Accountability II

A Bill Moyers/Michael Winship article in Huffington Post on the financial crisis brings up some excellent points, starting with advice to the Tea Party activists to be not "so single-minded about just who's responsible for all their troubles, real or imagined." Meaning: stop blaming Obama and join the outcry against Wall Street, the big banks, and the financial wizards who were in charge but now claim, along with Alan Greenspan, that no one could have foreseen what happened.

To Robert Rubin, who apologized for missing "the powerful combination of forces at work and the serious possibility of a massive crisis," Moyers and Winship say:

Okay, maybe you didn't have a crystal ball. But what about good, old-fashioned business sense? How could you make so much money and not know the score? . . . Citi paid you $120 million as a senior advisor and rainmaker and you're not responsible for knowing what's happening below you? You didn't bother to assess the risk you were peddling to clients?

In truth, a few wise economists did see it coming. And what about the investment managers who saw the risk, played the odds, and got out just in time? Like fund manager Michael Burry (this blog 4/7) who "waited for the lenders to offer the most risky mortgages conceivable to the least qualified buyers." Then he pulled his investments out, because he knew it was the end of the bubble. He knew the risk, took advantage of it, and got out in time. He knew.

And this:

The hedge fund called Magnetar . . . worked with . . . investment banks to create toxic CDO's -- collateralized debt obligations -- securities backed by subprime mortgages that management knew were bad. Then Magnetar took that knowledge and bet against the very same investments they had recommended to buyers, selling short and making a fortune. To simply call all of this "creative accounting" is to do it an injustice. This is corruption, cynicism and greed on a scale that would make the Roman Emperor Caligula cringe.

And now the executives and advisers claim to be surprised that it all came tumbling down? How could they not know the risk? Where along the way did business ethics fall over-board?

And yet the Republicans -- all 41 of them in the Senate -- have signed a pledge to filibuster the regulatory bill that is before the Senate. Obama has pledged to veto legislation if it does not regulate these derivatives.

The battle is on. It should be a classic Wall St vs Main St battle. Which side are the Tea Partiers going to be on? It's going to be quite a trick to be anti-Obama and anti-Wall St at the same time, but that seems what the Republican strategists are trying to pull off by distorting the bill, just as they did with health care.

Wake up, people !! It's important to understand what is happening !!

Ralph

Fred Phelps crowd to protest at Emory

The notorious and despicable Westboro Baptist Church crowd, made up mainly of Fred Phelps' extended family, will be staging a protest tomorrow before the Emory student production of "The Laramie Project." This is a terrific piece of theater, created by Moises Kaufman as an interactive writing project with the actual townspeople of Laramie, WY. It depicts the after-effects of the hate-crime murder of gay college student Matthew Sheppard on the people of Laramie.

The Rev. Fred Phelps is obsessed with denouncing not only homosexuals but the entire United States as a God-doomed country for its increasingly tolerant attitude toward gay people. Thus he protests at funerals of soldiers killed in Iraq, saying that God is punishing the U.S. by killing our soldiers. Phelps sees himself as a prophet in the Old Testament style, trying to warn us to turn away from wickedness.

Here's their message, released by the Westboro Church, printed in the student newspaper, The Emory Wheel:

"God hates homosexuals and homosexual enablers. Ergo, God hates f-g infested & f-g enabling Atlanta, GA and all having to do with spreading sodomite lies via The Laramie Project -- a tacky piece of cheap, lying, f-g propaganda masquerading as legitimate theater."

Students plan to stage a counter-protest.

I have seen a previous Atlanta production of this deeply moving play. It is full of sadness, loss, and anger but also filled with the heart-warming, redemptive experiences of people coming to terms with tragedy and ignorance, and leading to changed attitudes and actions.

Sadly, the faux-Christians from Topeka are mired in hatred and willful ignorance. There are several smart lawyers among this family, so the ignorance has to be willful and selective and manipulative. An appeals court has upheld their constitutional right to spread their message of hate as constitutionally protected speech, even at funerals. The case is headed for the Supreme Court. (see my blog, "It just ain't right," 04/13).

Ralph

Accountability

The SEC has filed a civil lawsuit charging Goldman Sachs with fraud.

Finally, somebody is insisting on bringing some reason and accountability into the whole financial markets mess. Here's what G/S did, essentially, as reported by AP/HuffingtonPost's Ryan McCarthy:

The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its executives. The agency alleges Goldman failed to disclose that one of its clients helped create -- and then bet against -- subprime mortgage securities that Goldman sold to investors. In essence, Goldman is accused of pushing a mortgage investment that was secretly devised to fail. . . .

"The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen," finance expert Sylvain R. Raynes told the New York Times about such deals. "When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else's house and then committing arson."

Any 10 year old should be able to see that this is wrong, wrong, wrong. This is why these large financial institutions should not have these multiple roles and why deregulation allowed it all to happen.

People must be held accountable. It is no comfort to know how much influence former Goldman Sachs officials now have in our economic policy making.

Ralph

Vatcan VII: Bad to worse

When I wrote "Vatican VI," I had not yet read the article in today's New York Times, which shows the Vatican's response going from bad to worse.

Cardinal Tarcisio Bertone, the Vatican Secretary of State and second only to the pope in the hierarchy, has said that homosexuality is "a pathology" and linked it to pedophilia. A Vatican spokesman responded quickly to the outraged protests by "distancing the Vatican" from Bertone's statements.

What does it mean to have to "distance the Vatican" from statements by its #2 person? They just don't get it.

What's their rationale for the comments? Bertone has said that many psychologists and psychiatrists "have shown that there is a relationship between homosexuality and pedophilia."

He is likely referring to the bogus, thoroughly discredited reports by Paul Cameron, which the right-wing, anti-gay zealots and reparative therapists love to quote. Cameron has been kicked out of both the psychological and sociological professional organizations, and his claims bear no relation to scientific methodology. Even a high school science student would recognize the lack of validity. But people quote his claims without even looking at his "data."

Then a Vatican spokesman went on to cite their own statistics of the abuse cases: of the 3000 abuse cases handled by the Vatican in the past decade, 60% involved priests attracted to adolescent boys; 30% involved priests in heterosexual relations; and 10% concerned pedophilia.

So?

This proves nothing. It might suggest that a very high percentage of priests are gay -- and their attraction would naturally be to boys, not girls. But that is not an indictment of homosexuality but of inappropriate boundaries in a relationship of trust. Why does the 30% heterosexual figure not lead them to indict heterosexuality -- at least at the 30% level?

This is just going from bad to worse.

Ralph

Vatican VI: The pope speaks

The Associated Press reports from Vatican City that Pope Benedict XVI broke his recent silence on the clerical abuse scandal, saying in unprepared remarks at a Mass inside the Vatican that "we Christians" must repent for sins and recognize mistakes.

"I must say, we Christians, even in recent times, have often avoided the word 'repent', which seemed too tough. But now under attack from the world, which has been telling us about our sins ... we realize that it's necessary to repent, in other words, recognize what is wrong in our lives. . . Open ourselves to forgiveness ... and let ourselves be transformed. The pain of repentance, which is a purification and transformation, is a grace because it is renewal and the work of divine mercy.

OK. These were "off the cuff remarks." So we shouldn't portray them as his considered and final word. . . . But repent? . . . Open ourselves to forgiveness and be transformed?

That's it?

Nobody has to pay any earthly consequences?

Well, they did revise the recommendations to bishops by inserting a sentence that tells them to report abuse crimes to the police -- claiming that it has been the policy all along, even though not in writing.

However, the AP article also says that senior Vatican officials were quoted in 2002 saying that requiring bishops to report abusive priests to the police would violate the trust between the priests and the church, and therefore bishops shouldn't be required to report the abuse.

This is about crimes and innocent victims. The church is not above the law of the land. Every week brings confirmation of the fact that the Vatican just doesn't get it. And maybe they are not capable of understanding what this is all about.

Ralph

There they go again . . .

Mitch McConnell (R-KY) is spouting the Republican talking points, trying to discredit the financial regulatory bill. A week after meeting with officials from 25 big Wall Street banks, he took to the Senate floor to claim that the reform bill actually guarantees "endless taxpayer bailouts of Wall Street banks."

McConnell went further:

"The Dodd bill' gives the government a new backdoor mechnism for propping up failing or failed institutions . . . . We won't solve this problem until the bigget banks are allowed to fail."

This is total bullshit. It is also exactly what the Republican political strategist, Frank Luntz, told them to say in his list of talking points designed to defeat regulatory reform.

Here's what the bill actually does.

It creates a Financial Stability Oversight Board to monitor large financial institutions. There will be a fund, paid for by the banks themselves, with no other purpose than shutting down failing firms that would pose some risk to the system. This will insure that it is done smoothly, in a way that protects the overall economy. It is not a bailout. The failing institutions will not be bailed out, Senator McConnell; they will be shut down in a way that does not hurt the economy. Your plan -- just let them fail all by themselves -- would hurt the economy. So it is more likely than the reform plan to result in a necessary bailout like the one instigated in 2008 by George Bush.

In Barney Franks' colorful language:

" . . . if they run into trouble the Board becomes a death panel. If a Wall Street bank or investment bank begins to fail, threatening the safety of the financial system, it will be put to death. End of story. Shareholders are wiped out, unsecured creditors are out of luck, management and every employee that is not required to shut down the company is fired. And even secured creditors may be required to take haircuts. The industry pays into a fund to put the institution to death, and this fund is only used to protect the system and our economy when the bank fails."

This is what Mitch McConnell claims is a permanent taxpayer bailout?

At least the Democrats have fought back aggressively. Senators Dodd, Whitehouse, Warner, Jack Reed, and others have all denounced McConnell's distortions. Even some Republicans have distanced themselves from their own minority leader's silliness (as MSNBC's John Harwood called it.)

Ralph

Bellwether?

In what could be regarded as the first test of the political landscape since health care reform passed, Democrat Ted Deutch, has easily won the Florida congressional seat in a special election to replace Democrat Robert Wexler, who resigned to head a Middle East think tank.

It is ordinarily considered a safe Democratic seat -- Obama won the disctrict with 65% of the vote, and Wexler was a "fire-breathing liberal," But so was Ted Kennedy. And Wexler's opponent tried to make the campaign a referendum on health care reform and on the Obama administration.

Deutch won by 62-35 in a vote where about 40% were senior citizens, who obviously didn't drink the kool aid about reform taking away their Medicare or pulling the plug on grandma.

This one election doesn't prove anything, but I breathe a little easier. At least Scott Brown's win in MA wasn't the bellwether some would like to think.

Ralph