Month: April 2010

Sen. Bob Bennett of Utah, the man legendary Mormon columnist Jack Anderson referred to as “Howard Hughes’s man in Washington,” is going to be the first incumbent senator to lose his job this year.

A new Salt Lake Tribune poll of Republican delegates shows Bennett running in third, behind GOP challengers Mike Lee and Tim Bridgewater.

Lee logged 37 percent support in the survey, while Bridgewater came in at 20 percent, and Bennett lagged at 16 percent.
The survey of 400 Republican delegates, with a 4.4 percent margin of error, was conducted April 22-25 by Mason-Dixon Polling & Research Inc. of Washington, D.C. It comes less than two weeks before the May 8 state GOP convention.

“Bennett has almost no shot of getting more votes at the convention than Bridgewater and Lee,” Brad Coker, managing director at Mason-Dixon, said Monday.

Utah uses a delegate system to determine who will be on the ballot. If any candidate gets 60% of the delegates, they win the primary outright. If not, then the two top delegate-winners face off before the Republican electorate at-large.

Sen. Bennett has always worried me because of his sinister early career as head of the Robert Mullen Company (a CIA front operation), his relationship with the shadowy Howard Hughes, and his murky connections to Watergate (e.g., he once employed E. Howard Hunt). But he’s actually been on the reasonable side of the Republican caucus over his long career, and that is now costing him his position. Although he is taking heat for voting for Bush’s initial Wall Street bailout plan, he was hardly alone among Republicans on that vote. What’s really crippling him is his decision in 2008 to team up with Senator Ron Wyden of Oregon in introducing the Healthy Americans Act, which included an individual mandate (notice that the 2008 Heritage Foundation critique did not like the mandate but made no argument that it would be unconstitutional). Now that the Republican Party has decided that an individual mandate is some of kind of insidious totalitarian plot, Sen. Bennett is left holding the bag.

Darren Park, a delegate from Riverton, is one of those. He hasn’t decided between backing [Mike] Lee or [Tim] Bridgewater, but says he won’t vote for Bennett because of the senator’s health care proposal, which would have required individuals to buy health care, and his support for the first round of bank bailouts during the Bush administration.

“It’s very much about Senator Bennett and not only what he has done and what he didn’t do,” Park said, in opposing congressional actions “that are incompatible, I believe, with the values and principles most Utahns share.”

Interestingly, the poll also found that 68% of the GOP’s delegates in Utah consider themselves aligned with the Tea Party.

In a better world, the Democrats would be ready to challenge for this open seat. Unfortunately, I don’t see it happening. If anyone knows what the Democrats in Utah plan on doing, let me know. The likely winner, Mike Lee, is a former clerk for Samuel Alito. If you want to know what he’ll be like in the U.S. Senate, think Jim DeMint. Do we really just have to lie here and take this? I guess we do. In the modern GOP, a former CIA frontman and bagman for Howard Hughes is now too moderate.

Check out Danielle Nierenberg’s Op-Ed, based on research for the Worldwatch Institute’s Nourishing the Planet project, featured on the front page of the Zambia Daily Mail. Cross posted from Border Jumpers, Danielle Nierenberg and Bernard Pollack.

In the United States, it seems like we only hear about what’s going wrong in Africa. We see and read stories about famine, HIV/AIDS, disease, or conflict.

In fact, few Americans will ever step foot in countries like Malawi or Zambia, largely because our media often scares people away.

As I travel across Africa, working as a senior researcher for the Worldwatch Institute as co-project director of Nourishing the Planet, I am hoping to show a different side of the continent.

Instead of stories of despair, we are looking at and sharing stories of success and hope, highlighting African-led innovations that are helping to alleviate hunger and poverty in an environmentally sustainable way.

After spending time in Lusaka meeting with non-governmental organisations, non-profits and projects on the ground, I discovered that this country is filled with incredible individuals and organisations – making my job very easy, and in many ways serving as a model for the rest of the continent.

Here are some examples:

COMACO, an organisation founded over 30 years ago to conserve local wildlife, helps farmers improve their agricultural practices in ways that can protect the environment – such as through conservation farming – while also creating a reliable market for farm products.

It organises the farmers into producer groups, encouraging them to diversify their skills by raising livestock and bees, growing organic rice, using improved irrigation and fisheries management and other practices so that they don’t have to resort to poaching elephants or other wildlife.

The United Nations World Food Programme’s Purchase for Progress (P4P) programme, with funding from the Bill & Melinda Gates Foundation, the Howard G. Buffett Foundation, and the Belgian government, is working with the private sector, governments and NGOs to provide an incentive for farmers to improve their crop management skills and produce high-quality food, create a market for surplus crops from small and low-income farmers and promote local processing and packaging of products.

Mobile Transactions, a financial services company for the `unbanked’ in Zambia, allows customers to use their phones like an ATM card. Over the last decade, cell-phone use in Africa has increased fivefold and farmers are using their phones to gain information about everything from markets to weather.

By using Mobile Transactions, farmers are not only able to make purchases and receive payment electronically; they are also building a credit history which can make getting loans easier.

And Mobile Transactions also works with USAID’s PROFIT programme to help agribusiness agents make orders for inputs, manage stock flows and communicate more easily with agribusiness companies and farmers.

Perhaps most importantly, the partnership helps agents better understand the farmers they are working with so that they can provide the tools, inputs and education each farmer and community needs.

Care International’s work in Zambia has two main goals: increase the production of staple crops and improve farmers’ access to agricultural inputs such as seeds and fertilisers. But instead of giving away bags of seed and fertilisers to farmers, Care is “creating input access through a business approach”, not a subsidy approach, according to Steve Power, assistant country director for Zambia.

One way they’re doing this is by creating a network of agro-dealers who can sell inputs to their neighbours as well as educate them about how to use hybrid seeds, fertilisers and other inputs. At the same time, “we are mindful” of the benefits of local varieties of seeds.

Jan Nijhoff of the Common Market for Eastern and Southern Africa (COMESA) and Michigan State University, who is also an advisor on Worldwatch’s Nourishing the Planet project, says COMESA’s mission is to promote regional economic integration through increased co-operation and integration of trade, customs, transport, communication, technology, energy, and gender, as well as agriculture, environment and natural resources.

Throughout most of my meetings, a theme I hadn’t heard as much in other African countries continued to surface – linking farmers to markets.

While at times I was sceptical about this focus on the private sector, the more I talked to farmers, NGOs, development workers and policy-makers, the more convinced I became that farmers need not just inputs to grow their crops, but a profitable – and sustainable – market to sell those crops.

In developing this model, it’s clear that Zambia is leading the way and creating examples that could work and be scaled up in other countries across the continent. – www.nourishingtheplanet.org

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Oh that financial reform bill is so awful, so horrible. It might keep you from selling your baseball cards on e-bay! It might make pay-pal go under! It might make it impossible to buy (gasp) that dream of every Real American — A Harley “Frickin” Motorcycle! Oh mercy, Sadie, pass me the smellin’ salts! I swear I’m about to faint!

How do I know all this? Why that liberal-islamo-socialo-fascist rag, The New York Times told me so. So it must be true!

WASHINGTON — Mars, the maker of M&M’s and Snickers, wants to make sure it can continue dabbling in the derivatives market to protect the price of sugar and chocolate for its candies.

Harley-Davidson is worried that its dealer-financed loans to bikers will fall victim to new federal financing regulations. And eBay is concerned about possible restrictions on PayPal, a subsidiary, in moving money in the Internet marketplace.

I guess rampant unemployment in a “jobless” recovery caused by Wall Street’s unregulated manipulation of the housing and commercial real estate markets prior to 2008 (when the whole house of cards fell down) isn’t good enough. I guess Goldman Sachs (and how many others) ripping off your pension funds and money market funds and 401K funds to the tune of BILLIONS of DOLLARS by betting against the very manure pile of unregulated derivatives (CDOs, CDSs and whatever Abacuses) and then gaming the government bailout funds (i.e. TARP) so that they got paid first and before anyone else wasn’t bad enough..

No friends, the New York Times is here to tell us that Main Street doesn’t want the banks re-regulated, Nosireebob. It wants the things to stay just the way they are. Really.

Far afield from Wall Street, the intense debate over the overhaul of financial regulations by Congress is attracting some unlikely but powerful players. More than 130 companies from the manufacturing, retail and service sectors have retained high-powered lobbyists to weigh in on, and often oppose, the regulatory system being debated this week in Washington, according to an analysis of lobbying records by The New York Times.

You know what I think? I think the six largest banks in America (they are by the way, Bank of America, Citigroup, JPMorgan Chase and Company, Wachovia Company, Wells Fargo and US Bancorp – tied with Capital One Financial for 6th place) the ones that now control assets equal to “63 percent” of our country’s Gross Domestic Product have been on the horn to their clients.

Along with Goldman Sachs, of course, smoking their fresh Cuban cigars after their most recent round of bonuses for the first three months of 2010 — FIVE BILLION DOLLARS while people who don’t commit fraud in a daily basis are losing their jobs, their homes and their health insurance.

And I believe that those same banks and Goldman Sachs’ lobbyists have been burning up their email, i-phones, i-pads and blackberries to give talking points to the lobbyists that their clients have been railroaded into hiring. And I believe that this is a scare campaign being waged to stop any financial reform and re-regulation of the banks and financial institutions in its tracks.

And I think the New York Times is a willing co-conspirator in that campaign.

So, why is this happening? Here’s one reason — no more unregulated derivatives trading which sank the economies of countries like Greece and the destroyed the budgets of hundreds of municipalities and local governments and even school districts across the United States if financial reform passes.

David DiCarlo, an Erie-based JPMorgan Chase banker, told Barker and the school board on Sept. 4, 2003, that all they had to do was sign papers he said would benefit them if interest rates increased in the future, and the bank would give the district $750,000, a transcript of the board meeting shows.

“You have severe building needs; you have serious academic needs,” Barker, 58, says. “It’s very hard to ignore the fact that the bank says it will give you cash.” So Barker and the board members agreed to the deal.

What New York-based JPMorgan Chase didn’t tell them, the transcript shows, was that the bank would get more in fees than the school district would get in cash: $1 million. The complex deal, which placed taxpayer money at risk, was linked to four variables involving interest rates. Three years later, as interest rate benchmarks went the wrong way for the school district; the Erie board paid $2.9 million to JPMorgan to get out of the deal, which officials now say they didn’t understand.

“That was like a sucker punch,” Barker says. “It’s not about the district and the superintendent. It’s about resources being sucked out of the classroom. If it’s happening here, it’s happening in other places.”

A sucker punch that the Big Banks have been getting away with scot free for years. TWELVE BILLION DOLLARS in such shady deals over the last four years in Pennsylvania alone according to the Bloomberg report I just cited above. Now multiply that by fifty states and thousands of local governments and national governments worldwide, and you can see why the BIG SIX (and Goldman Sachs, never forget them) don’t want this money tree going away anytime soon. , even if it means driving local governments into bankruptcy to fuel their greed for unearned illegitimate fees :

While JPMorgan has been relatively unscathed by the subprime crisis that hit Bear Stearns Cos., Merrill Lynch & Co., Lehman and other Wall Street firms, a little-known part of the largest bank in the U.S. made a tidy profit peddling a different kind of corrosive debt to hundreds of counties and school districts earlier this decade.

As the credit crunch froze lending globally, causing stock markets to plunge, local officials who say they trusted JPMorgan faced a crisis of their own. Wall Street’s drive for profits over the past decade has backfired on towns, cities and counties that borrow in the $2.7 trillion municipal bond market. […]

These come in municipal bond and derivative deals that have turned poisonous. Unlike JPMorgan, which has benefited from federal bailouts, the towns and schools the bank has financed have received no help from Washington.

That’s a lot of moola to protect, and a lot of rubes in and out of government to make your profits from, like a parasite that keeps sucking its host dry until it dies, and then moves on looking for the next poor sap to tap ( I know, mixed metaphors out the wazoo, but can you blame me?).

No, these Big Banks don’t want the Federal Government re-regulating their cozy “free market” con game, those “Too Big to Fail” banks whiny little Mitch McConnell keeps saying — lying through his teeth as he does so — he wants to put a stop to by killing the Democrat’s financial reform bill. After he held a secret meeting with Bank Lobbyists to coordinate their mutual strategy, naturally.

Nor do the Big Banks want to lose access to their essentially free money from the Federal Reserve Window. Nor so they want to have to actually have to hold cash in reserve to cover these unmitigated risks. Hell, there are sheep still to fleece. And they sure as hell don’t want to be downsized and broken up like the Trusts of old from Teddy Roosevelt’s days (you know TR, that famous Republican Reformer and cousin to the hated traitor to his class, Franklin Delano Roosevelt?), as a bill recently introduced by Senator Sherrod Brown, Democratic Senator from Ohio proposed:

“The major issue is to keep the banks from getting too large to begin with,” the lead sponsor of the bill, Senator Sherrod Brown, Democrat of Ohio, said Wednesday. “Too big to fail is too big. That’s where we need to be much more aggressive.”

As concern about the risk posed by the biggest financial institutions percolates among populists in Congress and at the Federal Reserve, the lawmakers plan to offer the bill as an amendment to the pending Senate legislation, which could reach the floor as soon as Monday.

The bill would cap the amount of nondeposit liabilities of any one bank — effectively, the amount the bank borrows in various ways to finance its operations — at an amount equal to 2 percent of the nation’s gross domestic product, a measure of the size of the economy. For major financial firms that are not banks, like the American International Group, Metropolitan Life or GE Capital, the financial arm of General Electric, the cap would by 3 percent of G.D.P.

The bill would reinforce a 1994 law that bars any single bank from holding more than 10 percent of the nation’s total deposits, or about $750 billion. In the years since then, large firms have obtained waivers or used loopholes in the law to exceed that ceiling. Three institutions — Bank of America, Wells Fargo and JPMorgan Chase — are over the limit now, and would have to lose the excess within three years.

So, I understand that the Banks have a vested interest in killing reform, but why does The New York Times give them a free piece of its valuable paper and online estate to run an infomercial against the reform bill? I mean, listen tyo who they quote for their “report.”

“I don’t think the level of concern could be any higher,” David Hyatt, vice president for the National Automobile Dealers Association, said Monday. “There’s a sense of urgency. And we’ve got to raise awareness about why this doesn’t make sense and why it’s anticonsumer.”

Like the automobile industry, many financial sectors unrelated to Wall Street are seeking exemptions — or “carve-outs” as their Washington lobbyists call them — to shield themselves from the impact of the new regulations. Unless a bipartisan deal is reached first, those exemptions are likely to be considered as amendments once the legislation reaches the Senate floor for a final vote, probably this week.

As Mr. Colwell, the Check ’n Go lobbyist, suggested, much of the concern from the private sector has focused on what the legislation could do, and disagreement is wide over what it actually would do.

Senator Christopher J. Dodd, the Connecticut Democrat who is chairman of the Banking Committee, said Sunday on “Meet the Press” on NBC that it was a “red herring” for opponents to suggest that the legislation would harm ordinary businesses and reduce the number of jobs.

Oh that dreaded word “anticonsumer” has appeared. We don’t know why the bill is anticonsumer, but it just is. I ask you, is that journalism, or is that the Times giving a tongue wash to the industry (financial services) that yanked its chain and said “heel girl” like any good master does when his pooch gets out of line?

Well I’m afraid that question is for smarter people than me. They will have to figure out all the Byzantine plots and Machiavellian maneuvering by “friends of the Times” that ended up with this sorry excuse for journalism that oozed out from under the foundations stones of the preeminent newspaper of this nation of ours. Let’s just say I can smell the head of a rotting fish lying in the middle of the street as well as the next guy and leave it at that.

It’s mainly the Republicans’ fault but politics is boring me at the moment, so I thought I would share a favorite bit of prose from Chapter Three of the The Great Gatsby, wherein narrator Nick Carraway introduces us to his brief fling with his cousin Daisy Buchanan’s friend, Jordan Baker.

For a while I lost sight of Jordan Baker, and then in midsummer I found her again. At first I was flattered to go places with her, because she was a golf champion, and every one knew her name. Then it was something more. I wasn’t actually in love, but I felt a sort of tender curiosity. The bored haughty face that she turned to the world concealed something—most affectations conceal something eventually, even though they don’t in the beginning—and one day I found what it was. When we were on a house-party together up in Warwick, she left a borrowed car out in the rain with the top down, and then lied about it—and suddenly I remembered the story about her that had eluded me that night at Daisy’s. At her first big golf tournament there was a row that nearly reached the newspapers—a suggestion that she had moved her ball from a bad lie in the semi-final round. The thing approached the proportions of a scandal—then died away. A caddy retracted his statement, and the only other witness admitted that he might have been mistaken. The incident and the name had remained together in my mind.

Jordan Baker instinctively avoided clever, shrewd men, and now I saw that this was because she felt safer on a plane where any divergence from a code would be thought impossible. She was incurably dishonest. She wasn’t able to endure being at a disadvantage and, given this unwillingness, I suppose she had begun dealing in subterfuges when she was very young in order to keep that cool, insolent smile turned to the world and yet satisfy the demands of her hard, jaunty body.

It made no difference to me. Dishonesty in a woman is a thing you never blame deeply—I was casually sorry, and then I forgot.
It was on that same house party that we had a curious conversation about driving a car. It started because she passed so close to some workmen that our fender flicked a button on one man’s coat.

“You’re a rotten driver,” I protested. “Either you ought to be more careful, or you oughtn’t to drive at all.”
“I am careful.”
“No, you’re not.”
“Well, other people are,” she said lightly.
“What’s that got to do with it?”
“They’ll keep out of my way,” she insisted. “It takes two to make an accident.”
“Suppose you met somebody just as careless as yourself.”
“I hope I never will,” she answered. “I hate careless people. That’s why I like you.”

Her gray, sun-strained eyes stared straight ahead, but she had deliberately shifted our relations, and for a moment I thought I loved her.

I like Fitzgerald’s conciseness and his ambiguity. They seem to blend perfectly in this book. Jordan Baker was an instinctive liar due to her pride, but at the same time she thought living outside of a code was impossible. And isn’t the narrator in some ways a clever and shrewd man? Yet, here she is going out on dates with him.

And then there’s Carraway’s unique form of generosity, where he is never quick to judge but never hesitant to damn with faint praise. What kind of generosity is it that forgives dishonesty in a woman because honesty isn’t considered one of their primary virtues in the first place?

Fitzgerald was a wonderful author. The careless woman who hates careless people. Priceless.

The Financial Reform cloture vote failed 57-41. According to CSPAN, Ben Nelson of Nebraska voted against cloture. I assume Harry Reid did as well, but only so he can reserve the right to move for reconsideration later. I guess someone on the Republican side didn’t bother to vote. So, the Republicans followed their leader in lockstep and filibustered even debating financial reform. I’m fine with that. It sets up the Goldman Sachs hearing tomorrow beautifully. The only reason I care at all is because it just represents more delay. Sen. Mark Begich took to the floor immediately after the vote to blast the hypocrisy of the Republicans. Good for him.

A new national poll released Friday shows that Americans are feeling more optimistic about the economy than they were in January 2010.  While this is good news, there is still work to be done.

Given the nearly-catastrophic downturn in the economy, most Americans would agree that regulation of the financial markets needs to change.  Unfortunately, a quick scan of the weekend’s “talking heads” shows reveals that the same tired partisan bickering and gamesmanship may derail the proposed financial reform legislation that may be debated in the Senate this week.  Neither party is blameless.  Conservatives are criticizing the proposed $50 billion fund to “close out” failing banks, while liberals are being accused of pushing ahead with the bill without sufficient negotiation with the opposition.

While several news outlets are reporting on the divisions over the issue, the coverage is not comprehensive.  It’s hard to argue with newsroom directors on this one – the story’s not intrinsically “sexy.”  However, Americans need to educate themselves on this issue.  It may have been necessary for David Gregory to ask Timothy Geithner to define “derivatives”<sup>1</sup&gt for his audience, but it was somewhat disheartening.  Shouldn’t people who are interested enough in politics and current events to watch Meet the Press know about the financial instruments that helped to sink the market?  It’s too easy for politicians to enter into negotiated settlements that serve no one’s interests if the people they represent fail to obtain the information they need to direct their representatives. 

I can remember President Clinton giving David Letterman a quick primer on derivatives and the sub-prime crisis during an appearance in October 2008<sup>2</sup&gt.  It was as cogent a backgrounder as I’ve ever seen on the economic mismanagement that created the downturn, and yet, Letterman said it made his head hurt.  Even discounting that as an attempt at humor, it’s hard to imagine a group of friends getting together and having a spirited debate on the need for a clearinghouse for derivatives over a pitcher of sangria.  But why not?  First of all, your friends might have some really interesting thoughts on regulation of our financial markets.  And I have a really good recipe for a white peach sangria.
—————————————————————-
1. “A derivative is a way to buy insurance against some risk or to bet on some financial outcome.”

Read more at The Opportunity Agenda website.

How, many people have asked since news broke about Bernie Madoff’s $50 billion ponzi scheme, could regulators have let such a blatant criminal slip through their fingers?

We know, now.

The Securities and Exchange Commission is the sheriff of the financial industry, looking for crimes such as Bernard Madoff’s Ponzi scheme, but a new government report obtained by ABC News has concluded that some senior employees spent hours on the agency’s computers looking at sites such as naughty.com, skankwire and youporn as the financial crisis was unfolding.

"These guys in the middle of a financial crisis are spending their time looking at prurient material on the Internet," said Peter Morici, a professor at the University of Maryland and former director of the Office of Economics at the U.S. International Trade Commission.

"It’s reckless, and indicates a contempt for the taxpayer and the taxpayer’s interest in monitoring financial markets," Morici said.

…One senior attorney at SEC headquarters in Washington spent up to eight hours a day accessing Internet porn, according to the report, which has yet to be released. When he filled all the space on his government computer with pornographic images, he downloaded more to CDs and DVDs that accumulated in boxes in his offices.

Clearly, they already had their hands full.

Quite a few of them did. Another SEC accountant tried to access porn sites 1,800 times in two weeks, and had more than 600 pictures on his hard drive. Yet another even took the time to upload his own videos. Still another used a flash drive to get around firewalls, and deliberately disabled a Google filter to access these sites.

One employee even indulged his entrepreneurial urges.

Investigators found employees in separate offices operated private photography businesses out of the commission:

An employee repeatedly and flagrantly used Commission resources, including Commission Internet access, e-mail, telephone and printer, in support of his private photography business for several years.

The IG’s office recommended "disciplinary action up to and including dismissal." In turn, the report notes, "management suspended the employee from duty and pay for nine calendar days."

When asked about the report, Deputy Director for Public Affairs John Heine said, "In each of these [cases] there is some sort of response from the Commission. We don’t have anything to say beyond that."

(Turns out this isn’t exactly a new story: ProPublica had it back in December 2008. The full report is here.)

Now, honestly, it’s not the pornography that I have a problem with. It’s that these folks were were smart enough to be hired to some pretty important positions, but not smart enough to know that you don’t do your porn surfing at work. Or at least only under certain conditions. Like, if things are really slow at work, and there’s absolutely nothing to do.

Maybe that was true for the SEC at the time. After all, there wasn’t a crisis underway, like there is now.

Except that it wasn’t quite that way. For starters, the SEC blew multiple chances to bust Madoff.

The Securities & Exchange Commission had several chances to uncover Bernard Madoff’s huge Ponzi scheme dating back to 1992 but failed because of a combination of inexperienced staff, inadequate preparation, bureaucratic inaction, and the simple failure to ask the right questions. That’s the theme of the executive summary of the SEC Inspector General’s report on the fraud, released on Sept. 2. It’s unlikely to make Madoff’s victims—who lost billions of dollars in the scheme—happy.

"[D]espite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff’s trading and never took the necessary, but basic, steps to determine if Madoff was running a Ponzi scheme," Inspector General H. David Kotz said in the report. "Had these efforts been made with appropriate follow-up at any time beginning in June of 1992 until December 2008, the SEC could have uncovered the Ponzi scheme well before Madoff confessed."

The investigation found that between 1992 and 2008, the SEC received six credible complaints that "raised significant red flags" about Madoff’s operations and was also aware of two articles in business publications, published in 2001, that raised questions about Madoff’s remarkably consistent returns. The SEC conducted three examinations and two investigations of Madoff during that time period, but either accepted Madoff’s explanations or failed to follow up on questions and inconsistencies in the information the agency was given.

Six credible complaints? Raised "significant red flags"?

Three examinations? Actually it was five. Five times the SEC investigated Madoff and five times they missed it.

The SEC opened inquiries five times in a 16-year period. But in each instance, inexperienced officials, at times ignorant of other agency probes into Madoff, took his explanations at face value and did little to verify them.

Madoff himself told the inspector general that he was "astonished" that the SEC did not verify whether he was carrying out the billions of dollars of trades he claimed to be making after he supplied the agency with account details.

"The SEC never properly examined or investigated Madoff’s trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme," the inspector general, H. David Kotz, concludes in the report.

The extensive number of contacts between the SEC and Madoff raises questions about whether the agency is capable of spotting and stopping other financial frauds. The SEC has said it doesn’t have the resources necessary to oversee the exploding number of financial firms and can review many of them only once every few years. It became aware of Madoff’s fraud only when he confessed to it in December.

One warning came from an SEC investigator, who smelled something rotten in 2004.

Genevievette Walker-Lightfoot, a lawyer in the SEC’s Office of Compliance Inspections and Examinations, sent e-mails to a supervisor, saying information provided by Madoff during her review didn’t add up and suggesting a set of questions to ask his firm, documents show. Several of these questions directly challenged Madoff activities that much later turned out to be elements of his massive fraud.

But with the agency under pressure to look for wrongdoing in the mutual fund industry, she wasn’t able to continue pursuing Madoff, according to documents and two people familiar with the investigation, and her team soon concluded its work on the probe.

But she got redirected to investigate mutual funds, along with a dozen more of her colleagues.

Another warning came from Harry Markopolos in 2005, in the form of a 20 page memo.

And it wasn’t just Madoff, either. There’s Bank of America, too.

Our story starts on December 8, 2008, shortly before Merrill Lynch was taken over by Bank of America. Bank of America shareholders had already approved the merger. Merrill gave out $3.62 Billion worth of bonuses, or 22 times the size of the AIG’s bonuses that caused such a stir. 36.3% of the money came from TARP funds and only employees making over $300,000 were eligible for the bonuses. Merrill’s Compensation Committee determined executive bonuses before the disastrous Q4 earnings had been calculated.

This was a departure from normal company practices. Bank of America was aware of Merrill’s intentions to award huge executive bonuses, but failed to tell its own shareholders prior to the vote. In fact, on August 3 they had released a proxy statement that Merrill wouldn’t pay year-end bonuses before the takeover without consent.

Eventually the SEC was shamed into action. After months of investigation the SEC decided that it had built its case and approached Bank of America with a settlement offer that basically amounted to a slap on the wrist.

But then something amazing and unprecedented happened: the sitting judge, Jed Rakoff, demanded accountability and disclosure.

The judge wondered immediately why, given the "serious questions" raised in its complaint, the SEC wasn’t going after more facts. If BofA and Merrill conspired to lie to shareholders about bonuses that had been agreed to when the merger was signed, then why isn’t the SEC trying to figure out who is responsible? "Was it some sort of ghost? Who made the decision not to disclose [the bonuses]?" said Rakoff.

Judge Rakoff called the settlement a "contrivance", which allowed the SEC to appear to be a regulator, but doing nothing substantially. The SEC was only asking for a $33 million fine and didn’t seek to punish any executives, or even to release their names. At least one Merrill executive got a bonus larger than $33 million.

And in the run-up to the crisis, its oversight was so non-existent that it was barely an afterthought.

Four years ago, the SEC made what appears to be a fateful decision. As ProPublica [1] and others have reported, the commission exempted major investment banks from limits on how debt versus cash they could have. After the change, the debt held by the firms soared. And many, including a former SEC official, have pointed to the change as one of the roots of the current crisis [2].

Today’s New York Times explains exactly how the SEC came about its decision [3]. It’s not pretty. The paper zeros in on "a brief meeting on April 28, 2004"…

Only one commissioner questioned the proposal, noting "We’ve said these are the big guys, but that means if anything goes wrong, it’s going to be an awfully big mess." (The Times helpfully posts the full audio [3] of the meeting.)

The proposal, which was quickly passed, also included a provision that would have allowed the SEC to get a clearer picture of just what deals the investment banks were making with the new leverage. But as the Times notes, "The agency never took true advantage of that part of the bargain."

The firms were only required to self-report their holdings. As for verifying the companies’ numbers, the SEC did not exactly [3] make it job number one…

It becomes, in some ways, difficult to tell who the SEC regulators were actually working for. Like people who live with each other for so long that they start to resemble each other, the SEC and the banksters it was supposed to regulate during the Bush era look practically like family. So it’s no wonder they missed Madoff. After all, he was family.

A top Securities and Exchange Commission compliance official who worked for the SEC when it found no problems at Bernard Madoff’s firm in 2005, later began to date and married Madoff’s niece, who was a compliance lawyer for the company.

A spokesman for Eric Swanson, who has since left the SEC, said Swanson "did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship" with Shana Madoff.

The failure of the SEC to detect the alleged fraud carried out by Madoff, estimated by Madoff himself at $50 billion, has raised questions about the SEC’s performance.

"The Securities and Exchange Commission failed the American people," said Senator Charles Grassley (R-IA).

Since 1992, the SEC has at least twice dismissed concerns about Madoff’s firm, following complaints.

Call it complicity, call it collusion, call it a strange sense of loyalty, but at some point a choice what made. A choice not to regulate, but to busy themselves with something else, while disaster approaches for someone else. Much like Alan Greenspan, among others, ignored repeated warnings of the crash that finally came.

At some point, you realize that it took real, hard work to remain that clueless in the face of so many warnings.

Now, with the resurfacing of the SEC web porn story, it just seems like more of that "devout neglect" that is part and parcel of conservative governance.

It seems inherent in conservative philosophy to see disaster approaching, to know where and whom it will strike, and to simply stand out of its way. The problem is that the person stepping into that intersection, about to get mowed down, is all of us. Or at least the 99.2% of us who are not, have never been, and never will be members of the ownership society.

Even if that disaster can be averted, it shouldn’t be. That’s the heart of both the conservative love of deregulation and reluctance to intervene that makes economic disasters like this likely to happen, and to happen on large scales like the metastasizing subprime crisis, and on the small scale of millions of personal stories ranging from foreclosure to bankruptcy to never-ending debt.

There’s a motive for letting simply letting it all happen, though. It’s very simple. As easy as it might be to write off that kind of “devout neglect” to the plain old mean-spirited notion that survival — economic or otherwise — “is a matter of privilege,” the bottom line is actually the bottom line. None of this would have happened, or been permitted to happen, unless somebody — and not just anybody, but people already significantly privileged when it comes to economic survival — stood to profit from it.

In a sense, it’s the same regulatory onanism that led to this crisis and it’s consequences. It’s the same as it ever was.

After all, Nero fiddled while Rome burned and the SEC… well, you get the idea.

First, would you rather the Republicans filibuster the financial reforms bill or see them cave in?

Second, is it true that when it comes to immigration reform, nobody wins?

First, the latest news from the Gaza siege:

Video footage shows Israel firing on nonviolent protest in Gaza

International Solidarity Movement (ISM) volunteer Bianca Zammit shot up by the Israeli military during a nonviolent protest in Gaza. In addition, 22-year old Hind Al Akra was shot in the stomach and 18-year old Nidal Al Naji was shot in the leg. All three are now in stable condition.
Philip Weiss reported on the title story about Chuck Schumer’s dual loyalties a few days ago.

It was Ben Smith, a British peace activist, who picked up a disturbing radio interview of Chuck Schumer by Nachum Segal, who is apparently to the right of Schumer. Schumer repeatedly sides with Israel over Obama and essentially states that the collective punishment of the Palestinian people in Gaza is tough luck.

Phil Weiss also notes that Schumer falsely claimed that all Americans share his feeling. But read the comments at Politico for a different reality, that “people ain’t buying,” and “the American street is enraged by Schumer’s allegiances” (in particular, his Israel first perspective).

The interview begins with an excerpt of Schumer’s reference to State Department spokesman PJ Crowley’s description of Hillary Clinton’s exchange with Netanyahu made public. If we recall, a pissed Clinton made clear that the Israeli government had to demonstrate “not just through words but through specific actions that they are committed to this relationship and to the peace process.”

“And Crowley said something I have never heard before, which is, the relationship of Israel and the United States depends on the pace of the negotiations.”

“That is terrible. That is the dagger because the relationship is much deeper than the disagreements on negotiations, and most Americans–Democrat, Republican, Jew, non-Jew–would feel that. So I called up Rahm Emanuel and I called up the White House and I said, ‘If you don’t retract that statement you are going to hear me publicly blast you on this…'”

[Ben Smith:] Schumer said the White House had backed off that statement, but that now “many of us are pushing back, some of the Jewish members will be meeting with the President next week or the week after, and we are saying that this has to stop.”

Schumer then speaks about pacifying the Palestinians:

…there is some economic growth in the West Bank. It’s growing at 7-8%, Netanyahu brags that — when he came here I spent a lot of time with him – That there are multiplex theatres in places like Ramallah and Janeen. At the same time that is happening, there is prosperity with the more moderate Palestinian Authority in the West Bank, and Hamas in Gaza is being squeezed and people there are doing very badly. Not only because Israel has blocked off the border and not let anything into Gaza, and I support Israel in doing that, and it may be tough on the Palestinian people, but when they vote for Hamas they are going to have to suffer the consequences…

SEGAL: Senator Schumer, the perception among New York state residents, and I’m one of them as you know, is there likely is no one closer in the Senate to the President than you.

SCHUMER: That’s not quite true, but I have an ear and frankly I spent time on the phone just yesterday talking to him about this, and telling him that I didn’t quite understand the United States policy, because even if the goal is to bring about talks of peace, it was counter-productive because it’s encouraging the Palestinians not to sit down.

SEGAL: More than ¾ of the Senate, including a lot of democrats, signed the letter to Sec. of State Clinton rebuking the administration for these confrontational stances toward Israel. Were you surprised that names like Kerry, Dodd, Durbin, Leahy and Reid were not included in that letter?

SCHUMER: Well I think Senator Reid signed the letter, some didn’t sign but the majority of both parties signed. And we’ll have other letters and other meetings to keep pushing that. I think you can say there are a handful of people who are not sympathetic to Israel in the Senate of each party, but 90% of the Senate is overwhelmingly in support of Israel. And one of my jobs, as you know is to rally those forces to do strong poll work for this year (couldn’t hear this part perfectly). Believe me I think the policy has to change, and I’m working hard to make it change and I think it will. Every administration at the beginning has this view even Ronald Reagan, the best friend Israel ever had, do you remember his first 2 years? When George Schultz wanted to sell AWACs to Saudi Arabia? Every administration has this idea to talk tough to Israel and make nice to the Arabs and the Palestinians and that’s the way to bring about peace. It’s counter-productive, it’s actually the opposite…

Luckily in terms of Jewish people we have good representation in terms of the Supreme Court. That will continue. One thing I want to assure your listeners Nachum, my name as you know comes from a Hebrew word. It comes from the word shomer, which mean guardian. My ancestors were guardians of the ghetto wall in Chortkov and I believe Hashem, actually, gave me name as one of my roles that is very important in the United States Senate to be a shomer to be A. a shomer for Israel and I will continue to be that with every bone in my body for of the other is against me.

So, not only is Chuck’s dual loyalty again out in the open, but his Israel first stance is evident, as is its right wing nature.

As always, David Waldman has the best introduction to what’s going to happen this week in Congress. At 5pm the Senate will have a cloture vote to end debate on whether to have a debate on S.3217, the Restoring American Financial Stability Act of 2010. No one knows whether this cloture vote will succeed.

Typically you don’t see the Majority Leader moving things to the floor without some inkling that it’s going to work out in the end. At least not all that often. But the Senate is a little different from the House in that respect, since moving for reconsideration of a vote is a much more routine practice there. Senate Democrats also likely think this particular issue breaks down fairly well in terms of putting pressure on the Republicans blocking reform, such that repeated attempts at invoking cloture won’t be seen so much as a failure to lead as an illustration of Republican intransigence on behalf of public enemy #1: Wall Street tycoons who love to rip ordinary working people off and then wallow naked in their stolen retirement funds.

If the Democrats and the president were willing to frame the argument in Waldman’s style, this wouldn’t even be a fight. But most Dems and the president seem to lack the will to frame this is as an all-out battle of the people vs. the Wall Street tycoons. This allows the Republicans to muddy the waters by suggesting that the reforms don’t go far enough in breaking up the big banks. Consider Ranking Member of the Senate Banking Committee Richard Shelby’s performance yesterday on Meet the Press.

SEN. SHELBY: We’re going to continue to work today, as Senator Dodd said. I think we’re closer than we’ve ever been. And will we get a bill by tomorrow? I, I doubt it. I would always hope so because there’s so, so much involved. But I think we will get a bill. If the Democrats want a bill and will give us some things that we think that are substantive in nature, like make the “too big to fail,” send a message that nothing is too big to fail in this country and tighten up the language. There’s some flexibility in the language there that we’re talking about is–and…

…SEN. SHELBY: We need to tighten that up to make sure that it doesn’t happen. The message should be, unambiguously, that nothing’s too big to fail. And if you fail, we’re going to put you, put you to sleep…

…SEN. SHELBY: Well, that’s a, a good question, and that’s one that Dr. Volcker’s talked about for years. And he says if you’re too big to regulate, maybe you’re too big to, to exist, in other words, because you will cause systemic risk. Being big, in my judgment, is not necessarily bad. But it’s bad, bad when the perception is that the big is going to be bailed out and the small are going to be gobbled up by the regulators.

See a theme? So, the Republicans are suggesting that the bill to address systemic risk arising from failing firms that cannot safely be allowed to go bankrupt doesn’t address that risk at all. And, therefore, they’re going to filibuster it. The Democrats are not facing the charge that they’re being too tough on banks, but the opposite. So, with no pushback, they should be free to take shots at the most unpopular people in the world. But, for some reason, they want to be honest and say that the reforms are actually quite modest and not seen as all that unreasonable by most people on Wall Street. This isn’t how you get credit for taking on the banks. The Dems don’t have to be dishonest to point out that they’re trying to fix it so the evil greedy banksters can’t screw up the economy again (at least, not in the same way). Get tougher with these rogues.