The (Liz) Warren Commission and Financial Reform

A lot of hope was placed on the back of Elizabeth Warren and the financial reform act passed by Congress at the behest of the Administration formally known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. Concurrent with belittling the liberal Democratic activist base as ungrateful whiners, the Administration and Democratic leadership has touted Liz Warren and Dodd-Frank as prime examples of accomplishments that should thrill and satisfy the base. But are those “accomplishments” really all that and should they mollify Democrats, at least on financial reform issues? The initial returns indicate no.

First, the ability of Dodd-Frank to do the job intended as to rapacious financial institutions is highly debatable at best, and that is being generous. It is already established the bill did not clamp down sufficiently on the reckless casino style trading in derivatives and synthetic financial products, and may even have opened a new portal for abuse by the Wall Street Masters of the Universe high frequency traders.

Gretchen Morgenson in today’s New York Times lays out beautifully the bigger picture on the lack of reform in the “reform”:

THE government is pulling a sheet over TARP, the Troubled Asset Relief Program created during the panic of 2008 to bail out the nation’s financial institutions. With the program’s expiration on Sunday, we can expect to hear lots of claims from the folks at the Treasury that it was a great success.

Such assertions would be no surprise from a political class justifiably concerned about possible taxpayer unhappiness, the continuing economic turmoil and the midterm elections. But if we have learned anything during this crisis, it is that the proclamations emanating from the Washington spin machine must be taken with an extra-hefty grain of salt.

Consider the claims made last summer that the Dodd-Frank financial reform act reduces the threats that large, interconnected banks pose to taxpayers and the economy when the banks are deemed too big to fail. Indeed, as regulators hammer out the rules governing derivatives transactions, it’s evident that the law has created a new set of institutions that will almost certainly be deemed too important to fail if they ever get into trouble. And that means there won’t really be an effective way to keep those firms from taking big, profitable, short-term risks that are dumped on the taxpayers when the bets fail.

Our roster of bailout candidates includes the clearinghouses, created under Dodd-Frank, that are meant to increase the oversight of derivatives trading. Because most derivatives transactions are expected to go through these clearinghouses, they will be “systemically important” under the law. As such, Dodd-Frank specifically provides that “in unusual or exigent circumstances,” the Federal Reserve may provide such entities with a financial backstop, including borrowing privileges.

Remember this: Financial backstop is just another term for a taxpayer bailout. And the major banks and brokerage firms are the members of the clearinghouses, so a backstop would essentially be for them.

According to the Bank for International Settlements, the entire derivatives market had a gross credit exposure of $3.5 trillion at the end of 2009. Obviously, even a small fraction of that amount could represent a sizable call on the taxpayers if a clearinghouse hit the skids.

So much for eradicating too-big-to-fail.

Read more

The Day after Blanche Filibusters Defense Bill, Biden Rewards Her w/$$$

This is just pathetic:

Vice President Joe Biden travels to Boston Wednesday, where he’s scheduled to team up with Sen. Blanche Lincoln of Arkansas.

A Democratic source tells CNN that the event is a fundraiser for the two-term Democratic senator, who faces a very difficult re-election bid this year.

Blanche Lincoln just joined Republicans to scuttle the defense bill, and with it the DREAM Act and DADT repeal–both purportedly Administration priorities (to say nothing about the Defense bill itself). Moreover, no amount of money is going to get Blanche out of her electoral hole this year. And her patrons, the Waltons, have plenty to give her all by themselves, without picking the pockets of Boston liberals.

So why is Joe Biden wasting some of his precious time and political capital helping a woman who, yesterday, broke with the party on the defense bill? Is this Administration so dysfunctional it can’t even demand discipline from those it’s financially supporting?

Sparky Takes a Dump, Produces Turd Named McCain and Other News and Notes From Wingnut Hell In Arizona

Yes, that is Sparky the Sun Devil and the small turd next to him is John McCain (no, it is not a photoshop; is a real picture McCain himself put out on Twitter). As you may have heard, the Arizona primary was last Tuesday and McCain squeaked by the “serious challenge” of gasbag extraordinaire J.D. Hayworth. McCain beat Hayworth by 25 points. But for months, going back even well before Hayworth finally was forced to quit campaigning on his radio show and admit he was actually running, the national media clucking heads were yammering relentlessly about how McCain was “vulnerable” and “in the fight of his political life”. It was, as just about everything with McCain is, a complete gin job and fabrication by the national media.

Here is what I said in an email discussion with a number of colleagues back on February 24 after one of them started talking about McCain being in trouble:

I am telling you, I just do not, at least yet, see any giant tidal wave here for Hayworth. … It may change, but so far in Arizona, the Hayworth bandwagon is far overrated by the national chattering classes.

….

Again, the problem is there is a very established Republican party and attendant power and money machine here and they do not like JD Hayworth for shit and never did; they did not give a rat’s ass about him losing to Harry Mitchell, in fact if they had, he would not have lost. Quite frankly, McCain is not their favorite either in some regards; but he sure is compared to Hayworth historically. Plus McCain has Grant Woods behind the scenes again, and he is very good and pretty ruthless. Hayworth’s sound bites make for dandy fodder for FoxNews, MSNBC and, to a lesser extent CNN, but they do not mean diddly shit here. This is not a national election, it is an Arizona Republican primary.

I tried to correct the record with any number of places and people when I saw this meme, right up to the election; mostly to little avail. I am a native here and have been around a long time, there was just never a chance in hell that Hayworth could even get close to McCain; but you just could not stop the national political horserace chattering chowderheads like Chuck Todd, Chris Matthews, Chris Cillizza, the Politico boys etc. from perpetrating this pile of dung.

They were full of it as the vote total demonstrated. Now they have blithely moved on to compensating for their ignorance and/or incompetence by clucking about “yes, yes, McCain won big, but he had to sell out and be someone he wasn’t to do it”. See for instance USA Today, NPR, Reuters, and Dan Balz of the Washington Post.

It is all pure unadulterated rubbish. A con. McCain has always been a completely self serving grifter con who has never been dedicated to any principle or cause other than John McCain. McCain walked out on his first wife and family after returning from Vietnam, after she had waited for him the entire time and while she was crippled and laid up bedridden from a tragic car accident. Left her while they were still married and brought his flim flam carpetbag to Arizona because it provided what he thought was his best shot of anywhere in the country to get a seat in Congress and because there was a very cute and very rich beer heiress here whose family could provide him with the juice and Read more

Obama’s Relentless Abandonment of Progressive Nominees

Barack Obama was never a hard liberal nor progressive, whatever the supposed difference between the two really is. Those blinded by hope and change who thought otherwise were imprinting their own desires and beliefs on what was a relatively blank slate, which was probably easy enough to do in the despair resultant from the eight years of George Bush. By the same token, however, Mr. Obama cultivated and encouraged such beliefs; this he worked hard at, and it was critical to him being elected president.

Now if you listened to, and read Obama, and paid attention, you knew he was a centrist who worked by increment, compromise and seeking consensus as opposed to a liberal beacon that would take the country in a new and markedly different direction. Again, that said, the liberals and progressives who served as the ground force, heart and soul of Obama’s candidacy and election had every right to believe he would would at least include them at his table and utilize their talents in his Administration and appointments. There was an implicit deal made in this regard, and Obama purchased on it to his wild success. Now he has defaulted.

I first wrote significantly on the betrayal of the Obama White House toward liberal nominees in relation to the nomination of Dawn Johnsen to the critical post of head of the Department of Justice’s Office of Legal Counsel. The scorn for, and abandonment of, the Johnsen nomination still stands out because of the fact it is clearly established that there were 60 votes cloture on a Senate floor vote for Johnsen’s nomination. It wasn’t that Johnsen could not be confirmed, she absolutely could have been and would have been; it was that Obama did not want her and would not call for a vote.

Johnsen was not only the best person for a critical job, she was a symbol to a critical part of Obama’s and the Democratic constituency. It is far more than Dawn Johnsen however it is a pattern of abuse and scorn the Obama White House relentlessly exhibits to a major portion of the base. Currently the focus of progressives is on the potential nomination of Elizabeth Warren as head of the newly enacted Consumer Financial Protection Bureau. Despite some public platitudes, it is quite clear the Obama Administration does not want a competent crusader for citizens like Warren and, apparently, is working through the cut out of Chris Dodd to see Warren doesn’t get the nod.

Maybe the pressure will get to the Obama White House and Warren will get the post she deserves and would be perfect for; but don’t count on it because Obama, Geithner, Summers, Rahm and the boys on the Obama bus just do not want her. And they didn’t want Christine Romer either, so they let the misogynistic, consistently wrong about everything he touches, Larry Summers push her out. It is becoming a broken record with this White House.

Most distressing to me, because I practice law in the 9th Circuit, is the complete abandonment of two critical liberal judicial nominees, Goodwin Liu and Edward Chen; you may not be aware of because Read more

Shocking Result In Dannehy US Attorney Purgegate Scandal!

As several folks have noticed in comments, the results are in from the Nick and Nora Dannehy DOJ investigation into the US Attorney firings by the Bush/Cheney Administration. And, shockingly, the Obama/Holder Department of Justice just cannot find any conduct, not one single instance, worthy of criminal prosecution.

From the official six page letter from DOJ Main’s AAG, Ronald Welch, making the belated and pitiful report to Judiciary Chairman John Conyers,

This supplements our earlier response to your letter of October 2, 2008, which requested information about the appointment of Assistant United States Attorney Nora R. Dannehy of the District of Connecticut to detennine if criminal charges are warranted based on certain findings in the public report of the Office of the Inspector General (OIG) and the Office of Professional Responsibility (OPR) (collectively OIG/OPR) entitled “An Investigation into the Removal of Nine U.S. Attorneys in 2006” (Report). We are sending identical responses to the other Members who joined in your letter to us. As more fully explained below, Ms. Dannehy has detennined that no criminal charges are warranted with respect to this matter.

…..

In closing, it is important to emphasize that Attorney General Holder is committed to ensuring that partisan political considerations play no role in the law enforcement decisions of the Department. In this instance, Ms. Dannehy, a long time career prosecutor, was asked only to assess the possible criminality of the actions described in the OIG/OPR report, to conduct such additional investigation as necessary to make that assessment, and to determine whether anyone made prosecutable false statements to Congress or OIG/OPR. The Attorney General appreciates the work of Ms. Dannehy and her investigative team and has accepted her recommendation that criminal prosecution is not warranted.

The Attorney General remains deeply dismayed by the OIG/OPR findings related to politicization of the Department’s actions, and has taken steps to ensure those mistakes will not be repeated. The Attorney General also appreciates the work of the Inspector General and the Office of Professional Responsibility on this matter.

We hope that this information is helpful. Please do not hesitate to contact this office if we can provide additional assistance regarding this or any other matter.

The whole letter is here and speaks for itself if you care to read it.

This is entirely what anybody with a lick of sense should have expected from the forward looking modus operandi of the Obama Administration. The one note I would make is that Dannehy’s “investigation” was never a full fledged inquiry into the entire matter; the focus was set at, and remained, on David Iglesias’ complaint, which was not phrased all that compellingly by Iglesias to start with, and was further muddled by the antics of Scott Bloch. Little but lip service was given to the remainder of the sordid picture of Purgegate. You might remember Scott Bloch, the “professional” Iglesias was so sure would do the right thing and get to the bottom of the abuse engendered upon Iglesias.

In other news, the Obama/Holder DOJ recently announced they have no problem with Scott Bloch getting off with probation on his criminal plea of guilt.

The Obama White House loves tidy little packages, and they have clearly wrapped one up here. Any more questions about how the big John Durham “preliminary review” will come out?

Coming late in the day (h/t Fatster) is the somewhat weak and ineffectual response from Judiciary Chairman John Conyers. Acceptance and resignation continue to rule the day. Every day.

Another Obama Recess Appointment For Someone Not Named Johnsen

President Obama has announced yet another recess appointment; the courtesy and propriety that he would not give to Dawn Johnsen:

President Barack Obama, frustrated by Republican obstruction of key administration staffing appointments, will use his power to appoint his pick to run Medicare and Medicaid while the U.S. Congress is in recess, the White House said on Tuesday.

Obama will make the appointment on Wednesday of Dr. Donald Berwick, a healthcare expert he nominated in April to run the vast federal medical programs for poor and elderly Americans, according to White House Communications Director Dan Pfeiffer.

Obama has found the inner spine to recess appoint NLRB member Craig Becker along with 14 other people to a variety of positions from the DOJ to Treasury Department, has stated he will do so for militarized spook James Clapper (who neither side seems to like), and now Donald Berwick.

Obama seems to consider Berwick critical:

Berwick’s appointment as administrator of the Centers for Medicare and Medicaid Services (CMS) place him at the heart of Obama’s historic healthcare reform, and the role was too vital to leave unfilled, Pfeiffer said.

“CMS has been without a permanent administrator since 2006, and even many Republicans have called on the Administration to move to quickly to name a permanent head,” he said.

Dan Pfeiffer and the White House are full of dung. If “many Republicans” were clamoring for his nominee, even a couple in the Senate, he would not need to recess appoint. What is truly stunning though is that Obama considers this position critical, but not the head of the Office of Legal Counsel, the body that is supposed to be the legal conscience of an administration. Equally galling is the fact the White House trots out the excuse that “CMS has been without a permanent administrator since 2006”. Four years is too long for CMS, but six years is no problem for the critical Office of Legal Counsel? Really?

As I have repeatedly explained and demonstrated with facts and evidence, Barack Obama had 60 votes for confirmation of Dawn Johnsen to head OLC for the entire second half of last year and sat on her nomination, refusing to even call a vote. The fact that Obama flat out refused to even consider a recess nomination for Dawn Johnsen to an office dying for real leadership, and that he will use the recess appointment power anywhere and everywhere else, ought to be proof to any doubters that the sole reason Dawn Johnsen is not leading the OLC is because Barack Obama did not want her there.

For a President intent on granting retroactive FISA immunity to criminally complicit telecoms, asserting endless claims of “state secrecy” to cover up crimes of the Bush/Cheney Administration, suppressing torture photos, tapes and evidence, ordering the indefinite detentions without trial or due process and ordering the extra-judicial assassination of remote targets (including American citizens), well I guess a person of Dawn Johnsen’s morals and ethics indeed might not be convenient. Even given that, why did the White House engage in such crass duplicity with the country and hang Dawn Johnsen out to dry for so long? Why won’t anybody ask that question of them and demand a legitimate answer?

Lanny Davis Fudges and Shills His Way Through Another Op-Ed

Being away to San Francisco to cover the Prop 8 Closing Arguments this week, I am just catching up on a few things. One I would like to point out is the contemptible and disingenuous op-ed Lanny Davis deposited at The Hill:

Two events last week involving elements of the Democratic Party who call themselves the “true progressives” show a danger they represent to the progressive change they say they want to effect. Together they offer President Barack Obama an opportunity for a “Sister Souljah moment” — perhaps to save the Democratic Party majority in both houses of Congress, as well as his progressive agenda in the last two years of his administration.

First was the success of Sen. Blanche Lincoln in June 8’s Arkansas Democratic primary, despite a campaign organized by these self-described progressives, along with certain labor unions.
……
The second event was a conference on that June 8 primary day, held in Washington and organized by the Campaign for America’s Future, a self-described “progressive” organization, which cheered denunciations of Obama for “retreat on Guantánamo [and] no movement on worker rights or comprehensive immigration reform,” according to The Washington Post’s Dana Milbank, and shouted down and nearly prevented liberal House Speaker Nancy Pelosi (D-Calif.) from speaking.
……
President Obama can confirm that the Democratic Party still stands for the centrist, Clintonian combination of fiscal conservatism, cultural moderation and progressive social programs that favor the middle class over the extremely wealthy — the best chance the Democrats have to hold their majorities in both houses of Congress and to enact the progressive changes that the critics on the left say they truly want.

The holier than thou arrogance and self entitled belligerence of Davis is simply stunning. As if Obama has not scorned the progressives and netroots enough already. Davis apparently feels he is the one who gets to decide who is, and who is not, a “true Progressive” and those he deems unfit are due the “Sister Souljah” execution hit. Nice. In the process of whining about progressive activism destroying Democratic party unity, he wants to divide, marginalize and destroy a significant sector of the Democratic party. Clearly Davis’ clarity of thought has been so addled by the toxic brine of the inbred Washington Beltway elitism he cannot see he is committing the very sins he complains of. Either that or he is so cravenly duplicitous he does not care. Davis has a history of such duplicity.

Davis similarly accuses the netroots of being “long on innuendo and personal attacks and short on substance”, which is hilarious for a man lobbing unlinked, uncited and unsupported screed in such a deceptive manner. For instance Davis directly intimates that if/when Blanche Lincoln loses in the general election it will because of the netroot and labor supported primary challenge of Bill Halter in Arkansas. This bit of self serving dishonesty of course neglects the fact that if Davis and his fellow centrist corporate shills really cared about retaining the seat in the general election, they should have supported Halter who arguably was a stronger candidate in the general than Lincoln. Not to mention Read more

BP Well Bore/Casing Integrity Issues and Senator Nelson’s Statements

One week ago, on the morning of June 7, I wrote about questions on the substantive physical integrity of the BP Macondo well casing and bore, and statements by Florida’s Senator Bill Nelson on the same, as well as potential resulting seepage from the sea floor surrounding the well head. To say the least it raised a few eyebrows.

I have again attached the FDL video from the appearance Nelson made on the Andrea Mitchell MSNBC show where he became the first official to materially discuss the game changing issue of sea floor seepage from a structurally compromised well below the surface. Since Nelson first made the statements and raised the questions, I have spoken to his office several times.

Here is a quote given directly to Emptywheel/Firedoglake by Senator Nelson:

Why do scientists and others suspect the well casing is breached beneath the seafloor? Well, for one, in one of my briefings I learned that a lot of mud used in the so-called “top kill” attempt didn’t come back up after it was pumped down there.

Clearly, from Senator Nelson’s quote, he has received multiple briefings in addition to the information in the public domain, and he is hearing other private disturbing reports. Quite frankly, this should be of no shock in light of that which is, and was, already in the public domain. In this post, mindful of the fact there is likely a wealth we in the public do not yet know, I would like to delve into the public evidence Senator Nelson was relying on and why this is an issue that should, and must, remain squarely in the forefront of public and media conscience.

First off, it is clear Senator Nelson’s measured statements to Andrea Mitchell were not an off the cuff or uninformed gaffe by Nelson. Quite the contrary, he and his staff had been probing the issue of the integrity of the well bore long prior to the MSNBC appearance. On June 2, Sen. Nelson directed the following correspondence to BP:

June 2, 2010

Mr. Lamar McKay
Chairman and president, BP America, Inc.
501 Westlake Park Boulevard
Houston, Texas 77079

Dear Mr. McKay:

I understand the priority of your company right now is capping the Deepwater Horizon well. But new information about the accident has come to light in two recently published accounts that raise serious questions I hope you can promptly Read more

BP Oil Slick The Result Of Republican DOJ And Regulatory Policy

The economic and environmental damage resulting from the exploding fireball compromise of the Deepwater Horizon oil platform may be unprecedented, with the potential to emit the equivalent of up to four Exxon Valdez breakups per week with no good plan to stop it. There will be plenty of finger pointing among BP, Transocean and Halliburton, while it appears the bought and paid for corporatist Congress put the screws to the individual citizens and small businesses by drastically limiting their potential for economic recovery; all in the course of insuring big oil producers like BP have effectively no damage liability for such losses.

How did this happen? There are, of course, a lot of pertinent factors but, by far, the one constant theme underlying all is the mendacious corporate servitude of the Republican party, their leaders and policies. The arrogance and recklessness of BP and its oily partners gestated wildly under the Bush/Cheney administration.

Until the turn of the decade, BP had a relatively decent safety and environmental record compared to others similarly situated. Then BP merged with American oil giant Amoco and started plying the soft regulated underbelly of Republican rule in the US under oil men George Bush and Dick Cheney. Here from the Project On Government Oversight (POGO) is an excellent list of BP misconduct, almost all occurring and/or whitewashed under the Bush/Cheney Administration. If you open the door, foxes eat the chickens.

But it is not just regulatory policy behind the open and notorious recklessness of BP and its ilk, it is intentional policy at the Department of Justice as well. Here is how the former Special Agent In Charge for the EPA Criminal Investigative Division, Scott West, described the DOJ coddling of BP under the Bush/Cheney Administration:

In March 2006, a major pipeline leak went undetected for days, spilling a quarter-million gallons of oil on the Alaskan tundra. The spill occurred because the pipeline operator, British Petroleum (BP), ignored its own workers warnings by neglecting critical maintenance to cut costs. The spill sparked congressional hearings and a large federal-state investigation. Despite the outcry, in a settlement announced in late October 2007, BP agreed to one misdemeanor charge carrying three-year probation and a total of only $20 million in penalties (a $12 million fine with $8 million in restitution and compensatory payments).

The settlement resulted from a sudden U.S. Justice Department August 2007 decision to wrap up the case, according to West. That precipitous shutdown meant Read more

SEC: CoxSlackers & BushWackers Fiddled While Wall Street Burned

The big outrage de jour making the rounds in the media currently is the porn scandal at the Securities and Exchange Commission (SEC). This report from the Washington Post is typical of the reporting coming out of the main media:

Republicans are stepping up their criticism of the Securities and Exchange Commission following reports that senior agency staffers spent hours surfing pornographic websites on government-issued computers while they were supposed to be policing the nation’s financial system.

California Rep. Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, said it was “disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation’s economy on the brink of collapse.”

He said in a statement Thursday that SEC officials “were preoccupied with other distractions” when they should have been overseeing the growing problems in the financial system.

Would it be too much for the media to actually think for a moment before they perform stenography for alarmist Darrell Issa? Because even a moment’s pause would yield the realization that Republican outrage on this is absurd and duplicitous. In fact the SEC – IG report produced for another of the Republican howlers, Iowa Senator Charles Grassley, proves the pornification of the SEC was born and grown during the Bush/Cheney Administration and the leadership of Republican stalwart and longtime Issa colleague and friend Chris Cox. The IG Report also demonstrates quite clearly that the vast majority of the incidents occurred during Cox’s reign during the second Bush term, although there were some that continued on during the Obama Administration.

But it is not just that the problem was born and matured under Bush and Cox, it is the fact that it is symptomatic for the emasculation and gutting of the SEC which occurred at their hands and express direction. It was not a bug, but a feature. As Bloomberg News reported last year:

Under former SEC Chairman Christopher Cox, the agency instituted policies that slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies, the Government Accountability Office said in a report today. An unidentified attorney said it was “widely felt” commissioners prevented the division from “doing its job,” according to the report.

“Some investigative attorneys came to see the commission as less of an ally in bringing enforcement actions and more of a barrier,” the GAO said. Cox’s policies “contributed to an adversarial relationship between enforcement and the commission.”

The non-partisan GAO report on the Bush/Cox SEC found poor management, determination to not pursue cases, lack of transparency, and collusion with business interests. It was the Republican philosophy and direction which neutered the SEC. It is little wonder they took to surfing the net for porn, they literally had nothing else to do under Republican “leadership”.

So perhaps the media stenographers ought to remember this when suddenly howling duplicitous Republican shills like Issa and Grassley want to tar, feather and undermine the SEC now that Democratic leadership, led by Mary Schapiro, have cleaned the agency up, turned it around and put it back to work doing its oversight and enforcement job.

On a related note in things financial, our friend Selise is going to be along in comments to discuss her Seminal Diary on financial reform and the commendable Fiscal Sustainability Conference and Teach-In occurring next week in Washington DC. This is a worthy effort and is supported by a variety of progressive interests including Jamie Galbraith and my friend and former colleague, Ian Welsh.

(graphic by nathan bransford)

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