Government won’t prosecute Goldman Sachs in fraud probe

I hate when that happens. On Thursday I posted this, secretly hoping I'd be proven ever so wrong:

[I]f Goldman is a proxy for Wall Street money, Obama was seriously bought by the banks in 2008.

The payback — zero banking prosecutions, including for billionaire thief (and Obama fundraiser) Jon Corzine, who will never see a courtroom or handcuffs.

It's the way it works, folks. Obama is employed, a wage-slave, just like you and me. Meet his paymasters.

As I say, I really want to be wrong about this stuff. Who wants to live in a country as corrupt as this one?

Now just one day later, turns out I was ever so right (my emphases and paragraphing; h/t Jordan Banks via Twitter):

The Justice Department said Thursday it won’t prosecute Wall Street firm Goldman Sachs or its employees in a financial fraud probe. In a written statement, the department said it conducted an exhaustive investigation of allegations brought to light by a Senate panel investigating the 2008-2009 financial crisis.

“The department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time,” the department said.

Bottom line — DoJ lets Goldman skate free.

It's at the discretion of the prosecutor whether to prosecute.

Some prosecutors — for example, in cases involving petty (brown-skinned) street crime — need only something approximating the possibility of a conviction, or near enough, so long as they have a single shaky witness from blocks away who might even look credible if cleaned up (or "coached").

Other prosecutors — for example, in cases involving Jon Corzine or others of Our Betters — need no less than a "smoking gun" plus crime scene photos of the perp as the bullet leaves the chamber — without which, they say, they just don't have enough to go to trial (do click, my characterization isn't far off; and yes, that's our hero Pat Fitzgerald talking).

Thus it is with Obama's Justice Dept — which in fine Bush II tradition, is no longer just the nation's Justice Dept.:

Four years ago, employees of New York-based Goldman gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama.

For what it's worth (not much apparently) this is the evidence from the Senate that Obama's DoJ decided wasn't enough (note: Senate panels conduct inquiries under oath):

A Senate subcommittee chaired by Sen. Carl Levin, D-Mich., in April 2011 found that Goldman marketed four sets of complex mortgage securities to banks and other investors but that the firm failed to tell clients that the securities were very risky.

The Senate panel said Goldman secretly bet against the investors’ positions and deceived the investors about its own positions to shift risk from its balance sheet to theirs. ...

The Justice Department’s decision capped a good day for Goldman as the Securities and Exchange Commission decided not to file charges against the firm over a $1.3 billion subprime mortgage portfolio. ...

Note the hippie-bashing in the sentence following the last one. The source for the Sun-Times article is the AP.

If this isn't fraud, nothing is fraud (so long as the perp is Goldman). And yes a very "good day for Goldman". Are we a banana yet, or just headed that way?

Now me, more directly. The Nixon pardon was ground zero for loss of Rule of Law. First it was one man, president-cum-king, the top guy, who could not be prosecuted. When Nixon said this —

"When the president does it, it's not illegal."

— he had managed through his pardon to make himself correct.

Next, under Bush I, the circle of "unprosecutables" opened to include the cabinet, Weinberger et al. Today it includes any major banker, even known thief (and Obama fundraiser) Jon Corzine.

The circle of protection is still widening. I'd watch the Sheldon Adelson news if I were you. If Adelson can't be prosecuted — not convicted, that's for a jury; just prosecuted — you'll know the umbrella of immunity has opened further.

My sad prediction — Adelson skates, never sees a courtroom. What's the script? The Rs charge "political prosecution" and Holder backs down.

The result? Now no one funding a political campaign above a certain dollar amount can be brought to trial for anything but the personally-murdered recently dead (plus witnesses).

"On a scale from one to America, how free are you?" Not free enough, I suspect.

GP

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Taibbi and Spitzer on LIBOR: The business model of the banks "is corrupt and rotten to its core"

A nice three-way discussion between Eliot Spitzer (who's met corruption face to face), Matt Taibbi (who writes about it almost daily), and Dennis Kelleher (who has represented banks for a living).

As Kelleher says at 2:10 in the clip below:

Their business model ... is based on making as much money, as quickly as possible, in any way that they can not get caught (emphasis his).

Remember, Kelleher knows these guys inside-out — as Spitzer notes, he has a history as a banking industry lawyer.

This is a guy who knows these guys. He later (8:10) calls them "not banks" but "finance and trading companies."

Great discussion. Watch:



Taibbi notes (4:30), because the BBA throws out the eight outliers in the 16 daily quotes, for LIBOR to be constantly wrong, it has to be "all of them" doing it:

It's not just five banks ... really it's going to come out that it's going to be all of them. It's "cartel-style" corruption; it's not just Barklays.

Be sure to watch Kelleher's close — it touches the political system.

(If you want a backgrounder with a little more depth, here's ours.)

GP

To follow or send links: @Gaius_Publius
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Why the U.S. Justice Dept is investigating the LIBOR scandal

This LIBOR scandal is both deep and wide. Wide enough to reach both sides of the Atlantic.

Why both sides, you ask? Good question, since LIBOR stands for the London Interbank Offered Rate. We're still digging to understand, we at La Maison, but the two bits below may help.

(By the way, you may find our earlier piece — "LIBOR for Laymen" — helpful to get you started. It explains the basics.)

■ Robert Reich says this in The Guardian (my emphasis and some reparagraphing throughout):

There are really two different Libor scandals, and both are about to hit America's shores. The first has to do with a period just before the financial crisis, around 2007, when Barclays and, presumably, other major banks submitted fake Libor rates lower than the banks' actual borrowing costs in order to disguise how much trouble they were in. This was bad enough. Had American regulators known then, they might have taken action earlier to diminish the impact of the near financial meltdown of 2008.

But the other scandal is worse, and is likely to get the blood moving even among Americans who assume they've already seen all the damage Wall Street can do. It involves a more general practice – starting around 2005 and continuing until … who knows, it might still be going on – to rig the Libor in whatever way necessary to assure the banks' bets on derivatives would be profitable. This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us – whose money they've used to make their bets – losers and chumps.

Obviously, Libor is not limited to the UK. As the benchmark for trillions of dollars of loans worldwide – mortgage loans, small-business loans, personal loans – it affects the most basic service banks provide: borrowing money and lending it out. People put their savings in a bank to hold in trust, and the bank agrees to pay interest on those. And people borrow money from the bank and agree to pay the bank interest.

Note: Two scandals.

One involves self-dealing — the banks were rigging LIBOR so derivatives deals they were involved in would be profitable. This amounts to being the both the pitcher and the umpire in a baseball game.

The other involves LIBOR as a benchmark for hundreds of trillions in other deals — loans, mortgages and contracts. If the rates are wrong, people who should have been paid a higher interest were cheated. As I said earlier, this is fraud, and the victims are world-wide, including in the U.S.

One more piece of information from Reich:

Wall Street will almost surely be implicated in the scandal. The biggest Wall Street banks – including the giants JP Morgan Chase, Citigroup and Bank of America – are likely to have been involved in similar manoeuvres. Barclay's couldn't have rigged the Libor without their witting involvement.

The reason they'd participate in the scheme is the same reason Barclay's did – to make more money.In fact, Barclays' defence has been that every major bank was fixing Libor in the same way, and for the same reason.

■ I'll have more on this scandal, including a list of which banks are LIBOR banks. These three are among them:

• The Bank of America
• JP Morgan Chase
• Citibank, NA

It may be a London rate; but it's not just London banks that set it.

GP

To follow or send links: @Gaius_Publius
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Did BP execs lie to Congress?

Obama has often been timid in his support of environmental issues, though maybe with the election coming into focus, he may be keen to connect with this group of voters. Despite his early cover for BP after the Deepwater Horizon disaster, he's received nothing but the typical bashing by Big Oil who pump millions into GOP campaign coffers.

Outside of the Republican Party, few really like Big Oil so they are always going to be an easy target. If they lied to Congress about the Deepwater Horizon accident as the Justice Department is alleging then they're going to be an even easier target.

Will the Justice Department finally get around to actual justice? It would make for a nice change after years of inaction and bootlicking for special interests.

The U.S. Justice Department is investigating whether BP executives lied to Congress about how much oil leaked in the company's 2010 Gulf of Mexico oil spill, the Wall Street Journal reported on Monday, citing people familiar with the investigation.

According to the Journal, prosecutors are looking into statements the company made to members of Congress at a closed-door briefing of members of the House Energy and Commerce Committee by officials from BP, Halliburton Co. and Transocean Ltd.

Dave Nagel, the executive vice president of BP America, and David Rainey, the company's former head of Gulf of Mexico exploration, were involved in the briefing, the Journal said.

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Justice Dept. supports right to film police

It's one of the few good moves to come out of this Justice Department. Police forces across the US have increasingly been abusing their power during legitimate protests, including taking away video recordings that show abusive police behavior. While such tactics may be normal in some countries, we should never accept that behavior in the US.

More via Wired:

In a surprising letter (.pdf) sent on Monday to attorneys for the Baltimore Police Department, the Justice Department also strongly asserted that officers who seize and destroy such recordings without a warrant or without due process are in strict violation of the individual’s Fourth and Fourteenth Amendment rights.

The letter was sent to the police department as it prepares for meetings to discuss a settlement over a civil lawsuit brought by a citizen who sued the department after his camera was seized by police.

In the lawsuit, Christopher Sharp alleged that in May 2010, Baltimore City police officers seized, searched and deleted the contents of his mobile phone after he used it to record them as they were arresting a friend of his.

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Obama transition advisor: Obama's advisers feared "revolt" if he prosecuted Bush-era war crimes

Looks like the State knows how to stand up for itself, even against an incoming president (my emphasis everywhere):

President-Elect Obama’s advisers feared in 2008 that authorities [sic] would “revolt” and that Republicans would block his policy agenda if he prosecuted Bush-era war crimes, according to [UC Berkeley Law School Dean Christopher Edley, Jr.,] who served as one of Obama’s top transition advisers.

There's a old joke that goes like this:

The new president gives his inauguration speech to wild applause, then retires with his transition team to the Oval Office to begin work. Soon one of the top career CIA officials, a man who has been in office for decades, comes to his side and whispers: "Mr. President, may I have a minute? There's something I'd like to show you."

He leads the president to a small room off the main hallway, where a DVD player and television are set up.

"Have a seat, sir," he says. "This will just take a moment."

The president sits and the CIA official starts the DVD. The president watches as the Kennedy assassination is played — shot from an angle never seen in public. It's over in minutes, and the TV screen goes black.

"Any questions, sir?" asks the CIA man.

The president returns to his office to prepare for his first day of administration.

Of course that's a joke; it's been around since Clinton days. Now back to the real world, and Naked Capitalism.

This story has a lot of angles, since Edley is dean of the faculty which includes John Yoo, Bush II's notorious torture-justifying lawyer. Another angle is — hey, this story is old; the exchange reported occurred in September 2011. Where's the press coverage? So please, go read.

I'll give you just one more snippet, about the aspect covered in the headline. Keep in mind, this information came out only because an activist asked the right question during a Q&A at a 9/11 presentation at which Dean Edley spoke. The article's author says:

The story arose because Susan Harman, a California resident opposed to torture, asked Edley a question Sept. 2 at his forum and mailed his comments to me, among others. ...

Here’s Harman’s account of her actions at the Boalt Hall forum, which focused on such goals as human rights and the rule of law:

I said I was overwhelmed by the surreality of Yoo being on the law faculty . . . when he was single-handedly responsible for the three worst policies of the Bush Administration. They all burbled about academic freedom and the McCarthy era, and said it isn’t their job to prosecute him.

Duh.

Dean Chris Edley volunteered that he’d been party to very high level discussions during Obama’s transition about prosecuting the criminals. He said they decided against it. I asked why. Two reasons: 1) it was thought that the CIA, NSA, and military would revolt, and 2) it was thought the Repugnants [sic; Harman speaking] would retaliate by blocking every piece of legislation they tried to move (which, of course, they’ve done anyhow).

Harman says that she approached Edley privately after the forum closed and said she appreciated that Obama might have been in danger but felt that he “bent over backwards” to protect lawbreakers within the Bush administration. She recalled, “He shrugged and said they will never be prosecuted, and that sometimes politics trumps rule of law.”

Thus we are where we are today. Rule of Law — We of the 99% have more than our share, and the 0.01% seem to have lost theirs.

It's important to note that this "fear of revolt" is not attributed to Obama himself, but to his transition team:

Edley confirmed to me in an exclusive email interview Harman’s quotations, and provided additional information about the transition team’s concerns. Among his important points is that transition officials, not Obama, agreed that he faced the possibility of a revolt.

There you have it. Just the messenger, folks — though it does suggest that the State has its own momentum, doesn't it?

(For longer pieces on the same subject by the same author, go here or here.)

GP

(To follow on Twitter or to send links: @Gaius_Publius)
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DOJ eyes Apple for price fixing of e-books

No, no, no. The price of books (or music or video) just happens to all be the same because like minds think alike. Everyone knows that Apple loves consumers so would never, ever do anything to mistreat them or anyone else.

The Justice Department is investigating whether deals Apple cut two years ago with the quintet of major publishers - when the consumer electronics maker launched its iPad tablet computer - were done with the intent of propping up prices for digital books, sources have said.

As part of those agreements, publishers shifted to a model that allowed them to set the price of e-books and give Apple a 30 percent cut of sales, the sources have said.

Talks between the Justice Department and some publishers had been proceeding, with settlements expected as soon as this week, one of the two sources familiar with the matter said on condition of anonymity, because the discussions were not public.

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Reagan judge freaks out in court over President's criticism of "activist" judges on HCR

Kevin Drum has the background. It's next to impossible to excerpt his post without stealing the entire thing. Just take a minute to read it, it's worth it, and short, then come back.

A few points.

1) The President was having a little fun turning the Republicans' "activist judges" rhetoric around on Republicans, and Republican judges, who seem to have no problem becoming activists when it comes to overturning health care reform or putting George Bush into office (Obama didn't mention Bush, I did).

2) It's really inappropriate for a judge to show that he's pissed off, in court, over anything the President has said.

3) It's actually kind of bizarre that the judge thought the President was saying that judges can't find laws unconstitutional. Though it is funny that when Democrats, or Democratic judges, deem any laws unconstitutional, such as those banning gay marriage or sex between gay people, conservatives are more than happy to cry "activist!"

The judge is appeals court judge Jerry Smith, a Reagan appointee in the 5th circuit.

I wonder where Judge Smith was a few years back when judges were being shot while Republicans in Congress were gleefully demonizing the entire bench. I'd like to think that Judge Smith was dutifully chastising President Bush and Republicans in  Congress for their incendiary rhetoric while judges were dying.  But sometimes you don't get what you like.

Some examples of times when I'd be curious if Judge Smith spoke out:

The time when a man offered $50,000 for the assassination of the judge in the Terri Schiavo case after conservatives savaged the judge. Any word from Judge Smith?

Things got so bad during the Schiavo affair that Supreme Court Justice O'Connor warned that the conservative rhetoric against judges could lead to violence.  Did Judge Smith speak out then?

When threats against judges surged in 2005 and 2006, just as Republicans like Frist, DeLay and Cornyn were demonizing judges left and right, did Judge Smith speak out?

When a GOP member of Congress talked about putting judges on the "endangered species list," did Judge Smith say a thing about it?

One wonders if the only thing Judge Smith is really worried about is Mitt Romney's sinking chances in November.

More from NY Magazine. Read the rest of this post...

Obama AG Holder: Obama can kill you ... any time he wants to

Did you know that U.S. President Barack Obama can now order you killed? Read on.

Barack Obama's Attorney General Eric Holder recently raised himself on his hind legs to explain to the nation what process is used to pick targets of Barack Obama's Presidential Murder Program (my caps; Holder is lowercase-modest).

This on the heels of the fact that President Barack Obama has been doing just that. Holder presumes the power; he just wants to explain the process.

(Did I say "Barack Obama" enough? I hope so.)

To explain, I give you Jonathan Turley, writing in Foreign Policy (my emphasis and much reparagraphing):

On Monday, March 5, Northwestern University School of Law was the location of an extraordinary scene for a free nation. U.S. Attorney General Eric Holder presented President Barack Obama's claim that he has the authority to kill any U.S. citizen he considers a threat.

It served as a retroactive justification for the slaying of American-born cleric Anwar al-Awlaki last September by a drone strike in northeastern Yemen, as well as the targeted killings of at least two other Americans during Obama's term.

What's even more extraordinary is that this claim, which would be viewed by the Framers of the U.S. Constitution as the very definition of authoritarian power, was met not with outcry but muted applause.

Where due process once resided, Holder offered only an assurance that the president would kill citizens with care. While that certainly relieved any concern that Obama, or his successor, would hunt citizens for sport, Holder offered no assurances on how this power would be used in the future beyond the now all-too-familiar "trust us" approach to civil liberties of this administration. ...

Holder's speech does not materially limit that claimed authority, but stressed that "our legal authority is not limited to the battlefields in Afghanistan." He might as well have stopped at "limited" because the administration has refused to accept any limitations on this claimed inherent power. ... [H]e insisted that "a careful and thorough executive branch review of the facts in a case amounts to 'due process.'"

Turley's summary:

What Holder is describing is a model of an imperial presidency that would have made Richard Nixon blush.

If the president can kill a citizen, there are a host of other powers that fall short of killing that the president might claim, including indefinite detention of citizens -- another recent controversy.

Thus, by asserting the right to kill citizens without charge or judicial review, Holder has effectively made all of the Constitution's individual protections of accused persons [into] matters of presidential discretion.

Turley has more, as do others. Please read it through.

Let me reiterate: Obama (through Holder) has turned "all of the Constitution's individual protections" of due process before incarceration or execution (state murder) into "matters of presidential discretion."

In other words, Obama can kill you ... any time he wants to. How is that not a fair description? And don't forget to note the "muted applause" in Turley's description of the speech's reception.

Might this be one of those "lines of conscience" we talked about?

GP

(To follow on Twitter: @Gaius_Publius) Read the rest of this post...

Crossing lines of conscience—Masaccio's open letter to the Obama Campaign

This will be the first of several posts — the start of a series — mapping out what I personally consider reasonable and unreasonable positions on the re-election of Barack Obama. Three things to note:

■ My goal is to help head off the intra-left tribal wars that marred the last campaign. We do not need a repeat, in my opinion.

■ I don't expect everyone who reads these posts to agree with all positions. Many positions will be mutually exclusive. But let's be smart about who we disagree with, and on what grounds. It's not just the position, it's the reason, that characterizes the reasoner.

■ I think the 2012 presidential campaign is probably over, so the Left Wars may be moot in any case. As soon as Romney secures the field, Movement Conservative Billionaires will likely see greater leverage in putting their big-money buys (sorry, campaign donations) into House and Senate races. If so, watch for a monumental flood, as presidential Super PAC dollars are freed up to overwhelm democracy in legislative contests. Goal: House & Senate in 2012.

Bottom line — Even if the presidential race is closely contested, not everyone who disagrees with you is evil, a bot-like beast. Only some of them are. Your humble correspondent (moi) would like to help you figure out who you might comfortably disagree with, and who you shouldn't. (I know: "Mommy, that man didn't say whom.")

So much for the meta; now the substance. There are a bunch of groups in the "Can't vote for Obama" camp; and a bunch in the "Must vote for Obama" camp. This post considers one group in one camp only. Other camps will get their due shortly.

Group 1 No — Crossing lines of conscience

Group 1 in the "Can't vote for Obama" crowd — no matter the other reasons for pulling that trigger — are those whose lines of conscience have been crossed.

I aim this at the people who say, "But President Santorum would take marching orders from Koch Bros Central." That's true; President Santorum would rule from Wichita (via its Wisconsin field office).

But there are those whose consciences are so offended (that's a war crimes link) that they cannot let themselves do one good thing for the perpetrator. Not one.

Unlike phony "consciences", these genuine cries of integrity must be honored, in my view, even if you tactically disagreed. You can fight a war, in other words, and still respect the Quakers.

Case in point, consider this cri de cœur from the writer Masaccio, addressed to Rufus Gifford, Obama Campaign Finance Director, who has been inundating our author with Hamburger-Today form letters. Masaccio finally writes back (my emphasis and some reparagraphing):

Rufus –

You and I have been carrying on an e-mail correspondence for some time now. You ask for money to help re-elect President Obama and hold out the possibility I might be selected to have dinner with the President. I e-mail back politely declining, usually with a brief explanation. ... [Then] Last Sunday, I got an e-mail noting that I haven’t donated, and asking me to answer a couple of questions about why. ...

[So] Let’s be clear. This isn’t 2008.

1. I won’t give any money.
2. I won’t make phone calls or travel to another state at my expense on election day to help out.
3. I haven’t decided how or whether to vote this November.*

Here’s the polite explanation. ...

Can you see where this is headed? Because Masaccio has a real-life background in securities fraud prosecution, he launches immediately into one of my favorite topics — Barack Obama, banking prosecutions, and the rule of law. After a sharp and brutal rundown of the banking crisis' history, Masaccio dryly notes:

Once we realized that legislators from both both parties in Congress were in bed with banksters and their sleazy lobbyists, it was hard to imagine decent legislation.

But I absolutely expected Obama to enforce the law. He didn’t. ... That’s a failure I can’t accept.

So, you see, I’d make a lousy dinner companion. ...

(About the last, by the way, I beg to differ.)

It seems for this writer, who was himself an Assistant Attorney General in Tennessee, the fact that Obama's Attorney General (note, not the nation's; Obama's) "can't find anyone to prosecute" despite "all the evidence collected by the Financial Crisis Inquiry Commission and the Senate Permanent Subcommittee on Investigations" — well, for Masaccio that's one bridge too far, in another country, on Mars.

Masaccio remembers Rule of Law, and may not be able to vote for its opposite. So who is evil — Masaccio, or paid-off politicians who destroy this country by letting banksters skate?

As Hamlet once said, "Oft tis seen, the wicked prize itself buys out the law." And so here.

What did we learn today?

I offer for your consideration, Rule 1 in our soon-to-be-several rules list — People who can't vote for war criminals, or paid subverters of the rule of law, are not evil. Even when they disagree with your voting recommendation.

The evil lies somewhere else.

Bonus video

Because the world should be fun, I want to repost the video that Masaccio attached to his post. It's short, it's funny, and it's apropos of, oh, you-guess. The great Tom Lehrer:



"A man whose allegiance / Is ruled by expedience." Wonder what that could mean?

GP Read the rest of this post...

Dept. of Justice makes arrests for 1%, again

You have to seriously wonder about the priorities of the US Department of Justice under Attorney General Holder. He's ignored the Wall Street problem that triggered the global recession and focused on helping the 1% in the recording industry. Now, he's going back to the well and organizing a global effort to shut down counterfeit luxury goods. How is it possible to spend so much precious bandwidth on small issues like this rather than the big issue of Wall Street? A $325 million dollar (tops) industry is a drop in the bucket compared to the trillions spent on fixing the problems created by Wall Street. This Justice Department looks a lot like what one would expect from a Republican, or even what Romney might have. CNBC:

Federal agents were in the process of arresting as many as 26 people who have been charged in the scheme to produce knock-off goods in China and sell them in the U.S., the Department said. A spokesperson told CNBC that the items mimicked by the alleged smugglers included Ugg boots, Timberland boots, Nike [NKE 108.23 -0.31 (-0.29%) ] shoes, and Burberry scarves. Other brand names impacted were Gucci, Lacoste, Coach [COH 76.9601 0.2201 (+0.29%) ], Ralph Lauren [RL 176.41 -1.50 (-0.84%) ], and Louis Vuitton. If those goods had been authentic, their total value would have been as much as $325 million, the spokesperson said. Officials called it one of the largest counterfeit goods smuggling operations ever charged.

What's next? Another Wall Street insider trading case that has nothing to do with the 2008 collapse? But of course! Read the rest of this post...

Is Preet Bharara, current Mahhattan DA, Obama's next AG?

There's speculation that Preet Bharara, current U.S. District Attorney for the southern district of New York (that's Manhattan and environs), will replace Eric Holder as Obama's AG.

The source of that rumor is Charlie Gasparino, whom Emptywheel calls a "noted Wall Street booster".

Gasparino (my emphasis):

All of the good publicity flowing from the crackdown on insider trading has one of the nation’s top law enforcement officials looking at what he might do in the future, and he’s seeing a lot of green.

Preet Bharara, the US Attorney for the Southern District, is telling friends that if he should leave his job today, he could earn as much as $6 million in the private sector, according to people with direct knowledge of these conversations. Bharara's private statements come as speculation grows in Washington that the politically savvy prosecutor might also replace his boss, US Attorney General Eric Holder, if President Obama wins re-election.

Let's analyze this piece. "Noted Wall Street booster" (read, go-to media mouth for Wall Street players) says Bharara is "telling friends" he could make a killing in the private sector.

Now ask yourself: How does Wall Street's top cop make a killing in the private sector? The same way everyone else in financial regulation does? (They call that "Thank You" money in revolving door parts of the world.)

Bharara's not exactly "known bad" — but if the qualification for Holder's job is "failing to prosecute" he might just fit. After all, Bharara's big-deal prosecution, of hedgie Raj Rajaratnam, was actually started under George Bush, prior to Bharara's taking office. Oops, taking false credit? Maybe that's what Gasparino means by "politically savvy":

Bharara has ruffled feathers of late among long-time prosecutors who believe he is taking undue credit for his office’s high-profile investigation into insider trading. President Obama appointed Bharara to the job in May of 2009, but the roots of the investigation began during the Bush Administration in 2007.

Not to mention, if Bharara's office found only one illegal hedgie, he's not looking. Just like the big-deal Chicago investigation into traffic-ticket-fixing some years ago, the one that found two bad lawyers and one corrupt judge. Heck, I could find ten corrupt traffic judges today; just give me a ticket and a list of law firms.

Emptywheel sums it up nicely (my paragraphing):

When ... Harvey Pitt, whose enabling of financial corruption set new standards even from the Wall Street-coddling SEC ... hails what your office is accomplishing, it usually means Wall Street crooks are getting a legal pass. As they are.

Click through for more, and don't forget to admire the nice Time magazine cover shown there. When Time pimps you as "busting Wall Street," look at your feet for the rising fog.

I have to say, though, I am disappointed in Time's cliché-checking department. I know they didn't use the phrase "blue-eyed boy" but really ... (the wonders of Photoshop).

If your little heart said, "Ah, branding" — you have a smart little heart. Yes, Time mag is part of the plan.

GP Read the rest of this post...

DOJ requests millions in 2013 budget to fight for recording industry

What surprising news on the day Obama is headed to Hollywood to raise money for his campaign. Handing over millions to the Justice Department to fight for the 1% is painfully out of touch in these times. It may not be a lot of money in the big picture, but it's also the last issue taxpayers should be funding while we're in the middle of the worst economy since the Great Depression. It's all part of the program in this era of the billion dollar campaign. TechDirt:

While the proposed Obama 2013 budget for the federal government is supposed to be about cutting extraneous expenditures, one area where it's seeking more money is to expand the Justice Department's copyright enforcement efforts. You see, this is what happens when you hand the Justice Department over to the RIAA and MPAA. DOJ is seeking an extra $5 million to focus on these kinds of efforts, to hire 14 new employees, including nine lawyers, claiming that it's "had an increase in the number of cases that we're dealing with in IP."

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Was MegaUpload shut down because it challenged the RIAA music business model?

The headline asks one of those questions that really is a question. Sometimes criminals are put out of business because they are criminals. Sometimes one criminal is chosen over other criminals because his sister wouldn't date the cop on the beat.

Here's the "RIAA wants me dead" part of the MegaUpload story, told first-person by MegaUpload founder Kim Dotcom (yes, that does seem to be the name). His article is wandery, and includes info about Kim's supposed wicked past, his explanations, and some background on the production of his song "Megasong".

Do read, but for me, that part's in the weeds, at least at my present level of understanding. What woke me up was this (my emphasis):

UMG [Universal Music Group, the former MCA Records] knows that we are going to compete with them via our own music venture called Megabox.com, a site that will soon allow artists to sell their creations direct to consumers and allowing artists to keep 90% of earnings.

We have a solution called the Megakey that will allow artists to earn income from users who download music for free. Yes that’s right, we will pay artists even for free downloads. The Megakey business model has been tested with over a million users and it works. You can expect several Megabox announcements next year including exclusive deals with artists who are eager to depart from outdated business models.

You need to understand that some labels are run by arrogant and outdated dinosaurs who have been in business for 1000 years. These guys think an iPad is a facial treatment, the Internet is the devil, and wired phones are still hip. They are in denial about the new realities and opportunities. They don’t understand that the rip-off days are over. Artists are more educated than ever about how they are getting ripped off and how the big labels only look after themselves.

Dinosaur labels don’t have the answers to today’s new realities. UMG chose to willfully sabotage our campaign instead of analyzing the situation and seeing that the answers to all their problems are right in front of them.

In parallel UMG were calling up all the artists who endorsed us telling them that they are endorsing piracy. That they are working with a convicted felon. That they are losing money because of us. They are trying to force the artists to issue statements against their endorsements and agreements. They are burning their own talents. And I wouldn’t be surprised if some of them fold under this enormous pressure.

Read that a couple of times. There's much there, but the assertion is clear: UMG is trying to kill a new business model for music ownership and delivery that challenges their revenue stream and that of their industry.

(More on MegaBox here.)

How different is this, if true, from the MPAA (Motion Picture Assn of America) trying to outlaw all VCR sales in the U.S. to kill a delivery system that could cut into their revenue stream? The takedown argument in both cases is (gasp) there are thieves in the world.

The story needs leg-work to verify all the threads, but this thread is certainly one of them. The head of MegaUpload, right or wrong, is a primary source and deserves to have his story told for its own sake.

Some background:

    ▪ Read about UMG here: they're the biggest music company in the world. Their trade association (mega-lobbyist) is the RIAA (more here). The relationship between the RIAA and UMG is the same as the relationship between the MPAA and Sony Pictures.

    ▪ The big enchilada. "Music publishing" rights are the real pot of gold in the music business. Owning the publishing rights to a song means owning the song itself, not just a version of it. When record labels used to sign new artists, they got them to sign away the publishing rights to their own songs as part of the deal. Most new artists had no clue what they were giving up and signed. (Talk about theft!)

To perform a song publicly, you need permission from the "owner" first, and you must pay him or her. When your four-year-old daughter sings "Yesterday" with feeling but without permission, and you post that to YouTube, you're a thief.

How does this relate to UMG? If a new artist doesn't have to go to people like UMG to make recordings, they aren't meat for the simultaneous "theft" (ignorant signing away) of their publishing rights in the same contract. A lose-lose for UMG.

Is the MegaBox model part of the story? Most of the story? Any of it? Time and research will tell.

But keep in eye on the money. Artists who bypass the predators and go directly to digital markets threaten the dollars these dinosaurs devour every day of their lives. And like all monomaniacs, corporate persons want only one thing — money. No other thing in the world matters to them; it's the law.

GP Read the rest of this post...

MegaUpload-type shutdowns could kill the Cloud Storage model

More on the implications of the MegaUpload shutdown from writer George Washington at Naked Capitalism (my emphasis everywhere):

The government’s takedown of the 800 pound gorilla online storage site Megaupload may have killed the cloud storage model.

Many innocent users have had their data taken away from them.

Keep in mind that MegaUpload had at least two capabilities — file-hosting and video-hosting (Megavideo). I suspect that the biggest problem for the money-soaked MPAA was the videos, though you can also share HD video files at a file-sharing site.

The author then quotes PC World:

The MegaUpload seizure shows how personal files hosted on remote servers operated by a third party can easily be caught up in a government raid targeted at digital pirates. ... Before its closure MegaUpload had 180 million registered users and an average of 50 million daily visits, claimed a total visitor history of more than one billion, and accounted for about four percent of all global Internet traffic[.] ...

And there are lots of MegaUpload-type sites. Back to PC World:

Take, for example, Videobb.com, a site that appears to be similar to Megavideo. Videobb bills itself as an ideal place to share videos without ever having to worry about “disk space or bandwidth again.” Videobb is “safe, secure and easy” the company says, and that’s probably true; at least unless the FBI and the Department of Justice decide that videobb is ripe for a takedown. Behind the scenes, videobb is rife with pirated content just as Megavideo was.

A quick check of sites that index pirated content shows you can find recent episodes of The Big Bang Theory, Modern Family, and the recent movie Contagion available for free streaming on Videobb.

And that doesn't begin to consider the wealth of file-sharing sites like RapidShare, Hotfile, and all the others. Back to the author:

In other words, the government is exercising the power to seize all of the legal property held in a storage facility because a handful of crooks have illegal property in theirs.

And if that’s not enough to kill your enthusiasm for cloud storage, CIO points out:

Worries have been steadily growing among European IT leaders that the USA Patriot Act would give the U.S. government unfettered access to their data if stored on the cloud servers of American providers—so much so that Obama administration officials this week held a press conference to quell international concern over the protection of data stored on U.S. soil.

So there are a couple of issues here. One is drug-enforcement–style property seizure. What if your company used that site (or a site like Dropbox) to store rapidly changing files (for example, within an active work-team), but backed them up only once daily (or, gasp, never)?

Another is death of businesses that sell such services. As the articles above make plain, who would trust their files to the U.S. Security State? No I, said the little red hen.

But the worst of the issues? Death of the gifts of the digital gods by "property rights" freaks who want the last dollar on the table to be theirs. They're willing to kill the market to keep the 10% theft (for example) at bay.

Look, the nature of digital "property" implies easy theft. Get over it. If the MPAA had their way, VCRs would have been banned in the U.S. Think I'm kidding? The Google (heh) is your friend — for now.

Which brings us to ... Senator Al Franken. Is he really Stuart Smalley on this one issue only, or is that just a clever disguise? You could ask him: 202-224-5641 or 651-221-1016.

GP Read the rest of this post...

Megaupload owner lifestyle a big issue, so let's see Wall Street lifestyles

If this doesn't look like an orchestrated campaign to win over support for the Megaupload raid, nothing does. I could care less what Megaupload did or didn't do according to the Feds, nor do I care about the lifestyle of the owner. As I said earlier, Megaupload did not cause the global recession. Wall Street caused it. If anyone wants to get cute about the lifestyle of the Megaupload owner, how about they're a little more honest about the process and show us the daily lifestyle of those in the music and movie industry along with the lifestyle of Wall Street. They won't though because that would only make their international raid look even more ridiculous. Rapper 50 Cent seems to be doing OK despite Megaupload even with the mansion going down in price. Dr Dre? Not too shabby either. Music/movie celebrity Jennifer Lopez on a $28 million yacht. Tom Cruise seems to be living a pretty comfortable life. Do you think he worries much about making his next house payment or what happens if he loses his job during the recession? How about Lloyd Blankfein's estate? Looks pretty much like how your average middle class American home, doesn't it? Sort of like former Clinton official and Citi board member Robert Rubin's house. Blankfein also has to have a simple little flat (a walk up, no doubt) for his work weeks in New York. How about JPMorgan Chase CEO Jamie Dimon's house in Chicago that he had to sell? Yeah, pretty simple and average but hey, the poor guy had to be bailed out by taxpayers after all. So whoever is coordinating the Megaupload smear campaign, how about some honesty about the other side, including the freeloading weasels on Wall Street who had to be bailed out. With Wall Street, we don't even need to just look at the CEO's, because it's just as easy to look at It seems a little too easy to jump on this supposed scandal but ignore the real scandal that still impacts us all and will continue to impact us for years to come. Read the rest of this post...

A major Julian Assange–WikiLeaks interview in Rolling Stone

I wanted to point you to this, in case you haven't seen it yet. The estimable Michael Hastings has a major interview with Julian Assange in Rolling Stone, and it's a great read.

It's also long; abstracting and commenting on its twists and angles would make a very complicated post. So maybe it's best just to bring it to your attention and let you have at. I may come back to it later, picking at the bits.

Here's the start, a terrific piece of writing in its own right. Note the visuals, note the conclusion (sorry, my asterisk):

It's a few days before Christmas, and Julian Assange has just finished moving to a new hide-out deep in the English countryside. The two-bedroom house, on loan from a WikiLeaks supporter, is comfortable enough, with a big stone fireplace and a porch out back, but it's not as grand as the country estate where he spent the past 363 days under house arrest, waiting for a British court to decide whether he will be extradited to Sweden to face allegations that he sexually molested two women he was briefly involved with in August 2010.

Assange sits on a tattered couch, wearing a wool sweater, dark pants and an electronic manacle around his right ankle, visible only when he crosses his legs. At 40, the WikiLeaks founder comes across more like an embattled rebel commander than a hacker or journalist. He's become better at handling the media – more willing to answer questions than he used to be, less likely to storm off during interviews – but the protracted legal battle has left him isolated, broke and vulnerable. Assange recently spoke to someone he calls a Western "intelligence source," and he asked the official about his fate. Will he ever be a free man again, allowed to return to his native Australia, to come and go as he pleases? "He told me I was f*cked," Assange says.

I've been calling Assange a classic case of "stain on the pavement" material. But maybe they've gotten more sophisticated — death-by-miserable-life, a fate Assange may well share with Bradley Manning. After all, it saves on all that "pressure-washing the concrete" money, and it's more fun for the torturer if the victim lingers, broken.

Anyway, please go read. It's engrossing and thought-provoking. This fight will not get less messy — it's widening as we speak.

GP Read the rest of this post...

Reuters discovers that Attorney General Holder deeply linked to big banks

Surprise, surprise. Who would have guessed that top Justice Department honchos would show such little interest in prosecuting Wall Street after working for them for years?  It's a lot easier to chase side shows like insider trading cases or chasing file sharing sites. Sure they don't address the real problems of the day, but Washington insiders are too concerned with their own future career paths to really care.

The never-ending, cross-party revolving door in Washington has to stop. They're fleecing America, and care more about themselves than they do the country. Reuters:

U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows. The firm, Covington & Burling, is one of Washington's biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for. Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

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Megaupload didn’t ruin the economy, Wall Street did. One gets shut down, other gets bonuses.

Putting aside whether Megaupload is truly dangerous and a pirate haven or not, it didn't cause the global economic collapse.  Yet it was shut down yesterday, while the barons of Wall Street remain unscathed.

Megaupload had nothing to do with the ugly unemployment numbers that are likely to stick around for years. It had nothing to do with families being thrown out of their homes. It had nothing to do with retirement accounts being slashed in half. It had nothing to do with the rapidly increasing divide between the middle class and the super-rich. It had nothing to do a lousy economy that is going to hang around for many more years. How is it possible that the feds can organize a global program to hunt down the owners of a Web site and shut it down (protecting the 1%) when they can't even be bothered to prosecute Wall Street for ruining the economy (again protecting the 1%)?

Outside of the movie and music industry, few give a damn about Megaupload - but everyone still cares a lot about the crisis that Wall Street brought down on our heads and pocketbooks. We also continue to be upset that Wall Street bonuses - even though they are being reduced - will still be considerably more than most Americans can expect to get for years to come. Even people working in industries with similar experience and backgrounds don't make the crazy money that is still being offered on Wall Street.

How about some real justice for a known problem rather than this side show to make the movie and music industry happy. Read the rest of this post...

Justice Dept. knocks down SC voter ID law

It's good to see that Attorney General Holder has managed to find something worthwhile to do rather than sucking up to the recording industry. This is what Democratic voters want to see from the Justice Department. Now onto the other states with similar racist laws.

Republican Gov. Nikki Haley in May signed into law a measure that says voters must show a driver's license, passport or military identification along with their voter registration card in order to vote. Under the law, anyone who wants to vote but does not have a photo identification must obtain a new voter registration card that includes a photo. A birth certificate or passport can be used to prove identity. The Justice Department said the requirement could harm the right to vote of tens of thousands of people, noting that just over a third of the state's minorities who are registered voters did not have a driver's license needed to cast a ballot.

Just in case you were wondering how the Justice Department has the power to block South Carolina's new law:

Under the landmark 1965 Voting Rights Act, certain states like South Carolina must seek approval from the Justice Department or the federal courts for changes made to state voting laws and boundaries for voting districts.

That's because certain states have historically been a bit too comfortable with racism. And it looks like certain states, and certain political parties, still are.

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