Original Link: http://www.adn.com/news/politics/fbi/stevens/story/493283.html
HELP: Defense team scrambling to sift through glut of legal material.
By ERIKA BOLSTAD ebolstad@adn.com
Lawyers for Sen. Ted Stevens, facing a stepped-up trial schedule, asked for help Wednesday trying to make sense of more than 67,000 documents and 2,800 audio files that could end up as evidence against him.
Prosecutors and lawyers for Stevens had a brief hearing Wednesday afternoon to decide how to handle discovery materials the Justice Department is handing over to Stevens' defense team. That includes recordings of roughly 10,000 phone conversations.
Stevens, 84, faces a Sept. 24 trial on charges he knowingly took home repairs and gifts worth more than $250,000 from the oil field services company, Veco Corp., and failed to report them on his annual U.S. Senate disclosure forms. Next week, a judge will decide whether to grant Stevens' request to move the trial to Alaska.
Wednesday, one of Stevens' lawyers, Alex Romain, asked the government to provide more detail about 67,000 pages of documents they scanned electronically and handed over to the defense. Some of the documents don't show where they begin and end, the defense complained. Those documents include bank records, spreadsheets and evidence that was seized from Veco Corp. computers.
Veco CEO Bill Allen and Richard Smith, a former vice president of community affairs and government relations for the now-defunct company, pleaded guilty in May 2007 to making more than $400,000 in corrupt payments to Alaska public officials.
Allen's testimony has been key in other convictions in the ongoing public corruption investigation, which to date has led to charges against 11 lawmakers, lobbyists and businessmen. Eight have been convicted or pleaded guilty. Three lawmakers, including Stevens, are awaiting trial.
Stevens' lawyers on Wednesday also asked to have better labeling on approximately 2,800 audio files, and the government agreed to be more forthcoming about who is calling or who is receiving the call, and when it was made. The audio files include wiretaps of both cell phones and land lines, Stevens' lawyers said Wednesday.
The defense also wants "surveillance logs" used by investigators to determine when calls began and ended and who is on the line.
With all the discovery materials, prosecutors said they would work with the defense to try to provide more information.
DISPUTES IN THE OPEN
The fast-moving trial calendar, sped up so Stevens could face a jury before the general election, means that some of the tug-of-war that generally goes on behind the scenes in criminal trials is playing out in the courtroom.
They're the kind of issues that could generally be handled over the telephone, said U.S. District Court Judge Emmet Sullivan. In this case, though, Sullivan said he is anxious to be as transparent as possible because of the high-profile nature of the trial and the intense media scrutiny.
When necessary, Sullivan said, he'll hold a hearing, but the speed of the case means that lawyers need to settle some of their disputes over potential evidence among themselves.
"I'm going to make myself available," he warned the defense and prosecution, "but this is an issue best resolved by the attorneys."
If the case remains in Washington, D.C., jury selection is scheduled to begin Sept. 22, two days before the trial. Lawyers for both the defense and the prosecution have asked to submit questionnaires to the jurors, so they can review them and base their selection on their answers.
Questionnaires are rarely used, Sullivan said, so he asked the lawyers to make plans to photocopy 30 to 40 copies of the answers submitted by the estimated 150 jurors in the initial pool. The copies will be needed for members of the legal teams.
PRETRIAL PUBLICITY
Meanwhile, Stevens' lawyers submitted a second brief Wednesday in support of their motion to move the trial to Alaska. In it they argued that holding the trial in Alaska is "the only way to permit Senator Stevens even a minor role in his reelection campaign." Stevens, a Republican who has held his Senate seat since 1968 and has been campaigning in Alaska, has attended only one of his court appearances since his indictment.
His attorneys continued to argue that most of the witnesses are in Alaska, as is one of the pieces of evidence in the case: Stevens' home in Girdwood.
Stevens' lawyers also dismissed concerns by the Justice Department prosecutors that moving the trial to Alaska -- while the senator campaigns there -- could taint the jury pool.
Stevens has "received positive and negative publicity in Alaska and in the District of Columbia," his lawyers wrote. "This publicity can be expected to continue in both venues during the trial. In either venue, the effects of pre-trial publicity can be addressed during jury selection while the effects of publicity during trial can be addressed by appropriate instructions to the jury."
Prosecutors argued in a motion filed Monday that they believe the case is fundamentally a Washington, D.C.-based one, since the case centers on disclosure forms Stevens filed with the U.S. Senate.
Saturday, August 16, 2008
Group says life not improving for tent camp Iraqis
Original Link: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/08/15/international/i063344D89.DTL
By BRADLEY S. KLAPPER, Associated Press Writer
The world's migration body said Friday that daily life has improved little for thousands of Iraqis living in tent camps, despite a slowdown in the number of people in Iraq being uprooted.
While most displaced Iraqis rent housing, live with relatives or squat in public buildings, less fortunate tent camp residents have no protection against extreme weather and poor access to medical care, education and other basic services.
In a new assessment, the International Organization for Migration found that those living in tent camps are "often the most vulnerable among a displaced population" of some 2.8 million in Iraq, said spokesman Jean-Philippe Chauzy.
He estimated their total number at a "few thousand," and said they were in "constant need of humanitarian assistance."
The 125-nation IOM is assisting displaced Iraqis with emergency food, water and household supplies, but overall help for those in tent camps remains inadequate, Chauzy said.
He described conditions in the al-Manathera camp in Najaf, the largest in Iraq, where "families who were evicted from public buildings live in cramped tents and caravans" with limited sanitation and drinking water.
A lack of family privacy — highly valued in Iraqi culture — combined with unemployment and overcrowding has caused "significant tensions" among the inhabitants, he said.
In the Qalawa camp in Sulaymaniyah, a group of displaced Iraqis that settled on a piece of open land two years ago still have no sanitation, electricity or toilets, Chauzy said.
They "live surrounded by garbage," he said. "As a result, cases of typhoid have recently been reported."
By BRADLEY S. KLAPPER, Associated Press Writer
The world's migration body said Friday that daily life has improved little for thousands of Iraqis living in tent camps, despite a slowdown in the number of people in Iraq being uprooted.
While most displaced Iraqis rent housing, live with relatives or squat in public buildings, less fortunate tent camp residents have no protection against extreme weather and poor access to medical care, education and other basic services.
In a new assessment, the International Organization for Migration found that those living in tent camps are "often the most vulnerable among a displaced population" of some 2.8 million in Iraq, said spokesman Jean-Philippe Chauzy.
He estimated their total number at a "few thousand," and said they were in "constant need of humanitarian assistance."
The 125-nation IOM is assisting displaced Iraqis with emergency food, water and household supplies, but overall help for those in tent camps remains inadequate, Chauzy said.
He described conditions in the al-Manathera camp in Najaf, the largest in Iraq, where "families who were evicted from public buildings live in cramped tents and caravans" with limited sanitation and drinking water.
A lack of family privacy — highly valued in Iraqi culture — combined with unemployment and overcrowding has caused "significant tensions" among the inhabitants, he said.
In the Qalawa camp in Sulaymaniyah, a group of displaced Iraqis that settled on a piece of open land two years ago still have no sanitation, electricity or toilets, Chauzy said.
They "live surrounded by garbage," he said. "As a result, cases of typhoid have recently been reported."
Friday, August 15, 2008
Greenspan in Bubble Denial
Original Link: http://www.minyanville.com/articles/Greenspan-fre-fnm-housing-bailout-real/index/a/18533/from/yahoo
By William Fleckenstein
In a Wall Street Journal article headlined "Greenspan Sees Bottom in Housing, Criticizes Bailout" former Federal Reserve chairman Alan Greenspan said: "Home prices in the US are likely to start to stabilize or touch bottom sometime in the first half of 2009."
He did leave himself some wiggle room, as he also noted: "Prices could continue to drift lower through 2009 and beyond."
Of course, we shouldn't forget that this is the same man who in October of 2006 opined: "I think the worst of this [housing problem] may well be over."
As I noted in my book and often in this column, while Greenspan was in office, he went to great lengths to suggest that housing couldn't experience a bubble. And, as the Journal pointed out, he also tried to make the case in 2004 -- when many of us were already certain that a disastrous bubble was in full bloom -- that "a national severe price distortion seems most unlikely in the United States, given its size and diversity."
Which just illustrates my strongly held (and I believe well-documented) view that when it comes to matters of economics, he is utterly clueless -- and completely unable to learn from his mistakes.
However, what really sent my blood boiling was his criticism of the government bailouts of Fannie Mae (FNM) and Freddie Mac (FRE). Now, you might wonder why I'd be angry that he said something that I agree with, especially: "They should have wiped out the shareholders." (He was referring to the Bear Stearns/Fannie/Freddie bailout.)
The reason I'm so angry is because of his logic -- which the Journal paraphrased as follows: "The Fed-financed takeover of investment bank Bear Stearns also made government backing of Fannie and Freddie debt 'inevitable.'" (His adjective, my emphasis.)
Then Greenspan went on to tell the Journal: "There's no credible argument for bailing out Bear Stearns and not the GSEs."
Y'all Have to Reap What I Didn't Sow
The problem with that line of logic: He made the Bear Stearns bailout "inevitable" -- when he set the precedent of rescuing Wall Street during the collapse of Long-Term Capital Management in 1998. Of course, those actions led to the massive blow-off to the stock bubble, the response to which led to the real-estate bubble. Thus, had he not bailed out Wall Street, I don't believe we would ever have been in the situation where a Bear Stearns bailout would have been required, or even considered.
In sum, it was Greenspan who set this train wreck in motion, with his specific policies regarding Long-Term Capital, dramatically altering the financial landscape, via the "Greenspan put." Making matters worse, in the wake of that "warning shot" he advocated the deregulation of the financial system and championed securitization at every chance he got. While in charge, he never tried to put a stop to any dangerous policy, but rather pursued it aggressively.
By William Fleckenstein
In a Wall Street Journal article headlined "Greenspan Sees Bottom in Housing, Criticizes Bailout" former Federal Reserve chairman Alan Greenspan said: "Home prices in the US are likely to start to stabilize or touch bottom sometime in the first half of 2009."
He did leave himself some wiggle room, as he also noted: "Prices could continue to drift lower through 2009 and beyond."
Of course, we shouldn't forget that this is the same man who in October of 2006 opined: "I think the worst of this [housing problem] may well be over."
As I noted in my book and often in this column, while Greenspan was in office, he went to great lengths to suggest that housing couldn't experience a bubble. And, as the Journal pointed out, he also tried to make the case in 2004 -- when many of us were already certain that a disastrous bubble was in full bloom -- that "a national severe price distortion seems most unlikely in the United States, given its size and diversity."
Which just illustrates my strongly held (and I believe well-documented) view that when it comes to matters of economics, he is utterly clueless -- and completely unable to learn from his mistakes.
However, what really sent my blood boiling was his criticism of the government bailouts of Fannie Mae (FNM) and Freddie Mac (FRE). Now, you might wonder why I'd be angry that he said something that I agree with, especially: "They should have wiped out the shareholders." (He was referring to the Bear Stearns/Fannie/Freddie bailout.)
The reason I'm so angry is because of his logic -- which the Journal paraphrased as follows: "The Fed-financed takeover of investment bank Bear Stearns also made government backing of Fannie and Freddie debt 'inevitable.'" (His adjective, my emphasis.)
Then Greenspan went on to tell the Journal: "There's no credible argument for bailing out Bear Stearns and not the GSEs."
Y'all Have to Reap What I Didn't Sow
The problem with that line of logic: He made the Bear Stearns bailout "inevitable" -- when he set the precedent of rescuing Wall Street during the collapse of Long-Term Capital Management in 1998. Of course, those actions led to the massive blow-off to the stock bubble, the response to which led to the real-estate bubble. Thus, had he not bailed out Wall Street, I don't believe we would ever have been in the situation where a Bear Stearns bailout would have been required, or even considered.
In sum, it was Greenspan who set this train wreck in motion, with his specific policies regarding Long-Term Capital, dramatically altering the financial landscape, via the "Greenspan put." Making matters worse, in the wake of that "warning shot" he advocated the deregulation of the financial system and championed securitization at every chance he got. While in charge, he never tried to put a stop to any dangerous policy, but rather pursued it aggressively.
Thursday, August 14, 2008
Can It Happen Here?
Original Link: http://www.nytimes.com/2008/08/11/opinion/11krugman.html
By PAUL KRUGMAN
Go to Columnist Page » Blog: The Conscience of a Liberal Can Democrats deliver on that commitment? In principle, it should be easy. In practice, supporters of health care reform, myself included, will be hanging on by their fingernails until legislation is actually passed.
What’s easy about guaranteed health care for all? For one thing, we know that it’s economically feasible: every wealthy country except the United States already has some form of guaranteed health care. The hazards Americans treat as facts of life — the risk of losing your insurance, the risk that you won’t be able to afford necessary care, the chance that you’ll be financially ruined by medical costs — would be considered unthinkable in any other advanced nation.
The politics of guaranteed care are also easy, at least in one sense: if the Democrats do manage to establish a system of universal coverage, the nation will love it.
I know that’s not what everyone says; some pundits claim that the United States has a uniquely individualistic culture, and that Americans won’t accept any system that makes health care a collective responsibility. Those who say this, however, seem to forget that we already have a program — you may have heard of it — called Medicare. It’s a program that collects money from every worker’s paycheck and uses it to pay the medical bills of everyone 65 and older. And it’s immensely popular.
There’s every reason to believe that a program that extends universal coverage to the nonelderly would soon become equally popular. Consider the case of Massachusetts, which passed a state-level plan for universal coverage two years ago.
The Massachusetts plan has come in for a lot of criticism. It includes individual mandates — that is, people are required to buy coverage, even if they’d prefer to take their chances. And its costs are running much higher than expected, mainly because it turns out that there were more people without insurance than anyone realized.
Yet recent polls show overwhelming support for the plan — support that has grown stronger since it went into effect, despite the new system’s teething troubles. Once a system of universal health coverage exists, it seems, people want to keep it.
So why be nervous about the prospects for reform? Because it’s hard to get universal care established in the first place. There are, I’d argue, three big hurdles.
First, the Democrats have to win the election — and win it by enough to face down Republicans, who are still, 42 years after Medicare went into operation, denouncing “socialized medicine.”
Second, they have to overcome the public’s fear of change.
Some health care reformers wanted the Democrats to endorse a single-payer, Medicare-type system for all. On the sheer economic merits, they’re right: single-payer would be more efficient than a system that preserves a role for private insurance companies.
But it’s better to have an imperfect universal health care plan than none at all — and the only way to get a universal health care plan passed soon is to inoculate it against Harry-and-Louise-type claims that people will be forced into plans “designed by government bureaucrats.” So the Democratic platform emphasizes choice, declaring that Americans “should have the option of keeping the coverage they have or choosing from a wide array of health insurance plans, including many private health insurance options and a public plan.” We’ll see if that’s enough.
The final hurdle facing health care reform is the risk that the next president and Congress will lose focus. There will be many problems crying out for solutions, from a weak economy to foreign policy crises. It will be easy and tempting to put health care on the back burner for a bit — and then forget about it.
So I’m nervous. The history of the pursuit of universal health care in America is one of missed chances, of political opportunities frittered away. Let’s hope that this time is different.
One more thing: if we do get real health care reform, a lot of people will owe a debt of gratitude to none other than John Edwards. When Mr. Edwards dropped out of the presidential race, I credited him with making universal health care a “possible dream for the next administration.” Mr. Edwards’s political career is over — but perhaps he and his family can take some solace from the fact that his party is still trying to make that dream come true.
By PAUL KRUGMAN
Go to Columnist Page » Blog: The Conscience of a Liberal Can Democrats deliver on that commitment? In principle, it should be easy. In practice, supporters of health care reform, myself included, will be hanging on by their fingernails until legislation is actually passed.
What’s easy about guaranteed health care for all? For one thing, we know that it’s economically feasible: every wealthy country except the United States already has some form of guaranteed health care. The hazards Americans treat as facts of life — the risk of losing your insurance, the risk that you won’t be able to afford necessary care, the chance that you’ll be financially ruined by medical costs — would be considered unthinkable in any other advanced nation.
The politics of guaranteed care are also easy, at least in one sense: if the Democrats do manage to establish a system of universal coverage, the nation will love it.
I know that’s not what everyone says; some pundits claim that the United States has a uniquely individualistic culture, and that Americans won’t accept any system that makes health care a collective responsibility. Those who say this, however, seem to forget that we already have a program — you may have heard of it — called Medicare. It’s a program that collects money from every worker’s paycheck and uses it to pay the medical bills of everyone 65 and older. And it’s immensely popular.
There’s every reason to believe that a program that extends universal coverage to the nonelderly would soon become equally popular. Consider the case of Massachusetts, which passed a state-level plan for universal coverage two years ago.
The Massachusetts plan has come in for a lot of criticism. It includes individual mandates — that is, people are required to buy coverage, even if they’d prefer to take their chances. And its costs are running much higher than expected, mainly because it turns out that there were more people without insurance than anyone realized.
Yet recent polls show overwhelming support for the plan — support that has grown stronger since it went into effect, despite the new system’s teething troubles. Once a system of universal health coverage exists, it seems, people want to keep it.
So why be nervous about the prospects for reform? Because it’s hard to get universal care established in the first place. There are, I’d argue, three big hurdles.
First, the Democrats have to win the election — and win it by enough to face down Republicans, who are still, 42 years after Medicare went into operation, denouncing “socialized medicine.”
Second, they have to overcome the public’s fear of change.
Some health care reformers wanted the Democrats to endorse a single-payer, Medicare-type system for all. On the sheer economic merits, they’re right: single-payer would be more efficient than a system that preserves a role for private insurance companies.
But it’s better to have an imperfect universal health care plan than none at all — and the only way to get a universal health care plan passed soon is to inoculate it against Harry-and-Louise-type claims that people will be forced into plans “designed by government bureaucrats.” So the Democratic platform emphasizes choice, declaring that Americans “should have the option of keeping the coverage they have or choosing from a wide array of health insurance plans, including many private health insurance options and a public plan.” We’ll see if that’s enough.
The final hurdle facing health care reform is the risk that the next president and Congress will lose focus. There will be many problems crying out for solutions, from a weak economy to foreign policy crises. It will be easy and tempting to put health care on the back burner for a bit — and then forget about it.
So I’m nervous. The history of the pursuit of universal health care in America is one of missed chances, of political opportunities frittered away. Let’s hope that this time is different.
One more thing: if we do get real health care reform, a lot of people will owe a debt of gratitude to none other than John Edwards. When Mr. Edwards dropped out of the presidential race, I credited him with making universal health care a “possible dream for the next administration.” Mr. Edwards’s political career is over — but perhaps he and his family can take some solace from the fact that his party is still trying to make that dream come true.
Wednesday, August 13, 2008
Figure in Abramoff scandal raises money for McCain
Original Link: http://seattletimes.nwsource.com/html/politics/2008110916_apmccainfundraiser.html
By CHARLES BABINGTON, Associated Press Writer
WEST BLOOMFIELD, Mich. —
A political strategist tied to the Jack Abramoff lobbying scandal is helping raise money for John McCain, urging his fellow Georgia Republicans to attend a fundraiser for the presidential candidate in Atlanta.
Ralph Reed, former director of the Christian Coalition, said he had agreed to be on McCain's "Victory 2008 Team" in an e-mail that solicited donations on McCain's behalf. The Republican National Committee is hosting the fundraiser set for an Atlanta hotel on Aug. 18.
A House investigative committee in 2006 did not call Reed as a witness, but concluded that he interceded with the Bush White House to help some of Abramoff's clients. Reed's public relations firm also received $4.2 million from Abramoff to mobilize Christian voters to fight the opening of casinos that could compete with Abramoff's Indian tribe clients.
Reed later said he regretted the actions, which contributed to his 2006 Republican primary loss in a bid to be Georgia's lieutenant governor. Abramoff went to prison for conspiracy, mail fraud and tax evasion.
McCain led a Senate investigation into Abramoff's dealings with Indian tribes, which included information about his ties to Reed. McCain said in a November 2007 presidential debate: "I led in the Abramoff hearings in the, in the obscure Indian Affairs Committee, for which people are still testifying and going to jail."
On Wednesday, Democratic National Committee Chairman Howard Dean criticized what he called "McCain's decision to cozy up to one of the central figures in the Republican culture of corruption."
In an e-mail statement, Reed said, "I take the long view of politics, which is that yesterday's opponent can be tomorrow's friend or ally." He said he suppports the Arizona Republican but holds "no position, title or official role in the McCain campaign and am not seeking one."
The Atlanta Journal-Constitution reported last week that Reed sent a message to an undetermined number of Georgia Republicans, saying that McCain "will be coming to Atlanta on August 18 for a very special event at the Marriott Marquis downtown and I have agreed to serve as a member of the McCain Victory 2008 Team."
Reed urged the recipients to donate money, saying, "If you select to use your credit card, you may fax the form to me."
The McCain campaign Wednesday referred questions to the Republican National Committee.
RNC spokesman Alex Conant said, "It's laughable Democrats would try to make this a political issue, considering John McCain led the Abramoff investigations and has a record of fighting to reform Washington."
Conant noted that Democratic candidate Barack Obama has had fundraising controversies, too, including instances in which Obama returned donations from tainted contributors.
The House Government Reform Committee reported in 2006 that Reed, who was close to Bush political adviser Karl Rove, helped Abramoff obtain a spot on the administration's 2001 transition team at the Bureau of Indian Affairs, an agency important to his clients.
"Do you think you might be able to contact Karl, as I am sure you have more weight there," Abramoff said in an e-mail to Reed. "Be happy to," Reed replied.
The House report found at least 14 instances in which Abramoff asked Reed to contact Rove on matters including political appointments "and obtaining favorable actions on client matters."
The report confirmed e-mails that Time magazine published in 2005 in which Abramoff asked Reed to help block the proposed appointment of the wife of Orson Swindle - who was a Vietnam prisoner of war with McCain - to an Interior Department job.
"Can you ping Karl on this?" Abramoff wrote. "I can't believe they just don't get this done."
Reed responded: "Talked to Rove about this and I think I killed it. He's on it. Keep this between us, don't want to raise expectations, but I banged on this one hard."
Swindle's wife did not get the job. Swindle has been an ally of McCain's campaign, criticizing Obama supporter Wesley Clark last month for saying that McCain's Vietnam service doesn't qualify him for the White House.
By CHARLES BABINGTON, Associated Press Writer
WEST BLOOMFIELD, Mich. —
A political strategist tied to the Jack Abramoff lobbying scandal is helping raise money for John McCain, urging his fellow Georgia Republicans to attend a fundraiser for the presidential candidate in Atlanta.
Ralph Reed, former director of the Christian Coalition, said he had agreed to be on McCain's "Victory 2008 Team" in an e-mail that solicited donations on McCain's behalf. The Republican National Committee is hosting the fundraiser set for an Atlanta hotel on Aug. 18.
A House investigative committee in 2006 did not call Reed as a witness, but concluded that he interceded with the Bush White House to help some of Abramoff's clients. Reed's public relations firm also received $4.2 million from Abramoff to mobilize Christian voters to fight the opening of casinos that could compete with Abramoff's Indian tribe clients.
Reed later said he regretted the actions, which contributed to his 2006 Republican primary loss in a bid to be Georgia's lieutenant governor. Abramoff went to prison for conspiracy, mail fraud and tax evasion.
McCain led a Senate investigation into Abramoff's dealings with Indian tribes, which included information about his ties to Reed. McCain said in a November 2007 presidential debate: "I led in the Abramoff hearings in the, in the obscure Indian Affairs Committee, for which people are still testifying and going to jail."
On Wednesday, Democratic National Committee Chairman Howard Dean criticized what he called "McCain's decision to cozy up to one of the central figures in the Republican culture of corruption."
In an e-mail statement, Reed said, "I take the long view of politics, which is that yesterday's opponent can be tomorrow's friend or ally." He said he suppports the Arizona Republican but holds "no position, title or official role in the McCain campaign and am not seeking one."
The Atlanta Journal-Constitution reported last week that Reed sent a message to an undetermined number of Georgia Republicans, saying that McCain "will be coming to Atlanta on August 18 for a very special event at the Marriott Marquis downtown and I have agreed to serve as a member of the McCain Victory 2008 Team."
Reed urged the recipients to donate money, saying, "If you select to use your credit card, you may fax the form to me."
The McCain campaign Wednesday referred questions to the Republican National Committee.
RNC spokesman Alex Conant said, "It's laughable Democrats would try to make this a political issue, considering John McCain led the Abramoff investigations and has a record of fighting to reform Washington."
Conant noted that Democratic candidate Barack Obama has had fundraising controversies, too, including instances in which Obama returned donations from tainted contributors.
The House Government Reform Committee reported in 2006 that Reed, who was close to Bush political adviser Karl Rove, helped Abramoff obtain a spot on the administration's 2001 transition team at the Bureau of Indian Affairs, an agency important to his clients.
"Do you think you might be able to contact Karl, as I am sure you have more weight there," Abramoff said in an e-mail to Reed. "Be happy to," Reed replied.
The House report found at least 14 instances in which Abramoff asked Reed to contact Rove on matters including political appointments "and obtaining favorable actions on client matters."
The report confirmed e-mails that Time magazine published in 2005 in which Abramoff asked Reed to help block the proposed appointment of the wife of Orson Swindle - who was a Vietnam prisoner of war with McCain - to an Interior Department job.
"Can you ping Karl on this?" Abramoff wrote. "I can't believe they just don't get this done."
Reed responded: "Talked to Rove about this and I think I killed it. He's on it. Keep this between us, don't want to raise expectations, but I banged on this one hard."
Swindle's wife did not get the job. Swindle has been an ally of McCain's campaign, criticizing Obama supporter Wesley Clark last month for saying that McCain's Vietnam service doesn't qualify him for the White House.
Tuesday, August 12, 2008
More college students using food stamps
Original Link: http://www.mcclatchydc.com/200/story/47818.html
By Evan S. Benn and Scott Andron The Miami Herald
In a down economy, some Florida college students have found a new form of financial aid: food stamps.
The number of Sunshine State students receiving stamps was up 44 percent in July compared to the same time in 2007.
That's about twice the rate of increase for food-stamp recipients in the population as a whole.
Statewide, 54,116 students were receiving the stamps, including 10,506 in Miami-Dade alone. Broward had another 4,311, according to figures from the state Department of Children & Families. Monroe had 51.
The numbers reflect a nationwide trend.
''It's pretty much impossible to get by anymore without some help,'' said John English, a Palm Beach Community College student who has received stamps.
English, 20, said he was in a halfway house when he moved to South Florida from Ohio. And signing up for the stamps wasn't hard.
''I got in easy,'' he said. "But then I got a job that paid a decent amount, and I couldn't qualify for food stamps anymore.''
By Evan S. Benn and Scott Andron The Miami Herald
In a down economy, some Florida college students have found a new form of financial aid: food stamps.
The number of Sunshine State students receiving stamps was up 44 percent in July compared to the same time in 2007.
That's about twice the rate of increase for food-stamp recipients in the population as a whole.
Statewide, 54,116 students were receiving the stamps, including 10,506 in Miami-Dade alone. Broward had another 4,311, according to figures from the state Department of Children & Families. Monroe had 51.
The numbers reflect a nationwide trend.
''It's pretty much impossible to get by anymore without some help,'' said John English, a Palm Beach Community College student who has received stamps.
English, 20, said he was in a halfway house when he moved to South Florida from Ohio. And signing up for the stamps wasn't hard.
''I got in easy,'' he said. "But then I got a job that paid a decent amount, and I couldn't qualify for food stamps anymore.''
Most corporations pay no federal income tax
Original Link: http://www.boston.com/business/ticker/2008/08/study_most_corp.html
Most US and foreign companies doing business in the United States pay no federal income tax, according to a study by the Government Accountability Office.
It said two-thirds of US corporations paid no federal income taxes between 1998 and 2005, and about 68 percent of foreign companies doing business in the country avoided corporate taxes over the same period.
‘‘It’s shameful that so many corporations make big profits and pay nothing to support our country,’’ said Senator Byron Dorgan, Democrat of North Dakota, who asked for the study with Senator Carl Levin, Democrat of Michigan.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called S corporations pay taxes under individual tax codes.
‘‘Half of all business income in the United States now ends up going through the individual tax code,’’ Edwards said.
The study by the GAO, the investigative arm of Congress, did not investigate why corporations weren’t paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million US companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the US corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities.
‘‘It’s time for the big corporations to pay their fair share,’’ Dorgan said.
Most US and foreign companies doing business in the United States pay no federal income tax, according to a study by the Government Accountability Office.
It said two-thirds of US corporations paid no federal income taxes between 1998 and 2005, and about 68 percent of foreign companies doing business in the country avoided corporate taxes over the same period.
‘‘It’s shameful that so many corporations make big profits and pay nothing to support our country,’’ said Senator Byron Dorgan, Democrat of North Dakota, who asked for the study with Senator Carl Levin, Democrat of Michigan.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called S corporations pay taxes under individual tax codes.
‘‘Half of all business income in the United States now ends up going through the individual tax code,’’ Edwards said.
The study by the GAO, the investigative arm of Congress, did not investigate why corporations weren’t paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million US companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the US corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities.
‘‘It’s time for the big corporations to pay their fair share,’’ Dorgan said.
Sunday, August 10, 2008
Know-Nothing Politics
Original Link: http://www.nytimes.com/2008/08/08/opinion/08krugman.html
By PAUL KRUGMAN
Go to Columnist Page » Blog: The Conscience of a Liberal And the debate on energy policy has helped me find the words for something I’ve been thinking about for a while. Republicans, once hailed as the “party of ideas,” have become the party of stupid.
Now, I don’t mean that G.O.P. politicians are, on average, any dumber than their Democratic counterparts. And I certainly don’t mean to question the often frightening smarts of Republican political operatives.
What I mean, instead, is that know-nothingism — the insistence that there are simple, brute-force, instant-gratification answers to every problem, and that there’s something effeminate and weak about anyone who suggests otherwise — has become the core of Republican policy and political strategy. The party’s de facto slogan has become: “Real men don’t think things through.”
In the case of oil, this takes the form of pretending that more drilling would produce fast relief at the gas pump. In fact, earlier this week Republicans in Congress actually claimed credit for the recent fall in oil prices: “The market is responding to the fact that we are here talking,” said Representative John Shadegg.
What about the experts at the Department of Energy who say that it would take years before offshore drilling would yield any oil at all, and that even then the effect on prices at the pump would be “insignificant”? Presumably they’re just a bunch of wimps, probably Democrats. And the Democrats, as Representative Michele Bachmann assures us, “want Americans to move to the urban core, live in tenements, take light rail to their government jobs.”
Is this political pitch too dumb to succeed? Don’t count on it.
Remember how the Iraq war was sold. The stuff about aluminum tubes and mushroom clouds was just window dressing. The main political argument was, “They attacked us, and we’re going to strike back” — and anyone who tried to point out that Saddam and Osama weren’t the same person was an effete snob who hated America, and probably looked French.
Let’s also not forget that for years President Bush was the center of a cult of personality that lionized him as a real-world Forrest Gump, a simple man who prevails through his gut instincts and moral superiority. “Mr. Bush is the triumph of the seemingly average American man,” declared Peggy Noonan, writing in The Wall Street Journal in 2004. “He’s not an intellectual. Intellectuals start all the trouble in the world.”
It wasn’t until Hurricane Katrina — when the heckuva job done by the man of whom Ms. Noonan said, “if there’s a fire on the block, he’ll run out and help” revealed the true costs of obliviousness — that the cult began to fade.
What’s more, the politics of stupidity didn’t just appeal to the poorly informed. Bear in mind that members of the political and media elites were more pro-war than the public at large in the fall of 2002, even though the flimsiness of the case for invading Iraq should have been even more obvious to those paying close attention to the issue than it was to the average voter.
Why were the elite so hawkish? Well, I heard a number of people express privately the argument that some influential commentators made publicly — that the war was a good idea, not because Iraq posed a real threat, but because beating up someone in the Middle East, never mind who, would show Muslims that we mean business. In other words, even alleged wise men bought into the idea of macho posturing as policy.
All this is in the past. But the state of the energy debate shows that Republicans, despite Mr. Bush’s plunge into record unpopularity and their defeat in 2006, still think that know-nothing politics works. And they may be right.
Sad to say, the current drill-and-burn campaign is getting some political traction. According to one recent poll, 69 percent of Americans now favor expanded offshore drilling — and 51 percent of them believe that removing restrictions on drilling would reduce gas prices within a year.
The headway Republicans are making on this issue won’t prevent Democrats from expanding their majority in Congress, but it might limit their gains — and could conceivably swing the presidential election, where the polls show a much closer race.
In any case, remember this the next time someone calls for an end to partisanship, for working together to solve the country’s problems. It’s not going to happen — not as long as one of America’s two great parties believes that when it comes to politics, stupidity is the best policy.
By PAUL KRUGMAN
Go to Columnist Page » Blog: The Conscience of a Liberal And the debate on energy policy has helped me find the words for something I’ve been thinking about for a while. Republicans, once hailed as the “party of ideas,” have become the party of stupid.
Now, I don’t mean that G.O.P. politicians are, on average, any dumber than their Democratic counterparts. And I certainly don’t mean to question the often frightening smarts of Republican political operatives.
What I mean, instead, is that know-nothingism — the insistence that there are simple, brute-force, instant-gratification answers to every problem, and that there’s something effeminate and weak about anyone who suggests otherwise — has become the core of Republican policy and political strategy. The party’s de facto slogan has become: “Real men don’t think things through.”
In the case of oil, this takes the form of pretending that more drilling would produce fast relief at the gas pump. In fact, earlier this week Republicans in Congress actually claimed credit for the recent fall in oil prices: “The market is responding to the fact that we are here talking,” said Representative John Shadegg.
What about the experts at the Department of Energy who say that it would take years before offshore drilling would yield any oil at all, and that even then the effect on prices at the pump would be “insignificant”? Presumably they’re just a bunch of wimps, probably Democrats. And the Democrats, as Representative Michele Bachmann assures us, “want Americans to move to the urban core, live in tenements, take light rail to their government jobs.”
Is this political pitch too dumb to succeed? Don’t count on it.
Remember how the Iraq war was sold. The stuff about aluminum tubes and mushroom clouds was just window dressing. The main political argument was, “They attacked us, and we’re going to strike back” — and anyone who tried to point out that Saddam and Osama weren’t the same person was an effete snob who hated America, and probably looked French.
Let’s also not forget that for years President Bush was the center of a cult of personality that lionized him as a real-world Forrest Gump, a simple man who prevails through his gut instincts and moral superiority. “Mr. Bush is the triumph of the seemingly average American man,” declared Peggy Noonan, writing in The Wall Street Journal in 2004. “He’s not an intellectual. Intellectuals start all the trouble in the world.”
It wasn’t until Hurricane Katrina — when the heckuva job done by the man of whom Ms. Noonan said, “if there’s a fire on the block, he’ll run out and help” revealed the true costs of obliviousness — that the cult began to fade.
What’s more, the politics of stupidity didn’t just appeal to the poorly informed. Bear in mind that members of the political and media elites were more pro-war than the public at large in the fall of 2002, even though the flimsiness of the case for invading Iraq should have been even more obvious to those paying close attention to the issue than it was to the average voter.
Why were the elite so hawkish? Well, I heard a number of people express privately the argument that some influential commentators made publicly — that the war was a good idea, not because Iraq posed a real threat, but because beating up someone in the Middle East, never mind who, would show Muslims that we mean business. In other words, even alleged wise men bought into the idea of macho posturing as policy.
All this is in the past. But the state of the energy debate shows that Republicans, despite Mr. Bush’s plunge into record unpopularity and their defeat in 2006, still think that know-nothing politics works. And they may be right.
Sad to say, the current drill-and-burn campaign is getting some political traction. According to one recent poll, 69 percent of Americans now favor expanded offshore drilling — and 51 percent of them believe that removing restrictions on drilling would reduce gas prices within a year.
The headway Republicans are making on this issue won’t prevent Democrats from expanding their majority in Congress, but it might limit their gains — and could conceivably swing the presidential election, where the polls show a much closer race.
In any case, remember this the next time someone calls for an end to partisanship, for working together to solve the country’s problems. It’s not going to happen — not as long as one of America’s two great parties believes that when it comes to politics, stupidity is the best policy.
Wednesday, August 6, 2008
Freddie posts 4th straight quarterly loss and slashes dividend
Original Link: http://today.reuters.com/news/articleinvesting.aspx?type=comktNews&rpc=33&storyid=2008-08-06T174729Z_01_WNAB5259_RTRIDST_0_BUSINESS-FREDDIEMAC-RESULTS-DC.XML
By Al Yoon
NEW YORK (Reuters) - Freddie Mac on Wednesday posted its fourth straight quarterly loss as it braced for a prolonged housing crisis by setting aside twice as much money for bad loans and plans to slash its dividend by at least 80 percent.
The worse-than-expected results came just three weeks after authorities orchestrated a sweeping effort to prop up the U.S. No. 2 provider of residential mortgage funding and its rival Fannie Mae.
Freddie Mac's chief financial officer Buddy Piszel reiterated that the company continues to maintain a surplus over regulatory capital requirements, and said the company can wait for "choppy" market conditions to improve before raising capital, which could exceed $5.5 billion.
For the second quarter, McLean, Virginia-based Freddie posted a loss of $821 million, or $1.63 per share, compared with a profit of $729 million, or 96 cents per share, in the same quarter a year earlier.
That included the first loss from its holdings of subprime and other risky loans, which formed a significant part of its $2.8 billion in realized and anticipated losses stemming from the steepest U.S. housing downturn since the Great Depression.
The company more than doubled its provisions for loan losses to $2.5 billion since the first quarter, marking the fourth increase in as many quarters. All credit-related expenses surged to $2.8 billion from $1.4 billion in the previous period and $463 million a year earlier.
"Credit-related expenses were far higher than what guidance had been," said Rajiv Setia, a strategist at Barclays Capital in New York. Barclays was expecting about $2 billion, he said, adding "that was on the high side" of analyst estimates.
FOURTH STRAIGHT LOSS
The second-quarter loss follows a $151 million loss in the first quarter and brings its cumulative loss over the past four quarters to more than $4.6 billion.
Piszel told Reuters it was still reasonable to expect a housing market recovery by early 2009, but "we have to prepare for a stress condition that looks worse than that."
Richard Syron, Freddie Mac's chief executive officer, said the company revised its expectations for home price declines that have wreaked havoc on foreclosures to 18 percent to 20 percent from peak-to-trough, from 15 percent in a previous assumption. The numbers are based on Freddie Mac's own model.
"Today's challenging economic environment suggests that the housing market is far from stabilizing," Syron said on a conference call with analysts and investors. "We now think that we are halfway through the overall peak-to-trough decline."
Freddie Mac shares plummeted by more than 14 percent to $6.89 in early afternoon trading in New York. The stock is up from its mid-July low of $3.89, but remains nearly 90 percent below its 52-week high of $66.65 set last August.
Freddie Mac and Fannie Mae faced a storm of stock selling last month as investors speculated the companies would fall short of the capital needed to offset losses sustained from delinquent mortgages.
The turmoil led U.S. Treasury Secretary Henry Paulson, in concert with Federal Reserve Chairman Ben Bernanke, to arrange emergency measures that bolstered federal backing for the government-sponsored enterprises.
"Either investors are going to be massively diluted given the amount of equity they are going to need or they are going to be nationalized," said Dan Alpert, managing director of Westwood Capital LLC in New York. "Without a larger equity capital base, they are going to be incapable of surviving. We don't think $5.5 billion even scratches the surface."
DIVIDEND SLASH
To help preserve capital, Freddie Mac said it would slash its quarterly dividend, pending board approval, by at least 80 percent to 5 cents a share or less from the current 25 cents a share. On an annualized basis, that will save Freddie Mac more than $500 million based on current shares outstanding.
It will also halt the rapid growth in its $792 billion portfolio as it becomes more conservative with capital, Piszel said. The company contends it can continue to support the mortgage market by replacing loans matured or refinanced.
Freddie Mac, along with Fannie Mae, owns or guarantees more than $5 trillion in mortgages, or nearly half of all U.S. home loans. Analysts also expect Fannie Mae to show a loss when it reports second-quarter results on Friday.
Freddie said revenue rose by more than 10 percent from the first quarter to $1.69 billion, including an increase of 92 percent in net interest income to $1.5 billion as the portfolio ballooned.
Total credit losses rose to $810 million in the period from $528 million in the first quarter.
"The reality is you don't know" what losses will be," said Malcolm Polley, chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania. "It's pretty ugly."
(Editing by Gary Crosse)
By Al Yoon
NEW YORK (Reuters) - Freddie Mac
The worse-than-expected results came just three weeks after authorities orchestrated a sweeping effort to prop up the U.S. No. 2 provider of residential mortgage funding and its rival Fannie Mae
Freddie Mac's chief financial officer Buddy Piszel reiterated that the company continues to maintain a surplus over regulatory capital requirements, and said the company can wait for "choppy" market conditions to improve before raising capital, which could exceed $5.5 billion.
For the second quarter, McLean, Virginia-based Freddie posted a loss of $821 million, or $1.63 per share, compared with a profit of $729 million, or 96 cents per share, in the same quarter a year earlier.
That included the first loss from its holdings of subprime and other risky loans, which formed a significant part of its $2.8 billion in realized and anticipated losses stemming from the steepest U.S. housing downturn since the Great Depression.
The company more than doubled its provisions for loan losses to $2.5 billion since the first quarter, marking the fourth increase in as many quarters. All credit-related expenses surged to $2.8 billion from $1.4 billion in the previous period and $463 million a year earlier.
"Credit-related expenses were far higher than what guidance had been," said Rajiv Setia, a strategist at Barclays Capital in New York. Barclays was expecting about $2 billion, he said, adding "that was on the high side" of analyst estimates.
FOURTH STRAIGHT LOSS
The second-quarter loss follows a $151 million loss in the first quarter and brings its cumulative loss over the past four quarters to more than $4.6 billion.
Piszel told Reuters it was still reasonable to expect a housing market recovery by early 2009, but "we have to prepare for a stress condition that looks worse than that."
Richard Syron, Freddie Mac's chief executive officer, said the company revised its expectations for home price declines that have wreaked havoc on foreclosures to 18 percent to 20 percent from peak-to-trough, from 15 percent in a previous assumption. The numbers are based on Freddie Mac's own model.
"Today's challenging economic environment suggests that the housing market is far from stabilizing," Syron said on a conference call with analysts and investors. "We now think that we are halfway through the overall peak-to-trough decline."
Freddie Mac shares plummeted by more than 14 percent to $6.89 in early afternoon trading in New York. The stock is up from its mid-July low of $3.89, but remains nearly 90 percent below its 52-week high of $66.65 set last August.
Freddie Mac and Fannie Mae faced a storm of stock selling last month as investors speculated the companies would fall short of the capital needed to offset losses sustained from delinquent mortgages.
The turmoil led U.S. Treasury Secretary Henry Paulson, in concert with Federal Reserve Chairman Ben Bernanke, to arrange emergency measures that bolstered federal backing for the government-sponsored enterprises.
"Either investors are going to be massively diluted given the amount of equity they are going to need or they are going to be nationalized," said Dan Alpert, managing director of Westwood Capital LLC in New York. "Without a larger equity capital base, they are going to be incapable of surviving. We don't think $5.5 billion even scratches the surface."
DIVIDEND SLASH
To help preserve capital, Freddie Mac said it would slash its quarterly dividend, pending board approval, by at least 80 percent to 5 cents a share or less from the current 25 cents a share. On an annualized basis, that will save Freddie Mac more than $500 million based on current shares outstanding.
It will also halt the rapid growth in its $792 billion portfolio as it becomes more conservative with capital, Piszel said. The company contends it can continue to support the mortgage market by replacing loans matured or refinanced.
Freddie Mac, along with Fannie Mae, owns or guarantees more than $5 trillion in mortgages, or nearly half of all U.S. home loans. Analysts also expect Fannie Mae to show a loss when it reports second-quarter results on Friday.
Freddie said revenue rose by more than 10 percent from the first quarter to $1.69 billion, including an increase of 92 percent in net interest income to $1.5 billion as the portfolio ballooned.
Total credit losses rose to $810 million in the period from $528 million in the first quarter.
"The reality is you don't know" what losses will be," said Malcolm Polley, chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania. "It's pretty ugly."
(Editing by Gary Crosse)
Insurer AIG posts large loss on bad mortgage bets
Original Link: http://www.reuters.com/article/marketsNews/idINN06230920080807
By Lilla Zuill
NEW YORK, Aug 6 (Reuters) - American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) posted its third consecutive quarterly net loss of more than $5 billion on Wednesday as it wrote down bad mortgage-related investments, sending its shares down almost 8 percent.
The world's largest insurer and one of the hardest hit in the credit crisis also reported a general deterioration in its mainstream insurance businesses, which were hurt in particular by a decline in investment income and losses from its mortgage insurer, United Guaranty Corp.
"Our second quarter results were adversely affected by the severe conditions in the housing and credit markets and a very difficult investment environment," AIG's chairman and chief executive Robert Willumstad said in a statement. Willumstad took the CEO job in June after Martin Sullivan resigned.
"We have a lot of work to do to restore AIG's profitability to where it should be," Willumstad warned, adding that AIG was considering all options as it looked to improve results and its risk profile and protect its capital base.
"We are examining every business, as well as the assumptions underlying how we do business in the markets where we have a presence," Willumstad said. He said a progress report would be issued in late September.
BATHED IN RED
AIG said its second-quarter net loss was $5.36 billion, or a loss of $2.06 a share, compared with net income of $4.28 billion, or $1.64 a share, a year ago. It had an adjusted net loss of 51 cents a share. Analysts, on average, had forecast a profit of 46 cents a share, according to Reuters Estimates.
It was the second-largest loss in AIG's 89-year history, surpassed only by the $7.7 billion net loss it recorded in the first quarter of 2008. AIG has posted net losses exceeding $18 billion over the past three quarters.
Long known for profitability, AIG said some of its workers had received Wells notices, indicating the U.S. Securities and Exchange Commission was considering civil action. The Justice Department and SEC are investigating investments that led to AIG's quarterly losses.
AIG said it recorded $5.56 billion in second quarter unrealized market valuation losses on credit default swaps, the same area that led to losses in the prior two quarters.
The company's financial ratings have been lowered, and it has been forced to raise $20 billion in recent months to strengthen its balance sheet.
Portfolio manager Thomas Russo at Gardner, Russo & Gardner in Lancaster, Pennsylvania, which manages more than $3 billion in assets and owns AIG shares, said he was concerned that AIG's credit losses would undermine its insurance business. AIG is best known for its insurance business.
Russo said he owns AIG shares because of strong growth forecasts for its foreign life insurance and retirement services. "What would be important is to know ... is this an up-to-date and full reflection of what they know to be their exposures," he said.
Much of the second-quarter 2008 loss was due to what AIG described as "severe, rapid declines in fair values of certain residential mortgage-backed securities and other structured securities in the second quarter." AIG said it had concluded that it could not "reasonably assert that the recovery period would be temporary."
AIG said second-quarter results included pre-tax net realized capital losses of $6.08 billion ($4.02 billion after tax) arising primarily from other-than-temporary impairment charges in its investment portfolio. The company said this compared to pre-tax net realized capital losses of $28 million ($17 million after tax) in the year-ago quarter.
General insurance operating income fell 54 percent to $1.39 billion, reflecting a 28.3 percent decline in investment income primarily due to lower partnership and mutual fund income, and an increase of $440 million in operating losses at United Guaranty Corp.
The general insurance division wrote $12.22 billion in net premiums in the quarter, slightly more than last year's $12.14 billion.
"They may have taken a write down in the same vein as Merrill Lynch did," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management, which manages $22 billion. "It looks like the new CEO took what I call a kitchen sink quarter," meaning all the bad news was out of the way.
AIG shares fell 7.7 percent in after-market trading to $26.84. The shares closed down 2.68 percent at $29.09 in the regular session on the New York Stock Exchange.
LIFE AND OTHER BUSINESS
Income from life insurance and retirement services fell 10 percent to $2.6 billion.
Premiums, deposits and other revenue were $25.55 billion, up 16.4 percent compared to a year ago. The company said they were favorably affected by foreign exchange.
AIG also has lending units, an asset management division and aircraft leasing.
Its financial services business reported a $5.88 billion loss for the quarter. But operating income for aircraft leasing, long one of AIG's most profitable units, rose 85.3 percent to $352 million compared to a year ago. The company said that was due to a larger fleet, higher lease rates, lower interest rates and more aircraft sales.
Consumer finance, a division that offered home mortgages, posted a $22 million operating loss compared to $58 million in operating income last year.
Equity research analyst Bill Fitzpatrick at Optique Capital in Milwaukee, Wisconsin, said the credit swap losses were "a little higher than we would have hoped for," but he said he expected AIG to benefit as market conditions improve.
"The thesis remains the same that these portfolios will ultimately be marked up," Fitzpatrick said. (Additional reporting by Paritosh Bansal and Dan Wilchins; Editing by Andre Grenon)
By Lilla Zuill
NEW YORK, Aug 6 (Reuters) - American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) posted its third consecutive quarterly net loss of more than $5 billion on Wednesday as it wrote down bad mortgage-related investments, sending its shares down almost 8 percent.
The world's largest insurer and one of the hardest hit in the credit crisis also reported a general deterioration in its mainstream insurance businesses, which were hurt in particular by a decline in investment income and losses from its mortgage insurer, United Guaranty Corp.
"Our second quarter results were adversely affected by the severe conditions in the housing and credit markets and a very difficult investment environment," AIG's chairman and chief executive Robert Willumstad said in a statement. Willumstad took the CEO job in June after Martin Sullivan resigned.
"We have a lot of work to do to restore AIG's profitability to where it should be," Willumstad warned, adding that AIG was considering all options as it looked to improve results and its risk profile and protect its capital base.
"We are examining every business, as well as the assumptions underlying how we do business in the markets where we have a presence," Willumstad said. He said a progress report would be issued in late September.
BATHED IN RED
AIG said its second-quarter net loss was $5.36 billion, or a loss of $2.06 a share, compared with net income of $4.28 billion, or $1.64 a share, a year ago. It had an adjusted net loss of 51 cents a share. Analysts, on average, had forecast a profit of 46 cents a share, according to Reuters Estimates.
It was the second-largest loss in AIG's 89-year history, surpassed only by the $7.7 billion net loss it recorded in the first quarter of 2008. AIG has posted net losses exceeding $18 billion over the past three quarters.
Long known for profitability, AIG said some of its workers had received Wells notices, indicating the U.S. Securities and Exchange Commission was considering civil action. The Justice Department and SEC are investigating investments that led to AIG's quarterly losses.
AIG said it recorded $5.56 billion in second quarter unrealized market valuation losses on credit default swaps, the same area that led to losses in the prior two quarters.
The company's financial ratings have been lowered, and it has been forced to raise $20 billion in recent months to strengthen its balance sheet.
Portfolio manager Thomas Russo at Gardner, Russo & Gardner in Lancaster, Pennsylvania, which manages more than $3 billion in assets and owns AIG shares, said he was concerned that AIG's credit losses would undermine its insurance business. AIG is best known for its insurance business.
Russo said he owns AIG shares because of strong growth forecasts for its foreign life insurance and retirement services. "What would be important is to know ... is this an up-to-date and full reflection of what they know to be their exposures," he said.
Much of the second-quarter 2008 loss was due to what AIG described as "severe, rapid declines in fair values of certain residential mortgage-backed securities and other structured securities in the second quarter." AIG said it had concluded that it could not "reasonably assert that the recovery period would be temporary."
AIG said second-quarter results included pre-tax net realized capital losses of $6.08 billion ($4.02 billion after tax) arising primarily from other-than-temporary impairment charges in its investment portfolio. The company said this compared to pre-tax net realized capital losses of $28 million ($17 million after tax) in the year-ago quarter.
General insurance operating income fell 54 percent to $1.39 billion, reflecting a 28.3 percent decline in investment income primarily due to lower partnership and mutual fund income, and an increase of $440 million in operating losses at United Guaranty Corp.
The general insurance division wrote $12.22 billion in net premiums in the quarter, slightly more than last year's $12.14 billion.
"They may have taken a write down in the same vein as Merrill Lynch did," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management, which manages $22 billion. "It looks like the new CEO took what I call a kitchen sink quarter," meaning all the bad news was out of the way.
AIG shares fell 7.7 percent in after-market trading to $26.84. The shares closed down 2.68 percent at $29.09 in the regular session on the New York Stock Exchange.
LIFE AND OTHER BUSINESS
Income from life insurance and retirement services fell 10 percent to $2.6 billion.
Premiums, deposits and other revenue were $25.55 billion, up 16.4 percent compared to a year ago. The company said they were favorably affected by foreign exchange.
AIG also has lending units, an asset management division and aircraft leasing.
Its financial services business reported a $5.88 billion loss for the quarter. But operating income for aircraft leasing, long one of AIG's most profitable units, rose 85.3 percent to $352 million compared to a year ago. The company said that was due to a larger fleet, higher lease rates, lower interest rates and more aircraft sales.
Consumer finance, a division that offered home mortgages, posted a $22 million operating loss compared to $58 million in operating income last year.
Equity research analyst Bill Fitzpatrick at Optique Capital in Milwaukee, Wisconsin, said the credit swap losses were "a little higher than we would have hoped for," but he said he expected AIG to benefit as market conditions improve.
"The thesis remains the same that these portfolios will ultimately be marked up," Fitzpatrick said. (Additional reporting by Paritosh Bansal and Dan Wilchins; Editing by Andre Grenon)
US officials defend Iraq's oil-fed budget surplus
Original Link: http://www.bnd.com/283/story/423141.html
By ROBERT H. REID Associated Press Writer
BAGHDAD --Iraq is paying for more of its own reconstruction but is still struggling to spend its multibillion-dollar surplus as it copes with a flood of oil revenue and a cumbersome approval process meant to curb corruption, U.S. officials said Wednesday.
Iraq could finish the year with as much as a $79 billion cumulative budget surplus as oil revenues add to leftover income the Iraqis still haven't spent on national rebuilding, according to a report by the Government Accountability Office made public Tuesday.
Many Iraqis - who lack adequate electricity, clean water and jobs - find it unfathomable their country is awash in oil dollars. Last year, it spent less than a third of the $12 billion budgeted for major projects such as electricity, housing and water.
In Washington, senators renewed calls for Baghdad to pay more for its own reconstruction, which has been heavily supported by hard-pressed American taxpayers.
"I think it's absurd that we're paying for the reconstruction in a country when right at the beginning of the war the Bush administration assured the American people that Iraq's reconstruction would be paid for by Iraq and through its oil revenues," Democratic Sen. Carl Levin said Wednesday on MSNBC.
Levin, who requested the GAO report along with Republican Sen. John Warner, said in a statement Tuesday that it was "inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves."
But U.S. officials who work with the Iraqis on reconstruction said the Baghdad government has been increasing its capital spending by 30 percent to 35 percent each year since 2006 - although they added that both governments want to see the pace increased.
The Iraqi government is drafting plans for Iraqi-funded projects to include 1,000 new primary health care centers over the next 10 years, new airports and a major renovation project for downtown Baghdad, the American officials said.
They spoke on condition of anonymity because they did not want to comment on Iraqi government performance.
The officials said the United States has not begun any new reconstruction projects in Iraq since 2004 and that ongoing work is funded by money approved by Congress four years ago.
In the report, the GAO said Iraq had an estimated budget surplus of about $29 billion from 2005 to 2007 and could have an additional surplus of up to $50 billion this year.
Nearly $10 billion of the estimated surplus is held by the Development Fund for Iraq at the Federal Reserve Bank of New York, according to the report. That fund was established by U.S.-led coalition authorities shortly after the 2003 overthrow of Saddam Hussein to hold Iraqi oil revenues and other state assets.
Every month, the government-owned State Oil Marketing Organization offers to sell Iraqi oil at an announced price. Oil companies interested in buying then request shipments. Preference is given to major international companies and those that have previously done business with Iraq.
Revenues are then deposited in the Development Fund account, which the Iraqi government has controlled since 2004. The Central Bank of Iraq is free to draw from the account, but the government decides how to spend the money. Other revenues are held by the Central Bank and Iraqi commercial banks.
The expected surplus is likely to be lower than $79 billion because parliament Wednesday approved legislation for a $21 billion supplemental budget for 2008.
Nevertheless, the GAO report faulted the government for holding back on spending plans.
"First ... (the) relative shortage of trained budgetary, procurement and other staff with the necessary technical skills is a factor limiting the Iraqi government's ability to plan and execute its capital spending," the GAO said, adding that a second problem is the government's weak accounting systems.
"Third ... violence and sectarian strife remain major obstacles to developing Iraqi government capacity," it said.
The report also estimated that this year Iraq could generate $67 billion to $79 billion in oil sales. Other U.S. officials previously had said they expected the oil windfall to be about $70 billion.
"This substantial increase in revenues offers the Iraqi government the potential to better finance its own security and economic needs," the GAO said.
But the U.S. officials said the influx of oil money had been difficult to manage, not only for Iraq but for other oil-producing countries.
Other problems cited by the officials included a cumbersome approval process - put in place to curb corruption - lack of expertise in the ministries and a shortage of Iraqi contractors capable of taking on major development projects.
Since 2005, the United States has funded a number of efforts to teach civilian and security ministries how to effectively execute their budgets.
The efforts included programs to advise and help Iraqi government employees develop the skills to plan programs and to effectively deliver government services such as electricity, water and security.
By ROBERT H. REID Associated Press Writer
BAGHDAD --Iraq is paying for more of its own reconstruction but is still struggling to spend its multibillion-dollar surplus as it copes with a flood of oil revenue and a cumbersome approval process meant to curb corruption, U.S. officials said Wednesday.
Iraq could finish the year with as much as a $79 billion cumulative budget surplus as oil revenues add to leftover income the Iraqis still haven't spent on national rebuilding, according to a report by the Government Accountability Office made public Tuesday.
Many Iraqis - who lack adequate electricity, clean water and jobs - find it unfathomable their country is awash in oil dollars. Last year, it spent less than a third of the $12 billion budgeted for major projects such as electricity, housing and water.
In Washington, senators renewed calls for Baghdad to pay more for its own reconstruction, which has been heavily supported by hard-pressed American taxpayers.
"I think it's absurd that we're paying for the reconstruction in a country when right at the beginning of the war the Bush administration assured the American people that Iraq's reconstruction would be paid for by Iraq and through its oil revenues," Democratic Sen. Carl Levin said Wednesday on MSNBC.
Levin, who requested the GAO report along with Republican Sen. John Warner, said in a statement Tuesday that it was "inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves."
But U.S. officials who work with the Iraqis on reconstruction said the Baghdad government has been increasing its capital spending by 30 percent to 35 percent each year since 2006 - although they added that both governments want to see the pace increased.
The Iraqi government is drafting plans for Iraqi-funded projects to include 1,000 new primary health care centers over the next 10 years, new airports and a major renovation project for downtown Baghdad, the American officials said.
They spoke on condition of anonymity because they did not want to comment on Iraqi government performance.
The officials said the United States has not begun any new reconstruction projects in Iraq since 2004 and that ongoing work is funded by money approved by Congress four years ago.
In the report, the GAO said Iraq had an estimated budget surplus of about $29 billion from 2005 to 2007 and could have an additional surplus of up to $50 billion this year.
Nearly $10 billion of the estimated surplus is held by the Development Fund for Iraq at the Federal Reserve Bank of New York, according to the report. That fund was established by U.S.-led coalition authorities shortly after the 2003 overthrow of Saddam Hussein to hold Iraqi oil revenues and other state assets.
Every month, the government-owned State Oil Marketing Organization offers to sell Iraqi oil at an announced price. Oil companies interested in buying then request shipments. Preference is given to major international companies and those that have previously done business with Iraq.
Revenues are then deposited in the Development Fund account, which the Iraqi government has controlled since 2004. The Central Bank of Iraq is free to draw from the account, but the government decides how to spend the money. Other revenues are held by the Central Bank and Iraqi commercial banks.
The expected surplus is likely to be lower than $79 billion because parliament Wednesday approved legislation for a $21 billion supplemental budget for 2008.
Nevertheless, the GAO report faulted the government for holding back on spending plans.
"First ... (the) relative shortage of trained budgetary, procurement and other staff with the necessary technical skills is a factor limiting the Iraqi government's ability to plan and execute its capital spending," the GAO said, adding that a second problem is the government's weak accounting systems.
"Third ... violence and sectarian strife remain major obstacles to developing Iraqi government capacity," it said.
The report also estimated that this year Iraq could generate $67 billion to $79 billion in oil sales. Other U.S. officials previously had said they expected the oil windfall to be about $70 billion.
"This substantial increase in revenues offers the Iraqi government the potential to better finance its own security and economic needs," the GAO said.
But the U.S. officials said the influx of oil money had been difficult to manage, not only for Iraq but for other oil-producing countries.
Other problems cited by the officials included a cumbersome approval process - put in place to curb corruption - lack of expertise in the ministries and a shortage of Iraqi contractors capable of taking on major development projects.
Since 2005, the United States has funded a number of efforts to teach civilian and security ministries how to effectively execute their budgets.
The efforts included programs to advise and help Iraqi government employees develop the skills to plan programs and to effectively deliver government services such as electricity, water and security.
Monday, August 4, 2008
The real deficit probably closer to $900 billion, Allan Sloan
Original Link: http://marketplace.publicradio.org/display/web/2008/08/04/sloan_deficit/
The real deficit and how we came to it
The Bush Administration is projecting the deficit for the next White House will be about half a trillion. But
Allan Sloan takes Scott Jagow through the numbers and explains why it's probably closer to $900 billion.
TEXT OF INTERVIEW
Scott Jagow: Last week, the Bush Administration said the next White House will inherit a half a trillion dollar budget deficit. That would be a record. But Fortune Magazine's Allan Sloan says unfortunately, that's not even close to the real deficit.
Allan Sloan: Well, the number the Bush people have put out is $482 billion, and people are going, "Huuhh!!" Or however you inhale. But the real number is significantly higher than that, the real deficit. In fact, it probably closes in on $900 billion. But it's only money and who's counting?
Jagow: Well, what would people say if it was $900 billion?
Sloan: Well, they'd say my god, it's 6 percent of the Gross Domestic Product. This is the number back in the 80's, in the early Reagan years, that shocked everybody and got Congress and Reagan and all of these people to put in a very large tax increase. And now, we're approaching that number and nobody seems to realize it other than me and one or two other people who're considered cranks -- like Senator Conrad of North Dakota.
Jagow: OK, so explain how you come up with $900 versus the $482 billion.
Sloan: All right, it's Washington math. So we start with 482, the stated number. We then add back $182 billion, which is the Social Security surplus, which reduces the stated deficit, but in theory this money's being set aside for you and me when we get to be old and even crankier than we are. Which makes it 664. Then, the government pays interest on its own securities to itself and its own trust funds, and that's about another $100 billion. Then there's $50-something billion for loans and loan guarantees. So you do all of this and you end up with Senator Conrad's number, which is 815. But he's being way too nice and way too conservative.
Jagow: So Allan, what do you propose we do about this?
Sloan: Well, I propose for starters that people in our profession -- your's and mine -- decide to use the real number instead of the stated number, people might actually listen. But right now, there's no pressure on the White House -- whoever happens to be in the White House -- to care about this. The people from Congress, for the most part, go their own way because there's nobody really in charge of the whole big financial picture. Maybe this will change with the next administration, but I sure wouldn't want to bet on it.
Jagow: All right, Allan Sloan from Fortune Magazine. Thank you.
Sloan: You're welcome, Scott.
Allan Sloan is a senior editor-at-large at Fortune (APM)
The real deficit and how we came to it
The Bush Administration is projecting the deficit for the next White House will be about half a trillion. But
Allan Sloan takes Scott Jagow through the numbers and explains why it's probably closer to $900 billion.
TEXT OF INTERVIEW
Scott Jagow: Last week, the Bush Administration said the next White House will inherit a half a trillion dollar budget deficit. That would be a record. But Fortune Magazine's Allan Sloan says unfortunately, that's not even close to the real deficit.
Allan Sloan: Well, the number the Bush people have put out is $482 billion, and people are going, "Huuhh!!" Or however you inhale. But the real number is significantly higher than that, the real deficit. In fact, it probably closes in on $900 billion. But it's only money and who's counting?
Jagow: Well, what would people say if it was $900 billion?
Sloan: Well, they'd say my god, it's 6 percent of the Gross Domestic Product. This is the number back in the 80's, in the early Reagan years, that shocked everybody and got Congress and Reagan and all of these people to put in a very large tax increase. And now, we're approaching that number and nobody seems to realize it other than me and one or two other people who're considered cranks -- like Senator Conrad of North Dakota.
Jagow: OK, so explain how you come up with $900 versus the $482 billion.
Sloan: All right, it's Washington math. So we start with 482, the stated number. We then add back $182 billion, which is the Social Security surplus, which reduces the stated deficit, but in theory this money's being set aside for you and me when we get to be old and even crankier than we are. Which makes it 664. Then, the government pays interest on its own securities to itself and its own trust funds, and that's about another $100 billion. Then there's $50-something billion for loans and loan guarantees. So you do all of this and you end up with Senator Conrad's number, which is 815. But he's being way too nice and way too conservative.
Jagow: So Allan, what do you propose we do about this?
Sloan: Well, I propose for starters that people in our profession -- your's and mine -- decide to use the real number instead of the stated number, people might actually listen. But right now, there's no pressure on the White House -- whoever happens to be in the White House -- to care about this. The people from Congress, for the most part, go their own way because there's nobody really in charge of the whole big financial picture. Maybe this will change with the next administration, but I sure wouldn't want to bet on it.
Jagow: All right, Allan Sloan from Fortune Magazine. Thank you.
Sloan: You're welcome, Scott.
Allan Sloan is a senior editor-at-large at Fortune (APM)
Ex-President Clinton to fight AIDS in US
Original Link: http://www.star-telegram.com/468/story/808089.html
Former President Bill Clinton said Monday that his foundation is going to focus its efforts on fighting AIDS in the United States, especially among blacks.
Speaking at an AIDS conference in Mexico City, Clinton said he was spurred to action after the U.S. Center for Disease Control reported that 40 percent more Americans are infected by HIV than previously estimated. The report released Saturday said nearly half of annual HIV infections in the United States are among black Americans.
"For Americans, this should be a wake up call," Clinton said. "Even as we keep working globally, we need to do much more to fight AIDS at home, and I intend to do so with my foundation."
Clinton flew to Mexico after touring Africa to see the work of the William J. Clinton Foundation's HIV/AIDS Initiative.
The foundation has negotiated agreements to lower the prices of rapid HIV tests and anti-AIDS drugs in the developing world and has collaborated with the Geveva-based UNITAID, a U.N.-backed fund that helps supply low-cost antiretroviral drugs.
Former President Bill Clinton said Monday that his foundation is going to focus its efforts on fighting AIDS in the United States, especially among blacks.
Speaking at an AIDS conference in Mexico City, Clinton said he was spurred to action after the U.S. Center for Disease Control reported that 40 percent more Americans are infected by HIV than previously estimated. The report released Saturday said nearly half of annual HIV infections in the United States are among black Americans.
"For Americans, this should be a wake up call," Clinton said. "Even as we keep working globally, we need to do much more to fight AIDS at home, and I intend to do so with my foundation."
Clinton flew to Mexico after touring Africa to see the work of the William J. Clinton Foundation's HIV/AIDS Initiative.
The foundation has negotiated agreements to lower the prices of rapid HIV tests and anti-AIDS drugs in the developing world and has collaborated with the Geveva-based UNITAID, a U.N.-backed fund that helps supply low-cost antiretroviral drugs.
Sunday, August 3, 2008
Senator Charged in Scheme to Hide Oil Firm Gifts
Original Link: http://www.nytimes.com/2008/07/30/washington/30stevens.html?ref=politics
By DAVID JOHNSTON and DAVID M. HERSZENHORN
Senator Ted Stevens of Alaska, a legendary political figure closely tied to the rough-and-tumble history of his home state, and who wields outsize influence over federal spending, was indicted on Tuesday on seven felony counts of failing to disclose gifts that he received from an oil services company.
A federal grand jury in the District of Columbia charged Mr. Stevens, who is 84 and the longest-serving Republican in the Senate, with failing to report more than $250,000 in gifts, including extensive renovations to his house in Alaska, a Land Rover and home furnishings on financial disclosure forms that he filed from 1999 to 2006.
The indictment said that Mr. Stevens “knowingly and willfully engaged in a scheme to conceal” the gifts he received from the VECO Corporation, once one of Alaska’s largest oil field contractors, and its former chief executive, William J. Allen, who last year pleaded guilty in the case. And it comes nearly a year to the day after F.B.I. agents raided the senator’s home as part of a long-running and expansive public corruption investigation in Alaska.
Mr. Stevens was informed of the indictment through a telephone call to his lawyer on Tuesday morning and was allowed to surrender instead of being arrested. He was expected to make an initial appearance in Washington before a federal judge, Emmet G. Sullivan, once a hearing is scheduled.
Mr. Stevens declared his innocence and his intention to fight the charges against him in a statement posted on his Web site. “I am innocent of these charges and intend to prove that,” he said.
But the indictment dealt a sharp blow to Mr. Stevens’s effort to win re-election in November, and raised the hopes of Democrats who have not won a Senate race in Alaska since 1974. Democrats were already relishing the chance to unseat Mr. Stevens, having recruited Mark Begich, the popular mayor of Anchorage, to challenge him. Mr. Stevens first must face six Republican challengers in the state’s Aug. 26 primary.
In his statement, Mr. Stevens also noted that he had served the nation and Alaska for more than half a century, beginning in World War II. “I have never knowingly submitted a false disclosure form required by law as a U.S. senator,” he said in the statement.
He also said that, in accordance with Senate Republican rules, he had relinquished, temporarily, his leadership positions, as senior Republican on the Commerce Committee and on the Defense Appropriations Subcommittee. He had served as chairman of the full Appropriations Committee for nearly a dozen years, and also as president pro tem of the Senate from 2003 to 2007, which put him third in line for the presidency.
Mr. Stevens, a short, square-shouldered man who shuffles through the Capitol these days in shoes with thick-cushioned soles, has long been a powerful force in the Senate, directing hundreds of millions of dollars to Alaska each year. Mr. Stevens is regarded as a nearly heroic figure in Alaska, where he is often called Uncle Ted, and played a crucial role in its achievement of statehood, which became official in 1959. Hardened by decades of legislative battles, he can be soft-spoken but also one of the most cantankerous lawmakers.
Mr. Stevens was not charged with performing improper favors for VECO, the company that gave him the unreported gifts, although the indictment said Mr. Stevens “could and did use his official position and his office on behalf of VECO.” At a news conference on Tuesday, prosecutors said they would not explain why the exchange of favors did not itself result in a charge.
The indictment said that Mr. Stevens met with the company to discuss its projects in Pakistan and Russia, its requests for “multiple federal grants and contracts to benefit VECO” and federal and state assistance in an effort to construct a natural gas pipeline from the North Slope of Alaska.
The indictment of a sitting senator, particularly one of Mr. Stevens’s seniority and stature, reverberated swiftly and ominously through the Capitol, in no small part because of the political implications.
Democrats already had high hopes that they would win more seats in November. They now control the Senate by a razor-thin 51 to 49, thanks only to two independents who vote with them.
As far-fetched as it might seem, some Democrats have started thinking aloud that they may be able to win nine more seats in November, bringing them a filibuster-proof majority of 60.
Senator Harry Reid of Nevada, the majority leader, boasted on Tuesday that Senate Democrats were mounting strong races against Republicans in 11 states.
The indictment could have implications beyond Mr. Stevens’s political future. It could set back Republican efforts to open more of Alaska to oil drilling. Mr. Stevens has been a powerful voice in favor of more drilling, including in the Arctic National Wildlife Refuge of Alaska.
The charges also handed Democrats an easy political weapon. Mr. Stevens has been a prolific fund-raiser for his party’s candidates, and Democrats immediately attacked several Republican incumbents for accepting money from him.
Mr. Stevens, in his committee positions, has helped funnel billions of federal dollars to Alaska. Since 1999, he has directed more than $3 billion in earmarks — pet projects sought by lawmakers outside the usual budget process — for Alaska, according to Citizens Against Government Waste, a Washington advocacy group.
One earmark that became a symbol of wasteful excess was the so-called Bridge to Nowhere, which was to connect the town of Ketchikan to a small, sparsely populated island, even though funds for the project were ultimately canceled.
Senator Mitch McConnell of Kentucky, the Republican leader, refused on Tuesday to answer questions about Mr. Stevens. Appearing before a huge throng of reporters at what is normally a regular weekly news conference, Mr. McConnell spoke for a scant 21 seconds.
“Let me just say that the Republican conference, like you, just learned of this news,” he said. “We’ll no doubt have more to say about it later.”
Mr. Reid said he learned of the indictment in an e-mail message from a staff member. He arrived at the lectern for his weekly news conference flashing a wide smile, the TV camera lights glinting off his teeth.
“I, of course, have served with Senator Stevens my entire Congressional career,” said Mr. Reid, who was elected to the Senate in 1986. “It’s a sad day for him, us. But you know I believe in the American system of justice. He is presumed innocent.”
Mr. Reid said that Senate Republicans would have to decide how to deal with Mr. Stevens, but suggested that they might move swiftly as they did after the news last summer that Senator Larry E. Craig, Republican of Idaho, had pleaded guilty to disorderly conduct, a misdemeanor, for allegedly soliciting an undercover police officer in an airport bathroom in Minneapolis.
Mr. Craig was stripped of his leadership positions and announced that he would resign, but then sought unsuccessfully to retract his guilty plea. He ultimately decided to remain in the Senate to complete his current term at the end of this year.
An investigation of Mr. Stevens by the Senate Ethics Committee is inevitable, but the chairwoman of the committee, Senator Babara Boxer, Democrat of California, said it would defer to the criminal authorities to complete their investigation first.
One of only a few World War II veterans left in the Senate, Mr. Stevens grew up in Indiana and California and moved to Alaska in 1950, before it was a state, according to the Almanac of American Politics.
He first ran for the Senate in 1962, losing to Ernest Gruening, a Democrat. In 1968, Mr. Stevens was appointed by Gov. Walter Hickel to fill a vacant seat in the Senate, and has been re-elected six times since then.
He is by far the most prominent figure to be charged in a four-year-old political corruption investigation in Alaska, which has resulted in seven convictions, among them three state lawmakers and the chief of staff of former Gov. Frank H. Murkowski.
The case, which began as an inquiry into VECO’s relationship with Alaska lawmakers, is still under way and several well-known figures in the state are said to remain under scrutiny, among them Representative Don Young, a Republican, and Mr. Stevens’s son, Ben, former president of the State Senate. Both have denied any wrongdoing.
The indictment was announced by Matthew Friedrich, the acting head of the Justice Department’s criminal division. He said at a news conference that politics played no role in the decision to bring the case or the timing of the charges.
The indictment was announced one day after a scathing inspector general’s report that said that senior Justice Department aides had improperly asked political questions to fill nonpolitical jobs under former Attorney General Alberto R. Gonzales.
The charges against Mr. Stevens said that, beginning in the spring and summer of 2000, Mr. Stevens and Mr. Allen discussed whether VECO could renovate Mr. Stevens’s residence in Girdwood, Alaska.
After that conversation, and over the next six years, Mr. Stevens is accused of accepting from VECO and Mr. Allen more than $250,000 in free labor, construction work like flooring, heating, plumbing and installation of electrical wiring and gutters, and a Viking gas grill.
By DAVID JOHNSTON and DAVID M. HERSZENHORN
Senator Ted Stevens of Alaska, a legendary political figure closely tied to the rough-and-tumble history of his home state, and who wields outsize influence over federal spending, was indicted on Tuesday on seven felony counts of failing to disclose gifts that he received from an oil services company.
A federal grand jury in the District of Columbia charged Mr. Stevens, who is 84 and the longest-serving Republican in the Senate, with failing to report more than $250,000 in gifts, including extensive renovations to his house in Alaska, a Land Rover and home furnishings on financial disclosure forms that he filed from 1999 to 2006.
The indictment said that Mr. Stevens “knowingly and willfully engaged in a scheme to conceal” the gifts he received from the VECO Corporation, once one of Alaska’s largest oil field contractors, and its former chief executive, William J. Allen, who last year pleaded guilty in the case. And it comes nearly a year to the day after F.B.I. agents raided the senator’s home as part of a long-running and expansive public corruption investigation in Alaska.
Mr. Stevens was informed of the indictment through a telephone call to his lawyer on Tuesday morning and was allowed to surrender instead of being arrested. He was expected to make an initial appearance in Washington before a federal judge, Emmet G. Sullivan, once a hearing is scheduled.
Mr. Stevens declared his innocence and his intention to fight the charges against him in a statement posted on his Web site. “I am innocent of these charges and intend to prove that,” he said.
But the indictment dealt a sharp blow to Mr. Stevens’s effort to win re-election in November, and raised the hopes of Democrats who have not won a Senate race in Alaska since 1974. Democrats were already relishing the chance to unseat Mr. Stevens, having recruited Mark Begich, the popular mayor of Anchorage, to challenge him. Mr. Stevens first must face six Republican challengers in the state’s Aug. 26 primary.
In his statement, Mr. Stevens also noted that he had served the nation and Alaska for more than half a century, beginning in World War II. “I have never knowingly submitted a false disclosure form required by law as a U.S. senator,” he said in the statement.
He also said that, in accordance with Senate Republican rules, he had relinquished, temporarily, his leadership positions, as senior Republican on the Commerce Committee and on the Defense Appropriations Subcommittee. He had served as chairman of the full Appropriations Committee for nearly a dozen years, and also as president pro tem of the Senate from 2003 to 2007, which put him third in line for the presidency.
Mr. Stevens, a short, square-shouldered man who shuffles through the Capitol these days in shoes with thick-cushioned soles, has long been a powerful force in the Senate, directing hundreds of millions of dollars to Alaska each year. Mr. Stevens is regarded as a nearly heroic figure in Alaska, where he is often called Uncle Ted, and played a crucial role in its achievement of statehood, which became official in 1959. Hardened by decades of legislative battles, he can be soft-spoken but also one of the most cantankerous lawmakers.
Mr. Stevens was not charged with performing improper favors for VECO, the company that gave him the unreported gifts, although the indictment said Mr. Stevens “could and did use his official position and his office on behalf of VECO.” At a news conference on Tuesday, prosecutors said they would not explain why the exchange of favors did not itself result in a charge.
The indictment said that Mr. Stevens met with the company to discuss its projects in Pakistan and Russia, its requests for “multiple federal grants and contracts to benefit VECO” and federal and state assistance in an effort to construct a natural gas pipeline from the North Slope of Alaska.
The indictment of a sitting senator, particularly one of Mr. Stevens’s seniority and stature, reverberated swiftly and ominously through the Capitol, in no small part because of the political implications.
Democrats already had high hopes that they would win more seats in November. They now control the Senate by a razor-thin 51 to 49, thanks only to two independents who vote with them.
As far-fetched as it might seem, some Democrats have started thinking aloud that they may be able to win nine more seats in November, bringing them a filibuster-proof majority of 60.
Senator Harry Reid of Nevada, the majority leader, boasted on Tuesday that Senate Democrats were mounting strong races against Republicans in 11 states.
The indictment could have implications beyond Mr. Stevens’s political future. It could set back Republican efforts to open more of Alaska to oil drilling. Mr. Stevens has been a powerful voice in favor of more drilling, including in the Arctic National Wildlife Refuge of Alaska.
The charges also handed Democrats an easy political weapon. Mr. Stevens has been a prolific fund-raiser for his party’s candidates, and Democrats immediately attacked several Republican incumbents for accepting money from him.
Mr. Stevens, in his committee positions, has helped funnel billions of federal dollars to Alaska. Since 1999, he has directed more than $3 billion in earmarks — pet projects sought by lawmakers outside the usual budget process — for Alaska, according to Citizens Against Government Waste, a Washington advocacy group.
One earmark that became a symbol of wasteful excess was the so-called Bridge to Nowhere, which was to connect the town of Ketchikan to a small, sparsely populated island, even though funds for the project were ultimately canceled.
Senator Mitch McConnell of Kentucky, the Republican leader, refused on Tuesday to answer questions about Mr. Stevens. Appearing before a huge throng of reporters at what is normally a regular weekly news conference, Mr. McConnell spoke for a scant 21 seconds.
“Let me just say that the Republican conference, like you, just learned of this news,” he said. “We’ll no doubt have more to say about it later.”
Mr. Reid said he learned of the indictment in an e-mail message from a staff member. He arrived at the lectern for his weekly news conference flashing a wide smile, the TV camera lights glinting off his teeth.
“I, of course, have served with Senator Stevens my entire Congressional career,” said Mr. Reid, who was elected to the Senate in 1986. “It’s a sad day for him, us. But you know I believe in the American system of justice. He is presumed innocent.”
Mr. Reid said that Senate Republicans would have to decide how to deal with Mr. Stevens, but suggested that they might move swiftly as they did after the news last summer that Senator Larry E. Craig, Republican of Idaho, had pleaded guilty to disorderly conduct, a misdemeanor, for allegedly soliciting an undercover police officer in an airport bathroom in Minneapolis.
Mr. Craig was stripped of his leadership positions and announced that he would resign, but then sought unsuccessfully to retract his guilty plea. He ultimately decided to remain in the Senate to complete his current term at the end of this year.
An investigation of Mr. Stevens by the Senate Ethics Committee is inevitable, but the chairwoman of the committee, Senator Babara Boxer, Democrat of California, said it would defer to the criminal authorities to complete their investigation first.
One of only a few World War II veterans left in the Senate, Mr. Stevens grew up in Indiana and California and moved to Alaska in 1950, before it was a state, according to the Almanac of American Politics.
He first ran for the Senate in 1962, losing to Ernest Gruening, a Democrat. In 1968, Mr. Stevens was appointed by Gov. Walter Hickel to fill a vacant seat in the Senate, and has been re-elected six times since then.
He is by far the most prominent figure to be charged in a four-year-old political corruption investigation in Alaska, which has resulted in seven convictions, among them three state lawmakers and the chief of staff of former Gov. Frank H. Murkowski.
The case, which began as an inquiry into VECO’s relationship with Alaska lawmakers, is still under way and several well-known figures in the state are said to remain under scrutiny, among them Representative Don Young, a Republican, and Mr. Stevens’s son, Ben, former president of the State Senate. Both have denied any wrongdoing.
The indictment was announced by Matthew Friedrich, the acting head of the Justice Department’s criminal division. He said at a news conference that politics played no role in the decision to bring the case or the timing of the charges.
The indictment was announced one day after a scathing inspector general’s report that said that senior Justice Department aides had improperly asked political questions to fill nonpolitical jobs under former Attorney General Alberto R. Gonzales.
The charges against Mr. Stevens said that, beginning in the spring and summer of 2000, Mr. Stevens and Mr. Allen discussed whether VECO could renovate Mr. Stevens’s residence in Girdwood, Alaska.
After that conversation, and over the next six years, Mr. Stevens is accused of accepting from VECO and Mr. Allen more than $250,000 in free labor, construction work like flooring, heating, plumbing and installation of electrical wiring and gutters, and a Viking gas grill.
Ted Stevens scandal puts Republican Senate seat in play
Original Link: http://www.latimes.com/news/nationworld/washingtondc/la-na-stevens30-2008jul30,0,5720247.story
By Richard B. Schmitt and Janet Hook, Los Angeles Times Staff Writers
The indictment of Sen. Ted Stevens (R-Alaska) on corruption charges Tuesday throws into question his grip on a Senate seat he has held for decades and offers Democrats a chance to strengthen their hold on Congress.
Stevens, the longest-serving Republican in the Senate and a towering figure in Alaska's political history, was indicted by a federal grand jury here on charges that he concealed hundreds of thousands of dollars in gifts from one of the state's most powerful employers. The indictment accuses Stevens, 84, of accepting more than $250,000 in improvements to his Alaska home, as well as other gifts such as a gas grill and a new Land Rover, from VECO Corp., an oil field services company.
"It saddens me to learn that these charges have been brought against me," Stevens said in a statement in which he denied that he had ever knowingly submitted a false disclosure form. "I am innocent of these charges and intend to prove that."
Stevens said he had relinquished his post as senior Republican on several congressional committees in accordance with Senate GOP rules that require members indicted on felony charges to give up leadership posts.
Stevens has served in the Senate since 1968 and has held some of its most powerful positions, including chairmanships of the Appropriations and Commerce committees. He is legendary for bringing home federal dollars to Alaska; the Anchorage Daily News once wrote that Stevens was "the second-largest engine of the Alaska economy."
According to Citizens Against Government Waste, a Washington watchdog group, Stevens sponsored a total of 1,452 pork barrel projects worth $3.4 billion between 1995 and 2008, making Alaska the No. 1 state in pork per capita every year since 1999.
The indictment casts a shadow over Stevens' future. He is up for reelection this year, and news reports questioning his ethics have already damaged his standing. Alaska has not elected a Democratic senator for a generation. But even before Stevens was indicted, polls showed him trailing his Democratic opponent, Anchorage Mayor Mark Begich.
Stevens' defeat would be a big notch in the belt of Democrats hoping to expand their party's slim control of the Senate. (The chamber's two independents typically vote with the 49 Democrats against the 49 Republicans). Some analysts wonder whether Stevens will drop his bid for reelection rather than risk the loss of his seat to a Democrat. Several Republicans are running against Stevens in the state's GOP primary Aug. 26.
"If Stevens runs, the likelihood of him getting beaten in the primary just went up 100%," said Jennifer Duffy, who analyzes Senate elections for the nonpartisan Cook Political Report.
Reaction to the indictment Tuesday was muted on Capitol Hill, where the Justice Department has been conducting a number of corruption probes.
Sen. Richard J. Durbin (D-Ill.), the Senate's majority whip, described the mood among Democrats as "somber" and said his caucus was thinking of Stevens and his family. "I believe in the presumption of innocence," Durbin added. "At this point, we should just let the courts do their work."
Republicans largely avoided reporters.
Senate Minority Leader Mitch McConnell (R-Ky.) appeared alone before reporters at a regular briefing usually attended by most of the GOP leadership. He appeared grim and spoke briefly on Stevens. "The Republican conference, like you, just heard of this news," McConnell said. "No doubt we'll have more to say about this later." He turned from reporters' shouted questions and walked away.
Stevens is charged with seven counts of making false statements on his financial disclosure forms for calendar years 2001 to 2006. The post-Watergate Ethics in Government Act requires lawmakers to disclose gifts over a specific monetary amount as well as liabilities in excess of $10,000.
The indictment alleges that, over a six-year period, Stevens failed to report gifts from VECO, in exchange for which he "received and accepted solicitations for multiple official actions," including helping VECO obtain lucrative federal contracts and providing "assistance" with company ventures in Pakistan and Russia.
The indictment does not accuse him of the more serious crime of bribery. Legal experts said that may reflect difficulty that prosecutors had in identifying specific legislative favors that Stevens performed for VECO. Bribery law requires that there be an identifiable exchange, known as a quid pro quo, between a thing of value and an official act.
The charges culminate a multiyear influence-peddling investigation that has led to the convictions of several Alaska state officials and the chief executive of VECO, Bill J. Allen, who last year admitted that he made more than $400,000 in payments to government officials. Stevens' son, Ben, a former president of the Alaska state Senate, remains under federal investigation, as does Republican U.S. Rep. Don Young of Alaska.
The indictment focuses on improvements to Stevens' home in Girdwood, Alaska, a onetime gold-mining town about 40 miles southeast of Anchorage that touts itself as the state's only year-round resort community. The remodeling more than doubled the home's size, starting in the summer of 2000, when Stevens and Allen first discussed the project, according to the indictment.
Over the ensuing six years, "Stevens accepted from Allen and VECO more than $250,000 in free labor, materials and other things of value" in connection with the home improvements, according to the indictment. "Stevens never paid Allen or VECO anything for these expenses, and Stevens never listed his receipt of these things of value on any of his yearly financial disclosure forms," the indictment says.
At one point, according to the indictment, the renovation work included jacking up and resting the house on stilts and building a new first floor with two bedrooms and a bathroom. Wraparound decks reportedly were added to the first and second floors along with a garage with a workshop. VECO employees and contractors allegedly bought and installed fixtures and kitchen appliances.
Stevens reportedly monitored the progress of the work closely. "We've never worked with a man so easy to get along with," Stevens said in a September 2000 e-mail to Allen, lauding the work of a VECO employee. "You . . . have been the spark plugs and we are really pleased with all you have done."
The indictment says that Allen also helped Stevens outfit the remodeled home with "new and used furniture, a new stationary tool storage cabinet with new tools, and a new professional Viking gas grill."
The indictment also accuses Stevens of accepting a $40,000 Land Rover Discovery from Allen in 1999 in exchange for a 1964 Ford Mustang that Stevens owned plus $5,000. The Ford was worth less than $20,000. The indictment said that Stevens wanted the new vehicle for one of his children.
Several other past and present Republican members of Congress are under investigation by Justice Department anti-corruption lawyers. Some political observers believe bringing charges in an election year could sway some voters.
At a news conference where the indictment of Stevens was announced, Matthew Friedrich, acting chief of the department's criminal division, said the election would not affect the timing or decision to bring any additional charges.
"When we bring cases as prosecutors, we bring cases based upon our evaluation of the facts and the law, and we bring cases when they are ready to be charged, and . . . that's what has happened here," he said.
rick.schmitt@latimes.com
janet.hook@latimes.com
Times staff writers Nicole Gaouette and Chuck Neubauer contributed to this report.
By Richard B. Schmitt and Janet Hook, Los Angeles Times Staff Writers
The indictment of Sen. Ted Stevens (R-Alaska) on corruption charges Tuesday throws into question his grip on a Senate seat he has held for decades and offers Democrats a chance to strengthen their hold on Congress.
Stevens, the longest-serving Republican in the Senate and a towering figure in Alaska's political history, was indicted by a federal grand jury here on charges that he concealed hundreds of thousands of dollars in gifts from one of the state's most powerful employers. The indictment accuses Stevens, 84, of accepting more than $250,000 in improvements to his Alaska home, as well as other gifts such as a gas grill and a new Land Rover, from VECO Corp., an oil field services company.
"It saddens me to learn that these charges have been brought against me," Stevens said in a statement in which he denied that he had ever knowingly submitted a false disclosure form. "I am innocent of these charges and intend to prove that."
Stevens said he had relinquished his post as senior Republican on several congressional committees in accordance with Senate GOP rules that require members indicted on felony charges to give up leadership posts.
Stevens has served in the Senate since 1968 and has held some of its most powerful positions, including chairmanships of the Appropriations and Commerce committees. He is legendary for bringing home federal dollars to Alaska; the Anchorage Daily News once wrote that Stevens was "the second-largest engine of the Alaska economy."
According to Citizens Against Government Waste, a Washington watchdog group, Stevens sponsored a total of 1,452 pork barrel projects worth $3.4 billion between 1995 and 2008, making Alaska the No. 1 state in pork per capita every year since 1999.
The indictment casts a shadow over Stevens' future. He is up for reelection this year, and news reports questioning his ethics have already damaged his standing. Alaska has not elected a Democratic senator for a generation. But even before Stevens was indicted, polls showed him trailing his Democratic opponent, Anchorage Mayor Mark Begich.
Stevens' defeat would be a big notch in the belt of Democrats hoping to expand their party's slim control of the Senate. (The chamber's two independents typically vote with the 49 Democrats against the 49 Republicans). Some analysts wonder whether Stevens will drop his bid for reelection rather than risk the loss of his seat to a Democrat. Several Republicans are running against Stevens in the state's GOP primary Aug. 26.
"If Stevens runs, the likelihood of him getting beaten in the primary just went up 100%," said Jennifer Duffy, who analyzes Senate elections for the nonpartisan Cook Political Report.
Reaction to the indictment Tuesday was muted on Capitol Hill, where the Justice Department has been conducting a number of corruption probes.
Sen. Richard J. Durbin (D-Ill.), the Senate's majority whip, described the mood among Democrats as "somber" and said his caucus was thinking of Stevens and his family. "I believe in the presumption of innocence," Durbin added. "At this point, we should just let the courts do their work."
Republicans largely avoided reporters.
Senate Minority Leader Mitch McConnell (R-Ky.) appeared alone before reporters at a regular briefing usually attended by most of the GOP leadership. He appeared grim and spoke briefly on Stevens. "The Republican conference, like you, just heard of this news," McConnell said. "No doubt we'll have more to say about this later." He turned from reporters' shouted questions and walked away.
Stevens is charged with seven counts of making false statements on his financial disclosure forms for calendar years 2001 to 2006. The post-Watergate Ethics in Government Act requires lawmakers to disclose gifts over a specific monetary amount as well as liabilities in excess of $10,000.
The indictment alleges that, over a six-year period, Stevens failed to report gifts from VECO, in exchange for which he "received and accepted solicitations for multiple official actions," including helping VECO obtain lucrative federal contracts and providing "assistance" with company ventures in Pakistan and Russia.
The indictment does not accuse him of the more serious crime of bribery. Legal experts said that may reflect difficulty that prosecutors had in identifying specific legislative favors that Stevens performed for VECO. Bribery law requires that there be an identifiable exchange, known as a quid pro quo, between a thing of value and an official act.
The charges culminate a multiyear influence-peddling investigation that has led to the convictions of several Alaska state officials and the chief executive of VECO, Bill J. Allen, who last year admitted that he made more than $400,000 in payments to government officials. Stevens' son, Ben, a former president of the Alaska state Senate, remains under federal investigation, as does Republican U.S. Rep. Don Young of Alaska.
The indictment focuses on improvements to Stevens' home in Girdwood, Alaska, a onetime gold-mining town about 40 miles southeast of Anchorage that touts itself as the state's only year-round resort community. The remodeling more than doubled the home's size, starting in the summer of 2000, when Stevens and Allen first discussed the project, according to the indictment.
Over the ensuing six years, "Stevens accepted from Allen and VECO more than $250,000 in free labor, materials and other things of value" in connection with the home improvements, according to the indictment. "Stevens never paid Allen or VECO anything for these expenses, and Stevens never listed his receipt of these things of value on any of his yearly financial disclosure forms," the indictment says.
At one point, according to the indictment, the renovation work included jacking up and resting the house on stilts and building a new first floor with two bedrooms and a bathroom. Wraparound decks reportedly were added to the first and second floors along with a garage with a workshop. VECO employees and contractors allegedly bought and installed fixtures and kitchen appliances.
Stevens reportedly monitored the progress of the work closely. "We've never worked with a man so easy to get along with," Stevens said in a September 2000 e-mail to Allen, lauding the work of a VECO employee. "You . . . have been the spark plugs and we are really pleased with all you have done."
The indictment says that Allen also helped Stevens outfit the remodeled home with "new and used furniture, a new stationary tool storage cabinet with new tools, and a new professional Viking gas grill."
The indictment also accuses Stevens of accepting a $40,000 Land Rover Discovery from Allen in 1999 in exchange for a 1964 Ford Mustang that Stevens owned plus $5,000. The Ford was worth less than $20,000. The indictment said that Stevens wanted the new vehicle for one of his children.
Several other past and present Republican members of Congress are under investigation by Justice Department anti-corruption lawyers. Some political observers believe bringing charges in an election year could sway some voters.
At a news conference where the indictment of Stevens was announced, Matthew Friedrich, acting chief of the department's criminal division, said the election would not affect the timing or decision to bring any additional charges.
"When we bring cases as prosecutors, we bring cases based upon our evaluation of the facts and the law, and we bring cases when they are ready to be charged, and . . . that's what has happened here," he said.
rick.schmitt@latimes.com
janet.hook@latimes.com
Times staff writers Nicole Gaouette and Chuck Neubauer contributed to this report.
Catalog of Ted Stevens’ Actions That Have Benefitted Clients of Ben Stevens
Original Link: http://blog.sunlightfoundation.com/2006/09/01/catalog-of-ted-stevens-actions-that-have/
By Bill Allison
From the miracle of Nexis comes this list compiled by Chuck Neubauer, Judy Pasternak and Richard T. Cooper of the Los Angeles Times in June 2003 of Sen. Ted Stevens official actions in the U.S. Senate that have benefited the clients of his son, state Sen. Ben Stevens. Regrettably, that article (part of a two-part series the Times did looking at congressional offspring who became lobbyists) is not available online; this is a small chunk of it.
The Stevens connection
The special interest: Cook Inlet Region Inc., (CIRI), a Native Alaskan corporation created by federal legislation sponsored by Sen. Stevens
What Sen. Ted Stevens has done: Put a rider on an appropriations bill to help CIRI make a profit from a telecommunications investment. Pushed other legislation that would benefit CIRI, including an attempt in January to make CIRI eligible for tribal gaming.
How much Ben Stevens has been paid in consulting fees*: $218,774
The special interest: VECO, a large Alaskan engineering and construction company with business around the world. It started out as an oil field service contractor
What Sen. Ted Stevens has done: Helped settle a contract dispute between VECO and Pakistan while chairing an appropriations subcommittee that was considering legislation to remove sanctions against Pakistan. Mandated that federal job training money be used to train Russian oil field workers for VECO and other Alaskan companies. Pushed for the Alaska Natural Gas pipeline.
How much Ben Stevens has been paid in consulting fees*: $148,000 in consulting fees from 2000 to 2002. $64,000 in lobbying fees in 1996 and 1997
The special interest: Special Olympics
What Sen. Ted Stevens has done: Brought more than $10 million in federal aid to put on the 2001 Special Olympics Winter Games in Anchorage.
How much Ben Stevens has been paid in consulting fees*: $715,395 in salary over three years to run the Alaska games. $57,000 as a consultant to the national Special Olympics since he ended his job running the Anchorage games
The special interest: At-Sea Processors Assn., the trade group of the 19 large factory trawlers that catch and process groundfish in the Bering Sea. The group’s executive director is Trevor McCabe, a former Stevens aide
What Sen. Ted Stevens has done: Sits on the subcommittee of the Senate Commerce, Science and Transportation Committee, which has jurisdiction over the fisheries. Co-sponsored American Fisheries Act in 1998 that gave 40% of the pollock harvest to the 19 trawlers in the association, which are listed by name in the legislation. In 2001, put through a rider that eliminated the sunset provisions of the act, making it permanent.
How much Ben Stevens has been paid in consulting fees*: $54,000
The special interest: North Pacific Crab Assn., a trade group of nine onshore processors
What Sen. Ted Stevens has done: Pushed legislation to have federal fishing regulators come up with a plan for crab quotas. Congress is expected to vote this year on the plan, which gives processors, vessel owners and skippers shares that can be bought and sold. Has held hearings on the plan.
How much Ben Stevens has been paid in consulting fees*: $56,000
The special interest: Bering Sea Crab Effort Reduction Fund, an ad hoc group of Bering Sea vessel owners
What Sen. Ted Stevens has done: Pushed through legislation for a $100-million buy-back program for crabbing vessels as the crab population shrinks.
How much Ben Stevens has been paid in consulting fees*: $42,500
The special interest: Norquest Seafood, a large fish processor
What Sen. Ted Stevens has done: Earmarked $10 million in federal funds to market Alaska seafood. Required Defense Dept. to buy only domestically produced seafood.
How much Ben Stevens has been paid in consulting fees*: $37,502
The special interest: Adak Fisheries, a groundfish processor
What Sen. Ted Stevens has done: Earmarked $10 million in federal funds to market Alaska seafood. Required Defense Dept. to buy only domestically produced seafood.
How much Ben Stevens has been paid in consulting fees*: $80,000
The special interest: Adak Seafood, former operator of a groundfish processing plant on Adak Island
What Sen. Ted Stevens has done: Sponsored legislation that opened this one-time naval base for commercial development.
How much Ben Stevens has been paid in consulting fees*: $25,000
The special interest: Southwest Alaska Municipal Conference, a nonprofit economic development agency
What Sen. Ted Stevens has done: Picked the agency to divide $30 million in disaster relief money after a bad groundfish season in 2000.
How much Ben Stevens has been paid in consulting fees*: $12,800
*Unless otherwise noted
Sources: Financial disclosure forms filed by Ben Stevens with the Alaska Public Offices Commission, covering 2000 through 2002; congressional bills, news releases and documents; interviews with Ben Stevens’ clients and others.
All coincidences, I’m sure. The full cite for the article is: Neubauer, Chuck, Judy Pasternak and Richard T. Cooper, “The Senators’ Sons; A Washington Bouquet: Hire A Lawmaker’S Kid.” Los Angeles Times, June 22, 2003 Sunday, Pg. A1.
By Bill Allison
From the miracle of Nexis comes this list compiled by Chuck Neubauer, Judy Pasternak and Richard T. Cooper of the Los Angeles Times in June 2003 of Sen. Ted Stevens official actions in the U.S. Senate that have benefited the clients of his son, state Sen. Ben Stevens. Regrettably, that article (part of a two-part series the Times did looking at congressional offspring who became lobbyists) is not available online; this is a small chunk of it.
The Stevens connection
The special interest: Cook Inlet Region Inc., (CIRI), a Native Alaskan corporation created by federal legislation sponsored by Sen. Stevens
What Sen. Ted Stevens has done: Put a rider on an appropriations bill to help CIRI make a profit from a telecommunications investment. Pushed other legislation that would benefit CIRI, including an attempt in January to make CIRI eligible for tribal gaming.
How much Ben Stevens has been paid in consulting fees*: $218,774
The special interest: VECO, a large Alaskan engineering and construction company with business around the world. It started out as an oil field service contractor
What Sen. Ted Stevens has done: Helped settle a contract dispute between VECO and Pakistan while chairing an appropriations subcommittee that was considering legislation to remove sanctions against Pakistan. Mandated that federal job training money be used to train Russian oil field workers for VECO and other Alaskan companies. Pushed for the Alaska Natural Gas pipeline.
How much Ben Stevens has been paid in consulting fees*: $148,000 in consulting fees from 2000 to 2002. $64,000 in lobbying fees in 1996 and 1997
The special interest: Special Olympics
What Sen. Ted Stevens has done: Brought more than $10 million in federal aid to put on the 2001 Special Olympics Winter Games in Anchorage.
How much Ben Stevens has been paid in consulting fees*: $715,395 in salary over three years to run the Alaska games. $57,000 as a consultant to the national Special Olympics since he ended his job running the Anchorage games
The special interest: At-Sea Processors Assn., the trade group of the 19 large factory trawlers that catch and process groundfish in the Bering Sea. The group’s executive director is Trevor McCabe, a former Stevens aide
What Sen. Ted Stevens has done: Sits on the subcommittee of the Senate Commerce, Science and Transportation Committee, which has jurisdiction over the fisheries. Co-sponsored American Fisheries Act in 1998 that gave 40% of the pollock harvest to the 19 trawlers in the association, which are listed by name in the legislation. In 2001, put through a rider that eliminated the sunset provisions of the act, making it permanent.
How much Ben Stevens has been paid in consulting fees*: $54,000
The special interest: North Pacific Crab Assn., a trade group of nine onshore processors
What Sen. Ted Stevens has done: Pushed legislation to have federal fishing regulators come up with a plan for crab quotas. Congress is expected to vote this year on the plan, which gives processors, vessel owners and skippers shares that can be bought and sold. Has held hearings on the plan.
How much Ben Stevens has been paid in consulting fees*: $56,000
The special interest: Bering Sea Crab Effort Reduction Fund, an ad hoc group of Bering Sea vessel owners
What Sen. Ted Stevens has done: Pushed through legislation for a $100-million buy-back program for crabbing vessels as the crab population shrinks.
How much Ben Stevens has been paid in consulting fees*: $42,500
The special interest: Norquest Seafood, a large fish processor
What Sen. Ted Stevens has done: Earmarked $10 million in federal funds to market Alaska seafood. Required Defense Dept. to buy only domestically produced seafood.
How much Ben Stevens has been paid in consulting fees*: $37,502
The special interest: Adak Fisheries, a groundfish processor
What Sen. Ted Stevens has done: Earmarked $10 million in federal funds to market Alaska seafood. Required Defense Dept. to buy only domestically produced seafood.
How much Ben Stevens has been paid in consulting fees*: $80,000
The special interest: Adak Seafood, former operator of a groundfish processing plant on Adak Island
What Sen. Ted Stevens has done: Sponsored legislation that opened this one-time naval base for commercial development.
How much Ben Stevens has been paid in consulting fees*: $25,000
The special interest: Southwest Alaska Municipal Conference, a nonprofit economic development agency
What Sen. Ted Stevens has done: Picked the agency to divide $30 million in disaster relief money after a bad groundfish season in 2000.
How much Ben Stevens has been paid in consulting fees*: $12,800
*Unless otherwise noted
Sources: Financial disclosure forms filed by Ben Stevens with the Alaska Public Offices Commission, covering 2000 through 2002; congressional bills, news releases and documents; interviews with Ben Stevens’ clients and others.
All coincidences, I’m sure. The full cite for the article is: Neubauer, Chuck, Judy Pasternak and Richard T. Cooper, “The Senators’ Sons; A Washington Bouquet: Hire A Lawmaker’S Kid.” Los Angeles Times, June 22, 2003 Sunday, Pg. A1.
Only luck can save America's economy
Original Link: http://us.ft.com/ftgateway/superpage.ft?news_id=fto080320081428403697&referrer_id=yahoofinance
By Clive Crook
The US economy may not be in recession, but this is the nearest thing. In spite of the recent fiscal stimulus, output grew less than 2 per cent at an annual rate in the second quarter, slower than expected. That followed growth of 1 per cent in the first quarter and a contraction (on revised numbers) of 0.2 per cent in the fourth quarter of 2007. A recession is usually defined as two consecutive quarters of shrinking output. It has not happened yet, but it very well might in the next few quarters. Even if it does not, that would be little consolation.
Prospects for the second half of the year are poor. Some of the current boost from the fiscal injection delivered last quarter will keep feeding through, but consumer spending, the hitherto unstoppable engine of US growth, is stalling. The prices of food and petrol, together with still-tightening credit conditions and a housing market that has not yet touched bottom, are weighing it down. Net exports were the main accelerator in the second quarter - without that rise, in fact, output would have fallen, fiscal stimulus or no. But they cannot be relied on in future because growth in Europe and elsewhere is going to be limited by, among other things, policymakers' worries about inflation.
Most forecasters are expecting a double-dip US slowdown - and the second dip could be a technical recession. Regardless, the labour market is already behaving that way. Unemployment moved up to 5.7 per cent in July, the labour department reported on Friday. Overtime is falling; involuntary part-time working is on the rise. Unemployment will climb above 6 per cent next year. While it may be true that the US has seen much worse, this is no mere "mental recession".
What more can be done? The short answer is nothing. The policy options have narrowed almost to zero. The Federal Reserve has already cut interest rates sharply - more than some think wise - and is having to assure the markets that it is keeping an eye on inflation. In spite of the slowdown, consumer prices are rising at their fastest for almost 20 years. Crucially, this has not embedded itself in expectations of permanently higher inflation. If that happens, and prices start pushing wages, interest rates would have to go up. The recent poor numbers for output and jobs led markets not to expect that interest rates will be cut further, but to hope that they will not be raised again just yet.
Some fiscal room for manoeuvre would be good right now - but precious little remains. The White House just updated its budget forecasts for next year. These pencil in a deficit of nearly $500bn (£253bn, €321bn). This excludes roughly $80bn of war costs. It also makes incomplete allowance for the fiscal component of the various housing-related bail-outs now in train. If Freddie Mac and Fannie Mae (NYSE:FNM) , the housing agencies, are forced to draw on the full support that the Treasury, with the passage of the new housing bill, is empowered to provide, add tens of billions more. A deficit of 5 per cent of gross domestic product next year is within reach.
Looking farther ahead, both presidential candidates are promising to cut taxes by thousands of billions of dollars over the next 10 years (relative to the Bush administration's bogus baseline). Barack Obama, the Democratic contender, is calling for an additional fiscal stimulus right now.
Budget deficits should indeed rise sharply in recessions. In the US, this requires more forceful intervention than in most European countries. Automatic fiscal stabilisers are less powerful in the US: the government is smaller, and the tax base (lacking a value-added tax or equivalent) is less cyclically sensitive. States have to comply with semi-binding balanced budget rules as well, which perversely tighten fiscal policy during recessions. California, in the midst of the current slowdown, has been forced to sack thousands of workers and put state employees on the minimum wage.
Even so, further aggressive fiscal easing at the federal level would be risky. If the budget outlook starts to scare the markets and interrupt the flow of foreign capital to the US, the dollar might fall abruptly - worsening the inflation risk and forcing the Fed's hand on interest rates. The point at which fiscal easing becomes self-cancelling may not be far away.
It is worth remembering where the blame for this neutering of fiscal policy lies: squarely with the Bush administration. At the start of this decade, the budget stood in surplus to the tune of 2.4 per cent of GDP. On unchanged policy, this was expected to grow to a surplus of 4.5 per cent of GDP by 2008. This year's actual deficit of 3 per cent of GDP therefore represents a worsening of more than 7 per cent of GDP, or roughly $1,000bn. Almost all of this deterioration is due to policy: to tax cuts, spending increases, and their associated debt-service costs.
That projected surplus was a priceless gift to the White House. It offered the Bush administration ample scope for outlays on homeland security and other unforeseen priorities, and moderate tax cuts as well, all within a budget balanced over the course of the business cycle. Instead, the administration knowingly opted for outrageous fiscal excess - adding insult to injury with its phoney tax-cut sunset provisions, designed for no other purpose than to disguise the long-term fiscal implications. Eight years on, this startling record of fiscal irresponsibility has all but taken fiscal policy off the table as an available response to the slowdown.
The US economy had better have luck on its side. Luck is about all it has left.
By Clive Crook
The US economy may not be in recession, but this is the nearest thing. In spite of the recent fiscal stimulus, output grew less than 2 per cent at an annual rate in the second quarter, slower than expected. That followed growth of 1 per cent in the first quarter and a contraction (on revised numbers) of 0.2 per cent in the fourth quarter of 2007. A recession is usually defined as two consecutive quarters of shrinking output. It has not happened yet, but it very well might in the next few quarters. Even if it does not, that would be little consolation.
Prospects for the second half of the year are poor. Some of the current boost from the fiscal injection delivered last quarter will keep feeding through, but consumer spending, the hitherto unstoppable engine of US growth, is stalling. The prices of food and petrol, together with still-tightening credit conditions and a housing market that has not yet touched bottom, are weighing it down. Net exports were the main accelerator in the second quarter - without that rise, in fact, output would have fallen, fiscal stimulus or no. But they cannot be relied on in future because growth in Europe and elsewhere is going to be limited by, among other things, policymakers' worries about inflation.
Most forecasters are expecting a double-dip US slowdown - and the second dip could be a technical recession. Regardless, the labour market is already behaving that way. Unemployment moved up to 5.7 per cent in July, the labour department reported on Friday. Overtime is falling; involuntary part-time working is on the rise. Unemployment will climb above 6 per cent next year. While it may be true that the US has seen much worse, this is no mere "mental recession".
What more can be done? The short answer is nothing. The policy options have narrowed almost to zero. The Federal Reserve has already cut interest rates sharply - more than some think wise - and is having to assure the markets that it is keeping an eye on inflation. In spite of the slowdown, consumer prices are rising at their fastest for almost 20 years. Crucially, this has not embedded itself in expectations of permanently higher inflation. If that happens, and prices start pushing wages, interest rates would have to go up. The recent poor numbers for output and jobs led markets not to expect that interest rates will be cut further, but to hope that they will not be raised again just yet.
Some fiscal room for manoeuvre would be good right now - but precious little remains. The White House just updated its budget forecasts for next year. These pencil in a deficit of nearly $500bn (£253bn, €321bn). This excludes roughly $80bn of war costs. It also makes incomplete allowance for the fiscal component of the various housing-related bail-outs now in train. If Freddie Mac and Fannie Mae (NYSE:FNM) , the housing agencies, are forced to draw on the full support that the Treasury, with the passage of the new housing bill, is empowered to provide, add tens of billions more. A deficit of 5 per cent of gross domestic product next year is within reach.
Looking farther ahead, both presidential candidates are promising to cut taxes by thousands of billions of dollars over the next 10 years (relative to the Bush administration's bogus baseline). Barack Obama, the Democratic contender, is calling for an additional fiscal stimulus right now.
Budget deficits should indeed rise sharply in recessions. In the US, this requires more forceful intervention than in most European countries. Automatic fiscal stabilisers are less powerful in the US: the government is smaller, and the tax base (lacking a value-added tax or equivalent) is less cyclically sensitive. States have to comply with semi-binding balanced budget rules as well, which perversely tighten fiscal policy during recessions. California, in the midst of the current slowdown, has been forced to sack thousands of workers and put state employees on the minimum wage.
Even so, further aggressive fiscal easing at the federal level would be risky. If the budget outlook starts to scare the markets and interrupt the flow of foreign capital to the US, the dollar might fall abruptly - worsening the inflation risk and forcing the Fed's hand on interest rates. The point at which fiscal easing becomes self-cancelling may not be far away.
It is worth remembering where the blame for this neutering of fiscal policy lies: squarely with the Bush administration. At the start of this decade, the budget stood in surplus to the tune of 2.4 per cent of GDP. On unchanged policy, this was expected to grow to a surplus of 4.5 per cent of GDP by 2008. This year's actual deficit of 3 per cent of GDP therefore represents a worsening of more than 7 per cent of GDP, or roughly $1,000bn. Almost all of this deterioration is due to policy: to tax cuts, spending increases, and their associated debt-service costs.
That projected surplus was a priceless gift to the White House. It offered the Bush administration ample scope for outlays on homeland security and other unforeseen priorities, and moderate tax cuts as well, all within a budget balanced over the course of the business cycle. Instead, the administration knowingly opted for outrageous fiscal excess - adding insult to injury with its phoney tax-cut sunset provisions, designed for no other purpose than to disguise the long-term fiscal implications. Eight years on, this startling record of fiscal irresponsibility has all but taken fiscal policy off the table as an available response to the slowdown.
The US economy had better have luck on its side. Luck is about all it has left.
Hundreds of banks will fail, Roubini tells Barron's
Original Link: http://www.reuters.com/article/marketsNews/idINN0344130720080803?rpc=44
The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition.
Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.
The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron's reported.
He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.
U.S. consumers, meanwhile, are "shopped out" and saving less, while the Federal Reserve's performance in handling the crisis has been poor, Roubini said, because it failed to see that the problem extended beyond subprime mortgage debt.
Now, Roubini told Barron's, the government is overregulating, bailing out troubled participants and intervening in every market.
"The regulators should investigate themselves for bailing out Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities," he told Barron's. "It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."
He said that sometimes it is necessary to use public money to rescue institutions, but in a way that does not bail out the people who made the mistakes. "In each one of these episodes, the government bailed out the shareholders, the bondholders, and to some degree, management," Roubini told Barron's.
As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities, Roubini said.
"Of three dozen or so medium-sized regional banks, a good third are in distress," he told Barron's, saying half of the group could go bankrupt. Some big banks could wind up insolvent, he added, but said they might be deemed too big to fail.
Nouriel stressed that he is "quite bullish" about the state of the global economy and that he is positive about the medium and long term.
(Reporting by Robert MacMillan, editing by Martin Golan)
The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition.
Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.
The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron's reported.
He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.
U.S. consumers, meanwhile, are "shopped out" and saving less, while the Federal Reserve's performance in handling the crisis has been poor, Roubini said, because it failed to see that the problem extended beyond subprime mortgage debt.
Now, Roubini told Barron's, the government is overregulating, bailing out troubled participants and intervening in every market.
"The regulators should investigate themselves for bailing out Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities," he told Barron's. "It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."
He said that sometimes it is necessary to use public money to rescue institutions, but in a way that does not bail out the people who made the mistakes. "In each one of these episodes, the government bailed out the shareholders, the bondholders, and to some degree, management," Roubini told Barron's.
As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities, Roubini said.
"Of three dozen or so medium-sized regional banks, a good third are in distress," he told Barron's, saying half of the group could go bankrupt. Some big banks could wind up insolvent, he added, but said they might be deemed too big to fail.
Nouriel stressed that he is "quite bullish" about the state of the global economy and that he is positive about the medium and long term.
(Reporting by Robert MacMillan, editing by Martin Golan)
Economic Free Fall?
Original Link: http://www.thenation.com/doc/20080818/greider
By William Greider
Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street's titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven't seen "bipartisan cooperation" like this since Washington decided to invade Iraq.
In their haste to do anything the financial guys seem to want, Congress and the lame-duck President are, I fear, sowing far more profound troubles for the country. First, while throwing our money at Wall Street, government is neglecting the grave risk of a deeper catastrophe for the real economy of producers and consumers. Second, Washington's selective generosity for influential financial losers is deforming democracy and opening the path to an awesomely powerful corporate state. Third, the rescue has not succeeded, not yet. Banking faces huge losses ahead, and informed insiders assume a far larger federal bailout will be needed--after the election. No one wants to upset voters by talking about it now. The next President, once in office, can break the bad news. It's not only about the money--with debate silenced, a dangerous line has been crossed. Hundreds of billions in open-ended relief has been delivered to the largest and most powerful mega-banks and investment firms, while government offers only weak gestures of sympathy for struggling producers, workers and consumers.
The bailouts are rewarding the very people and institutions whose reckless behavior caused this financial mess. Yet government demands nothing from them in return--like new rules for prudent behavior and explicit obligations to serve the national interest. Washington ought to compel the financial players to rein in their appetite for profit in order to help save the country from a far worse fate: a depressed economy that cannot regain its normal energies. Instead, the Federal Reserve, the Treasury, the Democratic Congress and of course the Republicans meekly defer to the wise men of high finance, who no longer seem so all-knowing.
Let's review the bidding to date. After panic swept through the global financial community this spring, the Federal Reserve and Treasury rushed in to arrange a sweetheart rescue for Bear Stearns, expending $29 billion to take over the brokerage's ruined assets so JPMorgan Chase, the prestigious banking conglomerate, would agree to buy what was left. At the same time, the Fed and Treasury provided a series of emergency loans and liquidity for endangered investment firms and major banks. Investors were not persuaded. Their panic was not "mental," as former McCain adviser Phil Gramm recently complained. The collapse of the housing bubble had revealed the deep rot and duplicity within the financial system. When investors tried to sell off huge portfolios of spoiled financial assets like mortgage bonds, nobody would buy them. In fact, no one can yet say how much these once esteemed "safe" investments are really worth.
The big banks and investment houses are also stuck with lots of bad paper, and some have dumped it on their unwitting customers. The largest banks and brokerages have already lost enormously, but lending portfolios must shrink a lot more--at least $1 trillion, some estimate. So wary shareholders are naturally dumping financial-sector stocks.
Most recently, the investors' fears were turned on Fannie Mae and Freddie Mac, the huge quasi-private corporations that package and circulate trillions in debt securities with implicit federal backing. Treasury Secretary Henry Paulson (formerly of Goldman Sachs) boldly proposed a $300 billion commitment to buy up Fannie Mae stock and save the plunging share price--that is, save the shareholders from their mistakes. So much for market discipline. For everyone else, Washington recommends a cold shower.
Talk about warped priorities! The government puts up $29 billion as a "sweetener" for JP Morgan but can only come up with $4 billion for Cleveland, Detroit and other urban ruins. Even the mortgage-relief bill is a tepid gesture. It basically asks, but does not compel, the bankers to act kindlier toward millions of defaulting families.
A generation of conservative propaganda, arguing that markets make wiser decisions than government, has been destroyed by these events. The interventions amount to socialism, American style, in which the government decides which private enterprises are "too big to fail." Trouble is, it was the government itself that created most of these mastodons--including the all-purpose banking conglomerates. The mega-banks arose in the 1990s, when a Democratic President and Republican Congress repealed the New Deal-era Glass-Steagall Act, which prevented commercial banks from blending their business with investment banking. That combination was the source of incestuous self-dealing and fraudulent stock valuations that led directly to the Crash of 1929 and the Great Depression that followed.
Even before Congress and Bill Clinton repealed the law, the Federal Reserve had aggressively cleared the way by unilaterally authorizing Citigroup to cross the line. Wall Street proceeded, with accounting tricks described as "modernization," to re-create the same scandals from the 1920s in more sophisticated fashion. The financial crisis began when these gimmicky innovations blew up.
Democrats who imagine they can reap partisan advantage from this crisis don't know the history. The blame is bipartisan; so also is the disgrace. In 1980, before Ronald Reagan even came to town, Democrats deregulated the financial system by repealing federal interest-rate ceilings and other regulatory restraints--a step that doomed the savings and loan industry and eliminated a major competitor for the bankers. Democrats have collaborated with Republicans on behalf of their financial patrons every step of the way.
The same legislation also repealed the federal law prohibiting usury--the predatory practices that ruin debtors of modest means by lending on terms that ensure borrowers will fail. Usurious lending is now commonplace in America, from credit cards and "payday loans" to the notorious subprime mortgages. The prohibition on usury really involves an ancient moral principle, one common to Judaism, Christianity and Islam: people of great wealth must not be allowed to use it to ruin others who lack the same advantages. A decent society cannot endure it.
The fast-acting politicians may hope to cover over their past mistakes before the public figures out what's happening (that is, who is screwing whom). But the Federal Reserve has a similar reason to move aggressively: the Fed was a central architect and agitator in creating the circumstances that led to the collapse in Wall Street's financial worth. The central bank tipped its monetary policy hard in one direction--favoring capital over labor, creditors over debtors, finance over the real economy--and held it there for roughly twenty-five years. On one side, it targeted wages and restrained economic growth to make sure workers could not bargain for higher compensation in slack labor markets. On the other side, it stripped away or refused to enforce prudential regulations that restrained the excesses of banking and finance. In The Nation a few years back, I referred to Alan Greenspan as the "one-eyed chairman" [September 19, 2005] who could see inflation in the real economy--even when it didn't exist--but was blind to the roaring inflation in the financial system.
The Fed's lopsided focus on behalf of the monied interests, combined with its refusal to apply regulatory laws with due diligence, eventually destabilized the overall economy. Trying to correct for previous errors, the Fed, with its overzealous free-market ideology, swung monetary policy back and forth to extremes, first tightening credit without good reason, then rapidly cutting interest rates to nearly zero. This erratic behavior encouraged a series of financial bubbles in interest-sensitive assets--first the stock market, during the late 1990s tech-stock boom, then housing--but the Fed declined to do anything or even admit the bubbles existed. The nation is now stuck with the consequences of its blindness.
The Federal Reserve's dereliction of duty is central to the financial failures. It betrayed the purpose for which the central bank was first created, in 1913, abandoning the sense of balance the Fed had long pursued and that Congress requires. Most politicians, not to mention the press, are too intimidated to question the Fed's daunting power, but their ignorance is about to compound the problem. Instead of demanding answers, the political system is about to expand the Fed's governing powers--despite its failure to protect us. Treasury Secretary Paulson proposed and Democratic leaders have agreed to make the insulated Fed the "supercop" that oversees not only commercial banks and banking conglomerates but also the largest investment houses or anyone else big enough to destabilize the system. This "reform" would definitely reassure club members who are already too cozy with the central bankers. Everyone else would be left deeper in the dark.
The political system, once again, is rewarding failure. The Fed is an unreliable watchdog, ideologically biased and compromised by its conflicting obligations. Is it supposed to discipline the big money players or keep them afloat? Putting the secretive central bank in charge, with its unlimited powers to prop up troubled firms, would further eviscerate democracy, not to mention economic justice.
If Congress enacts this concept early next year, the privileged group of protected financial interests is sure to grow larger, because other nonfinancial firms could devise ways to reconfigure themselves so they too would qualify for club membership. A very large manufacturing conglomerate--General Electric, for instance--might absorb elements of banking in order to be covered by the Fed's umbrella (GE Capital is already among the largest pools of investment capital). Private-equity firms, with their buccaneer style of corporate management, are already trying to buy into banking, with encouragement from the Fed (the Service Employees International Union has mounted a campaign to stop them). A new President could stop the whole deal, of course, but John McCain has surrounded himself with influential advisers who were co-architects of this financial disaster. For that matter, so has Barack Obama.
The nation, meanwhile, is flirting with historic catastrophe. Nobody yet knows how bad it is, but the peril is vastly larger than previous episodes, like the savings and loan bailout of the late 1980s. The dangers are compounded by the fact that the United States is now utterly dependent on foreign creditors--Japan and China lead the list--who have been propping us up with their lending. Thanks to growing trade deficits and debt, foreign portfolio holdings of US long-term debt securities have more than doubled since 1994, from 7.9 percent to 18.8 percent as of June 2007. If these countries get fed up with their losses and pull the plug, the US economy will be a long, long time coming back.
The gravest danger is that the national economy will weaken further and spiral downward into a negative cycle that feeds on itself: as conditions darken, people hunker down and wait for the storm to pass--consumers stop buying, banks stop lending, producing companies cut their workforces. That feeds more defaulted loan losses back into the banking system's balance sheets. This vicious cycle is essentially what led to the Great Depression after the stock market crash of 1929. I offer not a prediction but a warning. The comparison may sound farfetched now, but US policy-makers and politicians are putting us at risk of historic deflationary forces that, once they take hold, are very difficult to reverse.
A more aggressive response from Washington would address the real economy's troubles as seriously as it does Wall Street's. Financial firms have lost capital on a huge scale--more of them will fail or be bought by foreign investors. But Wall Street cannot get well this time if the economy remains stuck in the ditch. Washington needs to revive the "animal spirits" of the nation at large. The $152 billion stimulus package enacted so far is piddling and ought to be three or four times larger. Instead of sending the money to Iraq, we should be spending it here on getting people back to work, building and repairing our tattered infrastructure, investing in worthwhile projects that can help stimulate the economy in rough weather.
An agenda of deeper reforms can boost public confidence even as it undoes a lot of the damage caused by the financiers and bankers. Some suggestions:
§ Nationalize Fannie Mae and other government-supported enterprises instead of coddling them. Restore them to their original status as nonprofit federal agencies that provide a valuable service to housing and other markets. Make the investors eat their losses. Buy the shares at 2 cents on the dollar. Without a federal guarantee, these firms are doomed anyway.
§ Resolve the democratic contradiction of "too big to fail" bailouts by dismantling the firms that are too big to fail--especially the newly created banking conglomerates that have done so much harm. Restore the boundaries between commercial banking and investment banking. In any case, market pressures are likely to shrink those behemoths as banks sell off their parts to survive. For the remaining big boys, revive antitrust enforcement. Set stern new conditions for emergency lending from government--supervised receivership, stricter lending rules to prevent recidivism and severe penalties for greed-crazed shareholders and executives.
§ Assign the Federal Reserve's regulatory role to a new public agency that is visible and politically accountable. Make the Fed a subsidiary agency of the Treasury Department and reform its decision-making on money and credit to restore an equitable balance between competing goals and interests--seeking full employment but also stable money and moderate inflation.
§ Begin the hard task of re-creating a regulated financial system Americans can trust, one that recognizes its obligations to the broad national interest. This requires regulatory reforms to cover moneypots like private-equity funds and to clear away the blatant conflicts of interest and double-dealing on Wall Street, and also to give responsible shareholders, workers and other interests a greater voice in corporate management and greater protection against rip-offs of personal savings.
§ Re-enact the federal law against usury. The details are difficult and can follow later, but this would be a meaningful first step toward restoring moral obligations in the financial sector. People would understand it, and so would a lot of the money guys. Maybe in the deepening crisis, Washington will begin to grasp that money is also a moral issue.
By William Greider
Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street's titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven't seen "bipartisan cooperation" like this since Washington decided to invade Iraq.
In their haste to do anything the financial guys seem to want, Congress and the lame-duck President are, I fear, sowing far more profound troubles for the country. First, while throwing our money at Wall Street, government is neglecting the grave risk of a deeper catastrophe for the real economy of producers and consumers. Second, Washington's selective generosity for influential financial losers is deforming democracy and opening the path to an awesomely powerful corporate state. Third, the rescue has not succeeded, not yet. Banking faces huge losses ahead, and informed insiders assume a far larger federal bailout will be needed--after the election. No one wants to upset voters by talking about it now. The next President, once in office, can break the bad news. It's not only about the money--with debate silenced, a dangerous line has been crossed. Hundreds of billions in open-ended relief has been delivered to the largest and most powerful mega-banks and investment firms, while government offers only weak gestures of sympathy for struggling producers, workers and consumers.
The bailouts are rewarding the very people and institutions whose reckless behavior caused this financial mess. Yet government demands nothing from them in return--like new rules for prudent behavior and explicit obligations to serve the national interest. Washington ought to compel the financial players to rein in their appetite for profit in order to help save the country from a far worse fate: a depressed economy that cannot regain its normal energies. Instead, the Federal Reserve, the Treasury, the Democratic Congress and of course the Republicans meekly defer to the wise men of high finance, who no longer seem so all-knowing.
Let's review the bidding to date. After panic swept through the global financial community this spring, the Federal Reserve and Treasury rushed in to arrange a sweetheart rescue for Bear Stearns, expending $29 billion to take over the brokerage's ruined assets so JPMorgan Chase, the prestigious banking conglomerate, would agree to buy what was left. At the same time, the Fed and Treasury provided a series of emergency loans and liquidity for endangered investment firms and major banks. Investors were not persuaded. Their panic was not "mental," as former McCain adviser Phil Gramm recently complained. The collapse of the housing bubble had revealed the deep rot and duplicity within the financial system. When investors tried to sell off huge portfolios of spoiled financial assets like mortgage bonds, nobody would buy them. In fact, no one can yet say how much these once esteemed "safe" investments are really worth.
The big banks and investment houses are also stuck with lots of bad paper, and some have dumped it on their unwitting customers. The largest banks and brokerages have already lost enormously, but lending portfolios must shrink a lot more--at least $1 trillion, some estimate. So wary shareholders are naturally dumping financial-sector stocks.
Most recently, the investors' fears were turned on Fannie Mae and Freddie Mac, the huge quasi-private corporations that package and circulate trillions in debt securities with implicit federal backing. Treasury Secretary Henry Paulson (formerly of Goldman Sachs) boldly proposed a $300 billion commitment to buy up Fannie Mae stock and save the plunging share price--that is, save the shareholders from their mistakes. So much for market discipline. For everyone else, Washington recommends a cold shower.
Talk about warped priorities! The government puts up $29 billion as a "sweetener" for JP Morgan but can only come up with $4 billion for Cleveland, Detroit and other urban ruins. Even the mortgage-relief bill is a tepid gesture. It basically asks, but does not compel, the bankers to act kindlier toward millions of defaulting families.
A generation of conservative propaganda, arguing that markets make wiser decisions than government, has been destroyed by these events. The interventions amount to socialism, American style, in which the government decides which private enterprises are "too big to fail." Trouble is, it was the government itself that created most of these mastodons--including the all-purpose banking conglomerates. The mega-banks arose in the 1990s, when a Democratic President and Republican Congress repealed the New Deal-era Glass-Steagall Act, which prevented commercial banks from blending their business with investment banking. That combination was the source of incestuous self-dealing and fraudulent stock valuations that led directly to the Crash of 1929 and the Great Depression that followed.
Even before Congress and Bill Clinton repealed the law, the Federal Reserve had aggressively cleared the way by unilaterally authorizing Citigroup to cross the line. Wall Street proceeded, with accounting tricks described as "modernization," to re-create the same scandals from the 1920s in more sophisticated fashion. The financial crisis began when these gimmicky innovations blew up.
Democrats who imagine they can reap partisan advantage from this crisis don't know the history. The blame is bipartisan; so also is the disgrace. In 1980, before Ronald Reagan even came to town, Democrats deregulated the financial system by repealing federal interest-rate ceilings and other regulatory restraints--a step that doomed the savings and loan industry and eliminated a major competitor for the bankers. Democrats have collaborated with Republicans on behalf of their financial patrons every step of the way.
The same legislation also repealed the federal law prohibiting usury--the predatory practices that ruin debtors of modest means by lending on terms that ensure borrowers will fail. Usurious lending is now commonplace in America, from credit cards and "payday loans" to the notorious subprime mortgages. The prohibition on usury really involves an ancient moral principle, one common to Judaism, Christianity and Islam: people of great wealth must not be allowed to use it to ruin others who lack the same advantages. A decent society cannot endure it.
The fast-acting politicians may hope to cover over their past mistakes before the public figures out what's happening (that is, who is screwing whom). But the Federal Reserve has a similar reason to move aggressively: the Fed was a central architect and agitator in creating the circumstances that led to the collapse in Wall Street's financial worth. The central bank tipped its monetary policy hard in one direction--favoring capital over labor, creditors over debtors, finance over the real economy--and held it there for roughly twenty-five years. On one side, it targeted wages and restrained economic growth to make sure workers could not bargain for higher compensation in slack labor markets. On the other side, it stripped away or refused to enforce prudential regulations that restrained the excesses of banking and finance. In The Nation a few years back, I referred to Alan Greenspan as the "one-eyed chairman" [September 19, 2005] who could see inflation in the real economy--even when it didn't exist--but was blind to the roaring inflation in the financial system.
The Fed's lopsided focus on behalf of the monied interests, combined with its refusal to apply regulatory laws with due diligence, eventually destabilized the overall economy. Trying to correct for previous errors, the Fed, with its overzealous free-market ideology, swung monetary policy back and forth to extremes, first tightening credit without good reason, then rapidly cutting interest rates to nearly zero. This erratic behavior encouraged a series of financial bubbles in interest-sensitive assets--first the stock market, during the late 1990s tech-stock boom, then housing--but the Fed declined to do anything or even admit the bubbles existed. The nation is now stuck with the consequences of its blindness.
The Federal Reserve's dereliction of duty is central to the financial failures. It betrayed the purpose for which the central bank was first created, in 1913, abandoning the sense of balance the Fed had long pursued and that Congress requires. Most politicians, not to mention the press, are too intimidated to question the Fed's daunting power, but their ignorance is about to compound the problem. Instead of demanding answers, the political system is about to expand the Fed's governing powers--despite its failure to protect us. Treasury Secretary Paulson proposed and Democratic leaders have agreed to make the insulated Fed the "supercop" that oversees not only commercial banks and banking conglomerates but also the largest investment houses or anyone else big enough to destabilize the system. This "reform" would definitely reassure club members who are already too cozy with the central bankers. Everyone else would be left deeper in the dark.
The political system, once again, is rewarding failure. The Fed is an unreliable watchdog, ideologically biased and compromised by its conflicting obligations. Is it supposed to discipline the big money players or keep them afloat? Putting the secretive central bank in charge, with its unlimited powers to prop up troubled firms, would further eviscerate democracy, not to mention economic justice.
If Congress enacts this concept early next year, the privileged group of protected financial interests is sure to grow larger, because other nonfinancial firms could devise ways to reconfigure themselves so they too would qualify for club membership. A very large manufacturing conglomerate--General Electric, for instance--might absorb elements of banking in order to be covered by the Fed's umbrella (GE Capital is already among the largest pools of investment capital). Private-equity firms, with their buccaneer style of corporate management, are already trying to buy into banking, with encouragement from the Fed (the Service Employees International Union has mounted a campaign to stop them). A new President could stop the whole deal, of course, but John McCain has surrounded himself with influential advisers who were co-architects of this financial disaster. For that matter, so has Barack Obama.
The nation, meanwhile, is flirting with historic catastrophe. Nobody yet knows how bad it is, but the peril is vastly larger than previous episodes, like the savings and loan bailout of the late 1980s. The dangers are compounded by the fact that the United States is now utterly dependent on foreign creditors--Japan and China lead the list--who have been propping us up with their lending. Thanks to growing trade deficits and debt, foreign portfolio holdings of US long-term debt securities have more than doubled since 1994, from 7.9 percent to 18.8 percent as of June 2007. If these countries get fed up with their losses and pull the plug, the US economy will be a long, long time coming back.
The gravest danger is that the national economy will weaken further and spiral downward into a negative cycle that feeds on itself: as conditions darken, people hunker down and wait for the storm to pass--consumers stop buying, banks stop lending, producing companies cut their workforces. That feeds more defaulted loan losses back into the banking system's balance sheets. This vicious cycle is essentially what led to the Great Depression after the stock market crash of 1929. I offer not a prediction but a warning. The comparison may sound farfetched now, but US policy-makers and politicians are putting us at risk of historic deflationary forces that, once they take hold, are very difficult to reverse.
A more aggressive response from Washington would address the real economy's troubles as seriously as it does Wall Street's. Financial firms have lost capital on a huge scale--more of them will fail or be bought by foreign investors. But Wall Street cannot get well this time if the economy remains stuck in the ditch. Washington needs to revive the "animal spirits" of the nation at large. The $152 billion stimulus package enacted so far is piddling and ought to be three or four times larger. Instead of sending the money to Iraq, we should be spending it here on getting people back to work, building and repairing our tattered infrastructure, investing in worthwhile projects that can help stimulate the economy in rough weather.
An agenda of deeper reforms can boost public confidence even as it undoes a lot of the damage caused by the financiers and bankers. Some suggestions:
§ Nationalize Fannie Mae and other government-supported enterprises instead of coddling them. Restore them to their original status as nonprofit federal agencies that provide a valuable service to housing and other markets. Make the investors eat their losses. Buy the shares at 2 cents on the dollar. Without a federal guarantee, these firms are doomed anyway.
§ Resolve the democratic contradiction of "too big to fail" bailouts by dismantling the firms that are too big to fail--especially the newly created banking conglomerates that have done so much harm. Restore the boundaries between commercial banking and investment banking. In any case, market pressures are likely to shrink those behemoths as banks sell off their parts to survive. For the remaining big boys, revive antitrust enforcement. Set stern new conditions for emergency lending from government--supervised receivership, stricter lending rules to prevent recidivism and severe penalties for greed-crazed shareholders and executives.
§ Assign the Federal Reserve's regulatory role to a new public agency that is visible and politically accountable. Make the Fed a subsidiary agency of the Treasury Department and reform its decision-making on money and credit to restore an equitable balance between competing goals and interests--seeking full employment but also stable money and moderate inflation.
§ Begin the hard task of re-creating a regulated financial system Americans can trust, one that recognizes its obligations to the broad national interest. This requires regulatory reforms to cover moneypots like private-equity funds and to clear away the blatant conflicts of interest and double-dealing on Wall Street, and also to give responsible shareholders, workers and other interests a greater voice in corporate management and greater protection against rip-offs of personal savings.
§ Re-enact the federal law against usury. The details are difficult and can follow later, but this would be a meaningful first step toward restoring moral obligations in the financial sector. People would understand it, and so would a lot of the money guys. Maybe in the deepening crisis, Washington will begin to grasp that money is also a moral issue.
Speculation behind global commodity price rise
Original Link: http://www.informationclearinghouse.info/article20413.htm
By Ramgopal Agarwala
The vested interests are trying to divert the attention from regulation by arguing that other factors, including growing demand from emerging markets such as China and India, is responsible for commodity price increases. This game of blaming emerging economies in which the President of the US has also joined is patently absurd because the rapid growth in India and China has been going on for more than a decade with no increase in commodity prices even in nominal terms and cannot explain the sharp increase in last two years.
Other factors such as drought in Australia and switch of corn to biofuels can explain part of the increase in food prices but none of them can explain increases of more than 100% in many commodity prices in a single year as it has happened in 2007 and 2008. There is little doubt that speculative finance is a key factor in sudden price increases in oil, food and metals in the last two years. Amartya Sen in his classical work on famines pointed out that even when supply situation for food is healthy, famines can occur because of collapse of purchasing power of the common man. Today we are witnessing a phenomenon of food riots caused by food price increases due not to demand-supply imbalance but to greed of speculators facilitated by lax regulatory system in the key trading centre of the world.
Given the play of vested interests in US Congress it is not clear which way the legislation on regulating speculative finance in commodity futures will move. Policymakers in developing countries in which price increase in fuel and food are matters of life and death for the poor cannot remain silent and accept vulnerability to the price fluctuations originating in developed countries' financial markets. This must reflect on what they can do to safeguard their people against the onslaught of the speculators in foreign lands?
Over the long-term, the dominant role of a few commodity markets in the West must be reduced. As the centre of gravity of the world economy shifts to the South and South is becoming a dominant source of both demand and supply for commodities, it must develop its own markets with its own rules.
However, in the short run when the contagion effects of the markets in developed countries are still strong, the South must stake its claim in contributing to reform of the regulatory systems in the developed countries because its vital interests are involved. It should not remain silent when the contagion from developed economies is leading to mass starvation in its economies. It should demand, perhaps through international forums such as G-20, proper regulations in the developed countries so that the greed of the few in developed countries does not lead to misery of the many in the developing countries. It should also use its leverage through institutions such as Opec to persuade the developed countries to check the excesses of speculators which could have adverse effects in the long run on both producers and consumers of oil.
By Ramgopal Agarwala
The vested interests are trying to divert the attention from regulation by arguing that other factors, including growing demand from emerging markets such as China and India, is responsible for commodity price increases. This game of blaming emerging economies in which the President of the US has also joined is patently absurd because the rapid growth in India and China has been going on for more than a decade with no increase in commodity prices even in nominal terms and cannot explain the sharp increase in last two years.
Other factors such as drought in Australia and switch of corn to biofuels can explain part of the increase in food prices but none of them can explain increases of more than 100% in many commodity prices in a single year as it has happened in 2007 and 2008. There is little doubt that speculative finance is a key factor in sudden price increases in oil, food and metals in the last two years. Amartya Sen in his classical work on famines pointed out that even when supply situation for food is healthy, famines can occur because of collapse of purchasing power of the common man. Today we are witnessing a phenomenon of food riots caused by food price increases due not to demand-supply imbalance but to greed of speculators facilitated by lax regulatory system in the key trading centre of the world.
Given the play of vested interests in US Congress it is not clear which way the legislation on regulating speculative finance in commodity futures will move. Policymakers in developing countries in which price increase in fuel and food are matters of life and death for the poor cannot remain silent and accept vulnerability to the price fluctuations originating in developed countries' financial markets. This must reflect on what they can do to safeguard their people against the onslaught of the speculators in foreign lands?
Over the long-term, the dominant role of a few commodity markets in the West must be reduced. As the centre of gravity of the world economy shifts to the South and South is becoming a dominant source of both demand and supply for commodities, it must develop its own markets with its own rules.
However, in the short run when the contagion effects of the markets in developed countries are still strong, the South must stake its claim in contributing to reform of the regulatory systems in the developed countries because its vital interests are involved. It should not remain silent when the contagion from developed economies is leading to mass starvation in its economies. It should demand, perhaps through international forums such as G-20, proper regulations in the developed countries so that the greed of the few in developed countries does not lead to misery of the many in the developing countries. It should also use its leverage through institutions such as Opec to persuade the developed countries to check the excesses of speculators which could have adverse effects in the long run on both producers and consumers of oil.
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