July 30, 2014

New York Fed Worried About Gambling in Casablanca, Um, Ethics Problem at Big Banks

from Naked Capitalism:


New York Fed Worried About Gambling in Casablanca, Um, Ethics Problem at Big Banks
Posted on July 29, 2014 by Yves Smith


This story would be funny if it weren’t so pathetic. Yesterday, the Financial Times reported that the New York Fed woke up out of its usual slumber and realized that the crisis has changed nothing and that banks still (are in the business of looting) have unaddressed ethics issues.

From the Financial Times:

The Federal Reserve Bank of New York is stepping up pressure on the biggest banks to improve their ethics and culture, after investigations into the alleged rigging of benchmark rates led officials to conclude bankers had not learnt lessons from the financial crisis…

Fed officials were surprised that some of that reported behaviour occurred after the 2008 crisis, leading them to believe bankers had not curbed their poor conduct.

To make sure the biggest banks are paying enough attention to ethics and culture, NY Fed bank evaluations have begun incorporating new questions emphasising such issues. Topics include whether the right performance structure is in place to punish bad behaviour, especially when it comes to compensation.

The NY Fed does not have the authority to write regulations, but it plays a crucial role in the regulatory landscape, overseeing banks in its jurisdiction that include Goldman Sachs, JPMorgan, Citigroup, Barclays and Deutsche Bank. It assesses banks through evaluations, which often do not contain specific criteria but which provide guidance for standards.

NY Fed general counsel Thomas Baxter has also been meeting bank executives to emphasise that when it comes to ethics and culture the tone needs to be set at the top, people familiar with the efforts said. The agency will also hold a workshop on bank ethics and culture in the autumn…

“Banks are taking the Fed’s message very seriously,” a banking industry source said. “We just want to make sure we know what the rules are.”

The steps taken by the NY Fed come after its president, William Dudley, gave a surprisingly scathing speech in November saying tougher capital requirements may not solve the problem of banks’ “apparent lack of respect for law and regulation”.

This is simply ludicrous. How do you get bankers to behave in an ethical manner? You have serious consequences if they don’t, particularly for those in supervisory and executive positions.

The cute notion that the tone is set at the top (or more vividly, the fish rots from the head) is true but meaningless, since everyone knows that no one senior suffered any meaningful punishment for the colossal damage done in the crisis. It was the New York Fed, for instance, that was unwilling to renegotiate pay deals in the AIG Financial Products Group, the unit that booked the credit default swaps that led to the certain failure of the giant insurer had the Fed not rescued it.

As we pointed out, the authorities had the perfect mechanism for punishing bank executives, which was Sarbanes Oxley, passed in the wake of the Enron bankruptcy. It was meant to put an end to the “I’m the CEO and I know nothing” excuse. It requires that the CEO and the CFO personally certify the accuracy of the financial statements and the adequacy of internal controls. For financial firms, that includes risk controls. The fact that major banks and what were then investment banks would have all keeled over save for the munificence of the authorities and ultimately the American taxpayer is prima facie evidence that risk controls were seriously deficient. ..............(more)

The complete piece is at: http://www.nakedcapitalism.com/2014/07/new-york-fed-worried-about-bank-ethics.html

July 30, 2014

Paris Launched a Kid-Friendly Bike Share. Could the U.S. Be Next?

from YES! Magazine:


Paris Launched a Kid-Friendly Bike Share. Could the U.S. Be Next?
The city's mayor says the move will boost cycling in decades to come, creating a greener and more sociable city.

by Yessenia Funes
posted Jul 14, 2014




Mini aspiring cyclists in Paris can now be seen biking alongside their parents—or at least trying to—while rocking a red, green, or pink helmet adorned with a playful “P’tit Vélib’” logo on the side.

P’tit Vélib’, launched June 16, is an extension of Vélib’, one of the world’s largest bike-sharing services—public programs where people can cheaply and easily rent a bike for getting around the city.

Though the programs in the Chinese cities of Wuhan and Hangzhou are larger, Vélib’ is the first bike share in the world to include tiny bikes for toddlers.

The program aims to create young cyclists who will one day choose a bike lock over a car key, according to a statement by Paris Mayor Anne Hidalgo. “By introducing the very young to the most eco-friendly and sociable means of transport, we are preparing for the future of Paris,” she wrote. ...................(more)

The complete piece is at: http://www.yesmagazine.org/happiness/paris-launched-a-kid-friendly-bike-share-could-the-u-s-be-next

July 30, 2014

NSA Court Judges Invest in Verizon While Surveillance Warps Law and Journalism

from truthdig:


By Thor Benson

We must never be surprised when we learn once again that our lawmakers and law interpreters are in bed with the country’s largest corporations—this is how the American government now operates. A July 25 article in Vice includes documentation that shows three judges from the Foreign Intelligence Surveillance Act Court, the tribunal that evaluates the legality of the NSA’s practices, own stock in Verizon. Although there doesn’t seem to be a direct financial incentive for judges to allow the NSA to rifle through the data (our data) of a company in which they have invested, it does show the intimate relationship the NSA, the FISA Court and Verizon share.

Specifically, the article states: “On May 28 last year, Judge James Zagel, a FISA Court member since 2008, purchased stock in Verizon. In June of this year, Zagel signed off on a government request to the FISA Court to renew the ongoing metadata collection program.” The piece goes on to say that FISA Court Judges Susan Wright and Dennis Saylor also own shares in the company, and although Vice wasn’t able to obtain accurate numbers for the amount invested, it appears to be in the thousands of dollars.

The Vice article notes that judges are supposed to remove themselves from cases in which they might have a “financial stake in the outcome” or from any case in which they might find it difficult to be impartial. The Verge also pointed out that telecommunication companies like Verizon receive millions of dollars from the government in their “record-sharing deals.”

Cases are supposed to be reassessed when there is evidence of a conflict of interest. Perhaps it is time the government rethinks why it is allowing massive surveillance of its citizens when the majority of Americans are opposed to that practice and there appears to be a relationship between the court allowing it and the companies harvesting the information. Let’s also not forget that President Obama can unilaterally shut down the NSA’s phone surveillance, but he’s also the guy who’s just fine with a former Monsanto executive leading the FDA’s food and nutrition programs. ...............(more)

The complete piece is at: http://www.truthdig.com/report/item/nsa_court_judges_invest_in_verizon_while_20140730

July 30, 2014

Jeremy Scahill: Leaked US Terrorist Watchlist Rulebook Reveals "Global Stop and Frisk Program"

Jeremy Scahill: Leaked US Terrorist Watchlist Rulebook Reveals "Global Stop and Frisk Program"

Wednesday, 30 July 2014 12:26
By Amy Goodman and Aaron Mate, Democracy Now! | Video Interview

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The Obama administration has expanded the national terrorist watchlist system by approving broad guidelines over who can be targeted. A leaked copy of the secret government guidebook reveals that to be deemed a "terrorist" target, "irrefutable evidence or concrete facts are not necessary." Both "known" and "suspected" suspects are tracked, and terrorism is so broadly defined that it includes people accused of damaging property belonging to the government or financial institutions. Other factors that can justify inclusion on the watchlist include postings on social media or having a relative already deemed a terrorist. We are joined by investigative reporters Jeremy Scahill and Ryan Devereaux of The Intercept. Last week they published the secret U.S. document along with their new article, "The Secret Government Rulebook for Labeling You a Terrorist."

.....(snip).....

AMY GOODMAN: Democracy Now! invited the National Counterterrorism Center to join us on our program; they declined our request. A spokesperson sent us a statement that read in part: "Without speaking to the authenticity of the document referenced in the article, the watchlisting system is an important part of our layered defense to protect the United States against future terrorist attacks. ... Before an American may be included on a watchlist, additional layers of scrutiny are applied to ensure that the listing is appropriate," they said.

Well, for more, we're joined by Jeremy Scahill and Ryan Devereaux of The Intercept. Their new article is headlined "The Secret Government Rulebook for Labeling You a Terrorist." Jeremy is also the producer and writer of the documentary film, Dirty Wars: The World is a Battlefield, and author of a book by the same name.

We welcome you both back to Democracy Now! Jeremy, first, how did you get a hold of this book?

JEREMY SCAHILL: Well, I mean, we're not going to discuss sources. Or, you know, the Obama administration likes to talk about sources and methods, and ironically now, journalists have to be very, very careful in protecting our sources and how we get information, so we're not going to talk about the way that we got the document. But the document itself is something that has been fiercely and actively kept secret by the Obama administration, and the principles upon which this document is based were fiercely guarded, as well, by the Bush administration. In fact, Eric Holder went so far as to say, in a sworn affidavit in a court suit that was brought by an American citizen challenging their watchlisting status, that it's a state secrets privilege covered, and that if this were to be released, it would provide a roadmap, essentially, for undermining the watchlisting system.

What we have here is tantamount to a system that's sort of like a global stop-and-frisk program, because the standard for putting people on a list where they are going to be designated as known or suspected terrorists—the acronym is KST; you're a KST, a known or suspected terrorist—and there's no way of determining, if you're a law enforcement official and you get this information, whether there's actual evidence against someone to suggest that they're involved with a terror plot or their phone number popped up in the phone of someone who is suspected of potentially being a terror suspect. The standard that they use to put people on this is what's called "reasonable suspicion." We talked to former FBI agents, one of whom was a Los Angeles police officer for several decades, and he said, you know, "If I can't find reasonable suspicion to stop anyone I want, then I'm not a good cop." And so, what they're essentially doing is saying that if someone, not based on concrete facts or irrefutable evidence, but if someone within the intelligence community thinks someone is suspicious—maybe they're posting something on Facebook, maybe they're posting something on Twitter, that they think indicate that they have sympathies in favor of some sort of a jihadist group—let's go ahead and designate them as a suspected terrorist. .................(more)

The complete piece is at: http://www.truth-out.org/news/item/25274-jeremy-scahill-leaked-us-terrorist-watchlist-rulebook-reveals-global-stop-and-frisk-program

July 30, 2014

AFA loonball Tim Wildmon: Too much beefcake in the locker room for Michael Sam

American Family Association President Tim Wildmon has come to the defense of former NFL coach Tony Dungy, who made headlines this week in regard to a series of controversial remarks about Michael Sam of the St. Louis Rams.

In a blog post on AFA's website, Wildmon criticized ESPN's Keith Olbermann for calling Dungy the "worst person in sports," after the ex-coach said he would not have selected Sam, who made history as the first openly gay player to be drafted by the NFL, becuase "things will happen" and he "wouldn't want to deal with any of it," Right Wing Watch pointed out.

"Sexually, God made man for woman and woman for man. It's obvious. It's natural," Wildmon wrote. Noting that progressives are "always trying to equate homosexuality with heterosexuality," he added, "When someone like Dungy makes a comment that can in any way been seen as challenging this narrative then that person must be immediately discredited or publicly shamed no matter the truth of what he is saying."

But he didn't stop there. Pointing once again to Sam, he then wrote:

By the way, having been a sports reporter for a few years I've been in many football locker rooms where the players walk around naked or half-naked, changing clothes and going in and out of the showers. Putting a man like Sam, who says he is sexually attracted to men, in with all that beefcake seems unfair to the straight players and a distraction to Sam.

...............(more)

The complete piece is at: http://www.huffingtonpost.com/2014/07/25/michael-sam-tim-wildmon-_n_5620876.html?cps=gravity

July 30, 2014

Just when you think the NRA can't sink any lower ........

Brian Judy, a senior state lobbyist for the National Rifle Association, compared supporting gun control to paving the way for the Holocaust last week.

His particular target: venture capitalist Nick Hanauer, who is affiliated with the Washington Alliance for Gun Responsibility and has supported a Washington state gun control initiative. Hanauer has said his family fled Germany to escape the Nazis.

Judy laid into Hanauer and other gun control supporters at a July 23 event opposing the Washington state initiative, I-594, which would require criminal background checks of individuals purchasing firearms at gun shows and online. ..................(more)

The complete piece is at: http://www.huffingtonpost.com/2014/07/29/nra-holocaust_n_5628484.html?ncid=fcbklnkushpmg00000013

July 29, 2014

‘My Party Has Lost Its Soul’

via truthdig:



In a Salon review Sunday of Ralph Nader’s spring 2014 book “Unstoppable,” Bill Curry, former White House counselor to President Bill Clinton, takes Democrats led by Clinton and Barack Obama to task for making their party an indentured servant of Wall Street and gifting economic populism to the right.

Curry endorses Nader’s view that the present is ripe for a populist revival. Looking back to the Gilded Age, when “powerful trusts were turning farmers into wage slaves and the world’s greatest democracy into just another corrupt oligarchy,” he notes that agrarian populists “busted price fixing railroads and granaries, fought for rural free deliver and established cooperative banks that still provide a third of all credit to rural America.” Coming to the present, he writes:

Parallels to our own time could hardly be clearer. Like invasive species destroying the biodiversity of a pond, today’s global trusts swallow up everything smaller than themselves. The rules of global trade make organizing for higher wages next to impossible in developed and undeveloped countries alike. Fights for net neutrality and public Wi-Fi are exactly like the fight for rural free delivery. Small businesses are as starved for credit as small farmers ever were. PACs are our Tammany Hall. What’s missing is a powerful, independent reform movement.

Inaction from Democrats on these fronts has given populism to Republicans and their further-right colleagues. Tea party Sen. Rand Paul is a greater champion of privacy and opponent of empire than any of his liberal colleagues, Curry writes. And the tea party as a whole has railed “loudest against big banks and corporate corruption.”

And in response to the crisis, Democrats have had their eyes on the wrong solution, Curry explains:

Liberals have spent the intervening years debating macroeconomic theory but macroeconomics can’t fathom this crisis. This isn’t just a slow recovery from a financial sector collapse, or damage done by debt overhang or Obama’s weak tea Keynesianism. We’re in crisis because of all our broken systems; because we still let big banks prey on homeowners, students, consumers and retailers; because our infrastructure is decrepit; because our tax code breeds inefficiency and inequality; because foreign interventions bled us dry. We’re in peril because our democracy is dying. Reviving it will take more than deficit spending and easy money. It will take reform, and before that, a whole new political debate.

In response to this mess, Nader’s book advocates a cost-saving program that would earn credibility among the voting public by championing ethics, challenging big business, standing up for small businesses and incorporating new issues such as privacy. Obama was elected with a mandate to do all of these things. His victory was a win for populism. But as an exemplar of his party’s ethos he didn’t embrace the leadership. He didn’t “believe in ideas because [Democrats] don’t believe in people. Obama wasted years dickering with Republicans who wished him only ill. He should have talked to the people and let them talk to the Republicans,” ............(more)

The complete piece is at: http://www.truthdig.com/eartotheground/item/my_party_has_lost_its_soul_20140728

July 29, 2014

Michele Bachmann's biggest backers (cartoon)

http://www.truthdig.com/cartoon/item/bachmann_again_20140727

July 28, 2014

You Can’t Taper a Ponzi Scheme: Time to Reboot

By Ellen Brown, Web of Debt


One thing to be said for the women now heading the Federal Reserve and the IMF: compared to some of their predecessors, they are refreshingly honest. The Wall Street Journal reported on July 2nd:

Two of the world’s most powerful women of finance sat down for a lengthy discussion Wednesday on the future of monetary policy in a post-crisis world: U.S. Federal Reserve Chairwoman Janet Yellen and International Monetary Fund Managing Director Christine Lagarde. Before a veritable who’s-who in international economics packing the IMF’s largest conference hall, the two covered all the hottest topics in debate among the world’s central bankers, financiers and economists.

Among those hot topics was the runaway shadow banking system, defined by Investopedia as “The financial intermediaries involved in facilitating the creation of credit across the global financial system, but whose members are not subject to regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.” Examples given include hedge funds, derivatives and credit default swaps.

Conventional banks also engage in “shadow banking.” One way is by using their cash cushion as collateral in the repo market, where they can borrow to invest in the stock market and other speculative ventures. As explained by Bill Frezza in a January 2013 Huffington Post article titled “Too-Big-To-Fail Banks Gamble With Bernanke Bucks”:

If you think (the cash cushion from excess deposits) makes the banks less vulnerable to shock, think again. Much of this balance sheet cash has been hypothecated in the repo market, laundered through the off-the-books shadow banking system. This allows the proprietary trading desks at these “banks” to use that cash as collateral to take out loans to gamble with. In a process called hyper-hypothecation this pledged collateral gets pyramided, creating a ticking time bomb ready to go kablooey when the next panic comes around.

Addressing the ticking time bomb of the shadow banking system, here is what two of the world’s most powerful women had to say:

MS. LAGARDE: . . . You’ve beautifully demonstrated the efforts that have been undertaken . . . in terms of the universe that you have under your jurisdiction. But this universe . . . has generated the creation of parallel universes. And . . . with the toolbox with all the attributes that you have — what can you do about the shadow banking at large? . . .

MS. YELLEN: So I think you’re pointing to something that is an enormous challenge. And we simply have to expect that when we draw regulatory boundaries and supervise intensely within them, that there is the prospect that activities will move outside those boundaries and we won’t be able to detect them. And if we can, we won’t be — we won’t have adequate regulatory tools. And that is going to be a huge challenge to which I don’t have a great answer.

Limited to her tools, there probably is no great answer. All the king’s horses and all the king’s men could not rein in the growth of the shadow banking system, despite the 828-page Dodd-Frank Act. Instead, the derivatives pyramid has continued to explode under its watch, to a notional value now estimated to be as high as $2 quadrillion. ...............(more)

The complete piece is at: http://www.truthdig.com/report/item/you_cant_taper_a_ponzi_scheme_time_to_reboot_20140727

July 28, 2014

Clintonians Join Vulture Flock Over Argentina

from truthdig:



By Conn Hallinan


It is no surprise that right-wing Republican and hedge fund billionaire Paul Singer should be trying to wring hundreds of millions of dollars out of Argentina for a debt that Buenos Aires doesn’t really owe him. He screwed tens of millions of dollars out of poverty-stricken Peru and the Republic of Congo using the same financial sleight of hand. What may surprise people, however, is that key leaders in the administration of former President Bill Clinton are helping him do it.

Singer, who owns Elliot Management, a $17 billion hedge fund, is the leading “vulture investor”—a financial speculator who buys up the bonds of debt strapped nations for pennies on the dollar and then demands payment in full. When Argentina defaulted on its foreign debt in 2001, Singer moved in and bought up $48 million in bonds. He is now demanding that those bonds be paid at full-face value—$1.5 billion—plus interest and fees. It is a move that could derail Argentina’s long climb back into solvency, as well as undermine debt settlements worldwide.

A recent decision by federal District Judge Thomas Griesa in Manhattan may not only force Argentina to pay the vultures, it could unravel a 2006 debt deal between Buenos Aires and other creditors. Under the highly controversial principle of “pari passu” (“equal ranking among creditors”), if the vultures are compensated, so must all the other creditors, even those who settled back in 2006. That bill could reach $15 billion. Given that Argentina has only about $28 billion in foreign reserves, the tab could send Buenos Aires into a recession or force the country into bankruptcy.

The “sleight of hand” involves the fact that the countries the vultures prey on are not really in debt to creditors such as Singer and Eric Hermann of FH International Asset Management LLC. The hedge funds look for distressed countries, then buy their debt at bargain basement prices and sit on it. In the meantime, other creditors cut a deal to take a reduced payment on their bonds, which in turn helps improve the debtor’s economy and allows it to emerge from default. ...................(more)

The complete piece is at: http://www.truthdig.com/report/item/day_of_the_vulture_over_argentina_20140724