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The missing story of the 2014 election

2014 November 18

Few things are as dangerous to a long term strategy as a short-term victory. Republicans this week scored the kind of win that sets one up for spectacular, catastrophic failure and no one is talking about it.

What emerges from the numbers is the continuation of a trend that has been in place for almost two decades. Once again, Republicans are disappearing from the competitive landscape at the national level across the most heavily populated sections of the country while intensifying their hold on a declining electoral bloc of aging, white, rural voters. The 2014 election not only continued that doomed pattern, it doubled down on it. As a result, it became apparent from the numbers last week that no Republican candidate has a credible shot at the White House in 2016, and the chance of the GOP holding the Senate for longer than two years is precisely zero.

For Republicans looking for ways that the party can once again take the lead in building a nationally relevant governing agenda, the 2014 election is a prelude to a disaster. Understanding this trend begins with a stark graphic.

Behold the Blue Wall:

BlueWallElectoralCollege

The Blue Wall is block of states that no Republican Presidential candidate can realistically hope to win. Tuesday that block finally extended to New Hampshire, meaning that at the outset of any Presidential campaign, a minimally effective Democratic candidate can expect to win 257 electoral votes without even trying. That’s 257 out of the 270 needed to win.

Arguably Virginia now sits behind that wall as well. Democrats won the Senate seat there without campaigning in a year when hardly anyone but Republicans showed up to vote and the GOP enjoyed its largest wave in modern history. Virginia would take that tally to 270. Again, that’s 270 out of 270.

This means that the next Presidential election, and all subsequent ones until a future party realignment, will be decided in the Democratic primary. Only by sweeping all nine of the states that remain in contention AND also flipping one impossibly Democratic state can a Republican candidate win the White House. What are the odds that a Republican candidate capable of passing muster with 2016 GOP primary voters can accomplish that feat? You do the math.

By contrast, Republicans control a far more modest Red Fortress, which currently amounts to 149 electoral votes. What happened to that fortress amid the glory of the 2014 “victory?” It shrunk yet again. Not only are New Hampshire and probably Virginia now off the competitive map, Georgia is now clearly in play at the Federal level. This trend did not start in 2014 and it will not end here. This is a long-term realignment that been in motion for more than a decade and continues to accelerate.

The biggest Republican victory in decades did not move the map. The Republican party’s geographic and demographic isolation from the rest of American actually got worse.

A few other items of interest from the 2014 election results:

  • Republican Senate candidates lost every single race behind the Blue Wall. Every one.
  • Behind the Blue Wall there were some new Republican Governors, but their success was very specific and did not translate down the ballot. None of these candidates ran on social issues, Obama, or opposition the ACA. Rauner stands out as a particular bright spot in Illinois, but Democrats in Illinois retained their supermajority in the State Assembly, similar to other northern states, without losing a single seat.
  • Republicans in 2014 were the most popular girl at a party no one attended. Voter turnout was awful.
  • Democrats have consolidated their power behind the sections of the country that generate the overwhelming bulk of America’s wealth outside the energy industry. That’s only ironic if you buy into far-right propaganda, but it’s interesting none the less.
  • Vote suppression is working remarkably well, but that won’t last. Eventually Democrats will help people get the documentation they need to meet the ridiculous and confusing new requirements. The whole “voter integrity” sham may have given Republicans a one or maybe two-election boost in low-turnout races. Meanwhile we kissed off minority> votes for the foreseeable future.
  • Across the country, every major Democratic ballot initiative was successful, including every minimum wage increase, even in the red states.
  • Every personhood amendment failed.
  • For only the second time in fifty years Nebraska is sending a Democrat to Congress. Former Republican, Brad Ashford, defeated one of the GOP’s most stubborn climate deniers to take the seat.
  • Almost half of the Republican Congressional delegation now comes from the former Confederacy. Total coincidence, just pointing that out.
  • In Congress, there are no more white Democrats from the South. The long flight of the Dixiecrats has concluded.
  • Democrats in 2014 were up against a particularly tough climate because they had to defend 13 Senate seats in red or purple states. In 2016 Republicans will be defending 24 Senate seats and at least 18 of them are likely to be competitive based on geography and demographics. Democrats will be defending precisely one seat that could possibly be competitive. One.
  • And that “Republican wave?” In Congressional elections this year it amounted to a total of 52% of the vote. That’s it.
  • Republican support grew deeper in 2014, not broader. For example, new Texas Governor Greg Abbott won a whopping victory in the Republic of Baptistan. That’s great, but that’s a race no one ever thought would be competitive and hardly anyone showed up to vote in. Texas not only had the lowest voter turnout in the country (less than 30%), a position it has consistently held across decades, but that electorate is more militantly out of step with every national trend then any other major Republican bloc. Texas now holds a tenth of the GOP majority in the House.
  • Keep an eye on oil prices. Texas, which is at the core of GOP dysfunction, is a petro-state with an economy roughly as diverse and modern as Nigeria, Iran or Venezuela. It was been relatively untouched by the economic collapse because it is relatively dislocated from the US economy in general. Watch what happens if the decline in oil prices lasts more than a year.
  • For all the talk about economic problems, for the past year the US economy has been running at ’90’s levels. Watch Republicans start touting a booming economy as the result of their 2014 “mandate.”
  • McConnell’s conciliatory statements are encouraging, but he’s about to discover that he cannot persuade Republican Senators and Congressmen to cooperate on anything constructive. We’re about to get two years of intense, horrifying stupidity. If you thought Benghazi was a legitimate scandal that reveals Obama’s real plans for America then you’re an idiot, but these next two years will be a (briefly) happy period for you.

This is an age built for Republican solutions. The global economy is undergoing a massive, accelerating transformation that promises massive new wealth and staggering challenges. We need heads-up, intelligent adaptations to capitalize on those challenges. Republicans, with their traditional leadership on commercial issues should be at the leading edge of planning to capitalize on this emerging environment.

What are we getting from Republicans? Climate denial, theocracy, thinly veiled racism, paranoia, and Benghazi hearings. Lots and lots of hearings on Benghazi.

dead-horse

It is almost too late for Republicans to participate in shaping the next wave of our economic and political transformation. The opportunities we inherited coming out of the Reagan Era are blinking out of existence one by one while we chase so-called “issues” so stupid, so blindingly disconnected from our emerging needs that our grandchildren will look back on our performance in much the same way that we see the failures of the generation that fought desegregation.

Something, some force, some gathering of sane, rational, authentically concerned human beings generally at peace with reality must emerge in the next four to six years from the right, or our opportunity will be lost for a long generation. Needless to say, Greg Abbott and Jodi Ernst are not that force.

“Winning” this election did not help that force emerge. This was a dark week for Republicans, and for everyone who wants to see America remain the world’s most vibrant, most powerful nation.

Source:Houston Chronicle GOPLifer Blog. Written by Chris Ladd. Posted November 10, 2014

 

Posted by Gypsy Chief


Obama’s hypocrisy during China trip severely divides liberals

2014 November 12

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President Obama is currently on his second trip of the year to China. On one hand, the president has spoken about the importance of net neutrality and creating jobs, but on the other hand, is also attempting to push through a global free trade agreement that would drastically alter Internet use around the world, and possibly hamper job creation in the United States.

Before Barack Obama became President Obama, he rode a wave of progressive populism that hadn’t been seen since the days of John F. Kennedy. Shades of this energy were seen from time to time, Jack’s brother Bobby had it, Ronald Reagan had it, and even Bill Clinton to a certain degree. With the election of President Obama, and his re-election in 2012, millions of Americans were hoping for the “hope and change” that was promised on the campaign trail. Fast forward six years, and the results are mixed.

The economy has improved since the financial meltdown of 2008, but a stubborn Congress and questionable policies have restricted full recovery. Big strides in LGBT rights have been made, with more than half the states in the country now recognizing same-sex marriage. Though some issues are divided along the party line, other issues have divided the liberal base that was once so united behind the president.

In a statement on November 10 in China, President Obama spoke loudly in support for net neutrality, the idea of a free and open internet that can’t be dictated by private companies. The president asked the Federal Communications Commission to “create a new set of rules protecting net neutrality,” noting that cable and phone companies shouldn’t be able “to act as a gatekeeper, restricting what you can do or see online.” Opponents of net neutrality fear a possible government intervention, that could lead to, what Sen. Ted Cruz calls, “Obamacare for the internet.”

While many on the political left cheered President Obama, many were left scratching their heads when the president continued to push for the Trans-Pacific Partnership (TPP). Often described as “NAFTA on steroids,” and a “corporate coup d’etat,” the TPP is a massive global free trade agreement that includes the United States and 11 other countries representing 40 percent of the world’s economy.

Rep. Rosa DeLauro, a Democrat from Connecticut, said of Obama’s support of the TPP, “his push for the TPP is at cross-purposes with his stated goal of lifting the middle class and providing opportunity for those striving to reach the middle class.” DeLauro also said that Obama would need to “choose between that and trade policies that would only further exacerbate the economic problems in this country.” Progressive Caucus co-chair Rep. Keith Ellison, Democrat from Minnesota, is also against the TPP, saying that, “it’s hard to be for reducing inequality and the TPP…It’s like trying to sit down and stand up at the same time.”

In addition to the worry of job creation in the United States being restricted, the TPP would implement Internet restrictions that Obama had previously spoken against. Information obtained following a release from WikiLeaks focuses on intellectual property rights. “The TPP’s intellectual property regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons,” said Julian Assange, founder of WikiLeaks. Assange also notes that “If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs.”

The campaign group known as “Fight for the Future” has been active in pushing back against the TPP and has amassed over 130,000 signatures in a petition to stop the trade agreement. Campaign manager for Fight for the Future, Evan Greer has warned that, while speaking out in favor of net neutrality, President Obama and his administration are “quietly pushing for extreme, SOPA-like copyright policies that benefit Hollywood and giant pharmaceutical companies at the expense of our most basic rights to freedom of expression online.”

There is no doubt that being the President of the United States is a difficult job, one that often forces you to veer from previous commitments. On issues of taxes, health care, gun control, the minimum wage, education spending and others, blame can appropriately be placed at the doorstep of Republicans in Congress. However, there needs to be accountability for the actions that a president makes when there is no one else to blame but him, or her. Along with the expansion of the NSA, increased drone use, his aggressive stance against whistleblowers and journalists, Guantanamo Bay prison remaining open without much push to close it, as well as other legit criticisms, the political left, once a solid base behind President Obama, is starting to fracture. Many on the left balk at any criticism levied at Obama, but unless pressure is continued to be put on from his own supporters, the president will have no reason not to continue to move away from the polices that got him elected in the first place.

Source: Examiner. Written by Robert Sobel.

 

Posted by Gypsy Chief


Climate 101 with Bill Nye

2014 November 11
by chief

 

Posted by Gypsy Chief


The $9 Billion Witness: Meet JP Morgan Chase’s Worst Nightmare

2014 November 8

whistle

 

Published in Rolling Stone. Written by Matt Taibbi.

Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking…

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.’”

Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”

Alayne Fleischmann grew up in Terrace, British Columbia, a snowbound valley town just a brisk 18-hour drive north of Vancouver. She excelled at school from a young age, making her way to Cornell Law School and then to Wall Street. Her decision to go into finance surprised those closest to her, as she had always had more idealistic ambitions. “I helped lead a group that wrote briefs to the Human Rights Chamber for those affected by ethnic cleansing in Bosnia-Herzegovina,” she says. “My whole life prior to moving into securities law was human rights work.”

But she had student loans to pay off, and so when Wall Street came knocking, that was that. But it wasn’t like she was dragged into high finance kicking and screaming. She found she had a genuine passion for securities law and felt strongly she was doing a good thing. “There was nothing shady about the field back then,” she says. “It was very respectable.”

In 2006, after a few years at a white-shoe law firm, Fleischmann ended up at Chase. The mortgage market was white-hot. Banks like Chase, Bank of America and Citigroup were furiously buying up huge pools of home loans and repackaging them as mortgage securities. Like soybeans in processed food, these synthesized financial products wound up in everything, whether you knew it or not: your state’s pension fund, another state’s workers’ compensation fund, maybe even the portfolio of the insurance company you were counting on to support your family if you got hit by a bus.

As a transaction manager, Fleischmann functioned as a kind of quality-control officer. Her main job was to help make sure the bank didn’t buy spoiled merchandise before it got tossed into the meat grinder and sold out the other end.

A few months into her tenure, Fleischmann would later testify in a DOJ deposition, the bank hired a new manager for diligence, the group in charge of reviewing and clearing loans. Fleischmann quickly ran into a problem with this manager, technically one of her superiors. She says he told her and other employees to stop sending him e-mails. The department, it seemed, was wary of putting anything in writing when it came to its mortgage deals.

“If you sent him an e-mail, he would actually come out and yell at you,” she recalls. “The whole point of having a compliance and diligence group is to have policies that are set out clearly in writing. So to have exactly the opposite of that – that was very worrisome.” One former high-ranking federal prosecutor said that if he were taking a criminal case to trial, the information about this e-mail policy would be crucial. “I would begin and end my opening statement with that,” he says. “It shows these people knew what they were doing and were trying not to get caught.”

In late 2006, not long after the “no e-mail” policy was implemented, Fleischmann and her group were asked to evaluate a packet of home loans from a mortgage originator called GreenPoint that was collectively worth about $900 million. Almost immediately, Fleischmann and some of the diligence managers who worked alongside her began to notice serious problems with this particular package of loans.

For one thing, the dates on many of them were suspiciously old. Normally, banks tried to turn loans into securities at warp speed. The idea was to go from a homeowner signing on the dotted line to an investor buying that loan in a pool of securities within two to three months. Thus it was a huge red flag to see Chase buying loans that were already seven or eight months old.

What this meant was that many of the loans in the GreenPoint deal had either been previously rejected by Chase or another bank, or were what are known as “early payment defaults.” EPDs are loans that have already been sold to another bank and have been returned after the borrowers missed multiple payments. That’s why the dates on them were so old.

In other words, this was the very bottom of the mortgage barrel. They were like used cars that had been towed back to the lot after throwing a rod. The industry had its own term for this sort of loan product: scratch and dent. As Chase later admitted, it not only ended up reselling hundreds of millions of dollars worth of those crappy loans to investors, it also sold them in a mortgage pool marketed as being above subprime, a type of loan called “Alt-A.” Putting scratch-and-dent loans in an Alt-A security is a little like putting a fresh coat of paint on a bunch of junkyard wrecks and selling them as new cars. “Everything that I thought was bad at the time,” Fleischmann says, “turned out to be a million times worse.” (Chase declined to comment for this article.)

When Fleischmann and her team reviewed random samples of the loans, they found that around 40 percent of them were based on overstated incomes – an astronomically high defect rate for any pool of mortgages; Chase’s normal tolerance for error was five percent. One mortgage in particular that sticks out in Fleischmann’s mind involved a manicurist who claimed to have an annual income of $117,000. Fleischmann figured that even working seven days a week, this woman would have needed to work 488 days a year to make that much. “And that’s with no overhead,” Fleischmann says. “It wasn’t possible.”

But when she and others raised objections to the toxic loans, something odd started happening. The number-crunchers who had been complaining about the loans suddenly began changing their reports. The process she describes is strikingly similar to the way police obtain false confessions: The interrogator verbally abuses the target until he starts producing the desired answers. “What happened,” Fleischmann says, “is the head diligence manager started yelling at his team, berating them, making them do reports over and over, keeping them late at night.” Then the loans started clearing.

As late as December 11th, 2006, diligence managers had marked a full 33 percent of one loan sample as “stated income unreasonable for profession,” meaning that it was nearly inevitable that there would be a high number of defaults. Several high-ranking executives were copied on this report.

Then, on December 15th, a Chase sales executive held a lengthy meeting with reps from GreenPoint and the diligence team to examine the remaining loans in the pool. When they got to the manicurist, Fleischmann remembers, one of the diligence guys finally caved under the pressure from the sales executive. “He had his hands up and just said, ‘OK,’ and he cleared it,” says Fleischmann, adding that he was shaking his head “no” even as he was saying yes. Soon afterward, the error rate in the pool had magically dropped below 10 percent – a threshold that itself had just been doubled to clear the way for this deal.

After that meeting, Fleischmann testified, she approached a managing director named Greg Boester and pleaded with him to reconsider. She says she told Boester that the bank could not sell the high-risk loans as low-risk securities without committing fraud. “You can’t securitize these loans without special disclosure about what’s wrong with them,” Fleischmann told him, “and if you make that disclosure, no one will buy them.”

A former Olympic ski jumper, Boester was such an important executive at Chase that when he later defected to the Chicago-based hedge fund Citadel, Dimon cut off trading with Citadel in retaliation. Boester eventually returned to Chase and is still there today despite his role in this affair.

This moment illustrates the most basic element of the case against Chase: The bank knowingly peddled products stuffed with scratch-and-dent loans to investors without disclosing the obvious defects with the underlying loans.

Years later, in its settlement with the Justice Department, Chase would admit that this conversation between Fleischmann and Boester took place (though neither was named; it was simply described as “an employee?.?.?.?told?.?.?.?a managing director”) and that her warning was ignored when the bank sold those loans off to investors.

A few weeks later, in early 2007, she sent a long letter to another managing director, William Buell. In the letter, she warned Buell of the consequences of reselling these bad loans as securities and gave detailed descriptions of breakdowns in Chase’s diligence process.

Fleischmann assumed this letter, which Chase lawyers would later jokingly nickname “The Howler” after the screaming missive from the Harry Potter books, would be enough to force the bank to stop selling the bad loans. “It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing,” she says. “But when the Justice Department doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.”

In February 2008, less than two years after joining the bank, Fleischmann was quietly dismissed in a round of layoffs. A few months later, proof would appear that her bosses knew all along that the boom-era mortgage market was rotten. That September, as the market was crashing, Dimon boasted in a ball-washing Fortune article titled “Jamie Dimon’s SWAT Team” that he knew well before the meltdown that the subprime market was toast. “We concluded that underwriting standards were deteriorating across the industry.” The story tells of Dimon ordering Boester’s boss, William King, to dump the bank’s subprime holdings in October 2006. “Billy,” Dimon says, “we need to sell a lot of our positions.?.?.?.?This stuff could go up in smoke!”

In other words, two full months before the bank rammed through the dirty GreenPoint deal over Fleischmann’s objections, Chase’s CEO was aware that loans like this were too dangerous for Chase itself to own. (Though Dimon was talking about subprime loans and GreenPoint was technically an Alt-A pool, the Fortune story shows that upper management had serious concerns about industry-wide underwriting problems.)

In January 2010, when Dimon testified before the Financial Crisis Inquiry Commission, he told investigators the exact opposite story, portraying the poor Chase leadership as having been duped, just like the rest of us. “In mortgage underwriting,” he said, “somehow we just missed, you know, that home prices don’t go up forever.”

When Fleischmann found out about all of this years later, she was shocked. Her confidentiality agreement at Chase didn’t bar her from reporting a crime, but the problem was that she couldn’t prove that Chase had committed a crime without knowing whether those bad loans had been sold.

As it turned out, of course, Chase was selling those rotten dog-meat loans all over the place. How bad were they? A single lawsuit by a single angry litigant gives some insight. In 2011, Chase was sued over massive losses suffered by a group of credit unions. One of them had invested $135 million in one of the bank’s mortgage–backed securities. About 40 percent of the loans in that deal came from the GreenPoint pool.

The lawsuit alleged that in just the first year, the security suffered $51 million in losses, nearly 50 times what had been projected. It’s hard to say how much of that was due to the GreenPoint loans. But this was just one security, one year, and the losses were in the tens of millions. And Chase did deal after deal with the same methodology. So did most of the other banks. It’s theft on a scale that blows the mind.

In the spring of 2012, Fleischmann, who’d moved back to Canada after leaving Chase, was working at a law firm in Calgary when the phone rang. It was an investigator from the States. “Hi, I’m from the SEC,” he said. “You weren’t expecting to hear from me, were you?”

A few months earlier, President Obama, giving in to pressure from the Occupy movement and other reformers, had formed the Residential Mortgage-Backed Securities Working Group. At least superficially, this was a serious show of force against banks like Chase. The group would operate like a kind of regulatory Justice League, combining the superpowers of investigators from the SEC, the FBI, the IRS, HUD and a host of other federal agencies. It included noted anti-corruption- investigator and New York Attorney General Eric Schneiderman, which gave many observers reason to hope that finally something would be done about the crimes that led to the crash. That makes the fact that the bank would skate with negligible cash fines an even more extra-ordinary accomplishment.

By the time the working group was set up, most of the applicable statutes of limitations had either expired or were about to expire. “A conspiratorial way of looking at it would be to say the state waited far too long to look at these cases and is now taking its sweet time investigating, while the last statutes of limitations run out,” says famed prosecutor and former New York Attorney General Eliot Spitzer.

It soon became clear that the SEC wasn’t so much investigating Chase’s behavior as just checking boxes. Fleischmann received no follow-up phone calls, even though she told the investigator that she was willing to tell the SEC everything she knew about the systemic fraud at Chase. Instead, the SEC focused on a single transaction involving a mortgage company called WMC. “I kept trying to talk to them about GreenPoint,” Fleischmann says, “but they just wanted to talk about that other deal.”

The following year, the SEC would fine Chase $297 million for misrepresentations in the WMC deal. On the surface, it looked like a hefty punishment. In reality, it was a classic example of the piecemeal, cherry-picking style of justice that characterized the post-crisis era. “The kid-gloves approach that the DOJ and the SEC take with Wall Street is as inexplicable as it is indefensible,” says Dennis Kelleher of the financial reform group Better Markets, which would later file suit challenging the Chase settlement. “They typically charge only one offense when there are dozens. It would be like charging a serial murderer with a single assault and giving them probation.”

Soon Fleischmann’s hopes were raised again. In late 2012 and early 2013, she had a pair of interviews with civil litigators from the U.S. attorney’s office in the Eastern District of California, based in Sacramento.

One of the ongoing myths about the financial crisis is that the government is outmatched by the legal talent representing the banks. But Fleischmann was impressed by the lead attorney in her case, a litigator named Richard Elias. “He sounded like he had been a securities lawyer for 10 years,” she says. “This actually looked like his idea of fun – like he couldn’t wait to run with this case.”

She gave Elias and his team detailed information about everything she’d seen: the edict against e-mails, the sabotaging of the diligence process, the bullying, the written warnings that were ignored, all of it. She assumed that it wouldn’t be long before the bank was hauled into court.

Instead, the government decided to help Chase bury the evidence. It began when Holder’s office scheduled a press conference for the morning of September 24th, 2013, to announce sweeping civil-fraud charges against the bank, all laid out in a detailed complaint drafted by the U.S. attorney’s Sacramento office. But that morning the presser was suddenly canceled, and no complaint was filed. According to later news reports, Dimon had personally called Associate Attorney General Tony West, the third-ranking official in the Justice Department, and asked to reopen negotiations to settle the case out of court.

It goes without saying that the ordinary citizen who is the target of a government investigation cannot simply pick up the phone, call up the prosecutor in charge of his case and have a legal proceeding canceled. But Dimon did just that. “And he didn’t just call the prosecutor, he called the prosecutor’s boss,” Fleischmann says. According to The New York Times, after Dimon had already offered $3 billion to settle the case and was turned down, he went to Holder’s office and upped the offer, but apparently not by enough.

A few days later, Fleischmann, who had by then moved back to Vancouver and was looking for work, was at a mall when she saw a Wall Street Journal headline on her iPhone: JPMorgan Insider Helps U.S. in Probe. The story said that the government had a key witness, a female employee willing to provide damaging testimony about Chase’s mortgage operations. Fleischmann was stunned. Until that moment, she had no idea that she was a major part of the government’s case against Chase. And worse, nobody had bothered to warn her that she was about to be effectively outed in the newspapers. “The stress started to build after I saw that news,” she says. “Especially as I waited to see if my name would come out and I watched my job possibilities evaporate.”

Fleischmann later realized that the government wasn’t interested in having her testify against Chase in court or any other public forum. Instead, the Justice Department’s political wing, led by Holder, appeared to be using her, and her evidence, as a bargaining chip to extract more hush money from Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9 billion.

In late November, the two sides agreed on a settlement deal that covered a variety of misbehaviors, including the fraud that Fleischmann witnessed as well as similar episodes at Washington Mutual and Bear Stearns, two companies that Chase had acquired during the crisis (with federal bailout aid). The newspapers and the Justice Department described the deal as a “$13 billion settlement,” hailing it as the biggest white-collar regulatory settlement in American history. The deal released Chase from civil liability. And, in what was described by The New York Times as a “major victory for the government,” it left open the possibility that the Justice Department could pursue a further criminal investigation against the bank.

But the idea that Holder had cracked down on Chase was a carefully contrived fiction, one that has survived to this day. For starters, $4 billion of the settlement was largely an accounting falsehood, a chunk of bogus “consumer relief” added to make the payoff look bigger. What the public never grasped about these consumer–relief deals is that the “relief” is often not paid by the bank, which mostly just services the loans, but by the bank’s other victims, i.e., the investors in their bad mortgage securities.

Moreover, in this case, a fine-print addendum indicated that this consumer relief would be allowed only if said investors agreed to it – or if it would have been granted anyway under existing arrangements. This often comes down to either forgiving a small portion of a loan or giving homeowners a little extra time to pay up in full. “It’s not real,” says Fleischmann. “They structured it so that the homeowners only get relief if they would have gotten it anyway.” She pauses. “If a loan shark gives you a few extra weeks to pay up, is that ‘consumer relief’?”

The average person had no way of knowing what a terrible deal the Chase settlement was for the country. The terms were even lighter than the slap-on-the-wrist formula that allowed Wall Street banks to “neither admit nor deny” wrongdoing – the deals that had helped spark the Occupy protests. Yet those notorious deals were like the Nuremberg hangings compared to the regulatory innovation that Holder’s Justice Department cooked up for Dimon and Co.

Instead of a detailed complaint naming names, Chase was allowed to sign a flimsy, 10-and-a-half-page “statement of facts” that was: (a) so short, a first-year law student could read it in the time it takes to eat a tuna sandwich, and (b) so vague, a halfway intelligent person could read it and not know anyone had done anything wrong.

The ink was barely dry on the deal before Chase would have the balls to insinuate its innocence. “The firm has not admitted to violations of the law,” said CFO Marianne Lake. But the deal’s most brazen innovation was the way it bypassed the judicial branch. Previously, federal regulators had had bad luck with judges when trying to dole out slap-on-the-wrist settlements to banks. In a pair of celebrated cases, an unpleasantly honest federal judge named Jed Rakoff had rejected sweetheart deals worked out between banks and slavish regulators and had commanded the state to go back to the drawing board and come up with real punishments.

Seemingly not wanting to deal with even the possibility of such a thing happening, Holder blew off the idea of showing the settlement to a judge. The settlement, says Kelleher, “was unprecedented in many ways, including being very carefully crafted to bypass the court system.?.?.?.?There can be little doubt that the DOJ and JP-Morgan were trying to avoid disclosure of their dirty deeds and prevent public scrutiny of their sweetheart deal.” Kelleher asks a rhetorical question: “Can you imagine the outcry if [Bush-era Attorney General] Alberto Gonzales had gone into the backroom and given Halliburton immunity in exchange for a billion dollars?”

The deal was widely considered a good one for both sides, but Chase emerged with barely a scratch. First, the ludicrously nonspecific language surrounding the settlement put you, me and every other American taxpayer on the hook for roughly a quarter of Chase’s check. Because most of the settlement monies were specifically not called fines or penalties, Chase was allowed to treat some $7 billion of the settlement as a tax write-off.

Couple this with the fact that the bank’s share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal. What’s more, to defray the cost of this and other fines, Chase last year laid off 7,500 lower-level employees. Meanwhile, per-employee compensation for everyone else rose four percent, to $122,653. But no one made out better than Dimon. The board awarded a 74 percent raise to the man who oversaw the biggest regulatory penalty ever, upping his compensation package to about $20 million.

While Holder was being lavishly praised for releasing Chase only from civil liability, Fleischmann knew something the rest of the world did not: The criminal investigation was going nowhere.

In the days leading up to Holder’s November 19th announcement of the settlement, the Justice Department had asked Fleischmann to meet with criminal investigators. They would interview her very soon, they said, between December 15th and Christmas.

But December came and went with no follow-up from the DOJ. She began to wonder: If she was the government’s key witness, how was it possible that they were still pursuing a criminal case without talking to her? “My concern,” she says, “was that they were not investigating.”

The government’s failure to speak to Fleischmann lends credence to a theory about the Holder-Dimon settlement: It included a tacit agreement from the DOJ not to pursue criminal charges in earnest. It sounds outrageous, but it wouldn’t be the first time that the government used a wink and a nod to dispose a bank of major liability without saying so publicly. Back in 2010, American Lawyer revealed Goldman Sachs wanted a full release from liability in a dozen crooked mortgage deals, while the SEC didn’t want to give the bank such a big public victory. So the two sides quietly agreed to a grimy compromise: Goldman agreed to pay $550 million to settle a single case, and the SEC privately assured the bank that it wouldn’t recommend charges in any of the other deals.

As Fleischmann was waiting for the Justice Department to call, Chase and its lawyers had been going to tremendous lengths to keep her muzzled. A number of major institutional investors had sued the bank in an effort to recover money lost in investing in Chase’s fraud-ridden home loans. In October 2013, one of those investors – the Fort Worth Employees’ Retirement Fund – asked a federal judge to force Chase to grant access to a series of current and former employees, including Fleischmann, whose status as a key cooperator in the federal investigation had made headlines in The Wall Street Journal and other major media outlets.

In response, Dorothy Spenner, an attorney representing Chase, told the court that Fleischmann was not a “relevant custodian.” In other words, she couldn’t testify to anything of importance. Federal Magistrate Judge James C. Francis IV took Chase’s lawyers at their word and rejected the Fort Worth retirees’ request for access to Fleischmann and her evidence.

Other investors bilked by Chase also tried to speak to Fleischmann. The Federal Home Loan Bank of Pittsburgh, which had sued Chase, asked the court to force Chase to turn over a copy of the draft civil complaint that was withheld after Holder’s scuttled press conference. The Pittsburgh litigants also specified that they wanted access to the name of the state’s cooperating witness: namely, Fleischmann.

In that case, the judge actually ordered Chase to turn over both the complaint and Fleischmann’s name. Chase stalled. Later in the fall, the judge ordered the bank to produce the information again; it stalled some more.

Then, in January 2014, Chase suddenly settled with the Pittsburgh bank out of court for an undisclosed amount. Months after being ordered to allow Fleischmann to talk, they once again paid a stiff price to keep her testimony out of the public eye.

Chase’s determination to hide its own dirt while forcing Fleischmann to keep her secret was becoming more and more absurd. “It was a hard time to look for work,” she says. All that prospective employers knew was that she had worked in a department that had just been dinged with what was then the biggest regulatory fine in the history of capitalism. According to the terms of her confidentiality agreement, she couldn’t even tell them that she’d tried to keep the bank from committing fraud.

Despite it all, Fleischmann still had faith that the Justice Department or some other federal agency would make things right. “I guess I was just a trusting person,” she says. “I wasn’t cynical. I kept hoping.”

One day last spring, Fleischmann happened across a video of Holder giving a speech titled “No Company Is Too Big to Jail.” It was classic Holder: full of weird prevarication, distracting eye twitches and other facial contortions. It began with the bold rejection of the idea that overly large financial institutions would receive preferential treatment from his Justice Department.

Then, within a few sentences, he seemed to contradict himself, arguing that one must apply a special sort of care when investigating supersize banks, tweaking the rules so as not to upset the world economy. “Federal prosecutors conducting these investigations,” Holder said, “must go the extra mile to coordinate closely with the regulators who oversee these institutions’ day-to-day operations.” That is, he was saying, regulators have to agree not to allow automatic penalties to kick in, so that bad banks can stay in business.

Fleischmann winced. Fully fluent in Holder’s three-faced rhetoric after years of waiting for him to act, she felt that he was patting himself on the back for having helped companies survive crimes that otherwise might have triggered crippling regulatory penalties. As she watched in mounting outrage, Holder wrapped up his address with a less-than-reassuring pronouncement: “I am resolved to seeing [the investigations] through.” Doing so, he added, would “reaffirm” his principles.

Or, as Fleischmann translates it: “I will personally stay on to make sure that no one can undo the cover-up that I’ve accomplished.”

That’s when she decided to break her silence. “I tried to go on with the things I was doing, but I just stopped sleeping and couldn’t eat,” she says. “It felt like I was trying to keep this secret and my body was literally rejecting it.”

Ironically, over the summer, the government contacted her again. A new set of investigators interviewed her, appearing to have restarted the criminal case. Fleischmann won’t comment on that investigation. Frustrated as she has been by the decisions of the higher-ups in Holder’s Justice Department, she doesn’t want to do anything to get in the way of investigators who might be working the case. But she emphasizes she still has reason to be deeply worried that nothing will be done. Even if the investigators build strong cases against executives who oversaw Chase’s fraud, Holder or whoever succeeds him can still make the whole thing disappear by negotiating a soft landing for the company. “That’s the thing I’m worried about,” she says. “That they make the whole thing disappear. If they do that, the truth will never come out.”

In September, at a speech at NYU, Holder defended the lack of prosecutions of top executives on the grounds that, in the corporate context, sometimes bad things just happen without actual people being responsible. “Responsibility remains so diffuse, and top executives so insulated,” Holder said, “that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.”

In other words, people don’t commit crimes, corporate culture commits crimes! It’s probably fortunate that Holder is quitting before he has time to apply the same logic to Mafia or terrorism cases.

Fleischmann, for her part, had begun to find the whole situation almost funny.

“I thought, ‘I swear, Eric Holder is gas-lighting me,’?” she says.

Ask her where the crime was, and Fleischmann will point out exactly how her bosses at JPMorgan Chase committed criminal fraud: It’s right there in the documents; just hand her a highlighter and some Post-it notes – “We lawyers love flags” – and you will not find a more enthusiastic tour guide through a gazillion-page prospectus than Alayne Fleischmann.

She believes the proof is easily there for all the elements of the crime as defined by federal law – the bank made material misrepresentations, it made material omissions, and it did so willfully and with specific intent, consciously ignoring warnings from inside the firm and out.

She’d like to see something done about it, emphasizing that there still is time. The statute of limitations for wire fraud, for instance, has not run out, and she strongly believes there’s a case there, against the bank’s executives. She has no financial interest in any of this, no motive other than wanting the truth out. But more than anything, she wants it to be over.

In today’s America, someone like Fleischmann — an honest person caught for a little while in the wrong place at the wrong time – has to be willing to live through an epic ordeal just to get to the point of being able to open her mouth and tell a truth or two. And when she finally gets there, she still has to risk everything to take that last step. “The assumption they make is that I won’t blow up my life to do it,” Fleischmann says. “But they’re wrong about that.”

Good for her, and great for her that it’s finally out. But the big-picture ending still stings. She hopes otherwise, but the likely final verdict is a Pyrrhic victory.

Because after all this activity, all these court actions, all these penalties (both real and abortive), even after a fair amount of noise in the press, the target companies remain more ascendant than ever. The people who stole all those billions are still in place. And the bank is more untouchable than ever — former Debevoise & Plimpton hotshots Mary Jo White and Andrew Ceresny, who represented Chase for some of this case, have since been named to the two top jobs at the SEC. As for the bank itself, its stock price has gone up since the settlement and flirts weekly with five-year highs. They may lose the odd battle, but the markets clearly believe the banks won the war. Truth is one thing, and if the right people fight hard enough, you might get to hear it from time to time. But justice is different, and still far enough away.
~~

 

Posted by Gypsy Chief


Treasurer Walker Stapleton Channels ‘Dealin Doug’

2014 November 1
by chief

dealinwalkerfin

Did he take acting lessons? Gypsy Chief supports Betsy Markey.

 

Posted by Gypsy Chief


This is Why Mitch Needs Your Vote in KY Senate Race

2014 October 27

he needs your vote

he needs your vote

Everybody knows that Social Security is a Ponzi scheme – ‘experts’ such as Rick Perry, Gov. of TX say so. If you agree with this you should vote Mitch. If you like Social Security you should #DitchMitch and vote Alison Lundergan Grimes.

Thanks to the user on Rachel Maddow Facebook Fan page for the art work.

Our gal pal is Alison Grimes
Campaigns with the Big Dog at times
Says her friend Mitch
Is reluctant to switch
Could never keep up with the times

Just for the record, Cory Gardner [R-CO] seems to share McConnell’s view on Social Security.

 

Posted by Gypsy Chief


Blistering New Ad Against Mitch McConnell in KY

2014 October 26

 

Posted by Gypsy Chief


This City Came Up With a Simple Solution to Homelessness: Housing

2014 October 26
by chief
homeless in Salt Lake City

homeless in Salt Lake City

Salt Lake City’s Housing First initiative has reduced chronic homelessness by 72 percent. Now other cities are giving it a try.

Kilee Lowe was sitting in a park when cops picked her up and booked her into jail overnight.

After she got out the next morning, she returned to the park. The same officer who had thrown her into a cell not 24 hours before booked her again. It was back to jail for Kilee.

Kilee has been cycling in and out of the criminal justice system for years. After three and a half years in prison, she’s been homeless for a little over a year now.

“Just because I don’t have a credit card in my pocket,” she says, “does not make me a criminal.”

Kilee lives in Salt Lake City, Utah. It’s one of hundreds of American cities that have criminalized homelessness. Sometimes the “crime” is loitering. Sometimes it’s panhandling. In 2014 alone, one hundred American cities have banned sitting or lying down in public places. Wherever it happens, the fallout is frustratingly similar.

Not having a roof over your head means living in a continual crisis. The stress of not knowing where you’ll sleep at night, whether your family will be safe, and if you’ll be able to eat can suck up all your energy and your will. Regular stints in jail can only make it more difficult to find stability.

Not only that, but they drain tax dollars that could be put to much better use.

Salt Lake City crunched the numbers. And the prescription was clear. The city was spending $20,000 per homeless resident per year—funding for policing, arrests, jail time, shelter, and emergency services. Homelessness was not going down. Instead, for $7,800 a year through a new program called Housing First, the city could provide a person with an apartment and case management services.

And more importantly, chronic homelessness has dropped 72%.

In the latest video in the OverCriminalized series – produced in partnership with Brave New Films and The Nation – we spoke to people whose lives have been greatly improved by the Housing First program. One man told us that homeless people are often homeless because they are running from problems. Sometimes it’s abuse. Sometimes it’s addiction. He had been molested as a child and struggled with drug addiction as an adult. Recovery was hard and other programs would throw him back on the street if he relapsed, continuing the destructive cycle. After moving into stable housing, the unending stress of being homeless has dissolved. He’s been able to focus on sobriety and recovering. It’s worked.

Housing First hasn’t reached everyone like Kilee but that doesn’t mean the program isn’t improving people’s lives. But more could be done to reach out to the very people that desperately need programs like these.

For the last forty years, this country has continually ratcheted up the number of people behind bars and expanded the reasons we put them there. Social problems — like homelessness, drug addiction, and mental illness — have been sucked into a criminal justice system ill equipped to handle them. The problems haven’t been solved. Instead, we’ve locked too many people away and wasted money that could have been spent on interventions that could actually change the course of people’s lives. And as has always been the case with excessive correctional control, communities of color have been hardest hit.

But it doesn’t have to be this way. America can safely reduce our reliance on incarceration – several states have reduced their prison populations while crime rates have dropped.

Salt Lake City’s Housing First program is an important step in the right direction, a much more humane and fiscally responsible approach than criminalization. Other cities should follow suit. It’s time to end mass criminalization.

Article by Kara Dansky for The Nation.

 

Posted by Gypsy Chief


Glenn Beck: Not ‘All That Bad’ If McConnell Loses To Grimes

2014 October 24

Glenn Beck

Published in Talking Points Memo on October 23, 2014. Written by Sahil Kapur.

Glenn Beck doesn’t think it would be “all that bad for the country” if Kentucky Sen. Mitch McConnell (R) loses reelection to Alison Lundergan Grimes (D).

Less than two weeks before Election Day, the nationally syndicated talk radio host told his army of conservative listeners on Thursday that even though Grimes is “gonna be worse” for America, making her a senator could be worth the price of ousting an establishment Republican whom he suggested has added “poison” to Congress.

“It’s horrible for the country, but I’m not sure that it’s all that bad for the country,” Beck said. “I’m really not sure it’s all that bad to lose somebody like Mitch McConnell. … I don’t think it’s terrible.”

Beck’s beef with McConnell was on display during the Republican primary when he supported challenger Matt Bevin. But the general election is obviously a different beast. His argument that a McConnell defeat would be acceptable to conservatives is unhelpful to the GOP leader, who is unpopular in Kentucky and has faced questions of voter enthusiasm behind his reelection bid.

Though McConnell has a slight edge, the race is a statistical dead heat, according to the two most recent nonpartisan polls released this week. The election is on Nov. 4.

Below is the audio, followed by a transcript (with emphasis added), of Beck’s conversation with radio co-host Pat Gray.

here.

GRAY: How amazing would [McConnell losing] be after they — after the establishment Republicans worked so hard to get rid of Matt Bevin, would have been a tremendous candidate.

BECK: It’s horrible for the country, but I’m not sure that it’s all that bad for the country. I’m really not sure it’s all that bad to lose somebody like Mitch McConnell.

GRAY: Yeah, I know. I don’t think it’s so bad.

BECK: I don’t think it’s terrible.

GRAY: She would be worse.

BECK: Probably, but… [crosstalk]

BECK: She’s gonna be worse. But I’m tired of playing — I don’t want the poison to come from our own people. I’d rather get rid of all of our own people. Let the poison come from them so we are clean hands and we can say, “We didn’t have anything to do with that. We didn’t have anything to do with that.”

 

Posted by Gypsy Chief


McConnell Doubles Down on Obamacare Nonsense in Kentucky debate

2014 October 15

Senate Minority Leader McConnell speaks to reporters at U.S. Capitol in Washington

 

In the first and likely only Kentucky Senate debate, Mitch McConnell continued to offer his nonsensical word salad when it comes to Obamacare and his state’s implementation of it, Kynect. Calling Kynect, just “a website,” McConnell reiterated his position that Obamacare should be repealed.

“Kentucky Kynect is a website. It was paid for by a two-hundred-and-some-odd-million-dollar grant from the federal government. The website can continue but in my view the best interests of the country would be achieved by pulling out ObamaCare root and branch,” McConnell said in a debate with Alison Lundergan Grimes, the Democratic candidate for Senate.

How generous of him to allow the website to continue. The problem, as McConnell well knows but refuses to acknowledge, is that the program is not just a website. Without the federal law, there is no Medicaid expansion and there is no funding for subsidies to help people purchase insurance. And there are 520,000 Kentuckians who would lose their coverage if McConnell had his way, which Democrat Alison Lundergan Grimes was quick to point out, saying she’d “stand up for half a million Kentuckians” who have insurance for the first time. She blasted McConnell as being in a “fictional fantasy land” on the issue.

read more…