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“A Picture Of Massive Corruption And Cowardice”: The Decline Of The American Justice System

Jed Rakoff, a former prosecutor, has an interesting piece in the NYRB about why there have been no prosecutions of financial industry employees over the systemic fraud surrounding the financial crisis. The whole piece is worth a read, but here are the main points boiled down:

1) The FBI is consumed with terrorism, apparently cutting their financial fraud investigation force from over a thousand agents before 2001 to about 120 by 2007. Whether that’s justifiable or not, it does remind me of a line from one of the finest action movies of all time: “Jesus man, wake up! National security’s not the only thing going on in this country.”

2) Regulators and law enforcement, especially at the SEC, have been focused on insider trading cases and Ponzi schemes like the Madoff affair, which are easier to investigate and to prosecute. Mortgage and securities fraud, by contrast, are far more complex and difficult.

3) Government complicity. This isn’t a bad point, but Rakoff directs too much blame at subsidies for the poor. As I’ve written in the past, the whole government housing policy regime, most definitely including subsidies for the rich like the home mortgage interest deduction, are to blame as well.

4) A new trend in prosecuting companies instead of individuals. This seems unambiguously true, and it’s a reminder of how new trends in legal theories always seem to move in the direction of increased subsidies and decreased accountability for wealthy elites.

Those points are all fair enough. But taken together, I don’t think they go nearly far enough. As an instrumental account of the details of why these prosecutions aren’t happening, it makes a lot of sense. Though, for the record, they might not even be instrumentally true: according to a new David Kay Johnston report, the Justice Department has been running interference for JPMorgan Chase against Treasury investigators.

But in any case, make no mistake: added up, this is a picture of massive corruption and cowardice at the top levels of our law enforcement agencies. Because regardless of whatever structural trends are happening, no prosecutor with a single fair bone in her body could possible tolerate, oh I don’t know, a minor slap on the wrist for laundering money for drug traffickers and terrorists.

 

By: Ryan Cooper, Washington Monthly Political Animal, December 27, 2013

December 29, 2013 Posted by | Financial Institutions | , , , , , , , | Leave a comment

“More Bark Than Bite”: Tomorrow’s Obamacare Controversy, Today

If past is precedent, Republicans on the House Oversight Committee will soon release a draft memo they requested and received from the Health and Human Services Department just before most Washingtonians decamped for the Christmas holiday.

At first glance, the memo, obtained by National Journal, looks very bad for the Obama administration. In the Sept. 24 document, a top information security officer for the agency overseeing the Obamacare insurance exchanges warns that the marketplace “does not reasonably meet … security requirements” and that “there is also no confidence that Personal Identifiable Information (PII) will be protected.” Teresa Fryer, the chief information security officer at the Centers for Medicare and Medicaid Service, continues: The federal marketplace will likely “not be ready to securely support the Affordable Care Act … by October 1, 2013.”

It plays right into the Republican narrative about HealthCare.gov: The administration knew the website would not be ready by the launch date but went ahead with it anyway. And the site may still not be adequately protecting consumers’ information.

But, in context, the draft memo becomes much less exciting.

On the Friday before Christmas, Rep. Darrell Issa, the chairman of the House Oversight Committee, released a partial transcript from an interview conducted by the panel’s staff with Fryer. That partial transcript, shared with ABC and CBS, suggested that Fryer warned the administration that there were two findings of serious vulnerabilities in the system.

However, when Democrats on the Oversight Committee released parts of the transcript omitted from Issa’s version, Fryer’s comments looked far less explosive, and ABC updated its story to reflect the change. It turns out that by Sept. 27, a few days after Fryer raised her concerns about the security at launch, extensive new security measures were added.

As she told the committee’s investigators, “The added protections that we have put into place in accordance with the risk decision memo … are best practices above and beyond what is usually recommended.” She went on to describe her confidence in the three-level security system and to note that there have been “no successful breaches [or] security incidents.”

Which brings us back to the draft memo we obtained. We should note that it was just a draft, and was never sent or reviewed by more senior officers in the chain of command, and was written three days before the mitigation strategies went into effect. She later told Oversight Committee investigators that her earlier recommendation against giving the go-ahead to launch the site—the “authority to operate,” as it’s called—did not take into account the mitigation strategies laid out in the Sept. 27 Authority to Operate memo.

The investigators asked Tony Trenkle, then-CMS’ top information executive, this: “So as long as the mitigation strategy described in the [ATO] memo was carried out, you considered that it was, it would be sufficient to mitigate the risks described in the memo?” He responded, “Yes.”

She added that she was “satisfied” with the current security testing, and that she did not object when another CMS information security officer decided to move ahead with the launch. Again, she stated: “All systems are susceptible to attacks. There have been no successful attempts.”

As the Los Angeles Times‘ Pulitzer Prize-winning business columnist Michael Hiltzik noted, “Issa has absolutely no evidence” to support his broader claims that the system’s deep vulnerabilities put all kinds of consumers’ government data at risk, and that CMS moved ahead anyway to avoid embarrassing the White House.

Of course, sleight of hand with opaque bureaucratic documents is nothing new for Issa, but the potential to dissuade Americans from obtaining health insurance through the federal exchanges because of trumped up security fears has pushed relations between the committee chair and the administration to a new low. It’s one thing to say without evidence that the administration is corrupt, but it’s another to tell Americans that their Social Security number is at risk when there’s nothing to suggest that’s true.

But perhaps we can head off another round of this farce by putting out Fryer’s memo before Issa does—in its full context.

By: Alex Seitz-Wald, The National Journal, December 24, 2013

December 29, 2013 Posted by | Affordable Care Act, Republicans | , , , , , , , | Leave a comment

“Artificially Polarizing The Country”: Redistricting Reform Should Be Priority Number One

I became political aware at a young age and took a keen interest in the 1980 Republican primaries when I was only nine and ten years old. I still have cartoons I drew at the time that depicted Ronald Reagan as a warmonger intent on blowing up the world with nuclear weapons. This wasn’t something I learned from my parents. It was my own opinion. In retrospect, it was a little bit alarmist. I should have been worried about other things, like the long-term destruction of the middle class or a propensity to sell TOW missiles to Iran to pay a ransom for hostages held by Hizbollah in order to illegally transfer the proceeds to the Contras in Nicaragua. But, a nine year old’s capacity to imagine evil only goes so far.

When I see a book title like Tip and the Gipper: When Politics Worked, I want to claw my eyeballs out. Yet, I do understand what Chris Matthews is pining for, and it isn’t the fjords. However much Tip O’Neill and Ronald Reagan disagreed, they were civil to each other, and they knew how to strike a deal without threatening to default on the country’s debts. For Washington insiders of a certain age, there is a keen sense of nostalgia for the old days when politicians didn’t go home to their districts every weekend but stayed in town and socialized with each other.

Perhaps no one represents this group better than Cokie Roberts, who was almost literally raised in the Capitol Building. Her father, Hale Boggs, represented Louisiana’s 2nd District in 1941-43 and then from 1947 to 1972, when his plane disappeared in Alaska. By the time of his death, he had risen to be the Majority Leader, the same position held today by Eric Cantor. By that time, Cokie Roberts was an adult, but her mother, Liddy Boggs, went on to represent the New Orleans-based district until she retired to look after her dying daughter (Cokie’s sister) in 1990. I found a set of interviews that Ms. Roberts did with the Office of the Historian of the House of Representatives in 2007 and 2008, (you can read the interviews here in .pdf form) in which she describes her life growing up in the corridors of power and how things have changed.

In the following excerpt, she laments the use of the gerrymander, which she calls “picking your own voters.” In her opinion, the increasing efficiency with which the political parties draw the congressional maps is one of the main reasons why Congress is so deadlocked. Keep in mind that she said this in 2008, before things got even worse after the 2010 census and subsequent redrawing of district maps.

ROBERTS: I think that what this business of picking your voters—first of all, is so anti-democratic—it does a few very, very bad things. It creates a far more partisan chamber because you only worry about getting attacked from the true believers of your own party in a primary rather than a general election. Look what just happened to Chris [Christopher B.] Cannon as a perfect example of that.

You do only represent people who are just like you, so that your desire or even ability to compromise is far less than it used to be. I’ll give you an example. Bob Livingston used to represent a district that was 30- percent black. So he voted for fair housing, he voted for Martin Luther King holiday, he voted for a variety of things that were not the things that people whose representative in the state legislature was David Duke expected him to do. But he could explain to the yahoos in his district that he had to do it because of the black constituency when it was actually stuff that he wanted to do. Then it was redistricted to be lily-white conservative Republicans, and, you know, it’s almost impossible for that person—it was [David] Vitter, I don’t know who it is now—to do that. You just have to be fighting your constituency all the time to do something that would be a sort of national interest thing to do. And that’s true on both sides. It just makes legislating and governing much, much harder.

The President [George W. Bush], actually, was talking to me—I don’t often get to say, “The President was talking to me about it,” {laughter}—when I went with him to meet the Pope. We were talking about immigration, and he’s, you know, he’s basically just furious about immigration, about the failure of the bill, and he said, “It’s all about the way districts are drawn.” And it is fundamentally anti-democratic because the whole idea is you get to throw these people out. In 2006, I must say I was heartened, not for partisan reasons, but I thought they had drawn the districts so cleverly that you’d never be able to register that vote of no confidence, which an off-year election is—it’s either a vote of confidence or no confidence—I was afraid that that had been taken away from the voters, which would really be different from what the Founders had in mind. So the fact that even with that, you were able to change parties and register that vote was heartening, but it’s much harder than it should be.

There has been some debate recently about whether or not Justice Ginsburg should strategically retire from the Supreme Court to prevent a Republican president from appointing her successor. Ginsburg defends her continued presence of the Court by arguing that President Obama will be succeeded by a Democrat because “The Democrats do fine in presidential elections; their problem is they can’t get out the vote in the midterm elections.” She’s probably right in her prediction about Obama’s successor, but she is definitely correct that the Democrats have trouble getting out their vote in midterm elections. With the districts drawn the way there are, this threatens to prevent the people from expressing their vote of confidence or no confidence.

According to the Cook Political Report, the Democrats should have won the 2012 House elections.

By Cook’s calculations, House Democrats out-earned their Republican counterparts by 1.17 million votes. Read another way, Democrats won 50.59 percent of the two-party vote. Still, they won just 46.21 percent of seats, leaving the Republicans with 234 seats and Democrats with 201.

It was the second time in 70 years that a party won the majority of the vote but didn’t win a majority of the House seats, according to the analysis.

So, there are really two things here worthy of consideration. The first is that the gerrymander has the effect of artificially polarizing the country by creating districts that are only really contestable in primary, rather than general elections. Politicians are punished for cooperating more than they should be.

The second problem is a partisan one that only hurts the left. Democrats get less seats than they should have.

Yet, the first problem hurts the left, too, because it leads to dysfunctional government, which leads to a general disdain of government in the populace, which creates distrust about the government’s ability to do big things.

For these reasons, I believe that progressives should consider redistricting reform their top priority. Unless we can solve this problem, we will never be competing on a level playing field, and our ability to do great things will continue to erode.

Unlike Chris Matthews and Cokie Roberts, I don’t want to go back to some idyllic time of bipartisan cooperation that barely existed in reality, but I do want a fair shake and a government that works again.

 

By: Martin Longman, Washington Monthly Political Animal, December 28, 2013

December 29, 2013 Posted by | Democracy | , , , , , , , , | 1 Comment

“We Invent, Experiment, And Fix What Has To Be Fixed”: Why You Shouldn’t Succumb To Defeatism About The Affordable Care Act

Whatever happened to American can-do optimism?  Even before the Affordable Care Act covers its first beneficiary, the nattering nabobs of negativism are out in full force.

“Tens of millions more Americans will lose their coverage and find that new ObamaCare plans have higher premiums, larger deductibles, and fewer doctors,” predicts Republican operative Karl Rove. “Enrollment numbers will be smaller than projected and budget outlays will be higher.”

Rove is joined by a chorus of conservative Cassandra’s, from Fox News to the editorial pages of the Wall Street Journal, all warning that the new law will be a disaster.

Robert Laszewski, president of Health Policy and Strategy Associates, anticipates a shortage of doctors. “There just aren’t going to be enough of them.”

Professor John Cochrane of the University of Chicago predicts the individual mandate will “unravel” when “we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance.”

The round-the-clock nay-saying is having an effect. Support for the law has plummeted to 35 percent of those questioned in a recent CNN poll, a 5-point drop in less than a month. Sixty-two percent now say they oppose the law, up four points from November.

Even liberal-leaning commentators are openly worrying. On ABC’s “This Week,” Cokie Roberts responded to my view that the law eventually would prove popular by warning of “a whole other wave of reaction against it” if employers start dropping their insurance.

Some congressional Democrats are getting cold feet. West Virginia Senator Joe Manchin recently fretted that “if it’s so much more expensive than what we anticipated and if the coverage is not as good as what we had, you’ve got a complete meltdown.”

Get a grip.

If the past is any guide, some fixes will probably be necessary – but so what? Our current healthcare system is the real disaster — the most expensive and least effective among all developed countries, according Bloomberg’s recent ranking. We’d be collectively insane if we didn’t try to overhaul it.

But we won’t get it perfect immediately. What needs fixing can be fixed. And over time we can learn how to do it better.

If enrollments are lower than anticipated, the proper response is to keep at it until larger numbers are enrolled. CHIP, the Children’s Health Insurance Program, got off to a slow start in 1998. The Congressional Research Service reported “general disappointment … with low enrollment rates early in the program.” CHIP didn’t reach its target level of enrollment for five years. Now it enrolls nearly ninety percent of all eligible children.

Richard Nixon’s Supplemental Security Income program of 1974 – designed to standardize welfare benefits to the poor — was widely scorned at the time, and many states were reluctant to sign up. Even two years after its launch, only about half of eligible recipients had enrolled. Today, more than 8 million Americans are covered.

If mistakes are made implementing the Affordable Care Act, the appropriate response is to fix them. When George W. Bush’s Medicare Part D drug benefit was launched, large numbers of low-income seniors had to be switched from Medicaid. Many needed their prescriptions filled before the switch had been completed, causing loud complaints. The website for the plan initially malfunctioned. Pharmacies got the wrong information. Other complications led even Republican Representative John Boehner to call it “horrendous.” But the transition was managed, and Medicare Part D is now a firm fixture in the Medicare firmament.

If young people don’t sign up for the Affordable Care Act in sufficient numbers and costs rise too fast, other ways can be found to encourage their enrollment and control costs. If there aren’t enough doctors initially, medical staffs can be utilized more efficiently. If employers begin to drop their own insurance, incentives can be altered so they don’t.

Why be defeatist before we begin? Even Social Security — the most popular of all government programs — had problems when it was launched in 1935. A full year later, Alf Landon, the Republican presidential candidate, called it “a fraud on the workingman.” Former President Herbert Hoover said it would imprison the elderly in the equivalent of “a national zoo.” Americans were slow to sign up. Not until the 1970s did Social Security cover most working-age Americans.

As Alexis de Tocqueville recognized as early as the 1830s, what distinguishes America is our pragmatism, resilience, and optimism. We invent, experiment, and fix what has to be fixed.

Of course there will be problems implementing the Affordable Care Act. But if we’re determined to create a system that’s cheaper and more effective at keeping Americans healthy than the one we have now – and, in truth, we have no choice – we have every chance of succeeding.

 

By: Robert Reich, The Robert Reich Blog, December 27, 2013

December 29, 2013 Posted by | Affordable Care Act, Conservatives, Health Reform | , , , , , , | Leave a comment

“Please Proceed, Republicans”: With No Regard For Facts, Do They Have The Capacity For Shame?

Well, lookee here:

Months of investigation by The New York Times, centered on extensive interviews with Libyans in Benghazi who had direct knowledge of the attack there and its context, turned up no evidence that Al Qaeda or other international terrorist groups had any role in the assault. The attack was led, instead, by fighters who had benefited directly from NATO’s extensive air power and logistics support during the uprising against Colonel Qaddafi. And contrary to claims by some members of Congress, it was fueled in large part by anger at an American-made video denigrating Islam.

Let’s go back to that infamous appearance that Susan Rice made on Meet the Press the Sunday following the Benghazi attacks:

DAVID GREGORY: The images as you well know are jarring to Americans watching all of this play out this week, and we’ll share the map of all of this turmoil with our viewers to show the scale of it across not just the Arab world, but the entire Islamic world and flashpoints as well. In Egypt, of course, the protests outside the U.S. embassy there that Egyptian officials were slow to put down. This weekend in Pakistan, protests as well there. More anti-American rage. Also protests against the drone strikes. In Yemen, you also had arrests and some deaths outside of our U.S. embassy there. How much longer can Americans expect to see these troubling images and these protests go forward?

MS. RICE: Well, David, we can’t predict with any certainty. But let’s remember what has transpired over the last several days. This is a response to a hateful and offensive video that was widely disseminated throughout the Arab and Muslim world. Obviously, our view is that there is absolutely no excuse for violence and that– what has happened is condemnable, but this is a– a spontaneous reaction to a video, and it’s not dissimilar but, perhaps, on a slightly larger scale than what we have seen in the past with The Satanic Verses with the cartoons of the Prophet Muhammad. Now, the United States has made very clear and the president has been very plain that our top priority is the protection of American personnel in our facilities and bringing to justice those who…

GREGORY: All right.

MS. RICE: …attacked our facility in Benghazi.

I seem to recall that Ms. Rice received some criticism for those remarks. Yet, the New York Times reports:

Benghazi was not infiltrated by Al Qaeda, but nonetheless contained grave local threats to American interests. The attack does not appear to have been meticulously planned, but neither was it spontaneous or without warning signs…

…There is no doubt that anger over the video motivated many attackers. A Libyan journalist working for The New York Times was blocked from entering by the sentries outside, and he learned of the film from the fighters who stopped him. Other Libyan witnesses, too, said they received lectures from the attackers about the evil of the film and the virtue of defending the prophet.

So, to recap, the attacks in Benghazi were not carried out by al-Qaeda, were not meticulously planned, and the motivation to participate in them was largely “a spontaneous reaction to a video.”

It appears that Ms. Rice’s comments weren’t all that far off the mark.

The lack of an al-Qaeda role is particularly damaging to the Republicans because their main conspiracy theory all along has been that the administration blamed the whole thing on the Innocence of Muslims movie to deflect from the fact that they had not eradicated the terrorist organization by eliminating their leader, Usama bin-Laden. Supposedly, the real problem in Benghazi wasn’t insufficient security but the actual identity of the attackers.

But it wasn’t the administration that politicized the tragedy. It was Mitt Romney and the Republican Party, behind in the polls and smelling blood, that tried everything they could think of to gain an advantage.

I wonder if they have the capacity for shame.

 

By: Martin Longman, Washington Monthly Political Animal, December 28, 2013

December 29, 2013 Posted by | Benghazi, Republicans | , , , , , , , | Leave a comment

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