February 2012 archive

Cross posted from The Stars Hollow Gazette

Nothing surprising about the revelation in today’s New York Times that the SEC has failed to get tough with the big banks but it does highlight how Occupy Wall St. has change this conversation in the traditional media that is now taking a more critical look at what is wrong with the economy and why. Despite all the whining from the agency that it doesn’t have the resources or the tools, when in fact it does but has refused to use them against the biggest and repeat offenders. The SEC has repeatedly granted waivers to the laws and regulations that stop fraud:

JPMorganChase, for example, has settled six fraud cases in the last 13 years, including one with a $228 million settlement last summer, but it has obtained at least 22 waivers, in part by arguing that it has “a strong record of compliance with securities laws.” Bank of America and Merrill Lynch, which merged in 2009, have settled 15 fraud cases and received at least 39 waivers.

Only about a dozen companies – Dell, General Electric and United Rentals among them – have felt the full force of the law after issuing misleading information about their businesses. Citigroup was the only major Wall Street bank among them. In 11 years, it settled six fraud cases and received 25 waivers before it lost most of its privileges in 2010.

The SEC also does keep an organized data base of the waivers it granted, so in its investigation the NYT’s had do some digging but found some very telling facts about the SEC’s failures to protect investors while protecting the big banks from lawsuits and prosecution:

JPMorganChase is among the big Wall Street firms that have been granted multiple waivers with nearly every settlement of S.E.C. fraud charges. Last July, it agreed to pay $228 million to settle civil and criminal charges that it cheated cities and towns by rigging bids with other Wall Street firms to invest the money raised by several municipalities for capital projects.

JPMorgan received three waivers related to that case for privileges that it otherwise would have lost. But the S.E.C. said the company’s fraudulent actions didn’t involve misleading investors about JPMorgan’s business. [..]

Despite six securities fraud settlements in 13 years, JPMorgan rarely if ever lost any special privileges. It has been awarded at least 22 waivers since 2003, with most of its S.E.C. settlements generating two or more. In seeking the reprieves, lawyers for JPMorgan stated in letters to the S.E.C. that it should grant a waiver because the company has “a strong record of compliance with the securities laws.”

JPMorgan isn’t the only big bank that has received a pass on fraud from the SEC, Bank of America has been a recipient of favored status:

In 2009, the S.E.C. was negotiating with Bank of America over charges that it had failed to disclose to shareholders that billions of dollars in bonuses were being paid to Merrill Lynch executives just as Bank of America was bailing out the firm.

Because the S.E.C. charges involved fraudulent statements by both Bank of America and Merrill Lynch about their financial status, the merged company was in danger of losing its special privileges for both offerings and forecasts. [..]

It settled the case by agreeing to a $150 million payment. The S.E.C., however, decided not to charge the bank with fraud, which could have endangered the bank’s special status. Instead, the S.E.C. charged Bank of America with violating disclosure rules for shareholder materials and proxies, and Bank of America kept its privileges.

It took years before the SEC finally took action against Citigroup for its violations of rules and regulations but in 2010. That only happened because Citibank blatantly lied to its investors about the amount of risk it was carrying on its balance sheets. In its disclosure the bank stated that it was only holding $13 billion in risks when in reality it was $50 billion. It settled the case for $75 million but because of the falsification of its financial statement it lost the ability to insulate itself from lawsuits over mistaken predictions about its business and had to wait weeks for the SEC’s approvals to make itself eligible to sell stocks, bonds and other securities to the public. Prior to those sanctions Citibank had settled six fraud cases and received 25 waivers. Meanwhile JPMorgan, Gold Sachs and others have avoided sanctions and continue their fraudulent practices.

Yves Smith at naked capitalism in pointing out the significance of this article makes this observation:

What the article does not make quite clear is the SEC rationale for this double standard. I’d hazard that it’s that big financial players are often in the market raising funds, and restricting their access is, well, just a bit too mean since they are money junkies. Just look how hard it was for Citi when it fell out of the SEC’s most favored nations status and lost its ability to use so-called “shelf registrations” to sell stock and bonds:

   And the companies continue to use rules that let them instantly raise money publicly, without waiting weeks for government approvals. Without the waivers, the companies could not move as quickly as rivals that had not settled fraud charges to sell stocks or bonds when market conditions were most favorable.

OMG, if you break the law, you might be put at a competitive disadvantage! Can’t have that, now can we?

She concludes:

[..] As we have said, one of basic rules of regulating is to make sure the regulated know you are not cowed by them. When I was a young person working on Wall Street, investment banks were afraid of the SEC. By contrast, this article reveals, as many have suspected, that regulators have plenty of tools to bring banks to heel. They choose not to use them.

The SEC does have a defense of sorts, which is (as we have recounted) that Congress has cut off funding when it merely tried to be tough in defending retail investors from abuses under Arthur Levitt in the 1990s. The passivity of the SEC is a symptom of elite corruption. A reform-minded President could choose to cross swords with Congress and defend the agency against harassment for tough minded enforcement. But that would be in a parallel universe where the banks were not in charge.

It was the Occupy Wall St. movement and a handful of state attorneys general who have changed the conversation from protecting the 1% to investigating them and looking at their practices and the agencies that regulate them with a more critical eye.

Last time we looked at 1975, and if anything 1976 was a bit more settled for The Who in some respects.  Most of their time was spent doing a huge tour, with multiple Atlantic Ocean crossings.  There were a couple of reasons for that.

Likely the largest reason was that the dispute betwixt the band and Kit Lambert was still in litigation, and it was sort of difficult to release old material, and new material was still being written.  They were stuck in a way just to perform live.  That was to my personal advantage, and more on that is to come later.

One the whole, the band were probably at their best musically in 1976.  The exception was Moon, who was beginning to accelerate his decline both personally and musically, but that did not come out until sort of late in the year.

Cross posted from The Stars Hollow Gazette

Since of the Susan G. Komen for the Cure charity’s decision to eliminate funding to Planned Parenthood for breast cancer screenings, the Komen foundation has come under not just criticism for abandoning many women’s only option for breast cancer screening but it has brought to light some very ugly truths about the organization. The most critical one is that its pink ribbon campaign has done more harm than good. As David Dayen and TBogg at FDL both note, Komen’s official line that “our priority is and always will be the women we serve” is a joke considering the number of women who use Planned Parenthood for their health care and that Komen does virtually nothing for women’s health or fighting breast cancer

A documentary that premiered last fall at the Toronto Film Festival, Pink Ribbons, Inc, that is about to be released in Canadian theaters, exposes the Pink Ribbon campaign for what it is, a money raising farce for corporations that have done nothing to find a cure for breast cancer but in some cases may have contributed to its rise:

Indignant and subversive, “Pink Ribbons, Inc.” resoundingly pops the shiny pink balloon of the breast cancer movement/industry, debunking the “comfortable lies” and corporate double-talk that permeate the massive and thus-far-ineffectual campaign against a disease that claims nearly 60,000 lives each year in North America alone. Veteran helmer Lea Pool, working from Samantha King’s book, won’t be making any friends with her full-frontal attack on the corporate co-option of the breast cancer cause, which could limit Stateside circulation of this Canadian production. But there are plenty of women who’ll want to see it. And they’ll be seeing red, not pink.

The thrust of King’s thesis is that all the pink-themed walk-a-thons, parades, singing children and rose-lit monuments (the Empire State Building, Niagara Falls), actually do more harm than good. By putting a warm and fuzzy spin on the state of breast cancer, the public is distracted from some very ugly numbers: In 1940, a woman had a one-in-22 chance of developing breast cancer; today, the number is one in eight. Only 20%-30% of women with breast cancer have high-risk factors, which means no one really knows what causes the disease. The leading foundations involved in funding cancer research are peopled by representatives of the pharmaceutical, chemical and energy industries, so their ethics are inherently compromised.

This article from Salon’s Mary Elizabeth Williams details where all the Komen money goes. They raise a huge amount of money but only 24% goes to research and yet spends:

“a million dollars a year in donor funds” aggressively going after other organizations that dare to use the phrase “for the cure” – including small charities like Kites for a Cure, Par for the Cure, Surfing for a Cure, Cupcakes for a Cure, and even a dog-sledding event called Mush for the Cure.

The Komen foundation is nothing more than a front for corporations. Running for cures, buying pink ribbons and balloons will not find a cure and hasn’t done a damn thing but rake in profits for corporations. Those pink ribbons should make every woman and man (they get breast cancer, too) see red.

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.

February 3 is the 34th day of the year in the Gregorian calendar. There are 331 days remaining until the end of the year (332 in leap years).

On this day in 1959, “the music died” when rising American rock stars Buddy Holly, Ritchie Valens and J.P. “The Big Bopper” Richardson are killed when their chartered Beechcraft Bonanza plane crashes in Iowa a few minutes after takeoff from Mason City on a flight headed for Moorehead, Minnesota. Investigators blamed the crash on bad weather and pilot error. Holly and his band, the Crickets, had just scored a No. 1 hit with “That’ll Be the Day.”

After mechanical difficulties with the tour bus, Holly had chartered a plane for his band to fly between stops on the Winter Dance Party Tour. However, Richardson, who had the flu, convinced Holly’s band member Waylon Jennings to give up his seat, and Ritchie Valens won a coin toss for another seat on the plane.

Crash

The plane took off at around 12:55 AM Central Time. Just after 1:00 AM Central Time, Mr. Hubert Dwyer, a commercial pilot and owner of the plane, observing from a platform outside the tower, “saw the tail light of the aircraft gradually descend until out of sight.”

Peterson had told Dwyer he would file a flight plan with Air Traffic Control by radio after departure. When he did not call the Air Traffic Control communicator with his flight plan, Dwyer requested that Air Traffic Control continue to attempt to establish radio contact, but all attempts were unsuccessful.

By 3:30 AM, when Hector Airport in Fargo, North Dakota, had not heard from Peterson, Dwyer contacted authorities and reported the aircraft missing.

Around 9:15 AM, Dwyer took off in another small plane to fly Peterson’s intended route. A short time later, he spotted the wreckage in a cornfield belonging to Albert Juhl, about five miles (8 km) northwest of the airport.

The Bonanza was at a slight downward angle and banked to the right when it struck the ground at around 170 miles per hour (270 km/h). The plane tumbled and skidded another 570 feet (170 m) across the frozen landscape before the crumpled ball of wreckage piled against a wire fence at the edge of Juhl’s property. The bodies of Holly and Valens lay near the plane, Richardson was thrown over the fence and into the cornfield of Juhl’s neighbor Oscar Moffett, and the body of Peterson remained entangled inside the plane’s wreckage. Surf Ballroom manager Carroll Anderson, who drove the musicians to the airport and witnessed the plane’s takeoff, made positive identifications of the musicians.

All four had died instantly from “gross trauma” to the brain, the county coroner Ralph Smiley declared. Holly’s death certificate detailed the multiple injuries which show that he surely died on impact:

The body of Charles H. Holley was clothed in an outer jacket of yellow leather-like material in which four seams in the back were split almost full length. The skull was split medially in the forehead and this extended into the vertex region. Approximately half the brain tissue was absent. There was bleeding from both ears, and the face showed multiple lacerations. The consistency of the chest was soft due to extensive crushing injury to the bony structure.[…] Both thighs and legs showed multiple fractures.

Investigators concluded that the crash was due to a combination of poor weather conditions and pilot error. Peterson, working on his Instrument Rating, was still taking flight instrumentation tests and was not yet rated for flight into weather that would have required operation of the aircraft solely by reference to his instruments rather than by means of his own vision. The final Civil Aeronautics Board report noted that Peterson had taken his instrument training on airplanes equipped with an artificial horizon attitude indicator and not the far-less-common Sperry Attitude Gyro on the Bonanza. Critically, the two instruments display the aircraft pitch attitude in the exact opposite manner; therefore, the board thought that this could have caused Peterson to think he was ascending when he was in fact descending. They also found that Peterson was not given adequate warnings about the weather conditions of his route, which, given his known limitations, might have caused him to postpone the flight.