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 Guardian, Men's Journal, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndyKroll.

Get my RSS |

Advertise on MotherJones.com

Goldman CEO Safe—For Now

| Fri May 7, 2010 9:47 AM EDT

[UPDATE]: Earlier, I wrote about rumblings that Goldman Sachs CEO and chairman Lloyd Blankfein could be on his way out if Goldman decides to settle the Securities and Exchange Commission's fraud suit against the firm. Blankfein, however, isn't going down without a fight. Today, in a massive vote of confidence, Goldman's shareholders voted against splitting the firm's CEO and board chairman roles; for now, Blankfein remains the undisputed leader of the firm. "I have no current plan to step down," Blankfein told shareholders. Today's vote is sure to boost Blankfein's, um, stock, and should dampen calls for his ouster.

The Wall Street Journal reports today that besieged investment firm Goldman Sachs and the Securities and Exchange Commission have held early settlement talks to end the SEC's blockbuster civil suit. That's a big step away from the firm's initial reaction to the suit, saying it was completely false. The securities regulator filed suit against Goldman for allegedly misleading its clients about a complicated financial product that the SEC says was designed to fail. Moreover, the SEC claims Goldman failed to disclose that a trader betting against that product, a synthetic collateralized debt obligation named Abacus, played a large role in designing the product and ensuring its demise. Kind of like allowing a guy help build a house out of pure kindling, then letting him buy fire insurance against the sure-to-burn house and wait to collect his payout. Ultimately, the trader "shorting," or betting against, Goldman's Abacus, a hedge fund guru named John Paulson, made $1 billion in the deal, while investors who thought Abacus would succeed lost around $1 billion.

The settlement talks are in the very early stages, the Journal reports, and right now there's a sizeable gulf between the two parties' positions. One fund manager, Michael Mayo, suggested that if Goldman did indeed settle, the settlement figure could reach $1 billion—not much compared to the firm's $850 billion balance sheet, but a symbolic blow nonetheless. Even more jarring would be the forced departure of Goldman CEO and chairman Lloyd Blankfein. There've been rumblings that any settlement agreement would involve ousting Blankfein, the man at the helm during the go-go subprime years, the firm's decision to short the housing markets, and the 2008 collapse. Blankfein was also running the firm when the Abacus deal went down, in 2007.

It would undoubtedly be a blow to Goldman to lose Blankfein, a long-time trader and executive in the firm and the man who's lead Goldman through arguably the bleakest period in its history. But if the firm is to move past the tumult of the last two or three years, odds are you'll see Blankfein packing his bags.

Oddest Finance Amendment Awards

| Thu May 6, 2010 11:15 AM EDT

This week, the number of amendments seeking to improve or gut or merely tweak the Senate's financial reform bill has gone from a trickle to a pour. A few days into the full debate, at least 125 amendments have been offered, ranging from a major kneecapping of the bill's Consumer Financial Protection Bureau to setting caps on the size of banks and the amount of leverage they can use. As expected, nearly all of the amendments to the Senate's financial bill concern, well, financial regulation. A few, however, don't, having only the most tenuous connection to fixing Wall Street—if they have any connection at all.

Like South Carolina senator Jim DeMint's amendment that would require the completion of a 700-mile, double-layered fence along the US-Mexico border. DeMint announced yesterday that he was planning to introduce the border fence amendment because Democrats, and especially the Obama administration, had backed out on their pledge to finish the fence, he claimed. "We’ve had rhetoric and promises for four years without results," DeMint said in a statement. "It’s time we completed the fence and secured our borders to protect American citizens." What the border fence has to do with financial reform is unclear: There's no mention of financial reform in DeMint's statement announcing the amendment, and a call requesting comment from his office wasn't immediately returned.

Following in DeMint's footsteps is Sen. Sam Brownback (R-Kan.), who is planning to introduce an amendment relating to conflict minerals obtained from the Congo. While all the details on Brownback's amendment aren't available, odds are it will mirror past legislative efforts by Brownback to "brin[g] accountability and transparency to the supply chain of minerals used in the manufacturing of many electronic devices." Brownback has been a prominent voice in Congress on the issue of buying minerals from the Congo. He wants the Securities and Exchange Commission to take on the role of increasing transparency and disclosure in the mineral trade. To that effect, he co-sponsored a previous bill, the Congo Conflict Minerals Act of 2009, but the bill never made it out of committee. Again, the connection between disclosure of conflict minerals (a human rights issue, really) and financial regulatory reform seems weak. A call to Brownback's office wasn't immediately returned.

Debunking Norquist's Scare Tactics

| Thu May 6, 2010 10:29 AM EDT

[UPDATE]: Brian Johnson with Americans for Tax Reform responds in the comments section to my post earlier today with evidence he says supports Norquist's email. In response, I posted my own rebuttal to his attempted rebuttal, also in the comments section. Feel free to wade in and comment as you like.

You know conservatives are running out of substantive and articulate rebuttals when they fall back on the this-bill-is-a-government-takeover meme. Today, anti-tax activist Grover Norquist shot out an email blast imaginatively titled "Stop the Government Takeover of Our Banks" urging his followers to call their respective senators and plead with them to block the main financial reform bill now being debated on Senate floor. "Sen. Dodd and the Democrats are trying to force their 'Wall Street Bailout Bill,' S. 3217, the Restoring American Financial Stability Act of 2010, down the throats of the American public," Norquist's email reads. Nevermind that the bill is not a "bailout bill," as misinformed observers like Norquist and even lawmakers like, say, Senate Minority Leader Mitch McConnell, have said. That's conservative scare tactic number one in Norquist's email.

Number two: Norquist's email goes on to say, "This bill will give the government powers to monitor and track your personal bank account transactions and all of your purchases and give that information to Wall Street and Big Businesses." This statement refers to a proposed Office of Financial Research, an organization that would gather financial data for modeling and, according to the bill's summary text, "monitor emerging risks to the economy" to prevent future meltdowns. The idea of an OFR has been supported by Nobel laureates, leading economists, as well as both Democratic and Republican senators. (Sen. Bob Corker (R-Tenn.), a leading GOP figure on financial reform, supports it.) Moreover, there's no evidence—apart from the baseless claims of people like Karl Rove and Fox News host Steve Doocy—that this agency will pry into the financial data and private lives of Americans.

And number three: Finally, Norquist's says, "This bill will make permanent the same risky lending practices that contributed to the financial collapse and create Fannie Mae 2.0." The bill, as it looks now, will not "make permanent" the predatory abuses that precipitated the crisis—but will crack down on those practices. A proposed independent consumer protection agency, to be housed in the Federal Reserve, would focus on ending exactly these kinds of abuses, zeroing in on non-bank institutions like subprime and payday lenders and auto dealers. As for "Fannie Mae 2.0," it's hard to know what Norquist is even talking about here. It's true, the bill does not, in its current form, address the issues of Fannie and Freddie Mac, the two government-backed housing corporations, even though the twins are a massive headache and played a major role in fueling the subprime bubble. But lawmakers have said they'll take up legislation to fix the twins—that, indeed, separate legislation is needed given the size of their problems—when they're done with the current financial reform. And if they delay, Americans will need to pressure them to make sure it gets done.

All in all, Norquist's email shows that conservatives are running out of ways to oppose to financial reform. Instead of actually critiquing parts of the bill, they're continuing to fabricate or fudge parts of the bill to scare people into fighting it.

Tue Nov. 18, 2014 6:00 AM EST
Wed Oct. 15, 2014 2:01 PM EDT
Tue Jun. 24, 2014 2:22 PM EDT
Thu Apr. 24, 2014 5:06 AM EDT
Mon Jan. 13, 2014 12:19 PM EST
Mon Dec. 16, 2013 9:47 AM EST