Category Archives: Corruption

Congressional Republicans and Democrats Guilty of Crony Capitalism

Federal Reserve Chairman Ben Bernanke with committee chairman Spencer Bachus (R-AL) on Capitol Hill March 2, 2011. Bernanke reportedly defended the Federal Reserves monetary policy against criticism from Republicans.

Hypocrisy at its best. For us commoners, it is illegal to trade stocks and bonds if we have access to non-public information about a company. Remember Martha Stewart. She was sent to federal prison for this exact crime. But did you know it is not illegal for everyone. The members of the U.S. Congress are exempt from this law.  

Steve Kroft reports members of Congress and their aides have regular access to powerful political intelligence, and many have made well-timed stock market trades in the very industries they regulate. For now, the practice is perfectly legal, but some say it’s time for the law to change.  

Peter Schweizer’s new book, Throw Them All Out, delves into the details of how both parties are enriching themselves with inside information that the public is not privy to. Many members of Congress are shown to have made suspiciously timed trades including John Kerry, Dick Durbin, and Jim Moran. But it is a Republican from Alabama, Spencer Bachus, who tops them all.  

Henry Blodget of Daily Ticker recently reported on this.     

Rep. Bachus made more than 40 trades in his personal account in the summer and fall of 2008, in the early months of the financial crisis. 

The fact that Bachus personally traded while getting private government briefings is bad enough. The fact that he was the ranking member of the House Financial Services Committee at the time is simply outrageous. 

In one case, the day after getting a private briefing on the collapsing economy and financial system from Ben Bernanke and Hank Paulson, Rep. Bachus effectively shorted the market (by buying options that would rise if the market tanked.) 

A few days later, after the market tanked, Bachus sold his position and nearly doubled his money. 

If a corporate executive or Wall Street trader did this–cashed in personally after getting private, non-public information from his work–Rep. Bachus and every other member of Congress would be up in arms about corruption and insider trading. 

And they would be right. 

New Republican Study — Millionaires Receiving Billions In Taxpayer Support

People who are protesting against the wealth inequality and a tax code that grossly favors the 1% now have a new ally, Tom Coburn, Republican Senator from Oklahoma. He has released what he describes as the “first-ever compilation of federal aid for the richest.”  

Let me be the first to say how very surprised I am by this study. Mr. Coburn is known to be a bedrock conservative who has strongly supported the no new taxes mantra, and when someone with his background starts to shine a light into the inequalities in our government I firmly believe he can do more to further the Occupy Wall Street cause than any encampment ever could. 

The study reveals some startling findings. For example, in 2009, $21 million in unemployment insurance was collected by people who earned more than a million dollars. Also, the U.S. Treasury pays out more than $30 billion a yearto people who make more than a million a year. Mr. Coburn says what the study “reveals is sheer Washington stupidity with government policies pampering the wealthy costing taxpayers billions of dollars every year.”   

In a letter that accompanied the study, Mr. Coburn wrote, “The income of the wealthiest 1 percent of Americans has risen dramatically over the last decade. Yet, the federal government lavishes these millionaires with billions of dollars in giveaways and tax breaks,” as noted in the recent Congressional Budget Officestudy that examined the growing income gap over the last 30 years.  

“From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working. This welfare for the well-off — costing billions of dollars a year — is being paid for with the taxes of the less fortunate.” 

“The government’s social safety net, which has long existed to catch those who are down and help them get back up, is now being used as a hammock by some millionaires, some who are paying less taxes than average middle class families.” 

The following list was compiled by Mr. Coburn showing federal money handed out to millionaires over several years: 

  • $18.15 million in child care tax credits 
  • $74 million in unemployment checks 
  • $89 million for preservation of ranches and estates 
  • $316 million in farm subsidies  
  • $608 million in business entertainment deductions 
  • $9 billion in retirement checks 
  • $21 billion in gambling losses 
  • $28 billion in mortgage breaks for mansions, vacation homes and yachts 

These are powerful findings and they are coming out at a crucial time during which we are debating cutting such vital programs like Medicare, Medicaid, Social Security, Education, etc.

How Wall Street Is Shifting Money From Pensions to the Top 1%

Since the beginning of Occupy Wall Street, corporate media and political pundits have been trying minimize OWS. The problem these news agencies aren’t addressing and what OWS is bringing to the forefront is the staggering income inequality. Our income inequality is worse that some third world countries like Trinidad and Tobago, Mozambique and Tunisia, and the amount of wealth here in the US dwarfs these countries.  

Wall Street has many tricks to shift the wealth from the middle class to the top 1 percent and one way, which has not been talked about much is the way they have decimated pension funds. Investigative journalist Ellen Schultz wrote the book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workersthat exposes some of the tricks corporations have used to shift money from the working people’s pensions to their top executives.  

Here is what Ms. Schultz writes. 

It’s no secret that hundreds of companies have been slashing pensions and health coverage earned by millions of retirees. Employers blame an aging workforce, stock market losses, and spiraling costs- what they call “a perfect storm” of external forces that has forced them to take drastic measures.  

But this so-called retirement crisis is no accident. Ellen E. Schultz, award-winning investigative reporter for the Wall Street Journal, reveals how large companies and the retirement industry-benefits consultants, insurance companies, and banks-have all played a huge and hidden role in the death spiral of American pensions and benefits. 

A little over a decade ago, most companies had more than enough set aside to pay the benefits earned by two generations of workers, no matter how long they lived. But by exploiting loopholes, ambiguous regulations, and new accounting rules, companies essentially turned their pension plans into piggy banks, tax shelters, and profit centers. 

Drawing on original analysis of company data, government filings, internal corporate documents, and confidential memos, Schultz uncovers decades of widespread deception during which employers have exaggerated their retiree burdens while lobbying for government handouts, secretly cutting pensions, tricking employees, and misleading shareholders. 

She reveals how companies: 

  • Siphon billions of dollars from their pension plans to finance downsizings and sell the assets in merger deals. 
  • Overstate the burden of rank-and-file retiree obligations to justify benefits cuts while simultaneously using the savings to inflate executive pay and pensions. 
  • Hide their growing executive pension liabilities, which at some companies now exceed the liabilities for the regular pension plans. 
  • Purchase billions of dollars of life insurance on workers and use the policies as informal executive pension funds. When the insured workers and retirees die, the company collects tax-free death benefits. 
  • Preemptively sue retirees after cutting retiree health benefits and use other legal strategies to erode their legal protections. 

Though the focus is on large companies, which drive the legislative agenda, the same games are being played at smaller companies, non-profits, public pensions plans and retirement systems overseas. Nor is this a partisan issue. Employees of all political persuasions and income levels-from managers to miners, pro-football players to pilots-have been slammed.

Koch Brothers “Man Up” — They Are Called Out For Intimidation

The last segment of Maddow’s show last night was devoted to a recent effort by the Koch brothers (the people who fund the Tea Party) to intimidate her staff in response to posting of an article on the number of jobs Koch Industries has open right now and comparing their job openings with the number of people currently unemployed. 

The video of that segment is below for you to watch, and I encourage you to because she truly stands up these billionaire titans of industry…the little guy standing up to these thugs who use their wealth to buy our politicians and their votes. 

Here are few facts about Koch Industries that Rachel mentioned: 

  • Koch Industries is the 2nd largest privately held company in the country founded by Fred Koch, the daddy of Charles and David Koch.  
  • Koch brothers are richer than Warren Buffet. They have fired thousands of Koch Industries employees as the brothers have gotten more and more rich.  

    In 2007 Koch net worth was $34 billion and employed 80,000.  
    Now in 2011 Koch net worth is $50 billion and they employ 67,000.  

  • Koch brothers fund Republicans as well as the “Astroturf Tea Party”. All the funding for Americans for Prosperity who is the driving force behind the Tea Party is Koch brother money.  
  • Koch Industries operate in 60 countries. Recently it was discovered they were doing business illegally with Iran.  
  • When the Democrats passed the first stimulus in 2009 for job creation, The Koch funded Americans for Prosperity ran ads attacking Democrats who voted for this stimulus, and when the money started going to the states to promote job creation, Americans for Prosperity demanded that local governments reject this money — in essence do not do anything to help the economy. 

Rachel went on the attack and here is a transcript of parts of what she said. Watch the video for the full segment:  

If I had become billions and billions and billions of dollars richer while firing thousands and thousands and thousands of Americans from their jobs and then I had decided to spend multi-million dollar chunks of my fortune trying to make sure that teachers and firefighters would get laid off and stayed laid off, if I was that kind of guy. If I was the kind of guy who minted gold dimes with my own head on them, if I was the kind of guy who wanted to take money out of my pocket and see my own face looking back at me from the money……[they did this when running a Koch brother was running for VP in the 80s]……but even I was the kind of guy who minted myself onto coins, even if I was that kind of billionaire, I still could not imagine using my multi-billion dollar oil and chemical conglomerate to take shots……    

Your right Republicans…there is class warfare but you are instigating the war…you and your billionaire handlers. Rachel calls them out and I am thrilled that she is not backing down. 

I read a sign from one of the OWS protesters that read: They [Republicans] only call it class war when we fight back!”

Another Scandal for ALEC, Atlantic Bridge, and the Koch Brothers

Atlantic Bridge, the British affiliate organization to the American Legislative Exchange Council (ALEC), is in the midst of a scandal in the UK that is bringing into light the corruption-laced practices of these right-wing groups on both sides of the pond.  

To refresh your memory, ALEC whose motto is “Limited government, free markets, federalism” is a powerful lobbying organizations. So, in case you’re wondering who funds this group, you won’t be surprised because they include companies like Exxon Mobil, tobacco giant Philip Morris and the NRA.  

They regularly hold conventions where our legislators and lobbyists can get together. Center for Media and Democracy, non-profit media research group, reported that “during these events state legislators are presented with pre-drafted bills drawn up on behalf of its members.”  

The Guardian wrote in its article:  “Each year, close to 1,000 bills, based at least in part on ALEC model legislation, are introduced in the states. Of these, an average of 20% become law.” One of its biggest supporters is the Koch Foundation, whose founders, the oil barons Charles G Koch and David H Koch, have funnelled about $55 million to climate-denial front groups and are generous donors to the Tea Party movement.  

ALEC had a partnership with Atlantic Bridge, which was a think tank founded in 1997. Its purpose was to “bring people together,” i.e., John Ashcrot, Karl Rove, Jon Kyl, Lindsey Graham, Joe Lieberman, “who have common interests.”  

In my research about Atlantic Bridge, I found this out via Wikipedia: They were given charitable status in 2003 as “an education and research scheme.” In a 2010 report by the Charity Commission, it ruled that it was “not evident that [it] had advanced education” and “may lead members of the public to call into question its independence from party politics”. It was ordered to enact a 12-month review to bring it into line with its charitable objectives. 

In 2003, David Cameron’s Defense Secretary Liam Fox and Atlantic Bridge’s London-based director, Adam Werritty, partnered with ALEC to form the Atlantic Bridge nonprofit. ALEC supplied staff to the Atlantic Bridge, and Fox and his associates spoke at ALEC events. These “events” included meetings between American politicians and business lobbyists.  

Here is what ThinkProgress recently wrote about the scandal going on in the UK and their findings after investigating ALEC.  

Earlier this month, the U.K.’s Charity Commission shut down Atlantic Bridge after an investigationrevealed that the nonprofit has operated as little more than a front for various corporate lobbying and Tory party interests.  

The scandal has already forced the resignation of David Cameron’s Defense Secretary Liam Fox after the revelation that the Atlantic Bridge’s London-based director, Adam Werritty, had improperly acted as a high level advisor to Fox while employed by a number of military industry and lobbying clients.  

ThinkProgress has covered ALEC for years, and what we have found closely resembles the pay-to-play allegations against Atlantic Bridge. Our investigations helped expose the fact that health insurance lobbyists used ALEC to write anti-health reform legislation, that Koch Industries and coal lobbyists had used ALEC to kill clean energy programs, and that private prison corporations pushed immigrant detention laws with assistance from ALEC. 

Watch the ThinkProgress video report of the 2011 American Legislative Exchange Council conference:    

Speaking at a 2008 ALEC conference in Chicago, Fox said, “we at Atlantic Bridge have been delighted at the success of our partnership with ALEC and we’re excited about what we might achieve together in the future.” “In particular,” he added, “we are patting ourselves on the back at having chosen such a disguised and solid values-based organization to be our partner because the values that you have need to be embedded at every level of government — not just national or federal government.” Given the way Fox exported ALEC’s stealth lobbying agenda to the UK, one must wonder when the Atlantic Bridge corruption scandal will hit the United States.  

Shortly after news broke of the Atlantic Bridge controversy, the websites for ALEC and Atlantic Bridge went down. Both now claim to be undergoing maintenance.  

Presidential candidate Herman Cain’s spokesperson and foreign policy adviser also has strong ties to Atlantic Bridge.

We The People of Occupy Wall Street Want Justice – Time To Prosecute the Bankster Crooks

One of the recurring issues being raised by the Occupy Wall Street protesters is the lack of accountability by the Wall Street executives for taking our economy over the cliff.

In fact, they are now bringing in record profits with another round of record bonuses expected. Meanwhile not one person from Wall Street has been prosecuted with the exception of Madoff and a hedge-fund tycoon, Raj Rajaratnam, who was ordered to serve 11 years in prison for insider-trading. 

They have successfully escaped any repercussions from creating such things as credit-default swaps. Michael Greenberger, a law professor at the University of Maryland, explains: 

A credit default swap is a contract between two people, one of whom is giving insurance to the other that he will be paid in the event that a financial institution, or a financial instrument, fails. It is an insurance contract, but they’ve been very careful not to call it that because if it were insurance, it would be regulated. So they use a magic substitute word called a ‘swap,’ which by virtue of federal law is deregulated.   

Who was selling this? Banks like Bear Sterns, Lehman Brothers, AIG, Bank of America, and Citigroup. Yet not one executive from any of these banks has been arrested, charged, and prosecuted. How can that happen? It has something to do with the revolving door between our government and Wall Street. President Obama has chosen to surround himself with former Wall Street executives including former Goldman Sachs CEO Jon Corzine, Evercore Partners executive Charles Myers, Greenstreet Real Estate Partners CEO Steven Green, and Azita Raji, a former investment banker for JP Morgan. 

Tim Geithner was interviewed on CNBC yesterday and was asked about the OWS movement and their claims of the lack of prosecutions. He said that the Administration is getting right on the whole “prosecuting the people who defrauded the economy” thing. Geithner said action is on the way. “You’ve seen very, very dramatic enforcement actions already by the enforcement authorities across the U.S. government, and I’m sure you’re going to see more to come. You should stay tuned for that.”  

David Dayen of FireDogLake had his own version Geithner’s response: 

Let me rewrite that: “We moved within a year and a half of getting in office to put in place a relatively stronger set of rules of the game, in the sense that 1/8 is stronger than 1/16, across the financial sector. Now, we’re now facing a lot of resistance to those rules, and we’re accommodating that resistance by gutting the rules in implementation. We’re going to make sure that we deliver the promise of those reforms, or at least the promise we made to the finance lobby to back off and let them grow their way back to the top.” 

Unfortunately, I don’t see the Hope and Change candidate changing all that much. Saying that, I still think given the 2 parties and the candidate we have to choose from, Obama is still the better choice….but that is not saying much. 

I know there are people out there that will disagree saying he has tried, but keep in mind in 2008, he was swept in with a majority in both Houses, and even though he did have obstacles even within his own party, he chose to do nothing. He chose to ignore the crimes committed by Wall Street and as a result Eric Holder has done pretty much nothing.

How Bad Is The Income Gap In America – A Few Facts About The 1%

Why are Occupy Wall Street protesters out there….they don’t even know what they are protesting about? That is what we are hearing over and over from Fox News and other conservative pundits on an hourly basis.

I can’t speak for them all but here are a few clues: How about protesting to object corporate control of government policies, which has led to unfair tax loopholes, job outsourcing, cuts to public programs and gross overcompensation of executive employees, a widening wealth disparity between the top 1 percent and the rest of the country. 

So what is the disparity? How is wealth distributed in the United States? When you hear your conservative, Tea Party relatives or friends talking down the OWS movement, here are a few fun facts you can mention. These were compiled by staff writer of Life’s Little Mysteries, Natalie Wolchover

FACT #1: The wealthiest 1 percent of households own 34.6 percent of all privately held wealth, and 42.7 percent of all financial wealth (total net worth minus the value of one’s home). 

According to the NYU economist Edward Wolff a 2010 report, the bottom 80 percent of the population holds just 15 percent of the total wealth and only 7 percent of the total financial wealth (as a large portion of their wealth is tied up in their homes). The bottom 40 percent of Americans — that’s 120 million people — hold just 0.3 percent of the wealth. 

FACT #2: The United States has more income and wealth inequality than most countries that have been studied, including India and China — countries that are traditionally viewed as having unequal distributions of wealth. 

The degree of income inequality in each country is assigned a “Gini coefficient” — a number that ranges from zero (if everyone in the country has the same income) to 1 (if one person in the country has all the income). According to data gathered by the Central Intelligence Agency for 2010, the United States has a Gini coefficient of 0.45, on par with such countries as Iran (0.44) and Mexico (0.48); this is higher than the Gini coefficients of 94 of the 134 countries that have been studied, including China (0.42) and India (0.37), and much higher than Canada, Australia and all of Europe. Sweden has the lowest Gini coefficient at 0.23.  

The United States’ Gini coefficient has been rising for decades; it was just 0.35 in the 1960s. 

FACT #3: Among the 299 companies listed in the S&P 500 Index, the average CEO’s compensation was $11.4 million in 2010, or 343 times more than the median pay ($33,190) of American workers. The ratio of CEO pay to median worker pay was just 42:1 in 1980, and is currently 25:1 in Europe. 

Bill Domhoff, a sociologist at UC Santa Cruz, claims the ballooning of chief executives’ salaries in recent years has resulted from the fact that, for the most part, they set their own wages. “If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select — and which includes some fellow CEOs on whose boards they sit — gives them the pay they want,” Domhoff wrote in a 2011 articleon his website. 

FACT #4: Between 1979 and 2005, the average after-tax income for the top 1 percent increased by 176 percent, compared with an increase of only 6 percent for the bottom 20 percent. Between 1990 and 2005, the purchasing power of the federal minimum wage actually declined by 9.3 percent when adjusted for inflation. 

This rapid widening in the income gap between the rich and poor was identified in a 2007 report by the Center on Budget and Policy Priorities. The report attributed the trend to tax policies that favor the wealthy. According to Domhoff, other contributing factors include the diminishing political clout of labor unions and decreased expenditure on social services. 

FACT #5: Most Americans have no idea that the wealth distribution is as concentrated as it is, but regardless of their gender, age, income level or party affiliation, they believe wealth should be much more evenly distributed than they think it is

In 2010, Michael Norton of Harvard Business School and behavioral economist Dan Ariely of Duke University surveyed 5,522 Americans about their views on the country’s wealth distribution. They found that most respondents (regardless of their genders, ages, income levels and party affiliations) guessed that the top 20 percent of Americans hold about 60 percent of the wealth (rather than the 85 percent that they actually hold). Survey respondents also guessed that the bottom 40 percent hold between 8 and 10 percent of the wealth in the U.S. (rather than the 0.3 percent that they actually hold).