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9-11
Meta Index September 11 2001
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ACCOUNTING News:
 Christopher
Cox -  Corporate
-  Government
- Accounting
-  Law
-  Investigation
-  Politics
"SEC Chair Asked If He Deserves Blame For Wall Street Crisis: ‘Absolutely Not,’ It ‘Wasn’t The SEC’s Job’." ... "In a new interview with the Washington Post, embattled [Republican President Bush's] Securities and Exchange Commission Chairman Christopher Cox stridently “defend[ed] his restrained approach to the financial crisis.” He refused to accept any blame for the Wall Street crisis or the Madoff Ponzi scheme, saying that regulating Wall Street and protecting investors “wasn’t the SEC’s job“:" "Cox argued that the agency has carefully defined responsibilities and that it was unfair to blame it for every problem on Wall Street." ... "“The public might not understand that that wasn’t the SEC’s job,” he said, adding that the agency was not responsible for preventing investment banks from collapsing but rather for sheltering their securities trading units from problems in the broader corporation. “The SEC is not a safety and soundness regulator,” he said. [..]""In fact, the SEC’s mission statement clearly suggests that “safety” is — or should be — a primary concern of the commission:" "The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.""A review by the SEC inspector general “determined the agency’s monitoring of the five biggest Wall Street firms, which included Bear Stearns, was lacking.” (Just a few days before Bear Stearns collapsed, Cox said he had “a good deal of comfort” in the bank’s capital levels.) Another analysis showed that the SEC dramatically cut its oversight of financial trades. “In one of its core areas — regulation of Wall Street firms — its case load was down significantly,” said Ben A. Indek, a securities lawyer at the law firm that performed the analysis." ... "Cox also denied any culpability in the Madoff scandal: “When Cox was asked whether he should be blamed for a culture of lax enforcement that allowed multiple warnings about the fraud to go undetected, he said: ‘Absolutely not.’” However, a former SEC official slammed Cox for failing to prevent the Ponzi scheme: “I can’t comprehend how a well-run investigation would have missed a fraud of this magnitude,” said Lynn Turner, a former SEC chief accountant." -By Ali Frick -ThinkProgress.org
Corporate
- Government
- Accounting
- Politics
-  New
York
"AP study finds $1.6B went to bailed-out bank execs." ... "Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals." ... "The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages." ... "Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found." ... "_The average paid to each of the banks' top executives was $2.6 million in salary, bonuses and benefits." ... "_Lloyd Blankfein, president and chief executive officer of Goldman Sachs, took home nearly $54 million in compensation last year. The company's top five executives received a total of $242 million." ... "The New York-based company on Dec. 16 reported its first quarterly loss since it went public in 1999. It received $10 billion in taxpayer money on Oct. 28." ... "_John A. Thain, chief executive officer of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year." ... "Like Goldman, Merrill got $10 billion from taxpayers on Oct. 28." -By Frank Bass and Rita Beamish -AP via -Yahoo
Christopher
Cox - Corporate
- Government
- Accounting
- Law
- Enforcement
- Politics
"Who's Mess Is the S.E.C.? News Analysis: In his extraordinary mea culpa over the Madoff scandal, [Republican President Bush's Securities and Exchange Commission] S.E.C. chairman Christopher Cox accepted full blame...on behalf of his staff. But isn't he in charge?" ... "When Securities and Exchange Commission Chairman Christopher Cox made an extraordinary apology for the agency having failed to follow up on clear evidence of wrongdoing by suspected financial fraudster Bernard Madoff, he excluded one key player from blame: himself." ... "In the public statement on Tuesday, Cox laid out a blistering attack on his staff, while appearing to exonerate himself from any responsibility." ... "He said the agency's most senior officials learned only a week ago that "credible and specific allegations regarding Mr. Madoff's financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of S.E.C. staff, but were never recommended to the Commission for action."" ... ""I am gravely concerned," Cox added, "by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority [from the commission] to pursue them."" ... "Cox's decision to distance himself from the staffs' performance has rankled former senior S.E.C. officials who had nothing to do with the Madoff inquiries." ... "The S.E.C. is structured so that the chairman personally is in charge of the staff, these former agency officials said; he is in effect the agency's C.E.O. [Chief Executive Officer], with division heads reporting directly to him, and he makes decisions about staff appointments and allocation of resources." ... "As Condé Nast Portfolio magazine reported in its October issue, Cox took steps to weaken and hamstring the enforcement division." ... "He slowed down and delayed approval when staff members did ask for formal authority to investigate, and pressed the agency to focus more on penny-stock scams, boiler-room operations, and other relatively petty crimes. S.E.C. veterans said this detracted from efforts to pursue major Wall Street frauds." -By Scot Paltrow -Portfolio.com
Chris
Cox - Corporate
- Government
- Accounting
- Law
- Enforcement
- Politics
-  California
- New
York
"Cox "Worked to Dismantle The SEC," Says Commission Vet." ... "In recent years, particularly under [Republican President Bush's Securities and Exchange Commission Chairman Chris] Cox, a former California GOP [GOP=Grand Old Party=Republican] congressman, the SEC has pursued a policy of de-emphasizing enforcement, part of the broader anti-regulatory philosophy of the Bush years -- helping to make Madoff, and perhaps others like him, possible." ... ""[Cox] in many ways worked to dismantle the SEC," Ed Nordlinger, a former longtime enforcement director in the commission's New York office, told TPMmuckraker. "He slowed everything down. I don't think he believed in heavy regulation."" ... "That view has been echoed by several others in a position to know. Ross Albert told TPMmuckraker for a post published yesterday: "Under Cox, SEC had de-emphasized the enforcement program. Cox worshipped at the same altar of de-regulation that the rest of the Bush administration worshipped at."" ... "And a former enforcement division supervisor told Portfolio for a lengthy October story about the SEC under Cox: "It was like someone poured molasses on the enforcement division."" ... "The commission also appears to have passed over for promotion staff members who were too aggressive in their approach to enforcement. Veteran S.E.C. lawyer James Coffman told Portfolio that he was told he didn't get a promotion because he was "too tough." He left the SEC soon after." -By Zachary Roth -TPMMuckracker .TalkingPointsMemo
Chris
Cox - Money
- Accounting
- Politics
- New
York
"Paul Krugman: The Madoff economy." ... "The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion." ... "Consider the hypothetical example of a money manager who leverages up his clients' money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while - say, as long as a housing bubble continues to inflate - he (it's almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big - but he'll keep those bonuses." ... "We're talking about a lot of money. In recent years the finance sector accounted for 8 percent of America's GDP [Gross Domestic Product], up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing - and it probably was - we're talking about $400 billion a year in waste, fraud and abuse. But the costs of America's Ponzi era surely went beyond the direct waste of dollars and cents." ... "At the crudest level, Wall Street's ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From [Republican President] Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven't closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, [New York Democratic] Senator Schumer), politicians have walked when money talked." -By Paul Krugman -IHT.com
Corporate
- Government
- Investigators
- Politics
- Accounting
- Consumer
"Madoff misled SEC in '06, got off." ... "Securities and Exchange Commission investigators discovered in 2006 that Bernard Madoff had misled the agency about how he managed customer money, according to documents, yet the SEC missed an opportunity to uncover an alleged Ponzi scheme." ... "The documents indicate the agency had Madoff in its sights amid multiple violations that, if pursued, could have blown open his alleged multibillion-dollar scam. Instead, his firm registered as an investment adviser, at the agency's request, and the public got no word of the violations." ... "Harry Markopolos - who once worked for a Madoff rival - sparked the probe with his nearly decadelong campaign to persuade the SEC that Madoff's returns were too good to be true. In recent days, The Wall Street Journal reviewed emails, letters and other documents that Markopolos shared with the SEC over the years." ... "When he first began studying Madoff's investment performance a decade ago, Markopolos told a colleague at the time, "It doesn't make any damn sense," he and the colleague recall. "This has to be a Ponzi scheme."" -By Gregory Zuckerman -WSJ.com via -GreenwichTime.com
Corporate
- Government
-  Christmas
- Debt
-  History
- Accounting
- Politics
-  Homeowners
-  Auto
-  Military
-  Space
"Bailout payout tops $8 trillion." ... "As the holiday season commences, it’s worth taking stock of the last gift that [Republican] President George W. Bush and the 110th Congress have left for U.S. [United States] taxpayers." ... "It’s a package of about $8.7 trillion dollars’ worth of potential taxpayer commitments for loans, guarantees and other bailout goodies for businesses and distressed homeowners." ... "Amid the tissue paper:" ... "• More than $1.5 trillion in Federal Deposit Insurance Corp. [Corporation] loan guarantees, including a $139 billion assist to the lending arm of General Electric Corp." ... "• $1.8 trillion in cash, tax breaks and loan guarantees doled out from the Treasury Department to taxpayers, financial institutions and credit companies." ... "• $300 billion for homeowners from the Federal Housing Authority." ... "• $25 billion in assistance for auto companies from a program overseen by the Energy Department, which is separate from the bailout proposal that tanked last week in the Senate." ... "• And $5 trillion worth of new money, loan guarantees and loosened lending requirements from the Federal Reserve Bank." ... "According to Bianco Research President James Bianco, who crunched these numbers, that amounts to more government aid and assistance than nine other historic bailouts and big government outlays combined." ... "The New Deal, for instance, cost an estimated $32 billion in its day, which would be about $500 billion in today’s dollars. The Marshall Plan cost about $12.7 billion, which is the equivalent of a paltry $115.3 billion. The Louisiana Purchase? The French got $15 million, which would be worth about $217 billion today." ... "If you take those three items, add in the adjusted costs of the Race to the Moon, the savings and loan crisis, the Korean War, the Iraq war, the Vietnam War and assistance for NASA [National Aeronautics and Space Administration ], you still get to just $3.92 trillion — not even half of the taxpayers’ exposure today, according to Bianco." -By Jeanne Cummings -Politico.com via -AP
 US
-  Iraq
-  Reconstruction
- Money
- Politics
-  Foreign
-  Production
- Accounting
- Investigations
- Federal
- History
- Military
- Law
"Official History Spotlights Iraq Rebuilding Blunders." ... "An unpublished, 513-page federal history of the American-led reconstruction of Iraq depicts an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure." ... "The history, the first official account of its kind, is circulating in draft form here and in Washington among a tight circle of technical reviewers, policy experts and senior officials. It also concludes that when the reconstruction began to lag — particularly in the critical area of rebuilding the Iraqi police and army — the Pentagon simply put out inflated measures of progress to cover up the failures." ... "In one passage, for example, [Republican President Bush's] former Secretary of State Colin L. Powell is quoted as saying that in the months after the 2003 invasion, the Defense Department "kept inventing numbers of Iraqi security forces — the number would jump 20,000 a week! 'We now have 80,000, we now have 100,000, we now have 120,000.'"" ... "Mr. Powell's assertion that the Pentagon inflated the number of competent Iraqi security forces is backed up by [Lieutenant General] Lt. Gen. Ricardo S. Sanchez, the former commander of ground troops in Iraq, and L. Paul Bremer III, the top civilian administrator until an Iraqi government took over in June 2004." ... "Among the overarching conclusions of the history is that five years after embarking on its largest foreign reconstruction project since the Marshall Plan in Europe after World War II, the United States government has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale." ... "The bitterest message of all for the reconstruction program may be the way the history ends. The hard figures on basic services and industrial production compiled for the report reveal that for all the money spent and promises made, the rebuilding effort never did much more than restore what was destroyed during the invasion and the convulsive looting that followed." ... "By mid-2008, the history says, $117 billion had been spent on the reconstruction of Iraq, including some $50 billion in United States taxpayer money." ... "Five years after the invasion of Iraq, the history concludes, "the government as a whole has never developed a legislatively sanctioned doctrine or framework for planning, preparing and executing contingency operations in which diplomacy, development and military action all figure."" ... "Titled "Hard Lessons: The Iraq Reconstruction Experience," the new history was compiled by the Office of the Special Inspector General for Iraq Reconstruction, led by Stuart W. Bowen Jr., a Republican lawyer who regularly travels to Iraq and has a staff of engineers and auditors based here." ... "The manuscript is based on approximately 500 new interviews, as well as more than 600 audits, inspections and investigations on which Mr. Bowen's office has reported individually over the years. Laid out for the first time in a connected history, the material forms the basis for broad judgments on the entire rebuilding program." ... "In the preface, Mr. Bowen gives a searing critique of what he calls the "blinkered and disjointed prewar planning for Iraq's reconstruction" and the botched expansion of the program from a modest initiative to improve Iraqi services to a multibillion-dollar enterprise." -By T. Christian Miller and James Glanz -ProPublica.org -NYTimes ""Hard Lessons: The Iraq Reconstruction Experience."" ... "The draft of a federal report by the Office of the Special Inspector General for Iraq Reconstruction. Annotations are based on the review's findings." [(PDF) Original Document] via -NYTimes
Ecuador - Audit
- Law
- Foreign
- History
-  Argentina
"Ecuador defaults on foreign debt: Ecuador is to default officially on billions of dollars of foreign debt it considers "illegitimate", says President Rafael Correa." ... "Mr Correa said he had given the order not to approve a debt interest payment due on Monday, describing the international lenders as "monsters"." ... "The president said that some of Ecuador's $10bn debt was contracted illegally by a previous administration." ... "It is the first debt default by a country in Latin America since 2001." ... "At that time, Argentina failed to repay debt in the midst of its financial meltdown." ... "His decision follows a government audit in November which recommended that Ecuador default on almost 40% of the $10bn foreign debt, accusing former officials and bankers of profiting irresponsibly from bond deals." -BBC/News
 Kevin
Martin - Corporate
- Government
- Politics
-  Telecommunications
- Accounting
- Investigation
- Consumers
-  Video
-  Media
"Congressional report: FCC chair abused power." ... "[Republican President Bush's] Federal Communications Commission Chairman Kevin Martin ignored his responsibilities as head of the regulatory body and abused his power, according to a congressional report released Tuesday." ... "Over the course of his tenure, Martin manipulated and withheld information from the other FCC [Federal Communications Commission] commissioners and from Congress, neglected his statutory responsibilities to produce certain information to Congress, and ignored evidence that certain national communications programs were being grossly mismanaged, according to the report issued by the House Committee on Energy and Commerce, titled "Deception and Distrust: The Federal Communications Commission Under Chairman Kevin J. Martin." (PDF)" ... "The committee launched a bipartisan investigation in January after hearing allegations of mismanagement from current and former FCC employees, telecommunications industry representatives, and other FCC commissioners." ... "Typically, a congressional committee would hold hearings to investigate such matters, but the report was issued in lieu of hearings because, the report says, "due to the climate of fear that pervades the FCC...we found that key witnesses were unwilling to testify or even to have their names become known."" ... "The chairman's office, the report says, ignored evidence consumers were overcharged and providers were overcompensated by as much as $100 million a year. The neglect of that information led to a windfall of millions of dollars for the largest TRS [Telecommunications Relay Service] provider, Sorenson, which covers about 80 percent of the video relay services market." ... "The report also recommends the Government Accountability Office audit the entire TRS program, including the FCC's efforts to protect the integrity of the fund." ... "The report also says Martin manipulated information given to his fellow commissioners and Congress. For instance, upon becoming chair in 2005, the report says, Martin ordered FCC staff to reverse the findings of a study, which initially said that "a la carte" cable programming would not benefit consumers. He also demoted the Media Bureau chief, who had been in charge of the study." ... "The reversal led to suspicion inside and out of the FCC that the study sent to Congress was not based on objective analysis, the committee report says." -By Stephanie Condon -CNET /News
 Washington
-Political
- Financing
- Accounting
- Investigation
- Realtors
"Realtor group's account of expenses disputed: [Washington state's Public Disclosure Commission] PDC's complaints include over-the-limit contributions to [Washington state's Republican Governor Candidate Dino] Rossi." ... "State regulators have filed their second campaign-finance complaint of the year against the Washington Association of Realtors, this time alleging that the association improperly reported its spending on Republicans in races for governor and attorney general." ... "The executive director of the Public Disclosure Commission, Vicki Rippie, filed her complaint last week, and the agency is launching a full investigation, spokesmen said this week." ... "The complaint also named the GOP [GOP=Grand Old Party=Republican] campaigns of Attorney General Rob McKenna and gubernatorial hopeful Dino Rossi." ... "The Realtors PAC and [Realtors'] Quality of Life PAC both, in effect, made over-limit contributions to Rossi of $497,806. Rossi allegedly gave fundraising help to R-PAC before it sponsored its ads." ... "The PDC allegations do go so far as to suggest that the Realtors, Rossi or McKenna conspired to get around rules that forbid coordination between campaigns and independent groups. But they do say that actions the Realtors and Mc Kenna campaign took made the PACs ineligible for independent expenditures on behalf of Mc Kenna." ... "Realtors paid $80,000 in fines earlier in the year to settle an earlier complaint over failing to fully report $953,000 in transactions during 2004-07 — including $310,000 in independent expenditures during 2004. Another $50,000 of fines were suspended on condition the group did not have further wrongdoing." (1, 2) -By Brad Shannon -TheOlympian.com
 Unemployment
- Economics
- Accounting
- Politics
"Broader Unemployment Rate Hits 12.5%." ... "The headline unemployment rate of 6.7% in November isn’t the only one the Labor Department reports. [PDF] They also break the rate down by age, gender, ethnicity, and education. And in table A-12, on page 19 of the report, they also share their broadest estimate of the unemployment rate, which includes the total unemployed (the standard rate) plus “all marginally attached workers, plus total employed part time for economic reasons… plus all marginally attached workers.”" ... "That rate (called “U-6”) in November? A whopping 12.5%." -By Kelly Evans -WSJ.com 
 Children
-  Food
- Poverty
-  Health
-  Safety
-Government
- Language
- Politics
- Economics
- Accounting
"50 percent more US children went hungry in 2007." ... "Some 691,000 children went hungry in America sometime in 2007, while close to one in eight Americans struggled to feed themselves adequately even before this year's sharp economic downtown, the Agriculture Department reported Monday." ... "The department's annual report on food security showed that during 2007 the number of children who suffered a substantial disruption in the amount of food they typically eat was more than 50 percent above the 430,000 in 2006 and the largest figure since 716,000 in 1998." ... "Overall, the 36.2 million adults and children who struggled with hunger during the year was up slightly from 35.5 million in 2006. That was 12.2 percent of Americans who didn't have the money or assistance to get enough food to maintain active, healthy lives." ... "Almost a third of those, 11.9 million adults and children, went hungry at some point. That figure has grown by more than 40 percent since 2000. The government says these people suffered a substantial disruption in their food supply at some point and classifies them as having "very low food security." Until the government rewrote its definitions two years ago, this group was described as having "food insecurity with hunger."" -By Michael J. Sniffen -AP via -Yahoo PDF: USDA.gov Report: "Household Food Security in the United States, 2007."
 Obama
- Government
- Law
- Enforcement
- Markets
- Accounting
- History
-  Enron
- Eliot
Spitzer - New
York - US
- Global
"How to Ground The Street: The Former 'Enforcer' On the Best Way to Keep Financial Markets in Check." ... "[Democratic] President-elect Barack Obama will soon face the extraordinary task of saving capitalism from its own excesses, much as [Democratic President] Franklin D. Roosevelt had to do 76 years ago. Up until this point in the crisis, policymakers have appropriately applied the rules of triage -- Band-Aids and tourniquets, then radical surgery -- to keep the global financial system alive. Capital infusions, bailouts, mega-mergers, government guarantees of unimaginable proportions -- all have been sought and supported by officials and corporate chief executives who had until now opposed any government participation in the marketplace. But put aside for the moment the ideological cartwheel we have seen and look at the big picture: The rules of modern capitalism have been re-written before our eyes." ... "The new president's team must soon get to the root causes of the mistakes that have brought us to the economic precipice. Yes, we have all derided the explosion of leverage, the failure to regulate derivatives, the flood of subprime lending that was bound to default and the excesses of CEO [Chief Executive Officer] compensation. But these are all mere manifestations of three deeper structural problems that require greater attention: misconceptions about what a "free market" really is, a continuing breakdown in corporate governance and an antiquated and incoherent federal financial regulatory framework." ... "First, we must confront head-on the pervasive misunderstanding of what constitutes a "free market." For long stretches of the past 30 years, too many Americans fell prey to the ideology that a free market requires nearly complete deregulation of banks and other financial institutions and a government with a hands-off approach to enforcement. "We can regulate ourselves," the mantra went." ... "Those of us who raised red flags about this were scoffed at for failing to understand or even believe in "the market." During my tenure as New York state attorney general, my colleagues and I sought to require investment banking analysts to provide their clients with unbiased recommendations, devoid of undisclosed and structural conflicts. But powerful voices with heavily vested interests accused us of meddling in the market." ... "When my office, along with the Department of Justice, warned that some of American International Group's reinsurance transactions were little more than efforts to create the false impression of extra capital on the company's balance sheet, we were jeered at for attacking one of the nation's great insurance companies, which surely knew how to balance risk and reward." ... "And when the attorneys general of all 50 states sought to investigate subprime lending, believing that some lending practices might be toxic, we were blocked by a coalition of the major banks and the [Republican President] Bush administration, which invoked a rarely used statute to preempt the states' ability to probe." ... "No major market problem has been resolved through self-regulation, because individual competitive behavior doesn't concern itself with the larger market. Individual actors care only about performing better than the next guy, doing whatever is permitted -- or will go undetected. Look at the major bubbles and market crises. Long-Term Capital Management, Enron, the subprime lending scandals: All are classic demonstrations of the bitter reality that greed, not self-discipline, rules where unfettered behavior is allowed." ... "Those who truly understand economics, as did Adam Smith, do not preach an absence of government participation. A market doesn't exist in a vacuum. Rather, a market is a product of laws, rules and enforcement. It needs transparency, capital requirements and fidelity to fiduciary duty. The alternative, as we are seeing, is anarchy." (1, 2) -By Eliot L. Spitzer -WashingtonPost
 Henry
Paulson
- Corporate
- Government
- Investigation
- Legislation
"Bailout Lacks Oversight Despite Billions Pledged: Watchdog Panel Is Empty; Report Is Unfinished." ... "In the six weeks since lawmakers approved the Treasury's massive bailout of financial firms, the government has poured money into the country's largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders." ... "Along the way, the [Republican President] Bush administration has committed $290 billion of the $700 billion rescue package." ... "Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed." ... "The legislation grants the special inspector, who is expected to be the primary overseer of the program, a budget of $50 million. The measure calls for him to conduct audits and investigations of how the government spends money under the bailout program, including on equity investments in firms. In particular, he is to report about any assets acquired and their value, plus an explanation of why they were acquired and details on individuals or companies involved in the transactions." ... "The leading candidate for the post is Neil M. Barofsky, a federal prosecutor in New York, and his nomination could come as soon as this week, according to people familiar with the matter." ... "For their part, lawmakers have yet to nominate the five-member Congressional Oversight Panel, though leaders of both parties said they hoped they would be named by the end of the month and start work by December." ... "The legislation also created a body called the Financial Stability Oversight Board, whose five members include [Republican President Bush's Treasury Secretary Henry] Paulson and Federal Reserve Chairman Ben S. Bernanke. But it has no staff of its own, and few expect that policymakers can conduct oversight of themselves. "It's sort of a joke in terms of oversight," a congressional aide said." (1, 2) -By Amit R. Paley -WashingtonPost
Corporate
- Government
- Politics
- Investigations
-  Massachusetts
- New
York
"Hard Times, But Big Wall Street Bonuses." ... "For Wall Street workers still employed, there could be a hefty bonus in their checks next month." ... "According to a report from financial news agency Bloomberg, Goldman Sachs, for example, has set aside $6.8 billion for bonuses, and Morgan Stanley, $6.4 billion." ... "And the chairman of the House Financial Services Committee, Massachusetts [Democratic Representative] Democrat Barney Frank, isn't happy. "These are people who lost enormous amounts of money," Frank observes. "How do you give a bonus to someone for having failed so badly as many of these people did?"" ... "What's got many on Main Street and Capitol Hill angry, [CBSNews correspondent Priya] David says, is the possibility that some of the $700 billion government bailout package could go into the pockets of Wall Streeters to pay their bonuses." ... ""All of the money is to go into new loans," Frank points out. "None of it is to go into compensation of any kind for the employees."" ... "[Democratic] New York State Attorney General Andrew Cuomo has opened an investigation into the Wall Street bonuses. He sent a letter to nine financial institutions, demanding "a detailed accounting regarding your expected payments to top management in the upcoming bonus season."" ... "Cuomo told CBS News, "These are tax dollars that are going to these institutions, and I believe the taxpayers have a right to hold the institutions accountable for what they're doing with their money."" -CBSNews
AIG
- Corporate
- Government
- Politics
- Housing
"A Question for A.I.G.: Where Did the Cash Go?" ... "The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting." ... "“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz." ... "Mr. Vickery and other analysts are examining the company’s disclosures for clues that the cushion was threadbare and that company officials knew they had major losses months before the bailout." ... "Tantalizing support for this argument comes from what appears to have been a behind-the-scenes clash at the company over how to value some of its derivatives contracts. An accountant brought in by the company because of an earlier scandal was pushed to the sidelines on this issue, and the company’s outside auditor, PricewaterhouseCoopers, warned of a material weakness months before the government bailout." ... "The internal auditor resigned and is now in seclusion, according to a former colleague." ... "These accounting questions are of interest not only because taxpayers are footing the bill at A.I.G. but also because the post-mortems may point to a fundamental flaw in the Fed bailout: the money is buoying an insurer — and its trading partners — whose cash needs could easily exceed the existing government backstop if the housing sector continues to deteriorate." (1, 2, 3) -By Mary Williams Walsh -NYTimes
Reporter
- Politics
- Government
- Financial
-  Social
Security - Accounting
- 2008
Election
"If Social Security Was a Private Corporation Then it Would Sue Tom Brokaw for Every Penny He Has." ... "If a news reporter deliberately makes a false statement claiming that a private company like Boeing or Microsoft is going broke, the company has the right to sue the reporter and the news agency. That is why reporters rarely make statements like Microsoft or Boeing (or Lehman Brothers, AIG, or Goldman Sachs) are going broke." ... "However, reporters can freely impugn the financial health of a government program like Social Security because a government program cannot sue for libel. That is why Brokaw knew that he could imply that Social Security is going broke, even though it is not true. Social Security cannot sue Brokaw even if he deliberately tells explicit lies about its financial health." ... "Those who are interesting in learning about the true state of Social Security's financial health can find out by looking at the non-partisan Congressional Budget Office's website [PDF]." -By Dean Baker -Prospect.org
Financial
- Crisis
- Politics
- Government
"Bailout Could Deepen Crisis, CBO Chief Says: Asset Sales May Lead to Write-Downs, Insolvencies, Orszag Tells Congress." ... "The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis." ... "During testimony before the House Budget Committee, Peter R. Orszag -- Congress's top bookkeeper --said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems." ... ""Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."" ... "In an interview later yesterday, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company." ... "Such companies "look solvent today only because it's kind of hidden," Orszag said. "They actually are insolvent" already, he said." (1, 2) -By Frank Ahrens -WashingtonPost
US
- Iraq
- Investigators
- Reconstruction
- Accounting
- Politics
"$13 Billion in Iraq Aid Wasted Or Stolen, Ex-Investigator Says." ... "A former Iraqi official estimated yesterday that more than $13 billion meant for reconstruction projects in Iraq was wasted or stolen through elaborate fraud schemes." ... "Salam Adhoob, a former chief investigator for Iraq's Commission on Public Integrity, told the Senate Democratic Policy Committee, an arm of the Democratic caucus, that an Iraqi auditing bureau "could not properly account for" the money." ... "While many of the projects audited "were not needed -- and many were never built," he said, "this very real fact remains: Billions of American dollars that paid for these projects are now gone."" ... "He said a report that went to Iraqi Prime Minister Nouri al-Maliki and other top Iraqi officials was never published because "nobody cares" about investigating such cases. Many investigators, he said, feared for their safety because 32 of his co-workers have been murdered. " -By Dana Hedgpeth with contributions by Julie Tate -WashingtonPost
Henry
Paulson
- Corporate
- Government
- Illegal
- Accounting
- Politics
- History
- US
- Global
"Can you trust a Wall Street veteran with a Wall Street bailout?" ... "Making the rounds on the Sunday morning talk shows, [Republican President Bush's] Treasury Secretary Henry Paulson repeatedly said today's financial problems were long in the making. He should know. He was part of the Gold Rush that has brought the global financial system to the brink of collapse." ... "Paulson presided over one of the most profitable runs on Wall Street as chairman and chief executive officer of investment banking titan Goldman Sachs & Co. from 1999 until [Republican] President Bush nominated him on May 30, 2006 to take over the Treasury Department." ... "But with Paulson now seeking virtually unfettered authority to administer the largest bailout of the financial industry in U.S. [United States] history, many are wondering whether Paulson also doesn't come with enormous potential conflicts of interest." ... "Paulson has surrounded himself with former Goldman executives as he tries to navigate the domino-like collapse of several parts of the global financial market. And others have gone off to lead companies that could be among those that receive a bailout." ... "The administration's draft law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity." ... "The Treasury proposal sent to Congress also offers no process to hire asset managers in an open and competitive process. That's particularly questionable given that Wall Street players are now hiring Wall Street players, Rosner said." ... ""This seems to invite a risk of collusion between sellers and buyers to the detriment of the taxpayer," he wrote." ... "At a minimum, there's irony in Paulson being in charge of so large a bailout." ... "In the last annual report at Goldman that Paulson signed off on in November 2005, a year in which he received $38 million in compensation, investors were clearly told that the federal government wouldn't be there to save them from bad investments." ... "In 2002, Paulson received $12.1 million in compensation, including a $6.3 million bonus — an improvement over the previous three years when Wall Street accounting scandals unsettled investment banks, including a $1.5 billion settlement Goldman and other banks paid for issuing overly bullish research reports that promoted deals the banks themselves were involved in." ... "Published reports said Paulson received $30 million in compensation and salary in 2003." -By Kevin G. Hall -McClatchyDC.com
Money
- Politics
- Jobs
- Federal
- History
"Democrats are better for the economy than Republicans." ... "The figures below are all from the annual Economic Report of the President, and the analysis is primitive. Nevertheless, what these numbers show almost beyond doubt is that Democrats are better at virtually every economic task that is important to Republicans." ... "This exercise implicitly assumes that lower taxes are always good and higher government spending is always bad. " ... "The only point is that if you find the Republican mantra of lower taxes and smaller government appealing, and if you care only about how fast the economy is growing, not how that growth is shared, you should vote Democratic." ... "On average, in years when the president is a Democrat, the economy grows faster; inflation is lower; fewer people can't find a job; the federal government spends a smaller share of GDP, whether or not you include defense spending; and the deficit is lower (or—sweet [Democratic President] Clinton-years memory—the surplus is higher)." -By Michael Kinsley -Slate
Corporate
-  Oil
- Government
- Political
- Accounting
- Legal
- Investigation
-  Drugs
"Sex, drug use and graft cited in U.S. agency scandal." ... "As Congress prepares to debate expansion of drilling in taxpayer-owned coastal waters, the Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal — including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct." ... "In three reports delivered to Congress on Wednesday, the department's inspector general, Earl E. Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government's largest sources of revenue other than taxes." ... ""A culture of ethical failure" pervades the agency, Devaney wrote in a cover memo." ... "The reports portray a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the [Republican President] Bush administration's watch." ... "The highest-ranking official criticized in the reports is Lucy Denett, the former associate director of minerals revenue management, who retired earlier this year as the inquiry was progressing." ... "One former official named in the report, Jimmy Mayberry, pleaded guilty to a felony conflict-of-interest charge in August and faces a sentence of up to five years in prison and a $250,000 fine." ... "In late 2002, when he was about to retire from the government, Mayberry drafted a "statement of work" for a consulting contract to perform essentially identical functions to his own. He then retired, started a company, and in June 2003 won the contract with the help of Denett and Milton Dial, another friend at the agency who later went to work for Mayberry." ... "Denett did not return a message left at her home on Wednesday with her husband, Paul Denett, who was the top procurement official in the [President Bush] White House Office of Management and Budget until he resigned this month. He declined to comment." ... "The other high-ranking official the Justice Department has declined to prosecute is Gregory Smith, the former program director of the royalty-in-kind program." ... "Some 19 officials — a third of the program's staff — took gifts from oil and gas executives, some with "prodigious frequency."" ... "On one occasion, the report said, the royalty-in-kind program allowed a Chevron representative who won a bid to purchase some of the government's oil to pay taxpayers a lower amount than his winning offer because he said he had made a mistake in his calculations. A report from Devaney's office earlier this year found that the program had frequently allowed companies that purchase the oil and gas to revise their bids downward after they won contracts. It documented 118 such occasions that cost taxpayers about $4.4 million in all." (1, 2, 3) -By Charlie Savage -NYTimes via -IHT.com 
 Sarah
Palin -  John
McCain - Money
- Politics
- Accounting
-  Alaska
-  Wisconsin
- 2008
Election
"Plane Not Sold on eBay." ... "One of the compelling anecdotes about [2008 Election Republican Vice Presidential Candidate] Sarah Palin is that she auctioned off the Alaska governor's jet on eBay after taking office -- a swift move made by a reformer hoping to clean up the excesses of her predecessor." ... "But in fact, the jet did not sell on eBay. It was sold to a businessman from Valdez named Larry Reynolds, who paid $2.1 million for the jet, shy of the original $2.7 million purchase price, according to contemporaneous news reports, including a story in the New York Times." ... "Dan Spencer, the director of administrative services for Alaska's Public Safety Department, said that the Republican speaker of the Alaska House, John L. Harris, brokered the deal. Reynolds made campaign contributions to both Palin and Harris in 2006 and 2007." ... "But that hasn't stopped Palin, or John McCain, from implying -- and, on Friday, claiming outright -- that Palin did sell the jet on the Internet." ... ""You know what I enjoyed the most? She took the luxury jet that was acquired by her predecessor and sold it on eBay -- and made a profit!" [2008 Election Republican Presidential Candidate John] McCain declared in Wisconsin at a campaign stop on Friday." -By Anne E. K |