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The Colossal Blunder That is the Iraq War Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=11104"><span class="small">Charles Pierce, Esquire</span></a>   
Sunday, 13 January 2013 14:38

Pierce writes: "One of the more subtle benefits of the nomination of Chuck Hagel for Secretary Of Defense is that it has required in our political discourse that we re-litigate...the sweeping criminal fraud that was the selling of the war in Iraq."

Pierce: 'The Avignon Presidency's excellent adventure in Iraq was a fake from start to finish.' (photo: Getty Images)
Pierce: 'The Avignon Presidency's excellent adventure in Iraq was a fake from start to finish.' (photo: Getty Images)



The Colossal Blunder That is the Iraq War

By Charles Pierce, Esquire

13 January 13

 

ne of the more subtle benefits of the nomination of Chuck Hagel for Secretary Of Defense is that it has required in our political discourse that we re-litigate -- or, arguably, litigate honestly for the first time -- the sweeping criminal fraud that was the selling of the war in Iraq by the administration of George W. Bush. Remarkably, at least in the prominent arenas of public discussion, the "left" side of this debate is primarily represented by people who supported the criminal fraud at first -- like Peter Beinart and, admittedly, Hagel himself -- and who then soured on the whole business either because they saw what a massive blunder it was, or because they needed to obfuscate their own hysterical support of it in order to maintain their public credibility in a country that was realizing that they'd helped play it for a sucker. And hello to you, too, Andrew Sullivan.

Let us be clear. The Avignon Presidency's excellent adventure in Iraq was a fake from start to finish, planned long in advance of the 9/11 attacks and sold to the country on the basis of "evidence" that bordered on the risible. (Remember the Iraqi drones spraying anthrax up the Hudson?) More to the point, there were people who knew it at the time, who talked about it at the time, who yelled about it at the time, and who, at best, were ignored and, at worst, slandered and marginalized. Those voices are still on the outskirts of the conversation, as though the more right you were, the less credibility you had.

This phenomenon continues today. There were the people who were right all along. These included Al Gore, Hans Blix, the Washington bureau of the McClatchy news service, and any member of Congress who voted against the resolution. A subset of this group are the people who were right all along but didn't do enough. These included all those CIA types who knew what was going on, but who couldn't quite bring themselves to raise a sufficient amount of hell. These groups have been shoved aside again in favor of the people who feel really bad about their mistake, or who, like the ubiquitous Michael O'Hanlon, have chosen not to speak much of it again. They were serious people about supporting the war and serious people now that they take their regrets out for a walk on TV. Serious is as serious does, I reckon. We never are going to get right with this colossal blunder until this kind of thinking changes. With too many people spoiling for a fight with Iran, against which Hagel already has lined up, this is not a healthy bit of business.

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Character and Rape in Ohio Print
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=20877"><span class="small">William Boardman, Reader Supported News</span></a>   
Sunday, 13 January 2013 09:01

Boardman writes: "The girl was from another state, across the river, and didn't go to the local high school, so she was disposable."

Boardman: 'Peaceful public demonstrations in Steubenville have drawn crowds in the thousands.' (photo: Jimmyz Photography/OccupySteubenville/flickr)
Boardman: 'Peaceful public demonstrations in Steubenville have drawn crowds in the thousands.' (photo: Jimmyz Photography/OccupySteubenville/flickr)



Character and Rape in Ohio

By William Boardman, Reader Supported News

13 January 13


Reader Supported News | Perspective

 

If you Google "Steubenville Rape Case" you get more than 70 million results in less than a second. The trial of two juveniles is scheduled for February 13th, but a defense attorney is seeking a delay and a change of venue. This report offers a documented account of the initial events and investigation, and their context. Much remains uncertain or unknown, but it's reasonable to conclude that the most credible information has not come from the participants, the authorities, or the mainstream news media. And it's far from over. -- wb/RSN


Steubenville community is revealed in rape case responses.

he girl was from another state, across the river, and didn't go to the local high school, so she was disposable - apparently - not just to the high school football players who raped her or watched or took pictures, but she was also disposable to the lackadaisical police officers who investigated, to football coaches who testified as character witnesses for the accused, to the school authorities who let the football coach handle the situation, to the woman prosecutor with a football player son, and to all too many residents of the town of 18,000 with the need for a winning football team more on its mind than justice, or decency.

This image of the victim was posted online by Steubenville football player Cody Saltsman. (photo: Cody Saltsman/Instagram)This image of the victim was posted online by Steubenville football player Cody Saltsman.
(photo: Cody Saltsman/Instagram)

Although two of the 50 or more people taking part in the hours-long event were arrested eight days after the girl's parents reported the rape, there is little evidence that the authorities in the town acted as responsibly and conscientiously as they should have at the time, or at any time since last August. Rather, they appear to have done as little as they thought they safely could, without obvious dereliction of duty, out of fear of (or agreement with) prevailing community standards of behavior and local power structures. Perhaps the trial will dispel that impression.

Teenagers Drinking Was OK With Community

That impression, however, is the picture that emerges in early January from publicly available coverage of the "Steubenville Teen Rape Case," as one local Ohio TV station now brands it. The story is still evolving, attorneys are stepping up their media game, online observers of various sorts continue to weigh in, peaceful public demonstrations in Steubenville have drawn crowds in the thousands (another is called for February 2nd), people on all sides of the issues claim they're being threatened (an unsubstantiated Facebook post on January 8th led the high school to shut down and add permanent, unarmed guards), and the accused are not scheduled for trial until mid-February.

On Saturday, August 11, 2012, the Steubenville High School football team held its last scrimmage before the start of the fall season and prepared to party that night at three or more local homes. At least one of the hosts would be one of the school's 19 coaches (most of them volunteers). To no one's apparent surprise, the venues offered beer and liquor to underage players and their friends. Even in retrospect, it's hard to find anyone who thought this was an unusual event at the time. Steubenville loves its high school football team, though not everyone in town thinks that's a good thing.

The party was on. Sophomore starting quarterback Trent Mays, 16, posted on Twitter: "Party at jake howraths!!!! Huge party!!! Banger!!!!"

Steubenville Has a Long, Checkered Past

Head coach Reno Saccoccia said that because he hadn't seen the Internet posts he had no reason to suspend players. (photo: Newbrough Photography/Roll Red Roll)Head coach Reno Saccoccia said that because he hadn't seen the Internet posts he had no reason to suspend players. (photo: Newbrough Photography/Roll Red Roll)

Steubenville, Ohio, has had a reputation as a dark and dangerous place for generations, as a good many current and former residents sometimes ruefully attest. As The New York Times put it December 16th, in one of the few detailed accounts of August 11th and its aftermath: "The city once was teeming with so much gambling, prostitution and organized crime that Steubenville was given the nickname Sin City." Today, reports allege a violent drug trade (including cocaine and heroin) as well as well-established gambling operations.

The city of 18,400 has been losing population since it peaked at 37,651 in the 1940 census; since 1980, the Weirton-Steubenville region has lost population faster than any other US urban area. But football fans still fill the newly renovated, 10,000-seat Harding Stadium, complete with press box and lights, for "Big Red" games. And the team has rewarded them over the years with undefeated seasons in 2005 and 2006, as well as a 68-game winning streak in regular season games that didn't end until 2009. So if a group of the team's 86 high school players referred to themselves as "The Rape Crew," not many people took it seriously, or as anything more than adolescent bravado. (The New York Times and others omit mention of "The Rape Crew" in recent coverage, but extensive, mostly reliable background information provided by Local Leaks, an anonymous WikiLeaks-type website, offers enough verifiable detail to suggest that it was a real enough high school clique in August 2012.)

Fundamental Question: Did They Use a Date Rape Drug?

There are two basic versions of the August 11th party. In December, The Times summarized the end of the revels this way:

"By sunrise, though, some people in and around Steubenville had gotten word that the night of fun on Aug. 11 might have taken a grim turn, and that members of the Steubenville High football team might have been involved. Twitter posts, videos and photographs circulated by some who attended the nightlong set of parties suggested that an unconscious girl had been sexually assaulted over several hours while others watched. She may have even been urinated on."

A darker version of the story has also been circulating for months, reported early in September by the Cleveland Plain Dealer, as if it was already familiar news:

A protester asks a poignant question. (photo: Sutdog/OccupySteubenville/flickr)A protester asks a poignant question.
(photo: Sutdog/OccupySteubenville/flickr)
"Officials continue to investigate details of the reports - that the girl was drugged into unconsciousness, ferried from party to party, raped and urinated on before ending up at home where her parents, discovering she was disoriented, took her to a local hospital."

A few days earlier, the crime-oriented blogger on prinniefied.com reported that she had:

"... read many accounts of what transpired, but the end result was a young girl was brutally raped and attacked by members of the Steubenville High football team and it was videotaped and posted on the Internet. I am not solely pointing the finger at the football team because there were boys who took part in this attack who were also on the wrestling team, baseball team and track teams...."

Although some people continue to deny it, there seems little doubt that something awful and ugly happened for hours during the night and early morning of August 11-12, that it was perpetrated by teenagers, but that it went unnoticed by the adults hosting the parties and has been minimized as much as possible ever since by almost all of the other adults directly involved, except the sixteen-year-old girl's parents. When they had last seen their daughter on August 11th at their two-story colonial house in Weirton, West Virginia, she was still just a girl who attended a religion-based school where she was an honor student and an athlete.

Sixteen-year-olds Ma'lik Richmond (top) and Trent Mays have both been charged in the case. (photos: file)Sixteen-year-olds Ma'lik Richmond (top) and Trent Mays have both been charged in the case. (photos: file)

Aftermath: Agonizing Realizations and Questions

There is no credible public record of what the girl and her family went through all that Sunday or in the days after. The girl has said she had no memory of the evening before, from the time she was picked up to go to the party (early reports said she was given a "roofie" or date rape drug in the car). On Sunday, the parents - and the girl - couldn't avoid learning about the party through social media, thanks to friends who told them about the flood of comments, pictures, and video circulating through the community. At some point on Sunday or Monday, the parents took their daughter to the hospital and notified the Steubenville Police Department. Very late on Monday, August 13th (recorded at 1:38 am on Tuesday), the parents went to the police station to deliver a computer flash drive on which, downloaded from the Internet, were incriminating words and images from those who had acted and watched.

Steubenville Police Chief William McCafferty has been on the force for 23 years. He became chief 13 years ago, in the wake of a Steubenville scandal involving police patterns of making false arrests and using excessive force that resulted in a lawsuit against the city by the US Justice Department. In 1997, Steubenville became only the second police department in the country forced to sign a consent decree, promising to clean up its act - especially in handling domestic violence cases.

As a result, "Steubenville Facts" (the city's website put up January 5, 2013) notes:

"Prior to the Chief of Police being permanently appointed to that position, he was vetted and approved by officials in the US Department of Justice, which was at that time monitoring a Court Consent Decree involving the Steubenville Police."

Investigation: Who Was In Charge?

From the beginning of the gang-rape investigation, Chief McCafferty asked people to come forward if they had information. Five months later he was still asking. Only one witness had come forward, he told The Times. Three witnesses testified at a probable cause hearing in the fall.

The chief has complained publicly that the department has only one officer to investigate juvenile crimes, but the police department has 38 officers. It's not clear from McCafferty's public statements how seriously he took the investigation.

There's little mystery about the identities of most of those involved directly and indirectly. For whatever reason, it took about four days after receiving the flash drive for the authorities to seek warrants for cell phones and iPads of party-goers, eventually collecting 15 phones and two iPads, many of which had been scrubbed clean by that time.

In early September, according to the Plain Dealer:

Steubenville Police Chief William McCafferty. (photo: WTRF.com)Steubenville Police Chief William McCafferty.
(photo: WTRF.com)
"Police said they were still awaiting results on other physical and biological evidence collected at a crime scene and a local hospital. Lab tests should also reveal whether the victim was drugged."

In December, The Times was reporting that police said that a "medical examination at a hospital more than one day after the parties did not reveal any evidence, like semen, that might have supported an accusation of rape." The Times went on, with an odd bias toward the police, saying that the flash drive:

"... was all the evidence the girl's parents had, leaving the police with the task of filling in the details of what had happened that night. The police said the case was challenging partly because too much time had passed since the suspected rape. By then, the girl had taken at least one shower and might have washed away evidence, said McCafferty, the police chief. He added that it also was too late for toxicology tests to determine if she had been drugged."

Besides implicitly blaming the victim, the chief's assertions are clearly wrong. Why The Times accepted them uncritically is a mystery, given the availability of facts. While the passage of time - in this case something less than 48 hours - makes a difference, a medical exam is still relevant. Nor was it too late for a toxicology test, since date rape drugs can be detected in urine up to 72 hours later, and longer in hair.

Prosecutor Ignored Her Own Conflicts of Interest

The Jefferson County Prosecuting Attorney, Jane Hanlin, actively participated in the investigation from the start, even though she personally knew many of those she was investigating, including her son - who was starting his senior year, was a lineman on the football team, and was one of its six captains. Reportedly, one of the August 11th parties was hosted by her son at attorney Hanlin's house, a report she answered in January 2013 with a non-denial denial.

Hanlin, 42, who is married to a Steubenville police detective, became the first female county prosecutor in March 2011, following a unanimous vote of the Jefferson County Democratic Party Central Committee. Appointed to fill the term of the retiring prosecutor, she faces election in 2013. Up until her appointment she was an assistant prosecutor who also served as president of the Steubenville City Schools Board of Education. While serving in the prosecutor's office, she has maintained her private law practice. She said at the time of her appointment that her goal was to work with county law enforcement:

Jefferson County Prosecutor Jane Hanlin. (photo: WTRF.com/WorldNow)Jefferson County Prosecutor Jane Hanlin.
(photo: WTRF.com/WorldNow)
"That will be my biggest focus - improving relations with law enforcement. The success of the prosecutor's office only comes with cooperation with law enforcement. They put a lot of effort into catching criminals. Our job is to work with them to successfully prosecute the criminals."

Hanlin had provoked criticism of her ethics in the spring of 2012 as well when, despite being a public prosecutor, she chose to testify as a character witness for a Steubenville High School graduate who was an older friend of her son. The graduate had pleaded guilty to two charges of felonious assault and faced a sentence of 2 to 10 years on each. After she and fours others testified in West Virginia on the graduate's behalf, he was sentenced to 5 years probation and 250 hours of community service. Other conditions included abstaining from alcohol or drugs, random drug testing, continuing in Alcoholics Anonymous, and keeping a steady job.

Hints of the Old Boys' Club of Steubenville

One of Hanlin's biggest boosters for prosecutor was Jefferson County Democratic Party Chairman John Abdalla, who said Hanlin had won a conviction in every case she'd tried over the previous six years, all upheld on appeal, adding:

"Jane Hanlin takes the bad guys to trial and then shows them the prison door. That makes her perfect for the job."

During the summer of 2010, Abdalla faced ethical questions as the result of the Ohio Inspector General looking into as much as $250,000 in missing road salt from the transportation department. The story and reader comments also refer to apparent political patronage: transportation department jobs dispensed through the Democratic county committee.

Jefferson County Sheriff Fred Abdalla. (photo: Robin Rombach/Pittsburg Post-Gazette)Jefferson County Sheriff Fred Abdalla.
(photo: Robin Rombach/Pittsburg Post-Gazette)

Although the Steubenville police had primary jurisdiction of the investigation into the events of August 11-12, the Jefferson County Sheriff's Department also played a role. Steubenville is the county seat, and Sheriff Fred Abdalla is a Steubenville resident. In the fall of 2011, the sheriff worked with federal agents on the case of an Amish group terrorizing other Amish by cutting their hair. The case led to seven arrests. According to Abdalla, the leader of the Amish group is "evil," an issued a death threat to the sheriff.

Although both the city police department (with primary jurisdiction) and the county sheriff's office participated in the investigation, it's not clear who, if anyone, was in charge. The investigators, now including the state attorney general's office and the FBI, have said little publicly beyond indicating, as Ohio Attorney General Mike DeWine said January 7th, that the investigation continues and there may be more arrests or no more arrests. Prosecutors have time - 2 years for misdemeanors and 6 years for felonies - to bring further charges if evidence supports that.

Evidence Was Gathered - Slowly

On August 17th, after collecting cell phones and iPads, and three days after receiving the flash drive, the police sought forensic assistance from the Bureau of Criminal Investigation (BCI) in the attorney general's office. After examining the materials, Joann Gibbs of BCI reportedly recovered two pictures of the victim, but said that deleted material could not be recovered from Apple iPhones.

On August 22, 2012, ten days after unknown persons left the still disoriented sixteen-year-old on the front lawn of her house, authorities announced the early-morning arrests of two sophomore football players, both 16 years old, with the possibility under Ohio law of being tried as juveniles or adults. WTOV News9 put the story on its Facebook page at 9:02 am.

The first two comments on the story were: "Its about time," and "I can't believe they arrested anyone at all, after all this is Jefferson County!" Another 50 or more comments that day mostly expressed similar sentiments, widespread familiarity with the story, and deep distrust of Steubenville authorities, who were then still in control of the case.

Two days after the arrests, under prosecutor Hanlin's direction, the county charged the two boys as juveniles, although Ohio law allows for them to be tried as adults if the court is persuaded at a hearing that the evidence warrants the change. Trent Mays and Ma'lik Richmond were both charged as delinquents, with the underlying charges of rape and kidnapping. Mays was also charged with illegal use of a minor, based on a photo in his phone. Both were starters on the football team, Mays at quarterback and Richmond as a wide receiver. Mays was also a wrestler, Richmond a highly-regarded basketball player.

Arrests, but Still Suspicions of a Cover-Up

They had both been arrested without incident after 1 am, one by the city police and the other by the county sheriff. As WTOV News9 reported later on the day of the arrest:

"... officials said the suspects could face additional charges and more arrests may be forthcoming....

"During the juvenile detention hearing, one of the teens had legal representation and the second suspect's parent said they would obtain an attorney as well....

"The story is evoking much reaction from the public. The prosecutor's office, the sheriff's office and Steubenville police said they've all received an influx of calls from concerned citizens.

"[prosecutor] Hanlin said any claims of a cover-up are untrue....

"Hanlin said on Tuesday she would recuse herself from the case because she knows too many of the individuals ..."

Alex Goddard, 'Prinnie,'  has been writing about and investigating crime cases for over 10 years, and is a former resident of Steubenville. (photo: unknown)Alex Goddard, 'Prinnie,' has been writing about and investigating crime cases for over 10 years, and is a former resident of Steubenville. (photo: unknown)

In this context of fragmentary knowledge and sweeping suspicion, the arrest news drew the attention of a veteran Ohio crime blogger who had once lived in Steubenville. Two days after news of the arrests broke, Alexandria Goddard, 45, started posting on her blog, prinniefied.com, because, as she commented on December 30th,

"I wrote about the case to vent my outrage at everyone involved who did nothing to help this young lady. I am astonished at just how big this has gotten."

National Media Miss Story, Blame Messengers

The first national coverage of the story had come from The Times two weeks earlier, and has since spread in mainstream media and on the Internet. In its initial story, The Times had snidely, but wrongly, blamed Goddard for the way the story has grown, while the paper equally snidely cast doubt on the victim:

"Within days of the possible sexual assault, an online personality who often blogs about crime zeroed in on those public comments and photographs and injected herself into the story, complicating it and igniting ire in the community. She posted the information on her site and wrote online that the police and town officials were giving the football players special treatment."

In fact, Goddard's first online post was August 24th, two days after the story of the arrests was widely covered. Three days later, Goddard posted the evidence she had collected from social media, material that was still available despite the efforts of partygoers to delete anything incriminating.

With Mays and Richmond in jail and the authorities making no further arrests, the story largely disappeared from the mainstream media, but remained a subject of intense feeling on the Internet. On August 28th, after managing the case for more than two weeks, prosecutor Hanlin finally recused herself, turning her authority over to state special prosecutors Marianne Hemmeter and Jennifer Brumby of the Attorney General's Crimes Against Children unit, and they remain on the case.

Visiting Juvenile Court Judge Tom Lipps ruled that the defendants should be tried as juveniles. (photo: Mark Law/Weirton Daily Times)Visiting Juvenile Court Judge Tom Lipps ruled that the defendants should be tried as juveniles.
(photo: Mark Law/Weirton Daily Times)

Juvenile Court Hearing, Accused on House Arrest

On November 1st, Visiting Judge Tom Lipps held a two-hour hearing on the question of whether Mays and Richmond should be treated as adults by the courts. He heard from the defendants' parents and attorneys, all of whom asked that the case remain in juvenile court. The prosecutors asked that the court treat the pair as adults.

"They knew better than to treat a girl as they did," Brumby told the court. "Instead of helping her, they sexually assaulter her."

The girl's mother also testified as to her daughter's continued suffering, ostracized by her friends and their parents, not sleeping much, crying at night. But as to trying the defendants as adults, she said only, "I thought about it over a million times, and I leave it in God's hands."

In the end, Judge Lipps ruled that the boys would be tried in juvenile court. He released them to their families on electronically monitored house arrest, allowed to leave home only for church or the special education program at the jail. He ordered them to have no contacts with others involved in the case, or with the victim.

She has her own form of house arrest.



William Boardman runs Panther Productions.

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

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Jacob Lew: Wall Street on the Potomac Print
Friday, 11 January 2013 15:35

Black writes: "Lew is the real deal, another brick in Obama's creation of Wall Street on the Potomac."

Jacob Lew has been nominated to oversee the budget for the entire Federal government. (photo: Mark Wilson/Getty Images)
Jacob Lew has been nominated to oversee the budget for the entire Federal government. (photo: Mark Wilson/Getty Images)


Jacob Lew: Wall Street on the Potomac

By Bill Black, Reader Supported News

11 January 13

 

he New York Times has just run two articles confirming that President Obama intends to appoint Jacob Lew as Treasury Secretary Geithner's replacement. Most people assume that Geithner is a creature of Wall Street through direct employment, but Geithner never drew a paycheck directly from Wall Street. Geithner worked for a wholly-controlled subsidiary of Wall Street - the Federal Reserve Bank of New York. Lew is the real deal, another brick in Obama's creation of Wall Street on the Potomac. While the first NYT article ignored Lew's work on Wall Street, the second article simply tries to minimize it.

Mr. Lew had a brief turn in the financial industry before joining the Obama administration four years ago, working at the financial giant Citicorp, first as managing director of Citi Global Wealth Management and then as chief operating officer of Citigroup Alternative Investments.

"Global Wealth Management" refers to banking services for the wealthiest people in the world, a club in which mere millionaires are barely worth having as a client. "Alternative investments" refers to financial derivatives traded for the bank's own account. Lew's training was as a lawyer. From CBS News:

Obama is clearly comfortable bringing another ex-Wall Streeter into an administration that, beyond a recent ratcheting up of populist rhetoric, has done relatively little to rein in the financial industry.

That, in turn, reflects the ease with which Washington hands like Lew shuttle between the Street and the Hill. Case in point: Lew's predecessor as budget chief, Peter Orszag, left the agency and joined Citi as vice chairman of global banking. A job in politics is no longer a back-door to a lucrative job in banking - it's a red carpet. The revolving door keeps spinning.

The Citi [alternative investments] division ultimately lost billions. As for Lew, he naturally made big bucks during his three-year stint at Citi, including a roughly $950,000 bonus in 2009 - after the company's federal bailout.

Lew helped establish finance policy under President Clinton.

Lew served as OMB chief from May 1998 to January 2001 during the Clinton administration, when Clinton signed into law the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000 - two pieces of legislation at the heart of the deregulation of Wall Street. The first repealed the law that had long kept commercial banks from offering products or engaging in services more common with investment banks; the second "eliminated virtually all regulation" over the kind of derivatives that trade outside regulators' view....

Lew's predecessor as chief of staff was William Daley. Daley is a lawyer. Daley was on the executive board of J.P. Morgan-Chase during the crisis and before that he was on Fannie Mae's board of directors. Daley is a member of "Third Way's" controlling board. Third Way is a Pete Peterson ally that lobbies in favor of austerity and cuts to the safety net. It pushes Wall Street's, and Pete Peterson's, greatest dream - privatizing Social Security. Privatization would allow Wall Street to increase its profits by hundreds of billions of dollars in fees for managing our retirement savings.

Daley's predecessor as Obama's chief of staff was Rahm Emanuel. Emanuel's degrees are in the liberal arts and communications. Clinton appointed him to Freddie Mac's board of directors during the period when the board was heavily criticized for its failure to prevent massive accounting abuses at Freddie Mac. Emanuel worked for Wasserstein Perella, the prominent investment banking firm.

The obvious aspects of this pattern include: (1) Obama prefers to have Wall Street guys run finance (despite coming to power because Wall Street blew up the world), (2) the revolving door under Obama that connects Wall Street and the White House has been super-charged, and (3) even very short stints in Wall Street have made Obama's finance advisers wealthy. The obvious is vitally important, and it is largely ignored by the most prominent media. The obvious aspects help explain why Obama's economic policies have been incoherent, ineptly explained, inequitable, and often slavishly pro-Wall Street at the expense of our integrity and citizens.

The unobvious aspects of the pattern compound these problems. First, Obama likes to surround himself with failures. Geithner set the pattern. He was supposed to be the principal regulator of most of the largest U.S. bank holding companies. He was an abject failure. His speeches and his statements at the Federal Reserve System's FOMC meetings during the crisis demonstrate that he remained clueless to the end. For reasons of brevity, I discuss only three of his failures as Treasury Secretary below.

Lew has gone from failure to failure. He was one of the architects of both of the Clinton administration's disastrous statutory deregulatory actions that helped produce the epidemic of accounting control fraud that drove the Great Recession.

Emanuel and Daley were failures as directors of Fannie and Freddie. Lew was a failure at Citicorp's proprietary derivatives trading arm. That failure is particularly dangerous because the purpose of the Volcker rule was to ensure that federally insured banks did not take proprietary positions in derivatives. Obama has put failed anti-regulators in positions where they can best undermine the reregulatory effort that is essential to reduce the risk and harm of future crises.

Obama's senior financial advisors have also failed ethically. Lew's great moral challenge was whether he would be honest about his errors. Honesty is essential to preventing future harm. Lew failed this second, less obvious, test as well. The CBS special notes:

During a 2010 Senate hearing to confirm him as White House budget chief, Lew seemed to soft-pedal the role of financial deregulation in the housing crash, saying, "[I don't] personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."

The Financial Crisis Inquiry Commission (FCIC) found that deregulation played a decisive role in producing the crisis. My research confirms their finding.

This pattern repeats the savings and loan debacle. The National Commission on Financial Institution Reform, Recovery and Enforcement (NCFIRRE) found that deregulation contributed to that debacle. My book explains in detail how it did so. George Akerlof and Paul Romer's 1993 article ("Looting: the Economic Underworld of Bankruptcy for Profit") emphasized this point in its last paragraph.

Neither the public nor economists foresaw that [S&L deregulation was] bound to produce looting. Nor, unaware of the concept, could they have known how serious it would be. Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better. If we learn from experience, history need not repeat itself. (George Akerlof & Paul Romer.1993: 60).

Lew, President Clinton, Bob Rubin, Larry Summers, and Alan Greenspan pushed the key statutory acts of deregulation that helped create the crimionogenic environment that drove the crisis. But they also drove the destruction of regulation and supervision at the banking regulatory agencies. A senior official who lacks the integrity to admit his errors and learn from them is unqualified to serve in any capacity.

Geithner failed the same moral test. He also refused to pay his taxes that he knew he owed because he believed he could get away with it. The irony is that the Internal Revenue Service (IRS) reports to Geithner.

The third, less obvious problem is that the Treasury Department and its bureaus (which include bank regulators) is responsible for adopting an enormous number of critical regulations intended to reduce the risk of future crises. Appointing a failed anti-regulator to head a department that is supposed to adopt hundreds of regulations is a prescription for repeated failure.

The fourth non-obvious problem is that Obama chooses as his principal financial advisors people who have not been trained to have financial expertise. Geithner studied international politics. Emmanuel studied speech. Lew, Obama, and Daley studied law. Lew, Daley, Emanuel, and Geithner all worked in finance, but they did so because of politics and who they knew rather than what they knew. Competence was never the key. Their substantive failures in those finance positions did not matter. As a reward for their failures they were given bonuses that made them wealthy for failing. That is the norm for senior finance officers in the modern world. Lew became far wealthier because Citicorp was bailed out by the U.S. government.

The fifth less obvious problem is that each of these key advisors is so slavish in his dedication to our systemically dangerous institutions (SDIs) (the so-called "too big to fail" banks) that they have embraced crony capitalism and the ability of the SDIs' CEOs to lead "control frauds" with impunity from the criminal laws. I have explained in prior articles how this has crippled our nation's economy, democracy, and integrity and will cause recurrent, intensifying global financial crises.

Geithner has disgraced the nation and the Department of the Treasury by pushing to prevent criminal cases against the SDIs and their senior officers. There is nothing in Lew's record that suggests he will restore the nation's honor. He was picked to continue to serve the SDIs' interests. Lew will act to ensure that the revolving door remains a direct portal to immense Wall Street wealth for the administration's senior officials.

The final unobvious problem I describe is that all of these advisors are in thrall to the neo-liberal dogma of austerity that has devastated the Eurozone. I have explained this point in several prior articles. What needs to be emphasized is that Obama chose Geithner, Lew, and Daley as his principal advisors on his effort to commit the "Grand Betrayal" in July 2011. Geithner is a Republican who changed his affiliation to "independent" as a fig leaf, so his embrace of austerity is understandable. Daley is a senior Pete Peterson ally. Peterson is a Republican billionaire Wall Street leader who is leading the effort to unravel the safety net.

Lew's embrace of long-falsified austerity dogmas is intense.

Austerity is a lose-lose-lose-lose proposition most analogous to bleeding a patient. Austerity reduces growth so severely that it throws a nation back into recession, increases unemployment, increases misery by cutting social programs when they are most needed, and can often increase the deficit. Obama bears the responsibility for all of these financial officials and policies.

We (and Obama) have been saved three times from the Grand Betrayal. He called his plan "the Grand Bargain." In July 2011, Obama and Speaker Boehner nearly finalized agreement on a $4 trillion austerity package consisting of over $2 trillion in cuts in social programs, nearly $1 trillion in cuts to the safety net, and a series of often fictional revenue enhancements - all over the course of a decade.

Had Obama been able to finalize the deal, its draconian austerity would have thrown the nation and many other countries back into recession. U.S. unemployment was 9.1 percent in July 2011. Austerity would have led within months to a second recession. During 2012, an election year, unemployment would have risen every month to a level well in excess of 10 percent. Obama would have been crushed in the election and the Republicans would have retaken control of the Senate.

Obama and Boehner's July 2011 deal was blocked by the Tea Party and progressives in the Senate. Instead, they reached a budget deal in August 2011 that created a "super committee" that was supposed to reach an agreement on at least a $1.2 trillion austerity program by November 2011 and created what came to be known as the "fiscal cliff" (which automatically inflicted austerity absent a new deal by January 2013). The November 2011 deal was killed by the opposition of the same "odd couple" - the Tea Party and progressive Democrats. In late December 2012, Obama urged Senate Majority Leader Reid to adopt a list of concessions that included substantial cuts to the safety net. Reid threw the proposed instrument of surrender and betrayal into his office fireplace. The Tea Party revolted in the House and killed Boehner's alternate austerity plan. The January 2013 deal delayed inflicting the automatic austerity provisions for two months.

Progressives need to understand that the Grand Betrayal is not inevitable. What the administration and Boehner are attempting to inflict on the nation is indefensibly self-destructive. Medicine realized over a century ago that bleeding patients constituted medical malpractice. We have known for at least 75 years that austerity in response to a recession or the Great Depression constitutes economic malpractice. The ironic aspect of the Wall Street wing of the Democratic Party is that they are terrible at finance. Wall Street on the Potomac combines the worst aspects of finance and politics. It is crony capitalism - anti-American style.

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No on Lew Print
Friday, 11 January 2013 09:04

Sanders writes: "We don't need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis. We need a treasury secretary who will work hard to break up too-big-to-fail financial institutions so that Wall Street cannot cause another massive financial crisis."

White House Chief of Staff Jacob Lew has been nominated for Treasury Secretary. (photo: Getty Images)
White House Chief of Staff Jacob Lew has been nominated for Treasury Secretary. (photo: Getty Images)


No on Lew

By Sen. Bernie Sanders, Reader Supported News

11 January 13

 

resident Obama on Thursday nominated Jacob Lew to be treasury secretary. Sen. Bernie Sanders, a member of the Senate Budget Committee, said he would not vote to confirm Lew. "Jack Lew is clearly an extremely intelligent person and I applaud his many years of public service to our country. I believe that he will be confirmed by the Senate. Unfortunately, he will be confirmed without my vote. At a time when the middle class is collapsing and millions of workers are unemployed, I do not believe he is the right person at the right time to serve in this important position.

"As a supporter of the president, I remain extremely concerned that virtually all of his key economic advisers have come from Wall Street. In my view, we need a treasury secretary who is prepared to stand up to corporate America and their powerful lobbyists and fight for policies that protect the working families in our country. I do not believe Mr. Lew is that person.

"We don't need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis. We need a treasury secretary who will work hard to break up too-big-to-fail financial institutions so that Wall Street cannot cause another massive financial crisis.

"We don't need another treasury secretary who believes in ‘deficit neutral' corporate tax reform. We need a treasury secretary willing to fight to make sure that large, profitable corporations pay their fair share in taxes to reduce the deficit and create jobs.

"We don't need a treasury secretary who will advise the president that he should negotiate with the Republicans to cut Social Security, Medicare, and Medicaid benefits. We need someone who is going to strengthen these programs.

"We don't need another treasury secretary who believes that NAFTA and Permanent Normal Trade Relations with China have been good for the American economy. We need someone in the White House who works to fundamentally re-write our trade policy to make sure that we are exporting American goods, not American jobs."

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FOCUS | Greenberg Should Be Shot Into Space for AIG Bailout Lawsuit Print
Thursday, 10 January 2013 13:04

Taibbi writes: "If chutzpah were a crime, Hank Greenberg, American International Group's former chief, would be going away for a long, long time."

Hank Greenberg, being sworn in on Capitol Hill, told lawmakers 'AIG's business model did not fail - its management did.' (photo: AP)
Hank Greenberg, being sworn in on Capitol Hill, told lawmakers 'AIG's business model did not fail - its management did.' (photo: AP)


Greenberg Should Be Shot Into Space for AIG Bailout Lawsuit

By Matt Taibbi, Rolling Stone

10 January 13

 

lot of people are wondering what to think about the news that the board of AIG is considering joining the lawsuit filed by former AIG head Maurice "Hank" Greenberg against the Fed and the U.S. government - a suit that one news outlet describes as charging the state with handing out an "insufficiently generous bailout."

The editorial in today's Daily News captures the public feeling over this confusing news story quite well, I think:

If chutzpah were a crime, Hank Greenberg, American International Group's former chief, would be going away for a long, long time.

Long since driven out of AIG, Greenberg is waging a lawsuit claiming the U.S. hurt the firm's shareholders - including him - when the government rescued the insurance giant with the most humongous bailout of all time.

If you just read the headlines, the story that AIG is considering suing the government for bailing it out makes no sense at all. What could even be the basis for such a suit? One reader asked the question this way: "If a cop bursts into a motel room and stops you just as you're about to blow your head off with a shotgun, can you sue him? If the answer is yes, should I try it?"

Former bailout inspector Neil Barofsky put it this way, in an interview with Bloomberg: "The idea that AIG would have been better off by going bankrupt, for the shareholders is a very, very hard thing to sell, I think."

But here's the funny thing about the lawsuit filed against the government: It isn't all wrong. In fact, parts of it are quite on the mark.

The only problem is, the suit is being filed by maybe the biggest douchebag of all time, Hank Greenberg (and his company, Starr International), a man who has not only been proven to be corrupt and a fraud, but who perhaps more than anyone else was responsible for the galactic balance-sheet goat-fuck that caused AIG's implosion in the first place. If there is such a person as an innocent AIG shareholder who was harmed by the government's conduct, it sure as hell isn't Hank Greenberg.

In fact, since the collapse of AIG was perhaps the most important event in causing the financial crisis of 2008 to spiral out of control, you can put Hank Greenberg on the very short list of individuals who are most responsible for the economic catastrophe. A few weeks ago I put former Countrywide chief Angelo Mozilo, former Lehman head Dick Fuld and Greenberg's former subordinate Joe Cassano (the former head of AIG's Financial Products unit) on that list, but Greenberg should be right there riding the bus of shame with all of those excellent folks.

It's this fact, not the merits of the actual lawsuit, that make this news story so outrageous.

Like all narcissists, Greenberg is physically incapable of admitting any mistake he's ever made, and he's made plenty of them. Among other things, Greenberg in 2000 helped AIG artificially bolster its reserves by green-lighting a phony reinsurance transaction with a company called General Re (a subsidiary of Warren Buffett's Berkshire Hathaway) that puffed up AIG's loss reserves by about $500 million.

Even though a federal judge ruled that Greenberg was a conspirator in that case, and even though that scandal led to AIG in 2006 paying what at the time was the biggest settlement ever ($1.6 billion, paid to Eliot Spitzer's New York state regulators and George W. Bush's Justice Department and SEC), Greenberg has always denied responsibility, and his bumlicking minions in the financial press like Maria Bartiromo are still protesting his innocence long after everybody on Wall Street forgot about the case (that was nineteen billion-dollar scandals ago!).

Moreover, despite the fact that Greenberg personally settled for $15 million in another fraud case that led to a $2 billion accounting restatement by AIG, he's never accepted responsibility for any of his actions there, either. In fact, even after he paid the $15 million in that case, and even after AIG restated its balance sheet to the tune of $2 billion, Greenberg went out of his way to say the restatement was mostly "unnecessary" and that he had "no responsibility" for any fraud. That's just the kind of guy he is.

Why is it necessary to go over all of this ancient history? Because it was these Greenberg-instigated scandals that set in motion the events that led to AIG's collapse later on. When Greenberg was forced out on the heels of the reinsurance scandal, credit agencies downgraded AIG. This and subsequent downgrades are what eventually sank the firm.

How? Well, AIG, under Greenberg's watch, had entered into hundreds of billions of dollars of cosmically stupid credit default swap bets with all of the biggest banks in the world, essentially taking book for all of Wall Street, in many cases taking the wrong side of bets against the mortgage markets, among other things. Greenberg was dumb enough to allow his subordinate Joe Cassano to enter into these contracts, which were written in such a way that if AIG's credit rating were ever to fall, AIG would suddenly owe its customers billions in cash collateral.

When the ratings agencies started downgrading AIG because of anxiety over all of the investigations into the company's accounting, all of those collateral calls started coming due. Before you knew it, companies like Goldman were demanding more cash in collateral than AIG had, and when the company was finally bled dry, that's when the bailout took place.

The AIG bailout was not just a few guys from the Fed and some AIG board members hashing out a deal over lunch. It was hundreds of bankers and lawyers and accountants from many major law firms and big banks swarming all over AIG's books in search of enough cash to stave off the company's collapse. When that army of people couldn't find sufficient money in AIG's coffers, that's when the government stepped in, and this, too, was a major meeting of financial powers, with all the heads of the biggest banks and reams of government officials gathering at the New York Fed to hash out a deal.

The deal they ultimately came up with was genuinely outrageous - the state was to fork over more than $80 billion (it would eventually grow to $182 billion) and AIG's counterparties, like Goldman and Deutsche, would be paid off at 100 cents on the dollar for the bets they laid with the firm. Had AIG proceeded to a normal bankruptcy, companies like Goldman (which got $12 billion from the AIG bailout) would have recovered just a fraction of the money "owed" to them.

This, in part, is what Greenberg is suing about. Among other things, he's saying that the AIG bailout was really a bailout of companies like Goldman and Deutsche Bank, and that left to its own devices, it would have negotiated a better deal than the complete, 100-cents-on-the-dollar surrender that it "agreed" to under the guidance of the likes of Tim Geithner and Ben Bernanke.

Federal Judge Paul Engelmayer gave this dismissive description of Greenberg's suit in a ruling late last year:

To be sure, Starr's Amended Complaint paints a portrait of government treachery worthy of an Oliver Stone movie. Starr claims that, as the global financial system teetered on the brink of collapse, FRBNY seized control of AIG. Then, Starr claims, FRBNY, in an act of Napoleonic plunder, stole AIG's assets, re-distributing some to shore up other flagging financial institutions while keeping much of the residue for itself.

You know what's funny about this? IT'S TRUE!

The Fed, the U.S. Government, and the less-completely-fucked Wall Street powers like Goldman and Barclays and Citigroup absolutely did conspire to seize AIG and then use a monstrous mixture of AIG's assets and public money to keep themselves alive. In essence, AIG was the helpless fat guy in the lifeboat who got eaten when the rest of the survivors ran out of food.

In a vacuum, perhaps, there might be some sort of claim here, and there are ordinary people who worked for AIG who were probably harmed when the state decided not to force companies like Goldman to take even a 1 percent haircut on their CDS contracts with the firm. But Hank Greenberg, the guy who started all of this mess by monkeying with shady reinsurance deals and signing off on the bank's incredibly irresponsible bookmaking during the pre-crisis years, is not the guy to bring that claim.

Even Ben Bernanke was disgusted by the very idea of bailing out AIG, rewarding it for the vast greed and stupidity it displayed during the Greenberg years. Bernanke said the AIG rescue was "the single one that makes me the angriest," because the company had made "all kinds of unconscionable bets."

But it should also have made Bernanke sick to give companies like Goldman and Citigroup 100 cents on the dollar for laying bets with AIG. There are some who have argued that the government was right to make all of AIG's counterparties whole, because it upheld the sanctity of contracts or some such nonsense. This is bullshit, of course. When you enter into any deal with anyone, you have to weigh your risks, including the risk that your bookie, AIG, might implode thanks to its bad accounting and moronic management. AIG's counterparties failed to properly weigh those risks, and they got rewarded for their lack of diligence with the mother of all sweetheart bailout deals.

There are other aspects of the case that are comic in their outrageousness, but like all good comedy, they have elements of truth in them.

One of Greenberg's sour-puss claims is that the government denied AIG access to the Fed's discount window in July of 2008 - in other words, that the Fed didn't simply hand over a bunch of cash to AIG for free to allow it to escape its self-inflicted problems that way, instead of the government essentially taking over the company in exchange for a $182 billion rescue.

This would be ridiculous, were it not for the fact that the government did precisely that for other companies, including Goldman and Morgan Stanley, two investment banks which have been allowed to pose fictitiously as commercial banks for nearly half a decade now so that they could have access to the discount window.

Compared to the expert and loving attentions the government has lavished on the likes of Goldman and Morgan Stanley over the years, throwing money at these similarly irresponsible financial institutions essentially without any conditions at all (as Bloomberg reported, some of Goldman's secret Fed loans in 2008 came with interest rates as low as .01 percent) the take-it-or-take-it takeover/bailout of AIG comes off like a slap in the face, if getting $182 billion of the public's money can ever be seen that way.

Somebody probably has the right to complain about all of this. It just isn't Hank Greenberg. As for AIG, if its board seriously considers joining this suit, they should be tarred and feathered. When a $182 billion rescue isn't enough, you maybe, just maybe, have impossibly high expectations. This would be like Imelda Marcos walking out on Ferdie Bongbong because he didn't buy her enough shoes.

Is anything ever enough with these people?

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