Troy Davis Executed

I have not really been writing about Troy Davis at any length simply because I have been more consumed with the number of economic and tax related news lately. There are number of other good writers who have covered this: see Digby and TNC to name a few.

Before I get to my point, Davis was executed by the state of Georgia this evening despite numerous recantations by corroborating witnesses from his original trial. Davis maintained his innocence up until the moment of his untimely execution. In the days leading up to his execution, there was a veritable torch-and-pitchfork crowd within the right wing media overtly cheering for his execution.

I have never really waded into the social politics of capital punishment, but viewing this unfortunate spectacle has changed that for me. The mere thought of rotting for years on death row, facing down execution for a crime I did not commit is enough to make me want to vomit, let alone imagining any of my friends or family in a similar situation. And that is not to say that I am convinced either way of Davis' innocence or guilt. But as I mentioned before, when several witnesses basically say their original testimony was garbage, it probably bears some serious thought as to whether or not we ought to put this man to death. That was tried in various forms all the way up to the Supreme Court, but being the death-loving, ever macho, dick swinging, executions-are-awesome culture that we are, was ultimately denied. Apparently "beyond a reasonable doubt" is just a flimsy term that we don't let impede the assuaging of our bloodlust. 

I think this shows that in some ways, humanity really hasn't come very far from the days of the Roman Empire. When faced with a man's questionable guilt, instead of taking every precaution to ensure we don't execute an innocent man, we rally the most depraved aspects of our national psyche, cheering for his demise like a bunch of drunken Romans watching  a couple of gladiators swinging axes at each other in the Coliseum. On a similar note, this was also on display at recent Republican debates when audiences cheered enthusiastically at Gov. Rick Perry's record on executions (the most of any governor) and Wolf Blitzer's question as whether a thirty year old, coma stricken, uninsured man should be left to die. This sort of display is disgusting, craven, and has no place in a civilized democracy. You might also say this is why the GOP came unglued at the mention of "empathy" during the Justice Sotomayor confirmation hearings. It's because they have none, and the very idea of it is repellent to them.

But as for the politics of the death penalty, I assume its proponents (especially on the right) use their favored "if you've done nothing wrong, you have nothing to fear" sham of a moral argument. This was popularized during the rise of the Patriot act and the War on Terror as Americans rightly expressed their objections and reservations to the government's ever expanding powers of surveillance over its own citizens. But tragedies like Troy Davis' executions are precisely why we should fear the government having this sort of power. Humans, and by extension their institutions, are inherently fallible. This isn't the first case of a potentially innocent man being put to death, and it won't be the last either.

Learning From Our Mistakes

Nah just kidding, we wouldn't ever do that here in the good ol' US of A:

Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.
S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy.
[...]
Bank of America Corp. and Royal Bank of Scotland Group Plc sold $242.7 million of the Springleaf mortgage bonds today that are set to get S&P’s top ratings, according to people familiar with the matter, who declined to be identified because the terms haven’t been set.
[...]
The underlying mortgages represent 96.6 percent of the current value of the homes, the issuer estimates. Borrowers may have an incentive to walk away from the debt and leave investors with sizable foreclosure losses should the economy slow further and house prices continue to decline.
The securities were created by Springleaf Finance Corp., a lender to borrowers with risky credit that’s majority owned by private-equity firm Fortress Investment Group LLC and partly by former parent American International Group Inc., according to the people familiar with the offering.
[...]
Underlying loans for the bonds are on average five years old, according to a document sent to investors. Credit scores of the borrowers, none of whom has missed a payment over the past two years, average 651. The U.S. median is 711, according to Fair Isaac Corp., which creates the formulas behind FICO scores.
[...]
Of the $12.8 billion of loans made by the firm over the past decade that are still outstanding, 11.5 percent are 60 days or more delinquent, the term sheet shows. That’s a better track record than rivals, with the rate on subprime mortgages packaged into bonds averaging almost 37 percent, Bloomberg data show.
Ed Sweeney, an S&P spokesman, declined to comment on the Springleaf transaction. “We believe our ultimate success will be driven by the value investors derive from our ratings and analysis,” he said.

You can't make this shit up. Three years ago, the economy was brought to the brink of total meltdown (if you want to argue that the current state is anything dissimilar) in large part because Wall Street turned itself into a giant casino, pimping subprime loans to fuel their cocaine-addled binge on securitizing mortgage backed securities. Their accomplices were the rating agencies, who were (and as the article shows, still are) paid by the banks to issue ratings on these investments in a not-at-all conflict of interest riddled transaction. S&P's parent company, McGraw-Hill, depends on these payments for "27% of its $6.19 billion of 2010 revenues." S&P needs the banksters' business, the banksters need S&P to slap AAA ratings on their shit sandwich securities so they can make giant rips selling these scams to unsuspecting investors as solid investments. 

I would go on to discuss how this scenario from the financial crisis differs from current practice, but as the article shows, there is very little daylight between the two. Oh, well Dodd-Frank "tries" to make the banks and ratings agencies less reliant on one another, but an army of bankster lobbyists is presently ensuring that never happens since the law was weak at best and most of its rules have yet to be written or enacted. 

So there you have it. To summarize: the ratings agencies and banksters are still up to the same shit that fueled the global financial crisis, there have been no indictments of high-level banksters to date despite the widespread evidence of massive fraud and consumer and investor abuse, and the Obama administration presently wants to settle with the banksters and shield them from all future claims, litigation, and liability. 

I think I've ended a number of Wall Street related posts before with a similar tag line, but it bears repeating ad nauseum. The criminals from the biggest organized crime ring of the last 20 years savaged the global economy, caused trillions in losses  to households and investors alike, and they walked away scot free. And now they're back to those very same corrupt practices. If you ever needed a prime example of how justice is selectively applied in this country, look no further.

The Fragile Enterprise System

Hang on, let me roll my eyes some more:

The names have become synonymous with corporate wrongdoing — and forceful prosecution: Not just Enron, but also WorldCom, Tyco, Adelphia, Rite Aid and ImClone. In the early part of the last decade, senior executives at all these companies were convicted and imprisoned.

But by 2005, a debate was growing over aggressive prosecutions, as some business leaders had been criticizing the approach as perhaps too zealous.

That May, Justice Department officials met ahead of a session with a cross-agency group called the Corporate Fraud Task Force. It was weeks after Justice Department lawyers had presented to the Supreme Court their case against Arthur Andersen, which was seeking — successfully, it would turn out — to overturn its criminal fraud conviction in a prominent case.

In the meeting, the deputy attorney general at the time, James B. Comey, posed questions that surprised some attendees, according to two people there who asked to remain anonymous because they were not supposed to discuss private meetings.

Was American business being hurt by the Justice Department’s investigations?, Mr. Comey asked, according to these two people, who said they thought the message had come from others. He cautioned colleagues to be responsible. “It was a total retrenchment,” one of the people said. “It was like we were going backwards.”

Read the whole thing. It details how our lazy third world joke of a regulatory structure has granted us the awesome reality in which we will probably never see high-level prosecutions from the financial crisis, because that might be too "zealous" or "hurt American business."

But hey, we may get like a million bucks or two, and then we can all pat ourselves on the back for a job well done and that the banksters feel really, really sorry for what they did. And it'll never happen again! 

I love the smell of the free market in the morning.

Cheating Made Painless

I know this is a very difficult concept to comprehend, but when the marginal benefits of cheating far exceed the marginal costs, people are going to keep cheating:

SEC Enforcement Director and former Deustche Bank general counsel Robert Khuzami boasting about the latest slap on the wrist directed at a major bank, this time a $228 million fine of JP Morgan Chase for a bid-rigging scheme involving municipal bonds. The Chase ruling is the latest to come down in a series of fines involving a number of banks, including Bank of America and UBS.

This is one of the best examples we’ve had yet of the profound difference in the style of criminal justice enforcement for the very rich and connected, versus the style of justice for everyone else. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.

What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.

This is absolutely no different from what mafia groups in New York used to (and probably still do) do for public contracts – the proverbial five families would get together, divide up the boroughs and neighborhoods between them, and each family would individually buy or intimidate their way into the bidding process, corrupting the game so that the public had to overpay for their garbage collection or their construction labor or whatever. The only difference here is that we’re talking about debt, not garbage. But the concept is exactly the same; it’s the same crime.

If Khuzami’s defendants had been a bunch of Italians from Howard Beach, they would be facing RICO charges and would be looking at years in prison, plus seizure of all their ill-gotten gains, in addition to civil suits and penalties...But if the defendants are a bunch of Ivy-League educated bankers from Wall Street, what we end up getting is a negligible fine (officials will brag about this $228 million, but it’s a drop in the bucket compared to what the banks make scamming communities and governments) and, as always, no admission of guilt. This is how the SEC’s own press release reads:

Without admitting or denying the allegations in the SEC’s complaint, JPMS has consented to the entry of a final judgment enjoining it from future violations of Section 15(c)(1)(A) of the Securities Exchange Act of 1934 …

As it is, as my friend Eric points out, the endgame for banks like Chase is, “Admit nothing, pay two hours of revenue and all good!”

By accounting terminology, I think you would call this "provision for bad debts bets." This is simply a cost of doing business, and this will continue into perpetuity as long as the toothless ass clowns at the SEC allow it. 

Can you ever imagine this ridiculous standard applying to an average citizen? Say you get pulled over for doing 95 mph through a school zone. A cop is never going to say to you, "Well I'm sorry to inconvenience you, please just pay this $5.00 fine and I'll be on my way. Oh, and I won't make you admit any wrong doing. Again, really, really sorry to bother you." Hell no. The fines for such civil indiscretions are enormous, even doubled in school zones. And they are that way for a reason - they want the fiscal penalties to be painful and immense to the average driver's pocketbook so as to discourage that very kind of behavior. A Wall Street firm that makes close to $6 billion in a mere three months is not going to be dissuaded from its illicit activities when it faces no criminal indictments and is permitted to cough up what amounts to its budget for hookers and blow for a week to atone for its actions.