The Corrupt Financial Sector

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Kevin Hall of McClatchy Newspapers tells us what Moody’s Investors Service was up to before the meltdown:

Moody’s blue-ribbon board of directors stopped receiving key information from an internal committee that was supposed to keep the board informed of risks to the company, a McClatchy investigation has found.

Instead, the ad hoc risk-management committee suddenly disappeared, precisely at the time when the board and management should have been shifting to higher alert as the financial world began quaking.

As McClatchy reported last year, the credit-rating agency had been handing out Triple-A grades like candy for Wall Street mortgage securities that were backed by pools of home loans that turned out to be junk.

Moody’s, of course, is a financial research group that analyzes the financial soundness of commercial and government entities and hands out credit scores on borrowers. It’s not exactly a watchdog, but you could argue that it’s a means by which the glorious and infallible free market, praised be its name, regulates itself.

Well, so much for that.

Former Moody’s executives told Hall that the Moody’s board of directors were meeting six times a year, although what they actually did is questionable. The adjective “incurious” was attached to them a couple of times. For this industriousness, members were paid salaries of up to $115,000 a year, plus stock. Nice work if you can get it.

A committee charged with the job of warning the company of threats was disbanded in 2007 after a management shakeup, and the board either didn’t notice or didn’t care. The whole business stinks of crony capitalism.

Also,

… the legislation to overhaul financial regulation that’s now moving through Congress aims to empower ratings-agency boards by requiring a direct line of communication between the company officials who police for risks and the boards. It’s not clear whether that would have made any difference at Moody’s.

It wouldn’t have made any difference at Moody’s because the board members, apparently, did not take their responsibilities seriously. It appears people in the company were trying to get their attention and warn them something bad was about to go down, but the board remained oblivious. I’m sure the members all expect to golden parachute into a cushy retirement, no matter whether they succeed or fail, if they haven’t parachuted already.

I’m sure that if you give them enough time and latitude, libertarians will find some reason why Moody’s meltdown was the government’s fault, and that such things can never happens when markets are unregulated. But it seems to me that the financial sector is just plain corrupt, through and through.

This Is Not an April Fool’s Joke

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No, it’s what happens when you can’t think. One of the newer issues causing wingnut hysteria is a study that alleges Democratic districts got more stimulus money than Republican ones. The study’s author writes,

Controlling for the percentage of the district employed in the construction industry, a proxy for the vulnerability to recession of a district, I find no statistical correlation for all relevant unemployment indicators and the allocation of funds. This suggests that unemployment is not the factor leading the awards. Also, I found no correlation between other economic indicators, such as income, and stimulus funding.

Nate Silver, bless him, finds the correlation:

The district that received the largest amount of stimulus funding in the 4th Quarter of 2009, according to de Rugy’s tally, is California’s 5th Congressional District. Is there anything notable about the 5th Congressional? Well, it is home to the state capital, Sacramento. Let’s keep that in mind.

Next on the list is New York’s 21st Congressional District. The largest city in the 21st is the state capital of New York, Albany.

Third is the 21st Congressional District of Texas. It contains parts of Texas’ state capital, the wonderful city of Austin. (Another district that contains parts of Austin — the 25th — ranks 14th on de Rugy’s list.)

At this point, it ought to be pretty obvious what is going on. The three districts receiving the largest amount of stimulus funds are home to the capitals of the three largest states — New York, California, and Texas. Let’s pause for a moment and make a bold prediction. I’ll bet you that the district that ranks 4th on the list will contain the capital of the 4th largest state, Florida.

Bingo. Up 4th on the list is Florida’s 2nd Congressional, home to Tallahassee.

Fifth is Pennsylvania’s 17th, which hosts the state capital, Harrisburg.

In other words, the stimulus funds went from the federal government to state agencies, which nearly always have main offices near the state capitol buildings, which then distributed the monies throughout the state.

All together now: Duh.

Nate provides a chart showing that the whopping majority of districts hosting state capitals are “D” districts, and this is true even in “R” states such as Georgia, Tennessee, Mississippi, and Texas. As Nate points out, these districts tend to be relatively urban and home to state universities — that’s not always true, of course. But they’re also home to lots of government employees who have college educations. Hence, they are more likely to be “D” voters. It’s becoming more and more apparent that your average “R” can’t critically think his way out of a wet paper bag.

The wingnuts, however, continue to hyperventilate over the “fact” that Democrats districts are getting almost twice as much money on average than Republican districts. Check out the comments at Breitbart’s Big Government site, if you have the stomach for it.

Update: More about the study and the study’s author:

de Rugy wrote her paper for the Mercatus center at George Mason, a libertarian outpost where she is a senior research fellow. She testified about the paper before Congress, she’s an adjunct scholar at the Cato Institute, a director of the Center for Freedom and Prosperity, a former scholar at AEI, a columnist for Reason, and and a frequent contributor for National Review Online. There are hundreds of people like her in Washington, most of them conservative, living well-compensated lives of pure ideological hackery.

If you are a wingnut, and you can dress yourself and don’t smell too badly, you too can be a senior adjunct fellow scholar columnist and make a dandy living in Washington.

That Pesky 4th Amendment

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A U.S. District Judge just ruled that the Bush Administration illegally spied on an Islamic charity.

U.S. District Judge Vaughn Walker said attorneys for the Al-Haramain Islamic Foundation, once based in Oregon, could pursue civil remedies for being subjected to warrantless domestic surveillance under an anti-terrorism program put into place by the Bush administration after the Sept. 11, 2001, attacks on the U.S.

But you know what righties will say — we have to burn our freedoms to save them. Or something.

Update: More info in the New York Times —

In a 45-page opinion, Judge Vaughn R. Walker ruled that the government had violated a 1978 federal statute requiring court approval for domestic surveillance when it intercepted phone calls of Al Haramain, a now-defunct Islamic charity in Oregon, and of two lawyers who were representing it in 2004. Declaring that the plaintiffs had been “subjected to unlawful surveillance,” the judge said that the government was liable to pay them damages.

The ruling delivered a blow to the Bush administration’s claims that its warrantless surveillance program, which Mr. Bush secretly authorized shortly after the terrorist attacks of Sept. 11, 2001, was lawful. Under the program, the National Security Agency monitored Americans’ e-mail messages and phone calls without court approval, even though the Foreign Intelligence Surveillance Act, or FISA, required warrants.

Gubmint for Me, but Not for Thee

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Joan Walsh has a good article at Salon called “What’s the Matter With White People?” that documents the “tea partiers” don’t grasp that health care and other reforms are to help them. They only see that their taxes are going to be used to help other people.

This point is reinforced by a recent article by Ron Brownstein.

In a mid-March Gallup survey, 57 percent of white respondents said that the bill would make things better for the uninsured, and 52 percent said that it would improve conditions for low-income families. But only one-third of whites said that it would benefit the country overall — and just one-fifth said that it would help their own family.

Compounding the confusion is a recent article by Kate Zernike in the New York Times that found many of the “tea partiers” are unemployed or retired and receiving various kinds of government assistance, even as they demonstrate against government assistance.

Mr. Grimes, who receives Social Security, has filled the back seat of his Mercury Grand Marquis with the literature of the movement, including Glenn Beck’s “Arguing With Idiots” and Frederic Bastiat’s “The Law,” which denounces public benefits as “false philanthropy.”

“If you quit giving people that stuff, they would figure out how to do it on their own,” Mr. Grimes said.

Which is something of a departure from past populist movement sparked by hard economic times.

The Great Depression, too, mobilized many middle-class people who had fallen on hard times. Though, as Michael Kazin, the author of “The Populist Persuasion,” notes, they tended to push for more government involvement. The Tea Party vehemently wants less — though a number of its members acknowledge that they are relying on government programs for help.

They also say “the government” caused their own and the nation’s hardships, which I guess is true inasmuch as government stepped aside and allowed the financial sector to lead the nation off a cliff.

Anyway, I’ve argued in the past that Lyndon Johnson’s Great Society program caused a huge shift in attitude in white Americans about government. People who had been just fine with help from government programs initiated by FDR and Truman suddenly decided government shouldn’t be giving out “hand outs” when a large percentage of the recipients were African American. And, of course, Republicans (including Nixon and Reagan) hammered home the theme that “entitlements” were going to greedy (and nonwhite) people who wouldn’t work and who drove their new Cadillac to the grocery story and paid for their groceries with food stamps.

Being from the Ozarks myself, I could take you home with me and show you white families who have survived on government assistance for generations, but because such families tend to live outside the suburbs of the boonies they are mostly invisible to media. But I also know (I know my people; I’m related to most of ’em) that these same white folks, who rarely have regular jobs and who survive by the grace of food stamps (although I understand they use cards now) and Medicaid, will tell you they don’t think “those people” ought to be getting welfare.

Ah-HEM.

Anyway, Joan Walsh mentions research that found working-class whites bailed out of the Democratic Party beginning in the mid-1970s. It actually began during the Nixon Administration, but possibly not yet in large numbers. But what shook so many working-class people loose was a combination of factors that began with Republicans like Nixon painting “welfare” as a process by which white taxpayers were handing out money to chronically unemployed (i.e., lazy) black people. The other part of that process, of course, was that the Democratic Party itself abandoned New Deal-style progressivism.

Of course, another part of the problem might be the way President Obama and other Democrats kept trying to assure people that, if you already have employee benefit health insurance, your insurance won’t change. This was to calm fears that everyone’s doctor was about to be hauled off to the gulag, where you couldn’t see him without a stamp from the Bureau of Health Care Rationing. But maybe the message that got through was “this legislation is just for unemployed people.”

Walsh concludes,

So there’s a long history here of Republicans preying on white working-class insecurity, and Democrats mostly ignoring it, that shapes the response to healthcare reform. That’s why, to me, it was so important for Democrats to pass the bill, flawed as it was. Democrats need to deliver on their promises, with tangible benefits for their voters, and if whites remain suspicious now, maybe watching the bill’s colorblind protections help all groups can change white opinions about social spending. Maybe not. But Democrats are going to have to do a better job of selling the bill’s benefits to everybody to prevail in November, and Brownstein’s column framed the problem without name-calling.

That’s about where I come out also.

The Black Helicopters Return

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I can’t tell from news stories exactly why the feds raided a Midwestern “Christian militia” group called “Hutaree” and arrested seven members. There is vague information about unspecific threats against Muslims, but I would think a big, splashy raid and several arrests would require something more substantive.

However, it’s fun to watch the bold freedom fighters of other Midwestern militia groups trip all over themselves running away from Hutaree.

Mike Lackomar, of Michiganmilitia.com, said both The Southeast Michigan Volunteer Militia and the Michiganmilitia.com were not a part of the raid.

Lackomar said he heard from other militia members that the FBI targeted the Hutaree after its members made threats of violence against Islamic organizations.

“Last night and into today the FBI conducted a raid against homes belonging to the Hutaree. They are a religious cult. They are not part of our militia community,” he said.

And via Steve M, Mike Vanderboegh (who recently made a splash by suggesting that people who don’t like Democrats should break their office windows) wrote,

The Hutaree have indicated in the past that, much like John Brown, they WANTED to start a civil war, which is why no responsible militia group in Michigan was willing to ally with them.

However, Vanderboegh also said,

But here’s the deal, Feds. If you kill anyone or burn somebody’s house or church down with them inside, you will have started a civil war, no matter how despicable the Hutaree are, or how crazy, or how provocative. If that happens, there will be NOTHING responsible leaders of the constitutional militia movement will be able to do from our side to stop it. You will have crossed the Rubicon.

In other words, if the federal government takes action against a group about to engage in armed insurrection against the government (assuming that’s what Hutaree was doing), then the government, not the insurrectionists, will have started the civil war.

Again, there doesn’t seem to be much information out there about why an arrest warrant was issued for Hutaree members. It had better be a good reason. But somehow I’m not too concerned that there will be an armed uprising in support of Hutaree. Posturing, bombast, probably some midnight vandalism, yes. But no armed uprising.

Update: Yes, I’d say these charges are worthy of arrest warrants and big, splashy raids. They planned a mass killing of police. Nine people have been indicted. Keep in mind this is a Christian militia.

Update: Today the feds also indicted a man who threatened to kill Republican Senator Eric Cantor. This indictment also seems to me to be justified. I’m not even going to guess at the number of rightie bloggers who think this indictment is good but the indictments against the Hutaree militia members are bad.