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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Harry Reid's Tea Party Dreams

| Mon May 24, 2010 1:35 PM EDT

Thanks to a series of missteps by Sue Lowden, the top GOP candidate in Nevada's 2010 senate race, it's beginning to look like Nevada senator Harry Reid could square off against the Tea Party come November. That's a battle Reid would love, and one that political experts in Nevada say largely favors the Senate majority leader.

As both Politico and I reported today, Reid's main challenger, Lowden, a former chair of the Nevada GOP, has stumbled in the final weeks before Nevada's June 8 primary. (Reid has no Democratic primary opponent.) She blundered when she implicitly suggested that patients barter with doctors for care and even trade chickens. And now one of her primary opponents, Danny Tarkanian, says Lowden broke campaign finance law by accepting an RV from a donor that she's used to travel the state. (Lowden's campaign says she in compliance with the law.) Nonetheless, Lowden has slipped in the polls, with a Democratic-funded poll showing Sharron Angle, the Tea Party-backed underdog on the GOP side, just beating Lowden and Tarkanian, Politico reported.

All of this bodes well for Reid, who, as I reported today, also has the passage of financial reform to bolster his record on the campaign trail. From the sounds of it, his campaign couldn't be happier if it faced the Tea Party candidate, Angle, in November and not Lowden, the more established, traditional GOPer. Indeed, Reid's campaign has highlighted Lowden's gaffes as often as it can in an effort to knock her out of contention for the fall. And if Angle does win on June 8, there's no doubting Reid's people will do everything they can to paint the Tea Party Express darling as cut from the Rand-Paul-Civil-Rights-Act cloth.

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AIG's Ringleader Walks Away Freely

| Mon May 24, 2010 9:47 AM EDT

Without global insurer American International Group's Financial Products outfit, located in London, the financial calamity would've been less severe. AIG FP, as it was known, sold oodles of a product called a credit default swap, essentially an insurance policy on bundles of subprime mortgages. (The way it worked, if the homeowners stopped making payments on their mortgages and money ceased to flow into those mortgage pools, the owner of that unregulated insurance policy got a big payout for a pretty small initial investment.) Problem is, AIG FP, led by a guy named Joseph Cassano, sold way too many credit default swaps. Way, way too many of them. And when the housing bubble burst, AIG was forced to post cash or securities for all those people to whom AIG had sold these swaps. The rest you know: the firm crumbled, was deemed "too-big-to-fail" and got more than $140 billion in bailout cash, and so on.

Now comes this news: Despite leading an office that nearly imploded the global markets, Cassano, who author Michael Lewis dubbed "The Man Who Crashed the World," will face no charges for his role in the crisis. The Department of Justice had been investigating Cassano, the New York Times reports, to see "whether Mr. Cassano misled investors when he stated in December 2007 that the company’s obligations on the mortgage securities it backed were unlikely to produce losses." Apparently he didn't. Which means he was arguably the most oblivious executive to ever run such a complex, powerful financial operation.

Cassano's dropped case is indicative of a broader failure by regulators and prosecutors to nail down any high-level culprits from the financial crisis. In a recent investigation, the Huffington Post Investigative Fund detailed how, despite banks' reports of massive levels of fraud, banks regulators hadn't made one criminal referral stemming from the financial crisis. Why not? A culture of self-policing, the I Fund's David Heath writes:

While data on criminal referrals during the S&L crisis is spotty, the Government Accountability Office reported that in the first ten months of 1992 alone – a random snapshot – financial regulators sent the Justice Department more than 1,000 cases for criminal prosecution...

This time, prosecutors are relying more heavily on banks to report suspicious activity to the Treasury Department. Banks are required to report known or suspected criminal violations, including fraud, on Suspicious Activity Reports designed for the purpose. In effect, the reports, which can be many pages in length, provide substantive leads for criminal investigations.

Moreover, Heath adds, there are fewer cops on the beat when it comes to white-collar financial crime: "Deputy Director John Pistole testified before Congress last year that the bureau had 1,000 people working on the S&L crisis at its height. That compares to about 240 agents working on mortgage fraud cases last year."

Whether the lack of resources and hands-off mentality influenced Cassano's case is unclear. But it's telling that the leader of arguably the most infamous operation throughout the entire crisis will walk away from the entire mess with only a bruised ego and a tarnished name.

Wall Street Reform: The Battle Ahead

| Fri May 21, 2010 10:02 AM EDT

With last night's passage of the Senate's financial reform bill, next up is what's called "conference," where the House and Senate must resolve any differences and merge their two bills. In size and scope, the two bills are pretty much the same. But as always, the devil is in the details.

Here's a breakdown of the differences between the House bill, shepherded through that chamber by Rep. Barney Frank (D-Mass.), the House financial services committee chairman, and the Senate's, which relied on the negotiating acumen of Sen. Chris Dodd (D-Conn.), the banking committee chair, and Majority Leader Harry Reid's (D-Nev.) hard-charging leadership. I'll be updating this post as I dig through the two bills for more notable discrepancies.

Dems On a Roll: Finance Reform Passes

| Thu May 20, 2010 9:48 PM EDT

All this week, despite Republican threats to prolong or outright block the process, Senate Majority Leader Harry Reid (D-Nev.) said he wanted a swift finish to the Senate's debate on financial reform. Right on schedule, Reid got what he wanted. This evening, the Senate passed its massive, far-reaching, historic overhaul of how Wall Street does business and how our financial markets function. The vote was 59-39.

Unlike the hyperpartisan nature of health care reform's passage, the Senate's victory tonight featured a modicum of Republican support. Sens. Scott Brown (R-Mass.), Olympia Snowe (R-Me.), and Susan Collins (R-Me.), all of whom voted for the cloture motion to essentially end the debate on financial reform earlier this afternoon, as well as Sen. Charles Grassley (R-Ia.) voted in favor. There were two Democratic defectors: Sens. Maria Cantwell (D-Wash.) and Russ Feingold (D-Wisc.), both of whom voted against the bill because they thought it wasn't strong enough. Cantwell said changes were needed to the bill's derivatives reform language, which right now doesn't punish those who disobey the bill's proposed rules. The Senate's derivatives reform, in her view, is toothless. Meanwhile, Feingold said he believed the bill simply doesn't do enough to prevent banks and non-bank financial companies from becoming too-big- and too-interconnected-to-fail.

Financial reform advocates and the Obama administration generally hailed the bill's passage this evening.  "Today we stand closer than ever to enacting meaningful financial reform that will benefit every American family and business, help improve the competitiveness of our financial markets, and strengthen the safety and soundness of our financial system," said Treasury Secretary Tim Geithner. "This bill, while not perfect, takes significant steps to close those regulatory gaps and make our financial system both safer and more stable," added Barbara Roper, director of investor protection at the Consumer Federation of America. Michael Calhoun, president of the Center for Responsible Lending, congratulated lawmakers but warned, "[C]oncerns remain. In this final stretch we hope lawmakers will resist Wall Street’s efforts to water down the bills’ strong provisions."

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