1 Boring Old Man

Joe Baca: When Was It Broken?
By emptywheel

Joe Baca [D-CA] asked Ben Bernanke a very simple question in today’s House Financial Services hearing on AIG: When was AIG broken? When did it get so screwed up that we would have to bail it out.

Bernanke, however, didn’t give Baca a clear answer. He did say this:

The Office of Thrift Supervision is a small agency that specializes in addressing the problems of thrifts. It was, in this case, involved only because AIG owned a small thrift. It’s main concern is the protection of the thrift. It’s true, as [Polakoff] said, that he looked at some of these elements in the AIGFP division. But I do think that, given the size of the company and the risks being taken, a larger, more effective, stronger, better funded regulatory effort would have been needed in order to identify these problems.

What Bernanke didn’t want to say was:

1999. When Congress dismantled the regulation on this kind of gambling.

Matt Taibbi explained it in more depth. First, he talked about Glass-Steagall (passed in 1999), that made it possible for insurance companies to dress up as trading firms. Then, he explained that Gramm pushed through the Commodity Futures Modernization Act [in 2000)] which made it impossible to regulate CDS.

The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. "You have to remember, investment banks aren’t in the business of making huge directional bets," says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don’t have to hedge. And that’s what AIG did. "They just bet massively long on the housing market," says the source. "Billions and billions."

Then, another bit of 1999 deregulation made it easy for huge companies like AIG to select to be regulated by the undermanned Office of Thrift Supervision [the one that Bernanke talks about above].

In the biggest joke of all, Cassano’s wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts [better known as savings-and-loans]. Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.

Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe’s more stringent regulators, like Britain’s Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.

That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a "disparity between the size of the agency and the diverse firms it oversees." Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world’s largest insurer!

Finally, Taibbi described how the guy in charge of overseeing AIG concluded the CDS were harmless – solely on AIG’s say-so.

When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano’s portfolio were "fairly benign products." Why? Because the company told him so. "The judgment the company was making was that there was no big credit risk," he explained. [Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.]

See, Ben Bernanke could have offered Congressman Baca a very simple answer: 1999. But if he did so, he’d have to admit that the answer to "when was it broken" is "when Phil Gramm and friends deregulated everything." And for some reason, Bernanke didn’t want to give such a clear answer.

The insanity of all of this is almost overwhelming. AIG-FP offered insurance [CDSs] on CDOs. CDO’s were packaged Mortgage-backed Securities. CDOs were packaged by Mortgage Brokers who bought Mortgages from Banks and S&Ls. Banks and S&Ls loaned money to buyers.

I gather that they presumed that they would not have to pay out [which is a very unreasonable assumption]. But if you look at the scheme, what they were doing is accepting all of the risk in the system. With no risk, everyone below them was incentivized to make more and more loans. Why not? They were going to be sold up the ladder to the willing investors at the top of the chain, who could insure them with AIG-FP. With all this easy loan money available, housing prices soared – more Loans, CDOs, and CDSs. The availibility of Credit Default Swaps [CDSs] actually caused the housing bubble.

Now we learn that AIG-FP used a clever device to avoid regulation. They bought them a little S&L so they could choose to be regulated by the OTS [Office of Thrift Supervision], which means not regulated at all. And then they parleyed this OTS regulation to avoid being regulated by the Europeans. They were using every trick possible to position themselves to destroy AIG and the world economy – and no one was looking. So Bernie Madoff was running the World’s largest Hedge Fund as a Ponzi Scheme in New York with only one Accountant and a bunch of old computers, and Joseph Cassano was selling Trillions of dollars worth of unsecured insurance being overseen by an agency with only one insurance specialist. Cassano thought he’d found a sure thing – insuring against something that would never happen, but his insurance itself insured that it would happen.

 

Cheney’s Assassination Squads and Iran-Contra and Findings
By: emptywheel
March 23, 2009

Sy Hersh’s recent discussion at University of Minnesota included a number of tidbits, two of which are pertinent to this post. Hersh explained that the Joint Special Operations Command was doing operations that directly reported to Cheney, up to and including assassination. And Hersh revealed that Cheney had convened a meeting not long after 9/11 where he and other alumni of Iran-Contra brainstormed how to avoid the legal problems they had with Iran-Contra. A recent Congressional Research Service article on covert ops and presidential findings helps to show how these two revelations relate to each other…

Cheney’s Lessons Learned Meeting

Of course, given his intimate role in the history of presidential findings, Cheney would know that.  Cheney would know all the details about the requirements on presidential findings (indeed, much of what he wrote in the minority dissent on Iran-Contra objected to that kind of Congressional oversight over covert ops.

Which is why Hersh’s description of Cheney’s meeting to discussion "lessons learned" from Iran-Contra is so fascinating [this is about 1/4 to 1/3 of the way through the MP3–and the following is my imperfect transcription].

They set about and talking about how to sabotage oversight. And what is the model for sabotaging oversight? The model turned out to be the Bill Casey model. The Congress’ hold, in the Constitution, over the executive is about money. Everything that’s being spent must be approved by the Congress–even the most secret operation, there are secret committees in Congress that review it. And so the answer was, "let’s run operations off the books. Let’s find money elsewhere and the hell with Congress." And it was talked about as "this is the way to finally put those creeps in place." The contempt for Congress in the Bush-Cheney White House was extraordinary, just extraordinary. And it came out of Iran-Contra. 
[Mondale explains Iran-Contra]
The critical thing about Iran-Contra is that they were specifically barred from using money, and they went around. They were selling arms–the Israelis were involved in this–they were selling arms for a profit, taking the profit and the thought was to invest it.
[snip]
Elliott Abrams was also involved, he became a key player in the Bush-Cheney White House.

So what makes Bush-Cheney so interesting is that at some point, they had a meeting after 9/11 of the people who were in, in the White House, who worked in Iran-Contra–that would be Abrams and Cheney, and there were others involved who were also in the White House and they had a meeting of lessons learned, I’m telling you literally took place. They had a meeting with a small group of people who worked for Reagan and for George Bush when he was Vice President, his father, George Herbert Walker Bush, anyway.

And at the meeting, here were some of the conclusions: that the Iran-Contra thing, despite the disasters, proved you could do it, you could run operations without Congressional money and get away with it.

The reason they got exposed, and this is what was said in the White House, there were too many people that knew too much–too many people in the military knew in ’85 and ’86, and too many people in the CIA knew, and Oliver North who you might remember what a great witness he was, was the wrong person to be running that. So what you do is you tell nobody. One of things Cheney wrote in his dissent to the Iran-Contra committee, Cheney said, "my god, Reagan was telling too many people too much, don’t tell Congress anything. You don’t tell the CIA much, you don’t tell the military much, and YOU, Mr. Vice President, you’re the Ollie North for this. We’re going to run operations off the books and you’re going to honcho them." And this is what they did. And this is what is still left to be reported, this kind of stuff, this kind of extraordinarily contemptuous attitude towards the Constitution.  [my emphasis]

I’ve been talking about how Cheney had clearly integrated lessons learned from all his previous scandals and I’m glad that Hersh has now confirmed that. But consider what this means in regards to the disclosure that the covert ops going on in Iran and the rest of the Middle East. The "lessons learned" meeting concluded that:

• It is desirable to run covert ops off the books by finding funding from non-congressional sources 
• To succeed such ops must avoid any revelations to Congress and most revelations to the CIA and Defense
• Such ops should be run out of the VP’s office directly

Isn’t this just special? The Iran-Contra Affair was the front page topic of the late 1980’s. The US had sold Arms to Iran and used the proceeds to finance the Contras in Nicaragua [forbidden by Congress]. The Israelis were involved. The Tower Commission hearings were the dramatic hit of the decade starring Ollie North and his side-kick Fawn Hall. Unnoticed by most of us, there was a dissenting opinion in the Tower Commission report written by [you guessed it] Congressman Dick Cheney. It was an open statement of his opinion that Congress was eroding Presidential power, opinions channelled by John Yoo and David Addington a decade later. Now we learn that Cheney had a think-about-it meeting with the old Iran-Contra team to see how to do the same end-around with Congress, but avoid the pitfalls of the clumsy Reagan Administration.

At the risk of stating the obvious, the point of the Tower Commission was not that Ollie North’s little Iran-Contra operation wasn’t well executed. The point was that it was a wrong thing to do! Secretly defying Congress by finding creative loopholes isn’t a Presidential prerogative in most of Americans’ understanding of our government – exception: Dick Cheney [former college drop-out, former Presidential Chief of Staff, former Congressman, former Secretary of Defense, former Vice President]. For him, all of the outrage about Iran-Contra suggested that it was a poorly run operation that would be better run by someone competent at being secretive, like himself. We don’t yet know what his assassination squadron did, but we’re beginning to know it existed, modeled on the Iran-Contra blueprint, run out of the OVP in the White House. In this post, emptywheel is following Sy Hersh’s recent exposé that Cheney had a meeting of the old Iran-Contra veterans to review why they got caught, and to avoid those pitfalls.

Liddy’s Lies to Congress: Meet AIG’s $6.4 Million Man
By: emptywheel
March 20, 2009

As I noted this morning, Doug Poling was the guy whom AIG decided last year should get a $6.4 million "retention" bonus for sticking around a year. [He has since turned down the bonus.]

The WSJ has some details on what Poling has done to be worth so much money.

In August 2007, Douglas Poling sat in on a meeting at which Joseph Cassano, then-head of American International Group Inc.’s financial-products unit, berated an in-house auditor for raising questions about the accounting for a joint venture Mr. Poling led.

The auditor, Joseph St. Denis, resigned the next month after his reporting lines were changed to limit his communications with auditors at the parent company, according to an account of AIG’s dealings he detailed in a letter he wrote to Congress last October…

A former Wall Street lawyer who joined the AIG unit in the early 1990s, Mr. Poling oversaw legal work on the contracts that sat at the core of the unit’s business – such as customized insurance – like swaps and other derivative contracts that generated a steady stream of fees, according to former colleagues…

In May 2007, as AIG’s swaps problems began developing, Mr. Poling expressed confidence about the business approach of AIG’s financial unit toward one of its products, in an investor presentation with Mr. Cassano.

"We are very careful and disciplined and rigorous in the way in which we structure and document these transactions, and are very sensitive to ensuring that we have early termination rights so that if the rules change, we’re able to unwind those transactions and move on to other segments of the business that are more attractive," Mr. Poling said, according to a transcript of the investor presentation…

The Poling-led joint venture discussed at the meeting preceding Mr. St. Denis’ resignation was a partnership announced in March 2007 between AIG’s financial-products unit and closely held Tenaska Energy in Omaha, Neb. AIG began unwinding the partnership in January.

So, our $6.4 million man was one of the people cheering the safety of AIG’s CDS business, and one of the guys in charge of an energy deal that seemed to be based on dicey accounting. [For more on Tenaska, see page 6-7 of this]. Now, when he testified before Congress the other day, Edward Liddy repeatedly assured the Committee that the people who had put together the CDS business were gone. He stated clearly that the people left over were the good guys, people tied to "traditional" derivatives business. For example, here’s Liddy telling Bill Posey that the guys managing the derivatives–who are distinct from the guys who brought the company to its knees–are getting the bonuses.

Liddy: Nothing has come to light that I am aware of. It really is easy to paint with one brush. There are people who worked on one piece called CDS. Another regulatory capital. Derivitives book. For the most part those are separate people. Those are the ones that brought our company to our knees. In the derivatives book those are the ones we’re asking to please wind this down. Those are the ones that got the bonuses.

Question 9: What precipitated your resignation?

I resigned because on multiple instances beginning in the late summer of 2007, Mr. Cassano took actions that I believed were intended to prevent me from performing the job duties for which I was hired. One such instance involved AIGFP’s investment in Tenaska, a natural gas storage and distribution operation in Omaha, NE. In December 2006, I traveled to Omaha to perform pre-transaction accounting due diligence and immediately identified errors in Tenaska’s hedge accounting. I communicated these findings to AIGFP’s senior management, specifically Doug Poling and Mark Balfan, and to Tenaska. Tenaska told me that it would fix these problems prior to the effective date of the merger. In June of 2007, I went back to Tenaska and found that it had not corrected the problems. Again I reported these findings to Poling and Balfan. At the time I left AIGFP, it was my understanding that Tenaska had indeed corrected the issues, but I left before I was able to verify this…
During August of 2007, Mark Balfan pulled me out of a meeting with Doug Poling and brought into AIGFP’s HALO room where Mr. Cassano was on from London. Mr. Cassano berated me for several minutes for going to Tenaska and finding the problems. He shouted obscenities at me, and seemed especially angry with Elias Habayeb, the CFO of FSD, whom he repeatedly referred to in disparaging language. The source of Cassano’s anger was, in my understanding, a list of "closing issues" that Mr. Habayeb had prepared relating to third quarter issues. At one point Mr. Cassano held up the list and shrieked, "I’ve bent over backwards for this [expletive deleted] and still I get these [expletive deleted] lists!!" Mr. Habayeb had expressed interest in my findings at Tenaska, which was not surprising to me given that it was his job to make sure that AIGFP’s accounting followed GAAP, and an error in Tenaska’s financial results would be carried through to AIGFP’s financial statements through the equity pickup. Mr. Habayeb had included the item "Tenaska hedge accounting" on the list, apparently to prompt him to follow up. Mr. Cassano told me in no uncertain terms during this session that I worked for him, not FSD or OAP. Doug Poling, Mark Balfan, and William Kolbert also attended this meeting…

I’d never heard of Ann Wright before today. Back in 2003, we didn’t hear about such people. She served as a Colonel in the Army, then later as a Diplomat in Nicaragua, Grenada, Somalia, Uzbekistan, Kyrgyzstan, Sierra Leone, Micronesia, Afghanistan and Mongolia. She is the kind of American Patriot that has been missing for too many years. She deserves our salute…

From Three Decades as a Colonel and Diplomat to Six Years as a Peace Activist
March 20, 2009
by: Ann Wright, t r u t h o u t | Perspective

It was six years ago today that I resigned from the Bush administration and the US diplomatic corps in opposition to the war on Iraq. I remember the day so well. I woke up about 2 in the morning.

    Like so many mornings in the past months, I could not sleep through the night. I was very worried and upset hearing the comments out of Washington, that we, the US government, were being forced into taking military action against Saddam Hussein and his Iraqi government. I, like so many US diplomats and US citizens, was wondering, why must the United States attack Iraq right now? Should we not wait and hear the results of the United Nations weapons inspectors on whether there was a weapons of mass destruction program in Iraq? How could we take military action without the agreement of the member states of the United Nations Security Council?

    When President Bush launched "shock and awe" on Baghdad on the morning of March 19 and March 18 in the US, I decided I was not going to continue working in the Department of State. Upon arriving at the Embassy, I asked our communications officer to send my letter of resignation from the United States government to my boss, Secretary of State Colin Powell. I expected to join quickly the two other federal employees who had resigned…

Now, six years later, many have asked whether I have had any regrets about resignation from the US government. I must stay that, honestly, my only regret has been that so many people who felt the same way that I did, did not resign too. For me, my resignation freed me to speak freely about my concerns over the Bush administration’s war on Iraq, the treatment of prisoners in Guantanamo and Abu Ghraib and the unnecessary curtailment of civil liberties under the Patriot Act. I cannot imagine working the past six years in the Bush administration, and I fully intend to hold the Bush administration accountable for what it has done.

Since that fateful day, March 19, 2003, I have worked for peace in Iraq and have traveled for peace in other parts of the world, including Afghanistan, Cuba, Iran and Gaza. After six years of no longer working for the United States government, I have no regrets. I have met and become a part of a strong movement within the United States that works for peace in the United States and in countries throughout the world – Iraq, Afghanistan, Cuba, Iran and Gaza.

As I was honored to serve my country by working within our government for over 35 years, I am now honored to be serving my country by actively and visibly confronting our government, demanding peace and justice and accountability for actions of government officials. Challenging government policies that are harmful, much less illegal, is a responsibility for us as citizens. There are many ways to serve one’s country. I fully believe challenging policies that one feels are harmful to our nation is service, not treason.

So, six years after my resignation, I am proud to have resigned and value so much the new friends I have made, as well as the old friends from the past. I will continue working for peace and justice every day.

Peace!

It’s a paradox. These hyper-organized stickers for perfection always have a ‘secret mess,’ highlighting the fact that they are always in conflict – about everything. If you’re not on time, they complain bitterly [but they’re often late themselves].

Madoff Employee Breaks Silence
The Daily Beast
by Lucinda Franks

March 19, 2009

… one of the fraudster’s employees tells Lucinda Franks that the supposedly legitimate brokerage operations were in fact just money-losing fronts for the fraudster’s scheme.

… An employee of Bernard Madoff’s brokerage operations, which were described by the fraudster in his plea agreement as being “successful and profitable,” has told The Daily Beast that they were in fact money losers that acted as a front for his Ponzi scheme.

He said that these businesses, the proprietary and market-making arms on the 18th and 19th floors of Madoff Securities, were designed to lure investors in, especially highly placed figures in society, and to fool the SEC into thinking that he had a large and impressive galaxy of businesses. But behind the façade, these businesses were a shambles. They were excessively staffed with grossly overpaid people, and run with marked inefficiency, he said…

His description of how the legitimate arms of Madoff Securities were run sounds like a skit out of Monty Python. “The three managers who ran parts of the businesses were getting $500,000 to $750,000 a year and they didn’t even know anything about modern computerized trading,” the employee said. They knew only the antiquated methods of talking to clients and trading in the stock market by phone. They mostly socialized, read the news. They would have been unemployable on the outside”…

The firm’s odd way of being run was chalked up to Bernie’s quirkiness. “We just thought he was a brilliant eccentric man.” The 17th floor, for instance, to the shock of the employee, was messy. Papers strewn on desks, people in jeans, a sense of organized chaos.

“Yet take the 18th and 19th floors: Bernie was obsessive compulsive about the floors where the legitimate businesses were,” he said. “Everything had to be black. The computers, the tables, even the picture frames. If he saw a kid’s picture in a silver frame, for instance, he would order the offender to get a black frame. If you had a jacket over the back of your chair, he would take it off. He went down the row of windows and made sure that the slats were all at the exact same angle. You couldn’t have any paper on your desk“…

David Winnicott was a pioneer who studied the child’s developing personality as a function of childhood interpersonal relationships. One of his ideas was based on the style of infant feeding. Some parents feed the baby "on demand." They wait for the child’s cry [that "I’m hungry!" cry all parents know].  Others feed the child on a fixed schedule ["He’s crying, but it’s not time yet"]. In essence, the former method is responsive to the child’s communication and the second is an expectant environment – asking the child to adapt to the world. In a real world, most parents operate somewhere in-between depending on the circumstances.

But Winnicot’s distinction does define two broad ways children are raised. The environment leaning into the child versus the child adapting to the parent’s needs and wishes. Winnicott hypothesized that this had a dramatic impact on the child’s personality. The child raised in a responsive parental environment learns to communicate and experience needs. The personality develops in close relationship with inner experience and in dialog with others.

Children raised in an expectant environment don’t expect much from others. They develop a "false self" – public personality – adapting to the expectations of others – "people pleasers" in modern parlance. Their "true self," the self more in touch with their own inner experience is vague and concealed. It wasn’t responded to in early life, so it must be "bad." In adulthood, such people do well with others, responding to cues from the outside, but feel "un-known" as their "true self" is shamefully hidden, and constantly frustrated. This is often accompanied by a feeling of being an imposter [The Imposter Syndrome]. They may know many people, but are known by very few if any, because they don’t think others want to know what’s "inside" and they often resent others for not knowing them [even though they haven’t shown themselves to be known]. They are actors in most of their interactions with people.

Everything I read about Bernie Madoff fits this paradigm. His persona, his trappings, his monthly earnings, his business facade were all designed to please. Yet his wife thought better of a surprise party, as Bernie was so private and didn’t like to be known. And the 17th floor and what went on there seemed to represent his "true self" – messy, antiquated, corrupt, unruly. The inner self of such people is often a compendium of unmet needs and frustrations, but for Bernie, it had become a cesspool of unbridled greed. His outward affable personality hid an unfeeling, disconnected, greedy conman who took from others – unmoved by his effect on their lives.

The Last Revolutionary: Sara Jane Olson Speaks
By Greg Goldin
LA Weekly
January 18, 2002

^{…In truth, there was never any justification for the acts of the Symbionese Liberation Army. It was a "revolution" that had existed only in the eyes of its beholders. To many on the left, the early 1970s was an era of political disillusionment in America. In them, idealism was dying. It had crumbled as the moral imperatives of civil rights and the war in Vietnam receded. The veterans of the New Left retreated into the privacy of their personal thoughts and faded back into the middle class from which they’d emerged. Revolution was a thing of the past.}

^{Still, a dynamic of ’60s politics had yet to spin itself out — as farce. The SLA turned the paradigm of radical politics inside out. The New Left, at first, sought to fulfill the highest aspirations of the American enlightenment. It invoked Jefferson and Paine and Thoreau, and was animated by the idea that politics flows from the conscience, and not just the interests of mankind. The demise of the New Left soured radicalism into an open scorn for the common man and the uplifting possibilities of political engagement. The striving for democracy, the slow, patient, public spadework needed to win a popular following and to arouse the conscience of a nation, as Martin Luther King Jr. had done, fizzled. Stuck on the fringes of American politics — in that brief moment when Nixon’s impending impeachment raised new hopes — bands of crypto Marxist-Leninists assumed the self-righteousness of tyrants. The SLA, self-proclaimed enemy of injustice and inequality, embraced guns and the underground with the desperate fury that only total isolation can spawn.}

^{Vexed by the absence of genuine political movements, the SLA adopted Prince Peter Kropotkin’s "politics of the deed." As Communique No. 1, the death warrant against Marcus Foster, announced, "TO THOSE WHO WOULD BEAR THE HOPES AND FUTURE OF OUR PEOPLE, LET THE VOICE OF THEIR GUNS EXPRESS THE WORDS OF FREEDOM." Many thousands of white, college-educated, guilt-ridden, middle-class American kids, circa 1973, might not have picked up the guns, but the slogan had its combustible appeal. Kathleen Ann Soliah, whether or not Sara Jane Olson can admit it today, fell in love with the anger, the vengeance and the thrill of insanity.}

^{For two decades or more, the name Sara Jane Olson was fictitious, an assumed identity, a hiding place for the fugitive from the 1970s, . Within that name, Soliah built for herself a refuge, an unreal sanctuary. In St. Paul, Minnesota, she’d married a Harvard-educated emergency-room physician, was a devoted mother to three teenage daughters, read to the blind, volunteered to help victims of torture, organized soup kitchens. She reverted to her Palmdale upbringing — and proved that she was a woman of essential decency. No wonder the reality of a guilty plea gave her such a jolt. No wonder she seems to wear so many faces.}

^{How much easier it might have been for Sara Jane Olson if she’d come clean, if her guilty plea had been given without caveat. Had she admitted how enmeshed she had become in a radicalism gone amok, she might have been able to resurrect herself. This, sadly, seems impossible now. Contemplating what, exactly, was going on inside the Precita Avenue house with all those guns and explosives, Olson says, "If I had anything to do with that, that’s a terrible thing. This is something I’ve always wondered. I cling to things like the bomb expert saying that these were not signature bombs" — by which she means there might be no connection between the bombs found at Precita and those planted at Hollenbeck and the International House of Pancakes. "That’s what I believe."}

^{I ask her to address the facts which suggest she was more involved in the SLA than she has acknowledged. "You’ve had a lot of time to think about this in the last two years, and there is some factual…"}

^{She cuts in: "I sincerely hope not. I sincerely hope not. Because I don’t want to be responsible for that in any way. Not because I am afraid of responsibility, but because it’s an incredibly heavy burden to bear."}

^{"Because you might have supported people who really did commit the crimes of the SLA?"}

^{"Right, yeah," she says quietly, her voice once again trailing off.}

"To many on the left, the early 1970s was an era of political disillusionment in America. In them, idealism was dying. It had crumbled as the moral imperatives of civil rights and the war in Vietnam receded. The veterans of the New Left retreated into the privacy of their personal thoughts and faded back into the middle class from which they’d emerged. Revolution was a thing of the past." It wasn’t just a concept, it was something you could see and feel. Something died during those years. It wasn’t forgotten, it was killed from within. It had happened before. The idealism and progressive social movement of the 1930’s gradually faded and left behind "the Beatniks" – people who sang the songs and lived the lives of their predecessors, but mostly indulged themselves in the counterculture as a way of life, not as a way of bringing about social change. And the Civil Rights and anti-War movements of the 1960’s morphed into the "Hippies" and their latter-day saints, disconnected from the goals and plans of an earlier day. People like Kathleen Ann Soliah [AKA Sara Jane Olson] were trying to hold on to an ideal, and went insane in the process.

An “Aggressive” Prosecution? Breaking Down Madoff Auditor Case
WSJ Law Blog
March 19, 2009
By Amir Efrati

Now that we’ve all had a chance to reflect on the fraud charges brought Wednesday against Bernard Madoff’s outside auditor, David Friehling, let’s delve a little deeper. Friehling was accused of enabling Madoff’s fraud by conducting sham audits.

Friehling was charged with securities fraud and investment adviser fraud, as well as four counts of filing false audits with the SEC. Federal prosecutors from the Southern District of New York went out of their way to say they weren’t charging Friehling with having “knowledge of the Madoff Ponzi scheme.”

We’ve heard from some lawyers who say this prosecution is aggressive because the criminal complaint against him doesn’t have any direct evidence that Friehling had “fraudulent intent” in the form of witness testimony or tape recordings, for example, showing his “criminal state of mind.”

One such lawyer is David Siegal, a former SDNY prosecutor who is now at Haynes and Boone. “There’s nothing improper about this charge; it’s a viable legal theory,” he says. But “bringing a criminal case based on expert testimony that an audit was not conducted properly, absent any allegation of actual knowledge of fraud, is an aggressive, and in my experience, unusual prosecution.”

He says that in a typical fraud prosecution, the government shows evidence that the defendant had actual knowledge that something fraudulent was afoot. Here, by contrast, the allegations are that government’s accounting expert says that there are certain audit steps that would typically be taken in an audit; that the defendant certified he had taken appropriate audit steps; and that, in fact, the defendant failed to take those steps the government expert says he should have taken.”

Presumably, Siegal says, Friehling could argue in his defense that he was a “lousy auditor” and even “grossly negligent” but didn’t have knowledge of fraud and didn’t intend to mislead anyone. In other words, being a lousy accountant might not make him a criminal…

I had never heard of a Ponzi scheme before this winter, or a Credit Default Swap, or of a mortgage backed security. It never occurred to me that the disappearance of Banks as they increasingly morphed into BankAmerica or Citigroup was something new, and something bad. I knew house values were rising at an astronomical rate and that it had to stop, but I didn’t think about the forces behind the boom. When gas prices shot up, I thought that the Shieks were getting greedy. It never occurred to me to look in the background or that it all had something to do with Deregulation , an out-of-control financial industry, and a number of disasterous bills passed through Congress. I even thought Alan Greenspan must be a master mechanic [instead of a misguided idealogue].

Smallest known North American dinosaur found

[CNN] – Canadian researchers say they have discovered the smallest known North American dinosaur, a carnivore that roamed areas of the continent 75 million years ago and weighed less than most modern-day house cats. Nick Longrich found the dinosaur’s bones in storage at a museum and decided to analyze them.

Hesperonychus elizabethae, a 4.4 pound creature with razor-like claws, ran through the swamps and forests of southeastern Alberta, Canada, during the late Cretaceous period, the researchers said. The diminutive dinosaur likely hunted insects, small mammals and other prey, perhaps even baby dinosaurs, said Nick Longrich, a paleontology research associate in the University of Calgary’s Department of Biological Sciences. "It’s basically a predator of small things," Longrich said…

Although fossilized remains of Hesperonychus were collected in 1982, they remained unstudied until Longrich came across them in the University of Alberta’s collection in 2007, the university said. Because of their size, some of the fossilized parts had been thought to be from juveniles. Longrich said he suspected the claws had come from another, smaller adult species, but said finding a fossilized pelvis in which the hip bones were fused – which happens only once an animal is fully grown – convinced him…

Longrich came across the dinosaur’s bones in storage at the Royal Tyrrell Museum in Drumheller and decided to analyze them, Canadian Broadcasting Company reported in September…