Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Detroit News, the Guardian, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndrewKroll.

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Steve Eisman's Next Big Short: For-Profit Colleges

| Thu May 27, 2010 7:55 AM EDT

Steve Eisman, the outspoken investor whose huge wager against the subprime mortgage market was chronicled by author Michael Lewis in his bestselling book The Big Short, has set sights on a new target: for-profit colleges of the kind of you might see advertised on daytime TV and at bus stops. Think ITT Educational Services, Corinthian Colleges, or Education Management Corporation.

In a speech titled "Subprime Goes to College," delivered Wednesday at the Ira Sohn Investment Research Conference, Eisman blasted the for-profit education industry, likening these companies to the seamy mortgage brokers who peddled explosive subprime loans over the past two decades. "Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong," Eisman said. "The for-profit education industry has proven equal to the task." (All of Eisman's remarks here come from a copy of his prepared remarks obtained by Mother Jones.)

Eisman, a blunt, no-frills portfolio manager at FrontPoint Financial Services Fund, a Morgan Stanley subsidiary, became an overnight sensation as one of the main characters in Lewis' latest. After witnessing the first wave of subprime madness in the 1990s, Eisman grew skeptical of the industry as a whole, Lewis writes. Then, when subprime surged again in the 2000s, he put his knowledge to work. Needless to say, he's a lot richer than he was two years ago.

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Sarah Palin's Endorsement Curse

| Thu May 27, 2010 7:55 AM EDT

Quiz: What do these struggling or failed political aspirants all have in common?

  • Vaughn Ward, a GOP candidate for Idaho's 1st congressional district who plagiarized Barack Obama's famous 2004 Democratic National Convention speech and thought Puerto Rico was a separate country;
  • Nikki Haley, the South Carolina gubernatorial candidate embroiled in controversy with a political blogger who claims he had an affair with Haley, who is married with two children;
  • Doug Hoffman, the conservative candidate in last fall's special House election in upstate New York's 23rd district who ultimately lost in an upset to Democrat Bill Owens;
  • Tim Burns, the Republican candidate to fill the late Pennsylvania Democratic congressman John Murtha's 12th district who lost to Democrat Mark Critz;
  • Clint Didier, the Republican candidate for Senate in Washington state trailing incumbent Democrat Patty Murray by anywhere from 15 to 26 percentage points; and
  • John McCain, the Republican loser in the 2008 presidential election

They're all the (un)lucky recipients of campaign endorsements from the Tea Party darling herself, Sarah Palin! Of course, there's no doubt Palin remains a superstar in conservative circles, her every tweet and Facebook message treated as conservative scripture these days. And she has been right on a few occasions—notably, Rand Paul in the recent Kentucky GOP Senate primary. But overall, her political seal of approval may be losing some of its luster.

And some of her fellow Republicans have noticed. In early May, Palin endorsed Carly Fiorina in the California Republican Senate primary. Later that month, Matt Rexroad, a director for political strategy group Meridian Pacific, which is employed by Fiorina's campaign, posted on Facebook  that "if Sarah Palin endorsed me I would be too embarrassed to tell anyone. [F]rom my point of view, I don't know how you quit as the governor of your state and get taken seriously." Ouch.

I guess we'll have to wait and see how the remaining candidates that Palin has blessed with her endorsement—Fiorina, Wisconsin House candidate Sean Duffy, et al—fare before deciding whether Palin's support amounts to a golden touch or the kiss of death.

Nevada's Rand Paul Primary Redux?

| Wed May 26, 2010 3:50 PM EDT

Sharron Angle, the Tea Party favorite in Nevada's three-way Republican primary, is mounting an anti-establishment, Rand Paul-esque charge in her state's June 8 primary vote. Between late April and mid-May, Angle surged in the polls, from 13 percentage points to 25, according to R2000/Daily Kos and Las Vegas Review-Journal polling data. Meanwhile, the front-runner and GOP choice in that primary, former state GOP chairwoman Sue Lowden, dropped from 38 points to 30, and the third main candidate, Danny Tarkanian, dipped from 28 points to 22.

A former Nevada assemblywoman, Angle has seized on a handful of mistakes by Lowden, whose comfortable lead in the primary has all but eroded. Adopting the wildcard, Tea Party mantle, Angle is now bashing Lowden's fiscal record, claiming her opponent raised taxes and supported state spending hikes. Angle also unleashed the ultimate of political insults in the hard-hit Silver State, claiming Lowden—gasp!—"backed Harry Reid for years."

Whether Angle can overcome Lowden in the final days before the primary—Angle's raised a mere $945,000 for her campaign, less than half of Lowden's war chest—depends on how much she can paint Lowden as another political insider wedded to an incredibly unpopular Republican Party. Here's Angle's most recent ad attempting to do just that:

Behind Dems' Record Low Approval Rating

| Wed May 26, 2010 9:43 AM EDT

A new CBS News poll out last night reveals approval levels have declined to an all-time, basement low for Obama's Democratic Party, with only 37 percent of those polled saying they have a favorable view of the Dems. That's a decrease of 20 percentage points in the past year. Then again, Republican Party's image isn't much better, either: 33 percent approve of Michael "Keepin' It Real" Steele and Co. And in the "unfavorable" view category, it's a neck-and-neck race between which party gets the mantle of most loathed by American populace so sick of Washington the name evokes disgust and resentment—55 percent of Americans have a negative view of the GOP, and 54 percent say the same about Democrats.

The conclusion here is obvious: If you're a candidate running for national or even state political office, you basically have to do everything you can to separate yourself from the folks in Washington, casting yourself in the starkest terms possible as an outsider untainted by the influence and money of modern-day politics. Take Rory Reid, a gubernatorial candidate in Nevada and the son of Senate Majority Leader Harry Reid (D-Nev.). The other day I was clicking around Reid's site, reading up on his ambitious new education reform plan. Then it hit me: You'd never know that Rory was the son of Harry from reading Rory's website. The only mention I could find of papa Reid was in a smattering of press clippings posted on the site. As one Nevadan wrote me in an email recently, "it doesn't take a rocket scientist to see the negative effects that could arise from such a relationship."

Back to the CBS poll. While the broad political data is mostly predictable, the economic-related results are more telling. For instance, 59 percent of respondents said Wall Street has undue influence on Washington. That's a no-brainer—consider that the finance, insurance, and real estate (or FIRE) sector has spent more than $4 billion lobbying Washington in the last decade or so. And when Washington had the chance to beat back the Wall Street influence machine by limiting the size of big banks, constraining not just their financial size but the size of their political influence, too, the Senate failed to act and the White House did nothing. And there's little chance the House and Senate together will revive that idea.

What's more, the poll shows the public strongly backs government support for homeowners—but not bank bailouts. Which means the Obama administration has it all backward: It's poured billions of dollars and plenty of political capital into the massively unpopular bailouts; but the program that could win them public support, the Making Home Affordable program, the Treasury's homeowner rescue, has been a complete mess. Some would say a failure.

Indeed, with the perilous state of the economy still looming large on the minds of Americans (eight of 10 told CBS the economy remained in bad shape), the administration's inability to help homeowners as it helped the banks could prove disastrous in this fall's elections.

Dem Warfare on Derivatives Proposal

| Tue May 25, 2010 9:22 AM EDT

Sen. Blanche Lincoln (D-Ark.) can add a new group to her growing list of opponents in Washington and on Wall Street: House Democrats, led by Rep. Michael McMahon (D-NY). McMahon, Bloomberg reports, is leading a bloc of Democrats who want to kill the toughest of Lincoln's derivatives regulation proposals—namely, forcing big banks to break off their "swaps" desks. "The House bill is based on principles on how to reduce risk and make the system more transparent," McMahon said, "it’s not based on wiping out the system or destroying the system and that’s what the provision does."

The swaps trading desks that Lincoln wants to cut out of banks are highly profitable operations that trade complex financial products like derivatives, whose value depends on that of an underlying asset (wheat, oil, or a stock). Lincoln believes these trading desks are too risky to remain in taxpayer-backed banks. Her demand to make banks convert their swaps desks into separate subsidiaries or divest them altogether, and her fight to keep that provision in the Senate's financial reform bill, has earned her plenty of opponents in addition to McMahon—all of Wall Street, Treasury Secretary Tim Geithner, Senate banking committee chair Chris Dodd (D-Conn.), former Federal Reserve chairman Paul Volcker, and a slew of others. Indeed, Dodd briefly flirted with the idea of killing Lincoln's provision while the Senate was still negotating its own bill earlier this month, but Lincoln demanded the provision remain—which it did.

Another House Democrat, Gary Ackerman of New York, wrote to top House leaders to warn them of the consequences of Lincoln's swaps desk proposal, Bloomberg noted. "We are deeply concerned by the very real possibility that, as a result of the Senate derivatives provision, America's largest financial institutions will move their $600 trillion derivatives businesses overseas, at the expense of both New York’s and the United States' economy," Ackerman wrote.

Complicating the debate on Lincoln's proposal is her midterm election this fall. Senate lawmakers had held off on fighting over the provision last week to avoid hurting Lincoln's chances in her Democratic primary race against progressive candidate Bill Halter. In the primary, though, neither Democratic candidate secured 50 percent of the vote, leading to a June 8 run-off and prolonging the uncertainty over whether Lincoln's rule would survive or not. There's no doubt that Lincoln will continue fighting for her swaps desk rule at least until that run-off to maintain her unrelenting stance toward regulating Wall Street. The question is whether Lincoln, now largely on her own, can withhold the barrage of criticism and opposition that grows by the day. 

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