Tag: Department of Justice

Last week the Senate finally confirmed Loretta Lynch as the 83rd Attorney General after a 5 month delay. She was sworn in on Monday by Vice President Joe Biden. The reasons the Republican majority made for the hold on her confirmation were baseless and revealed just how dysfunctional the congress really is. Using the fight over abortion provisions in an human trafficking bill that Democrats found untenable, looked more like hostage taking than politics. Ms. Lynch had sailed through her other confirmations with unanimous bipartisan support. She has a history of being tough on political corruption and police brutality. She famously prosecuted the New York City Police officers who had brutally abused Abner Louima and was investigating the officer involved in the choke hold death of Eric Garner last year.

But the one really good reason the Republicans had to not confirm her was never mentioned by them or the media, the banks. As the article by William K. Black, a  professor of economics and law, discusses, “(Ms.) Lynch’s failure to prosecute HSBC and its officers exemplified a real Obama scandal, the effective end of the rule of law for criminal bankers.”

GOP opposition to Lynch was a missed opportunity

By William K. Black, Al Jazeera

The Republicans’ failed tactics against Loretta Lynch reveal the big banks’ hold on both parties

The reason Lynch was such a godsend to the GOP never appeared in the Times article: HSBC. The biggest bank in Europe and the most disreputable large bank in the world, HSBC was the subject of the most important case Lynch ever handled. It demonstrated that Lynch’s “formidable reputation as a prosecutor” is undeserved, making Republican opposition to her nomination legitimate. More important, her failure to prosecute HSBC and its officers exemplified a real Obama scandal, the effective end of the rule of law for criminal bankers.

Lynch’s sweetheart deal with HSBC, her indefensible reactions to the bank’s failures to comply even with the sweetheart deal and the bank’s continued commission of thousands of felonious transactions after the sweetheart deal offered Republican leaders the ideal circumstances to attack the Obama administration. The Republicans did not need to suddenly develop investigative skills and honest congressional reports. The Democrats, Lynch’s appointee as HSBC’s monitor and the whistleblowers have done all the heavy investigative lifting for the GOP. The ultrashort version is that HSBC and its personnel were caught red-handed having laundered over $1 billion for Mexico’s Sinaloa drug cartel – one of the most violent cartels in the world – and helped Sudan and Iran violate U.S. anti-terrorism and anti-genocide sanctions with impunity. This was all documented in a Senate investigation by former Sen. Carl Levin – a Democrat and Congress’ most respected and competent investigator – in a report that the Republicans could have joyfully quoted. The bank was found to have engaged in massive efforts to aid and abet tax fraud. HSBC’s monitor discovered that the bank was not complying with even the sweetheart nonprosecution agreement that Lynch negotiated. She nevertheless failed to prosecute any of the numerous felonies at HSBC outlined in the Levin report.

Remarkably, the supposedly liberal New York Times and GOP leaders have something in common: Both refused to mention HSBC as a key reason for rejecting Lynch’s nomination. What the GOP’s embarrassingly self-destructive strategy for opposing Lynch proves is that even when the Republicans have the perfect opportunity to embarrass the Obama administration and highlight one of its largest scandals – the failure to prosecute a single bank officer who led the most destructive epidemics of financial fraud in history that caused our Great Recession – the Republicans refused, lest they upset their leading source of political contributions. The approval of the Lynch nomination demonstrates that bipartisanship does exist on Capitol Hill: when it favors the big banks and their lobbyists

Prosecuting these bank criminals was too hard for former AG Eric Garner, it obviously will be for AG Lynch, as well. The banks not only own congress, they own the White House and the Department of Justice.  

Cross posted from The Stars Hollow Gazette

There is a double standard when it comes to the Obama administration prosecuting individuals for leaking information under the Espionage Act of 1917. If you’re a general in the US military leaking information to a reprter or head of the CIA having an affair, it’s fairly safe to say that you won’t be prosecuted for espionage. The sweetheart deal that was given former CIA director and retired General David Petraeus is a prime example, not a day in jail and he is still in good graces with the White House. I guess when you know where all the bodies are buried you can get away with anything. But that doesn’t excuse the Obama administrations fervor for prosecution the whistleblowers who outed crimes and constitutional violations.

Obama’s war on whistleblowers leaves administration insiders unscathed

By Spencer Ackerman and Ed Pilkington, The Guardian

Five key political players enjoy ‘virtual impunity’ – while four lower-level figures are in prison or facing time

Since Barack Obama entered the White House in 2009, his government has waged a war against whistleblowers and official leakers. On his watch, there have been eight prosecutions under the 1917 Espionage Act – more than double those under all previous presidents combined.

And yet other apparent leaks have gone entirely unpunished or have been treated, as in the case of General David Petraeus, as misdemeanors. As Abbe Lowell, lawyer for one of the Espionage Act eight, Stephen Kim, has argued in a letter to the Department of Justice, low-level officials who lack the political connections to fight back have had the book thrown at them, while high-level figures have been allowed to leak with “virtual impunity”.

Lawyers for CIA Leaker Cite Selective Prosecution After Petraeus Plea Deal

By Peter Maas, The Intercept

Lawyers for Jeffrey Sterling, a former CIA official convicted earlier this year of leaking classified information to a New York Times reporter, have requested a reconsideration of his conviction because two former generals, David Petraeus and James Cartwright, have received far more lenient treatment for what they call similar offenses. [..]

In January, Sterling was convicted by a jury on nine criminal counts, including violations of the Espionage Act, for leaking classified information to Times reporter James Risen about a CIA effort to undermine Iran’s nuclear program. Sterling is to be sentenced in April and faces a maximum sentence of decades in jail. In a statement after the verdict was announced, Attorney General Eric Holder called the guilty verdict a “just and appropriate outcome.”

But the government is coming under increasing criticism for its uneven prosecution of leakers.

Earlier this month, Petraeus, who led U.S. forces in Iraq and Afghanistan and was the director of the CIA, reached an agreement with prosecutors in which he pleaded guilty to a single misdemeanor charge of mishandling classified information when he gave his lover and authorized biographer, Paula Broadwell, eight notebooks filled with highly-classified information about military plans and secret programs, covert agent names, and confidential discussions he had with senior officials including President Obama. Petraeus, who resigned from the CIA when his affair with Broadwell was revealed, also admitted to lying to the FBI, but he was not charged for that. The plea agreement calls for two years probation and a $40,000 fine but no jail time.

No charges have been filed against Cartwright even though it has been reported that federal prosecutors believe he leaked highly classified information to Times reporter David Sanger about a joint effort by the U.S. and Israel to cripple Iran’s nuclear centrifuges through a cyber-attack with a computer worm called Stuxnet. According to The Washington Post, the FBI has interviewed Cartwright on at least two occasions but has stopped short of indicting him.

National Security & Human Rights director Jesselyn Radack, who is also the lawyer for whistleblowers Edward Snowden, Thomas Drake and John Kiriakou, spoke with Democracy Now!‘s Amy Goodman and Aaron Maté about the White House’s double standard.

It’s OK if you’re a white general and know where all the bodies are.

Former Director of the CIA and four star general David H, Patraeus has reached a plea deal with the Department of Justice for passing classified information to his mistress in exchange for sexual favors. He will plea to one misdemeanor count of unauthorized removal and retention of classified material and a $40,000 fine. No jail time.

This is what he handed his girlfriend:

The Justice Department and Federal Bureau of Investigation alleged back in 2012 that Petraeus gave secret information to Paula Broadwell, but the seriousness of the information wasn’t clear until now.

While he was commander of coalition forces in Afghanistan, Petraeus “maintained bound, five-by-eight inch notebooks that contained his daily schedule and classified and unclassified notes he took during official meetings, conferences and briefings,” the U.S. Attorney’s Office for the Western District of North Carolina writes in a statement of fact regarding the case.

The notebooks had black covers with Petraeus’s business card taped on the front of each of them.

All eight books “collectively contained classified information regarding the identifies of covert officers, war strategy, intelligence capabilities and mechanisms, diplomatic discussions, quotes and deliberative discussions from high-level National Security Council meetings… and discussions with the president of the United States.”

The books also contained “national defense information, including top secret/SCI and code word information,” according to the court papers. In other words: These weren’t just ordinary secrets. This was highly, highly classified material.

Besides lying to the FBI twice, this man compromised lives of undercover operatives, the troops operating in the field and national security and all he gets is a slap on the wrist. Pater Maas, writing at The Intercept, says that this deal reveals a two tiered justice system for leaks. He cites the penalties handed down to other defendants who did far less than the general:

For instance, last year, after a five-year standoff with federal prosecutors, Stephen Kim, a former State Department official, pleaded guilty to one count of violating the Espionage Act when he discussed a classified report about North Korea with Fox News reporter James Rosen in 2009. Kim did not hand over a copy of the report – he just discussed it, and nothing else – and the report was subsequently described in court documents as a “nothing burger” in terms of its sensitivity. Kim is currently in prison on a 13-month sentence. [..]

In 2013, former CIA agent John Kiriakou pleaded guilty to violating the Intelligence Identities Protection Act by disclosing the name of a covert CIA officer to a freelance reporter; he was sentenced to 30 months in jail. Kiriakou’s felony conviction and considerable jail sentence – for leaking one name that was not published – stands in contrast to Petraeus pleading guilty to a misdemeanor without jail time for leaking multiple names as well as a range of other highly-sensitive information. [..]

In 2013, Army Private Chelsea Manning, formerly known as Bradley Manning, pleaded guilty to violating the Espionage Act by leaking thousands of documents to Wikileaks, and she was sentenced to 35 years in prison. Manning received a harsh sentence even though then-Defense Secretary Robert Gates said in 2010 that the leaks had only “modest” consequences.

In an interview at The Guardian, Pentagon Papers leaker, Daniel Ellsberg commented on Edward Snowden and former CIA analyst Jeffery Sterling:

The factual charges against [Edward Snowden] are not more serious, as violations of the classification regulations and non-disclosure agreements, than those Petraeus has admitted to, which are actually quite spectacular. [..]

Jeffrey Sterling, a former CIA officer, was also just convicted of leaking classified information to New York Times journalist James Risen last month, “having first revealed it to Congress, as I did”, according to Ellsberg. Sterling was convicted of felony counts under the Espionage Act, and faces sentencing at the end of April. Ellsberg says Sterling’s “violations of security regulations were in no way more serious than what Petraeus has now admitted to”, and that, while it’s too late to do anything about his conviction, the judge should take the Petraeus plea bargain into account at his sentencing.

“If disclosing the identities of covert agents to an unauthorized person and storing them in several unauthorized locations deserves a charge with a maximum sentence of one year,” Ellsberg said, “then Edward Snowden should face not more than that same one count.”

As in the past when those in power violate the law and lie to congress and the FBI there are little to no consequences. So much for the Obama administration’s respect for the rule of law.

Cross posted from The Stars Hollow Gazette

It seems that since 2010, the US Department of Justice has known that one of the largest banks in Europe has been sheltering money for dictators and arms dealers, among others:

Banking Giant HSBC Sheltered Murky Cash Linked to Dictators and Arms Dealers

By Gerard Ryle, Will Fitzgibbon, Mar Cabra, Rigoberto Carvajal, Marina Walker Guevara, Martha M. Hamilton and Tom Stites, February 8, 2015, The International Consortium of Investigative Jouranlists

Team of journalists from 45 countries unearths secret bank accounts maintained for criminals, traffickers, tax dodgers, politicians and celebrities

Secret documents reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.

The leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than $100 billion. They provide a rare glimpse inside the super-secret Swiss banking system – one the public has never seen before. [..]

These disclosures shine a light on the intersection of international crime and legitimate business, and they dramatically expand what’s known about potentially illegal or unethical behavior in recent years at HSBC, one of the world’s largest banks.

The leaked account records show some clients making trips to Geneva to withdraw large wads of cash, sometimes in used notes. The files also document huge sums of money controlled by dealers in diamonds who are known to have operated in war zones and sold gemstones to finance insurgencies that caused untold deaths.

These are some of the key findings the journalists found:

 

HSBC Private Bank (Suisse) continued to offer services to clients who had been unfavorably named by the United Nations, in court documents and in the media as connected to arms trafficking, blood diamonds and bribery.

   HSBC served those close to discredited regimes such as that of former Egyptian president Hosni Mubarak, former Tunisian president Ben Ali and current Syrian ruler Bashar al-Assad.

   Clients who held HSBC bank accounts in Switzerland include former and current politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Lebanon, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, Philippines and Algeria.

   The bank repeatedly reassured clients that it would not disclose details of accounts to national authorities, even if evidence suggested that the accounts were undeclared to tax authorities in the client’s home country. Bank employees also discussed with clients a range of measures that would ultimately allow clients to avoid paying taxes in their home countries. This included holding accounts in the name of offshore companies to avoid the European Savings Directive, a 2005 Europe-wide rule aimed at tackling tax evasion through the exchange of bank information.

If this seems all too familiar, that’s because it is. HSBC was fined $1.6 billion in June of 2013 after it reached an agreement with the US Department of Justice which resolved charges it enabled Latin American drug cartels to launder billions of dollars

HSBC was accused of failing to monitor more than $670 billion in wire transfers and more than $9.4 billion in purchases of U.S. currency from HSBC Mexico, allowing for money laundering, prosecutors said. The bank also violated U.S. economic sanctions against Iran, Libya, Sudan, Burma and Cuba, according to a criminal information filed in the case. [..]

Under a deferred prosecution agreement, the U.S. allows a target to avoid charges by meeting certain conditions — including the payment of fines or penalties — and by committing to specific reforms.

US government faces pressure after biggest leak in banking history

So just what was the Department of Justice and the IRS doing with this information about the bank and its clients? Apparently not much.

Confronted by the Guardian’s evidence, HSBC admitted wrongdoing by its Geneva-based subsidiary. “We acknowledge and are accountable for past compliance and control failures,” the bank said in a statement. The Swiss arm, the statement said, had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist. [..]

The 2012 settlement was overseen by Loretta Lynch, who was then US Attorney for the Eastern District of New York. Lynch is currently Barack Obama’s current nominee for attorney general.

At the time, the HSBC settlement was heavily criticised by both Republicans and Democrats for allowing the bank to escape criminal indictments and keep the charter which enables it to operate in the US. Lynch and other senior DoJ officials defended the deal, pointing out it committed HSBC to a five-year plan to stamp out money laundering and other illicit practices, an ongoing process that is being overseen by an independent, court-appointed monitor. [..]

The DoJ was under pressure to go beyond financial penalties – to bring criminal charges against HSBC or its bankers – in July 2012, after the Senate’s permanent subcommittee on investigations published its crushing 330-page report documenting how the bank’s lax anti-money laundering controls had been exploited by drug traffickers. [..]

The settlement proved controversial because it stopped short of criminally indicting the bank or its executives; lawmakers from both parties complained it revealed some Wall Street institutions were considered “too big to jail”. [..]

HSBC is now just over two years into its reform plan, and has been deemed to be complying with the terms of the settlement. However the court-appointed monitor, Michael Cherkasky, who oversees a team of banking investigators who review HSBC’s changes, has expressed some concern over the pace of reform. Cherkasky’s most recent assessment of HSBC’s ongoing efforts to clean up its act has once again concluded it could do better, according a recent report in the Wall Street Journal which cited people familiar with its findings.

CBS’s “60 Minutes” aired The Swiss Leaks a report by Bill Whitaker that examined “HSBC’s business dealings with a collection of international outlaws.”

The sickening part of this is the US Justice Department was well aware of this when they settled the HSBC’s drug laundering case in 2013. Also. HSBC is one of the institutions that is refusing to handle the money of legitimate marijuana businesses.

Nice going, Eric.

Cross posted from The Stars Hollow Gazette

In this chapter of the Obama administration’s war on freedom of the press, the cast of character are:

Jeffrey Alexander Sterling, an former employee of the CIA, was indicted, arrested, and charged with violating the Espionage Act in 2010.

James Risen, a Pulitzer Prize-winning American journalist for The New York Time, is the author of the book State of War: The Secret History of the CIA and the Bush Administration, which was discussed CIA operations, specifically Operation Merlin.

Mr. Risen was subpoenaed to testify at Mr. Sterling’s trial and would have been asked if Mr. Sterling was the source for the Operation Merlin. He refused and fought the subpoena through the courts. In July 2013, the Fourth Circuit Court of Appeals ruled that Mr. Risen would have to testify. The Supreme Court refused to hear the case. Mr. Risen said that he would not comply and was willing to go to jail. That was not the end of Mr. Risen’s fight to protect a confidential source.

Then in October 2014, Attorney General Eric Holder stated “no reporter’s going to jail as long as I’m attorney general.” On December 10, a federal court judge told prosecutors that they had a week to decide whether they enforce the subpoena.  On this Tuesday, it was announced that Mr. Risen would be subpoenaed to answer questions before the trial but there is some confusion about what those questions are:

Prosecutors say they will not ask James Risen if ex-CIA man Jeffrey Sterling was his anonymous source for part of the 2006 book “State Of War” that detailed a botched CIA effort to cripple Iran’s nuclear program. However, they do want to know if the two had a prior, on-the-record source relationship.

Risen’s lawyer, Joel Kurtzberg, said at Tuesday’s hearing that he is not sure whether his client is willing to answer the questions that prosecutors want to pose.

Furthermore, defense attorneys indicated they may also have their own questions, which puts Risen at risk of being found in contempt of court if he refuses to answer. {..}

On Tuesday, though, as prosecutors detailed what they would seek from Risen, it was unclear whether Risen would agree to the limitations. And it became equally clear that Risen may have as much to fear, if not more, from defense lawyers, who would be free to cross-examine Risen and could even seek to subpoena him themselves.

Edward MacMahon, one of Sterling’s lawyers, told Brinkema that “the notion we can sanitize this by limiting (his testimony) to two or three questions is hard for us to fathom.”

He declined comment after the hearing on whether he may seek to subpoena Risen.

Prosecutor James Trump said there is much more uncertainty about the questions Risen might face from the defense than there is about what prosecutors will seek.

Democracy Now‘s Amy Goodman and Juan González spoke to Marcy Wheeler, investigative blogger who runs EmptyWheel.net and writes for ExposeFacts.org.

In Plan for Risen Subpoena, Government Raises Sixth Amendment Interests of Jeffrey Sterling

Marcy Wheeler, Expose the Facts

December 16, 2014

The government has now submitted its explanation for the limited information it will seek from James Risen in the Jeffrey Sterling trial and pre-trial hearings.

It will ask him to confirm that:

•    He has  confidentiality agreement with his source or sources on the Merlin story (though they will not ask who those sources are)
•    He authored the Merlin chapter of his book State of War, but also one article in which he explicitly and another the government claims he relied on Sterling as a source
•    He worked with Sterling for one of those earlier stories in a non-confidential relationship

[..]

The last line of the filing, however, suggests ExposeFacts may have correctly predicted their plan. The government raises the possibility Risen will refuse to answer Sterling’s questions.

It’s obvious that the DOJ is behind the eight ball and is praying that the they will not be the reason Mr. Risen ends up behind bars.

Cross posted from The Stars Hollow Gazette

This administration, especially the Department of Justice really hates your Fourth Amendment rights and is doing everything in its power to narrow your right to privacy as much as it can.

DOJ Says Americans Have No 4th Amendment Protections At All When They Communicate With Foreigners

by Make Masnick, Techdirt

We’ve already questioned if it’s really true that the 4th Amendment doesn’t apply to foreigners (the Amendment refers to “people” not “citizens”). But in some new filings by the DOJ, the US government appears to take its “no 4th Amendment protections for foreigners” to absurd new levels. It says, quite clearly, that because foreigners have no 4th Amendment protections it means that any Americans lose their 4th Amendment protections when communicating with foreigners. They’re using a very twisted understanding of the (already troubling) third party doctrine to do this. As you may recall, after lying to the Supreme Court, the Justice Department said that it would start informing defendants if warrantless collection of information under Section 702 of the FISA Amendments Act (FAA) was used in the investigation against them.

Last October, it finally started alerting some defendants, leading courts to halt proceedings and re-evaluate. As two of those cases have moved forward, the DOJ is trying to defend those cases, and one way it’s doing so is to flat out say that Americans have no 4th Amendment protections when talking to foreigners.

   The Supreme Court has long held that when one person voluntarily discloses information to another, the first person loses any cognizable interest under the Fourth Amendment in what the second person does with the information. . . . For Fourth Amendment purposes, the same principle applies whether the recipient intentionally makes the information public or stores it in a place subject to a government search. Thus, once a non-U.S. person located outside the United States receives information, the sender loses any cognizable Fourth Amendment rights with respect to that information. That is true even if the sender is a U.S. person protected by the Fourth Amendment, because he assumes the risk that the foreign recipient will give the information to others, leave the information freely accessible to others, or that the U.S. government (or a foreign government) will obtain the information.

This argument is questionable on so many levels. First, it’s already relying on the questionable third party doctrine, but it seems to go much further, by then arguing that merely providing information to a foreign person means that it’s okay for the US government to snoop on it without a warrant.

The official US position on the NSA is still unlimited eavesdropping power

by Jameel Jaffer, the ACLU at The Guardian

One year after Snowden, the government is defending – in not-so-plain sight – the ‘paramount’ power to spy on every call and email between you and your friends abroad

The government’s argument is not simply that the NSA has broad authority to monitor Americans’ international communications. The US government is arguing that the NSA’s authority is unlimited in this respect. If the government is right, nothing in the Constitution bars the NSA from monitoring a phone call between a journalist in New York City and his source in London. For that matter, nothing bars the NSA from monitoring every call and email between Americans in the United States and their non-American friends, relatives, and colleagues overseas.

In the government’s view, there is no need to ask whether the 2008 law violates Americans’ privacy rights, because in this context Americans have no rights to be violated.

Marcy Wheeler at emptywheel points out that former Sen Russ Feingold warned us back in 2008 about the abuses that could occur under Section 702 of the FISA Amendments Act (FAA).

Cross posted from The Stars Hollow Gazette

JP Morgan Chase is once again under investigation by the Department of Justice. This time for possibly bribing the daughter of the Chinese prime minister with a lucrative business deal to gain preferential treatment on the Chinese markets.

To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang.

Ms. Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms. Chang lacked the influence and public name recognition needed to unlock business for the bank.

But what was known to JPMorgan executives in Hong Kong, and some executives at other major companies, was that “Lily Chang” was not her real name. It was an alias for Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China’s prime minister, with oversight of the economy and its financial institutions.

While the bank emerged from the financial crisis stronger than it ever was, Moody’s Investors Service cut its ratings of the JPMC and three other banks after deciding the government would be less likely to help them repay creditors in a crisis. JPMorgan was cut to A3 from A2. According to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority, the yield on JPMorgan’s $2 billion of 3.375 percent subordinated notes due May 2023 slipped 10 basis points to 4.3 percent.

Moody’s said that there was less likelihood of a widespread bailout of banks by the United States government as there was during the financial crisis five years ago and that bank debt holders would be forced to shoulder more of the losses in the future.

But the rating agency said it expected banks would be required by regulators in the United States to hold a higher level of capital, which was likely to result in higher recoveries for creditors in any future bank default. [..]

Under the Dodd-Frank Act, the Federal Reserve has been limited in its ability to provide taxpayer money to individual banks, and failing banks would be wound down in a so-called orderly liquidation, in which creditors would bear the bulk of the burden of the losses.

However, some critics have expressed doubts that regulators could handle the liquidation of one or more of the nation’s largest banks in a severe financial crisis.

In the midst of this, somebody at JPMC thought it would be a great idea to hold a Twitter Q&A with the public using the hashtag #AskJPM. The results were extremely amusing but a major PR #FAIL for the bank. Award winning actor Stacy Keech, the voice of American Greed, reads some of the best tweets verbatim.

If you’re a poet and good at writing haiku, Rolling Stone‘s contributing editor Matt Taibbi is offering a Jaime Dimon tee shirt for the best “J.P. Morgan Chase Q&A Fiasco” haiku. Matt will announce the winner Monday.

Cross posted from The Stars Hollow Gazette

The recent news of a thirteen billion dollar settlement agreed to by JP Morgan with the Justice Department to resolve an array of crisis-related mortgage cases may seems like a large chunk of change but in the grand scheme of the banks assets and the losses to the global economy its a drop in the bucket. JP Morgan’s current assets are valued at $$2.25 trillion and the losses to Americans alone is estimated at $22 trillion. Meanwhile, papers like The Wall Street Journal and The New York Post, both owned by Rupert Murdock, are calling the settlement “a shakedown” and “robbery.”

There are a lot of questions about the details of the settlement that Dimon personally helped negotiate with Attorney General Eric Holder in private meetings, cutting the deal without admission of any wrong doing. The New York Times‘ assistant business and financial editor, Gretchen Morgenson commented about this unusual special treatment to Bill Moyers in an interview on Moyers & Company

   BILL MOYERS: Do you find it remarkable – Jamie Dimon asking for a personal meeting with the Attorney General, Eric Holder to decide, in private, on a penalty?…

   GRETCHEN MORGENSON: It seems unusual to me and it does smack of favoritism, special treatment. It certainly was unusual I would say for Eric Holder, the Attorney General of the United States of America, to have a personal meeting with someone that his office is negotiating a settlement with. That raised eyebrows with me. I know I would not be able to get that meeting if I asked – and if I implored.

   I think it really sends a signal, also which is disturbing that again – two sets of rules in America. There’s one set for the people who are in positions of power, certainly in the financial world – one set of rules perhaps for them. And one set for the rest of us. I really don’t understand why Eric Holder would not have decided that it was the optics just didn’t look that good for him to meet with Jamie Dimon, but maybe there is something behind it that I don’t know.

At Democracy Now!, Yves Smith, the proprietress at naked capitalism, sat down with Amy Goodman to discuss the deal and how it is being misreported.

A $13 Billion Reminder of What’s Wrong

by Gretchen Morgansen, The New york Times

t was the deal of the week – a possible $13 billion settlement between JPMorgan Chase and the Justice Department to resolve an array of crisis-related mortgage cases.

While arguments over the deal’s terms and numbers are to be expected, the discussion so far has seemed to miss its significance as a teaching moment. This possible settlement once again depicts the extensive and damaging behavior that led to the 2008 crisis and its aftermath. For those with short memories, the deal is a refresher course in how far-off the rails our largest financial institutions veered in the years leading up to the mess.

It also stands as a reminder that not enough has been done to fix the flawed incentives in our sprawling and powerful financial system. This applies to both the private sector – the mighty banks – and their supposed minders, the regulators.

The Ridiculous “Jamie Dimon as Victim” Meme on the Pending JP Morgan Mortgage Settlement

by Yves Smith, naked capitalism

Nothing like having a credulous, leak-dependent media to carry your messages.

There’s been a remarkable hue and cry about the pending JP Morgan settlement, as if the amount is somehow too high. As we’ve discussed repeatedly, the director of financial stability for the Bank of England, Andrew Haldane, already ascertained that a mere 1/20th of low-end estimate of what the banks ought to pay for all the damage they did would wipe our their market capitalization. So even if you think JP Morgan is only half as culpable as other banks (a point we will debunk in a post tomorrow) it would only be half as dead.

In other words, Dimon and all his crew should thank their lucky stars that they got off so well and didn’t have their banks turned into utilities. But that moment passed, so now we are haggling over price with ingrates.

Nobody Should Shed a Tear for JP Morgan Chase

by Matt Taibbi. Rollingstone

A lot of people all over the world are having opinions now about the ostensibly gigantic $13 billion settlement Jamie Dimon and JP Morgan Chase have entered into with the government.

The general consensus from most observers in the finance sector is that this superficially high-dollar settlement – worth about half a year’s profits for Chase – is an unconscionable Marxist appropriation. It’s been called a “robbery” and a “shakedown,” in which red Obama and his evil henchman Eric Holder confiscated cash from a successful bank, as The Wall Street Journal wrote, “for no other reason than because they can and because they want to appease their left-wing populist allies.”

Look, there’s no denying that this is a lot of money. It’s the biggest settlement in the history of government settlements, and it’s just one company to boot. But this has been in the works for a long time, and it’s been in the works for a reason. This whole thing, lest anyone forget, has its genesis in a couple of state Attorneys General (including New York’s Eric Schneiderman and Delaware’s Beau Biden) not wanting to sign off on any deal with the banks that didn’t also address the root causes of the crisis, in particular the mass fraud surrounding the sale and production of subprime mortgage securities.

The cost of the financial crisis hits Americans harder than banks

by Heidi Moore, The Guardian

As you rise up the financial ladder, the consequences of the financial crisis are increasingly arbitrary

What’s the real cost of a financial crisis? Apparently, it depends on who’s paying.

If you’re Jamie Dimon, the CEO of JP Morgan Chase, or Brian Moynihan, the CEO of Bank of America, it’s a price your $2tn bank can easily afford to make trouble go away.

If you’re a homeowner, it’s a price that has rendered your past five years a struggle of financial anxiety. If you’re an American, it’s a price that has resulted in a recession and recovery characterized by historically high poverty – with 42 million Americans on food stamps – and historically low rates of Americans working, with only 63% of the population gainfully employed.

As you rise up the financial ladder, the consequences of the financial crisis are increasingly arbitrary. The Department of Justice is looking for scalps – finally, after five years of drowsy hibernation – but some banks are whining about merely getting haircuts.

This week, two mortgage-crisis settlements hit the news: one potential and one official. The idea of a $13bn rumored fine to JP Morgan and an $848m fine to Bank of America would indicate two things.

Cross posted from The Stars Hollow Gazette

I’m proud to be here as you host World Press Freedom Day.  So everybody from the American press corps, you should thank the people of Costa Rica for celebrating free speech and an independent press as essential pillars of our democracy.

~President Obama

Remarks by President Obama and President Chinchilla of Costa Rica in a Joint Press Conference, in National Center for Art and Culture San Jose, Costa Rica, 10 days ago.

That was so ten days ago. The news broke that Obama Department of Justice had secretly seized two months of phone records of the Associated Press reporters and editors.

The government would not say why it sought the records. Officials have previously said in public testimony that the U.S. attorney in Washington is conducting a criminal investigation into who may have provided information contained in a May 7, 2012, AP story about a foiled terror plot. The story disclosed details of a CIA operation in Yemen that stopped an al-Qaida plot in the spring of 2012 to detonate a bomb on an airplane bound for the United States.

In testimony in February, CIA Director John Brennan noted that the FBI had questioned him about whether he was AP’s source, which he denied. He called the release of the information to the media about the terror plot an “unauthorized and dangerous disclosure of classified information.”

Prosecutors have sought phone records from reporters before, but the seizure of records from such a wide array of AP offices, including general AP switchboards numbers and an office-wide shared fax line, is unusual.

The president and CEO of AP, Gary Pruitt sent a letter protesting the “massive and unprecedented intrusion” (pdf):

Last Friday afternoon, AP General Counsel Laura Malone received a letter from the office of United States Attorney Ronald C. Machen Jr. advising that, at some unidentified time earlier this year, the Department obtained telephone toll records for more than 20 separate telephone lines assigned to the AP and its journalists. The records that were secretly obtained cover a full two-month period in early 2012 and, at least as described in Mr. Machen’s letter, include all such records for, among other phone lines, an AP general phone number in New York City as well as AP bureaus in New York City, Washington, D.C., Hartford, Connecticut, and at the House of Representatives. This action was taken without advance notice to AP or to any of the affected journalists, and even after the fact no notice has been sent to individual journalists whose home phones and cell phone records were seized by the Department.

There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters. These records potentially reveal communications with confidential sources across all of the newsgathering activities undertaken by the AP during a two month period, provide a road map to AP’s newsgathering operations, and disclose information about AP’s activities and operations that the government has no conceivable right to know.(my emphasis)

h/t to Marcy Wheeler who points out the two months, April to May of 2012, that were of interest covered the period that, now CIA Director, John Brennan had rolled out his drone propaganda campaign:

That would mean they’d get the sources for this Kimberly Dozier story published May 21 [..]

Within 10 days of the time Dozier published that story, John Brennan had rolled out an enormous propaganda campaign – based on descriptions of the drone targeting process that Brennan’s power grab had replaced, not the new drone targeting process – that suckered almost everyone commenting on drones that drone targeting retained its previous, more deliberative, targeting process, the one Brennan had just changed.

And that propaganda campaign, in turn, hid another apparent detail: that UndieBomb 2.0, a Saudi sting had actually occurred earlier in April, and that UndieBomb 2.0 preceded and perhaps justified the signature strikes done at the behest of the Yemenis (or more likely the Saudis).

Marcy listed the timeline of the AP stories that were focused on Brennan and the undie bomber. However, it was after the Dozier story that  Brennan began his propaganda campaign to cover up how illegal and uncontrollable the drone program is.

Comparing this to Nixon and Watergate, Charles P. Pierce goes full throttle on why Eric Holder should be fired:

This isn’t hard. This is what made Egil (Bud) Krogh famous. This is what got people sent to jail in the mid-1970’s. This is the Plumbers, all over again, except slightly more formal this time, and laundered, disgracefully, even more directly through the Department Of Justice. And of course, this is not nearly good enough. And even if you point out, as you should, that the AP is hyping this story a little — The government “secretly” obtained the records? Doesn’t that imply that nobody knew the records had been seized? Wasn’t there a subpoena? The phone companies knew. — the ignoble clumsiness of this more than obviates those particular quibbles.

The White House on Monday said that other than press reports it had no knowledge of Justice Department attempts to seek AP phone records. “We are not involved in decisions made in connection with criminal investigations, as those matters are handled independently by the Justice Department,” spokesman Jay Carney said.

That is all my arse. At the least, this was a counter-terrorism operation. (Why else would Brennan have been questioned already?). Which puts the whole business inside the White House. And you’d have to be a toddler or a fool to believe that Eric Holder could go off on his own and take as politically volatile a step as this. But, let us take the White House at its word. Eric Holder did this by himself. He should be gone. This moment. Not only is this constitutionally abhorrent, it is politically moronic. Nobody likes the press, I will grant you that, but the administration is soft if it thinks the public distrusts the press that much. And to have this genuinely chilling revelation emerge simultaneously with the Benghazi, Benghazi!, BENGHAZI! mummery and the IRS dumbassery is pretty much a full broadside below the water line of this administration’s credibility. Good god, this is going to be one long-ass summer.

Pres. Obama needs to do damage control starting with throwing Holder to the wolves. I suspect this will be the next congressional investigation in an effort to not just derail Hillary Clinton’s 2016 campaign but to build a case for impeachment of Obama for abuse of his executive powers. A long hot summer, indeed.