September 26, 2013 archive

Sep 26

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Sep 26

Who needs infrastructure?

Sagging pavement closes Interstate 43 bridge over Fox River in Green Bay

THE ASSOCIATED PRESS  

September 25, 2013 – 5:31 pm EDT

The dip is 400 feet long and 20 inches deep, and goes across all four lanes of the interstate. That portion of the bridge was last inspected in August 2012. Cracks were found in the piers, but were determined to be normal wear.

Crews completed work on the bridge earlier this year as part of a nearly $17 million project to improve several miles of Interstate 43. The project included resurfacing the bridge’s span, replacing joints and repainting its steel support girders.

Federal data indicate the bridge deck, superstructure and substructure were rated as good to satisfactory in a 2012 inventory.

The dip was caused by a support pier settling about 2 feet.  There is no estimate on how long it could take to repair.

Sep 26

Cartnoon

Sep 26

Fail Whale

Once Again, Punishing the Bank but Not Its Top Executives

By PETER EAVIS, The New York Times

September 19, 2013, 3:48 pm

The government says there is wrongdoing at a large bank and makes it pay a fine. But senior executives who seemed to play a role in the missteps are not singled out for individual punishment.

It happened again on Thursday, when regulators in the United States and Britain hit JPMorgan Chase with nearly $1 billion in fines for the bank’s failure to properly handle a trading debacle last year.

The traders, based in JPMorgan’s London office, made wagers in complex financial instruments that saddled the bank with over $6 billion in losses. The bank’s problems became known as the London Whale affair, because the traders involved accumulated such large positions. In recent months, regulators have identified and gone after some of the employees who worked on the trades, saying that they had incorrectly valued the trades on JPMorgan’s books to make their losses look substantially smaller.



But not only did the agencies fail to take action against any of the executives, they did not even identify them (although it is clear who some of them are).



“JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses,” George S. Canellos, co-director of the S.E.C’s division of enforcement, said in a statement. “While grappling with how to fix its internal control breakdowns, JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors and regulators.”

Given language like that, those who favor stricter sanctions for bankers raised questions on Thursday about why the regulators did not take individual actions against the JPMorgan executives.

In JPMorgan Case, a Missed Opportunity to Charge Its Executives

By JESSE EISINGER, ProPublica, The New York Times

September 25, 2013, 12:30 pm

By cracking down on the bank for its faulty internal controls in the $6 billion London Whale trading loss, the S.E.C. can claim to be the ferocious regulator we have all been waiting for. JPMorgan and its chief executive, Jamie Dimon, got the best coverage they could have hoped for under the circumstances: the sense that the bank is beleaguered, surrounded by regulators, but at least it could put the trading loss behind it.

Yes, the S.E.C. wrung an admission of wrongdoing out of the bank, and the regulators scored a large settlement. It’s an improvement for a regulator to display the ferocity of a mealworm, rather than a banana slug, but let’s hold the celebrations until it reaches at least the level of a garter snake.



The admission was nice, but the S.E.C. did not charge any top executives with misleading disclosure. Why not?

Financial markets depend on true and accurate information. Disclosure isn’t some i-dotting, t-crossing regulatory nicety; it’s fundamental. And the Senate Permanent Subcommittee on Investigations, in its huge report on the trading loss, made a convincing case that the chief financial officer at the time, Douglas L. Braunstein, made several highly misleading statements in an April 13, 2012, conference call with shareholders and the public.



On that April 13 call, Mr. Braunstein made four statements that the Senate subcommittee found erroneous about the trades made by the bank’s chief investment office. He said the trading was “fully transparent to the regulators.” He said of the trading that “all of those positions are put on pursuant to the risk management at the firmwide level.” He said they were “made on a very long-term basis.” And most important, he emphasized that the traders were hedging.

It wasn’t only Mr. Braunstein. His comments mirrored talking points the bank had prepared days earlier. The Senate subcommittee report says the bank’s communications officer and chief investor liaison circulated talking points and met with reporters and analysts with the “primary objectives” to communicate that the chief investment office’s activities were ” ‘for hedging purposes’ and that the regulators were ‘fully aware’ ” of the trading. “Neither of which was true,” the Senate report says.



The trading wasn’t disclosed to regulators, the bank’s top risk managers had no window into it, and the traders were actively buying and selling. Most significant, it wasn’t hedging. The trading in the London group of the chief investment office was proprietary, intended to create profit for the bank. That’s the kind of activity that will presumably be banned under the interminably delayed Volcker Rule, should the regulators deign to finish it and not permit large exemptions.

“Given the information that bank executives possessed in advance of the bank’s public communications on April 10, April 13, and May 10, the written and verbal representations made by the bank were incomplete, contained numerous inaccuracies, and misinformed investors, regulators and the public,” the Senate report says.



The S.E.C. says it isn’t finished yet. The investigation has three parts: the case against the traders for mismarking the value of the trades, for which two have been charged criminally; the look into the company for internal controls, which was settled last week; and a third, against senior individuals for misrepresentations. The third continues. The agency may yet come down on top executives for their misleading statements.

I got a different sense from the company, however. The S.E.C. investigated the April 13 statements and the bank regards its senior executives to be in the clear, a person at JPMorgan told me. Mr. Dimon, for one, has been cleared, according to bank statements that were approved by the S.E.C.



The one unshakable talking point, repeated like a drumbeat, is the executives emphasizing their good faith.

The implications for the public are larger than this single case. One of the important aspects for the Volcker Rule, which aims to bar banks from speculating with money that is backed by taxpayers, will be how much disclosure regulators require.

Clear and complete disclosures would allow institutional investors, regulators, counterparties and financial experts to sort out whether the banks are complying with the law or not.

A slap for lesser sins darkens the future of the already enfeebled rule. Without serious disclosure and serious enforcement, the risk of another calamity rises.

You may think this represents the lamest sort of regulation.  Not so.

This is America’s worst regulator (and JPMorgan’s best pal)

By David Dayen, Salon

Wednesday, Sep 25, 2013 11:45 AM UTC

At times it doesn’t seem like JPMorgan Chase runs any legal businesses. The good news is that some in the federal government appear to be slowly catching up to their illicit enterprises. Unfortunately, there’s one regulator whose negligence is beyond problematic, and damaging the country. Meet Thomas Curry, head of the Office of the Comptroller of the Currency (OCC).

The OCC is the obscure yet powerful primary regulator for JPMorgan Chase and other national banks – and is frankly the reason why JPMorgan believes it can run multiple illegal businesses and get away with it. The OCC has been more of the mega-bank’s pal within the government, rather than a tough-minded regulator. And a settlement in yet another case of malfeasance at JPMorgan, released late last week, shows that nothing has changed.

The case involves litigation practices by JPMorgan in various collections, and a failure to comply with the Servicemembers Civil Relief Act (SCRA), a statute that protects members of the military in financial transactions. It turns out that JPMorgan conducted its credit card, auto and student loan collections in the same illegal fashion as it did its foreclosure operations: using affidavits where low-level employees testified to personal knowledge of the cases without actually knowing anything about them.

This is called “robo-signing,” and it means that fraudulent sworn documents were filed as evidence in court so JPMorgan could obtain judgments against borrowers. Often the sworn documents would have inaccurate financial information, so the bank was attempting to collect false sums from the borrowers. And it rarely complied with the SCRA, which sets maximum interest rates charged to service members and bans legal proceedings for service members in active duty in a war zone. JPMorgan couldn’t even manage that, suing soldiers while they served in Iraq or Afghanistan or elsewhere.

Unlike the SEC, the OCC agreed to a settlement without forcing JPMorgan Chase to admit or deny wrongdoing. Worse, they are giving the bank several months to design their own punishment, a fairly common but nonetheless appalling practice. It’s like arresting someone who knocked over a 7-Eleven and telling them they have 180 days to figure out how much of the money they stole they should have to give back. Needless to say, the criminal is an unreliable judge of the proper punishment.



The other federal agencies attempting to render judgment on JPMorgan Chase certainly aren’t doing enough. The Justice Department did indict two ex-traders of the bank after it admitted fault in hiding their London Whale derivatives trading loss from regulators and investors, but they are both living in Europe and don’t expect to get extradited, rendering ineffective any effort to pursue them or their superiors. Senior management has faced no punishment in the Whale case or any others, up to and including CEO Jamie Dimon, despite obvious culpability. The bank has been forced to sell their physical commodities business after questions about market manipulation, and Dimon has promised to further simplify JPMorgan’s lines of business, reflecting a cumulative effect of the constant fines and lawsuits to their reputation. They’ve suffered billions in litigation costs and plan to spend another $4 billion this year to comply with regulations (don’t cry for them; they make about $6.5 billion every quarter). That’s about the best you can say about this sorry attempt at taking down the biggest crook on Wall Street.



This negligence is particularly stark considering how many others are finally onto JPMorgan’s shenanigans. Just over the past week, it paid $920 million in fines and admitted fault in the aforementioned London Whale case; paid another $389 million in fines and reimbursements over charging credit card customers for services they never received; were informed of an imminent enforcement action over their manipulation of the commodities market; faced bribery investigations over hiring the children of well-connected Chinese politicians; faced another investigation from the state of Massachusetts over credit-card collection practices; were uncovered as the main beneficiary of ultra-cheap borrowing from the Federal Home Loan Banks, a program meant to help small community-based lenders; and just yesterday, learned of a civil lawsuit from the U.S. Justice Department over selling mortgage-backed securities to investors without informing them of the poor quality of the loans in the portfolio.

Sep 26

On This Day In History September 26

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

September 26 is the 269th day of the year (270th in leap years) in the Gregorian calendar. There are 96 days remaining until the end of the year.

On this day on 1957, West Side Story premieres on Broadway. East Side Story was the original title of the Shakespeare-inspired musical conceived by choreographer Jerome Robbins, written by playwright Arthur Laurents and scored by composer and lyricist Leonard Bernstein in 1949. A tale of star-crossed lovers-one Jewish, the other Catholic-on Manhattan’s Lower East Side, the show in its original form never went into production, and the idea was set aside for the next six years. It was more than just a change of setting, however, that helped the re-titled show get off the ground in the mid-1950s. It was also the addition of a young, relatively unknown lyricist named Stephen Sondheim. The book by Arthur Laurents and the incredible choreography by Jerome Robbins helped make West Side Story a work of lasting genius, but it was the strength of the songs by Stephen Sondheim and Leonard Bernstein that allowed it to make its Broadway debut on this day in 1957.

There are no videos of the original Broadway production which starred Larry Kert as Tony, Carol Lawrence as Maria, Ken Le Roy as Bernardo and Chita Rivera as Anita (Ms. Rivera reprized her role in the movie), so here is the Prologue from the Academy Award winning movie. The area that the movie was filmed no longer exists. The 17 blocks between Columbus and Amsterdam Avenues, from West 60th to West 66th Street on the Upper West Side of Manhattan where he filming took place were demolished to build Lincoln Center for the Preforming Arts.

Sep 26

Muse in the Morning

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Muse in the Morning


Ball O’ Fire

Sep 26

Late Night Karaoke

Sep 26

Elephant Walk

According to the World Wildlife Fund, the elephant is the largest animal walking the earth wandering 37 countries in Africa. Their presence help maintain suitable habitats for numerous other species but due to the illegal poaching for their ivory, over hunting for sport and the loss of their habitat the number of elephants are dwindling. Not yet considered endangered, they are vulnerable.

The illegal demand for ivory is the biggest driver of elephant poaching. Despite a global CITES ban on international sales of ivory since 1990, tens of thousands of elephants are killed to meet a growing demand for ivory products in the Far East. Asia stands behind a steadily increasing trend in illegal ivory and there are still thriving domestic ivory markets in Africa. Limited resources combined with remote and inaccessible elephant habitats make it difficult for governments to monitor and protect elephant herds. The impacts of war and over-exploitation of natural resources often lead to increased poaching as elephants are also regarded as source of wild meat. 2011 saw the highest volume of illegal ivory seized since global records began in 1989.

The punishment for poaching is very lenient as law professor and animal lover, Jonathan Turley notes in this report at his blog:

The reason why elephants are going extinct may have something to do with a trial in Cameroon against twin brothers accused of killing more than 100 elephants in Central Africa. What is most striking about this story is that these brothers – Symphorien Sangha and Rene Sangha – have been arrested before and never served a day in jail. Now, with over 100 dead elephants to their credit, they are only looking at a maximum of three years in jail. Indeed, Symphorien Sangha was found guilty of killing elephants and wounding a forest ranger. He will receive 10 years for wounding the ranger but no more than three years for killing a huge number of elephants and a long record of poaching. With a deterrent level of that kind, it is astonishing that any elephants remain alive.

If that isn’t outrageous enough, in a second article by Prof Turley, an NBC Sports Network show featured an NRA lobbyist, Tony Makris, shooting an elephant in the face and then celebrating while the animal lingered in pain before it is finally put down. I’m with Prof. Turley on this outrageous act:

I am also confused why this is so impressive. The elephant is standing there and you shoot it at close quarters in the face with a powerful weapon. The elephant however does not die after two shots but lingers in pain before it is finally put down. The episode ends with celebration with what appears to be champagne. [..]

The episode is filmed in the Botswana wilderness where he is led to around 20 feet from an elephant. While the number of elephants continue to fall in the country, a ban on trophy hunting will not kick in until 2014. That leaves people like Makris rushing to kill elephants while they still can.

We are not alone in our disgust:

NRA lobbyist Tony Makris sparks outrage by killing elephant on NBC show Under Wild Skies

by Bernard Humphries, The Australian

NBC Sports sparks outrage for airing an NRA-sponsored show in which the host kills an elephant by shooting it in the face

from the DailyMail.co.uk

   ‘Under Wild Skies’ is hosted by Tony Makris, a lobbyist for the National Rifle Association

   In a highlighted reel from this week’s episode, Makris travels to Botswana and hunts an elephant, shooting it several times before it dies

   Makris laughs as the animal lets out one last groan after the final shot and then he jokes about wanting to hunt for birds

   Makris celebrates the hunt by drinking champagne

   Some NBC Sports viewers are now calling on the network to cancel the show

I won’t post the video since it’s very graphic and disturbing. You can view it at Prof Turley’s site.

As one commenter put it, “We’re an awful species.”