Archive for the ‘Business’ Category
There are plenty of conclusions you can draw from this, but one of the key ones is that it demonstrates that corporate boards are almost completely unable to predict how well CEO candidates will do on the job. They insist endlessly that they’re looking for only the very top candidates—with pay packages to match—and I don’t doubt that they sincerely think this is what they’re doing. In fact, though, they don’t have a clue who will do better. They could be hiring much cheaper leaders and would probably get about the same performance.
One reason that CEO pay has skyrocketed is that boards compete with each other for candidates who seem to be the best, but don’t realize that it’s all a chimera. They have no idea.
Jeff Horowitz reports at The Big Story:
The Consumer Financial Protection Bureau has heard from hundreds of thousands of consumers who feel wronged by banks and finance companies. Now the agency wants the public to hear from those consumers too.
On Wednesday, the bureau proposed allowing consumers to publish online the details of their complaints against lenders and financial service providers. Those narratives would augment the bureau’s consumer complaint database, which lists complaints about checking accounts, credit cards, student loans and other financial products. If consumers choose to make their complaints public, the companies involved would then be given a chance to write a public response.
“By proposing to share people’s stories, we are giving consumers an opportunity to be heard by the entire world and not simply by a government agency and its officials,” CFPB Director Richard Cordray said in remarks prepared for a Thursday event in El Paso, Texas.
The consumer bureau’s current database simply lists the company being complained about, a general subject matter like “deposits and withdrawals,” and whether the complaint has been resolved. By adding the narratives, the bureau believes it will help consumers determine where to take their business and identify systemic problems. A similar complaint reporting system is already in place at the Consumer Product Safety Commission, which seeks to identify dangerous products from appliances to toys.
Consumer groups were elated by the bureau’s proposal, which Ruth Susswein, a deputy director at Consumer Action, called “essential for consumers to protect themselves.” Banks have complained bitterly about . . .
This is excellent news—indeed, the complaints from the banks show how good it is. And as we saw in the previous article, making Federal databases open to the public whenever possible can help mitigate fraud and bad practice.
The simple answer is that Medicare was not reviewing its billing data and seemed to have little interest in stopping fraud. Charles Ornstein reports in ProPublica:
A few years ago, Illinois’ Medicaid program for the poor noticed some odd trends in its billings for group psychotherapy sessions.
Nursing home residents were being taken several times a week to off-site locations, and Medicaid was picking up the tab for both the services and the transportation.
And then there was this: The sessions were often being performed by obstetrician/gynecologists, oncologists and urologists — “people who didn’t have any training really in psychiatry,” Medicaid director Theresa Eagleson recalled.
So Medicaid began cracking down, and spending plummeted after new rules were implemented. In July 2012 the program stopped paying for group psychotherapy altogether for residents of nursing homes.
Yet Illinois doctors are still billing the federal Medicare program for large numbers of the same services, a ProPublica analysis of federal data shows.
Medicare paid Illinois providers for more than 290,000 group psychotherapy sessions in 2012 — more than twice as many sessions as were reimbursed to providers in New York, the state with the second-highest total.
Among the highest billers for group psychotherapy in Illinois were three ob/gyns and a thoracic surgeon. The four combined for 37,864 sessions that year, more than the total for all providers in the state of California. They were reimbursed more than $730,000 by Medicare in 2012 just for psychotherapy sessions, according to an analysis of a separate Medicare data set released in April.
“That’s not good,” Eagleson said when told of the Medicare numbers.
Medicare’s recent data release has led to a string of analyses showing how waste and fraud is inflating the nation’s bill for health care. This work has echoed the findings of ProPublica’s investigation last year into Medicare’s prescription drug program known as Part D, which had fewer barriers to waste and fraud than other government health care programs – and was making less effective use of its own data.
Of the Illinois ob/gyns billing for group psychotherapy, . . .
Some of these physicians should face criminal charges for fraud and also lose their license to practice medicine.
Pam Martens reports at Wall Street on Parade:
Only one word comes to mind to describe the testimony taking place before the U.S. Senate’s Permanent Subcommittee on Investigations this morning: Machiavellian.
The criminal minds on Wall Street have twisted banking and securities laws into such a pretzel of hubris that neither Congress, Federal Regulators or even the General Accountability Office can say with any confidence if the U.S. financial system is an over-leveraged house of cards. They just don’t know.
According to a copious report released last evening, here’s what hedge funds have been doing for more than a decade with the intimate involvement of global banks: the hedge fund makes a deposit of cash into an account at the bank which has been established so that the hedge fund can engage in high frequency trading of stocks. The account is not in the hedge fund’s name but in the bank’s name. The bank then deposits $9 for every one dollar the hedge fund deposits into the same account. Some times, the leverage reaches as high as 20 to 1.
The hedge fund proceeds to trade the hell out of the account, generating tens of thousands of trades a day using their own high frequency trading program and algorithms. Many of the trades last no more than minutes. The bank charges the hedge fund fees for the trade executions and interest on the money loaned.
Based on a written side agreement, preposterously called a “basket option,” the hedge fund will collect all the profits made in the account in the bank’s name after a year or longer and then characterize millions of trades which were held for less than a year, many for just minutes, as long-term capital gains (which by law require a holding period of a year or longer). Long term capital gains are taxed at almost half the tax rate of the top rate on short term gains.
There are so many banking crimes embedded in this story that it’s hard to know where to begin. Let’s start with the one most dangerous to the safety and soundness of banks: extension of margin credit.
Under Federal law known as Regulation T, it is perceived wisdom on Wall Street that a bank or broker-dealer cannot extend more than 50 percent margin on a stock account. But since the banks involved in these basket options called these accounts their own proprietary trading accounts, even though the hedge fund had full control over the trading and ultimate ownership of profits, the banks were justified (in their minds) with thumbing their nose at a bedrock of doing business on Wall Street.
We learn from a footnote in the Senate’s report that hedge funds have gamed Regulation T further. The report . . .
I blogged earlier on Andrew Cuomo, who increasingly seems to be corrupt, and his relationship with Howard Glaser. Nicole Bronzan has a brief article in ProPublica—and there’s a podcast at the link:
Justin Elliott (@JustinElliott) was doing his poking around a year ago when he uncovered a story he hadn’t even known existed, he tells Assistant Managing Editor Eric Umansky (@ericuman) in this week’s podcast.
Looking into the relationship between Howard Glaser, a mortgage industry lobbyist, and Andrew Cuomo, now New York’s governor, he filed a Freedom of Information request for Glaser’s emails in that capacity. The state denied the request, citing Glaser’s role as a consultant in Cuomo’s investigation into the mortgage industry during his time as attorney general — a previously unreported fact.
It was a surprising twist on the revolving door between government and industry, Elliott says: “Howard Glaser was on both sides of that door at the same time, and not only that, at least two of the companies that Andrew Cuomo was investigating as attorney general were actually acknowledged clients of Glaser.”
Umansky takes a moment to “savor the deliciousness” of that turn of events. “In the course of objecting to and fighting our open records request,” he says, “their argument for that actually turned out to be revealing another story to us.”
In the end, one of Glaser’s clients ended up getting immunity, Elliott says, which may have made sense for the investigation, but it’s never been reported that Cuomo ever used any information obtained as part of the deal with the due diligence firm Clayton. “It’s not clear why this deal was made,” he says.
Meanwhile, Glaser had a prominent role in news reports about Cuomo’s investigations, including the story that broke the news of the 2007 deal with Clayton, Elliott says– but without mention of his role consulting for the attorney general’s office. “If you read the New York Times story, which we link to in our story, who’s quoted in it? None other than Howard Glaser, as a mortgage consultant,” he says. “Story doesn’t mention the fact that Glaser had worked for both Clayton and Cuomo.”
Asked for answers about all this, Glaser instead began a Twitter campaign against ProPublica and its founding funder weeks before the article was published, Elliott says.
That “prebuttal” of the story actually worked against him in the end, Umansky says, calling it one of the “great moments in PR management.” In response to Glaser’s tweets, “a number of reporters started tweeting about their interest in seeing what the story was.”
By publishing time, ProPublica’s publicity team already had a head start, thanks to Glaser.
You credit card numbers and expiration dates sent (and stored) without encryption, for example. See this article at Ars Technica by Cyrus Farivar. From the article:
. . . Hasbrouck pointed out that the more information the airlines choose to retain, the more of an opportunity the government has to build a profile on me. “They have seat assignments [and] could probably search who is seated next to you for social network analysis,” he said. “You have no way of knowing when you’re using this website which information they are storing.”
“This is not to catch people under suspicion; this is for the purpose of finding new suspects,” Hasbrouck added.
I asked Travelocity about its practices and received a statement from Keith Nowak, a company spokesman.
“As the ticketing agents to the airlines, travel agencies like Travelocity routinely provide ticketing and other relevant passenger data to the airlines to help facilitate passenger flight requests,” he said, declining to answer further specific questions. “Once this data has been transferred, the airlines use the data for appropriate operational purposes, and the airlines determine how and when the data may be shared with other parties. As a partner in this process, Travelocity consistently complies with all relevant data privacy and data security requirements.”
He declined to respond to how or why my credit card number was transmitted in the clear.
Fred Cate, a law professor at Indiana University, said that my story raises a lot of questions about what the government is doing.
“Why isn’t the government complying with even the most basic cybersecurity standards?” Cate said. “Storing and transmitting credit card numbers without encryption has been found by the Federal Trade Commission to be so obviously dangerous as to be ‘unfair’ to the public. Why do transportation security officials not comply with even these most basic standards?”
The goal of PNR collection, according to CBP, is “to enable CBP to make accurate, comprehensive decisions about which passengers require additional inspection at the port of entry based on law enforcement and other information.”
This information is retained for quite some time in government databases. CBP publicly states that PNR data is typically kept for five years before being moved to “dormant, non-operational status.” But in my case, my earliest PNR goes back to March 2005. A CBP spokesperson was unable to explain this discrepancy. . .
A somewhat depressing article in Mother Jones by Tom Philpott.
He cites many studies, but the EPA so far has shown little or no interest.
Missouri is the only state that refuses to create a prescription drug database to detect and prevent prescription drug abuse. The reasons seem to be a refusal to be shown. The NY Times story by Alan Schwarz begins:
On his office phone at L & S Pharmacy, Richard Logan listened as a doctor’s office detailed how a patient had just left with her third prescription for painkillers in only nine days — and was quite possibly getting more, illegally, elsewhere.
Mr. Logan, 61, holstered two guns, slipped on a bulletproof vest and jumped into his truck. Because in his small corner of America’s epidemic of prescription drug abuse, Mr. Logan is no ordinary pharmacist. He is also a sheriff’s deputy who, when alerted to someone acquiring fraudulent drug prescriptions, goes out to catch that person himself.
“I’m only one guy, and for every person we get to, there are probably 100 who we can’t,” Mr. Logan said. “How many people have to get addicted and die for us to do what everyone else is doing about it?”
Continue reading the main story
His frustration stems from this: Missouri is the only state in America that has declined to keep a prescription drug database — the primary tool the other 49 states use to identify people who acquire excess prescriptions for addictive painkillers and tranquilizers, as well as the physicians who overprescribe them.
Not having the database has not only hampered Missouri’s ability to combat prescription drug abuse, but also attracted people from neighboring states looking to stockpile pills and bring them home to take themselves or sell to others, according to law enforcement officials, legislators and data compiled by a prescription drug processing firm.
“Welcome to Missouri — America’s Drugstore,” said Dr. Douglas Char, an emergency room physician in St. Louis. “We aren’t just allowing abuse, we’ve created a business model for dealers.”
Drug monitoring programs, whose procedures and powers can vary significantly from state to state, all share a similar strategy: to require doctors, pharmacists or both to enter all prescriptions into a database that can — or, in some states, must — be consulted later to make sure patients do not get excess medication.
Because many states’ programs appear effective, Missouri has been urged to put one into effect. Among those calling for a change are Missouri medical associations, members of Congress from neighboring states, the White House and even Mallinckrodt Pharmaceuticals, the St. Louis-based manufacturer of oxycodone, the highly abused prescription painkiller.
But while proponents say the vast majority of the Legislature supports the measure, it has been blocked by . . .
Very interesting incident, well reported: Denver Police harassing Uber driver (and passenger as well). Being able to use a smartphone to do research on the spot (not to mention the camera and video capabilities) certainly changes the nature of interactions with police.
It will take a while to figure out best practices, and that is why we try to preserve cultural knowledge—i.e., things painfully and slowly worked out. I sound like I’m becoming a conservative.
A meme evolving. In the Washington Post Linda Bernardi has a good rundown of the current sources of venture funding, which has moved far beyond the venture capitalists.
Over the last decade the venture capital and funding market has changed dramatically. Whereas in the past venture capitalists were the go-to-guys in the playground, there are new players giving entrepreneurs with many choices. One used to focus their efforts in the famed VC offices on Sand Hill Road, but today it is happening in every corner and coffee shop around the world.
Here are nine of the new entrants into the funding game:
1. Corporations making equity investments in start-ups. These are generally strategic investments and can have potentially huge upsides. Often a precursor for an intended acquisition and could mean a large investment, but the corporation is not interested in leading the round. They are generally passive investors and not on boards.
2. Corporate venture funds. With billions of dollars in reserves, companies are very well equipped to make large venture investments. Most large companies have very large VC operations, i.e. Intel Venture Capital, which has billions of dollars invested in start-ups and larger companies, and runs as a lucrative venture firm. Other companies with major venture operations include Google, Samsung, and many others. This assures a seat at the table for the large corporations and close involvement in innovation.
3. . .
Very interesting article in the NY Review of Books by Tim Parks:
Is there any consistent relationship between a book’s quality and its sales? Or again between the press and critics’ response to a work and its sales? Are these relationships stable over time or do they change?
Raise your hand, for example, if you know what the actual sales are for Karl Ove Knausgaard’s My Struggle. This mammoth work of autobiography—presently running at three five-hundred-page volumes with three more still to be translated from his native Norwegian—is relentlessly talked about as an “international sensation and bestseller” (Amazon) and constantly praised by the most prestigious critics. “It’s unbelievable… It’s completely blown my mind,” says Zadie Smith. “Intense and vital…. Ceaselessly compelling…. Superb,” agrees James Wood. Important newspapers (The New York Times for one) carry frequent articles about Knausgaard and his work. A search on The Guardian website has ten pages of hits for articles on Knausgaard despite the fact that his work wasn’t published in the UK until 2012. In a round-up of authors’ summer-reading tips in the same newspaper, the academic Sarah Churchwell remarks that after sitting on the jury for the Booker prize she looks forward to being “the last reader in Britain” to tackle My Struggle.
One could be forgiven, then, for imagining that this is one of those books which periodically impose themselves as “required reading” at a global level: Umberto Eco’s Name of the Rose, Jostein Gaardner’s Sophie’s World, Peter Hoeg’s Smilla’s Sense of Snow, Jonathan Franzen’s Freedom all spring to mind, literary equivalents of internationally successful genre works like Stieg Larssen’s The Girl with the Dragon Tattoo, Dan Brown’s The Da Vinci Code, and E. L. James’s Fifty Shades of Grey.
Well, as of a few days ago UK sales of all three volumes of Knausgaard work in hardback and paperback had barely topped 22,000 copies. A respectable but hardly impressive performance. In the US, which has a much larger market, that figure— total sales of all three volumes (minus e-books)—stood at about 32,000. This was despite the fact that with Knausgaard’s growing reputation the powerful Farrar, Straus and Giroux stepped in to buy the paperback rights from the minnow Archipelago and bring its own commercial muscle to bear. On the Amazon bestsellers ranking, A Death in the Family, the first and most successful volume of the My Struggle series, is presently 657th in the USA and 698th in the UK, this despite a low paperback price of around ten dollars.
So what is going on here? Should we be reassured that critics are sticking loyally by a work they admire regardless of sales, or bemused that something is being presented as a runaway commercial success when in fact it isn’t? Wouldn’t it be enough to praise Knausgaard without trying to create the impression that there is a huge international following behind the book? Or do the critics actually assume that everyone is buying it because they and all their peers are talking about it?
The truth is . . .
Perhaps GMO foods are not so benign after all—particularly if the genetic modification was to allow the food crop to survive being sprayed and coated with highly toxic herbicides, such as Roundup. Oliver Tickell reports in The Ecologist:
A scientific study that identified serious health impacts on rats fed on ‘Roundup ready’ GMO maize has been republished following its controversial retraction under strong commercial pressure. Now regulators must respond and review GMO and agro-chemical licenses, and licensing procedures.
A highly controversial paper by Prof Gilles-Eric Séralini and colleagues has been republished after a stringent peer review process.
The chronic toxicity study examines the health impacts on rats of eating a commercialized genetically modified (GM) maize, Monsanto’s NK603 glyphosate-based herbicide Roundup.
The original study, published in Food and Chemical Toxicology (FCT) in September 2012, found severe liver and kidney damage and hormonal disturbances in rats fed the GM maize and low levels of Roundup that are below those permitted in drinking water in the EU.
However it was retracted by the editor-in-chief of the Journal in November 2013 after a sustained campaign of criticism and defamation by pro-GMO scientists.
Toxic effects were found from the GM maize tested alone, as well as from Roundup tested alone and together with the maize. Additional unexpected findings were higher rates of large tumours and mortality in most treatment groups.
Criticisms addressed in the new version
Now the study has been republished by Environmental Sciences Europe. The republished version contains extra material addressing criticisms of the original publication.
The raw data underlying the study’s findings are also published – unlike the raw data for the industry studies that underlie regulatory approvals of Roundup, which are kept secret. However, the new paper presents the same results as before and the conclusions are unchanged.
The republication restores the study to the peer-reviewed literature so that it can be consulted and built upon by other scientists.
The republished study is accompanied by . . .
Monsanto will fight this to the bitter end. Monsanto really doesn’t care whether the foods are damaging to the body; Monsanto is striving purely to make sure profits grow.
Another very interesting article in Pacific Standard (and again, right now in Firefox you have to scroll past several screens of links), this one by Nicole Woo:
The Nation recently sparked a robust discussion with its incisive online conversation, “Does Feminism Have a Class Problem?” The panelists addressed the “Lean In” phenomenon, articulating how and why Sheryl Sandberg’s focus on self-improvement—rather than structural barriers and collective action to overcome them—angered quite a few feminists on the left.
While women of different economic backgrounds face many different realities, they also share similar work-life balance struggles. In that vein, the discussants argue that expanding family-friendly workplace policies—which would improve the lives of working women up and down the economic ladder—could help bridge the feminist class divide.
A growing body of research indicates that there are few other interventions that improve the economic prospects and work-life balance of women workers as much as unions do. A new report from the Center for Economic and Policy Research (CEPR), which I co-authored with my colleagues Janelle Jones and John Schmitt, shows just how much of a boost unions give to working women’s pay, benefits, and workplace flexibility.
For example, all else being equal, women in unions earn an average of 13 percent—that’s about $2.50 per hour—more than their non-union counterparts. In other words, unionization can raise a woman’s pay as much as a full year of college does. Unions also help move us closer to equal pay: A study by the National Women’s Law Center determined that the gender pay gap for union workers is only half of what it is for those not in unions.
Unionized careers tend to come with better health and retirement benefits, too. CEPR finds that women in unions are 36 percent more likely to have health insurance through their jobs—and a whopping 53 percent more likely to participate in an employer-sponsored retirement plan.
Unions also support working women at those crucial times when they need time off to care for themselves or their families. Union workplaces are 16 percent more likely to allow medical leave and 21 percent more likely to offer paid sick leave. Companies with unionized employees are also 22 percent more likely to allow parental leave, 12 percent more likely to offer pregnancy leave, and 19 percent more likely to let their workers take time off to care for sick family members.
Women make up almost half of the union workforce and are on track to be in the majority by 2025. As women are overrepresented in the low-wage jobs that are being created in this precarious economy—they are 56.4 percent of low-wage workers and over half of fast food workers—unions are leading and supporting many of the campaigns to improve their situations. In an important sense, the union movement already is a women’s movement.
Education and skills can get women only so far. It’s a conundrum that women have surpassed men when it comes to formal schooling, yet women have made little progress catching up on pay. Many women who do everything right—getting more education and skills—still find themselves with low wages and no benefits. . . .
Because corporations focus totally on growing profits, they have an equally intense focus on cutting costs: every dollar cut from costs drops straight to the bottom line as pure profit. Thus corporations try to avoid clean-up costs (thus the Superfund sites: corporations put those costs on taxpayers), no longer care much about the communities around them, and have stripped training from their budgets, in effect demanding that training costs be borne by others—the taxpayers, most often, through community college training programs, but also their own employees, who must pay out of their own pockets for training. The corporation wants all the benefits, but none of the costs.
Lauren Weber writes in the Wall Street Journal:
Hu-Friedy, a manufacturer of dental instruments in Chicago, says its future hinges on four employees. So, it is paying them to leave their jobs for two years.
While their colleagues bend and grind cylinders of steel on the factory floor, the four workers since March have been mastering the fundamentals of metal composition and heat-treating, among other things. The hope, managers say, is that the two years of full-time training will help keep the 106-year-old dental-instruments maker competitive in a mature industry crowded with rivals.
What’s happening at Hu-Friedy Mfg. Co. LLC is a rare exception to decades of corporate disinvestment in skills development, and gets at the heart of the debate playing out in the hiring market over whose job it is to train workers.
Companies complain that they can’t find skilled hires, but they aren’t doing much to impart those skills, economists and workforce experts say. U.S. companies have been cutting money for training programs for decades, expecting schools and workers to pick up the slack. Economists say that reluctance to develop workers in-house has made it hard for workers to launch or sustain careers, resulting in a stalemate in the labor market: Companies won’t look at job candidates who lack a specific skill set, so openings go unfilled even as millions linger on the unemployment rolls.
The government hasn’t tracked spending on corporate training since the mid-1990s, but one rough measure, the percentage of staffers at U.S. manufacturers dedicated to training and development, has fallen by about half from 2006 to 2013, according to research group Bersin by Deloitte.
Employers’ expectations for new hires have shifted since the recessions of the early 1980s, when companies laid off masses of workers and slashed training programs. Where bosses once hired for potential, viewing workers as lumps of clay to be molded to the company’s needs, they now want hires to arrive with all or most of the skills needed for the job—another symptom of how the employer-employee relationship has become reduced to a transaction, said Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School.
If employers “want only people who can step in immediately because they are currently doing the job, [they] narrow the pool to almost no one,” said Mr. Cappelli. He added that today’s novices are more likely to briefly shadow an experienced worker or log a few hours of on-the-job training than participate in a weekslong learning program. . . .
Pam Martens reports in Wall Street on Parade:
Wall Street On Parade has been reporting for the past six months on a series of tragic, sudden deaths of Information Technology workers at JPMorgan. Now coming to the fore are stories of relentless prosecutions of Wall Street’s IT workers by Manhattan District Attorney, Cyrus Vance. Bloomberg News reports today that Vance is engaged in at least four prosecutions of Wall Street workers over theft of computer code or other intellectual property.
Bestselling author, Michael Lewis, devoted a significant part of his latest book, Flash Boys, to the prosecution of Sergey Aleynikov over alleged stolen computer code. Aleynikov had been working for Goldman Sachs when he received an offer to move to a hedge fund and build a system from scratch. Aleynikov accepted the offer but agreed to stay at Goldman for six weeks to train his colleagues. (That does not seem like the action of a person on the run with stolen computer code.)
That was 2009. For the past five years, Aleynikov has been arrested and jailed by the Feds, had his conviction overturned by the Second Circuit Appeals Court, rearrested by the Manhattan District Attorney Cyrus Vance, and now faces more prosecution over the same set of facts: namely, that he took computer code that belonged to Goldman Sachs. Aleynikov is said to be among the best coders in the industry. He is increasingly being seen as the victim of malicious prosecution at the behest of the powerful Goldman Sachs.
According to the Lewis book, on the very same day that Kevin Marino, Aleynikov’s lawyer, gave his oral arguments to the Appeals Court, “the judges ordered Serge released, on the grounds that the laws he stood accused of breaking did not actually apply to his case.” He had been in prison for a year.
When the Second Circuit Appeals Court handed down its opinion of the case in December 2010, it found that Aleynikov had neither taken a tangible good from Goldman nor had he stolen a product involved in interstate commerce – noting that at oral argument the government “was unable to identify a single product that affects interstate commerce.”
But the hounds from hell were not finished with Aleynikov. Approximately six months after his vindication by the Second Circuit Appeals Court, the Manhattan District Attorney, Cyrus Vance, arrested Aleynikov, placed him in jail on essentially the same charges, and sought to have bail denied on the basis that he was a flight risk. Lewis notes in the book that the prosecutor put in charge of the case, Joanne Li, was actually the flight risk – Li soon fled the case, getting a job at Citigroup.
The ill repute that is now surrounding the Vance case is sending a message to close observers that this is more about harassing IT workers and delivering a cautionary warning to others than it is about punishing a real crime.
On Friday, June 20 of this year, New York State Judge Ronald A. Zweibel found that Aleynikov’s arrest at the hands of the Feds had been illegal. The Judge wrote that the FBI agent “did not have probable cause to arrest defendant, let alone search him or his home.” The Judge further noted that the “defendant’s Fourth Amendment rights were violated.”
The Judge also ruled that Aleynikov’s computer property seized by the FBI should have been returned to him after his case was overturned by the Federal Appeals Court. Instead, the Federal prosecutors turned the computers over to Vance’s office.
After Zweibel’s ruling, Aleynikov’s lawyer, Kevin Marino, released a statement saying that the Judge’s decision “represents a damning indictment of those assistant U.S. attorneys, assistant district attorneys and FBI agents who have now twice pursued an unlawful prosecution of an innocent man at the behest of Wall Street giant Goldman Sachs.” Marino added that Goldman “not only provoked but has been an active co-conspirator in the government’s case against Mr. Aleynikov.”
Is co-conspirator too strong a word? To comprehend the arrest and imprisonment of IT workers on Wall Street, one has to have context.
For many decades, there was a saying on Wall Street that . . .
It’s pretty clear that Wall Street controls at least some of the Federal government. They do not use their power to good ends.
I think Cuomo has shown his true colors, and they are unattractive in the extreme. Consider this report from Justin Elliott in ProPublica:
In early 2007, when he was New York State attorney general, Andrew Cuomo brought on a longtime confidant as a consultant on mortgage industry investigations, a move that has gone undisclosed until now.
The friend was Howard Glaser and he had another job at the same time: consultant and lobbyist for the very industry Cuomo was investigating.
Glaser, who went on to become a top state official in Cuomo’s gubernatorial administration, was operating a lucrative consulting firm, the Glaser Group, with a host of mortgage industry clients.
Later that year, Glaser provided insights on Cuomo’s investigations to industry players on a conference call hosted by an investment bank.
Cuomo’s office ended up giving immunity to one of Glaser’s clients a year into his term as attorney general.
In the end, experts say, the mortgage investigations Cuomo touted as “wide-ranging” came to little, even as he held one of the country’s most powerful prosecutorial positions through the financial crisis and its aftermath.
Glaser’s role in the attorney general’s investigations was disclosed to ProPublica in response to a public records request. The extent of his work is unclear, as is how long it lasted. Glaser told ProPublica the scope of the work was limited. While it was a formal arrangement, it was unpaid.
Cuomo’s office referred questions to Steven Cohen, who was chief of staff when Cuomo was attorney general. “There is no doubt Glaser provided advice to the governor when he was attorney general,” said Cohen. “The role he served was as a general consultant on the industry overall. He did not provide advice on specific investigations.”
Glaser also said that, despite the investment bank conference call, he never advised clients on Cuomo investigations.
One person who worked in the mortgage industry during that time said Glaser had a reputation as having Cuomo’s ear.
“If you needed to get to Cuomo, Glaser was the guy to go to,” the person said.
Before becoming a lobbyist for the mortgage industry, Glaser worked in the late 1990s under Cuomo at the Department of Housing and Urban Development, where he was known as Cuomo’s “right-hand man” and “hammer.”
Glaser declined to release a list of his clients from the period he worked for the attorney general. . .
This is similar to Obama’s picking a telecommunications industry lobbyist to head the FCC or a Wall Street defense lawyer to head the SEC: finding foxes to guard chicken coops. It shows where Cuomo’s (and Obama’s) true loyalties lie.
Corporations will do anything to make money (read this article on how they are leeching money from higher education), and one tactic is to get states to make it illegal for cities to offer free (and quite good) broadband services to residents. The FCC might be able to forestall this heavy-handed tactic, as Brian Fung explains:
While everyone’s worked up about how to keep the Internet an open platform, another little-known controversy is quickly gaining steam. How it plays out could determine whether millions of Americans get to build their own, local alternatives to big, corporate ISPs such as Comcast and Verizon.
Last night, House lawmakers pushed through legislation that would effectively undo those prospects for many cities around the country. In an amendment to a must-pass funding bill, Republicans led by Rep. Marsha Blackburn of Tennessee approved an amendment that would prohibit federal regulators from ensuring cities’ ability to sell their own high-speed broadband directly to consumers.
Cities have lately been taking matters into their own hands, attempting to lay down publicly owned fiber optic cables where they say there are gaps in coverage, quality or price from incumbent ISPs. In Blackburn’s state, Chattanooga has emerged as a prominent example of a city that successfully challenged the status quo; the local government now offers 1 Gbps service for $70 a month. (Those speeds are roughly 100 times faster than the national average.) Longmont, Colo. is also moving forward with its municipal broadband project despite earlier resistance from the cable industry.
In Longmont and various other jurisdictions, though, state laws have made it difficult if not impossible for cities to build their own broadband networks. Some states, like Colorado, require voter referendums to reach a certain threshold before it’ll let cities proceed. Google Fiber reportedly passed over Boulder, Colo. because of such restrictions, meaning that consumers missed out on a potentially game-changing service.
Other states have sought to ban municipal networks outright: Earlier this year, Kansas tried to outlaw city broadband before public opposition convinced the legislature to back down. New Mexico is also considering a ban.
The Federal Communications Commission has signaled its intention to intervene, saying that its congressional charter, the Communications Act of 1996, gives it the authority to overturn or “preempt” the state-level restrictions. A federal court seemed to agree with that interpretation of the law in January when it wrote that the bans posed a “paradigmatic barrier to infrastructure investment” that the FCC is empowered to move against.
“If the people, acting through their elected local governments, want to pursue competitive community broadband, they shouldn’t be stopped by state laws promoted by cable and telephone companies that don’t want that competition,” wrote FCC Chairman Tom Wheeler in a recent blog post.
But opponents of intervention argue that whatever the law says about the FCC’s authority, the agency must first deal with a higher constitutional problem. By leaping into the municipal broadband debate, the FCC would be inserting itself into the relationship between states and their cities — a potential no-no when it comes to the issue of federalism. . .
Continue reading. Later in the article:
“If the people, acting through their elected local governments, want to pursue competitive community broadband, they shouldn’t be stopped by state laws promoted by cable and telephone companies that don’t want that competition,” wrote FCC Chairman Tom Wheeler in a recent blog post.
The GOP pretty much hates anything the government does that benefits the public. The GOP wants businesses to make money from the public in every way possible, because the GOP derives its support from businesses. It’s very difficult to see any benefit to the people of the state for the legislature to make it illegal for cities to offer a municipal broadband service—and the vigorous public reaction in Kansas showed that the state legislature was doing this in obedience to private businesses, not out of a concern for citizens.
I was thinking of the male movie stars generally regarded as masculine and attractive in a fit, tough, man kind of way: Joel McCrae, for example, or Gary Cooper, or Randolph Scott. When they had to play some no-shirt scene, sometimes involving fisticuffs, it bears little resemblance to the current version: today the fisticuffs are martial arts production pieces, and the chiseled body we view has been shaped by weeks if not months of training and day-to-day diet control with a professional nutritionist and professional trainers. Movies are big bucks, and as little is left to chance as possible—plus there is the meme-evolution/competition factor: each new blockbuster must set a new mark, and one strand of the resulting evolution is how the hero’s physique became increasingly developed and ripped—to the point where the normal guy starts to feel that something’s going wrong here: reality is being distorted, in effect, so that the internalized cultural image a man carries and secretly measures himself against is such a god-like warrior that makes his own physique seem somewhat lacking. I bet feminism has some useful reading on this sort of thing, when cultural values/memes undermine and weaken the power of certain groups. And, of course, if you can make a person feel that there’s something wrong with him (or her), you can make a lot of money selling potions and equipment and supplements and training courses that promise to fix what’s wrong. “Power abs in 10 days!” You start to see that sort of thing—very much along the lines of “Lose 25 lbs in 7 days with …!”
Pam Martens reports in Wall Street on Parade how Senator Warren asked some very pertinent questions of Fed Chair Yellen—and got totally unsatisfactory answers.
Yesterday, Federal Reserve Chair Janet Yellen delivered her Semiannual Monetary Policy Report to the Senate Banking Committee. Yellen deftly maneuvered questions on slack in the job market, asset bubbles on Wall Street, and assorted digs at the explosion of the Fed’s balance sheet to over $4 trillion as a result of quantitative easing.
When it finally came to the turn of the last Senator on the docket to quiz Yellen, Senator Elizabeth Warren, the Fed Chair gave her a big, warm smile at the beginning of the questioning, likely figuring she was about to steal home and get big kudos for her performance back at the Fed.
Things didn’t go as planned.
Senator Warren has apparently been looking at the bare bones 35-pages released to the public for the various “living wills” or wind-down plans if a systemically important (too-big-to-fail) bank gets into trouble again and compared these to the cryptic, unintelligible tomes of paper that constitute the real wind-down plans behind the Fed’s equally opaque draperies.
Senator Elizabeth Warren Questioning Janet Yellen During Senate Hearing on July 15, 2014
Senator Elizabeth Warren Questioning Janet Yellen During Senate Hearing on July 15, 2014
Warren opened her questioning of Yellen by reminding the Fed Chair that Section 165 of the financial reform legislation known as Dodd-Frank mandated that large financial institutions submit plans to the Federal Reserve and the FDIC explaining how they could be “rapidly” liquidated without bringing down the economy – as occurred in 2008.
To drive home her point, Warren compared the situation of Lehman Brothers at the time of its collapse in 2008 to the Wall Street behemoth, JPMorgan today. Lehman, said Warren, had $639 billion in assets and 209 subsidiaries when it failed and it took three years to unwind the bank. Today, said Warren, JPMorgan has $2.5 trillion in assets and a staggering 3,391 subsidiaries.
Warren pointedly asked Yellen if these big Wall Street banks had ever given the Fed wind-down plans that were “credible.”
Yellen proceeded to bury herself pretty deeply in her answer. She said it was her “understanding” that there is a “process.” (Surely the Fed Chair should be completely on top of this critical piece of the Fed’s supervisory role of the largest bank holding companies in the country and have more than just an “understanding.”) Yellen went on to say that the wind-down plans are “complex” and some plans encompass “tens of thousands of pages.”
Yellen added: “I think what was intended is this interpretation you’re talking about, whether they’re credible, in other words, do they facilitate an orderly resolution, and I think we need to give these firms feedback.”
“Feedback” to banks which have exponentially increased in size since the greatest economic collapse since the Great Depression and have consistently demonstrated illegal cartel and consumer rip-off behavior was clearly not the answer Warren had in mind.
Warren responded: . . .
Continue reading. You’ll learn how another Obama appointee, Stanley Fischer, basically said that the Fed has no intention of complying with the law. Fischer, a creature of Citigroup (at the link: a story about Citigroup’s shady if not criminal operation—and it probably is criminal, but DoJ and the SEC are not really good against the wealthy), is apparently pledged to protect his former employer and the source of his wealth.
Obama has done a poor job with his choices to regulate Wall Streeet, though better than the abysmal job done by George W. Bush.