Skip to content

Honor among thieves

Monday, June 4, 2012

The inestimable Gretchen Morgenstern unearths yet another example of corporate crime, soon to disappear, unpunished, into the infinite number of memory holes at the Justice Department and the SEC:

Days before Bank of America shareholders approved the bank’s $50 billion purchase of Merrill Lynch in December 2008, top bank executives were advised that losses at the investment firm would most likely hammer the combined companies’ earnings in the years to come. But shareholders were not told about the looming losses, which would prompt a second taxpayer bailout of $20 billion, leaving them instead to rely on rosier projections from the bank that the deal would make money relatively soon after it was completed.

What Bank of America’s top executives, including its chief executive then, Kenneth D. Lewis, knew about Merrill’s vast mortgage losses and when they knew it emerged in court documents filed Sunday evening in a shareholder lawsuit being heard in Federal District Court in Manhattan.

(via New York Times)

It is becoming increasingly difficult for the bankers to maintain the fiction that their job is to enhance shareholder value. That, after all, is the excuse they often use to justify socially destructive actions. It is, we are often told, not their job to do what’s right for the community, state, nation or world, but only to maximize shareholder return. In fact, their job is to maximize their own incomes, shareholders and society alike be damned. The one responsibility they take to heart is the obligation they owe each other, to make sure that no executive goes unpaid or unbonused.

As a lawyer, I particularly enjoyed this:

Bank of America officials declined to comment. Andrew J. Ceresney, a lawyer for Mr. Lewis, also declined to comment on the filing, but he referred to a motion filed on behalf of Mr. Lewis on Sunday contending that the former chief executive did not disclose the losses because he had been advised by the bank’s law firm, Wachtell, Lipton, Rosen & Katz, and by other bank executives that it was not necessary.

I never knew that as a lawyer I could pre-absolve my client’s transgressions. I mean, even priests can only forgive your sins after you commit them. If a client wants to, lets say, fail to give required disclosures about the condition of a home before sale, all he need do is ask me if he has to. I tell him he doesn’t, and boom, no need to tell the buyer that the furnace doesn’t work and the basement floods. Of course, I’m exempt from liability because all I did was give advice; it wasn’t my duty to disclose. But Lewis is going this example one better, because he’s saying his illegal activities were okay because they were also sanctioned by his co-conspirators. Only a banker would make that argument; and only a banker would be likely to get away with it.

Filed in Corporate Crime | | Comments (0)

Back from the wet North

Monday, June 4, 2012

I haven’t blogged for a few days, as my wife and I were up in Maine at my XXth College reunion. There is no need to go into further numerical details here, though it is safe to say that I am, to put it kindly, on the brink of geezerdom, or perhaps, already in the abyss. Maine was truly beautiful on Friday, but was awash all day Saturday and that portion of Sunday in which we wended our way back home.

Among other things, I was not able to post a Friday night video, but I did make one musical discovery. It seems Pete Seeger made an appearance at Bowdoin in 1960. It was recorded by the college radio station, which did a top rate job, and the tapes, now lovingly restored, have been made into a two CD set by the Smithsonian. It was displayed at each cash register at both college bookstores, so naturally I bought one, and it’s really quite good. It’s fun to hear Pete singing to an appreciative Bowdoin audience, most of whom, judging by the fate of my own classmates, went on to become good Republicans. Who knows, it’s always possible that Pete made a difference in one of those young lives and turned him (there were no hers) away from a life in “finance” or one of the other criminal arts.

Filed in Ramblings | | Comments (0)

Chris Powell knows it when he sees it

Tuesday, May 29, 2012

Chris Powell, of the Manchester Journal Inquirer, has been threatened with a libel suit by the World Wide Wrestling company. The offending prose is as follows:

If, having spent several times more money than had ever been spent on a campaign in Connecticut, a candidate isn’t known well enough, whose fault would that be? But of course nearly everyone knew very well who McMahon was — that was the problem. Her practical qualifications for office did not extend beyond her fantastic wealth, and that wealth derived from the business of violence, pornography, and general raunch.

(via The Darien Times)

Powell appears to have responded to a letter demanding a retraction appropriately:

As the May 25 article pointed out, Powell’s column did not mention the Stamford-based WWE. “But answering Flinn by email the editor asked if WWE wanted the letter published in the newspaper and if lawsuit depositions — preparatory interrogations of witnesses — could be undertaken before the Republican Senate primary Aug. 14, adding that he was eager to meet ’Trish’, the shapely actress featured in an infamous WWE program in which McMahon’s husband, Vince, instructs her to undress down to her bra and panties, kneel in the wrestling ring, and bark like a dog in front of an audience of thousands. She complies.”

(via The Darien Times)

Some of the legal aspects of this are discussed here (forgive me, I’m linking to a Republican, but the analysis is basically correct), but I think the emphasis on the actual malice standard is misplaced. The problem with the lawsuit would be more fundamental than that, putting aside that the potential plaintiff is never mentioned in the alleged libel.

As Justice Stewart so famously said, in reference to pornography of the hard core sort: “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it…”

Libel requires proof that someone has uttered a factual untruth about the plaintiff. It rarely reaches expressions of opinion. If even a Supreme Court justice feels privileged to use an “I know it when I see it standard”, it seems only fair to let Powell use the same standard. If hard core pornography is impossible to define, pornography of the softer sort is even more so. One man’s pornography is another’s harmless entertainment, and it’s unlikely in the extreme that any court would hold that characterizing simulated sex with a dead body or the “Trish” doggie scene mentioned above as pornography is not a legitimate expression of opinion. The letter from WWE’s lawyers even compares the entertainment it dishes out to Hollywood. Whether that’s fair to Hollywood or not, the fact is that the works of that city of sin are regularly denounced from many a pulpit.

So, the letter is simply at attempt at intimidation, and Powell’s “bring it on” response is entirely appropriate. Should the WWE do so, then once again the question will arise as to whether, as in 2010, the WWE is impermissibly contributing to the McMahon campaign.

 

Filed in Lawyer stuff, Linda McMahon, Media | | Comments (0)

The Butler Did It

Tuesday, May 29, 2012

Seems there was someone at the Vatican with a conscience, who has been leaking stories to the Italian press about criminal activity at Holy Mother Church:

The pope’s butler has been arrested by Vatican police on suspicion of leaking a large number of confidential letters addressed to Benedict XVI which have lifted the lid on alleged corruption and nepotism at the Holy See.

(via The Guardian)

That’s right, folks, the Vatican has its own police, who, like their American counterparts, are more comfortable chasing whistleblowers than corrupt higher ups. The butler, apparently, despite all he’s seen, has a touching faith in the good intentions of Ratzinger, who did bestir himself to react to the leaks-by ordering an investigation of the leaker.

First things first, after all.

As to the title of this post, who could resist?

 

Filed in Religion | | Comments (0)

None so blind

Monday, May 28, 2012

Paul Krugman observes in his blog that we are being subjected to a new, and far more pernicious, kind of political correctness.

Remember the furor over liberal political correctness? Yes, some of it was over the top — but it was mainly silly, not something that actually warped our national discussion.

Today, however, the big threat to our discourse is right-wing political correctness, which — unlike the liberal version — has lots of power and money behind it. And the goal is very much the kind of thing Orwell tried to convey with his notion of Newspeak: to make it impossible to talk, and possibly even think, about ideas that challenge the established order.

Thus, even talking about “the wealthy” brings angry denunciations; we’re supposed to call them “job creators”. Even talking about inequality is “class warfare”.

(via Paul Krugman’s blog)

That sort of correctness, at least to my eyes, is on display in a review in Sunday’s Times by Benjamin Friedman of Timothy Noah’s new book, The Great Divergence, about the causes and potential cures for our rapidly growing inequality.

I haven’t read Noah’s book, so I have no idea whether it addresses the concerns I’ll raise here, but if it does, Friedman ignores it. That is, Friedman totally ignores the extent to which our widening inequality is the result of deliberate and quite obvious government policy. Since 1980, with the exception of the Clinton tax increase, we have seen a series of tax cuts that have disproportionately favored the wealthy. This amounted to a direct transfer of wealth to the rich from the rest of us, particularly because our share of the tax cuts was so often absorbed by increased costs at the state and local levels to make up for decreases in federal expenditures in such things as education. This was entirely out in the open. It was basic math, hidden by a supply side fig leaf that really hid nothing. The drop in the top marginal tax rate is roughly inverse to the rise in inequality. This 10 ton gorilla is certainly worth more scrutiny than the right wing meme, to which Friedman returns again and again, that the educational system the right has done so much to cripple has not been producing workers with the skills needed for the available jobs. As Krugman and Baker have repeatedly pointed out, if that were true, employers would be competing for those workers who are qualified by offering higher wages. That ain’t happening.

There are nuances to almost everything, but the fact is that bringing back something like the marginal rates of the fifties, and, for good measure, lifting the cap on the amount of income subject to the payroll tax, would go a long way toward reducing the widening gap between the .001% and the rest of us. Unfortunately, it’s not politically correct to talk of such things.

Filed in Economics, Media | | Comments (0)

Friday Night Music-Father forgive me, for I know not what I do

Friday, May 25, 2012

I can’t help myself. Another dead rocker, and the choice is made. I actually think that the early Bee Gees stuff is superior to the disco dreck, but I can’t deny there’s something about Stayin’ Alive that is quite infectious. But then, so is the flu.

 

 

Filed in Music | | Comments (0)

What a guy

Friday, May 25, 2012

I subscribe to a number of Apple related RSS feeds, most of which are manned by Apple worshippers for whom Steve Jobs is a saint, and Tim Cook his anointed successor. I am hoping this is snark, but…

Apple’s Board of Directors approved a dividend equivalent payment to employees holding restricted stock units, but this won’t apply to Tim Cook, says a report in MacRumors. These RSUs vest after a period of time and are usually given to employees to entice them to stay with the company for a length of time.

Tim Cook, for example, was awarded 1.125 million RSUs when he stepped into the CEO position last year. At the current dividend payment of US$2.65 per share, Cook would receive a payment of approximately $75 million. Keeping with his character as a kind and gentle leader of Apple, Cook is refusing to accept this dividend, says a recent SEC filing.

(via The Unofficial Apple Weblog)

I don’t know how he’s going to do it. He’s going to have to get by on the mere $400 million he pulled in last year and the similar pittance he’ll get this year. Guess he’ll just have to tighten his belt.

Filed in Corporate Crime | | Comments (0)

No value added

Friday, May 25, 2012

If you’re a Daily Kos reader, you are no doubt familiar with the Daily Pundit Roundup, in which snippets of columns are featured. Today, Eugene Robinson is excerpted, the excerpt containing the following:

There’s nothing inherently wrong with private equity, which plays an important role in the economy.

This in a column in which he is rightly praising Obama for going after Romney on his Bain record. The statement is all too typical of liberals, who, in order to make themselves seem reasonable when measured against rabid Republicans, are always willing to give credit where it is not due, and to buy into the prevailing, right wing manufactured meme. In fact, there is something inherently wrong with private equity, as practiced by Romney, who was merely typical of the breed. And while it is true that private equity plays an important role in our economy, that role is almost entirely negative. Don’t take it from me, take it from the rarely wrong Paul Krugman, at the link contained in the same Kos Pundit Round up:

Once upon a time, this fairy tale tells us, America was a land of lazy managers and slacker workers. Productivity languished, and American industry was fading away in the face of foreign competition.

Then square-jawed, tough-minded buyout kings like Mitt Romney and the fictional Gordon Gekko came to the rescue, imposing financial and work discipline. Sure, some people didn’t like it, and, sure, they made a lot of money for themselves along the way. But the result was a great economic revival, whose benefits trickled down to everyone.

You can see why Wall Street likes this story. But none of it — except the bit about the Gekkos and the Romneys making lots of money — is true.

For the alleged productivity surge never actually happened. In fact, overall business productivity in America grew faster in the postwar generation, an era in which banks were tightly regulated and private equity barely existed, than it has since our political system decided that greed was good.

For the most part, people like Romney are leeches, except leeches can have some beneficial uses. Romney type leeches merely suck the blood out of corporations, and leave the body behind when they finish feeding. It is purely incidental to them whether the body lives or dies once they’ve finished feeding. In this they are typical of the rot that has set into a system where money is most easily made either by draining money from the government or from truly productive enterprises, or getting the government to sanction what by any measure should be criminal activity. Thus we have insurance companies that do not insure, for-profit educational institutions that do not educate, and bankers who gamble with our money, secure in the knowledge that the more they screw up, the more likely they’ll get more of our money to bail them out.

Yet somehow, these folks have all managed to convince us liberals, or at least those in the Beltway, that we are supposed to genuflect, before pointing out that maybe, sometimes, they cause a few problems. The fact of the matter is that they only rarely, and never intentionally, contribute anything of value to society. To the extent they do contribute anything of value, we almost always get more of the good stuff if we tightly regulate them to make sure they stay on task.

Filed in Corporate Crime | | Comments (0)

Could it be?

Wednesday, May 23, 2012

Could it be that Mitt Romney will go the way of John Kerry, convinced either by himself or his handlers that he need not respond to attacks on his record? With Kerry, it was somewhat understandable. He, or his handlers, had a sort of naive faith that the American press would never allow a baseless attack on his war record to get traction. With Romney, it’s a little different. The attacks are basically grounded in truth and he should have been fairly warned, as he has been beaten over the head with Bain before, and rightly so. The Bain business plan is emblematic of the worst of unfettered capitalism, which considers any amount of inflicted suffering and harm to society justified so long as someone is making a profit. But Romney does appear to be stumbling, as if he never anticipated these attacks. Perhaps this is all a result of bubble thinking; it does appear that many Republicans are convinced that everyone else sees Obama as the devil incarnate, so there’s no need to believe that you have to present a convincing case for your own candidate:

Here’s an AP story Mitt Romney’s campaign would rather not see:

The core of his presidential candidacy under attack, Mitt Romney has yet to shape a playbook to defend a quarter-century in the business world that created great riches for himself and great hardship, at times, for some American workers.

Romney and his aides have struggled to respond consistently to intensifying criticism about his tenure at Bain Capital and how it would be reflected in his presidency. The lack of a cohesive message stems, in part, from Romney’s fundamental belief that any debate that puts the economy front and center is a win for Republicans.

It’s hard to imagine Mitt Romney actually believes that he can sit back and coast to victory as long as the economy stays front and center, but based on his lackadaisical response to the Bain assault, it might actually be true. As Alexander Burns notes, he’s been AWOL from the campaign trail since Friday and isn’t scheduled to make an appearance until noon on Wednesday when he addresses the Chamber of Commerce.

(via Daily Kos: Mitt Romney punts on Bain)

As Kerry learned to his sorrow, even if an attack is a pack of lies, you risk everything if you don’t get ahead of it. It has, one hopes against hopes, to be harder to suppress a meme grounded in truth than one grounded in lies. If it is, then Romney may be spending a considerable amount of his time from now until November talking about Bain.

 

Filed in Romney | | Comments (0)

What religion is JP Morgan Chase?

Monday, May 21, 2012

Not to be outdone by Arizona, Missouri is getting deeper into the crazy act. The legislature there has passed a bill to keep women safe from any possibility that they might try controlling their own bodies:

The bill states that no employer or health plan provider can be compelled to provide coverage _ or be penalized for refusing to cover _ abortion, contraception or sterilization if those items run contrary to their religious or moral convictions. The bill also gives the state attorney general grounds to sue other governmental officials or entities that infringe on the rights granted in the legislation.

“This bill is about religious freedom and moral convictions,” said Rep. Sandy Crawford, R-Buffalo. “This is about sending a message to the federal government that we don’t like things rammed down our throat.”

(via Hullabaloo)

In these days of Citizens United, this raises an interesting question, and some even more interesting possibilities. Most employers are corporations. So far as I know, most religious sects do not baptize corporations, but this bill wisely rejects such a crabbed approach. Corporations being people, of course they can have religions, and this being America, it is only right, just and fit that the religious sensibilities of corporations be entitled to far greater deference than might be extended to the the moral qualms of mere flesh and blood mortals. Why stop with women, after all. Besides the obvious, there are all kinds of possibilities here. If memory serves, the Amish were allowed to opt out of Social Security. Most corporations have deeply religious objections to paying taxes, paying the minimum wage, abiding by environmental regulations-or any regulations for that matter-not to mention a host of other moral positions they hold which might be unique to their religion, but are nonetheless sincerely held. These deeply held moral convictions must also be respected. Thankfully, they have no objections to taking government money, so we’ll still be able to bail them out when they tank the economy again.

 

Filed in Crazies, Religion | | Comments (0)