Mojo - February 2012

In a 325-Page SEC Letter, Occupy's Finance Gurus Take on Wall Street Lobbyists

| Tue Feb. 14, 2012 5:20 PM EST

Yesterday, a group affiliated with Occupy Wall Street submitted an astounding comment letter to the Securities and Exchange Commission. Point by point, it methodically challenges the arguments of finance industry lobbyists who want to water down last year's historic Dodd-Frank Wall Street reforms. The lobbyists have been using the law's official public comment period to try to kneecap the reforms, and given how arcane financial regulation can be, they might get away with it. But Occupy the SEC is fighting fire with fire, and in so doing, defying stereotypes of the Occupy movement. Its letter explains:

Occupy the SEC is a group of concerned citizens, activists, and professionals with decades of collective experience working at many of the largest financial firms in the industry. Together we make up a vast array of specialists, including traders, quantitative analysts, compliance officers, and technology and risk analysts.

The letter, which has been in the works for months, passionately defends the Volcker Rule, a provision of the Dodd-Frank Wall Street reforms meant to prohibit consumer banks from engaging in risky and speculative "proprietary" trading. That barrier had collapsed in the 1990s with the gradual watering down, and eventual repeal, of the Glass-Steagall Act. Occupy the SEC explains why this became a problem:

Proprietary trading by large-scale banks was a principal cause of the recent financial crisis, and, if left unchecked, it has the potential to cause even worse crises in the future. In the words of a banking insider, Michael Madden, a former Lehman Brothers executive: "Proprietary trading played a big role in manufacturing the CDOs (collateralized debt obligations) and other instruments that were at the heart of the financial crisis. . . if firms weren't able to buy up the parts of these deals that wouldn't sell. . .the game would have stopped a lot sooner."

What makes Occupy the SEC so unique and inspiring is the way that it straddles the two worlds. On the one hand, it's authentically grassroots, forged in Zuccotti Park's crucible of discontent. As such, it is transparent, open to anyone, and accountable to everyone. On the other hand, it includes financial insiders with the education and regulatory vocabulary to challenge high-powered lobbyists at their own game. That's a powerful combination that the SEC can't easily ignore. From the letter:

The United States aspires to democracy, but no true democracy is attainable when the process is determined by economic power. Accordingly, Occupy the SEC is delighted to participate in the public comment process. . .

For more on how Occupy the SEC came to be, read my story on its umbrella organization, the Alternative Banking Group.

Occupy the SEC Comment Letter on the Volcker Rule

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Are Apple's New China Auditors Toothless Tigers?

| Tue Feb. 14, 2012 2:26 PM EST
Workers on the production line at the Foxconn factory in Shenzhen, China.

Apple caved—sort of. For the first time in its history, the beloved electronics company has started allowing labor inspectors with the Fair Labor Association into the factories that churn out Apple's most popular products, the company said Monday.

The announcement is clearly a reaction to This American Life's searing narrative on workers and working conditions in Chinese factories (including Apple's), "Mr. Daisey and the Apple Factory," as well as the New York Times' devastating "iEconomy" series, which sparked protests at Apple stores nationwide. One of the stories in the series, on the human costs of manufacturing the iPad, revealed dangerous, if not inhumane, working conditions at Apple suppliers. The story begins with this anecdote:

The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws.

When workers in the cafeteria ran outside, they saw black smoke pouring from shattered windows. It came from the area where employees polished thousands of iPad cases a day.

Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.

That individual, a 22-year-old college graduate named Lai Xiaodong, would die in the hospital two days later.

It was revelations like this that ignited an outcry about working conditions at Apple suppliers, and pushed Apple into allowing the FLA to inspect suppliers such as Foxconn, the Taipei-based mega-manufacturer that makes iPads and iPhones. But how seriously should we take Apple's announcement?

The FLA, after all, has its own set of critics, who point out that the group is funded by the same companies—Apple, Adidas, and Nike—whose factories the group claims to be independently inspecting. The group also counts 200-plus universities as partners. Times labor reporter Steven Greenhouse quotes labor rights experts who call the FLA "largely a fig leaf" and hardly independent from the companies they're inspecting. FLA chief Jorge Perez-Lopez told Greenhouse the FLA's work isn't swayed by its funders.

There are also larger, more systemic problems here that won't be solved by letting FLA inspectors into Apple factories. Suppliers cooking their books to pass inspections is all-too-common in China, as is the use of off-the-books, secretive "shadow" factories that inspectors never even see. And the auditing industry itself, even self-styled independent auditors, is plagued by bribery (factory bosses paying off inspectors) and corruption, according to labor and manufacturing experts.

Apple's problems in China aren't the result of a few bad suppliers that can be rooted out by inspectors, either. As the group China Labor Watch wrote in a letter to Apple CEO Timothy Cook, the company's problems speak to a conflict at the heart of how Apple does business:

We believe the most basic cause of the problems at your supplier factories is the low price Apple insists on paying them, leaving next to no room for them to make a profit. The demand for astronomically high production rates at an extremely low price pushes factories to exploit workers, since it is the only way to meet Apple's production requirements and make its factory owners a profit at the same time.

To be fair, Apple's problems are not unique. They are faced by the entire electronics industry and its customers as they attempt to manage a global manufacturing system that locates factories wherever the cost of production is cheapest. The key choice Apple has to make as a company is whether it will try to shift the attention of journalists and the public towards the individual factories that make their products, or will sincerely acknowledge its responsibility for these factories' deplorable working conditions and make systemic changes to its supply chain.

Dispatching the FLA into supplier factories won't fix these deep-rooted problems. In a recent email to Apple employees, Cook said the company's reforms would reach "deeper into the supply chain." That's more along the lines of what it will take to truly fix labor problems in countries like China. Anything less is lip service.

Gay Rights Groups Mark Valentine's Day With Marry-Ins

| Tue Feb. 14, 2012 2:14 PM EST

To celebrate Valentine's Day, several gay rights groups are organizing actions at courthouses and other places where marriages are performed. GetEQUAL, Marriage Equality USA, and a number of local groups around the country have pitched the events as a modern-day equivalent of the Civil Rights Movement's lunch-counter protests.

In Phoenix, activists are planning to show up at the Centennial Marriage Event, wherein couples can mark the state's 100th anniversary by getting married en masse in a plaza outside of the Arizona Courts Building. They just have pay the $72 fee for the marriage license and "meet Arizona's statutory requirements"—which currently only allow heterosexual marriages. GetEQUAL says on its website that the event "highlights the inequality and state-enforced discrimination against citizens of Arizona," which is why the group is hoping to get a bunch of same-sex couples out there to protest.

Similar actions for couples who want to go apply for marriage licenses are planned in California, Ohio, New Mexico, Texas, Virginia, and Wyoming. For the event in Austin, organizers told couples to make sure they bring the $71 needed to get a marriage license, adding, "You may be turned down, meaning you will get to keep your money."

Similar actions have been held on past Valentine's Days, but this year's protest is both the biggest to date and the most significant, Heather Cronk, managing director of GetEQUAL, told Mother Jones. In recent weeks, a federal appeals court struck down California's ban on gay marriages, Washington State approved a new law allowing gay marriage, and the New Jersey state Senate approved a bill on marriage equality.

"It's really exciting to be celebrating folks who are getting more equal," said Cronk. "These protests and rallies and actions are a reminder that we're not equal yet, and we have a lot more work to do."

DOJ Memo: We're Not Biased Against Conservatives

| Tue Feb. 14, 2012 7:35 AM EST
Attorney General Eric Holder.

Rep. Lamar Smith (R-Texas), the chairman of the House judiciary committee, has accused the civil rights division of the Obama Justice Department of being biased against hiring conservatives. Now, in a letter obtained by Mother Jones, the DOJ has responded to the charges. (You can read the full letter below.)

In a September letter to Attorney General Eric Holder, Smith argued that the DOJ's civil rights division is biased toward liberals because many of the new hires in the division have experience working for civil rights organizations. You read that right: Hiring people with experience in civil rights to work in the civil rights division reflects "bias."

Smith's argument is that attorneys with experience in civil rights law are disproportionately liberal, and therefore the division's "neutral" hiring requirements are biased against conservatives. The idea that neutral employment qualifications can be a vehicle for bias is a cornerstone of civil rights law, and one that conservatives frequently oppose. It's the argument behind traditional affirmative action: that weighing two people's qualifications equally when one is from a historically disfavoured group, like black Americans, could be biased against the person from the historically disfavoured group. Smith has embraced this concept, but only as it applies to conservatives, who are not typically seen as a historically disfavored group deserving of special treatment. It's almost as if Smith is objecting to the idea that the Justice Department shouldn't consider political affiliation—instead, he seems to think conservatives are entitled to some strange form of affirmative action. 

The Justice Department's response to Smith's charges, which was sent in December and recently provided to Mother Jones, gives the congressman a detailed explanation of the DOJ hiring process and how it currently works. According to the letter, which was signed by Assistant Attorney General Ronald Weich, career attorneys at the head of each section, rather than political appointees, now make hiring recommendations. The new head of the civil rights division, Assistant Attorney General Thomas Perez, can only overrule those recommendations with a written statement explaining why—something Perez has yet to do. Even Internet searches of prospective employees are prohibited, lest those attorneys doing the hiring allow the perception of what an applicant's political beliefs might be influence their evaluation. 

Romney Wins the Nomination!

| Tue Feb. 14, 2012 7:00 AM EST

The view from the floor at W&L's Warner Center Photo by Tim MurphyFred Thompson is winding his way through his prepared remarks at Washington & Lee University's Republican Mock Convention, and, as he gestures to the audience once more with his reading glasses, it is clear he has left some children behind. The gymnasium floor at the Warner Center, peppered with big red signs indicating where representatives of each of the 57 states and territories should sit, is about three-quarters full of students in varying states of concentration. The Alaska delegate who was sleeping at the beginning of George Allen's speech has dozed off again. His friend looks to be asleep too, but then he pulls out his phone and starts texting. A few rows back, another delegate tilts her head back and raises her eyebrows: "Jesus Christ, this is long."

Since 1908, students at W&L, located about three and a half hours southwest of DC in Lexington, Virginia, have been convening every four years to pick the presidential nominee of one of the two major political parties. They form properly proportioned state delegations, adopt bylaws, and spend the better part of a year studying voting trends and polling data. Before they ever take the stage for the roll call, they've spoken with all of the  delegations whose nominating contests fall earlier on the calendar, so as to best understand the hypothetical state of play—if Romney's cleaning up in the early states, the stragglers know better than to go swing en masse for Ron Paul. It's a political ritual akin to Groundhog Day, if only Punxsutawney Phil wore a blue blazer with boat shoes.

We're Still at War: Photo of the Day for February 14, 2012

Tue Feb. 14, 2012 6:57 AM EST

Soldiers from the Minnesota National Guard complete a ruck march to earn the Expert Infantryman Badge at Forward Operating Base Gerber, in Kuwait, on January 27, 2012. The Expert Infantryman Badge is awarded to soldiers who hold infantry or special forces military occupational specialties and complete a series of tests. DoD photo by Cpl. Trisha Betz, US Army.

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Your Daily Newt: "Gingrich Has Done It Again"

| Mon Feb. 13, 2012 5:33 PM EST

As a service to our readers, every day we are delivering a classic moment from the political life of Newt Gingrich—until he either clinches the nomination or bows out.

Newt Gingrich's appetite for reading is notorious. He's a speed-reader, and friends and aides like to tell stories about Gingrich walking around in circles, moving his fingers across the pages of some massive history book. So it was only natural that, when his political talents were no longer in high demand in Washington, the former speaker reinvented himself as an Amazon.com reviewer. Between 2005 and 2008, Gingrich penned 156 reviews—all positive—at the online retailer, on subjects ranging from Civil War novels to science fiction and longform journalism. Here's one I've selected totallly at random, which will doubt endear him to the GOP's social conservative base:

Dave Freedman's Natural Selection is just plain fun. It is pop-Darwinism carried to its ultimate extreme, but it stresses your mind, gets you to wonder about the species that could be in the ocean deep and reminds you that things aren't always the way they seem. While this book is fantasy rather than science, it brings just enough science and high technology in to make you pay constant attention. The intelligence of the dangerous new species makes this a cross between Jaws and Michael Crichton's description of intelligent nano-biology. I recommend it for pure fun and for getting you to think a little differently about the possibilities on our planet.

Gingrich, whose weakness for adverbs is a matter of public record, adopted a new set of rhetorica; tics in his reviews. As Dave Weigel noted:

Gingrich was a master of blurb-speak; it's a surprise he didn't end up cited on the back covers of more paperbacks. On Robert B. Parker's thriller Potshot: "Parker has done it again." On Mark Bowden's drug war classic Killing Pablo: "Bowden has done it again." On Ken Follett's Jackdaws: "Follett has done it again."

Fox Pundit: Women in Military Should "Expect" to Get Raped (Video)

| Mon Feb. 13, 2012 1:57 PM EST

For someone who's so pro-war, commentator Liz Trotta sure has trouble figuring out who the enemy is. On Fox News over the weekend, she belittled proponents of women in combat and derided "feminists" who complain that uniformed ladies "are now being raped too much" by male soldiers. As evidence, she cited a recent DOD report that assaults on women had risen 64 percent in the past six years. "Now, what did they expect? These people are in close contact," she told anchor Eric Shawn. Here's part of the exchange via Media Matters (video below the jump; watch at your own risk):

SHAWN: Well, many would say that they need to be protected, and there are these sexual programs, abuse programs, are necessary—

TROTTA: That's funny, I thought the mission of the Army, and the Navy, and four services was to defend and protect us, not the people who were fighting the war.

SHAWN: Well, you certainly want the people fighting the war to be protected from anything that could be illegal.

TROTTA: Oh, look, I mean, that's—nice try Eric. This whole question of women in the military has not been aired properly, and it's the great sleeping giant.

I've got three takeaways here:

We're Still at War: Photo of the Day for February 13, 2012

Mon Feb. 13, 2012 1:16 PM EST

Arabian Gulf (February 12, 2012) MH-60S Sea Hawk helicopters assigned to the Golden Falcons of Helicopter Sea Combat Squadron (HSC) 12 prepare to land on the flight deck of the Nimitz-class aircraft carrier USS Abraham Lincoln (CVN 72). Abraham Lincoln is deployed to the US 5th Fleet area of responsibility conducting maritime security operations, theater security cooperation efforts, and support missions as part of Operation Enduring Freedom. (US Navy photo by Mass Communication Specialist 2nd Class Jonathan P. Idle/Released)

The Closest Thing We've Got to an Awlaki Indictment

| Mon Feb. 13, 2012 11:00 AM EST
Anwar al-Awlaki

Last week prosecutors filed their sentencing memorandum in the case of admitted underwear bomber Umar Abdulmutallab, who tried to blow up a flight to Detroit in 2009 but ended up setting himself on fire and being subdued by nearby passengers. The memo includes a document that purports to show how Abdulmutallab ended up on Northwest Airlines Flight 253 with a bomb in his pants. The document provides the first real public evidence that extremist American cleric Anwar al-Awlaki, who was killed by a drone strike in September, had an "operational" role in Al Qaeda.

Though Obama administration officials frequently insisted to reporters that Awlaki was not simply a pro-Al-Qaeda propagandist, but someone with a functional role in Al Qaeda's franchise in Yemen, actual evidence to that effect was scarce. According to the Abdulmutallab memo, in which prosecutors recommend a life sentence, Awlaki:

  • Helped facilitate Abdulmutallab's travel to Yemen, and allowed Abdulmutallab to stay at his home.
  • Evaluated Abdulmutallab's "suitability for jihad," and then helped him get training.
  • Gave "final approval" to the attempted plane bombing.
  • Helped Abdulmutallab film his "martyrdom video."

This information likely forms at least part of the justification for the decision to target Awlaki, who, according to the New York Times, was placed on the US's covert "kill list" following Abdulmutallab's failed attempt to kill more than two hundred people. Since Awlaki is dead and the government remains tight-lipped both about the legal justification for targeting him and the evidence regarding his role in Al Qaeda, it's impossible to objectively evaluate how reliable this information actually is. 

H/T Marcy Wheeler