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Monday, September 8, 2008
Nearly 600,000 Subject to Possible Caging in Ohio
By: David Rosenfeld
How many voter-registration mass mailers are "returned to sender" in the run-up to Election Day may determine how many Ohio residents are eligible to vote.
Ohio election officials are sending out a mass mailer stamped “do not forward” to all registered voters today (Sept. 5) with an absentee ballot application and other important notices for Nov. 4.
What’s important here is not so much what’s going out as what’s being returned to sender.
Unbeknownst to the would-be recipients, the same mailer — just 60 days before the election — has the potential to determine their eligibility to vote, challenged not by election officials but by partisan opposition.
A similar mailer in March netted nondeliverable mail from almost 600,000 registered voters in just five Ohio counties who could now have their ballots thrown out for voting under the wrong address.
The National Voter Registration Act prohibits any state from purging names from the voting rolls within 90 days of an election.
The law doesn’t, however, preclude mass partisan challenges on or shortly before Election Day — known as voter caging — based on the same returned envelopes from state-sponsored mailers like the ones in Ohio and others going out across the country.
In 2004, the year the national election hinged on results from Ohio, the Ohio Republican Party challenged 35,000 voters based on returned mail from the GOP's own friendly reminder notices. From 2004 to 2006, Republicans challenged 77,000 voters this way nationwide. A consent decree issued in 1982 and amended in 1987 enjoins the GOP from instituting “ballot security programs” that focus on minority voters.
No evidence so far suggests Republicans — vote caging is essentially a GOP sport — have mounted a caging campaign this year. Yet, in July, Franklin County Election Director and County GOP Chairman Doug Preisse told reporters he didn’t rule out challenges before November, particularly because of increased home foreclosures, which would make failures to change address on voter registration records more common.
A challenged voter will likely cast a provisional ballot, which often requires voters to return to election divisions to prove their identity and address. Nearly a third of all 1.6 million provisional ballots cast in 2004 were thrown out.
Voting-rights groups don’t oppose voter-roll housekeeping, but they cite the federal law as evidence that executing it so close to the actual election isn’t fair.
The fraud that voter caging purportedly roots out is relatively rare, although vote solicitors working for the liberal group ACORN, the Association of Community Organizations for Reform Now, in 2004 and again this year were accused of submitting false registration forms. Ohio is one of five states where ACORN employees have been investigated and, in some instances, jailed over submitting false voter registration forms.
Unrelated to ACORN, the Web site GOP.com cites two voting-fraud court cases in Ohio, both focused on individuals casting a second ballot intentionally.
On Nov. 1, 2004, voter-rights groups reacted and challenged the partisan caging in Ohio all the way to the U.S. Supreme Court in just two days but lost in a final-hour appeal. This year, they want to be as proactive as possible, said Donita Judge, Ohio staff attorney for the nonprofit Advancement Project.
“A single returned piece of mail is not a reliable basis for challenging the right to vote,” Judge said. “Mail may be returned for many reasons, including errors in the database from which the mailing is derived, errors in the mailing labels, failure to include an apartment number or poor matching criteria.”
Since 2005, Ohio state law has required a non-forwarded mailer 60 days before each federal election. The suspicious part about the law, Judge said, is that it’s set to expire after the November election.
But it’s not all about throwing votes out. Another aspect of Ohio’s reformed election law is that it opens a window between Sept. 30 and Oct. 6 when voters can register one minute and cast a ballot the next.
That’s generally seen as a benefit for Democrats this year since the new registrations refer mainly to 400,000 or so resident college students in Ohio. Obama holds a 2-to-1 lead over McCain among 18- to 34-year-olds, according to a Washington Post-ABC News poll released last month.
Following a statewide mailer similar to the one going out today, before the Ohio primary in March, the Advancement Project obtained the lists of returned notices through simple public records requests. The organization requested records from five urban Ohio counties — Cuyahoga, Franklin, Hamilton, Lucas and Summit.
The total came to 600,000 names out of 3 million voters, amounting to 19.7 percent of all registered voters.
Sally Krisel, director of the Hamilton County Board of Elections, said the high percentage was misleading because the mailer in her county included those on the inactive voter roll. Considering only active registered voters, the county received about 5 percent returned in March, she said.
Inactive voters, tagged for possible removal, are given two years to cast a ballot before they can be removed from the rolls. None of the returned, 60-day notices are used for that purpose, Krisel said.
“We have not purged anybody this year,” she said. “In big counties, we’re often carrying a lot of inactive voters.”
In Franklin County, the March mailer went to all registered voters as well. Out of 780,000, more than 150,000 notices were returned. Those voters are now excluded from receiving another notice this week, said Ben Piscitelli, spokesman for the Franklin County Board of Elections. The only public records request for the list so far came from the Obama campaign, Piscitelli said.
Meanwhile, the sweeping Ohio election law loosens the rules around challenging voters. It also strips much of the ability of voters to know they are being challenged and defend their right to vote before an election judge.
Iraqis Protest Against US Presence In Iraq
Thousands of Shi'ites protested against the U.S. presence in Iraq, heeding orders from anti-U.S. cleric Moqtada al-Sadr for a peaceful show of force on the first Friday of the Muslim holy month of Ramadan.
Crowds of people waved photos of the reclusive cleric, dancing and shouting, following Friday prayers in Sadr City, a Shi'ite stronghold in northeastern Baghdad.
Several men burned a red, white and blue flag as they pledged support for the reclusive Sadr.
"We all support you, Sayyid Moqtada! We are your soldiers!" they shouted, addressing Sadr by a title of respect.
In the southern holy city of Najaf, several hundred protesters turned out for a parallel protest. "No, no to occupation!" read one banner.
Late last month, Sadr extended indefinitely a ceasefire for the Mehdi Army, the feared militia that until a government crackdown earlier this year controlled Sadr City and swathes of southern Iraq.
The cleric, who is believed to be holed up in the Iranian city of Qom, has asked the bulk of his followers to dedicate themselves to helping poor Shi'ites and countering western influence in Iraq. He also ordered Friday's protests.
The question as violence drops sharply across Iraq is whether the bulk of Sadr's militia will obey orders to put down their arms.
In Sadr City, Imam Muhenned al-Moussawi addressed the thousands of men and boys gathered for prayers under the blistering summer sun.
"Everybody knows that the goals of American wars are commercial. They use war to drain desperate nations economically and socially," he told the crowd.
The protests came as attention focused on the future of the U.S. troop presence in Iraq, and the Shi'ite-led government of Prime Minister Nuri al-Maliki sought assurances from Washington about gradually reducing its military activities in the country.
Pentagon sources said this week they were recommending the withdrawal of one combat brigade, 3,000 to 5,000 soldiers, in early 2009, a move that reflects both improving conditions in Iraq and growing needs in Afghanistan.
Who Lost Iraq?
By Michael Schwartz
Is the Maliki Government Jumping Off the American Ship of State?
As the Bush administration was entering office in 2000, Donald Rumsfeld exuberantly expressed its grandiose ambitions for Middle East domination, telling a National Security Council meeting: "Imagine what the region would look like without Saddam and with a regime that’s aligned with U.S. interests. It would change everything in the region and beyond."
A few weeks later, Bush speechwriter David Frum offered an even more exuberant version of the same vision to the New York Times Magazine: "An American-led overthrow of Saddam Hussein, and the replacement of the radical Baathist dictatorship with a new government more closely aligned with the United States, would put America more wholly in charge of the region than any power since the Ottomans, or maybe even the Romans."
From the moment on May 1, 2003, when the President declared "major combat operations… ended" on the deck of the USS Abraham Lincoln, such exuberant administration statements have repeatedly been deflated by events on the ground. Left unsaid through all the twists and turns in Iraq has been this: Whatever their disappointments, administration officials never actually gave up on their grandiose ambitions. Through thick and thin, Washington has sought to install a regime "aligned with U.S. interests" -- a government ready to cooperate in establishing the United States as the predominant power in the Middle East.
Recently, with significantly lower levels of violence in Iraq extending into a second year, Washington insiders have begun crediting themselves with -- finally -- a winning strategy (a claim neatly punctured by Juan Cole, among other Middle East experts). In this context, actual Bush policy aims have, once again, emerged more clearly, but so has the administration’s striking and continual failure to implement them -- thanks to the Iraqis.
In the past few weeks, the Iraqi government of Prime Minister Nouri al-Maliki has made it all too clear that, in the long run, it has little inclination to remain "aligned with U.S. interests" in the region. In fact, we may be witnessing a classic "tipping point," a moment when Washington’s efforts to dominate the Middle East are definitively deep-sixed.
The client state that the Bush administration has spent so many years and hundreds of billions of dollars creating, nurturing, and defending has shown increasing disloyalty and lack of gratitude, as well as an ever stronger urge to go its own way. Under the pressure of Iraqi politics, Maliki has moved strongly in the direction of a nationalist position on two key issues: the continuing American occupation of the country and the future of Iraqi oil. In the process, he has sought to distance his government from the Bush administration and to establish congenial relationships, if not an outright alliance, with Washington’s international adversaries, including the Bush administration’s mortal enemy, Iran.
Withdrawal Becomes an Official Issue
Perhaps the most dramatic symbol of this new independence is the Iraqi government’s resistance to a Washington proposal for a "status of forces agreement" (SOFA) that would allow for a permanent and uninhibited U.S. military presence in Iraq.
With the impending expiration of the UN resolutions that gave legal cover to the U.S. military presence in Iraq, the SOFA negotiations are crucial. They began with a proposal that expressed the full extent of Washington’s ambitions to utilize Iraq as the base for making the U.S. "more wholly in charge of the region than any power since the Ottomans, or maybe even the Romans." The proposal first leaked to the press in June 2008 was essentially a major land grab, including provisions like the following that would not have seemed out of place in a nineteenth century colonial treaty:
*An indefinite number of U.S. troops would remain in Iraq indefinitely, stationed on up to 58 bases in locations determined by the United States.
*These troops would be allowed to mount attacks on any target inside Iraq without the permission of, or even notification to, Iraqi authorities.
*U.S. military and civilian authorities would be free to use Iraqi territory to mount attacks against any of Iraq’s neighbors without permission from the Iraqi government.
*The U.S. would control Iraqi airspace up to 30,000 feet, freeing the U.S. Air Force to strike as it wishes inside Iraq and creating the basis for the use of, or passage through, Iraq’s air space for planes bent on attacking other countries.
*The U.S. military and its private contractors would be immune from Iraqi law, even for actions unrelated to their military duties.
*Iraq’s defense, interior, and national security ministries (and all of Iraq’s arms purchases) would be under U.S. supervision for 10 years.
When leaked (clearly by Iraqis involved in the negotiations), this proposal generated opposition across the political spectrum from parliament to the streets. It was even denounced by the usually silent Grand Ayatollah Ali al-Sistani, the most influential Shia Ayatollah. Soon, Prime Minister Maliki made clear his own rejection of the proposal, setting in motion a chaotic negotiating process in which the Iraqis seem to have argued vehemently for a more modest, briefer U.S. presence, as well as a definite deadline for full withdrawal -- a proposal that was anathema to the Bush administration.
By early August, when the details of a new proposal endorsed by Secretary of State Condoleezza Rice began to leak out, it was clear that U.S. negotiators had given way, granting significant concessions to the Iraqi side. According to Iraqi insiders, the new draft agreement called for U.S. troops to be completely withdrawn from Iraqi cities, where most of the fighting usually takes place, by the summer of 2009. All U.S. troops -- not just the "combat" troops usually mentioned when Democrats talk about withdrawal timelines in Iraq -- would have to be gone by the end of 2011.
If the leaked draft were implemented, the U.S. would leave behind those 58 bases, including the five massive "enduring" bases into which the Bush administration has poured billions of dollars. Moreover, the unhindered scope of action Washington had originally demanded for its forces would be dramatically limited: The U.S. would not have the right to attack other countries from Iraqi soil, its ability to conduct operations within Iraq would be circumscribed, and immunity from prosecution would be restricted to U.S. military personnel (and then only when they were participating in approved military actions).
Symptomatic of the loosening U.S. grip on its Iraqi client government were the reactions of the two sides to the leaked provisions of the new version of the agreement. Secretary of State Rice declared it "acceptable" and explained uneasily that the timeline proposed was not the sort of fixed withdrawal date that the Bush administration had long adamantly rejected, but an "aspirational" "time horizon" that would depend on "conditions" in Iraq.
Maliki, in all likelihood responding to the fervor of public protests to Rice’s comments, immediately declared the agreement unacceptable unless the deadline for withdrawal was time-based and unconditional. In a well publicized speech to a gathering of tribal sheiks, he said that any agreement must be based on the principle that "no foreign soldier remains in Iraq after a specific deadline, not an open time frame." In further clarifying his remarks, a key aide told the Associated Press that "the last American soldiers must leave Iraq by the end of 2011, regardless of conditions at the time."
The latest reports suggest that a further round of secret negotiations had restored some U.S. demands, including full immunity for American soldiers (but not mercenary fighters), and application of the withdrawal deadline to combat troops only. Such concessions by Maliki, however, appeared certain to trigger another round of protest and resistance in the streets and in the Iraqi Parliament.
Whatever their outcome, the still-unfinished negotiations point to something quite new in the relationship between the two governments. Until recently, the Iraqi leadership faithfully sought to enact whatever policies the Bush administration favored (though its capacity to implement them was always in question). With the proposed SOFA, this posture disappeared, replaced by a clear antagonism to Washington’s desires. With its formidable weapons (including 146,000 soldiers on the ground), Washington is bound to win at least some of these confrontations, but what we may be seeing is the end of the dream of a regime "closely aligned" with U.S. policies.
The Re-emergence of Oil Nationalism
Nothing better highlights this transformation than oil policy. From the beginning of its occupation of Iraq, the Bush administration sought to quadruple Iraqi oil production by delivering control of the industry to the major international oil companies. Once given free rein to act on their own discretion, Washington policymakers believed that the oil majors would invest vast sums in modernizing existing fields, activate undeveloped reserves using the most advanced technology available, and discover major new fields utilizing state-of-the-art exploration and extraction methods.
Up until 2007, the Iraqi government was an active ally in this enterprise, even though the vast majority of Iraqis -- including the powerful oil workers union, the religious leadership, and a majority of Parliament -- vehemently opposed these plans, demanding instead that control of the industry remain in government hands. In 2004, the U.S.-appointed Iraqi government enthusiastically endorsed an International Monetary Fund agreement that mandated the development of major Iraqi oil reserves by international oil companies. When those companies found the legal basis for such investment too fragile to risk vast sums of capital, the Iraqi government (surrounded by American advisors) immediately began work on an oil law that would presumably provide a more secure foundation for their investment. In the meantime, informal advice was accepted from the oil majors, whose technicians were placed in charge of various engineering operations within the country.
In 2007, when the oil law was finally delivered to the Iraqi Parliament, it met with unremitting opposition. The always strong oil unions immediately began a ferocious resistance campaign that stalled the law.
None of these developments altered the Bush administration’s determination to push the law through. They did not, however, anticipate that the Maliki administration itself would become a further source of opposition. As Charles Ries told journalists on leaving his position as U.S. Economic Ambassador to Iraq in August 2008 after a year of failure, "When I got here… I was quite optimistic it was only a month or two [before the petroleum bill would be passed, but the] more I understood what the real issues were… it was clear this was going to be a major political challenge."
While Ries was on the job, even the leadership of the Ministry of Oil, until then a pro-American bastion, went into opposition. One symptom of this was its failure to complete five no-bid contracts (that did not include either investment or extraction rights) with oil consortia led by the usual suspects -- Exxon Mobil, Royal Dutch Shell, BP, Total, and Chevron -- designed to increase Iraqi production by 500,000 barrels per day. Oil Minister Hussein al-Shahrastani told the Wall Street Journal that a key reason for the faltering negotiations was the desire of the oil companies for "preferential treatment for future oil-exploration deals." This comment, like the faltering negotiations, hinted at the abandonment of the Bush administration’s long-desired version of Iraqi oil policy.
The new attitude was underscored when the Oil Ministry revived a Saddam-era agreement with the China National Petroleum Corporation, which was now granted a $3 billion contract to develop the Ahdab oil field. Given the growing U.S.-China rivalry over the control of foreign oil sources, the symbolism of this act couldn’t have been clearer -- especially since the earlier contract had been unceremoniously canceled by the United States at the beginning of the occupation in 2003. No less important, this was a "service contract" whose terms did not follow U.S. guidelines calling for the reduction or elimination of Iraqi government control of the oil industry.
Soon after announcing this new agreement, Oil Minister Shahrastani offered what might be seen as a declaration of oil policy independence. "[Global] oil supplies," he declared, "meet and may slightly exceed current world demand." The world, that is, had plenty of oil, and so there was, he insisted, no global need to rush pell-mell into oil development agreements that might not, in the long run, be of use to Iraq.
This represented an attack on the fundamental premise of U.S. oil policy -- that, as Vice President Cheney told an oil industry gathering back in 1999, "By 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? While many regions of the world offer great oil opportunities, the Middle East, with two-thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies."
Significantly, back in 2001 -- and before 9/11 -- the Cheney Energy Task Force, working with the National Security Council, would make this commitment the centerpiece of administration Middle Eastern policy, defining the world situation as one in which the supply of oil must be drastically increased to meet the demand for an "additional fifty million barrels a day."
Oil-producing countries of the Middle East never embraced Cheney’s analysis and consistently resisted U.S. efforts to encourage, induce, or coerce dramatic increases in oil production. Instead, they viewed the "shortage" of oil as a natural result of market forces, beneficial to their own economies.
With the success of the U.S. invasion, the Iraqi government threatened to become a maverick among the Organization of the Petroleum Exporting Countries (OPEC), endorsing U.S. supported plans that, theoretically, would have quadrupled Iraqi production within 10 years. So Shahrastani’s comments were a signal that Iraq was rejoining OPEC’s ranks and potentially opening a new era in post-invasion Iraqi politics in which the government he represented would no longer be a reliable ally of the United States.
A Nail in the Coffin of American Defeat?
Implicit in these actions is a new attitude toward, and assessment of, the U.S. presence in Iraq. Prime Minister Maliki and his cohorts appear to have adopted the viewpoint of journalist Nir Rosen that "the Americans are just one more militia," just the most powerful of the rogue forces that they have to manage and eventually eliminate.
As the Iraqi government accumulates an expanding lake of petrodollars and finds ways to shake them loose from the clutches of U.S. banks and U.S. government administrators, its leaders will have the resources to pursue policies that reflect their own goals. The decline in violence, taken in the U.S. as a sign of American "success," has actually accelerated this process. It has made the Maliki regime feel ever less dependent for its survival on the American presence, while strengthening internal and regional forces resistant or antagonistic to Washington’s Middle East ambitions.
The respected Iraqi newspaper Azzaman pointed to one of these forces in a recent editorial: "Iran has emerged as the country’s top trading partner. Its firms are present in the Kurdish north and southern Iraq carrying out projects worth billions of dollars. Iranian goods are the most conspicuous merchandise in Iraqi shops. Iraq, though occupied and administered by America, has grown to be so dependent on Iran that some analysts see it as a satellite state of Tehran."
To support this contention, Azzaman asserted: "The Ministry of Oil and other key portfolios such the Ministry of Interior and Finance are in the hands of pro-Iran Shiite factions." Citing Oil Ministry sources, it suggested that recent changes in oil policy actually reflected Iranian pressure to "exclude U.S. oil majors from contracts to develop the country’s massive oil fields."
Azzaman may be overemphasizing Iranian influence, since there are myriad internal Iraqi influences that continue to press against Washington’s desire for a client regime. Parliament, the Sunni and Shia religious leaderships, powerful unions, and the Sunni and Shia insurgencies have all registered broad opposition to continued U.S. presence and influence.
As all this occurs, U.S. leverage over the Iraqi government, though still formidable, is in decline. The Bush administration -- or its soon-to-be elected successor --- may face a difficult dilemma: whether to accept some version of the withdrawal demands of the Iraqi government or re-escalate the war in yet one more attempt to create a government that is "aligned with U.S. interests." The recent declaration by the Pentagon that only the most modest of troop reductions is militarily feasible in the foreseeable future may be a symptom of this dilemma. Without a full complement of U.S. troops, after all, it will be increasingly difficult to convince the Maliki regime to re-embrace policies favored by Washington.
The question remains: Can anything reverse the centripetal forces pulling Iraq from Washington’s orbit? Will the President’s "surge" strategy prove to have been the nail in the coffin of its hopes for U.S. dominance in the Middle East?
If this turns out to be the case, then watch out domestically. The inevitable controversy over "who lost Iraq" -- an echo of those earlier controversies over "who lost China" and "who lost Vietnam" -- is bound to be on the way.
Bush Still Fights House Subpoenas
By Jason Leopold
The Bush administration still is resisting a congressional subpoena seeking testimony from former White House counsel Harriet Miers on the firing of nine federal prosecutors in 2006, taking the unprecedented executive privilege battle to the U.S. Court of Appeals.
A three-judge appeals court panel – two Republican judges and one Democrat – granted the White House a stay of a lower-court order that would have required Miers to testify before the House Judiciary Committee on Thursday. The judges set deadlines this week for submitting arguments in the case.
The administration’s continued resistance to permitting the testimony – even in the face of a July 31 ruling by U.S. District Court Judge John Bates, who called the White House position “entirely unsupported by existing case law” – shows how President George W. Bush can thwart congressional oversight with delaying tactics.
A parallel situation is developing in Alaska where Gov. Sarah Palin, the Republican vice presidential nominee, and her top aides are refusing to cooperate with an independent counsel investigation into allegations that Palin abused her authority in firing the public safety commissioner.
Palin’s strategy of forcing the state legislature into a subpoena fight follows in the footsteps of the Bush administration resisting congressional oversight investigations into the so-called “prosecutor-gate” and other scandals. [See Consortiumnews.com’s “Palin’s Trooper-gate Cover-up.”]
The Bush administration won at least a temporary victory on Friday with the appeals court’s decision to grant the stay.
“The purpose of this administrative stay is to give the court sufficient opportunity to consider the merits of the motion for stay,” the three-judge panel wrote in its decision. But the three-judge panel cautioned that the temporary stay “should not be construed in any way as a ruling on the merits of that motion.”
The House Judiciary Committee subpoenaed Miers and White House chief of staff Joshua Bolten last year, but they were instructed by President Bush to ignore the subpoenas. Bush claimed that Miers and Bolten were immune from congressional subpoenas, protected by the theory of executive privilege.
The House voted to hold the two officials in contempt of Congress, the first time in 25 years a full chamber of Congress has voted on a contempt-of-Congress citation.
Documents released by the Justice Department last year show that Miers was briefed by department officials about the decision to purge the nine U.S. Attorneys who were deemed insufficiently loyal to Bush and that she was aware of a planned cover story to explain the dismissals.
Judge Bates, a Bush appointee, ruled that the White House’s legal argument of blanket executive privilege lacked legal precedent and that Miers must comply with the congressional subpoena and invoke executive privilege only on a question-by-question basis.
“The Executive cannot identify a single judicial opinion that recognizes absolute immunity for senior presidential advisors in this or any other context,” Bates wrote in a 93-page opinion that was seen as a rebuke to the White House.
"In fact, there is Supreme Court authority that is all but conclusive on this question and that powerfully suggests that such advisors do not enjoy absolute immunity,” Bates wrote.
After Bates’s ruling, White House Counsel Fred Fielding sent a letter to House Judiciary Committee Chairman John Conyers requesting a meeting to negotiate possible parameters for the testimony of Miers and Bolten.
However, House counsel Irv Nathan said negotiations with the White House have been "completely useless."
"We have not found willing partners on the other side of the table," Nathan said. "We’re being dunced around here."
Unable to get Bates to issue a stay of his order, the Justice Department turned to the U.S. Court of Appeals of the Washington, D.C., Circuit, which is dominated by conservative Republican appointees.
A three-judge panel of the Appeals Court then granted the stay, although putting consideration of arguments on a fast track. House Judiciary Committee Chairman John Conyers had scheduled a hearing with Miers on Thursday.
Sunday, September 7, 2008
U.S. Rescue Seen at Hand for 2 Mortgage Giants
By STEPHEN LABATON and ANDREW ROSS SORKIN
Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control, officials and company executives briefed on the discussions said.
The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.
It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history.
The drastic effort follows the bailout this year of Bear Stearns, the investment bank, as government officials continue to grapple with how to stem the credit crisis and housing crisis that have hobbled the economy. With Bear Stearns, the government provided guarantees, and the bulk of its assets were transferred to JPMorgan Chase, leaving shareholders with a nominal amount.
Under a conservatorship, the common and preferred shares of Fannie and Freddie would be reduced to little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers. Shareholders have already lost billions of dollars as the stocks have plunged more than 80 percent this year.
A conservatorship would operate much like a pre-packaged bankruptcy, similar to what smaller companies use to clean up their books and then emerge with stronger balance sheets. It would allow for uninterrupted operation of the companies, crucial players in the diminished mortgage market, where they are now responsible for nearly 70 percent of new loans.
The executives were told that the government had been planning to announce the decision as early as Sunday, before the Asian markets reopen, the officials said.
For months, administration officials have grappled with the steady erosion of the books of the two mortgage finance giants. A fierce behind-the-scenes debate among policy makers has been waged over whether to seize the companies or let them work out their problems. Even after the companies are put under government control, debates will continue over whether they should be independent and how they should operate over the long term.
The declines in the housing and financial markets apparently forced the administration’s hand. With foreign governments increasingly skittish about holding billions of dollars in securities issued by the companies, no sign that their losses will abate any time soon, and the inability of the companies to raise new capital, the administration apparently decided it would be better to act now rather than closer to the presidential election in two months.
Just five weeks ago, President Bush signed a law to give the administration the authority to inject billions of dollars into the companies through investments or loans. In proposing the legislation, Treasury Secretary Henry M. Paulson Jr. said that he had no plan to provide loans or investments, and that merely giving the government the authority to backstop the companies would provide a strong shot of confidence to the markets. But the thin capital reserves that have kept the two companies afloat have continued to erode as the housing market has steadily declined and the number of foreclosures has soared.
As their problems have deepened — and the marketplace has come to expect some sort of government rescue — both companies have found it difficult to raise new capital to absorb future losses. In recent weeks, Mr. Paulson has been reaching out to foreign governments that hold billions of dollars of Fannie and Freddie securities to reassure them that the United States stands behind the companies.
In issuing their quarterly financial statements last month, the two companies reported huge losses and predicted that home prices would fall more than previously projected.
The debt securities the companies issue to finance their operations are widely owned by mutual funds, pension funds, foreign governments and big companies.
Officials said the participants at the meetings included Mr. Paulson, Ben S. Bernanke, the chairman of the Fed, and James Lockhart, the head of both the old and new agency that regulates the companies. The companies were represented by Daniel H. Mudd, the chief executive of Fannie Mae, and Richard F. Syron, chief executive of Freddie Mac. Also participating was H. Rodgin Cohen, the chairman of the law firm Sullivan & Cromwell, who was representing Fannie.
Officials and executives briefed on the meetings said that Mr. Mudd and Mr. Syron were told that they would have to leave the companies.
Spokesmen at the two companies did not return telephone calls seeking comment.
The meetings reflected the reality that senior administration officials did not believe they could wait for some kind of financial tipping point, as happened with Bear Stearns, which was saved from insolvency in March by government intervention after its stock plummeted and lenders withheld their capital.
Instead, Mr. Paulson has struggled to navigate through potentially conflicting goals — stabilizing the financial markets, making mortgages more widely available in a tightening credit environment, and protecting taxpayers from possibly enormous losses.
Publicly, administration officials have tried to bolster the companies because the nation’s mortgage system relies on their continued ability to purchase mortgages from commercial lenders and pull the housing markets out of their slump.
But privately, senior officials have been critical of top executives at the companies, particularly Freddie Mac. They have raised concerns about major risks to taxpayers of a bailout of companies whose executives have received huge compensation packages. Mr. Syron, for instance, collected more than $38 million in compensation since he joined the company in 2003.
Although Mr. Syron promised regulators earlier this year that he would raise $5.5 billion from investors, he has failed to make good on that promise — even as Fannie Mae raised more than $7 billion. Mr. Syron was slated to step down from the chief executive position last year, but that was delayed when his appointed successor, Eugene McQuade, chose to leave the company.
With the possible removal of the top management and the board, it is no longer clear who would appoint new management.
Mr. Paulson had hoped that merely having the authority to bail out the two companies, which Congress provided in its recent housing bill, would be enough to calm the markets, but if anything anxiety has been increasing. The clearest measure of that anxiety has been the gradually widening spread between interest rates on Fannie- or Freddie-backed mortgage securities and rates for Treasury securities, making home mortgages more expensive. The stock prices of the companies have also plunged.
After stock markets closed on Friday, the shares of Fannie and Freddie plummeted. Fannie was trading around $5.50, down from $70 a year ago. Freddie was trading at about $4, down from about $65 a year ago.
With Fannie and Freddie guaranteeing $5 trillion in mortgage-backed securities, and a big share of those held by central banks and investors around the world, Mr. Paulson appears to have decided that the stakes are too high to take chances.
The Treasury Department is required by the new law to obtain agreement from the boards of Fannie and Freddie for a capital infusion. The exception is if the companies’ regulator, Mr. Lockhart, determines that the companies are insolvent or deeply undercapitalized it could take the companies over anyway.
Charles Calomiris, a professor of economics at Columbia Business School, said delaying a rescue would only increase the risks and costs.
“The last thing you want to do is give a distressed borrower more time, because when people are in distress they tend to take a lot of risks,” he said. “You don’t want zombie institutions floating around with time on their hands.”
Only in America Could a Two-Faced Creature Like McCain Attain Such Media Status
By Rory O'Connor
Only in America could a man who has been in office for decades run as an "outsider" against the entrenched interests in Washington.
Only in America could a man who is a longtime Republican stalwart run against his own party, which has governed while controlling most of the institutional levers of power -- the presidency, the Supreme Court and the Congress -- for much of the past eight years.
And only in America could a man who has called the corporatized, in-the-tank, mainstream media his "base" -- the media that made him its darling and hailed him for his supposed "straight talk" -- run against that very same media, bashing it figuratively while "peace officers" were doing so quite literally to journalists in the streets of St. Paul, in a manner unseen since the ’60s and the Chicago days of Richard Daley and the subsequent Nixonian "nattering nabobs of negativity" era.
Yes, welcome to America, land of opportunity, where every politician is a self-styled "change agent" -- yet little ever seems to change.
Running hard against the elite, effete (or as Bill O’Reilly concisely puts it, the "sniveling, left-wing, wine-drinking, brie-eating") media establishment -- while simultaneously chewing on pork rinds, downing shots of Crown Royal with beer chasers, and quadrennially cozying up to Soccer and Hockey Moms and Nascar Dads -- is of course a time-honored tradition among political practitioners within both the Republican and the Democratic wings of America’s ruling Property Party. Yet few since the days of Tricky Dick and his attack dog Spiro Agnew have taken the obligatory attacks on the media to such heights -- or depths, really -- as the McCain-Palin campaign, now effectively run by the bullet-headed attack dog Steve Schmidt and other acolytes of Karl Rove and the band of merry miscreants most responsible for the debacle formerly known as the Bush administration.
One after another, speakers at the Republican National Convention unleashed a barrage of attacks on the news media, as the trade journal Broadcasting & Cable reported:
As the GOP convention hit its stride Tuesday, after its opening was overshadowed by Hurricane Gustav, the press became almost as big a target as Sen. Barack Obama (D-Ill.), with speech after speech tarring the media as liberal and elitist.
Fred Thompson, the senator-turned-actor whose own campaign for the Republican nomination ended early, fired the first broadside in his speech Tuesday. On Wednesday, former Republican presidential candidates Mike Huckabee and Rudy Giuliani joined in before Palin herself took aim.
"I’m not a member of the permanent political establishment," Palin said in her speech accepting the nomination. "And I’ve learned quickly these past few days that if you’re not a member in good standing of the Washington elite, then some in the media consider a candidate unqualified for that reason alone."
This prompted sustained boos from the audience at the Xcel Energy Center in St. Paul, Minneapolis.
Meanwhile, beleaguered Big Media news executives struggled against the unmitigated assaults to defend their coverage. "It’s a time-honored marketing ploy, and every time they bash the media, it means they’re not talking about a vision or a plan," CNN President Jon Klein said, while also predictably trotting out his usual assault on the blogosphere as a sort of arms-length apologia: "This onslaught about the mainstream media seems woefully time-worn and out of step, considering how new media have become the source of the scurrilous rumor-mongering on both the Right and the Left. If they want to pick a target, let them pick irresponsible bloggers who are reporting rumors promiscuously."
From literally beating the press outside in the streets (and even threatening them inside their offices) to verbally bashing reporters and executives alike everywhere from the convention podium to select media outlets they favor, John McChange and his lipsticked pit bull Sarah Palin are counting on the fact we as a culture have developed such a severe case of ADD that we can no longer ADD one and one and get two!
Is there a problem in Washington? Forget the fact that the Republicans have been running everything there for years -- and elect a Republican "change agent!" Is there a problem with the ongoing war and occupation of Iraq? Forget the fact that the Republicans have been waging a war there for years -- and elect a Republican "change agent!" Is there a problem with our media being complicit with those in power and concealing the truth from the American people? Forget the fact that the Republican candidate for president has benefited from a cozy relationship with his media "base" for years -- and yes, elect a Republican "change agent," who will then, unchanged, crawl right back into bed with that same elite, effete crowd the minute he sets foot in the Oval Office!
Only in America, Land of Opportunity, is everyone free to start over -- and over and over -- endlessly reinventing themselves. Here, as the poet Allen Ginsberg once noted, "yesterday’s newspaper is amnesia."
RNC in Twin Cities: Eight protesters charged with terrorism under Patriot Act
By Tom Eley
On Wednesday eight members of the anarchist protest group the Republican National Convention Welcoming Committee (RNCWC) were charged under provisions of the Minnesota state version of the Patriot Act with “Conspiracy to Riot in Furtherance of Terrorism.”
The eight charged are all young, and could face up to seven-and-a-half years in prison under a provision that allows the enhancement of charges related to terrorism by 50 percent. They are: Monica Bicking, Eryn Trimmer, Luce Guillen Givins, Erik Oseland, Nathanael Secor, Robert Czernik, Garrett Fitzgerald and Max Spector.
Among other things, the youth, who were arrested last weekend even prior to the start of the convention, are charged with plotting to kidnap delegates to the RNC, assault police officers and attack airports. Almost all of the charges listed are based upon the testimony of police infiltrators, one an officer, the other a paid informant.
“These charges are an effort to equate publicly stated plans to blockade traffic and disrupt the RNC as being the same as acts of terrorism. This both trivializes real violence and attempts to place the stated political views of the defendants on trial,” said Bruce Nestor, president of the Minnesota Chapter of the National Lawyers Guild. “The charges represent an abuse of the criminal justice system and seek to intimidate any person organizing large scale public demonstrations potentially involving civil disobedience,” he said.
An affidavit filed by police with the District Court for Ramsey County that allowed the warrant to raid and arrest declares the RNCWC a “criminal enterprise” and strongly implies that it is a terrorist organization. It claimed that numerous examples of weaponry would be found if the judge allowed the warrants. However, police turned up no such physical evidence in conducting their raids.
“Police found what they claim was a single plastic shield, a rusty machete, and two hatchets used in Minnesota to split wood. This doesn’t amount to evidence of an organized insurrection, particularly when over 3,500 police are present in the Twin Cities, armed with assault rifles, concussion grenades, chemical weapons and full riot gear,” said Nestor.
In requesting the warrant, the police reminded the court that the RNC has been declared by the Department of Homeland Security a “National Security Special Event.” The affidavit did not explain the connection between this designation and the necessity of the police raid.
Anarchistic groups like the RNCWC—with their emphasis on the “direct action” of small groups and their aversion to politics and the lessons of history—are quite easily infiltrated by agents and provocateurs. Nonetheless, there is little to suggest that the youth are violent or that they are anything more than politically naive. The police evidence is threadbare on the surface, and depends primarily on the counterfactual charge of “conspiracy”—that those arrested would have committed crimes, or that they are responsible for the crimes of others.
Several of those arrested were also members of the student group “Food not Bombs,” and were working in a soup kitchen at the time of their arrest.
In an interview, Ramsey County Sherriff Bob Fletcher, who has faced criticism from protesters for his methods, gloated that the aim of the arrest had been to decapitate the RNCWC, which hoped to coordinate the protest activities of those attending the demonstrations from outside of the Twin Cities. “Severing that leadership ... was huge,” he said. “We only removed 10 percent of the problem, but the 10 percent was the coordinating aspect of it.”
The charges against the “RNC 8” stand as a sharp warning to the working class. The charge “conspiracy to riot” has a long and sordid pedigree in US history. It has been used against the leadership of unions and working class parties precisely as a means of “severing the leadership” from the rank and file. The coupling of this charge with “terrorism” under the Patriot Act is especially chilling.
The police-state atmosphere in the Twin Cities, not so long ago a center of American liberalism, continued throughout the week.
On Thursday, about 300 protesters were arrested in downtown St. Paul near the site of the Republican National Convention, bringing to well over 800 the total number of arrests since before the start of the RNC.
The protesters had planned to march from the grounds of the state capital to the Xcel Center, the arena housing the RNC. However, just before the start of the demonstration, police announced that the march permit would expire in 10 minutes, at 5 p.m.
In spite of the police order, hundreds of protesters determined to carry on the march. After starting out toward the Xcel Center, they were pinned down on a freeway overpass by police, who intercepted the march on horseback and bicycles. Police donned gas masks and prepared tear gas canisters. Intersections were blocked with dump trucks and steel barriers.
After an hour in this position, protesters retreated back across the overpass toward the state capital building, where they were trapped by yet another police barricade and soon surrounded by a police cordon.
On Wednesday night in Minneapolis, police arrested over 100 outside a concert of the radical rap-metal band, Rage Against the Machine. Police in riot gear massed outside of the Target Center in the downtown area. According to Minneapolis Police Captain Larry Doyle, the police had “intelligence that there may be issues.”
Prior to ending the concert, the lead singer of Rage Against the Machine, Zach de la Rocha, asked concertgoers to avoid trouble with the police. The police presence continued after the concert’s end, however, until well past midnight, when law enforcement ordered a crowd they accused of “loitering” to disperse. According to the Minneapolis Star Tribune, “some scuffles followed,” and at 12:30 a.m. police arrested over 100, who were charged with misdemeanor offenses. Of these 15 were jailed, two of whom were still in custody the next morning.
Members of the antiwar group Code Pink managed to enter the Xcel center, unveiling banners during the acceptance speech of John McCain. They were quickly removed from the building.
There has also been widespread repression of the media that covered the protests during the RNC. Amy Goodman of Democracy Now! was arrested on Monday, after protesting the arrest of several members of her news crew. Also reportedly arrested were Associated Press photographer Matt Rourke, two cameramen of Twin City CBS and NBC affiliates, and several independent videographers. There was also an unverified report that a Fox News crew was gassed.
The media reform movement Free Press has collected over 50,000 signatures demanding that charges against all journalists arrested during the RNC be dropped.
The conventions of the two major parties have been conducted in an unprecedented police-state atmosphere, in which local police and major American cities—Denver and the Twin Cities—have been militarized and placed under the official control of the executive branch of the federal government. The police have trampled basic democratic rights—including freedom of speech, freedom of assembly, and the freedom of the press—with impunity and contempt.
All of this has taken place without a murmur of protest from any section of the political or media establishment gathered to rub elbows with delegates and party officials inside the convention halls.
US jobless rate soars as foreclosures break new record
By Bill Van Auken
In a stark indication that the crises gripping the US housing market and the financial sector are spreading throughout the economy, unemployment figures for August rose far more sharply than expected, hitting a five-year high.
The official unemployment rate rose to 6.1 percent last month, according to a report released Friday by the Bureau of Labor Statistics. In addition to the net loss of 84,000 jobs last month, the agency revised its figures for June and July, reporting the destruction of an additional 58,000 jobs, pointing to an entire summer dominated by layoffs and economic slump.
Meanwhile the so-called misery index, which adds the unemployment and inflation rates, hit 11.7 percent, the worst figure recorded since mid-1991, as high gas, food and utility prices continue to gouge workers’ paychecks even as layoffs mount.
Also on Friday, the Mortgage Bankers Association issued a report showing that the new foreclosure rate has risen to its highest point in nearly three decades, as falling home prices and tighter credit is forcing more and more people out of their homes. The total number of homes in foreclosure hit 2.75 percent, triple the rate recorded three years ago. Meanwhile, 6.41 percent of all home mortgages were one or more payments overdue, a record high since these figures were first recorded in 1979.
At the same time, existing home sales fell to a 10-year low in the second quarter, while the median price of a single-family house plummeted by another 7.6 percent, the National Association of Realtors reported.
The increase in unemployment and the rising number of foreclosures are clearly trends that are feeding into one another in a vicious downward spiral. Workers having lost their jobs are finding it impossible to meet monthly mortgage payments, and the collapse of home values has wiped out credit for many, leading to falling consumption and new layoffs.
The loss of jobs was spread throughout the economy, with health care, education and government employment virtually alone in resisting the surge of layoffs. Manufacturing companies cut 61,000 workers from their payrolls; business and professional companies eliminated 53,000 jobs, temporary employment—which generally is a leading indicator of future job trends—fell by 36,000 and the retail trade sector cut 19,900 jobs. Construction employment was down just 8,000, reflecting in part the massive bloodletting that has already taken place—558,000 jobs wiped out since the beginning of 2007.
Massive new layoffs are on the horizon. The Air Transport Association reported Friday that US airlines plan to cut at least 36,000 jobs by the end of the year.
Job cuts will continue throughout the auto industry as new vehicle sales slump. The DMAX engine plant in Dayton, Ohio announced this week that it is laying off another 330 workers, on top of 290 jobs cut in July. The plant makes engines for GM trucks. Daimler Trucks North America, meanwhile, has announced plans to cut one of the two shifts at its Mount Holly, North Carolina Freightliner plant, putting 675 workers on the unemployment lines.
The financial sector is also shedding large numbers of jobs. GMAC Financial Services announced this week it will lay off 5,000 workers, while Wachovia Corp. has indicated that it intends to eliminate the jobs of some 7,000 of its employees.
The official figures released Friday were substantially higher than those predicted by economists, who had projected only a 0.1 percent increase over July’s rate of 5.7 percent, with the loss of 75,000 jobs, rather than a 0.4 jump to 6.1 percent and the loss of 84,000 jobs.
The decisive issue in the unemployment figures is the sustained character of the assault on jobs, with unemployment rising for eight months straight—the most protracted such trend in the last 25 years. The result is that 2.2 million more workers have joined the unemployment lines over the past year, for a total of 9.4 million officially counted as out of work.
These figures drastically underestimate the real crisis confronting working people in the US. An alternative measure provided by the Bureau of Labor Statistics, which includes so-called “discouraged workers”—those who have given up actively looking for work—as well as those forced to eke out a living with part-time jobs because they are unable to get full-time work, rose by a tenth of a percentage point to account for fully 10.7 percent of the US workforce.
The latest report on the growth in unemployment elicited widespread acknowledgment that the US economy is gripped by recession.
“The economy has clearly slipped into a jobs recession because the housing meltdown and credit market turmoil has spread to the broader economy,” Steven Wood, chief economist at Insight Economics, wrote after the new figures were released.
Bank of America economist Peter Kretzmer, in a note to investors, wrote, “The rapid rise in the unemployment rate points to a US recession, as such an increase has never occurred outside of one.” The economist said that household surveys have produced data indicating that 1.75 million jobs have been wiped out since April alone.
William Poole, former president of the Federal Reserve Bank of St. Louis, told Bloomberg Television, “It certainly increases the probability that we really are in a recession. It is a weak number, including the [June, July] revisions.”
Friday’s dismal unemployment and foreclosure figures came at the end of the worst week for the world financial markets since the aftermath of the terrorist attacks on New York City and Washington seven years ago.
The Dow Jones Industrial average eked out a 32-point advance Friday after falling nearly 350 points, or 3 percent, the day before—the worst losses in two months. The sell-off was attributed to the release of the initial projection of a 5.7 percent unemployment rate, combined with dismal retail sales figures and rampant rumors that a major hedge fund, Atticus Capital, with $14 billion in investments, was on the brink of collapse.
While the Atticus executives insisted that the rumors were false and that the fund had substantial cash reserves, the fears that major hedge funds will go under are well founded. Many of them had invested heavily in the commodity bubble, which has been rapidly deflating with the recent fall in oil and food prices.
Asian stock markets, which fell every day this week, suffered sharp losses Friday, with the Hang Seng index in Hong Kong falling 2.2 percent, Tokyo’s Nikei down 2.75 percent, the Shanghai A-share market dropping 3.3 percent and Australia’s market down 2.1 percent. Similar percentage losses were recorded on all of the major European markets.
Meanwhile, the manager of the world’s largest bond fund warned Friday that the US economy faced a “financial tsunami” unless the government intervenes to buy up assets being dumped by banks and finance houses.
“Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami,” Bill Gross of California-based Pacific Investment Management Co. wrote in a statement on the company’s web site. “If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the US Treasury.” Specifically, he called for the federal government to stem the foreclosure tide by issuing subsidized loans and buying up properties.
Gross’s statement reflects growing fears within financial circles that the worst of the credit crisis is still to come and could produce a catastrophic global collapse.
In the face of the rapidly deepening economic crisis, the White House issued a sanguine statement that simply ignored the job losses and rise in foreclosures, pointing instead to earlier figures showing an increase in the gross domestic product. “The level of growth demonstrates the resilience of the economy in the face of high energy prices, a weak housing market and difficulties in the financial markets,” the White House said.
While this is obviously cold comfort to the millions forced onto the unemployment lines or facing the loss of their homes, the attempt by the candidates of the two major parties to turn the latest figures into political hay offered little more.
Republican candidate John McCain acknowledged that “Americans are hurting and we must act to create jobs.” He vowed to enact a “Jobs for America” program, which appeared to involve little more than job training schemes, tax cuts for business and advocacy of free trade.
Democratic candidate Barack Obama issued a predictable statement accusing his rival McCain of preparing “more of the same” and continuing the Bush administration’s tax cuts for the rich. He pledged instead to institute an exceedingly modest tax cut for “middle-class families” plus a $50 billion fund to aid state budgets.
There is no reason to believe such paltry promises will be realized. Even they were, they would prove entirely inadequate to stem the tide of layoffs or stabilize the crisis-ridden financial system. The Democratic Party is incapable of advancing any serious alternative to the policies of the Bush administration, tied as it is to the interests of Wall Street and corporate America.
Palin's 'Trooper-gate' Cover-up
By Robert Parry
Ripping a page from George W. Bush’s playbook on obstructing investigations, Alaska Gov. Sarah Palin and her senior aides are maneuvering to thwart an abuse-of-power investigation that Palin initially vowed to assist.
Now, rather than cooperate with an independent counsel assigned to examine whether Palin fired the state’s public safety commission because he refused to fire her ex-brother-in-law from the state troopers, Palin, her husband and seven witnesses close to Palin are resisting giving testimony.
Moreover, on Tuesday, just one day before giving her widely acclaimed speech to the Republican National Convention, Palin took the unusual step of filing an ethics complaint against herself – to move the investigation to the state personnel board whose three members are appointed by the governor.
Palin’s decision to, in effect, turn herself in so she could get a hearing before more sympathetic investigators was known by the U.S. news media before Palin’s speech, but was rarely, if ever, mentioned by TV pundits filling hours of air time with chatter about her charisma, her moose hunting and her 17-year-old daughter’s pregnancy.
Back in Alaska, state Republicans also took on the role played by congressional Republicans in Washington, attacking the fairness of any investigation that might put a GOP leader in a negative light.
John Coghill, a Republican state legislator from North Pole, Alaska, demanded that Democratic Sen. Hollis French, who has been overseeing the probe, resign because French suggested that Palin’s alleged abuse of power could lead to her impeachment.
“These statements cause me to think that the report is already written even though the investigation is only just begun and the most important witnesses have not even been interviewed,” Coghill said in a letter. [NYT, Sept. 6, 2008]
However, Palin and her administration appear determined to make sure that those witnesses don’t get interviewed, at least not in a way that might cause political embarrassment before the November elections.
State legislators have set a goal of issuing a report by Oct. 10 on Palin’s firing of state public safety commissioner Walt Monegan, but it now appears that the legislature will have to issue subpoenas to compel the testimony of the seven witnesses, including Palin’s top aide, her personnel director and the commissioner for administration.
A subpoena battle could eat up time both in getting approval from Republican legislators and in overcoming objections from lawyers for the witnesses.
Balking at Depositions
Palin and her husband, Todd, also are balking at giving depositions to independent counsel Steve Branchflower, who was picked by the legislature to investigate whether Monegan’s firing was retaliation for his refusal to fire trooper Mike Wooten, who has been embroiled in a bitter divorce/custody battle with Palin’s sister for several years.
Palin’s lawyer, Thomas Van Flein, indicated that Sarah and Todd Palin would likely rebuff any request by Branchflower for a deposition and insist that the investigation only be handled by the state personnel board.
Palin’s legal team also appeared to be following another favorite tactic of the Bush administration – putting the investigator on the defensive by lodging complaints against him for supposed wrongdoing.
Attorney Van Flein complained that independent counsel Branchflower had sought to reach Todd Palin directly “on a secure and confidential line,” which Van Flein called “a serious security breach that we may be obligated to report to the Secret Service.” [Anchorage Daily News, Sept. 3, 2008]
Palin’s recent attempts to frustrate the legislative investigation reverse her assurances in late July that she was “happy to comply, to cooperate.”
After her surprise selection as John McCain’s running mate, she began traveling with the national Republican crowd, which has many years of experience in fending off legislative oversight of controversial actions by the Bush administration.
For instance, Bush has made broad executive privilege claims to block testimony from his subordinates about a White House drive to politicize the Justice Department, including the firing of nine federal prosecutors who were not considered “loyal Bushies.”
The case of Palin’s firing of public safety commissioner Monegan is somewhat different because the allegations are that the governor was abusing her power to carry out a personal -- rather than a political -- vendetta, but many of the tactics for thwarting an investigation would be similar.
Family Vendetta
When Palin was sworn in as Alaska’s governor in December 2006, she was enmeshed in a messy family feud with her sister’s ex-husband, trooper Wooten. Through complaints to his superiors, Palin already had helped engineer Wooten’s five-day suspension from the state police earlier in 2006 for various examples of personal misconduct.
In January 2007, a month into Palin’s term, her husband, Todd, invited Palin’s new public safety commissioner Monegan to the governor’s office, where Todd Palin urged Monegan to reopen the Wooten case. After checking on it, Monegan informed Todd Palin that he couldn’t do anything because the case was closed.
In an interview with the Washington Post, Monegan said that a few days later, the governor also called him about the Wooten matter and he gave her the same answer. Monegan said Gov. Palin brought the issue up again in a February 2007 meeting at the state capitol, prompting a warning that she should back off.
However, Monegan said Gov. Palin kept bringing the issue up indirectly through e-mails, such as comparing another bad trooper to “my former brother-in-law, or that trooper I used to be related to.”
Monegan said he also began getting telephone calls from Palin’s aides about trooper Wooten, including from then-chief of staff Mike Tibbles; Commissioner Annette Kreitzer of the Department of Administration; and Attorney General Talis Colberg.
Colberg acknowledged making the call, after an inquiry from Todd Palin about “the process” for handling a threatening trooper, and then relaying back the response from Monegan that the issue had been handled and nothing more could be done.
Monegan also told the Post that he warned each caller about the risk of exposing the state to legal liability if Wooten filed a lawsuit.
However, Todd Palin continued collecting evidence against Wooten and lobbying for his dismissal. The governor’s husband acknowledged giving Wooten’s boss, Col. Audie Holloway, photos of Wooten driving a snowmobile while he was out of work on a worker’s compensation claim.
Alaska’s Deputy Attorney General Michael Barnhill told the Post that a member of the governor’s staff, personnel director Diane Kiesel, also made at least one call to Col. Holloway about the snowmobile incident. [Washington Post, Aug. 31, 2008]
On July 11, 2008, Palin abruptly fired Monegan, saying only that she wanted to take the public safety department in a different direction.
Monegan then went public with his account of the mounting campaign against Wooten from the governor’s family and staff. Monegan told the Anchorage Daily News that Todd Palin showed him the work of a private investigator, who had been hired by the family to dig into Wooten’s life and who was accusing the trooper of various misdeeds, such as drunk driving and child abuse.
Though Palin insisted she wasn’t involved in the pressure campaign, a review by the Attorney General’s office found that half a dozen state officials had made about two dozen phone calls regarding Wooten.
A tape recording of one conversation – between Palin’s chief of boards and commissions Frank Bailey and police Lt. Rodney Dial in February 2008 – revealed Bailey saying, “Todd and Sarah are scratching their heads, ‘Why on earth … is this guy still representing the department?’”
Facing mounting evidence of improprieties, Palin now appears determined to sidetrack the investigation, much as President Bush has delayed and obstructed probes into his alleged wrongdoing for seven years.
Gov. Palin has a well-worn GOP playbook to draw from.
Government to Wipe Out Fannie/Freddie Shareholders by Sunday
By Peter Cohan
And now what could become history’s biggest transfer of tax dollars to bail out bad lending begins. Last month Congress passed a bill that gave the Treasury Department $800 billion to bail out Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). And while it is unclear how much money will be used to bail them out, the general outlines of the soon-to-be-announced terms are becoming clearer than they were last night.
The New York Times and The Washington Post report on five key features as follows:
- Government bankruptcy. Fannie and Freddie will be taken under a conservatorship -- which is similar to a bankruptcy wherein a trustee operates the company so it can be fixed and ultimately sold back to public investors. The bailout would reduce the value of their common and preferred shares "to little or nothing," according to the Times.
- Taxpayers bailout defaulted mortgages. Some share of the $800 billion in taxpayer funds will be used to pay "any losses on mortgages [Fannie and Freddie] own or guarantee," according to the Times.
- Payouts on a quarterly basis depending on reported results. Treasury is trying to dribble the bailout over time. "Instead of giving each company a big capital infusion up front, the government could make quarterly injections as the companies’ losses warrant. This would be an attempt to minimize the initial cost of the rescue," according to the Washington Post.
- Fire CEOs and replace the boards. At a meeting earlier in the week, on which I posted, Daniel Mudd, Fannie’s CEO, and Richard Syron, Freddie’s CEO, "were told that they would have to leave. [And] the companies boards would be replaced," according to the Times. I can only imagine the firestorm that will ensue if Syron gets another $38 million as a severance package.
- Announce deal before Asian markets open. As it did with the Bear Stearns bailout, the government caters to Asian markets so it "had been planning to announce the decision as early as Sunday, before the Asian markets reopen," according to the Times -- as I thought yesterday.
Why did Paulson decide on this bailout? His bazooka strategy -- merely having the authority to bail out the two companies -- did not alleviate investor anxiety. He measured that by the widening interest rate difference between Treasury and Fannie- and Freddie-backed securities. And concluded that in order to lower that spread and bring down mortgage rates he would need to use his bazooka rather than merely keeping it in his pocket.
When it was announced in May 2006 that Paulson would take over as Treasury Secretary, I speculated that he did so because he thought he would have a bigger challenge than Robert Rubin -- another Goldman Sachs Group (NYSE: GS) alum -- in cleaning up the coming financial catastrophe created by our dependence on foreign ownership of U.S. debt. And I thought Paulson would try to make his name in the history books by dealing with that cleanup.
It remains to be seen how history will judge him -- but since China owns $340 billion of Fannie and Freddie mortgage-backed securities -- it looks like my guess about the first part was partially right.
Triangulating an Asian Conflict
By Chan Akya
One of the more predictable turns during any US presidential election year is the sheer speed with which issues of longer-term strategic importance are quietly subsumed by a global media fed a steady diet of soap-operatic drama on the candidates, their spouses, born and unborn children and so on. By no means am I throwing stones while sitting in a glass house though; this is more of an introspective comment on the realities of the supply and demand for newsworthy discussions.
In 2000, it was all about the drama about the election battle between George W Bush and Al Gore, not to mention the post-election vote-capturing behavior of the US Supreme Court. Never mind that the US economy had slipped into a recession following the bursting of the dot.com bubble or that al-Qaeda was quietly expanding its control of the Taliban even as the latter itself was engaged in a final push against the Northern Alliance and its charismatic commander, Ahmad Shah Massoud. The costs of ignoring those developments are still being felt around the world.
The 2004 election perhaps went against that trend - and readers can disabuse that notion by pointing out the big emerging stories that were not given serious importance in that election, such as the debacle in the conduct of the Iraq occupation - but this time around certainly looks like a replay of 2000. This observation is based on my read of major global online newspapers for the past few weeks; and pertains especially to the apparent indifference with which three major trends in Asia are being treated.
Even as the media feverishly debates the paternity of the Republican vice-presidential candidate's granddaughter and the difficulties associated with sitting through an Obama speech without either dancing or dozing off, these important Asian stories are being relegated to the back pages. The first of these stories gets some coverage, but perhaps without any comprehensive analysis of its longer-term ramifications; the second and third are virtually missing from all media.
These stories are: firstly, the encirclement of Pakistan; secondly the resurgence of Han nationalism and thirdly the trend towards Hindu fanaticism.
Pakistani nukes
Readers will argue that the Pakistan story has been given sufficient importance in global media, and especially in American newspapers. A cursory examination of the coverage though shows a morbid fascination with character analysis (or assassination) of the major players, namely ex-president Musharraf, putative president-elect Zardari and PM-in-waiting Nawaz Sharif.
As the reasonably quick exit of Musharraf showed, none of these players actually matter in the current situation. Increased lawlessness on the border with Afghanistan, which prompted a US cross-border raid this week, is the story with greater significance over the near term.
Some analysts have speculated that al-Qaeda is now firmly on the path of securing nuclear weapons in Pakistan. The trifurcation of Pakistani politics on the lines of the above three players still leaves out two important interest groups, namely the army and Islamic fundamentalists. While the last two parties tended to be part of the same continuum - as shown in the war against India in 1999 and even the terrorist attacks that followed - events since 2001 have sundered the alliance. With parts of the army turning on its own al-Qaeda sympathizers, there is no more trust between the two groups.
The abortive attempt on the life of the current Pakistani prime minister this week was an indication of how close to the corridors of power the Islamic fundamentalists are. It is even possible that this attempt was a warning shot intended to present a fait accompli to Pakistani politicians: deal with us or die.
Pakistan debt this week climbed to become the most risky credit across all global sovereigns, a motley crowd of risky governments around the world that includes Argentina (which seeks to refuse payment to external creditors) among others. This dubious distinction signals the complete shutdown of external funding for Pakistan, at a critical juncture when a slowing economy and foreign portfolio outflows combine to make matters hard enough.
The Pakistani rupee has continued to fall dramatically even as the stock market remains in limbo. The mounting problems on the market front highlight the firm belief among external investors that be it the US or Saudi Arabia, there is no likelihood of imminent assistance for Pakistan to address its mountain of maturing debt obligations. Now more than ever, the temptation for rogue government and military officials to threaten a violation of safeguards on the country's nuclear weapons must rank very high.
Meanwhile in Afghanistan, areas outside Kabul that are under the control of the Taliban will likely expand in winter months. The paucity of any new armed commitment to that country by the North Atlantic Treaty Organization (NATO), which now needs to make contingency plans to contain the Russian bear in its own neighborhood, and the US (which thinks it has bigger problems in Iraq or Iran depending on who you ask) means that by the time a new US president takes office, the Taliban conceivably will be back in control of Afghanistan.
Bleeding on its western flanks and ever-watchful of its eastern border with India, the Pakistani military has limited options. Cooperating with the US or NATO is unlikely in the current political climate, which ensures that increasing resources are misspent on the lost war pursuing al-Qaeda. Quelling an internal rebellion - no military man actually wants to die in combat, contrary to their popular image - would take an assumption of political power once again in the country, with all the baggage this brings.
Taken to a logical extreme, the slippage of the Pakistani establishment to a quasi-vassal relationship with al-Qaeda ideologues appears all the more likely. Politicians will strike deals with extremist Islamic groups and seek to appease their grievances; these range from the heavy handedness of Pakistani police against the militant groups to the regrouping of madrassas across the country.
Meanwhile, the army is also likely to secure its own peace with the terrorist groups by calling off intensive operations and allowing for a return of an expanded Taliban state within Pakistani borders that calls the shots in Afghanistan. I don't believe it will take more than year for the current Afghan government to fall and make way for the Taliban when this happens.
The resulting theocratic state will be run essentially by today's al-Qaeda reservists, with the added advantage of possessing nuclear weapons. As epitaphs go, George W Bush could not wish for anything worse, but sadly this does seem to his most likely legacy.
Han-Hindu resurgence
The increased attention that the world will give Pakistan from the beginning of next year though brings a new host of challenges. The most reasonable expectation would be for increased military intervention in the region to push back the Taliban and along with it, the al-Qaeda sympathizers in the Afghan and Pakistani establishments.
Geographically this would present serious obstacles, not the least because Iran is likely to remain fiercely antagonistic to any strikes against military targets in Afghanistan and Pakistan by Western powers. That leaves the northern approach, where a resurgent Russia will complicate matters to no trivial degree.
Simplistically put, the West will have to depend on the munificence of China and India to control the pest that will be unleashed on their borders over the near term. While China has less to fear initially as compared with India about the expansionist aims of Islamic fundamentalists, it does have a sensitive border problem in Xinjiang, which could present the Achilles' heel of its non-interventionist policy with respect to Muslim issues.
Simply put, a Taliban government with nuclear capabilities is unlikely to treat China any differently - better or worse - than it treats India over the longer term.
The emerging economic slowdown - sparking talk of a government stimulus package in short order - presents a casus belli for the majority Han. Frowning on the subsidies and handouts to minority groups will become more prevalent when millions lose their jobs in the manufacturing belts of southern China. The majority group believes that the minorities are already spoiled in terms of their ability to have more than one child as well as benefiting from a plethora of handouts. That resentment will become palpable in the face of any protests about human rights and the like in China - which is exactly what has happened over the recent past.
The Beijing Olympics highlighted a sensitive weakness for Han Chinese, namely how to reconcile to their existence when issues of trust are clearly paramount. Taking the paranoia to its extreme, the government assigned Han children to play the part of ethnic children in the opening ceremony in order to preclude even the remote chance of someone whisking out and waving a Muslim or Tibetan flag from under their costumes.
In turn, this resurgence of Han nationalism - that only the majority group can be trusted to represent China and its interests - causes its own set of complications. Getting along with minority groups requires vastly greater amounts of trust than the current wave of Han nationalism seems capable of showing. That will cause alienation of minority groups, with an automatic feedback loop to perpetuating Han dominance. Needless to say, that puts Han China in a direct path of conflict with any new Islamic power in South Asia.
Echoing the behavior of the Chinese during the Tibetan riots earlier this year, India's Hindus have gone on the warpath in the eastern state of Orissa, against Christian missionaries who they claim are illegally converting their members. Even as the Han are pushing for greater dominance over their own affairs in China, India's Hindus appear to be rebelling under a similar impulse in their country.
Having already outlawed untouchability, India's approach to the problem needs to be socio-economic. I have consistently argued that the key issue for India is to pursue economic development and to destroy poverty in all its guises - rural and urban - rather than the simplistic questions of handouts and welfare payments that politicians seem to be prefer. That path, which necessitates infrastructure building, better schooling and access to healthcare, is more or less an afterthought in the current climate of short-term goal-setting by the government.
It is these handouts that democratic India is up in arms about. With an economic slowdown underway, various sections of Indian society are in greater need of government attention, whether it is in the form of infrastructure building or simple handouts. Conversions within geographically concentrated groups create lobbying power, which has in turn led to policy intervention in funding and budget allocations by politicians eager to capture votes. With an election due by next year, political behavior has shifted up a gear in India, with the almost inevitable result of sparking violent confrontations among interest groups.
In the past, these confrontations used to be within the construct of Hinduism but have now seeped out to encompass other religious groups. That is no surprise given that Indians of all religions - including Christianity - still observe caste segregation in one fashion or another.
The current wave of Hindu fanaticism isn't about putting the right-wing political parties into power, seeing as they seem to have had little impact in the matter. Rather, it seems like an incident in one part of the country that has lit the fuse of Hindu nationalism elsewhere. This is where the echoes to Han Chinese resurgence since the Tibetan events become more relevant.
Thus, the indomitable force of Islamic fundamentalism that emerges from Pakistan will have to confront the immovable objects of Han and Hindu resurgence. It is well likely that the first course of action will be against the well-known enemy of India rather than the scarier opponent in China, but that is a relatively minor detail in that it only applies over the relative near term.
The last one?
As a postscript to the above, one thought that does strike a chord is the likelihood that future US elections will matter a whole lot less to the rest of the world. The decline of the sole superpower, along with a concurrent emergence of alternative powers on the military, ideological and economic fronts, means that parts of the global media could well be disengaged from US election reviews - that is, regurgitating the latest specials from US media outlets - to doing something a lot more productive in their own backyards.
The opposite side of that loop is that the column inches devoted to candidate discussions could well decline in the US media itself, as the relative importance of the rest of the world becomes increasingly apparent.
At least, I hope so.
St. Paul's Police Protest the Press
By Michael Winship
Chronicling his life as a journalist in the colonial British Raj, a young Winston Churchill wrote that, "Nothing in life is so exhilarating as to be shot at without result." Nor, I'd add, is there anything in life quite so discombobulating as to turn a corner and unexpectedly walk into a wall of tear gas.
It happened to me on a couple of occasions during the years of anti-Vietnam war protests, when I was a college student and young reporter in Washington, DC. Once I was gassed while filming a counterdemonstration on Honor America Day, a nationally televised celebration hosted by Bob Hope. As God is my witness, the gas hit just as Kate Smith was singing, "On a Clear Day You Can See Forever."
The following year, 1971, demonstrators came from around the country to shut Washington down during morning rush hour. A photographer, another reporter and I were on the scene covering a failed attempt to close the Key Bridge crossing of the Potomac. Police in pursuit, we dashed uphill into the Georgetown neighborhood only to run smack into more police lobbing canister after canister of gas until it blanketed the streets. I remember then Rhode Island Senator Claiborne Pell standing at the top of his townhouse stoop in robe and slippers, bewildered at the scene unfolding below him, clutching his rolled up copy of the Washington Post for dear life. Momentarily blinded, students took us in hand and led us to a makeshift infirmary in the basement of a university building.
So, attending the Democratic National Convention in Denver and watching events at the Republican National Convention in St. Paul via television, the sights and sounds of police and protesters were familiar. And that scent, the heavy, cloying smell of gas and pepper spray, as evocative as, but far less delicate than a Proustian cookie.
In both cities, getting tickets to the big shindigs hosted by major corporations seeking to bend the ear of party VIP's was a media challenge - they were blocked by sometimes heavy-handed attempts by police and private security to keep the press out. A very few, like ABC News' Brian Ross got in, recording, for example, the bash thrown for Republicans by Lockheed Martin, the American Trucking Association and the NRA, featuring a band named Hookers and Blow. However, in Denver, one of Ross' producers, Asa Eslocker, was arrested while trying to interview Democratic senators and donors leaving a private event at the Brown Palace Hotel.
What was different in St. Paul was that the police seemed especially intent on singling out independent journalists and activists covering the Republican convention for the Internet and other alternative forms of media. Over the weekend, police staged preemptive raids on several buildings where planning sessions for demonstrations were being held, one of them a meeting of various video bloggers, including I-Witness Video, a media group that monitors law enforcement. Later in the week, I-Witness' temporary headquarters were entered by police, claiming they had received news of a possible hostage situation.
Why all this interest? One can only speculate, but footage that I-Witness shot at the Republican convention four years ago in Manhattan has helped exonerate hundreds who were arrested and detained by the New York Police Department, their cases either dismissed or resulting in acquittals at trial.
In St. Paul, two student photographers and their advisor from the University of Kentucky were held without charge for 36 hours. The ACLU of Minnesota ID'd several other journalists, bloggers and photographers from Rhode Island, California, Illinois, Florida, and other parts of the country that also were arrested. Many others were gassed or hit by pepper spray.
Perhaps the most prominent arrest was that of journalist Amy Goodman, anchor of the daily television and radio news program, "Democracy Now!" Police had taken two of her producers into custody as they were trying to cover the news. Goodman went out looking for them, but didn't get very far. She was stopped, slapped into handcuffs, and hauled into a detention center, along with almost 200 hundred other people. They had come to demonstrate, she had come to report on them.
Goodman was released a few hours later and back on the job anchoring her daily radio and TV show, a favorite of listeners and viewers who go to her for news they won't find in the mainstream or rightwing press.
What has those in control worried is that despite what the politicians tell us from inside their fortified compounds where the party line rules, more and more people outside have cameras and laptops, and they're not afraid to use them.
Forty years ago, protestors in Chicago shouted, "The whole world is watching." More and more, the whole world isn't just watching. From Minnesota to China, citizen journalists are reporting what they see and hear, and the powers that be don't like it.