Financial Crisis Commission confirms data showing ratings agencies ignored proof of unsafe loans

In other words, it was every bit as bad as many of us thought. Isn't it interesting that people aren't going to jail? Good work when you can get it. NY Times:

According to testimony last week, from January 2006 to June 2007, Clayton reviewed 911,000 loans for 23 investment or commercial banks, including Citigroup, Deutsche Bank, Goldman Sachs, UBS, Merrill Lynch, Bear Stearns and Morgan Stanley.

The statistics provided by these samples, according to Mr. Johnson and Vicki Beal, a senior vice president at Clayton who also testified before the inquiry commission, indicated that only 54 percent of the loans met the lenders’ underwriting standards, regardless of how stringent or weak they were.

Some 28 percent of the loans sampled over the period were outright failures — that is, they were unable to meet numerous underwriting standards and did not have positive factors that compensated for their failings. And yet, 39 percent of these troubled loans still went into mortgage pools sold to investors during the period, Clayton’s figures showed.

Read More......

US unable to document Abu Ghraib abuse payments

Maybe BPs oil spill payment team was on the job. What's the problem here?

Fending off demands that he resign over the Abu Ghraib prison scandal, then-Defense Secretary Donald H. Rumsfeld told Congress in 2004 that he had found a legal way to compensate Iraqi detainees who suffered "grievous and brutal abuse and cruelty at the hands of a few members of the United States armed forces."

"It's the right thing to do," Rumsfeld said. "And it is my intention to see that we do."

Six years later, the U.S. Army is unable to document a single payment for prisoner abuse at Abu Ghraib.

Read More......

Telegraph: Aliens have deactivated British and US nuclear missiles, say US military pilots

I will never understand the British press.

The beings have repeated their efforts in the US and have been active since 1948, the men said, and accused the respective governments of trying to keep the information secret.

The unlikely claims were compiled by six former US airmen and another member of the military who interviewed or researched the evidence of 120 ex-military personnel.

The information they have collected suggests that aliens could have landed on Earth as recently as seven years ago.

Read More......

Biden's message to energize base: 'Stop whining'

This is, I believe, the third time that Obama (twice) and Biden (once) have recently belittled the Democratic base heading into this election. It's now clearly a White House strategy, for at least its wealthiest fundraisers, to knock the base of the party. That base would include labor, Latinos, gays, women, environmentalists, health care advocates, and more.

The thing is, I can't for the life of me understand what the White House thinks it gains by continually poking the base - the people who actually vote in mid-term elections - only five weeks before the election. Are they trying to convince the rest of Democrats - you know, the people who don't vote in mid-terms - that if they did vote, they should vote for Democrats because the people concerned about the state of the party, and the nation, are "whiners"?

The President, rather famously, routinely refuses to stand up to conservative Democrats and Republicans, and it's likely the primary reason we're about to lose the House.  The President insisted on compromising out the gate on the stimulus - rather than asking for the amount of money we needed, he asked for half, then gave another 35% away in near-useless tax cuts, cutting the impact of the emergency legislation even further.  The entire country, all of us with friends and family members currently out of a job, are paying dearly for this mistake.  So for him and his to tell us and ours to stop whining is pretty pathetic.  It's also a pretty idiotic strategy a month out from a crucial election. Read More......

Krugman on getting out of personal debt

No, this is not financial advice from the Professor — he's not making recommendations, but predictions.

There are two ways to get out from under a pile of debt: thrift (paying it down) and default. We've visited this topic a number of times, most recently here. When one person is thrifty, that person improves his life, and the economy experiences the growth benefits of increased savings.

But in a demand-driven recession, no amount of savings will stimulate growth, since few are willing or able to spend. Thus diverting even more funds from spending to savings in a demand recession, while good for the individual, is bad for the nation.

But what about paying debt? If you think of debt as negative savings (which it is — a negative against your personal balance sheet instead of a positive), paying down debt has the same effect as increasing savings. In both cases, your balance sheet improves, either to a more positive number (more savings), or to a less-negative number (less debt).

Either way, not good for a struggling national economy, since both further reduce demand.

So what's the other way to reduce debt? The old "immoral" standby (one that businesses use all the time, by the way). Default. Walking away. Mailing in the keys. Leaving without paying. Scarpering.

If you think about it, this is good for the nation, since it destroys debt (allowing people to get back into the business of buying) without taking money out of circulation the way debt-payment does.

Interesting, yes? Now the Professor:

I think it’s fair to say that a majority of economists believe that excessive private debt played a key role in getting us into this economic mess, and is playing a key role in preventing us from getting out. So, how does it end? ...

In the end, I’d argue, what must happen is an effective default on a significant part of debt, one way or another. The default could be implicit, via a period of moderate inflation that reduces the real burden of debt; that’s how World War II cured the depression. Or, if not, we could see a gradual, painful process of individual defaults and bankruptcies, which ends up reducing overall debt.

And that’s what is happening now: as this story in today’s Times points out[.]

The chart on the left is from the Times story Krugman references, and deals with credit card debt only.

Isn't it interesting that techniques that are common between companies, such as lawsuits and bankruptcies, are affronts to God when practiced by actual humans with blood in their veins?

By the way, I personally think that reducing personal debt, one way or the other, is a necessary pre-condition to recovery. Thus the reason I see a long-term slump (best case) or a severe double-dip — then a long-term slump.

GP Read More......

In Wisconsin, GOPer Ron Johnson publicly opposed bill to help child sex abuse victims

Recent polls have shown political newcomer, Ron Johnson, the GOP Senate candidate in Wisconsin, ahead of solid progressive Russ Feingold. Johnson is spending millions of his own money to basically buy the seat. People in Wisconsin don't know much about him. But, they're going to know more after today. Video has emerged of Johnson testifying at the Wisconsin legislature against victims of child sexual abuse:

Oshkosh businessman Ron Johnson, the Republican nominee for U.S. Senate, made his first foray into politics in January when he testified against legislation aimed at making it easier for victims of childhood sexual abuse to sue their abusers.

Seriously, who sides with child sex abusers over victims?

This is stunning. Watch out for your kids, Wisconsin. Ron Johnson is not on their side.

Feingold's campaign website is here. Read More......

Roubini predicts a 'couple of financial crises over the next 10 years'

Another interesting interview with Nouriel Roubini who challenges the inside the Beltway view of the financial "reform" that so many believe was significant. CNBC:

"Nothing has changed fundamentally. When the regulatory reform was passed by the U.S. Congress, my view is too little, too late," Roubini told CNBC Monday on the sidelines of the World Capital Markets Symposium in Kuala Lumpur, Malaysia.

Roubini said even if the world economy doesn't slip into a double-dip, the effects will still be felt.

Read More......

'Officials are preparing to seek sweeping new regulations for the Internet'

I'd call this an election-year two-fer. It will further depress progressives — and we're already fully depressed — and at the same time further enrage Tea Bag Nation, which is just certain that the "big bad Kenyan" has big bad plans. (Sadly, in this respect they're right.)

Charlie Savage (a hero) in the New York Times:

Federal law enforcement and national security officials are preparing to seek sweeping new regulations for the Internet, arguing that their ability to wiretap criminal and terrorism suspects is “going dark” as people increasingly communicate online instead of by telephone.

Essentially, officials want Congress to require all services that enable communications — including encrypted e-mail transmitters like BlackBerry, social networking Web sites like Facebook and software that allows direct “peer to peer” messaging like Skype — to be technically capable of complying if served with a wiretap order. The mandate would include being able to intercept and unscramble encrypted messages.

The bill, which the Obama administration plans to submit to lawmakers next year, raises fresh questions about how to balance security needs with protecting privacy and fostering innovation. And because security services around the world face the same problem, it could set an example that is copied globally.

Deeper in the article, an FBI official talks about "lawfully authorized intercepts." How about starting now with those, before asking for more?

It began with the War on Cash — gotta track them drug deals, you know; after all, people who are seriously "other" need serious tamping down. And with that (the War on the Other) as a known-good cover story, the War on Privacy proceeds apace. These guys love power, don't they?

Dem or not-Dem, it matters not at all. Thanks, Mr. Change, for showing what we can believe in. Election year, you say? Check.

GP Read More......

Taliban Dan Webster, the GOPer running against Alan Grayson

Rep. Alan Grayson isn't messing around. This ad is another reason why I love the guy. He plays to win. (Other Democrats should take lessons from him.)


We need to make sure Grayson wins. Our ActBlue page is here. Read More......

Teabaggers not thrilled with GOP 'pledge'

Politico:

“It’s a mealy-mouthed sop to the tea party movement that is rife with platitudes and little on substance,” e-mailed Andrew Ian Dodge, the Maine state coordinator for the Tea Party Patriots national coalition of local groups. “I have yet to see one person who is wholly impressed with it.”

Judson Phillips, founder of the tea party Nation online social network, called it “a nice PR piece, but I don't think it is even showing up on our radar.” Most tea partiers, he said, “are skeptical.”

Read More......

Obama wants to monitor 100% of money transfers in and out of US

I expect such overreach from Republicans, but from a Democrat? Shouldn't someone have to prove the real world value first before implementing such an enormous program in this phony war against terror, or whatever they want to call it now. Since the GOP didn't push this they will surely be up in arms but they will be correct. What a horrible move and another breach of personal privacy.

But critics have called it part of a disturbing trend by government security agencies in the wake of the 2001 attacks to seek more access to personal data without adequately demonstrating its utility. Financial institutions say that they already feel burdened byanti-terrorism rules requiring them to provide data, and that they object to new ones.

"These new banking surveillance programs are testing the boundaries of privacy," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "Many consumers both in the United States and outside are likely to object."

"This regulation is outrageous," said Peter Djinis, a lawyer who advises financial institutions on complying with financial rules and a former FinCEN executive assistant director for regulatory policy. "Consider me old-fashioned, but I believe you need to show some evidence of criminality before you are granted unfettered access to the private financial affairs of every individual and company that dares to conduct financial transactions overseas."

Read More......

91% of money for Rove's American Crossroads group from billionaires

Not that this is much of a surprise. Billionaires need their voices to be heard too!

In August, American Crossroads raised $2,639,052. Fully $2.4 million of that -- or 91 percent -- came in the form of gifts from just three billionaires.

We've previously reported that the group is getting a staggering amount of support from billionaires, several of whom made their fortune in the energy industry and live in Texas. Last month Trevor Rees-Jones, president of Dallas-based Chief Oil and Gas, contributed another $1 million to American Crossroads, on top of the $1 million he gave earlier this year. Fellow billionaire Robert Rowling, CEO of the company TRT Holdings, also gave Crossroads his second $1 million donation in August.

The only new name on the list is American Financial Group, a Cincinnati-based firm owned by nonagenerian Carl Linder. Forbes put Linder's net worth at $1.7 billion this year, a fortune built up through the growth of United Dairy Farmers. He previously owned Chiquita and currently owns a stake in the Cincinnati Reds. American Financial Group gave American Crossroads $400,000 last month.

Read More......

Monday Morning Open Thread

Good morning.

The President has a busy day. at 8:00 AM, he's doing a live interview with the TODAY Show's Matt Lauer on the state of education in the U.S. Later, he's doing a call with student-journalists. (still hasn't talked to one member of the LGBT media since he's become President. Not even one question.)

This afternoon, Obama will sign the Small Business bill. Tonight, he's heading to Albuquerque, New Mexico for the start of a multi-state swing that will take him to Wisconsin and Iowa, too.

The House and Senate will wrap up this work period by the end of the week. Then, they'll all head home to campaign. Prediction: The House will pass some meaningful bills this week. The Senate won't.

36 days til the election. Read More......

Computer worm in Iran raises questions

The worm has been disrupting Iranian industrial sites. So far, no group or country has claimed ownership though experts believe the list of possible sources is very limited. The Guardian:

Creating the malicious code required a team of as many as five to 10 highly educated and well-funded hackers. Government experts and outside analysts say they haven't been able to determine who developed it or why.

The malware has infected as many as 45,000 computer systems around the world. Siemens AG, the company that designed the system targeted by the worm, said it has infected 15 of the industrial control plants it was apparently intended to infiltrate. It is not clear what sites were infected, but they could include water filtration, oil delivery, electrical and nuclear plants.

None of those infections has adversely affected the industrial systems, according to Siemens.

US officials said last month that the Stuxnet was the first malicious computer code specifically created to take over systems that control the inner workings of industrial plants.

Read More......

Another banking executive payout?

If you are an HSBC customer, you may want to follow this story. It's not yet clear what the final number will be though it will be large enough to stand out during this recession. Again, why would anyone want to continue supporting such a bank?The Indepedent:

Last Friday, the bank confirmed that Mr Geoghegan would leave next March after it broke with 30 years of tradition and passed him over for the chairmanship.

In a statement, the UK's largest company said Mr Geoghegan would be paid £1.42m, "pursuant to the notice provisions of his service contract". He will also be eligible for a bonus, which will be calculated by the remuneration committee later in the year. Last year, Mr Geoghegan gave his £4m bonus to charity.

However, it emerged over the weekend that Mr Geoghegan will receive multiples of the amount announced by the bank on Friday, when longer-term incentive plans are added into the equation. The final value of the incentive plan is unknown and will depend on HSBC's performance in the next few years, but estimates over the weekend ranged from £20m to £36m.

A spokesman for HSBC yesterday described reports that Mr Geoghegan could eventually pocket £36m as "inaccurate and sensationalist".

Read More......