Legal Team For Abu Ghraib Victims: U.S. Ignores Torture

The Obama administration struck a blow to the protection of fundamental human rights by recommending that the Supreme Court not hear the case of 250 civilians allegedly tortured and seriously harmed by corporate contractors at the infamous Abu Ghraib prison, according to the detainees' legal team.

Site of a U.S. prison in Iraq following the American invasion of that country, Abu Ghraib became synonymous with torture for widespread cases of abuse of prisoners at the hands of Americans, including cases of psychological, physical and sexual abuse.

The abuse came to light in 2004.

On Friday, the Obama administration advised the Supreme Court not to hear a 2004 lawsuit that alleges employees of U.S. corporate military contractors CACI and Titan (now L-3 Services) participated in torture and serious abuses while they were hired to provide interrogation and interpretation services at Abu Ghraib and other detention facilities in Iraq, according to a statement from the victims' attorneys.

"This litigation should be allowed to contribute to the true history of Abu Ghraib. These innocent men were senselessly tortured by U.S. companies that profited from their misery. These men came to U.S. courts because our laws, as they have for generations, should allow their claims to be heard here," says attorney Susan Burke.

The detainees' lawyers argued that the Supreme Court should hear the case because a September 2009 appellate decision, which dismissed the suit in a 2-1 decision, gave corporate contractors more protections than U.S. soldiers enjoy and constituted judicial overreaching.

The plaintiffs' brief noted that military investigations had found contractors participated in torture at Abu Ghraib. In October 2010, the Supreme Court invited the administration to file a brief in this case expressing the views of the U.S. government.

The Abu Ghraib victims are represented by Burke PLLC, of Washington; Motley Rice LLC, of Mt. Pleasant, S.C.; the Center for Constitutional Rights; and Akeel & Valentine, P.C., of Troy, Mich. The case is Haidar Muhsin Saleh, et al. v. Titan Corporation, et al.

"The Obama Administration's brief acknowledges the serious flaws in the lower court's decision that cost the Abu Ghraib victims their day in court, but it ultimately says that justice for torture victims is not worth the Supreme Court's time," says Katherine Gallagher, senior staff attorney at the Center for Constitutional Rights. "The torture survivors are entitled to have their claims against U.S. corporations heard on the merits in a U.S. court."

The position of the Obama administration sends the wrong signal internationally, according to another lawyer.

"We are very disappointed. By filing this Supreme Court brief, the U.S. is sending the world a terrible message about justice and democracy," says Shereef Akeel, of Akeel & Valentine, P.C.

The Senate Judiciary Committee last week held a hearing on the trouble with U.S. law in holding private contractors, such as those alleged in the Abu Ghraib case, accountable for crimes committed abroad.

The chairman of the judiciary panel has pledged to re-introduce legislation making it easier to hold contractors accountable.



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Automakers’ Bailout and Bankruptcies Shortchanged Accident Victims

by Marian Wang, ProPublica

As part of their government-brokered bankruptcies, American auto giants Chrysler and General Motors were released of some legal liability for product defects, the Wall Street Journal reported. As a result, the automakers do not have to pay out damages to car accident victims who had lawsuits pending or had already won damages before the companies filed for bankruptcy.

Chrysler and GM went on government life support during the financial crisis and were bailed out with more than $60 billion in taxpayer dollars. While the cash infusion may have saved jobs and averted the collapse of the American auto industry, the restructuring process left thousands of accident claimants with little to no legal recourse.

A University of Pennsylvania law professor and bankruptcy expert told the Journal that it's an unusual case of the government picking winners and losers. With mixed legal precedents on the issue, federal bankruptcy judges prioritized certain lenders—the U.S. Treasury, for one, received huge ownership stakes in the two companies—and left car accident victims in the lurch. The Journal explains what happened behind the scenes:

Leaving behind product-liability claims didn't initially raise red flags for the president's auto task force, said people familiar with the negotiations. In part, that was because such methods had been used in other bankruptcy sales. But also, setting aside more money for accident victims, these people said, could have prompted complaints from others who felt shortchanged by the restructurings, at a time when government bailouts were unpopular.

Unable to recover damages from the car companies, some victims and victims’ families have tried to sue other parties. (Bloomberg noted this phenomenon in 2009.)

“They will sue the GM dealer that sold the car because they sold a defective product, or they will sue the owner of the roadway, claiming that the pavement was the problem,” auto-safety expert Daniel Melcher [3] told me. Melcher said the companies’ protection from liability has had a significant effect within his industry.

“The party that we all know is responsible can’t be sued, so people play lawyer games of who else we can sue. They have to go somewhere else to get compensation for the accident.”

Chrysler and GM told the Journal they sympathize with claimants but emphasized that many stakeholders also sacrificed as the companies fought off collapse—jobs were lost, dealerships closed, and lenders weren’t fully repaid.

Chrysler announced this week that it repaid the government loans it took out two years ago, and GM made a similar announcement last year. But as Politifact notes, those claims were a bit misleading.

The U.S. Treasury still holds a stake in Chrysler that it intends to sell, and an Obama administration official has said that the government doesn’t expect to fully recover about $1.9 billion in remaining investments. And while GM has paid back the $6.7 billion in bailout loans, it did so using other taxypayer money. Meanwhile, the government still owns a huge percentage of the company and may never be made whole on that investment.

Follow on Twitter: @mariancw

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Study: Medicare Cuts Could Harm Healthcare

A new study from George Mason University and the Urban Institute reveals that greater spending on medical services means better overall health for Medicare participants. Health Administration and Policy professor Jack Hadley and his co-authors, Urban Institute researchers Timothy Waidmann, Stephen Zuckerman, and Robert Berenson, analyzed data from more than 17,000 Medicare beneficiaries to draw this conclusion.

The new findings come as congressional Republicans appear to be doubling down on their unpopular plan to cut Medicare spending.

Previous reports showed that Medicare spending varies greatly by geographic area, but with little to show for it-the health outcomes for people who live in expensive geographic areas are not necessarily better than those who live in less expensive geographic areas. As a result, policymakers have considered limiting Medicare payments in high-cost areas.

But, as described in their recent study, "Medical Spending and the Health of the Elderly," the research team found that spending more on Medicare medical expenses actually resulted in greater survival and a better overall health score, using an index that measures perceived health and activity limitations.

"The motivation for the study was a large body of research that's been done over the past ten years that typically has found that there is little or no relationship between how much Medicare spends and the health outcomes of elderly people," Hadley says.

But these studies looked at large swathes of populations, typically by geographic location, and used averages to draw their conclusions. "The implication was that higher spending was not contributing to better health," Hadley says.

He explains, "While that finding is very persuasive, it doesn't look at individuals and the amount of medical care that they each receive." So in this study, the research team used data from the Medicare Current Beneficiary Survey, which collects extensive information from Medicare participants over a three-year span, to determine whether a relationship existed between medical spending and better health.

The statistical analysis indicates that the individuals' health did vary with their medical care spending. Over a three-year span, for a 10 percent increase in medical spending, there was 1.9 percent increase in the patient's health score, called the Health and Activity Limitations Index and a 1.5 percent greater survival probability.

The researchers classify this finding as a "modest effect" but stress that "the key thing is that we did find a positive relationship as opposed to other studies which have suggested that there's no relationship between how much care a person receives and what their health outcomes are."

"This suggests that policymakers need to understand that across-the-board reductions in Medicare spending in a geographic area or on a national level could have harmful effects on beneficiaries' health," The Urban Institute's Timothy Waidmann explains. "To look for inefficiencies, you need to look more closely at specific conditions and diseases and how those are treated. Analysis from 40,000 feet just doesn't do that for you."

Although their proposal to cut Medicare spending has unleashed a torrent of negative public opinion against Republicans -- and contributed to the loss last week of a traditionally GOP-held House seat -- Republicans have only intensified their push for cuts.

The Senate's top Republican has explicitly linked a needed vote to increase the federal debt limit to the enactment of Medicare cuts. Senate Republican Leader Mitch McConnell of Kentucky indicated that the GOP will agree to limit the debt ceiling only if Medicare spending is cut, according to a published report.

The debt limit must be raised in coming weeks in order to prevent a potential first-ever default by the federal government. Such a default could have dire consequences for the struggling U.S. economy.

“Republicans are holding the United States’ credit hostage to ram through their plan to end Medicare. They are now saying they won’t accept any plan to reduce the deficit unless it also cuts Medicare. Voters have resoundingly rejected this ideological agenda. Republicans should drop it and move on,” says a spokesman for Senate Majority Leader Harry Reid (D-Nev.), who has opposed the GOP Medicare plan.



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Capitol Idea: In A 2012 Democratic Wave, Beware Senate Wipeout

By Scott Nance

The election this week of a Democrat to a traditionally Republican seat in the House of Representatives is amping up what already have been percolating hopes for Democrats to retake their House majority in 2012.

Make no mistake: I share the aspiration. But at the risk of casting a pall over the excitement before it's barely begun, I'd like to inject a cautionary thought.

No, I'm not going to waste your time by beating the drum for the old political disclaimer that one should not read too much in the result of one special election, such as the one just concluded in upstate New York which will send Kathy Hochul to Washington as the newest member of Congress.

(If anything, the string of Republican wins in a series of special and off-year elections through 2009 and 2010 turned out to be a pretty good predictor of the drubbing Democrats ended up taking last November.)

Rather, my warning to Democrats is this: Go ahead and get excited about wresting the speaker's gavel back out of John Boehner's hands — but don't forget about the Senate in the process.

Don't assume House and Senate necessarily go hand-in-hand.

They don't.

After all, while Republicans were able to win the House in 2010, they fell short in the Senate, and Democrat Harry Reid remains majority leader today.

Imagine what could happen next year if Democrats succeed storming their way back in the House, but Republicans knock Democrats out in the Senate.

It could well happen.

E. J. Dionne, the smart liberal Washington Post commentator, forecast the possibility in a recent column:

Both houses could switch parties, but in opposite directions. The Democrats could take back the House — the GOP is defending a lot of Democratic-leaning seats — while Republicans could take over the Senate, given the difficult array of states Democrats must win. If this happens, remember, you read it here first.

Dionne nails it. Politically, the House Republicans and Senate Democrats actually have the same problem: they each have to hold a number of marginal seats to defend their majorities.

Add to that, this unpleasant math for Democrats: they have 23 Senate seats to defend in 2012, while the GOP has just 10. Republicans have to only pick up four and we would be saying hello to Majority Leader Mitch McConnell.

Democrats will have to win next year in tough places like Montana and Missouri, if Reid is to hold on in charge of the Senate.

The Washington Post already has spilled ink on just how tough it could be for Montana Democrat Jon Tester to win a second term.

Stu Rothenberg, the influential nonpartisan political analyst, predicts Democrats' Senate majority will hinge entirely on how well their candidates perform in the swing states of Montana, Missouri, and Virginia.

“These three states will probably determine the control of the United States Senate,” he says. “It’s that simple.”

If they were to win back the House but lose the Senate, Democrats would be no better off than they are today with a divided Congress. In reality, Democrats would be worse off.

That's because the Senate is the upper chamber of Congress, and Democrats would lose important influence if they were to slip into a Senate minority.

The Senate, not the House, has presidential confirmation authority.

A Democratic minority would be on the losing end of either of these two scenarios.

The first scenario assumes Barack Obama gets re-elected in 2012.

Presidents often see substantial turnover of their Cabinet and other officials at the start of their second terms. Obama's nominees would likely face a more hostile confirmation process with Republicans in charge.

Then there is the matter of Supreme Court nominees. In his first two picks to the high court, Obama had a friendly ally with Democrat Patrick Leahy at the head of the Senate Judiciary Committee. If he had to get any future court nominees past conservative Republican Jeff Sessions as Judiciary chair, the president would be in deep trouble.

The second (albeit less likely) scenario assumes a Republican wins the White House in 2012.

The new president-elect will be assembling his or her administration from scratch, and Democrats would be less of a position to challenge any such nominees if they slid into the minority.

(They, likewise, would be at a disadvantage, too, if the new GOP president had a chance to start naming justices to the Supreme Court.)

So, my Democratic friends, don't stop dreaming of a House takeover next year. Just don't forget to fight like hell to keep the Senate blue, too.

Scott Nance has covered Congress and the federal government for more than a decade. Capitol Idea is his regular column from Washington. This article was first published as In A 2012 Democratic Wave, Beware Senate Wipeout on Blogcritics.

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Exxon Ad Makes Gas Drilling Seem Simpler—and Safer—Than It Really Is

by Nicholas Kusnetz, ProPublica

ExxonMobil has been running a series of ads aimed at assuring people that shale gas drilling is safe. One of those ads, a full-page spread in Monday's New York Times and Washington Post, shows what a well looks like as it extends more than a mile and a half beneath the surface. It includes a close-up of the layers of steel and cement that are supposed to protect the surrounding earth from the gas and fluids inside the well pipe.

The ad, which depicts a gas well in the Marcellus Shale, implies that these layers of protection extend all the way down the well. But in the vast majority of horizontal wells, they do not. An Exxon spokeswoman acknowledged that fact in an email.

"The ad is a graphic that compresses over a mile into 18 inches and the enlarged area depicts the casing layers protecting the fresh water aquifer," she said, adding that all of Exxon's Marcellus wells are surrounded by multiple layers of steel and cement near the surface.

The ad makes for a good moment to remind people that most states require multiple layers of casing for only a short distance underground, so they can protect shallow aquifers. After that, a well may have only one casing layer for a short way, and then no casing at all. Some wells run for thousands of feet through rock and dirt with no cement or additional steel barrier at all. Only at the very bottom are they again encased in protective cement.

Check out our gas well diagram to see which parts of a well are usually encased. The Exxon ad, while meant to be a simple summary of how a well is built, looks the same all the way down.

Even multiple layers of casing don't always protect drinking water sources. Casing and cement failures were responsible for most of the recent gas drilling accidents in the Marcellus Shale, as well as previous contaminations in Colorado and Ohio. Pennsylvania's Department of Environmental Protection recently issued its largest oil and gas fine ever to Chesapeake Energy after casing and cement failures on its wells allowed methane gas to seep into the water supply for 16 homes.

Cementing failures also contributed to the blowout of BP's Macondo well in the Gulf of Mexico last summer, the largest oil spill in U.S. history.

The Exxon ad has also drawn attention from the Natural Resources Defense Council, which campaigns for more oversight of gas drilling. The organization sent a letter to the editor to the Washington Post yesterday, disputing the ad's claim that thousands of feet of rock protect groundwater from contamination.

Follow on Twitter: @nkus

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PATRIOT Act Extended After McConnell Objects To Civil Liberties Protections

Senators approved an extension of the controversial PATRIOT Act hours before three provisions were set to expire, but they did so only after the Senate's top Republican objected to a bipartisan amendment intended to enhance civil liberties protections under the law.

The House also voted to extend the decade-old surveillance law. Although he is traveling in Europe, President Obama reportedly signed the extension into law via "autopen."

The president called the PATRIOT Act an "important tool" in the fight against terrorism.

The final Senate vote came after Senate Republican Leader Mitch McConnell objected to a bipartisan amendment meant to address long-standing civil liberties and privacy concerns about the law, which was first enacted after the Sept. 11, 2001 terrorist attacks.

McConnell's objection scuttled the amendment, introduced by Sens. Patrick Leahy (D-Vt.) and Rand Paul (R-Ky.).

Leahy was not pleased.

"[My amendment] has been voted on by a bipartisan majority. Republicans and Democrats twice voted it out of Committee,” he says.

Among its provisions, the Leahy/Paul amendment would have enacted a sunset of the controverial use of National Security Letters as of Dec. 31, 2013, and would have expanded public reporting on the use of National Security Letters and authorities under the Foreign Intelligence Surveillance Act.

“It is my inclination to object further. And I realize the difficult position that would put the [Democratic] Majority Leader in, and so I will not object," Leahy says in remarks delivered on the Senate floor after McConnell's objection. "But I do feel this really ruins the chances to make the PATRIOT Act one that could have had far, far greater bipartisan support, and we have lost a wonderful chance.”

The three provisions of the USA PATRIOT Act extended by lawmakers included roving wiretaps, the “lone wolf” measure, and section 215 orders for tangible things, commonly referred to as the “library records” provision.

The provisions at issue have long rankled civil liberties advocates on both the left and right.

"I'm pleased that we have cracked open the door that we will shed some light on the PATRIOT Act," says Paul, elected just last year with fervent support from conservative tea party activists. "I wish the door were wider open, the debate broader and more significant, but we will talk a little bit about the constitutionality today of the PATRIOT Act.

"I was a cosponsor of Senator Leahy's amendment, and I think it would have gone to many great steps forward to make sure that we have surveillance on what our government does; authorized audits and the inspector general to continue to watch over to make sure that government is not invading the rights of private citizens," Paul adds.

Despite McConnell's objections, Leahy vows to continue to make his improvements.

“I assure the Leader this amendment will be offered as a free-standing bill. And I hope because of the bipartisan support, it could be brought up at some point,” Leahy says.

The law enacted Thursday contains straight extension of its authorities until June 1, 2015, more than five years after the original expiration date, and nine years after legislative improvements to the original USA PATRIOT Act were last enacted. The legislation approved Thursday, however, makes no additional improvements to the law, according to a statement from Leahy's office.



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Think Again: The Times’ Frank Bruni, or How to Succeed in Journalism Without Really Caring (About Issues)

This article was published by the Center for American Progress.

By Eric Alterman

New York Times editorial page editor Andrew Rosenthal announced the appointment of Frank Bruni to the august position of op-ed page columnist this week. The selling point for Bruni, whose last job was as the paper’s restaurant critic, is that he is the paper’s first openly gay op-ed columnist. Otherwise, neither Rosenthal nor Bruni appears to be able to explain the rationale for the choice. Rosenthal told New York Magazine that he expected “a sharp, opinionated look at a big event of the last week, from a different or unexpected angle, or a small event that was really important but everyone seems to have missed, or something entirely different.” Bruni told Women’s Wear Daily, “the Sunday column should be very clearly keyed to, and should very obviously stem from, something that occurred in the previous six days.” The fact that the above descriptions could apply pretty much to just about any columnist writing about almost anything indicates that neither one appears to have given the matter of Bruni’s subject matter much thought.

If I might be so bold as to offer a suggestion—or perhaps a caution—I would respectfully propose that Bruni stay the heck away from politics. During the period he covered the Bush presidential campaign and the early years of that administration, Bruni demonstrated almost perfectly how not to cover a presidential race and a new presidential administration. Indeed, if I were teaching a course on political coverage, one could use Bruni’s Times coverage of George W. Bush—together with his campaign memoir—as examples of what every young reporter should take heed to avoid.

Shortly after the 2000 election, Richard Wolffe, then a reporter for the Financial Times, summed up what went wrong in the coverage. “The Gore press corps is about how they didn't like Gore, didn't trust him. … over here, [on the Bush press plane], we were writing only about the trivial stuff because he charmed the pants off us.” The New York Times’s Frank Bruni, however, did not think he or his colleagues were to blame. Rather, the trivial nature of his work was apparently the fault of the voters. “Modern politics wasn't just superficial because the politicians made it so,” he argued. “It was superficial because the voters let it be.”

For starters, in his 2001 campaign book, Ambling Through History, Bruni described the first presidential debate between Bush and Gore as a dispiriting debacle for Bush. He wrote:

By any objective analysis, Bush was at best mediocre in the first debate, in Boston. … in all of [the debates], he was vague. A stutter sometimes crept into his voice. An eerie blankness occasionally spread across his features. He made a few ridiculous statements. … I remember watching the first debate from one of the seats inside the auditorium and thinking that Bush was in the process of losing the presidency.

Funny, but the guy who covered that very same debate for The New York Times—a fellow by the name of “Frank Bruni”—wrote it up rather differently. Nothing at all appeared in his coverage about Bush’s “ridiculous statements.” Instead, Times readers got the following:

It was not enough for Vice President Al Gore to venture a crisp pronunciation of Milosevic, as in Slobodan, the Yugoslav president who refuses to be pried from power. … Mr. Gore had to go a step further, volunteering the name of Mr. Milosevic’s challenger, Vojislav Kostunica. Then he had to go a step beyond that, noting that Serbia plus Montenegro equals Yugoslavia. … and as Mr. Gore loped effortlessly through the Balkans, barely able to suppress his self-satisfied grin, it became ever clearer that the point of all the thickets of consonants and proper nouns was not a geopolitical lesson. … it was more like oratorical intimidation, an unwavering effort to upstage and unnerve an opponent whose mind and mouth have never behaved in a similarly encyclopedic fashion.

So the problem with Al Gore was the fact that he could remember and correctly pronounce the names of world leaders with whom the United States had just been involved in war. This apparently offended Bruni and he thought his readers should share his offense—at least until he wrote a book about it.

Bush knew a good thing when he saw it. As a candidate, he put his arms around Bruni, whom he nicknamed “Panchito” Bruni, and cooed, “You know we love you.” Later, Bush looked across a crowded room at Bruni and mouthed, “I love you, man.” Bruni did not mention whether he told Bush that he loved him back, but in relationships as in literature, it is always better to show than to tell. Either way, Bush sure knew his man. Bruni went over to the Gore camp one day and found out, to his apparent horror, that Al Gore not only did not love him; he did not even bother to come up with a nonsensical nickname for the writer.

Gore, Bruni complained, “made no effort. His energies were channeled into his campaign trail remarks, so dense with knowledge, so showy with digressions. He sweated the big stuff and muffed the small stuff.” To Bruni this was unforgiveable—the idea that a potential president thought it worthwhile to focus on issues rather than declaring his love for reporters—and Bruni more than made him pay for it.

Once the U.S. Supreme Court decided to hand the election to Bush, “Panchito” Bruni continued to treat the presidency as a sitcom he happened to enjoy, like “Friends” or “The Cosby Show.” On a presidential trip to Mexico, for instance, Bruni professed to spy Bush's boots “peek[ing] out mischievously” from beneath his trousers. How do boots “peek” and why would such peeking imply mischievousness? Bruni did not bother to explain. But he sure liked the word. Upon meeting Tony Blair, Bush, Bruni wrote, “indulged a mischievous impulse” when he shouted out “Hello, Landslide!” to the British prime minister. Despite the fact that Blair had actually won his election in a landslide, Bruni explained Bush's comment as “an irreverent, towel-snapping one at that-to Mr. Blair's recent re-election, and it recalled the playful dynamic ... when he cracked during a news conference that he and Mr. Blair liked the same brand of toothpaste.”

Towel snapping? Toothpaste? Really, one is hard-pressed to know what to make of Bruni's junior-high-level journalism (and maturity) in covering a presidential trip except for the fact that this is the kind of writing that apparently qualifies one for a spot on the op-ed page.

Frequently, Bruni sounded like a man who had fallen in love with someone he knew lacked the qualities he wished for him, but could not allow himself to admit that he had been so wrong for so long. The solution to this problem appeared to be to offer extraordinary praise for the most ordinary acts on the pretense that expectations were so low that anything beyond disaster might be successfully masqueraded as genuine triumph.

When Bush met Russian leader Vladimir Putin, for instance (and later professed to have seen into his soul), Bruni still felt compelled to celebrate the apparently amazing fact that Bush refrained from drooling all over himself at a state dinner. “Rarely,” Bruni wrote of Bush and Putin, “have the two nations’ leaders so surpassed the limited expectations of their meeting.” Nowhere, however, did the reporter bother to explain how rarely, whose expectations, how limited, or how limited by whom to what.

Not long ago, the Times editors and publisher embarrassed themselves by offering a column to the conservative apparatchik William Kristol, whose brief tenure on the page turned out to be a predictably unmitigated disaster. Given the deep affection that Bruni consistently demonstrated for Bush, one sees potential for Bruni to perform in a similarly awful fashion. But this is actually unlikely. True, Bush was a hard-line conservative, and Bruni loved him. But his affection was laced with a profound lack of interest—one might fairly call it contempt—for the issues upon which Bush took up a position. How else to explain an author of a book on a presidential race that contained barely a word about health care, Social Security, tax cuts, the Middle East conflict, missile defense, or, heaven forbid, global warming. In Bruni’s book, readers learned precisely how many seconds the Bushes danced at each of the inaugural balls, but precious little that would prepare us to understand what the president might be doing the next day when he went to work.

It's certainly possible that, while covering the Vatican and then working as food critic, Bruni has found a new respect for the substance of politics rather than as an outlet for his own emotional attachments and resentments. Then again, perhaps, as with the Kristol debacle, the Times is again demonstrating that it simply does not care about the quality of its columnists anymore. What was once considered the most influential space in American journalism has become nothing more than a marketing tool in a journalistic world where personality trumps issues and journalistic integrity turns out to be an impediment to professional success.

Eric Alterman is a Senior Fellow at the Center for American Progress and a Distinguished Professor of English at Brooklyn College and the CUNY Graduate School of Journalism. He is also a columnist for The Nation, The Forward, and The Daily Beast. His newest book is Kabuki Democracy: The System vs. Barack Obama. Portions of this column were drawn from his 2003 book, What Liberal Media? The Truth about Bias and the News, where sources can be found for all quotations employed.

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Bill Would Extend Law To Hold Blackwater-style Contractors Accountable

The chairman of the Senate Judiciary Committee says he soon will re-introduce legislation aimed at to close a gap in current law to make certain that American government employees and contractors are not immune from prosecution for crimes committed overseas.

Sen. Patrick Leahy (D-Vt.), who first authored the Civilian Extraterritorial Jurisdiction Act in the previous 111th Congress, chaired a hearing of the judiciary panel Wednesday which was focused on the issue.

At the hearing, Leahy cited a 2007 incident in which security contractors working for the firm formerly known as Blackwater, under contract to the State Department, shot more than 20 unarmed civilians on the streets of Baghdad, killing at least 14 of them.

"Efforts to prosecute those responsible for these shootings have been fraught with difficulties, and our ability to hold the wrongdoers in this case accountable remains in doubt," Leahy says. "Had jurisdiction for these offenses been clear, FBI agents likely would have been on the scene immediately, which could well have prevented the problems that have plagued the case."

Nor has the Blackwater killings been an isolated incident, the chairman notes, further citing the case of Jamie Leigh Jones, a woman from Texas who took a job with Halliburton in Iraq in 2005 when she was 20-years-old. In her first week on the job, she was drugged and gang-raped by co-workers. When she reported this assault, her employers moved her to a locked trailer, where she was kept by armed guards and freed only when the State Department intervened, Leahy notes.

Jones previously testified before Leahy's panel about her ordeal.

"Ms. Jones testified about the arbitration clause in her contract that prevented her from suing Halliburton for this outrageous conduct, and Congress has moved to change the civil law to prevent that kind of injustice," Leahy says. "Criminal jurisdiction over these kinds of atrocious crimes abroad, however, remains complicated, depending too greatly on the specific location of the crime, making prosecutions inconsistent and sometimes impossible. We must fix the law to help avoid arbitrary injustice and ensure that victims will not see their attackers escape accountability."

Leahy says his legislation would "establish clearly that all U.S. government employees and contractors who commit crimes while working abroad – whether they work with the military or not – can be charged and tried in the United States.

"As the military withdraws from Iraq and Afghanistan, the American presence in those countries will consist largely of civilian employees and contractors," he adds. "There must be accountability for all of those who represent our Government overseas. And in those instances where the local justice system may be less fair, this explicit jurisdiction will also protect Americans by providing the option of prosecuting them in the United States, rather than leaving them subject to hostile and unpredictable local courts."

Leahy says that he hopes Republicans will support his bill.



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New GOP Budget: Hands Off Medicare, But Potentially Worse

The Senate may have defeated a House GOP budget that would have turned Medicare into a private voucher-based programs, but Republicans haven't given up.

But Sen. Pat Toomey (R-Pa.) has proposed a budget that leaves Medicare alone, but is potentially worse, according to an independent analysis.

Senators on Wednesday voted down the budget blueprint first offered by House Budget Chairman Paul Ryan (R-Wis.), with a handful of Republicans joining Democrats to block further consideration of the bill, which included the Medicare overhaul.

Under political pressure by President Obama and other Democrats, public opinion turned against the Ryan Medicare plan, evidenced most notably by a Democrat winning a special House election Tuesday in which the Ryan plan was a key issue.

Toomey, the conservative freshman, however, has put forward his own spending plan.

Toomey touted his budget proposal Wednesday on the Senate floor in a speech before he voted for the Ryan plan.

"At first blush, the Toomey plan may seem more moderate than the Ryan budget, which the Senate also will likely consider this week," says the analysis by James Horney, vice president for federal fiscal policy at the Center on Budget and Policy Priorities, an independent, left-leaning Washington think tank. "That’s because the Toomey plan does not include Chairman Ryan’s controversial proposal to replace guaranteed Medicare benefits with vouchers that would cover part of the cost of purchasing private health insurance — a provision that would raise total health care spending attributable to Medicare beneficiaries and more than double out-of-pocket costs for a typical 65-year-old beneficiary in 2022. (Neither plan proposes savings in Social Security.)

"But, in several ways, the Toomey budget is more radical than the Ryan plan," Horney adds. "While it essentially mirrors the Ryan plan in proposing deep cuts in nondefense discretionary programs, it proposes much deeper cuts in entitlement programs other than Medicare — and relies on a rosy economic scenario and fanciful assumptions about tax collections — to claim it produces modest surpluses in 2020 and 2021 instead of the approximately $400 billion deficits in each of those years under the Ryan plan."

Although the Toomey plan doesn't include Ryan's controversial Medicare overhaul, it would turn Medicaid into a block grant and cut federal funding for the program by half by 2021, Horney says.

It also would cut nearly $900 billion from social safety net programs, which include programs such as SNAP (food stamps), Supplemental Security Income, and unemployment insurance.

"By 2021, funding for this category would shrink by more than one-fifth," Horney says. "Toomey’s cuts in this category are more than twice as large as the $380 billion cut over ten years in the Ryan plan."



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In HBO’s ‘Too Big to Fail,’ the Heroes Are Really Zeroes

by Jesse Eisinger, ProPublica

HBO's "Too Big To Fail"—I just caught up with it Tuesday night; thank you, HBO On Demand—is extraordinarily revealing about the financial crisis. Only its revelations are almost entirely inadvertent.

The movie is set up in the Hollywood conventional way: A gang of misfits, each with a special expertise, is brought together for an impossible mission. There's Treasury Secretary Henry Paulson, steely eyed at the moment of truth. There's New York Federal Reserve head Timothy Geithner, the athlete (he doesn't just jog, but also plays what appears to be squash). And then there's Federal Reserve chairman Ben Bernanke, the professor with a heart of gold and secret knowledge of the Great Depression.

Ostensibly it's a story of their success against all odds. Michael Kinsley, reviewing the movie in the New York Times, labeled Hank Paulson the "hero" of the account.

Except that the movie actually depicts something entirely different: failure upon failure. "Too Big To Fail" The Movie isn't the story of how the Three Musketeers saved the global economy. It's a story of how the three didn't see the financial crisis coming; hadn't prepared for it; made mistake after mistake as it was cresting; and then, in their moment of triumph, made their most colossal blunder of all.

That, it turns out (whether or not "Too Big To Fail" knows it), is the true story of the financial crisis.

How much did Curtis Hanson and the writers mean for that to be the story? Throughout, the characters drop hints about their missteps, but the plot unfolds like a financial "Die Hard," with our intrepid heroes battling fiendishly powerful forces toward a happy ending. (Full disclosure in this era of transparency: I write a regular column for DealBook, the New York Times section edited by Andrew Ross Sorkin, the reporter upon whose book the movie was based.)

Early on, Paulson complains to his staff that they have been behind on everything as the crisis began to emerge. And that's true! The crisis actually started in the late summer of 2007. Paulson's first effort, late that year, was to get a bunch of banks to assemble a giant off-balance-sheet concoction that would save each individual bank's off-balance-sheet monstrosity. It was a complete flop.

In the movie, as bankers and government officials frantically try to save Lehman, Chris Flowers, the private equity investor and banking impresario, is depicted as informing Paulson and Geithner that AIG is teetering on the edge. In their fumbled response, he immediately grasps the truth. "They're not on top of it," he tells a confederate.

And they weren't. In real life, AIG had been struggling since the middle of 2007. Paulson and Geithner of course had some inkling of the problems at the world's largest insurer. But they didn't prepare for it.

In the movie, the chief executive of General Electric, Jeff Immelt, places a terrified call to Paulson saying that GE can't borrow. GE is standing in for every Real American manufacturing company. We are reminded it makes light bulbs and washing machines. Paulson is shocked that such a stalwart could be having trouble borrowing.

The reality, of course, is that GE was more a finance company than a manufacturer and was teetering because it financed those operations with billions of short-term borrowing. It is also true that Paulson, Bernanke and Geithner had no inkling of GE's troubles until the very last moment and therefore had no plan to deal with it.

Plans are, in the movie, almost nonexistent. The team of heroes races from crisis to crisis, as Bond goes from chase scene to babe, eventually stumbling on the evil SPECTRE plot to take over the world. Intentionally or not, the movie is echoing real life.

Despite warning signs, Paulson, Geithner and Bernanke had no evident plans throughout the last half of 2007 and the first eight months of 2008. Not for how to resolve Lehman after Bear Stearns' collapse, not for AIG, not for recapitalizing the banking system.

Indeed, they asked Congress for $700 billion to implement the Troubled Asset Relief Plan to buy toxic assets from the banks, and then, without any further discussion, abandoned that idea and injected capital into the banks. Many economists and financial experts had been urging them to do just that, but when they finally hit on that as a solution, it was so poorly thought out that they gave the money to the banks on overly generous terms.

This moment is depicted at the end of the movie, and because it is both a triumph in the conventional narrative sense, but also a major mistake by our heroes, it is the point at which the movie is most cognitively dissonant. Paulson, Bernanke and Geithner have finally come to their solution: Put capital in the banks. They gather outside the boardroom where they are going to confront the CEOs.

For purposes of dramatic tension, we have to see their nervousness that the deal won't go through. The Treasury secretary and the two most powerful central bankers in the country are about rescue these CEOs and their institutions from their own recklessness, yet they cower in fear of rejection.

Of course, this rings true because the government drove awful bargains. In the aftermath of the greatest credit bubble in history, it protected creditors at almost every turn. The government gave the banks money but didn't get voting rights and didn't prevent the banks from using the money to pay dividends or bonuses. They wrote what was essentially a blank check. In real life, Warren Buffett got much better terms when he invested in Goldman Sachs.

What is the audience to make of these scenes? Paulson, our supposed hero, insists that if the government puts any restrictions on the money, "They won't take it!"

It's left to the hapless PR woman, played by Cynthia Nixon (who has, moments earlier, had the crisis explained to her in words of one syllable for the sake of her, and the audience's, simple minds), to wonder why, if the government is saving these institutions, it couldn't impose any limits on how the money be used.

The banks do take the money, of course. They have no choice by the conventions of Hollywood. Nor did they in real life, something that the Three Musketeers never fully appreciated.

After the scene, the Big Three gather in a room, relieved, and Bernanke asks, "They will lend the money out, won't they?" The director, Curtis Hanson, focuses in on Paulson, who gazes out the window, as if contemplating the question for the first time. He insists they will. But an unmistakable moment of doubt passes across his face.

Fade to the postscript. There we learn that, whoops, the banks didn't lend it out after all. Instead, they got bigger, banker bonuses recovered, and Wall Street is getting bottle service at velvet-roped clubs all over again. The world was saved from ruin, but the banks quickly went back to business as usual and even felt self-righteous about it.

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Celebrating House Win, Left Hopes Political Winds Have Shifted

Progressives woke up Wednesday celebrating Democrat Kathy Hochul's victory for a House seat from upstate New York previously held by the GOP for decades. In Hochul's success, they see a fresh opportunity for wider gains to reverse the drubbing Democrats took in the 2010 midterm elections.

Hochul beat Republican state Assemblywoman Jane Corwin 48 percent to 42 percent, with an independent candidate pulling up the rear.

The Democrat won Tuesday's special election for a vacant seat in New York's conservative 26th Congressional District by linking Corwin to the Washington Republicans' plan to privatize Medicare.

Progressives say they also see the victory as a wider repudiation of the GOP drive to cut taxes for the wealthy and limit the federal government's ability to deliver services for the middle class.
Alan Charney, policy and strategic director for USAction, a Washington advocacy organization, sees Hochul's win as part of an emerging pattern, noting that Republicans have lost several other recent special elections, as well.

"In state after state, voters are telling us they want an end to tax cuts for the super-rich," he says. "They want an end to corporate loopholes. And most importantly, they want to preserve Medicare and the vital services that are key to maintaining a healthy, vibrant middle class. For voters, the massive cuts that are happening at the state level and in Congress mark their season of discontent."

Besides New York, conservatives have lost three special elections in as many weeks. In Wisconsin, a Democrat captured a General Assembly seat that had been held by Republicans for more than a decade. In Maine, a Democrat beat her opponent for a state Senate seat by more than 30 percentage points. And in New Hampshire, a Democrat easily captured a state House district that was ranked as the 16th strongest Republican district in the state.

"Yesterday, voters in Western New York sent a strong message that Medicare needs to be protected, that tax cuts for billionaires and big corporations won't be accepted, and that in order to make our communities stronger, we must come together to build an economy that works for everyone," says Karen Scharff, executive director of Citizen Action of New York. "Kathy Hochul's election to Congress doesn't just mean that New York will have another great representative in Washington. Her election also proves a public desire for a government that puts its people before corporate profits."

Ultimately, Charney says, the recent elections send a message: voters cherish the freedom that comes from opportunity and prosperity. "Freedom is about a fair wage, a decent life and hope for the future," he says. "Programs like Medicare and Social Security help secure our freedom by protecting our dignity if we get sick and as we grow older."

Another prominent Washington progressive group, Democracy For America (DFA), sees Tuesday's win as further evidence Democrats should stand up against the conservative agenda pushed by House Republicans.

DFA Communications Director Levana Layendecker also cites a poll of voters in four states which she says finds opposition to cuts in such social programs as Medicare, Medicaid and Social Security.

"Hochul won last night because she listened to voters that were telling her that what they really wanted Congress to do, above everything else, was to focus on jobs and protecting popular programs they depend on," she says in an email which urges supporters to pressure House Democratic Whip Steny Hoyer to take Medicare cuts off the bargaining table.

"It's clear from our poll and from last night's election results that if more Democrats follow Hochul's lead, they will win in 2012 -- and if they fall into the GOP's trap by voting to cut Medicare benefits, they will suffer dire consequences in the next election," she says.

If this new political dynamic holds, it could represent a dramatic shift back to the favor of Democrats, who lost control of the House last year due largely to tea party-fueled anger.



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Sherrod Brown Takes Hard Line On Israel

Sen. Sherrod Brown may be one of the most liberal members of the Senate, but the Ohio freshman is among the Democrats taking a hawkish stance on the conflict between Israel and the Palestinians.

Brown released a statement following Israeli Prime Minister Benjamin Netanyahu's address Tuesday before a joint session of Congress, in which Netanyahu once again rejected President Obama's approach to solving the decades-old conflict.

Obama has come under fire for his approach since it outlined it last week in a major policy address at the State Department in Washington.

Several top congressional Democrats reportedly oppose Obama's plan to base a peace plan on Israel's 1967 borders with mutually-agreed land swaps.

Although Brown doesn't mention borders, he embraced a pending resolution that would express opposition to Palestinian efforts to seek unilateral recognition at the United Nations.

“Ohio’s communities and businesses have a long and enduring history with Israel,” Brown says. “From agriculture and the environment, to economic development and clean energy, Ohioans and all Americans benefit from the rich cultural and commercial exchange between our countries. That’s why it is imperative that friends of Israel in the United States continue to bolster this most vital relationship.

“To strengthen the relationship between the U.S. and Israel, it is imperative that we address the Palestinian people’s unilateral efforts to seek recognition before the UN,” Brown adds. “And when the Palestinians seek unilateral UN recognition, we say ‘no’, clearly with a single voice – which is why I’m proud to sign onto S. Con Res. 185, sponsored by Senators [Ben] Cardin [D-Md.] and [Susan] Collins [R-Maine].”

The Palestinians appear to have support elsewhere internationally to seek recognition.

Brown notes that he sent a letter in February to GOP House Appropriations Committee Chairman Mike Rogers and House Budget Chairman Paul Ryan in defense of foreign aid funding to the nation of Israel.

Brown visited Israel last November.

The senator notes that Ohio is Israel’s 19th largest trading partner, exporting nearly $228 million worth of goods in 2010 and more than $3.1 billion since 1996.

Brown was first elected to the Senate in 2006, the year Democrats swept control of Congress. He faces a potentially difficult re-election next year in what is typically a swing state.



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Leahy And Paul, Latest Senate Odd Couple, Wants To Fix The PATRIOT Act

Sens. Patrick Leahy (D-Vt.) and Rand Paul (R-Ky.) , have teamed up to improve pending legislation to extend three expiring provisions of the USA PATRIOT Act.

The anti-terrorism law has rankled both progressives on the left and libertarians on the right since it was originally approved in the wake of the Sept. 11, 2001, attacks.

Lawmakers are about to extend three of the most contentious provisions of law, which are to expire at the end of the month, with the support of the Obama administration.

Leahy and Paul have proposed an amendment to the controversial decade-old surveilliance law that they say would make significant improvements to the underlying legislation, promote transparency, and expand privacy and civil liberties safeguards.

“The bill before the Senate today merely extends the expiring authorities to June 1, 2015,” says Leahy. “Regrettably, these authorities have not been refined since 2006. If that remains the case through the extensions contemplated by this bill, it will amount to nine years without legislative improvement. I know that we can do better. The amendment we offer today seeks to change that by improving the PATRIOT Act.”

Leahy says his bipartisan amendment closely tracks legislation he introduced earlier this year. That bill won approval in March by a bipartisan majority of the Senate Judiciary Committee, which Leahy chairs.

The three expiring provisions of the USA PATRIOT Act include roving wiretaps, the “lone wolf” measure, and section 215 orders for tangible things, commonly referred to as the “library records” provision. The authorities were originally set to expire in December 2009. Leahy first proposed legislation to reauthorize the intelligence-gathering tools in September 2009.

The bill received bipartisan support in the Senate Judiciary Committee in 2009, and was backed by the Obama administration, including the attorney general, and the director of national intelligence, Leahy says.

Provisions included in the bipartisan Leahy-Paul amendment include a sunset on National Security Letters, audits and public reporting requirements, protections for the privacy of all Americans, and a provision to fix an unconstitutional element of the USA PATRIOT Act. A detailed summary is available online.

Leahy and Paul could not be more opposite in most regards. Leahy has been a liberal stalwart in the Senate for decades, while Paul was elected just last year as a favorite of the highly conservative tea party movement.

The Senate has a history of political odd couples, such as Leahy and Paul, coming from opposite ends of the political spectrum to accomplish common goals, however.

Notably, Sen. John McCain (R-Ariz.) once worked with the late Sen. Edward Kennedy (D-Mass.) on immigration reform, and McCain also worked with then-Sen. Russ Feingold (D-Wis.) to enact campaign finance reform.

In addition to Leahy and Paul, their amendment is also cosponsored by Democratic Sens. Ben Cardin of Maryland, Jeff Bingaman of New Mexico, Christopher Coons of Delaware, Jeanne Shaheen of New Hampshire, Ron Wyden of Oregon, Al Franken of Minnesota, Kirsten Gillibrand of New York, Tom Harkin of Iowa, Dick Durbin of Illinois, Jeff Merkley of Oregon, Barbara Boxer of California, and Daniel Akaka of Hawaii.



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Cheat Sheet on Bank Investigations and the Probes That Have Petered Out

by Marian Wang, ProPublica

As we and many others have noted, no top banking executives have been successfully prosecuted in connection with the financial crisis: not for making the bad loans that fed the mortgage machine, not for lying about the quality of the mortgages, and not for foreclosing improperly when homeowners struggled to make loan payments.

But there have been many investigations. Some are still pending, others seem to have fallen by the wayside. Here’s our overview of what the banks have been accused of doing at each stage of the mortgage machine.

Let us know in the comments section if we’ve left off any significant investigations that have died quiet deaths or are still ongoing.

The First Step in the Machine: Risky Lending and Underwriting

Regulatory action against the major lenders has been relatively rare. In one of the few cases, the FDIC filed a civil suit in March against three former executives at Washington Mutual for risky lending. The executives at the failed bank were accused of taking “extreme and historically unprecedented risks” in their lending practices in order to maximize their compensation. The executives have denied the charges. Federal authorities have been investigating the bank since it failed and was sold to JPMorgan Chase in 2008.

Earlier this year, the Justice Department ended its criminal investigation of Angelo Mozilo, the former CEO of Countrywide Financial, a major subprime lender. It did not bring charges. Mozilo had settled civil charges with the SEC for $67.5 million—though that was for insider trading, not bad lending.

And when the Justice Department did get a conviction of a mortgage company CEO in April, the executive, Lee Farkas of Taylor, Bean & Whitaker, was found guilty of bank fraud, wire fraud, securities fraud and conspiracy—offenses not specific to the company’s mortgage operations. It was nonetheless touted as “the most significant criminal prosecution to date rising out of the financial crisis.”

For the most part, banks struggling with allegations of bad lending have faced demands from investors to buy back troubled mortgages. The banks have at times resisted, attributing the losses to broader economic turmoil.

The relative lack of regulatory action was highlighted in a New York Times article by Gretchen Morgenson and Josh Rosner, which detailed the case of NovaStar Financial, a subprime lender that the SEC never took any action against. That’s despite a damning report from HUD, lawsuits from homeowners, cease-and-desist orders from state regulators and repeated tips from short-sellers. (The SEC declined to comment on its investigation.)

The government has recently shown signs of taking action when it comes to recouping its own losses. The Justice Department sued Deutsche Bank in early May, alleging that a unit within the German bank “recklessly” endorsed bad mortgage loans in order to get government guarantees that would 1) make the loans easier for the bank to resell to investors, and 2) put the government on the hook for losses.

The lawsuit alleges that Deutsche hid evidence that the loans were bad, costing the government millions in insurance payouts while the bank made profits off the resale. Deutsche told the Wall Street Journal that most of the allegations were about activity that occurred before the unit became a subsidiary of the bank.

Though the suit against the mortgage lender was believed to be the first of its kind, prosecutors have said that it probably wouldn’t be the last. Here’s the Journal:

It wouldn't be a "fantastical stretch to think we are looking at other financial institutions as well," Mr. Bharara said at a news conference, declining to be more specific.

Next Step: Scandals of Securitization

The Journal reported this week that state attorneys general in New York and California are stepping up investigations of a whole range of bank activities—from the origination of mortgage loans to the packaging of mortgage securities.

New York’s attorney general Eric Schneiderman also recently announced investigations into the packaging and selling of mortgage-backed securities by a number of big banks. Morgan Stanley, Goldman Sachs, Bank of America, Royal Bank of Scotland, UBS, JPMorgan and Deutsche Bank are said to be the subjects. Of course, there’s no guarantee that anything will come of these. Schneiderman’s predecessor—now New York Gov. Andrew Cuomo—also had been investigating whether several banks had lied to rating agencies about the quality of their mortgage securities, and no charges resulted from that investigation.

The Justice Department also declined to bring criminal charges against executives at AIG, the insurer that sold financial instruments that allowed major financial firms to place bets against the housing market—and sometimes, against the same financial products they sold to investors. As of last year, the SEC reportedly was still investigating.

In 2009, prosecutors lost the first major criminal case of the financial crisis when the jury acquitted two Bear Sterns hedge fund managers accused of securities fraud and lying to investors about their failing investments.

And Then Came Those Fancy, Complex Securities Called CDOs

We’ve documented a number of investigations into the big banks’ dealings of mortgage-backed securities known as collateralized debt obligations. The Securities and Exchange Commission of course settled a civil suit against Goldman Sachs last year for $550 million, though its related suit against Goldman trader Fabrice Tourre is ongoing.

As we noted earlier this month, Goldman Sachs disclosed in a regulatory filing that it had received subpoenas from regulators regarding the same deal as well as other CDO deals. And it’s not just regulators: The Journal reported on Friday that Goldman executives expect to receive subpoenas soon from U.S. prosecutors seeking more information.

We also reported late last year that the SEC has an investigation into a JPMorgan Chase deal called “Squared.” The agency formally warned two execs involved in the deal that it may take action against them, as Bloomberg reported in April. JPMorgan disclosed in a recent filing that it is in “advanced negotiations” with regulators but didn’t specify which deals were being scrutinized.

UBS, Deutsche, and Citigroup also were last year reported to have received civil subpoenas from the SEC as part of an investigation into CDO dealings. (See our cheat sheet from around that time.) The Journal also reported that Morgan Stanley and Goldman Sachs were under early-stage criminal scrutiny by the Justice Department.

Finding the Flaws in the Foreclosure Process

Charges against the banks could be coming for their foreclosure-related problems. Huffington Post reported last week that government audits of Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial accused the banks of engaging in fraud with government-guaranteed mortgages. There are few details about what are in the audits, but here’s how HuffPo explains the allegations:

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

The Department of Housing and Urban Development’s inspector general conducted the audits and has referred the findings to the Justice Department, which will have to decide whether to bring charges. (Bank of America and Wells Fargo declined to comment to Reuters at the time—the others weren’t available for comment.)

Both federal regulators and 50 state attorneys general also have been conducting investigations since news of “robo-signers” and flawed foreclosure practices by the nation’s biggest banks exploded into a full-blown scandal last fall.

There have been numerous reports of divisions within the two coalitions of investigators. Among the federal agencies, the historically bank-friendly Office of the Comptroller of the Currency had pushed for more modest fines compared with the proposals favored by other federal agencies.

As we’re reported, federal regulators have issued “consent orders” that require banks to perform reviews of their own foreclosure actions and compensate borrowers for financial injuries. From our earlier reporting:

The reviews are expected to culminate late this year or early next year, when checks are scheduled to go out to victims. Regulatory sources told us that the total amount sent to eligible homeowners would likely be disclosed. Even before this phase, observers may get a hint of what's happening if, as expected, regulators levy financial penalties against the banks. The findings of the reviews will determine the size of those penalties, regulatory officials said.

The state attorneys general are also, along with Justice Department negotiators, trying to reach a settlement with the banks. There’s also dissent among their ranks: At least eight Republican attorneys general have voiced disagreement with any proposal that would require banks to cut borrowers’ mortgage debt. Virginia’s attorney general compared the debt writedowns to welfare [40].

Banks, meanwhile, have reportedly proposed paying $5 billion to settle the states’ foreclosure investigation. That’s a quarter of the $20 billion penalty that had been previously proposed.

More Flaws in the Fallout After Foreclosure

Other investigations and lawsuits against the banks have focused less on their dealings with homeowners and more on the fallout after foreclosure. For instance, the City of Los Angeles earlier this month filed a civil complaint against Deutsche Bank, alleging that the bank illegally evicted tenants and let foreclosed homes fall into disrepair and cause neighborhood blight. Deutsche, in this case, was the trustee for the investors who technically owned the loans. The city said that made Deutsche “contractually responsible” for maintenance and actions against tenants—but the bank said the city “filed this lawsuit against the wrong party.”

The L.A. Times notes that Deutsche and other banks have faced similar suits before and gotten off the hook:

In 2008, the city of Cleveland sued Deutsche Bank and other financial institutions alleging that subprime mortgage lending practices had resulted in widespread foreclosures and blight. A judge dismissed the suit.

Follow on Twitter: @mariancw



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Race and Beyond: Playing the Dozens

This article was published by the Center for American Progress.

By Sam Fulwood III

When you dig down to the nitty-gritty, there’s not much new or substantial in the ongoing beef that Princeton University’s public intellectual Cornel West picked with President Barack Obama. It’s an old-school game of “playing the dozens,” albeit an erudite version for an Internet-savvy audience. Back in the day, black kids on the playground woofed at each other, issuing verbal taunts and insult-laden rejoinders. “Your momma so skinny, she could hula-hoop with a Cheerio,” one wit might say. Then, came the reply: “Oh yeah, well, your momma so fat, her school picture was an aerial photograph.”

For the most part, the insults tossed around are meant to be good natured and entertaining. And, of course, they were never to wander far from the unarticulated propriety established by those who enjoy the game. The fun stopped if anyone crossed the line with a cutting remark that sliced too deep or proved too humiliating. Typically, such an infraction resulted on one or both players suffering a bloody nose or split lip.

A week ago, West played the dozens on President Obama. In an interview with Truthdig blogger Chris Hedges, the loquacious philosopher described a personal and political pique with the president. “I think my dear brother Barack Obama has a certain fear of free black men,” he said. And, he called him “a black mascot of Wall Street oligarchs and a black puppet of corporate plutocrats.”

Did West cross that line?

Perhaps he has, if the resulting reaction in the blogophere serves as the game’s referee. But I’m a bit more charitable toward West. Sure, West’s bottom-line complaint about the president’s policies (or lack thereof) that specifically address the dire situations in many black communities is worthy of public debate. And, yes, the good professor went awry in linking his personal issues with his public critique.

But the real issue here is a gross fear among some progressive leaders that such attacks have—or will have—bearing on the president or his ability to get re-elected. Fear not. Judging by the silence from the White House, Team Obama doesn’t seem the least concerned about the food fight that’s raging among the intelligentsia seated at the black dining table in the Ivy League faculty lounge. Indeed, the president just left Ireland, where he jested about his “O’Bama” Irish ancestry.

Why? Well, just like schoolyard games, no one who matters really cares about the taunts and insults tossed around like bubble gum and candy. So Professor West didn’t get tickets to the inauguration and his hotel doorman did. Big whoop! Endless invective over this trivia makes a sideshow of supposedly earnest public policy discourse. In this case, one played by well educated and highly compensated media stars.

After the West comments went viral, black political commentators (and a few, in-the-know white pundits) were invited to join the game on cable news shows and op-ed pages, almost uniformly rushing to the president’s defense. Most notably, Melissa Harris-Perry, who was a colleague of West’s at Princeton’s Center for African American Studies before recently accepting a position at Tulane University, tossed a few dozen insults of her own.

Writing in The Nation, she accused West of being jealous and petty. “West may have had principled, even prophetic reasons, for choosing this outsider position relative to Obama, but it is dishonest to later frame that choice as a betrayal on the part of the president,” she wrote, noting that much of West’s complains are personal, such as Obama’s refusal to return phone calls or declining to offer choice tickets to inauguration activities. “It is clear to me that West’s ego, not the health of American democracy, is the wounded creature in this story.”

Two other media-powered progressives—Jonathan Capehart of The Washington Post and Joan Walsh writing for Salon—offered provocative takes, as well. No need to summarize them here; you may read them at your leisure.

If there can be found a tiny nugget of interest in this noxious diversion, it is mildly remarkable that the media-savvy commentators happen to be African Americans, debating who is and who is not black enough to lead our nation. This is a novel development in the usually snow-white political pundit class, which tends to have these conversations with little to no black voices at the microphone. Is this progress?

I draw attention to this matter because it advances the idea that President Obama is changing the way Americans deal with race, particularly the degree of candor and visibility of the debate. That’s a great thing, even if it’s not always a straight-line move in an upward direction. There are spikes of high moments and low valleys. This West-Obama nonsense is a pitfall.

The speck of substance in West’s attack on President Obama—that the president isn’t doing enough for black Americans—has been downplayed or ignored in the freak-show hoopla of personal attacks. That’s the least important aspect of this matter. But like the way the schoolyard criers endlessly replayed the best lines during an especially rousing game of the dozens, those on the sidelines are stirring the pot to draw attention to their ability to keep the beef alive. For them, the retelling is as good as witnessing the actual event and helps make the commentators as popular as the players in the game.

Sam Fulwood III is a Senior Fellow at the Center for American Progress. His work with the Center's Progress 2050 examines the impact of policies on the nation when there will be no clear racial or ethnic majority by the year 2050.

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Consumers Union: CFPB Already Subject to Enough Oversight

A prominent consumer advocacy organization is hitting back at attempts to limit the authority of a nascent federal agency designed to protect Americans from the financial abuse rampant in the lead-up to the 2008 economic meltdown.

The Consumer Financial Protection Bureau (CFPB) is already subject to sufficient oversight and should not be hamstrung by any more constraints on its ability to protect consumers, according to Consumers Union, the nonprofit publisher of Consumer Reports.

The organization issued its statement Tuesday, the same day House Republicans plan to hold a hearing designed to rein in the new agency, which was established by last year's financial reform law.

The CFPB is to ensure that financial companies provide consumers with the information they need to understand the true costs and risks of different products. It has been charged with identifying and stopping unfair, deceptive, and abusive financial practices and keeping the rules governing financial service products up-to-date.

"Current law already provides the needed balance on the CFPB's authority without undermining its mission to serve as a watchdog for consumers," says Pamela Banks, senior policy counsel for Consumers Union. "If CFPB opponents get their way, consumers will end up with a lap dog that's all bark and no bite."

Under current law, any new rules adopted by the CFPB can be set aside by a two-thirds vote of the Financial Stability Oversight Council (made up of representatives of other banking agencies) if it determines that the rules put the stability of the financial system at risk. Other financial regulators are not subject to this kind of veto. In addition, the CFPB's funding is already subject to a ceiling limit. No other financial regulator has this kind of statutory limit on its funding, Consumers Union notes.

Earlier this month, the House Financial Services Committee approved bills that would make it easier for other financial regulators to nullify new CFPB rules, politicize the watchdog's budget by subjecting it to the appropriations process, and create more bureaucracy by replacing its director with a five-member commission. Forty-four members of the Senate have signed a letter pledging to oppose any nominee to head the CFPB unless similar changes are made.

"Consumers deserve a watchdog that can take on shady loans, hidden bank fees, and the latest financial scams," says Banks. "It's time for Congress to let the CFPB do its job and stop putting the interests of the big banks and Wall Street over consumers."


'Fair And Transparent Markets'


Elizabeth Warren, who first proposed an an agency such as the CFPB, is setting it up as special advisor to Treasury Secretary Timothy Geithner. Warren, who many on the left hope becomes President Obama's nominee to be CFPB director, was to defend the CFPB at the hearing.

"At the consumer bureau, we believe in markets – markets that make prices and risks clear and that give consumers the basic information they need to determine who is offering the best deals," Warren says in her prepared testimony. "Our primary goal is to make markets for consumer financial products and services work in a fair, efficient, and transparent manner. That means ensuring that consumers have access to information to help them understand the terms of the deal.

"Fair and transparent markets encourage personal responsibility and smart decision-making. When consumers are presented with a clearer choice between two financial products and they can easily know the costs, benefits, and risks of those products, they will be better able to make decisions that work for themselves and for their families," she adds.

The CFPB is still under construction, and as such, has gone out of its way already to be open and transparent, Warren says.

"That is why we launched our website in early February, more than five months ahead of the time the agency would assume many of its powers," she says. "We posted our draft organizational chart when we launched, and we have posted additional information about our budget and our progress in standing up the new agency over the time since. We have also consulted with various organizations dedicated to transparency in government to explore how we might add more information to our website or provide other useful data to the public.

"We are committed to letting everyone know how we are working for the American people," Warren adds. "One way we have sought to accomplish that is through the public release of my calendar. We began to post my calendar to the Treasury website proactively on November 24, 2010, even before we launched our website. We have now posted my calendar online each month and will continue to do so as a commitment to our openness."



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