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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FCIC's Dull Opening

| Wed Jan. 13, 2010 2:17 PM EST

Like boxers sizing each other up and tossing the occasional jab, the opening hearing of the Financial Crisis Inquiry Commission got off to fairly predictable start this morning, with four of the biggest executives on Wall Street—Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase, John Mack of Morgan Stanley, and Brian Moynihan of Bank of America—outlining their reasoning for why the meltdown happened and fielding questions on anything from lending practices to risk management to compensation from the 10-person commission.

The four Wall Street execs almost unanimously agreed in their prepared testimonies that the root of the financial crisis lay in the housing market, and more specifically, in predatory and reckless practices and products, like not verifying a borrower's income for a loan or peddling mortgages where you can pick how much to pay or interest rates drastically reset after a few years. Those kinds of practices fueled a massive housing bubble, Dimon said, which in turn "helped fuel asset appreciation, excessive speculation and far higher credit losses" that spread throughout the financial markets. As banks and investors kept making larger and larger bets on both housing and other markets, they failed to adequately managing the risks that accompanied those outsized bets should they fail, Blankfein said, and when the housing bubble popped and so many of those risky bets soured, institutions like Lehman Brothers and Bear Stearns collapsed.

Boiled to its essence, that was what the four execs pointed to as the main root cause of the crisis. Aside from that, however, the morning's questioning didn't shed much light on anything. Daniel Indiviglio at The Atlantic bemoans FCIC chairman Phil Angelides' apparent lack of finance know-how in his questioning of Blankfein (which I mostly agree with); and to be honest, none of the FCIC's commissioners—barring perhaps former CBO director Douglas Holtz-Eakin—seemed to ask anything that hadn't been covered before. Former congressman Bill Thomas did request that all four men to answer the questions featured in today's New York Times op-ed page—questions far more probing than what the FCIC asked.

But in all fairness, the commission is just getting warmed up and I'm sure their work will only get better going forward. Especially if do the gritty, investigative work that my colleague Nick Baumann writes about today, like subpoenaing documents and records and even tracking down whistleblowers for testimony. That'll bring out the juicy details that can really shed some light on what happened behind the scenes, the kind of decisions and actions that Lloyd Blankfein or Jamie Dimon are never going to share.

 

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Terrorism and the Reason Why

| Mon Jan. 11, 2010 8:11 AM EST

Kudos to Helen Thomas, that 89-year-old front-row mainstay of the Washington press corps. At President Obama's press briefing this past week with counterterrorism official John Brennan and Department of Homeland Security secretary Janet Napolitano, which I'd mostly avoided figuring it to be an hour's worth of canned statements and only revisited Sunday, I completely missed an important—and painfully telling—question Thomas posed to Brennan and Napolitano. A question that in my estimation revealed more about the Obama administration than the rest of the 40-minute briefing.

What Thomas asked, in essence, was this: Why do terrorists like Umar Farouk Abdulmutallab hate and attack us? What causes them to want to do such a thing? Napolitano dodged the question entirely, but Thomas pressed on: 

Thomas: What is the motivation? We never hear what you find out on why.

Brennan: Al Qaeda is an organization that is dedicated to murder and wanton slaughter of innocents. What they have done over the past decade and half, two decades, is to attract individuals like Mr. Abdulmutallab and use them for these types of attacks. He was motivated by a sense of religious sort of drive. Unfortunately, al Qaeda has perverted Islam, and has corrupted the concept of Islam, so that he's able to attract these individuals. But al Qaeda has the agenda of destruction and death.

HT: And you're saying it's because of religion?

JB: I'm saying it's because of an al Qaeda organization that uses the banner of religion in a very perverse and corrupt way.

HT: Why?

JB: I think this is a—this is a long issue, but al Qaeda is just determined to carry out attacks here against the homeland.

HT: But you haven't explained why.

At that point Thomas was cut off, the briefing moved on, and her prodding was left behind.

 

Graph of the Day: Unemployment

| Fri Jan. 8, 2010 1:18 PM EST

The latest unemployment data released today paint a somewhat disheartening picture—the jobless rate remains at 10 percent, and the economy shed 85,000 jobs last month—especially for this reason: Although jobs were lost, the unemployment rate held steady from the month before, meaning a large number of people had simply given up looking for a new job.

Which brings me to this graph from Calculated Risk. The blue line represents the number of people out of work for more than 26 weeks, and the red line represents the percentage of the workforce those long-term unemployed people represent. As you'll see, those 6.13 million people unemployed for more than 26 weeks constitute 4 percent of the civilian workforce—a record since the the Bureau of Labor Statistics started collecting this data in 1948.

Now, there are a few bright signs in today's jobs report. A crucial manufacturing index showed an encouraging uptick, raising the possibility of some growth in manufacturing industries, while the Labor Department revised jobs estimates from November to reflect gains of 4,000 jobs (the government had originally projected 11,000 lost jobs), the first gain in jobs in almost two years.

Krugman says the report supports his and others' belief that the stimulus was too small, and Brad DeLong uses the report as evidence that our economic recovery, if that's what this actually is, is likely going to be a jobless one. All in all, a decidedly mixed report, especially when it comes to the record numbers of the chronically unemployed, a total that's only likely to grow in the coming months.

(H/T Calculated Risk)

Hail, Teach for America?

| Fri Jan. 8, 2010 7:35 AM EST

The Atlantic has a story in its January/February issue promisingly titled "What Makes a Great Teacher?" What indeed? As someone who follows education reform closely and occasionally writes about it, I clicked through to the article, eager to see what the writer, Amanda Ripley, had to say on one of the most puzzling, beguiling, confounding questions in all of education. What I found was far from inspiring or groundbreaking, and to be honest felt less like journalism and honest inquiry into teacher performance and more like, well, a Teach for America press release.

I guess the story's subhead should've clued me in:

For years, the secrets to great teaching have seemed more like alchemy than science, a mix of motivational mumbo jumbo and misty-eyed tales of inspiration and dedication. But for more than a decade, one organization has been tracking hundreds of thousands of kids, and looking at why some teachers can move them three grade levels ahead in a year and others can't. Now, as the Obama administration offers states more than $4 billion to identify and cultivate effective teachers, Teach for America is ready to release its data.

What follows is nearly 6,000 words that mainly focus on the Teach for America's long-term data collecting on the performances of its teachers and their students, all in hopes of answering, as the story's title suggests, a crucial question: What distinguishes good and great teachers, the ones whose students excel in the classroom and are eager to learn everyday, from the rest of the pack? (Teach for America, or TFA, for the few stragglers still unfamiliar with the program, is a nonprofit organization that takes a class of smart, talented college graduates each year; puts them through TFA's five-week summer training program; then places them in low-income schools throughout the country where they teach on a two-year contract.) The promise of The Atlantic story is it will reveal the results of TFA's exhaustive, long-term teacher data and offer rigorously tested, refined, definitive predictors on what makes a good teacher.

Geithner's Other AIG Rescue

| Thu Jan. 7, 2010 5:42 PM EST

Via Daniel Indiviglio at The Atlantic, a report by Bloomberg turns up some grisly facts about Treasury Secretary Tim Geithner's tenure at his former employer, the New York Fed—namely, how the New York Fed told AIG to keep mum about its swaps deals with other banks that would benefit if AIG got bailed out.

According to emails obtained by Rep. Darrell Issa (R-Calif.), the New York Fed cut from a draft of an AIG regulatory filing mention that banks like Goldman Sachs and Societe Generale had swaps agreements with AIG and would benefit from AIG's rescue via a "backdoor bailout"—a troubling omission at a time when AIG's fate was up in the air and full disclosure was critical. Bloomberg quotes Issa as saying, "It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information." Taxpayers, he added, "deserve full and complete disclosure under our nation's securities laws, not the withholding of politically inconvenient information."

Indiviglio uses the latest revelation in the AIG counterparty saga to not only insist that the overly opaque Fed doesn't deserve any more authority (as I did yesterday), but to even question Geithner's position as Treasury Secretary. Without a doubt, that Geithner's New York Fed tried to cover up AIG's exposure is embarassing at the very least; it's also more broadly indicative of the Fed's belief that it can get away with almost anything behind closed doors. Is that the kind of regulator, as some have proposed, that should be tasked with overseeing financial institutions and markets?

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