Associate Attorney General Thomas Perrelli to Leave DOJ in March

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The guy in charge of–among other things–the elusive foreclosure fraud settlement with the banksters just told NPR’s Carrie Johnson he’ll be leaving in March.

Associate Attorney General Tom Perrelli will leave the third highest-ranking post at the Justice Department in March after nearly three years managing a bustling portfolio that has run the gamut from mortgage abuses and the oil spill in the Gulf of Mexico to stamping out domestic violence in Indian country.

Perrelli, 45, says that he’ll take several months off to spend with his growing family. He and his wife have a five-year-old, a two-year-old, and a pair of twins due in May. “This is the best job I’ll ever have,” Perrelli tells us, “you really couldn’t ask for better.” But, long hours spent overseeing Justice Department units that handle tax, civil rights, environment, antitrust, civil cases and billions of dollars in federal grant programs has taken “an enormous amount of energy and commitment and sacrifice.”

As Johnson points out, Perrelli has had his fingers in a number of contentious issues: the Cobell settlement and the BP investigation. But I suspect it also sets a finite deadline for the foreclosure fraud settlement, rumored to be imminent for about a year.

One of his biggest efforts has yet to come to fruition. For more than a year, the Justice Department and state attorneys general have been hammering out a settlement with the country’s largest mortgage servicing companies over faulty paperwork and forclosure abuses known as “robo signing” that helped push people out of their homes. The process has been complicated and sometimes fractious, as top lawyers for the state of California and New York criticized the process as going too soft on the banks.

And then, of course, there’s the question of a replacement–because there’s no way Republicans are going to confirm anyone for a functional post at a Department of Justice they like to claim is responsible for sending guns to Mexican drug cartels.

Just what this country needs, a DOJ even more hampered by missing key operational executives.

The Mafia Bank

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In his book, McMafia, Misha Glenny describes how mobsters filled the vacuum left by communism in Eastern Europe and Russia.

The new circumstances bewildered old international institutions. All had to improvise and no party quite understood the implications of its actions or their unintended consequences.

One group of people, however, saw real opportunity in this dazzling mixture of upheaval, hope, and uncertainty. These men, and occasionally women, understood instinctively that rising living standards in the West, increased trade and migration flows, and the greatly reduced ability of many governments to police their countries combined to form a gold mine. They were criminals, organized and disorganized, but they were also good capitalists and entrepreneurs, intent on obeying the laws of supply and demand.

Which appears to be what’s happening in Italy, too, where the mafia now constitutes the country’s largest “bank.”

Organized crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country’s biggest “bank” and squeezing the life out of thousands of small firms, according to a report on Tuesday.

Extortionate lending by criminal groups had become a “national emergency,” said the report by anti-crime group SOS Impresa.

Organized crime now generated annual turnover of about 140 billion euros ($178.89 billion) and profits of more than 100 billion euros, it added.

“With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business.

Now, obviously, the strength of the Italian mafia is nothing new. Nor is its role in loan-sharking.

Nevertheless, it appears that the chaos caused by the financial crisis–and the oligarchs’ refusal to pursue a sane approach that puts the interest of society ahead of bond-holders–has created another vacuum the mob can fill.

Of course, that just makes Italy like many other countries in the world, where the mob has similarly accrued more power in recent years.

The refusal to inconvenience the oligarchs is really going to increasingly empower a more obviously brutal form of oligarchs. Something to look forward to!

Fast and Furious Money Laundering

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Every time I read Treasury’s updates of sanctions designations, I’m reminded that two of our three new trade partners–Colombia and Panama–are really centers for corruption, money laundering, and crime. One of three new kingpins added to the list is from Colombia (the other two from Mexico), something like 23 of 50-some people and companies being taken off the list are Colombian, and something like 8 are from or have ties to Panama. (Speaking of which, former Iraqi Oil Minister Dr. Safa Haji al-Habobi, congratulations on being de-listed!) While you could argue making it easy to import to the US might stem the corruption, you might also argue that our trade agreements just facilitate such corruption.

Which brings me to this story from yesterday’s NYT, describing how the DEA helped drug traffickers launder money as part of an investigation into Colombian trafficker Harold Mauricio Poveda-Ortega.

American drug enforcement agents posing as money launderers secretly helped a powerful Mexican drug trafficker and his principal Colombian cocaine supplier move millions in drug proceeds around the world, as part of an effort to infiltrate and dismantle the criminal organizations wreaking havoc south of the border, according to newly obtained Mexican government documents.

The documents, part of an extradition order by the Mexican Foreign Ministry against the Colombian supplier, describe American counternarcotics agents, Mexican law enforcement officials and a Colombian informant working undercover together over several months in 2007. Together, they conducted numerous wire transfers of tens of thousands of dollars at a time, smuggled millions of dollars in bulk cash — and escorted at least one large shipment of cocaine from Ecuador to Dallas to Madrid.

And since we’ve been tracking sealed dockets, the NYT includes this tidbit:

According to the newly obtained documents, Mexico agreed to extradite Mr. Poveda-Ortega to the United States last May. But the American authorities refused to say whether the extradition had occurred.

This story, of course, follows allegations made by a key Sinaloa cartel member that the US had developed a cooperation deal with the cartel.

Mexican soldiers arrested Zambada Niebla in late March 2009 after he met with DEA agents in a posh Mexico City hotel, a meeting arranged by a US government informant who also is a close confident of Ismael Zambada and Chapo Guzman. That informant, Mexican attorney Humberto Loya Castro, by the US government’s own admission in court pleadings in the Zambada Niebla case, serves as an intermediary between the Sinaloa Cartel leadership and US government agencies seeking to obtain information on rival narco-trafficking organizations.

“Toward the end of June 3, 2005, the CS [informant Loya Castro] signed a cooperation agreement with the United States Attorney’s Office for the Southern District of California,” states an affidavit filed in the Zambada Niebla case by Loya Castro’s handler, DEA agent Manuel Castanon. “… Thereafter, I began to work with the CS. Over the years, the CS’ cooperation resulted in the seizure of several significant loads of narcotics and precursor chemicals. The CS’ cooperation also resulted in other real-time intelligence that was very useful to the United States government.”

According to Zambada Neibla, he and the rest of the Sinaloa leadership, through the informant Loya Castro, negotiated a quid-pro-quo immunity deal with the US government in which they were guaranteed protection from prosecution in exchange for providing US law enforcers and intelligence agencies with information that could be used to compromise rival Mexican cartels and their operations.

I understand the need for informants in such investigations. But I also wonder about the level of oversight that exists over such operations.

And I find it really ironic that, even while Republicans try to make gun-running their signature gotcha issue for the Obama Administration (in spite of Bush’s use of the tactic as well), they’re ignoring how much we seem to be fostering money laundering in the guise of law enforcement.

Obama Swaps a JP Morgan Chase Chief of Staff for a Citi One

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Former JP Morgan Chase Exec Bill Daley has finally quit the job he sucked at, White House Chief of Staff. He will be replaced by former Citi Exec and current OMB Director Jack Lew.

Chicagoan Bill Daley is stepping down as White House chief of staff and budget director Jack Lew is taking over the president’s team as it heads into a tough election year, senior administration officials say.

Daley gave his letter of resignation to the president in a private meeting in the Oval Office last week, recounting the administration’s successes of his one year on the job and saying it was time for him to return to his hometown of Chicago.

Obama plans to announce the change in leadership in a public event this afternoon. The official shift will take place at the end of this month, giving Lew time to complete the administration’s budget proposal while Daley leads the team through the crafting of the State of the Union address due in two weeks.

The guy who’s been doing Daley’s job for some time–Pete Rouse–and who appears to be quite good at the job has no ties with any TBTF bank.

I guess that’s why he’s not getting the job officially.

John Yoo Defends Senate’s Authority to Sit Around and Do Nothing

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Yes, it is hysterical, in general, that John Yoo has finally discerned some limits to the President’s authority under Article II now that Obama used a recess appointment to get around Senate obstruction.

The president’s power over what are known as “recess appointments” stems from Article II of the Constitution, which grants him the authority “to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” The Constitution does not define what a “recess” is — the Senate adjourns for short periods of time, and the question becomes when an “adjournment” becomes long enough to turn into a “recess.” In the past, attorneys general and presidents have thought that an adjournment would have to be longer than at least ten days to become a “recess.”

Particularly given that Yoo has embraced a rather expansive notion of what Youngstown says about Presidential authority regarding activities that aren’t defined under existing statute.

I’m amused, too, by the way Yoo trolls for clients at the end of his column.

Most importantly, private parties outside government can refuse to obey any regulation issued by the new agency. They will be able to defend themselves in court by claiming that the head of the agency is an unconstitutional officer, and they will have the grounds for a good test case. They can call Richard first, me second, for advice!

I hope, for NRO’s sake, they get a cut if Yoo does go on to consult with the Chamber of Commerce, which has threatened to sue.

But I’m most amused by what Yoo has to defend to make his case. John Yoo, arch conservative, defends the right of Senators to sit around doing nothing but reading the paper on the taxpayer’s dime.

It is up to the Senate to decide when it is in session or not, and whether it feels like conducting any real business or just having senators sitting around on the floor reading the papers.

I’ll grant you, the Senate is pretty ineffective and it usually feels like they are, in fact, not doing anything. I’m sure they do have the legal authority to just sit around scratching their collective arse. But I do find it rather cute that John Yoo has come out of his hole to make an inspired defense of Article I authority based on Senators’ rights to do absolutely nothing.

This constitutional lawyer business really is a noble profession.

The Challenge To Richard Cordray Not Being Discussed

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The internets are alive with the sound of excitement over the appointment today by President Obama of Richard Cordray to be Director of the Consumer Finance Protection Bureau (CFPB). And, as Brian Buetler correctly points out, by doing it today, the first day of the new legislative session, Obama (assuming he gets re-elected) has provided Cordray with the longest term possible to serve as a recess appointee:

By acting today, with session two of this Congress technically under way, Obama has given Cordray the rest of this session and the full next session of the Senate to run the bureau. Cordray could potentially serve through the end of 2013.

The Congressional Research Service outlined this in a recent report (PDF) — and the White House and Senate leaders of both parties confirm the analysis.

If Obama loses in 2012, that could shorten Cordray’s tenure — and of course Cordray can leave early if he wants to. But this move makes it much more likely that the CFPB will truly take root.

Most of the banter so far has been on the viability of Obama’s move to recess appoint in this manner. I have looked at this issue for years, going back to early in the Dawn Johnsen imbroglio, and find no reason to believe this was not a proper exercise of Presidential power and prerogative.

The long and short of it is, there is no restriction on timing of recess appointments by a President pursuant to Article II, Section 2 of the Constitution. Both the “10 day rule”, which got narrowed to the “3 day rule” were practices and, at best were based on non-binding dicta from an early 90s DOJ memo; they are not now, nor have they ever been, binding law or rule. Legally, they are vapor. The issue was actually litigated in the 2004 11th Circuit case of Evans v. Stephens.

And when the President is acting under the color of express authority of the United States Constitution, we start with a presumption that his acts are constitutional.2 See United States v. Allocco, 305 F.2d 704, 713 (2d Cir. 1962) (Recess Appointments Clause case); see also U.S. v. Nixon, 94 S.Ct. 3090, 3105 (1974) (observing “In the performance of assigned constitutional duties each branch of the Government must initially interpret the Constitution, and the interpretation of its powers by any branch is due great respect from the others.”).
…….
The Constitution, on its face, does not establish a minimum time that an authorized break in the Senate must last to give legal force to the President’s appointment power under the Recess Appointments Clause. And we do not set the limit today.

And there you have it. There is no minimum time. Also, somewhat significant, is that Evans was decided by the full 11th Circuit, not a three judge panel, and SCOTUS considered a full cert application, and denied it, leaving the 11th Circuit decision standing as good law and citable precedent.

Oh, and if you wonder if SCOTUS has a real hard on for Presidential recess appointments, the answer would appear to be no. During the oral argument in New Process Steel v. NLRB last year, Chief Justice Roberts scoldingly asked Deputy Solicitor General Neal Katyal “And the recess appointment power doesn’t work why?” I am not sure the blustering Republicans like McConnell and Boehner will find quite as receptive an ear from the Roberts Court as they think.

Well, as Beutler notes, things should be all rosy and good to go for Cordray and CFPB, right? Not so fast, there is another issue not receiving any attention by the chattering classes.

The CFPB was promulgated by a pretty bizarre act – The Dodd Frank Act – bizarre, specifically, in how it structures and empowers the CFPB in its various duties. Notably, several of the key powers flow not necessarily through the agency, but through the “confirmed director” of CFPB. If there is no director, the bureau is run in the interim by the Treasury Secretary. Yep, good ‘ole Turbo Tax Timmeh Geithner. Specifically, Section 1066 provides:

The Secretary is authorized to perform the functions of the Bureau under this subtitle until the Director of the Bureau is confirmed by the Senate in accordance with section 1011. (emphasis added)

So, in all this meantime, and despite the White House trying to put the patina on that Liz Warren was running the CFPB, it has actually been Geithner. And the problem with this has been (remember I said the enabling language was bizarre??) that not all of the full powers of the CFPB vest, nor can they be exercised, until there is a director.

A director “confirmed by the Senate” according to the literal wording of the Dodd Frank Act.

If I were speculating on legal challenges to Cordray, rather than focusing solely on Obama’s ability to so appoint him (which, again, I think stands up), I might be more concerned about the issue of whether Cordray has full powers to lead and operate CFPB because he is not “confirmed by the Senate”. That should be a stupid argument you would think, but the words “confirmed by the Senate” in the enabling act make it at least a very cognizable question.

Normally a confirmed appointee and a recess appointee have the same legal authority and powers but, to my knowledge, there is no other situation in which substantive power for an agency flows only through its specific “confirmed” director. If I were going to attack Cordray, I would certainly not restrict it to the propriety of Obama’s recess appointment, I would also attack his scope of authority since he was not “confirmed”. I would like to think such a challenge fails, but Congress sure left a potential hidden boobytrap here.

How Dare the President Protect Consumers!?!?!

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We’ll have to come back to the issue of why President Obama decided to use his recess authority to appoint Richard Cordray to head the Consumer Financial Protection Board but not Dawn Johnsen or Elizabeth Warren. But for now, I’d like to collect the wails of Republican outrage.

Shorter John Boehner: Protecting consumers from rapacious banks is an extraordinary and entirely unprecedented power grab! Protecting consumers is bad for the economy!

Shorter Mitch McConnell: Obama has arrogantly circumvented the American people by protecting the American people!

Shorter Orrin Hatch: It is a very grave decision by this heavy-handed, autocratic White House to appoint someone to protect consumers. The American people deserve to be treated with more respect than this White House is affording them by protecting them from the banks!

Shorter Spencer Bachus: Appointing a director to the CFPB will cripple it for years. The greatest threat to our economy right now is uncertainty, and by protecting consumers the President just guaranteed there will be even more uncertainty.

 

Shorter Jamie Dimon: “I am not a psychopath”

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As business professor Clive Boddy describes it, banksters like Jamie Dimon succeed–and cause great catastrophe–because they are able to exploit the chaos of today’s business environment while ignoring the consequences of their ruthlessness.

Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”

[snip]

They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”

Boddy doesn’t name names, but the type of personality he describes is recognizable to all from the financial crisis.

He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done.

Meanwhile, a Reuters article offers a possible explanation for how millions of MF Global funds disappeared: because its clearing firm, JP Morgan Chase, dawdled while clearing hundreds of millions of dollars in securities MF Global sold to Goldman Sachs as an effort to stay afloat.

MF Global unloaded hundreds of millions of dollars’ worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co , one of the sources said.

The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.

[snip]

JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global’s assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan’s interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.

As it turns out, a week before JPMC was stalling on clearing MF Global’s sales, Jamie Dimon sent out an email to JPMC employees boasting about the firm’s expansion at a time of strife for the industry.

“2011 was another year of challenges, both for JPMorgan Chase and for countries around the world,” Dimon wrote in a year-end e-mail to staff. “There is a lot of frustration out there and more than a little hostility toward our industry.”

[snip]

JPMorgan hired 16,000 people in the U.S. in 2011, Dimon said in the letter, expanding its total workforce to more than 260,000 in a year when financial companies announced more than 200,000 job cuts and protests against Wall Street firms spread worldwide. The New York-based lender is adding about 175 branches a year in the U.S., he said.

“In the face of challenges, JPMorgan Chase is doing its part,” Dimon wrote. “We have not shrunk back.”

I tell you, indefinite detention looks better and better for Jamie Dimon.

“Crackpots don’t make good messengers”

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For the record, I have no intention of voting for Ron Paul in the General election (though depending on how the GOP primary rolls out, I might consider crossing over to vote for Paul in the MI primary, for similar reasons as I voted for John McCain in the 2000 primary: because I knew my vote wouldn’t matter in the Democratic primary and I hoped a McCain win might slow down George Bush’s momentum and focus some attention on campaign finance reform, McCain’s signature issue at the time).

I don’t want Ron Paul to be President and, for all my complaints with Obama, he is a less bad presidential candidate than Paul.

But that’s an entirely different question then the one Kevin Drum purports to address with this post:

Should we lefties be happy he’s in the presidential race, giving non-interventionism a voice, even if he has other beliefs we find less agreeable? Should we be happy that his non-mainstream positions are finally getting a public hearing?

Drum doesn’t actually assess the value of having a non-interventionist in the race, or even having a civil libertarian in the race (which he largely dodges by treating it as opposition to the drug war rather than opposition to unchecked executive power), or having a Fed opponent in the race.

Instead, he spends his post talking about what a “crackpot” Paul is, noting (among other things), that Paul thinks climate change is a hoax, thinks the UN wants to confiscate our guns, and is a racist.

Views, mind you, that Paul shares in significant part with at least some of the other crackpots running for the GOP nomination.

Of course, Paul does have views that none of the other Republicans allowed in Presidential debates share. And that’s what Drum would need to assess if he were genuinely trying to answer his own question: given a field of crackpots, several of whom are explicit racists, several of whom make claims about cherished government programs being unconstitutional, most of whom claim to believe climate change doesn’t exist, is it useful that one of the candidates departs from the otherwise universal support for expanded capitulation to banks, authoritarianism, and imperialism? Read more →

A Note About OWS and Pre-Trial Diversion in Los Angeles

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I have seen a lot of garment rending on Twitter and in discussion forums I participate in about the Los Angeles Times report that a pre-trial diversion option is being offered to some Occupy Wall Street-Los Angeles protesters:

Many Occupy L.A. protesters arrested during demonstrations in recent months are being offered a unique chance to avoid court trials: pay $355 to a private company for a lesson in free speech.

Los Angeles Chief Deputy City Atty. William Carter said the city won’t press charges against protesters who complete the educational program offered by American Justice Associates.

He said the program, which may include lectures by attorneys and retired judges, is being offered to people with no other criminal history and who were arrested on low-level misdemeanor offenses, such as failure to disperse.

“Tin eared!” “Propaganda!” “Re-Education!” “Stupid!” “Tone-deaf!” “By a private corporation??” “Seriously, LA, this is the worst ever!” “Unbelievable!”

Those are a smattering of the responses I saw, and all are from people I know and respect greatly. And they are all wrong to take such umbrage at this report. Here is why.

Pre-trial diversion of criminal misdemeanor charges is an extremely common tool in municipal and other misdemeanor courts (and in some felon courts on the lowest grade offenses such as marijuana possession). It is, from a policy perspective, considered a win-win for both sides; the state and taxpayers avoid the cost of processing the defendant through the court system, and the defendant avoids having a conviction on their record (often avoid even having a formal charge lodged). But whether or not to offer pre-trial diversion lies entirely within the prosecutorial discretion of the state’s attorney. It is an option that can be offered, but certainly is not mandatory.

Just as pre-trial diversion is a voluntary option that does not have to be offered in the first place, the decision on whether to accept the offer is entirely up to the individual facing the charge. There is no punishment whatsoever for declining – none – they will stand in the EXACT same position vis a vis the state as if they had not been offered pre-trial diversion at all, i.e. there will be a municipal offense that has either been charged, or is pending charge, with a one year statute of limitation running.

There has been a hue and cry that – gasp! – the program will be administered by – gasp! – a private company. Well, they always are. I have never seen a diversion program with an educational component that was not farmed out to a private or non-profit outside entity. That is simply how it is done; cities and individual courts are not structured and funded to have classrooms, instructors and curriculum for these matters. And, being as it is a discretionary option to resolve outside of the criminal process (most are contractual, not court compelled) it just does not make fiscal or judicial sense to have it run by the court or state.

As to the content suggested for this particular diversion program offer, it is precisely what you would expect to be offered under the circumstances. Pre-trial diversion at the misdemeanor level almost always involves a perfunctory remedial/instructive class in the subject of the offense. This is the case with defensive driving class to get out of a ticket, it is the case with anger management for assault and domestic violence, it is the case for shoplifting and solicitation programs as well. For the OccupyLA cases, it is hard to imagine a more appropriate subject than a free speech centered Read more →