2010 - %3, February

Don't Call Me Madoff!

| Thu Feb. 25, 2010 1:30 PM EST

Citing safety concerns, Bernie Madoff's daughter-in-law Stephanie has legally petitioned to change her name—and those of her young children—to "Morgan," the New York Post reports. It's unlikely, of course, that anyone would hurt a couple of toddlers (the children are one and three). But more than a few who lost their life savings to history's biggest swindler probably fantasize about taking a broken bottle to Stephanie's husband, Mark Madoff, who filed an affadavit in support of the name change.

In our January/February issue, reporter Erin Arvedlund, the first non-trade journalist to question Madoff's unusually consistent returns, provided a still-current update on the status—legally and otherwise—of Madoff's inner circle, including his two boys, Mark and Andrew. Here's one snippet from our report, "Meet the Madoff Minions." (Picard is Irving Picard, the court-appointed trustee in the Madoff bankruptcy case.)

Papa Madoff claimed his boys, who codirected trading at the firm, learned of the fraud only when he told them, days before his arrest. Alternate theory: Madoff knew the jig was up and took the fall to protect his family. Mark Madoff withdrew nearly $67 million from company accounts over the years, trustee Picard alleges, and divides his time between a $5.6 million Manhattan apartment, a $6.6 million Nantucket home, and a $2.2 million pad in Greenwich, Connecticut. All told, Mark got more than $29 million in salary and bonuses, and racked up $797,000 in personal expenses on the corporate AmEx. Andrew Madoff received more than $31 million in compensation, Picard claims, and used another $32 mil to cover expenses such as a $300,000 investment in Blow Styling Salon, LLC, and a $75,000 payment to Lock and Hackle, a members-only fly-fishing and hunting club. And waiter beware: After dropping more than a grand on the corporate card at Manhattan's swank Per Se, Andrew left a miserly $60 tip. Picard is suing Mark and Andrew, along with Bernie's brother Peter and his niece Shana, to recover some $199 million. But their assets are not frozen, and none of them has yet been charged with any crime.

Arvedlund, whose book about the Madoff affair is titled, Too Good to Be True, similarly details the exploits of Bernie's wife, older brother, niece, right-hand man, and key enablers—including the keystone cops at the SEC who ignored enough red flags to supply a Soviet political rally. As for the grandchildren, the Madoff name isn't so much a safety issue as one of shameful notoriety. If you happen to live in New York City and your name happens to be Madoff, well, best of luck in your future prospects.

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The Other Paravant Scandal

| Thu Feb. 25, 2010 1:28 PM EST

When salacious details emerge about run-amok contractors, it's easy to lose sight of the big picture—the reason why these scandals keep happening and happening and happening. So what's the big picture, you ask? Great question. Let me tell you. In military parlance, oversight is FUBAR. (If you don't know what that means, look it up.) And the Paravant/Blackwater scandal I've been reporting on for the past few days is a perfect case study in what happens when oversight goes AWOL. Yes, the firm's personnel acted recklessly and knowingly violated military regulations—even the company acknowledges that—but no one bothered to stop them, to enforce the rules in place. As an investigation by Sen. Carl Levin's armed services committee documents, there was mass confusion about who was actually responsible for monitoring Paravant on the ground.

Ultimately Paravant had a contract with Raytheon. Raytheon had a contract with the Army's Program Executive Office for Simulation, Training, and Instrumentation. PEO STRI, headquartered in Orlando, Florida and without a rep on the ground, says it relied on a Dutch military officer attached to NATO's Combined Security Training Center-Afghanistan. That officer's supervisor told Levin's committee he had "no idea" why anyone would think this officer was responsible for Paravant—in fact, he knew of no one at CSTC-A who was. And things got even more ridiculous from there.

Has Pakistan Finally Turned Against the Taliban?

| Thu Feb. 25, 2010 1:15 PM EST

Following up on yesterday's post about the capture of Taliban leaders in Pakistan, the New York Times fills in some details about increased cooperation between Pakistan's ISI and the CIA:

Interviews in recent days show how they are working together on tactical operations, and how far the C.I.A. has extended its extraordinary secret war beyond the mountainous tribal belt and deep into Pakistan’s sprawling cities.

Beyond the capture of Mullah Abdul Ghani Baradar, C.I.A. operatives working with the ISI have carried out dozens of raids throughout Pakistan over the past year, working from bases in the cities of Quetta, Peshawar and elsewhere, according to Pakistani security officials. The raids often come after electronic intercepts by American spy satellites, or tips from Pakistani informants — and the spies from the two countries then sometimes drive in the same car to pick up their quarry.

....And yet for two spy agencies with a long history of mistrust, the accommodation extends only so far....Even as the ISI breaks up a number of Taliban cells, officials in Islamabad, Washington and Kabul hint that the ISI’s goal seems to be to weaken the Taliban just enough to bring them to the negotiating table, but leaving them strong enough to represent Pakistani interests in a future Afghan government.

This contrasts sharply with the American goal of battering the Taliban and strengthening Kabul’s central government and security forces, even if American officials also recognize that political reconciliation with elements of the Taliban is likely to be part of any ultimate settlement.

Italics mine. However, Spencer Ackerman suggests that far from being as sharp as the Times suggests, "the strategic differences here may be ones of degree." This seems like the better guess. Both sides now agree that the Taliban needs to be seriously beaten up, and at most, the argument is over just how much to beat them up in order to get them to sue for peace. Not only is that not a huge difference, but it's one that both sides will legitimately find difficult to calibrate anyway. If that's really the extent of their disagreement — admittedly a big if — there's a real glimmer of progress here.

McCain Goes Off the Nuclear Deep End

| Thu Feb. 25, 2010 12:22 PM EST

The Obama administration’s $54.5 billion plan to ignite the nuclear power industry might seem like the shot in the arm that nuclear advocates have been demanding for some time. But it’s apparently not good enough for John McCain.

One might think that McCain, who has long touted nuclear as the ideal low-carbon fuel source, would be enthused about Barack Obama’s State of the Union statement that creating clean energy jobs "means building a new generation of safe, clean nuclear power plants in this country." But apparently not. McCain told The Hill:

During the campaign, I said, 'Look, the only way we're going to reduce greenhouse gas emissions and eliminate, over time, our dependency on foreign oil is nuclear power.’ I said it over and over and over again. So what did this administration just do? They say, 'We're for nuclear power, but we're shutting down Yucca Mountain,' in which we invested $16 billion. They keep saying, 'Yes, we're for nuclear power,' but the rhetoric is contradicted by their actions. So I cannot engage in serious contemplation, serious discussion, until nuclear power is a viable option. It is not viable when you announce the only place you can store is closing, and they're not recycling. So it's a non-starter.

McCain must be living in an alternate universe if $54.5 billion in support for the industry does not live up to the administration's rhetoric. And while the administration has decided to shut down Yucca, that was largely because it has long been clear that there was very little support for efforts to locate the waste facility there. The Department of Energy has formed a new commission to look at options for waste disposal and recycling, as there are a lot of questions about how exactly that can be done.

McCain's buddy Lindsey Graham has taken the lead on efforts to pass a nuclear-friendly climate bill this year and calls the Obama administration "very pro-nuclear." Yet while the Obama administration is holding out nuclear support as an incentive for Republicans to support a climate and energy bill, it looks like that won't be enough for McCain.

The Healthcare Summit So Far

| Thu Feb. 25, 2010 11:33 AM EST

Quick comment on today's healthcare summit: John Boehner and Mitch McConnell are smart enough to know their own limitations and choose others to speak for the Republican side. And they've mostly chosen speakers who are good at this stuff and know how to talk in ways that make sense.

The Democrats, who should be in better shape because they have a single leader, are insisting on letting every leader speak: Nancy Pelosi, Harry Reid, Steny Hoyer, and Max Baucus so far. These folks are not great speakers. Why are they so lame that they insist on speaking anyway? For once in their preening lives, why don't they just fade into the background and let President Obama orchestrate their side? Obama may yet come out on top in today's session, but the behavior of the Democratic congressional leadership so far constitutes political malpractice.

Reid Demands Climate Bill

| Thu Feb. 25, 2010 11:24 AM EST

Get the latest on environmental politics on Blue Marble:

Reid Bullish on Climate Bill

John Kerry is weirdly optimistic about passing climate and energy legislation this year. Now Harry Reid is calling for a bill ASAP. Might we actually see movement on legislation sometime soon?

Obama to CEOs: A Carbon Cap is Good for You

Barack Obama makes a business case for capping carbon pollution, telling CEOs that the rules will give them long-term certainty and a leg-up in international competition.

Vermont to Shut Down Leaking Nuclear Plant

The Obama administration may pushing for a nuclear renaissance, but up in Vermont, the state senate voted yesterday to close their lone, leaky nuclear plant amid fears that the owners have concealed information about plant safety.

Rockefeller Seeking Delay on EPA Climate Regs

West Virginia Democrat Jay Rockefeller indicated that he intends to introduce legislation to delay the Environmental Protection Agency’s regulation of greenhouse-gas emissions. While administrator Lisa Jackson earlier this week outlined a slower progression for regulations in response to concerns from Rockefeller and other Senate Democrats, he said that legislation is needed to "provide Congress the space it needs to craft a workable policy that will protect jobs and stimulate the economy."

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A Tale of Two Bernankes

| Thu Feb. 25, 2010 11:08 AM EST

Ben Bernanke testified before Congress yesterday. Here are two newspaper accounts of the exact same testimony. First, the Washington Times:

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

And here is the Los Angeles Times:

Federal Reserve Chairman Ben S. Bernanke acknowledged Wednesday that the government's bulging deficits are reaching levels that are unsustainable in the long run, but he said substantial action to reduce them was probably at least two years away.

The embryonic recovery from the worst economic crisis in more than half a century, especially the nation's weak job market, is much too fragile to begin cutting back on government support any time soon, he said...."I'm not advocating, I don't think anyone's really advocating trying to balance the budget this year or next year," he said in delivering the Fed's semiannual report to Congress in front of members of the House Financial Services Committee.

Of course, there's another difference between the two accounts as well. Later in its piece, the LA Times does report that Bernanke also has long-term deficit concerns. They tell the whole story. Later in its story, the Washington Times.....reports that Alan Greenspan is concerned about deficits too. You can read their entire 1000-word account and never have any idea the Bernanke thinks big federal deficits are just fine for the next couple of years. Nice job.

Reid Bullish on Climate Bill

| Thu Feb. 25, 2010 11:05 AM EST

Does John Kerry have good reason to be so optimistic about a climate bill? The Washington Post reports that he’s getting strong signals that Senate Majority Leader Harry Reid wants a bill ASAP, indicating that senators might be closer to a deal on climate and energy than many people around Washington have assumed.

Kerry indicated to reporters Tuesday that an energy package is still atop Reid’s agenda for the year. And in a statement to the Post, Kerry said that Reid is “deadly serious about making progress this year on climate and energy reform.” Reid met with Kerry on Tuesday after a he huddled with Lindsey Graham (R-SC) and Joe Lieberman (I-Conn.) to discuss the anticipated measure.

"Senator Reid made it clear to me the other day that he wants a bill and he wants it soon," Kerry said. "I can't give you an exact timeline, but we are working very very diligently with our colleagues and all of the stakeholders to think this through carefully and get this done right, and get it done in a way that can pass the Senate."

Finance Chair Max Baucus (D-Mont.) has been less enthusiastic about moving on a bill this year, saying earlier this week that he doesn’t think it stands much of a chance of going anywhere. His committee has jurisdiction over some key elements of the bill, like permit allocation and any revenues it may bring in.

Sources close to the climate debate at environmental and energy industry lobbying groups indicate that they, too, are getting positive signals that the Kerry, Graham, and Lieberman are getting close to a deal. Kerry indicated that they’ve close to agreement on key elements like a nuclear energy title, but the outstanding issue remains what kind of mechanism they will use to price carbon.

Barack Obama’s appeal to industry leaders to support a cap also seems to have revived hopes that something will move forward soon. So we might well see the fruits of Kerry, Graham, and Lieberman's efforts some time soon.

Live Tweeting the White House Health Care Summit

Thu Feb. 25, 2010 10:23 AM EST

Mother Jones' DC bureau chief, David Corn, is covering Obama's health care summit live. His tweets from the summit are below the video.

Live tweets of the #HCR summit from @DavidCornDC:

More David Corn on Twitter Links

Firing Back in Wall St.'s Reform War

| Thu Feb. 25, 2010 10:07 AM EST

Americans for Financial Reform, a leading advocacy group lobbying for major regulatory crackdowns on Wall Street, released a new ad today coming to the defense of Sen. Jon Tester (D-MT), who's been under fire lately for his support for an independent Consumer Financial Protection Agency and for generally backing greater reforms of the financial markets. In particular, Tester's been taking a lot of heat from a secretive, deep-pocketed organization called the Committee for Truth in Politics, which has targeted Tester and called the financial reform supported by the Montana senator a $4 trillion bank bailout in disguise. (That language, you'll remember, comes from a memo circulated by consultant Frank Luntz trying to torpedo Wall Street reforms.) Earlier this month, Tester called the committee's attacks on him "flat-out false," and asking to see the source of the committee's funding, which it doesn't publicize. "Our economy almost collapsed a year and a half ago because there were no referees on Wall Street," Tester wrote in a statement. "Montana's Main Street small business owners and families should never have to pay the price of greed on Wall Street."

Here's the ad: