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.

December 2 is the 336th day of the year (337th in leap years) in the Gregorian calendar. There are 29 days remaining until the end of the year.

On this day in 2001, Enron filed for Chapter 11 bankruptcy protection in a New York court, sparking one of the largest corporate scandals in U.S. history.

An energy-trading company based in Houston, Texas, Enron was formed in 1985 as the merger of two gas companies, Houston Natural Gas and Internorth. Under chairman and CEO Kenneth Lay, Enron rose as high as number seven on Fortune magazine’s list of the top 500 U.S. companies. In 2000, the company employed 21,000 people and posted revenue of $111 billion. Over the next year, however, Enron’s stock price began a dramatic slide, dropping from $90.75 in August 2000 to $0.26 by closing on November 30, 2001.

As prices fell, Lay sold large amounts of his Enron stock, while simultaneously encouraging Enron employees to buy more shares and assuring them that the company was on the rebound. Employees saw their retirement savings accounts wiped out as Enron’s stock price continued to plummet. After another energy company, Dynegy, canceled a planned $8.4 billion buy-out in late November, Enron filed for bankruptcy. By the end of the year, Enron’s collapse had cost investors billions of dollars, wiped out some 5,600 jobs and liquidated almost $2.1 billion in pension plans.

Accounting practices

Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising the profitability of a business. This provided ownership and management with full freedom of currency movement and the anonymity that allowed the company to hide losses. These entities made Enron look more profitable than it actually was, and created a dangerous spiral, in which each quarter, corporate officers would have to perform more and more contorted financial deception to create the illusion of billions in profits while the company was actually losing money. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. Chief Financial Officer Andrew Fastow led the team which created the off-books companies, and manipulated the deals to provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at the expense of the corporation for which he worked and its stockholders.

In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the United States. Enron president and chief operating officer Jeffrey Skilling began advocating a novel idea: the company didn’t really need any “assets.” By pushing the company’s aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, trading over $27 billion per quarter. The firm’s figures, however, had to be accepted at face value. Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were tabulated as if real today. Thus, Enron could record gains from what over time might turn out to be losses, as the company’s fiscal health became secondary to manipulating its stock price on Wall Street during the Tech boom. But when a company’s success is measured by agreeable financial statements emerging from a black box, a term Skilling himself admitted, actual balance sheets prove inconvenient. Indeed, Enron’s unscrupulous actions were often gambles to keep the deception going and so push up the stock price, which was posted daily in the company elevator. An advancing number meant a continued infusion of investor capital on which debt-ridden Enron in large part subsisted. Its fall would collapse the house of cards. Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst Richard Grubman, who questioned Enron’s unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied “Well, thank you very much, we appreciate that . . . asshole.” Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling’s lack of tact. When asked during his trial, Skilling wholeheartedly admitted that industrial dominance and abuse was a global problem: “Oh yes, yes sure, it is.”

Cross posted from The Stars Hollow Gazette

Another state attorney general is suing five major banks and Mortgage Electronic Registration System Inc. and its parent company over deceptive foreclosure practices. Massachusetts Attorney General Martha Coakley  filed the suit on Wednesday seeking redress from Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial.

Ms. Coakley joins a small group of state attorney generals from larger states that have been hit the hardest by the foreclosure/mortgage fraud scandal:

Ms. Coakley, whose reputation was tarnished after her loss to a Republican for the late Ted Kennedy’s senate seat, has been strong on tightening state regulations and force banks to assist financially stressed homeowners save their homes:

Coakley spoke in support of legislation she filed in January with state Senator Karen Spilka, an Ashland Democrat, and Representative Steven M. Walsh, a Lynn Democrat. The proposed law, which they call An Act to Prevent Unlawful and Unnecessary Foreclosures, focuses on mortgage loans that are considered to be risky, including those with interest-only payment and adjustable rates.

The bill would require lenders to analyze a borrower’s financial information to determine whether modifying the loan to a more affordable payment would be more beneficial financially to the lender than going through the lengthy and costly process of taking the property through foreclosure. Many lenders already undertake such a study before deciding whether to foreclose, but the bill would permit homeowners to file a lawsuit if the process does not occur, according to Coakley’s staff.

The proposed law also would force lenders to prove they are the legal owner of mortgages before foreclosing, incorporating the findings of recent foreclosure-related decisions from the state’s Supreme Judicial Court.

These five state attorney generals are doing the hard work that should be done by the US Attorney General Eric Holder. Instead Mr. Holder is still clinging to Iowa AG Tom Miller’s stalled negotiations with the banks to settle the fraud for a mere $25 billion and exoneration from criminal prosecution. Mr. Holder has made protecting banks and corporations his priority and just recently announced a new initiative to prosecute intellectual property rights thefts by the public. This is not what Americans elected this administration to do.

Cross posted from The Stars Hollow Gazette

Apparently, US Attorney General Eric Holder thinks it is far more important to protect corporations from intellectual property (IP) theft than to protect us from predatory and fraudulent banking practices that has led to collapse of the economy. He is more concerned that you or your neighbor are illegally downloading movies or songs from the internet or receiving pharmaceuticals from Canada.

On November 29, Mr. Holder held a press conference to announce a serious crack down on IP theft:

As our country continues to recover from once-in-a-generation economic challenges, the need to safeguard intellectual property rights – and to protect Americans from IP crimes – has never been more urgent. But, in many ways, this work has also never been more difficult.

Recent technological advances – particularly in methods of manufacturing and distribution – have created new opportunities for businesses of all sizes to innovate and grow. But these quantum leaps have also created new vulnerabilities, which tech-savvy criminals are eager to exploit. As a result, we’re seeing an alarming rise in IP crimes – illegal activities that can not only devastate individual lives and legitimate businesses, but undermine our nation’s financial stability and prosperity.

Make no mistake: IP crimes are anything but victimless. For far too long, the sale of counterfeit, defective, and dangerous goods has been perceived as “business as usual.”   But these and other IP crimes can destroy jobs, suppress innovation, and jeopardize the health and safety of consumers.   In some cases, these activities are used to fund dangerous – and even violent – criminal enterprises and organized crime networks. And they present a significant – and growing – threat to our nation’s economic and national security.

But we are fighting back – in bold, comprehensive, and collaborative ways.

One of those “bold, comprehensive, and collaborative ways” is a series of series of television, radio, and Internet public service announcements that will ask the public to spy on their neighbors.

We shouldn’t be surprised by this since, as reported in the Wired:

The Justice Department under President Barack Obama has seen a sea change in attitude when it comes to intellectual-property enforcement, which could have been predicted by the number of former Recording Industry Association of America attorneys appointed by the Obama administration. (Hollywood votes and donates Democratic).

Meanwhile, as Matt Stoller writes, mortgage fraud continues unabated and unprosecuted:

In 2004, the FBI warned Congress of an “epidemic of mortgage fraud,” of unscrupulous operators taking advantage of a booming real estate market. Less than two years later, an accounting scandal at Fannie Mae tipped us off that something was very wrong at the highest levels of corporate America.

Of course, we all know what happened next. Crime invaded the center of our banking system. Wall Street CEOs were signing on to SEC documents knowing they contained material misstatements. The New York Fed, riddled with conflicts of interest, shoveled money to large banks and tried to hide it under the veil of central bank independence. Even Tim Geithner noted that Lehman had “air in the marks” in its valuations of asset-backed securities, as the bankruptcy examiner’s report showed that accounting manipulation to disguise the condition of the balance sheet was a routine management tool at the bank. [..]

And yet, no handcuffs. [..]

And what happens when this kind of fraud goes unprosecuted? It continues, even today. The same banks that ran the corrupt home mortgage securitization chain are now committing rampant fraud in the foreclosure crisis. Here’s New Orleans Bankruptcy Judge Elizabeth Magner discussing problems at Lender Processing Services, the company that handles 80 percent of foreclosures on behalf of large banks. [..]

The bad behavior is so rampant that banks think nothing of a contractor programming fraud into the software. This is shocking behavior and has led to untold numbers of foreclosures, as well as the theft of huge sums of money from mortgage-backed securities investors.

It would be nice if the Obama Justice Department devoted the same man power, resources and efforts into prosecuting the banks and mortgage service lenders who pushed fraudulent loans and have illegally foreclosed on thousands of homes. The attitude of Obama administration continues to be that they must bail out banks and protect corporations while the public gets sold out by the government that is suppose to protect us.

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.

December 1 is the 335th day of the year (336th in leap years) in the Gregorian calendar. There are 30 days remaining until the end of the year

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On this day in 1990, the Chunnel makes breakthrough. Shortly after 11 a.m. on December 1, 1990, 132 feet below the English Channel, workers drill an opening the size of a car through a wall of rock. This was no ordinary hole–it connected the two ends of an underwater tunnel linking Great Britain with the European mainland for the first time in more than 8,000 years.

The Channel Tunnel, or “Chunnel,” was not a new idea. It had been suggested to Napoleon Bonaparte, in fact, as early as 1802. It wasn’t until the late 20th century, though, that the necessary technology was developed. In 1986, Britain and France signed a treaty authorizing the construction of a tunnel running between Folkestone, England, and Calais, France.

The Channel Tunnel (French: Le tunnel sous la Manche), (also informally known as the Chunnel) is a 50.5-kilometre (31.4 mi) undersea rail tunnel linking Folkestone, Kent near Dover in the United Kingdom with Coquelles, Pas-de-Calais near Calais in northern France beneath the English Channel at the Strait of Dover. At its lowest point, it is 75 metres (250 ft) deep. At 37.9 kilometres (23.5 mi), the Channel Tunnel possesses the second longest undersea portion of any tunnel in the world. The Seikan Tunnel in Japan is both longer overall at 53.85 kilometres (33.46 mi), and deeper at 240 metres (790 ft) below sea level.

The tunnel carries high-speed Eurostar passenger trains, Eurotunnel Shuttle roll-on/roll-off vehicle transport-the largest in the world-and international rail freight trains. The tunnel connects end-to-end with the LGV Nord and High Speed 1 high-speed railway lines. In 1996 the American Society of Civil Engineers identified the tunnel as one of the Seven Wonders of the Modern World.

Ideas for a cross-Channel fixed link appeared as early as 1802, but British political and press pressure over compromised national security stalled attempts to construct a tunnel. However, the eventual successful project, organised by Eurotunnel, began construction in 1988 and opened in 1994. The project came in 80% over its predicted budget. Since its construction, the tunnel has faced several problems. Fires have disrupted operation of the tunnel. Illegal immigrants and asylum seekers have attempted to use the tunnel to enter Britain, causing a minor diplomatic disagreement over the siting of the Sangatte refugee camp, which was eventually closed in 2002.

Cross posted from The Stars Hollow Gazette

In case you missed it (I strongly suspect you did), Yves Smith of naked capitalism appeared as a guest on the PBS News Hour to discuss why there have been so few prosecutions of ceo’s or bankers in the recent banking scandal.

The other guests are:

Lynn Turner is a former chief accountant for the Securities and Exchange Commission. He’s now a managing director at the consulting firm Litinomics.

Anton Valukas is a former U.S. attorney. He’s now in private practice and issued a bankruptcy report examining the collapse of Lehman Brothers.

Mark Calabria is a former Republican staff member of the Senate Committee on Banking, Housing and Urban Affairs. He’s now at the libertarian think tank, the Cato Institute.

In Aftermath of Financial Crisis, Who’s Being Held Responsible?

The full transcript is here.

Cross posted from The Stars Hollow Gazette

One of the architects of the audit of the Federal Reserve was former Rep. Alan Grayson (D-FL) who is running for his old house seat. He appeared with Keith Olbermann to discuss the Bloomberg report on the secret no strings, 0% interest $7.7 trillion had out to the banks that they also reaped another $13 billion in profits. As Rep. Grayson points out it is far worse than even the Bloomberg report.

So what does the Obama administration have to say about this? Apparently not a lot. The president is too busy raising campaign money from those who benefited most from this bailout. Obama’s minions on Twitter and in so-called “progressive” blogs have rushed in to defend him against any appearance that he sides with the banks. They ignore the history of the president’s part in the dilution of the Dodd/Frank regulations which has yet to take affect. So here is a brief refresher to keep this based in reality.

Way back at the beginning of Barack Obama’s administration and in the aftermath of the 2008 Wall St/Banking meltdown, financial reform had strong bipartisan support. The original Dodd-Frank Bill contained a provision for regular audits to the end the secrecy of the Federal Reserve. It was introduced in the House by Rep. Alan Grayson (D-FL) and Rep, Ron Paul (R-TX) with strong support from on the Senate side from Sen. Bernie Sanders (I-VT) and Sen. Jim DeMint (R-SC). However, the amendment was opposed by not only Wall St. and the Federal Reserve, it was also opposed by the Obama administration so strenuously that Obama threatened to veto the entire Dodd/Frank bill if the audit was included. That amendment failed and a second one was crafted for the one time audit which was just as adamantly opposed by Obama and company.

Deal Killer? White House Takes Aim At Fed Audit Provision

by Brian Beutler | May 4, 2010,

Possibly today, but if not today then soon, the Senate will decide whether or not to follow the House’s lead and adopt a provision requiring government auditors to open up the books at the Federal Reserve. The measure enjoys a great deal of popularity on both the left and the right, but is so fiercely opposed by powerful interests that it could nonetheless become a stumbling block in the way of financial regulatory legislation.

Right now Sen. Bernie Sanders (I-VT) is trying to round up 60 or more votes to overcome a likely filibuster and include an “audit the Fed” provision in the Senate’s bill. There are just a few small obstacles: the White House, major financial institutions, and the Fed itself. Their resistance is fierce–but the measure is so popular that killing it will be difficult for them and that, in their eyes, threatens to put a grenade at the center of efforts to to tighten the rules on Wall Street. [..]

That’s why, according to the Wall Street Journal they’ll “fight to stop it at all costs.” The White House is hoping to cut off “audit the Fed” in the Senate, so that they’ll have a stronger hand when House and Senate negotiators meet to iron out the differences between their regulatory reform bills. If the Senate bill does not include Sanders’ amendment, then the House will be in a weak position vis-a-vis the Senate and White House and the provision could be easily stripped.

If Sanders prevails, then the White House will be all but out of options and President Obama will likely be left with the choice of vetoing the legislation, or signing it and raising the ire of very powerful people. Stay tuned.

Sanders’ amendment for a one time only audit prevailed and was conducted this past year that has revealed a massive handout to banks. We now know why the Federal Reserve and the banks didn’t want this audit. The question now is what is going to be done to prevent the Federal Reserve from dong this again. It’s fairly obvious what the president’s policy is, he sides with Wall St and the banks, the 1%.

Cross posted from The Stars Hollow Gazette

Ten leading US lenders may have unlawfully foreclosed on the mortgages of nearly 5,000 active-duty members of the US military in recent years, according to data released by a federal regulator.

JPMorgan Chase and Bank of America this year reached legal settlements in which they agreed to pay damages to nearly 200 service members who claimed that their homes had been improperly seized.

Data released last week by the Treasury’s Office of the Comptroller of the Currency, which regulates national banks, shows that 10 lenders – including BofA, but not JPMorgan, which was not part of the study – are reviewing nearly 5,000 foreclosures of homes belonging to service members and their families to see if they complied with the law.

Pat Garofalo reported this at Think Progress:

Back in April, JPMorgan Chase, which was not one of the 10 banks that the OCC examined, agreed to a $56 million settlement over allegations that it had overcharged members of the military on their mortgages. Chase Bank has even auctioned off the home of a military member the very day that he returned from Iraq. Two other mortgage servicers agreed in May to settle charges of improperly foreclosing on servicemembers.

Even without the banks illegally foreclosing, military members have been hard hit by the foreclosure crisis. Last year alone, 20,000 members of the military faced foreclosure, a 32 percent increase over 2008. The newly created Consumer Financial Protection Bureau is tasked with ensuring that military members are treated fairly by financial services companies – a job that is obviously necessary – but Republicans in Congress have, so far, refused to confirm a director for the agency, leaving it unable to fulfill all of its responsibilities.

Up Date: New York State Attorney General Eric Schneiderman has launched an investigation into military foreclosures under a NY State consumer protection law, the Martin Act, that gives him broad powers to investigate fraud.

Also, Congress is getting on the bandwagon, Sen. Jack Reed (D-RI), a member of the Senate Banking Committee, will be requesting hearings. From David Dayen at FDL:

It looks like even Congress is getting involved, or at least a few of them, because systematic illegal foreclosures on everyday people can be ignored, but systematic foreclosures on members of the military cannot. Jack Reed, a member of the Senate Banking Committee, will request a hearing on the matter. Brad Miller, who has actually been great on this issue and who sees it as a lever to open up a host of inquiries on foreclosure fraud, had a great statement yesterday:

   It is hard to see this as anything except a flagrant disregard for a law that has been on the books continuously since the First World War. The Servicemembers Civil Relief Act is very clear: if you’re in harm’s way in our nation’s military, you can devote your whole energy to our nation’s service without worrying what’s happening in a courthouse back home. And if you have a claim against someone in our military, you can wait until they get home and can defend themselves.

   The SCRA is not some obscure legal technicality that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks, but they’re huge and specialized. Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required, and consciously decided that they could just ignore it, the same way they apparently decided it was okay to file false affidavits in legal proceedings.

   The continued failure to pursue criminal charges in the face of flagrant violations of the criminal law is destroying Americans’ faith in their government and democracy. In a democracy, no one is too big to prosecute.

Schneiderman is doing the job that we would expect Eric Holder to be doing. Just where is Mr. Holder? We know where the president is, campaigning.

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.

November 30 is the 334th day of the year (335th in leap years) in the Gregorian calendar. There are 31 days remaining until the end of the year.

On this day in 1886, the Folies Bergère in Paris introduces an elaborate revue featuring women in sensational costumes. The highly popular “Place aux Jeunes” established the Folies as the premier nightspot in Paris. In the 1890s, the Folies followed the Parisian taste for striptease and quickly gained a reputation for its spectacular nude shows. The theater spared no expense, staging revues that featured as many as 40 sets, 1,000 costumes, and an off-stage crew of some 200 people.

In 1886, the Folies Bergère went under new management, which, on November 30, staged the first revue-style music hall show. The “Place aux Jeunes,” featuring scantily clad chorus girls, was a tremendous success. The Folies women gradually wore less and less as the 20th century approached, and the show’s costumes and sets became more and more outrageous. Among the performers who got their start at the Folies Bergère were Yvette Guilbert, Maurice Chevalier, and Mistinguett. The African American dancer and singer Joséphine Baker made her Folies debut in 1926, lowered from the ceiling in a flower-covered sphere that opened onstage to reveal her wearing a G-string ornamented with bananas.

The Folies Bergère remained a success throughout the 20th century and still can be seen in Paris today, although the theater now features many mainstream concerts and performances. Among other traditions that date back more than a century, the show’s title always contains 13 letters and includes the word “Folie.”

Located at 32 rue Richer in the 9th Arrondissement, it was built as an opera house by the architect Plumeret. It was patterned after the Alhambra music hall in London. The closest métro stations are Cadet and Grands Boulevards.

It opened on 2 May 1869 as the Folies Trévise, with fare including operettas, comic opera, popular songs, and gymnastics. It became the Folies Bergère on 13 September 1872, named after a nearby street, the rue Bergère (the feminine form of “shepherd”).

Édouard Manet‘s 1882 well-known painting A Bar at the Folies-Bergère depicts a bar-girl, one of the demimondaines, standing before a mirror.

The painting is filled with contemporaneous details specific to the Folies-Bergère. The distant pair of green feet in the upper left-hand corner belong to a trapeze artist, who is performing above the restaurant’s patrons.

The beer which is depicted, Bass Pale Ale (noted by the red triangle on the label), would have catered not to the tastes of Parisians, but to those of English tourists, suggesting a British clientèle. Manet has signed his name on the label of the bottle at the bottom left, combining the centuries-old practice of self-promotion in art with something more modern, bordering on the product placement concept of the late twentieth century. One interpretation of the painting has been that far from only being a seller of the wares shown on the counter, the woman is herself one of the wares for sale; conveying undertones of prostitution. The man in the background may be a potential client.

But for all its specificity to time and place, it is worth noting that, should the background of this painting indeed be a reflection in a mirror on the wall behind the bar as suggested by some critics, the woman in the reflection would appear directly behind the image of the woman facing forward. Neither are the bottles reflected accurately or in like quantity for it to be a reflection. These details were criticized in the French press when the painting was shown. The assumption is faulty when one considers that the postures of the two women, however, are quite different and the presence of the man to whom the second woman speaks marks the depth of the subject area. Indeed many critics view the faults in the reflection to be fundamental to the painting as they show a double reality and meaning to the work. One interpretation is that the reflection is an interaction earlier in time that results in the subject’s expression in the painting’s present.

Cross posted from The Stars Hollow Gazette

What you need to know about the dangers of passing these bills and how it will destroy the Internet.

The video above discusses the Senate version of the PROTECT IP Act, but the House bill that was introduced TODAY is much much worse.

It’ll give the government new powers to block Americans’ access websites that corporations don’t like. The bill would criminalize posting all sorts of standard web content — music playing in the background of videos, footage of people dancing, kids playing video games, and posting video of people playing cover songs.

This legislation will stifle free speech and innovation, and even threaten popular web services like Twitter, YouTube, and Facebook.

America Censorship has a great infographic on how SOPA will block you from the Internet.

Sen. Ron Wyden (D-OR), who is leading the charge to stop the passage of these bills appeared on Countdown with Keith Olbermann to explain how catastrophic to Internet and your rights that these bill are.

Along with Sen. Wyden, Sen. Maria Cantwell (D-WA), Sen. Rand Paul (R-KY) (go figure) and Rep. Nancy Pelosi strongly oppose passage. Sen. Wyden has started a petition and will read the names on the Senate floor should these bills come to the floor for a vote (I have signed). We at The Stars Hollow Gazette and Docudharma urged you to sign Sen. Wyden’s petition (sign petition) and contact your Senators and House Representative telling them to vote against these bill. You can do that here

Congress needs to hear from you, or this bill passes