September 11, 2015 archive

Sep 11 2015

Stupid or Evil?

Stupid implies they were motivated by noble instincts and were merely misguided, ignorant, or incompetent.

Evil says they knew exactly what they were doing.

Unless you think everyone’s an idiot except you (which I do with ample justification but is not really relevant) I think you’ve got to come out somewhere on the evil side.  Does the rot go to the top?

Have you been asleep since Lehman?

Now the DOJ Admits They Got it Wrong

by William Black, New Economic Perspectives

Posted on September 11, 2015

It is now seven years after Lehman’s senior officers’ frauds destroyed it and triggered the financial crisis. The Bush and Obama administrations have not convicted a single senior bank officer for leading the fraud epidemics that triggered the crisis. The Department’s announced restoration of the rule of law for elite white-collar criminals, even if it becomes real, will come too late to prosecute the senior bankers for leading the fraud epidemics. The Justice Department has, effectively, let the statute of limitations run and allowed the most destructive white-collar criminal bankers in history to become wealthy through fraud with absolute impunity. This will go down as the Justice Department’s greatest strategic failure against elite white-collar crime.

The Obama administration and the Department have failed to take the most basic steps essential to prosecute elite bankers. They have not restored the “criminal referral coordinators” at the banking regulatory agencies and they have virtually ignored the whistleblowers who gave them cases against the top bankers on a platinum platter. The Department has not even trained its attorneys and the FBI to understand, detect, investigate, and prosecute the “accounting control frauds” that caused the financial crisis. The restoration of the rule of law that the new policy promises will not happen in more than a token number of cases against senior bankers until these basic steps are taken.

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As a corporate executive once told a former Assistant Attorney General of ours: “[A]s long as you are only talking about money, the company can at the end of the day take care of me . . . but once you begin talking about taking away my liberty, there is nothing that the company can do for me.”(1) Executives often offer to pay higher fines to get a break on their jail time, but they never offer to spend more time in prison in order to get a discount on their fine.

We know that prison sentences are a deterrent to executives who would otherwise extend their cartel activity to the United States. In many cases, the Division has discovered cartelists who were colluding on products sold in other parts of the world and who sold product in the United States, but who did not extend their cartel activity to U.S. sales. In some of these cases, although the U.S. market was the cartelists’ largest market and potentially the most profitable, the collusion stopped at the border because of the risk of going to prison in the United States.”

As prosecutors, (real) financial regulators, and criminologists, we have known for decades that the only effective means to deter elite white-collar crimes is to imprison the elite officers that grew wealthy by leading those crimes (which include the largest “hard core cartels” in history – by three orders of magnitude). In the words of a Deutsche Bank senior officer, the bank’s participation in the Libor cartel produced a “mountain of money” for the bank (and the officers). Holder’s bank fines were useless – and the Department’s real prosecutors told him why they were useless from the beginning. No one, of course, thinks Holder went rogue in refusing to prosecute fraudulent bank officers. President Obama would have requested his resignation six years ago if he were upset at Holder’s grant of de facto immunity to our most destructive elite white-collar criminals.

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The Department’s top criminal prosecutor, Lanny Breuer, publicly stated his paramount concern about the fraud epidemics that devastated our nation – he was “losing sleep at night over worrying about what a lawsuit might result in at a large financial institution.” That’s right – he was petrified of even bringing a civil “lawsuit” – much less a criminal prosecution – against “too big to prosecute” banks and banksters. I lose sleep over what fraud epidemics the banksters will lead against our Nation. The banksters have learned to optimize “accounting control fraud” schemes and learned that they can grow immensely wealthy by leading those fraud epidemics with complete impunity. None of them has a criminal record and even those that lost their jobs are overwhelmingly back in financial leadership positions. In the aftermath of the savings and loan debacle, because of the prosecutions and criminal records of the elites that led those frauds, no senior S&L fraudster who was prosecuted was able to become a leader of the fraud epidemics that caused our most recent financial crisis.

We have known for decades that repealing the rule of law for elite white-collar criminals and relying on corporate fines always produces abject failure and massive corporate fraud. We have known for millennia that allowing elites to commit crimes with impunity leads to endemic fraud and corruption. If the Department wants to restore the rule of law I am happy to help it do so. We have known for over 30 years the steps we need to take to succeed against elite white-collar criminals through vigorous regulators and prosecutors. We must not simply prosecute the current banksters, but also prevent and limit future fraud epidemics through regulatory and supervisory changes.

The Justice Department’s New Policy Is a Brutal Admission of Eric Holder’s Failures

By David Dayen, The Fiscal Times

September 11, 2015

This week, the Justice Department felt the need to write a memo to staff instructing them to indict individuals when they commit crimes, seemingly something implied by their job titles. It doesn’t say as much about the current Justice Department regime under Loretta Lynch as it does about the former one under Eric Holder.

No major Wall Street executive went to jail for the illegal actions that precipitated the financial crisis, despite a mountain of documentary evidence of fraud. Corporations and their employees got away with what amounted to slaps on the wrist. And Holder, after presiding over this, joined the head of his Justice Department criminal division and several top deputies at Covington & Burling, a white-collar defense firm that represents most major banks.

You can draw a direct line from this failure back to the “Holder memo,” written when he served as a deputy in the Clinton Justice Department. That memo created the “collateral consequences” policy, arguing that prosecutors who seek criminal cases against large companies should take into account innocent victims who may get hurt. It laid out a host of alternative remedies, such as fines and deferred prosecution agreements.

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The Justice Department would not have attempted to make this change without full recognition of the loss of public trust its actions over the past several years have engendered. Relentless criticism of the lack of white-collar prosecutions had an impact, and those who participated in that conversation should be proud.

But at this point, guidelines won’t do the trick, only actions will – a genuine effort to make the concept of justice more than a punch line. This is the beginning of a real overhaul in mindset at the Department of Justice. Hopefully, the resources and training needed to undertake wide-ranging investigations will accompany the guidelines. Hopefully, U.S. Attorneys and FBI agents will be allowed to do their jobs. Hopefully, settlements with corporations no longer represent a dead end of accountability. Hopefully, the Justice Department will live up to its name.

The End of the Deferred Prosecution Agreement?

by David Dayen, Naked Capitalism

Posted on September 8, 2015

DPAs usually arise out of the company disclosing misconduct and convening an internal investigation with some Assistant AG, promising full cooperation. The company gets credit for remedial conduct prior to the settlement, essentially setting their own punishment. And typically, DPAs are not paired with prosecutions for individuals committing the crimes.

So let’s look at the DPA that could bring this cozy situation crashing down. DoJ headlined back in June 2014 that Fokker Services BV would forfeit $10.5 million for selling aircraft parts and services to customers in Iran, Burma and Sudan. There was a parallel civil settlement with the Treasury Department’s Office of Foreign Assets Control (OFAC) to pay an additional $10.5 million. If you go down the press release, you find that Fokker received $21 million in gross revenue for these 1,153 illegal transactions, so the penalty was simply to give back what they received. Now they’re out a bunch of aircraft parts, one assumes, and I don’t really know the markup here. But that doesn’t seem too taxing.

In fact, in the DPA itself, we learn that “at least $21 million” was involved in the transactions. So it’s not possible to know what, if any, financial penalty was imposed. And FWIW, the civil penalty for the crime FSBV committed could have been as high as $51 million, per corporate law firm Akin Gump.

FSBV had to “accept responsibility” for its actions and really do little else. They agreed to cooperate with any matters relating to this investigation, making documents and individual employees available. For what purpose I have no idea, since nobody at FSBV has been indicted for this, 4 years after the company disclosed everything. FSBV must also continue to apply what it has already implemented voluntarily, namely compliance programs to prevent it from continuing to break the law. And… that’s about it. Plus, “in consideration of FSBV’s remedial actions to date,” this “punishment” all goes away within 18 months.

So I can see why Judge Richard Leon rejected this deal back in February, calling it “grossly disproportionate” and that “it would undermine the public’s confidence in the administration of justice and promote disrespect for the law… to see a defendant prosecuted so anemically for engaging in such egregious conduct.”

Just as a sidebar, I have a problem with a Dutch company being prosecuted by the United States for trading with other countries. There are a series of “trading with the enemy” type of laws that put the U.S. in the position of world trading policeman, sometimes for inscrutable reasons. But as long as that law is on the books, sentencing an offender to give back (some? all?) of their profits and promise not to do it again does seem a bit thin.

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DoJ and FSBV jointly appealed Judge Leon’s order, saying he exceeded his authority. When the law enforcement agency and the offending entity end up on the same side of a lawsuit, well, it certainly doesn’t look great.

So this week we’ll have arguments in the 1st Circuit Court of Appeals D.C. Circuit Court of Appeals (h/t Abigail Field). And I don’t really know what DoJ will have to say for themselves. These are the kind of craptastic agreements they’ve been making with corporate offenders for the entire Holder era (Holder, last seen just hanging out at his awesome new office at Covington & Burling, was AG when this DPA was made). Presumably they’ll avoid the specifics and just claim that judges can’t have the temerity to reject contractual agreements made by two sides, and how this would damage the separation of powers, prosecutorial discretion, &c.

But judges have held up DPAs in the past, though they were eventually approved. And considering that DoJ can also file a non-prosecution agreement, which don’t require court approval, there’s obviously some role for judges to play here. If you want to get judicial approval, you can’t expect that approval to come automatically. And if the goal is to extract the proper consequences out of a corporate offender, a judge resisting settlements that are overly lenient can only enhance DoJ’s efforts.

Of course, that isn’t what DoJ is after. They would rather settle these matters quietly, write a press release, and then get a judge to bless it to get buy-in from another branch of government, so if anyone questions the slap on the wrist they can say “well a judge approved it.”

Legally this is a jump ball; DoJ could easily wriggle off the hook here. But if the 1st Circuit D.C. Circuit blows up this little charade, they will have to make their terrible deals without a patina of outside approval. Or maybe, horror of horrors, they’ll have to do their job properly.

Sep 11 2015

Cartnoon

Sep 11 2015

Dr. Mary Edwards Walker, Medal Of Honor Recipient

photo Mary_Edwards_Walker.jpg The only woman to be awarded the Medal of Honor, America’s highest military honor, was a civilian and a surgeon. Dr. Mary Edwards Walker served the US military as a volunteer surgeon during the American Civil War and for a short time, she was held in a Confederate prison after crossing enemy lines to assist with civilian casualties.

At the beginning of the American Civil War, she volunteered for the Union Army as a civilian. At first, she was only allowed to practice as a nurse, as the U.S. Army had no female surgeons. During this period, she served at the First Battle of Bull Run (Manassas), July 21, 1861 and at the Patent Office Hospital in Washington, D.C. She worked as an unpaid field surgeon near the Union front lines, including the Battle of Fredericksburg and in Chattanooga after the Battle of Chickamauga. As a suffragette, she was happy to see women serving as soldiers and alerted the press to the case of Frances Hook in Ward 2 of the Chattanooga hospital.

In September 1862, Walker wrote to the War Department requesting employment on Secret Service to spy on the enemy, but the offer was declined. Finally, she was employed as a “Contract Acting Assistant Surgeon (civilian)” by the Army of the Cumberland in September 1863, becoming the first-ever female surgeon employed by the U.S. Army Surgeon. Walker was later appointed assistant surgeon of the 52nd Ohio Infantry. During her service, she frequently crossed battle lines, treating civilians.

On April 10, 1864, she was captured by Confederate troops and arrested as a spy, just after she finished helping a Confederate doctor perform an amputation. She was sent to Castle Thunder in Richmond, Virginia and remained there until August 12, 1864, when she was released as part of a prisoner exchange. While she was imprisoned, she refused to wear the clothes provided because they were more “becoming of her sex.” Walker was exchanged for a Confederate surgeon from Tennessee on August 12, 1864.

She went on to serve during the Battle of Atlanta and later as supervisor of a female prison in Louisville, Kentucky, and head of an orphanage in Tennessee.[

After the war, Dr. Walker was awarded the Medal of Honor on November 11, 1865 by President Andrew Johnson on the recommendations of Generals William Tecumseh Sherman and George Henry Thomas. The citation reads:

   Whereas it appears from official reports that Dr. Mary E. Walker, a graduate of medicine, “has rendered valuable service to the Government, and her efforts have been earnest and untiring in a variety of ways,” and that she was assigned to duty and served as an assistant surgeon in charge of female prisoners at Louisville, Ky., upon the recommendation of Major-Generals Sherman and Thomas, and faithfully served as contract surgeon in the service of the United States, and has devoted herself with much patriotic zeal to the sick and wounded soldiers, both in the field and hospitals, to the detriment of her own health, and has also endured hardships as a prisoner of war four months in a Southern prison while acting as contract surgeon; and Whereas by reason of her not being a commissioned officer in the military service, a brevet or honorary rank cannot, under existing laws, be conferred upon her; and Whereas in the opinion of the President an honorable recognition of her services and sufferings should be made. It is ordered, That a testimonial thereof shall be hereby made and given to the said Dr. Mary E. Walker, and that the usual medal of honor for meritorious services be given her.

She was 32 years old when she received the award. Her story did not end there.

She became a writer and lecturer, supporting such issues as health care, temperance, women’s rights and dress reform for women. She was frequently arrested for wearing masculine styled clothing and insisted on her right to wear clothing that she thought appropriate. She wrote two books that discussed women’s rights and dress.

Mary Edwards Walker was a supporter of the women’s suffrage movement. She was a member of the central woman’s suffrage Bureau in Washington. During her time as a member, she solicited funds to endow a chair in the medical school at Howard University to be filled by a woman professor. Walker attempted to register to vote in 1871, but was turned away. The initial stance of the movement, taking Dr. Walker’s lead, was to claim that women already had the right to vote, and Congress need only enact enabling legislation. After a number of fruitless years taking this stance, the movement took the new tack of working for a constitutional amendment. This was diametrically opposed to Mary Walker’s position, and she fell out of favor with the movement. She continued to attend conventions of the suffrage movement and distribute her own brand of literature, but was virtually ignored by the rest of the movement. Her penchant for wearing male-style clothing, including a top hat, only exacerbated the situation. She received a more positive reception in England than in the United States.  In 1907, Walker published a work on “Crowning Constitutional Argument” to state her views. Walker argued that some states, as well as the Constitution, had already granted women the right to vote. She testified on women’s suffrage in 1912 and 1914 before the U.S. House of Representatives.

Walker died on February 21, 1919, from natural causes at the age of 86 and is buried in Rural Cemetery Oswego, New York. She had a plain funeral, but an American flag was draped over her casket and she was buried in her black suit instead of a dress. Her death in 1919 came one year before the passage of the Nineteenth Amendment to the United States Constitution, which guaranteed women the right to vote.

The host of MSNBC’s “The Last Word,” Lawrence O’Donnell tells her story.

Sep 11 2015

The Breakfast Club (Keep It Simple)

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. 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.

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This Day in History

American Revolution: Gen George Washington defeated at the Battle of Brandywine; FDR dedicated the Hoover Dam; The Beatles recorded their first singles.

Breakfast Tunes

Something to Think about over Coffee Prozac

Life is really simple, but we insist on making it complicated.

Confucius

Sep 11 2015

On This Day In History September 11

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

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

September 11 is the 254th day of the year (255th in leap years) in the Gregorian calendar. There are 111 days remaining until the end of the year. It is usually the first day of the Coptic calendar and Ethiopian calendar (in the period AD 1900 to AD 2099).

On this day in 1941, ground is broken for the construction of The Pentagon.

The Pentagon is the headquarters of the United States Department of Defense, located in Arlington County, Virginia. As a symbol of the U.S. military, “the Pentagon” is often used metonymically to refer to the Department of Defense rather than the building itself.

Designed by the American architect George Bergstrom (1876-1955), and built by Philadelphia, Pennsylvania, general contractor John McShain, the building was dedicated on January 15, 1943, after ground was broken for construction on September 11, 1941. General Brehon Somervell provided the major motive power behind the project; Colonel Leslie Groves was responsible for overseeing the project for the Army.

The Pentagon is the world’s largest office building by floor area, with about 6,500,000 sq ft (604,000 m2), of which 3,700,000 sq ft (344,000 m2) are used as offices. Approximately 23,000 military and civilian employees and about 3,000 non-defense support personnel work in the Pentagon. It has five sides, five floors above ground, two basement levels, and five ring corridors per floor with a total of 17.5 mi (28.2 km) of corridors. The Pentagon includes a five-acre (20,000 m2) central plaza, which is shaped like a pentagon and informally known as “ground zero”, a nickname originating during the Cold War and based on the presumption that the Soviet Union would target one or more nuclear missiles at this central location in the outbreak of a nuclear war.

On September 11, 2001, exactly 60 years after the building’s groundbreaking, hijacked American Airlines Flight 77 was crashed into the western side of the Pentagon, killing 189 people, including five hijackers, 59 others aboard the plane, and 125 working in the building.

Sep 11 2015

The Daily Late Nightly Show (Steroid Abuse)

So down 4.4 million for the 2nd episode and a .4 deficit in the demo (not insignificant, it’s like 30%) but ’twas ever thus destined to be.  Fallon labors under the handicap or advantage of a Thursday Night Throwball intro pairing the Patsies and the Steelers in the season opener.

Biden made ‘news?’ today in his interview with Stephen which was embargoed and then transcripts unembargoed while the tape remained embargoed.  I’m hard put to call it actual news because nothing new came out of it except his continued protestation that running for President takes your full commitment and he got all verklempt about his kid’s service in Iraq.

The reason Biden is being sucked up to by the Villagers is Good Old Senator Credit Card is their very own pod produced clone, a hollow empty husk of institutionalized graft and corruption that they hope can fool enough of the people when Hillary falls to their decades of Clinton hate.

He says himself he is no populist.  Do we really need another Democrat running to the right of Hillary?  That’s Jim Webb’s job.

I hope Stephen cleans him like a fish and drops him still flopping in a pan but I expect he’ll be much gentler than that.  His other guests are Travis Kalanick and Toby Keith.

So, do Natasha and Bruce ever get together?

The New Continuity

Welcome to Mars

Tonightly we will be talking about Tom Brady’s balls, concussions, and other things thrown with Tony Richards, Mike Yard and Rory Albanese.

Tomorrow will be all Amy Schumer all the time.