Apr 30 2014
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Apr 30 2014
Two Giant Banks, Seen as Immune, Become Targets
By BEN PROTESS and JESSICA SILVER-GREENBERG, The New York Times
April 29, 2014, 8:40 pm
Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.
In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fueled a public outcry over the perception that Wall Street giants are “too big to jail.”
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The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France’s largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.
First, I’ll believe it when I see it.
Second, where are Bank of America, Citigroup, Goldman Sachs, JP Morgan, or Wells Fargo? Is this just a protectionist assault of foriegn owned institutions?
Why Only One Top Banker Went to Jail for the Financial Crisis
By JESSE EISINGER, The New York Times Magazine
APRIL 30, 2014
American financial history has generally unfolded as a series of booms followed by busts followed by crackdowns. After the crash of 1929, the Pecora Hearings seized upon public outrage, and the head of the New York Stock Exchange landed in prison. After the savings-and-loan scandals of the 1980s, 1,100 people were prosecuted, including top executives at many of the largest failed banks. In the ’90s and early aughts, when the bursting of the Nasdaq bubble revealed widespread corporate accounting scandals, top executives from WorldCom, Enron, Qwest and Tyco, among others, went to prison.
Continue reading the main storyThe credit crisis of 2008 dwarfed those busts, and it was only to be expected that a similar round of crackdowns would ensue. In 2009, the Obama administration appointed Lanny Breuer to lead the Justice Department’s criminal division. Breuer quickly focused on professionalizing the operation, introducing the rigor of a prestigious firm like Covington & Burling, where he had spent much of his career. He recruited elite lawyers from corporate firms and the Breu Crew, as they would later be known, were repeatedly urged by Breuer to “take it to the next level.”
But the crackdown never happened. Over the past year, I’ve interviewed Wall Street traders, bank executives, defense lawyers and dozens of current and former prosecutors to understand why the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker – one who happened to be several rungs from the corporate suite at a second-tier financial institution. Many assume that the federal authorities simply lacked the guts to go after powerful Wall Street bankers, but that obscures a far more complicated dynamic. During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms. By the time Serageldin committed his crime, Justice Department leadership, as well as prosecutors in integral United States attorney’s offices, were de-emphasizing complicated financial cases – even neglecting clues that suggested that Lehman executives knew more than they were letting on about their bank’s liquidity problem. In the mid-’90s, white-collar prosecutions represented an average of 17.6 percent of all federal cases. In the three years ending in 2012, the share was 9.4 percent.
Why Wall Streeters Don’t Go To Jail
Linette Lopez, Business Insider
4/30/2014
(H)ere are five things you need to know about what Eisinger found in his reporting.
- There’s a pendulum swing thing going on here. The white-collar guys at the DOJ were inspired by their colleagues who took down the mob. That’s why when a man who had worked under Rudy Giuliani named Michael Chertoff became the criminal chief of the DOJ in 2001, the agency was ready for war.
- When Chertoff went after Arthur Anderson hard for its role in disguising Enron’s fraud, there was a backlash. Corporate America, and even some prosecutors, thought Chertoff had overstepped his bounds.
- Corporate attorneys started figuring out ways to protect their clients. They were trying to counter the ‘Thompson Memo’, a strategy written by then-Deputy Attorney General Larry Thompson. Basically he gave corporations carrots for rolling back the attorney client privileges that protected them. Because of the backlash, however, the memo has been all but rolled back, according to Eisinger.
- In 2003 there was a turning point. The Fed stepped in while the DOJ was prosecuting PNC Financial Services, and asked for a meeting with Chertoff, where Chertoff told then-Fed official Herbert Biern that: “if the DOJ ‘can’t bring these cases because it may bring harm, then maybe these banks are too big.'” Sound familiar?
- After that, they deferred and non-prosecution agreements started pouring out of the DOJ. There were 242 from 2004-2012. There had been 26 in the previous 12 years.
Apr 30 2014
Cross posted from The Stars Hollow Gazette
After over a two year investigation in campaign finance corruption, Representative Michael Grimm (R-NY11) was indicted on Monday, with charges including mail, wire, and healthcare fraud, filing false tax returns, perjury, and employing undocumented immigrants. Grimm, with a history of bad behavior made headlines most recently when he threatened to throw a NY1 reporter, Michael Scotto, off the balcony of the Capitol rotunda when he lost his temper over Scotto’s commentary.
The district that Grimm represents, Staten Island and part of Brooklyn, was hard hit by super storm Sandy in October 2011 and is still has not fully recovered due much to the lax distribution of funds by New York City, a problem that newly elected Mayor Bill De Blasio is working quickly to remedy. Grimm is also, or was, a climate change denier. In episode 3 of the Showtime series on climate change, “Years of Living Dangerously,” Grimm sat down with MSNBC’s Chris Hayes to discuss the devastation, recovery and climate change. In that segment which was taped in August 2012, Grimm revealed that he had changed his mind about climate change and said that the storm was a major factor in his decision. However, he also said that there is nothing that he could do to change the conversation in the House.
This was news to his constituents since since Grimm has consistently voted with his Republican colleagues to block any climate change solutions. He even told Hayes “I don’t think the science is there to tell us what’s causing it…. I don’t want to get into the political debate of what’s causing it.” Ironically, the segment aired on Sunday, the day before Grimm surrendered to authorities to face the 20 count indictment.
Monday night, Hayes revisited his interview with Rep. Grimm where the conversation turned to the environment.
After all this Grimm is not resigning his house seat and he is still the GOP nominee for that district. But even if the Staten Island GOP wanted to replace him, they are hard pressed to try and their choice to replace him is a former congressman whose career ended with a DUI arrest that exposed an affair, Vito Fossella. If you thought the Republicans in the midwest and south were ignoramuses, you haven’t been to Staten Island, the last stronghold for the GOP in New York City.
Grimm’s constituents deserve better. They deserve someone who will stand up and fight for them.
Apr 30 2014
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.
Click on images to enlarge
April 30 is the 120th day of the year (121st in leap years) in the Gregorian calendar. There are 245 days remaining until the end of the year.
On this day in 1900, Jones dies in a train wreck in Vaughn, Mississippi, while trying to make up time on the Cannonball Express.
John Luther (“Casey”) Jones (March 14, 1863 – April 30, 1900) was an American railroad engineer from Jackson, Tennessee, who worked for the Illinois Central Railroad (IC). On April 30, 1900, he alone was killed when his passenger train, the “Cannonball Express,” collided with a stalled freight train at Vaughan, Mississippi, on a foggy and rainy night.
His dramatic death, trying to stop his train and save lives, made him a hero; he was immortalized in a popular ballad sung by his friend Wallace Saunders, an African American engine wiper for the IC.
On April 29, 1900 Jones was at Poplar Street Station in Memphis, Tennessee, having driven the No. 2 from Canton (with his assigned Engine No. 382 ). Normally, Jones would have stayed in Memphis on a layover; however, he was asked to take the No. 1 back to Canton, as the scheduled engineer (Sam Tate), who held the regular run of Trains No. 1 (known as “The Chicago & New Orleans Limited”, later to become the famous “Panama Limited”) and No. 4 (“The New Orleans Fast Mail”) with his assigned Engine No. 382, had called in sick with cramps. Jones loved challenges and was determined to “get her there on the advertised” time no matter how difficult it looked.
A fast engine, a good fireman (Simeon T. Webb would be the train’s assigned fireman), and a light train were ideal for a record-setting run. Although it was raining, steam trains of that era operated best in damp conditions. However, the weather was quite foggy that night (which reduced visibility), and the run was well-known for its tricky curves. Both conditions would prove deadly later that night.
Normally the No. 1 would depart Memphis at 11:15 PM and arrive in Canton (188 miles to the south) at 4:05 AM the following morning. However, due to the delays with the change in engineers, the No. 1 (with six cars) did not leave Memphis until 12:50 am, 95 minutes behind schedule.
The first section of the run would take Jones from Memphis 100 miles south to Grenada, Mississippi, with an intermediate water stop at Sardis, Mississippi (50 miles into the run), over a new section of light and shaky rails at speeds up to 80 mph (129 km/h). At Senatobia, Mississippi (40 miles into the run) Jones passed through the scene of a prior fatal accident from the previous November. Jones made his water stop at Sardis, then arrived at Grenada for more water, having made up 55 minutes of the 95 minute delay.
Jones made up another 15 minutes in the 25-mile stretch from Grenada to Winona, Mississippi. The following 30-mile stretch (Winona to Durant, Mississippi) had no speed-restricted curves. By the time he got to Durant (155 miles into the run) Jones was almost on time. He was quite happy, saying at one point “Sim, the old girl’s got her dancing slippers on tonight!” as he leaned on the Johnson bar.
At Durant he received new orders to take to the siding at Goodman, Mississippi (eight miles south of Durant, and 163 miles into the run) and wait for the No. 2 passenger train to pass, and then continue on to Vaughan. His orders also instructed him that he was to meet passenger train No. 26 at Vaughan (15 miles south of Goodman, and 178 miles into the run); however, No. 26 was a local passenger train in two sections and would be in the siding, so he would have priority over it. Jones pulled out of Goodman, only five minutes behind schedule, and with 25 miles of fast track ahead Jones doubtless felt that he had a good chance to make it to Canton by 4:05 AM “on the advertised”.
But the stage was being set for a tragic wreck at Vaughan. The stopped double-header freight train No. 83 (located to the north and headed south) and the stopped long freight train No. 72 (located to the south and headed north) were both in the passing track to the east of the main line but there were more cars than the track could hold, forcing some of them to overlap onto the main line above the north end of the switch. The northbound local passenger train No. 26 had arrived from Canton earlier which had required a “saw by” in order for it to get to the “house track” west of the main line. The saw by maneuver for No. 26 required that No. 83 back up and allow No. 72 to move northward and pull its overlapping cars off the south end, allowing No. 26 to gain access to the house track. But this left four cars overlapping above the north end of the switch and on the main line right in Jones’ path. As a second saw by was being prepared to let Jones pass, an air hose broke on No. 72, locking its brakes and leaving the last four cars of No. 83 on the main line.
Meanwhile, Jones was almost back on schedule, running at about 75 miles per hour toward Vaughan, unaware of the danger ahead, since he was traveling through a 1.5-mile left-hand curve which blocked his view. Webb’s view from the left side of the train was better, and he was first to see the red lights of the caboose on the main line. “Oh my Lord, there’s something on the main line!” he yelled to Jones. Jones quickly yelled back “Jump Sim, jump!” to Webb, who crouched down and jumped about 300 feet before impact and was knocked unconscious. The last thing Webb heard when he jumped was the long, piercing scream of the whistle as Jones tried to warn anyone still in the freight train looming ahead. He was only two minutes behind schedule about this time.
Jones reversed the throttle and slammed the airbrakes into emergency stop, but “Ole 382” quickly plowed through a wooden caboose, a car load of hay, another of corn and half way through a car of timber before leaving the track. He had amazingly reduced his speed from about 75 miles per hour to about 35 miles per hour when he impacted with a deafening crunch of steel against steel and splintering wood. Because Jones stayed on board to slow the train, he no doubt saved the passengers from serious injury and death (Jones himself was the only fatality of the collision). His watch was found to be stopped at the time of impact which was 3:52 AM on April 30, 1900. Popular legend holds that when his body was pulled from the wreckage of his train near the twisted rail his hands still clutched the whistle cord and the brake. A stretcher was brought from the baggage car on No. 1 and crewmen of the other trains carried his body to the depot ½-mile away.
Apr 30 2014
Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Everyone’s welcome here, no special handshake required. Just check your meta at the door.
Join us every weekday morning at 9am (ET) and weekend morning at 10:30am (ET) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.
Apr 30 2014
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Apr 29 2014
TPP Unraveling?
Real News Network
April 27, 14
President Obama returns from East Asia empty-handed after Japan rejects bilateral agreement – but if the TPP moves forward, will it be in the interest of most Americans?
President Obama’s smoking problem in Malaysia
By ERIC BRADNER, Politico
4/28/14 6:53 PM EDT
However, one thing neither leader talked specifically about during the media event was a brewing tension surrounding the negotiations: the way Malaysia’s health officials fear the deal might sabotage their country’s efforts to fight its smoking problem.
Malaysia worries that it will suffer the fate that Uruguay, Australia and Thailand did in other trade deals: dragged into an expensive, yearslong international legal fight over its right to block cigarette companies from advertising.
“The U.S. government’s proposal on tobacco does not go far enough. It is insufficient to protect the government’s sovereignty to do their utmost to protect public health,” said Mary Assunta, a senior policy adviser for the Southeast Asia Tobacco Control Alliance. “Tobacco companies should not interfere with this, nor challenge governments using the free-trade platform.”
Early in the deal’s negotiations, the United States was willing to give Malaysia something close to what it wanted, calling for a so-called safe harbor provision that protected anti-smoking rules. But under pressure from business groups and lawmakers, the Obama administration changed its mind in August.
However, the U.S. proposal doesn’t block tobacco companies from making such challenges in the first place – driving Malaysia’s worries that one of those companies could potentially persuade an independent dispute panel to order the elimination of the government’s prohibition against advertising cigarettes, just as those policies appear to be stopping the growth in the country’s number of smokers.
Obama trip stirs emotions over Asia trade pact
By DOUG PALMER, Politico
4/21/14 3:32 PM EDT
The trip gives the president a high-profile opportunity to ignite action in Congress on trade legislation that is stalled largely because of opposition from fellow Democrats. But even under the most optimistic scenario, that seems like a long shot.
“I basically think the White House knows this is over,” Rep. Louise Slaughter (D-N.Y.) recently told reporters, in regard to the stalled trade promotion authority bill, or “fast track,” that would allow Obama to submit the TPP agreement to Congress for a straight up-or-down vote without any amendments.
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“If they have really good meetings with really good optics and strong commitments coming out of the Asia trip, that provides the incentives” for Congress to begin work on the trade bill, (Scott) Miller (a trade analyst at the Center for Strategic and International Studies) said. “But it’s not going to happen without a major lift from the executive branch.”
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Meanwhile, Obama’s visit to South Korea draws attention to a trade deal that in its first two years has not delivered an expected increase in U.S. exports, putting the administration on the defensive as it makes the case to Congress for TPP and trade promotion authority.
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In a call with reporters, they (Democratic critics) said past trade deals like the North American Free Trade Agreement and the more recent free-trade pact with South Korea have hurt the U.S. economy more than they’ve helped and warned that the TPP agreement would be more bad news for the United States.“TPP would force Americans to compete against workers from Vietnam, where the minimum wage is $2.75 per day,” Rep. Rosa DeLauro (D-Conn.) said. “It threatens to roll back financial regulations, environmental standards and U.S laws that protect the safety of drugs and food and the toys we give our kids.”
Did Japan’s Prime Minister Abe Serve Obama Beefsteak-Flavored Revenge for US Trade Representative Froman’s TPP Rudeness?
Clive, Naked Capitalism
Posted on April 28, 2014
(A)ccording to the US playbook, Froman’s roughing up of Japan in public would be followed at the end of April by US President Obama’s visit to Japan where he would then be able to seal a TPP deal, have a photo op and declare his Asian visit a triumph.
What happened instead is that, according to credible reports, is it was the US which had to capitulate on rice and wheat tariffs. Japan is still holding out for the retention of tariffs on other agricultural products such as pork and beef. As Obama left Japan last week without a deal, an agreement seems as far away as ever.
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Okay, who having got this far isn’t starting to think to themselves, hey, wait a minute, this doesn’t sound at all plausible. We’re supposed to have had the Japanese Prime Minister and two other key cabinet members dining in public in a Tokyo restaurant bad mouthing (albeit mildly) the US President…and this conversation just happens to have been overheard by some mysterious agent who just happened to blab to the press. Really? If you believe that, Iíd love to talk to you about a great deal I can offer you on the Akashi-Kaikyo Bridge… Much more likely of course is that the whole story was a plant by the Japanese government to make clear what it thinks of Obama.
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From the Japanese Gendai Daily News-Obamaís Just Left the Country…And Leaves Prime Minister Abe Bitchin’ about the State Visit
US Given the Brush-off at 500-bucks a Head SteakhouseThere’s even more to the steak angle of this story. Right now, Japan is the cause of the impasse in the TPP negotiations (which includes beef tariff elimination which Japan is resisting). But despite Obama’s known fondness for Kobe beef he wasn’t served any during his visit to Japan. On the first day of his trip, he was invited to a ritzy sushi place in Tokyo. And at the state banquet in the Imperial Palace on the second day, he was served steamed sheep leg.
But on the same day as Abe treated Obama to sushi (at a moderately upscale place in Tokyo charging about $300 a head, which is pricy but not exceptional by Tokyo’s famously over the top dining scene standards), he himself was enjoying beefsteak at the ultra-exclusive Kawamura restaurant charging a minimum of $500 per person before extras. Those in political circles commented “You can see how Obama might gripe that he didn’t get to enjoy such wonderful beefsteak because of Abe, due to a misunderstanding (of Abe’s actions)”
TPP Is Right Where We Want It: Going Nowhere
by Maira Sutton, Common Dreams
Tuesday, April 29, 2014
As negotiations continue to be shrouded in secrecy, the Pacific trade deal faces mass opposition both inside and outside of the U.S., and reports say little progress has been made for many months. State leaders and trade delegates have held dozens of closed-door meetings to discuss possible trade-offs and concessions over various tariffs and regulations, including some of the most controversial copyright enforcement provisions in the Intellectual Property chapter. Based upon the leaked text published by Wikileaks in November, several countries are resisting the extreme U.S. proposals on Digital Rights Management (DRM) and Internet Service Provider (ISP) liability.
Following massive blows to the Fast Track bill introduced in January, many Senators are maintaining their stiff opposition against handing over trade authority to the White House. Under Fast Track, also known as Trade Promotion Authority, lawmakers would be limited to an up-or-down vote, and shirk their responsibility to hold proper hearings on its provisions. Republican Senator Roger Wicker has openly stated that he “couldn’t be less optimistic” about any progress being achieved during Obama’s trip to Asia. In an op-ed published this week in the LA Times, three Democratic Representatives reiterated their strong criticism of the TPP, advising that no one should “blindly endorse” this agreement. In November, the New York Times had done precisely that, but they too have suddenly changed their tune-publishing an editorial this week that expressed their heavy doubts over TPP’s objectives. They correctly questioned the administration’s secrecy over the negotiations and wrote that the “Obama administration also needs to do much more to counter the demands of corporations with those of the public interest.”
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As others have pointed out, the Obama administration only has itself to blame for this mess. By listening to corporate demands above all else, it has alienated itself from its own political party, public interest groups, and most of all, the people whose interests it is supposedly meant to represent. Unless the U.S. trade rep radically changes its approach to this agreement-to make the negotiations truly transparent and incorporate substantive input from the public, for starters-it seems the President is going to be stuck defending a bad deal and a bad process.
