debtors prisons coming back bigtime

I have personally seen this for many years. People arrested for minor offenses often driving without a license or insurance a/k/a driving while poor and getting caught up into system. Then owing thousands =sof dollars they can't pay and getting arrested over and over for not paying fines, missing court dates etc. I am not excusing the behavior as you need to have a drivers license, insurance and show up at court on time, but often I have had to bite my lip as I see single mothers trying to raise kids as husband were killed in Iraqi, left them etc  get drug into a system they will never get out of.  Shady fiance companies loading up $300.00 notes with ridiculous attorneys fees, expenses, etc and turning them into $1,500 to $ 2,500 judgments and not getting good service but taking default anyway. The people then show up explain they moved, etc after being arrested and are basically willing to sign anything to get out of jail. Unfortunately, in the justice court systems in Mississippi this is the rule not the exception and is a daily occurance.

December 12, 2011from WBEZ Although debtors' prisons are illegal across the country, it's becoming increasingly common for people to serve jail time as a result of their debt. Collection agencies are resorting to some unusually harsh tactics to force people to pay their unpaid debt, some of whom aren't aware that lawsuits have been filed against them by creditors. Take, for example, what happened to Robin Sanders in Illinois. She was driving home when an officer pulled her over for having a loud muffler. But instead of sending her off with a warning, the officer arrested Sanders and she was taken right to jail. "That's when I found out [that] I had a warrant for failure to appear in Macoupin County. And I didn't know what it was about." Sanders owed $730 on a medical bill. She says she didn't even know a collection agency had filed a lawsuit against her. "They say they send out these court notices, and nobody gets them," Sanders says. She spent four days in jail waiting for her father to raise $500 for her bail. That money was then turned over to the collection agency.Sanders' story is an increasingly common one across the country. Similar stories have been reported in Indiana, Tennessee and Washington.  Here's how it happens: a company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.Beverly Yang, a legal aid attorney with Land of Lincoln Legal Assistance, says most debtors don't know their rights.   The U.S. became an early proponent of banning debtors' prisons, especially since up to two-thirds of Europeans who came to the colonies, arrived in the new world with debt. Before they debtors' prisons were done away with, thousands of colonial Americans were thrown in jail for their outstanding debt--which sometimes totaled less than 60 cents.Although debtors' prisons are now illegal across the country, a study by the Wall Street Journal found that over a third of all states in the U.S. allow borrowers who can't or won't pay to be jailed--including those where debtors' prisons are explicitly prohibited by state constitutions.A report by the American Civil Liberties Union found that people were imprisoned even when the cost of doing so exceeded the sum total of the debt they owed. In the City of New Orleans, for example, the Sheriff pays $22.39 per day for each detainee held in the Orleans Parish Prison. Sean Matthews, a homeless construction worker, was incarcerated for five months for $498 of legal debt in 2009. Matthews' jail time cost the city $3,201.77--over six times the amount he owed. Some are even made to pay for their jail time themselves. Walter Riepen, a Michigan resident, was released from jail after he served a 30-day sentence, only to discover a bill for $1260 when he returned home--the cost of his incarceration at a rate of $60 a day. Since his only income is a monthly social security disability payment, Riepen cannot pay back the amount, and the ACLU reports that he still lives under the threat of being sent back to prison for his unpaid legal financial obligations.  --Beenish Ahmed Source: The New Yorker; The Acquisition of the Political, Social, and Industrial Rights of Man in America; Brennan Center for Justice; The Wall Street Journal; the American Civil Liberties Union In fact, she says, some judges don't even know the debtors' rights, which could result in the debtor being intimidated into a pay agreement.  "I've seen this even when I'm standing in the court room as the legal aid attorney," Yang says, "The judge will ask if they can pay, how about $150 a month. How about $75 a month? How come you can't even pay $50 a month? Did you apply for a job last week?"Leveraging Payments The Federal Trade Commission received more than 140,000 complaints related to debt collection in 2010. That's nearly 25,000 more than the previous year.  Yang says some creditors are eager to use harsh tactics. "Whatever the creditors, or the creditors' attorneys can do to leverage some kind of payment, it will help their profits enormously because they have, literally, millions of these." Kevin Kelly, president of the Illinois Creditors Bar Association, says members of his organization only issue warrants in extreme situations. "There's an assumption in what you're saying that we'd rather throw them in jail than work with them," he says. "And I don't find that to be true at all." Sometimes it's the debtor who's keeping information from the collectors, Kelly says. That prevents important documents from getting to the right place. He says most collectors want to make reasonable arrangements, but it's difficult when the vast majority don't respond to the notices sent to them. Illinois Attorney General Lisa Madigan thinks more can be done. It's illegal in Illinois for people to be sent to jail because they're in debt. But Madigan thinks some creditors are abusing the law. "You wouldn't be in that predicament if you didn't have debt," Madigan says, "But for being in debt, you wouldn't be in prison. And that essentially equates to being thrown in jail, debtors prison." She says courts need to be certain they have correct information to serve notices. Madigan also says judges need to be properly educated in these proceedings to prevent a debtor from needlessly going to jail. The Illinois Attorney General also says the state is investigating agencies that it thinks are abusing the law.  As for Sanders, she has a remaining balance of about $160 on her medical bill. But at least she now knows she won't have to go to jail for it.

http://www.npr.org/2011/12/12/143274773/unpaid-bills-land-some-debtors-behind-bars

Since is is almost Halloween decided to scare you this month Prophets of Doom

Prophets Of Doom: 12 Insider Quotes About The Nearing Economic Crisis

We are getting so close to a financial collapse in Europe that you can almost hear the debt bubbles popping. All across the western world, governments and major banks are rapidly becoming insolvent. So far, the powers that be are keeping all of the balls in the air by throwing around lots of bailout money. But now the political will for more bailouts is drying up and the number of troubled entities seems to grow by the day. Right now the western world is facing a debt crisis that is absolutely unprecedented in world history. Europe has had a tremendously difficult time just trying to keep Greece afloat, and several much larger European countries are now on the verge of a major financial crisis. In addition, there are a growing number of very large financial institutions all over the western world that are also rapidly approaching a day of reckoning. The global financial system is a sea or red ink, and when we get to the point where there are hundreds of ships going under how is it going to be possible to bail all of them out? The quotes that you are about to read show that quite a few top financial and political insiders know that things cannot hold together much longer and that a horrific economic crisis is coming. We built the global financial system on a foundation of debt, leverage and risk and now this house of cards that we have created is about to come tumbling down.
A lot of people in politics and in the financial world know what is about to happen. Once in a while they will even be quite candid about it with the media.
As I have written about previously, Europe is on the verge of a financial collapse. If things go really badly, things could totally fall apart in a few weeks. But more likely it will be a few more months until the juggling act ends.
Right now, the banking system in Europe is coming apart at the seams. Because the global financial system is so interconnected today, when major European banks start to fail it is going to have a cascading effect across the United States and Asia as well.
The financial crisis of 2008 plunged us into the deepest recession since the Great Depression.
The next financial crisis could potentially hit the world even harder.
The following are 12 shocking quotes from insiders that are warning about the horrific economic crisis that is almost here....
#1 George Soros: "Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation."
#2 PIMCO CEO Mohammed El-Erian: "These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy."
#3 Attila Szalay-Berzeviczy, global head of securities services at UniCredit SpA (Italy's largest bank): "The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits."
#4 Stefan Homburg, the head of Germany's Institute for Public Finance: "The euro is nearing its ugly end. A collapse of monetary union now appears unavoidable."
#5 EU Parliament Member Nigel Farage: "I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine."
#6 Carl Weinberg, the chief economist at High Frequency Economics: "At this point, our base case is that Greece will default within weeks."
#7 Goldman Sachs strategist Alan Brazil: "Solving a debt problem with more debt has not solved the underlying problem. In the US, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth. Can the US continue to depreciate the world’s base currency?"
#8 International Labour Organization director general Juan Somavia recently stated that total unemployment could "increase by some 20m to a total of 40m in G20 countries" by the end of 2012.
#9 Deutsche Bank CEO Josef Ackerman: "It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."
#10 Alastair Newton, a strategist for Nomura Securities in London: "We believe that we are just about to enter a critical period for the eurozone and that the threat of some sort of break-up between now and year-end is greater than it has been at any time since the start of the crisis"
#11 Ann Barnhardt, head of Barnhardt Capital Management, Inc.: "It's over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken."
#12 Lakshman Achuthan of ECRI: "When I call a recession...that means that process is starting to feed on itself, which means that you can yell and scream and you can write a big check, but it's not going to stop."
*****
In my opinion, the epicenter of the "next wave" of the financial collapse is going to be in Europe. But that does not mean that the United States is going to be okay. The reality is that the United States never recovered from the last recession and there are already a lot of signs that we are getting ready to enter another major recession. A major financial collapse in Europe would just accelerate our plunge into a new economic crisis.
If you want to read something that will really freak you out, you should check out what Dr. Philippa Malmgren is saying. Dr. Philippa Malmgren is the President and founder of Principalis Asset Management. She is also a former member of the Bush economic team. You can find her bio right here.
Malmgren is claiming that Germany is seriously considering bringing back the Deutschmark. In fact, she claims that Germany is very busy printing new currency up. In a list of things that we could see happen over the next few months, she included the following....

The Germans announce they are re-introducing the Deutschmark. They have already ordered the new currency and asked that the printers hurry up.

This is quite a claim for someone to be making. You would think that someone that used to work in the White House would not make such a claim unless it was based on something solid.
If Germany did decide to leave the euro, you would see an implosion of the euro that would be truly historic. But as I have written about previously, it should not surprise anyone that the end of the euro is being talked about because the euro simply does not work. The only way that the euro would have had a chance of working is if all of the governments using the euro would have kept debt levels very low.
Unfortunately, the financial systems of the western world are designed to push governments into high levels of debt. The truth is that the euro was doomed from the very beginning.
Now we are approaching a day of reckoning. We have been living in the greatest debt bubble in the history of the world, but the bubble is ending. There are several ways that the powers that be could handle this, but all of them will lead to greater financial instability.
In the end, we will see that the debt-fueled prosperity that the western world has been enjoying for decades was just an illusion.
Debt is a very cruel master. It will almost always bring more pain and suffering than you anticipated. It is easy to get into debt, but it can be very difficult to get out of debt. There is no way that the western world can unwind this debt spiral easily.
The only way that another massive economic crisis can be put off for even a little while would be for the powers that be to "kick the can down the road" a little farther by creating even more debt. But in the end, you can never solve a debt problem with more debt.
The next several years are going to be an incredibly clear illustration of why debt is bad. When the dominoes start to fall, we are going to witness a financial avalanche which is going to destroy the finances of millions of people.
You might want to try to get out of the way while you still can.


Come on guys and gals you all really know you cant rob Peter to pay Paul forever right? Soon or later you have to pay the piper. Even in the world of high fiance laws of nature must apply sooner or later.  Party is about to come to an end and we are going to have to clean this mess up.  Damn look at Germany lost two world wars but still manages to destroy Europe in the end by simply being responsible with its debt. A weapon more powerful than the V-2.









http://seekingalpha.com/article/297081-prophets-of-doom-12-insider-quotes-about-the-nearing-economic-crisis

Another real tragedy and hypocrisy of 9-11: The treatment of the First responders

Some of these critically ill guys should strap a few bombs on their bodies and blow up some politicians, then maybe the news media would cover this bull.

The air around the twin towers was toxic and deadly and everyone knew it. I called a friend of mine in Atlanta that as an asbestos expert and ask him wasn't it true that most all of tower one was full of asbestos insulation. I remember that from a lecture or case somewhere. He was in fact an expert on  a case for workers that built the towers and got cancer and it was full of I believe, WR Grace insulation. But despite all the bull by the corporate whores that if the buildings has all had this insulation they wouldn't have burned down, thereby making plaintiffs lawyers responsible for the terrorist attacks and deaths instead of big oil, he confirmed to me that all the insulation was less than 15% asbestos, thus had no real fireproofing ability. Everyone knew this plus the facts that the air would be full of benzene, silica, and god knows what. It was scientifically impossible for the air to be safe. Yet the EPA just plain out lied to everyone and said it was fine.

http://www.commondreams.org/headlines03/0823-03.htm

http://www.bibliotecapleyades.net/sociopolitica/esp_sociopol_911_42.htm

So you can guess what happens next a bunch of health care workers get sick, many die.

http://en.wikipedia.org/wiki/Health_effects_arising_from_the_September_11_attacks

Now


Getting Wall Street back to work was job one and a few more bodies wouldn't matter in long run.  Now the really fun part, all these politicos that are so quick to invoke the names of these people and 9/11 screw them. Deny the causation and link between the lung cancers, and the dust even though peer reviewed studies are saying now that there is a link. (May God protect them.)

http://www.nbcnewyork.com/news/local/9-11-Dust-WTC-Anniversary-Cancer-Zadroga-Act-129382268.html

News Post on this topic.

A new medical study supports the argument for including cancers on a list of World Trade Center-linked diseases that qualify for assistance under the national Sept. 11 health program, federal lawmakers said Wednesday.

"The evidence is now compelling," said U.S. Rep. Jerrold Nadler, standing with Reps. Carolyn Maloney, Charles Rangel and Nydia Velazquez at the entrance to the subway station at the trade center site in lower Manhattan. "It's essential that we do this."

They say a recently published study of cancer cases among firefighters exposed to World Trade Center dust from the Sept. 11 attacks supports including cancer to the program's list of diseases.

The lawmakers said they filed a petition with the administrator of the 9/11 health program to require an immediate review of the study, which was published last week in the medical journal The Lancet, and to consider adding coverage for cancers.

The study said the nearly 9,000 firefighters who were exposed to the trade center were 19 percent more likely to have cancer than firefighters who didn't work down near the pile.

The study did note a few potentially worrisome trends, including an unexpected number of thyroid cancers. But cancers can take decades to develop, and the authors of the study cautioned that the seven-year period the study covered might be too brief to make anything but qualified interpretations.

The administrator of the 9/11 Health Program said this past summer that a review of medical evidence failed to support adding cancer to a list of trade center-linked diseases, and the law -- known as the Zadroga Act -- does not pay for benefits in cancer cases.

Federal lawmakers said the new study was still sufficient to revisit the administrator's decision of whether to add cancers to a list of diseased covered under the James Zadroga 9/11 Health and Compensation Act.

"We don't want to wait until all of the evidence is in," said Rangel, who called the study "a tremendous medical bit of evidence." He said people who were sick could not afford to wait.

Nadler said that they have "always known that many of the chemicals in that that toxic brew that people were breathing causes cancer." And he said they knew with "moral certainty" that a link between 9/11 and cancers existed, but did not have the peer-reviewed studies to support that — until now.

"It would be inhuman to wait for more and more evidence," he said.

Maloney said it was "a definitive study for firefighters, and that's a very healthy portion of our population" of those who were exposed at ground zero.

But she said she would let the medical experts who consult with the 9/11 health program administrator to make the final determination of whether the study is enough to support adding cancers.

"I won't be content, but they have to rely on medical evidence," she said.

Copyright Associated Press / NBC New York

So we lied, lied again, they died, and died and we are still trying to screw them. Over what, some workers comp benefits. No one is indicted goes to jail or is held accountable. All this so Goldman Sachs can get back to heir posh offices a few weeks early in time to destroy the economy by the Fall of 2008.

What a Country!

Are you kidding me, payroll taxes are not taxes only taxes on millionaires are?

This is a point I have argued many many times but it all goes back to my days at Ole Miss when my Econ 101 professor pulled his wheel chair up to the black board and wrote the following letters across the board in a herky jerky motion caused by his disability, TINSTAAFL. He said this is really the most important lesson he could teach us and very few if any of us will ever get it. It stand for there is no such thing as a free lunch. Somebody has to pay for it, he explains..always. This is the same BS, with the top 2 percent and their army of monkeys aka social conservatives who think Jesus was a free market economist, ( Don't ask, it is not as if they ever read the Bible or any other book. Yes I have cover to cover if you need to know, although I think you really only need the new testament if you are a Christian.), not only destroying the middle class and working class but pretty much the whole damn country. Does it matter whether you income tax is 38 % income tax level at Feds, 6 % at state level, with another 10k in fees and taxes, Fica is 10% or vice versa. What matters is who much money you have to spend in real dollars each month. Moving one tax to replace it with fees etc doesn't really help anyone unless you make so much money it doesn't matter. This jackasses seem to want to Replace the British Royalty we  rebelled against to start this experiment with a new American version only richer and meaner. Well as PT Barnum saying "You can fool some of the people all the time and all of the people all the time but you can fool all the people all the time."

Here is to the next civil war, may it be bloody and great. Maybe, one day soon, someone will do like may great, great, great, grandfather Alexander Moulins did in a Paris cafe 100 years ago and  announce "Viva Liberty" and the mobs will began to burn something like Goldman Sachs to the ground. Or maybe not.

The GOP Position on Taxes Gets Worse

By James Fallows

Please focus on the boundless cynicism here.

Through the artificial debt-ceiling "crisis," through the Moonie-like spectacle in Iowa of candidates (including Mr. Sanity, Jon Huntsman) raising hands to promise never to accept any tax increase, the Republican field has been absolutist and inflexible about not letting any revenue increase, in any form, be part of dealing with debts and deficits.

Except, it now turns out, when the taxes are those that (a) weigh most heavily on the people who are already struggling, and (b) would have the most obvious "job-killing" effect if they went up.

When it comes to those taxes -- hell, we're easy! According to the AP and Business Insider, Rep. Jeb Hensarling of Texas (at right), the Republican co-chair of the all-powerful budget Super Committee, is dead set against letting the Bush-era tax cuts expire for anyone, including millionaires. But he sees no problem in letting the current cut in payroll-tax rates -- you know, the main tax burden for most Americans -- run out.  As the AP story puts it:

>>Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn...

"It's always a net positive to let taxpayers keep more of what they earn," says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again."<<

"Not created equal" is exactly right. In fact, payroll-tax cuts are the sort of tax break most likely to "get the economy moving again" during a recession. (Because they put money in the hands of people most likely to spend it and therefore boost other businesses. And on balance they lower the cost of adding new workers.) Income-tax breaks at the top end are least likely to create new demand or jobs. (Because they go to people who have a lower "marginal propensity to spend" and are more likely to park the money in the bank.)

I had thought that Republican absolutism about taxes, while harmful to the country and out of sync with even the party's own Reaganesque past, at least had the zealot's virtue of consistency. Now we see that it can be set aside when it applies to poorer people, and when setting it aside would put maximum drag on the economy as a whole. So this means that its real guiding principle is... ??? You tell me.____
The fine print. Yes, I know that there is a critique of these tax cuts from the left: That by reducing the self-funding nature of Social Security, they could in the long run undermine its legitimacy and support. I am confident that this is not the reason for Rep. Hensarling's position.

And, yes, there is a further level to the critique from the right. The problem with this tax cut, according to Republican majority leader Eric Cantor, is precisely that it's temporary, so businesses can't base plans on it. Eg, according the AP quote from Cantor's spokesman, he "has never believed that this type of temporary tax relief is the best way to grow the economy."

But as an anti-recession measure, the temporary nature of the cut is its advantage. It gets money into people's hands when they need it, without building in another permanent revenue hole -- like the tax cuts Cantor fights so hard to preserve.This article available online at:
http://www.theatlantic.com/politics/archive/2011/08/the-gop-position-on-taxes-gets-worse/243930/

Copyright © 2011 by The Atlantic Monthly Group. All Rights Reserved.

Rating-Agency Hypocrites

All I can add to this is "tell it again sister" There must be a way that Goldman & Sachs can make a few billion out this downgrad. Oh, and thanks right wing nuts.

 

Rating-Agency Hypocrites

Aug 7, 2011 7:06 AM EDT

S&P’s downgrade carries a large dose of irony, since the extra debt the U.S. has piled on recently came courtesy of S&P's moronic toxic-asset ratings.

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Can’t say rating agencies don’t have a sense of humor. Last weekend, the painfully embarrassing bipartisan political drama to raise the U.S. debt ceiling centered around doing whatever it took to avoid losing our sacrosanct AAA credit rating. This weekend, under cover of a Friday night, with markets safely closed and global traders gone for the weekend, the best-known rating agency, Standard & Poor’s, basically mooned U.S. economic policy.

On one main score, S&P’s downgrade rationale is right: Washington policy-making is decidedly "dysfunctional.” In fact, that’s a seismic understatement.

But that would also be a fair description of S&P’s decision making in recent years. Remember: In the run-up to this very financial crisis, for which our debt-creation machine at the Treasury Department ramped into overdrive, S&P was raking in fees for factory-stamping "AAA" approval on assets whose collateral was hemorrhaging value.

That high-class rating was the criterion hurdle that allowed international cities, towns, and pension funds to scoop up those assets, and then borrow against them because of their superior quality, and later suffer devastating losses and bankruptcies when the market didn’t afford them the value that the S&P AAA rating would have implied.

Perhaps this downgrade is S&P’s way of saying, we’re on it now—we’re not going to give bad debt a pass anymore. Earlier this week, it downgraded a bunch of Spanish and Danish banks that are sitting on piles of crappy loans. Then, of course, there was Greece.

But just like Washington, the agency is missing the main reason for the recent upshot in debt. There’s a bar chart on the White House website that cites an extra $3.6 trillion of debt created during the Obama administration that is labeled for "economic and technical changes." That figure doesn’t include the $800 billion of stimulus money delineated separately, which is more deserving of that moniker.

Banks concocted $14 trillion of toxic assets that S&P rated AAA between 2003 and 2008.

Jin Lee / AP Photo

But it’s not as if the GOP, in particular its Tea Party wing, screamed once about that $3.6 trillion figure during the latest Capitol cacophony. Instead, the Treasury Department made up a name for Wall Street subsidies, and Congress went along. And until this spring, when the debt-cap debate geared up a notch, S&P was pretty mum about this debt and exactly why it was created.

Recall, banks concocted $14 trillion of toxic assets that S&P rated AAA between 2003 and 2008—or higher in creditworthiness than it now deems the U.S. government to be. These banks now store $1.6 trillion of excess Treasury debt on reserves at the Fed (vs. about zero before the 2008 crisis) on which interest is being paid. In addition, the Fed holds $900 billion of mortgage-related assets for the banks. Plus, about half a trillion of debt is still backing some of AIG’s blunders, JPMorgan Chase’s takeover of Bear Stearns, the agencies that trade through Wall Street, and other sundries. That pretty much covers the extra debt since 2008—not that S&P mentioned this.

But yes, S&P is right. There is no credible plan coming from Washington to deal with this excess debt, nor is the deflection of the conversation to November fooling anyone, but that’s because there’s been no admission from either party as to why the debt came into being.

The bottom line? In the aftermath of the financial crisis, the U.S. created trillions of dollars of debt to float a financial system that was able to screw the U.S. economy largely because banks were able to obtain stellar ratings for crap assets, which had the effect of propagating them far more quickly through the system than they otherwise would have spread. The global thirst for AAA-rated assets pushed demand for questionable loans to fill them from the top down, as Wall Street raked in fees for creating and selling the assets. Later, banks received cheap loans, debt guarantees, and other financial stimulus from Washington when it all went haywire, ergo debt.

Despite a few congressional hearings on the topic, the rating agencies were never held accountable for their role in the toxic-asset pyramid scheme. Now they are holding the U.S. government accountable. The U.S. government deserves it, not because spending cuts weren’t ironed out, but because Wall Street stimulus wasn’t considered, the job market remains in tatters, and there’s no recovery on the horizon.

Still, the downgrade demonstrates that the U.S. doesn't run the show—the private banks and rating firms that get paid by them do.

My actual IKEA email

May god help me when I try to put this stuff together. The things we do for our kids. Customer service is truly dead.



Guys,

To put in bluntly in todays language, "Your website sucks." I have been trying to place an order for 2 days but it will not let me get to my shopping cart. I keep getting a message that says you cant get to that page from here. So I loaded the order again, (all 1100 dollars of it) only to have it do it again. There is no online help or support other than that damn Anna who appears to be an evil avatar who's purpose is to taunt customers with her lack of helpful knowledge. This site is so bad we finally just started laughing as if we were caught in a Saturday night live skit. To add insult to injury when we finally just gave up, which I assume is the intended purpose of your website, (Did you get the people of DMV to design it or was it the Russians?), we cant find any orderig number.
If you guys are really a company that has some humans in it somewhere and not a myth like Santa Claus or an honest lawyer, or a computer version of "Punked"  can someone please help me out of this hell. If it was not a gift for my daughter I would have quit this madness long ago. I know you cant give me the hours of my life you have wasted, nor will you want to pay my hourly rate, can you at least help me complete this order. And please hire some middle school kids to fix your rotten website.

Thanks

Really think you have chance to be herad in DC? Goood luck

Lobbyists That the Founders Just Never Dreamed of

The "right ... to petition the government" has come a long way in over 200 years, and health care organizations are not shy in exercising it.

By Maureen Glabman

"Those who are organized, have the most money, the most influence, the most mobilized memberships are the ones whose viewpoints are being most heard."
        — Charles Lewis
        Founder, Executive Director, Center for Public Integrity,
        in a speech to the National Press Club, 1994

Cynthia Berry rises at 6 a.m. to dress for the $500-a-plate fundraising breakfast she arranged for Arizona Sen. Jon Kyl at La Colline, a French restaurant near Capitol Hill. By 9:30 a.m., the health care lobbyist and lawyer is back in her Washington office at Wexler & Walker Public Policy Associates, returning calls and e-mail messages and arranging educational briefings for congressmen and staff members.
A medical client is in town, so she dashes out to Capitol Hill, darting from office to office to introduce the client and to talk about the client's issues.
At 4 p.m., Berry, former Washington counsel to the AMA, has arranged for Erik Lindbergh, grandson of Charles, to talk to congressmen and staff members in a briefing room about early diagnosis and treatment of rheumatoid arthritis.
At dinner, she reconvenes with her morning client to assess how the meetings went and to discuss follow-up.
Such is a day in the life of one of 17,800 registered Washington lobbyists upon whom interest groups spent $1.56 billion last year to sway Congress and the executive branch — numbers that are grossly understated due to the narrow definition of "registered lobbyist," says Jeffrey Birnbaum, author of The Lobbyists: How Influence Peddlers Get Their Way in Washington.
An estimated 40 percent of those 17,800 lobbyists promote health care agendas, according to James Albertine, president of the Alexandria, Va.-based American League of Lobbyists. To put it another way, there are 13 health care lobbyists for each of the 535 members of Congress. Among their most passionate causes this year are Medicare reimbursements and tort reform.

Health care agendas

Hundreds of medical groups have a lobbying presence in Washington. The AMA — the third-largest lobbying group (based on expenditures) — spent about $17 million in 2000, the latest year for which figures are available.
On the other hand, there's the American Association for Cardiovascular and Pulmonary Rehabilitation, which spent less than $10,000.
Collectively, health care groups spent $209 million in 2000 to gain passage of bills that benefit their members or to sideline legislation that might harm them. That places health care interests third in lobbying expenditures, behind power brokers for finance, insurance, and real estate, who spent $229 million, and manufacturers and retailers, who invested $224 million in their work.
In Washington, a vote in Congress, a presidential directive, or new regulation can positively or adversely affect the pocketbook of an entire industry.
For example, in 2000, just before he left office, President Clinton issued an executive order mandating, among other things, that doctors and hospitals that receive federal Medicare and Medicaid funding make translators available to patients who do not speak English.
One result of that: Physicians whose practices depend on federal reimbursement will have to endure huge expenses, or "sick taxes," to learn the languages of the communities in which they practice, or else hire translators or multilingual staff. The alternative is to refuse to accept Medicare and Medicaid patients. The AMA and the medical societies of all 50 states lobbied — to no avail — to force the federal government to find the cash somewhere other than physicians' pockets.
Despite this failure, the AMA has chalked up at least one sick-tax victory. The association averted a proposed $1-per-claim surcharge on Medicare claims that are not sent electronically. "Our most important role is to prevent things from happening to doctors," says Timothy Flaherty, MD, who chairs the AMA board of trustees.
In 1994, when the not-for-profit, nonpartisan Washington-based Center for Public Integrity tracked them, there were at least 660 medical organizations lobbying Congress. Besides the AMA, some of the physician groups include the American College of Physicians-American Society of Internal Medicine, which spent $2.1 million in 2000; the American Academy of Family Physicians, which spent $1.6 million; and the American College of Obstetricians and Gynecologists, which funded $450,000 in lobbyist activity, according to the Washington-based Center for Responsive Politics (CRP), an organization that tracks such expenditures.
"A number of interests compete against doctors in Washington. Without the lobbyists, doctors and their patients would not have the same rights," says Christian Shalgian, senior government affairs associate at the American College of Surgeons in Washington.

Big spending

Nonphysician health groups with sometimes similar interests are the American Hospital Association, the sixth-largest spender in 2000 at $12 million; Blue Cross, the 18th largest at $8 million; and the American Association of Health Plans, whose $4 million made it the 67th-largest spender. The reported numbers account only for what lobbyists spend on Congress and the executive branch, says Therese Foote, a CRP researcher. They do not include advertising, PR, state lobbying, or grass-roots efforts.
Member dues, some of which support lobbying, can add up to hundreds — or hundreds of thousands — of dollars annually per member. Membership is $420 for the AMA, up to $25,000 for the AHA, and from $2,500 to several hundred thousand dollars for the AAHP.
What are these lobbyists fighting for? Tort reform has been on the AMA's list for years, but it may never have bee/n so high as it is this year. Malpractice premiums have shot up at least 30 percent in eight states, including Texas and Illinois, according to the association's analysis of state insurance department and insurer records.
The association wants Congress to pass legislation that would put a $250,000 cap on noneconomic damages (pain and suffering), often seen as the key to holding down malpractice premiums. The thrust is similar to California's 1975 MICRA (Medical Injury Compensation Reform Act) legislation. Many other groups consider the cap a top priority too, including the American Association of Obstetricians and Gynecologists, the American Hospital Association, and the American Association of Health Plans.
On this issue, state medical groups and hospital associations are also putting some lobbying clout to work on Capitol Hill. Then there are the many coalitions, such as the Health Care Liability Alliance and the American Tort Reform Association — organizations that push professional liability insurance limits.
With the tremendous financial resources of these groups, why hasn't Congress passed a tort reform bill? Indeed, between 1995–2001, a tort reform measure that included a $250,000 cap on noneconomic damages passed in the House alone six times. Only once has a similar bill, one with a $500,000 cap, reached the Senate floor; it was defeated 56–44 in 1995.
"Trial lawyers have had more influence in the Senate and are pumping more money into Senate campaigns," says James Thurber, PhD, director of the Center for Congressional and Presidential Studies at American University in Washington.
Albertine of the American League of Lobbyists adds: "ATLA [Association of Trial Lawyers of America] is uniformly preventing any, even minor, revision in the tort reform laws because it is a bread-and-butter issue for them."
ATLA is No. 5 in Fortune magazine's 2001 "Power 25" list of Washington's most powerful lobbying groups, while the AMA is 12 and the AHA 13. ATLA's lobbying expenses were $3 million in 2000. But, then, ATLA doesn't need a big lobbying budget: It has power in numbers — of bodies. There are only nine physicians in Congress, but there are 218 representatives and senators with law degrees.
The AMA has tried a number of strategies over the years to combat the enormous power of the lawyers, one of which was the 1988 creation of a campaign school to encourage and train physicians to become legislators. "It would help the medical groups if there were more doctors in Congress," Albertine says.
Washington is a confusing place where groups can be buddies and enemies. Though ATLA and the AMA are diametrically opposed on the issue of physician tort reform, they cozy up to each other against the health plans regarding the Patients' Bill of Rights, united on the key issue of a patient's right to sue HMOs.
The lawyers want the right to sue health plans. The AMA thinks that it is OK to reduce liability for doctors but to expand liability for health plans, because doctors feel the plans are forcing them to deny care and therefore leave them holding the malpractice bag. Health plans argue that allowing patients to sue HMOs will drive up health costs and, as a result, force businesses to drop employee health insurance coverage.
"How can the AMA say it wants tort reform if it supports suing health plans?", AAHP spokesman Mohit Ghose asks rhetorically.
The AMA and AAHP also butt heads over antitrust legislation, called the Barr-Conyers bill. That bill would permit independent doctors to band together to bargain collectively with health plans for better rates. The AMA feels it would reduce the plans' disproportionate power; the AAHP sees it as price fixing.
While the AMA and AAHP duke it out over these two issues, they are bedfellows when it comes to tort reform for physicians. Both are members of the American Tort Reform Association, a lobbying coalition that supports a cap on pain-and-suffering awards.
The AMA runs afoul of drug makers over direct-to-consumer advertising, though drugmakers fund many educational programs for physicians. Doctors want the FDA to study the effects of the ads, because patients sometimes request medications that they have seen on television that may be inappropriate. PhRMA, the drug manufacturers trade association, is standing behind the First Amendment. The organization spent $7.5 million on lobbying in 2000.

Sibling rivalry

Sometimes health care groups play as friends; other times, they argue like siblings. Nowhere is this truer than with Medicare. The AMA, AHA, and AAHP are asking Congress to rescind Medicare payment restraints included in the Balanced Budget Act of 1997. AAHP wants Medicare+Choice to be well funded. AMA and AHA want provider payment levels increased.
"Before the 1980s, there was plenty of money to go around, so doctors, hospitals, and health plans didn't fight with each other," says Robert Zinkham, a lawyer at Venable, Baetjer and Howard, a Washington firm that handles health care lobbying. "Now that money is tight, everyone is fighting for limited funds."
The AMA's Flaherty says the federal government unwittingly inspires conflict between the AMA, AHA, and AAHP by taking Medicare funds from doctors and giving them to hospitals or plans. Rarely are there turf wars between specialty societies, though there remain long-simmering power scuffles between groups representing nurse anesthetists and anesthesiologists, optometrists and ophthalmologists, psychologists and psychiatrists, and physicians and pharmacists. Sometimes these are pitched battles as one group seeks to gain more privileges by legislative decree.
More unusual are lobbying efforts that do not pay off by lining the pockets of group members. For instance, the AMA has taken positions against smoking, alcohol, and firearms. The AMA wants to boost funding for the Centers for Disease Control to study guns and children. It also supports a plan to have the U.S. Food and Drug Administration regulate tobacco products, because it holds that the FDA's objectivity regarding product safety would reduce or eliminate tobacco.
"Historically, we've been the umbrella organization for doctors. We take a broad view," says Flaherty.
But such actions may not be wholly altruistic.
"The AMA selects issues specifically to forge alliances that work to serve other bread-and-butter issues for its members," says Washington health care lobbyist Thomas Donnelly of Jefferson Government Relations. Some AMA lobbying has balanced the lobbying of other big spenders, such as the National Rifle Association and Philip Morris.
Few medical organizations had a lobbying presence in the capital before the mid-1970s. Some relied on the AMA or other groups to do their bidding. Some had public affairs directors who did the job on their own, and some hired lobbyists when they needed them, says Paul Herrnson, director of the Center for American Politics and Citizenship at the University of Maryland.
After Watergate, freshmen legislators bent on change entered Congress as the infamous "Class of 1974." The seniority system ended, the number of subcommittees increased substantially, committees became more democratized, and power became diffuse, writes Charles Lewis, in The Buying of Congress.
At the same time, instead of patients paying doctors, hospitals and pharmacies for services, patients paid third parties, and government stepped in to control how those payments were made.
"There was a confluence of events, and as government expanded, so did the number of lobbyists," says Lewis, who is also the founder of the Center for Public Integrity.
Adds Albertine, "There is a direct relationship between the size of government and increases in the number of Washington lobbyists."

A free-for-all

What used to be the domain of a small group of people has become a free-for-all. Today, it's inconceivable that medical organizations would not have a lobbying presence for self-preservation. It's easy to spot their agenda on their web sites under such euphemisms as "advocacy" and "health policy."
What often goes unrecognized, however, is that while lobbyists bring home legislative gifts to hungry memberships, they also aid members of Congress in drafting complex medical legislation. Says Foote, the CRP researcher, "They are not just vultures. Their technical advice can be invaluable."

Maureen Glabman, of Miami, is the 2000 Columbia University Reuters Fellow in Medical Journalism.

Buyers and sellers of medical care lead lobby list
Top lobbyists in 2000
1. U.S. Chamber of Commerce	$26.2 million
2. Business Roundtable	$21.5 million
3. American Medical Association	$16.6 million
4. General Electric	$16.0 million
5. Edison Electric Institute	$12.0 million
6. American Hospital Association	$11.9 million
SOURCE: CENTER FOR RESPONSIVE POLITICS, WASHINGTON
Blue Cross has the cash
After the AMA and AHA, the Blue Cross Blue Shield Association and the American Association of Health Plans were the big health care spenders.
Sampling of medical lobbyists' budgets in 2000
Blue Cross Blue Shield Association	$8.0 million
American Association of Health Plans	$3.6 million
American College of Physicians/ASIM	$2.1 million
American Academy of Family Physicians	$1.6 million
American College of Obstetricians and Gynecologists	$450,000
American Association of Oral and Maxillofacial Surgery	$20,000
American College of Emergency Physicians	$60,000
SOURCE: CENTER FOR RESPONSIVE POLITICS
Expenditures on lobbying by industry in 2000
1. Finance, insurance, real estate	$229 million
2. Misc. business/manufacturing, retail, etc.	$224 million
3. Health care	$209 million
SOURCE: CENTER FOR RESPONSIVE POLITICS

Chase is in the foreclosure business not modification business

Why did we bail this POS out again?


Ex-Chase Employee Was Told 'We're in the Foreclosure Business, not the Modification Business.'
Tue, 2011-06-21 10:08 -- Mortgage News Ticker
... But then I met Jared, an ex-employee of Chase's servicing company. He had worked in the foreclosure department for 18 months, left on very good terms, and agreed to an interview.
Jared explained that it was his responsibility to make sure foreclosures were being completed in compliance with Fannie's guidelines, and to document everything that went on with each file. "Everything the homeowner sends in has to be scanned, copied and attached to their file," he said.
So, how come servicers are always losing paperwork submitted by borrowers, I asked? He said that didn't happen at Chase. "We never lost anything, it's was a big part of how you'd be awarded the maximum bonus of $12,000 a year."
I must be thinking about Wells Fargo, I replied under my breath.
"Half of the bonus was tied to documenting your files in case investors wanted to audit them," and the other half was based on how fast you'd foreclosure… at Chase they say that the 'perfect foreclosure' is 120 days," he said.
Well, that must have been something to aspire to, I replied. I mean, not every foreclosure can hope to be "perfect," right? He nodded in agreement, not quite sure of my meaning.
Jared recalled what his boss had told him during his first week on the job: "We're in the foreclosure business, not the modification business."
"Foreclosures are a no lose proposition for servicers," Jared explained. "The servicer gets paid more to service a delinquent loan, and they get to tack on extra charges. If the borrower reinstates, which is rare, then the borrower pays the extra fees. If the borrower loses the house, then the investor pays them. Either way, the servicer gets their money."

Whores to big banks block Elizabeth Warren Appointment

Banks too big to fail and too greedy to succeed and  Goldman Sacs call upon their trusty band of paid whores to block Warren on head of agency to attempt to keep them from screwing every American alive on weekly basis. If they are not corrupt and dishonest what are they afraid of ? Get ready for next great Depression coming soon.  

 

 

Republicans prevent Senate vacation to block possible recess appointments

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By Theo Emery, Globe Staff

This is a corrected version of an earlier post. A correction is embedded in the story text below.
WASHINGTON – Despite weeks of speculation and lobbying by consumer groups, there will be no recess appointment of former Harvard law professor Elizabeth Warren to head the newly formed Consumer Financial Protection Bureau.
That's because, technically, there will be no recess.
Through parliamentary maneuvering this week, Republicans were able to prevent the Senate from officially shutting down during its Memorial Day vacation next week. During the so-called "pro-forma'' session during vacation, President Obama will not have the power to circumvent Senate confirmation proceedings and make appointments to key posts.

Warren (who also has been mentioned as a possible challenger to Republican Senator Scott Brown of Massachusetts) is highly unlikely to win Senate confirmation to the consumer bureau post because of heavy GOP opposition. Consumer advocates have been calling on Obama to name her in a recess appointment, but he has given no sign that he would.
Warren has been building the CFPB since shortly after it was approved with passage of the Dodd-Frank financial regulation overhaul last year. The agency, which will have authority to regulate consumer credit and protect debtors from predatory practices, is supposed to begin operations in July.
Mid-week, as part of their parliamentary maneuver, 20 GOP senators wrote to House Speaker John Boehner of Ohio asking him to block the Senate from adjourning, citing the need to thwart recess appointments. Without agreement from the House, the Senate can’t adjourn for more than three days, and vice versa.
In addition, Senator Jeff Sessions, an Alabama Republican, said he would object to the Senate adjourning without passing a budget. His letter made no mention of recess appointments. Nearly every GOP Senator signed on. Correction: An earlier version of this posting incorrectly stated that all GOP senators had signed on to the Sessions letter.
During the so-called "pro-forma'' session during the Memorial Day vacation, one or two senators will show up each morning, gavel in a session, and then leave. This morning, Democratic Senator Mark Begich of Alaska presided over the chamber for all of 29 seconds.
Typically, senators in neighboring states such as Maryland and Virginia preside during a pro-forma session. Most of the other senators went home this week – all but Begich. One senate aide joked that maybe Begich ended up in the president’s seat this morning because he missed the last flight to Alaska.
Theo Emery can be reached at temery@globe.com. Follow him on Twitter @temery.

America vs Goldman Sachs (The real war)

Matt is the freaking man! Clearly, the greatest threat to America is not thousands of radical Muslims living in Pakistan but hundreds of super rich Jewish bankers living in the Hamptons. Ironic isn't it.

If only we could get Al Quada to fly a Plane into these guys.

The People vs. Goldman Sachs

A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges

Goldman Sachs CEO Lloyd Blankfein tesifies before the Senate in April 2010

Mark Wilson/Getty Images

By Matt Taibbi

May 11, 2011 9:30 AM ET

They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.

This article appears in the May 26, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive May 13.

The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history — "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.

Photo Gallery: How Goldman top dogs defrauded their clients and lied to Congress

To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn't exist) was almost completely unconnected to the systematic corruption that led to the crisis. What's more, many of the earlier criminals in the chain of corruption — from subprime lenders like Countrywide, who herded old ladies and ghetto families into bad loans, to rapacious banks like Washington Mutual, who pawned off fraudulent mortgages on investors — wound up going belly up, sunk by their own greed.

Read Matt Taibbi on Goldman Sachs, the 'great vampire squid'

But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences. Thus, while much of the Levin report describes past history, the Goldman section describes an ongoing? crime — a powerful, well-connected firm, with the ear of the president and the Treasury, that appears to have conquered the entire regulatory structure and stands now on the precipice of officially getting away with one of the biggest financial crimes in history.

Read Taibbi's 2010 piece on how bailed-out banks are recreating the conditions for a crash

Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. Goldman isn't a pudgy housewife who broke her diet with a few Nilla Wafers between meals — it's an advanced-stage, 1,100-pound medical emergency who hasn't left his apartment in six years, and is found by paramedics buried up to his eyes in cupcake wrappers and pizza boxes. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.

To fully grasp the case against Goldman, one first needs to understand that the financial crime wave described in the Levin report came on the heels of a decades-long lobbying campaign by Goldman and other titans of Wall Street, who pleaded over and over for the right to regulate themselves.

Before that campaign, banks were closely monitored by a host of federal regulators, including the Office of the Comptroller of the Currency, the FDIC and the Office of Thrift Supervision. These agencies had examiners poring over loans and other transactions, probing for behavior that might put depositors or the system at risk. When the examiners found illegal or suspicious behavior, they built cases and referred them to criminal authorities like the Justice Department.
This system of referrals was the backbone of financial law enforcement through the early Nineties. William Black was senior deputy chief counsel at the Office of Thrift Supervision in 1991 and 1992, the last years of the S&L crisis, a disaster whose pansystemic nature was comparable to the mortgage fiasco, albeit vastly smaller. Black describes the regulatory MO back then. "Every year," he says, "you had thousands of criminal referrals, maybe 500 enforcement actions, 150 civil suits and hundreds of convictions."

But beginning in the mid-Nineties, when former Goldman co-chairman Bob Rubin served as Bill Clinton's senior economic-policy adviser, the government began moving toward a regulatory system that relied almost exclusively on voluntary compliance by the banks. Old-school criminal referrals disappeared down the chute of history along with floppy disks and scripted television entertainment. In 1995, according to an independent study, banking regulators filed 1,837 referrals. During the height of the financial crisis, between 2007 and 2010, they averaged just 72 a year.

But spiking almost all criminal referrals wasn't enough for Wall Street. In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC's inspector general described the program's regulatory army: "The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office."
Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman's CEO at the time. And in exchange for "submitting" to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.
Goldman's chief financial officer then and now, a fellow named David Viniar, wrote a letter in February 2004, commending the SEC for its efforts to develop "a regulatory framework that will contribute to the safety and soundness of financial institutions and markets by aligning regulatory capital requirements more closely with well-developed internal risk-management practices." Translation: Thanks for letting us ignore all those pesky regulations while we turn the staid underwriting business into a Charlie Sheen house party.
Goldman and the other banks argued that they didn't need government supervision for a very simple reason: Rooting out corruption and fraud was in their own self-interest. In the event of financial wrongdoing, they insisted, they would do their civic duty and protect the markets. But in late 2006, well before many of the other players on Wall Street realized what was going on, the top dogs at Goldman — including the aforementioned Viniar — started to fear they were sitting on a time bomb of billions in toxic assets. Yet instead of sounding the alarm, the very first thing Goldman did was tell no one. And the second thing it did was figure out a way to make money on the knowledge by screwing its own clients. So not only did Goldman throw a full-blown "bite me" on its own self-righteous horseshit about "internal risk management," it more or less instantly sped way beyond inaction straight into craven manipulation.
"This is the dog that didn't bark," says Eliot Spitzer, who tangled with Goldman during his years as New York's attorney general. "Their whole political argument for a decade was 'Leave us alone, trust us to regulate ourselves.' They not only abdicated that responsibility, they affirmatively traded against the entire market."

By the end of 2006, Goldman was sitting atop a $6 billion bet on American home loans. The bet was a byproduct of Goldman having helped create a new trading index called the ABX, through which it accumulated huge holdings in mortgage-related securities. But in December 2006, a series of top Goldman executives — including Viniar, mortgage chief Daniel Sparks and senior executive Thomas Montag — came to the conclusion that Goldman was overexposed to mortgages and should get out from under its huge bet as quickly as possible. Internal memos indicate that the executives soon became aware of the host of scams that would crater the global economy: home loans awarded with no documentation, loans with little or no equity in them. On December 14th, Viniar met with Sparks and other executives, and stressed the need to get "closer to home" — i.e., to reduce the bank's giant bet on mortgages.
Sparks followed up that meeting with a seven-point memo laying out how to unload the bank's mortgages. Entry No. 2 is particularly noteworthy. "Distribute as much as possible on bonds created from new loan securitizations," Sparks wrote, "and clean previous positions." In other words, the bank needed to find suckers to buy as much of its risky inventory as possible. Goldman was like a car dealership that realized it had a whole lot full of cars with faulty brakes. Instead of announcing a recall, it surged ahead with a two-fold plan to make a fortune: first, by dumping the dangerous products on other people, and second, by taking out life insurance against the fools who bought the deadly cars.
The day he received the Sparks memo, Viniar seconded the plan in a gleeful cheerleading e-mail. "Let's be aggressive distributing things," he wrote, "because there will be very good opportunities as the markets [go] into what is likely to be even greater distress, and we want to be in a position to take advantage of them." Translation: Let's find as many suckers as we can as fast as we can, because we'll only make more money as more and more shit hits the fan.
By February 2007, two months after the Sparks memo, Goldman had gone from betting $6 billion on mortgages to betting $10 billion against them — a shift of $16 billion. Even CEO Lloyd "I'm doing God's work" Blankfein wondered aloud about the bank's progress in "cleaning" its crap. "Could/should we have cleaned up these books before," Blankfein wrote in one e-mail, "and are we doing enough right now to sell off cats and dogs in other books throughout the division?"
How did Goldman sell off its "cats and dogs"? Easy: It assembled new batches of risky mortgage bonds and dumped them on their clients, who took Goldman's word that they were buying a product the bank believed in. The names of the deals Goldman used to "clean" its books — chief among them Hudson and Timberwolf — are now notorious on Wall Street. Each of the deals appears to represent a different and innovative brand of shamelessness and deceit.
In the marketing materials for the Hudson deal, Goldman claimed that its interests were "aligned" with its clients because it bought a tiny, $6 million slice of the riskiest portion of the offering. But what it left out is that it had shorted the entire deal, to the tune of a $2 billion bet against its own clients. The bank, in fact, had specifically designed Hudson to reduce its exposure to the very types of mortgages it was selling — one of its creators, trading chief Michael Swenson, later bragged about the "extraordinary profits" he made shorting the housing market. All told, Goldman dumped $1.2 billion of its own crappy "cats and dogs" into the deal — and then told clients that the assets in Hudson had come not from its own inventory, but had been "sourced from the Street."
Hilariously, when Senate investigators asked Goldman to explain how it could claim it had bought the Hudson assets from "the Street" when in fact it had taken them from its own inventory, the bank's head of CDO trading, David Lehman, claimed it was accurate to say the assets came from "the Street" because Goldman was part of the Street. "They were like, 'We are the Street,'" laughs one investigator.
Hudson lost massive amounts of money almost immediately after the sale was completed. Goldman's biggest client, Morgan Stanley, begged it to liquidate the investment and get out while they could still salvage some value. But Goldman refused, stalling for months as its clients roasted to death in a raging conflagration of losses. At one point, John Pearce, the Morgan Stanley rep dealing with Goldman, lost his temper at the bank's refusal to sell, breaking his phone in frustration. "One day I hope I get the real reason why you are doing this to me," he told a Goldman broker.
Goldman insists it was only required to liquidate the assets "in an orderly fashion." But the bank had an incentive to drag its feet: Goldman's huge bet against the deal meant that the worse Hudson performed, the more money Goldman made. After all, the entire point of the transaction was to screw its own clients so Goldman could "clean its books." The crime was far from victimless: Morgan Stanley alone lost nearly $960 million on the Hudson deal, which admittedly doesn't do much to tug the heartstrings. Except that quickly after Goldman dumped this near-billion-dollar loss on Morgan Stanley, Morgan Stanley turned around and dumped it on taxpayers, who within a year were spending $10 billion bailing out the sucker bank through the TARP program.
It is worth pointing out here that Goldman's behavior in the Hudson scam makes a mockery of standards in the underwriting business. Courts have held that "the relationship between the underwriter and its customer implicitly involves a favorable recommendation of the issued security." The SEC, meanwhile, requires that broker-dealers like Goldman disclose "material adverse facts," which among other things includes "adverse interests." Former prosecutors and regulators I interviewed point to these areas as potential avenues for prosecution; you can judge for yourself if a $2 billion bet against clients qualifies as an "adverse interest" that should have been disclosed.
But these "adverse interests" weren't even the worst part of Hudson. Goldman also used a complex pricing method to turn the deal into an impressive triple screwing. Essentially, Goldman bought some of the mortgage assets in the Hudson deal at a discount, resold them to clients at a higher price and pocketed the difference. This is a little like getting an invoice from an interior decorator who, in addition to his fee for services, charges you $170 a roll for brand-name wallpaper he's actually buying off the back of a truck for $63.
To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it's betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried.

Timberwolf, the most notorious of Goldman's scams, was another car whose engine exploded right out of the lot. As with Hudson, Goldman clients who bought into the deal had no idea they were being sold the "cats and dogs" that the bank was desperately trying to get off its books. An Australian hedge fund called Basis Capital sank $100 million into the deal on June 18th, 2007, and almost immediately found itself in a full-blown death spiral. "We bought it, and Goldman made their first margin call 16 days later," says Eric Lewis, a lawyer for Basis, explaining how Goldman suddenly required his client to put up cash to cover expected losses. "They said, 'We need $5 million.' We're like, what the fuck, what's going on?" Within a month, Basis lost $37.5 million, and was forced to file for bankruptcy.
In many ways, Timberwolf was a perfect symbol of the insane faith-based mathematics and blackly corrupt marketing that defined the mortgage bubble. The deal was built on a satanic derivative structure called the CDO-squared. A normal CDO is a giant pool of loans that are chopped up and layered into different "tranches": the prime or AAA level, the BBB or "mezzanine" level, and finally the equity or "toxic waste" level. Banks had no trouble finding investors for the AAA pieces, which involve betting on the safest borrowers in the pool. And there were usually investors willing to make higher-odds bets on the crack addicts and no-documentation immigrants at the potentially lucrative bottom of the pool. But the unsexy BBB parts of the pool were hard to sell, and the banks didn't want to be stuck holding all of these risky pieces. So what did they do? They took all the extra unsold pieces, threw them in a big box, and repeated the original "tranching" process all over again. What originally were all BBB pieces were diced up and divided anew — and, presto, you suddenly had new AAA securities and new toxic-waste securities.
A CDO, to begin with, is already a highly dubious tool for magically converting risky subprime mortgages into AAA investments. A CDO-squared doubles down on that lunacy, taking the waste products of the original process and converting them into AAA investments. This is kind of like taking all the kids who were picked last to play volleyball in every gym class of every public school in the state, throwing them in a new gym, and pretending that the first 10 kids picked are varsity-level players. Then you take all the unpicked kids left over from that process, throw them in a gym with similar kids from all 50 states, and call the first 10 kids picked All-Americans.
Those "All-Americans" were the assets in the Timberwolf deal. These were the recycled nightmare dregs of the mortgage craze — to quote Beavis and Butt-Head, "the ass of the ass."
Goldman knew the deal sucked long before it dinged the Aussies in Basis Capital for $100 million. In February 2007, Goldman mortgage chief Daniel Sparks and senior executive Thomas Montag exchanged e-mails about the risk of holding all the crap in the Timberwolf deal.
MONTAG: "CDO-squared — how big and how dangerous?"
SPARKS: "Roughly $2 billion, and they are the deals to worry about."
Goldman executives were so "worried" about holding this stuff, in fact, that they quickly sent directives to all of their salespeople, offering "ginormous" credits to anyone who could manage to find a dupe to take the Timberwolf All-Americans off their hands. On Wall Street, directives issued from above are called "axes," and Goldman's upper management spent a great deal of the spring of 2007 "axing" Timberwolf. In a crucial conference call on May 20th that included Viniar, Sparks oversaw a PowerPoint presentation spelling out, in writing, that Goldman's mortgage desk was "most concerned" about Timberwolf and another CDO-squared deal. In a later e-mail, he offered an even more dire assessment of such deals: "There is real market-meltdown potential."
On May 22nd, two days after the conference call, Goldman sales rep George Maltezos urged the Australians at Basis to hurry up and buy what the bank knew was a deadly investment, suggesting that the "return on invested capital for Basis is over 60 percent." Maltezos was so stoked when he first identified the Aussies as a target in the scam that he subject-lined his e-mail "Utopia."
"I think," Maltezos wrote, "I found white elephant, flying pig and unicorn all at once."
The whole transaction can be summed up by the now-notorious e-mail that Montag wrote to Sparks only four days after they sold $100 million of Timberwolf to Basis. "Boy," Montag wrote, "that timeberwof [sic] was one shitty deal."
Last year, in the one significant regulatory action the government has won against the big banks, the SEC sued Goldman over a scam called Abacus, in which the bank "rented" its name to a billionaire hedge-fund viper to fleece investors out of more than $1 billion. Goldman agreed to pay $550 million to settle the suit, though no criminal charges were brought against the bank or its executives. But in light of the Levin report, that SEC action now looks woefully inadequate. Yes, it was a record fine — but it pales in comparison to the money Goldman has taken from the government since the crash. As Spitzer notes, Goldman's reaction was basically, "OK, we'll pay you $550 million to settle the Abacus case — that's a small price to pay for the $12.9 billion we got for the AIG bailout." Now, adds Spitzer, "everybody can just go home and pretend it was only $12.4 billion — and Goldman can smile all the way to the bank. The question is, now that we've seen this report, there are a bunch of story lines that seem to be at least as egregious as Abacus. Are they going to bring cases?"

Here is where the supporters of Goldman and other big banks will stand up and start wanding the air full of confusing terms like "scienter" and "loss causation" — legalese mumbo jumbo that attempts to convince the ignorantly enraged onlooker that, according to American law, these grotesque tales of grand theft and fraud you've just heard are actually more innocent than you think. Yes, they will say, it may very well be a prosecutable crime for a corner-store Arab to take $2 from a customer selling tap water as Perrier. But that does not mean it's a crime for Goldman Sachs to take $100 million from a foreign hedge fund doing the same thing! No, sir, not at all! Then you'll be told that the Supreme Court has been limiting corporate liability for fraud for decades, that in order to gain a conviction one must prove a conscious intent to deceive, that the 1976 ruling in Ernst and Ernst clearly states....
Leave all that aside for a moment. Though many legal experts agree there is a powerful argument that the Levin report supports a criminal charge of fraud, this stuff can keep the lawyers tied up for years. So let's move on to something much simpler. In the spring of 2010, about a year into his investigation, Sen. Levin hauled all of the principals from these rotten Goldman deals to Washington, made them put their hands on the Bible and take oaths just like normal people, and demanded that they explain themselves. The legal definition of financial fraud may be murky and complex, but everybody knows you can't lie to Congress.
"Article 18 of the United States Code, Section 1001," says Loyola University law professor Michael Kaufman. "There are statutes that prohibit perjury and obstruction of justice, but this is the federal statute that explicitly prohibits lying to Congress."
The law is simple: You're guilty if you "knowingly and willfully" make a "materially false, fictitious or fraudulent statement or representation." The punishment is up to five years in federal prison.
When Roger Clemens went to Washington and denied taking a shot of steroids in his ass, the feds indicted him — relying not on a year's worth of graphically self-incriminating e-mails, but chiefly on the testimony of a single individual who had been given a deal by the government. Yet the Justice Department has shown no such prosecutorial zeal since April 27th of last year, when the Goldman executives who oversaw the Timberwolf, Hudson and Abacus deals arrived on the Hill and one by one — each seemingly wearing the same mask of faint boredom and irritated condescension — sat before Levin's committee and dodged volleys of questions.
Before the hearing, even some of Levin's allies worried privately about his taking on Goldman and other powerful interests. The job, they said, was best left to professional prosecutors, people with experience building cases. "A senator's office is not an enormous repository of expertise," one former regulator told me. But in the case of this particular senator, that concern turned out to be misplaced. A Harvard-educated lawyer, Levin has a long record of using his subcommittee to spend a year or more carefully building cases that lead to criminal prosecutions. His 2003 investigation into abusive tax shelters led to 19 indictments of individuals at KPMG, while a 2006 probe fueled insider-trading charges against the notorious Wyly brothers, a pair of billionaire Texans who manipulated offshore investment trusts. The investigation of Goldman was an attempt to find out what went wrong in the years leading up to the financial crash, and the questioning of the bank's executives was not one of those for-the-cameras-only events where congressmen wing ad-libbed questions in search of sound bites. In the weeks leading up to the hearing, Levin's team carefully rehearsed the moment with committee members. They knew the possible answers that Goldman might give, and they were ready with specific counterquestions. What ensued looked more like a good old-fashioned courtroom grilling than a photo-op for grinning congressmen.
Sparks, who stepped down as Goldman's mortgage chief in 2008, cut a striking figure in his testimony. With his severe crew cut, deep-set eyes and jockish intransigence, he looked like a cross between H.R. Haldeman and John Rocker. He repeatedly dodged questions from Levin about whether or not the bank had a responsibility to tell its clients that it was betting against the same stuff it was selling them. When asked directly if he had that responsibility, Sparks answered, "The clients who did not want to participate in that deal did not." When Levin pressed him again, asking if he had a duty to disclose that Goldman had an "adverse interest" to the deals being sold to clients, Sparks fidgeted and pretended not to comprehend the question. "Mr. Chairman," he said, "I'm just trying to understand."
OK, fine — non-answer answers. "My guess is they were all pretty well coached up," says Kaufman, the law professor. But then Sparks had a revealing exchange with Sen. Jon Tester of Montana. Tester calls the Goldman deals "a wreck waiting to happen," noting that the CDOs "were all downgraded to junk in very short order."
At which point, Sparks replies, "Well, senator, at the time we did those deals, we expected those deals to perform."
Tester then cannily asks if by "perform," Sparks means go to shit — which would have been an honest answer. "Perform in what way?" Tester asks. "Perform to go to junk so that the shorts made out?"
Unable to resist the taunt, Sparks makes a fateful decision to defend his honor. "To not be downgraded to junk in that short a time frame," he says. Then he pauses and decides to dispense with the hedging phrase "in that short a time frame."
"In fact," Sparks says, "to not be downgraded to junk."
So Sparks goes before Congress and, under oath, tells a U.S. senator that at the time he was selling Timberwolf, he expected it to "perform." But an internal document he approved in May 2007 predicted exactly the opposite, warning that Goldman's mortgage desk expected such deals to "underperform." Here are some other terms that Sparks used in e-mails about the subprime market affecting deals like Timberwolf around that same time: "bad and getting worse," "get out of everything," "game over," "bad news everywhere" and "the business is totally dead."
And we indicted Roger Clemens?

Another extraordinary example of Goldman's penchant for truth avoidance came when Joshua Birnbaum, former head of structured-products trading for the bank, gave a deposition to Levin's committee. Asked point-blank if Goldman's huge "short" on mortgages was an intentional bet against the market or simply a "hedge" against potential losses, Birnbaum played dumb. "I do not know whether the shorts were a hedge," he said. But the committee, it turned out, already knew that Birnbaum had written a memo in which he had spelled out the truth: "The shorts were not a hedge." When Birnbaum's lawyers learned that their client's own words had been used against him, they hilariously sent an outraged letter complaining that Birnbaum didn't know the committee had his memo when he decided to dodge the question. They also submitted a "supplemental" answer. Birnbaum now said, "Having reviewed the document the staff did not previously provide me" — his own words! — "I can now recall that ... I believed ... these short positions were not a hedge." (Goldman, for its part, dismisses Birnbaum as a single trader who "neither saw nor knew the firm's overall risk positions.")
When it came time for Goldman CEO Lloyd Blankfein to testify, the banker hedged and stammered like a brain-addled boxer who couldn't quite follow the questions. When Levin asked how Blankfein felt about the fact that Goldman collected $13 billion from U.S. taxpayers through the AIG bailout, the CEO deflected over and over, insisting that Goldman would somehow have made that money anyway through its private insurance policies on AIG. When Levin pressed Blankfein, pointing out that he hadn't answered the question, Blankfein simply peered at Levin like he didn't understand.
But Blankfein also testified unequivocally to the following:
"Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market. The fact is, we were not consistently or significantly net-short the market in residential mortgage-related products in 2007 and 2008. We didn't have a massive short against the housing market, and we certainly did not bet against our clients."
Levin couldn't believe what he was hearing. "Heck, yes, I was offended," he says. "Goldman's CEO claimed the firm 'didn't have a massive short,' when the opposite was true." First of all, in Goldman's own internal memoranda, the bank calls its giant, $13 billion bet against mortgages "the big short." Second, by the time Sparks and Co. were unloading the Timberwolves of the world on their "unicorns" and "flying pigs" in the summer of 2007, Goldman's mortgage department accounted for 54 percent of the bank's risk. That means more than half of all the bank's risk was wrapped up in its bet against the mortgage market — a "massive short" by any definition. Indeed, the bank was betting so much money on mortgages that its executives had become comically blasé about giant swings on a daily basis. When Goldman lost more than $100 million on August 8th, 2007, Montag circulated this e-mail: "So who lost the hundy?"
This month, after releasing his report, Levin sent all of this material to the Justice Department. His conclusion was simple. "In my judgment," he declared, "Goldman clearly misled their clients, and they misled the Congress." Goldman, unsurprisingly, disagreed: "Our testimony was truthful and accurate, and that applies to all of our testimony," said spokesman Michael DuVally. In a statement to Rolling Stone, Goldman insists that its behavior throughout the period covered in the Levin report was consistent with responsible business practice, and that its machinations in the mortgage market were simply an attempt to manage risk.
It wouldn't be hard for federal or state prosecutors to use the Levin report to make a criminal case against Goldman. I ask Eliot Spitzer what he would do if he were still attorney general and he saw the Levin report. "Once the steam stopped coming out of my ears, I'd be dropping so many subpoenas," he says. "And I would parse every potential inconsistency between the testimony they gave to Congress and the facts as we now understand them."
I ask what inconsistencies jump out at him. "They keep claiming they were only marginally short, that it was more just servicing their clients," he says. "But it sure doesn't look like that." He pauses. "They were $13 billion short. That's big — 50 percent of their risk. It was so completely disproportionate."
Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn't make a massive short bet and didn't bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a "big short" and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?
This issue is bigger than what Goldman executives did or did not say under oath. The Levin report catalogs dozens of instances of business practices that are objectively shocking, no matter how any high-priced lawyer chooses to interpret them: gambling billions on the misfortune of your own clients, gouging customers on prices millions of dollars at a time, keeping customers trapped in bad investments even as they begged the bank to sell, plus myriad deceptions of the "failure to disclose" variety, in which customers were pitched investment deals without ever being told they were designed to help Goldman "clean" its bad inventory. For years, the soundness of America's financial system has been based on the proposition that it's a crime to lie in a prospectus or a sales brochure. But the Levin report reveals a bank gone way beyond such pathetic little boundaries; the collective picture resembles a financial version of The Jungle, a portrait of corporate sociopathy that makes you never want to go near a sausage again.
Upton Sinclair's narrative shocked the nation into a painful realization about the pervasive filth and corruption behind America's veneer of smart, robust efficiency. But Carl Levin's very similar tale probably will not. The fact that this evidence comes from a U.S. senator's office, and not the FBI or the SEC, is itself an element in the worsening tale of lawlessness and despotism that sparked a global economic meltdown. "Why should Carl Levin be the one who needs to do this?" asks Spitzer. "Where's the SEC? Where are any of the regulatory bodies?"
This isn't just a matter of a few seedy guys stealing a few bucks. This is America: Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high-profile nature of its confrontation with a powerful Senate committee makes this a political story as well. If the Justice Department fails to give the American people a chance to judge this case — if Goldman skates without so much as a trial — it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are.

http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511?page=6

http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511