May 2014 archive

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.

May 22 is the 142nd day of the year (143rd in leap years) in the Gregorian calendar. There are 223 days remaining until the end of the year.

On this day in 1843, the Great Emigration departs for Oregon

A massive wagon train, made up of 1,000 settlers and 1,000 head of cattle, sets off down the Oregon Trail from Independence, Missouri. Known as the “Great Emigration,” the expedition came two years after the first modest party of settlers made the long, overland journey to Oregon.

Great Migration of 1843

In what was dubbed “The Great Migration of 1843” or the “Wagon Train of 1843”, an estimated 700 to 1,000 emigrants left for Oregon. They were led initially by John Gantt, a former U.S. Army Captain and fur trader who was contracted to guide the train to Fort Hall for $1 per person. The winter before, Marcus Whitman had made a brutal mid-winter trip from Oregon to St. Louis to appeal a decision by his Mission backers to abandon several of the Oregon missions. He joined the wagon train at the Platte River for the return trip. When the pioneers were told at Fort Hall by agents from the Hudson’s Bay Company that they should abandon their wagons there and use pack animals the rest of the way, Whitman disagreed and volunteered to lead the wagons to Oregon. He believed the wagon trains were large enough that they could build whatever road improvements they needed to make the trip with their wagons. The biggest obstacle they faced was in the Blue Mountains of Oregon where they had to cut and clear a trail through heavy timber. The wagons were stopped at The Dalles, Oregon by the lack of a road around Mount Hood. The wagons had to be disassembled and floated down the treacherous Columbia River and the animals herded over the rough Lolo trail to get by Mt. Hood. Nearly all of the settlers in the 1843 wagon trains arrived in the Willamette Valley by early October. A passable wagon trail now existed from the Missouri River to The Dalles. In 1846, the Barlow Road was completed around Mount Hood, providing a rough but completely passable wagon trail from the Missouri river to the Willamette Valley-about 2,000 miles.

Cross posted from The Stars Hollow Gazette

Naked capitalism‘s Yves Smith appeared in RT news Boom/Bust to discuss the risky business and abuses of private equity in the real estate rental market. Her segment starts at 3:45.

In her article, Yves also noted this piece from an article on private equity from Friday’s Bloomberg News:

PE Slump

Private-equity transactions overall have fallen 22 percent to $53 billion through April, data compiled by Bloomberg show, led by the drop in buyouts of public companies. The value of those leveraged buyouts declined to $3.2 billion compared with an average of $34 billion in the 10 years through 2013.

The peak for buyouts came before the financial crisis, when U.S. funds struck $659 billion of deals from 2005 through 2007, including the purchases of HCA Inc., Hilton Worldwide Inc. and Biomet Inc., the data show. Buying inexpensive public companies was generally easier for the funds than carve-outs are, said Raymond Lin, a mergers and acquisitions attorney at Latham & Watkins LLP.

“The easy days for private-equity buyers are over when they profited from buying undervalued companies,” he said. “Carve-out deals require a lot of up-front work that would incur additional costs and could affect returns.”

The Standard & Poor’s 500 Index, which reached a record this week, trades at 17.4 times reported profit, the highest level since 2010, according to data compiled by Bloomberg.

PE’s Limits

While high valuations haven’t scared off dealmaking between companies, buyout firms are motivated by different factors, said Gordon Caplan, chairman of the private-equity practice group at law firm Willkie Farr & Gallagher LLP.

“If business growth slows, companies have to buy things,” he said. “Private-equity buyers can’t create synergies like company mergers can in most cases.”

Corporations are more willing to spin off divisions as management continues to clean up underperforming businesses and pay down debt following the financial crisis, said Tom Franco, a partner at Clayton Dubilier.

SEC Official Describes Widespread Lawbreaking and Material Weakness in Controls in Private Equity Industry

Posted on May 8, 2014 by Yves Smith

At a private equity conference this week, Drew Bowden, a senior SEC official, told private equity fund managers and their investors in considerable detail about how the agency had found widespread stealing and other serious infractions in its audits of private equity firms.

In the years that I’ve been reading speeches from regulators, I’ve never seen anything remotely like Bowden’s talk. I’ve embedded it at the end of this post and strongly encourage you to read it in full.

Despite the at times disconcertingly polite tone, the SEC has now announced that more than 50 percent of private equity firms it has audited have engaged in serious infractions of securities laws. These abuses were detected thanks to to Dodd Frank. Private equity general partners had been unregulated until early 2012, when they were required to SEC regulation as investment advisers. [..]

Bowden pointed out that private equity is unique among the investment advisers the SEC supervises. The general partners’ control of portfolio companies gives them access to their cash flows, which the GPs can divert into their own pockets in numerous ways. Naked Capitalism readers may recognize that this arrangement is similar to the position mortgage servicers are in: they control the relationship with the funds source, and they are also responsible for records-keeping and remitting money to investors. And as we’ve chronicled at considerable length, servicers have shown remarkable creativity in lining their wallets and investors have been unable to discipline them. [..]

Needless to say, this overly cozy arrangement has proven to be a ripe breeding ground for illegal conduct.

Cross posted from The Stars Hollow Gazette

President Barack Obama has said that he wanted to reform how the NSA collects and stores metadata. What he says and what he does, again, are two different things.

The “Consult with Congress” Stage of USA Freedumb

By Marcy Wheeler, emptywheel

Remember how, in the days after President Obama announced his principles for reforming the dragnet, his Senior Administration Official pretended that any efforts to make the scope of the program worse would come from Congress? [..]

Well, it looks like the Administration isn’t so passive after all. They’re working with House leadership to gut the bill.

   TROUBLE FOR USA FREEDOM? – House leadership and Obama administration officials met with committee members Sunday to negotiate changes to key NSA reform legislation, parting late in the evening without reaching a final resolution, said a congressional staffer close to the process. Still, it seems clear that the USA FREEDOM Act, approved by the House Judiciary and Intelligence committees little more than a week ago, will not reach the House floor intact. Some passages have been watered down already, the staffer acknowledged, declining to go into specifics. The bill is set for “possible consideration” this week, according to the schedule circulated by House Majority Leader Eric Cantor’s office.

   Word of the talks caused some of the bill’s most ardent privacy and civil liberties backers to cry foul and say they could withdraw support. Areas of concern to watchdogs include possible removal of transparency language allowing companies to tell their customers about the broad numbers of lawful intercept requests they receive; and a debate on whether the search terms used by the NSA to search communications records should be narrowly defined in statute.

   “The version we fear could now be negotiated in secret and introduced on the House floor may not move us forward on NSA reform,” said human rights organization Access. “I am gravely disappointed if the House leadership and the administration chose to disrupt the hard-fought compromise that so many of us were pleased to support just two weeks ago,” said Kevin Bankston, policy director of the New America Foundation’s Open Technology Institute.

And while it’s not clear these secret changes would broaden the scope outside of counterterrorism (though I think that’s possible already), it does seem clear the Administration is pushing for these changes because the already weak bill is too strong for them.

Congress is no better.

Advocates fear NSA bill is being gutted

By Kate Tummarello, The Hill

To win the support of NSA defenders, lawmakers abandoned some reform provisions in Sensenbrenner’s original bill. One of the major changes was dropping the appointment of a constitutional advocate to the Foreign Intelligence Surveillance Court, which approves the NSA’s spying requests, and substituting it for a panel of experts.

The bill was also stripped of language that would have allowed tech companies to publish more specific information about the number and types of government requests for user data they receive.

During Judiciary consideration, an amendment to allow less specific reporting was added back into the bill, but some worry that provision is in danger now because the administration thinks it’s already reached a deal that allows tech companies to publish more information about the NSA requests.

While pro-reform advocacy groups and members hailed the House bill as a positive first step, many lamented the revisions and said the legislation will be in trouble on the floor if it undergoes further changes.

A Deep Dive into the House’s Version of Narrow NSA Reform: The New USA Freedom Act

By Mark Jaycox, Electronic Freedom Foundation

Here’s how the House version of the USA Freedom Act compares to the Senate’s version, what the new House version of the USA Freedom Act does, and what it sorely lacks.

The Senate’s Version of USA Freedom Act

As we mentioned when the original USA Freedom Act was first introduced, it proposed changes to several NSA activities and limited the bulk collection of all Americans’ calling records. It would fix a key problem with Section 702 (.pdf) of the Foreign Intelligence Surveillance Amendments Act (FISAA), bring more transparency to the Foreign Intelligence Surveillance Act Court (FISA court), and introduce a special advocate to champion civil liberties in the FISA court.

The House’s New Version of the USA Freedom Act:

The new USA Freedom Act concentrates on prohibiting the collection of all Americans’ calling records using Section 215 of the Patriot Act. Other sections of the bill would allow the FISA Court to assign amici, or non-parties who can brief issues before the court; create new government reports about the spying powers; and create new company reports detailing how many accounts and customers are affected by FISA Court orders.

First and foremost, the bill introduces a different conceptual approach to prohibiting mass spying under Section 215. Unlike the Senate version, which tries to stop the mass collection of calling records by mandating that the records sought “pertain to” an agent of a foreign power or their activities-an approach that we’ve worried about because “pertains to” and “relevant” are so similar-the House version mandates that a “specific selection term” (currently defined as uniquely describing a person, entity, or account) be the “basis for the production” of the records. The overall language may be stronger than in the old USA Freedom Act, but “specific selection term” must be further defined as “entity” could be construed expansively. After the order is filed, the government can obtain up to “two hops“-which may be too expansive for many investigations-from the selection term.

The bill also tries to tighten the “minimization procedures” that apply to government collection of records using Section 215 and other spying authorities like national security letters and the FISA Pen Register/Trap and Trace (PR/TT) provision. But the procedures only touch the FBI, not other agencies-like the NSA-that may be obtaining records using Section 215. In addition, the House version uses language we’ve seen in Section 702’s minimization procedures. If you remember, those procedures are horrendous. They allow for the overcollection, overretention, and oversharing of Americans’ communications “mistakenly” collected. The House must draft stronger minimization language to completely ensure improper information about untargeted users is not collected. For instance, simply inserting the word “acquisition” or “collection” would help.

End the NSA’s Mass Spying

Tell Congress: Support the USA FREEDOM Act. Stop the FISA Improvements Act & Other Fake Reforms.

There’s a powerful reform proposal moving through Congress. H.R. 3361, the House’s version of the USA FREEDOM Act, would limit bulk collection of phone records and add transparency to the egregious NSA spying.

If it passes, the USA FREEDOM Act will be the most meaningful reform of government surveillance in decades. While the USA FREEDOM Act doesn’t address every issue with NSA surveillance, it’s a powerful first step.

But certain members of Congress don’t want reform. Representatives Mike Rogers and Dutch Ruppersberger have introduced a bill that attempts to make NSA spying worse. And Senator Dianne Feinstein is promoting the FISA Improvements Act, a bill posing as reform that attempts to legalize the worst aspects of NSA surveillance.

We can’t let NSA apologists preserve the status quo. Demand real reform.  Stop mass spying.

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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.

This Day in History

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 image to enlarge

May 21 is the 141st day of the year (142nd in leap years) in the Gregorian calendar. There are 224 days remaining until the end of the year.

On this day in 1881, the American Red Cross was established in Washington, D.C. by Clara Barton, who became the first president of the organization.

Clara Barton

Clara Barton (1821-1912) had a career as a teacher and federal bureaucrat when the American Civil War broke out. Barton liked teaching when she was younger. All of her older siblings became teachers. Her youngest sibling was 12 years of age, when Barton was born. Her brother David was always like a teacher to her. She taught her first class, at age 17. She also expanded her concept of soldier aid, traveling to Camp Parole, Maryland, to organize a program for locating men listed as missing in action. Through interviews with Federals returning from Southern prisons, she was often able to determine the status of some of the missing and notify families.

After performing humanitarian work during and after the conflict, on advice of her doctors, in 1869, she went to Europe for a restful vacation. There, she saw and became involved in the work of the International Red Cross during the Franco-Prussian War, and determined to bring the organization home with her to America.

When Barton began the organizing work in the U.S. in 1873, no one thought the country would ever again face an experience like the Civil War. However, Barton was not one to lose hope in the face of the bureaucracy, and she finally succeeded during the administration of President Chester A. Arthur on the basis that the new American Red Cross organization could also be available to respond to other types of crisis.

As Barton expanded the original concept of the Red Cross to include assisting in any great national disaster, this service brought the United States the “Good Samaritan of Nations” label in the International Red Cross. Barton became President of the American branch of the society, known officially as the American National Red Cross. Soon after the initial May 1881 meeting in Washington, on August 22, 1881, the first local chapter of the Red Cross was formed in village of Dansville, New York, where Barton kept a part-time residence between 1876 and 1886. Subsequent local chapters were established in Rochester and Syracuse. Ultimately, John D. Rockefeller, along with four others and the federal government, gave money to create a national headquarters in Washington, D.C., located one block from the White House.