Daily Archives: July 5, 2016

Sorry Hillary-Haters, ‘Extreme Carelessness’ is Not Enough to Indict Clinton

“I know there were many opinions expressed by people who were not part of the investigation—including people in government—but none of that mattered to us. Opinions are irrelevant, and they were all uninformed by insight into our investigation, because we did the investigation the right way. Only facts matter, and the FBI found them here in an entirely apolitical and professional way. I couldn’t be prouder to be part of this organization.”
-FBI Director James B. Comey


I’m not remotely surprised at the FBI’s conclusion that no reasonable prosecutor would bring charges against Hillary Clinton based on the facts its investigation yielded. The statutes on which such a prosecution would be based are clearly not intended to catch a cabinet member who had sloppy e-practices; they’re aimed at actual bad guys seeking to bring down the American government.

Law Newz:

In fact, as LawNewz.com’s Dan Abrams pointed out in an earlier article, the Supreme Court somewhat addressed this issue:

In 1941, the U.S. Supreme Court heard a case which challenged whether the phrase “national defense” in this Espionage Law was too vague and overbroad. The answer was no only because:

“we find no uncertainty in this statute which deprives a person of the ability to predetermine whether a contemplated action is criminal under the provisions of this law. The obvious delimiting words in the statute are those requiring intent or reason to believe that the information to be obtained is to be used to the injury of the United States, or to the advantage of any foreign nation. This requires those prosecuted to have acted in bad faith.”

The Supreme Court clearly never envisioned a prosecution under the Espionage Act without “intent” to injure the United States and in “bad faith.”  (This was in reference to a different section of the same law but the point remains the same.) Other courts have interpreted the phrase “national defense” narrowly as a direct result of the fact that on its face, the words seem so broad.

Clearly, FBI agents found that Clinton had no intent nor bad faith to mishandle classified information when she used her private email server. Furthermore, prosecutors are not obligated to indict everyperson who has done something wrong; they are expected to exercise prosecutorial discretion to make informed choices about which casesmake sense to bring. The imagined case against Hillary Clinton has never seemed particularly compelling, except to those who have disliked her for years, hoping for any excuse to watch her crash and burn.

And this news that Hillary Clinton is cleared from this investigation didn’t go well for many people in the political world that would have like to see Clinton indicted and politically destroyed. Donald Trump threw in his two cents of outrage on Twitter and compared Clinton’s exoneration vs. David Petraeus’ case in which Trump stated that got Petraeus “in trouble for far less.” Petraeus pleaded guilty to one misdemeanor charge of mishandling classified information. Certainly Clinton’s case is far different from Petraeus’ case. Thinkprogress:

Petraeus knowingly provided highly classified information to an unauthorized person.

Petraeus gave Paula Broadwell, his mistress and biographer, his notebooks after telling her they contained “highly classified” information. This conversation was captured on tape by Broadwell and included in the government’s statement of facts:


A few days later he sent Broadwell an email agreeing to provide her the “black books.” The books contained “the identities of covert officers, war strategy, intelligence capabilities, diplomatic discussions, and quotes and deliberative discussions from National Security Council meetings, including discussions with the president of the United States.”

In contrast, Comey concluded that in Clinton’s case there was no “clearly intentional and willfulmishandling of classified information.”

Comey said the way Clinton handled the email was “careless” but that falls well below the legal standard for prosecution under the statute used to convict Petraeus.

Petraeus allegedly lied to the FBI.

In an interview with the FBI, Petraeus allegedly claimed that he only started his relationship with Broadwell after he left the military and never provided her with classified information.


He ultimately was not charged with lying to the FBI, but such a charge could have carried years and jail and likely influenced his decision to plead guilty to a misdemeanor.

Comey, in contrast, made clear he found no evidence that Clinton was attempting to impede the investigation. He found “no intentional misconduct” in the handling of the emails or “an effort to conceal them.”

Uh, Oh! Feds Investigating Dating Hookup Site Ashley Madison

The parent company of infidelity dating site Ashley Madison, hit by a devastating hack last year, is now the target of a U.S. Federal Trade Commission investigation, the new executives seeking to revive its credibility told Reuters.

The breach, which exposed the personal details of millions who signed up for the site with the slogan “Life is short. Have an affair,” cost Avid Life Media more than a quarter of its revenue, Chief Executive Rob Segal and President James Millership revealed in an interview, the first by any senior executive since the incident.

“We are profoundly sorry,” said Segal, adding that more could perhaps have been spent on security.

The two executives, hired in April, said the closely held company is spending millions to improve security and looking at payment options that offer more privacy.

But it faces a mountain of problems, including U.S. and Canadian class action lawsuits filed on behalf of customers whose personal information was posted online, and allegations that it used fake profiles to manipulate some customers. The site’s male-to-female user ratio is five to one, the executives said.

An Ernst & Young report commissioned by Avid and shared with Reuters confirmed that Avid used computer programs, dubbed fembots, that impersonated real women, striking up conversations with paying male customers.

Read on.

Fed Approves Bank of America’s Plan To Return $8 Billion To Shareholders

Earlier this week, the Federal Reserve unconditionally approved Bank of America’s 2016 capital return plan as a part of its annual stress test for the country’s biggest banks (see Lots Of Winners In The Fed’s 2016 Stress Test, But Deutsche Bank, Santander Stumble Again). Following the approval, the diversified banking giant announced plans to hike its quarterly dividends 50% from 5 cents now to 7.5 cents beginning Q3 2016. [1] The bank will also repurchase $5 billion worth of its common shares over the next four quarters.

Notably, Bank of America had only managed to secure a conditional clearance of its capital plan last year as the Fed took note of “weaknesses in certain aspects of Bank of America’s loss and revenue modeling practices and in some aspects of the BHC’s internal controls.” The fact that the bank admitted to an error in its capital ratio calculation in April 2014 played a role in the conditional clearance, but the fact that things went well with the regulator this time indicate that Bank of America has gotten things in order since then.

Given the bank’s roughly 10.3 billion outstanding shares, the 2016 capital plan entails a payout of just over $8 billion to investors over Q3 2016 – Q2 2017. We maintain our price estimate for Bank of America’s stock at $18.50. While our price target is about 40% higher than the current market price, the primary reason for this is the sharp sell-off in bank shares over recent months in anticipation of the U.K. leaving the European Union as key economic indicators point to weak growth figures in the near future.

Read on.

“Reigniting Competition in the American Economy”: Keynote Remarks at New America’s Open Markets Program Event

By Elizabeth Warren

June 29, 2016

Thank you, thank you. As Barry mentioned, before I was a senator, I was a law professor. What he didn’t say is that I taught contracts, secured transactions, and bankruptcy—all courses related to the functioning of competitive markets. I love markets! Strong, healthy markets are the key to a strong, healthy America.

That’s the reason I am here today. Because anyone who loves markets knows that for markets to work, there has to be competition. But today, in America, competition is dying. Consolidation and concentration are on the rise in sector after sector. Concentration threatens our markets, threatens our economy, and threatens our democracy.

Evidence of the problem is everywhere. Just look at banking. For years, banks have been in a feeding frenzy, swallowing up smaller competitors to become more powerful and, eventually, too big to fail. The combination of their size, their risky practices, and the hands-off policies of their regulators created a perfect storm, resulting in the worst financial crisis in 80 years. We know that excessive size and interconnectedness promotes risky behavior that can take down our economy—and yet, today, eight years after that financial crisis, three out of the four biggest banks in America are even bigger than they were before the crisis and two months ago five were designated by both the Fed and the FDIC as “too big to fail.”

The concentration problem—and particularly the idea of too-big-to-fail in the financial sector—gets a lot of attention. But the problem isn’t unique to the financial sector. It’s hiding in plain sight all across the American economy.

In the last decade, the number of major U.S. airlines has dropped from nine to four. The four that are left standing—American, Delta, United, and Southwest—control over 80% of all domestic airline seats in the country. And man, are they are hitting the jackpot now. Last year those four big airlines raked in a record $22 billion in profits. Eighteen billion alone came from fees for baggage and legroom and pay toilets. Ok, the last one was a joke, but what have passengers received in return for their higher costs? Fewer flights and worse service. Airline complaints rose 30 percent just from 2014 to 2015.

The list goes on. A handful of health insurance giants—including Anthem, Blue Cross Blue Shield, United Healthcare, Aetna, and Cigna—control over 83 percent of the country’s health insurance market.

Three drug stores—CVS, Walgreen’s and Rite Aid—control 99% of the drug stores in the country.

Four companies control nearly 85% of the U.S. beef market, and three produce almost half of all chicken.

Some people argue that concentration can be good because big profits encourage competitors to get into the game. This is the perfect stand-on-your-head-and-the-world-looks-great argument. It says that there’s no competition today, but maybe there will someday be competition. The truth is pretty basic—markets need competition now. So I want to talk about five reasons to be concerned about the decline of competition.

Read on.


Panama Papers reveal yet another secretive aspect of hedge funds


Bernard Madoff’s feeder funds show up in the Panama Papers

2 other managers who used offshores to hide assets find themselves in jail

One fund manager says there is room for more transparency

The kinds of secret offshore companies that have hidden political corruption and tax evasion around the world are often used by Wall Street’s biggest money makers — the $2 trillion hedge fund industry.

The now-famous Panama Papers leak offers rare insight into the workings of this exclusive investment club.

Hedge funds accept individual investors with net worths of $1 million or more and worker pension funds with $5 million or more. They and their investors often locate in tax havens such as the Cayman Islands or the British Virgin Islands.

The names found in the leaked files from the Panamanian law firm Mossack Fonseca include two now-imprisoned hedge fund managers, a major “feeder fund” that was part of the largest-ever Ponzi scheme run by Bernard Madoff and several anonymous investors whose offshore companies became tangled in the Madoff web.

In the aftermath of the Madoff scandal and the 2008 U.S. financial crisis, hedge funds have been forced to register with regulators, and they face severe penalties under a new “bad actor rule” if they take money from criminals or proceeds of corruption.“Most financial institutions do require considerable information on investors” today, said Robert Van Grover, an attorney with Seward & Kissel LLP in New York who thought the abuses found in the Panama Papers “would be very difficult in the United States” now.

But the hedge fund managers and their investors identified in the leaked documents by McClatchy and partners underscore what has been a weakness in oversight: They often used secret offshore companies, which hid investor fraud and potentially unsavory investors from U.S. regulators.

NY AG Cuomo Involved in Keeping a Lid on Bridgegate Scandal

Three months into the Bridgegate scandal, New York Gov. Andrew Cuomo was asked about it for the first time. “I don’t know anything more than basically what has been in the newspaper, because it was basically a New Jersey issue,” Cuomo said. He was talking about a disruptive traffic jam that had engulfed the bi-state agency he runs with New Jersey Gov. Chris Christie.

But newly-released records stemming from a WNYC freedom of information request show Cuomo and his top aides responding instantly and far more intensely to the abrupt lane closures on the George Washington Bridge than had previously been known.

The records show Cuomo’s right-hand man immediately applauding the reversal of the lane closures on the world’s busiest bridge, frequent consultations on communications strategy between Albany and top New York appointees at the Port Authority, and Cuomo himself getting on the phone to discuss the response as the scandal got hotter.

“It was exactly what should be done,” a Cuomo spokesman said about the newly-released details of the administration’s response. The spokesman added that the governor’s office “was asking the agency to brief them on the facts.”

To be sure, there’s nothing particularly startling about a governor and his top aides frequently consulting with the leaders of a multi-billion dollar authority about a burgeoning scandal.

But the record of email and phone traffic on the New York side paints a different picture from what the two governors have led the public to believe about high-level response to the lane closures.

And it contrasts sharply with Christie’s claim that he was unaware and uninterested.

“My goodness, no,” Christie’s spokesman said early on. “The governor of the state of New Jersey does not involve himself in traffic studies.”

Five top-level officials from Trenton, Albany and the Port Authority have told WNYC that Christie’s nonchalant response was baffling. One described it as “consciously oblivious.”

What also has become more apparent are the gaps in the record on the New Jersey side.

Read on.

Despite What Media Says, TPP Isn’t About Free Trade — It’s About Protecting Corporate Profits

The Intercept:

THE NEWS MEDIA and advocates of the proposed Trans-Pacific Partnership (TPP) trade agreement have repeatedly described opponents of the deal as “protectionist” or opposed to trade itself.

For instance, after Donald Trump pressed Hillary Clinton to swear off passage of the deal, the New York Times reported that Trump was embracing “nationalistic anti-trade policies.” The Wall Street Journal said Trump expressed “protectionist views.” President Obama warned that you can’t withdraw “from trade deals” and focus “solely on your local market.”

But opposition to the TPP is not accurately described as opposition to all trade, or even to free trade.

In fact, the deal’s major impact would not come in the area of lowering tariffs, the most common trade barriers. The TPP is more focused on crafting regulatory regimes that benefit certain industries.

So the most consequential parts of the deal would actually undermine the free flow of goods and services by expanding some protectionist, anti-competitive policies sought by global corporations.

“We already have trade agreements with six of the 11 countries. Canada and Mexico — our two biggest trading partners — are in there. The tariffs are almost zero [with those countries] anyhow,” Dean Baker, an economist at the Center for Economic and Policy Research, told The Intercept. “What’s in the deal? Higher patent and copyright protection! That’s protectionism.”

The U.S. International Trade Commission’s own report on the agreement notes that “few tariffs remain between the United States and its existing [free trade agreement] partners,” which compose a majority of TPP countries.

It’s true that past trade deals such as the North American Free Trade Agreement (NAFTA) have dramatically lowered tariffs, freeing companies to move manufacturing jobs out of the country. And as a result, the very notion of trade agreements has left many Americans understandably skeptical.

Concerns that the TPP would lead to even more job losses “are real and I think that the political discussion is responding to those concerns from both parties,” Melinda St. Louis, director of international campaigns at Public Citizen, told The Intercept. But, she noted, “I do think that the trade aspects of the TPP are a small part of it. It’s only six of 30 chapters that have to do with trade and goods really at all. The rest of it is about setting global rules.”

One of the proposed TPP rules, for instance, involves the expansion of copyrights, which would impose anti-competitive costs on economies.

The agreement has been harshly criticized by humanitarian organizations like Doctors Without Borders, which deploys thousands of doctors overseas to offer medical care to those who cannot afford it, because it expands monopoly protections and patents for various pharmaceutical drugs.

For instance, the agreement requires the countries involved to offer eight years of market exclusivity, or five years plus other mechanisms, to assure “comparable market outcome” for a class of pharmaceutical products calledbiologics. These cutting-edge, biologically manufactured drugs have been used to treat Crohn’s disease, arthritis, and other common ailments — and expanding market exclusivity means there is less room for competitors to produce lower-cost generic drugs to compete.