Later On

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Archive for January 12th, 2016

Interesting point: Ted Cruz is not eligible to be president because he is not a “natural born” citizen of the US

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Mary Brigid McManamon, a constitutional law professor at Widener University’s Delaware Law School, writes in the Washington Post:

Donald Trump is actually right about something: Sen. Ted Cruz (R-Tex.) is not a natural-born citizen and therefore is not eligible to be president or vice president of the United States.

The Constitution provides that “No person except a natural born Citizen . . . shall be eligible to the Office of President.” The concept of “natural born” comes from common law, and it is that law the Supreme Court has said we must turn to for the concept’s definition. On this subject, common law is clear and unambiguous. The 18th-century English jurist William Blackstone, the preeminent authority on it, declared natural-born citizens are “such as are born within the dominions of the crown of England,” while aliens are “such as are born out of it.” The key to this division is the assumption of allegiance to one’s country of birth. The Americans who drafted the Constitution adopted this principle for the United States. James Madison, known as the “father of the Constitution,” stated, “It is an established maxim that birth is a criterion of allegiance. . . . [And] place is the most certain criterion; it is what applies in the United States.”

Cruz is, of course, a U.S. citizen. As he was born in Canada, he is not natural-born. His mother, however, is an American, and Congress has provided by statute for the naturalization of children born abroad to citizens. Because of the senator’s parentage, he did not have to follow the lengthy naturalization process that aliens without American parents must undergo. Instead, Cruz was naturalized at birth. This provision has not always been available. For example, there were several decades in the 19th century when children of Americans born abroad were not given automatic naturalization.

Article I of the Constitution grants Congress the power to naturalize an alien — that is, Congress may remove an alien’s legal disabilities, such as not being allowed to vote. But Article II of the Constitution expressly adopts the legal status of the natural-born citizen and requires that a president possess that status. However we feel about allowing naturalized immigrants to reach for the stars, the Constitution must be amended before one of them can attain the office of president. Congress simply does not have the power to convert someone born outside the United States into a natural-born citizen.

Let me be clear: I am not a so-called birther. I am a legal historian. President Obama is without question eligible for the office he serves. The distinction between the president and Cruz is simple: The president was born within the United States, and the senator was born outside of it. That is a distinction with a difference.

In this election cycle, numerous pundits have declared that Cruz is eligible to be president. They rely on a supposed consensus among legal experts. This notion appears to emanate largely from a recent comment in the Harvard Law Review Forum by former solicitors general Neal Katyal and Paul Clement. In trying to put the question of who is a natural-born citizen to rest, however, the authors misunderstand, misapply and ignore the relevant law.

First, although Katyal and Clement correctly declare that the Supreme Court has recognized that common law is useful to explain constitutional terms, they ignore that law. Instead, they rely on three radical 18th-century British statutes. While it is understandable for a layperson to make such a mistake, it is unforgivable for two lawyers of such experience to equate the common law with statutory law. The common law was unequivocal: Natural-born subjects had to be born in English territory. The then-new statutes were a revolutionary departure from that law.

Second, the authors appropriately ask the question whether the Constitution includes the common-law definition or the statutory approach. But they fail to examine any U.S. sources for the answer. Instead, Katyal and Clement refer to the brand-new British statutes as part of a “longstanding tradition” and conclude that the framers followed that law because they “would have been intimately familiar with these statutes.” But when one reviews all the relevant American writings of the early period, including congressional debates, well-respected treatises and Supreme Court precedent, it becomes clear that the common-law definition was accepted in the United States, not the newfangled British statutory approach.

Third, . . .

Continue reading.

And here’s a column by Lawrence H. Tribe, a Harvard Law School professor, on the same point:

There’s more than meets the eye in the ongoing dustup over whether Ted Cruz is eligible to serve as president, which under the Constitution comes down to whether he’s a “natural born citizen” despite his 1970 Canadian birth. Senator Cruz contends his eligibility is “settled” by naturalization laws Congress enacted long ago. But those laws didn’t address, much less resolve, the matter of presidential eligibility, and no Supreme Court decision in the past two centuries has ever done so. In truth, the constitutional definition of a “natural born citizen” is completely unsettled, as the most careful scholarship on the question has concluded. Needless to say, Cruz would never take Donald Trump’s advice to ask a court whether the Cruz definition is correct, because that would in effect confess doubt where Cruz claims there is certainty.

People are entitled to their own opinions about what the definition ought to be. But the kind of judge Cruz says he admires and would appoint to the Supreme Court is an “originalist,” one who claims to be bound by the narrowly historical meaning of the Constitution’s terms at the time of their adoption. To his kind of judge, Cruz ironically wouldn’t be eligible, because the legal principles that prevailed in the 1780s and ’90s required that someone actually be born on US soil to be a “natural born” citizen. Even having two US parents wouldn’t suffice. And having just an American mother, as Cruz did, would have been insufficient at a time that made patrilineal descent decisive.

This narrow definition reflected 18th-century fears of a tyrannical takeover of our nation by someone loyal to a foreign power — fears that no longer make sense. But the same could be said of fears that a tyrannical federal army might overrun our state militias. Yet that doesn’t lead Cruz — or, more importantly, the conservative jurists he admires — to discard the Second Amendment’s “right to bear arms” as a historical relic, or to limit that right to arms-bearing by members of today’s “state militias,” the national guard.

On the other hand, the kind of judge I admire and Cruz abhors is a “living constitutionalist,” one who believes that the Constitution’s meaning evolves with the perceived needs of the time and longstanding practice. To that kind of judge, Cruz would be eligible to serve because it no longer makes sense to be bound by the narrow historical definition that would disqualify him.

When Cruz was my constitutional law student at Harvard, he aced the course after making a big point of opposing my views in class — arguing stridently for sticking with the “original meaning” against the idea of a more elastic “living Constitution” whenever such ideas came up. I enjoyed jousting with him, but Ted never convinced me — nor did I convince him.

At least he was consistent in those days. Now, he seems to be a fair weather originalist, abandoning that method’s narrow constraints when it suits his ambition.

By the time another president takes office, three of the Supreme Court’s sitting members will have passed the age of 80 and one will be nearly 84. Cruz’s public pronouncements about the kinds of justices he would appoint suggest that his litmus test would filter out any jurist who views the Constitution as flexible enough to reflect accumulated experience and changed perspectives. Unless, it seems, that kind of jurist would rule in a way Cruz favors on one or another issue crucial to him — like his eligibility to serve as president. Because a rigid “originalism” tends not to favor women’s rights or gay rights, I wouldn’t count on a Cruz appointee to be open-minded on such matters. . .

Continue reading.

Written by LeisureGuy

12 January 2016 at 6:06 pm

Posted in Election, GOP, Law

Uh-oh: FBI looking into public corruption issues regarding Clinton Foundation donors and Clinton State Department work

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Keep in mind that this story is from Fox News, not a big Clinton fan and not a totally reliable source of information (and even the NY Times got it wrong when it reported that Clinton was facing a “criminal investigation” over her emails: she was not). But Catherine Herridge and Pamela Browne report:

The FBI investigation into Hillary Clinton’s use of private email as secretary of state has expanded to look at whether the possible “intersection” of Clinton Foundation work and State Department business may have violated public corruption laws, three intelligence sources not authorized to speak on the record told Fox News.

This new investigative track is in addition to the focus on classified material found on Clinton’s personal server.

“The agents are investigating the possible intersection of Clinton Foundation donations, the dispensation of State Department contracts and whether regular processes were followed,” one source said.

Clinton, speaking to the Des Moines Register, on Monday pushed back on the details of a second investigative track. According to reporter Jennifer Jacobs, Clinton said Monday she has heard nothing from the FBI.

“No, there’s nothing like that that is happening,” Clinton said, according to a tweet from Jacobs.

Experts including a former senior FBI agent said the bureau does not have to notify the subject of an investigation.

The development follows press reports over the past year about the potential overlap of State Department and Clinton Foundation work, and questions over whether donors benefited from their contacts inside the administration.

The Clinton Foundation is a public charity, known as a 501(c)(3). It had grants and contributions in excess of $144 million in 2013, the most current available data.

Inside the FBI, pressure is growing to pursue the case.

One intelligence source told Fox News that FBI agents would be “screaming” if a prosecution is not pursued because “many previous public corruption cases have been made and successfully prosecuted with much less evidence than what is emerging in this investigation.”

The FBI is particularly on edge in the wake of how the case of former CIA Director David Petraeus was handled.

One of the three sources said some FBI agents felt Petraeus was given a slap on the wrist for sharing highly classified information with his mistress and biographer Paula Broadwell, as well as lying to FBI agents about his actions. Petraeus pleaded guilty to a misdemeanor in March 2015 after a two-plus-year federal investigation in which Attorney General Eric Holder initially declined to prosecute. . .

Continue reading.

Written by LeisureGuy

12 January 2016 at 4:37 pm

The “ruthlessness” of Bernie Sanders vs. the “kindness” of real-estate developers

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Although the Bloomberg Businessweek article on Bernie Sanders by Joel Stein has many good and interesting tidbits, it’s quite clear that Stein himself doesn’t get it. In the article he repeatedly misses the point of what he describes or quotes. To take one example, Stein writes:

The reason a wonky septuagenarian can even convincingly talk about revolution is that Sanders is so genuinely angry. Often, he doesn’t play nicely. As mayor of Burlington, he was once invited to speak at a United Way fundraiser. His speech, perhaps for the only time, lasted just a few minutes and consisted of telling people that the United Way shouldn’t exist—that asking for dollars from workers’ paychecks to do the government’s job was shameful. As mayor, he strong-armed a real estate group that was going to convert low-income housing to luxury condos by passing laws specifically to thwart their efforts. The righteous can be ruthless.

It’s interesting that Stein views enabling people with low incomes to keep their homes is “ruthless,” while evicting them to find housing wherever they can in order to develop luxury condos is considered… what? kindness? The “ruthlessness” in this instance seems to me to belong to the real estate group.

If you read the article while thinking, it’s clear that Stein has a point to make, a point that does not fit well with what he actually finds in writing the report.

I would use “ruthless” for the Wall Street companies that ran systematic frauds to scam people out of their money, or for DuPont deliberately and knowingly poisoning thousands of people for decades and concealing the crime, and when faced with the facts, tried to bury the facts and buy off (or replace) the regulators. That’s ruthless.

And I agree with Bernie about United Way, too: we should make workers pay because the government doesn’t want to collect a fair share of taxes from the wealthy and from corporations.

Written by LeisureGuy

12 January 2016 at 12:18 pm

DuPont and the environment

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Corporations have zero moral sense—or, perhaps, as much moral sense as does not interfere with increasing profits. The NY Times has a strong editorial today:

An article in The Times Magazine on Sunday has laid bare the unconscionable decades-long efforts of the DuPont company to hide the dangers of an obscure chemical and bamboozle regulators into allowing toxic pollution to continue long after the dangers were known to the company. The article by Nathaniel Rich described how a corporate lawyer, Rob Bilott, built a devastating case against DuPont, based on the company’s own studies and internal documents. The case illustrates the urgent need for Congress to complete its efforts to reform the Toxic Substances Control Act, which has allowed tens of thousands of untested chemicals to remain on the market with little more than the manufacturer’s say-so that they are safe.

The chemical that DuPont was protecting is known as PFOA, or perfluorooctanoic acid. It is used in the production of Teflon for non-stick frying pans, a huge source of profits for DuPont. When the Toxic Substances Control Act was enacted in 1976, PFOA was one of a multitude of untested chemicals allowed to remain on the market. The act also made it extremely difficult for the Environmental Protection Agency to require safety tests or crack down on chemicals known to be hazardous. Only a handful have been restricted over the past 40 years.

In the case of PFOA, DuPont brazenly dumped its toxic waste into a creek that ran through a pasture where farmers grazed and watered their cows, causing grotesque malformations and deaths among the animals. Meanwhile, the company hid evidence that the chemical had contaminated the local water supply well beyond what the company’s own scientists considered safe and far beyond what independent scientists considered safe.

The Senate and the House have passed bills that would go a long way toward preventing such tragedies. What remains is for the two chambers to reconcile their versions into one bill that can be sent to the president for his signature. The Senate bill is the stronger of the two. Both would make it harder for companies to hide information from the public and from federal or state agencies by claiming it is confidential business information. Both bills would require companies to justify claims of confidentiality, but the stronger Senate bill would also require the E.P.A. to review such claims. . .

Continue reading.

The article that the editorial references is by Nathaniel Rich; it begins:

Just months before Rob Bilott made partner at Taft Stettinius & Hollister, he received a call on his direct line from a cattle farmer. The farmer, Wilbur Tennant of Parkersburg, W.Va., said that his cows were dying left and right. He believed that the DuPont chemical company, which until recently operated a site in Parkersburg that is more than 35 times the size of the Pentagon, was responsible. Tennant had tried to seek help locally, he said, but DuPont just about owned the entire town. He had been spurned not only by Parkersburg’s lawyers but also by its politicians, journalists, doctors and veterinarians. The farmer was angry and spoke in a heavy Appalachian accent. Bilott struggled to make sense of everything he was saying. He might have hung up had Tennant not blurted out the name of Bilott’s grandmother, Alma Holland White.

White had lived in Vienna, a northern suburb of Parkersburg, and as a child, Bilott often visited her in the summers. In 1973 she brought him to the cattle farm belonging to the Tennants’ neighbors, the Grahams, with whom White was friendly. Bilott spent the weekend riding horses, milking cows and watching Secretariat win the Triple Crown on TV. He was 7 years old. The visit to the Grahams’ farm was one of his happiest childhood memories.

When the Grahams heard in 1998 that Wilbur Tennant was looking for legal help, they remembered Bilott, White’s grandson, who had grown up to become an environmental lawyer. They did not understand, however, that Bilott was not the right kind of environmental lawyer. He did not represent plaintiffs or private citizens. Like the other 200 lawyers at Taft, a firm founded in 1885 and tied historically to the family of President William Howard Taft, Bilott worked almost exclusively for large corporate clients. His specialty was defending chemical companies. Several times, Bilott had even worked on cases with DuPont lawyers. Nevertheless, as a favor to his grandmother, he agreed to meet the farmer. ‘‘It just felt like the right thing to do,’’ he says today. ‘‘I felt a connection to those folks.’’

The connection was not obvious at their first meeting. About a week after his phone call, Tennant drove from Parkersburg with his wife to Taft’s headquarters in downtown Cincinnati. They hauled cardboard boxes containing videotapes, photographs and documents into the firm’s glassed-in reception area on the 18th floor, where they sat in gray midcentury-modern couches beneath an oil portrait of one of Taft’s founders. Tennant — burly and nearly six feet tall, wearing jeans, a plaid flannel shirt and a baseball cap — did not resemble a typical Taft client. ‘‘He didn’t show up at our offices looking like a bank vice president,’’ says Thomas Terp, a partner who was Bilott’s supervisor. ‘‘Let’s put it that way.’’

Terp joined Bilott for the meeting. Wilbur Tennant explained that he and his four siblings had run the cattle farm since their father abandoned them as children. They had seven cows then. Over the decades they steadily acquired land and cattle, until 200 cows roamed more than 600 hilly acres. The property would have been even larger had his brother Jim and Jim’s wife, Della, not sold 66 acres in the early ’80s to DuPont. The company wanted to use the plot for a landfill for waste from its factory near Parkersburg, called Washington Works, where Jim was employed as a laborer. Jim and Della did not want to sell, but Jim had been in poor health for years, mysterious ailments that doctors couldn’t diagnose, and they needed the money.

DuPont rechristened the plot Dry Run Landfill, named after the creek that ran through it. The same creek flowed down to a pasture where the Tennants grazed their cows. Not long after the sale, Wilbur told Bilott, the cattle began to act deranged. They had always been like pets to the Tennants. At the sight of a Tennant they would amble over, nuzzle and let themselves be milked. No longer. Now when they saw the farmers, they charged.

Wilbur fed a videotape into the VCR. The footage, shot on a camcorder, was grainy and intercut with static. Images jumped and repeated. The sound accelerated and slowed down. It had the quality of a horror movie. In the opening shot the camera pans across the creek. It takes in the surrounding forest, the white ash trees shedding their leaves and the rippling, shallow water, before pausing on what appears to be a snowbank at an elbow in the creek. The camera zooms in, revealing a mound of soapy froth.

‘‘I’ve taken two dead deer and two dead cattle off this ripple,’’ Tennant says in voice-over. ‘‘The blood run out of their noses and out their mouths. … They’re trying to cover this stuff up. But it’s not going to be covered up, because I’m going to bring it out in the open for people to see.’’

The video shows a large pipe running into the creek, discharging green water with bubbles on the surface. ‘‘This is what they expect a man’s cows to drink on his own property,’’ Wilbur says. ‘‘It’s about high time that someone in the state department of something-or-another got off their cans.’’

At one point, the video cuts to a skinny red cow standing in hay. Patches of its hair are missing, and its back is humped — a result, Wilbur speculates, of a kidney malfunction. Another blast of static is followed by a close-up of a dead black calf lying in the snow, its eye a brilliant, chemical blue. ‘‘One hundred fifty-three of these animals I’ve lost on this farm,’’ Wilbur says later in the video. ‘‘Every veterinarian that I’ve called in Parkersburg, they will not return my phone calls or they don’t want to get involved. Since they don’t want to get involved, I’ll have to dissect this thing myself. … I’m going to start at this head.’’

The video cuts to a calf’s bisected head. Close-ups follow of the calf’s blackened teeth (‘‘They say that’s due to high concentrations of fluoride in the water that they drink’’), its liver, heart, stomachs, kidneys and gall bladder. Each organ is sliced open, and Wilbur points out unusual discolorations — some dark, some green — and textures. ‘‘I don’t even like the looks of them,’’ he says. ‘‘It don’t look like anything I’ve been into before.’’

Bilott watched the video and looked at photographs for several hours. He saw cows with stringy tails, malformed hooves, giant lesions protruding from their hides and red, receded eyes; cows suffering constant diarrhea, slobbering white slime the consistency of toothpaste, staggering bowlegged like drunks. Tennant always zoomed in on his cows’ eyes. ‘‘This cow’s done a lot of suffering,’’ he would say, as a blinking eye filled the screen.

‘‘This is bad,’’ Bilott said to himself. ‘‘There’s something really bad going on here.’’ . . .

Continue reading.

People should go to prison for this. But they won’t. The company will pay a fine, and things will go on as usual, with no one punished. It’s how we arrived at this sort of thing.

Later in the article:

The story began in 1951, when DuPont started purchasing PFOA (which the company refers to as C8) from 3M for use in the manufacturing of Teflon. 3M invented PFOA just four years earlier; it was used to keep coatings like Teflon from clumping during production. Though PFOA was not classified by the government as a hazardous substance, 3M sent DuPont recommendations on how to dispose of it. It was to be incinerated or sent to chemical-waste facilities. DuPont’s own instructions specified that it was not to be flushed into surface water or sewers. But over the decades that followed, DuPont pumped hundreds of thousands of pounds of PFOA powder through the outfall pipes of the Parkersburg facility into the Ohio River. The company dumped 7,100 tons of PFOA-laced sludge into ‘‘digestion ponds’’: open, unlined pits on the Washington Works property, from which the chemical could seep straight into the ground. PFOA entered the local water table, which supplied drinking water to the communities of Parkersburg, Vienna, Little Hocking and Lubeck — more than 100,000 people in all.

Bilott learned from the documents that 3M and DuPont had been conducting secret medical studies on PFOA for more than four decades. In 1961, DuPont researchers found that the chemical could increase the size of the liver in rats and rabbits. A year later, they replicated these results in studies with dogs. PFOA’s peculiar chemical structure made it uncannily resistant to degradation. It also bound to plasma proteins in the blood, circulating through each organ in the body. In the 1970s, DuPont discovered that there were high concentrations of PFOA in the blood of factory workers at Washington Works. They did not tell the E.P.A. at the time. In 1981, 3M — which continued to serve as the supplier of PFOA to DuPont and other corporations — found that ingestion of the substance caused birth defects in rats. After 3M shared this information, DuPont tested the children of pregnant employees in their Teflon division. Of seven births, two had eye defects. DuPont did not make this information public.

In 1984, DuPont became aware that dust vented from factory chimneys settled well beyond the property line and, more disturbing, that PFOA was present in the local water supply. DuPont declined to disclose this finding. In 1991, DuPont scientists determined an internal safety limit for PFOA concentration in drinking water: one part per billion. The same year, DuPont found that water in one local district contained PFOA levels at three times that figure. Despite internal debate, it declined to make the information public.

Read the whole thing. The criminality and malicious disregard of public safety by DuPont is astonishing. It was quite deliberate criminality, and some DuPont managers and executives fully deserve both lengthy prison terms and public condemnation.

Written by LeisureGuy

12 January 2016 at 10:46 am

A big choice: Hillary Clinton, with business as usual; or Bernie Sanders, with a chance of real reform

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Take, for example, this story by David Dayen in The Intercept:

Hillary Clinton’s response to Bernie Sanders’s plan to aggressively break up the big banks responsible for the financial crisis is to suggest that he is naive.

“My plan also goes beyond the biggest banks to include the whole financial sector,” Clinton wrote in a New York Times op-ed in December. “My plan is more comprehensive,” she said at the first Democratic debate in October — and for that reason, “frankly, it’s tougher.”

But Clinton’s vision of financial reform neglects one part of the industry everyone agrees was an essential factor in the 2008 crisis: the credit rating agencies, which assess the worthiness of Wall Street securities for investors.

Sanders’s plan, released last week, would no longer allow the companies that issue securities to pick which rating agency they use – a simple but outrageous practice that creates an enormous conflict of interest and helps facilitate fraud.

The heart of Clinton’s pitch on Wall Street is that she recognizes all potential hazards. But there is not one word in her big reform plan about the rating agencies.

The ludicrousness of the current system was brilliantly depicted in The Big Short, the Oscar-contending comedy about the financial collapse. In a pivotal scene, Melissa Leo (sporting comically large eyeglasses, above) plays an employee of Standard and Poor’s, one of the three biggest rating agencies.

She explains to Steve Carell (as hedge fund manager Mark Baum) why S&P continues to give AAA ratings (connoting no risk of default) to mortgage-backed securities composed of junk loans: If they didn’t, the issuers would just go to their competitors, Moody’s and Fitch.

Investors use those ratings to make decisions about what bonds to buy. But because the banks that issue securities pay for the ratings, the rating agencies have a significant financial incentive to grant high ratings in order to attract more business.

This is not just true in the movies. The Financial Crisis Inquiry Commission found that the rating agencies “were key enablers of the financial meltdown,” inflating ratings and giving investors false confidence that mortgage-backed securities were safe. Trillions of dollars in rotten securities “could not have been marketed and sold without their seal of approval,” the FCIC said.

The bipartisan Senate Permanent Subcommittee on Investigations agreed, finding that over 90 percent of subprime mortgage bonds given AAA ratings in 2006 and 2007 were eventually downgraded to junk status. Investigators uncovered an emblematic message from an S&P analyst speaking to their diligence: “[W]e rate every deal[.] [I]t could be structured by cows and we would rate it.”

And since then, nothing has changed. Unlike other failings addressed by the Dodd-Frank financial reform law, the compensation model for credit rating agencies is the same today as it was then.

And as the New York Times’s Gretchen Morgenson pointed out on January 10, the most recent Securities and Exchange Commission (SEC) report on the rating agencies finds that this conflict of interest still distorts the ratings they dole out.

The SEC identified that larger rating agencies were “motivated at least in part by market-share considerations,” and that senior ratings personnel on occasion altered ratings in violation of the firm’s policies and procedures.

Even before this latest report, we knew that

Hillary Clinton’s response to Bernie Sanders’s plan to aggressively break up the big banks responsible for the financial crisis is to suggest that he is naive.

“My plan also goes beyond the biggest banks to include the whole financial sector,” Clinton wrote in a New York Times op-ed in December. “My plan is more comprehensive,” she said at the first Democratic debate in October — and for that reason, “frankly, it’s tougher.”

But Clinton’s vision of financial reform neglects one part of the industry everyone agrees was an essential factor in the 2008 crisis: the credit rating agencies, which assess the worthiness of Wall Street securities for investors.

Sanders’s plan, released last week, would no longer allow the companies that issue securities to pick which rating agency they use – a simple but outrageous practice that creates an enormous conflict of interest and helps facilitate fraud.

The heart of Clinton’s pitch on Wall Street is that she recognizes all potential hazards. But there is not one word in her big reform plan about the rating agencies.

The ludicrousness of the current system was brilliantly depicted in The Big Short, the Oscar-contending comedy about the financial collapse. In a pivotal scene, Melissa Leo (sporting comically large eyeglasses, above) plays an employee of Standard and Poor’s, one of the three biggest rating agencies.

She explains to Steve Carell (as hedge fund manager Mark Baum) why S&P continues to give AAA ratings (connoting no risk of default) to mortgage-backed securities composed of junk loans: If they didn’t, the issuers would just go to their competitors, Moody’s and Fitch.

Investors use those ratings to make decisions about what bonds to buy. But because the banks that issue securities pay for the ratings, the rating agencies have a significant financial incentive to grant high ratings in order to attract more business.

This is not just true in the movies. The Financial Crisis Inquiry Commission found that the rating agencies “were key enablers of the financial meltdown,” inflating ratings and giving investors false confidence that mortgage-backed securities were safe. Trillions of dollars in rotten securities “could not have been marketed and sold without their seal of approval,” the FCIC said.

The bipartisan Senate Permanent Subcommittee on Investigations agreed, finding that over 90 percent of subprime mortgage bonds given AAA ratings in 2006 and 2007 were eventually downgraded to junk status. Investigators uncovered an emblematic message from an S&P analyst speaking to their diligence: “[W]e rate every deal[.] [I]t could be structured by cows and we would rate it.”

And since then, nothing has changed. Unlike other failings addressed by the Dodd-Frank financial reform law, the compensation model for credit rating agencies is the same today as it was then.

And as the New York Times’s Gretchen Morgenson pointed out on January 10, the most recent Securities and Exchange Commission (SEC) report on the rating agencies finds that this conflict of interest still distorts the ratings they dole out.

The SEC identified that larger rating agencies were “motivated at least in part by market-share considerations,” and that senior ratings personnel on occasion altered ratings in violation of the firm’s policies and procedures.

Even before this latest report, we knew that rating agency abuse continued, because last January the SEC and state attorneys general fined Standard and Poor’s for improperly rating commercial mortgage securities deals in a bid to acquire new business, both before and after the financial crisis.

Sanders’s financial reform speech last week highlighted the rating agency conflict of interest. “No longer will Wall Street be able to pick and choose which credit agency will rate their products,” Sanders vowed.

And while his proposal to turn the ratings agencies into non-profits was new, his idea of overhauling their compensation model mirrors a proposal from the leading champion of rating agency reform in Congress: Senator Al Franken, the Minnesota Democrat.

The Franken plan would use a governmental entity to assign securities to qualified rating agencies based on capacity and expertise. Over time, the more accurate rating agencies would receive more securities to rate, forcing them to compete on quality rather than on how many AAA ratings they can hand out to please the banks.

Franken’s plan actually passed during the Dodd-Frank debate, with 64 votes in the Senate. However, as economist Dean Baker explains, in the final conference committee, Dodd-Frank co-author Barney Frank – at the behest of the Obama Administration – stripped out the Franken amendment, merely directing the SEC to study the matter. Frank is now a policy adviser to Clinton.

And although they were supposed to issue new rules that either adopted the Franken model or another solution deemed more “feasible,” the SEC punted, adding only a few paperwork requirements while maintaining the same compensation model. . .

Continue reading.

So far as I can tell, Clinton is totally on the side of Wall Street, if not actually in Wall Street’s pocket. Bernie Sanders clearly is not, and people recognize that. Take a look at this Bloomberg Businessweek profile of Bernie by Joel Stein:

Bernie Sanders cannot understand why anyone is interested in Bernie Sanders. Sure, he has learned to toss a paragraph of biography into his presidential campaign speeches, but he gives that section less passion than any other. He mumbles something about growing up with an immigrant father in a tenement with three and a half rooms. When asked privately what this “half room” is, Sanders looks as if he’s never considered it. “Probably the foyer,” he says. “It had a kitchen, a living room, a bedroom, and foyer. They threw in a bathroom as well, but I didn’t count it. You know, my memory of my bathroom is that one time a fish actually came up through a toilet.” He pauses. “We did not cook it.”

And the selfies—Sanders does not enjoy the selfies. “If I had my options I’d prefer to shake hands,” he says. Wading through a selfie barrage at a Christmas tree lighting ceremony in Plymouth, N.H., he allows the local radio DJ to put a knit cap with reindeer antlers on him. “I was a little afraid it would tussle your hair,” the DJ jokes. Sanders’s hair is famously disheveled. But Sanders has no interest in fashion banter. “This is a real New England hat,” says Sanders. “We worry less about looks and more about keeping warm.” Later, visiting his campaign office in Salem, N.H., he agrees to sign a few “Bernie” T-shirts for volunteers. “This is one of the skills as president I will clearly need: writing your name on T-shirts,” he says. “Who would believe that a grown-up person is debasing T-shirts all over America?”

Bernie Sanders is more an idea than a person. An idea does not need to comb its hair. An idea can get away with skipping the task that occupies so much of most politicians’ time—phoning the rich to ask for money—by instead writing fundraising letters, which contain words that make people with money anxious, like “oligarchy.” An idea can give speeches filled with so many statistics and numbers that they’re really just white papers with hand gestures. Bernie Sanders is not a leader so much as a messenger. And his message can fit on a Post-it note: The rich are screwing you.

It’s the most passion-inducing message of the presidential campaign. Sanders has gotten more donations—2.5 million-plus—at this point in the election cycle than any candidate in history, including sitting presidents, and twice as many individual donors as Hillary Clinton. The slouching, rumpled 74-year-old, who was slouching and rumpled in his 20s, has often attracted far larger audiences to his boring-ass speeches than any 2016 candidate, including Donald Trump: 28,000 in Portland, Ore.; 27,500 in Los Angeles; 20,000 in Boston; 15,000 in Seattle. While there is no calendar of semi-nude men supporting Clinton, the February model in “Men Who Bern” proclaims, “Only you can rebuild the crumbling infrastructure of my heart.”

For an angry, self-righteous Post-it note, Sanders is pretty likable. He’s warm, thoughtful, self-aware, brave, funny, and—in that way that hippies don’t care what people think of them—cool. Sitting near a provolone-filled refrigerator in the cafeteria kitchen at Plymouth State University, he roughly pulls his sweater vest over his head, to look more formal, maybe, or to stay cool, or to achieve his hairstyle. He approaches his son Levi, a paralegal at Greater Boston Legal Services, who is about to introduce him onstage. He picks a huge piece of lint off his son’s lapel and asks, “Is this what genetics is about? He has more crap on his suit jacket than I have on mine.”

Levi nods and says, “I’m trying to make you look good.” . . .

Continue reading.

The tone is a bit odd. The blurb reads “On the road with a man so angry he scares Democrats, too.” But, as the article notes, Democrats don’t act scared: the crowds that turn out to hear him are large, enthusiastic, and even loving. But the writer has difficulty understanding what is happening and why, even though he notes:

Sanders has the highest constituent approval rating and lowest disapproval rating among U.S. senators.

One secret, I think, is that Sanders does not waste time in posturing and personal attacks. His interest and his speeches are focused on actual policy positions: the speeches have substance, and he provides specifics about what must be done. Many people like that. (I like also the line about the speeches being “white papers with hand gestures.”)

It’s also interesting how Sanders is respected and liked by many in the GOP who have worked with (or against) him. Sen. James Inhofe (R-OK), no one’s idea of a pushover. The article notes:

“Bernie Sanders is unique,” Inhofe says, “in that most of the Democrats I know in the Senate vote liberal and press-release conservative. Not Bernie. He’s a proud, in-the-heart, sincere liberal. I’ve never heard him once say something that didn’t come from his heart. That’s not true with all the people running for president, Democrats and Republican. I hold him in high regard.” Sanders and Inhofe met in the early ’90s, when they were both representatives, and Sanders was proposing an amendment hiking taxes on the oil and gas industry. Inhofe rushed to the floor, debated him, and won the vote. Afterward, Sanders thanked him for offering a thoughtful, fact-based exchange.

The article is well worth reading. From later in the article:

. . . Win or lose in an election, he’s always stuck to his message. And it’s possible that people will keep responding. Robert Reich, an economist who was secretary of labor under Bill Clinton, says that anyone who carried on Occupy Wall Street’s attack on growing inequality would have attracted the same support. Massachusetts Senator Elizabeth Warren, he says, perhaps more so. “Essentially, America faces a choice between authoritarian populism, represented by Donald Trump, and reform populism, represented by Bernie Sanders. If we don’t make the choice in 2016, we’ll be making it in 2020 or 2024,” Reich says. “I am amazed at the enthusiasm amongst young people for Bernie. But he seems to be very aware that this isn’t a personality cult. His ego is very much under control.”

Sanders makes no attempt to seem fun or milk trends. While Hillary Clinton’s Twitter feed gets down with tweets like “Yaas, queen,” Sanders’s feed is unapologetically wonky. While Warren will tackle income inequality, she sounds like a Harvard professor. Sanders sounds like a guy who at least considered cooking a toilet fish.

It also helps that he isn’t beholden to anyone, for anything. While Sanders is running for the Democratic nomination, he’s still not a member of the party. He doesn’t have an affiliated super PAC collecting and spending money on his behalf. Fewer than 300 of his supporters have given the individual maximum of $2,700 during the primary and as a group are responsible for less than 2 percent of his cash; Clinton’s almost 18,000 maximum donors account for nearly two-thirds of hers.

He will not allow himself to be taken off message. He gets furious when people talk to him about nonsubstantive issues, refusing to take a moderator’s prodding to attack a vulnerable Clinton at the first Democratic debate by saying, “The American people are sick and tired of hearing about your damn e-mails.” To New Hampshire voters, most of the political ads on TV appear the same: Chris Christie nodding thoughtfully at town halls, Marco Rubio smiling while shaking hands, Jeb Bush on a lot of factory tours. The Sanders ads have charts. . .

UPDATE: Also note this NY Times article, “Hillary Clinton Races to Close Enthusiasm Gap With Bernie Sanders in Iowa,” by Patrick Healy and Yamiche Alcindor, which begins:

Iowa Democrats are displaying far less passion for Hillary Clinton than for Senator Bernie Sanders of Vermont three weeks before the presidential caucuses, creating anxiety inside the Clinton campaign as she scrambles to energize supporters and to court wavering voters.

The enthusiasm gap spilled abundantly into view in recent days, from the cheering crowds and emotional outpourings that greeted Mr. Sanders, and in interviews with more than 50 Iowans at campaign stops for both candidates.

Voters have mobbed Mr. Sanders at events since Friday, some jumping over chairs to shake his hand, snap a selfie or thank him for speaking about the middle class. “Did you get to touch him?” asked one woman who could not get close enough after an event here on Saturday.

“We love you, Bernie! Enough is enough!” Nathan Arentsen, 29, cheered several times at another event in Des Moines as he stomped his feet to signal support for the candidate.

Continue reading the main storyRELATED COVERAGE

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Who’s Winning the Presidential Campaign?SEPT. 16, 2015
Audiences for Mrs. Clinton have yet to grow to consistently match those for Mr. Sanders, and the typical reception for her was evident on Monday in Waterloo. About 300 people welcomed Mrs. Clinton enthusiastically and listened to her diligently, but many of them, still unsure, rebuffed Clinton aides trying to get them to sign “commitment cards” to caucus for her. . .

Continue reading.

That certainly doesn’t read as though Democrats are fearful of Bernie Sanders. It reads as though they like him a lot.

Written by LeisureGuy

12 January 2016 at 10:05 am

Loss in coal-mining jobs more than offset by new green-energy jobs

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Paul Krugman has an interesting blog post:

The Wall Street Journal has a remarkable editorial titled The Carnage in Coal Country, accusing President Obama of destroying jobs through his terrible, horrible, no good regulations on coal: “According to the National Mining Association, 40,000 coal jobs have been lost in the U.S. since 2008.”

That’s a bigger number than the BLS figure, but never mind; you might want to put that in perspective by remembering that the US economy has added 14 million private sector jobs since 2010. You might also want to note that coal has been declining for a long time, of which more in a second.

But what really struck me were two things. First, the editorial sneers that we’re “still waiting for all those new green jobs Mr. Obama has been promising since he arrived in Washington.” Um:

Green energy jobs v coal jobs

Yes, that number is from the Solar Foundation, a private group; so is the Journal’s number on mining jobs. And while you might want to quibble with specific numbers, the boom in renewable energy is very real, as are the surging number of jobs in things like solar panel installation. I can’t imagine any calculation under which the number of green jobs added doesn’t exceed the loss in coal mining, which was already a shadow of its former self before Obama took office.

The other striking thing is that the editorial simply takes it as a given that any regulation is bad, including regulations on mercury and coal ash (which is also loaded with mercury and other heavy metals like lead). Let’s see: mercury is a neurotoxin, which can impair intelligence; other heavy metals can cause cancer and poison people in a variety of ways. In what moral or even economic universe is it obviously wrong to limit emissions of neurotoxins?

Continue reading.

Written by LeisureGuy

12 January 2016 at 9:40 am

Selling another razor: The LASSC BBS-1, made by Wolfman Razors

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BBS-complete

I’m selling another razor on eBay (listing). It’s really a fine razor, but I have another Wolfman Razor and I’m trying to shrink the collection. (It also seems a bit greedy to have two when they are so difficult to procure: the BBS-1 is very seldom available, and Wolfman Razors has a backlog of orders so the wait times are severe.

Written by LeisureGuy

12 January 2016 at 9:33 am

Posted in Shaving

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