Tuesday, May 5, 2009

Walk Away Mysteriously

The NY Times is reporting that the DoJ's draft report on the torture memos will recommend a grand total of zero prosecutions.
An internal Justice Department inquiry into the conduct of Bush administration lawyers who wrote secret memorandums authorizing brutal interrogations has concluded that the authors committed serious lapses of judgment but should not be criminally prosecuted, according to government officials briefed on a draft of the findings.

The report by the Office of Professional Responsibility, an internal ethics unit within the Justice Department, is also likely to ask that state bar associations consider possible disciplinary action, including reprimands or even disbarment, for some of the lawyers involved in writing the legal opinions, the officials said.

The conclusions of the 220-page draft report are not final and have not yet been approved by Attorney General Eric H. Holder Jr. The officials said it is possible the final report might be subject to revision, but they did not expect major alterations in its main findings or recommendations.
Reprimands! Why that'll teach them.

Look, disbarment is the absolute minimum these scumbags should face, and in the case of Jay Bybee, impeachment and then disbarment. But for the most part these guys will walk, just like the rest of the Bushies. Washington doesn't care and never will. Obama will continue to cite "moving forward".

And we torture people and reserve the right to do so again.

Great country we live in, huh?


It's just not fair. Mean old Obama is apparently threatening Chrysler's creditors with political retribution if they don't accept taking pennies on the dollar and keeping the company going.
The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking "end justifies the means" group they have ever encountered. Another characterized Obama was "the most dangerous smooth talker on the planet- and I knew Kissinger." Both were voters for Obama in the last election.

One participant in negotiations said that the administration's tactic was to present what one described as a "madman theory of the presidency" in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.

The White House has denied the allegation that it threatened Perella Weinberg.

Gosh, Obama's just the worst excuse for a human being ever picking on those poor, defenseless corporate bondholders.

Only one problem. The story's completely fabricated rumor-mongering.

This morning, ThinkProgress documented a series of facts about how right-wing radio helped push a false political attack against President Obama. The attack began with a false assertion made by a corporate lawyer named Tom Lauria who appeared on a conservative radio show. The comment was taken up by a right-wing radio host who works for ABC. The story then got the attention of ABC’s Jake Tapper who took it to the White House for comment (the White House denied it). And finally, it ended up on Drudge. An ABC News spokesperson issued a statement to ThinkProgress denying that Tapper first learned of the story from a right-wing radio host. ABC explains that Tapper simply “overheard” an unnamed radio reporter talking about the matter:

Your assertion that Jake reported on this matter because he was encouraged to do so by conservative talk radio hosts or their listeners is inaccurate. No one pressured him, no one peddled anything to him, and no one reached out to him to cover this. Indeed, the first he heard of Mark Levin pushing this story was in your post.

Jake first heard of this story when he overheard a radio reporter talking about Mr. Lauria’s interview with WJR-AM. Having covered the Chrysler deal for ABC News, and having spoken to many Obama administration officials about the hedge funds whom President Obama disparaged, Jake was also interested in hearing the other side of the story.

He did due diligence on Lauria, found he was a leading bankruptcy attorney who represents players in this debate, with no discernible partisan bias, and called him up. He also reached out to the White House and got its denial of the story. Your implication is completely different from what actually happened.

By reporting the story, Tapper chose to accept the validity of Lauria’s claim that the White House could get “the full force of the White House press corps” to threaten a private company. Despite the fact that the parties with direct knowledge — the White House and Perella Weinberg — denied to ABC that any threats were made, Tapper still reported Lauria’s false accusation on his “Political Punch” blog. Drudge and other right-wing outlets are glad he did.

The Chrysler creditor arm-twisting story is pretty much a lie, denied by all parties involved. but it hasn't stopped more vicious rumors from magically coming forth from the Wingerverse, not to mention brutal attacks on President Obama from the usual suspects.

After all, Barack is just a horrible person for making business follow the rules.

[UPDATE] But let's not kid ourselves, Chrysler's creditors are after money, money, money and have every reason to try to slime the White House to divert the narrative.

I Do Not Believe That Word Means What You Think It Means

Steve Benen nails the GOP/Village Idiot definition of "bipartisan" cold (emphasis mine):
Karen Tumulty shares an important anecdote about negations over health care reform.

When Barack Obama informed congressional Republicans last month that he would support a controversial parliamentary move to protect health-care reform from a filibuster in the Senate, they were furious. That meant the bill could pass with a simple majority of 51 votes, eliminating the need for any GOP support for the bill. Where, they demanded, was the bipartisanship the President had promised? So, right there in the Cabinet Room, the President put a proposal on the table, according to two people who were present. Obama said he was willing to curb malpractice awards, a move long sought by the Republicans and certain to bring strong opposition from the trial lawyers who fund the Democratic Party.

What, he wanted to know, did the Republicans have to offer in return?

Nothing, it turned out. Republicans were unprepared to make any concessions, if they had any to make.

So far, we've seen quite a bit of this when the president and the shrinking congressional minority disagree. President Obama sought a stimulus package, for example, and hoped to win over Republicans with a healthy dose of tax cuts. What did Republicans respond with? Nothing, except a counter-proposal with nothing but huge tax cuts.

The president also wants health care reform. He doesn't want to curb malpractice awards, but he's willing to compromise and make concessions to win over Republicans. What is the GOP willing to compromise on? Not a thing. They want the folks who won the elections and are pushing a popular idea to move closer to them -- in exchange for nothing.

As Matt Yglesias explained, "I think it makes a certain amount of sense for a battered minority party to say to hell with bipartisan compromise, now it's your turn to govern by your ideas and pay the consequences when they fail. But that's not really what's happening here. Instead the minority whines that White House isn't doing enough to compromise, but doesn't actually want any kind of compromises."

Compromise is a two-way street. Time and time again Obama offers to do X or Y, and the Republicans respond by saying "Well, you're a bit closer to our position now. Keep going."

The Village is just as bad, all the screaming and pearl-clutching about sensible centrism that you hear from cement-headed old fools like David Broder, Charles Krauthammer, Ross Douthat, George Will, Cokie Roberts, etc. are just filled with this kind of nonsense. They keep saying how wonderful the universe would be if Obama stopped trying to do silly things like give 45 million Americans health care and instead just let the Republicans keep running the country with the great ideas they have had for the last eight years.

Bipartisan has always been code for "let the GOP win."

Only problem is, the GOP lost. So yes, after 100 days of the Republicans unanimously telling the President to go screw himself and his compromises, now Obama is playing hardball. And the GOP isn't invited.

Making Things Right

The problem with the Village whenever it gets around to SCOTUS pickin' time is that the argument is constantly put forward from the Wingers and Village Idiots that any effort to correct racism and misogyny is in and of itself racist and misogynistic.

With the election of Obama, the pressure to make sure Obama nominates a white guy to replace Souter is doubly on, since of course the "most qualified nominee" would have to be a white male, and any effort Obama makes to nominate anyone else will be seen as playing the race card or gender/sexual preference card or whatever.

The reality is this:

Affirmative action was installed as a corrective against bigotry, a way to ensure qualified people were not passed over because of arbitrary conditions of their race or gender -- not as a "punishment" for whites, although it's not surprising to me that Cohen sees it that way. The fact that white women have been the greatest beneficiaries of affirmative action goes unmentioned because it's harder to make the case that "white people" have been hurt, because in the end, "white people" have benefited more than anyone else. "There's no need to cling to such a remedy anymore," says Cohen, who shares the WaPo op-ed page with a single black columnist.

The reaction to Sonia Sotomayor makes the perfect case for why we still need affirmative action. She's been a federal judge since the early 1990s, she served as an ADA in Manhattan, she's worked in private practice. On paper, she's qualified, but yesterday Jeffrey Rosen, admittedly knowing next to nothing about her, wrote that the summa cum laude from Yale Law School might not be "that smart." The folks at National Review got the signal. "So she's dumb and obnoxious. Got it," wrote Mark Hemingway. Responded John Derbyshire, "Judge Sotomayor may indeed be dumb and obnoxious; but she's also female and Hispanic and those are the things that count nowadays." This from someone who believes that social statistics prove that whites as a group are smarter than say, black people. Mark Krikorian concluded that "I'm sure Mark H. is right about Sotomayor's being dumb and obnoxious, just as Derb is right about her being female and Hispanic is all the matters," but that "an Hispanic Supreme Court justice is an almost mandatory consolation prize for the amnesty folks."

In short, everyone agrees that Sotomayor is an idiot, based on an anonymous quote solicited by Rosen, who admits that he hasn't "read enough of Sonia Sotomayor’s opinions to have a confident sense of them," and that he hasn't "talked to enough of Sonia Sotomayor’s detractors and supporters to get a fully balanced picture of her strengths."

This is exactly what affirmative action is meant to correct: People coming to the arbitrary conclusion that someone is "an idiot" despite all evidence to the contrary, except if you consider not being a white man evidence. Sotomayor's detractors see themselves as Frank Riccis, white men whose greatness isn't recognized because we're too busy giving brown people who can't tie their shoes certificates of achievement. But the truth is that in life and in employment, discrimination rarely manifests itself the way it did against Ricci, as something as easy to quantify as an unfair test. It's far more insidious -- a rumor, a feeling, a notion that the person standing in front of you who doesn't look like you is just "dumb and obnoxious." So you throw their resume in the "no" pile because you don't like their name, you seat them in the back of the class, you promote another person. You just can't really explain why. It's... just a feeling.

But it's so badly stacked against white men in Washington, it's just a crime.

[UPDATE] The Double G drops the hammer on Jeffrey Rosen's profile of Sonia Sotomayor. It is breathtaking, the carnage. Almost exquisite.

Winners And Losers

Via CalcRisk, we get a pretty deep legal perspective on the Chrysler bankruptcy and how it very well may set a strong legal precedent for years to come:
One thing's for sure, Chrysler's (and soon GM's) court battles will afford us a rare opportunity to witness one of bankruptcy law's most fundamental questions being litigated in the highest stakes battles of all time, that being:
When does the "absolute priority rule" (compare FRB-Cleveland's strict construction of the rule back in 1996 here with US Government's position today), which establishes a hierarchy of recovery rights among creditor classes, take a back seat to the "fresh start," rehabilitative policy of chapter 11?
Chrysler's opening memorandum touched upon this question by focusing on the US Supreme Court's classic pronouncement in NLRB v. Bildisco & Bildisco, 465 U.S. 513, 528 (1984), where the Court stated that the "fundamental purpose of reorganization is to prevent the debtor from going into liquidation, with an attendant loss of jobs and possible misuse of economic resources." This principle, Chrysler argues, is paramount and (quoting NY's judicial patriarch, Bankruptcy Judge Lifland, in the old Eastern Airlines case) "all other bankruptcy policies are subordinated" to it. (Mem. at 4).

Many, however, will surely disagree with Judge Lifland's statement from 20 years ago that all bankruptcy policies should be subordinated to the reorganization objectives of the Bankruptcy Code. Indeed, even on a very practical level, as the authors of this 1997 article entitled "Chapter 11's Failure in the Case of Eastern Airlines" note, such a policy is a failure:
Eastern Airlines' bankruptcy illustrates the devastating effect of court-sponsored asset stripping-using creditors' collateral to invest in negative net present value "lottery ticket" investments-on firm value. During bankruptcy, Eastern's value dropped over 50%. We show that a substantial portion of this value decline occurred because an over-protective court insulated Eastern from market forces and allowed value-destroying operations to continue long after it was clear Eastern should be shut down.
Relying on Bildisco to establish an unwavering rule of law is also risky because Supreme Court jurisprudence on bankruptcy matters is anything but a seamless web. Indeed, Ken Klee points out in his remarkable new book, Bankruptcy and the Supreme Court, Justice Rehnquist once wrote to Justice Stevens: "I do not feel that I am qualified to make any sort of exegesis on the meaning of the Bankruptcy Code." (Klee, p. 48).
In other words, there's two sides in this battle. On one, is Chrysler, the UAW, Fiat, and the Obama administration. They are arguing that Chrysler's case represents a unique situation that demands that the company and its jobs be kept intact so it can be sold to Fiat and the UAW.

On the other side are Chrysler's creditors. They are arguing that if the bankruptcy courts start making exceptions for Chrysler, then any company will want to make the same argument. The specific reason that the Obama administration didn't want this to go to bankruptcy court is that a precedent would be established either way that could end up hurting the country down the road.

If the court decide to side with Chrysler, then creditors are going to want a lot more up front knowing that companies can pull the "Chrysler Rule" and get out of paying creditors should things go bad. It would be a devastating precedent on the part of corporate bondholders, and investment in corporate bonds will dry up overnight, recreating the credit crisis. Who as a creditor will want to invest in a risky company knowing you're going to lose 80 cents on the dollar if things go bad?

Likewise, should the court decide to side with the creditors, the Chrysler sale is doomed, Fiat will pull out, and the company will be liquidated, wiping out tens of thousands (if not hundreds of thousands) of jobs, again setting a brutal precedent and all but assuring that GM's creditors will demand the same liquidation. Both companies will be annihilated and perhaps a million jobs or more along with them.

Somebody has to win, and somebody has to lose here. Either way, it's going to be a major knock on the economy and could decide the fate of companies for years.

Al Versus Norm, Part 1065

The GOP is more determined than ever to keep Al Franken from ever being seated now that Franken would represent the 60th Democratic Senator.
“This makes it pretty darn important,” said Sen. John Cornyn (R-Texas), chairman of the National Republican Senatorial Committee, of the race following Specter’s switch. “I expect they will pursue the appeals until they are exhausted, whenever that may be. … I would assume if they were unsuccessful in the Minnesota Supreme Court, there may very well be an appeal to the United States Supreme Court.”

Democrats, meanwhile, are planning a full-scale public pressure campaign to force Coleman to concede should the court affirm a three-judge panel’s ruling that Al Franken is the winner. Democrats have already begun using the race’s elevated importance to raise money, and they’re mounting a fresh campaign to pressure Minnesota Gov. Tim Pawlenty, a Republican, to sign an election certificate once the state Supreme Court rules.
And once again, Gov. Pawlenty is the key to what happens from here. No matter what, if he doesn't sign the certificate (and there is zero reason to expect he will when Franken's win is upheld and Coleman goes to federal court) Franken won't be seated. Forcing it through would be ham-handed, tone-deaf, and pretty stupid on the part of the Dems. But Franken's team is smart.
Pawlenty’s role is central to the dispute, and the question of whether Pawlenty must sign the election certificate after the ruling by the state’s highest court is unclear. Coleman’s lawyers say there is a legal gray area as to whether Pawlenty should sign the certificate if there is a federal appeal pending, and the governor – who is eying a run for the White House in 2012 — says that he’ll follow the direction of the courts.

Pawlenty’s handling of the matter could endear him to the GOP base, but it might also infuriate some Minnesota voters if he seeks reelection as governor next year.

Pawlenty, however, may have no choice in the matter. As part of the fight before the state’s high court, where oral arguments are scheduled for June 1, Franken’s team is likely to ask for a ruling on whether Pawlenty is required to sign an election certificate even if the loser appeals the case to federal court, according to Sen. Robert Menendez, chairman of the Democratic Senatorial Campaign Committee.

“If the court does that, there would be no opportunity for circumvention by Pawlenty,” Menendez said Thursday.
Should the courts rule in favor of Franken on both the win and the certificate, Franken could be seated next month. If not, this could drag on for months, if not years.

Your Morning Roubini

In the WSJ this morning, Nouriel Roubini and Matthew Richardson once again make the case for Plan N, given their belief that the stress tests are useless (emphasis mine)
...it is highly likely that some of these large banks will be insolvent, given the various estimates of aggregate losses. The government has got to come up with a plan to deal with these institutions that does not involve a bottomless pit of taxpayer money. This means it will have the unenviable tasks of managing the systemic risk resulting from the failure of these institutions and then managing it in receivership. But it will also mean transferring risk from taxpayers to creditors. This is fair: Metaphorically speaking, these are the guys who served alcohol to the banks just before they took off down the highway.

And we shouldn't hear one more time from a government official, "if only we had the authority to act . . ."

We were sympathetic to this argument on March 16, 2008 when Bear Stearns ran aground; much less sympathetic on Sept. 15 and 16, 2008 when Lehman and A.I.G. collapsed; and now downright irritated seven months later. Is there anything more important in solving the financial crisis than creating a law (an "insolvency regime law") that empowers the government to handle complex financial institutions in receivership? Congress should pass such legislation -- as requested by the administration -- on a fast-track basis.

The mere threat of this law could be a powerful catalyst in aligning incentives. As the potential costs of receivership are quite high, it would obviously be optimal if the bank's liabilities could be restructured outside of bankruptcy. Until recently, this would have been considered near impossible. However, in 2008 there was a surge in distressed exchanges of debt for equity or preferred equity.

Still, the recent negotiations with Chrysler's creditors suggest large obstacles. The size and complexity of large banks' capital structures make debt-for-equity exchanges an even taller task, particularly because creditors will want to hold out for a full bailout along the lines they have been receiving.

The government should be able to dangle an insolvency law as an incentive to cooperate. This will result in a $1 trillion game of chicken. But given the size of the stakes, and the alternative of the taxpayers continuing to foot the bill, it's the best way forward.

Just so. So far, this very legislation that we need -- legislation for receivership powers that FDIC chair Sheila Bair had asked for six weeks ago and something she said the FDIC needed to have back last June -- has all but been forgotten. The stress tests and the Obama declaration that Too Big To Fail means just that has pretty much scuttled any Plan N implementation.

Which is a shame. As long as the government lacks the power to beat Too Big To Fail, the banks will continue to extort the American taxpayer to the tune of trillions. Given the fact that the banking industry continues to own Congress however, the odds of this happening will continue to be slim to none.


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