Bankster-Coddling Party Suffers “Electoral Meltown”

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Everyone knew that Fianna Fáil was going to lose Friday’s election in Ireland. But the results (still coming in because the Irish hand count their paper ballots and have an instant runoff voting system) are pretty stunning. Here’s how Fianna Fáil did in Laois-Offaly (both Mr. EW’s home district and that of outgoing Taoiseach Brian Cowen) in 2007 (these graphics are from the Irish Times):

And here’s how they did Friday:

And Laois-Offaly is going to be one of Fianna Fáil’s stronger districts (Cowen’s brother, Barry, will likely take one of the five seats). In Dublin, FF went from holding 13 seats in parliament to just one, that of the former Finance Minister Brian Lenihan. And the Green Party, which had been in coalition with FF, will lose all 6 of the seats it held.

Now, it’s not clear that Fine Gael–which will rule with Labor–will be all that much better than FF with regards to coddling banksters. Rising Taoiseach Enda Kenny has promised to renegotiate the bailout, but unless and until he threatens to default, Ireland will still be taking money from retirees to pay off the banksters.

But what will be interesting is the presence of more further left members of Parliament. And Gerry Adams, Sinn Féin’s President, will have a seat in the Republic’s parliament for the first time. He’s been getting a lot of press for his populist criticism of the bailout:

Sinn Féin leader Gerry Adams says a good government requires a good opposition, vowing his party would oppose the “swingeing, anti-citizen, economically-illiterate measures” being proposed by the establishment parties.

So it’s not clear whether this “electoral meltdown” will have an effect on the banks. But it sure is interesting to see how political accountability works in a system with more than two parties.

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The John Walsh-Liz Warren-Investors & Homeowners Cage Fight

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I noted the other day that the Administration was floating a ridiculously small $20 billion Get out of Jail Free plan to excuse the banksters fort their foreclosure fraud. Apparently, the banksters think that $20 billion is just a “crazy figure” that will never be imposed. The actual homeowners affected by the banksters’ crime, however, believe it is “chump change.” From a press release from the CrimeShouldn’tPay effort:

“We need more than just another slap on the wrist.  Home prices have plummeted by $9 trillion over the last four years because of the massive fraud that the big banks perpetrated on the American people. $20 billion is chump change, especially when you divide that amongst the nation’s 14 largest banks,” says Gina Gates from San Jose, CA who lost her home fraudulently to JP Morgan Chase.  “This cannot be more ‘business as usual’ for the nation’s biggest banks – break the law, make hundreds of billions of dollars doing so, and then pay a small percentage of their bounty in fines while leaving everyone else suffering the consequence of their actions. No, this time, the punishment must fit the crime. The big banks must pay commensurate to the pain and suffering they’ve caused so many people.”

But the truth behind the figure is–as Shahien Nasiripour reports–actually that Elizabeth Warren and Office of the Comptroller of the Currency, headed by John Walsh, are fighting over what an appropriate remedy might be. Warren, along with the FDIC and FHA, believes a still-too-paltry $25-$30 billion penalty is in order.

Officials at the Federal Deposit Insurance Corporation, the Federal Housing Administration, and those now creating a fledgling consumer financial protection bureau are inclined to seek as much as $30 billion in fines, making those funds available to provide relief to borrowers at risk of losing their homes.

[snip]

Elizabeth Warren of the Consumer Financial Protection Bureau has floated a figure of about $25 billion for a unified settlement, according to people familiar with the situation.

But OCC–which has a long history of protecting banksters from actual regulation–wants just a $5 billion penalty with no principal reductions.

The Office of the Comptroller of the Currency, which oversees the nation’s largest banks, intends to pursue its own settlement with lenders, a track distinct from the talks conducted by its federal counterparts, the sources said. The OCC, eager to protect major banks from expensive fines, is seeking to limit the terms to $5 billion, while also ensuring that lenders retain wide latitude in how to administer relief for homeowners, the sources said.

[snip]

Housing experts assert that mortgage companies have been largely unwilling to shrink principal balances on first mortgages, because they understand that that this would trigger huge losses on the second mortgages they own themselves.

The OCC is opposing a settlement that would entail large-scale write-downs of mortgages precisely because of concerns about this very scenario, the sources said.

Problem is, the OCC, as the banskters’ primary regulator enabler, has control of the key documents demonstrating the banksters’ fraud.

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Vikram Pandit’s Material Mistatements

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It appears that Vikram Pandit’s failure to disclose material problems with Citibank’s valuation of its shitpile is another of the crimes we’re supposed to look forward and ignore. Jonathan Weil looks at how one of the documents disclosed in the FCIC dump–a February 14, 2008 OCC report finding that Citibank’s models for measuring the value of its shitpile were crap.

The gist of the regulator’s findings: Citigroup’s internal controls were a mess. So were its valuation methods for subprime mortgage bonds, which had spawned record losses at the bank. Among other things, “weaknesses were noted with model documentation, validation and control group oversight,” the letter said. The main valuation model Citigroup was using “is not in a controlled environment.” In other words, the model wasn’t reliable.

That report was addressed to Vikram Pandit.

But eight days later, in the annual report that Pandit certified himself, Citibank made no mention of its shitpile valuation problems.

Eight days later, on Feb. 22, Citigroup filed its annual report to shareholders, in which it said “management believes that, as of Dec. 31, 2007, the company’s internal control over financial reporting is effective.” Pandit certified the report personally, including the part about Citigroup’s internal controls. So did Citigroup’s chief financial officer at the time, Gary Crittenden.The annual report also included a Feb. 22 letter from KPMG LLP, Citigroup’s outside auditor, vouching for the effectiveness of the company’s financial-reporting controls. Nowhere did Citigroup or KPMG mention any of the problems cited by the OCC. KPMG, which earned $88.1 million in fees from Citigroup for 2007, should have been aware of them, too. The lead partner on KPMG’s Citigroup audit, William O’Mara, was listed on the “cc” line of the OCC’s Feb. 14 letter.

Now, if DOJ actually want to jail a high level criminal, this is the kind of easy thing they ought to look into. And perhaps Pandit’s failure to disclose Citi’s problems modeling shitpile is one of the things FCIC referred to DOJ.

But I doubt it. Pandit’s a former MOTU, after all, and MOTUs simply shouldn’t be bothered with minor things like misleading stockholders.

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HAMP II: The $20 Billion Get Out of Jail Free Card

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A day after the Case-Shiller Index confirmed that the housing market is in a double dip, the Powers that Be (a subsidiary of the Masters of the Universe, currently CEOed by one Barack Obama) have floated their proposal for a mortgage fraud settlement.

The settlement terms remain fluid, people familiar with the matter cautioned, and haven’t been presented to banks. Exact dollar amounts haven’t been agreed on by U.S. regulators and state attorneys general.

For the low, low price of $20 billion, the Administration proposes, banks could be excused for the abundant mortgage fraud they’ve committed.

Terms of the administration’s proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won’t be borne by investors who purchased mortgage-backed securities, these people said.

But basically, it sounds like HAMP II–a “plan” that still lets banks decide how to implement that “plan”–with the sole improvement on HAMP I that it requires 2nd Liens to be “reduced” (but not eliminated) in the process of modifying the first liens.

The deal wouldn’t create any new government programs to reduce principal. Instead, it would allow banks to devise their own modifications or use existing government programs, people familiar with the matter said. Banks would also have to reduce second-lien mortgages when first mortgages are modified.

In short, it includes bailout within bailout (since 2nd liens should be eliminated).

Over a quarter of mortgage holders are underwater on their homes. A big chunk of these people were sold houses at artificially inflated prices, courtesy of the bank and captured appraisers. Every single one of them is owed compensation for being cheated at the hands of the banks.

But $20 billion won’t even begin to compensate those victims of fraudulent appraisals for the fraud committed on them.

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Angelo Mozilo Will Not Be Charged

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In news that will not surprise you in the least–but will put you off your breakfast–Countrywide CEO Angelo Mozilo will not be charged.

Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing.

Perhaps the most insightful comment in LAT’s coverage of Mozilo’s escape of any liability is this:

Columbia University law professor John Coffee said mortgage cases like Mozilo’s were muddied by the numerous parties involved, unlike Enron and other “cook the books” cases in which executives were convicted.

Countrywide’s model was to make or buy mortgages only to sell them off immediately to Fannie Mae or Wall Street as fodder for securities.

Given that model, Coffee said, blame could be assigned to an entire chain of players: mortgage brokers who falsified applications; investment bankers who concocted complex and “opaque” mortgage bonds; rating firms that provided high ratings on the bonds but said they were lied to; and institutional investors that relied on dubious ratings because the securities carried above-market interest while promising to be risk-free.

“All share responsibility, but none are culpable enough by themselves to compare with [Enron’s] Ken Lay, Jeff Skilling or the WorldCom CEO,” Coffee said.

I guess we could write a new corollary to the line, “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” If you commit massive amounts of fraud by yourself, even George Bush’s DOJ will indict you; but if everyone in an industry conspires to commit the same kind of fraud, Barack Obama’s DOJ won’t charge anyone.

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Hunton & Williams Left Fingerprints at SEIU

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Hunton & Williams, the law firm that solicited HBGary and two other security firms to spy on Chamber of Commerce opponents, has remained silent so far about its efforts.

But it hasn’t covered its tracks. The SEIU reports that people from Hunton & Williams spent 20 hours last November–at the time when Themis was pitching H&W to use a JSOC approach to go after Chamber opponents–on the SEIU sites.

Server logs and leaked emails reveal that employees at Hunton & Williams, the principal law firm of the U.S. Chamber of Commerce, spent 20 hours on SEIU websites last November while partners from the firm were working with private security firms on an illegal “dirty tricks” campaign aimed at undermining the credibility of the Chamber’s political opponents, including the Service Employees International Union (SEIU).

And of course SEIU is able to see precisely what H&W was looking at in that period: top H&W page views in 2010 include SEIU’s page on the Chamber and on big banks. People from H&W searched on individuals at SEIU as well as on SEIU’s organizing of protests outside of BoA’s General Counsel. They even searched on “hourly pay for SEIU organizers.” (Whatever that is, it’s less than Themis was going to charge for its paid trolls.)

No wonder H&W has been so quiet about their role in this campaign.

Update: This post has been edited for accuracy.

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HBGary Fees: “Dam It Feels Good to Be a Gangsta”

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One of the more interesting documents on HBGary et al’s partnership with the Chamber of Commerce details the prices they wanted to charge. Now, other emails make it clear that the Chamber balked at what the team originally proposed would be $2 million of work–the Chamber didn’t pay these rates (indeed, they probably haven’t paid for any of this).

But I was particularly interested in what HBGary’s Aaron Barr proposed charging for the work of what they called a “Social Media SME.”

Social media sme ($250 per hour) – experienced in social media link analysis. Personna development. Content management. Social media exploitation techniques.

This is a social media consultant, someone we know from the team’s plans they intended to deploy on Facebook and Twitter in false personas ultimately aiming to destroy the credibility of anti-Chamber activists.

These are just reasonably skilled trolls.

And for that, they wanted to charge $2,000 a day.

To put it in even more stark perspective, consider one ultimate target of the campaign: the men and women SEIU organizes pushing back against the anti-worker policies of the Chamber. Many of these workers–the kind of people who keep your building clean or care for you when you’re sick—make as little $12/hour or less (though the wages for nurses and other skilled medical care providers are higher).

These corporate spook assholes–in addition to targeting Americans for political activism–also think they’re worth 20 times as much as the people who care for the sick.

As the Palantir employee working with Barr on these numbers put it, “Most of all that we are the best money can buy! Dam it feels good to be a gangsta…..”

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From the ChamberPot: A Carefully Worded Nondenial Denial

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The Chamber of Commerce has responded to ThinkProgress’ reporting of the Chamber’s discussions with Hunton & Williams about an intelligence campaign against USChamberWatch and other anti-Chamber efforts. It purports to deny any connection with Hunton & Williams and HBGary.

More Baseless Attacks on the Chamber

by Tom Collamore

We’re incredulous that anyone would attempt to associate such activities with the Chamber as we’ve seen today from the Center for American Progress. The security firm referenced by ThinkProgress was not hired by the Chamber or by anyone else on the Chamber’s behalf. We have never seen the document in question nor has it ever been discussed with us.

While ThinkProgress and the Center for American Progress continue to orchestrate a baseless smear campaign against the Chamber, we will continue to remain focused on promoting policies that create jobs.

But it does no such thing.

First, note what they are denying:

  1. The “security firm” referenced by TP was not hired by the Chamber or by anyone else on the Chamber’s behalf
  2. “We have never seen “the document in question”

By “security firm,” it presumably means HBGary, the one of the three security firms involved that got hacked.

Note, first of all, that they’re not denying hiring Hunton & Williams, the law firm/lobbyist which they hired last year to sue the Yes Men. They’re not even denying that they retain Hunton & Williams right now.

What they’re denying is that they–or, implicitly, Hunton & Williams, on their behalf–hired HBGary.

But as I suggested in my last post on this, they are not paying HBGary (or Hunton & Williams) for the work they’re doing right now; they’re all working on spec, to get the business (business which I’m guessing they’re not going to get).

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The Homes Chuck Schumer Didn’t Save

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DDay and Zach Carter both reported yesterday on the NY Fed’s conclusion that the 2005 Bankruptcy Bill had pushed an extra 200,000 people into foreclosure. Here’s Zach:

Economists at the New York Federal Reserve have concluded that a controversial 2005 law backed by banks and credit card companies pushed more than 200,000 people into foreclosure and exacerbated the subprime mortgage crisis.

[snip]

In a paper released Tuesday, New York Fed researchers Donald P. Morgan, Benjamin Iverson and Matthew Botsch determined that the law sparked about 116,000 additional subprime mortgage foreclosures a year after going into effect.What’s more, they note, these foreclosures pushed home prices down, which may have lead to additional foreclosures. When the value of a home drops below what a borrower owes on the mortgage, it becomes nearly impossible to get out of the loan by selling the house or refinancing, making foreclosure more likely if they become unable to afford the monthly payment.

“By making it harder for borrowers to avoid paying credit card debt, [the 2005 bankruptcy law] made it more difficult for them to pay their mortgages, so foreclosure rates rose,” the economists wrote.

Which I guess means it’s time again to recall what Chuck Schumer responded to me on January 28, 2008, when I pointed out that the bankruptcy bill was going to exacerbate the financial crisis that was about to hit. Schumer, Byron Dorgan, and Sherrod Brown all agreed the law was a problem. (Schumer and Dorgan voted against the bill, though Debbie Stabenow, pictured in my post, voted for it.) But, Schumer said, we couldn’t just fix the obvious problems with it in 2008 because (you guessed it) we needed a bigger majority.

Senator Schumer explained that he didn’t want to pick around the edges, he wanted to make a real fix, and we’re not going to be able to do that until we get a bigger majority.

That was, of course, in 2008. That November, the Democrats would win solid majorities in both houses, as big a majority as you’re ever going to get. Yet the Democrats never found time to get around to fixing the Bankruptcy bill.

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“Made in America” in the 21st Century

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In Trash Talk, bmaz wrote about a “lunchpail” Superbowl, pitting two teams named after people who make things against each other: the Steelworkers versus the Meatpackers. And the game ended appropriately, with a team owned by the people of a small city, having gone to a monstrous stadium as much a tribute to one arrogant man as it is a sports venue, taking home the trophy named after the man who put their city on the map. We can rest easy as Jerry Jones and the other greedy bastards threaten to lock out their players, knowing that the spirit of the game will be in the hands of the people of Green Bay.

All of which was the perfect background for this ad, as much a tribute to a city and a way of life our elites would like us to forget as it is an ad for a car. The visuals are amazing–not just the great monuments of Detroit, but (at :16) the juxtaposition of the disaster porn that our media have lapped up in the last couple of years–“a town that’s been to hell and back”–with the American flag–“the finer things in life.” (It was perhaps a better tribute to our national anthem than the one Christina Aguilera gave.) And, then, with Joe Louis’ fist punctuating the image, followed quickly by Diego Rivera’s tribute to industry, the ad laid out its creed in a working man’s voice.

You see, it’s the hottest fires that make the hardest steel. Add hard work and conviction and the know-how that runs generations deep in every last one of us. That’s who we are. That’s our story.

All culminating in a synthesis of the grit of Eminem and the uplift of gospel.

Yeah, there’s an irony at the heart of the ad: as the tagline “Imported from Detroit” suggests. We’ve been sold to the highest–the only–bidder, for scraps. And it took the genius of a metrosexual Canadian-Italian to reclaim the dignity of America’s industrial base.

Made in America isn’t as simple as it used to be.

Back in the 70s, as our industries were first struggling against the challenges of globalization, the unions had a campaign–Made in America–that appealed to the pride and perhaps parochialism of average Americans as reason enough to buy a product.

As the last few decades have shown, it turns out that Made in America wasn’t reason enough.

This ad, I think, tries to reclaim that idea, to appeal to the dignity of the men and women in flyover country so often maligned by “experts” who know little about what they write.

Now, it’s probably not the [story] you’ve been reading in papers, the one being written by folks who’ve never even been here and don’t know what we’re capable of.

Who knows if the ad will work? Who knows whether it’ll sell cars; who knows whether it’ll convince a region barely regaining confidence after a terrible trauma to believe?

But whatever the cynical calculations behind this ad, whatever the value of the Chrysler 200, someone needed to tell this story.

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