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It’s Getting Warmer

Cross posted from The Stars Hollow Gazette

It’s getting warmer and that appears to be the trend. Is it too late to so something? What are the consequences? Is there the political will to take action? Naomi Wolf exams those questions in this article from The Guardian about the impact of the current American drought, the American phenomenon of climate change denial and the effects of “political polarization” on public opinion:

America has led the world in climate change denial, a phenomenon noted with amazement by Europeans, not to mention thinking people around the world. Year after year, the US has failed to sign global treaties or curb emissions, even as our status as a source of a third of the world’s carbon emissions goes unchanged. [..]

But could our denial be cracking, this summer, as, in the heartland – that most iconic of American landscapes – broiling temperatures injure humans and cook fish in the water? This summer a crisis has occurred (though one that, again, is seldom reported on in terms of our outsize contribution to the disaster), as midwestern farmers lost vast swaths of their corn crop to scalding heat and drought. In the American unconscious of wishful ignorance, this disaster and loss was to be borne, as usual, by other people far away. [..]

But we face some serious problems in rising out of our torpor. In “Shifting Public Opinion on Climate Change: An Empirical Assessment of Factors Influencing Concern over Climate Change in the US, 2002-2010“, John Wihbey shows that Gallup surveys reveal Americans’ level of concern varying widely [..]

Wihbey and colleagues’ study found that this fluctuation was caused by, among other factors, political polarization. In other words, when one party says global warming is a crisis and the other says all that is nonsense, and there is no cooperation between political elites at both ends of the spectrum, the net result is apathy.

What is even more ominous, is how China and India have manipulated carbon credits to make a profits from the production of HFC-23, a gaseous byproduct of a coolant that causes global warming and is used in air-conditioners and then destroying it:

When the United Nations wanted to help slow climate change, it established what seemed a sensible system.

Greenhouse gases were rated based on their power to warm the atmosphere. The more dangerous the gas, the more that manufacturers in developing nations would be compensated as they reduced their emissions.

But where the United Nations envisioned environmental reform, some manufacturers of gases used in air-conditioning and refrigeration saw a lucrative business opportunity.

They quickly figured out that they could earn one carbon credit by eliminating one ton of carbon dioxide, but could earn more than 11,000 credits by simply destroying a ton of an obscure waste gas normally released in the manufacturing of a widely used coolant gas. That is because that byproduct has a huge global warming effect. The credits could be sold on international markets, earning tens of millions of dollars a year. [..]

What was intended to fix the problem of hydro-chlorofluorocarbons has now created its own major problem:

The United Nations and the European Union, through new rules and an outright ban, are trying to undo this unintended bonanza. But the lucrative incentive has become so entrenched that efforts to roll it back are proving tricky, even risky.

China and India, where most of the 19 factories are, have been resisting mightily. The manufacturers have grown accustomed to an income stream that in some years accounted for half their profits. The windfall has enhanced their power and influence. As a result, many environmental experts fear that if manufacturers are not paid to destroy the waste gas, they will simply resume releasing it into the atmosphere. [..]

Some Chinese producers have said that if the payments were to end, they would vent gas skyward. Such releases are illegal in most developed countries, but still permissible in China and India. [..]

Already, a small number of coolant factories in China that did not qualify for the United Nations carbon credits freely vent this dangerous chemical. And atmospheric levels are rapidly rising.

Wall St. also has their grubby paws in this, too. Goldman Sachs invested in carbon credits and a coolant factory in Monterrey, Mexico, that receives carbon credits is 49 percent owned by Honeywell. So these companies, especially in China and India, are holding the world hostage. Pay up or we kill the climate faster.

James Hansen, director of NASA’s Goddard Institute for Space Studies joined Eliot Spitzer, host of “Viewpoint” to discuss how heat waves are a indicator of global warming.

“If we continue with business as usual this century, we will drive to extinction 20 to 50 percent of the species on the planet,” Hansen says. “We are pushing the system an order of magnitude faster than any natural changes of climate in the past.”

“We’re gonna have to reduce carbon dioxide emissions, and that is not as difficult as you think. If we would just make fossil fuels pay for their true cost to society, we could begin to move to different energies and energy efficiency,” Hansen contends. “We should be collecting a fee from fossil fuel companies that gradually rises over time and 100 percent of that money should be distributed to the public, not one dime to the government. If we did that, the people who do better than average in limiting their fossil fuel use will actually get more in this dividend than they would pay in increased energy prices.”

NASA’s James Hansen warns escalating climate crisis requires intervention

On This Day In History August 12

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

August 12 is the 224th day of the year (225th in leap years) in the Gregorian calendar. There are 141 days remaining until the end of the year.

It is the peak of the Perseid meteor shower. It is also known as the “Glorious Twelfth” in the UK, as it marks the traditional start of the grouse shooting season.

On this day in 1990, fossil hunter Susan Hendrickson discovers three huge bones jutting out of a cliff near Faith, South Dakota. They turn out to be part of the largest-ever Tyrannosaurus rex skeleton ever discovered, a 65 million-year-old specimen dubbed Sue, after its discoverer.

Amazingly, Sue’s skeleton was over 90 percent complete, and the bones were extremely well-preserved. Hendrickson’s employer, the Black Hills Institute of Geological Research, paid $5,000 to the land owner, Maurice Williams, for the right to excavate the dinosaur skeleton, which was cleaned and transported to the company headquarters in Hill City. The institute’s president, Peter Larson, announced plans to build a non-profit museum to display Sue along with other fossils of the Cretaceous period.

Preparation and display

The Field Museum hired a specialized moving company, with experience in transporting delicate items, to move the bones to Chicago. The truck arrived at the museum in October 1997. Two new research laboratories funded by McDonalds were created and staffed by Field Museum preparators whose job was to slowly and carefully remove all the rock, or “matrix” from the bones. One preparation lab was at Field Museum itself, the other was at the newly opened Animal Kingdom in Disney World in Orlando. Millions of visitors observed the preparation of Sue’s bones through glass windows in both labs. Footage of the work was also put on the museum’s website. Several of the fossil’s bones had never been discovered, so preparators produced models of the missing bones from plastic to complete the exhibit. The modeled bones were colored in a reddish hue so that visitors could observe which bones were real and which bones were plastic. The preparators also poured molds of each bone. All the molds were sent to a company outside Toronto to be cast in hollow plastic. Field Museum kept one set of disarticulated casts in its research collection. The other sets were incorporated into mounted cast skeletons. One set of the casts was sent to Disney’s Animal Kingdom in Florida to be presented for public display. Two other mounted casts were placed into a traveling tour that was sponsored by the McDonald’s Corporation.

Once the preparators finished removing the matrix from each bone, it was sent to the museum’s photographer who made high-quality photographs. From there, the museum’s paleontologists began the study of the skeleton. In addition to photographing and studying each bone, the research staff also arranged for CT scanning of select bones. The skull was too large to fit into a medical CT scanner, so Boeing’s Rocketdyne laboratory in California agreed to let the museum use their CT scanner that was normally used to inspect space shuttle parts.

Bone damage

Close examination of the bones revealed that Sue was 28 years old when she died, making her the oldest T. rex known. During her life this carnivore received several injuries and suffered from numerous pathologies. An injury to the right shoulder region of Sue resulted in a damaged shoulder blade, a torn tendon in the right arm, and three broken ribs. This damage subsequently healed (though one rib healed into two separate pieces), indicating Sue survived the incident. The left fibula is twice the diameter of the right one, likely a result of infection. Original reports of this bone being broken were contradicted by the CT scans which showed no fracture. Multiple holes in the front of the skull were originally thought to be bite marks by some, but subsequent study found these to be areas of infection instead, possibly from an infestation of an ancestral form of Trichomonas gallinae, a protozoan parasite that infests birds. Damage to the back end of the skull was interpreted early on as a fatal bite wound. Subsequent study by Field Museum paleontologists found no bite marks. The distortion and breakage seen in some of the bones in the back of the skull was likely caused by post-mortem trampling. Some of the tail vertebra are fused in a pattern typical of arthritis due to injury. The animal is also believed to have suffered from gout. In addition, there is extra bone in some of the tail vertebrae likely caused by the stresses brought on by Sue’s great size. Sue did not die as a result of any of these injuries; her cause of death is not known.

Display

After the bones were prepared, photographed and studied, they were sent to New Jersey where work began on making the mount. This work consists of bending steel to support each bone safely and to display the entire skeleton articulated as it was in life. The real skull was not incorporated into the mount as subsequent study would be difficult with the head 13 feet off the ground. Parts of the skull had been crushed and broken, and thus appeared distorted. The museum made a cast of the skull, and altered this cast to remove the distortions, thus approximating what the original undistorted skull may have looked like. The cast skull was also lighter, allowing it to be displayed on the mount without the use of a steel upright under the head. The original skull is exhibited in a case that can be opened to allow researchers access for study. When the whole skeleton was assembled, it was forty feet (twelve meters) long from nose to tail, and twelve feet (four meters) tall at the hips.

What We Now Know

Up with Chris Hayes returned after a two week hiatus for NBC’s coverage of the 2012 Olympics and just in time for a major political announcement by the presumptive Republican presidential nominee. It was leaked late last night and all over Twitter in seconds that former Massachusetts Governor Mitt Romney has selected Rep. Paul Ryan, (R-WI) for his running mate. So it isn’t at all surprising that this was the topic that dominated the discussion. Two segments that I felt were most important examined Rep. Ryan’s stance on Medicare and it impacts on the Romney campaign. In the second segment Chris and his guests reviewed Ryan’s voting record and the impact on tackling the deficit. Joining Chris on the panel were Rachel Maddow, host of MSNBC’s Rachel Maddow Show; Avid Roy, health care policy adviser to Gov. Romney; Melissa Harris Perry, host of MSNBC’s Melissa Harris Perry Show and Ezra Klein, political analyst for the Washington Post; and John Nichols, contributing editor at The Nation.

The “Rule of Lawsky”

Cross posted from The Stars Hollow Gazette

Yves Smith at naked capitalism and Marcy Wheeler at emptywheel have been following the latest banking scandal with a certain amount of “glee” as New York Superintendent of Financial Services, Benjamin Lawsky, Federal regulators (mainly Treasury and the Federal Reserve) and Mr. Lawsky’s target, the British bank, Standard Charter, all do the “Rule of Law” waltz in the media.

The “dance” so far has resulted in a flurry of furious responses to Mr. Lawsky’s charges that the Standard Charter Bank (SCB) laundered billions of dollars for Iran hiding the transaction from federal investigators for 10 years.

These are the latest developments over the last few days since the story broke:

First from Yves where she confesses her enjoyment of the “dust up” and the latest counter by SCB to sue Mr. Lawsky:

The lead story in the Financial Times on SCB is so obviously barmy that I’m astonished that the pink paper would give it prominent play. The headline: StanChart seeks advice over countersuit. Even floating this as an course of action reeks either of desperation to create positive news hooks or delusion:

   The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although StanChart is conscious of the delicacy of taking an aggressive stance towards its regulators.

The whole “delicacy” part is code for this having odds of close to zero of happening, so this looks like yet more spin.

The damage was done by the threat to yank the license and access to dollar clearing services, not the “rogue institution” label in the order. And as we’ve written in earlier posts, despite the spinmeister’s efforts to contend otherwise, Lawsky has cited violations of New York law that appear to let him get there, in addition to the charge under the Federal laws on transfers to Iran.

Yves notes that the likelihood of this lawsuit going forward is “zero” since the risk of losing in a NY civil court and the exposure of any other damning evidence that the superintendent has would be a disaster for SCB.

She also highlighted a comment made by Frank Partnoy, former derivatives salesman, now law professor, who noted:

   Indeed, the order puts the bank’s senior attorneys and compliance officers at the heart of the wire stripping scheme, even when outside counsel advised otherwise. As early as 1995, soon after President Bill Clinton announced economic sanctions against Iran, the bank’s general counsel allegedly “embraced a framework for regulatory evasion”. He allegedly strategised about how to avoid scrutiny by the US Office of Foreign Assets Control, known as OFAC, and instructed employees that a memorandum describing the plan to avoid regulatory compliance was “highly confidential & MUST NOT be sent to the US”….

   As recent debacles at Barclays, HSBC and now Standard Chartered demonstrate, employees of big global banks increasingly lack a moral compass. Some general counsels and compliance officers do provide ethical guidance. But many are facilitators or loophole instructors, there to show employees the best way to avoid the law. Not even mafia lawyers go that far; unlike many bankers, mobsters understand the value of an impartial consigliere who will tell them when to stop.

If silly civil lawsuits weren’t enough, the original Reuters’ article, the source of Marcy Wheeler’s original post, was edited to exclude the orders of magnitude of the fraud:

The Reuters article was a pretty damning picture of how the Get Out of Jail Free industry works.

And then, the most damning parts of the article disappeared (Update from Briinhild: the full story is back up). As Yves discovered later in the day yesterday, Reuters pulled those paragraphs of the story that described this whole process.

Yves then posted that Reuters was running interference for elite corruption by scrubbing the article clean of the damning parts and posted original Reuters’ article:

Now I decided to go have a look myself. Being on the vampire shift, I didn’t go looking until mid afternoon. And guess what, the story that was now at that URL was not the same story. Yes, there was a story on Standard Chartered. But the version that Marcy worked from was apparently the original, released at 00:28 AM, titled “U.S. regulators irate at NY action against StanChart.” I’ve loaded that version in a Word and put it up at ScribD, and am embedding it below. It’s 1766 words. Be sure to download it if you are interested in this topic.

Apparently, as was pointed out by an emptywheel reader, Briinhild, Marcy and Yves must have embarrassed Reuters because they reposted the original article later that day.

The latest today from Yves, this “plot thickens” as Federal regulators try to “leash and collar” Superintendent Lawsky:

Today, the Wall Street Journal reported that, “Regulators Seek Unity in U.K. Bank Talks.”

If you read the article, a more accurate headline would be “Federal regulators desperate to get in front of Lawsky mob and call it a parade.” All the article says is the mucho unhappy and very much outflanked Federal regulators have gotten a meeting with Lawsky. Just look at the disconnect between the PR in the first paragraph and the actual state of play in the second:


   U.S. authorities are forming a group with New York’s top financial regulator to negotiate a settlement with Standard Chartered over allegations it illegally hid financial dealings with Iran.

   The U.S. Treasury Department, Federal Reserve, U.S. Department of Justice and Manhattan district attorney’s office are scrambling to reach an understanding with the New York State Department of Financial Services over the ground rules for negotiations with the U.K.’s fifth-largest bank by assets, according to people familiar with the talks.

This is hysterical. “Ground rules for negotiations”? Lawsky does not need the permission of Geithner et. al. to negotiate with Standard Chartered. As long as Lawsky has Cuomo’s backing, he has all the leverage here. And three independent sources told me as of today that Cuomo was fully behind Lawsky. That means he is likely to remain free to operate as he sees fit. It’s a given that if the White House had any real sway over Cuomo and saw fit to intervene, they would have done so by now. There is no downside to Lawsky in going through the motions of seeing if there is a way for him to proceed and have the Feds save a bit of face.

Let me stress again: Lawsky has all the cards, and he must know that.

Yves also cites this article from Bloomberg:

   New York’s financial-services regulator has grounds to shut Standard Chartered Plc (STAN) in the state even if he accepts the firm’s argument that it illegally laundered only a fraction of the $250 billion he claims.

   As the state’s top banking regulator, Benjamin Lawsky has power to act in his discretion against any financial institution he deems untrustworthy, according to the charter of his year-old department.

   Penalties he could impose include fines and the revocation of the bank’s license to operate in the state…

   Even if Standard Chartered’s position is legally sound, the order’s disclosure of internal e-mails suggesting a conspiracy to hide the identity of Iranian clients from regulators has given Lawsky grounds to act when the two sides face off at an administrative hearing Aug. 15, according to experts on both sides of the Atlantic.

   “I don’t care whether it is a half of one percent that weren’t right,” said Arthur Levitt, former chairman of the Securities and Exchange Commission,…

   “There are going to be more that weren’t right…The e-mails are really outrageous. I think Lawsky has uncovered something that probably has a much deeper depth.”…

   Neil Barofsky, who oversaw the U.S. Troubled Asset Relief Program and criticized the U.S. Treasury Department in his book, Bailout, objected to the criticism heaped on Lawsky.

   “This is not Lawsky getting ahead of other regulators,” said Barofsky. “This is Lawsky doing his job.”…

   “Willful non-compliance is very serious,” said Tariq Mirza, a former Federal Deposit Insurance Corp. official now with Grant Thornton. “If those allegations can be substantiated, regulators throw the book at institutions.”

Another article from the International Business Times that speculates what SBC’s sentence would be if it were an individual found guilty of these crimes:

Under New York state statutes against those two crimes, a defendant found guilty could be sentenced to a penalty of between eight-and-one-third and 25 years. The attorney noted that “it seems likely that a maximum sentence would be given because of the extent of criminality alleged in this case.” And if the judge really wanted to throw the book at them, the attorney explained, they could consider every instance where Standard Chartered Bank engaged in alleged illegal conduct, no doubt hundreds of them, as a “discrete act of criminality” rather than “one criminal transaction.”

Federal involvement would make the possible prison term even stiffer, with the appropriate federal money-laundering statute carrying a penalty of “roughly 15 to 19 years,” and a racketeering conviction “punishable by up to 20 years” in Club Fed.

(emphasis mine)

Wouldn’t that be a delightful sight?

As Yves notes in her discussion of these news articles, there is a lot of spin or, as with the case of a New York Times article, misinformation:

There is also an article at the New York Times on Lawsky which comes close to being a hatchet job. It does not look as if the Times made any effort to get to anyone in Lawsky’s camp (by contrast, I know of at least one reporter working on a profile who says everyone who Lawsky has worked with him is extremely complimentary). It also has sources that are spinning (one might say misrepresenting) the genesis. It acknowledges that Lawsky discussed his findings and theories, so it undermines the “blindsided claim. We were told three months ago, with the Fed; the article says April, so this is pretty close to the same time frame and sounds like the same meeting. [..]

(emphasis mine)

The traditional MSM is going to do a lot of the work for federal regulators by sniping at Mr. Lawsky and painting him as a “rogue” and “over-stepping his authority”. It’s bloggers like Marcy Wheeler and Yves Smith that sort out the facts from the hype and innuendo. The ladies rock.

As Yves requested, if you live in New York and support what Mr. Lawsky is doing, especially since the New York Times is taking shots at him now, drop him a note using this form.

Thanks and a h/t to naked capitalism reader Bryan Sean McKown for the title.

On This Day In History August 11

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.

August 11 is the 223rd day of the year (224th in leap years) in the Gregorian calendar. There are 142 days remaining until the end of the year.

On this day in 1934, the first Federal prisoners arrived at Alcatraz.

A group of federal prisoners classified as “most dangerous” arrives at Alcatraz Island, a 22-acre rocky outcrop situated 1.5 miles offshore in San Francisco Bay. The convicts–the first civilian prisoners to be housed in the new high-security penitentiary–joined a few dozen military prisoners left over from the island’s days as a U.S. military prison.

Alcatraz was an uninhabited seabird haven when it was explored by Spanish Lieutenant Juan Manuel de Ayala in 1775. He named it Isla de los Alcatraces, or “Island of the Pelicans.” Fortified by the Spanish, Alcatraz was sold to the United States in 1849. In 1854, it had the distinction of housing the first lighthouse on the coast of California. Beginning in 1859, a U.S. Army detachment was garrisoned there, and from 1868 Alcatraz was used to house military criminals. In addition to recalcitrant U.S. soldiers, prisoners included rebellious Indian scouts, American soldiers fighting in the Philippines who had deserted to the Filipino cause, and Chinese civilians who resisted the U.S. Army during the Boxer Rebellion. In 1907, Alcatraz was designated the Pacific Branch of the United States Military Prison.

In 1934, Alcatraz was fortified into a high-security federal penitentiary designed to hold the most dangerous prisoners in the U.S. penal system, especially those with a penchant for escape attempts. The first shipment of civilian prisoners arrived on August 11, 1934. Later that month, more shiploads arrived, featuring, among other convicts, infamous mobster Al Capone. In September, George “Machine Gun” Kelly, another luminary of organized crime, landed on Alcatraz.

By decision of Attorney General Robert F. Kennedy, the penitentiary was closed on March 21, 1963. It was closed because it was far more expensive to operate than other prisons (nearly $10 per prisoner per day, as opposed to $3 per prisoner per day at Atlanta), half a century of salt water saturation  had severely eroded the buildings, and the bay was being badly polluted by the sewage from the approximately 250 inmates and 60 Bureau of Prisons families on the island. The United States Penitentiary in Marion, Illinois, a traditional land-bound prison, opened that same year to serve as a replacement for Alcatraz.

The entire Alcatraz Island was listed on the National Register of Historic Places in 1976, and was further declared a National Historic Landmark in 1986. In 1993, the National Park Service published a plan entitled Alcatraz Development Concept and Environmental Assessment.  This plan, approved in 1980, doubled the amount of Alcatraz accessible to the public to enable visitors to enjoy its scenery and bird, marine, and animal life, such as the California slender salamander.

Today American Indian groups such as the International Indian Treaty Council hold ceremonies on the island, most notably, their “Sunrise Gatherings” every Columbus and Thanksgiving Day.

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On This Day In History August 10

Cross posted from The Stars Hollow Gazette

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

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

Click on images to enlarge

August 10 is the 222nd day of the year (223rd in leap years) in the Gregorian calendar. There are 143 days remaining until the end of the year.

The term ‘the 10th of August’ is widely used by historians as a shorthand for the Storming of the Tuileries Palace on the 10th of August, 1792, the effective end of the French monarchy until it is restored in 1814.

On this day in  1846, Smithsonian Institution was created. After a decade of debate about how best to spend a bequest left to America from an obscure English scientist, President James K. Polk signs the Smithsonian Institution Act into law.

In 1829, James Smithson died in Italy, leaving behind a will with a peculiar footnote. In the event that his only nephew died without any heirs, Smithson decreed that the whole of his estate would go to “the United States of America, to found at Washington, under the name of the Smithsonian Institution, an Establishment for the increase and diffusion of knowledge.” Smithson’s curious bequest to a country that he had never visited aroused significant attention on both sides of the Atlantic.

After the nephew died without heirs in 1835, President Andrew Jackson informed Congress of the bequest, which amounted to 104,960 gold sovereigns, or US$500,000 ($10,100,997 in 2008 U.S. dollars after inflation). The money, however, was invested in shaky state bonds that quickly defaulted. After heated debate in Congress, former President John Quincy Adams successfully argued to restore the lost funds with interest.  Congress also debated whether the federal government had the authority to accept the gift. Congress ultimately accepted the legacy bequeathed to the nation and pledged the faith of the United States to the charitable trust July 1, 1836.

Eight years later, Congress passed an act establishing the Smithsonian Institution, a hybrid public/private partnership, and the act was signed into law on August 10, 1846 by James Polk. (See 20 U.S.C. § 41 (Ch. 178, Sec. 1, 9 Stat. 102).) The bill was drafted by Indiana Democratic Congressman Robert Dale Owen, a Socialist and son of Robert Owen, the father of the cooperative movement.

Fines Not Commensurate with the Crime

Cross posted from The Stars Hollow Gazette

The fines that are being levied against banks and companies for investment fraud, fraudulent advertising, money laundering and the like are large but come nowhere near the cost to tax payers and investors. Since these fines are but a fraction of the profits that these criminals reap, the fines won’t deter them from repeating the offense. Nor does it help that as part of the settlement the company and its employees are let off the hook for criminal wrongdoing.

Glaxo Agrees to Pay $3 Billion in Fraud Settlement

In the largest settlement involving a pharmaceutical company, the British drugmaker GlaxoSmithKline agreed to plead guilty to criminal charges and pay $3 billion in fines for promoting its best-selling antidepressants for unapproved uses and failing to report safety data about a top diabetes drug, federal prosecutors announced Monday. The agreement also includes civil penalties for improper marketing of a half-dozen other drugs. [..]

Part of the civil settlement also includes claims that the company overcharged the government for drugs. Glaxo did not admit any wrongdoing in the civil settlement.

Despite the large amount, $3 billion represents only a portion of what Glaxo made on the drugs. Avandia, for example, racked up $10.4 billion in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9 billion during the years covered by the settlement, according to IMS Health, a data group that consults for drugmakers.

In the New York Times article, Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, stated, “So a $3 billion settlement for half a dozen drugs over 10 years can be rationalized as the cost of doing business.” Also, Eliot Spitzer, former New York State Attorney General who sued GlaxoSmithKline in 2004 over allegations about the drug Paxil, was quoted as saying that “What we’re learning is that money doesn’t deter corporate malfeasance, The only thing that will work in my view is C.E.O.’s and officials being forced to resign and individual culpability being enforced.”

In another case, Morgan Stanley, an international investment firm, has agreed to pay a fine of $4.8 million with no admission of wrongdoing for electricity price-fixing said to cost consumers $300 million. Justice department officials said that it sends a message to the banking industry. What message would that be?

The government said the arrangement allowed KeySpan to withhold substantial electricity generating capacity from the market, driving prices higher for consumers, and generated $21.6 million of net revenue for Morgan Stanley.

U.S. District Judge William Pauley in Manhattan said he shared the concerns of state officials and the AARP, a nonprofit serving people 50 and older, that any settlement should have reflected the harm to consumers and forced Morgan Stanley to give up the $21.6 million.

“Given the government’s stark allegations of manipulative conduct against Morgan Stanley, disgorgement of $4.8 million is a relatively mild sanction,” Pauley wrote. “There is a risk that a large financial services firm like Morgan Stanley could view such a modest penalty as merely a cost of doing business.

“But despite this court’s misgivings, the government’s decision to settle for less than full damages is entitled to judicial deference, particularly in view of the novelty of the government’s theory.”

The judge also rejected the AARP argument that the $4.8 million be returned to consumers, in part because sending it instead to the U.S. Treasury served the public interest.

So the consumers are left holding the bag, particularly the financially stressed elderly and poor, while the Morgan Stanley and Keyspan continue business as usual concocting new ways to break the law.

If whistleblowers can reveal it, why can’t the government prosecute it? The claim by the Obama administration that it’s too hard to find the evidence to pin on an individual just rings too hollow. It may be hard but it is possible with subpoenas and little more effort. It is well past time we held the criminals responsible for breaking the laws and stop prosecuting those who expose it.

Sleeping with the Enemy

Cross posted from The Stars Hollow Gazette

The LIBOR scandal continues to rattle the banking industry revealing the fraud that has gone unchecked by regulators in the US and Europe. The latest scandal that is now rocking international banking involves billions of dollars that were laundered by the British bank, Standard Charter, for Iran:

Standard Chartered bank ran a rogue unit that schemed with Iran’s government to hide more than $250bn (£160bn) in illegal transactions for nearly a decade, according to a scathing report by New York regulators that may put intense pressure on the management of the UK-based bank.

According to the report filed by the New York state department of financial services (NYSDFS), when warned by a US colleague about dealings with Iran, a Standard Chartered executive caustically replied: “You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.” [..]

The 27-page report claims that Standard Chartered bankers helped Iranian clients skirt US financial sanctions against their country for nearly a decade.

Benjamin Lawsky, superintendent of the NYSDFS, said a Standard Chartered subsidiary in New York had also sought to do business with other US-sanctioned countries, including Libya, Burma and Sudan.

It is the latest blow to the reputation of the City, already criticised in Washington following the HSBC money-laundering debacle and JP Morgan’s multibillion-dollar trading losses at its London office. [..]

The New York regulator has provided emails between members of Standard Chartered staff. In one the head of the US operations warned, among others, the executive director of risk in London, that the dealings with Iran could cause “very serious or even catastrophic reputational damage” to the group.

The email, dated October 2006, warned: “There is equally importantly potential of risk of subjecting management in US and London (e.g. you and I) and elsewhere to personal reputational damages and/or serious criminal liability.” It was this memo that provoked the response about “you f—ing Americans”.

But it wasn’t the Treasury Department or the Federal Reserve that dropped the bomb with these charges, it was  Benjamin Lawsky, the New York Superintendent of Financial Services. Yves Smith at naked capitalism asked yesterday, “where were the Feds?

The lack of action by everyone ex the lowly New York banking supervisor is mighty troubling. The evidence presented in Lawsky’s filing is compelling; he clearly has not gone off half cocked. Why has he pressed forward and announced this on his own? The Treasury Department’s Office of Terrorism and Financial Intelligence has supposedly been all over terrorist finance; the consultants to that effort typically have very high level security clearances and top level access (one colleague who worked on this effort in the Paulson Treasury could get the former ECB chief Trichet on the phone). For them not to have pursued it anywhere as aggressively as a vastly less well resourced state banking regulator, particularly when Iran is now the designated Foreign Enemy #1, does not pass the smell test.

At a minimum, this lack of sufficient inquisitiveness on behalf of the Feds would the bank snookered them by being terribly forthcoming (as in it was responding only to specific inquiries, and then as narrowly as possible). But it raises the more troubling specter that Federal regulators (oh, and the US Department of Justice) wanted to keep this all quiet so as not to lead to embarrassing headlines. Although there is nothing in the filing to point to failure to act by the New York Fed, which was presumably the lead party in the 2003 sanctions against SCB (indeed, it says specifically that SCB deceived Federal regulators), the flip side is there would be only downside to Lawsky in doing anything that would make Fed or Treasury think he was trying to make then look bad.

There was a huge furor in the UK over who among the banking regulators knew what when on the Libor scandal. If our Congresscritters are at all worth their salt, they ought to be putting Geithner and the relevant folks at the New York Fed under the hot lights. We’ll see soon enough how the Fed and Treasury play this. If they don’t launch parallel actions pronto, it will be a damning sign as to where they think their, and perhaps most importantly, Geithner’s, interests lie.

At emptywheel, Mary Wheeler, wondered as well why the Superintendent of Financial Services is policing our Iran sanctions?

Normally, we’d see accusations like SFS released today from Treasury’s OFAC (Office of Terrorism and Financial Intelligence), perhaps (for charges as scandalous as these) in conjunction with the NY DA and/or a US Attorney. And yet OFAC has had these materials in hand for 2 years, and has done nothing.

In fact, we have a pretty good idea what OFAC’s action would look like, because earlier this year it sanctioned ING for actions that were similar in type, albeit larger in number (20,000 versus 60,000) and far larger in dollar amount ($1.6 billion involving Cuba versus $250 billion involving Iran). Both banks were doctoring fields in SWIFT forms to hide the source or destination of their transfers. [..]

My wildarsed guess, in this case, is that we have an understanding with our allies that they’ll allow us to require the rest of the world to comply with our sanctions so long as it doesn’t affect that country’s businesses. That is, I suspect countries like Britain are happy to comply with our sanctions so long as British banks don’t lose competitive advantages as a result. Of course, these sanctions are different that-say-our stupid Cuba sanctions in that the UK is as enthusiastic about sanctioning Iran into docility as the US is, and this scheme is all about retaining lucrative business with Iran.

But we may never learn what reason that is, because that would make things uncomfortable for the entities that claim there is rule of law for banks while they ensure that usually is not the case.

But no matter, the Feds are now upset with Lawsky who had the cajones to do what they were obviously trying to cover up. Barry Ritholtz at Economonitor points out that Lawsky has virtually declared the Treasury and Federal reserve as “too corrupt” to handle this:

   “Pursuant to the statutory powers vested in him by the People of the State of New York . . . [and] extensive investigation included the review of more than 30,000 pages of documents, including internal SCB (Standard Chartered Bank) e-mails that describe willful and egregious violations of law.

  For almost ten years, SCB schemed with the Government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees. SCB’s actions left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity.

   –NYS Department of Financial Services

Benjamin Lawsky, head of the New York State Department of Financial Services, has declared that the Treasury Department and the Federal Reserve is “too corrupt” to be involved in NY’s actions against money launderers and Iran sponsors at Standard Chartered bank.

At least, that corruption is what was implied by his actions (note those are my words, not his). Lawsky refused to give Tim Geithner or Ben Bernanke or anyone else at Treasury or the Fed any advance notice of pending legal/regulatory actions. Sorry, Treasury, he seemed to be saying, but your track records preceded you. [..]

This Treasury Department, like the one that preceded it, along with Congress and the White House, have proven themselves to be utterly incapable of overseeing the banking industry. Rather than adhere to this betrayal of the public trust, Mr. Lawsky decided to do something amazing: He actually followed the law. The rest of the regulatory sector should take note.

Have a read of the paragraph at the top of this page to see how prosecution of banking felons and their crony capitalist allies is supposed to be done.

We live in the Banana Republic formerly known as the United States. Its time to turn this nation back into a Democracy . . .

Let’s hope that Mr. Lawsky doesn’t cave to pressure like NY State Attorney General Eric Scneiderman did.

Health and Fitness News

Welcome to the Health and Fitness News, a weekly diary which is cross-posted from The Stars Hollow Gazette. It is open for discussion about health related issues including diet, exercise, health and health care issues, as well as, tips on what you can do when there is a medical emergency. Also an opportunity to share and exchange your favorite healthy recipes.

Questions are encouraged and I will answer to the best of my ability. If I can’t, I will try to steer you in the right direction. Naturally, I cannot give individual medical advice for personal health issues. I can give you information about medical conditions and the current treatments available.

You can now find past Health and Fitness News diaries here and on the right hand side of the Front Page.

A New View of Tofu

Spiacy Tofu Marinade

If you’re stuck in a summer heat wave and can’t imagine firing up the stove, think tofu. Enjoy it cold, with dipping sauces or in a sandwich. This week I’m presenting a selection of sauces, which you can make up in advance and have on hand in the refrigerator. You might want to sear or grill the tofu first, but I am even more likely to enjoy my tofu uncooked, spread with or dipped into a sauce. It provides high-quality protein in a very light package that’s just right for hot summer days. Even the sodium in these recipes may be welcome if you are dealing with very hot weather.

~Martha Rose Shulman~

FOOD’s Amazing Cilantro Tofu Sandwich

This hearty sandwich consists of tofu dipped in a delicious cilantro-spiked marinade, briefly baked, then topped with a roasted corn relish.

Tofu With Peanut-Ginger Sauce

This sweet and pungent mixture also makes a nice dip for crudités or spring rolls.

Tofu With Hot Chipotle Barbecue Sauce

Don’t throw out the spicy adobo that canned chipotles are packed in: It gives this dish a real kick.

Spicy Tofu Marinade

This mixture works as a marinade or dipping sauce for pan-seared, grilled or plain cold tofu.

Tofu With Orange Miso Peanut Sauce

Pomegranate molasses, a Middle Eastern food, is a guest star in this otherwise Asian production.

On This Day In History August 9

Cross posted from The Stars Hollow Gazette

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

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

Click on images to enlarge

August 9 is the 221st day of the year (222nd in leap years) in the Gregorian calendar. There are 144 days remaining until the end of the year.

On this day in 1974, one day after the resignation of President Richard M. Nixon, Gerald R. Ford is sworn in as president, making him the first man to assume the presidency upon his predecessor’s resignation. He was also the first non-elected vice president and non-elected president, which made his ascendance to the presidency all the more unique.

Gerald Rudolph Ford, Jr. (born Leslie Lynch King, Jr.; July 14, 1913 – December 26, 2006) was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974. As the first person appointed to the vice-presidency under the terms of the 25th Amendment, when he became President upon Richard Nixon’s  resignation on August 9, 1974, he also became the only President of the United States who was elected neither President nor Vice-President.

Before ascending to the vice-presidency, Ford served nearly 25 years as Representative from Michigan’s 5th congressional district, eight of them as the Republican Minority Leader.

As President, Ford signed the Helsinki Accords, marking a move toward detente in the Cold War. With the conquest of South Vietnam by North Vietnam nine months into his presidency, US involvement in Vietnam essentially ended. Domestically, Ford presided over what was then the worst economy since the Great Depression, with growing inflation and a recession during his tenure. One of his more controversial acts was to grant a presidential pardon to President Richard Nixon for his role in the Watergate scandal. During Ford’s incumbency, foreign policy was characterized in procedural terms by the increased role Congress began to play, and by the corresponding curb on the powers of the President. In 1976, Ford narrowly defeated Ronald Reagan for the Republican nomination, but ultimately lost the presidential election to Democrat Jimmy Carter.

Following his years as president, Ford remained active in the Republican Party. After experiencing health problems and being admitted to the hospital four times in 2006, Ford died in his home on December 26, 2006. He lived longer than any other U.S. president, dying at the age of 93 years and 165 days.

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