Mojo - March 2011

Peter King's Radicalization Hearings, Explained

| Wed Mar. 9, 2011 1:01 AM PST

On Thursday, Rep. Peter King (R-N.Y.), the chairman of the House Committee on Homeland Security, will hold hearings on what he calls the "radicalization" of members of the American Muslim community. King, who has previously called for the New York Times to be tried for treason and for WikiLeaks to be listed as a terrorist organization, has never shied away from confronting terrorist threats wherever he sees them—but this time he's struck a nerve. He's been denounced by the ACLU and Democratic rivals—who have compared him to Joseph McCarthy. His own party, meanwhile, has been conspicuously silent. So who's going to speak on Thursday? And what are they going to say? We've got you covered:

When: Thursday at 9:30 A.M. You can watch it live on C-Span, catch the webcast here, and follow my Twitter feed for live updates.

What's the back story? When King announced the hearings last December, he explained that law enforcement officials "are constantly telling me how little cooperation they get from Muslim leaders." King concedes that only a small fraction of American Muslims have ties to terrorism, but argues that those extremists have outsized influence, citing one figure that 80-percent of mosques in the United States are under the control of jihadists (that figure has been debunked). King believes "political correctness" is interfering with national security; as he explains it, the hearings are analogous to investigations into the Italian-American mafia.

Is there anything to that? Attorney General Eric Holder, the nation's top law enforcement officer, has said the threat of homegrown terrorism "keeps me up at night," citing, among others, Yemeni-American cleric Anwar al-Awlaki. In a speech last weekend, Deputy National Security Adviser Denis McDonough called combatting radicalization at home "part of our larger strategy to decisively defeat Al Qaeda." Other American citizens who have been charged with planning or commmitting acts of terrorism include Maj. Nidal Hasan, the Fort Hood shooter, and failed Time Square bomber Faisal Shahzad. Law enforcement officials say Latino converts to Islam are increasingly vulnerable to radicalization.

But. But, critics of the hearings dispute King's central premise—that American Muslims are complicit in the radicalization of a tiny minority. A February study by the Triangle Center on Terrorism and Homeland Security, for instance, reported that Muslim-American terrorist attacks had dropped significantly in the last year, and that 40-percent of all terrorism arrests came after a tip from the Muslim-American community.

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How to Put Wall Street CEOs in Prison

| Tue Mar. 8, 2011 1:59 PM PST

“Forgive me,’’ director Charles Ferguson said in receiving an Academy Award for his documentary Inside Job, "I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail — and that’s wrong.''

In New York, Tuesday marked the beginning of the long awaited trial of hedge fund manager Raj Rajaratnam, who ran the $7 billion Galleon Group and whose personal wealth is estimated at $1.3 billion. He is being prosecuted by the SEC for insider trade deals. Rajaratnam is said to have made $45 million in illegal profits. He has denied the charges and is free on $100 million bond. If he is convicted he could go to prison for as long as 20 years. The SEC historically has been such a handmaiden of the finance business that it's hard to imagine anything serious coming out of its prosecutions, but one never knows.

Whatever happens to Rajaratnam, it  would be simple enough to prosecute many of the high rollers on first civil, then criminal charges, fining them millions of dollars and taking them out of circulation for up to 20 years.

"Contrary to prevailing propaganda, there is a fairly straightforward case that could be launched against the CEOs and CFOs of pretty much every US bank with major trading operation," writes Yves Smith in her popular Naked Capitalism blog. "I'll call them 'dealer banks' or 'Wall Street firms' to distinguish them from very big but largely traditional commercial banks.’’ She proceeds to lay out the case, the key points of which I have excerpted below:

Since Sarbanes Oxley became law in 2002, Sections 302, 404, and 906 of that act have required these executives to establish and maintain adequate systems of internal control within their companies. In addition, they must regularly test such controls to see that they are adequate and report their findings to shareholders (through SEC reports on Form 10-Q and 10-K) and their independent accountants. “Knowingly” making false section 906 certifications is subject to fines of up to $1 million and imprisonment of up to ten years; “willful” violators face fines of up to $5 million and jail time of up to 20 years.

The officers in question must certify that, among other things, they "are responsible for establishing and maintaining internal controls" and making sure everyone concerned knows about them--and beyond that, for taking steps to have these controls evaluated and reported. Smith continues:

House GOPers Looking to Gut Public Housing

| Tue Mar. 8, 2011 12:49 PM PST

Much has been written about the House GOP's 2012 budget bill (HR1), which would cut government spending by $61 billion this year by clamping down on non security-related discretionary spending. One line item that's not getting as much attention: cuts to low-income rental assistance programs for the elderly and the disabled.

A new paper from the Center on Budget and Policy Priorities (CBPP) crunches the numbers on the GOP's plan, which would target some of the most vulnerable Americans, potentially pushing people who are nearly homeless out into the cold. Here are some of HR1's greatest housing hits:

  • $5.4 billion in cuts to the Department of Housing and Urban Development's (HUD) funding for housing and community development programs (12 percent below their 2010 level).
  • Funding for housing vouchers for some 10,000 homeless veterans would be eliminated.
  • $587 million slashed from housing programs for the elderly (a 71 percent reduction).
  • Funding for 4,500 new units per year of housing for low-income seniors and the disabled would be axed.
  • $210 million in funding cuts or housing for people with disabilities (70 percent).
  • Housing vouchers for 14,000 low-income people with disabilities wouldn't be renewed, putting them in danger of losing their homes.

These cuts couldn't come at a worse time. New data from HUD shows that 7.1 million renter households had "worst-case housing needs" in 2009. That means that they received no federal, state, or local housing assistance, earned incomes below 50 percent of the areaS median income, and lived either in severely substandard housing or directed half their income toward housing costs. That 7.1 million figure represents an increase of 20 percent since 2007 and 42 percent since 2001.

Meanwhile, the budget proposal advanced by Senate Democrats—which cuts non-security discretionary spending by $6.5 billion—rejects the House GOP's more draconian measures. It restores $75 million for new housing vouchers for homeless veterans that were cut in HR1. It also boosts funding for homeless assistance grants by $190 million, and rejects the House GOP's cuts to the elderly and disabled. The Senate bill also fully renews funding for Section 8, whose programs in 2010 helped over 3 million low-income households, over half of which were headed by seniors or people with disabilities. To assist the same number of homes in 2011, CBPP recommends boosting Section 8 funding by a little over $100 million.

But that seems unlikely to happen. As the budget battle rages on, one Continuing Resolution extender at a time, it's far from clear how much the Democrats are prepared to push back. 

Foreclosure King's Public Company Will Delist

| Tue Mar. 8, 2011 11:50 AM PST

The day after foreclosure attorney David J. Stern announced the closure of his once-powerful law firm, the publicly traded foreclosure processing company he helped create announced plans to delist from the NASDAQ stock market a little over a year after debuting.

In a filing with the Securities and Exchange Commission today, DJSP Enterprises said it will voluntarily drop out of NASDAQ exchange trading by the middle of March. Last winter, the company received notice from NASDAQ that it would be forced to delist unless the company boosted its stock price and maintained a market value of at least $15 million. DJSP's current market capitalization is a measly $2.6 million, and its stock is hovering around 12 cents a share.

A spin-off of all the foreclosure processing operations of Stern's law firm, DJSP's stock opened on the NASDAQ last January at $9.25 a share, with a market capitalization of $300 million. The company's stock then began to climb, peaking at $13.50 a share in late April 2010. But it all went south a month later, when the company disclosed that it had lost a major chunk of business from a top mortgage company. That admission directly contradicted Stern's cheery talk about DJSP, investors said. Feeling duped, multiple investors later sued Stern for securities fraud for misrepresenting DJSP's prospects.

The company's slide only continued throughout 2010, as media reports—including my investigation into Stern's firm, published in August—and a Florida attorney general investigation raised serious questions about the allegedly illegal practices of David Stern's law firm, which was DJSP's primary source of business.

DJSP's stock could still be traded but in off-market venues, according to today's SEC filing. Nevertheless, with the announcement that DJSP is leaving the NASDAQ—presumably before the NASDAQ forcibly delisted the company—the second pillar of Stern's business empire has crumbled. The downfall of DJSP and the Law Offices of David J. Stern, which will shutter by month's end, stands in stark contrast with what Stern told prospective investors just one year ago describing the ongoing foreclosure crisis: "So, yeah, we're in the 2nd inning, but guess what? When we get to the 9th inning, it's going to be a doubleheader and we got a second game coming." Turns out, it's just about game over for Stern.

Rick Scott: Florida's Drug Fraud Enabler?

| Tue Mar. 8, 2011 8:49 AM PST

In 1997, Rick Scott was implicated in the biggest Medicare fraud case in US history, stepping down as CEO of Columbia/HCA after the hospital giant was fined $1.7 billion and found guilty of swindling the government. As Florida's new governor, Scott is now trying to kill off an anti-fraud database that would track the fraudulent distribution of addictive prescription drugs in Florida, over the protestations of law enforcement officials, Republican state lawmakers, and federal drug policy officials. 

Without consulting state lawmakers, Scott snuck a repeal of the database in his budget this year, despite the fact that it will cost Florida no money. (It's funded by federal money and private donations.) The governor claims the database—which allows doctors to search patient drug purchases for potential abuses—would amount to an invasion of privacy, as the New York Times notes in a story about state Republicans who are at war with Scott. Lawmakers from both parties and patient advocates who fought for the creation of the database are flabbergasted: some view the resource as a critical tool in combating black-market drug traffic, the proliferation of pain clinics, and the abuse of prescription drugs.

Florida is at the center of national epidemic of prescription drug abuse. Prescription drugs are estimated to kill seven people a day in the state, and the number of overdose deaths from oxycodone alone doubled to 1,185 between 2006 and 2009. As a result, Scott has received a hailstorm of criticism from all sides, as the St. Peterberg Times reports:

"This is a step in the wrong direction," said Capt. Robert Alfonso, head of the narcotics division of the Pinellas County Sheriff's Office. "We were looking forward to using it…"

"It makes no logical or rational sense," said Paul Sloan, a Venice-based pain clinic owner and president of the Florida Society of Pain Management Providers. "It's absolutely absurd. This is the most important weapon in the fight against prescription drug abuse…"

Sen. Mike Fasano, R-New Port Richey, who has been a champion of efforts to fight prescription drug abuse and sponsored the drug monitoring legislation, rapped the governor for sliding his proposal into his mass of budget recommendations.

"I'm extremely, extremely disappointed with the governor and his administration for sneaking this into a...bill," Fasano said.

Scott is also taking aim at Florida's Office of Drug Control, which is charged with raising private money for the database. His repeal effort has even caught the attention of the Obama administration, whose "Drug Czar" Gil Kerlikowske is currently trying to meet with Scott to persuade him not kill off the database.

Scott has made it clear that he doesn't plan to stop with the anti-fraud database. As the New York Times adds, he's also making a big push to privatize Medicaid as well—supposedly to save the state money—while trying to give corporations and property owners $1.7 billion in tax breaks. 

So it Begins: GOP Candidates Sound Off in Iowa

| Tue Mar. 8, 2011 7:31 AM PST
Photo: Gage Skidmore

With just 610 days to go before election day, GOP presidential candidates gathered at Point of Grace Church in Waukee, Iowa Monday night for their first candidate forum of the 2012 race. Or at least some of them did—Mitt Romney took a rain check; so did Mitch Daniels, Haley Barbour, Sarah Palin, and Mike Huckabee (among others).

So what did the candidates who did show up talk about? Nothing particularly groundbreaking. They bragged about their children and grandchildren, the strength of their marriages, quoted scripture, and generally stayed within their individual comfort zones. Newt Gingrich lectured on Camus and Israel and American Exceptionalism—the latter two of which he believes are being ignored by the Obama administration; Buddy Roemer spoke bluntly about cutting off oil and ethanol subsidies; Herman Cain delivered the equivalent of a PowerPoint presentation, explaining how he'd fix the country in three simple steps; Tim Pawlenty gave the same stump speech you've already seen on YouTube, delivered with a hockey-coach-as-slam-poet cadence; Rick Santorum talked extensively about partial-birth abortion, and how his kids once thought his first name was "ultra" (good thing they didn't Google it).

If you're looking for a quick analysis, Dave Weigel's grades struck me as pretty spot-on. But in reality, the night was less about the five would-be candidates who showed up, than the man they were there to see: Faith and Freedom Coalition founder Ralph Reed. Just five years after his political career imploded amid the Jack Abramoff scandal, the former head of the Christian Coalition and GOP boy wonder has clawed his way back into the role of Republican kingmaker. The 2010 midterms were something of a trial run for Reed, who rode the tea party wave with his new organization, and then rushed into the post-election autopsy to take credit for everything.

Last night, he used his introductory speech to ask for money—"every dollar that you give tonight will stay in Iowa"—and to solidfy his role central in the nominating process. "Some have suggested that we call a truce on the social and moral issues," Reed said. "I don't know about you, but I prefer to have a leader who can walk and chew gum at the same time." Reed has re-emerged as a GOP power-broker by acting as if the past never happened. And for the men on stage, that just might be a good thing; if social conservatives can look past Ralph Reed's transgressions, there might be hope for Gingrich after all.

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We're Still at War: Photo of the Day for March 8, 2011

Tue Mar. 8, 2011 3:30 AM PST

As the snow falls, U.S. Army Pvt. Lamont I. Wright a generator mechanic from Ocala, Fla., assigned to Forward Support Company G, 2nd Battalion, 320th Field Artillery Regiment, Task Force Balls, provides security during a recent convoy in eastern Afghanistan's Nangarhar Province, Feb. 28. Photo by U.S. Army Sgt. 1st Class Mark Burrell, 210th MPAD

David Koch: Lamenting Cancer Research Cuts—and Bankrolling the GOPers Behind Them

| Tue Mar. 8, 2011 1:01 AM PST

On Friday, conservative billionaire David Koch lamented the deep federal cuts that are expected to impact both the National Institutes of Health and the National Cancer Institute—and, by extension, MIT's new David H. Koch Institute for Integrative Cancer Research. "If the cutbacks happen, it will significantly diminish the level of research that can be carried on at the Koch Institute," he said, speaking at the opening of the research center.  Koch, the executive vice president of Koch Industries, implored the deep-pocketed attendees of the ceremony to fill the gap with personal donations: "I earnestly ask you to do all you can to help maintain the superb research at the Koch Institute at its maximum level."

But who's responsible for making these crippling cutbacks? Some of the very Republicans that David Koch and his brother, Charles, have bankrolled in their deep-pocketed—and successful—effort to help the GOP win back the House.

House Republicans axed $1.6 billion in NIH funding in the budget bill they passed last month—5.2 percent of the agency's budget—which will deliver a significant blow to the agency's National Cancer Institute, according to government officials. Spearheading the effort has been Rep. Paul Ryan (R-Wis.), the party's budget-slashing golden boy, whose office tells Bloomberg that the NIH has received enough spending increases—and that "the Democrats' 'spending spree' must stop and that priorities need to be set."

Corn on "Hardball": Huckabee's Obama Derangement Syndrome

Mon Mar. 7, 2011 6:13 PM PST

David Corn and Eric Boehlert joined Chris Matthews on MSNBC's Hardball to discuss the field of contenders for the 2012 GOP presidential nomination and whether or not Mike Huckabee's recent lies about Obama's childhood have cost him a shot.

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

Foreclosure King David Stern Shuttering His Law Firm

| Mon Mar. 7, 2011 10:35 AM PST
A caricature of David J. Stern, the once-mighty foreclosure attorney, that he printed on T-shirts used to woo potential investors.

By the end of the month, the Law Offices of David J. Stern, the once-mighty foreclosure mill in southeastern Florida, will be no more. According to a terse, two-sentence filing with the Securities and Exchange Commission, the firm—the subject of a Mother Jones investigation published last August—"will be ceasing the practice of law with respect to all pending foreclosure matters in the State of Florida" by March 31.

The reversal of fortune for David Stern and his law firm has been swift and breathtaking. A little over a year ago, the Stern's operation reigned king in the foreclosure business. Its clients included Wall Street powerhouses such as JPMorgan Chase, Bank of America, and Citgroup; the firm was also cozy with government housing corporations Fannie Mae and Freddie Mac, which hand-picked Stern's firm operation to process foreclosure cases for them. In 2009, the firm handled 70,000 foreclosure cases, and employed more than 1,000 people—paralegals, attorneys, paper-pushers, secretaries, and more. From 2006 to 2008, revenue generated by the non-legal, foreclosure-related parts of Stern's operations spiked from $40 million to $200 million. But the big payoff didn't come until January 2010, when Stern spun off those lucrative non-legal operations into a separate, publicly-traded company, netting him $58.5 million.