Mojo - March 2009

DREAM Act Supporters Try Again

| Mon Mar. 30, 2009 8:56 AM PDT

If you are the son or daughter of an illegal immigrant, brought to this country at a young age, you have the opportunity to go to high school, and with some complications, college. But frequently, that's where your pursuit of the American dream ends -- becoming a professional (i.e. using your expertise to contribute to the arts, letters, commerce, or social development of this country) can be immensely difficult. The DREAM Act, which was recently reintroduced in the House, would remedy that. It would give undocumented immigrants who arrived in this country before the age of 16 the opportunity to become American citizens if they have no criminal record and they complete two years of college or serve two years in the military.

The bill has its supporters. And they've got lots of reasons -- moral and economic -- why it ought to pass. But it failed last year in the Senate. One would think that an immigration bill would have conservative support if it only makes citizens out individuals in the undocumented population who (1) have raised themselves up from nothing to the point where they are ready and willing to contribute to society, (2) will not be taking low-wage jobs from everyday working Americans, and (3) who came to this country at such a young age that their illegal status was clearly something that happened to them, not that they chose. And yet, it faces persistent opposition from those who believe it is back-door amnesty. So if you're the type to support legislation, and you are represented by a Blue Dog Democrat or a moderate Republican, consider picking up the phone.

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Iran Nuke Update and Media Imbalance

| Mon Mar. 30, 2009 8:26 AM PDT
I want to point out that when the current administration gives non-inflammatory updates on the state of Iran's nuclear capability, it earns way less media attention than the previous administration's public fear-mongering. The result is that Americans still nervous about Iran because of Bush, Cheney, et al's repeated but unfounded warnings don't have the information they need to know they can breathe easy. This strikes me as problematic. 

Torture Follies (Confirmed!)

| Mon Mar. 30, 2009 7:40 AM PDT

For all of you who don't get the Washington Post over the weekend (which, I'm assuming, is the vast majority of you), here is the beginning of its very important Sunday front-pager, on how useless torture enhanced interrogation techniques were under the Bush Administration.

When CIA officials subjected their first high-value captive, Abu Zubaida, to waterboarding and other harsh interrogation methods, they were convinced that they had in their custody an al-Qaeda leader who knew details of operations yet to be unleashed, and they were facing increasing pressure from the White House to get those secrets out of him.

The methods succeeded in breaking him, and the stories he told of al-Qaeda terrorism plots sent CIA officers around the globe chasing leads.

In the end, though, not a single significant plot was foiled as a result of Abu Zubaida's tortured confessions, according to former senior government officials who closely followed the interrogations. Nearly all of the leads attained through the harsh measures quickly evaporated, while most of the useful information from Abu Zubaida -- chiefly names of al-Qaeda members and associates -- was obtained before waterboarding was introduced, they said.

Moreover, within weeks of his capture, U.S. officials had gained evidence that made clear they had misjudged Abu Zubaida. President George W. Bush had publicly described him as "al-Qaeda's chief of operations," and other top officials called him a "trusted associate" of al-Qaeda leader Osama bin Laden and a major figure in the planning of the Sept. 11, 2001, terrorist attacks. None of that was accurate, the new evidence showed.

Not much of this is new -- if you've read books like The One-Percent Doctrine and The Dark Side, you know that torture never produced the bounty of information that Dick Cheney still wants you to believe it did, and that Zubaida (most news outlets have spelled it Zubaydah in the past) was a fixer, a functionary, a glorified travel agent. And he was mentally unstable to boot. The idea that he is an example of how the Bush Administration got detainee policy right is one of the great and enduring fictions of the last decade., and this article confirms that.

Update: Andrew has some additional thoughts.

How the Nation’s Only State-Owned Bank Became the Envy of Wall Street

| Fri Mar. 27, 2009 6:33 PM PDT

The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer.

Mother Jones: How was the bank formed?

Eric Hardmeyer:
It was created 90 years ago, in 1919, as a populist movement swept the northern plains. Basically it was a very angry movement by a large group of the agrarian sector that was upset by decisions that were being made in the eastern markets, the money markets maybe in Minneapolis, New York, deciding who got credit and how to market their goods. So it swept the northern plains. In North Dakota the movement was called the Nonpartisan League, and they actually took control of the legislature and created what was called an industrial program, which created both the Bank of North Dakota as a financing arm and a state-owned mill and elevator to market and buy the grain from the farmer. And we’re both in existence today doing exactly what we were created for 90 years ago. Only we’ve morphed a little bit and found other niches and ways to promote the state of North Dakota.

MJ:
What makes your bank unique today?

EH:
Our funding model, our deposit model is really what is unique as the engine that drives that bank. And that is we are the depository for all state tax collections and fees. And so we have a captive deposit base, we pay a competitive rate to the state treasurer. And I would bet that that would be one of the most difficult things to wrestle away from the private sector—those opportunities to bid on public funds. But that’s only one portion of it. We take those funds and then, really what separates us is that we plow those deposits back into the state of North Dakota in the form of loans. We invest back into the state in economic development type of activities. We grow our state through that mechanism.

MJ:
Clearly other banks also invest their deposits. Is the difference that you are investing a larger portion of that money into the state’s own economy?

EH:
Yeah, absolutely. But we have specifically designed programs to spur certain elements of the economy. Whether it’s agriculture or economic development programs that are deemed necessary in the state or energy, which now seems to be a huge play in the state. And education—we do a lot of student loan financing. So that’s our model. We have a specific mission that was given to us when we were created 90 years ago and it guides us throughout our history.

MJ:
Are there areas that you invest in that other banks avoid?

EH:
We made the first federally-insured student loan in the country back in 1967. So that’s been a big part of what we do. It’s become almost a mission-critical thing. I don’t know if you have been following the student loan industry lately, but it’s been very, very interesting as many have decided to leave. We will not though.

MJ:
So you are able to invest in certain areas because they provide a public good.

EH:
Yeah, or a direction, whether it’s energy or primary sector type of businesses. We have specific loan programs that are designed at very low interest rates to encourage activity along certain lines. Here’s another thing: We’re gearing up for a significant flood in one of the communities here in North Dakota called Fargo. We’ve experienced one of those in another community about 12 years ago which prior to Katrina was the largest single evacuation of any community in the United States. And so the Bank of North Dakota, once the flood had receded and there were business needs, we developed a disaster loan program to assist businesses. So we can move quite quickly to aid with different types of scenarios. Whether it’s encouraging different economies to grow or dealing with a disaster.

MJ:
What do private banks think of you?

EH:
The interesting thing about the bank is we understand that we walk a fine line between competing and partnering with the private sector. We were designed and set up to partner with them and not compete with them. So most of the lending that we do is participatory in nature. It’s originated by a local bank and we come in and participate in the loan and use some of our programs to share risk, buy down the interest rate. We even provide guarantees similar to SBA to encourage certain activity for entrepreneurial startups. Aside from that, we also act as a bankers’ bank or a wholesale bank. So we provide services to banks, whether it’s check clearing, liquidity, or bond accounting safekeeping. There’s probably 20 other bankers' banks across the country. So we act in that capacity as kind of a little mini-fed actually. And so we service 104 banks and provide liquidity to them and clear their checks and also we buy loans from them when they have a need to overline, whether it’s beyond their legal lending limit or they just want to share risk, we’ll do that. We’re a secondary market for residential loans, so we have a portfolio of $500 to $600 million of residential loans that we buy.
MJ: So what’s the advantage of a publicly owned “bankers’ bank” instead of a privately owned one?
EH: Our model is we use our deposit base to help [other banks] with funding their loans, even providing fed funds lines with our excess liquidity—we buy and sell fed funds and act as a clearinghouse for check clearing activity. That would be the benefit or different model. We’re a depository bank and can bring that to bear.
MJ: If other states had a bank like yours, do you think they would have been more insulated from the credit crisis?

Bank of America CEO: No Apology

| Fri Mar. 27, 2009 5:42 PM PDT

I was waiting for the daily White House briefing. It was a lovely near-spring day. Most of the reporters were outside, many preparing to hurl questions at the banking CEOs who were finishing their private lunch with President Barack Obama in the East Wing. It was expected that the soon-to-be departing bankers would stop at the stake-out position in front of the entrance to the West Wing and field queries from the journalists.

And then they came. Mostly tall men. All white, I recall. In very nice suits. Most had silver hair. It was as if Central Casting had been asked for a dozen banking chiefs. After being surrounded by reporters and camera crews--business journalists were in a frenzy--the gaggle of titans made its way to the microphones. They said what you'd expect: that they had had a productive meeting with the president, that we're all in this together (just some of us have more retirement worries than some others), that Treasury Secretary Timothy Geithner's toxic assets plan is a good first step (these guys are lucky to have anyone giving them any kind of step), that they were not surprised by the public outrage over the AIG bonuses (did they want to seem more out of touch?), that the financial regulatory system does need updating, and that we're all in this together. Oh, did I say that already? That was a talking point that someone had obviously instructed them to use whenever it was necessary to exhale.

I was standing toward the back of the pack of reporters, watching as each question seemed to bounce off the impenetrable wall of spin the bankers had constructed. (Was it woven into the Italian wool of their suits?) There came a momentary pause in the not-so-tough grilling, and I yelled out, "Do you think you owe the American people an apology for helping to cause this economic decline?"

The men at the front of the banker's crowd looked at one another, and then one moved to the mike. It was Kenneth Lewis, the CEO of Bank of America. He noted that there were few financial institutions that had not committed mistakes. "I don't think the public should think we've done everything right," he said. (Not much need to worry about that, sir.)

But what about a simple plea for forgiveness?

"At some point," he said, "we have to stop talking about the past and talk about the present." Apparently that point was right now. He said nothing else about the mistakes of the past. He pointed to "mixed signals" in the economy that had positive implications.

So no apology, no expression of regret, no "my bad." Onward and--we can hope--upward. I suppose that high finance means never having to say you're sorry.

Would Marijuana Light Up the Economy?

| Fri Mar. 27, 2009 1:22 PM PDT

Guest blogger Mark Follman writes frequently about current affairs and culture at markfollman.com.

The debate about whether to legalize marijuana in the United States has never been a mainstream one. So it's been fascinating to watch how much attention the concept has gotten lately, however viable it may or may not be.

Preoccupation with the violent drug war is one factor; marijuana is the largest source of revenue for the Mexican cartels' multibillion dollar business north of the border. Commodify the major cash crop through legalization, the idea goes, and its cost will plummet, putting a serious dent in the bad guys' bank accounts.

But the larger issue lighting up the idea seems to be the battered American economy.

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Wall Street Whiners: Billionaires Are Victims, Too

| Fri Mar. 27, 2009 1:17 PM PDT

The culture of Wall Street has always been an oblique, half-hidden world, unlike any other, which not even writers and filmmakers have ever managed to depict with much authenticity. But the financial meltdown is creating cracks in the facade, allowing bits of that culture to ooze out—the shallowness, greed, arrogance, and most of all superficiality of the money men. Why did we ever fall for these guys, either as guardians of our life savings, or as icons of American life? Now that we’re getting some new insights into what lies beneath the gray flannel suits, it is not a pretty sight.

Just when you thought they couldn’t behave any worse, the now-reviled financial industry executives have taken to depicting themselves as the true victims of the recession. As they come face to face with public rage, few seem to feel the least bit ashamed or contrite about their role in wrecking the world economy, or for their undeserved wealth. Instead, their responses are ranging from peevish to paranoid.

On Tuesday, at a conference on the “Future of Finance” hosted by my old employers, the Wall Street Journal, “Finance executives expressed anger and betrayal at Washington’s latest anti-Wall Street rhetoric,” the Journal reported. Glenn Hutchins of the private equity firm Silver Lake complained (in a triumph of mixed metaphors): “To point the finger at one group means, No. 1, you’re not understanding the problem, two, you’re stretching our social fabric thinly, and you’re throwing the baby out with the bathwater.” Former SEC chair Arthur Levitt decried the “‘us’ and ‘they’” mentality dividing Main Street from Wall Street. “We’re now shifting to the left pretty far in terms of business-bashing,” he said, “and it has reached extremes of incivility that are intolerable.”

Holbrooke Calls for "Complete Rethink" of Drugs in Afghanistan

| Fri Mar. 27, 2009 12:44 PM PDT

This morning, after President Barack Obama unveiled his new Afghanistan policy, three senior administration officials held an on-the-record (but no cameras) briefing for White House reporters. Ambassador Richard Holbrooke, the special envoy for Afghanistan and Pakistan, Bruce Riedel, chair of the Afghanistan policy review, and Michèle Flournoy, undersecretary of defense for policy, hammered home the points that Obama had made: that this policy has a concise and clear goal (protecting Americans from al Qaeda by making sure this terrorist band does not have any safe havens in Afghanistan or Pakistan), that it has a regional focus (Afghanistan and Pakistan), and that it has a strong civilian component (i.e., sending not just more troops, but more advisers to work on development and related matters). They did not talk timelines, deadlines, costs, or exit strategies. They did repeatedly refer to benchmarks and flexibility.

I asked if this review had addressed Obama's previous complaint that the national government in Afghanistan is "detached" from the rest of the country and whether any of the development envisioned by the review could be accomplished given the widespread and profound corruption in Afghanistan. Holbrooke fielded this one:

I would just point you to the fact that no American chief executive has spoken about corruption this way ever before in open. Isn't that a fair statement, Bruce? And on the way out, a former Assistant Secretary of State, who many of you know, but I better not give his name, since he isn't...said to me, I've been waiting six years to hear a speech like that, and the emphasis on corruption is essential. You've all been reporting it for years. We view it as a cancer eating away at the country and it has to be dealt with. And obviously we're not going to lay out how we're going to deal with it. To some extent, we don't know yet. There's so much dispute about it. Senators have talked about it, including senators who are now President, Vice President and Secretary of State. And they bring what they said as senators to this issue.

And speaking for myself, I've written about it a lot. I don't take back anything I ever wrote as a private citizen. Now we've been offered the extraordinary challenge of trying to deal with this problem. And we're here to say, it is at the highest levels. Why? This isn't baksheesh. We've got to make a distinction between ordinary problems that happen in every society. This is massive efforts that undermine the government. President Karzai himself has said this, and we need to work on this. It's a huge recruiting draw—excuse me, huge recruiting opportunity for the Taliban. It's one of their major things they exploit. But I can't lay out to you how exactly we're going to do this. We're just starting out. And by the way, we're in the middle of an election campaign in Afghanistan, which complicates everything enormously.

So here Holbrooke was acknowledging the significance of the corruption issue, somewhat eloquently and candidly, yet he could not say how it might be addressed. As for Karzai's government being "detached," he didn't go there.

Holbrooke is a wonderfully engaging character—an old-school power player. He schmoozes reporters, coming across as intelligent, crafty, and concerned. He is a charmer who knows his stuff. He won't no-comment a tough question; he will compliment the reporter on posing an insightful query, show he fully understands the issue at hand (which he does), and then explain he can't answer it—in a manner that can be convincing, not annoying.

But at the end of the briefing, Holbrooke did speak somewhat candidly about a vexing part of the Afghanistan problem: drugs. What to do about the opium flowing out of Afghanistan has always been a knotty element of US policy regarding Afghanistan. How much of a priority should it be? (Simply put, if you attack the the opium trade, warlords and locals get pissed off and join or support the other side.) Asked about the priority of drug fighting in the Afghanistan review, Holbrooke, as he was leaving the briefing, said "We're going to have to rethink the drug problem." That was interesting. He went on: "a complete rethink." He noted that the policymakers who had worked on the Afghanistan review "didn't come to a firm, final conclusion" on the opium question. "It's just so damn complicated," Holbrooke explained. Did that mean that the opium eradication efforts in Afghanistan should be canned? "You can't eliminate the whole eradication program," he exclaimed. But that remark did make it seem that he backed an easing up of some sort. "You have to put more emphasis on the agricultural sector," he added.

For years, officials of the US government and other government have pondered what to do about the poppy fields of Afghanistan. Holbrooke indicated he favors a significant shift in this front of the war on drugs. But what specific policy does he fancy? He offered no clues, and then began talking to several reporters in French. Whatever he was saying, it sounded quite good.

Bush Leaves Legacy of Fraud and Abuse At Small Business Administration

| Fri Mar. 27, 2009 9:42 AM PDT

It's been a rough decade for the Small Business Administration. The Bush administration slashed its budget by more than half, and many of its most experienced and knowledgeable employees were let go. To make matters worse, multiple investigations have found evidence of waste, fraud, and abuse at the agency, which is supposed to help small businesses drive economic growth. On Wednesday, the embattled agency was dealt another blow when the Government Accountability Office revealed that the SBA's $8 billion program designed to funnel government contracts to small businesses in poor areas gave millions to companies that did not meet the legal requirements, including one that was "headquartered" in a trailer home occupied by someone unrelated to the company. Some of the owners of the "small businesses" in question admitted straight-out to the GAO that they were defrauding the SBA's HUBZone program by funnelling money to big businesses or businesses outside the zones.

John Galt vs. Bilbo Baggins

| Fri Mar. 27, 2009 7:53 AM PDT

Killer quote from Kung Fu Monkey:

There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

My thoughts on Randians here.