record is heroic, Evan? The part where he called up SEC director William Donaldson in 2004 and quietly arranged to get the state to drop capital requirements for the country’s top five investment banks? … After that, it was party time! Bear Stearns in just a few years had a debt-to-equity ration of 33-1! Lehman’s went to 32-1. By an amazing coincidence, both of these companies exploded just a few years after that meeting, and all of the rest of us, Evan, ended up footing the bill, thanks to a state-sponsored rescue of Bear and a much larger massive bailout of Wall Street in general, necessitated in large part by the damage caused by the chaos surrounding Lehman’s collapse.

Meanwhile your own Goldman, Sachs ended up with a 22:1 debt-to-equity ratio a few years following that meeting, a number that would have been much higher if one didn’t count the hedges Goldman bought through a company called AIG. Thanks in large part to Paulson’s leadership in his last years as head of Goldman, the company was so massively over-leveraged that it would have gone under if AIG — which owed Goldman billions when it went into its death spiral last September — had been allowed to collapse. But thanks to Hank Paulson, who heroically stepped in and gave AIG $80 billion the same weekend he allowed one of Goldman’s last key competitors, Lehman, to collapse, Goldman didn’t have to go without that money; $13 billion of the AIG bailout went straight to Goldman. So I guess we have Paulson to thank for the fact that he used about $13 billion of our taxpayer money to essentially bail out his own [screw]ups. …

Maybe it was the way Paulson pronounced the subprime fallout “contained” in 2007 and called the economy the “strongest in decades?” Or maybe it was the way he remained calm last July, saying that it was a “very manageable situation” and “our regulators are on top of it?” Remember how he said all that [stuff], Evan, just about six weeks before the world exploded? Remember that Henry Paulson was actually in charge of regulating the financial environment during the last years of the crisis and did nothing as his buddies on Wall Street built one gigantic mountain of leverage after another, gashing underwriting standards across the board, saddling the country with a generation of toxic assets that all of the rest of us will be paying for in taxes (instead of, for instance, a health care program, which we can now no longer afford) for the next fifty … years? Do you remember that part? …

Maybe it was that. Or maybe it was the way Paulson got a $200 million tax deferral thanks to an obscure rule that allows executives who join the government to defer taxes on their holdings. That means that not only did Paulson use billions of our money to bail out his own mistakes, he managed to use a loophole to get out of paying his fair share of that same bailout.

Even if it weren’t about five years too early to make any kind of judgment at all about whether or not TARP helped, the notion that Henry Paulson is a hero is complete and utter madness because TARP would never have been necessary if someone, anyone, who wasn’t a greed-addled incompetent like Paulson had actually been regulating the economy in the last years of the Bush adminstration.

I understand that the WSJ op-ed pages and blogs are dedicated to propagating a wide variety of opinions (ahem). But is it asking too much that those opinions at least be based on facts that apply in this dimension?

Apparently so.

UPDATE: Taxpayers, the banks’ TARP repayments may well mean just another screwing:

Through cheap loans, debt guarantees and a promise that big banks will not be allowed to fail, these officials say the government has created an artificial environment in which profits and stock prices have rebounded, helping banks in recent weeks to raise about $50 billion from private investors.

The money allows the strongest banks to return federal aid provided at the peak of the fall financial crisis, but few banks have expressed eagerness for the government to end the other forms of support, creating concern that these programs will be habit-forming and more difficult to terminate.

As a result, independent experts warn that the government’s relationship with the industry is entering a precarious new phase. As with mortgage giants Fannie Mae and Freddie Mac, the government will no longer share in the banks’ profits, but it still stands ready to absorb losses.

“It’s good from an individual investor point of view, it’s great for the banks, but from a system point of view it’s very dangerous,” said Simon Johnson, a Massachusetts Institute of Technology professor and former chief economist at the International Monetary Fund.

See, the thing is, despite Paulson’s, um, heroism (and Newmark’s sycophancy), we’re still vulnerable if we don’t fix the things that got us here in the first place:

We have both spent large chunks of our lives working on Wall Street, absorbing its ethic and mores. We’re concerned that nothing has really been fixed. We’re doubly concerned that people appear to feel the worst of the storm is over — and in this, they are aided and abetted by a hugely popular and charismatic president and by the fact that the Dow has increased by 35 percent or so since Mr. Obama started to lay out his economic plans in March. But wishing for improvement and managing by the Dow’s swings are a fool’s game. …

The storm is not over, not by a long shot. Huge structural flaws remain in the architecture of our financial system, and many of the fixes that the Obama administration has proposed will do little to address them and may make them worse. …

Six months ago, nobody believed that our banking system was well designed, functioning smoothly or properly regulated — so why then are we so desperately anxious to restore that model as the status quo? Nearly every new program emanating these days from the Treasury Department — the Term Asset-Backed Securities Loan Facility, the Public Private Investment Program, the “stress tests” of major banks — appears to have been designed to either paper over or to prop up a system that has clearly failed.

Instead of hauling out the new drywall to cover up the existing studs, let’s seriously consider ripping down the entire structure, dynamiting the foundation and building a new system that rewards taking prudent risks, allocates capital where it is needed, allows all investors to get accurate and timely financial information and increases value to shareholders and creditors.

Problem is, the Tim Geithners of the world are what got us here in the first place. And Barack Obama is what got Geithner here in the first place.

Create a free website or blog at WordPress.com.

%d bloggers like this: