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Big Banks Plead Guilty to Collusion, But Fines are Pocket Change

| Wed May 20, 2015 11:43 AM EDT

Five of the planet's biggest banks have finally been forced to plead guilty to collusion charges in the foreign exchange market:

The Justice Department forced four of the banks — Citigroup, JPMorgan Chase, Barclays and the Royal Bank of Scotland — to plead guilty to antitrust violations in the foreign exchange market as part of a scheme that padded the banks’ profits and enriched the traders who carried out the plot....Underscoring the collusive nature of their contact, which often occurred in online chat rooms, one group of traders called themselves “the cartel,” an invitation-only club where stakes were so high that a newcomer was warned, “Mess this up and sleep with one eye open.” To carry out the scheme, one trader would typically build a huge position in a currency and then unload it at a crucial moment, hoping to move prices. Traders at the other banks agreed to, as New York State’s financial regulator put it, “stay out of each other’s way.”

....The guilty pleas, which the banks are expected to enter in federal court later on Wednesday, represent a first in a financial industry that has been dogged by numerous scandals and investigations since the 2008 financial crisis. Until now, banks have either had their biggest banking units or small subsidiaries plead guilty.

....As part of the criminal deal with the Justice Department, a fifth bank, UBS, will plead guilty to manipulating the London Interbank Offered Rate, or Libor, a benchmark rate that underpins the cost of trillions of dollars in credit cards and other loans.

The total fine is about $5 billion, and it's about damn time this happened. Unfortunately, I assume that a billion dollars each is basically pocket change that's already been fully reserved on their balance sheets. Needless to say, not a single dime of this will hit the actual people running the banks, who couldn't possibly be expected to know that any of this stuff was going on. They were too busy drinking their lunches and remodeling their corner offices to know what a few rogue traders on the 23rd floor were doing. The Times confirms that life will go on as usual:

For the banks, though, life as a felon is likely to carry more symbolic shame than practical problems. Although they could be technically barred by American regulators from managing mutual funds or corporate pension plans or perform certain other securities activities, the banks have obtained waivers from the Securities and Exchange Commission that will allow them to conduct business as usual. In fact, the cases were not announced until after the S.E.C. had time to act.

It's good to be king.

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Michelle Obama Can Kick Your Ass

| Wed May 20, 2015 11:32 AM EDT

Feeling pleased with your morning run or cardio stroll? Well here's a reminder that Michelle Obama, who was already likely to be crushing you in most parts of your life, rules when it comes to the exercise game.  

In a new video posted to her @FLOTUS account, the first lady responded to the president's #GimmeFive challenge by showing off her fierce workout skills—boxing, lifting, and jumping rope. 

So thanks for the assist Lebron, but this glimpse into Obama's workout proves once again the first lady can hold court all on her own.

The Truth About How Obama Has Handled the Pacific Trade Deal

| Wed May 20, 2015 9:00 AM EDT
Japanese Prime Minister Shinzo Abe and President Barack Obama at the White House on April 28, 2015

While Kevin Drum is focused on getting better, we've invited some of the remarkable writers and thinkers who have traded links and ideas with him from Blogosphere 1.0 to this day to contribute posts and keep the conversation going. Today we're honored to present a post from Daniel Drezner.

One of the enduring memes of the Obama administration has been the notion that the president is a lousy politician. One of the things that Bill Clinton and George W. Bush had in common is that they knew how to schmooze. Obama, on the other hand, does not have any close friendships on the international stage, nor is he particularly tight with Republican or Democrat members of Congress. Indeed, this has been a sufficiently common lament for someone to write "A Brief History of President Obama Not Having Any Friends" last year.

So let's stipulate that the president is a cold fish. What remains contested is whether this matters in terms of getting things done. There are DC insiders who argue that personal relationships and one-on-one politicking really do matter. These are the pundits who tend to bemoan presidential passivity and write "Why won't Obama lead?" ledes and ask why Barack Obama doesn't drink more whiskey with Mitch McConnell or play more golf with John Boehner. And then there are structuralists who argue that what really matters are the separation of powers written into the Constitution and the incentive of opposition parties to, you know, oppose the president's policies.

When it comes to managing his own party, there may be something to the "Why can't Obama lead?" meme.

Last week's machinations over trade promotion authority (TPA) regarding the Trans Pacific Partnership (TPP) will not definitively settle this debate, but they did offer a few data points that suggest the relative merits of each side of this debate.

First, Senate Majority Leader Mitch McConnell gave a delightfully blunt interview to the New York Times' John Harwood. On TPA/TPP, McConnell and most of the Senate Republicans are working with Obama, which puts him in strange territory. To explain this to Harwood, McConnell flatly debunked the notion that Obama would have accomplished more in the GOP-controlled Congress if only he'd been more sociable with Republican members of Congress:

In the caricature of how Washington works, Mr. McConnell and other congressional Republicans were supposed to bond with Mr. Obama at a so-called bourbon summit meeting, as though a soothing, generous pour would bring them together.

It has never happened—which, as far as Mr. McConnell is concerned, counts for exactly zero.

"It's all good stuff for you all to write, but it has no effect on policy," Mr. McConnell said. He dismissed "press talk" that social outreach could bridge the deep ideological and partisan divisions of 21st-century American politics.

"It wouldn't make any difference," he concluded. "Look, it's a business." (emphasis added)

And that sound you just heard was the combined egos of the "why can't Obama lead" crowd visibly deflating.

McConnell's Hyman Roth-like answer would seem to validate the structuralist position of the president's ability to get legislation passed—at least when it comes to dealing with the opposition party.

When it comes to dealing with his own party, however, I'm not sure that the structuralists can claim victory. One could argue that Democrats are just as constrained on trade as Republicans because of their base's public opinion, but I don't think it's really that simple.

There were a lot of things going on in last Tuesday's initial failure of TPA to pass the Senate, including genuine policy differences between Obama and elements of the progressive movement. But as Reuters noted, at least part of it was Obama's alienation of Senate Democrats:

As for Obama, he may have hurt his chances with Democrats by minimizing concerns about trade's impact on labor, the environment and regulations, and his explicit criticism of the anti-trade stance of leading liberal Democratic Senator Elizabeth Warren.

"The president was disrespectful to her," Democratic Senator Sherrod Brown told reporters. "When he said that a number of us, not just Senator Warren, don't know what we're talking about...he shouldn't have." Brown opposes the fast-track bill.

Indeed, there has been a lot of Democrat grumbling about Obama's rhetorical jabs at Warren and other anti-TPP Democrats, to the point where Sherrod Brown accused Obama of sexism.

Of course, twenty-four hours later, a deal had been struck for a vote on TPA in the Senate. If Edward Isaac-Dovere and Burgess Everett's Politico recap is accurate, then Presidential Leadership (TM) played a pivotal role in the process:

The White House named names. And not 24 hours later, President Barack Obama and his aides had a deal to get fast-track back on track...

Obama aides strategically put out word to reporters of the meeting, even before senators had arrived at the White House. Shortly after the meeting ended, they released the list: the seven Democrats who'd voted for fast-track in committee, plus Sens. Heidi Heitkamp (D-N.D.), Patty Murray (D-Wash.) and Tim Kaine (D-Va.). A few hours before, every Senate Democrat except Tom Carper of Delaware had publicly rebuked his trade effort. Now the White House put on the spot the other nine who had either publicly or privately indicated they would support the underlying fast-track and Trade Adjustment Assistance package, but who voted against opening debate.

In other words, the president had more than enough votes just in the room to get the trade bill moving. According to senators who were there, the president took his time, spending 90 minutes to explain why they needed to get their act together.

Now this does sound like some Old Time-y Presidential leadership, and so maybe, when it comes to managing his own party, there is something to the "Why can't Obama lead?" meme.

But not a lot. My colleague Greg Sargent's take suggests that last Tuesday's vote was more about Reid/McConnell dynamics than anything to do with Obama. And even the close of Politico's story:

Then again, some Senate Democrats said this all would have been resolved even without Obama—though maybe not in time for the House to take up the bill in June, keeping it on track to help Obama seal the Trans-Pacific Partnership with 12 Pacific Rim countries.

"This was going to end up there anyway," Nelson said. "But I would say the meeting with the president accelerated the discussion."

So, to sum up: Most of the time, the structuralists are mostly right when it comes to presidents exercising leadership in pushing legislation through Congress. But they're not completely right. On the margins, when dealing with one's own party, maybe presidential leadership matters just a wee bit.

Bird Flu Is Slamming Factory Farms But Sparing Backyard Flocks. Why?

| Wed May 20, 2015 6:00 AM EDT

The Midwest's ongoing avian flu crisis is wreaking havoc on the region's large-scale egg and turkey farms. Last week alone, the US Department of Agriculture confirmed that the virus had turned up in more than 20 additional facilities in the region, condemning 4 million birds to euthanasia. Altogether, the H5N2 virus—"highly pathogenic" to birds, so far non-threatening to humans—has affected 168 sites and a jaw-dropping 36 million birds, the great bulk of them in Iowa and surrounding states. It's the largest avian flu outbreak in US history—and it has already wiped out 40 percent of the egg-laying flock h Iowa, the number-one egg-producing state in the US, according to The New York Times.

But it's largely leaving backyard flocks unscathed. Why?

You'd expect backyard flocks to be widely affected too, but they don't seem to be," said one virologist.

According to Hon S. Ip, a virologist at the US Geological Survey's National Wildlife Health Center, it's a genuine mystery. Backyard flocks typically roam outdoors, in ready contact with wild birds, which are thought to be the origin of the virus. Their commercial counterparts live in tight confinement under strict "biosecurity" protocols: birds are shielded from contact with the outdoors; workers change into special boots and coveralls—or even shower—before entering facilities, etc.

Ip said that wild birds could be spreading the virus in one of two ways: directly, by bringing chickens and turkeys into contact with infected feces; or indirectly, through wind-borne particles that, say, blow through vents in a confined facility. "If that's how it's spreading, you'd expect backyard flocks to be widely affected too, but they don't seem to be," he told me. Moreover, it has continued to spread in Iowa, even after the egg industry had ample time to ramp up biosecurity. All of this suggests something else, besides wild birds, might be the cause, Ip added.

USDA secretary Tom Vilsack speculated that the virus could be entering farms through biosecurity breaches.

But what? He has no idea, he said. And nor, apparently, does anyone else. In a recent news item [paywalled], the journal Science declared the outbreak "enigmatic." "All the old dogma about high-path influenza transmission has just gone out the window," Michael Osterholm, director of the Center for Infectious Disease Research and Policy here at the University of Minnesota, told the journal. "We're in totally uncharted territory."

Meanwhile, in an interview with Iowa Public Radio, USDA secretary Tom Vilsack speculated that the virus could be entering farms through biosecurity breaches. "We've had circumstances recently where folks have been using pond water, for example, to feed and to water their birds. Well, that's a problem because the pond water could be contaminated," Vilsack said in the interview. "We've had situations where folks are supposed to shower before they go into the facility, but the shower doesn't work, so they go in anyway."

I've seen no reports detailing current conditions on egg farms in Iowa, but it's worth noting that in 2010, the Food and Drug Administration found troubling biosecurity lapses within some of the state's largest egg facilities, after they had been forced to recall 550 million eggs due to potential salmonella contamination. The FDA inspectors' report detailed a variety of problems, including several involving contact between egg-laying hens and wild birds.

While experts scramble to figure out how the disease is spreading, the egg and turkey industries are dealing with one particular immediate consequence: how to safely dispose of millions of potentially flu-ridden bird carcasses. As the Des Moines Register reports, the process is not going smoothly:

Landfills in South Dakota, Nebraska and northwest Iowa, where poultry producers have been the hardest hit, have turned away the dead birds, fearful of the risk of contamination. The problem is so severe that on Friday, U.S. Secretary of Agriculture Tom Vilsack stepped in to urge landfills to accept some of the millions of birds killed or destroyed by the H5N2 virus, saying delays could [exacerbate] odors and flies, problems neighbors have already complained about in some parts of the state.

In response to these difficulties, the USDA has "dedicated 266 employees, including 85 in Iowa, and contracted more than 1,000 personnel to work around the clock across the 20 states affected by the outbreak," Vilsack wrote in a statement. In addition, the agency has allotted $130 million "in indemnity payments to help poultry producers who have lost flocks get back on their feet," Vilsack added.

That relatively modest measure of taxpayer support for the poultry industry may just be the beginning. The USGS's Ip said the rate of new infections is "showing signs of slowing down" as warm weather sets in. Flu viruses are "less stable" at higher temperatures, he said, which is why flu tends to be much worse in winter than in summer. But as Reuters reported recently, the USDA warns that it's "highly probable" the strain will return when the weather cools this fall. If it does, and it spreads to the eastern and southern poultry belts—where the great bulk of the chicken we eat is produced—taxpayers could be in for a real hit.

The 85-Year-Old Nun Who Went to Prison for Embarrassing the Feds Is Finally Free

| Tue May 19, 2015 4:17 PM EDT
Sister Megan Rice

Sister Megan Rice, the 85-year-old activist nun who two years ago humiliated government officials by penetrating and vandalizing a supposedly ultra-high-security uranium storage facility, has finally been released from prison. A federal appeals court on Friday overturned the 2013 sabotage convictions of Rice and two fellow anti-nuclear activists, Michael Walli, 66, and Greg Boertje-Obed, 59, ruling that that their actions—breaking into Tennessee's Y-12 National Security Complex and spreading blood on a uranium storage bunker—did not harm national security.

Rice's case has become the subject of intense media scrutiny, including a recent New Yorker profile by Eric Schlosser, whose latest book exposed gaping flaws in America's nuclear weapons program. The activists now await re-sentencing on a lesser charge of damaging federal property. The punishment is expected to be less than the two years they've already spent in federal prison.

Speaking with Rice over the phone this afternoon, I asked her how it feels to be free. "Not that much different, because none of us is free," she said, "and it looks like we are going to go on being un-free for as long as there is a nuclear weapon waiting."

Asked on Democracy Now this morning about her experience in federal prison, Rice gave a response worthy of Sister Jane Ingalls, a character from the Netflix prison drama Orange Is the New Black, who was clearly inspired by Rice. "They are the ones who are the wisest in this country," she said of her fellow inmates. "They know what is really happening. They are the fallout of nuclear weapons production."

Skip to the 33-minute mark to watch the interview:

Are You a True Political Junkie? A Wee Test.

| Tue May 19, 2015 2:49 PM EDT

I'm often amazed at the incredible memories that true political junkies have for trivial stuff that happened well over a decade ago. I was just reading a Kevin Williamson item over at The Corner, and he was noting that (a) some police organizations are apparently referring to President Obama's new restrictions on transfer of military equipment as a "ban," and (b) that lefties were attacking this as fear-mongering, since it wasn't a ban, just a restriction on how the federal government plans to spend its own money.

Where's he going with this, I wondered. I didn't have to wait long to find out:

Well....

Am I the only one who remembers the so-called federal ban on stem-cell research enacted by the Bush administration? That was a ban that was not, in fact, a ban at all, or even a ban on federal funding for embryonic stem-cell research, but a restriction on federal funding for research using newly created lines of embryonic stem cells. When the [Fraternal Order of Police] complains that police departments cannot use federal funds the way they did before, the Left insists that the word “ban” is inappropriate, that the complaints amount to “fear-mongering.” But Mother Jones wrote of a “Stem Cell Research Ban” under Bush, CBS News reported “Obama Ends Stem Cell Research Ban,” Wired wrote of a “Bush stem cell ban,” U.S. News and World Report wrote of “Bush’s Stem Cell Research Ban,” etc.

A funding restriction is not a ban; it isn’t now—but it wasn’t then, either. It is too much to expect even a modicum of consistency from our feckless, lollygagging media, which is mainly composed of people who were too thick for law school and too lazy to sell real estate, and certainly not from the intellectually dishonest Democratic operatives within the media (Hello, Mr. Stephanopoulos!). But we should always keep that dishonesty in mind.

I guess I take a much more easygoing attitude toward this stuff, especially when we're talking about headlines. Heds are almost never entirely accurate thanks to space constraints, and using the word ban instead of ban on federal funding of new stem cell lines seems pretty much inevitable. As long as the hed is reasonably close to reality and a more accurate explanation is put in the first paragraph or two, I can't get too excited.

And if it was something that happened back in 2001? I'd be racking my brains to remember what happened and whether I should still give a damn. I guess that's what marks me as not really a true political junkie. I don't hold grudges against the press quite long enough.

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Columbia Student Defiantly Carries Mattress to Graduation to Protest Sexual Assault

| Tue May 19, 2015 2:20 PM EDT

Emma Sulkowicz, the Columbia University student who protested her alleged sexual assault by carrying a mattress every day to campus last year, graduated today. The mattress, the defining symbol of her assault and senior arts thesis titled Mattress Performance (Carry That Weight), was also present at Tuesday's ceremony, despite the school administration urging students not to bring large items that could potentially "create discomfort to others."

Sulkowicz was seen hauling her mattress to the ceremony with the help of friends and fellow graduating students. According to Columbia Spectator editor Teo Armus, when Sulkowicz went on stage to collect her diploma, she pointedly did not shake university president Lee Bollinger's hand.

In September, Sulkowicz became a national figure and an unofficial spokesperson for sexual assault activists after she went public with her rape. She vowed to carry the mattress to class for as long as the student who she says assaulted her was not prosecuted or expelled. In April, her alleged rapist, Paul Nungesser, filed a lawsuit against the university claiming administrators exhibited bias and failed to protect him from the accusations. He says their alleged failure "destroyed" his college experience and reputation. 

Nungesser also graduated and was present at Tuesday's ceremony.

 

Finally! It's Tax Fantasyland Season Again!

| Tue May 19, 2015 11:29 AM EDT

One of the more entertaining aspects of the 2012 presidential race was keeping track of the ever-expanding array of fanciful tax plans from Republicans. Even after Herman Cain announced his absurd 9-9-9 plan, other plans that would cut taxes even more kept coming down the pike. No candidate was willing to give up the mantle of biggest tax cutter.

But that wasn't the truly entertaining part. The entertainment came from the fact that the candidates were all willing to describe in almost loving detail what they'd cut: capital gains vs. regular income; different tax brackets; precise rates that millionaires would have to pay; and so forth. But when anyone asked which tax deductions and tax credits they'd kill in order to make their plans revenue neutral, they'd blush like schoolchildren and insist that only Congress could make that call. So brave!

Josh Barro reports today that even with only a few candidates yet in the race, Republicans are already tying themselves in knots over taxes:

There are a few ways the 2016 Republican candidates can avoid the Romney middle-class tax trap. They can break with party tradition and abandon the position that there should be significant tax-rate cuts for top earners. They can forthrightly defend the idea that people with low and middle incomes should pay more. They can abandon the promise of revenue neutrality — so a tax cut for the rich does not need to be offset by tax increases elsewhere. They can be as vague as possible.

So far, apparently, the scorecard looks like this:

  • Carson, Cruz and Paul are calling for flat taxes but are taking the classic position that they'll talk about ways to stay revenue neutral sometime.....in the future. Like maybe the 14th of never.
  • Christie has a slightly modified version of the classic. He won't talk about how he'll stay revenue neutral either, but he's also claiming that he might just let the deficit take some of the hit, which would mean fewer hot-button deductions to eliminate that could wreck his candidacy.
  • Rubio, the boy genius of the Everglades, goes even further, taking what I'll call the Sam Brownback position: screw the deficit, he says. He's just going to lower taxes and leave it at that. After that we're in God's hands.
  • Finally, Jeb Bush has taken the most unusual position of all: he's not even talking about taxes. He's generally in favor of lowering taxes, but that's as much as he's willing to say.

That's only six candidates, and there are many more to come—and we can expect plenty of tax fantasyland from all of them, I think. I mean, can you imagine what Lindsey Graham or Carly Fiorina are going to come up with? The mind reels. With the exception of the poor shmoes at the Tax Policy Center, who have to pretend to take this stuff seriously while they trudge through their analysis of each and every farfetched plan, it should be plenty of fun for the rest of us. Which candidate will come up with the most ridiculous, most pandering plan of all? Your guess is as good as mine.

Taylor Swift: "Misogyny Is Ingrained in People From the Time They Are Born"

| Tue May 19, 2015 9:36 AM EDT

According to this year's "Hot 100" list, an annual inventory in which Maxim's editors meticulously rank famous women by level of attractiveness, Taylor Swift is 2015's reigning queen of female hotness. Rather than use the title to gloat about her declared hotness, Swift used the magazine's cover to call out the double standards women face everyday and the importance of feminism in her life today: From Maxim:

Honestly, I didn't have an accurate definition of feminism when I was younger. I didn't quite see all the ways that feminism is vital to growing up in the world we live in. I think that when I used to say, "Oh, feminism's not really on my radar," it was because when I was just seen as a kid, I wasn't as threatening. I didn't see myself being held back until I was a woman. Or the double standards in headlines, the double standards in the way stories are told, the double standards in the way things are perceived.

Swift's interview is especially noteworthy considering in 2012, she shied away from the label to the Daily Beast, telling the news site she didn't view matters as a "guys versus girls" situation. This was also during a time in which the media unfairly portrayed Swift as something of a pathetic boy chaser—a female singer who used her lyrics to lament about the latest boy who got away.

Since then, she has shattered that image with very real, thoughtful insight into an industry built on sexist frameworks:

A man writing about his feelings from a vulnerable place is brave; a woman writing about her feelings from a vulnerable place is oversharing or whining. Misogyny is ingrained in people from the time they are born. So to me, feminism is probably the most important movement that you could embrace, because it's just basically another word for equality.

This is what young girls need today. Now, we leave you with her badass new video, "Bad Blood."

 

Obamacare Is Making It Easier to Be a Young Working Parent

| Tue May 19, 2015 6:20 AM EDT

With Kevin Drum continuing to focus on getting better, we've invited some of the remarkable writers and thinkers who have traded links and ideas with him from Blogosphere 1.0 to this day to contribute posts and keep the conversation going. Today we're honored to present a post from economist Dean Baker.

The main point of the Affordable Care Act was to extend health insurance coverage to the uninsured. While this is a tremendously important goal, a benefit that is almost equally important was to provide a guarantee of coverage to those already insured if they lose or leave their job. This matters hugely because roughly 2 million people lose their job every month due to firing or layoffs. As a result of the ACA most of these workers can now count on being able to get affordable coverage even after losing their job.

The ACA also means that people who may previously have felt trapped at a job because of their need for insurance now can leave their job without the risk that they or their family would go uninsured. This could give many pre-Medicare age workers the option to retire early. It could give workers with young children or other care-giving responsibilities the opportunity to work part-time. It could give workers the opportunity to start a business. Or, it could just give workers the opportunity to leave a job they hate.

While it is still too early to reach conclusive assessments of the labor market impact of the ACA, the evidence to date looks promising. Republican opponents of Obamacare have often complained that the program would turn the country into a "part-time nation." It turns out that there is something to their story, but probably not what they intended. The number of people who are working part-time for economic reasons, meaning they would work full-time if a full-time position was available, has fallen by almost 16 percent from the start of 2013 to the start of 2015. This is part of the general improvement in the labor market over this period.

The number of people working part-time involuntarily is still well above pre-recession levels, but it has been going in the right direction.

It is true that the employer sanction part of the ACA has not taken effect (which required that employers with more than 50 workers provide insurance or pay a penalty, but it is not clear this would make a difference. Under the original wording of the law (Obama subsequently suspended this provision), employers would have expected that the sanctions would apply for the first six months of 2013. We found no evidence of shifting to more part-time work during this period compared to the first six months of 2012.

But there is a story on increased voluntary part-time employment. This is up by 5.7 percent in the first four months of 2015 compared to 2013. This corresponds to more than 1 million people who have chosen to work part-time. We did some analysis of who these people were and found that it was overwhelmingly a story of young parents working part-time.

Back in the old days we might have thought this was an outcome that family-values conservatives would have welcomed.

There was little change or an actual decline in the percentage of workers over the age of 35 who were working part-time voluntarily. There was a modest increase in the percentage of workers under age 35, without children, working part-time voluntarily. There was a 10.2 percent increase in the share of workers under the age of 35, with one to two kids, working part-time. For young workers with three of more kids the increase was 15.4 percent.

Based on these findings it appears that Obamacare has allowed many young parents the opportunity to work at part-time jobs so that they could spend more time with their kids. Back in the old days we might have thought this was an outcome that family-values conservatives would have welcomed.

As far as other labor market effects of Obamacare, there has been a modest uptick in self-employment, but it would require more analysis to give the ACA credit. Similarly, older workers are accounting for a smaller share of employment growth, perhaps due to the fact that they no longer to need to get health care through their jobs. These areas will require further study to make any conclusive judgments, but based on the data we have seen to date, it seems pretty clear that Obamacare is allowing many young parents to have more time with their kids. And that is a good story that needs to be told.