Kevin Drum

Mary Schapiro

| Thu Jan. 15, 2009 11:34 AM PST

MARY SCHAPIRO....The Financial Industry Regulatory Authority is a private regulatory body formed a couple of years by merging the enforcement arm of the NASD and part of the New York Stock Exchange's regulatory apparatus. The head of Finra is Mary Schapiro, who has been nominated to lead the SEC by Barack Obama. Today, the Wall Street Journal has a long story on its front page raising questions about whether she's tough enough for the job:

Last year, amid historic market convulsions and Wall Street scandals, Finra often filed tiny cases against small players. During the past few years of Ms. Schapiro's career as a regulator, which earns her over $3 million a year, enforcement fines against firms have plunged.

....Finra levied fines against financial firms totaling $40 million in 2008, according to a Wall Street Journal analysis. That was the third straight annual decline in fines levied by Finra or one of its predecessor agencies, the NASD.

....Finra also appears to have lagged behind in a Wall Street mess that affected thousands of individual investors in early 2008 — a freeze-up in the market for what are known as auction-rate securities.

....One of the biggest Wall Street disasters of 2008 was the September bankruptcy filing of Lehman Brothers Holdings Inc....Joseph Mays Jr., a consultant to small broker-dealers and a former NASD examiner, says Finra should have scrutinized the mortgage-backed securities at the root of the crisis. "If I had to assign blame, I'd blame Finra and the SEC, but I'd blame Finra first because it's the first line of defense," he said.

....At Citigroup, which has had huge mortgage-related write-downs and still struggles despite massive federal aid, Finra's largest 2008 action was a fine of $300,000 for failing to supervise commissions on stock and options trades.

Finra also failed to catch the Bernie Madoff ponzi scheme, which is probably the most defensible of its lapses but also, obviously, the most headline grabbing. Felix Salmon has more, and comes down against confirming Schapiro: "The SEC needs someone in charge who's committed to root-and-branch reform of the regulatory system. So far, there's no evidence whatsoever that the toothless and narrowly-focused Schapiro is that person, and I do wonder how committed the Obama transition is to her nomination." Her confirmation hearing bears watching.

Advertise on MotherJones.com

Party News

| Thu Jan. 15, 2009 10:56 AM PST

PARTY NEWS....Sarah Palin won't be attending an inaugural dinner in honor of John McCain next week. But was she not invited? Or did she decide not to come? Turns out no one knows.

Going Back for More

| Thu Jan. 15, 2009 10:12 AM PST

GOING BACK FOR MORE....Last night I read in the New York Times that a mere 20 months after triumphantly nationalizing several massive oil projects in the Orinoco Belt, Venezuelan president Hugo Chávez is inviting foreign oil companies back in to bid on a few new projects. The plummeting price of oil explains Chávez's U-turn, but on the other side of the table I had about the same reaction as Dan Drezner:

The willingness of the oil companies to re-enter the fray in Caracas is more intriguing. In recent years there has been a lot of loose talk about how holders of capital also hold the levers in a bargaining situation with debtors, because the latter must do what they can to please the former.

In fact, recent research suggests that when debtors violate their contracts, the price to be paid is often much less than anticipated. Chávez certainly seems quite aware of this fact.

What puzzles me is that Chávez's reputation does suggest that the moment oil prices go up again, he'll reverse course yet again and put the screws on his foreign investors. I understand that exploration opportunities are scarce, but the willingness of these firms to go back is item #345 on Things I Do Not Understand About Energy Markets.

Count me among the puzzled too. I suppose the companies who are bidding on the Orinoco projects may be counting on Chávez failing in his attempt to become president for life, and are thus figuring they won't have to deal with him in the long term. And as the Times points out, oil companies are pretty desperate for projects these days since there just aren't many big new fields left to open up.

Still, it seems kind of masochistic, doesn't it?

Oscar Grant

| Thu Jan. 15, 2009 9:45 AM PST

OSCAR GRANT....I've been following this story but haven't posted about it, so here's the latest:

A former transit police officer seen on video shooting an unarmed man in the back has been charged with murder and could face up to life in prison in a racially tinged case that has sparked outrage and street protests in Oakland.

....The shooting occurred two weeks ago, early on New Year's morning. Grant and his friends were heading home to the East Bay aboard a BART train after celebrating New Year's Eve in San Francisco when a fight broke out between two groups of riders. BART police met the train at Oakland's Fruitvale station and demanded that passengers disembark.

In videos that have been broadcast on television and viewed hundreds of thousands of times on the Internet, a uniformed officer later identified as Mehserle stands over a prostrate Grant, pulls his gun and fires point-blank into Grant's back.

If you watch the video, it looks for all the world as if transit officer Johannes Mehserle, who quit the force shortly after the incident, does indeed simply pull out his gun and shoot Grant in the back while he's prostrate on the floor and being held down by three officers (at about the 0:30 mark in the video above). It's just stunning.

What's equally stunning is that, as near as I can tell from watching several videos of the shooting, the other officers don't really appear to be all that taken aback by what happened. They don't grab Mehserle or yell at him (in the videos with sound) or anything like that. They seem to treat it like a fairly routine thing.

On another note, the LA Times tells us that "There has been some speculation that Mehserle meant to stun Grant with a Taser, not shoot him with his gun — a confusion that has occurred before." If that's really true, that's as good a reason for banning Tasers as I've ever heard.

Looks Like Geithner Is a Shoo-In

| Wed Jan. 14, 2009 11:34 PM PST

LOOKS LIKE GEITHNER IS A SHOO-IN....Although even most Republican senators think Tim Geithner's tax problems aren't a very big deal, McClatchy claims to detect hints of heartland rebellion against his nomination as Secretary of the Treasury:

However, there were some signs of broader public reaction against Geithner. The Competitive Enterprise Institute, a research group in Washington that opposes federal regulation of business, issued a statement against Geithner on Wednesday.

Ah, yes. The Competitive Enterprise Institute. The wingnut outfit that came up with the slogan "CO2: We Call It Life" as part of an advertising campaign designed to convince the public that rising levels of greenhouse gases are actually good for us. If that's the best dirt McClatchy can come up with, I'd say the public is probably pretty unruffled about Mr. Geithner's tax troubles.

No More GWOT

| Wed Jan. 14, 2009 10:52 PM PST

NO MORE GWOT....Britain's foreign minister, David Miliband, writes today that it's past time to ditch the phrase "war on terror":

The idea of a "war on terror" gave the impression of a unified, transnational enemy, embodied in the figure of Osama bin Laden and al-Qaida. The reality is that the motivations and identities of terrorist groups are disparate. Lashkar-e-Taiba has roots in Pakistan and says its cause is Kashmir. Hezbollah says it stands for resistance to occupation of the Golan Heights. The Shia and Sunni insurgent groups in Iraq have myriad demands.

....The more we lump terrorist groups together and draw the battle lines as a simple binary struggle between moderates and extremists, or good and evil, the more we play into the hands of those seeking to unify groups with little in common....We must respond to terrorism by championing the rule of law, not subordinating it, for it is the cornerstone of the democratic society. We must uphold our commitments to human rights and civil liberties at home and abroad. That is surely the lesson of Guantánamo and it is why we welcome President-elect Obama's commitment to close it.

The Guardian reports that British officials "cannot wait" for the Bush administration to finally leave town. "The new administration has a set of values that fit very well with the values and priorities I am talking about," Miliband told them.

Advertise on MotherJones.com

No Science Allowed

| Wed Jan. 14, 2009 9:59 PM PST

NO SCIENCE ALLOWED....Today Chad Orzel passes along a Seed magazine interview with outgoing Presidential Science Advisor John Marburger. Here's an excerpt:

Seed: Did you see President Bush ever change his mind based on the scientific evidence that you presented him?

Marburger: As far as I can tell, the president, as a matter of principle, doesn't think it's wise to defy nature. By the time I've arranged a presentation about something for the president, all science questions have been resolved. And he expects it. He would probably fire me if I permitted a science question to leak into his briefings.

Chad comments: "It really lifts my spirits to know that we've been led for the last eight years by a man who would fire his science advisor if he were to be forced to confront a science question." Mine too!

Quote of the Day - 01.14.09

| Wed Jan. 14, 2009 7:57 PM PST

QUOTE OF THE DAY....From Robin Hanson, on the source of human disputation:

We disagree because we explain our own conclusions via detailed context (e.g., arguments, analysis, and evidence), and others' conclusions via coarse stable traits (e.g., demographics, interests, biases). While we know abstractly that we also have stable relevant traits, and they have detailed context, we simply assume we have taken that into account, when we have in fact done no such thing.

There's more to disagreement than this, of course, but still. There's probably more truth to this than most of us would like to admit.

Mapping Your Enemies

| Wed Jan. 14, 2009 5:39 PM PST

MAPPING YOUR ENEMIES....Rod Dreher:

Here is a Google map that allows you to find your way to the homes of people who donated money to Prop 8 in California. It's damn creepy, is what it is. What could possibly be the use of this kind of information, presented in this way? It's intended to intimidate people into not participating in politics by donating money. Do that, and you'll end up on some activist group's map, with hotheads being able to find your street address on their iPhones.

....You might be thinking: those haters deserve to be outed. But think about how this same technology can be used against gay folks and gay-marriage supporters in parts of the country that aren't inclined to support gay rights. Would you want some gay-bashing group to post to the Internet a map to the homes of contributors to a pro-gay marriage initiative?....What happens if there's another Islamic terrorist attack, and some vigilante group posts a Google map to the homes of donors to CAIR, or other Muslim causes?

Andrew Sullivan isn't impressed: "The second anyone does anything inappropriate with this information Dreher has a right to complain. Until then, it's public information."

I'm....not so sure about that. It's not as if I have an answer to this problem — like Dreher, I accept that political donations need to be public — but I have to say that I find it kind of creepy too. This sort of thing has been possible for quite a long time, of course, but it was inherently limited in scope because of the time and money it took. Technology has changed that: it probably required little more than a few hours of coding to create a map that identified every Prop 8 donor in the state. And that map isn't only in the hands of the folks who created it. It's out on the internet where it's practically begging to be abused by some nutball.

I dunno. I'm probably overreacting. And it is public information. But I remain a bit of a privacy crank who hasn't yet been reconciled to the inevitability of David Brin's "Transparent Society." I can at least see Dreher's point.

Raw Data

| Wed Jan. 14, 2009 4:12 PM PST

RAW DATA....Andrew Gelman presents us today with the chart on the right. Basically, it's a measure of statewide vote changes between the parties from one election to the next. The big spike upward in 1976, for example, shows that Jimmy Carter won a whole bunch of states that had been won in 1972 by Richard Nixon.

The overall trend is down, which means that states are, in some sense, more set in their ways today than they were in the past. Red states are red states, blue states are blue states, and they just don't swing much from election to election. This is consistent with a bunch of data that shows increasing self-segregation in the United States: communities tend to attract likeminded residents, and as the number of likeminded residents increases, they become far less likely to encounter opposing views that might swing their vote from one party to the other. So they vote the same way year after year.

There's also a view that blames part of this trend on the increasing partisanship of the media. If you can surround yourself exclusively with Fox News and Rush Limbaugh on the one hand, or NPR and Daily Kos on the other, you're going to become much more set in your ways. But although that seems plausible, I have my doubts: European countries have long had a more partisan media than in the U.S., but that doesn't stop them from having big swings from election to election. In any case, my sense is that while partisan media may be on the rise in the U.S., its audience is mostly people who are already true believers. The swing voters still watch CNN and read Time magazine. Contrary data welcome, of course.