government

How Mitt Romney Got A Seven-Digit Windfall Courtesy Of Goldman Sachs

by The Huffington Post on January 24, 2012

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Mitt Romney, man of considerable wealth, has Goldman Sachs to thank for at least some of his fortune. In his 2010 and preliminary 2011 tax returns, made available for public viewing on Tuesday, Romney’s relationship with the Wall Street firm comes to life — one in which a future Republican presidential candidate benefited from preferential treatment during the iconic investment bank’s initial public offering in 1999. (Read More about the Mitt Romney-Goldman Sachs connection at The Caucus) As noted by The New York Times , Romney experienced a seven-digit windfall in 2010 thanks to his connection with Goldman Sachs, which handled many of the candidate’s assets in return for some $48,582 in management fees . Romney’s bonanza came about as a result of a 2010 sale of 7,000 stock shares from Goldman Sachs’s initial public offering, which happened in 1999. At the time, Goldman’s public launch raised some eyebrows for how carefully the company steered the allocation of its own stock. The fact that Romney was even given the opportunity to have shares in the company when it went public makes him part of a rather exclusive club, as shares went to a handpicked group of customers, employees, and partners . Romney acquired 7,000 shares, which went into a blind trust managed by Goldman itself — eventually netting $1,130,123.87 . That sale wasn’t the only time that Romney realized financial benefits as a result of his connection with Goldman Sachs. The Center for Responsive Politics, which tracks campaign contributions from the employees, owners and political action committees of various organizations, lists Goldman Sachs as the top donor to Romney’s campaign in this election. Romney’s relationship with Goldman Sachs could raise questions about his ability to police the financial sector in the wake of the financial crisis. Still, he’s not alone in getting criticized. The cozy relationship between Wall Street and Washington has come under fire thanks in part to the Occupy movement .

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How Mitt Romney Got A Seven-Digit Windfall Courtesy Of Goldman Sachs

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Anna Cuevas: HAMP’s Second Lien Modification Saves Fewer Than 50% of Second Mortgages

by Anna Cuevas on January 18, 2012

Huffington Post…

In January 2011, one of the government’s largest mortgage lenders, Fannie Mae, implemented the U.S. Treasury’s Second Lien Modification Program. Also referred to as 2MP, slightly less than 50 percent of eligible Housing Affordable Modification Program (HAMP) second liens have been modified to date. Through the 2MP initiative, services of second mortgages have the option to modify the lien or to extinguish it — which is an admission that the mortgagor is not likely to be repaid for the second mortgage, and as a result, they clear their interest in the property by filing a lien waiver. To qualify for this HAMP modification directive, the borrower’s first lien must be in modification. In addition, the remaining balance of the principal of the second mortgage must be a minimum of $5,000 with an existing monthly payment of $100 or more. It should be noted that Second Lien Modification Program is voluntary, and not all banks have opted to participate. Of the major HAMP servicers, only six have chosen to do so. These services for these lenders are notified by the U.S. Treasury Department if a second lien is eligible for modification under the program. To date, over 115,000 second liens have been identified as eligible. Yet, less than half had begun the modification process. Almost 10,000 of those were extinguished. The HAMP loan modification program continues through 2012. Initial projections estimated that 3 to 4 million mortgages would benefit from the program; however, at its current rate of 25,000 to 30,000 a month, fewer than 1 million mortgages have been modified. If you are the holder of a second mortgage that meets the guidelines stated above, you should contact your lender to determine if they participate in HAMP’s 2MP program. Some of the voluntary participants as of this writing are Citigroup, Bank of America, Wells Fargo, JP Morgan Chase, and Ally Financial. Anna Cuevas, known as “America’s Loan Modification Guru,” has guided thousands of Americans in keeping their homes from foreclosure. A popular blogger (askaloanmodguru.com), Cuevas has been called a “superhero of the loan modification industry” and has been nominated for CNN’s Heroes. She is the #1 bestselling author of SAVE YOUR HOME Without Losing Your Mind or Money.

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Anna Cuevas: HAMP’s Second Lien Modification Saves Fewer Than 50% of Second Mortgages

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Handful Of Americans Account For Half Of U.S. Health Care Costs

January 17, 2012

The cost of health care may have gone up for almost all Americans in recent years, but a handful of consumers are getting hit especially hard. Just five percent of Americans accounted for half of the country’s health care costs in 2009 , according to a report from the Agency for Healthcare Research and Quality. Though the findings indicate that a small share of the population is responsible for much of the country’s health care costs, the concentration right at the top is actually going down, the report found — one percent of Americans accounted for 22 percent of health care costs in 2009, down from 28 percent in 2008. Baby boomers — those between the ages of 45 and 64 — and the elderly were overly represented among the top health care spenders, the report found . Women and white Americans were additionally overly represented among the top health care spenders. Children and young adults were disproportionately represented among the bottom half of spenders. Relief from skyrocketing health care costs may be in sight. Overall health care spending as a share of the nation’s economy stabilized in 2010 , after two years of slow growth, according to a government report released earlier this month. Still, if health care spending is only stabilizing because of the sluggish economy, costs may not be slowing for good. Indeed, if current estimates prove correct, the nation’s health care spending is on track to comprise a fifth of the U.S. economy by the end of the decade , according to a July report from Medicare’s Office of the Actuary. Should that prediction prove true, it would be up from the roughly 17 percent of GDP health care spending accounted for last year. This is nothing new; domestic health care spending has been on the rise for years. In 2008, Americans spent more than three times on health care than what they spent just 18 years before , according to a Kaiser report. Health care costs accounted for more than 15 percent of U.S. gross domestic product by that time — one of the highest rates of industrialized nations. The rising cost of paying medical bills has hit Americans especially hard in recent years. The total number of Americans with health insurance fell in 2010 for the first time in decades , CNNMoney reports. All told, the number of Americans without health insurance rose to 49.9 million that year , according to Census Bureau data.

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Jeffrey Sachs: How the Wall Street Journal Misleads About Federal Jobs

January 14, 2012

The editorial board of Rupert Murdoch’s Wall Street Journal has a simple game. They want to cut taxes for the rich and government services for the rest, and end regulations of banks and the environment. They support taxpayer-financed bailouts of Wall Street when needed. They will twist any facts in the service of these goals. Today’s lead editorial, with its graph of “Obama’s Growing Payroll,” is a perfect example of how the WSJ misleads rather than informs. The gist of the editorial is that Obama is presiding over a massive increase of government, exemplified by the surge of civilian employees. The graph shows a striking rise of federal employment from around 1.875 million in 2008 to 2.1 million in 2011. (I reproduce this as Figure 1 below). The Journal neglects the fact that today’s 2.1 million workers is actually identical to the number of Federal employees in 1981 at the start of the Reagan Administration, 1989 at the end of the Reagan Administration, and 1993 at the end of the Bush Sr. Administration. The numbers went down slightly after that (by around 200,000-300,000 workers as of the late 1990s) with a decline in Defense Department civilian employees, a decline that was probably offset by the rise of private defense contractors (not included in the OMB tables). There is no long-term trend at all. (I show this as Figure 2 below). The Journal endlessly tries to portray the “growth of government” as a social welfare system run amok. The editorial implies that President Obama is repeating LBJ’s Great Society by building up giant welfare and regulatory programs reflected in the “boom” of federal employment. But where did this so-called “boom” (actually a tiny boomlet) actually appear? In Great Society programs? In entitlements? No, the increase in employment is mainly in national-security-related employment : the military, homeland security, and justice (including prisons, FBI, drug enforcement, and the like). Welfare and entitlements programs little to do with. If we parse the increase of 225,000 federal jobs between 2008 and 2011, three-fourths came in the Defense Department (+84,000), Homeland Security (+28,000), Justice (+13,000), and Veteran’s Affairs (+45,000). Of course the Journal’s entire argument is absurd, a red herring, since the increase of 225,000 jobs represents all of 0.0017 of U.S. non-farm employment of 131 million workers. The entire federal civilian workforce is a mere 1.6 percent of the total non-farm employment. The Journal is taking tiny fluctuations and making them into a federal case, so to speak, for its propagandistic purposes. The actual fact of relevance is that the federal government has been declining as a share of national non-farm employment, from 2.3 percent in 1981 to 1.6 percent in 2011. (I show this in Figure 3 below). Partly this is because services that government should be providing have instead been outsourced to political cronies (especially among defense and security contractors). Partly its because of the true shrinkage, not expansion, of the federal government’s programs relative to GDP in non-security activities such as the environment, job training, community development — the matters that benefit poor and working class households, who don’t, incidentally, read the Wall Street Journal . The big lie of our time is that the federal government is expanding out of control. Yes, there is undoubted waste, especially in military outlays and in outlays for over-priced private health services. The Journal is a promoter of that variety of waste, the kind that benefits the 1 percent represented by powerful lobbyists, and that hurts the rest of society. For government services that count for the 99 percent, the federal government is shrinking, alas, no matter which phony figures the Wall Street Journal throws our way. Figure 1. Federal Employment 2001-2012, Source: OMB Figure 2. Federal Employment, 1981 to 2011, Source: OMB Figure 3. Federal Employment as a Percent of Non-Farm Employment, Source: OMB and Bureau of Labor Statistics

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What Does Obama’s Consolidation Plan Mean For The SBA?

January 14, 2012

Is President Obama’s announcement that he plans to consolidate the Small Business Administration with five other government offices into one agency and to elevate the SBA Administrator to a Cabinet-level position good news or bad news for small business? It may be too early to tell, but several small-business advocacy groups and associations did weigh in with some immediate reactions. Here are excerpts of what they had to say, starting with the SBA administrator herself: Karen Mills, Administrator, Small Business Administration “Today was an important day for America’s small businesses. President Obama asked Congress for the authority to reorganize and modernize government and he elevated my position as the SBA Administrator to Cabinet-level status. “These actions are a reflection of the importance he places on small business, economic growth, and job creation. “He asked Congress for the authority that Presidents from Hoover to Reagan have had to reorganize and modernize the federal government. This authority lapsed in 1984, but, today, the federal government needs to be updated to ensure that it meets the demands of entrepreneurs and small business owners in the 21st century. “The President’s first proposal under this authority would be to create a unified department focused on economic growth and job creation, so that we can be more effective at helping businesses do what they do best –- create jobs. “For the entrepreneurs and small business owners that SBA and other agencies serve, this is very good news. A more integrated approach would ensure that small businesses would have access to all of the federal government’s programs in a more seamless, coordinated, and coherent way.” Susan Eckerly, Senior Vice President of Federal Public Policy, National Federation of Independent Business “Despite the President’s lip service to small businesses in announcing his plan, it is unlikely to help job creators in any meaningful way. If the President really wants to help small businesses succeed, he can start by shrinking the agencies most responsible for standing in the way of their growth, such as the Environmental Protection Agency and the Department of Labor. Unfortunately, the President has consistently opposed meaningful regulatory reform, and we are skeptical that his plan to shrink the government will help tear down regulatory obstacles his agencies continue to impose.” Steve Caldeira, President and CEO, International Franchise Association “Today’s announcement by President Obama to elevate SBA Administrator Karen Mills to a Cabinet-level position serves as a stamp of approval for her diligent and proven work to improve small business access to credit during a still very-challenging economic and public policy environment. Small business access to credit is the number one challenge facing prospective and existing franchisees and any steps that will enhance small business access to credit will help to boost our economy and create the jobs our country so desperately needs. “While details of the proposed changes to the SBA and other government agencies are still unclear, under the leadership of Administrator Mills, the SBA has been a lifeline to the franchise community that has had difficulty acquiring loans in the commercial lending market during the economic downturn, increasing lending to record levels and reducing lender paperwork for SBA loans. With franchise small businesses poised for modest growth of 2.0 percent in 2012, access to capital, particularly through the SBA’s 7(a) lending program, will be critical to achieving our forecasted growth.” “As part of any proposed reorganization, it would be essential that SBA loan programs remain intact and at their current funding levels, to ensure franchise small businesses can continue to access capital through these successful loan programs.” Todd McCracken, President and CEO, National Small Business Association “While NSBA is firmly committed to reducing the deficit, there simply aren’t enough details available yet to know if this will be a net win or loss for small business. “On the one hand, reorganizing federal agencies to create a ‘one-stop-shop’ for America’s small businesses could streamline processes and make accessing information and assistance much easier. On the other hand, such a reorganization could minimize the emphasis placed on small business by the federal government and lead to an even greater imbalance toward promoting the interests of large businesses over those of small business. “Any proposal to consolidate agencies must ensure that SBA, Ex-Im Bank, OPIC, USTR and USTDA remain thriving vehicles for the U.S. to promote entrepreneurship. Anything short of that would be a disservice to America’s small businesses and the U.S. economy.” Lloyd Chapman, President, American Small Business League “I’ve been predicting this for years. It has nothing to do with shrinking government but has everything to do with eliminating contracting programs for small businesses. When was last time you heard of a U.S. President holding a press conference to talk about saving $3 billion over a decade? $3 billion is nothing compared to what the Pentagon will spend this year alone. It’s an amount not even worth mentioning and definitely not worth dismantling the only agency to assist America’s 28 million small businesses.”

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Nigerian Muslims And Christians Unite In Frustration

January 13, 2012

LAGOS, Nigeria — A human wave of more than 20,000 surrounded the Muslim faithful as they prayed toward Mecca Friday, as anti-government demonstrations over spiraling fuel prices and corruption showed unity among protesters despite growing sectarian tensions in Africa’s most populous nation. While violence sparked by religious and ethnic divisions left about 1,500 people dead last year alone in Nigeria, some hope the ongoing protests gripping the oil-rich nation will bring together a country that already suffered through a bloody civil war. “It shows that Nigeria is now coming together as one family,” said Abdullahi Idowu, 27, as he prepared to wash himself before Friday prayers. Labor unions, meanwhile, announced Friday they would halt their five-day strike for the weekend, allowing families stuck largely inside their homes to go to markets and rest. Union leaders also plan to meet President Goodluck Jonathan and government officials on Saturday for new negotiations, just ahead of a promised labor shutdown of Nigeria’s oil industry. Nigeria, which produces about 2.4 million barrels of crude a day, is the fifth-largest oil exporter to the U.S. While the country has a several-week stock of oil ready for export, the threatened shutdown Sunday could shake oil futures as traders remained concerns about worldwide supply. The strike began Monday, paralyzing the nation of more than 160 million people. The root cause remains gasoline prices: President Goodluck Jonathan’s government abandoned subsidies that kept gasoline prices low Jan. 1, causing prices to spike from $1.70 per gallon (45 cents per liter) to at least $3.50 per gallon (94 cents per liter). The costs of food and transportation also largely doubled in a nation where most people live on less than $2 a day. Anger over losing one of the few benefits average Nigerians see from being an oil-rich country, as well as disgust over government corruption, have led to demonstrations across this nation and violence that has killed at least 10 people. Red Cross volunteers have treated more than 600 people injured in protests since the strike began, the International Committee of the Red Cross said Friday. “Over 4,000 persons have also been temporarily displaced there as a result of the strike and communal tensions,” said Mamadou Sow, the deputy head of the committee’s delegation in Nigeria. “Most of them have now started to return to their homes.” Protesters say they will not accept anything other than a full restoration of the estimated $8 billion in subsidies the government spends to keep gas prices low. On Friday, the president of the Nigeria Labor Congress said the government offered a slight subsidy to lower prices during negotiations on Thursday night. However, Abdulwaheed Omar said labor organizers rejected it, saying they wanted a full return of the subsidy. At the mass demonstration in Lagos, Pastor Tunde Bakare called in Nigeria to reject a government that “is working hard to remove the crumbs the poor people survive on,” while not providing adequate clean drinking water and electricity. “We have become a generator republic,” said Bakare, a one-time vice presidential candidate for the opposition party Congress for Progressive Change. Bakare also urged those gathered in Nigeria’s predominantly Christian south not to retaliate against Muslims living in their neighborhoods over recent attacks by a radical Islamist group known as Boko Haram. The group, which wants to implement strict Shariah law across Nigeria, is blamed for killing at least 67 people so far this year alone, according to an Associated Press count. Boko Haram also has begun specifically targeting Christians in Nigeria’s Muslim north in their attacks, causing some to flee while exploiting deep-seated ethnic suspicions in the country. Jonathan himself described the situation as worse than the nation’s 1960s civil war, which saw 1 million people killed after Nigeria’s southeast declared itself the Republic of Biafra. “In every family in the south, there are Muslims and Christians. They are not violent people. The sect can be identified and dealt with,” Bakare told the AP. In a show of solidarity, the protests Friday included prayers for Muslims. Several thousand gathered in the grass near an expressway off-ramp. Sheik Abdulrahman Ahmad preached to the crowd about the evils of terrorism, calling on them to shun possible reprisal attacks over the ongoing unrest. “Because we forget ourselves, oil has become our curse,” Ahmad told the crowd. He later added: “Our problem is oppression; our problem is bad governance.” Though Christians gathered around praying Muslims to protect them during their prayers, violence still lurks around the edges of the protest in a country where people are beginning to become hungry. A crowd suddenly ran after a suspected thief at one point, stoning him and beating him with sticks until he fell into a trash and feces-filled ditch. The crowd continued to throw things at him, cursing. “This is the life of a Nigerian,” a man in the crowd called out. “This is how we live.” ___ Associated Press writer Bashir Adigun in Abuja, Nigeria contributed to this report. ___

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Improved Hiring Forecasts May Not Be All Good News For Workers

January 13, 2012

The hiring outlook seems to be improving, according to some forecasts. What that means for the actual wages has yet to be decided. A number of reports in recent days have suggested that hiring is on its way up in the new year. According to Bloomberg Businessweek , some economists believe the U.S. will see more jobs created in 2012 than any year since 2006 , before the economy began to turn sour. Experts polled by the Associated Press said the economy would add 2.1 million jobs this year — more than in 2010 or 2011. The National Federation of Independent Businesses recently posted one of their strongest hiring forecasts since the financial crisis. And the auto industry looks to be in an especially strong position, with factory payrolls poised to grow by 10 percent this year , according to the Los Angeles Times . But it’s still unclear if this projected job creation will help to restore the middle class, which has been squeezed in recent years by declining wealth and static incomes. Some of the new jobs appear to come with an expiration date, including the 70,000 seasonal workers that Home Depot is hiring in anticipation of spring shopping. Seasonal positions can lead to permanent employment — but often they don’t, as seen with the recent spike in jobless claims believed to have been caused by holiday workers returning to the unemployment line. And in many cases it appears that there’s a trade-off between putting people to work and paying them what was once considered the standard wage. General Electric was able to add jobs in the U.S. after reaching an agreement with union workers to drop their starting salary to $13 an hour, according to Businessweek . Many new manufacturing hires are looking at hourly wages $10 to $15 below those of current employees — and they may not catch up for years, if at all , according to The New York Times . At a time when the median salary for American workers is only $26,364 , and millions of people are struggling to afford the basic necessities , this lack of wage growth could prove politically disastrous for President Obama in the November election — as could the unemployment rate, which is widely expected to remain high through the end of the year. While the jobless rate has slowly been falling in recent months, more than 13 million Americans remain out of work, and according to Gallup polls, the electorate is more worried about the state of the economy and the labor market than anything else.

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Ryan Mack: Year 2012: Back to Basics

January 10, 2012

Here we are in the middle of yet another bad economy. Technically it is not a recession as the GDP numbers were better than expected for the year of 2011, the Dow Jones has recovered its losses, and analysts are expecting a stronger 2012 for the banks. Yet if you ask the average Joe in the Detroit area and across the country, most are concerned about their own personal economic well-being. Is Greece going to successfully deal with their debt crisis? Is Congress ever going to function properly? Will the housing market recover? Will the banks start lending again? Will the labor market pick up pace to increase employment? All these and more are questions that loom within the minds of many across the country. However, are these questions the most appropriate questions to ask at this time? When the world seems to be in total chaos and you feel as if you are losing an economic grip, the beautiful element of financial literacy is there are always factors you can control, regardless of the economic situation. So for the year of 2012, it is time to start asking the right questions which enable us to focus on those things that we can control. Here are a few basic questions you should be asking yourself for this year: Are you spending less than you earn each month? This sounds like a simple question but most in this country are not accomplishing this task and operating their household in a deficit mode because of excessive amounts of personal debt. Don’t let another day go by this year without putting together a budget for your household that reflects less spending than your earnings. Have you done everything possible to minimize your debt? You would be surprised how few people actually take the time to assemble a strategy to eliminate their debt levels. This is the year that you must start your journey to being debt free; here are some simple steps. 1. Go to www.annualcreditreport.com and print a copy of your credit report. 2. Write down all the debt you see on your report from the largest debt on the top to the smallest. Make sure you organize the headings of each column to read the name of the creditor, telephone number, amount owed, total line of credit, interest rate, telephone number, minimum due, and any other information you feel is pertinent. 3. Call EACH creditor and attempt to negotiate both the amount owed and the interest rate. 4. With your budget you have already assembled, use any surplus to pay extra money on the smallest debt until it is completely paid off and then do the same for the next smallest debt owed. This is called the “snowballing” method. Are you ensuring more of your purchases add to your net worth rather than decrease your net worth? You should be putting yourself in a position to purchase more investments that add to your net worth, such as stocks, bonds, real estate, and savings accounts, where the interest works for you. You should be gradually eliminating as much wasteful spending as possible on items that depreciate (decrease in value), such as cars, clothes, material things and bad debt; these are items where the excessive interest works against you and your money disappears into “money heaven.” Are you doing all you can to minimize your taxes? The top 400 income earners in the country have a tax rate of less than 17% because they are very proficient in maximizing tax loopholes. You have access to loopholes as well but they mean nothing if you are not taking advantage of them. Purchasing a home, maximizing tax-deferred savings accounts and that new business that you should have started long ago are great ways to take advantage of tax advantages. Plan properly and succeed at minimizing your taxes. Is your social status more important than financial independence? This question resonates to the heart of financial literacy. Rent-A-Center preys on those who desire to look good on the outside with instant gratification, while being financially strapped because of excessive fees and interest paid for material items. The Rush Card preys on those who want to look good by using a card with a Visa logo because that gives you “status,” but those who hold it pay fees they can’t afford and more than likely don’t have a bank account which can help them accumulate wealth more effectively. Did you see the mob of people who were so desperate to purchase a pair of Jordan sneakers they trampled others upon opening the store doors? People waited in long lines for hours for the “privilege” of spending $200 for a pair of shoes that were perceived to add to their social status (and incidentally cost $5 to make.) How much time, energy, and thought have you allocated to create ways to build wealth? We must be real with ourselves in 2012. The jobs that once were will probably be never more. The companies that have been laying off have now discovered how to work more effectively with a smaller workforce by maximizing productivity from the current work pool and maximizing the use of technology. If you are amongst the unemployed, underemployed, or simply are looking for additional ways to increase streams of revenue, it is up to you to create opportunities for yourself. • If you currently have expertise in a specific area, are not looking to acquire additional skill sets but were laid off, you might consider relocating in order to find employment with a firm looking to hire someone like you. • If you are willing to invest the time and energy you might consider taking additional courses at the local community college or university to learn an entire new trade or skill set. • If you are looking to create another stream of revenue you might consider doing some research on the needs in your community and creating a business that intersects your passion in life with the needs of your community. None of these are quick, none of these are easy, none of these are without risk, and most likely you will have some setbacks. However, on the other side of your hard/smart work and effort lies empowerment for yourself and community. I recently saw a graph that outlined a few employment scenarios. According to the graph, if we duplicate the BEST jobs creating year of the 1990s we won’t return to full employment until 2017. We are in this for the long haul and there is no quick fix! The chickens have come home to roost as a result of the years of greed and excess on every level from the government, to corporations, and the people. While reality states that we will be in slow economy for some time, the bright side is that we can get out; we must, however, recognize that it will not be a quick turnaround. Let 2012 be the year where we ask the right questions, have the right mindset, and collectively do the right things that will benefit us and our communities. Let’s begin the task of righting a ship that has been going in the wrong direction far too long! Let’s get to work!

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David Isenberg: FAR 49.402-4(b) to the Rescue

January 10, 2012

From an oversight perspective, the situation in Iraq today where the bulk of private military and security contractors are now working for the State Department, and not the U.S. military, is certainly interesting, and more than a little ironic. I mean after all, how diligent can the client, the U.S. State Department, be in overseeing its contractors, when those very same contractors are responsible for preserving the security, indeed, the very lives of all the client’s staff in Iraq? Saying “do better or I’ll fire you and do it myself” isn’t a viable solution. This bring us to the article, “Private Military Contractor Liability Under the Worldwide Personal Protective Services II Contract” published in the Spring 2009 issue of Public Contract Law Journal by Samuel P. Cheadle, then a student at the George Washington University Law School. WPPS is the State Department’s effort to pre-plan, organize, set up, deploy and operate contractor protective service details around the world. It has also been the main cash cow for what was once Blackwater, now Academi . Its primary public contract was WPPS and WPPS II umbrella contracts, along with DynCorp International and Triple Canopy, Inc. for protective services in Iraq, Afghanistan, Bosnia and Israel. This is not a contract which will go down in contracting history for its transparency. In January 2010, the state’s inspector general office released its August 2009 Memorandum Report on the Preliminary Review of the Second Worldwide Personal Protective Services (WPPS II) Contract Task Orders . The memo informed various State offices of the audit cancellation of the WPPS II contracts due to “insufficient documentation.” The Department of State’s Bureau of Diplomatic Security contracts with Triple Canopy, the U.S. Training Center (formerly Blackwater), and DynCorp for personal protective services around the world, including Jerusalem, Iraq, and Afghanistan. OIG’s review of Triple Canopy, Blackwater, and Dyncorp contract TOs found insufficient documentation to meet the objectives of the audits. Federal Acquisition Regulation (FAR) 4.805 requires contract files listed in FAR 4.803 to be retained for a minimum of six years and three months after the disbursement of the final payment on the contract. OIG requested 34 contract and procurement documents for each TO. The table below depicts the number of documents provided for review and the number not available for review. Based on DIG’s receiving insufficient documentation during its preliminary review of the Office of Acquisition Management, DIG is cancelling the following previously announced audits immediately: …. Audit of Contract Administration of the DynCorp Second Worldwide Protective Services (WPPS II) Contract in Iraq, Task Order 009, under Contract Number S-AQM-PD-05-D1099; … Audit of Contract Administration of the Triple Canopy Second Worldwide Personal Protective Services Contract in Iraq, Task Order 007, under Contract Number S-AQM-PD05-D-1100. I’ve written before on the limitations of such laws and regulations as the Military Extraterritorial Jurisdiction Act and the Uniform Code of Military Justice and thus won’t rehash them here. But putting aside their specific problems what they have in common is that they focus on creating avenues of criminal liability for individual contractors, as opposed to ensuring corporate accountability to ensure long-term compliance with “use of force” policies. According to Cheadle, contract enforcement is a simple vehicle to achieve corporate accountability. Yet, little has been written on the actual terms of the contracts that PMCs hold with the U.S. government and the potential liability they could face for criminal actions that breach specific terms of those contracts. Just like PMC trade groups, Cheadle recognizes that PMCs are a necessary element of our armed forces abroad and that removal of PMCs from their responsibilities is an option the government cannot afford. Yet he believes that at the same time the U.S. government must find a means of punishing PMCs for criminal conduct while not hindering their essential roles in the war effort. His solutions is elegantly simple; especially so, given that he is not proposing a new law; remember that PMC trade groups always say that there are plenty of laws on the books to ensure proper PMC accountability. Cheadle agrees with this view. He thinks the government should resolve this dilemma by holding PMCs liable for breaches of contract under an alternative clause in FAR Part 49, termination for default. FAR 49.402-4(b) permits the performance of a contract to continue in lieu of a termination for default, but only under a third-party contract or subcontract. Termination for default is generally the exercise of the government’s contractual right to completely or partially terminate a contract because of the contractor’s actual or anticipated failure to perform its contractual obligations.” Specifically, the government can terminate a contract for default if the contractor fails to perform any provision of the contract. However, standard termination for default, however, is not a feasible solution to the problem of how best to enforce a violation of the WPPS II contract. PMCs cannot simply be uprooted from their roles abroad and replaced by military. PMCs cannot simply be uprooted from their roles abroad and replaced by military personnel because, to name one reason, there are not enough military personnel to replace them. Thus, part 49 of the FAR to the rescue. It provides several options for the government “in lieu of termination for default. Under one such alternative clause, FAR 49.402-4, the government may, when in its best interest, permit the contractor to continue performance under a revised delivery schedule 8 or continue performance “by means of a subcontract or other business arrangement with an acceptable third party.” This permits a contract to continue, benefiting the government, while effectively punishing the contractor by transferring the work to a third party. How would this work in real life? Think back to the killing of Iraqi civilians by Blackwater contractors in 2007. According to Cheadle the government may, “under FAR 49.402-4(b), let Blackwater’s duties under the WPPS II contract continue upon a finding of termination for default through a subcontract or third-party contract. Discussed below, this could be in the form of requiring Blackwater to hand some of its duties over to one of the other contractors under the WPPS II contract-DynCorp International or Triple Canopy-companies already familiar with the contract and fit to meet its demands.” Considering that PMC trade groups always say that it is free market competition which allows the private sector to produce “cost-effective” high performance solutions. Cheadle agrees, writing that “The key to this system is its focus on competition within the existing contract. The purpose of this competition would be to create incentives to comply with the “use of force” policy. Competition is the heart of the government contract system, the policy being to get the best price and product through competitive procedures.” Thus, trade groups can hardly complain when the laws of supply and demand are used to ensure contract compliance. This would be a great opportunity for trade groups like ISOA and PSC to match their corporate funding with their talking points. Cheadle recognizes that a “potential problem presented by applying FAR 49.402-4(b) is that it may cause the government to hire an entity unfamiliar with the dangers of operating in Iraq and Afghanistan to take over the contract, endangering the lives of the individuals the PMCs were hired to protect. Thus, he proposes that: The government should utilize this clause by establishing a system that requires the contract to continue through one of the two nonbreaching parties already under the WPPS II contract. Creating a system of competition among the parties already under the WPPS II contract is the best option to attain the necessary balance between a policy that ensures the safety of the con tractors and the officials they are hired to protect and a policy that ensures compliance with the “use of force” terms of the contract. This remedy would allow smooth transitions between contractors because all parties involved would already be familiar with the contract and the terrain, and would have the experience to negotiate the dangers inherent in providing security services in Iraq. Essentially, if a contractor screws up by, say, shooting someone it shouldn’t have, the company will pay the price by see its work go to another company working on the same WPPS contract. But perhaps the greatest benefit would be this: The greatest asset of this system would be its ability to achieve the delicate balance between the best protection of U.S. and foreign officials and compliance with the “use of force” policy of the contract, which ensures the safety of Iraqi civilians. All three of the contractors already at work under the WPPS II contract know the territory and know what they have to do to keep their subjects and their own employees safe. They would, over time, learn what steps are necessary to ensure compliance with the “use of force” policy while maintaining maximum levels of safety for their security subjects. No contractor would go so far as to sacrifice safety by not firing when there is a clear and present threat of danger. Competition among the three contractors would force them to find the balance between an effective defensive policy and maximum safety for the officials who are at the heart of the contract. The competition also likely would induce greater oversight of contractor actions within the contracting companies themselves. PMCs would likely monitor each other for potential violations, creating another layer of oversight on top of the Regional Security Officers and the Diplomatic Security High Threat Protection Program Office.

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Paul Ryan Changes Tune On Controversial Bill

January 9, 2012

Facing pressure from constituents, Rep. Paul Ryan (R-Wis.) came out against the Stop Online Piracy Act (SOPA) on Monday. In a statement released on his official website, the House Budget Committee chairman outlined why he does not support the bill, noting that the current openness offered by the web should stay as is. “The internet is one of the most magnificent expressions of freedom and free enterprise in history. It should stay that way. While H.R. 3261, the Stop Online Piracy Act, attempts to address a legitimate problem, I believe it creates the precedent and possibility for undue regulation, censorship and legal abuse. I do not support H.R. 3261 in its current form and will oppose the legislation should it come before the full House.” Mashable notes that a Reddit campaign may have played a role in Ryan’s decision. “Operation Pull Ryan” was introduced last month, directing criticism against the congressman over his then-pro stance toward the bill. Ryan has accepted hundreds of thousands of dollars from organizations that support the initiative. Rob Zerban , Ryan’s 2012 Democratic challenger , has been part of the Reddit thread . The Kenosha County Supervisor applauded Ryan’s change of heart as an example of social networking power. “This is an extraordinary victory,” Zerban wrote. “Reddit was able to force the House Budget chair to reverse course — shock waves will be felt throughout the establishment in Washington today — other lawmakers will take notice.” Back in mid-December, The Huffington Post’s Zach Carter provided some SOPA background , explaining how the bill has “the power to fundamentally reshape the laws governing the internet.” Passage of the act would give the federal government broad powers to eliminate web domains believed to be partaking in piracy-related activities. SOPA opponents have come out swinging against the legislation. Moves against the measure include creating boycott apps , filming protest videos and transferring domains from pro-SOPA sites. GoDaddy.com was among the victims of that movement, eventually releasing a statement expressing opposition to the bill.

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CDC Scientist: More Tests Needed To Determine Gas Drilling Impact On Health

January 4, 2012

PITTSBURGH — One of the government’s top scientists says much more research is needed to determine the possible impacts of shale gas drilling on human health and the environment. “Studies should include all the ways people can be exposed, such as through air, water, soil, plants and animals,” Dr. Christopher Portier wrote to The Associated Press in an email. Portier is director of the National Center for Environmental Health at the federal Centers for Disease Control and Prevention in Atlanta. While other federal and state regulators are already studying the impacts of gas drilling on air and water, Portier said research should also include “livestock on farmed lands consuming potentially impacted surface waters; and recreational fish from potentially impacted surface waters.” Portier made clear that the science on the issue isn’t settled yet. “We do not have enough information to say with certainty whether shale gas drilling poses a threat to public health,” he wrote. “More research is needed for us to understand public health impacts from natural gas drilling and new gas drilling technologies.” He also suggested pre- and post-testing of private drinking water wells near drilling sites. Another prominent scientist said the answers won’t come quickly. “I think it will take three to five years to sort through this,” Duke University researcher Rob Jackson told AP in an email. Jackson said that doesn’t mean there isn’t evidence of water contamination by drilling in some communities_ Wyoming, for example, or Dimock, Pa. “On the other hand a handful of cases of contamination is not enough to shut down an industry,” he said. Jackson was part of a team behind a much-discussed study last spring on possible water well contamination from drilling in Pennsylvania. Environmentalists hailed the study, while others, including the head of the state Department of Environmental Protection, criticized it. The question of whether gas drilling causes health impacts has led to angry debates. Some environmentalists and people in communities where drilling is occurring say there are clear and major risks, while the industry says those fears are exaggerated, and that the process been used safely on tens of thousands of wells nationwide. And though regulatory agencies in some states have determined the practice is safe, other states – and recently, the Environmental Protection Agency – have found evidence of contamination from either methane or the fluids used in fracking. Jackson said both sides in the debate should be prepared for mixed news. “I suspect what you’ll see over the next year or two are new papers that won’t find significant evidence of contamination and new papers that will. The best response would be to try and understand what causes the difference,” he wrote, adding that extremists on both sides will try and spin all the news. “Many people outside of the scientific community won’t want to accept a mixed message. They’ll dismiss one set of papers outright as biased and latch on to the other set that upholds their belief system_on both sides of the issue,” Jackson said. Jackson said researchers may find that drilling is overwhelmingly safe in one area, but not everywhere. “What’s safe in Oklahoma might not be an acceptable risk somewhere else, where the population density is higher. And you have different geology,” he said. Vast deposits of natural gas that couldn’t be produced economically just a decade ago are now being unlocked by hydraulic fracturing, or fracking, which involves pumping pressurized water, sand and chemicals underground to open fissures and improve the flow of oil or gas to the surface. Thousands of the deep wells have been drilled across the nation in recent years, and the shale gas boom is expanding to more and more states. It’s generating jobs and enormous profits and is helping to keep energy costs down. Adding to the confusion, some water wells in Pennsylvania and other states were contaminated with naturally existing methane gas even before drilling began. Portier said one huge issue is that there is no accepted medical standard for the symptoms that may come from exposure to gas drilling activities. “This poses an extremely complex problem for epidemiology researchers, given the range of possible environmental exposures that are currently not well defined,” he said. In layman’s terms, that means that if a person who lives near a gas drilling site gets sick, doctors don’t have enough information to say whether the drilling or other environmental or physical factors are to blame. But Jackson said the complexity doesn’t mean waiting is the only answer. He’s working on a list of recommendations that could help researchers and industry answer some of the key questions about possible methane contamination of drinking water. In December, the U.S. EPA announced that fracking may be to blame for groundwater pollution in a Wyoming community. But the agency said the findings are preliminary and need more review, and that the fracking that occurred there differed from methods used in other regions with different geological characteristics. EPA is also working on a nationwide review of fracking, with plans to examine drilling sites in Pennsylvania, Colorado, Louisiana, North Dakota and Texas. The earliest results will be available this year. EPA has already taken steps recently to boost federal regulation of fracking, announcing it will develop national standards for the disposal of the briny, chemical-laced wastewater and proposing controls on air pollution at oil and gas wells, particularly where fracking is used. Drillers and many states have resisted enhanced federal regulation, saying it should be left up to individual states.

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Michael Bociurkiw: ‘Occupy’ Protests Become Major Challenge to Nigerian Government

January 4, 2012

Whether commuting to and from my job to my office in the Nigerian capital, Abuja, or racing down the back roads of the country’s parched and neglected North, I would often shake my head in amazement at the lack of any display of discontent from ordinary Nigerians. Power outages that drag on, in some cases, for days; crumbling roads; rampant corruption and rising food costs — these are common complaints among the tens of millions of Nigerians that have been left behind by the country’s oil wealth. My bewilderment came from the knowledge that Nigeria is among the ten largest oil exporters globally, and yet it can hardly manage to power the street lamps in the showcase, man-made capital city of Abuja. Most people live on less than $2 a day; malnutrition and even cases of polio can be found in the northern states. During national elections last year, government workers had to use candles and flashlights to check voters’ IDs. “Nigerians will just sit back and tolerate whatever fate that is handed to them,” said a driver for an international NGO. “They will say it is God’s will — or they will lean on their extended family members for help.” I spent several months in Nigeria last year — just as the “Arab Spring” was sending convulsions through the precincts of many North African and Middle Eastern power centers. I even travelled to Cairo to see empowered protesters staring down armed riot police in Tahrir Square. Yet even though Nigeria is just a few hours flight from Egypt or Libya, no one believed for a moment that the winds of change would reach Africa’s most populous nation. But that all changed on January 1, when the Nigerian Government moved ahead after months of deliberation and removed a long-cherished fuel subsidy that more than doubles the price of fuel and transport fares. The impact has been so great that many ordinary Nigerians can no longer afford to get to work. Over the past few days Nigerians have been taking to the streets in great numbers, in the first mass protests against the relatively new government of Goodluck Jonathan and his powerful PDP ruling party. “The subsidy was the only benefit that we have been getting from the oil wealth and now that is gone,” tweeted one angry Nigerian. (Because of the subsidy Nigerians have the cheapest pump prices in Africa; but many use the petrol to power generators that have been made necessary by shoddy infrastructure). To be sure, there are few parallels between the ‘Arab Spring’ protests and what is now transpiring in Nigeria. But one significant similarity is the use of social media to share feelings of outrage and to mobilize people. One brief, revolting video of a young man being beaten by Lagos police during a protest went viral as soon as it was posted on YouTube. So paranoid is the government of the situation galloping out of control that it is reportedly considering a move to shut down Blackberry messenger services in the country. The service has been a vital link for protest organizers and supporters. In many cities there are reports of police arrested and beating protesters. Just yesterday indications were that the massive and powerful trade unions will join the protests, a move which could effectively bring the country to a standstill. Even though Nigeria is the continent’s biggest oil producer, it imports refined oil. Plans to install refinery capacity have never gotten off the ground, due to corruption and mismanagement. Most Nigerians harbor well-grounded suspicions that billions of dollars in oil wealth have been salted away in the offshore accounts of current and past leaders. The International Monetary Fund (IMF) has reportedly been pressuring the government to remove the subsidy, which costs the treasury an estimated $8 billion a year. If this is indeed the case, the IMF could be repeating the horrendous mistake of the last 1990s, when pressure on countries like Indonesia to remove subsidies and devalue their currencies triggered the East Asian financial crisis. A general strike has been declared for Monday and on Twitter and Facebook the outrage is palpable. Said one Tweet posted by a Nigerian: “Nigeria is a fool at 51 (years old) and a fool forever. No electricity, no transportation, no fuel, no education, no good governance, no nothing.” Even members of the Diaspora are in awe at the growing ‘Occupy’ protests. “I’d like to see Nigerians truly have a revolution and be willing to die for what they believe in,” said Oluwa Uduak, a Nigerian-American lawyer, on her Facebook page. To be sure, Jonathan is not the first president to try to do away with the cherished fuel subsidy — his predecessors tried but quickly backed down in the face of widespread opposition. Promises to plow the extra $7.5 billion of revenue from the scrapping of the subsidy into health, education and infrastructure have been poorly communicated and met with skepticism by ordinary Nigerians. In order to quell unrest, promises could be made to install additional refineries, which could help to bring down the real cost of fuel. But such actions take months if not years and, with anger past the boiling point, the Jonathan administration may not have the luxury of time to bring about major reforms.

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Swiss Bankers Charged With Hiding U.S. Taxpayer Accounts From The IRS

January 3, 2012

Three Swiss bankers were charged Tuesday with hiding more than $1.2 billion in U.S. taxpayer accounts from the IRS, by Preet Bharar, the Manhattan U.S. Attorney. Michael Berlinka, Urs Frei And Roger Keller allegedly conspired with some U.S. taxpayers and others to hide Swiss bank accounts and the income generated from them while working as client advisers for a Swiss bank, according to a press release from Bharar’s office. The three worked on dozens of undeclared bank accounts in 2008 and 2009 in an effort to scoop up business lost by UBS and another Swiss bank following reports that UBS was helping U.S. account holders evade taxes, according to the press release. The case has been assigned to Judge Jed Rakoff, according to the release. The three bankers allegedly helped U.S. clients open using sham corporation names in other countries as well as used code names and numbers on undeclared accounts to minimize references to the clients’ actual names, according to the press release. In addition, they allegedly made sure that any mail related to the accounts wasn’t sent to clients at their U.S. addresses and communicated using their personal email accounts to avoid detection, among other allegations, according to the release. The charges come as tensions between Switzerland and the U.S. are rising over Swiss bank secrecy — a result of a Swiss law that prevents Swiss bankers from revealing client information, according to Reuters. S wiss banks hold an estimated $2 trillion in offshore wealth and the U.S. Justice Department is investigating 11 Swiss banks suspected of helping wealthy Americans evade through Swiss accounts.

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Jonathan Weiler: Republican Nonsense on Regulation

December 29, 2011

A persistent GOP line of attack against President Obama is that he’s inflicted an intolerable “regulatory burden” on American businesses. Mitt Romney, for instance, has been telling campaign crowds that the Obama administration has issued four times as much regulation as past presidents. This claim is false. According to Bloomberg news, the Obama administration has issued 613 new federal rules so far in his presidency. During the same period in the presidency of George W. Bush, his administration had issued 643 new rules. Romney has, in fact, repeatedly misrepresented the Obama administration’s regulatory record. As with so many Republican Party talking points these days, his claims about Obama and regulation are not intended to be factual statements. Instead, they’re meant to advance a larger conservative meme: that regulations are necessarily and inherently bad. The standard GOP view of regulations is that they impose a cost on business and “kill” jobs in the process, while delivering no benefit to the economy or society more broadly. Examples to the contrary abound. For example, in the wake of the Deepwater Horizon oil spill, the Obama administration issued new rules on deep sea oil drilling. Those regulations might cost industry $200 million or so. But it’s quite obvious that the problem in this case isn’t “excessive” regulation — it’s that the regulation didn’t come soon enough (a disastrous oversight for which the Obama administration bears some responsibility ). The direct costs alone of the Deepwater Horizon disaster could exceed $16 billion. Had the new rules been in place prior to the disaster, billions of dollars would have been saved and a larger environmental catastrophe could have been avoided. In that vein, among the most far-reaching regulations has been the Clean Air Act, whose estimated cost savings since its passage run into the trillions of dollars. In addition, while Republicans repeatedly decry the job-destroying effects of regulations, most sober-minded economists say that the overall effects of regulations on jobs are minimal. The GOP’s attack on regulation is part of a larger attempt to discredit the idea that government can play a positive role in people’s lives. That attack is itself based on a fantasy — that in the absence of the distorting and freedom-destroying effects of government, human action would yield generally optimal outcomes for society as a whole. Such notions themselves hearken back to Adam Smith’s discussion of an “invisible hand.” Leaving aside repeated misrepresentations of what Smith meant by that phrase, he was no fantasist and endorsed myriad public works and a range of what we would now call government regulations. Smith’s quite sensible views on the matter derive from a simple point, one that most grown-ups acknowledge in their day-to-day lives: Our actions can have adverse consequences for others. Government regulations can, of course, impose burdensome costs. But that’s not the same as arguing that any regulation imposes a cost on individuals or businesses that otherwise would not exist. As the economist Dean Baker explains , if I dump toxic sludge onto your lawn and a law requires me to clean it up, you can argue that the “cost” of the regulation is simply the cost I incur to take care of the problem. There is, however, also a price that you pay for having toxic sludge on your lawn. Regulation, seen in this light, does not create new costs. Instead, it seeks to assign existing costs to the responsible parties by forcing them to clean up their messes, or by preventing those parties from creating the mess in the first place. Blanket condemnations of regulation, of the type that are de rigueur among Republicans these days, refuse to acknowledge this basic truth. Republicans also decry the incredibly lengthy and unwieldy nature of federal rules, running as they do to thousands or tens of thousands of pages in some cases. Kevin Drum has pointed out that this is often not the result of liberals’ insatiable desire to kill more trees. For example, when the so-called Volcker rule was first conceived — the purpose of which was to limit federally insured banks’ ability to engage in speculative investment — it was pretty simple and straightforward. That was before the lobbyists set upon it like shape-shifting sorcerers. The result: a law whose preamble alone was 215 pages with nearly 400 footnotes. Drum notes that, in general, regulators prefer simple, clear rules. Industry, on the other hand, has an incentive to make those rules as unwieldy and exemption-ridden as possible. Simple rules are bad for business, Drum says, because they’re “hard to evade.” Of course, big business interests will publicly lament laws that run to thousands of pages. Privately, though, they’re paying attorneys a lot of money to render those laws more obscure, complex, unmanageable and difficult to enforce than any regulator would ever want. That regulation is fully justifiable when it mitigates the harm that some private actors might otherwise inflict on others ought to be the minimally agreed upon foundation for a larger conversation about the proper limits and potential pitfalls of specific kinds of government regulation. Instead of joining such a conversation, one of our two major parties offers up a fairy tale version of the economy. The simple idea that private interests, left to their own devices, have the potential to hurt others and undermine the public good is denounced as “socialistic” thinking and un-American. Wealthy private interests are heroic job creators that could and would build a nearly perfect society, if only they were left alone to work their job-creating magic. In that world, only the lazy and undeserving would fail to prosper. Such fantasies ought to have been finally discredited by the disastrous role that deregulation played in the 2008 financial crisis. Instead, the anti-regulatory zealots have doubled down on this delusion and spun a particularly inventive — and typically fact-free — tale about how the financial crisis was itself caused by the evils of government regulation (and Barney Frank), a zombie lie that just won’t die. This article originally appeared in the Independent Weekly of North Carolina .

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The Coolest Green Innovations And Advances Of 2011

December 28, 2011

2011 was an important year for green innovations and technological advances. In the world of fuels, a number of strides were made. President Obama announced increased fuel standards for both big and small vehicles in the coming years. Alternative fuels also made headlines. The use of biofuel for aviation is becoming a reality, after the U.S. military announced it would begin using it , and a joint U.S.-Chinese venture tested biofuel in civilian aircraft . Solar technology also grew in 2011. Researchers at Notre Dame have invented a house paint that could one day be used to collect solar energy. Elsewhere in the midwest, scientists at the University of Michigan invented an “optical battery” that might eventually eliminate the need for semi-conductors in solar cells. For more of 2011′s best green technology innovations, vist EarthTechling for their ” 2011 Green Technology Year In Review. ” Check out some of the coolest and most important green advances of 2011, and vote for your favorites! For more on the best of 2011, visit bestof2011.aol.com .

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Former Obama Adviser: Geithner Set Obama Up For Payroll Tax Success

December 28, 2011

Progressives have a spring in their step this holiday season after the debacle suffered by House Republicans in the debate over the payroll tax. Many liberals will be surprised to learn that a good deal of the credit belongs to one of their least-favorite members of the president’s economic team: Treasury Secretary Timothy Geithner, whose economic and strategic counsel set the trap that the House hardliners fell into.

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Italian Short-Term Debt Costs Half At Auction, But Concerns Still Loom

December 28, 2011

MILAN (Reuters) – Italian short-term debt costs halved at auction on Wednesday as a new package of budget austerity and an injection of cheap long-term money from the European Central Bank won Rome some respite in thin year-end markets. Analysts warned market tensions could easily reignite and pointed to a new test on Thursday when Italy will sell up to 8.5 billion euros ($11.1 bln) of longer-term bonds, including three- and ten-year paper. But the average rate of 3.25 percent at which Italy sold 9 billion euros of six-month BOT bills was down from a euro lifetime record of 6.50 percent just a month earlier. “Many things have changed from a month ago: the government has won a confidence vote on its austerity package and the ECB has acted to help banks,” an Italian bill trader said. “This doesn’t mean we can rule out further problematic auctions. Markets are easily unnerved.” Demand for bills totaled 1.69 times the amount on offer, a clear improvement versus a bid-to-cover ratio of around 1.5 at the end of November. This is the first Italian debt sale since the ECB provided 490 billion euros in cheap three-year loans to euro zone banks on December 21 in an unprecedented move aimed at easing credit strains. Expectations of a strong take-up at the ECB’s tender contributed to an equally dramatic fall in Spanish short-term borrowing costs this month. Madrid’s six-month debt costs more than halved to 2.4 percent at an auction on the eve of the ECB’s tender. However, doubts about how much of the cheap three-year funds would find their way into troubled government bonds weighed on Italian and Spanish yields in the following sessions. Italy’s ten-year yields briefly climbed back above 7 percent this week, pushing the premium over the equivalent German benchmark above 500 basis points. On Wednesday, the yield stood at 6.8 percent, giving a premium of 489 basis points over Germany. Credit Agricole strategist Peter Chatwell said the results bode well for the auction of three-year bonds on Thursday but he was less sure about the 10-year sale – typically a better measure of underlying interest from external investors. “Demand for short term paper is good. It remains to be seen whether this extends to the longer maturities,” he said. Italy paid a euro lifetime record high yield of 7.56 percent to sell ten-year bonds at the end of November. TESTING START Italy can count on key support from retail domestic investors at short-term sales but longer-term bonds remain more challenging. With more than 91 billion euros of bonds maturing in the first four months of 2012, Rome faces a crucial test early next year. In a push to regain market confidence, in the run-up to Christmas Italy’s parliament gave the final seal to an emergency austerity budget rushed through by a new technocrat government. Market attention will now turn to the reform agenda of Prime Minister Mario Monti who has promised to tackle Italy’s chronic low-growth problems — after inaction by former PM Silvio Berlusconi pushed the country to the brink of financial disaster. Monti has convened a cabinet meeting on Wednesday to outline his plans and he could provide some indications to investors in his traditional year-end press conference on Thursday. Analysts expect Monti’s 33 billion euro austerity package to further depress Italy’s weak internal demand, making government’s efforts to revive growth through a series of long-delayed liberalizations even more crucial. Italy also sold on Wednesday 1.7 billion euros of 24-month, zero-coupon CTZ bonds at an average yield 4.85 percent, sharply down from 7.8 percent a month ago. For the first time, the Treasury set a target range for the CTZ sale, as it does for other bonds. It gives a set amount for bill auctions. The Treasury had planned to sell between 1.5 billion and 2.5 billion euros of CTZs. ($1 = 0.7654 euros) (Additional reporting by William James in London) Copyright 2011 Thomson Reuters. Click for Restrictions .

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SEC Ramping Up Efforts To Stop Hedge Fund Fraud

December 28, 2011

Memo to hedge fund managers: It’s a bad time to try to overachieve. The Securities and Exchange Commission is cracking down on hedge fund fraud, and the first places they’re looking are the firms that seem to be doing a little too well . According to a report in The Wall Street Journal , the SEC has devised a method of sorting data that highlights hedge funds whose balance sheets never seem to suffer, no matter how rocky the market gets. The WSJ notes that the agency is trying to spot the next Bernie Madoff before he or she can defraud investors of billions of dollars, the way Madoff did with his Ponzi scheme. Already, the WSJ says, the SEC has initiated four civil-fraud lawsuits based on their data review system. It’s an auspicious time for the SEC to be seen bringing the hammer down on Wall Street scofflaws, because many have criticized the agency since the height of the financial crisis for not doing more to identify and prosecute financial malpractice. In one such high-profile instance, Harry Markopolos, the fraud investigator who spent almost a decade building a case against Madoff’s wealth management firm, told the House Financial Services Committee in 2009 that the SEC was “financially illiterate” and ” captive to the industry it regulates .” The SEC has also taken heat for its failure to place a check on Lehman Brothers’ heavy over-leveraging in the months before its collapse, and for waiting until 2005 to investigate the business practices of Texas billionaire Alan Stanford, even though the agency had begun to suspect the truth — that Stanford was operating a sizable Ponzi scheme — as early as 1997. More recently, a report issued in November from the SEC’s Office of Inspector General noted that the SEC had failed to investigate a tip about another unnamed hedge fund manager allegedly perpetrating “massive fraud.” Perhaps in response to these and other criticisms, late 2011 has been a proactive period for the SEC. The agency recently touted its redoubled efforts to stamp out insider trading , and earlier this month, it sued six former executives of Fannie Mae and Freddie Mac for securities fraud, claiming that the executives misrepresented the degree of their companies’ exposure to risky subprime loans during the period preceding the financial crisis.

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National Security Advisers To GOP Presidential Candidates Tied To $40 Billion In Federal Contracts

December 24, 2011

National security advisers to the Republican presidential candidates have ties to defense, homeland security and energy companies that have received at least $40 billion in federal contracts since 2008.

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Venezuela inks deal with Repsol, Eni to develop gas field

December 24, 2011

(MENAFN) Venezuela’s Energy Minister, Rafael Ramirez, said that the government inked a deal with Spain’s Repsol-YPF and Italy’s Eni SpA in order to develop a gas field, reported AP. Ramirez added …

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As Evidence Against Lenders Piles Up, Federal Prosecutors Have Stayed On Sidelines

December 22, 2011

Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing. The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said. The government also hasn’t brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies. But this part of the financial system, a Reuters examination shows, is filled with potential leads: Foreclosure-related case files in just one New York federal bankruptcy court, for example, hold at least a dozen mortgage documents known as promissory notes bearing evidence of recently forged signatures and illegal alterations, according to a judge’s rulings and records reviewed by Reuters. Similarly altered notes have appeared in courts around the country. Banks in the past two years have foreclosed on the houses of thousands of active-duty U.S. soldiers who are legally eligible to have foreclosures halted. Refusing to grant foreclosure stays is a misdemeanor under federal law. The U.S. Treasury confirmed in November that it is conducting a civil investigation of 4,500 such foreclosures. Attorneys representing service members estimate banks have foreclosed on up to 30,000 military personnel in potential violation of the law. In Alabama, a federal bankruptcy judge ruled last month that Wells Fargo & Co. had filed at least 630 sworn affidavits containing false “facts,” including claims that homeowners were in arrears for amounts not yet due. Wells Fargo “took the law into its own hands” and disregarded laws banning perjury, Judge Margaret A. Mahoney declared. And in thousands of cases, documents required to transfer ownership of mortgages have been falsified. Lacking originals needed to foreclose, mortgage servicers drew up new ones, falsely signed by their own staff as employees of the original lenders – many of which no longer exist. But the mortgage-foreclosure mess has yet to yield any federal prosecution against the big banks that are the major servicers of home loans. UNPRECEDENTED FRAUD Reuters has identified one pending federal criminal investigation into suspected improper foreclosure procedures. That inquiry has been under way since 2009. The investigation focuses on a defunct subsidiary of Jacksonville, Florida-based Lender Processing Services, the nation’s largest subcontractor of mortgage servicing duties for banks. People close to the investigation said indictments may come as early as the end of this month. Nationwide press reports had showed photos of what appeared to be obviously forged signatures on foreclosure affidavits. The Justice Department doesn’t disclose pending investigations, making it impossible to say if other criminal inquiries are underway. Officials in state attorneys’ general offices and lawyers in foreclosure cases say they have seen no signs of any other federal criminal investigation. “I think it’s difficult to find a fraud of this size on the U.S. court system in U.S. history,” said Raymond Brescia, a visiting professor at Yale Law School who has written articles analyzing the role of courts in the financial crisis. “I can’t think of one where you have literally tens of thousands of fraudulent documents filed in tens of thousands of cases.” Spokesmen for the five largest servicers – Bank of America Corp., Wells Fargo & Co., JP Morgan Chase & Co, Citigroup Inc., and Ally Financial Group – declined to comment about the possibility of widespread fraud for this article. Paul Leonard, spokesman for the Housing Policy Council, whose membership includes those banks, said any faults in foreclosure cases are being addressed under a civil settlement earlier this year with federal regulators. FALSE STATEMENTS Justice Department and Federal Bureau of Investigation officials say they have brought mortgage-fraud criminal cases through their “Operation Stolen Dreams.” None, however, were against big banks. All targeted small-scale operators who allegedly defrauded banks with forged mortgage applications or took advantage of homeowners by falsely promising arrangements to get them out of default and then pocketing their money. Justice Department spokeswoman Adora Andy declined to comment on the absence of prosecutions for foreclosure practices by big banks. She said in a statement: “The Department of Justice has been and will continue to aggressively investigate financial fraud wherever it occurs, including at all levels of the mortgage industry and, when we find evidence of a crime, we will not hesitate to pursue it.” Some judges have accused banks of falsely stating in court that they are working on loan modifications for homeowners in default. In a November 30 court hearing, not previously reported, a federal bankruptcy judge in New York accused Bank of America of falsely telling courts and the public that it was working to renegotiate loans. “Bank of America issues constant press releases about how it is responsive to their borrowers on these issues. They are not, period,” said Judge Robert Drain, in a case involving homeowner Richard Tomasulo, a pharmacist from Crompond, New York. Drain said Bank of America had been telling the court since January that it was working to modify Tomasulo’s mortgage, but hadn’t done so. “Whoever is in charge of this program and their supervisor, who should be following it, should be fired” because “they are frankly incompetent.” Bank of America spokeswoman Jumana Bauwens said the bank has completed “nearly one million” modifications since 2008. The U.S. Treasury this year suspended loan modification incentive payments to the bank because it was “seriously deficient” in responding to requests for modifications. CHEATERS AND LIARS Foreclosure fraud came to light in September 2010, with evidence that employees of Ally Financial Corp. had committed “robo-signing,” in which low-level workers signed and swore to the facts in thousands of affidavits they hadn’t read or checked. The affidavits were notarized outside the signers’ presence, in apparent violation of state and federal criminal laws. Since then, mounting evidence of possible foreclosure fraud has convinced judges and state regulators that servicers have harmed homeowners and the investors who bought mortgage-backed securities. A unit of the Justice Department that oversees bankruptcy court cases, the U.S. Trustees Program, said in its 2010 annual report that there were “pervasive and longstanding problems regarding mortgage loan servicing,” which “are not merely ‘technical’ but cause real harm to homeowners in bankruptcy.” Banks, the Trustees Program says, have falsified affidavits by claiming homeowners owe fees for services never rendered and by overstating how much owners are behind on payments. Former federal prosecutor Daniel Richman, a professor of criminal law at Columbia University Law School, says a central question is who prosecutors would target in criminal investigations. Richman said it would be easy but not worthwhile to charge large numbers of rank-and-file workers who, directed by supervisors, falsely churned out affidavits. He said criminal investigations would be warranted, but harder to bring, “if there are particular individuals who lie at the heart of this conduct in a very significant way.” In October 2010, members of Congress pressed the Justice Department to investigate. Attorney General Eric Holder said investigations were best left to the states, with help from the Justice Department. The Office of the Comptroller of the Currency, the top bank regulator, quickly negotiated settlements with the 14 largest servicers, requiring changes in practices and “remediation” for harmed homeowners. That settlement allows the banks to choose their own contractors to determine who was harmed and by how much. Lawmakers and homeowner advocates have criticized the arrangement, contending that it will let the banks avoid making all wronged homeowners whole, because the contractors are paid by and answer to the banks. Since then, the department’s civil division has worked with a shaky coalition of all 50 states, which have been seeking a civil settlement with five banks that are the largest loan servicers. The negotiations center on requiring them to pay $20 billion or more in penalties, only some of which would go to compensate wronged homeowners. STATES TAKE ACTION Federal law enforcement has been noticeably absent, even in areas hardest hit by the crisis, such as Las Vegas. In 2010 the FBI’s Las Vegas office shut down its mortgage fraud task force, which had focused on small-scale swindlers. Tim Gallagher, chief of the FBI’s financial crimes section, said that the Las Vegas office had asked to transfer agents to other duties. Impatient with the lack of federal prosecution, states including New York, Massachusetts, Delaware and California have launched their own investigations of the banks. In November, it became the first state to file criminal charges. The state attorney general obtained a 606-count indictment against two California-based executives of Lender Processing Services. It accuses the executives of paying Nevada notaries to forge the pair’s signatures and falsely notarize them on notices of default, documents Nevada requires in foreclosure actions. State officials said more indictments are expected. In an interview, John Kelleher, Nevada’s chief deputy attorney general, said the investigation began in response to citizen complaints. “We were concerned and then shocked at the sheer number of fraudulent documents we were finding that had been filed with the county recorder,” Kelleher said. Investigators found “tens of thousands” of false records filed on behalf of big mortgage servicers, he said. The two executives have pleaded not guilty. In a press release, the company said: “LPS acknowledges the signing procedures on some of these documents were flawed; however, the company also believes these documents were properly authorized and their recording did not result in a wrongful foreclosure.” BACK HOME IN NEW YORK The U.S. Attorney’s Office in Manhattan is the federal prosecutors’ office that traditionally has filed the most cases against top banks and financiers. But it hasn’t brought any foreclosure-related criminal cases involving Wall Street’s biggest financial houses or the law firms that represent them. To date the only step it has taken publicly was an October 2011 civil settlement with New York State’s largest foreclosure law firm. The Steven J. Baum P.C. law firm, based near Buffalo, New York, in recent years filed approximately 40 per cent of all foreclosures in New York State, on behalf of banks and other mortgage servicers. Court records show that the firm angered state court judges for alleged false statements and filing suspect documents. Arthur Schack, a state court judge in Brooklyn, in a 2010 ruling said that pleadings by the Baum firm on behalf of HSBC Bank, a unit of London-based HSBC Holdings, in a foreclosure case were “so incredible, outrageous, ludicrous and disingenuous that they should have been authorized by the late Rod Serling, creator of the famous science-fiction television series, The Twilight Zone.” Another state judge that year imposed $5,000 in sanctions and ordered the firm to pay $14,500 in attorneys’ fees, ruling that “misrepresentation of the material statements here was outrageous.” But the U.S. Attorney’s office in Manhattan filed no criminal charges against the Baum firm. Instead, it signed a settlement with Baum ending an inquiry “relating to foreclosure practices.” The agreement made no allegations of wrongdoing, but required the firm to improve its foreclosure practices. Baum agreed to pay a $2 million civil penalty, but didn’t admit wrongdoing. The law firm said it would shut down after New York Times columnist Joe Nocera in November published photographs of a 2010 Baum firm Halloween party in which employees dressed up as homeless people. Another showed part of Baum’s office decorated to look like a row of foreclosed houses. “The settlement between the Manhattan U.S. Attorney’s Office and the Steven J. Baum Law Firm resulted in immediate and comprehensive reforms of the firm’s business practices,” said Ellen Davis, spokeswoman for the Manhattan U.S. Attorney’s office. Earl Wells III, a spokesman for Baum, said the lawyer wouldn’t comment because “he’s laying low right now.” An HSBC spokesman said: “We are working closely with the regulators to address any matters raised regarding” the bank’s foreclosure practices. BROKEN PROMISES The most serious potential foreclosure violations involve falsified mortgage promissory notes, the documents homeowners sign vowing to repay mortgage loans. Courts uniformly have ruled that unless a creditor legally owns the promissory note, it has no legal right to foreclose. For each mortgage there is only one promissory note. Bankruptcy court records reviewed by Reuters show that at least a dozen radically different documents purporting to be the authentic promissory note have turned up in foreclosure cases involving six different properties in the federal bankruptcy court for the Southern District of New York. In one, Wells Fargo is battling to foreclose on the Bronx home of Tindala Mims, a single mother who works as an ambulance driver. In September 2010, Wells Fargo filed a promissory note bearing a signed stamp showing that the note belonged to defunct Washington Mutual Bank, not Wells Fargo. The judge threw out the case. In a second attempt, the court was given a different version of the note. But inspection showed physical alterations. A variety of marks on the original were missing or seemed obviously altered on the second. And the second version had a stamped endorsement, missing on the first, that appeared to give Wells Fargo the right to foreclose. The judge threw out the second attempt too. Wells Fargo is trying a third time. It declined to comment on the case. Linda Tirelli, Mims’ lawyer, in October sued Wells Fargo, alleging “fabrication of documents.” “It seems to me that Washington is deathly afraid of the banking industry,” Tirelli said. “If you’re talking about filing false documents and filing false notarizations, do you really think that the U.S. Attorney would find it too difficult to prosecute?” The office of Attorney Preet Bharara in Manhattan has routinely brought charges involving forgery and filing false documents against smaller targets. In April, the FBI arrested seven employees of the USA Beauty School in Manhattan. Bharara’s office alleged that the seven suspects had forged documents such as high school diplomas, attendance records and applications for financial aid for students taking cosmetology classes. In August, Bharara’s office filed felony charges against a sports-memorabilia company’s CEO, accusing him of auctioning jerseys falsely advertised as “game used” by Major League Baseball players. In a press conference, a U.S. Postal Inspection Service official said prosecution was important because “victims felt that they had a piece of history only to be defrauded and left with a feeling of heartbreak.” Given the record of Bharara’s office, and those of his fellow U.S. Attorneys around the country, to aggressively pursue violations both big and small, the absence of cases involving the foreclosure fiasco seems to stand out. “Why there hasn’t been more robust prosecution is a mystery,” said Brescia, the visiting professor at Yale. (Editing by Michael Williams and Chris Kaufman) (Reporting By Scot Paltrow) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Scott Brown: House GOP Would Rather Play Politics Than Find Solutions

December 20, 2011

Sen. Scott Brown (R- Mass.) denounced House Republicans for rejecting a payroll tax cut deal on Tuesday, and accused his colleagues of putting politics before the needs of American families. “It angers me that House Republicans would rather continue playing politics than find solutions,” Brown said in a statement released shortly after the House voted to block the bipartisan bill. “Their actions will hurt American families and be detrimental to our fragile economy. We are Americans first; now is not the time for drawing lines in the sand.” The Senate bill would have prevented the payroll tax cut from expiring on January 1, 2012 by ensuring a two-month extension. Republicans in the House opposed to the bill argued in favor of a year-long extension or no extension at all, claiming that approving a bill for just two months would create uncertainty. Brown’s criticism followed harsh comments he made on Monday, when he called the GOP’s refusal to compromise “irresponsible and wrong.” Brown — who is up for re-election in 2012 — is preparing for what will likely be a challenging race against Democratic Senate candidate Elizabeth Warren. A recent poll spelled good news for Warren, showing her leading Brown 49 to 42 .

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Dave Johnson: NLRB Fight Shows How Far We’ve Fallen

December 20, 2011

Here is how far we have fallen: Republicans and big corporations are going to extremes, even threatening to shut down entire agencies of the government, just to keep people from knowing what their rights are . They are “investigating” the NLRB for enforcing the laws that cover employees and employers. They are pledging to block any appointees in order to prevent the agency from operating. How far have we fallen, if the fight is over just letting people know what their rights are? How much power do the big corporations have now, if these wealthy giants of the 1% feel they can even challenge our right to know what the rules are , and an entire political party exists to help them do this? The Latest Fight The National Labor Relations Board (NLRB) is trying to require big corporations to put up a poster informing their employees of their rights under the law. The big corporate, anti-union organizations are fighting this as hard as they can. They are suing in court to block the rule, while Republicans in the House and Senate are using every trick in the book to stop the NLRB requirement, right down to holding Congressional investigations of the agency, and threatening to defund it, and to shut it down by crippling its Board. What The Poster Says Here are the things that the Republicans and the big corporations that fund them are fighting to keep working people from knowing: Under the law you have the right to: Organize a union to negotiate with your employer concerning your wages, hours, and other terms and conditions of employment. Form, join or assist a union. Bargain collectively through representatives of employees’ own choosing for a contract with your employer setting your wages, benefits, hours, and other working conditions. Discuss your wages and benefits and other terms and conditions of employment or union organizing with your co-workers or a union. Take action with one or more co-workers to improve your working conditions by, among other means, raising work-related complaints directly with your employer or with a government agency, and seeking help from a union. Strike and picket, depending on the purpose or means of the strike or the picketing. Choose not to do any of these activities, including joining or remaining a member of a union. Under the law it is illegal for your employer to: Prohibit you from talking about or soliciting for a union during non-work time, such as before or after work or during break times; or from distributing union literature during non-work time, in non-work areas, such as parking lots or break rooms. Question you about your union support or activities in a manner that discourages you from engaging in that activity. Fire, demote, or transfer you, or reduce your hours or change your shift, or otherwise take adverse action against you, or threaten to take any of these actions, because you join or support a union, or because you engage in concerted activity for mutual aid and protection, or because you choose not to engage in any such activity. Threaten to close your workplace if workers choose a union to represent them. Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support. Prohibit you from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances. Spy on or videotape peaceful union activities and gatherings or pretend to do so. Under the law, it is illegal for a union or for the union that represents you in bargaining with your employer to: Threaten or coerce you in order to gain your support for the union. Refuse to process a grievance because you have criticized union officials or because you are not a member of the union. Use or maintain discriminatory standards or procedures in making job referrals from a hiring hall. Cause or attempt to cause an employer to discriminate against you because of your union-related activity. Take adverse action against you because you have not joined or do not support the union. Click here to see the poster . This latest fight is because the NLRB is trying to require companies to put up posters that tell workers what their rights are. That’s it. That’s what the poster does. Companies are trying to block this and are fighting with everything they have. The Lawsuit Big corporate groups have sued to block the poster requirement, saying the NLRB doesn’t have “the authority” to require them mto put up this poster, and claiming that it violates the “free speech rights” of big corporations if employees learn what their own rights are. Seriously, that’s the claim. How far have we fallen, when big corporations feel they can challenge government’s right to even inform citizens of what the laws say? They have good reason to believe that conservative-dominated courts will rule that this violates the “free speech” of non-sentient entities called corporations, over the rights of citizens! The Hill: Business group challenges NLRB over union poster rule , Business groups continue to press the National Labor Relations Board (NLRB) over its proposed rule to have employers post notices informing workers of their organizing rights. On Monday, the National Association of Manufacturers (NAM) will present oral arguments in federal court for their lawsuit against the proposed regulation. [. . .] Trauger said NAM filed the lawsuit because it believes only Congress has the authority to authorize the notice rule. Further, they believe it impinges on employers’ free speech rights. “We believe the NLRB does not have the authority to require all employers to post the notice in their workplace,” [NAM VP] Trauger said. Other groups are suing the NLRB over the rule, including the National Federation of Independent Business and the U.S. Chamber of Commerce. Crippling The NLRB At the end of this year the NLRB will not have enough board members to operate, effectively shutting down the agency. The Supreme Court, in another 5-4 decision (yes, the same 5 corporate-conservative-movement sponsored judges that always rule in favor of the big corporations), ruled in 2010 that the NLRB cannot operate without at least 3 members on the Board. This was part of an ongoing strategy to keep the Board from operating effectively, allowing illegal anti-union efforts to continue. Republicans in the Senate have since filibustered to block the Board from having enough members. Last year President Obama made two recess appointments to the Board to keep it operating, so Republicans have prevented the Senate from going into recess since then, vowing to to anything necessary to continue to block any new appointments that could keep the NLRB in operation and enforcing the law. The Washington Post explains, in Obama nominates 2 for labor board, despite GOP threat to block any appointments to the agency , President Barack Obama on Wednesday announced plans to nominate two Democrats to the National Labor Relations Board, despite a Republican threat to block any appointments to the agency. Once again: “A Republican threat to block any appointments to the agency.” The Republicans in the Senate are blocking any appointments, in order to force the agency that enforces the rules to stop doing its job. Meanwhile, in the House, Republicans are engaged in a different tactic to fight the NLRB. The Center for American Progress Action Fund explains, in House Republican Attacks on the National Labor Relations Board Hurt All Workers , House Republicans are using every tool available to them–including their budget, regulatory, and legislative-oversight powers–to wage a coordinated attack on workers’ rights by trying to eviscerate the National Labor Relations Board, or NLRB. … Over the past year, Republicans in Congress voted to slash funding for the NLRB, attempted to block enforcement of existing worker-protection laws, and even threatened to shut down parts of the federal government in order to advance their goals. The the House Oversight and Government Reform Committee is “investigating” the NLRB, to see if the Board is helping employees who are in unions, demanding the Board turn over documents to the committee by Jan. 3. The Stakes A New York Times op-ed, Crippling the Right to Organize , explains the stakes, UNLESS something changes in Washington, American workers will, on New Year’s Day, effectively lose their right to be represented by a union. … Workers illegally fired for union organizing won’t be reinstated with back pay. Employers will be able to get away with interfering with union elections. Perhaps most important, employers won’t have to recognize unions despite a majority vote by workers. Without the board to enforce labor law, most companies will not voluntarily deal with unions. What You Can Do Download and print the NLRB poster , and out it up at your workplace. Download and print this “Unions 101″ sheet , and leave copies at your workplace for people to find and read. Send people to visit the AFL-CIO’s A Quick Study of How Unions Help Workers Win a Voice on the Job online.

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Dems Find Silver Lining In GOP Opposition To Payroll Tax Deal

December 19, 2011

WASHINGTON — Many Democrats think House Republicans have given them an early political Christmas present by opposing the Senate deal to extend the middle-class payroll tax cut for two months . “Without a doubt, this is a gift,” a senior Democratic aide told HuffPost, predicting that if the House GOP kills the compromise, Democrats will hammer them relentlessly through the holidays and beyond for hurting the middle class. “If Republicans block this vote,” the aide said, “we are going to spend a month back in every member’s state talking about how we reached an overwhelming compromise to extend unemployment benefits and a middle-class tax cut, but that it was blocked by House Republicans, whose only concern all year has been keeping millionaires and billionaires from paying a penny more in taxes.” The Democratic Congressional Campaign Committee is so certain that GOP opposition to the deal is a political loser that it is already campaigning on that opposition, launching a website and a round of robocalls targeting 20 Republicans in swing districts. “If House Republicans block this bipartisan compromise it will be a middle class mugging of $1,000 from 160 million middle income Americans,” said DCCC Chairman Steve Israel in a statement. Democrats feel they are on especially strong ground because most of the GOP senators voted for the two-month extension of the 2 percent payroll tax break for salaries up to $110,000. Republicans in the Senate backed it because they’ve asked for all the measures in the deal, including language about the controversial Keystone XL pipeline that they insisted on. Republicans and Democrats in the Senate settled on a two-month deal because they could not agree on how to pay for a longer-term package that would cost about $200 billion. They figured that at least taxes wouldn’t immediately rise for middle-class workers, and lawmakers would have gained more time to deal with their disagreements over funding. But House Republicans have rebelled. They’re threatening to vote down the deal on Monday evening, arguing that it should have done more and run longer — a full year. “After 39 Republicans in the Senate voted for this compromise, House Republicans have the chance tonight to stop this $1,000 middle income tax hike from happening on January 1,” said Rep. Israel (D-N.Y.). “If they fail, their extreme partisanship will have cost Americans money.” For some of the robocalls, the DCCC employed opinionated Democratic strategist James Carville, including for a spot rolling out in the district of Rep. Bob Gibbs (R-Ohio). “Something remarkable happened this weekend — Democrats and Republicans in the Senate worked together to stop a $1,000 payroll tax hike on 160 million middle class families,” Carville says. “Sounds too good to be true? It is, if Representative Bob Gibbs doesn’t do the right thing and support it.” Also singled out are GOP Reps. Elton Gallegly (Calif.), Jerry Lewis (Calif.), Mike Coffman (Colo.), Bill Young (Fla.), Tom Rooney (Fla.), Kevin Yoder (Kan.), Tim Walberg (Mich.), Renee Ellmers (N.C.), Jon Runyan (N.J.), Michael Grimm (N.Y.), Mike Kelly (Pa.), Pat Meehan (Pa.), Mike Fitzpatrick (Pa.), Tim Murphy (Pa.), Kristi Noem (S.D.), Stephen Fincher (Tenn.), Joe Barton (Texas), Jaime Herrera Beutler (Wash.) and David McKinley (W.Va.). One senior Democratic aide, who would have preferred to have the issue resolved, nevertheless couldn’t believe Democrats’ political good fortune. “This is a great message in small markets throughout the country, where a $1,000 a year means something and where everyone knows someone who’ll be dropped off the unemployment rolls,” the aide said. “House Republicans are letting their egos cloud their judgment on this one.” Still, the DCCC’s counterpart, the National Republican Congressional Committee, tried to spin the argument its way, sending out a statement entitled, “Vacation, All House Dems Ever Wanted.” “House Democrat Leader Nancy Pelosi is leading her fellow Democrats to oppose any effort to prevent a tax increase on middle class families for one full year,” the NRCC argued, although voting down the Senate’s two-month deal actually raises the chance that taxes will go up Jan. 1 if the sides cannot agree. “It seems that while America’s families suffer in record poverty, all House Democrats want to do is take the easy way out and vote for a Senate-passed bill that raises taxes on middle class families in two months, just so they can go on vacation,” the NRCC argued.

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TARP To Cost The U.S. Nearly Double The Initial Estimates: CBO

December 16, 2011

The government’s bailout of banks may cost U.S. taxpayers nearly two times more than originally estimated, according to the Congressional Budget Office. The Troubled Asset Released Program, better known as TARP, will cost the federal government $34 billion , the CBO reported on its director’s blog. That’s $15 billion higher than the agency’s previous estimate in March. The increase in the estimate is mostly due to a drop in the market value of the government’s investments in American International Group and General Motors. In addition to the TARP loan, the Federal Reserve provided financial institutions with loans totaling more than $1 trillion in December 2008, at the height of the credit crisis, according to Bloomberg. Federal officials engineered TARP in October 2008, arguing that giving banks billions of dollars would help them withstand the credit crunch and stymie financial disaster. Critics allege that the money, which was supposed to spur lending to American businesses, never made it to Main Street. More recently, the contrast between the government bailouts bankers received and ordinary Americans’ lingering jobs and housing woes has become a rallying cry for Occupy Wall Street . In fact, many of the banks went back to making the same high-risk bets that got them into trouble in the first place, according to a September study from the University of Michigan . Banks treated the money and the limited guidelines that came with it as an implicit reassurance that the government would help the them in the event of future disaster. Though Treasury Secretary Timothy Geithner told a watchdog panel in June 2010 that the banks had repaid 75 percent of the bailout money they received , there’s still billions outstanding. Financial institutions owe the government $18 billion , while AIG still needs to repay $50 billion, according to a CBO infografic. While the CBO boosted its estimate, it’s guess is still lower than that of other agencies. The Office Of Management and Budget estimates that the bailout will cost the federal government $53 billion , according to the CBO blog.

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Majority Say They’re Living The American Dream: Poll

December 16, 2011

The economy might be failing, pushing millions of Americans down the earnings ladder , but many people nevertheless say they’re living the American dream. A recent poll from the Allstate Corporation and National Journal shows that 60 percent of people say they’re participating in the American dream — defined as “the opportunity to go as far as your talents and hard work will take you and to live better than your parents.” The findings are striking in part because they arrive at a moment when opportunities appear few and far between for many Americans — when unemployment is forcing middle-class families to scrimp and save , when almost half the people in the country are either poor or low-income , when many feel like their only recourse is to protest in the streets , and when hundreds of thousands of people are giving up on looking for jobs that aren’t there . Even in the Allstate/ National Journal poll itself, signs of the grim economic climate are evident . Fifty-eight percent of people described their financial condition as “only fair” or “poor,” compared with 41 percent who said they were in “excellent” or “good shape.” Fifty-one percent said they can get by every month but have difficulty saving or putting money aside, while another 20 percent said they have trouble making ends meet. Only 26 percent said they can live comfortably and save for retirement or other needs. The idea that hard work pays off in a better life for you and your children is one that almost every American hears from a young age, but statistics show that it often doesn’t hold true. One long-term study recently suggested that more than a quarter of Americans who were teenagers in middle-class families in the 1970s have since fallen down the economic ladder to become low-income or poor. This relatively high rate of downward mobility from one generation to the next might be due to the decline of blue-collar industries in the U.S., or it might have to do with a 30-year trend of wage stagnation that has left middle-and working-class incomes almost unchanged while the very richest members of society earn more than ever. In any case, while optimism seemingly remains strong, a growing number of Americans appear to be getting more skeptical about the notion that anyone can make it if they work hard enough. In a Pew Research poll published this week, 40 percent of respondents — the highest rate since Pew started asking the question in 1994 — said they disagreed with that idea .

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White House Suggests A Short Tax Holiday

December 15, 2011

WASHINGTON — Faced with (still) intransigent Republicans, the White House on Thursday floated an idea: that Congress extend the payroll tax cuts and long-term unemployment insurance “for a short period of time.” Until today, the Obama administration had been arguing for a full-year extension of both. The compromise idea, floated by a senior administration official at a small meeting with reporters, would constitute a significant concession to Republicans and fits what many Democrats see as an all-too-familiar pattern of the Obama administration caving in to GOP leaders, who are bent on making life as miserable as possible for the president and, some would argue, the economy. Congress, said the official, “could pass a continuing resolution through to January tied to an extension of the payroll tax and unemployment insurance for a short period of time.” Contacted afterward to confirm and clarify the official’s remarks, White House Communications Director Dan Pfeiffer said that the official was “just making the point that the president’s principle is, no one goes home until we guarantee taxes won’t go up.” Still, “going home” with only a temporary “guarantee” is far different from what the administration and Democrats have publicly championed. It constitutes sticking to “principle,” but in a way that would be less costly — finding ways to pay for the measures would be much easier — and less confrontational. In the long run, however, it would require another legislative drama sooner rather than later. Administration officials such as Treasury Secretary Tim Geithner have said repeatedly that failure to fully extent the payroll tax cut and unemployment insurance would not only pose hardships for working people and the middle class, but would cut economic growth by at least 1 percent at a time when the economy needs all the help it can get. A short-term extension of both would at least put off that danger for now, at a moment when Europe is teetering on the brink and the Obama administration (and the world) can’t afford another bout of legislative paralysis here. On Wednesday, Democrats and administration officials privately abandoned their preferred method of paying for extension of the payroll tax holiday: a surtax on millionaires. The tax is popular in the country, but Obama and his allies have decided they aren’t willing to risk a confrontation — including another possible shutdown of the federal government — to get it. As for the payroll tax cut itself, some Democrats have suggested that the White House simply let it lapse and pick up the issue after the Christmas recess. It’s a popular measure and Republicans would take a political hit for raising taxes. But the senior administration official said that keeping the economy moving along — it has been performing somewhat better than expected — is more important, both for its own sake and, ultimately, for the president’s. “You would have the issue, but you would also have the reality” of slower growth, the official said. As a result, the administration is casting about for alternative ways to pay for extending the payroll tax cut and unemployment insurance, including raising fees paid by Fannie Mae and Freddie Mac and further cuts to mandatory spending . The administration is also open to negotiating a reduction in the number of weeks that long-term unemployment insurance benefits would be available. The current limit is 99 weeks; the GOP has suggested 55, the Democrats 79. The official said that a compromise of some kind was still possible on that score.

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Lyric Hughes Hale: Why the Bankers Aren’t In Jail

December 12, 2011

“The secret of a great success for which you are at a loss to account is a crime that has never been discovered, because it was properly executed.” Balzac, Le Père Goriot Conversely, when execution is faulty and failure occurs, crimes are exposed, and an effort to apportion blame and punishment is launched by the guilty and innocent alike. This is an apt description of what happened when Bernard Madoff’s investment firm collapsed. As long as high returns were being generated, no one wanted to ask questions, including the obvious “isn’t this too good to be true?” When the music stopped and markets tanked, the entire scheme collapsed. Make no mistake: if his investments had continued to do well, Madoff would be in business today. But they didn’t and he is now in jail, and at least four suicides, including his own son’s, have been attributed to his crimes. Mr Madoff doesn’t seem sorry for the risks he took, but certainly, he is suffering. Partial restitution has been made to his victims. There are certainly those who feel that although the regulators failed to prevent, the justice system was able to punish. The same applies in the Enron case. This contrasts with the frequent refrain–why haven’t more bankers gone to jail as a result of the global financial crisis? This has become a key demand of the Occupy Wall Street movement. The CBS news program 60 Minutes recently had a widely viewed and quoted segment that tried to answer this question, targeting Countrywide in particular. Many explanations have been offered, depending on your location within the political spectrum: the cause of judicial inaction is corruption, undue influence, the ability of the wealthy to hire the best attorneys, or simply that it is hard to convict people for making bad investment decisions in a free market environment. Those who are most indignant point to the widely quoted number that more than 1,000 bankers were imprisoned as a result of the Savings & Loan Crisis of the 1980′s. The true number was 582, as reported by UPI in back in 1992, but that was still high in terms of the relative economic effect at the time: The Justice Department said Monday it has charged more than 1,100 people so far in nearly four years of prosecuting the multibillion-dollar savings and loan scandal, winning 905 convictions but less than half a billion dollars in restitution. The department, in a release containing statistical information about the major savings and loan prosecutions, said 905 of 1,188 people charged in the scandal had been convicted in cases between Oct. 1, 1988, and June 30, 1992. Only 71 defendants were acquitted. The cases prosecuted represented $8.3 billion in losses to the thrifts. Of the 750 cases in which sentences have been handed down, judges imposed $11.2 million in fines and ordered $439 million in restitution. They ordered prison terms for 582 defendants but let off 168 without jail time. Among those charged, 137 were chief executive officers, board chairmen or presidents of savings and loan institutions. Of the high-level executives charged, 102 were convicted and 10 were acquitted. Only $8.3B in losses–that certainly seems small beer by today’s standards. Based upon 582 convictions, this represents a ratio of one jail term per $14.3M in losses. In his article in Foreign Affairs , Roger Altman estimated US losses as a result of the financial crisis to be $8.3 trillion. So add three zeros, and the number of people going to jail now at this loss-to-conviction ratio would be 582,000. Literally, half a million people! One-third by the way, would be high-level executives. California prisons are currently so full that they are turning out convicted criminals–where would we put all these people, and what would it cost to incarcerate them? To say nothing of the fact that we don’t have enough prosecutors. The FBI has also decreased, not increased their manpower dedicated to white-collar crime since 2001, as priorities shifted to counterterrorism after 9/11. The truth is that historically economic crimes, however they are defined, are not usually punished that severely even if they are uncovered; the S&L crisis was an anomaly. Not many of the tulip speculators ended up in jail, mostly it was the poorer blokes at the end of the chain who were thrown into debtors’ prison. Another view: Economic crimes beyond stealing physical property aren’t easy to discover, expose, define and differentiate from the normal market activity of selling something for more than it was bought. As Gary Becker, the University of Chicago economist explains his theory, “I was not sympathetic to the assumption that criminals had radically different motivations from everyone else.” This ambivalence is true even in dealings between states under conditions of war and economic dictatorship. At the Nuremberg trials after the end of World War II, the industrialists who served the Third Reich by building gas chambers and weapons got off lightly compared with the likes of Adolph Eichmann. Alfried Krupp for example, one of a small group of businessmen who went on trial, was given the most severe punishment, and he went to prison for just 12 years. Krupp’s firm lives on of course, as do the Japanese companies that built the weaponry of the Pacific–Mitsubishi is a name that has survived and thrived. One interpretation is that under the circumstances of war, or in times of financial distress, it is not possible or advisable to dismantle the infrastructure that holds a country together. This was certainly a tenet of US post-war reconstruction policy. A popular view is that the lack of prosecution is the result of a lack of regulation , and there are now calls for new banking and financial industry legislation. However, this might just be the worst prescription possible. The real problem was lack of care in the enforcement process, as well as poorly written laws, according to Carole Basri, a legal ethicist and contributor to What’s Next? She makes this point in her chapter ‘The Future of Corporate Compliance’: The future of compliance lies in the shadow of the global financial crisis of 2008. Predictably, demands for greater regulation immediately followed the crisis. However, we do not need more regulations that will create more administration and more extensive compliance programs. We need better-targeted regulations that are consistently enforced, that foster corporate integrity, and that streamline the compliance process. Reductions in the number of compliance officers and of the funding of compliance programs will be counterproductive, yet this is precisely what is happening today. Ms Basri’s view is that ethics must be part of the ‘compliance cocktail’ and that ethics can be promulgated at an institutional level. All of this will require a more global outlook in order to be effective in the vast new marketplace for financial services in particular. This presupposes that people are motivated not just by greed, but also by doing the right thing professionally and as human beings, if given a chance. Which all harks back to the work of Adam Smith, especially The Theory of Moral Sentiments and the importance of values-based governance. Another way of looking at this problem is from a revolutionary point of view. Financial crises can be seen as either the cause or the effect of political unrest, leading to what can be dispassionately described as a redistribution of wealth. The French Revolution was seen as a time of swift judgment against the wealthy, but in fact, economic crimes were not a focus at all: The ultimate weapon in the war against the rich was, of course, the scaffold. In a period at which economic mechanisms were so unregulated that a large part of the population depended for their survival upon the black market, it was no longer possible to put a number to those guilty of a breach of the laws in force. Therefore sentences for economic crimes were relatively scarce . To be more precise, recent studies suggest that the Revolutionary Tribunal had pronounced 267 sentences of this sort, 181 of which were for hoarding or for failure to respect the maximum, and eighty-six for passing counterfeit money or for trading in assignats.” – The French Revolution, An Economic Interpretation by Florin Aftalion Disclosure is another critical issue that prevents a judgment of fraud. Many of the banks fully disclosed risks in the endless paperwork that accompanied both mortgages and mortgage-backed securities sales. The problem was that all of this was so difficult to understand that even Alan Greenspan, a math whiz, did not understand the risks. The Wall Street Journal recently reported that the Justice Department has concluded that criminal convictions might be difficult to obtain, and therefore it is doing the next best thing, which is offloading these cases to the regulatory authorities for possible civil penalties. Again, the upshot is no jail time. Indeed, cases against Countrywide, AIG, Citibank, Washington Mutual, and Goldman Sachs have gone nowhere. Loren Steffy, business commentator for the Houston Chronicle , also addresses this question: Three years ago, I asked Sam Buell, the former federal prosecutor in the government’s effort to indict Enron’s Jeff Skilling, the question of whether we’d see widespread prosecutions from the financial crisis. His prediction: Don’t count on it . As I wrote at the time: In the current crisis, few people understood the complex debt instruments that had become common on Wall Street and therefore the firms failed to make good risk assessments. But what they were doing — such as packaging dodgy mortgages into investment pools that were supposed to minimize risk — was widely known. ” It’s not a conspiracy if everybody’s in on it ,” Buell said. “In order to have a fraud conspiracy you’ve got to have some effort by one group to deceived another group.” But what about the fact that America as whole seems deceived by what happened? Doesn’t matter, Buell argues. Just because Main Street didn’t understand what was happening doesn’t make it a fraud. Those who are stand-ins for investor interest — regulators, brokers, credit agencies — “seem to have known what was going on,” he said. So the reasons that there aren’t any trophy heads are plentiful: there are legal obstacles, practical obstacles, a lack of personnel, and general fuzziness about how economic crimes are defined. Convictions were high as a result of the S&L crisis, but it can be argued that few lessons were learned and a new banking crisis was not prevented as a result of vigorous prosecution. Still, it is early days, and political pressures are mounting. Surely prosecutors somewhere are carefully preparing their cases against high-profile bankers, just as legislators are drafting new regulations. Will any of this help the current situation or prevent another crisis? Most likely, no. But sometimes hungry crowds demand that heads must roll. This post originally appeared at the Yale Books blog . What’s Next? Unconventional Wisdom on the Future of the World Economy by David Hale and Lyric Hale is available now from Yale University Press.

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John W. Whitehead: Speak Out: America Is a Free Speech Forum

December 8, 2011

“Congress shall make no law… abridging the freedom of speech… or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” — First Amendment to the U.S. Constitution The United States has historically stood for unfettered free speech, which is vital to a functioning democracy. Unfortunately, the tendency on the part of government and law enforcement officials to purge dissent has largely undermined the First Amendment’s safeguards for political free speech. The Occupy Movement, and the government’s response to its encampments in public spaces, perfectly illustrates the fact that there is no longer any such thing as unfettered free speech in America today. The very fact that protesters have had to resort to occupying various public spaces in order to open up a national dialogue about issues of concern says a lot about the state of the First Amendment, or rather the sad state of it. Moreover, the heavy-handed police response to the Occupiers shows the degree to which the corporate state will go to silence these protesters and discourage any further uprisings. There was a time when communities had town squares — public areas where people gathered to exchange information, ideas, and do business. These served a vital function in America’s history, allowing opinions and ideas — whether good or bad — to be aired and debated. Yet as areas once open to the public have been overtaken by state and corporate interests, traditional public forums for free speech have all but disappeared. Town squares have been replaced by private shopping malls and parking lots, neither of which are freely accessible to individuals hoping to voice their views. Consequently, protesters, even those not engaging in civil disobedience, are shut out, sometimes forcibly, from public areas, while attempts to peaceably assemble are overburdened by government regulations and permit requirements. Furthermore, the court-sanctioned use by the government and private entities of so-called “free speech zones” to isolate protesters, even in public parks and college campuses, makes clear that the right to speak freely in public has eroded. Concentrating, monitoring and minimizing the effects of protests are the real reasons for using designated protest zones. Obviously, protesters are only perceived as dangerous because their message challenges the status quo. It’s the message that is feared. Thus, efforts to confine and control the dissenters are really efforts to confine and control the effect of their messages, whatever those might be. This is true whether they’re challenging environmental policies, free trade agreements or the political campaigns of candidates running for public office. Martin Luther King, Jr. recognized the importance of being able to come together in public and address social, political, and economic issues. He knew that there was more to American democracy than simply waiting for Election Day. The ability to come together and hash out differences is instrumental in pushing government officials to respond to the wishes of the people. Without a mass mobilization of individuals during the Civil Rights Era, we would be living in an entirely different America. Just imagine if the hundreds of thousands of participants in the 1963 March on Washington for Jobs and Freedom, which culminated with Martin Luther King, Jr.’s “I Have a Dream” speech at the Lincoln Memorial, had been forced into free speech zones. There likely would not have been a 1964 Civil Rights Act. The right of political free speech is the basis of all liberty. It’s the citizen’s right to confront the government and demand that it alter its policies. But first, citizens have to be seen and heard, and only under extraordinary circumstances should free speech ever be restricted. Historically, societies have always benefitted when the right to speak freely was secured rather than curtailed. These free speech forums provided groups and individuals of all political and ideological persuasions a physical space to be able to come together to speak their minds. For example, the agora , the center of public life in ancient Greece, found its most spectacular display in Athens. Public life emanated from the agora, with courts, commercial enterprises, and libraries adorning the square. People assembled in the agora to talk politics, religion, and business. The Roman Forum had a comparable function during the time of the Roman Republic, allowing citizens to engage civic and business leaders and discuss the issues of the day. The Forum housed marketplaces, courts of law, and religious temples. Both of these public areas were used with frequency, allowing citizens to keep abreast of current events and debate with their neighbors. Moreover, many of the most important actions during the American Revolutionary period took place in public areas. In fact, it is where Americans mobilized themselves against British tyranny. For example, Faneuil Hall in Boston (sometimes referred to as “the Cradle of Liberty”) is where the colonists protested against the Sugar Act in 1764. On March 6, 1770, Americans gathered at Faneuil Hall to recount the events of the Boston Massacre . It was there that colonial radical Samuel Adams gave an impassioned speech demanding that the lieutenant governor remove all British troops from the town. However, somewhere along the way, Americans lost touch with the impact and importance of these free speech forums. For example, Faneuil Hall, once the staging ground for revolutionary fervor, now requires individuals hoping to use the venue to submit an “Event Application” form at least 30 days in advance of proposed events. This erosion of free speech started with the upheaval of the 1960s. The protests against the Vietnam War frightened many establishment figures and led to the creation of “free speech zones.” Now free speech zones have come to dominate the political landscape. George W. Bush, for example, used them excessively during his first term as president and both the Democratic and Republican parties have used them at various conventions to mute any and all criticism of their policies. Perhaps the most egregious instance of imposing a free speech zone upon protesters came in 2004 at the Democratic National Convention. It was there that Boston Police constructed a cage of jersey walls and chain link fences out of sight of the convention center which protesters were huddled in to. Caging people who want to exercise free speech goes against the entire concept of our Constitution, the Bill of Rights and what the revolutionary generation stood for. When political protest is caged, it’s not just the rights of a few protesters that are at stake. The very definition of freedom is in danger. Freedom cannot be exercised from within a cage. Nor should the centers of power be shielded from the citizen. Our representatives have a contractual, constitutional duty to make themselves available to us. Unfortunately, politicians have gone to great lengths to evade this fundamental duty in recent years. In fact, keen to avoid voter rage, Democrats and Republicans have come up with a plan to keep things “civil”: that is, avoid town-hall meetings at all cost, make minimal public appearances while at home in one’s district, only appear at events in controlled settings where they’re the only ones talking, and if one must interact with constituents, do so via telephone town meetings or impromptu visits to local businesses where the chances of being accosted by angry voters are greatly minimized. What this does, of course, is effectively do away with any pretense that we have a representative government. No matter what your political persuasion may be, every American has a First Amendment right to speak their mind, gather together and protest against government programs with which they disagree. As such, there are really only three ways to deal with a government that doesn’t listen to the voters: one, you can be uncivil — showing up at a controlled event and shouting, heckling, and creating a disturbance and otherwise raising hell; two, you can engage in civil disobedience — staging sit-ins, refusing to pay taxes, etc.; or the final option, which is no real option at all and which we don’t want to see happen, is violence. We’ve already seen the first option, incivility, exercised more frequently, especially in the wake of the heated town hall meetings over health care reform where outspoken Tea Party activists made headlines for heckling politicians and causing disruptions. Their “uncivil” behavior prompted a number of so-called free speech advocates to start propounding about the need for “civility.” We are seeing the second option played out now in the Occupy protests, as people resort to creating shanty towns and occupying parks to get attention. The response by government officials has been to send in the police, armed with rubber bullets, sound cannons and pepper spray. Unless we act now to preserve the freedoms enshrined in the First Amendment, not only the right to freedom of speech and assembly but the right to petition one’s government for a redress of grievances — and by that I mean something as simple as picketing in front of City Hall, then I fear we will see the third option played out, outright violence, which will play right into the government’s hands and the institution of police state tactics. What can you do? Right now, the best thing you can do is sound the alarm. Form local citizens groups in your community. Educate your neighbors on their rights and inform them about the grave possibilities we face as the police state aura grows stronger. Continue to voice your discontent to your representatives at the local and state levels, and in Congress. Most of all, stay informed and exercise your right to redress your grievances with the government while you still can. It’s fine to occupy public parks, but it would be far better to occupy city council meetings and congressional offices.

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Administration Shames Banks For Poor Performance In Anti-Foreclosure Program

December 7, 2011

The Obama administration chided two of the nation’s biggest banks Wednesday for failing to improve their performance in the administration’s signature anti-foreclosure program. The U.S. Treasury Department announced Wednesday that Bank of America and JPMorgan Chase would not receive incentive payments for modifying mortgages under the Home Affordable Modification Program, the administration’s signature effort to reduce foreclosures. The two lenders lost points for poor outreach and miscalculating homeowners’ incomes. Under HAMP, banks can earn $1,000 payments per modified loan if their mortgage servicing divisions reduce monthly payments for struggling borrowers, but the program has been dogged by the poor performance of participating banks — especially JPMorgan Chase, which the administration said needs “substantial improvement.” “We are disappointed with our rating, and will continue to work hard to improve our processes and controls,” Chase spokesman Tom Kelly said in a statement. The administration first started withholding payments from Bank of America, Chase, and Wells Fargo in June. Wells Fargo was let out of the doghouse in September and given the withheld cash, but Bank of America and Chase are still out their incentive payments, a total of $53 million and $57 million, respectively. It’s not a huge penalty considering the banks’ combined earnings of more than $10 billion in the last quarter, and the fact that the payments will be delivered if the lenders do better (though Treasury said Chase is at risk of never getting its payments). Big banks may eventually face a more severe penalty for mistreating homeowners; the Obama administration has partnered with a coalition of state attorneys general in seeking a $25 billion settlement that would reform the mortgage servicing industry. But the talks have dragged and several attorneys general have objected to the terms. The lenders targeted in those talks are Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial, the nations five largest mortgage servicers. As with HAMP, the settlement would exclude loans owned by government mortgage companies Fannie Mae and Freddie Mac. Bank of America noted in a statement Wednesday that it received two or three stars on each of the three-star metrics Treasury uses for HAMP, and that the department no longer considered it in need of “substantial improvement.” Yet the lender hasn’t improved enough to receive its incentive payments. “While we are disappointed with this decision, these financial incentives do not drive our efforts to help our customers in need of assistance,” spokesman Richard Simon said. “We will continue to build on the progress we’ve made to improve our operations and provide customers the transparent, responsive process they deserve.” “The mortgage servicing industry lacked accountability and transparency when this crisis started,” Treasury official Tim Massad said in a statement. “Publishing these servicer assessments is key to our efforts to hold servicers publicly accountable for their performance and keep necessary pressure on them to improve.” President Obama said in 2009 that HAMP would modify mortgages for 3 to 4 million homeowners, but so far just 735,464 homeowners have had their loans permanently modified, while more than 900,000 have had their modifications canceled.

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White House Targeting GOP Senators In Seven States For Their Support

December 5, 2011

WASHINGTON — The White House is launching an aggressive, eleventh-hour media blitz this week aimed at pressuring Senate Republicans to confirm a stalled nominee to lead the Consumer Financial Protection Bureau. But senior Senate Republican aides are already signaling that the all-out public relations offensive planned by the White House — one that even includes President Barack Obama’s personal involvement — won’t be enough to sway Republicans to support a director for an agency that they say needs an overhaul first. The Senate is lining up its vote on Obama’s nominee, Richard Cordray, for Thursday. The president nominated the former Ohio attorney general for the slot in July, but his confirmation process has been beset by delays by Republicans, nearly all of whom signed a letter in May saying they would oppose any CFPB nominee until key changes at the agency are made. Among their demands: eliminating the director’s position, creating an oversight board instead, and requiring the agency to be dependent on congressionally appropriated funds for its operating budget. Democrats have framed Republicans’ criticisms as an attempt to undermine the agency’s work altogether. Cordray cleared the Senate Banking Committee in October along partisan lines, but Thursday’s vote is the real test. And with just a few days left to sell its message to the public, the White House is coming out of the gate full throttle. Administration officials kicked off their effort Sunday night with the release of a report , “Improving Americans’ Financial Security: The Importance of a CFPB Director.” In it, the administration outlines the kinds of bad practices that will continue to play out among nonbank institutions like payday lenders and credit reporting agencies until CFPB has a director officially to supervise their activities and ensure consumer protections are in place. For example, the report states that, unlike banks, payday lenders don’t currently have to comply with federal laws that relate to consumer financial protections, which means they can continue to charge fees of about $16 for a $100 two-week loan. That translates to an annual percentage rate of 400 percent for borrowers already struggling with debt. About 20 million people currently rely on payday lenders, the report states. “The fact that the CFPB cannot currently supervise payday lenders creates a serious regulatory gap that puts consumers at substantial risk,” reads the report. In addition to releasing the report, Obama will sit down on Monday with a handful of print reporters from seven states — Alaska, Indiana, Iowa, Maine, Nevada, Tennessee and Utah — to discuss the impact that Cordray’s nomination would have in their communities. The White House is targeting those states because they are home to Republican senators who currently oppose Cordray’s nomination. “We’re making a special effort in this handful of seven states because we believe … the citizens in these states have a lot to gain from the confirmation of Mr. Cordray,” White House deputy press secretary Josh Earnest said in a Sunday conference call with reporters. “It sets up an important decision for senators who represent the families in those states: whether they will side with the financial industry and block Mr. Cordray, or side with middle-class families.” Throughout the week, senior administration officials plan to flood television markets in those states with messages about the need for a director at CFPB, the idea for which originally came from Harvard law professor and now-Massachusetts Senate candidate Elizabeth Warren. The White House will also release bipartisan letters signed by dozens of attorneys general and mayors calling for Cordray’s confirmation. And on Thursday, the day the Senate is expected to vote, the president will talk to local television anchors from each of those seven states about the need for a leader at the consumer protection bureau. Obama is also expected to press for Cordray during a previously scheduled speech on Tuesday in Kansas, though White House officials would give no details on what he will say. The consumer protection agency was created a year and a half ago as part of the sweeping Dodd-Frank financial reform legislation that was signed into law. But while it has some operations in effect, it still lacks a director, which administration officials say has prevented the agency from fully supervising nonbank financial institutions like payday lenders, nonbank mortgage lenders, debt collectors and credit reporting agencies. “In summary, today the CFPB is hamstrung by not having a director in place,” said Brian Deese, deputy director of Obama’s National Economic Council, during the same Sunday conference call. The lack of a director at the agency means there isn’t an even playing field for banks and other financial entities, which is “bad for the financial system overall,” Deese said. In addition, he contended, some of the most “harmful, deceptive, unfair, predatory lending practices” will continue to take place, including those that precipitated the financial crisis that drove the economy into a recession. Senate Republican aides dismissed the idea that any GOP senators would cave in their opposition to Cordray without changes being made at the agency first. “You know who they’re not talking to? Republican senators who raised concerns about transparency and accountability at the CFPB seven months ago,” said a Senate GOP leadership aide. “Maybe instead of a PR campaign, they should work with Congress to fix the problems. But they haven’t lifted a finger. They haven’t talked with us about this at all. The President will talk to more reporters this week about the CFPB than he has to Republican senators.” Another senior Senate Republican aide chalked up Obama’s latest push on the issue to his need for a bump in the polls. “Another week and another White House public relations campaign ostensibly about policy but more likely related to the president’s sagging poll numbers and dicey reelection prospects,” said this aide. “There are serious policy concerns about the CFPB as it is currently exists, and we ought to be addressing that rather than having yet another White House media blitz.”

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EU Leaders Seek Agreement On Rescue Plan With Euro’s Future At Stake

December 4, 2011

PARIS (Paul Taylor) – The euro faces a decisive week as European Union leaders, urged on anxiously by the United States, seek agreement on a convincing rescue plan that has eluded them for two years. Despite short-term market optimism about a possible deal to tackle Europe’s sovereign debt crisis and underpin the survival of the single currency, the outcome is far from certain as the EU gears up for a summit in Brussels on Thursday and Friday. “This week, the stable future of the euro and thus the economic recovery in Europe and employment are at stake,” EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters. “This calls for a convincing package of measures from the European Council (summit).” Portuguese Prime Minister Pedro Passos Coelho went further. “We have to find a response” to the crisis, he told the daily Publico. “If we don’t, clearly that could represent the end of the European Union.” If all goes according to plans being hatched in Berlin and Paris, the EU will have taken a step towards fiscal union by Friday night, agreeing on a treaty change to anchor coercive budget discipline for the 17-nation currency area. The European Central Bank will have cut interest rates on Thursday to counter a looming recession and taken new measures to provide longer-term funding for Europe’s teetering banks. And new prime ministers in Italy, Greece and Spain will have demonstrated their commitment to tough austerity measures and structural economic reforms to tackle their debt problems and restore investor confidence. World financial markets rallied last week on the prospect of such a masterplan after ECB chief Mario Draghi signalled that in response to a new “fiscal compact” in the euro zone, the central bank could act more decisively to fight the crisis. A convincing show of political determination to stand behind the euro and surmount the crisis through closer euro zone integration could prompt the ECB to do more to support Italian and Spanish bonds, cementing that reversal of market sentiment. “It all comes down to what the ECB does, and whether political leaders produce a sufficiently convincing plan to give the ECB a basis to intervene,” a senior EU government source said, speaking on condition of anonymity to respect the independence of the central bank. However, if the 27-nation EU is unable to agree, or settles for another half-measure after months of dithering, the flight from euro zone bond markets may accelerate, confidence may ebb further and the crisis could become acute in January, when Italy has to start a massive refinancing campaign. The chief executives of leading Dutch multinationals published a joint newspaper ad warning it was now “one minute to midnight” for the euro zone. “There is almost 1,000 billion euros in refinancing that needs to be done next year, while the risk premium on interest rates is increasing strongly. That means that it will be almost impossible for many countries to refinance. That indicates how urgent it is to take measures now,” Frans van Houten, CEO of electronics giant Philips told TV programme Buitenhof. MERKEL PERMISSIVE? Underlining Washington’s vital interest in averting a euro zone meltdown, U.S. Treasury Secretary Timothy Geithner will visit Frankfurt, Berlin, Paris, Marseille and Milan from Tuesday — his fourth trip to Europe since early September — to urge key European officials to take decisive action. Sources close to German Chancellor Angela Merkel say she is prepared, despite hostility from the German Bundesbank, to see the ECB step up buying of troubled states’ bonds as a short-term bridging measure until stricter budget controls take hold. But things may not go entirely according to plan. Merkel visits French President Nicolas Sarkozy in Paris on Monday to outline joint proposals on economic governance, but Berlin and Paris still have significant differences about how the euro zone would control national budgets. Merkel wants to empower the executive European Commission to veto national budget plans that breach EU limits before they go to parliament, with automatic sanctions for deficit sinners and the possibility to take serial offenders to the European Court of Justice for punishment. Sarkozy, struggling to win re-election next May, wants euro zone leaders to have the final say, with no new supranational powers for EU institutions. Several other governments, notably Britain, Ireland and the Netherlands, do not want treaty change at all because of the domestic political risks. Some fear it would be hard if they have to win public backing in referendums. European Council President Herman Van Rompuy, who chairs the crucial end-of-week summit in Brussels, will present options for stricter budget control without touching the treaty, as well as steps that would require amendments, aides said. European Parliament President Jerzy Buzek warned last Friday that treaty change could be divisive and “dangerous.” But diplomats say it is a political must for Merkel. Veteran former German Chancellor Helmut Schmidt, 92, urged Germans on Sunday to soothe growing fears of German dominance in Europe and help rescue debt-stricken euro zone partners, warning that Berlin faced isolation otherwise. For British Prime Minister David Cameron, the choice is between enraging eurosceptics at home by letting treaty change go ahead without winning a return of key powers to London, or seeing the 17 euro zone states reach a separate agreement outside the treaty that could cement a two-speed Europe. SHORT-CIRCUIT Germany and France want to short-circuit the complex treaty amendment procedure by wrapping the new budget procedures into a single amended protocol 14 on the euro zone. They hope to avoid a parliamentary convention and spare most, if not all, countries the need for a referendum on ratification. That has outraged some lawmakers who say the EU’s major powers are sidelining national parliamentary budget sovereignty without any democratic accountability. In their defence, Paris and Berlin argue the debt crisis is an emergency that requires swift executive action to avert disaster, and that member states already signed up to the budget rules in the 1992 Maastricht Treaty. New Prime Minister Mario Monti brought forward to Sunday a cabinet meeting to approve rigorous austerity measures and economic reforms designed to save Rome from requiring the next international bailout. And bailed-out Ireland will be presenting an eye-watering 2012 austerity budget. Italy has become the centre of the debt crisis since yields on its 10-year bonds shot up above 7 percent, levels at which Greece, Ireland and Portugal were forced to seek EU/IMF help. Government sources say Monti’s mix of cuts and tax rises will total some 20 billion euros ($27 billion) over two years. About half will go to reduce the deficit and balance the budget by 2013 despite an economic downturn and rising borrowing costs. The rest will free up resources to try to regenerate Italy’s recession-bound economy. On Tuesday, the Greek parliament is due to give final approval to a draconian 2012 austerity budget that is a condition for a second bailout package still under negotiation with private creditors, euro zone governments and the IMF. On Wednesday and Thursday, centre-right leaders who control most EU governments meet in Marseille, France. That will provide the platform for incoming Spanish Prime Minister Mariano Rajoy to outline his commitment to radical budget cuts and economic reforms to restore Madrid’s parlous public finances. It will also give “Merkozy” — as the Franco-German leadership team has become known — a last chance to lobby reticent partners, with Geithner in the wings, to accept treaty change as a crucial part of the long-term plan to secure the euro before the summit starts with a dinner on Thursday evening. (Additional reporting by Madeline Chambers and Andreas Rinke in Berlin, Catherine Hornby in Rome and Gilbert Kreijger in the Netherlands; Writing by Paul Taylor, Editing by Mark Trevelyan) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Tom Fox: Improving Your Agency’s Best Places to Work in the Federal Government Ranking

December 3, 2011

I’m a big believer in the old adage, “Everything that needs to be done to improve government is being done somewhere, just not everywhere.” The key, of course, is sharing those lessons across agencies to improve performance government-wide. Here’s a case in point. A few agencies have seen considerable improvements in the just released 2011 Best Places to Work in the Federal Government rankings by directly addressing employee satisfaction, commitment and performance issues. The rankings, produced by my organization, the Partnership for Public Service, are the most comprehensive assessment of federal employee perceptions of their jobs and agencies, and are based on a government-wide survey conducted by the Office of Personnel Management (OPM). Organizations struggling to improve their rankings would be wise to understand what successful agencies have done, and then adopt those strategies to build a more engaged and, ultimately, a more effective workforce. I consulted with my colleague Erika Kaneko, our Best Places to Work agency services manager, on how agencies can make progress in improving their employee satisfaction and commitment. She noted that many of the biggest movers have followed some basic principles. They have engaged employees, managers and union leaders to better understand the story behind their Best Places to Work numbers, and to get feedback and ideas for change. They have followed through with action plans, have monitored progress, and have communicated with employees about what is taking place and the reasons for decisions. In addition, they have celebrated successes and recognized exceptional employees. As part of the 2011 Best Places to Work rankings, the Partnership interviewed officials at agencies that increased their scores over last year. In talking with those agencies, we’ve collected some lessons learned that may benefit agencies still looking to move on up the rankings. · Federal Deposit Insurance Corporation (FDIC) – The FDIC rose to the No. 1 spot as a result of instituting a series of cultural change initiatives three years ago. The FDIC devoted time, energy and resources to supporting employees and creating a positive work environment even in the midst of the financial crisis. The agency leaders communicated the importance of employee engagement, held regular town hall meetings and conference calls with employees to open lines of communication, and invested in training for front-line employees while also investing in their own continuous learning as leaders. In an effort to develop new ideas over time, they appointed a manager to coordinate cultural change initiatives and created a culture change council with responsibility for proposing workplace improvements. · OPM – To improve employee engagement, OPM’s top leaders made it clear that the agency’s senior executives, human resource leaders and office supervisors would be held accountable for their survey results. Teams analyzed their survey data and came up with plans to address problem areas. In addition, OPM’s Director John Berry convened free-flowing town hall meetings every month to solicit employees’ ideas from across the agency. In response, OPM increased its investment in employee training and the use of telework. It revamped employee awards programs, making the process more open and employee driven. In addition, OPM instituted Idea Factory – an innovation process and tool developed with much success by the Transportation Security Administration to provide an ongoing forum for employee-driven ideas about improving the agency. · U.S. Patent and Trademark Office (PTO) – PTO Director Dave Kappos made workplace improvements a top priority. The PTO reengineered the patent examination system with input from employees, the union, managers and stakeholders to increase productivity. It initiated a series of training programs. One helped patent examiners better understand new technologies. Other programs focused on developing leaders – starting with top managers – all of whom must create executive development plans and chart their progress against those plans. · Department of Treasury – Bureau of Engraving and Printing (BEP) – While the Treasury launched several department-wide initiatives to improve performance, there were particular bright spots in components like the BEP. Department-wide, Treasury began embedding workplace goals into all of the senior leaders’ performance plans. In addition to those efforts, the BEP went a step farther when senior executives launched a “Walking in Your Shoes” program that involves spending a day doing line work in the printing plants to better understand the nature and stresses of the jobs, and to get suggestions on ways to improve the workplace. There are many ways for agencies to get assistance in improving the workplace. Beginning in December, for example, the Partnership for Public Service will be holding workshops on how to analyze and use the Best Places to Work data. For more information, please click here . And if you have examples of good workplace practices and how to make improvements, please share your ideas and stories by adding a comment below, or by sending an email to me at fedcoach@ourpublicservice.org . This column was first published in the Washington Post .

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Carrier IQ Hit With Class-Action Suit

December 3, 2011

SAN FRANCISCO — Technology bloggers are asking if our cellphones are spying on us after a security researcher said a piece of software hidden on millions of phones was recording virtually everything people do with them. Amid a broad outcry, Sen. Al Franken (D- Minn.) is calling for an investigation. A class-action lawsuit has been filed against the software’s maker, Carrier IQ Inc. of Mountain View, Calif. The software, which Carrier IQ says is used on some 150 million mobile devices, appears relatively innocuous. It does watch what owners of Sprint Nextel Corp. and AT&T Inc. smartphones do with them, including what people type and the numbers they dial. But it doesn’t seem to transmit every keystroke to the company. Instead, it kicks into action when there’s a problem, like a call that doesn’t go through, and it lets the phone company know. “It is software that is developed in partnership with carriers with the intent to improve network performance. As far as we can tell, it meets this description in execution,” said Tim Wyatt, principal engineer at Lookout, a cellphone security company. “In line with our privacy policy, we solely use CIQ software data to improve wireless network and service performance,” AT&T said in a statement. Carrier IQ says the data its software gathers is stored by the phone companies or at Carrier IQ’s facilities. It doesn’t sell the data to third parties. Phone companies, of course, already are custodians of a wealth of private information, including whom you call, where you surf and what your text messages say. The brouhaha started a few weeks ago, when a programmer named Trevor Eckhart documented Carrier IQ’s workings with videos on his blog. The software company threatened him with a lawsuit if he didn’t take the information down. The Electronic Frontier Foundation took on Eckhart’s case, and the company backed down. Eckhart posted another video this week, showing Carrier IQ’s software logging keystrokes on an HTC EVO 3D from Sprint. A central privacy worry is what kind of data Carrier IQ is retaining. Andrew Coward, a Carrier IQ vice president, said the software doesn’t record every keystroke or send information about all of them back to the company. The only keystrokes it cares about are specific administrative commands, including those instructing the software to phone “home.” The rest it discards, Coward said. “We never expected to need the content of SMS messages, so we didn’t code for it,” Coward told The Associated Press in an interview. Apple Inc. has said it has stopped supporting Carrier IQ in most of its products. Separately, the company came under fire last year over location-tracking features of the iPhone and made a software change to keep data on users’ movements for less time. For now, there’s no easy way to uninstall the Carrier IQ software without unsanctioned third-party software. Coward said it is “too early to tell” whether the company will make any substantial changes to the software because of the uproar. ___ Svensson reported from New York.

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The Good Times May Be Over For U.S. Defense Industry

December 1, 2011

U.S. weapons makers told investors this week they are doing all they can to prepare for leaner and more uncertain U.S. defense budgets, including redoubling their efforts to cut costs, drum up export sales and sell more goods to commercial clients. Industry executives and Pentagon officials say they are still sorting out the potential impact of an additional $600 billion in defense cuts over the next 10 years, on top of some $489 billion in cuts already being absorbed. Even if those additional cuts can be averted, as Republicans hope, the industry is facing pressure on profit margins and a dearth of new programs after more than a decade of strong growth, industry executives and analysts agreed. The Pentagon’s No. 2 budget official, Mike McCord, told a conference hosted by Credit Suisse and Aviation Week that the fiscal 2013 defense budget proposal now being finalized already included cuts in the $40 billion-range from previous plans, following a cut of around $25 billion in fiscal 2012. He said the White House had not ordered the Pentagon to revamp that plan to reflect another $50 billion in cuts, and it would be difficult, if not impossible, to do that in the few weeks before the budget documents must be completed. “We’re a little bit in the dark like everybody else is about the future of sequester,” McCord said. Clay Jones, chief executive of Rockwell Collins Inc (COL.N), a flight-controls supplier and subcontractor on many key weapons programs, said commercial sales would account for a growing share of his company’s revenue as government orders declined. “It’s been a great ride,” he told the conference. “The ride’s over.” Rockwell Collins expects sustained double-digit growth in its commercial business but says its outlook for government sales is clouded by lingering uncertainty about the U.S. defense budgets for fiscal 2012 and beyond. Bill Swanson, chief executive of Raytheon Co (RTN.N), said he was hopeful that Washington could avert the additional $600 billion in defense cuts but said his company had studied the potential impact of such cuts. “We’ve got to be smaller, we’ve got to be more efficient. We’ll get the job done,” he said. Raytheon, he said, was well positioned, given prospects for continued sales in the missile defense, intelligence, surveillance and reconnaissance, and cyber security areas. International sales — likely to account for 30 percent of Raytheon’s bookings in 2011 — would help the company offset the downturn in U.S. defense spending, he said. Swanson cited arms sales already in the works or soon to be completed, naming Saudi Arabia, Taiwan, Kuwait, Turkey and Oman. “We got a lot of activity in the pipeline,” he said, noting that in addition to solid demand from the Middle East and Asia, Raytheon was also eyeing new orders from India, Brazil and other countries in South America. The Navy’s No. 2 acquisition official said the service had not yet been asked to plan for additional budget cuts, and there was no “convergence” within the Pentagon on how to deal with the possible additional cuts. Vice Admiral Mark Skinner, principal military deputy to the Navy’s acquisition chief, said budget plans submitted by the Navy and other military services to Pentagon leaders addressed only the initial round of cuts, not the additional $600 billion now on the table. The Navy’s share of the initial cuts is $9 billion to $10 billion in fiscal 2013, Skinner said. “Sequestration is bad,” he said, referring to the additional budget cuts required because a congressional “super committee” failed to agree on at least $1.2 trillion of deficit reduction over 10 years. The cuts would affect all Pentagon programs across the board and could result in violations of existing multi-year contracts, he said. “We’re going to break a lot of china,” he told conference participants. Shay Assad, the Pentagon’s director of pricing, said the department was continuing its efforts to trim waste and improve oversight of billions of dollars of contracts. He emphasized that the effort was not aimed at squeezing corporate profit margins, but said well-run companies deserved better results than those whose programs were over budget and behind schedule. “We’re raising the bar and the expectations of our workforce, and we expect the companies to do the same on their side of the table,” Assad told the conference. Swanson welcomed Pentagon efforts to reform the way it buys weapons and said Raytheon was continually trying to reduce its costs and safeguard its healthy profit margins. But he said industry was also vigilant about taking on too much risk on new development programs, especially on bigger programs. (Reporting by Andrea Shalal-Esa and Karen Jacobs; Editing by John Wallace and Gunna Dickson) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Facebook Settles With The FTC, Admits To Privacy ‘Mistakes’

November 29, 2011

This post has been updated. On Tuesday, Facebook reached a settlement agreement with the Federal Trade Commission regarding the social network’s policy on changing privacy controls and informing users of those changes. Under the terms of the settlement Facebook must obtain approval from users before making changes to the way their personal data is shared on the network. For the next 20 years, Facebook must also submit to scheduled checkups by “independent, third-party auditors” to ensure that the company’s privacy policies and practices do not violate users’ rights. “Facebook is obligated to keep the promises about privacy that it makes to its hundreds of millions of users,” said FTC Chairman Jon Leibowitz, according to a release published by the agency . “Facebook’s innovation does not have to come at the expense of consumer privacy. The FTC action will ensure it will not.” Facebook Co-founder and CEO Mark Zuckerberg also published a lengthy post on the Facebook Blog regarding the social network’s future privacy efforts and its settlement with the FTC. “I’m the first to admit that we’ve made a bunch of mistakes,” Zuckerberg wrote . These announcements confirm rumors earlier this month that Facebook and the FTC were reaching an agreement over the site’s controversial policies regarding the protection of users’ data. The FTC’s release lists seven complaints against Facebook’s allegedly deceptive privacy practices, specifically that it told users some of their personal information would be kept private, but that the site later allowed that information to become accessible. The agency’s complete list of allegations are as follows: In December 2009, Facebook changed its website so certain information that users may have designated as private – such as their Friends List – was made public. They didn’t warn users that this change was coming, or get their approval in advance. Facebook represented that third-party apps that users’ installed would have access only to user information that they needed to operate. In fact, the apps could access nearly all of users’ personal data – data the apps didn’t need. Facebook told users they could restrict sharing of data to limited audiences – for example with “Friends Only.” In fact, selecting “Friends Only” did not prevent their information from being shared with third-party applications their friends used. Facebook had a “Verified Apps” program & claimed it certified the security of participating apps. It didn’t. Facebook promised users that it would not share their personal information with advertisers. It did. Facebook claimed that when users deactivated or deleted their accounts, their photos and videos would be inaccessible. But Facebook allowed access to the content, even after users had deactivated or deleted their accounts. Facebook claimed that it complied with the U.S.- EU Safe Harbor Framework that governs data transfer between the U.S. and the European Union. It didn’t. Under the proposed agreement, Facebook must adopt a policy of allowing users to opt-in whenever changes are made to the site’s privacy policy and sharing options. If a user deletes his or her account, Facebook must block other users from accessing data from the deleted account after 30 days. For the next 20 years, Facebook’s privacy policy will be assessed every two years to ensure that the company has made its privacy policies clear to its users and that it hasn’t violated the terms of its agreement with the FTC. Mark Zuckerberg wrote in his blog post that Facebook had recently taken many steps recently to give users more control over what they share on the network. However, he admitted that the company could do more to guarantee data security to its users. Zuckerberg also wrote that the company has added two new Chief Privacy Officer positions. Erin Egan will become Facebook’s executive in charge of policy, and Michael Richter will oversee products. According to AllThingsD , “Facebook’s punishment is in line with what its competitors Twitter and Google have already agreed to: Clearer privacy policies that are audited every two years for the next 20 years.” Take a look at a roundup of reactions to the announcement that Facebook would cooperate with the FTC regarding users’ privacy.

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Banks May Have Illegally Foreclosed On Nearly 5,000 Military Members

November 29, 2011

Even those people putting their lives on the line for their country may not be safe from the American foreclosure crisis. Ten lenders are reviewing close to 5,000 foreclosures of homes belonging to active-duty service members in an attempt to discover if they were carried out improperly, according to data from the Office of the Comptroller of the Currency, cited by the Financial Times . The OCC’s report is based on projections prepared by the lenders and and their consultants. Bank of America said it is reviewing 2,400 foreclosures of homes belonging to active-duty service members and Wells Fargo said it’s looking at nearly 900 cases. Citigroup is reviewing 700 foreclosures, the bank said. The Servicemembers Civil Relief act aims to protect active-duty members of the military from financial difficulty, including through measures that restrict foreclosures on properties owned by active-duty military members. Still, as the OCC data indicates, thousands of active-duty members of the armed forces have lost their homes while fighting abroad. Bank of America and Morgan Stanley reached deals with the Justice Department earlier this year, agreeing to pay more than $20 million to settle claims that they foreclosed on more than 175 active-duty service members without court orders. They’re not the only ones. JPMorgan Chase also admitted to illegally foreclosing on the families of 27 active-duty military members earlier this year and has very publicly attempted to give the families back their homes or compensate them for damages if the house was sold. The bank also agreed to pay $27 million in cash to about 6,000 active-duty service members who were overcharged on their mortgages, Bloomberg reports. Illegal foreclosures have affected service members like U.S. Army Sgt. James Hurley who lost his house to foreclosure while he was serving in Iraq. Tim Collette said in June that he had been negotiating with JPMorgan Chase since 2008 to save his house from foreclosure while his son was serving in Iraq. Though illegal foreclosures may be some of the most egregious examples of lenders mistreating service members, banks have wronged members of the military in other ways. An October lawsuit claims that 13 banks and mortgage companies charged hidden and illegal fees from veterans trying to refinance their homes.

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Occupy LA Protesters Defy Mayor, Refuse To Leave Encampment

November 28, 2011

LOS ANGELES — Wall Street protesters in Los Angeles defied the mayor’s early Monday deadline to vacate their encampment near City Hall, with about 1,000 flooding into the area as hundreds of tents remained standing as they have for nearly two months. A celebratory atmosphere filled the night with protesters milling about the park and streets by City Hall in seeming good spirits. A group on bicycles circled the block, one of them in a cow suit. Organizers led chants with a bull horn. “The best way to keep a non-violent movement non-violent is to throw a party, and keep it festive and atmospheric,” said Brian Masterson. Police presence was slight right after the 12:01 a.m. PST Monday deadline, but it began increasing as the morning wore on. At the same time, the number of protesters dwindled. “People have been pretty cooperative tonight. We want to keep it peaceful,” police Cmdr. Andrew Smith told The Associated Press. He refused to discuss how or when police will move to clear the park, but he said: “We’re going to do this as gently as we possibly can. Our goal is not to have anybody arrested. Our goal is not to have to use force.” By 2:30 a.m., most protesters had moved from the camp site in the park to the streets. That put them technically in compliance with the mayor’s eviction order, but could lead to confrontation with police if they try to clear the streets. There have so far been no arrests or reports of violence. “We’re still here, it’s after 12, ain’t nobody throwing anything at the cops, they haven’t come in and broken anyone’s noses yet, so it’s a beautiful thing,” said Adam Rice, a protester standing across the street from police in riot gear. The Los Angeles showdown follows police actions in other cities – sometimes involving the use of pepper spray and tear gas – that resulted in the removal of long-situated demonstration sites. Some of those encampments had been in use almost since the movement against economic disparity and perceived corporate greed began with Occupy Wall Street in Manhattan two months ago. Mayor Antonio Villaraigosa said earlier that the park grounds would be closed after the deadline, while Police Chief Charlie Beck promised that arrests would eventually be made if protesters did not comply. But in a statement issued shortly before midnight, the mayor said police “will allow campers ample time to remove their belongings peacefully and without disruption.” As the deadline approached, people poured into the grounds, likely many of them answering calls on Facebook and Twitter to come out and show solidarity. Well after midnight, some protesters began marching into the streets, and several crossed the street to police headquarters. “Me and my friends, we are not leaving no matter what,” said Brian Guzman, who stood on the street corner holding a “Power to the People” sign. “Not until we get some changes.” Masterson said he had turned his own tent into a “non-violent booby trap” by filling it with sandbags to make it tough to tear down. “We can’t beat the LAPD, but we can make it difficult for them to do their job, and have fun while we’re doing it,” Masterson said. Elsewhere, a deadline set by the city for Occupy Philadelphia to leave the site where it has camped for nearly two months passed Sunday without any arrests. The scene outside Philadelphia’s City Hall was quiet most of Sunday and by early Monday the numbers of protesters – and police officers – had decreased. Philadelphia’s protesters have managed to avoid aggressive confrontations so far. By early Monday there was still hope the City of Brotherly Love would continue to be largely violence-free. But eight people were arrested in Maine Sunday after protesters in the Occupy Augusta encampment in Capitol Park took down their tents and packed their camping gear after being told to get a permit or move their shelters. In Los Angeles, some campers packed up their tents and belongings to avoid police trouble, but said they intended to return without them in support of their fellow protesters. Scott Shuster was one of those breaking down his camp, but he said it was only to protect his property and he planned to remain. “I just don’t want to lose my tent,” he said. Others moved their tents to the sidewalk so they were technically out of the park. Villaraigosa, a former labor organizer himself, has said he sympathizes with the movement but that he felt it was time it moved beyond holding on to “a particular patch of park.” He said public health and safety could not be sustained for a long period. Chief Charlie Beck told the Los Angeles Times in an interview published Sunday that he expected to make arrests at some point. “I have no illusions that everybody is going to leave,” Beck said. “We anticipate that we will have to make arrests.”

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Nathalie Rothschild: On ‘Buy Nothing Day,’ It’s the Occupiers vs. the Masses

November 25, 2011

On Black Friday, the true colors of the Occupy Wall Street movement really shone through. Premised on the idea that it speaks on behalf of 99 percent of Americans, the Occupy movement is in fact deeply contemptuous of the masses. In no way was this made clearer than through the alignment of the Buy Nothing Day campaign and the Occupy movement. Part of the Occupy X-Mas initiative, which will last throughout the holiday season, Buy Nothing Day kicked off the day after Thanksgiving on so-called Black Friday. This is when vast numbers of Americans go on shopping sprees with hopes of laying their hands on cut-price flat-screen TVs, sneakers and other goods that are on their families’ Christmas wish lists. Many get in line hours before the shops open, some even set up tents and camp in front of stores to get in early. The Occupiers are apparently horrified at the prospect of seeing malls and high-street shops filled with the bargain-hunting masses, or ‘the 99%’ as the Occupiers call the American people, when they need to align great numbers to their cause in order to give it an air of legitimacy and popularity. But of course Occupy Wall Street never spoke for 99 percent of Americans. This was always a fantasy figure that lent itself well to sloganeering and to presenting a black-and-white view of the world, according to which the powerless masses struggling to get by are on one side, and the fat cat CEOs and reckless bankers are on the other. In this Star Wars -like narrative, the Occupiers serve as the heroes who will purportedly save the masses from their downfall by enlightening them and campaigning on their behalf. The message that the Occupiers want to send through their anti-consumption campaign is that Americans have been brainwashed by corporations, that they have been induced to blind over-consumption and unthinking acceptance of the messages put out by ‘the 1%’. As one Occupy sympathizer recently put it on the movement’s website: ‘The working class in this country has been brainwashed by MSM, Fox News, and the right-wing propaganda machine… We need to de-programme people against the brainwashing they’ve experienced.’ This is the Occupier’s Burden, a kind of re-vamped version of the civilising mission described by Rudyard Kipling: to ‘de-program’ Americans and, in the meantime, render them voiceless and clueless so that the apparently enlightened Occupiers can justify stepping in to define their interests for them and to speak on their behalf. The message of Buy Nothing Day follows in this vein. Initiated by Adbusters , every anti-consumption hipster’s must-have mag, the campaign is essentially promulgation for mass austerity — a point well-made on the American Situation blog — and it is an elaborate way of telling people they are stupid, irresponsible, greedy and shallow. For this year’s Black Friday, Adbusters promised ‘flash mobs, consumer fasts, mall sit-ins, community events, credit card-ups, whirly-marts and jams, jams, jams!’ It was Adbusters that originally called for the occupation of Wall Street back in September and designed the Occupy movement’s stylish posters and other propaganda. In a message posted on OWS’ website in the run-up to Black Friday, Adbusters says: You’ve been sleeping on the streets for two months pleading peacefully for a new spirit in economics. And just as your camps are raided, your eyes pepper sprayed and your head’s knocked in, another group of people are preparing to camp-out. Only these people aren’t here to support Occupy Wall Street, they’re here to secure their spot in line for a Black Friday bargain at Super Target and Macy’s. There you have it. On the one side are the Occupiers, ready to deploy every thinkable kind of shenanigan to bring the message home to those on the other side — i.e. vast numbers of ordinary Americans — that they are ‘rabid consumers’ hooked on ‘conspicuous consumption,’ that they are acting like zombies by pigging out and destroying the planet with their addiction to cheap electronics and videogames. A video ad for the 2007 Buy Nothing Day shows a globe in which a big, fat, lip-licking, burping pig sticks out of North America. A voice-over informs viewers that ‘we are the most voracious consumers in the world — a world that could die because of the way we North Americans live.’ In short, Adbusters and their fellow Occupiers see Americans — or, in their own lingo, ‘the 99%’ — as gluttonous, obese pigs. What a joyful holiday message.

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European Bank Using Emergency Facilities To Tackle ‘Very Dramatic’ Problem

November 24, 2011

BRUSSELS (Ben Deighton) – Franco-Belgian bank Dexia (DEXI.BR) is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, as analysts described its liquidity situation as “very dramatic.” The source said the bank was making use of the Emergency Liquidity Assistance (ELA) facility of the Belgian central bank as well as “national central banks in France, in Spain, in Italy,” where Dexia has units. One analyst said the fact Dexia was tapping national central banks’ liquidity via the European Central Bank network showed how bad the situation had become for the lender. “The emergency window of the ECB … is very expensive, so it shows that the liquidity situation is very dramatic,” the analyst said, speaking on condition of anonymity. “At some point you run out of unencumbered assets to post at the ECB, and then the only way to fund yourself is via the ELA, which is clearly not a good sign,” the analyst said. Dexia and the central banks of France and Belgium both declined to comment. The source added that Dexia would try to raise money on markets again after the finalization of a 90 billion euro ($120 billion) guarantee scheme agreed in October by France, Belgium and Luxembourg. Belgian Finance Minister Didier Reynders said Wednesday that he hoped to reach an agreement with the European Commission about the restructuring plan for Dexia (DEXI.BR) in the coming days. ($1 = 0.7490 euros) (Additional reporting by Dan Flynn in Paris; Editing by Luke Baker and Will Waterman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Futures Industry Reconsiders Customer Bailout After MF Global Disaster

November 24, 2011

CHICAGO (Ann Saphir) – In November 1986, shaken by traders’ losses after a brokerage went bust, the U.S. futures industry considered, and then rejected, the notion of insuring customer funds in a broker default. The collapse last month of MF Global Holdings Inc, and hundreds of millions of dollars of still-missing customer money, is forcing a rethink of that 25-year-old decision. Executives at the National Futures Association have been talking with senior management at CME Group Inc and other market participants about how best to safeguard customer funds in future broker bankruptcies, Dan Driscoll, NFA’s chief operating officer, told Reuters in an interview. Under discussion is the feasibility of a government-sponsored insurance fund modeled after the Securities Investors Protection Corporation (SIPC). Another option is an industry-sponsored bailout fund, Driscoll said. Neither response would prevent a broker’s misuse of customer funds, as CME has said happened with MF Global, but some type of insurance could help restore shattered faith in the industry, helping allay growing fears that money parked at futures brokerages simply is not safe. “In the past, one reason there hasn’t been a SIPC is there hasn’t been a clearing firm that went bankrupt and lost customer funds,” Driscoll said. “Now there is. It’s a big amount of money, and it really has an impact on customer confidence.” But questions about how to pay for such insurance hang over the debate. Both schemes could make trading more expensive, forcing brokers — many of whom have seen profit margins shrivel — to push more costs down to customers. MF Global was one of the biggest U.S. futures brokerages until it filed for bankruptcy protection on Oct 31, after revelations it had made a bad $6.3 billion bet on European sovereign debt, sparked a liquidity crunch. Customers are still struggling to get their frozen funds back, and the bankruptcy trustee estimates that as much as $1.2 billion in customer funds has simply disappeared. CME, which puts the estimate of lost money significantly lower, has offered $50 million to repay customers stuck with losses after the final accounting. A CME spokeswoman declined to comment on whether CME would support an industry-wide bailout fund for customers. “Could there be a SIPC-type approach for futures? Yes,” said Don Horwitz, of Oyster Consulting in Chicago. “It’s not as if they could just overlay it, there are some costs, but this will be one of the things I’d think would be considered.” After the collapse of the Bernie Madoff ponzi scheme in late 2008, SIPC raised its broker assessments from a flat $150 per firm per year to a quarter of a percent of yearly operating revenues, costing bigger firms hundreds of thousands of dollars, Horwitz said. All told SIPC collected $410 million last year. Talks among industry leaders so far have been one-on-one, Driscoll said, but in “coming days” there would be an effort to bring participants around a table to hash out a formal set of proposals. TOW TRUCK? Adopting an insurance scheme, particularly one modeled after that used to backstop securities markets, would be an about face for the futures industry, which has long said its customer funds are safer and its markets more reliable and transparent than the highly regulated world of stock trading. Created in 1970 to help restore confidence to the securities markets, SIPC has authority to use its funds to pay back securities customers up to $500,000 per account when brokerages fail. The insurance, which is funded by member brokers, does not cover futures accounts. The futures industry seeks to protect customers by requiring brokers to wall off customer accounts from their own funds. The system is an important selling point for CME, which touts the stringency of fund segregation in materials aimed at winning business from fund managers. The safety of customer fund segregation was also among the reasons that NFA cited when it recommended against adopting a bailout fund 25 years ago, in the wake of the collapse of Volume Investors, a brokerage on New York’s Commodity Exchange. With $13.7 million in customer funds, it was one of the largest futures brokerage failures of its time. By contrast, MF Global had about $5.5 billion in funds when it went under. COMEX — which is now owned by CME — in the end spent $3.6 million repaying traders who lost money in the bankruptcy. The payout equaled about 12 percent of the average customer funds held by a futures broker at the time. Futures trading has skyrocketed since then; an equivalent payout today would come to $170 million, based on the latest figures on futures customer funds published by the Commodity Futures Trading Commission. In a 122-page report entitled “Customer Account Protection Study,” dated November 20, 1986, the NFA concluded that insolvencies were so rare and fund segregation and other protections so strong that “it does not appear that even retail customers would require a public commitment to account insurance to maintain participation in the futures industry.” Post MF Global, that argument no longer passes muster. Trader anger at the brokerage and its regulators is mounting, and many smaller market participants are pulling or threatening to pull their money from futures markets. Volume Investors’ 1985 failure affected fewer than 100 traders. MF Global had tens of thousands. Industry executives say that if industry does not come up with its own solutions, change will be foisted on it. “I don’t think they’ll get off without a fix,” Horwitz said. Not all market participants support the idea. John Roe, a Chicago broker and former MF Global customer, said he fears an insurance scheme would only encourage risk taking by assuring traders there will always be a savior ready to pick up the pieces should something go wrong. “When there’s a car wreck, do you look for a better tow truck?” Roe asked. “Let’s build a better car.” (Reporting by Ann Saphir; Editing by Alden Bentley) Copyright 2011 Thomson Reuters. Click for Restrictions .

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In Response to Occupy Movements, Severity of Police Tactics Varies Widely

November 24, 2011

NEW YORK — In the two months since its inception in a small park in lower Manhattan, the Occupy Wall Street movement has spread from coast to coast, inspiring hundreds of like-minded encampments and demonstrations in city centers and college campuses. But while the vast majority of demonstrators have hewed consistently to a non-violent ethos, the tactics of law enforcement have been anything but uniform. From jurisdiction to jurisdiction, official responses have varied from paramilitary style crackdowns to peaceful accommodation. In Oakland, Calif., riot-gear clad police officers cleared demonstrators from their encampment using rubber bullets and tear gas grenades, gravely wounding an Iraq war veteran in the process. At the University of California at Davis, campus police doused the faces of seated protesters with pepper spray at close range, in an incident that quickly went viral after video of the event appeared online. Other cities have taken a different approach. In Albany, N.Y., a planned move by the mayor — with the support of Gov. Andrew Cuomo — to oust Occupy demonstrators from a city park near the capitol was quashed after the city’s police chief and district attorney aired reservations. “So long as we have no violence that is being perpetrated against law enforcement and no damage to state property, there’s room for peaceful coexistence here,” the district attorney, P. David Soares, said in a recent interview with the Associated Press . “I support the right of all parties to assemble peacefully and express their points of view.” Such an approach has been scorned in other cities, but not without consequences. In Oakland, the violent raid, authorized by Oakland Mayor Jean Quan, was harshly criticized by Dan Siegel, the mayor’s top legal adviser. He called the raid “tragically unnecessary” in a press conference announcing his resignation . Siegel, a civil rights attorney, followed up the press conference with a sharply-worded Twitter post. “Support Occupy Oakland, not the 1 percent and its government facilitators,” Siegel wrote. Norm Stamper, who resigned as Seattle’s police chief after the city’s chaotic globalization protests in 1999, which included the use of tear gas and rubber bullets against demonstrators, said the behavior of officers in Oakland was symptomatic of the highly authoritarian style of policing common in U.S. cities. Stamper, an author, has become an advocate for policing reforms in the years since. “These officers are brought up steeped in a tradition of authority and power,” Stamper said. “They are taught that they can never back down, that you meet force with force, and too many of them have been taught that passively resisting demonstrators represent force.” Oakland’s Mayor has vowed to avoid future violent police action against demonstrators, and so far protests in the city have been met with substantially reduced force. The city’s Occupy demonstrators, however, show no sign of backing down. In their latest provocation, they have called for a shutdown of all West Coast ports on Dec. 12. As protests continue — and possibly grow in size and ambition — the potential for violence will remain, in Oakland and other cities, Stamper said. “I just don’t see police changing their tactics tomorrow,” he said. “Unless and until the police recognize that there’s a better way to deal with this we’re going to see repeats.” In New York City, where the Occupy movement began, police tactics toward the demonstrators have shifted away from accommodation and toward confrontation. Mayor Michael Bloomberg initially gave protesters permission to stay in Zuccotti Park, but then authorized the police department to clear the encampment in an unannounced early morning raid . The raid on Zuccotti was followed by a march on the New York Stock Exchange, which was met with harsh tactics by police officers, according to protesters who participated and attorneys representing demonstrators who were arrested that day. “Multiple friends got the shit kicked out of them,” said Katama Rose, 23, an Occupy demonstrator. Martin Stoller, an attorney with the National Lawyers Guild, said that several demonstrators he represented after their arrest during the Nov. 17 marches had been injured by police officers throwing punches and swinging batons. The injuries were mostly “soft-tissue damage,” he said. “I arraigned a couple of people they pushed around and beat up pretty good,” he said. “They were not resisting arrest.” “There’s no necessity to use a baton on somebody who’s essentially non-violent,” he added. Bloomberg, however, praised the officers for their handling of the demonstrators, saying that they exercised restraint. NYPD commissioner Ray Kelly, meanwhile, accused the demonstrators of provoking the police. “There is no question about it, there was a group of people bent on confronting the police,” Kelly said in a press conference. “They were taunting them.” The NYPD did not respond to a request for comment. But while harsh action against non-violent demonstrators may restore order to city streets, it can have both short and long-term political consequences, warned Timothy McCarthy, a professor of history and public policy at Harvard’s Kennedy School of Government. “I would be very cautious if I was the mayor of a city that was being occupied,” McCarthy said. “When the state engages in forceful and violent acts of repression against folks engaged in non-violent civil disobedience, the state doesn’t come out as the hero.” “The Birmingham police are not the hero of the civil rights story,” he said.

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States Missing Out On Revenue From Whistle-Blower Law

November 23, 2011

(Andrew Longstreth) – For many states, a law intended to root out corruption also has been good for the bottom line. Over the last decade, more than 20 states have passed a version of the federal anti-corruption law known as the False Claims Act (FCA). The local laws, like the federal one, allow governments to join lawsuits filed by whistle-blowers who spot fraud involving taxpayers dollars. They have been a lucrative proposition, helping states collect millions of dollars in fines. In May, California announced a $241 million settlement of an FCA lawsuit against Quest Diagnostics Inc that alleged overcharges to the state’s medical program for the poor. California’s share of the settlement, $171 million, flowed to the state’s general fund. Yet at least nine states have tried and failed to pass local versions of the False Claims Act. In Ohio, there have been attempts to pass a bill since at least 2007. Republican state Attorney General Mike DeWine threw his support behind a bill in April, but so far nothing has come of it. Kentucky and Pennsylvania have also been unable to beat back opponents. Some of the most vocal criticism of the False Claims Act has come from the pharmaceutical and medical industries, which claim that the law encourages meritless lawsuits and creates a hostile business environment. They also question the cost-effectiveness of such statutes, which require significant government resources to investigate the claims and oblige the government to share recoveries with whistle-blowers. Samuel Denisco of the Pennsylvania Chamber of Business and Industry, said that a state False Claims Act would be duplicative of the federal law, adding that policy makers have a responsibility to avoid “protractive litigation that is not beneficial to the state.” States that have been unable to counter those objections are starting to pay the price, according to proponents of the law. In August, for example, Kentucky sought to join a sweeping lawsuit accusing Education Management Corp, a for-profit educational company, of fraud. The state said that EMC made false statements to the Kentucky Higher Education Assistance Authority and the U.S. Department of Education. California, Florida and Illinois — all of which have False Claims statutes — had already joined the case, first filed by a whistleblower in 2007 alleging that EDMC wrongfully received more than $11 billion in federal and state funds. But on October 24, Federal District Judge Terrence McVerry in Pittsburgh ruled that Kentucky could not intervene, citing its lack of a False Claims Act. A spokeswoman for the Kentucky attorney general’s office said it “respectfully disagrees” with the judge’s decision and is considering an appeal. “It’s a shame that Kentucky didn’t have all the tools that other states have to go after fraud against taxpayers,” said Harry Litman, an attorney for the whistle-blowers in the case. False Claims legislation has run into similar obstacles in Pennsylvania. A coalition of Pennsylvania business groups, mainly in the medical professions, urged the legislature to oppose a version of a False Claims Act bill that was introduced last year. It argued that the bill would duplicate the federal statute and would hurt the state’s efforts to recruit and retain physicians. Opposition to the False Claims Act hardly is hardly ever about politics or ideology, said Patrick Burns of Taxpayers Against Fraud, who notes that states with the law are both blue and red. “It’s really about how state legislators will sell themselves out for a few thousand dollars apiece,” said Burns. “Even in a state like Ohio or Pennsylvania where the economy is in shatters and unemployment is through the roof, a few thousand dollars will prevent the state legislature from passing a bill that will stop the hemorrhaging of fraud and recover hundreds of millions of dollars.” DATING TO LINCOLN’S ERA The federal False Claims Act has a long history. It was first passed in 1863 in an effort championed by President Abraham Lincoln to combat unscrupulous defense contractors defrauding the Union Army. But the act really got its teeth in 1987 when it was amended to allow whistle-blowers who discover fraud against the government to bring a lawsuit and to receive 15 percent to 30 percent of any recovery. The changes also increased potential recoveries available to plaintiffs to three times the amount of actual damages. As states began passing their own version of the False Claims Act, they tended to use the statutes to target healthcare fraud. Recoveries were initially relatively modest, according to findings published in a 2005 Tulane Law Review article. In Hawaii, for example, recoveries obtained between 2000 and the fall of 2004 were $4 million. But more recently, some states have reached eight and nine-figure settlements in whistleblower cases and begun to amend their False Claims Act laws to tackle other types of corruption. New York, with one of the most powerful state FCAs in the country, put the statute to novel use in October when Attorney General Eric Schneiderman intervened in a whistleblower case brought against Bank of New York Mellon for bilking investors in foreign exchange transactions. He is seeking nearly $2 billion on behalf of public pension funds and other investors. And False Claims Act boosters whose efforts have been unsuccessful are going back to the drawing board. Kentucky’s House speaker, Greg Stumbo, has been trying to push a False Claims Act since he was attorney general of the state from 2003 to 2007. Though an effort to pass a version of the law failed earlier this year, Stumbo says he plans to reintroduce the legislation in January. “There’s no reason for states not to have it,” he said. (Reporting by Andrew Longstreth; Editing by Eileen Daspin and Steve Orlofsky) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Delaware River Basin Fracking Decision Delayed For Now

November 23, 2011

Environmentalists are cheering after a meeting on the future of hydraulic fracturing, or fracking, for natural gas in the Northeast has been postponed. The Delaware River Basin Commission , consisting of the governors of Pennsylvania, New Jersey, New York, Delaware and a representative from the Army Corp of Engineers, was set to meet this week and vote on regulations for natural gas drilling in regions near the Delaware River. Three days ahead of the meeting, the DRBC commission’s website announced the meeting was postponed with no rescheduled date listed. The announcement came after Delaware withdrew its support, threatening the draft regulations ‘ chances of receiving a majority vote from the five-member commission. Last week, Delaware Governor Jack Markell sent a letter to the commission’s other members , announcing that he would not vote for the currently-proposed fracking regulations, joining New York in opposition. Despite the postponement, a planned protest rally still took place Monday at the meeting site in Trenton, N.J. The Wall Street Journal reports that the hundreds of activists in attendance shared a celebratory mood . Yet their victory only means an extension of a fracking moratorium for the time being. Filmmaker Josh Fox, the director of ” Gasland ” and one of the rally’s organizers, told HuffPost, “I think that what we’re dealing with here is obviously a very practical issue, 15.6 million people’s water, but also something symbolic, because we’re there with an enormous amount of strength on the ground.” An important concern for activists is fracking’s history of groundwater contamination . Earlier this year, a peer-reviewed study from Duke University linked “natural gas drilling and hydraulic fracturing with a pattern of drinking water contamination so severe that some faucets can be lit on fire.” The Delaware River Basin provides drinking water to over 15 million Americans — roughly five percent of the country’s population. This includes the city of Philadelphia and about half of New York City’s water supply. While the DRBC claims its proposed regulations are intended to ” protect the water resources of the Delaware River Basin ,” during natural gas extraction, others aren’t so sure. Actor Mark Ruffalo , who also attended Monday’s rally, said in a statement , “I applaud Governor Markell for admitting that there is no science to justify opening up one of North America’s important River Basins to industrialization and greed. Now the rest of the commission will hear from us, the people who speak for this beautiful river not for short term profits.” Fox said he was also pleased with the meeting’s postponement and the show of support in Trenton on Monday. “This was a huge victory,” Fox told HuffPost. “We were on the brink of disaster. We were on the brink of having the gas industry move into the Delaware River Basin without any assessment of what impact [fracking] would have on it.” According to Fox, an official count put an estimated 850 people at the gathering in front of the New Jersey Statehouse, with around 1,000 at the earlier rally at the site of the cancelled DRBC meeting. He said, “It was an amazing rally. I really think it was a turning point.” A federal advisory panel recently reported that if steps aren’t taken to reduce the impact of fracking, ” serious environmental consequences ” could occur. The Associated Press reports that there has not been much progress on 20 recommendations given to the federal government and the oil and gas industry by the committee. Supporters of natural gas drilling cite its abundance in the U.S. and its ability to create jobs in struggling areas of the Midwest and Northeast. For more information about the campaign against natural gas drilling in the Delaware River Basin, visit the Save The Delaware website . To learn more about the disputed pros and cons of fracking, click here .

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Airport Workers Say Pay Is Illegally Low

November 23, 2011

CHICAGO, Ill. — Every day she goes to work at O’Hare International Airport, Elda Burke faces the same dilemma. Burke, 30, works as a passenger attendant at the airport, escorting the elderly and disabled to and from their gates by wheelchair. Even though the airlines describe this as a free service, Burke’s employer has her working partly for tips, which is why her base pay is a low $6.50 an hour, somewhat like a restaurant server’s, rather than the typical Illinois minimum wage of $8.25. But unlike diners at a restaurant, many of the passengers Burke will be escorting on their holiday travels this week won’t realize she’s working for tips — and by federal law, she won’t be allowed to tell them. “We cannot say anything,” Burke says. “If we do that, they can fire us.” Burke works for Illinois-based Prospect Airport Services, Inc., a company that has contracts to supply service workers at O’Hare and other airports around the country. Prospect and similar contractors often pay their workers like Burke at a reduced rate before tips, which allows them to shift a portion of the salary burden to passengers. Such a pay scheme is perfectly legal , so long as the employer makes up the difference whenever a worker comes up short of the minimum wage after tips. But several attendants at O’Hare claim their pay often works out to be less than the legal minimum, an issue that lies at the center of an ongoing unionization push among service workers at the airport. The Service Employees International Union has been trying to organize workers at O’Hare and Chicago’s other airport, Midway International, this year. SEIU officials say a union could help airport workers earn a living wage. They note that many have not seen raises in years and don’t have paid vacation or sick days, even though they carry some security responsibilities, like checking the cleaning crews who enter planes. Burke says she started out at $5 per hour in 2002 and has only received a $1.50 pay bump in her nine years. She also says she has gone without health insurance the entire time because the company plan is too expensive. “A lot of them are paid poverty wages, in some cases below the minimum wage, and they have no access to affordable health care insurance,” says Izabela Miltko with SEIU Local 1. “They’re organizing to have a dignified workforce and to win higher wages.” Tom Murphy, general counsel for Prospect, says that the company has been following all state and federal laws, and that the complaints from workers like Burke amount to “a union ruse.” A handful of workers recently filed labor-law complaints against the company with the state labor department, though a subsequent inspection of the company by officials found that the company was in compliance with minimum-wage laws, Murphy notes. “For years they’ve always gotten paid well more than the minimum wage,” Murphy says. “Their paychecks match the law. I don’t know what more we can do.” A labor department spokesperson says the state is currently investigating the allegations. Workers who don’t earn the minimum wage are supposed to fill out “tip sheets” detailing how much they earned in tips and how much they’re owed by their employer, if anything. These sheets are rarely if ever filled out, Murphy says, because workers do in fact take home sufficient pay. But Burke and some of her colleagues at O’Hare say many workers don’t fill out tip sheets because they feel their supervisors won’t deal with it or because they don’t want to be seen as not pulling their weight. Several of them told HuffPost that they often don’t earn the $1.75 in tips each hour that they’re expected to. According to a survey of workers done by the SEIU, 86 percent said there was a time they didn’t earn the minimum wage. “A lot of people just stopped reporting their tips,” says Aaron Crawford, a 20-year-old aspiring pilot who takes public transit to O’Hare from Chicago’s South Side for each shift with the wheelchair. “They know it won’t be taken care of.” Some workers attribute their low pay partly to the fact that they work in the international terminal, where many of the foreign travelers don’t have the tipping customs of Americans. The federal Air Carrier Access Act that requires airlines to staff attendants for disabled and elderly travelers also prevents those attendants from soliciting tips or putting out tip jars. Waldo Gucwa, a 22-year-old student who’s been an attendant at O’Hare for three years, says that some workers who are desperate for tips try to artfully steer the conversation with passengers toward employment, in hopes that the passenger might ask if they can accept tips. Gucwa also says that many young, apparently able-bodied travelers seem to request wheelchair service as a way to bypass the lines at security, and often choose not to tip at the end of the ride. The attendants are forbidden from asking a passenger if he or she is actually disabled. “There are days you leave here with 7 bucks, 8 bucks” in tips, says Gucwa, who said he supports the idea of a union. “When you go home and do the math, you’re not even getting the minimum wage, and that’s the reason people are getting real riled up around here.” The O’Hare workers aren’t the first to say they’re earning less than the minimum wage escorting passengers. Last year a group of 20 workers who drive passenger carts at Dallas-Fort Worth International Airport sued Prospect. The workers claimed the company had switched them to a tipped pay schedule because it had put in a low bid on the airport contract and could no longer afford to pay the full minimum wage, according to the suit . The workers said they did not “customarily” receive tips and were required to do odd jobs on top of escorting passengers. Worker paychecks, the complaint alleged, were “extremely confusing” and often led to a wage below the federal and state minimums. Workers said they stopped reporting their low tips because they feared losing their jobs. Prospect denied the allegations and the case was settled, according to court documents. This summer, wheelchair escorts at Bush International Airport in Houston lodged similar allegations against their employer, Nashville-based PrimeFlight Aviation Services. The workers were earning between $5.25 and $6.35 per hour before tips, and some told the Houston Chronicle that they were pressured to pad their tips out of fear they’d be punished or lose their jobs if their employer had to pay them more. One worker told the paper she reports $80 worth of false tips each month, nonexistent earnings that she would be paying taxes on. PrimeFlight was receiving state funding for its workforce — up to $2,000 per employee — but the company was recently suspended from the subsidy program, the Chronicle reported earlier this month. Keisha Davis, a passenger attendant at O’Hare, says she’s been trying to raise her two-year-old twins on her salary, but she can’t do it without food stamps and Medicaid. She says she was earning more money when she was pregnant, taken off wheelchair duties and paid a flat rate of $8.25 per hour. Now that she’s escorting passengers again, she too says her tips don’t boost her pay to where it needs to be. “We really couldn’t make it without government assistance,” Davis says. “It’s like living from paycheck to paycheck to paycheck. … At the end, there’s nothing left.”

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Drug Giant To Pay Hundreds Of Millions To Settle Charge

November 22, 2011

Merck & Co will pay roughly $950 million to settle criminal and civil charges that it promoted the painkiller Vioxx for an unapproved use, the U.S. Justice Department said on Tuesday. The fine will conclude a long-running investigation into Merck’s promotion of its one-time blockbuster drug, which was withdrawn from the market in September 2004 after being linked to heart risks. The Justice Department alleged that Merck promoted the drug for treating rheumatoid arthritis before it had been approved for that condition by the U.S. Food and Drug Administration. The case is the latest settlement by a major pharmaceutical company over marketing drugs in the United States for uses that have not been approved by the FDA, known as off-label promotion. Merck pled guilty to a misdemeanor charge and paid $321.6 million for introducing the misbranded drug Vioxx into interstate commerce. It also agreed to pay an additional $628.4 million civil settlement to resolve additional allegations regarding its off-label marketing of Vioxx. Merck said the settlement does not mean it admits liability or wrongdoing. “We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx,” said Bruce Kuhlik, executive vice president and general counsel of Merck, in a statement. The large American drugmaker had already told investors in October 2010 it was taking a $950 million charge related to the previously disclosed U.S. government probe. The civil settlement agreement is signed with the United States and individually with 43 states and the District of Columbia, but previously disclosed litigation with seven states is still unresolved, Merck said. In 2007, Merck also agreed to pay $4.85 billion to settle lawsuits filed by former Vioxx users, who alleged they had been harmed by the pill. (Reporting by Sarah N. Lynch and Anna Yukhananov; Editing by Tim Dobbyn and Carol Bishopric) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Rabbi Shmuley Boteach: Why Critics of Wall Street Exist Among Avowed Capitalists

November 21, 2011

A Wall Street banker friend of mine dismissed Occupy Wall Street as a bunch of socialists with too much time on their hands. Indeed, I myself criticized the protestors in an interview on CNN recently by saying that I lived under socialism in Western Europe for 11 years and the complete meltdown of their economies shows it leads to bankruptcy. I believe that people who can work have to work. I believe the government should be kept small and empower its citizens to be self-sufficient. I believe that human dignity is achieved through individual effort and receiving handouts undermines our self-sufficiency and our self-confidence. There have been times in my life when, due to financial pressures, I have had to turn for help from others. I obviously never felt good about it. It was humiliating, and I cannot imagine that anyone would believe that economic dependency of any kind should be a first choice. While government must, of course, provide a safety net for those in need, it dare never create an unhealthy reliance. But we should not dismiss the protests outright for, whatever they have morphed into, there exists an important message that ought to be heard. About 18 years ago I started writing columns about how the banking industry is taking over every other profession. My students at Oxford, where I had already served for four years as Rabbi, would discard their training as doctors and attorneys if the investment banks made them offers. I worried that the brain drain into banking would handicap professional talent in so many other sectors. How could it not? With the banks offering starting salaries in the hundreds of thousands of dollars and the potential to make tens of millions a year, you had to be crazy not to accept it. But even I could not foresee hedge fund managers routinely making half a billion dollars a year or feeling like failures for making just 10 to 20 million, a phenomenon I addressed in my book The Broken American Male . Now, since I am an avowed capitalist, why should there be any issue with banks or those who have legitimately found a means by which to produce staggering wealth, especially when a great many of the hedge fund managers known to me are highly charitable? For two reasons. The first is that any of us who have dealings with banks have learned just how awful they can be, how condescending, how greedy, and how dismissive. The second is that there seem to be two standards, one for Wall Street, the other for Main Street, and to the extent that OWS has garnered wider support, then it deserves it, because Wall Street refuses to reform itself and insists on retaining unfair privileges. I have earlier written of my battle with Bear Stearns over my treatment at the hands of a trader who tried to gorge me with fees. Then I had my issues with JP Morgan Chase, and I wrote about how, amid tens of billions of dollars in TARP money they received, they obstructed virtually every effort I attempted at a mortgage adjustment, which was the purpose of them receiving government assistance in the first place. Just getting someone on the phone was a near impossibility, and it was common, after waiting an hour to speak to someone, to suddenly have the line drop and nobody call you back. I have also had my run-ins with American Express and the utter incompetence and arrogance of some of the staff associated with the elite cards they offer, even as they charge you an annual fortune to have it. And if these were just my experiences, you could dismiss me as a grouch, but in the most prestigious and reliable news outlets, you will see endless horror stories of how the banks treat their customers. The same arrogance is manifest in the fact that the fund managers are insisting on retaining their absurd 15-percent capital gains loophole. Said loophole allows hedge fund managers and private equity firms to treat a substantial portion of their compensation as capital gains, meaning they are taxed at 15 percent rather than the 35-percent rate that applies to income such as wages and salary. To be sure, I think all taxes in this nation are way too high, and the last thing I want to see is tax raised anywhere. But I don’t want us little people to be suckers, either. And the idea that the tax rate is 35 percent on income over $379,150 but fund managers like John Paulson, earning as much as $15 billion in a single year, are able to pay a 15-percent tax rate on the majority of their income is unfair. The same of course applies to the bailouts that were given to banks but did not trickle down to end users like me. In August 2009 The New York Times released a story detailing former Treasury Secretary Henry Paulson’s calls to his former firm, Goldman Sachs, in the days leading up to the A.I.G. bailout and financial collapse of 2008. Paulson asked for and received an ethics waiver from both the White House counsel’s office and the Treasury Department, allowing him to speak freely with Goldman Sachs chairman Lloyd Blankfein. Information obtained by The Times shows that during the week of the A.I.G. bailout Paulson spoke with Blankfein two dozen times, making their communication far more frequent than with any other bank chairman. Goldman Sachs, of course, was the bank that benefitted most from the A.I.G. bailout. All the above highlights a huge conflict of interest that the public is arrogantly told to accept as necessary on account of the “too big to fail” notion. And why, when the banks are borrowing money at 0.25 percent from the Federal Reserve, do we have to borrow at a minimum 3.25-percent prime rate that is often far greater for individuals with even a single credit blemish? Why the huge spread? This is where the objectors to Wall Street are gaining traction even among avowed capitalists, by demonstrating to the public that too many bankers insist on a privileged position, as if they are masters of the universe whom we have to support. I don’t want to see Wall Street punished, and I don’t want bankers treated any worse than anyone else. I reject class warfare. If people work hard and find ways to become extraordinarily wealthy, G-d bless them, and I hope they devote huge sums to charity. But just as the bankers should not be treated worse, they should not be treated better, either. What is needed is an even playing field, which, once achieved, will help reestablish the credibility of bankers and undermine their opposition. Rabbi Shmuley Boteach has just published Ten Conversations You Need to Have with Yourself (Wiley) and will shortly publish Kosher Jesus . Follow him on his website, www.shmuley.com , and on Twitter @RabbiShmuley .

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Stars Stand With Occupy Wall Street After AMAs

November 20, 2011

Music, at its best, has given voice to protesters and provided the soundtrack for change. On Sunday night, some of the biggest names in the industry will unite to show solidarity with the Occupy Wall Street movement following the national broadcast of the American Music Awards. Occupy Los Angeles announced on Sunday that an all-star lineup of musicians and activists will participate in a live discussion at the Villa Lounge in West Hollywood to discuss the entertainment industry’s relationship with the national Occupy movement. Already, music has intertwined itself with the growing movement. Stars such as Russell Simmons and Tom Morello have made their presence felt in a big way at New York’s Zuccotti Park, the birth place of the Occupy Wall Street protests, and many more have spoken out in support of the self-styled 99% and their push for economic justice. In October, folk legends Arlo Guthrie and Pete Seeger visited Occupy Wall Street , performing for protesters in a set that linked these protests to the push for justice that changed American in the 1960s. Third Eye Blind front man Stephan Jenkins just released a song dedicated to the movement.

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WATCH: Chilling Video Of Students Confronting UC Davis Chancellor

November 20, 2011

A crowd of UC Davis students confronted chancellor Linda Katehi in the wake of an incident that occurred between protesters and campus police on Friday. According to reports , police unleashed pepper spray on a group of students protesers who were part of the Occupy Wall Street movement. Video footage of the protest shows that students were sitting quietly when police began to show off a can of pepper spray before dousing the students. Katehi held a press conference on Saturday to address the incident. Students began to surround the building in protest and she reportedly refused to leave amid safety concerns. Finally, the students cleared a path for her to exit. As she walked back to her car, surrounded by students, some began to ask her questions, which she mostly brushed off “Chancellor, do you still feel threatened by the students?” someone asked. She replied, “no” and a companion said that “we’ve asked for it to be a silent, respectful exit.” Katehi will address the students directly on Monday. The officers’ behavior has sparked outrage among the Occupy Wall Street and UC Davis communities. Two involved officers have reportedly been put on administrative leave and students have even called for the chancellor’s resignation . WATCH:

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Joseph Gordon-Levitt Talks Emotional, Inspiring Experience In NYC

November 16, 2011

When the massive production caravan hauling “The Dark Knight Rises” descended upon lower Manhattan last month, there was speculation that the Batman epic’s director, Christopher Nolan, would work to somehow incorporate the Occupy Wall Street protesters into his film. And while that didn’t quite come to pass , one of the movie’s stars decided to take a camera down to Zuccotti Park and explore the scene on his own. Joseph Gordon-Levitt’s timing couldn’t have been any better. As it turned out, the 30-year old star found himself Tuesday in the thick of the volatile struggle between protestors and the New York Police Department, which raided the park earlier in the morning and cleaned out the nearly-two-month-old makeshift tent city. Gordon-Levitt ended up shooting about three hours worth of footage at the scene, he told The Huffington Post Tuesday night at the premiere of “50/50″ co-star Bryce Dallas Howard’s new short film for Canon’s “Project Imagin8ion” . Despite the fevered pitch at the protest sites, he was very encouraged by what he saw. “I had a lot of long conversations with all sorts of people — kids, older people, some cops — I talked to some people who look really rebellious, I talked to some people who were wearing a suit,” the star said. “I talked to all sorts of people and everyone’s just feeling really positive and optimistic. They look around and they see people who are on the same page, and they’re not going to just sit around and say, ‘Oh, there’s nothing I can do,’ and it’s reassuring, it’s exciting.” He said he was moved in particular by the call and response public address system dubbed the people’s mic by protesters. It was “beautiful to see,” he said. It’s no surprise that the makeshift open platform appeals to Gordon-Levitt, who runs an online collaborative production company, HitRecord . Just getting the message out, he said, was a major improvement over his last round of First Amendment-flexing pavement pounding. “You know, when I was like, in college say, I remember when in 2003, when the United States started bombing Iraq, and we marched in protest, and no one gave a fuck man. No one paid attention; no one wanted to talk about it,” he remembered, growing animated. “Now, for various reasons, I guess because partially things have gotten so bad and I think partially because of the Occupy movement, it’s become a topic of conversation and people are willing to talk about it.” Check out Gordon-Levitt’s initial post about the experience on his website .

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