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Sunday Loon Watch

Mon, 04/19/2010 - 15:54

This one is going to sound familiar: Republican Senate leader Mitch McConnell claims Republicans really do want to reform Wall Street, but only if Democrats are willing to "go back to the drawing board" and start over. Sound familiar?

Talk about ripping a page from your own failed playbook...when Republicans tried to block health care reform, they made the same exact argument, nearly word-for-word:

Three months later, Republicans are trying the same ineffective approach on Wall Street reform as they did on health care reform. It's a complete replay. Nothing has changed. It's still Mitch McConnell calling the shots, Frank Luntz telling them how to say it, and big money cheering them on. Now that's a status quo teabaggers can believe in!

A Concurrence in the Case Against Elena Kagan as Supreme Court Justice

Mon, 04/19/2010 - 15:45

photo: dbking via Flickr

Last week Glenn Greenwald penned a solid case delineating why current Solicitor General Elena Kagan, who is at the top of the purported Obama “short list”, would make a poor nominee to replace the retiring Justice John Paul Stevens on the Supreme Court. Despite the hard truth in Greenwald’s facts and arguments, he has been blistered by both the Obama Administration and their apologists and fanboys. The Administration has, as reported by Sam Stein, even enlisted a hit team of loyalist flaks and supporters to discredit Greenwald and his article.

The reason the White House finds itself in the position of fighting off its own base in the first place is because Greenwald is dead on the money with his analysis, criticism and conclusion that Kagan is a poor nominee; and especially considering it is Stevens’ critical seat she would be filling. Glenn’s facts and argument speak for themselves, but there is an additional area neither he, nor anyone else, has substantively touched on which militates against Kagan. Elena Kagan is so terminally inexperienced with the American court system as to be unqualified to serve on the Supreme Court.

I appeared in three different courthouses last Friday. Which is two more than Elena Kagan has appeared in as either an attorney or judge during her entire legal career. Her first appearance in the Supreme Court as Solicitor General, little more than six months ago, was the first time she had substantively appeared in any court. Ever. You can still count her total number of live court experiences (all appellate arguments) on one hand. The complete absence of experience and seasoning showed in several key areas in Kagan’s uneven oral argument presentations, and the claim Kagan is some kind of wonderful talent who necessarily would bring diverse Supreme Court justices together exposed as unsupported fawning fantasy.

The American trial court system is literally the backbone of our rule of law; they are where the public substantively interacts with the law and their law is meted out, as well as being where the foundation and record for appellate cases and controversies are made and perfected. How is it appropriate to be considering a woman for a position that will impact evidentiary, procedural and substantive trial processes – for every trial court in the country; federal, state and local – when she has never been in one? There are forty Justices in the long and glorious history of the Supreme Court who had no prior judicial experience; there are none I am aware of who had the nearly complete absence of any practical legal court experience as an attorney, much less as a judge, such as is the case with Elena Kagan.

These are complex situations and issues arising in uniquely dynamic confrontational adversary settings; they are not fully cognizable nor understandable from the cold isolation of a printed record. If you have never been in the halls, bowels and docks of trial courts, you just do not know. An understanding of the dynamics, biases, unwritten rules, grit and feel of trial level courts simply cannot be gained without at least some exposure to them. Elena Kagan has absolutely none, yet Barack Obama and the Kagan fan club blithely think she should be given a lifetime appointment to review and affect the daily literal life and death matters occurring there. She is not fit for the job, and it is reckless and deplorable the Obama White House does not realize it.

It is already such that the Supreme Court has only one member, Sonia Sotomayor, with any experience as a trial judge, but at least the other Justices have varying substantial histories and experience as attorneys and judges in a variety of trial and inferior appellate courts. Elena Kagan has squat. The cloistered imperious disconnect between the hallowed halls of the Supreme Court and the actual public judicial system would go from the already bad to far worse were Kagan confirmed to replace Stevens. An extremely troubling move being contemplated by a President who ran on the supposed mantle of being an experienced lawyer, Constitutional scholar and wise leader.

One of the heavyweights rolling out to buck up Kagan against Greenwald was Supreme Court appellate specialist Tom Goldstein of Akin Gump and SCOTUSBlog fame and fortune. Goldstein savaged Glenn by painting him, and other unnamed progressive Kagan critics, as “wingnuttery extremists” operating on the “ideological fringes”. Goldstein’s attack posturing is unfounded and scurrilous, all the while as he conveniently omits any disclosure of his own personal connection to Kagan, her former Harvard largesse and dependence on the acts and kindness of Supreme Court Justices.

Yes Mr. Goldstein, Greenwald and a lot of us others believe the executive branch is not above the law, that the Fourth Amendment and FISA laws actually have meaning and that the US government should not sanction and institutionalize torture. I guess these tenets are what sensible “centrists” like the oh so superior Goldstein consider indicative of the radical fringe left. Funny, at one time they were considered the kind of concepts the United States was founded and built upon.

Irrespective of Goldstein’s malevolent and false posturing, the theoretical policy distinctions he strains to argue are one thing; Kagan’s complete lack of foundational experience is quite another. If Goldstein is going to slough off this disqualifying fact, it will require greater fictional liberties than even his new self promoting television show.

Republicans are between a rock and a hard tea bag

Mon, 04/19/2010 - 15:18

House Republicans want to party like its 1994:

Republicans are salivating over the prospect of winning back the House in November, and they’re planning to produce a new “Contract With America” in the hopes of sealing the deal.

... but there's one little problem:

The catch: They don’t agree yet on what should be in it.

Actually, make that two problems:

House Minority Whip Eric Cantor wants a document, akin to Newt Gingrich’s 1994 Contract With America, that identifies specific pieces of legislation Republicans could pass ... So does Indiana Rep. Mike Pence ...

But Rep. Kevin McCarthy, the California Republican who is leading the effort to craft the document, says that including specific legislation in the contract would smack of the backroom deals the GOP accuses Democrats of making, so “you won’t see it written out.”

But really, that's not the problem. The problem is the teabaggers that the Republican party cheerfully jumped into bed with. Because they've already come up with their own contract, and if the GOP "Contract With America doesn't line up with the tea party's "Contract From America," there's going to be hell to pay.

But tying your party's political future to a group that only 18% of the country identifies with isn't a recipe for success. And the Republican leadership knows it.

GOP Senate leader McConnell still dodging questions about his secret Wall Street meeting

Mon, 04/19/2010 - 14:49
GOP Senate Leader Mitch McConnell recently met with two dozen top Wall Street executive to talk about how to block Wall Street reform. Right after, McConnell announced his opposition to such reform. From President Obama's Saturday radio address:Just the other day, in fact, the leader of the Senate Republicans and the chair of the Republican Senate campaign committee met with two dozen top Wall Street executives to talk about how to block progress on this issue.

"Lo and behold, when he returned to Washington, the Senate Republican Leader came out against the common-sense reforms we've proposed."During a CNN interview on Sunday, McConnell was asked about the meeting, and was also forced to admit that the Democrats' financial reform package doesn't include any taxpayer bailouts for big business as McConnell is alleging.When reminded by CNN Chief Political Correspondent Candy Crowley that the money in the disputed fund would be provided by banks themselves rather than taxpayers, McConnell responded, “Regardless of where the – how the money is produced, it is a bailout fund that sort of guarantees in perpetuity that we’ll be intervening once again to bail out these big firms.”Sorry, it does matter. When I use my own money to help myself in times of trouble it's not a bail out. It's simply delving into my own piggy bank. McConnell is lying. It's unfortunate that when asked the other day if McConnell was lying, Senator Dodd refused to answer the question and went off on how some Republicans were being fair brokers.

This is how we got death panels. Dems need to learn how to call a lie a lie.

The Fall of Goldman Sachs?

Mon, 04/19/2010 - 14:05

The last 72 hours have left Goldman Sachs with a shattered reputation among the people who matter to them, their customers and the politicians they have courted. The SEC’s civil fraud suit over one of their synthetic CDO deals is bad enough, but it’s just getting worse and worse for them.

First of all, the SEC is not alone in investigating the giant financial firm. Gordon Brown, fighting for his political life in Britain, savaged Goldman’s “moral bankruptcy” in an interview and called for an immediate investigation with the UK Financial Services Authority. Germany’s Angela Merkel joined him, saying that her nation would evaluate “legal steps.” The major clients in the derivative deal, the ones who bought long while Goldman never disclosed their hedge fund partner Paulson and Co. was buying short, included the Royal Bank of Scotland and the German bank IKB.

Obviously, politicians here in America are pushing each other out of the way to find a microphone where they can denounce Goldman Sachs. You couldn’t find a speech at the California Democratic Party convention which didn’t mention them by name. The DNC bought the Google ad for “Goldman Sachs SEC,” and Democrats are clearly wanting to use the case as a springboard for financial reform.

And beyond the politics there are the facts of the case. Securities fraud is pretty clear on the point that disclosure to investors must be put in writing. “Nobody reads those statements” is no excuse. The Abacus (name of the deal) pitchbook just never mentions Paulson’s role in devising the mortgage-backed securities that made up the deal. And while Goldman wants to claim that this was merely one deal and they were not trying to mislead their investors, today’s NY Times just obliterates that argument:

Mr. Tourre was the only person named in the S.E.C. suit. But according to interviews with eight former Goldman employees, senior bank executives played a pivotal role in overseeing the mortgage unit just as the housing market began to go south. These people spoke on the condition that they not be named so as not to jeopardize business relationships or to anger executives at Goldman, viewed as the most powerful bank on Wall Street.

According to these people, executives up to and including Lloyd C. Blankfein, the chairman and chief executive, took an active role in overseeing the mortgage unit as the tremors in the housing market began to reverberate through the nation’s economy. It was Goldman’s top leadership, these people say, that finally ended the dispute on the mortgage desk by siding with those who, like Mr. Tourre and Mr. Egol, believed home prices would decline [...]

With Mr. Paulson’s help, Goldman created an Abacus investment that, the S.E.C. now says, was devised to fall apart. By betting against that Abacus investment, Mr. Paulson reaped $1 billion in profit, according to the S.E.C. Mr. Paulson was not named in the S.E.C. complaint.

Goldman’s top ranks changed its stance on housing in December 2006. In a meeting in a windowless conference room on the executive floor, Mr. Viniar, the chief financial officer, and Mr. Cohn, the president, gathered about 10 executives for a briefing. Mr. Sparks, the head of the mortgage unit, walked them through the numbers. The group was unanimous: Goldman had to reduce its exposure to the increasingly troubled mortgage market.

All the literature provided to investors said basically the opposite, that the securities put in the CDO (which is “synthetic” because the holders of the CDO don’t own the product in question) were designed for long-term advances. With Goldman’s top executives apparently aware of what they were doing in the housing market, they face serious criminal and civil penalties, says Simon Johnson (he also thinks John Paulson should call a lawyer).

And Goldman’s in serious, class-action lawsuit kind of trouble if this is true:

Talk about Goldman not disclosing material information. I’m not talking about Abacus here, I’m talking about the fact that Goldman knew as far back as last September that the SEC was on the warpath with respect to Abacus, and gave no hint to shareholders that there might be legal trouble afoot.

The WSJ has got its hands on — but, unforgivably, has not posted online — a letter that Goldman Sachs sent to the SEC in September, claiming that the Paulson’s involvement in Abacus was not material … In fact, the SEC probe dates back all the way to August 2008.

Anyone who did business with Goldman between August 2008 and last week has reason to sue.

And what’s more, this one deal is most certainly the beginning and not the end. The newly vigorous SEC is actively investigating other mortgage deals. Indeed, what they’re pinning on Goldman in the Abacus deals could just as easily be subscribed to the banks running the Magnetar deal, where that hedge fund created CDOs on mortgage backed securities they believed would fail.

Brad DeLong has a pretty helpful POV of the case as well. My gut feel is that this has the potential to take down the firm, and they’re going to have to call in every chit they have around the world to avoid that.

Editor of conservative NV paper wants to repeal 19th amendment since women are voting for Harry Reid

Mon, 04/19/2010 - 13:51
In a real newspaper this kind of story would likely be sarcasm. But this is the conservative Las Vegas Review-Journal. I'm told the paper has no women on its editorial board, and that the publication had to settle a gender discrimination lawsuit with a former female editor who was passed over for promotion. All the major decisions at the paper are made by men. And now the men want to repeal women's suffrage. Classy.

PS That's the editor, Thomas Mitchell, in the upper left.

Scott 'Bankers gave me $450k in 6 days' Brown opposes Wall Street reform

Mon, 04/19/2010 - 13:45
Remember how Scott Brown was going to be the darling of the teabaggers? Now, he's a wholly owned subsidiary of Wall Street. And, it didn't cost them too much. First, know this :In a six-day span just before the US Senate election, Republican Scott Brown collected nearly $450,000 from donors who work at financial companies, a sign the industry is prepared to spend heavily in the upcoming midterm elections to beat back new controls and taxes President Obama wants to impose.

The donations, from hundreds of financial executives, far exceeded what Brown received from doctors and others in the health care industry in the final days of the campaign.Then, this isn't a surprise: Sen. Scott Brown (R-Mass.) said Sunday he would filibuster financial regulatory reform legislation in its present form because the “bill is not a good bill, period.”

Speaking on CBS’s “Face the Nation,” Brown charged that President Barack Obama is politicizing the debate – an “unfortunate” happenstance – and people should get into a room and start solving problems.On January 19th, Election Day for this Senate race, I was listening to a Boston radio station and tweeted one of the things I heard: Just heard on Boston's WBZ: "I voted for Scott Brown. I'm a banker. There isn't a banker alive who voted for Martha Coakley"Now, we know why. The bankers and Wall Street are getting their money's worth from Brown.

SLDN 'disturbed by multiple reports' that Obama admin. is urging congress not to vote on DADT this year, asks Obama to keep his promise

Mon, 04/19/2010 - 13:14
I just posted this at AMERICAblog Gay. Usually, I wouldn't just repost an entire post, but this one is very important. There are now multiple sources saying that the White

Today, via Ben Smith, we learn that Aubrey Sarvis, the Executive Director of Servicemembers Legal Defense Network (SLDN) wrote a letter directly to President Obama asking him to get involved in the effort to repeal DADT this year. After all, that was Obama's promise to the nation in the State of the Union on January 27th. Sarvis also noted that he's been hearing that administration officials are urging a delay:I am very disturbed by multiple reports from Capitol Hill that your Congressional liaison team is urging some Members of Congress to avoid a vote on repeal this year. The upcoming House and Senate votes will be close, and very frankly, Mr. President, we need your help now.In the letter, Sarvis makes it clear that time is running out to get repeal done this year. The House and Senate Armed Services Committees will soon be marking up the Department of Defense authorization bills, which offers the best hope for repeal.

Last week, John reported that he and I "were just informed that the White House congressional liaison office is telling US House members not to include the repeal of "Don't Ask Don't Tell" in the Defense Authorization bill, and not to have a vote on DADT on the House floor, this year." In response, an unnamed "White House official" issued a response denying our report, without stating whether or not the White House did indeed want a vote this year. John deconstructed that response here. After reading the Sarvis letter, it sure sounds like we're not the only people hearing that a delay is being urged. This is a significant development and the White House needs to address it from a named official this time: the Deputy Chief of Staff, Jim Messina, is in charge of the DADT strategy. Someone needs to ask him if the White House wants DADT repealed this year.

Kerry Eleveld talked to Sarvis about this letter. He indicated the roadblock was coming from officials at the Pentagon: Sarvis told The Advocate that he has gotten reports from Capitol Hill staffers in both the Senate and House that representatives from the Department of Defense have asked them to hold off on taking a vote to end the policy until a report on how to implement repeal is completed. The study, ordered by Defense Secretary Robert Gates in February, is due in early December.

“The administration is saying, ‘Look, the working group has its task, their work is not concluded until the end of the year, and we would prefer that this not be voted on this year,’” Sarvis said.

Asked if the directive came from the officials at the White House or the Defense Department, Sarvis said, “It’s the Pentagon, but the Pentagon is part of the administration.”That is indeed true. The Pentagon is under the command of Obama. This also comports with what Secretary Gates said last month. He indicated that he didn't want a change in the law until his study was done -- and he indicated that the President was comfortable with that strategy. So, the White House could deny what AMERICAblog reported. Will they deny this charge from Sarvis, too?

From the tone of the letter, it's obvious SLDN sees an urgency. No wonder. SLDN is the organization that represents servicemembers who are being discharged. This isn't about access and party invitations for SLDN. It's about people's live. And, these people are willing to put their lives on the line for the rest of us. The groups representing our gay and lesbian servicemembers speak with moral authority. The White House really should listen to them. Obama needs to get control of this situation. He made the promise to repeal DADT "this year." He needs to make sure his staff is getting it done. If the Democrats suffer serious losses in November, the opportunity to repeal DADT may be lost for years. Repeal has to happen "this year."

Here's the letter to the President from Aubrey Sarvis:
SLDN's Letter to the President

Your Abbreviated Pundit Round-up

Mon, 04/19/2010 - 13:14

Monday punditry.

Eileen Pollack:

And today, thousands of militia members from around the country, many of them armed, plan to march in the capital and in Virginia to "celebrate" the 15th anniversary of the Oklahoma City bombing and "restore the Constitution."

The problem here in Michigan is knowing which militia members are dangerous and which aren’t. Not long ago, I attended Tax Blast, an annual event put on by the Southeast Michigan Volunteer Militia. Families chowed down on pulled pork sandwiches; a tiny girl in pink clutched a stuffed dinosaur. The lid on one chafing dish read "Kosher Meals Available"; it stood empty until a man wearing a pistol and a black T-shirt reading "When I Snap You’ll Be the First to Go" filled it with Hebrew National hot dogs.

Paul Krugman:

Most discussion of the role of fraud in the crisis has focused on two forms of deception: predatory lending and misrepresentation of risks. Clearly, some borrowers were lured into taking out complex, expensive loans they didn’t understand — a process facilitated by Bush-era federal regulators, who both failed to curb abusive lending and prevented states from taking action on their own. And for the most part, subprime lenders didn’t hold on to the loans they made. Instead, they sold off the loans to investors, in some cases surely knowing that the potential for future losses was greater than the people buying those loans (or securities backed by the loans) realized.

What we’re now seeing are accusations of a third form of fraud.

We’ve known for some time that Goldman Sachs and other firms marketed mortgage-backed securities even as they sought to make profits by betting that such securities would plunge in value. This practice, however, while arguably reprehensible, wasn’t illegal. But now the S.E.C. is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure. That’s what I would call looting.

NY Times:

Donald Moore, 75, one of those patients, expressed his uneasiness about the law recently: "The fact is that I don’t understand it, and no one else I talk to understands it. Every day, you read something different in the paper."

Mr. Moore’s latest concern was a "rumor that the new health care procedures are going to be monitored and managed by the I.R.S."

Remember, teabaggers get their news from Fox. Disinformation is rampant. But the truth will out...

EJ Dionne:

The Tea Party is nothing new. It represents a relatively small minority of Americans on the right end of politics, and it will not determine the outcome of the 2010 elections.

Anne Applebaum:  

I understand why some want science to explain this volcano, and others see it as the revenge of the gods.

Forget about that. The big threat is that it will wake up the trolls and pixies.

MedPage Today:

The number of babies born with syphilis is sharply on the rise after 14 years of declines, the CDC reported.

Congenital syphilis cases jumped 23% from 2005 to 2008 (8.2 to 10.1 cases per 100,000 live births), found J.R. Su, MD, of the CDC's National Center for HIV, Hepatitis, STD, and TB Prevention in Atlanta, and colleagues.

The reason appeared to be a 38% increase in the rate of primary and secondary syphilis among women ages 10 and older from 2004 to 2007, they wrote in the April 16 issue of Morbidity and Mortality Weekly Report.

Health reform can't solve all social problems, but it can be part of the solution.

It was notable that the increase in congenital syphilis from 2005 to 2008 occurred largely in the South (from 9.6 to 15.7 per 100,000 live births) and among infants born to black mothers (from 26.6 to 34.6 per 100,000 live births).

This, again, mirrored the rise in syphilis among black women in the South, which has been linked to crack cocaine use and commercial sex work there, the editorial note said.

NYT: Goldman Senior Execs Oversaw the Mortgage-Based CDOs After Choosing Policy to Short Market

Mon, 04/19/2010 - 13:03

graphic: courtesy of watertiger

The New York Times has a potentially explosive story in Monday’s edition in which it reveals Goldman Sach’s top executives personally oversaw the mortgage-securities trading unit that created the Abacus deals.

Equally important, by [late 2006,] GS top management had decided to move from positive to negative on the housing market and related securities, just in time to oversee the 2007 Abacus deals.

Based on interviews with several GS employees, the Times’ Louise Story describes the internal Goldman executives’ debate on whether the housing market was still going up or was ripe for a collapse:

According to these people, executives up to and including Lloyd C. Blankfein, the chairman and chief executive, took an active role in overseeing the mortgage unit as the tremors in the housing market began to reverberate through the nation’s economy. It was Goldman’s top leadership, these people say, that finally ended the dispute on the mortgage desk by siding with those who, like Mr. Tourre and Mr. Egol, believed home prices would decline. . . .

By early 2007, Goldman’s mortgage unit had become a hive of intense activity. By then, the business had captured the attention of senior management. In addition to Mr. Blankfein, Gary D. Cohn, Goldman’s president, and David A. Viniar, the chief financial officer, visited the mortgage unit frequently, often for hours at a time. . . .

Goldman’s top ranks changed its stance on housing in December 2006. In a meeting in a windowless conference room on the executive floor, Mr. Viniar, the chief financial officer, and Mr. Cohn, the president, gathered about 10 executives for a briefing. Mr. Sparks, the head of the mortgage unit, walked them through the numbers. The group was unanimous: Goldman had to reduce its exposure to the increasingly troubled mortgage market.

A few months later, in February 2007, senior executives began turning up on the trading floor. The message, one former employee said, was clear: management was watching.

“They basically said, ‘What does this department do? Tell us everything about mortgages,’ ” this person said.

The executives told Mr. Sparks to tell his traders to sell Goldman’s positive bets on housing. The traders’ short positions — that is, negative bets, mostly used to hedge other investments — were placed in a central trading account.

The fact that GS was ahead of some other large investment banks in expecting the housing market to go south is not news; GS made a ton of money in 2007 while others were losing. What’s interesting is that top GS executives made a corporate-wide decision in late 2006 to move from positive to negative — to short the housing securities market — and to oversee the switch from the top of GS, before the Abacus deals were finalized and well in advance of the time when Mr. Tourre was putting together the Abacus deal the SEC alleges involved fraud.

Equally interesting, if the Times’ story is correct, after GS got negative publicity from recent stories, including the exposure of its role in helping Greece hide its debt, GS put out its annual letter to its shareholders explaining that, as a neutral market maker, GS was simply creating CDOs and related CDS demanded by the market, because some investors thought the housing/securities market was still positive and others thought it negative. See, Goldman 2009 Annual Letter to Shareholders

That may have been literally true, but GS seemed to leave the impression it was neutral and could be taking positions either way for its own account, or simply hedging its own positive positions, when in fact, according to the Times, it’s top management was overseeing a strategic shift from positive to negative positions. So did GS’ statements mislead or at least not fully inform its shareholders, never mind the public, Congress and regulators?

What the NYT story suggests is GS’ top management had firmly decided in late 2006 the housing securities market was about to tank and to move GS positions to short, even while it was creating and hawking mortgage-based CDOs and related CDSs as impartial “market makers.” [And see additional GS statement of April 16 below]

I can still remember listening to Enron’s CEO, Jeff Skilling using the “we’re just market makers” line to the California Public Utilities Commission back in 1995 and the Legislature in 1996. The latter moment was immediately after I testified that Enron and its allies were writing the rules for the new electricity market in ways that would allow them to game the system and manipulate prices. It’s deja vu all over again.

More background

From Goldman Sachs: Statement of April 16, 2010

Update: From another Times’ article by Morgenson and Story Landon Thomas: A Glare on Goldman From US and Beyond

In a previous post, I asked whether any of the Abacus deals were involved in the US decisions in late 2008 to pay AIG counterparties, including Goldman, 100 percent on the related CDSs. [I asked because some of the Abacus deals used AIG as the CDS/insurer.] According to the Times’ article, they weren’t; the 100 percent payout involved a different batch of CDO/CDSs:

A.I.G. collapsed in the fall of 2008 after the mortgage market plummeted. The company was imperiled when it was unable to supply billions of dollars in collateral to its trading partners as required under the insurance it had written on complex mortgage-related securities like Abacus. Goldman Sachs was one of its biggest trading partners.

The Abacus securities insured by A.I.G. were not among those that the Federal Reserve unwound in late 2008, paying the insurer’s trading partners 100 cents on the dollar for what they were owed.

[Goldman has denied the SEC allegations of fraud.]

Still, the Times reports Congress is already asking SEC about these other Abacus deals to determine if there was fraud associated with any of the securities for which Goldman demanded more collateral from AIG, demands that helped lead to AIG’s fall and the government takeover and bailout. [After all, well before that time, GS had made it's strategic decision to move from positive to negative, so it's own traders, not just Paulson's PCI, would probably have been screaming for more likely-to-fail CDO/CDS opportunities.]

From Calculated Risk: Goldman Sachs, the SEC, and Countrywide

[Early Monday a.m. edits]

Early Morning Swim

Mon, 04/19/2010 - 11:50

Monday Morning Open Thread

Mon, 04/19/2010 - 11:42
Good morning.

The President is heading to California later today to attend fundraisers in Los Angeles for the DNC and Los Angeles.

The House isn't in session. The Senate convenes at 2:00 PM. On the docket is a vote to confirm Lael Brainard as the Under Secretary of the Treasury for International Affairs. This week, we can expect the Senate GOPers to continue their efforts to block Wall Street reform. They are, after all, dependent on Wall Street for massive amounts of campaign funding.

Today is Patriots Day, which is actually a holiday in Maine and Massachusetts. It commemorates the first organized resistance to the British in Massachusetts back in 1775. Henry Wadsworth Longfellow captured the events in his poem, "The Midnight Ride of Paul Revere."

This is also the 15th anniversary of the worst act of domestic terrorism in the U.S.: The Oklahoma City Federal Building bombing. And, in 1993, the Bureau of Alcohol, Tobacco and Firearms (ATF) raided the Branch Davidian compound in Waco, Texas. This is now a big day for those anti-government, militia types.

Should be an interesting week...

Redefining the Boob-tube

Mon, 04/19/2010 - 08:30

Conservatives, disgruntled over the daily bias they have to endure from the likes of Steve Doocy, Megyn Kelly, and Glenn Beck are determined to have a television network that doesn’t even bother to pretend it’s ‘Fair and Balanced‘.

Ladies and Gentlemen, see what Comcast has now wrought, the RightNetwork, which proclaims it “focuses on entertainment with Pro-America, Pro-Business, Pro-Military sensibilities.” So other than 24/7 marathons of “Patton” .
What could the lineup possibly be?

Reruns of “The Andy Griffith Show” and “Mayberry RFD“, during the daytime hours — looking back on the innocent days of the 60s when the South was only populated by white people and Andy Griffith wasn’t an Obama supporter, research by Conservapedia.

Survivor: Grand Turismo: Kelsey Grammer teaches various Duggar children the joys of driving a car without all those socialist speed limits and lane rules.

Cops:Catch & Release: focusing solely on Palin & Huckabee children with occasional special appearances by Ben Roethlisberger.

And don’t forget sports, like a new basketball league populated solely with NASCAR Drivers, at least when the latter are not quoting biblical verse.

Other suggestions?

Europe starts to open air for travel

Mon, 04/19/2010 - 07:46
The UK continues to remain closed while other countries such as Austria are opening their skies. France is scheduled to open flights later today for a window. The British tried a "spirit of Dunkirk" mission with small boats to help shuttle stranded British travelers back to the UK though somehow the French authorities blocked it. The UK is now reviewing the possibility of using the Navy to help. A few airlines flew test flights on Sunday and there were no issues reported so far. What's interesting to note is how this is also negatively impacting workers as far away as Africa who rely on trade. BBC:But Brian Flynn, deputy head of operations for Eurocontrol, told the BBC that while half of the European landmass could be clear of ash cloud, that did not mean half of the flights could go ahead.

The flight bans came amid fears that the ash - a mixture of glass, sand and rock particles - can seriously damage aircraft engines.

The international airports council, ACI, said a total of 313 airports had been paralysed by the restrictions and the global backlog was affecting more than 6.8 million travellers.

In another development, hundreds of thousands of Kenyans working in agriculture, the country's largest export sector, face economic uncertainty because of the flight bans.

Refrigerated stores at Nairobi airport and on farms are now completely full, and a huge amount of fresh flowers and vegetables destined for the European market is in danger of perishing, the BBC's East Africa correspondent, Will Ross, reports.

Late Late Night FDL: Jesus Stole My Girlfriend

Mon, 04/19/2010 - 05:00

Featuring new videos by Allen Thompson and Violent Soho.

What’s on your mind tonight?

Open Thread and Diary Rescue

Mon, 04/19/2010 - 04:03

Tonight's Diary Rescue is brought to you by these stalwart Rescue Rangers: grog, ItsJessMe, srkp23, sunspark says, jlms qkw and claude.

The Rescued Diaries:

jotter brings us Week's High Impact Diaries: April 10-16, 2010 AND yesterday's High Impact Diaries: April 17, 2010.

bronte17 has tonight's Top Comments (04-18-2010): Iraqi Marsh Arabs, Restoration of the Cradle of Civilization marshes.

Enjoy and please promote your own favorite diaries in this open thread.

NYT reviews Rachel Maddow's "The McVeigh Tapes"

Mon, 04/19/2010 - 03:03
It's on Monday at 9pm Eastern and Pacific, 8pm central. From the NYT:It’s hard to read faces, but voices are even harder to gauge. Timothy J. McVeigh, the anti-government extremist who killed 168 people in the 1995 Oklahoma City bombing, had a calm, almost reassuringly matter-of-fact way of speaking. He could have been a building inspector, a driving instructor or a Persian Gulf war veteran, which, of course, he was, having earned a Bronze Star before he went completely off his head.

“See, with these tapes, I feel very free in talking ’cause I know you’re using the information appropriately,” McVeigh told a journalist in a prison interview. “Here, I’m just letting it all come out.” The reporter, Lou Michel, co-author of “American Terrorist: Timothy McVeigh and the Oklahoma City Bombing,” shared 45 hours of those taped prison interviews to MSNBC.

“The McVeigh Tapes: Confessions of an American Terrorist,” which will be shown on Monday, the 15th anniversary of the bombing, comes at a time when right-wing militia groups are on the rise, or at least more audible, and heightened anti-government talk is heating up anti-anti-government fervor. McVeigh’s descent into violence is presented as much as a cautionary tale as a commemoration.

Sunday Late Night: Harold & Clay

Mon, 04/19/2010 - 03:01

This shouldn’t happen in 21st century America. We say we’ve given people the legal tools to protect themselves and their relationships from this kind of horror. A same-sex Sonoma County (CA) couple, Harold & Clay, found that their legal protections were meaningless, because, well — because their government decided their documented protections could be ignored.

That’s not right.

Clay, 77, and Harold, 88, still lived together in their home and cared for one another, having put medical directives in place that allowed one to decide for the other what was best in case of emergencies. But in a perfect example of ‘you are only as protected as your government decides’ they were separated after Harold suffered a fall at home:

One evening, Harold fell down the front steps of their home and was taken to the hospital. Based on their medical directives alone, Clay should have been consulted in Harold’s care from the first moment. Tragically, county and health care workers instead refused to allow Clay to see Harold in the hospital. The county then ultimately went one step further by isolating the couple from each other, placing the men in separate nursing homes.

While ignoring Clay in deciding about Harold’s care, Sonoma County also decided they’d like to make financial decisions for the couple. A court said the county couldn’t do that, but unfortunately allowed limited access to one of Harold’s bank accounts to pay for his care. Then it gets worse:

Without authority, without determining the value of Clay and Harold’s possessions accumulated over the course of their 20 years together or making any effort to determine which items belonged to whom, the county took everything Harold and Clay owned and auctioned off all of their belongings. Adding further insult to grave injury, the county removed Clay from his home and confined him to a nursing home against his will. The county workers then terminated Clay and Harold’s lease and surrendered the home they had shared for many years to the landlord.

Harold died alone. Clay has nothing left of their possessions except a scrapbook of photos Harold assembled during his last three months of life. After 20 years of life together, these men were separated, their home torn asunder, their possessions auctioned off, and their lives ruined.

That’s not right. But it happened, in America, despite the couple’s best laid-plans.

Kate Kendall of NCLR tells us that while Clay will never see Harold again in this life, others have stepped up to help him:

With the help of a dedicated and persistent court-appointed attorney, Anne Dennis of Santa Rosa, Clay was finally released from the nursing home. Ms. Dennis, along with Stephen O’Neill and Margaret Flynn of Tarkington, O’Neill, Barrack & Chong, now represent Clay in a lawsuit against the county, the auction company, and the nursing home, with technical assistance from NCLR. A trial date has been set for July 16, 2010 in the Superior Court for the County of Sonoma.

h/t to Bilerico Project, who brought this to my attention and included this note:

Are you disturbed by the story of how Clay Greene was treated by the County? Please blog about this, pass it on over Facebook or Twitter, just do whatever you can to help raise the visibility of what happened to Clay. Send a letter to the local paper, the Santa Rosa Press Democrat at letters@pressdemocrat.com. Send them this link to NCLR’s page.

A Whiter Shade of Fail

Mon, 04/19/2010 - 02:00

Much as I would like to sit in the TBogg Cave and be all broody and shit, Gotham City needs me and the TBogg Signal in the sky alerts me to the fact that someone said something stupid on the internet and how often does that happen? Like, always.

Okay. So anyway, Charles Blow was in Texas as some form of punishment and he decided to take in the Dallas-area Tea Party, and we will dispense with the pejorative “teabagger” here since a teabagger is someone who wishes to provide pleasure to a sexual partner, while a Tea Partier is someone who just likes to suck balls.. Blow checks out the local action and writes:

I had specifically come to this rally because it was supposed to be especially diverse. And, on the stage at least, it was. The speakers included a black doctor who bashed Democrats for crying racism, a Hispanic immigrant who said that she had never received a single government entitlement and a Vietnamese immigrant who said that the Tea Party leader was God. It felt like a bizarre spoof of a 1980s Benetton ad.

The juxtaposition was striking: an abundance of diversity on the stage and a dearth of it in the crowd, with the exception of a few minorities like the young black man who carried a sign that read “Quit calling me a racist.”


I found the imagery surreal and a bit sad: the minorities trying desperately to prove that they were “one of the good ones”; the organizers trying desperately to resolve any racial guilt among the crowd. The message was clear: How could we be intolerant if these multicolored faces feel the same way we do?

By summing up the experience as a “minstrel show”, Blow managed to offend the genteel sensibilities of JammieWearingFool who is tired of the meme/canard/generally accepted accounting principles that Tea Partiers are racists/bigots/big ol’racists. JWF sets the record straight about WHO THE REAL BIGOT IS HERE, ALRIGHTY:

NYT Affirmative Action Columnist Smugly Dismisses Black Tea Partiers

For a guy who wouldn’t qualify to write for a high school newspaper except for his skin pigmentation….

For those keeping score at home, JammieWearingFool used “smugly” as opposed to “uppity” which makes him, for enumeration purposes, only three-fifths racist.

Corporate Cluelessness: Not Just for the US Anymore!

Mon, 04/19/2010 - 01:00

Satellite images of Iceland's Eyjafjallajokull volcano. Left: natural-color visible image; Right: composite of MODIS thermal infrared channels. (Source: NASA GSFC/JPL, dd. April 16, 2010)

I assume folks have seen the news about the volcano in Iceland and how it has affected air travel worldwide due to concerns about the affect volcanic ash has on engines.

Well, we now have news from Europe that show another export from the US in operation, i.e., corporate cluelessness. It seems some of the European airlines are anxious to re-start. From today’s New York Times we have this quote:

“While safety remains a non-negotiable priority, it is not incompatible with our legitimate request to reconsider the present restrictions,” Olivier Jankovec, director general of ACI Europe, which represents 400 European airports in 46 countries, said in a statement.

It appears to me that the airlines are saying “We believe in safety up until the point that governments stop us from making money because it would not be safe.”

What’s the big deal with all of this? Well, this from Boeing might help explain things:

In the past 30 years, more than 90 jet-powered commercial airplanes have encountered clouds of volcanic ash and suffered damage as a result.

So there is a historical record available explaining the affects. Verifiable evidence of the safety problems encountered.

Significant ash encounters from the past include those involving such well-known volcanoes as Mt. Pinatubo, Mt. Redoubt, and Mt. St. Helens. The airplanes that encountered volcanic ash during these events and in the other events listed chronologically experienced varying degrees of damage.

Fairly well known eruptions in that little group…

And Boeing does offer tips to avoid the problem:


Preventing flight into potential ash environments requires planning in these areas:

- Dispatch needs to provide flight crews with information about volcanic events, such as potentially eruptive volcanoes and known ash sightings, that could affect a particular route (see sidebar page).

- Dispatch also needs to identify alternate routes to help flight crews avoid airspace containing volcanic ash.

- Flight crews should stay upwind of volcanic ash and dust.

- Flight crews should note that airborne weather radar is ineffective for distinguishing ash and small dust particles.

This map from the NY Times show just how widespread the ash clouds are in Europe.

How best to avoid widespread volcanic ash clouds? By not flying. But of course, nothing should stand in the way of the Airlines making their profits, right? Right?

And as anyone who has spent significant time in Hawai’i can tell you, Madame Pele can get very angry and we anger her at our peril. I don’t know the name of the Icelandic equivalent to Madame Pele, but I would assume it works nearly the same.

And because I can (and really, could I have any other video here?):