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FOCUS | Obama Puts Fox In Charge of Henhouse |
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Friday, 25 January 2013 13:00 |
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Taibbi writes: "Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades?"
Matt Taibbi. (photo: Current TV)
Obama Puts Fox In Charge of Henhouse
By Matt Taibbi, Rolling Stone
25 January 13
 was shocked when I heard that Mary Jo White, a former U.S. Attorney and a partner for the white-shoe Wall Street defense firm Debevoise and Plimpton, had been named the new head of the SEC.
I thought to myself: Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn't they have found someone who isn't a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?
I'll leave it to others to chronicle the other highlights and lowlights of Mary Jo White's career, and focus only on the one incident I know very well: her role in the squelching of then-SEC investigator Gary Aguirre's investigation into an insider trading incident involving future Morgan Stanley CEO John Mack. While representing Morgan Stanley at Debevoise and Plimpton, White played a key role in this inexcusable episode.
As I explained a few years ago in my story, "Why Isn't Wall Street in Jail?": The attorney Aguirre joined the SEC in 2004, and two days into his job was asked to look into reports of suspicious trading activity involving a hedge fund called Pequot Capital, and specifically its megastar trader, Art Samberg. Samberg had made suspiciously prescient trades ahead of the acquisition of a firm called Heller Financial by General Electric, pocketing about $18 million in a period of weeks by buying up Heller shares before the merger, among other things.
"It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalled. "And he wasn't just buying shares - there were some days when he was trying to buy three times as many shares as were being traded that day."
Aguirre did some digging and found that Samberg had been in contact with his old friend John Mack before making those trades. Mack had just stepped down as president of Morgan Stanley and had just flown to Switzerland, where he'd interviewed for a top job at Credit Suisse First Boston, the company that happened to be the investment banker for . . . Heller Financial.
Now, Mack had been on Samberg's case to cut him in on a deal involving a spinoff of Lucent. "Mack is busting my chops" to let him in on the Lucent deal, Samberg told a co-worker.
So when Mack returned from Switzerland, he called Samberg. Samberg, having done no other research on Heller Financial, suddenly decided to buy every Heller share in sight. Then he cut Mack into the Lucent deal, a favor that was worth $10 million to Mack.
Aguirre thought there was clear reason to investigate the matter further and pressed the SEC for permission to interview Mack. Not arrest the man, mind you, or hand him over to the CIA for rendition to Egypt, but merely to interview the guy. He was denied, his boss telling him that Mack had "powerful political connections" (Mack was a fundraising Ranger for President Bush).
But that wasn't all. Morgan Stanley, which by then was thinking of bringing Mack back as CEO, started trying to backdoor Aguirre and scuttle his investigation by going over his head. Who was doing that exactly? Mary Jo White. This is from the piece I mentioned, "Why Isn't Wall Street In Jail?":
It didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street . . .
Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.
It got worse. Not only did the SEC ultimately delay the interview of Mack until after the statute of limitations had expired, and not only did the agency demand an investigation into possible alternative sources for Samberg's tip (what Aguirre jokes was like "O.J.'s search for the real killers"), but the SEC official who had quashed the Mack investigation, Paul Berger, took a lucrative job working for Morgan Stanley's law firm, Debevoise and Plimpton, just nine months after Aguirre was fired.
It later came out that Berger had expressed interest in working for the firm during the exact time that Aguirre was being dismissed and the Mack investigation was being quashed. A Senate investigation later uncovered an email to Berger from another SEC official, Lawrence West, who was also interviewing with Debevoise and Plimpton at the time. This is from the Senate report on the Aguirre affair:
The e-mail was dated September 8, 2005 and addressed to Paul Berger with the subject line, "Debevoise.'' The body of the message read, "Mary Jo [White] just called. I mentioned your interest.''
So Berger was passing notes in class to Mary Jo White about wanting to work for Morgan Stanley's law firm while he was in the middle of quashing an investigation into a major insider trading case involving the C.E.O. of the bank. After the case dies, Berger later gets the multimillion-dollar posting and the circle is closed.
This whole episode highlights everything that's wrong with modern Wall Street. First of all, everybody's buddies with each other - cops and robbers, no adversarial system at all. As Bill Murray would say, it's dogs and cats, living together.
Here, a line investigator gets a good lead, it's quickly taken out of his hands and the whole thing is negotiated at 50,000 feet by friends and former co-workers of the top regulators now working at hotshot firms.
If Barack Obama wanted to send a signal that he's getting tougher on Wall Street, he sure picked a funny way to do it, nominating the woman who helped John Mack get off on the slam-dunkiest insider trading case ever to cross an SEC investigator's desk.
When I contacted Gary today, his take on it was simple. "Obama is not going to clean up financial corruption," he said, "by pinning a sheriff's badge on Wall Street's protector-in-chief."
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John Nichols: Republicans Scheming to 'Win' Even if They Lose |
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Friday, 25 January 2013 08:53 |
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Nichols writes: "Republican National Committee Chairman Reince Priebus now wants to rig the Electoral College so that when Republicans lose, they still might 'win.'"
RNC Chairman Reince Priebus is taking aim at the electoral college. (photo: CNN)
John Nichols: Republicans Scheming to 'Win' Even if They Lose
By John Nichols, The Capital Times
25 January 13
 resh from claiming the GOP's 2012 run was "a great campaign - a great nine-month campaign" that went awry only at the end, Republican National Committee Chairman Reince Priebus now wants to rig the Electoral College so that when Republicans lose, they still might "win."
The defeated Wisconsin state Senate candidate who now runs a defeated national party has a long history of seeking to game the political system - from battling for restrictive voter ID laws to battling against same-day voter registration to aligning the RNC with groups that make little secret of their determination to intimidate likely Democratic voters. But nothing rivals his latest scheme to rewrite the election rules to make America not just less Democrat but less democratic.
Specifically, Priebus is urging Republican governors and legislators to take up what was once a fringe scheme to change the rule for distribution of Electoral College votes. Under the Priebus plan, electoral votes from battleground states such as Florida, Ohio, Pennsylvania, Virginia, and Wisconsin that now regularly back Democrats for president would be allocated not to the statewide winner but to the winners of individual congressional districts.
Because of gerrymandering by Republican governors and legislators, and the concentration of Democratic votes in urban areas and college towns, divvying up Electoral College votes based on congressional district wins would yield significantly better results for the GOP. In Wisconsin, where Democrat Barack Obama won in 2012 by a wider margin than he did nationally, the president would have received only half of the electoral votes. In Pennsylvania, where Obama won easily, he would not have gotten the 20 electoral votes that he did; instead, under the Priebus plan, it would have been 13 for Republican Mitt Romney, seven for Barack Obama.
Nationwide, Obama won a sweeping popular-vote victory - with a margin of almost 5 million votes, making him the first president since Dwight Eisenhower to take more than 51 percent of the vote in two elections. That translated to a very comfortable 322-206 win in the Electoral College.
How would the 2012 results have changed if a Priebus plan had been in place? According to an analysis by FairVote: The Center for Voting and Democracy, the results would have been dramatically closer and might even have yielded a Romney win.
Under the most commonly proposed district plan (the statewide winner gets two votes with the rest divided by congressional district), Obama would have secured the narrowest possible win: 270-268. Under more aggressive plans (including one that awards electoral votes by district and then gives the two statewide votes to the candidate who won the most districts), Romney would have won 280-258.
"If Republicans in 2011 had abused their monopoly control of state government in several key swing states and passed new laws for allocating electoral votes, the exact same votes cast in the exact same way in the 2012 election would have converted Barack Obama's advantage of nearly 5 million popular votes and 126 electoral votes into a resounding Electoral College defeat," explains FairVote's Rob Richie.
This is something Priebus, a bare-knuckles pol who promoted a variety of voter disenfranchisement schemes in 2012, well understands.
The RNC chair is encouraging Republican governors and legislators- who, thanks to the "Republican wave" election of 2010, still control many battleground states that backed Obama and the Democrats in 2012 - to game the system.
"I think it's something that a lot of states that have been consistently blue (Democratic in presidential politics) that are fully controlled red (in the statehouse) ought to be considering," Priebus says with regard to the schemes for distributing electoral votes by district rather than the traditional awarding of electoral votes to a state's overall winner. (The exceptions are Nebraska and Maine, which have historically used narrowly defined district plans.)
Already, there are moves afoot in a number of battleground states to "fix" the rules to favor the Republicans in 2016, just as they have already fixed the district lines for electing members of the House. Thanks to gerrymandering and the concentration of Democratic votes, Republicans were able to lose the overall nationwide vote for U.S. House seats by 1.4 million votes and still keep control of the chamber - thus giving the United States the divided government that voters have rejected.
There are many reforms that are needed to expand democracy in the United States. But gaming the Electoral College is not one of them.
Indeed, as Richie says, the very fact that it is possible to rewrite the rules and use gerrymandered congressional district lines to thwart the will of the people regarding the election of the president of the United States "should give us all pause."
"The election of the president should be a fair process where all American voters should have an equal ability to hold their president accountable," says Richie. "It's time for the nation to embrace one-person, one-vote elections and the ‘fair fight' represented by a national popular vote. Let's forever dismiss the potential of such electoral hooliganism and finally do what the overwhelming majorities of Americans have consistently preferred: make every vote equal with a national popular vote for president."
That's the right standard for a modern nation that respects democracy.
And Reince Priebus, who was wrong about the Republicans running a "great" campaign in 2012, is even more wrong when he proposes rule changes that would allow a losing Republican candidate to "win" the presidency.
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Why Filibuster Reform Didn't Happen |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=23815"><span class="small">Chris Cillizza, The Washington Post</span></a>
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Friday, 25 January 2013 08:47 |
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Cillizza reports: "So, why did Senate Majority Leader Harry Reid (Nev.) cut a deal on filibuster reform despite having voiced support in the not-too-distant past for the possibility of big changes?"
A scene from 'Mr. Smith Goes to Washington.' (photo: Colombia Pictures)
Why Filibuster Reform Didn't Happen
By Chris Cillizza, Washington Post
25 January 13
 he news of an agreement that skirts around the edge of reforming Senate filibusters without actually, you know, reforming the filibuster will disappoint liberal Democrats and leave old Senate hands saying "I told you so."
So, why did Senate Majority Leader Harry Reid (Nev.) cut a deal on filibuster reform despite having voiced support in the not-too-distant past for the possibility of big changes? We talked to a few smart Democratic political minds and put that question to them. Their thoughts - coupled with our own observations - are below. And, make sure to read Reid's explanation to Wonkblog's Ezra Klein for why he did what he did.
No one cares about filibuster reform. While that previous sentence is an exaggeration, it's only a slight one. The people who do care about filibuster reform are liberal activists and liberal donors. They believe that the rules as they currently stand are a perversion of democracy and must be fundamentally altered. For the rest of the country, however, the filibuster barely registers - much less the attempts to reform it. Doubt it? Check out this 2010 Pew poll where just 26 percent of people knew it took 60 votes to break a filibuster. Given that lack of care/concern among the general public, it made little sense for Reid to risk poisoning the Senate well with bigger fights on sequestration and funding the government looming.
Reid is an institutionalist….: Harry Reid has spent the past three decades of his life in the Senate and, like many of the men and women who have dedicated their lives to the chamber, believes deeply in honoring its traditions. "With the history of the Senate, we have to understand the Senate isn't and shouldn't be like the House," Reid told Ezra. In short: Reid didn't want to be the one who changed the accepted tradition of requiring a two-thirds vote of the Senate to change the rules of the Senate. He knew - rightly - that invoking that so-called "nuclear option" would not only complicate what he wants to get done in the near term (see above) but also would change the way his Senate legacy is and will be perceived.
…and Reid is a pragmatist: Reid has been around long enough to know that politics moves in cycles. One day you are the Senate Majority Leader, the next you are the Senate minority leader. (Remember how Republicans were on the cusp of building permanent GOP majorities in 2004? How did that work out for them?) Reid, an astute political strategist in his own right, understands that the 2014 Senate landscape doesn't favor his party and could well lead to Democrats in the minority when the next Congress convenes in early 2015. And, given that, he didn't want to scuttle his own side's ability to slow down/tie up the proceedings if the tables are turned in two years time.
Baby steps: To quote Bill Murray in "What About Bob": "All I have to do is take one little step at a time and I can do anything." (Incredibly underrated movie, by the way.) A look back at some of the biggest things the Senate has done - in terms of their impact on history, political and otherwise - suggests that the first step toward change is the hardest, but once it's made the next steps are easier. The most historically important moment that saw the "baby steps" approach work was the 1957 Civil Rights Act. (And, no, we are not directly equating civil rights with filibuster reform but rather noting it as an example of how the Senate works its will.) While the 1957 bill was decried as too watered-down to really change much of anything, its passage loosened the gridlock around the issue and led to the far more sweeping 1960 Civil Rights Act. Reid understood that and figured that taking a single small step on filibuster reform was better than taking no step at all.
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A Fine Speech |
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Thursday, 24 January 2013 15:41 |
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Rich writes: "There are limits on what any president can achieve when (a) Congress is held hostage by radicals of the other party and (b) he will be a lame duck in about eighteen months."
President Obama extends former President George W. Bush's tax cuts for the rich, 12/17/10. (photo: Saul Loeb/AFP/Getty Images)
A Fine Speech
By Frank Rich, New York Magazine
24 January 13
Every week, New York Magazine writer-at-large Frank Rich talks with assistant editor Eric Benson about the biggest stories in politics and culture. This week: Obama's inaugural, the GOP's debt-ceiling surrender, and the future of abortion rights.
 resident Obama's second inaugural address has been widely praised by liberals for championing "collective action" and advocating for gay rights, climate-change legislation, and progressive immigration reform. This speech was one of Obama's clearest articulations of his progressive worldview, rivaling the effectiveness of Bill Clinton's turn at the Democratic Convention. Will it matter?
A fine speech, but only actions matter, of course. There are limits on what any president can achieve when (a) Congress is held hostage by radicals of the other party and (b) he will be a lame duck in about eighteen months. Any progress on climate change and on gun control may well depend on whatever Obama can accomplish through executive actions. On immigration reform, the president has the leverage to achieve more. Even the present-day GOP isn't enough of a suicide cult to keep antagonizing and demonizing the fast-growing Hispanic electorate that threatens its very existence. It's also possible that the president's rhetorical elevation of gay rights, including marriage rights, to the pantheon of historic American civil rights battles, equating Stonewall with Selma and Seneca Falls, may have some impact on John Roberts, the legacy-minded chief justice. As I've said before, I doubt Roberts wants to go down in history as the jurist who blocked equality for gay Americans, particularly since full equality increasingly looks inevitable. Obama's formulation crystallized the crossroads at which Roberts finds himself: He can be the Earl Warren of Brown v. Board of Education or Roger Taney, whose court delivered the infamous Dred Scott decision before the Civil War.
Conservatives were largely critical of Obama's inaugural address, with John McCain saying he wished the president had done a "little more outreach" and Paul Ryan accusing him of "shadowbox[ing] a straw man." Does the GOP reaction tell us anything about what's going to happen over the next year and a half?
So what else is new? It would have been shocking if they had liked the speech; they've loathed Obama from day one. Indeed, it's somewhat alarming to learn that Newt Gingrich was the rare Republican to praise the president, calling the address not particularly liberal and extolling "95 percent" of it as "classically American." It's enough to make one fear that Newt, ever the opportunist and something of a pariah in his own party after his vitriolic assault on Romney and Bain, has a new political reinvention up his sleeve. The Democrats batten down the hatches.
House Republicans are expected to pass a bill later today that would ignore (but not raise) the debt ceiling, with May 18 selected as the next false doomsday deadline. Was this a shrewd political move from the Party of No? Or was it, as tea-party Senator Rand Paul sees it, a GOP retreat?
Here is a sentence I won't be using often: Rand Paul is right. No matter how they try to spin it with Frank Luntz-approved language, the House Republicans have, as Paul put it, waved "the white flag of surrender," abandoning their previous imperative that any extension of the debt limit must be tied to matching budget cuts. This was the second GOP white flag between the election and the Inaugural, the first being the collapse of the Republican pledge to never raise taxes during the "fiscal cliff" standoff. This shows what the post-Kumbaya Obama can achieve with the wind of victory at his back, when he holds to his key principles, and when he abandons fantasies of bipartisan compromise with the Party of No.
Obama's inauguration coincided with the release of a new NBC-WSJ poll showing a small uptick in support for abortion rights on Roe v. Wade's 40th anniversary. (Overall, 70 percent of Americans now favor upholding Roe and a majority has long favored legal abortions.) But while Obama ran on abortion rights, he declined to mention them in his inaugural despite name-checking gay rights, immigrant rights, civil rights, and equal pay for women. How essential are abortion rights to the progressive platform? The Roberts court has already stood up for guns. What if it further chips away at choice?
It was an odd omission by Obama, but I doubt we should read anything into it, anymore than we should overinterpret his scant allusion to gun control. What is significant is that Bill McInturff, the Republican pollster who collaborates on the NBC-WSJ poll, pronounced the rise in Roe support as "profound." Not only did 70 percent favor upholding Roe, but 57 percent felt "strongly" about it. My own strong conviction is that abortion rights are essential, period; I find the notion that government would regulate women's health decisions appalling - as do most Americans, including libertarian conservatives in the Goldwater tradition. I think the uptick in Roe support happened because the 2012 tea party GOP senatorial candidates Todd Akin and Richard Murdock, with their outlandish remarks about rape, along with Rush Limbaugh's verbal assault on the Georgetown University law student Sandra Fluke, alerted American women to the growing threat to their reproductive rights. If the Roberts court undermines reproductive rights, it's tragic news for American women but it may further mobilize voters to support the party that will push back.
Our colleague Joe Hagan broke a story that Donald Trump "has engaged in more than one meeting" to explore buying the Times. One imagines a Trump takeover is unlikely, but that said, how do you imagine the Donald would reshape the Gray Lady?
Whatever the fate of the Times, it is a sure bet that Trump will not be a player. As a fan of the old, long-defunct Trump board game, what I do look forward to is a Trump app, which could be one-stop shopping for his various self-promoting PR campaigns, his Obama conspiracy theories, and his daily Twitter temper tantrums. As for Trump the erstwhile media mogul, I doubt he could even reshape the New York Observer, which is owned by his son-in-law.
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