Blogs

New Torture Memos Outline Black Sites, Ghost Prisoners

| Thu Feb. 12, 2009 2:03 PM EST

Three human rights groups released more than a thousand pages of Department of Defense and CIA documents Thursday that outline how closely the two agencies worked in rendering terrorism suspects to black sites, keeping detainees' identities secret, and tempering bad publicity for inmate treatment at Guántanamo Bay.

Most of the documents—obtained after Amnesty International, the Center for Constitutional Rights, and the Center for Human Rights and Global Justice sued under the Freedom of Information Act—simply contain news articles, but the Center for Constitutional Rights scoured the files and found three significant disclosures from the DoD.

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New York Attorney General Cuomo Slams Merrill Lynch

| Thu Feb. 12, 2009 1:39 PM EST

Andrew Cuomo, New York's Attorney General, is most displeased. Cuomo is investigating why Merrill Lynch handed out $3.6 billion in bonuses before releasing its horrendous results for the fourth quarter of 2008, in which it lost $15.31 billion. After doling out the bonuses, Merrill Lynch was subsequently bought by Bank of America (with $20 billion of taxpayer help), and Bank of America was later the beneficiary of a $25 billion government bailout. The bonuses were also very unequally distributed—while 39,000 employees received some bonus money, 700 employees were made millionaires by the bonus pool, and the top 149 bonus recipients alone received $858 million. The New York AG's office wants to know why Merrill Lynch saw fit to reward so few of its employees so extravagantly for such massive failure. But Cuomo's not stopping at a state-level investigation—he's also calling in the feds. In a letter to Rep. Barney Frank (D-Mass.), the chair of the House Financial Services Committee, Cuomo dishes the dirt on his ongoing investigation of Merrill:

On October 29, 2008, we asked Merrill Lynch to detail, among other things, their plans for executive bonuses for 2008, including the size of the bonus pool and the criteria they planned to use in determining what, if any, bonuses were appropriate for their top executives... Merrill did not provide my Office with any details as to the bonus pool, claiming that such details had not been determined.
Rather, in a surprising fit of corporate irresponsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my Office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives. Merrill Lynch had never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth quarter earnings announcement and before the planned takeover of Merrill by Bank of America. [emphasis added]

The sheer Rod-Blagojevich-esque audacity of Merrill's move is impressive. Merrill knew it was being watched by Cuomo, who had asked them to behave reasonably and transparently with their bonuses. One would think that knowledge would inspire some sort of caution. But no—instead, Merrill just went ahead and did what it wanted to anyway, likely figuring that politicians wouldn't have the stomach to take back bonuses that had already been handed out. (Better to beg forgiveness than to ask permission.) That may be the case, but one of Cuomo's accusations seems to make government punishment a bit more likely. "One disturbing question that must be answered," Cuomo writes, "is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding." Sure, politicians are reluctant make people give up already-awarded bonuses. But if the bonuses essentially came from taxpayer money, public outrage might force Congress (or Cuomo) to make Merrill's employees give the money back.

RSS Feed

| Thu Feb. 12, 2009 1:30 PM EST
RSS FEED....Just a quick note: we know our RSS feed is having some teething problems.  We're working on it.  Some of you are reporting that you're only getting headlines, others (like me) aren't getting any feed at all.  Once we've figured what's going on, full feeds will be restored.

There are other problems we're working on too.  Hopefully they'll all be taken care of in the next day or two.  In the meantime, feel free to leave comments to describe any bugs you're seeing.  Please let us know what OS and browser you're using since that will help us track things down.  Your help and patience is greatly appreciated.

Stress Test

| Thu Feb. 12, 2009 12:25 PM EST
STRESS TEST....Matt Yglesias comments on today's Nick Kristof column on the economic meltdown:

As he says “the larger conundrum is that a bailout is both: A) urgent and essential; and B) unfair and unpopular.” Thus far, officials have attempted to resolve that conundrum with timidity, but ultimately that results in measures that fail on both counts. What’s needed is more boldness — really decisive action to clean up the financial sector combined with measures that are tough enough on CEOs and shareholders to give the effort political legitimacy.
OK, but here's the problem: you also have to do this in a way that's at least nominally fair.  And the process has to be fairly transparent.  If you ask Vikram Pandit right now if Citigroup is solvent, he'll tell you it is — and he'll then haul out a detailed PowerPoint presentation to prove it.  Citigroup's internal numbers suggest that they're well capitalized and in no need of being taken over.

Now, those numbers are almost certainly hooey.  Certainly investors don't believe them, and to register their disbelief they've driven Citigroup stock down to almost nothing.  Nonetheless, the numbers are there, and the government can't be in the business of taking over banks that swear on a stack of Bibles that they're perfectly healthy.  This, I assume, is the point of Tim Geithner's stress test.  In the same way that the Swedes set up a transparent process to evaluate their banking sector in the early 90s and ended up nationalizing two banks but not the others, Geithner needs to set up a process that does the same here.  If the process is seen as fair, there will be way less political blowback when some of the big banks are taken over and others aren't.

This, anyway, is the optimistic point of view: that Geithner and Obama, far from being unwilling to nationalize insolvent banks, are merely setting up the political and financial process to make it tolerable in the near future.  The pessimistic view is that they're just screwing around and don't really have any plan at all.  For the moment, then, I plan to take the optimistic point of view just for the sake of my own mental health.  Your mileage may vary, of course.

The Economy Up North

| Thu Feb. 12, 2009 11:45 AM EST
THE ECONOMY UP NORTH....The economy in Canada is doing pretty well.  Fareed Zakaria explains why:

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking.
Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north.
So there you have it.  Keep your housing bubble to merely huge but not gargantuan size, and keep the gearing in your banking sector to merely huge but not gargantuan levels, and you'll do OK.  Boring, isn't it?

The FEC Brings Down the Hammer (Belatedly)

| Thu Feb. 12, 2009 11:40 AM EST
I was encouraged to see this, kind of:
...the Federal Election Commission has closed the books on 17 more campaign finance investigations... Among those fined were Sen. Mel Martinez and former House Minority Leader Richard A. Gephardt.
Martinez, R-Fla., was fined $99,000 for exceeding contribution limits in his 2004 campaign by some $313,000, and for not properly filing required forms.
Gephardt, D-Mo., was fined $42,000 for accepting $211,000 in donations beyond the limit in his 2004 presidential bid and for spending $163,000 more on the Iowa caucuses than allowed.

These fines are hefty, and I'm happy to see the FEC extract them. But this highlights a major shortcoming in the way the FEC does business -- fining politicians five years after they violate elections law does not provide them with a serious disincentive for doing it again. If you're a special interest group and you desperately want to see a proposition defeated or a candidate booted from office, you are far more likely to circumvent the law in order to do so if you know you can tie the FEC up in legal knots for years and only pay a fine way down the road.

And let's say you do get hit with a serious fine five years on. Half a decade's worth of beneficial policy that you got by cheating the electoral system is almost certainly worth a couple hundred thousand bucks, right? For more on how/why the FEC doesn't work like it should, see here and here.

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Good News

| Thu Feb. 12, 2009 11:29 AM EST
GOOD NEWS....Some modestly good news today:
U.S. retail sales jumped 1% in January, reversing a six-month declining trend and defying economists' expectations by posting the biggest increase in 14 months.
What else?  For my local readers, a solar firm has signed yet another deal to provide Southern California with 1,300 megawatts of solar electricity.  The first plant should be operational in four years.

And the California legislature has supposedly reached a deal to "balance" the state budget.  It includes $15 billion in spending cuts, $15 billion in tax increases, and $12 billion in smoke and mirrors — which isn't a bad ratio considering how prevalent accounting tricks usually are.  Now all we have to do is round up two or three non-insane Republicans to vote for it.  Stay tuned.

Pentagon Worried About Spending Cuts

| Thu Feb. 12, 2009 10:54 AM EST
As the economy collapses around our heads, the federal government is preparing financial bailout packages totaling an estimated $2 trillion--and that, perhaps, just to start. There's a lot of money going out the door, but one potential loser could be the Pentagon, reports UPI. A notoriously profligate spender (read this), the Defense Department, according to the Congressional Budget Office, accounts for more than half of all federal discretionary spending and about 4.5 percent of GDP. And despite what you may think, the Pentagon's budget has not declined since the end of the Cold War; it's now 20 percent greater, adjusted for inflation, than it was in 1985 when President Reagan was spending the Soviets into the ground.

In short, the Pentagon is flush with cash, but could the glory days of almost limitless spending be winding down? Defense Secretary Robert Gates seems to think so. "The spigot of defense spending that opened on Sept. 11 is closing," he said at a Senate hearing last month. But the reality of a leaner fiscal climate comes at a bad time for the military services, which are straining to maintain readiness while fighting a two-front war. There's equipment to refurbish or replace, soaring personnel costs, and next-generation weapons to develop.

Nuclear Pork Axed From Stimulus

| Thu Feb. 12, 2009 10:09 AM EST

Senate and House negotiators cut a $50 billion provision from the stimulus package Wednesday that would have allocated funds for federal loans to the nuclear and coal industries.

The so-called "nuclear pork" authorized loans under the Energy Policy Act of 2005, which was intended to help fund alternative energy sources, but diverts the bulk of subsidies and tax breaks to nuclear reactors and "clean" coal plants.

A Dispatch from Darwin Day

| Thu Feb. 12, 2009 7:24 AM EST

Christians have Christmas. Atheists have Charles Darwin's birthday--a date that has inspired months of zealous non-worship in the lead-up to today’s fete of his 200th. Before midnight the world will have witnessed some 600 Darwin Day events, from the Darwin Day Barbecue in Melbourne, Australia, to the Darwin Day Rally in Dhaka, Bangladesh, to the Darwin Day Evolutionpalooza, a gathering last Sunday in the basement conference room of the San Francisco Public Library, where 100 guests of the local atheist club ate birthday cake and heard the Charles Darwin Backup Singers belt out “The Twelve Ages of Evolution,” a Christmas-inspired ditty that ended with the Pleistocene era’s shopping list of "bisons and humans, hawks and higher primates, horses and whales, conifers and mammals, bipedal dinosaurs, reptiles, trees, and insects, spiders, mites and sharks, land plants and fish!" And the list went on.

Other than taking place in America's most Godless major city, San Francisco’s D-Day was notable for the presence of the mutton-chopped Darwin himself, who took to a podium in a chiffon scarf tied like a cravat and thanked the crowd for "all your great efforts in channeling me into the 21st Century." Forthwith began the kind of autobiography that could only come from a scientist--a mostly dry, rambling affair occasionally enlivened by Far Side jokes. "I have a friend who was Unitarian," Darwin said at one point, without mentioning that he was raised as one, "and the Klu Klux Klan burned a question mark in front of his house."

Evolutionpalooza, which was advertised on Facebook with a drawing of hominids evolving into a man carrying a birthday cake, is the brainchild of atheist author David Fitzgerald, who’d shown up wearing the classic walking fish shirt. "I hesitate to venerate Darwin too highly, to make him sound like he's our prophet," he told me. "There's already so much baggage attached to that kind of thing." But, he added, Darwin was a convenient rallying point in the effort of group’s 1,000 members to counteract the Religious Right. And they certainly had cause to party: President Barack Obama had proclaimed during his inauguration speech that “we are a nation of Christians and Muslims, Jews and Hindus — and non-believers.” This followed by Darwin’s bicentennial hinted at sunrise over a decade of darkness: “I have never been more optimistic about seeing Atheism being accepted in America,” Fitzgerald said. “The more we learn, the less plausible any one of those religions out there seems.”