Sen. Bernard Sanders (I-Vt.) is pushing an amendment to the financial overhaul bill before the Senate that would broaden the Government Accountability Office’s power to audit the Fed and compel the central bank to disclose details about the firms that received emergency federal aid during the financial crisis.
Of course, the Obama White House is looking to kill the amendment. Surprise!
I know I’m somewhat late to the party on this one, but I wanted to point out to anyone who wasn’t aware that senior members of the Securities and Exchange Commission, our main regulatory body, watched hours of pornography per day, while on the job. This peak porn usage occurred during 2007-2008, at the height of our banks’ financial fraud.
From ComputerWorld, of all places:
Seventeen investigations involved senior SEC staffers earning between $100,000 and $222,000 annually. In many cases, the Kotz’s office obtained on-the-record admissions from the employees involved, though the report does not say how, or even whether, the employees were disciplined.
Kotz’s report lists several instances where SEC employees spent several hours daily on porn. One such case involved a senior attorney at the SEC’s Washington headquarters who sometimes spent eight hours a day surfing pornographic sites and downloading explicit images. The attorney apparently downloaded so much porn that he filled up all the available space on his government-issued computer. He then downloaded more images onto personal CDs and DVDs, which he stored in boxes in his office.
Enjoy the rest of your day.
It’s true. From the BBC:
Five times as much oil as previously thought could be leaking from the well beneath where a rig exploded and sank last week, US officials said earlier.
The slick is 45 miles (72km) by 105 miles (169km) – almost the size of Jamaica – and heading for the US coast.
A third leak has been discovered, and a fire-fighting expert said the disaster may become the biggest oil spill ever.
“Probably the only thing comparable to this is the Kuwait fires [following the Gulf War in 1991],” Mike Miller, head of Canadian oil well fire-fighting company Safety Boss, told the BBC World Service.
“The Exxon Valdez [tanker disaster off Alaska in 1989] is going to pale [into insignificance] in comparison to this as it goes on.”
Scientists say only a quarter of local marine wildlife survived the Exxon Valdez disaster.
Annie Lowrey over at The Washington Independent has a nice post deconstructing the latest series of advertisments attacking the financial regulation bill now being debated in the Senate.
I admit I hadn’t seen this lovely bit of propaganda until she drew my attention to it, and it’s interesting to examine the claims it makes. The first rule of propaganda is to attribute to your enemy your own actions and intentions. Thus, the commercial rather cleverly accuses the Senate of setting up an apparatus for “unlimited bailout authority”, and, astoundingly, claims that “Goldman Sachs is in favor of the bill”.
Neither of these statements is true, of course, but the implications go deeper than that. As TPM revealed earlier this week, the sponsors of the ad, a front-organization calling themselves “Stop Too Big to Fail”, are funded entirely by corporate dollars, including, yes, Goldman Sachs. This attempt to dust up public anger against the financial reform bill indicates Wall Street’s fear of it, and their willingness to tell any lie in order to see that the reform bill doesn’t pass.
Not that they really have that much to worry about. As George Washington remarks, the reform bill currently being debated is “All Holes and No Cheese“, noting that:
- Won’t break up or reduce the size of too big to fail banks
- Won’t remove the massive government guarantees to the giant banks
- And won’t even increase liquidity requirements to prevent future meltdowns
What it will do, however, is set up new protections for consumers, specifically to protect them from predatory lending practices, overdraft fees, byzantine contracts that require a Ph.D to understand, etc. The bill will also (hopefully) enact some barriers to the trade of over-the-counter (unregulated) derivatives, those delightful instruments that got us into this crisis.
As with the health care bill, I feel really ambivalent about this.
On one hand, the Dodd bill does almost nothing to prevent too-big-to-fail, it proposes some watered-down reform on derivatives trading, it doesn’t reduce the size or power of our mega-conglomerate banks, it doesn’t reinstate Glass-Stegall, and it does nothing to rein in the frankly absurd amounts of cash the bank executives make, whether or not they happen to crash the economy
On the other hand, this bill does provide some new consumer protection services, it bans proprietary trading (whatever that is), and it does create a new regulatory body whose specific charge is to watch over our mega-banks (as opposed to the SEC, which has a universal mandate).
Is this good enough? Can we do better? With the flood of Wall Street money flowing into campaign coffers, and with the November election only 6 months away, I’m inclined to say no. Maybe we should take what we can get. And keeping in mind that, unlike the health-care bill which had full industry support, the Dodd bill is being opposed by nearly every major bank, maybe it isn’t so bad after all. If the banks are against it, there must be something good inside this bill.
Update: Also see Nomi Prins’ article in Alternet entitled “Ten Ways The Dodd Bill is Failing on Financial Reform“:
It won’t constrain the Fed’s future bailout operations. It appears to limit the Fed’s ability to lend money freely to firms in trouble by “allowing” its system-wide support only for healthy institutions or systemically important market utilities. But what’s to stop the Fed from designating any company a “systemically important market utility”? That was basically the rationale behind the AIG bailout.
Update II: It’s also important to keep in mind that Chris Dodd, the bill’s sponsor, is heavily funded by some of the most odious Wall Street titans, including Citigroup (who gave him $110,000 this cycle), AIG ($87,000), Merrill Lynch ($61,650), Morgan Stanley ($44,000), and JP Morgan ($37,000). Hooray for transparency!
Alan Mutter over at Newsosaur gives us a great profile of a new non-profit news startup in Minneapolis called MinnPost that seems to be as good a hope as any to revive our failing news economy:
MinnPost, a scrappy news start-up in Minnesota, is beginning to show how to run a sustainable non-profit venture without depending on major philanthropic support.
And it is doing so in two ways: First, by keeping costs low. Second, by raising money almost continuously through such diversified initiatives as advertising, NPR-style user contributions and even an annual gala featuring organic-vodka martinis.
In other words, the highly regarded Minnesota news site is the antithesis of such large-scale journalism projects as Pro Publica, Texas Tribune and Bay Citizen, which at this writing all rely on multimillion-dollar endowments from wealthy individuals and institutions.
MinnPost not only started life without a multimillion-dollar nest egg but also is committed to fully supporting its ongoing operations without major philanthropic donations by 2012, says Joel Kramer, a former editor of the Minneapolis Star Tribune who launched the site in 2007.
Back when Propublica emerged we heard a lot of talk about how its model of non-profit news gathering was a harbinger for the future of news. And while they have given us a series of fantastic investigations, capped most recently by their explosive profile of corrupt hedge fund Magnetar, the uncomfortable fact remained: their business model depended on multi-million dollar grants from wealthy philanthropists. They were, by definition, not a sustainable project.
MinnPost, on the other hand, appears to be the first non-profit whose stated goal is to provide quality journalism free of massive philanthropic donations. They do so by a mixture of low overheads, low operating costs, and good old fashioned reader donations. One of my major criticisms of ProPublica, fantastic though they are, is the obscene six-figure salaries their reporters and editors make. MinnPost does away with these, but (and this should come as a surprise to the Wall Street banks who contend that multi-million dollar bonuses are the only way to secure “talent) the quality of their reporting does not appear to have suffered.
We’re all holding our breath to see what’s going to come of the bloodbath our legacy news media are swimming in (They lost 27% circulation in the past five years), but startups like MinnPost are a genuine ray of hope.
The Cape Wind project, the nation’s first offshore wind farm, is go for launch. After nine years of controversy and heated negotiations, U.S. Interior Secretary Ken Salazar announced today that Nantucket Sound, about five miles off the coast of Massachusetts’s Cape Cod, will host a 130-turbine wind farm covering 24 square miles that will begin generating electricity as early as 2012. Salazar made the announcement from the Massachusetts Statehouse in Boston and was joined by Massachusetts Governor Deval Patrick, a big supporter of the project.
Salazar included a few modifications to help protect the historical, cultural, and environmental assets of Nantucket Sound. The farm was originally intended to include 170 turbines, but he dropped the number to 130 to help reduce visual impact. He also stipulated that developers need to take additional marine archaeological surveys and other “commonsense measures” to “minimize and mitigate” potential adverse effects of the project.
Well, the big Goldman Sachs hearing just wrapped up 10 hours of grueling testimony, and I’m still reeling from the stupendous prevarications their executives offered. The financial bloggers were out in full form today with some great live-blogs here, here and here. I’m sure I’ll have more to say about this as the hearings progress, and I’d love to see how Goldman will justify its fraudulent deals with AIG once the Senate gets around to asking about them; but until then, a couple comments:
1) I really have to hand it to Sen. Carl Levin for his rigorous and adversarial line of questioning. Watching him tear these executives apart for knowingly engaging in outright fraud is gratifying, though of course some jail time for these executives would be even more so. Watch this video for the money shot (as it were).
2) I was really astounded by the total lack of contrition these executives showed. They defrauded investors to the tune of $500 million (at least) by selling them bonds which they knew were worthless and then betting against those bonds. The basic refrain from all these executives, particularly Mr. Sparks, was that “these bonds were traded on the open market and at market values” – but of course that’s an entirely spurious argument because Goldman was withholding valuable information from their clients (that the bonds were worthless). Amazingly, the Goldman executives don’t seem to think they were doing anything wrong! Fraud is totally acceptable in their world, just so long as it makes them money. Just don’t buy a used car from them – they’d probably sell you a death-trap and then take out car insurance and life insurance on you.
Before I get too gushy on Senator Levin, I should hasten to remind my readers that he voted for the Financial Services Modernization Act back in 1999 – the same act that allowed Goldman Sachs to trade unregulated (“over-the-counter”) derivatives. Without the FSMA, the sort of fraud Goldman engaged in would have been impossible, and any attempt to prevent this sort of behavior in the future is meaningless without repealing the FSMA. Needless to say such a repeal is not even being discussed.
Watching the hearings today gave me a strange, other-worldly feeling. Some of the same senators who took major campaign donations from Goldman Sachs were sitting there and grilling these executives. A cynical observer might have gotten the impression that this was all a bit of political theater designed to soothe the public’s anger, which by all accounts is badly in need of catharsis. Certainly when one remembers that the very behavior for which Goldman is now being indicted was standard practice for nearly all of the major banks, it seems strange that the Senate should decide to focus all of its ire on Goldman. But then again, they are, after all, the most visible symbol of Wall Street insanity.