Elizabeth Warren implies that AG Holder is Wall Street"s "Bitch" @ Justice

Elizabeth Warren Presses Eric Holder On Mortgage Settlement

. 08/21/2013

 

 

WASHINGTON -- Sen. Elizabeth Warren (D-Mass.) sent a letter to Attorney General Eric Holder Wednesday questioning whether a major government settlement with the nation's largest mortgage companies is merely a way to absolve banks of malpractice under a "timid enforcement strategy."

The letter follows months of criticism from Warren over weak penalties imposed on banks accused of defrauding consumers and investors. She has denounced settlement strategies that allow financial firms to set aside past violations without acknowledging wrongdoing.

Wednesday's letter addresses a settlement among the U.S. Department of Justice, the Federal Housing Administration and 49 state attorneys general over charges that major banks submitted a torrent of false claims in pursuit of government benefits. In February 2012, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial agreed to pay $25 billion to settle allegations that they forged signatures, fabricated documents and engaged in other illegal practices during foreclosures.

The DOJ claimed the violations allowed banks to push through improper evictions, and receive government compensation for loans that homeowners did not repay. In the worst cases, homeowners were evicted without actually defaulting on their loans. In many others, banks instructed families to miss loan payments in order to apply for bank and government assistance, only to foreclose on them once the loan entered default proceedings.

"I am concerned that this might be yet another example of the federal government's timid enforcement strategy against the nation's largest financial institutions," wrote Warren. "I believe that if DOJ and our banking regulatory agencies prove unwilling over time to take the big banks to trial or even require admission of guilt when they cheat consumers and break the law -- either out of timidity or because of a lack of resources -- then the agencies lose enormous leverage in settlement negotiations."

Warren called on the DOJ to avoid "settling on the cheap," and said that "rushed and inadequate settlements fail to fully compensate victims and taxpayers, and insufficiently deter future misconduct."

While the headline dollar figure is the largest ever for a settlement against financial institutions, banks were able to reduce their liability with standard cost-saving business practices -- many of which they already were legally required to perform. In several cases, the government effectively paid banks to lower their own costs. Warren's letter takes specific aim at one type of violation included in the settlement deal, in which banks paid $225 million to get off the hook for submitting false mortgage insurance claims to the government. In Warren's calculations, the number of total insurance claims submitted by the banks between October 2008 and September 2010 would have subjected them to $37 billion in total liability, had every claim been fraudulent -- indicating that the government had only been compensated for 0.6 percent of the potential maximum. Although every claim was not likely fraudulent, failures in bank documentation were pervasive in the years following the financial meltdown, and continue to be problematic nearly 18 months after the settlement was announced.

We're Back

We have had a difficult summer and we are not in a good mood. The trials that the middle class now have to endure to keep their head above water have taken their toll on our good humor. So with that warning, let truth telling begin.

Republicrats in Gov. Make Great Strides In Creating Informant Society. Orwell Was Right.

America’s Informant Society

 

The seemingly endless “war on terror” has made government hostility to openness part of America’s permanent wartime mentality.

 

June 26, 2013 

 

 By Melvin Goodman

 

 

President Dwight Eisenhower’s Farewell Address more than 50 years ago is famous for its warning about the military-industrial complex, but he also warned that permanent war and a “permanent arms industry” would do great harm to American rights and liberties

Over the past decade, we have experienced a George W. Bush administration that deputized the Pentagon to spy on law-abiding citizens, with military officers attending antiwar rallies and staff sergeants engaged in the National Security Agency’s warrantless eavesdropping.

American World War II poster by Seymour R. Goff.
 

And now we have an Obama administration that has encouraged the creation of its own informant network among millions of federal employees and contractors to watch for “high-risk persons or behaviors” among co-workers.

The use of informant networks dates at least as far back as the Roman Empire. Delatores (informants) were recruited from all classes of society, including slaves, lawyers and philosophers. Prior to the death of Joseph Stalin, the Soviet Union used pervasive informant networks in the Communist Party’s efforts to eradicate so-called “crimes” against state property.

Massive citizen informant networks were used throughout the Soviet Bloc in Eastern Europe to destroy perceived opposition to dictatorial rule, particularly in Czechoslovakia, Poland and Hungary. The best example of an informant network in the communist world, of course, was in East Germany where the Ministry of State Security (or Stasi) controlled one informant for every 60 citizens. These informants were told that they were their country’s first line of defense against threats to national security.

The informant network of the Obama administration is similarly insidious, with federal employees required to keep close tabs on co-workers, and managers facing penalties, including criminal charges, for failing to report their suspicions.

According to Marisa Taylor and Jonathan Landay, reporting in McClatchyDC.com on June 20, there are government documents that equate leaks with espionage. A Defense Department paper issued in 2012 exhorts its employees to “hammer this fact home … leaking is tantamount to aiding the enemies of the United States.”

The Obama administration’s initiative is called the Insider Threat Program and it is not restricted to the national security bureaucracy. The Department of Education has informed its employees that co-workers going through “certain life experiences,” such as divorce or “frustrations with co-workers,” could turn a trusted employee into “an insider threat.”

According to Taylor and Landay, the Department of Agriculture and the National Oceanic and Atmospheric Administration have produced online tutorials titled “Treason 101” to teach employees to recognize the psychological profile of spies. They say that the Peace Corps is implementing such a program.

The Bush administration initiated similar programs to conduct surveillance against American citizens, not merely federal workers. Vice President Dick Cheney encouraged the Pentagon to create the Counter Intelligence Field Activity (CIFA) in 2003 to conduct surveillance against American citizens near U.S. military facilities, particularly against those Americans who attended antiwar meetings. In the summer of 2004, CIFA monitored a small protest in Houston, Texas, against Halliburton, the giant military contractor once headed by Cheney.

At the same time, Undersecretary of Defense Paul Wolfowitz created a fact-gathering operation called TALON (Threat and Local Observation Notice) to collect “raw information” about “suspicious incidents.” The unauthorized spying of CIFA and the computer collection on innocent people and organizations for TALON were illegal; both organizations were eventually shut down.

In addition to instituting the Insider Threat Program, the Obama administration has expanded the domestic reach of the intelligence community, perpetuated the culture of secrecy, and instituted a pervasive lack of transparency.

Although President Obama has stated that American citizens are not the targets of the NSA’s sweeping electronic collection system, it is possible that Britain’s G.C.H.Q., London’s counterpart to NSA, is collecting intelligence on Americans and sharing the information with Washington.
Under a program called Tempora, the British communications intelligence agency has an unequalled capacity to tap high-capacity fiber cables. Britain, moreover, has a weak oversight regime, and G.C.H.Q. has a unique and storied collaboration with NSA and CIA.

Our congressional intelligence committees have failed in their primary task – providing oversight over this pervasive and secret surveillance system. Oversight and accountability must be part of government, particularly the secret agencies within government, and congressional oversight is needed to correct the collective harm that has been done to the United States and its reputation at home and abroad because of the zealous actions of the past decade.

Vice President Cheney defended the Iraq War in 2003 on the basis of the infamous “one percent doctrine,” which justified the invasion on the grounds that if there was a one percent chance that something is a threat, it requires that the United States responds as if the threat were 100 percent certain.

This logic has been applied in many ways to the problem of terrorism with the Department of Homeland Security and the 16 agencies of the intelligence community assuming that “Today’s terrorists can strike at any place, at any time, and with virtually any weapon.” As a result, the “war on terror” has become a permanent fixture in our national security architecture, and an economic cornucopia for private contractors.

Last month, President Obama told a high-ranking military audience at the National Defense University that our torture and detention policies “ran counter to the rule of law;” that our use of drones will “define the type of nation that we leave to our children;” that even legal military tactics are not necessarily “wise or moral in every instance;” and that we must repeal the mandate of the Authorization to Use Military Force to fight terrorism.

Referring to Guantanamo, he argued that holding “people who have been charged with no crime on a piece of land that is not part of our country” is not “who we are.” And that “leak investigations [that] may chill investigative journalism that holds government accountable” is not “who we are.”

If so, then massive surveillance programs at home and abroad as well as massive informant networks within the entire federal bureaucracy should also not be who we are. It is long past time for President Obama to address these issues with operational policies and not mere rhetoric. The audacity of hope requires that he do so.

Melvin A. Goodman is a former CIA analyst and the author of the forthcoming “National Insecurity: The Cost of American Militarism” (City Lights Publishing, January 2013).

In this Bizarro World we live in only the serial liars, always wrong pundits, corporate shills are taken seriously. check out who is always on the sunday news talk shows.

Ben Bernanke, Hippie

By PAUL KRUGMAN

Published: February 28, 2013

We’re just a few weeks away from a milestone I suspect most of Washington would like to forget: the start of the Iraq war. What I remember from that time is the utter impenetrability of the elite prowar consensus. If you tried to point out that the Bush administration was obviously cooking up a bogus case for war, one that didn’t bear even casual scrutiny; if you pointed out that the risks and likely costs of war were huge; well, you were dismissed as ignorant and irresponsible.

It didn’t seem to matter what evidence critics of the rush to war presented: Anyone who opposed the war was, by definition, a foolish hippie. Remarkably, that judgment didn’t change even after everything the war’s critics predicted came true. Those who cheered on this disastrous venture continued to be regarded as “credible” on national security (why is John McCain still a fixture of the Sunday talk shows?), while those who opposed it remained suspect.

And, even more remarkably, a very similar story has played out over the past three years, this time about economic policy. Back then, all the important people decided that an unrelated war was an appropriate response to a terrorist attack; three years ago, they all decided that fiscal austerity was the appropriate response to an economic crisis caused by runaway bankers, with the supposedly imminent danger from budget deficits playing the role once played by Saddam’s alleged weapons of mass destruction.

Now, as then, this consensus has seemed impenetrable to counterarguments, no matter how well grounded in evidence. And now, as then, leaders of the consensus continue to be regarded as credible even though they’ve been wrong about everything (why do people keep treating Alan Simpson as a wise man?), while critics of the consensus are regarded as foolish hippies even though all their predictions — about interest rates, about inflation, about the dire effects of austerity — have come true.

So here’s my question: Will it make any difference that Ben Bernanke has now joined the ranks of the hippies?

Earlier this week, Mr. Bernanke delivered testimony that should have made everyone in Washington sit up and take notice. True, it wasn’t really a break with what he has said in the past or, for that matter, with what other Federal Reserve officials have been saying, but the Fed chairman spoke more clearly and forcefully on fiscal policy than ever before — and what he said, translated from Fedspeak into plain English, was that the Beltway obsession with deficits is a terrible mistake.

First of all, he pointed out that the budget picture just isn’t very scary, even over the medium run: “The federal debt held by the public (including that held by the Federal Reserve) is projected to remain roughly 75 percent of G.D.P. through much of the current decade.”

He then argued that given the state of the economy, we’re currently spending too little, not too much: “A substantial portion of the recent progress in lowering the deficit has been concentrated in near-term budget changes, which, taken together, could create a significant headwind for the economic recovery.”

Finally, he suggested that austerity in a depressed economy may well be self-defeating even in purely fiscal terms: “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.”

So the deficit is not a clear and present danger, spending cuts in a depressed economy are a terrible idea and premature austerity doesn’t make sense even in budgetary terms. Regular readers may find these propositions familiar, since they’re pretty much what I and other progressive economists have been saying all along. But we’re irresponsible hippies. Is Ben Bernanke? (Well, he has a beard.)

The point is not that Mr. Bernanke is an unimpeachable source of wisdom; one hopes that the collapse of Alan Greenspan’s reputation has put an end to the practice of deifying Fed chairmen. Mr. Bernanke is a fine economist, but no more so than, say, Columbia’s Joseph Stiglitz, a Nobel laureate and legendary economic theorist whose vocal criticism of our deficit obsession has nonetheless been ignored. No, the point is that Mr. Bernanke’s apostasy may help undermine the argument from authority — nobody who matters disagrees! — that has made the elite obsession with deficits so hard to dislodge.

And an end to deficit obsession can’t come a moment too soon. Right now Washington is focused on the idiocy of the sequester, but this is only the latest episode in an unprecedented run of declines in public employment and government purchases that have crippled our economy’s recovery. A misguided elite consensus has led us into an economic quagmire, and it’s time for us to get out.

Too Big To Fail, Too Incompetent To Be Profitable, Big Banks On the US Dole, Are America's Biggest Moochers.

Illustration by Bloomberg View

Why Should Taxpayers Give Big Banks $83 Billion a Year?

A Bloomberg editorial

On television, in interviews and in meetings with investors, executives of the biggest U.S. banks -- notably JPMorgan Chase & Co. Chief Executive Jamie Dimon -- make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.
So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

Enlarge image

Granted, it’s a hard concept to swallow. It’s also crucial to understanding why the big banks present such a threat to the global economy.

Let’s start with a bit of background. Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.
Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers -- Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz -- put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

Big Difference

Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.

Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.

Once shareholders fully recognized how poorly the biggest banks perform without government support, they would be motivated to demand better. This could entail anything from cutting pay packages to breaking down financial juggernauts into more manageable units. The market discipline might not please executives, but it would certainly be an improvement over paying banks to put us in danger.

The Best Thing About Sequestration is that it denies Obama the the one thing he really wants... The Chance ot CUT Social Security and Medicare.

Why Sequestration May Not Actually Reduce America’s Deficit

By Travis Waldron

The United States is on the brink of sequestration, the $1.2 trillion in automatic budget cuts included in the summer 2011 deficit deal that will begin taking effect March 1 if Congress does not act to avert them. The goal of the cuts is to reduce America’s budget deficit, which remains Washington’s focus even as unemployment is high and the overall economic recovery is modest at best.

Despite the $85 billion in cuts that will take place this year, it is entirely possible that sequestration won’t actually lead to substantial shrinking of America’s deficit. There are a number of reasons for that, as Scott Lilly from the Center for American Progress explained in a column today. The primary reason, though, is that fiscal contraction caused by sequestration is likely to slow economic growth, reducing tax revenue and preventing meaningful deficit reduction, as CAP’s Adam Hersh notes:

Figure 1 also shows that the projected effect of the sequester will be to lower U.S. economic output by $287 billion from where we would be without any fiscal contraction—barely ahead of where the U.S. economy was at the end of 2012. To be certain—with sequestration on top of other fiscal contraction draining so much momentum—the U.S. economy would need to steer clear of all other risks to growth: potential oil- and commodity-price shocks, slowing global demand for U.S. exports, and the faltering confidence in the governability of U.S. economic policy. It is possible none of those risks will rear their ugly heads in the next year, but it would be foolish to bet America’s economic future on it.

Lilly estimates that the cuts could result in $17 billion in lost revenue this year, but because reducing government investment will also inhibit private sector growth, the effects may be even bigger than the Congressional Budget Office projects:
Read Less

Government is intertwined with private-sector activity throughout much of the economy, and in many instances, a reduction in government activity will cause commensurate reduction in private-sector activity. That will damage not only the nation’s economy but also the revenue that the government collects based on the strength of the economy. It is difficult to project with any accuracy how much overall economic activity might be affected by the sequester, but it is very likely that it will be by an amount much larger than is projected by standard econometric modeling.

It may seem counter-intuitive to say that cutting spending won’t reduce the deficit, but Europe provides evidence that that could be the case. The result of fiscal contraction in Europe has been slower economic growth, second (and possibly third) recessions, and high unemployment, all of which has hampered deficit reduction efforts. Spain and France have both missed deficit reduction targets because of slow growth. When the United Kingdom’s austerity efforts began in 2010, finance leaders projected its deficits would fall from 4.8 percent of the total economy to just 1.9 percent by now. Instead, three years and a second recession later, it stands at 4.3 percent.

If America’s goal is to reduce long-term deficits and debt, the fastest way to do so would be to invest more money now into programs that will foster job creation and economic growth. Previous economic downturns were bolstered by government spending, and the current recovery was aided by initial efforts to stimulate the economy. Focusing on spending cuts and other austerity measures now, however, will only hamper growth, meaning, as Lilly wrote, “the savings that can reasonably be expected from sequestration is far less than $85 billion promised, and the fact is there could be no savings at all.”

The Sequester, a celebration of greed, corruption and stupidity. A Beltway circle jerk..

Sequester of Fools

By PAUL KRUGMAN

Published: February 21, 2013 

They’re baaack! Just about two years ago, Erskine Bowles and Alan Simpson, the co-chairmen of the late unlamented debt commission, warned us to expect a terrible fiscal crisis within, um, two years unless we adopted their plan. The crisis hasn’t materialized, but they’re nonetheless back with a new version. And, in case you’re interested, after last year’s election — in which American voters made it clear that they want to preserve the social safety net while raising taxes on the rich — the famous fomenters of fiscal fear have moved to the right, calling for even less revenue and even more spending cuts.

But you aren’t interested, are you? Almost nobody is. Messrs. Bowles and Simpson had their moment — the annus horribilis of 2011, when Washington was in thrall to deficit scolds insisting that, in the face of record-high long-term unemployment and record-low borrowing costs, we forget about jobs and concentrate exclusively on a “grand bargain” that would supposedly (not actually) settle budget disputes for ever after.

That moment has now passed; even Mr. Bowles concedes that the search for a grand bargain is on “life support.” Let’s convene a death panel! But the legacy of that year of living foolishly lives on, in the form of the “sequester,” one of the worst policy ideas in our nation’s history.

Here’s how it happened: Republicans engaged in unprecedented hostage-taking, threatening to push America into default by refusing to raise the debt ceiling unless President Obama agreed to a grand bargain on their terms. Mr. Obama, alas, didn’t stand firm; instead, he tried to buy time. And, somehow, both sides decided that the way to buy time was to create a fiscal doomsday machine that would inflict gratuitous damage on the nation through spending cuts unless a grand bargain was reached. Sure enough, there is no bargain, and the doomsday machine will go off at the end of next week.

There’s a silly debate under way about who bears responsibility for the sequester, which almost everyone now agrees was a really bad idea. The truth is that Republicans and Democrats alike signed on to this idea. But that’s water under the bridge. The question we should be asking is who has a better plan for dealing with the aftermath of that shared mistake.

The right policy would be to forget about the whole thing. America doesn’t face a deficit crisis, nor will it face such a crisis anytime soon. Meanwhile, we have a weak economy that is recovering far too slowly from the recession that began in 2007. And, as Janet Yellen, the vice chairwoman of the Federal Reserve, recently emphasized, one main reason for the sluggish recovery is that government spending has been far weaker in this business cycle than in the past. We should be spending more, not less, until we’re close to full employment; the sequester is exactly what the doctor didn’t order.

Unfortunately, neither party is proposing that we just call the whole thing off. But the proposal from Senate Democrats at least moves in the right direction, replacing the most destructive spending cuts — those that fall on the most vulnerable members of our society — with tax increases on the wealthy, and delaying austerity in a way that would protect the economy.

House Republicans, on the other hand, want to take everything that’s bad about the sequester and make it worse: canceling cuts in the defense budget, which actually does contain a lot of waste and fraud, and replacing them with severe cuts in aid to America’s neediest. This would hit the nation with a double whammy, reducing growth while increasing injustice.

As always, many pundits want to portray the deadlock over the sequester as a situation in which both sides are at fault, and in which both should give ground. But there’s really no symmetry here. A middle-of-the-road solution would presumably involve a mix of spending cuts and tax increases; well, that’s what Democrats are proposing, while Republicans are adamant that it should be cuts only. And given that the proposed Republican cuts would be even worse than those set to happen under the sequester, it’s hard to see why Democrats should negotiate at all, as opposed to just letting the sequester happen.

So here we go. The good news is that compared with our last two self-inflicted crises, the sequester is relatively small potatoes. A failure to raise the debt ceiling would have threatened chaos in world financial markets; failure to reach a deal on the so-called fiscal cliff would have led to so much sudden austerity that we might well have plunged back into recession. The sequester, by contrast, will probably cost “only” around 700,000 jobs.

But the looming mess remains a monument to the power of truly bad ideas — ideas that the entire Washington establishment was somehow convinced represented deep wisdom.