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Hitting the Fan: Volker’s Text Messages Released

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[NB: Check the byline, thanks! ~Rayne]

Around 10:00 p.m. last night, House Democrats released partial transcripts of text messages between former U.S. Special Representative for Ukraine Kurt Volker and other officials, including:

— William B. “Bill” Taylor, Charge d’Affaires for the U.S. Embassy in Ukraine;
— Gordon Sondland, U.S. Ambassador to the European Union;
— Andrey Yermak, Aide to Ukraine’s president Volodymyr Zelensky;
— Rudy Giuliani, in his role as Trump’s agent;

and others.

The specific texts released had already been “leaked” out of context, according to the cover letter accompanying the partial transcripts sent to members of the Intelligence, Oversight and Reform, and Foreign Affairs Committees, subsequently shared at the Foreign Affairs Committee’s website.

You can read the letter and transcript at this link.

The transcripts suggest the entire State Department knew about the quid pro quo — the release of delayed military and financial assistance in exchange for investigations intended to aid Trump’s personal political aims including re-election. The quid pro quo also looks obvious:

Only one person recognized this effort as problematic: Bill Taylor, who assumed some of the responsibilities of recalled ambassador Marie Yovanovitch.

There’s more than one quid pro quo outlined in the transcripts, not readily acknowledged in the media. Less obvious is the trade-off of an agreement to a scripted statement in exchange for an invitation to visit the White House. Such a visit would be a validation of support for Zelensky’s young presidency and a thumb in the eye to Vladimir Putin, bolstering Zelensky’s image with Ukraine’s public.

Community member harpie pointed to a statement on camera at 8:28 AM on August 9 by Trump which fits in the middle of the negotiations, suggesting Trump was fully aware of the exchange.

TRUMP: I think he’s [Zelensky] going to make a deal with President Putin, and he will be invited to the White House, and we look forward to seeing him. He’s already been invited to the White House and he wants to come. And I think he will. He’s a very reasonable guy. He wants to see peace in Ukraine. And I think he will be coming very soon, actually.

(source: Aaron Rupar)

The transcripts suggest that Zelensky’s aide/adviser Yermak has been identified as ethically flexible — amenable to this quid pro quo and willing to present it to Zelensky. Yermak’s background is in film/TV production, similar to several of Zelensky’s administration. Only a couple of Zelensky’s team appear to be lawyers, one of which has been barred from holding public office (Andriy Bohdan, appointed to equivalent of Chief of Staff). In the text messages Yermak appears to keep Zelensky at arm’s length from the negotiations, but this may be due to the limited amount of texts released; Zelensky may have been wholly involved on a more direct basis.

~ ~ ~

Compounding the pressure on House Dems to act is Trump’s increasingly overt behavior, asking China yesterday on camera to investigate both of his 2020 political rivals, Joe Biden and Elizabeth Warren.

China has now issued a statement in response:

Now that we know how this works in Trumplandia, we can interpret the unexpressed portion of this statement: China will not interfere in U.S. domestic affairs and the U.S. should not interfere in China’s domestic affairs — including Hong Kong.

We can only wonder at what else was in the text transcripts not yet disclosed, and how Trump will react if yesterday was just the beginning act of this program.

[Photo: Emily Morter via Unsplash]

ODNI Whistleblower Complaint: The Next ConFraudUS? [UPDATE-4]

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[NB: Check the byline. A new Ukraine-oriented timeline appears at the bottom of the text. Updates will be noted in the text or at the bottom of the post. /~Rayne]

In my last post about the whistleblower complaint we were left with unresolved questions, including:

Q1 — What constitutes an “urgent concern” validated by the Intelligence Community Inspector General as credible?
Q2 — What constitutes an unlawful act that would compel a whistleblower to file a complaint if the president can declassify information at will?
Q3 — What kind of unlawful act characterized as an “urgent concern” could occur as a “promise” in communications with a foreign leader?
Q4 — How does the existing timeline frame this “promise”?
Q5 — Who is the “higher authority” who ordered the ADNI not to turn over the whistleblower complaint to the HPSCI, obstructing investigatory oversight?

Since then the Washington Post published another article linking the complaint to a phone call about Ukraine. It only partially answered our questions.

A1 — We have to assume the criteria the IC IG used to determine the concern as credible will eventually be revealed; the House is already asking about the determination. We still do not know what about the complaint constituted an “urgent concern” though the use of our foreign policy to further a presidential re-election campaign is definitely a concern.
A2 — The corrupt acts, based on WaPo’s two articles so far, appear to be

    • conspiracy
    • solicitation of bribery or extortion
    • violation of campaign finance laws (receiving a thing of value from a foreign entity)
    • misappropriation of federal funds for personal campaign use
    • self-dealing (not a crime per se but an abuse of power)

De-classification of information doesn’t appear to be involved so far.

A3 — The “promise,” depending on what it is, could foment increased hostilities against a NATO ally or allies, unless there was another quid pro quo involved intended to offset and tamp down friction. If Trump promised to deliver financial aid to Ukraine only on completion of solicited performance by Ukraine’s president, was there another promise between Trump and Putin that Ukraine would not be punished for receiving the financial aid? Did a second promise make this situation a more “urgent concern,” or was it the risk of hostilities that did so?
A4 — The timeline appears flexible but dependent upon Ukraine both delivering to Trump’s agent, Rudy Giuliani, and within a possible budget and/or campaign deadline.
A5 — Obviously the “higher authority” is Trump or someone who reports directly to Trump, now that we know he’s the one who badgered Zelensky eight times in a single phone call. Authority doesn’t go any higher.

We still have open, unresolved questions. An investigation could answer them (although Trump and his henchman Rudy Giuliani appear intent on dumping it all out in the open on their own).

An impeachment inquiry would work best because it would have the constitutional clout necessary to overcome obstruction this administration has repeatedly demonstrated in response to other subpoenas to non-impeachment related inquiries.

And an impeachment inquiry is wholly appropriate to the overarching criminal behavior we see unfolding in this case: yet another conspiracy to defraud the United States, this time by conspiring with Ukraine’s president to obtain illegal foreign aid for campaign purposes using taxpayer money.

There are no more rational, non-corrupt excuses the House Democratic leadership can offer for failing to move directly to an impeachment inquiry.

~ ~ ~ ~ ~ ~

Timeline — this version includes foreign policy items related to Ukraine in indigo blue font; some may reflect the tensions between Ukraine and Russia. This timeline is subject to additions/revisions.

19-AUG_2016 — Ukrainian journalist and member of parliament Serhiy Leshchenko revealed secret payments outlined in the ‘black ledger of the Party of Regions’ showing payments made by the former pro-Russian president Viktor Yanukovych to Trump campaign chairman Paul Manafort.

________

10-MAY-2017 — Trump met Russian Foreign Minister Sergey Lavrov and Russian ambassador to the US Sergey Kislyak in the Oval Office.

15-MAY-2017 — Washington Post reported Trump revealed code word level classified information to Lavrov and Kislyak during Oval Office meeting. The information covered ISIL’s bomb-making capabilities and may have exposed allies’ intelligence gathering means and methods.

XX-MAY-2017 — Decision made to exfiltrate key Russian asset. Unclear exactly when decision made or when exfiltration occurred, only that it happened after the Oval Office meeting with Lavrov and Kislyak, and before the G20 meeting in Hamburg, Germany.

7/8-JUL-2017 — Trump meets Putin at G20 meeting in Hamburg, Germany.

11-JUL-2017 — European Union’s 28 member states formally endorsed the EU-Ukraine Association Agreement, effective September 1.

30-OCT-2017 — Paul Manafort, former Trump campaign manager, indicted.

________

09-APR-2018 — John Bolton begins as National Security Adviser.

30-APR-2018 — U.S. State Department confirmed that Washington delivered thirty-five Javelin anti-tank launchers to Ukraine.

02-MAY-2018 — Ukraine had ceased cooperation with the Special Counsel investigation, according to NYT; “‘In every possible way, we will avoid irritating the top American officials,’ one Ukrainian lawmaker says. ‘We shouldn’t spoil relations with the administration.'” Ukraine had also halted its money laundering investigation into former President Viktor Yanukovych, who may have used stolen Ukrainian taxpayer funds to pay convicted former Trump campaign manager Paul Manafort to aid him in winning in Ukraine.

15-MAY_2018 — Russia’s President Putin opened a new bridge linking southern Russia to Crimea; Ukraine’s president Poroshenko said it was an attempt to legitimize the occupation of Crimea while Ukrainian critics said the bridge project violates international law. The bridge was built following the illegal 2014 annexation of Crimea by Russia.

16-JUL-2018 — U.S.-Russia Summit meeting in Helsinki, Finland; Trump meets with Putin.

XX-JUL-2018 — Coats expressed opinion differing from Trump’s after Helsinki summit. Rumors began about Trump replacing Coats.

09-OCT-2018 — Ambassador to the U.N. Nikki Haley announced her resignation; effective date 31-DEC-2018. [UPDATE-1]

11-OCT-2018 — Ecumenical Patriarchate of Constantinople recognized the independence of the Ukrainian Orthodox Church, praised by Ukraine but protested by Russia. The move by the patriarchate heightened tensions between the two nation-states.

25-NOV-2018 — Russia seized three Ukrainian navy ships, injuring six crew after firing on them in the Kerch Straits of the Black Sea near Crimea. The attack violated a 2003 treaty which designated the Kerch Strait and Sea of Azov as shared territorial waters. US representative Nikki Haley called the incident an “outrageous violation of sovereign Ukrainian territory” during an emergency U.N. Security Council meeting.

26-NOV-2018 — Ukraine implemented martial law for 30 days in response to the Kerch Straits event, due to concerns over a Russian invasion.

26-DEC-2018 — Martial law in Ukraine ended, to allow adequate time before the country’s elections.

31-DEC-2018 — Volodymyr Zelensky, a TV producer who starred in a series playing the role of President of Ukraine, announced his candidacy for Ukraine’s presidency.

________

29-JAN-2019 — Coats testified before Senate Intelligence Committee; he said North Korea “is unlikely to completely give up its nuclear weapons and production capabilities,” in contrast to Trump’s claims that Kim Jong-un has committed to denuclearization.

XX-FEB-2019 — Trump discussed replacements for DNI.

05-MAR-2019 — U.S. Ambassador to Ukraine Marie Yovanovitch criticized Ukraine’s record on corruption; she noted the country’s high court’s decision weakens Ukraine’s National Anti-Corruption Bureau.

20-MAR-2019 — The Hill’s John Solomon interviewed Ukraine’s prosecutor general Yuriy Lutsenko; Lutsenko claimed Amb. Yovanovitch gave him a do-not-prosecute list during their first meeting. State Department denied this claim in an email to Radio Free Europe.

~28-MAR-2019 —  In ‘early 2019’, Giuliani met with Ukraine’s prosecutor general Yuriy Lutsenko in New York (exact date TBD).

31-MAR-2019 — Ukraine’s first run-off presidential election narrowed down the field to the incumbent Petro Poroshenko and Volodymyr Zelensky.

21-APR-2019 — Volodymyr Zelensky won Ukraine’s presidential election over Petro Poroshenko, 73.22% to 24.45% of the vote. 12% of the population were unable to vote due to the conflict with Russia in Donbass region.

21-APR-2019 Trump called and congratulated Zelensky; the call was noted in a late evening/early morning tweet by U.S. Special Representative to Ukraine Kurt Volker:

25-APR-2019 — After two years of indecision, former VP Joe Biden formally launched his campaign for POTUS. [UPDATE-4]

07-MAY-2019 — Amb. Yovanovitch was recalled — removed from her position.

09-MAY-2019 — Giuliani said he intended to meet with President-elect Zelensky in Ukraine to push for an investigation into the release of negative information about Paul Manafort as well as former VP Joe Biden’s efforts to remove Ukraine’s general prosecutor. [UPDATE-2 — date and link changed from CNN 10-MAY to NYT 09-MAY (byline: Ken Vogel)]

10-MAY-2019 — Senator Chris Murphy (D-CT) made an official request of the Senate Committee on Foreign Relations to investigate Giuliani’s influence operation in Ukraine. [UPDATE-2]

11-MAY-2019 — Giuliani reverses his decision and says he won’t go to Ukraine to meet with Zelensky.

20-MAY-2019 — Date Zelensky assumes office of presidency. [UPDATE-2]

21-MAY-2019 — Lawyer and film producer Andriy Yermak appointed aide to Ukraine’s Zelensky.

24-MAY-2019 — Trump issued a directive allowing Attorney General William Barr to declassify any intelligence that sparked the opening of the Russia investigation.

11-JUN-2019 — Ukraine’s president Zelensky signed a motion for Ukraine’s parliament to dismiss prosecutor general Yuriy Lutsenko, an ally of former president Poroshenko. Lutsenko resisted, saying he would step down after the July 21 parlimentary elections.

11-JUN-2019 In an interview released on Thursday, June 13, Trump told ABC’s George Stephanopoulos,

“I think you might want to listen, there isn’t anything wrong with listening,” Trump continued. “If somebody called from a country, Norway, [and said] ‘we have information on your opponent’ — oh, I think I’d want to hear it.”

20-JUN-2019 — In retaliation for downing a U.S. drone, Trump approved strikes on Iran which were abruptly aborted.

~11-JUL-2019 — Date TBD. On or about this time, Giuliani had a phone meeting with Zelensky’s adviser, Andriy Yermak.

22-JUL-2019 — Zelensky’s Servant of the People wins Ukraine’s parliamentary elections.

24-JUL-2019 – Special Counsel Robert Mueller appears before House Judiciary Committee. The same day that GOP Rep. John Ratcliffe (TX-4) used his time to question Mueller to accuse Mueller of breaking DOJ regulations; CNN reported that “Ratcliffe has been under consideration for a job within the Trump administration, sources told CNN, including an intelligence or national security role.”

25-JUL-2019 — Trump talked with Ukraine’s Zelensky on the phone “to congratulate him on his recent election.” Ukraine’s English-language readout of this call said Trump discussed “investigations into corruption cases that have hampered interaction between Ukraine and the U.S.A.” (This call is the subject of whistleblower complaint.)

28-JUL-2019 — Coats’ departure and John Ratcliffe nominated as replacement announced by Trump via Twitter.

02-AUG-2019 — Ratcliffe withdraws from consideration.

~02-AUG-2019 — Trump administration asked ODNI for a list of all ODNI employees at the federal government’s top pay scale who have worked there for 90 days or more. This was believed to be a search for a new Director of ODNI; others speculated there was an impending personnel shakeup. [UPDATE-2]

08-AUG-2019 — Primary Deputy Director DNI Sue Gordon resigned effective 15-AUG-2019, without additional prior notice, as ordered. Resignation letter without handwritten note.

Copy of former PDDNI’s resignation letter with handwritten cover: ODNI_LTR_08AUG2019

11-AUG-2019 — Giuliani debriefing with two State Department diplomats about his meeting with Ukraine’s Zelensky aide in Madrid, Spain.

12-AUG-2019 — IC IG received the whistleblower compaint, via Schiff’s 10-SEP letter.

15-AUG-2019 — Coats’ last day as DNI.

22-AUG-2019 — Giuliani said the U.S. State Department helped set up his meeting(s) with Zelensky’s aide Yermak, assisting “his efforts to press the Ukrainian government to probe two prominent Democratic opponents of the president: former Vice President Joe Biden and the Democratic National Committee.”

26-AUG-2019 — IC IG transmitted the whistleblower complaint to the Acting DNI, via Schiff’s 10-SEP letter.

26-AUG-2019 — GOP appointee Matthew Peterson resigned from Federal Election Commission; effective date of resignation 31-AUG-2019. FEC no longer has a quorum with his departure. [UPDATE-1]

27-AUG-2019 — Russia barred a visa for entry to Senators Chris Murphy (D-CT) and Ron Johnson (R-WI) for a trip planned in early September. Senator Mike Lee (R-UT) received clearance and a visa, however. Johnson, Murphy and Lee are all members of the Senate Foreign Relations Committee; Johnson is the subcommittee chair for Europe & Regional Security Cooperation. The three senators voted in favor of the Russia sanctions bill. [UPDATE-2]

28-AUG-2019 — John Bolton met with Ukraine’s Zelensky (video). [UPDATE-2 – date revised, video link added.]

28-AUG-2019 — Bolton met his counterpart, Oleksandr Danyliuk, Ukraine’s head of the National Defense and Security Council; Bolton told Danyliuk that the U.S. support for Ukraine against Russian-backed separatists in contested eastern Ukraine would ‘intensify’. [UPDATE-2]

Late AUG-2019 — U.S. suspends $250M military aid for Ukraine – exact date TBD. Reuters’ report on 29-AUG-2019 said ‘may’ suspend’. [UPDATE-2 – remove and replace with following item.]

29-AUG-2019 — Trump stalled the $250M military assistance provided under the Ukraine Security Assistance Initiative by asking Bolton and Defense Secretary Mark Esper to review the package. Defense Department had already reviewed the aid and supported it. [UPDATE-2]

29-AUG-2019 — Ukraine’s Prosecutor General Yuriy Lutsenko submitted his resignation.

30-AUG-2019 — Trump tweeted a high-resolution satellite image of Iran’s failed Safir SLV launch while claiming the U.S. was not involved. The image may have been classified and ‘insta-declassified’ by Trump.

01-SEP-2019 — VP Mike Pence flew to Poland and met with Poland’s president Andrzej Duda and Ukraine’s Zelensky, discussing security and energy issues (remarks issued by White House). Per pool reporter, the meeting included National Security Adviser John Bolton and Energy Secretary Rick Perry; Pence avoided answering media questions whether the Trump administration would still allocate $250M for security aid.

01/02-SEP-2019 — US Special Rep. for Afghanistan Zalmay Khalizad met with Afghan president Ashraf Ghani in Kabul where the Taliban, Afghan government and the U.S. had “reached an agreement in principle” toward an eventual “total and permanent cease-fire.”

02-SEP-2019 — During news conference after the meeting with Duda and Zelensky in response to a question by AP’s Jill Colvin, Pence denied speaking about Joe Biden with Zelensky:

“Well, on the first question [about Biden], the answer is no. But we — with President Zelensky yesterday, we discussed — we discussed America’s support for Ukraine and the upcoming decision the President will make on the latest tranche of financial support in great detail.”

02-SEP-2019 — Deadline for ADNI to forward the complaint to Intelligence committees of Congress passes without a referral, via Schiff’s 10-SEP letter.

03-SEP-2019 — Sen. Murphy and Johnson began a 5-day trip to Serbia, Kosovo, Ukraine, and Germany. [UPDATE-2]

03-SEP-2019 — Russian media outlet Tass reported that Russian Deputy Foreign Minister said the U.S. and Taliban “insist that Russia must be present in one capacity or another at the possible signing of the agreements that the parties are working on now.”

04-SEP-2019 — Secretary of State Mike Pompeo refused to sign the agreement with the Taliban.

07-SEP-2019 — Russia and Ukraine completed a major prisoner swap; some of the prisoners included Ukrainian sailors seized during the Kerch straits incident.

09-SEP-2019 — CNN broke story of a CIA asset extracted from Russia in 2017; followed by NYT on the 9th (and then NBC’s Ken Dilanian appears at the asset’s house…)

09-SEP-2019 — Trump asked for Bolton’s resignation and tweeted about it the next morning.

09-SEP-2019 — Intelligence Community Inspector General (IC IG) sent a letter to the House Permanent Select Committee on Intelligence, notifying it of a whistleblower complaint which it had determined to be credible and a matter of “urgent concern.”

10-SEP-2019 — Bolton tells Fox’s Brian Kilmeade by text that he’d quit.

10-SEP-2019 — HPSCI Rep. Adam Schiff requested the full, unredacted complaint, the IC IG’s determination about the complaint, and all documentation of ODNI’s action regarding this complaint, including correspondence with the White House.

11-SEP-2019 — Bloomberg reported Bolton pushed back Monday-Tuesday at Trump over Iran sanctions; Bolton wanted maximum pressure while Trump wanted to encourage a meeting with Iran’s Rouhani later in September.

12-SEP-2019 — Schiff and ADNI “discussed at length” the need to protect the whistleblower from any retaliation, including if the whistleblower subsequently comes forward to the committee with his/her concerns, via Schiff’s 13-SEP letter.

13-SEP-2019 — Zelensky said in a press conference that not only was the U.S. going to send $250M in military aid but an additional $140M.

13-SEP-2019 — ODNI declined the request, claiming the request as “it involves confidentially and potentially privileged communications by persons outside the Intelligence Community.”

13-SEP-2019 — HPSCI subpoenaed acting DNI Joseph Maguire for materials declined by ODNI.

17-SEP-2019 — Deadline, materials responsive to subpoena must be turned over by this date; Maguire failed to do so.

19-SEP-2019 — Date Maguire was compelled to appear before Congress in a public hearing. The Intelligence Community Inspector General Michael Atkinson appeared before the House Intel Committee in a closed door session.

19-SEP-2019 — Giuliani denied asking Ukraine to investigate Joe Biden moments before admitting that he had done just that.

20-SEP-2019 — Senator Murphy published a press release about the whistleblower complaint, renewing his call for a Senate Foreign Services Committee investigation into Giuliani’s efforts to influence Ukraine. [UPDATE-2]

20-SEP-2019 — Russian armed forces bombarded front along  western edge of contested Donbas territory.

22-SEP-2019 — During an interview on Meet the Press, Treasury Secretary Steve Mnuchin can’t explain where the additional $140M in aid for Ukraine came from.

22-SEP-2019 — In front of press on the White House lawn, Trump said he had spoken with Zelensky about Biden on July 25 in a congratulatory call. Later in the day he indicated he might allow a transcript of the call to be published.

23-SEP-2019 — TK

Future dates:

26-SEP-2019 — Maguire is scheduled to testify before the House Intelligence Committee in a public hearing.

30-SEP-2019 — Federal fiscal year ends on September 30.

Much of the timeline in black font above is the crowdsourced timeline from September 14-15. Note how much of this latest version is Ukraine-Russia, and how little we saw going on as we considered what a whistleblower might have filed a complaint about after July 25.

Is it at all possible there are other influence operations underway at the same time to which we are equally blind, asking for help from other nation-states to shape the outcome of Trump’s 2020 run for re-election?

If you have any relevant events with dates which should be added to this timeline, please share them in comments. I’m especially interested in dates nailing down Giuliani’s meetings with any Ukrainians including former prosecutor general Lutsenko and Zelensky aide Yermak.

The sad part of all the noise generated by Trump (corruption!-corruption!-corruption!) and Giuliani (Biden!-Biden!-Biden!) is that they are actively trying to corrupt an ally’s president who ran on an anti-corruption platform, possibly unwitting collateral damage.

If Zelensky agreed to a quid pro quo knowing that Trump was using him to further his 2020 re-election, Zelensky is compromised.

_____

UPDATE-1 — items added/changed noted in the timeline.

UPDATE-2 — 3:45 p.m. EDT 24-SEP-2019 — items added/changed noted in the timeline.

UPDATE-3 — items added/changed noted in the timeline.

UPDATE-4 — 12:00 a.m. EDT 25-SEP-2019 — item added, noted in timeline.

ODNI Whistleblower Complaint: Shoes Dropping All Over the Place [UPDATE-2]

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[NB: Check the byline. Updates are anticipated and will appear within the timeline or at the bottom of the text. /~Rayne]

In an effort to guess at the likely subject of a whistleblower complaint, the emptywheel community started a crowdsourced timeline of events surrounding the complaint received by the Intelligence Community Office of Inspector General on August 12.

As noted in the timeline, the House Intelligence Committee subpoena issued last Friday required the acting Director of National Intelligence (ADNI) Joseph Maguire to report to Congress about the complaint by Tuesday, September 17; failure to comply would require an appearance before Congress on Thursday, September 19. Maguire did not report as expected.

However dates for the ADNI to testify before the House have now been arranged:

. . .

[emphasis mine]

The Washington Post reported more details Wednesday evening about the whistleblower complaint:

Trump’s communications with foreign leader are part of whistleblower complaint that spurred standoff between spy chief and Congress, former officials say

One bit stood out for me in the lede:

The whistleblower complaint that has triggered a tense showdown between the U.S. intelligence community and Congress involves President Trump’s communications with a foreign leader, according to two former U.S. officials familiar with the matter.

Emphasis mine. Two former officials.

Speculation about the whistleblower’s identity is rampant across social media. Some suggest Fiona Hill, former Special Assistant to the President and National Security Council Senior Director for European and Russian Affairs, as the whistleblower; her planned departure in August was announced June 18. Others suggest an as-yet unnamed low-level analyst.

Marcy tweeted earlier,

It’s not outside the realm of possibility. Bolton seems in a mood to burn it all down, ‘shanking’ POTUS during a Trumpists-dense luncheon on Wednesday. But given the “two former U.S. officials” and former DNI Dan Coats interruption of a meeting to ask his deputy Sue Gordon to resign, I wonder if both Coats and Gordon resigned so they would be able to testify before Congress while escaping the appearance of being compromised by unethical or unlawful acts?

Important points for consideration:

  • What constitutes an “urgent concern” validated by the Intelligence Community Inspector General as credible?
  • What constitutes an unlawful act that would compel a whistleblower to file a complaint if the president can declassify information at will?
  • What kind of unlawful act characterized as an “urgent concern” could occur as a “promise” in communications with a foreign leader?
  • How does the existing timeline frame this “promise”?
  • Who is the “higher authority” who ordered the ADNI not to turn over the whistleblower complaint to the HPSCI, obstructing investigatory oversight?

Promising to violate or ignore violation of bipartisan sanctions against Russia would be unlawful, but would this be an “urgent concern”?

Was there instead an unlawful act with regard to the doxxing of the exfiltrated Russian asset?

Or was there a promise related to surveillance of North Korea?

Did the tensions between the U.S. and Iran spawn an unlawful promise?

There are probably dozens more scenarios that might fit. They may be related to items we didn’t add to the crowdsourced timeline, like these items directly related to North Korea:

28-FEB-2019 — Trump cut short the two-day summit with North Korea for no clear reason.

11-JUN-2019 — Trump received a “beautiful letter” from North Korea’s Kim Jong-un.

09-AUG-2019 — Trump received another “very beautiful letter” from Kim.

This one related to Iran:

03-SEP-2019 — New sanctions were placed on Iran after Trump administration claimed it was developing ballistic missile technology using its communications satellite program as cover.

And these related to Russia:

26-JUN-2019 — Trump told reporters that his anticipated discussion with Vladimir Putin at the G20 summit in Japan was “none of your business.”

31-JUL-2019 — Trump and Putin talked over the phone about Siberian wildfires and trade.

29-AUG-2019 — Trump’s trip to Poland canceled, ostensibly to monitor Hurricane Dorian though he ended up playing golf instead at his N. Virginia course. Was he avoiding conflict over increased Russian troop presence at the administrative border between Russian-occupied South Ossetia and Georgia? (Georgia has been pursuing NATO membership but is not yet a member state.)

Time will tell what other events were needed to pick out the narrative behind the complaint. One more data point may flesh out the nature of the challenge:

Is the complaint about a Trump-Russia issue alone, or does it also include a promise related to one of the other countries in the timeline — like North Korea or Iran?

Share your thoughts in comments with supporting content.

UPDATE — 19-SEP-2019 9:23 A.M. —

The ADNI should be in a closed door session with the House Intelligence Committee at this time.

Important to note that the IC IG is a Trump appointee — Michael Atkinson. He’s responsible for the determination that the unidentified whistleblower’s complaint was credible and an “urgent concern.”

ADNI broke the law as Amee Vanderpool noted here because the complaint was deemed credible:

Very, very odd how CNBC’s website news crawl makes zero mention of this unfolding story even though an NBC story confirmed WaPo’s report last night.

UPDATE — 19-SEP-2019 8:20 P.M. —

This is like a really cheap game of Clue. It wasn’t Professor Plum in the Library with a Lead Pipe.

It was Trump about Ukraine with a phone call to Zelensky, according to the latest report by WaPo.

(Although Trump does look like a crappy version of Colonel Mustard.)

Explains why the suggestions the matter was part of an ongoing investigation; the House was already investigating whether Trump and his lawyer Rudy Giuliani were trying to persuade President of Ukraine Volodymyr Zelensky to help dig up dirt on Joe Biden to help Trump’s 2020 campaign.

Now we need to know if the $250M aid to Ukraine was dependent on this matter, as well as a meeting later this month between Trump and Zelensky — and if Vladimir Putin had been involved in this exchange in any way.

Waiting for the next version of  “No Collusion!” tweets from Team Trump.

May explain why Rudy had been radio silent for three days on Twitter though he’s resumed his brand of trash talking in the last hour.

Crowdsource: Build a Timeline on ODNI Whistleblower Complaint [UPDATED-4]

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[NB: Updates will appear within the timeline or at the bottom of the text. /~Rayne]

Hey gang, Rayne here.  I have to confess I am completely over my head right now. I have a huge pile of projects and I can’t get through them fast enough to pull a post together. I have family coming to visit, a garden to harvest, laundry to do — the list is a mile long. I could use more hands.

Are you up for crowdsourced investigation into one of the writing projects on my list? Whatever you put in comments I will go through and pull together into a more complete timeline.

The topic: The whistleblower complaint believed to be withheld by acting Director of National Intelligence Joseph Maguire to prevent investigation.

Point of origin: Schiff accuses top intel official of illegally withholding ‘urgent’ whistleblower complaint, by Kyle Cheney, POLITICO, published 13-SEP-2019, 8:12 p.m. EDT

Note carefully this piece ended up in the news dump zone — a Friday evening after 5:00 p.m.

What could the whistleblower complaint have been about, assuming there are other related matters in the public eye? A timeline might help us piece together the topic, or it may help us prepare for anticipated hearings.

I want to point out again that one of the five drafted Articles of Impeachment against Richard Nixon was about unauthorized activity disclosed by a whistleblower. We may be looking at yet another impeachable offense (as if there haven’t been enough already).

Here’s what I have so far — help me fill in some blanks you think may be relevant to a possible “urgent concern” in a whistleblower complaint, the Office of Director of National Intelligence, the Intelligence Community, and the House Permanent Subcommittee on Intelligence over the last 33 months.

10-MAY-2017 — Trump met Russian Foreign Minister Sergey Lavrov and Russian ambassador to the US Sergey Kislyak in the Oval Office. [UPDATE-3b]

15-MAY-2017 — Washington Post reported Trump revealed code word level classified information to Lavrov and Kislyak during Oval Office meeting. The information covered ISIL’s bomb-making capabilities and may have exposed allies’ intelligence gathering means and methods. [UPDATE-3b]

XX-MAY-2017 — Decision made to exfiltrate key Russian asset. Unclear exactly when decision made or when exfiltration occurred, only that it happened after the Oval Office meeting with Lavrov and Kislyak, and before the G20 meeting in Hamburg, Germany. [UPDATE-3b]

7/8-JUL-2017 — Trump meets Putin at G20 meeting in Hamburg, Germany.[UPDATE-3b]

________

09-APR-2018 — John Bolton begins as National Security Adviser.

16-JUL-2018 — U.S.-Russia Summit meeting in Helsinki, Finland; Trump meets with Putin.

XX-JUL-2018 — Coats expressed opinion differing from Trump’s after Helsinki summit. Rumors began about Trump replacing Coats.

________

29-JAN-2019 — Coats testified before Senate Intelligence Committee; he said North Korea “is unlikely to completely give up its nuclear weapons and production capabilities,” in contrast to Trump’s claims that Kim Jong-un has committed to denuclearization.

XX-FEB-2019 — Trump discussed replacements for DNI.

24-MAY-2019 — Trump issued a directive allowing Attorney General William Barr to declassify any intelligence that sparked the opening of the Russia investigation. [UPDATE-3c]

20-JUN-2019 — In retaliation for downing a U.S. drone, Trump approved strikes on Iran which were abruptly aborted. [UPDATE-4a]

24-JUL-2019 – The same day that John Ratcliffe used his time to question Robert Mueller before the Judiciary Committee to accuse Mueller of breaking DOJ regulations — CNN reported that “Ratcliffe has been under consideration for a job within the Trump administration, sources told CNN, including an intelligence or national security role.” [UPDATE-2a]

28-JUL-2019 — Coats’ departure and John Ratcliffe nominated as replacement announced by Trump via Twitter.

02-AUG-2019 — Ratcliffe withdraws from consideration. [UPDATE-2b]

08-AUG-2019 — Primary Deputy Director DNI Sue Gordon resigned effective 15-AUG-2019, without additional prior notice, as ordered. Resignation letter without handwritten note.

Copy of former PDDNI’s resignation letter with handwritten cover: ODNI_LTR_08AUG2019

12-AUG-19 — ICdIG received the whistleblower compaint, via Schiff’s 10-SEP letter [UPDATE-1]

15-AUG-2019 — Coats’ last day as DNI.

26-AUG-19 — IC IG transmitted the whistleblower complaint to the Acting DNI, via Schiff’s 10-SEP letter [UPDATE-1]

30-AUG-2019 — Trump tweeted a high-resolution satellite image of Iran’s failed Safir SLV launch while claiming the U.S. was not involved. The image may have been classified and ‘insta-declassified’ by Trump.

01/02-SEP-2o19 — US Special Rep. for Afghanistan Zalmay Khalizad met with Afghan president Ashraf Ghani in Kabul where the Taliban, Afghan government and the U.S. had “reached an agreement in principle” toward an eventual “total and permanent cease-fire.” [UPDATE-4a]

02-SEP-19 — Deadline for ADNI to forward the complaint to Intelligence committees of Congress passes without a referral, via Schiff’s 10-SEP letter [UPDATE-1]

03-SEP-2019 — Russian media outlet Tass reported that Russian Deputy Foreign Minister said the U.S. and Taliban “insist that Russia must be present in one capacity or another at the possible signing of the agreements that the parties are working on now.” [UPDATE-4a]

04-SEP-2019 — Secretary of State Mike Pompeo refused to sign the agreement with the Taliban. [UPDATE-4b]

09-SEP-2019 — CNN broke story of a CIA asset extracted from Russia in 2017; followed by NYT on the 9th (and then NBC’s Ken Dilanian appears at the asset’s house…) [UPDATE-3a]

09-SEP-2019 — Trump asked for Bolton’s resignation and tweeted about it the next morning.

09-SEP-2019 — Intelligence Community Inspector General (IC IG) sent a letter to the House Permanent Select Committee on Intelligence, notifying it of a whistleblower complaint which it had determined to be credible and a matter of “urgent concern.”

10-SEP-2019 — Bolton tells Fox’s Brian Kilmeade by text that he quit.

10-SEP-2019 — HPSCI Rep. Adam Schiff requested the full, unredacted complaint, the IC IG’s determination about the complaint, and all documentation of ODNI’s action regarding this complaint, including correspondence with the White House.

11-SEP-2019 — Bloomberg reported Bolton pushed back Monday-Tuesday at Trump over Iran sanctions; Bolton wanted maximum pressure while Trump wanted to encourage a meeting with Iran’s Rouhani later in September. [UPDATE-4a]

12-SEP-19 — Schiff and ADNI “discussed at length” the need to protect the whistleblower from any retaliation, including if the whistleblower subsequently comes forward to the committee with his/her concerns, via Schiff’s 13-SEP letter [UPDATE-1]

13-SEP-2019 — ODNI declined the request, claiming the request as “it involves confidentially and potentially privileged communications by persons outside the Intelligence Community.”

13-SEP-2019 — HPSCI subpoenaed acting DNI Joseph Maguire for materials declined by ODNI.

_____

Future items:

17- SEP-2019 — Deadline, materials responsive to subpoena must be turned over by this date

19- SEP-2019 — Date when Maguire will be compelled to appear before Congress in a public hearing

What a freaking mess. I have nothing here about Mike Pompeo or any other intelligence personnel or issues. The bit about Coats’ departure and Bolton’s termination stick out as well as that insta-declassified intelligence photo, but what might have been an “urgent concern”?

Knock yourselves out — I’ll check in as time permits. Let’s see if a narrative emerges besides the obvious fact the Trump administration has severely damaged our national security apparatus.

HEARING THREAD: Special Counsel Robert Mueller

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[Check the byline, thanks. /~Rayne]

Former Special Counsel Robert Mueller testifies before two different House committees today. This post is dedicated to these hearings. Please take any other topics to the open thread.

Hearing schedule:

• 8:30 a.m. ET – House Judiciary Committee (HJC) Hearing

Link to C-SPAN streaming

• 12:00 p.m. ET – House Permanent Select Committee on Intelligence (HPSCI) Hearing

Link to C-SPAN streaming

Who to follow:

https://twitter.com/emptywheel (of course)

https://twitter.com/bmaz (naturally)

https://twitter.com/BarbMcQuade – will be on MSNBC to cover at least one of these hearings

https://twitter.com/ZoeTillman – BuzzFeedNews

https://twitter.com/NatashaBertrand – Politico

https://twitter.com/BBuchman_CNS – CourthouseNews

https://twitter.com/jentaub – (late adder – she’s live tweeting a numbered thread)

Apart from our team, here’s a list containing these and other folks who cover Trump-Russia at https://twitter.com/raynetoday/lists/trump-russia.

According to late Tuesday evening reports, Aaron Zebley, former deputy to Mueller, will be sworn in and appear alongside Mueller during at least one of the House committee hearings. (I see differing reports that Zebley will appear before the Judiciary, Intelligence, or both committees.)

The right-wing/Trump supporters are completely freaking out about Zebley’s appearance, blabbering he “was an attorney for Justin Cooper, the IT staffer who set up #HillaryClinton’s private email server & the aide who destroyed Clinton’s old Blackberry phones with a hammer.” (source on Twitter)

The likely loudest GOP voices on the House Judiciary Committee: Doug Collins (ranking minority member, GA-9); Louis Gohmert (TX-1); Jim Jordan (OH-4); Matt Gaetz (FL-1). If past HJC hearings are predictive, expect lots of hot-headed pontificating and few rational questions. Hard to say who will be the worst of the lot but Gaetz has the foolhardiness of youth and past approval from Trump to goad him on. Jordan will focus on “insufficient evidence” to sow fear,  uncertainty and doubt about the Special Counsel’s report and the investigation.

As for the HPSCI, the GOP’s most problematic participant will be Devin Nunes (CA-22) who is the ranking minority member. He’s been meeting with Trump this week about a replacement for Director of National Intelligence Dan Coats (who Trump wants to jettison for being too determined to protect the country). At least the explanation offered is Coats’ replacement; it’s possible that Nunes has been meeting with Trump about Mueller’s appearance before the HPSCI.

Content here may be subject to updates.

Again, this post is dedicated to these hearings. Please take any other topics to the open thread.

Thread: House Intelligence Committee Hearing on Special Counsel’s Report

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This post is dedicated to the House Permanent Select Committee on Intelligence hearing already underway; it began at 9:00 a.m. EDT. I will add content here going forward.

Topic of today’s hearing: Lessons from the Mueller Report: Counterintelligence Implications of Volume 1 (Open)

Panelists:

Stephanie Douglas — 23-year FBI veteran, former Executive Assistant Director of the National Security Branch
Robert Anderson — 21-year FBI veteran, former executive assistant director of the Criminal, Cyber, Response and Services Branch
Andrew McCarthy — former Assistant United States Attorney

Not certain why this hearing isn’t airing on C-SPAN since it’s in the schedule.

You can follow the hearing via live tweet stream from Courthouse News’ Brandi Buchman (click on the link at the date to open the thread):

I’ll add more content about this hearing soon — check the bottom of the post for new content.

~ ~ ~

Other important hearings today:

09:52 a.m.: House Oversight Votes on AG Barr & Commerce Sec. Ross In Contempt of Congress (CSPAN link)
10:00 a.m.: House Armed Services Committee on National Defense Authorization Act
10:00 a.m.: House Foreign Affairs Committee on “Emergency” Arms Sales

TBD: Senate Intelligence Committee closed door session with Donald Trump Jr. (his second appearance)

~ ~ ~

EDIT — 10:25 a.m. —

Because there’s no feed on the HPSCI meeting I’ve got the House Oversight hearing on right now. I am bloody sick of assholes like Mark Meadows and Jim Jordan talking (in Jordan’s case, yelling) over the chair Elijah Cummings in their desperation to stop this hearing.

It’s not just bullying in an effort to protect their orange liege in the White House but outright racism.

They’re voting right now and I’m so pissed off I don’t even no what they’re voting on.

EDIT —  10:45 a.m. — 

The Moscow Project also  has a live tweet thread covering the HPSCI hearing; the site has been inserting relevant supporting content along the way.

Over at the House Oversight Committee hearing, Jim Jordan is YELLING yet again about not being able to add a racist and unconstitutional question to the U.S. Census. “Why are we here?”

BECAUSE RACISM, that’s why; the GOP can’t win elections without relying on denying marginalized citizens their vote. Read the Constitution, knuckledragger. Take a breath once in a while during your racist filibustering. And get a sports jacket.

I suppose this is where I’d better make sure anyone reading this doesn’t mistake it for Marcy’s work. Check the byline as always.

EDIT —  10:56 a.m. — 

Ugh. House Oversight Committee hearing probably deserved a thread of its own but then I’d be giving real estate to these whiny white men like Rep. Jody Hice droning on and on that all efforts have not been exhausted (after a year of multiple requests in multiple forms, mind you) and that the majority is rushing this process.

FINALLY. Alexandria Ocasio-Cortez brings the heat. She’s noting the constitutionally-mandated nature of the Census and asking why the question about citizenship was added. This is the video capture you’re going to want to view later.

EDIT —  11:28 a.m. — 

Rep. Rankin’s turn to YELL on behalf of the House Dems. I feel his pain; I’m yelling at the television about these GOP jackasses doing their utmost to prevent accountability on this Census question. They really, REALLY don’t want to go into this issue at all, aiding and abetting a cover-up going all the way to the White House.

Another cover-up, mind you.

10 Years Out: What’s with the Bear in the Middle?

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[NB: Check the byline — it’s me, Rayne. I am not a registered financial representative or a lawyer; this post is based on my own observations and opinions. As always, your mileage may vary.]

On a chilly March evening ten years ago tonight, I was yelling at loved ones: Sell. For gods’ sake, SELL.

My own household had moved its investments from a number of mutual funds to guaranteed income. Every fund in the portfolio to that point contained a chunk of an investment bank and was therefore exposed to what I felt was sure to come.

It was obvious to anyone who was really paying attention that something was really off. Trying to buy a house in 2004 was almost impossible where I live, in spite of the ongoing migration of manufacturing jobs offshore. In the target price range for a 2000-square foot house, there were only a handful of homes listed and they all needed more than $50K in improvements. The nearby farmers’ fields were full of a new crop: single-family homes, mostly 3-bedroom and up, had eaten acres and acres in less than a year. It was insanity — there was no way this pace could be maintained, not with my state’s problematic over-reliance on the automobile industry.

Instead of buying an existing home, I built a new one. It didn’t make sense to spend $50K on improvements requiring a lot of construction if I couldn’t guarantee I could hire a contractor when new construction was so hot. I didn’t build in the top end neighborhood, either. I left myself some room in case I had to leave the area quickly for a new job; I also left room for the market to improve.

Except it didn’t. The last landscaping contractor must have pulled away from my new home in 2005 just as the bubble began to deflate. There were signs it was going to get worse, too, what with fuel prices skyrocketing. Banks increasingly offered crazy terms on mortgages just so they could something, anything, not taking the hint the market was saturated. Given the number of people relying too heavily on adjustable rate mortgages with ridiculously low entry rates, the increased gasoline price costing the average family more than $1000 a year was certain to cause credit card defaults and foreclosures.

Something ugly was coming.

~ ~ ~

In March 2008 — almost exactly a month after the Washington Post published an op-ed by New York’s then-Governor Eliot Spitzer exhorting action on subprime mortgages — 85-year-old  American investment bank Bear Stearns crashed and burned.

After urgent, fancy foot work by the Federal Reserve Bank, J.P. Morgan and other key investors, settlements were made with bail out money and remnants of the firm were ultimately snapped up by J.P. Morgan for what amounted to the cost of Bear Stearn’s headquarters building, about $2 per share. By St. Patrick’s Day, Bear Stearns was no more, completely subsumed.

It would be another six months before the next large investment bank crashed — Lehman Brothers — taking the global economy with it.

~ ~ ~

At the time the crash was blamed on lax controls on lending to home buyers, encouraging an excess of subprime mortgages, combined with investment banks’ more recent taste for collateralized debt obligations bundling mortgages into tranches for slicing up and trading.

But not all of the trash loans were residential mortgages stuffed into tranches. Some of the loans were to developers and contractors who were building commercial facilities and multi-family buildings. Some of these loans were packaged into funds which were more like offshore corporations.

The two funds triggering Bear Stearns’ meltdown were just that: offshore funds incorporated in the Cayman Islands in 2003, holding various assets including tranches of poorly-collateralized mortgages, managed by Bear Stearns Asset Management (BSAM). What mortgages were in these two funds the public doesn’t really know; were they single-family residential mortgages or commercial facilities mortgages, or some combination? The information is out there somewhere but it’s not at the public’s fingertips.

The financial media still paints a messy picture even a decade later, blaming Bear Stearns management but not its own persistent failure to provide a more comprehensive and accessible picture of the financial industry’s health.

These two funds collapsed because too many mortgages within their CDOs failed; the effect on the bank was like pulling out two critical load-bearing pieces in a game of Jenga. The cascading demand for cash to resolve the failures may have pushed other investment banks’ equally sketchy funds to fail as well, crashing the entire heap nearly a decade ago.

~ ~ ~

It was a surprise blast from the unpleasant past to see Bear Stearns’ name pop up in the middle of recent testimony before the House Permanent Subcommittee on Intelligence. Fusion GPS’ Glenn Simpson cited the investment bank as a source of financing for Donald Trump and some sketchy condominium development.

[SIMPSON]… There’s the Trump vodka business that was earlier. And then ultimately, you know, what we came to realize was that the money was actually coming out of Russia and going into his properties in Florida and New York and Panama and Toronto and these other places.

And what we, you know, gradually begun to understand, which, you know, I suppose I should kick myself for not figuring out earlier, but I don’t know that much about the real estate business, which is I alluded to this earlier, so, you know, by 2003, 2004, Donald Trump was not able to get bank credit for — and if you’re a real estate developer and you can’t get bank loans, you know, you’ve got a problem.

And all these guys, they used leverage like, you know, — so there’s alternative systems of financing, and sometimes it’s — well, there’s a variety of alternative systems of financing. But in any case, you need alternative financing.

One of the things that we now know about how the condo projects were financed is that you have to — you can get credit if you can show that you’ve sold a certain number of units.

So it turns out that, you know, one of the most important things to look at is — this is especially true of the early overseas developments, like Toronto and Panama — you can get credit if you can show that you sold a certain percentage of your units.

And so the real trick is to get people who say they’ve bought those units, and that’s where the Russians are to be found, is in some of those pre-sales, is what they’re called. And that’s how, for instance, in Panama they got the credit of — they got a — Bear Stearns to issue a bond by telling Bear Stearns that they’d sold a bunch of units to a bunch of Russian gangsters.

And, of course, they didn’t put that in the underwriting information, they just said, we’ve sold a bunch of units and here’s who bought them, and that’s how they got the credit. So that’s sort of an example of the alternative financing. … [bold mine, excerpt pages 95-96]

The timing mentioned, 2003-2004, is very close to the time that Bear Stearns launched the two Cayman-based funds which failed first. Is it possible Trump’s financing provided by Bear Stearns ended up in the funds’ CDOs? Probably not — Simpson refers to bonds. But let’s look at a financial statement from one of the subject funds:

It’s difficult to tell what’s in any of the CDOs listed in this summary. Who knows what mortgages are in them or from where they originated without access to more details?

Note the bonds at the bottom — again, what’s in them? What percentage of these bonds consisted of dicey or outright fraudulent financing for construction related to money laundering? Again, we can’t tell without access to more granular details. We don’t know whether bond(s) offered to Trump developments were in Bear Stearns’ first two failed funds or if they helped cause the eventual financial pyroclastic flow toward Bear Stearns’ end.

~ ~ ~

Another thing sticks in my craw — a bit from Michael Lewis’ The Big Short:

The bond market, because it consisted mainly of big institutional investors, experienced no similarly populist political pressure. Even as it came to dwarf the stock market, the bond market eluded serious regulation. Bond salesmen could say and do anything without fear that they’d be reported to some authority. Bond traders could explore inside information without worrying that they would be caught. Bond technicians could dream up ever more complicated securities without worrying too much about government regulation — one reason why so many derivatives had been derived, one way or another, from bonds. … [bold mine]

In other words, nobody would look askance at all at bonds sold to finance a condominium development with rather thin commitment to payment. Nobody looked askance at the ratio of CDOs to bonds, either, though Bear Stearns would try to offset the CDOs’ losses by liquidating bonds. This fund as an example couldn’t manage this offset based on the ratio alone; it would have been catastrophically worse if the collateral beneath the bonds was as fraudulent as many subprime adjustable rate mortgages in CDOs were at the time.

The root cause of the 2008 crash remains the collapse of poorly collateralized as well as fraudulent mortgages. But I have to wonder:

— With so much attention on CDOs and mortgage defaults combined with a lack of bond market adequate monitoring, how much did crappy bonds, based on fraudulent representations of collateral, contribute to the crash?

— If there was so little regulation and oversight of the bond market, how much sketchy or fraudulent project financing was in bonds on the banks’ books — including projects like Trump’s, based on promises to pay made by offshore vehicles or non-U.S. citizens?

— With so little regulation and oversight, would it have been possible for one or more nation-states using offshore finance vehicles to “weaponize” banks’ books? How many of the crappy bonds contributing to the 2008 crash were based on poorly collateralized pre-sales to Russian oligarchs and gangsters?

— What assurances do we have today — especially with Mick Mulvaney defunding the Consumer Finance Protection Bureau and knocking off an opportunity to look more deeply into credit reporting by killing off the Equifax investigation — that investment banks have changed their practices and ensured legitimate projects are financed?

—What assurances do we have that our legislators see the slippery slip when they approve legislation like S. 2155 just this week, weakening Dodd-Frank reforms?

~ ~ ~

Recall the state of the economy between Bear Stearns’ and Lehman Brothers’ crashes. Oil prices rose to over $150/barrel, resulting in $4/gallon gasoline. Other commodity prices rose in tandem with fuel prices. The home buyers who could least afford any change in their household expenses were the same ones targeted for subprime mortgages with shady terms; it came down to paying for gas to get to work and feeding the family, or making the mortgage payment.

The price of oil at the time had been driven up by excess speculation. Legislation passed in June 2008 requiring all commodity futures trading to require a minimum of 30% margin upfront rather than 10%. Oil prices dropped drastically and reduced in volatility almost overnight, but it was already too late. Too many home buyers could no longer afford their payments and mortgage defaults began to snowball.

Which brings me to yet another question: if the bond market could have been “weaponized” at that time, could a volatile commodities market likewise have been used as a trigger?

Are there any other weak points in our market which could be “weaponized,” for that matter?

~ ~ ~

On this tenth anniversary after the crash began with Bear Stearns’ collapse, I feel more secure about my retirement portfolio. There were no frantic phone calls to family members exhorting moves to safety this evening. My exposure to the remaining weaknesses of investment banking have been minimized as much as possible, though I remain vulnerable because I have a mortgage. Real estate isn’t the sure return it once was. Only uber-wealthy investors buying into certain urban markets come out on top. But wealthy real estate investors can still cause self-inflicted damage.

Atlanta, Georgia’s market has turned around since the crash — but it was home to another failed Trump real estate project, a 363-unit Trump Tower which went into foreclosure with pre-sales of only 100 units. (In January 2017, Trump ranted about Atlanta as Rep. John Lewis’ district, calling it “falling apart” and “crime infested.” One wonders what crime he meant…)

Hollywood, Florida had a brush with a failed Trump project:

In 2006, he and billionaire condo king Jorge Perez began selling a 23-story apartment building near Mar-a-Lago, but the project was abandoned a year later because of slow sales. Another Perez-Trump deal, the 200-unit Hollywood oceanfront tower, was foreclosed in 2010 after selling less than 15% of its units. (The building eventually opened, still Trump-branded, but without Perez.)

So did the Miami, Florida area:

Trump Sunny Isles, a three-tower residential complex outside Miami, has also struggled. Trump partnered with Perez again and another developer named Gil Dezer to build the project, which targeted wealthy Latin Americans. . . .

Unfortunately, the last two towers of the development opened in the middle of the financial crisis, and Perez bailed on them. . . .

And Puerto Rico, too, was home to a Trump-branded golf course which failed in 2015.

Though with so many failures followed by continued attempts, it’s worth asking if this is a business model. How does Trump continue to benefit from so much failure? How do the backers he has benefit from staking Trump money or title?

Trump’s business alone wasn’t the cause of the 2008 crash. There were far more players involved — millions, if we want to blame residential homeowners who were misled by banks to believe they could safely contract a mortgage in spite of either inadequate collateral or income and ultimately forced into foreclosure. But at least one of Trump’s business projects was in the mix if Fusion’s Simpson’s testimony is truthful; what would keep Trump or real estate investors like Trump from contributing to (if not causing) another crash today?

We must ask when we see that Trump’s former campaign manager Paul Manafort and his former son-in-law Jeffrey Yohai were engaged in sketchy real estate development projects the community/regional Banc of California may have deterred by forcibly shutting their accounts.

And ask again when we see a community bank like The Federal Savings Bank of Chicago involved in another of Manafort’s bank frauds.

The damage could be even worse, in the case of Trump’s son-in-law Jared Kushner, who is over his head in debt on 666 Fifth Avenue and whose family business is distressed, possibly causing geopolitical turmoil to shakedown new financing.

How many of these flimsy real estate deals and junky mortgages, loans, and bonds are there in the system when we can now see these affiliated with the president and his campaign advisers? How many of them will it take to cause another crash if legislators continue to pick away at safeguards?

Let’s hope I’m not writing another financial postmortem like this one in March 2028.

A Cheap Ploy to Avoid Giving Testimony, Jose Rodriguez

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Today’s article from Joby Warrick and Walter Pincus answers a lot of questions we’ve been asking about the torture tapes–the biggest being that the tapes were stored and destroyed in Thailand. And it has a lot of interesting details I’ll return to in a follow-up post, after I enjoy some rare MI sun with my dog. But the most important detail readers should take away is its function, as suggested by the following two passages. First, the recognition that John Rizzo will testify before HPSCI today.

John A. Rizzo, the CIA’s acting general counsel, is scheduled to discuss the matter in a closed House intelligence committee hearing scheduled for today.

And second, the incorporation of long excerpts from a written statement from Bob Bennett to present Jose Rodriguez’ justifications for his actions.

Those three circumstances pushed the CIA’s then-director of clandestine operations, Jose A. Rodriguez Jr., to act against the earlier advice of at least five senior CIA and White House officials, who had counseled the agency since 2003 that the tapes should be preserved. Rodriguez consulted CIA lawyers and officials, who told him that he had the legal right to order the destruction. In his view, he received their implicit support to do so, according to his attorney, Robert S. Bennett.

[snip]

Rodriguez, whom the CIA honored with a medal in August for "Extraordinary Fidelity and Essential Service," declined requests for an interview. But his attorney said he acted in the belief that he was carrying out the agency’s stated intention for nearly three years. "Since 2002, the CIA wanted to destroy the tapes to protect the identity and lives of its officers and for other counterintelligence reasons," Bennett said in a written response to questions from The Washington Post.

"In 2003 the leadership of intelligence committees were told about the CIA’s intent to destroy the tapes. In 2005, CIA lawyers again advised the National Clandestine Service that they had the authority to destroy the tapes and it was legal to do so. It is unfortunate," Bennett continued, "that under the pressure of a Congressional and criminal investigation, history is now being revised, and some people are running for cover." [my emphasis] Read more →

No Immunity, Yet, for Rodriguez

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Well, Crazy Pete Hoekstra hasn’t managed to slip a little immunity deal to Jose Rodriguez–at least not yet.

The former CIA official who destroyed videotapes showing harsh interrogation tactics has been granted a temporary reprieve by the House intelligence committee, officials said last night.

The committee had demanded that Jose Rodriguez Jr. testify before it on Wednesday, but after being told that he would not answer questions without a grant of legal immunity for his testimony, the panel withdrew its demand, according to officials familiar with the arrangement.

[snip]

Officials said that a subpoena for Rodriguez will remain in effect and that talks between lawmakers, Justice Department officials and Rodriguez’s attorney, Robert S. Bennett, will continue.

I’m not sure what to make of the description of on-going talks. Hopefully, HPSCI has agreed not to do anything to impede the criminal investigation. But I’d be a lot more comfortable if HPSCI said it would hold off entirely on Rodriguez testimony until DOJ gave the okay.