Will the McPalin Campaign Ask Carly Fiorina to Give Her $42 Million Back?

/in , /by

John McCain and Sarah Palin both came out today to condemn CEOs who get golden parachutes. Here’s McCain:

We will stop multimillion dollar payouts to CEO’s who have broken the public trust.

And here’s Palin:

We’re going to reform the way Wall Street does business and stop multimillion-dollar payouts and golden parachutes to CEOs who break the public trust.

Seems to me McCain could put that campaign promise into effect right away. One of his top advisors, Carly Fiorina, laid off 20,000 HP workers, oversaw huge losses, and engaged in corporate spying. Sure sounds like she "broke the public trust" to me. And for her troubles, HP gave her $21.4 million in severance pay, plus another $21.1 million in stock options and other benefits. 

Over $42 million for–as John McCain describes it–breaking the public trust.

Call John McCain’s campaign at (703) 418-2008 and demand that McCain stand by his promise to stop this practice. Ask him to demand this his campaign advisor, Carly Fiorina, give back her loot to HP’s stockholders. 

Ford Discovers the Fiesta

/in /by

John Cole notices this article in the NYT–announcing Ford’s decision to refocus its production on smaller, more efficient cars, and asks a few questions. My answers to his questions–speaking as someone who used to consult in this industry–follow.

1.) Isn’t this long overdue? Wouldn’t a responsible company that was actually concerned with the long-term health of the organization have made a shift like this a long, long time ago? If companies were concerned with long-term stability and profitability, rather than focusing on the rather short-term earnings reports, it would seem to me they would have, but as they are beholden to the shareholders who demand a dividend every quarter, they probably produced their cash cow trucks and SUV’s for far longer than they should have. Possibly a situation where capitalism works against itself.

Yes, this is long overdue, and not just a long overdue addiction to the American SUV. Remember, both GM and Ford have what success they have had recently because they are competitive in Europe and because they have significant chunks of the hugely growing markets in China and India, respectfully. That is, their global success has depended in recent years on staving their losses in the US, but also on building competitive cars for Europe and Asia.

But the decision is also belated because of some real short-sightedness on the part of company management that–I have long suspected–resulted from a relative lack of diversity at higher levels of management (that is, they’ve got really diverse staffs on a global basis, but the really smart people in India or Brazil aren’t getting mainstreamed into global, as opposed to local, management quickly enough). Take one example. A number of years ago, I was meeting with a VP of one of these companies in a region of the world that was experiencing huge growth. However, that same week, three of the high-population, growing middle class countries in the region had just announced they were going to end subsidies for auto fuel. The VP, ignoring the fact that in these three countries the end of subsidies would severely limit the ability of the middle class in the country to own and operate their own car, told me about the growth he expected in the region–he basically predicted the same astronomical growth the auto industry has experienced in the region in recent years. Read more →

Fannie and Freddie’s Turn at that Taxpayer’s Trough

/in /by

You know how, when I go off grid on vacation or something, corrupt Bush officials tend to resign? Well, it looks like CalculatedRisk has that same power, only with our economy. While CR was hiking in the Sierra (man am I jealous), Fannie and Freddie were diving off a cliff on Thursday and Friday. And now, just as happened with Bear Stearns, Hank Paulson seems to be crafting a taxpayer backed bailout of the mortgage giants.

US TREASURY secretary Hank Paulson is working on plans to inject up to $15 billion (£7.5 billion) of capital into Fannie Mae and Freddie Mac to stem the crisis at America’s biggest mortgage firms.

The two companies lost almost half their market value last week as rumours of a government bail-out swept the stock markets, hammering share prices around the world.

Together, the two stockholder-owned, government-sponsored companies own or guarantee almost half of America’s $12 trillion home-loan market and are vital to the functioning of the housing market.

The capital-injection plan is said to be high on a list of options being considered by regulators as a means of restoring confidence in the lenders. The move would protect the American housing market, but punish shareholders in both companies.

CR, now back from the Sierra, has more. 

Golly. $20 billion for Bear Stearns. $15 billion for Fannie and Freddie. Meanwhile we’re still struggling to pass a housing bill that will help actual, human taxpayer families stay out of foreclosure. I guess there’s just not the money for bailing out real people, huh?

John McCain Says: Want to Fix the Economy? Elect a Democrat

/in , /by

A number of people are already mocking John McCain’s "plan" to fix the economy.

Savings from Victory!

First, there’s this little Orwellian gem.

The McCain administration would reserve all savings from victory in the Iraq and Afghanistan operations in the fight against Islamic extremists for reducing the deficit. Since all their costs were financed with deficit spending, all their savings must go to deficit reduction.

Elsewhere, McCain admits we might not have victory in Iraq for 100 years. Until then, I presume we’ll be using deficit spending under President McCain to fund the garrisons of our empire that he’s loath to close down. But once we get victory, we’re going to have "savings," in that we’ll no longer be doing all that deficit spending, and somehow we’ll put the money we never had in the first place and still don’t have to pay down Bush’s Iraq disaster.

Because saying, "if we withdraw from Iraq, we won’t be spending so much money that we don’t have and can’t afford" doesn’t sound quite so honorable, does it, even if the "savings" (as in, huge amounts we won’t be using deficit funding to fund) are bigger and quicker?

McCain Writhes Around on the Third Rail in Glee!!

And then there’s this bit–where he appears to be planning to both privatize social security and cut promised benefits.

John McCain supports supplementing the current Social Security system with personal accounts – but not as a substitute for addressing benefit promises that cannot be kept.

Vote McCain! He will renege on the promises made to our nation’s seniors! Because I hear seniors don’t vote in appreciable numbers!

"Read My Lips: No New Taxes Growth"

McCain, faced with a shitty economy and the prospect of huge deficits, still isn’t going to make the mistake Poppy Bush made. Rather than talking about taxes and deficits, he’ll just magically promise growth!

Growth is an imperative – historically the greatest success in reducing deficits (late 1980s; late 1990s) took place in the context of economic growth.

Or, to state that another way, "historically the greatest success in reducing deficits (later 1980s; late 1990s) took place in the context of tax increases." Only he doesn’t mention that part; it’s so much easier to snap your fingers and make this economic disaster go away.

Democrats Are Good for the Economy, One

But I’m most amused that twice, McCain advocates doing what his Democratic colleagues have been busy doing while McCain was AWOL from the Senate. Read more →

Why Does Senator Ensign Hate Foreclosed Homeowners … and Veterans … and Seniors … and Telecoms?

/44 Comments/in /by

I’ve got a call into John Ensign’s Communications Director for confirmation now, but it sounds like John Ensign is the one Senator referenced in Harry Reid’s statement last night and Dodd’s statement a few minutes ago on the Senate floor. That is, because John Ensign has refused to a unanimous consent agreement on the housing bill, he is holding up everything the Senate is doing right now.

That means Ensign is preventing the thousands of Nevadans facing foreclosure–Nevada’s foreclosure rate rivals even Michigan’s–from the relief that the housing bill in the Senate will give them.

But because Reid has said the Senate has to get housing done before it gets anything else done, it means Ensign is also standing between a bunch of veterans and the expanded GI bill included in the supplemental bill. And a bunch of people who’ve been looking for jobs hoping to get an extension on their unemployment benefits. And doctors hoping to be compensated fairly, in a new Medicare bill, for treating our nation’s seniors.

Of course, it’s not all bad. We FISA bloggers owe Ensign a debt of gratitude, it looks like. Because he’s blocking unanimous consent on housing, we may be able to push out FISA beyond the July 4 break. So thank you, John Ensign, for standing in the way of the shredding of the Constitution.

If you’re a Nevada resident, you might want to call Ensign at (202) 224-6244 and ask him why he’s preventing Nevada homeowners from getting some alternatives to losing their house.

But if you’re not a Nevada resident, you might want to call Ensign and thank him for standing up to the evil telecoms who illegally spied on American citizens.

Update: Corrected Medicare language per cboldt.

Mukasey’s Whack-a-Mole Mortgage Fraud Approach

/24 Comments/in /by

For some reason, Michael Mukasey doesn’t want to investigate and prosecute mortgage fraud using a comprehensive, centralized approach.

Attorney General Michael B. Mukasey rejected on Thursday the idea of creating a national task force to combat the country’s mortgage fraud crisis, calling the problem a localized one akin to “white-collar street crimes.”

Mr. Mukasey made clear that he saw the mortgage fraud problem at the root of the nation’s housing crisis as a serious one. But he said he was confident that the Justice Department’s current approach — using local prosecutors’ offices around the country to oversee separate F.B.I. investigations — was adequate.

Since he took over as attorney general last November, Mr. Mukasey has grappled with how best to deal with the law enforcement side of the growing housing crisis. He said in March, for instance, that the Justice Department was still struggling to determine whether there was a “larger criminal story” behind the housing crisis.

He gave his most definitive answer on Thursday in a briefing for reporters, saying that he did not think that the kind of national task force created at the Justice Department in 2002 to investigate the collapse of Enron was “the proper response” to the current crisis.

[snip] 

 The Federal Bureau of Investigation is investigating 19 major corporate fraud cases related to the mortgage crisis. The targets of most of those investigations have not been disclosed. In addition, the F.B.I. has 1,380 small mortgage fraud investigations now open in field offices around the country, a sharp increase over previous years, officials said.

Now perhaps there’s a very good reason to keep these investigations localized. But the cynic in me thinks that a centralized approach might just demonstrate the need for increased federal regulation on the lending industry. 

“You can play that game when it doesn’t matter.”

/42 Comments/in /by

Apparently (according to Senator Johnny Isakson), all the posturing the Republicans have done to rip up the safety net and push families into bankruptcy over the last 8 years didn’t really matter. In the last two weeks–since Isakson returned home to Georgia and realized such policies have real consequences for real constituents–they matter.

"Unless every member of the Senate was in a cave over the two-week recess, it’s pretty obvious that gas prices and housing crisis are the two most important issues to the American public," said Sen. Johnny Isakson (R-Ga.), a former real estate broker who was among those urging Republican leaders to stop blocking the legislation. "You can play that game when it doesn’t matter. But people’s lives, their fortunes, their largest single asset is at stake."

Though I suppose I shouldn’t be churlish with Isakson’s recent epiphany, since he is pushing the Republican caucus to actually negotiate with the Democrats.

That said, here’s how the proposed compromise would divvy up money, per the WaPo:

$300 billion guarantee: Allow the FHA to insure refinanced mortgages for homeowners who had become upside-down on their previous mortgages; lenders would have to forgive the previous loan and accept a loan that is no more than 85% of the value of the previous loan (BushCo wants to accomplish this through administrative means, but Republicans are coming around to this Dodd-Frank proposal)

$30 billion: Reimburse the Fed for any losses relating to its Bear Stearns bailout

$14.5 billion: Give people who buy a newly built home, home in foreclosure, or a home whose owner has defaulted on a mortgage in the next year a $5,000 tax credit for the next three years (this is Isakson’s proposal; and in case you’re wondering, yes, Isakson was a realtor before he became a full time politician)

$10 billion: Finance tax-exempt bonds that could be used to finance distressed subprime mortgages

$4 billion: Allow communities to buy and redevelop properties in foreclosure, thereby preventing entire neighborhoods from declining (The White House says this $4 billion–about the cost of paying for two weeks of the wars in Iraq and Afghanistan–is too expensive)

$200 million: Finance additional counselors to help those at risk for foreclosure

No cost: Require lenders to tell borrowers what the highest possible rate for ARMs would be

No cost: Permit bankruptcy judges to change interest rates on mortgages of those in bankruptcy proceedings (this measure is opposed by Republicans)

Read more →

Cell Phone Remittances

/8 Comments/in /by

Given yesterday’s discussion about the Taliban extorting money from Afghan cell phone providers, I wanted to link to today’s story describing the expansion of such cell phone based payment systems in Latin America. 

Sending money back home? Just press "talk."

That’s what Western Union, Radio Shack and the small wireless carrier Trumpet Mobile hope millions of Hispanic immigrants will do with a new service announced yesterday.

[snip]

Under the plan, a customer could buy a Trumpet Mobile phone, which costs $29.99 at Radio Shack. The user can load the phone with money through Western Union. To send money to a relative Nicaragua, for example, a customer would specify the amount and the recipient over the phone. The money would then be debited from the customer’s account and routed to a local agent in Nicaragua, who would dispense the money to the relative.

I guess that answers my question about whether the Taliban were extorting actual currency or just cell phone minutes.

There are several interesting aspects of this story. Barnett Rubin described the cell phone extortion in Afghanistan as a way to work around Western Union–which was quickly co-opted by US intelligence after 9/11. But here, Western Union is one of the three partners. So I suspect this an attempt to avoid losing any more money transfer business to cell phone carriers.

The story also notes that Western Union offers this service in India and Philippines. So between Kashmir, Colombia, and Philippines’ own Islamic extremists, this puts Western Union in several areas with their own terrorist problems.  

I wonder how involved the US is in backing this venture? Anyone know anything about Trumpet Mobile? 

The Rhetoric of More of the Same

/91 Comments/in /by

I’m no financial whiz (though I understand the general concept of the shitpile), so I can’t really judge the content of Paulson’s "new" plan to save our economy. But I do have a credential or two in deconstructing rhetoric–and on that level the executive summary is a fascinating document. The summary, after all, is a Bush Treasury plan to stave off any additional regulation in exchange for our recent and ongoing bailout of the financial industry. As such, it’s imperative for the summary to appear to be putting consumers’ interests at the forefront. It’s imperative for the document to downplay the panic which would justify real regulation. And it’s imperative to create the appearance of a reasoned response to a massive bailout while actually calling for diminished regulation.

We’re All Bankers Now

The summary starts by pretending that the primary purpose of the Department of the Treasury is to ensure a competitive (but stable) financial services industry.

The mission of the Department of the Treasury ("Treasury") focuses on promoting economic growth and stability in the United States. Critical to this mission is a sound and competitive financial services industry grounded in robust consumer protection and stable and innovative markets.

Note how this differs from the Treasury’s stated mission–to ensure the overall health of US finances, not just the competitiveness of the financial services industry.

Serve the American people and strengthen national security by managing the U.S. Government’s finances effectively, promoting economic growth and stability, and ensuring the safety, soundness, and security of the U.S. and international financial systems.

The Treasury summary justifies turning a broad mandate for ensuring the overall fiscal health of the economy into this narrow emphasis on financial services this way:

Financial institutions play an essential role in the U.S. economy by providing a means for consumers and businesses to save for the future, to protect and hedge against risks, and to access funding for consumption or organize capital for new investment opportunities. [my emphasis]

So note, even before the summary gets into the guts of its proposed changes, it has jettisoned its concern for "safe, sound, and secure US and international financial systems" in favor of "innovative and stable financial services industry." And it has transformed your average consumer (some might call them taxpayers or even citizens) into actors who "save for the future" or "access funding for consumption." Read more →

Sometimes You Eat The Bear, Sometimes The Bear Eats You – Stearns Thoughts

/81 Comments/in , , , , /by

That whole financial disaster, black hole rivaling the Great Depression, collapse of the American economy thing is oh so last week eh? Because from what I can tell this week, Britney has been on a sitcom, Barrack (gasp!) has listened to a fiery preacher man, Bush and McCain say stupid things (okay, that is not news, but it is being reported on), and Hillary (gasp!) won’t quit a race that is essentially neck and neck (and this reference does not make this a thread for discussion of the horserace, so give that a rest). What happened to the biggest financial crisis in our nation’s history?

What was the the Bear Stearns takeover/bailout about anyway? Who really benefitted in the present? What does it portend for the future? I don’t have these answers; but I have a lot of questions and the ground seems to be morphing so fast on this that not only are we not getting answers, the real questions are getting left behind in the wake. To paraphrase Wilson Pickett, we need to "slow this mustang down" and think about what has occurred and where it will lead us for the future. Really, the implications are pretty incredible. The federal government, under the cover of a spring weekend, stepped in to force one private financial company to sell itself to another private financial company at a price more than fifteen times less than the market valuation at the time. And then the government pledged the public’s money to guarantee the worst parts of the deal. Wow. And here I thought the free market was the golden holy rule for those currently running our country into the ground.

How did something so huge, and with so many far ranging implications, happen literally overnight? One thing is sure, if the economy was as great as they say, and Bush and his band of merry pillagers were on top of everything as much as they claim, this never would have happened. There has been plenty of discussion about the sub-prime shitpile and the exponential rise in derivitives in the financial industry, but my question here is what really happened with the Bear Stearns deal itself? Thankfully, people that know a whole lot more about this than I do are starting to ask the right questions. Today’s example is an outstanding Read more →