Wall Street Continues To Burn

May 16th, 2012

Chief Executive Jamie Dimon has survived a move to oust him as chairman of JP Morgan-Chase, even though the FBI’s financial crimes squad is investigating how his bank lost $2 billion or more from risky speculative trades.

Still, the likelihood of any charges being filed against Dimon or anyone else at his firm are slim to none, given that no one has ever been charged for the events leading up to the 2008 financial debacle that nearly brought down the US economy. Dimon admitted on Meet the Press last Sunday that it was “stupid.” Ya think? But what is even more stupid is that Congress hasn’t broken up the five largest banks and reinstituted Glass-Steagal and the Bank Holding Company Act.

In 1933, following the 1929 stock market crash and the nationwide failure of nearly 5,000 commercial banks, Congress passed the Glass-Steagall Act, which set up a regulatory firewall between commercial and investment bank activities. At the time, commercial banks were accused of being too speculative and taking on huge risks in the hope of even bigger rewards. Sound familiar?

Then in 1956 Congress passed the Bank Holding Company Act that created a wall between insurance and banking by prohibiting banks from underwriting insurance, though banks could sell insurance and insurance products.

Never comfortable with success, Congress passed the Gramm-Leach-Bilely Act in 1999, which repealed the Glass-Steagall Act’s restrictions on bank and securities-firm affiliations. It also amended the Bank Holding Company Act and allowed banking institutions to provide a broader range of services, including underwriting. In other words, the new law removed the very restrictions that Glass-Steagall had erected.

Free once again to speculate with taxpayer money, Wall Street gamblers crashed the US economy in 2008, all the while arguing against more government regulation by saying that bankers could manage their businesses without oversight.

Since the taxpayer bailout, the five largest banks are now 13% larger than they were before the financial collapse. The stock market has doubled. The Wall Street casino is still placing bets with taxpayer money. The largest financial institutions have spent billions lobbying Congress against any form of regulation. The banks are basically in charge of their own risk management. Most of the Dodd/Frank legislation designed to end the speculation hasn’t even been implemented yet.

The chances of another financial meltdown are rising with each passing day. While Congress fiddles, the country’s financial house continues to burn, driven by the winds of high-risk speculation with taxpayer money. Next time, there may be no way of putting out the inferno that could wipeout trillions in savings and pensions, and plunge the country into a deep and long-lasting depression.

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Most Violent and Corrupt States

May 1st, 2012

The Institute for Economics and Peace has declared that the United States is more peaceful now than at any time in the past 20 years. The bad news, according to an analysis done by 24/7 Wall Street, is that “violence costs our economy at least $460 billion in 2010, through a combination of lost productivity and direct costs.”

“The report considers five categories — separated into three groups — to calculate the United States Peace Index for 2011. The first group includes rates of violent crimes such as robbery and aggravated assault, as well as the rates of homicide in each state. The second group relates to the institutions used to prevent violence and is measured by the number of police per capita and the number of incarcerated residents per capita. The third includes the availability of small arms.” All rates are calculated per 100,000 people.

Louisiana is ranked as the least peaceful state. It has the highest murder rate and incarceration rate in the country. Tennessee is ranked as the second most violent state, followed by Nevada, Florida, Arizona, Missouri, Texas, Arkansas and South Carolina.

Maine is considered the most peaceful state and has the lowest rate of violent crime. However, a March report from the Center for Public Integrity ranked Maine as the fifth most corrupt state in the country. Maine received F grades in nine of the 14 measured categories, including legislative accountability, lobbying disclosure and public access to information.

Georgia received the dubious number one ranking as the most corrupt state in the union, followed by South Dakota, Wyoming, Virginia, Maine, South Carolina, North Dakota and Michigan.

Before the rest of us pat ourselves on the back, it should be noted that no state earned an A, and only five states received better than a B+. More than half the states received a D+ or worse. The report found that “states with stagnant political environments often encourage corruption. Governments with high levels of corruption tend to have a political party — either the Democrats or Republicans — in power for a long time.”

As Lord Acton, the British historian, politician, and writer, once said, “Power tends to corrupt, and absolute power corrupts absolutely.”

Update: Yesterday, a federal judge dismissed claims of fraud and racketeering against “Three Cups of Tea” author Greg Mortenson, which I wrote about in my last blog.

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Greg Mortenson’s Fact versus Fiction

April 20th, 2012

After making a $1 million deal to settle allegations that he misused his charity’s money and resources, author and humanitarian Greg Mortenson now faces a lawsuit accusing him of fabricating parts of his best-selling books “Three Cups of Tea” and “Stones Into Schools.”

The alleged fabrications were exposed last July in Jon Krakauer’s book Three Cups of Deceit, in which the best-selling author questioned the truth behind Mortenson’s writings and whether he was benefiting from his charity. The book led to the Montana attorney general’s investigation and also a civil lawsuit.

The plaintiffs claim that Mortenson lied about how he came to build schools in Central Asia after losing his way in a failed mountaineering expedition and being nursed back to health in a Pakistani village. The lawsuit also claims that his recollections about holding Mother Teresa’s hand while her body was lying in state in 2000 were fabrications, since Mother Teresa actually died three years earlier. The plaintiffs allege that Mortenson purposely presented lies as the truth to trick readers into buying the books and donating to the charity. They accuse Mortenson and his publisher of racketeering, fraud, deceit, breach of contract and unjust enrichment. The lawsuit is asking a U.S. District Court judge to refund money to everyone who bought the books, which could amount to several million dollars.

One of the lawyers in the case is Larry Drury, who also represented plaintiffs in a class-action lawsuit against James Frey, who admitted on the “Oprah Winfrey Show” that he lied in his memoir A Million Little Pieces. That lawsuit ended in a settlement that offered refunds to buyers of the book.

Mortenson’s attorneys are seeking a dismissal, arguing that the plaintiffs can’t prove that they were actually injured by anything that was written in the books, and that this lawsuit amounts to a threat to free speech. They claim that Mortenson did not defame or harm anyone in his books, and that he can write his story however he wants.

Interestingly, Mortenson and Penguin, his publisher, make no claim that the events in the books are true. Instead, they argue that nobody can rely on the truth or accuracy of autobiographies because they are based on the authors’ own recollections. Penguin attorney F. Matthew Ralph argues that, “No standards exist for drawing the line where `fiction’ becomes `nonfiction’ or vice versa; and the courts are not a proper place for developing such standards or policing that line.”

But should there be a clear distinction between fiction and non-fiction? When you, as a consumer, purchase a book that claims to be non-fiction, how accurate and honest do you expect the author to be?

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Time To End The War On Drugs

April 9th, 2012

Benjamin Arellano-Felix

Benjamin Arellano-Felix, the former leader of the Tijuana Cartel was sentenced last week in U.S. District Court in San Diego to serve 25 years in federal prison and ordered to forfeit $100 million in criminal proceeds. The sentence followed his conviction for racketeering and conspiring to launder monetary instruments. After serving out his time in the U.S., he will be deported to Mexico to finish a 22-year sentence.

Jose Antonio Acosta-Hernandez, the Juarez Drug Cartel’s leader in Juarez and Chihuahua, Mexico, also pled guilty in El Paso, Texas last week, and was sentenced to life in prison for his participation in drug trafficking and numerous acts of violence in connection with the Barrio Azteca gang.

Despite these successes, the War on Drugs has been an abject failure. Drug smuggling and distribution are currently estimated to be a $300-$400 billion global business.

In a recent article, Jess Rigelhaupt, an assistant professor of history and American studies at the University of Mary Washington noted that the U.S. currently has more than 2.3 million people behind bars. One in every 100 adults is in jail. The incarceration rate is 750 per 100,000 residents, the highest rate in the world. We have 5 percent of the world’s population and 25 percent of the people in jail. We imprison people at a rate five times higher than comparable Western industrial nations. More than half of new prison sentences to state prisons between 1985 and 2000 were for drug offenses.

According to the Drug Sense website, the U.S. federal government spent over $15 billion on the war in 2010, which amounts to about $500 per second. Someone is arrested for violating a drug law every 19 seconds. Police arrested an estimated 858,408 persons for cannabis violations in 2009. Of those charged with cannabis violations, approximately 89 percent were charged with possession only. An American is arrested for violating cannabis laws every 30 seconds.

Last November, president Juan Manuel Santos of Colombia declared that market alternatives to deal with narcotics trafficking should be considered. In February, President Otto Perez Molina of Guatemala called for a debate on drug regulation to reduce violence in Latin America. Costa Rica, Nicaragua, Panama, Honduras and Mexico all voiced support for the initiative.

Three weeks ago, at the 55th annual session of the Commission on Narcotic Drugs in Vienna, Austria, Fernando Henrique Cardoso, former president of Brazil and chair of the Global Commission on Drug Policy, said, “There is a clear rise in public perception on the flaws of the current approach to deal with drugs in our society. We can no longer afford the levels of violence in Mexico, Brazil, Central America and West Africa, the trillions of dollars spent on this endless war and the obstacles it presents to harm reduction policies. It is about time that the UN and politicians in office engage on a constructive debate towards decriminalization, regulation, and public health programs that may reduce violence whilst preventing and relieving the suffering of drug abusers.”

I couldn’t agree more.

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An Excuse For Murder

March 20th, 2012

As a mystery writer, I spend a lot of my time planning fictional murders, murders that my protagonist, Homicide Detective John Santana––and my readers––have to solve. Unlike a mystery writer, I’m sure you don’t spend your time planning the perfect crime, though I’ll bet that many of you––at least at some point in your life have thought about it.

But imagine for a moment that you wanted to murder someone. And imagine that you lived in a state such as Florida that has a Stand Your Ground law, considered one of the most sweeping in the nation. The law legalizes the use of deadly force by anyone “who is not engaged in an unlawful activity and who is attacked in any other place where he or she has a right to be. The law adds that a person “has no duty to retreat, and has the right to stand his or her ground and meet force with force, including deadly force if he or she reasonably believes it is necessary to do so to prevent death or great bodily harm to himself or herself or another or to prevent the commission of a forcible felony.”

So far so good, you think. But it gets even better, because the Florida statute immunizes the person who uses deadly force from civil or criminal liability. Under the law, you could acquire a handgun or use one you already own, wait for an opportunity when there are no witnesses, cold-bloodedly murder someone, and then claim self-defense. Sounds more like fiction, you say. Unfortunately, it isn’t.

One doesn’t have to be a mystery writer to imagine George Zimmerman’s thought process before he murdered Trayvon Martin, an unarmed, black, teenager. Martin was talking on his cell phone with his girlfriend, when he was followed and confronted by Zimmerman, then fatally shot in the chest. Zimmerman knew, as everyone in Florida who has contemplated murder knew, that he could use the law to try and escape prosecution. Given the outrage, the supposition that this was a hate crime, and the mounting evidence against him, George Zimmerman may have figured wrong. One hopes so.

Thirty-one states now have some variation of the Florida Stand Your Ground law. While it’s unlikely that few on either side of the highly charged debate will be swayed by the killing of Trayvon Martin, it is likely that more innocent lives will be lost under the guise of “self-defense.” And that isn’t fiction.

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NFL Hitmen

March 3rd, 2012

Minnesota Viking’s fans have suffered through four disheartening Super Bowl losses to the Kansas City Chiefs in 1970, the Miami Dolphins in 1974, The Pittsburgh Steelers in 1975, and the Oakland Raiders in 1977. Fans also had to endure gut-wrenching playoff losses, as in 1975 when the Vikings lost 17-14 to the Dallas Cowboys, on a controversial touchdown pass from the Cowboys’ quarterback Roger Staubach to wide receiver Drew Pearson that became known as the Hail Mary Pass. Many felt that Pearson had pushed off defensive back Nate Wright, and that offensive pass interference should have been called.

Then there was the 1998 season when an explosive offense led by Randall Cunningham, Robert Smith, Chris Carter, and rookie sensation Randy Moss, set a then-NFL record by scoring a total of 556 points, never scoring fewer than 24 in a game. The Vikings finished the season 15-1, their only loss by 3 points to the Tampa Bay Buccaneers in week nine.

In the playoffs that year, the Vikings crushed the Arizona Cardinals 41-21, and were heavily favored to win their NFC title showdown with the Atlanta Falcons. However, kicker Gary Anderson, who had just completed the first perfect regular season in NFL history (not missing a single extra point or field goal attempt the entire year), missed a 38- yard attempt with less than 2 minutes remaining. That allowed the Falcons to tie the game. Atlanta went on to win it 30-27 in overtime on Morten Andersen’s field goal, also a 38-yarder. The Vikings became the first 15-1 team to fail to reach the Super Bowl.

Eleven years later in 2009, the Vikings returned to the league championship against the New Orleans Saints. Tied at 28-28 late in the game, and with the Vikings driving and in position to kick the winning field goal, Brett Farve threw an ill-advised pass across the middle with seven seconds left that was intercepted. New Orleans won in overtime, 31-28, and the Vikings futility continued.

Viking fans were angry with Brett Farve, despite an incredible season. Many thought he could have run a few yards and stepped out of bounds, setting up what could have been the winning field goal. But Farve didn’t run. He had suffered a number of vicious hits in the game, and had a severely injured ankle. The Saints received three unnecessary roughness penalties that day, but none of their players were tossed from the game. Farve was roundly, though I think unfairly, criticized for his decision to pass instead of run. After all, without his leadership and passing, the team never would have been in the championship game in the first place.

But now comes news that defensive players for the Saints were paid a bounty for deliberate hits designed to injure or disable opposing players during the 2009-2011 seasons. League officials have determined that as many as 27 players, as well as former defensive coordinator Gregg Williams, were involved in the scheme. Players contributed $50,000 to an illegal pool, despite a league rule, which prohibits non-contract bonuses, not to mention the obvious safety concerns and motives behind paying players to deliberately injure opponents. Had Farve not been injured, who knows what would have happened that day?

The league had better come down hard on the Saint’s organization including suspensions, fines, and loss of draft choices. Though no punishment will ever make up for, or help Minnesota fans forget, the Viking losses.

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Hit and Run

February 25th, 2012

According to the National Safety Council, a vehicle injures a pedestrian every 8 minutes in the United States, and one pedestrian dies as a result of injuries from an accident with a vehicle every 111 minutes. 5,000 pedestrians die each year as a result of these accidents, and over 60,000 more are injured. Four people die each day as a result of a hit and run driver.

38-year-old Anousone Phanthavong of Roseville, Minnesota was one of those who died. He was hit and killed as he poured gas into his vehicle on Interstate 94 near a Minneapolis ramp at 11p.m. on the night of August 23, 2011. He might have been just another statistic, if it were not for the fact that the driver of the vehicle who hit and killed him––and then left the scene of the accident––was Amy Senser, the wife of former Minnesota Viking Joe Senser.

The day after the accident, an attorney for the Senser family called the State Patrol and told investigators that Joe Senser owned the vehicle involved in the fatal accident. The State Patrol found the SUV in the Senser’s garage, with blood on the hood. Inside the SUV, they found a bobby pin, earrings, and the cap off a Mike’s Hard Lemonade. Despite Amy Senser’s confession and the damaged Mercedes in their possession, authorities did not make any attempt to arrest and question any of the Sensers until more than three weeks after the incident.

Attorneys for Amy Senser claim that she was lost and suffering from a migraine and did not know that she had struck Phanthavong while en route to pick up her daughter and a friend from a concert at the Xcel Energy Center in St. Paul. Prosecutors contend that moving the vehicle into the garage the next morning, refusing to give a statement when state troopers arrived to take custody of the vehicle, and waiting to come forward as the driver, constitute circumstantial evidence of guilt.

Two weeks after the fatal accident, Phanthavong’s family filed a wrongful death lawsuit against Joe Senser, now the owner of a chain of sports bars in the Twin Cities, and his wife. After a four-month break, the civil case resumed this month. Amy Senser also faces possible imprisonment for up to three years and/or a fine of up to $5,000 if she’s convicted of a felony charge of Criminal Vehicular Homicide.

Investigators have determined that the impact threw Phanthavong’s body into the air. It took off the rear view mirror of his car and landed forty feet from his vehicle. Is it possible that Amy Senser––or anyone for that matter––could hit a pedestrian that violently and not realize it? While that defense may seem hard to believe, a recent Minnesota Supreme Court decision (State v. Al-Naseer) reversed a hit-and-run conviction against a man because prosecutors failed to prove that he knew he had struck and killed a man changing a tire when he left the scene.

Only Amy Senser knows if she is lying about what occurred that night, and whether she purposely fled the scene. But we do know that a hospital was one block away. Had she stopped, perhaps Anousone Phanthavong would still be alive today.

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Congressional Insider Trading

February 17th, 2012

In Oliver Stone’s terrific 1987 movie, Wall Street, Bud Fox, played by Charlie Sheen and Gordon Gekko, the infamous “greed is good” character played by Michael Douglas, are both indicted for insider trading. The movie shed light on a crime unfamiliar to most Americans.

By the time Stone directed Douglas in the 2010 sequel, Wall Street: Money Never Sleeps, many more Americans understood the definition of insider trading. What they didn’t understand, is that for years, members of Congress have been guilty of the same crimes that sent Bud Fox and Gordon Gekko to prison.

Currently, investment advisers for hedge funds and equity funds are not required to register as lobbyists, which means they can call a Congressional staffer to ask about the status of a bill the relates to the fund’s investment decisions. Based on that information, the fund can choose to buy or sell shares. This practice, called “political intelligence services,” is estimated to be a $400 million a year global industry that involves nearly 300 companies. Members of Congress are also unregulated.

When 60 Minutes ran the story about Congressional Insider trading last November, largely based on the book, Throw Them All Out, by Peter Schweitzer, members of Congress panicked. The Senate quickly produced a bill that would force fund managers and investment advisers to register as lobbyists.

The Stop Trading on Congressional Knowledge (STOCK) Act prohibits members of Congress from buying or selling securities based on confidential information they receive as lawmakers. House Republicans rejected the provision that requires “political intelligence” firms to register as lobbyists. A conference committee will try to reconcile the differences, but many are concerned that the bill will be so watered down and full of loopholes, that nothing will actually change.

According to a study done by the Center for Responsive Politics in 2010 about 47% of Congress are millionaires. That number has continued to increase, despite the economic meltdown and lingering recession.

Is it any wonder that a recent Gallop poll found that more people approve of porn (30%) and polygamy (11%) than of Congress (9%)? I’m guessing that those same people believe that Congress should be held to the same standards as Bud Fox, Gordon Gekko, and all other American investors.

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Bankster Justice

February 6th, 2012

In the mid-1990s, the top mortgage insurers and service providers, along with Fannie Mae and Freddie Mac, the government entities that hold many of the country’s mortgages, created a database for tracking mortgage ownership called the Mortgage Electronic Registration System, or MERS. Since that time, more than 70 million mortgage loans, including millions of sub-prime loans, have been registered in the MERS system, rather than in local county clerks’ office.

Last Friday, Eric Schneiderman, New York Attorney General and co-chair of President Obama’s new crisis unit, sued Bank of America, Wells Fargo and JP Morgan, accusing them of deceptive and illegal practices in their use of the database, including falsifying documents in foreclosure proceedings.

Schneiderman contends that the database is inaccurate and that the mortgage industry created MERS so that financial institutions could avoid county recording fees and publicly recorded mortgage transfers, saving the banks two billion dollars in recording fees. The lawsuit seeks to stop the banks from filing foreclosure actions through MERS.

Too bad it’s taken the Obama administration, and Eric Holder in particular, so long to go after the banksters responsible for the country’s financial collapse. (How one wishes that Robert Kennedy were heading the Justice Department.) Instead, Holder tried to cut an incredibly bad deal that would have the banks pay $20-25 billion in fines and mortgage relief in exchange for protection from further liability.

But thanks to Schneiderman, California’s Kamala Harris, Martha Coakley of Massachusetts and Beau Biden of Delaware––and a series of court rulings that have blocked foreclosures because banks presented fraudulent robo-signed documents––the administration has been forced to seek much stiffer fines and prison sentences.

But beyond stiff fines and long prison sentences for the worst of the banksters, the economy and the real estate market will not fully recover until the millions of homeowners with upside down mortgages get some relief. It appears that the Obama administration has finally come to the conclusion that creating a crisis unit and appointing a bulldog like Schneiderman is in their––and the country’s best interest.

It was illegal behavior by the banks, and not the homebuyer, that caused the greatest financial collapse since the Great Depression. Now, finally, we may get a reckoning. It’s the banksters’ worst nightmare come true.

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Success Without Honor

January 23rd, 2012

Joe Paterno won 409 football games during his coaching career, but he lost the two most important battles of his life.

He had little choice in his losing battle with lung cancer. By all accounts, he wasn’t a smoker. Some have suggested that radon might have caused the tumor in his lung. High levels of radon are found in the area in which he lived. But whether the tumor was caused by genetics or something in the environment, poor choices didn’t cause or contribute to his death at 85. But he did make a poor choice in his second losing battle, and it’s a choice he’ll always be remembered for.

While at Penn State, detractors claim that his players often received special treatment, and some feel he stayed on too long, simply because he wanted to win more games. But neither of those arguments diminishes the positive influence he had on many young men, and the large amounts of money he donated to improve the Penn State campus.

Yet, for 10 years, while preaching his credo of “Success With Honor,” Joe Paterno let his former assistant, Jerry Sandusky, have access to the football facilities and to more young boys, which Sandusky molested.

Paterno first learned of Sandusky’s sexual abuse in 2002, when graduate assistant Mike McQueary reported seeing Sandusky with a young boy in the showers of the football complex. Paterno waited a day before reporting the incident to his superiors and did not go to the police. And he never confronted his friend Sandusky––nor did he ban him from the facilities. While administrators at Penn State covered up the incident, the abuse continued, and Joe Paterno continued to look the other way.

In hindsight, it seems obvious that Paterno actually did more damage to his and to Penn State’s reputation, than he would have if he’d come forward with the allegations in 2002 and demanded accountability for Jerry Sandusky. But he didn’t.

A credo is only as good as the person behind it. Joe Paterno, despite all his victories and accomplishments, ignored what he preached to his players, and in so doing, he lost the most important battle of his life. And he should rightfully be remembered for it.

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