Posts Tagged ‘corruption’

Is Paris Burning ?

Sunday, December 2nd, 2018

toulouse

A famous request from Adolf Hitler was also the tile of a book about the liberation of Paris in 1944, and might be a question about the riots of this week by the “Yellow Vests”

There is not a single media report about the Yellow Vest demonstrations in Paris and France that I’ve read or watched that has not been slanted by Fake News.

It has (usually) not been deliberate, I gather, and nobody has said anything factually wrong; what is the problem is the fact that (very) important stuff has been omitted.

It is not wrong to say that the demonstrations were caused by the government’s decision to raise gas prices. What is missing is that this is just one of several draconian measures dating back half a year, i.e., ‘tis the proverbial straw that broke the camel’s back.

It requires someone on the scene to describe what has really been happening.

For the past four to five months, the French government has done nothing but double down on bringing more and more gratuitous oppression and more and more unwarranted persecution measures down on the necks the nation’s drivers and motorcycle riders.

In fact, the imposition of ever harsher rules has been going on for the past decade and a half or so — whether the government was on the right or on the left — and that is why the choice of les gilets jaunes (the yellow jackets) by the demonstrators is particularly ironic.

The 2008 law (under the presidency of Nicolas Sarkozy) requiring the presence of high-visibility vests (gilets de haute visibilité) aka security vests (gilets de sécurité) in every vehicle — hardly an unreasonable rule, for sure, as similar ones exist throughout the continent — was just another example of the myriad of evermore-onerous rules for car and motorcycle owners over the past 15 years, and so the government in effect provided the 2018 rebels with their uniforms.

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Newspapers and local politics

Monday, June 15th, 2009

As a brief diversion from the world-shaking events going on right now in Iran, I have a small tale of local politics. I have lived in Mission Viejo most of the past 37 years. I moved here in 1972 and opened my medical practice when this was a small new development, one of the first master-planned developments in the west. The Mission Viejo Company developed a portion of the family ranch into this city. The ranch extends from El Toro on the north to Camp Pendelton on the south, to the Cleveland National Forest on the east and the Santa Fe Railroad tracks on the west. Since the tracks run along the beach south of San Clemente, the ranch extends almost to the ocean. Originally, the ranch was twice as large and extended to Oceanside but in 1942 the owners donated/ sold the land to the Marine Corps for Camp Pendelton.

Mission Viejo prided itself on the planning that went into its city and there is considerable pride on the part of residents. About nine years ago, I got interested in local politics. The city council had been taken over by a small clique in the city and had begun to make decisions that did not follow the master plan. The first I became aware of this was when the planning commission decided to rezone some land that was planned for office buildings to multifamily residential. They were going to approve a 700 unit apartment complex in an area zoned commercial. The significance of this includes the requirement for services, such as schools, plus the volume of traffic and parking and even crime. Prior to that time there were very few apartments in the city. The residents were unhappy with the proposed zone change and I attended a planning commission meeting where the matter was to be considered. In an effort to avoid citizen involvement, the commission placed the matter last on their agenda and it was after midnight before the matter came up. They squelched comments and voted to approve the project in spite of local opposition. The residents, led by a small group of activists, took up a petition and got nearly 8,000 residents to sign it. The city ignored the petition and the residents wishes and the project was built.

Several years later, there was another controversy over the cost of a new city hall. The city council placed an item on the ballot with a low ball estimate of the cost and voters approved the project. Activists, and by this time I was starting to pay more attention, opposed the measure suggesting that the city hall project would cost far more than the estimate in the ballot measure and, sure enough, it turned out be almost twice the cost. Finally, in 2000, I joined a group called the Committee for Integrity in Government and we managed to oust the majority of the old city council in 2002. Some of that history is here although you won’t see that history on the official city web site.

We are now in an era where the traditional newspapers have less and less excuse for their existence. One of the remaining best excuses is local coverage of local issues and local government. The Orange County Register has done an excellent job over the years of doing so but that seems to be waning and it is a damned shame. Read this. We had a local reporter who was actually ferreting out some of the ugly little local stories.

The OC Register announced new staff assignments last week. For more than a year, reporter Lindsey Baguio covered Mission Viejo for the Register and Saddleback Valley News. She has been reassigned to Laguna Niguel.

In April 2008, Baguio exposed the city staff’s wasteful spending on 500 custom-built easels. She followed the city’s 20th anniversary spend-a-thon, which ended with easels thrown in a heap on a hillside. A city contractor took up to 200 of the easels to a county dump while city employees claimed the trashed easels were being “stored for future use.” City administrator Keith Rattay lied to Baguio – she quoted him – about costs and volunteer participation, and activists combed city records to expose the true figures. For a brief time, residents saw the real city hall through SVN coverage.

Baguio at first reported both sides – activists’ statements alongside city hall’s spin. But before the dust settled on Easelgate, City Manager Dennis Wilberg invited Baguio to his office. Baguio’s investigative reporting ended, and SVN published almost no letters about city hall after July 2008. Requests for public records revealed an email trail in which Wilberg pressured Baguio for favorable reporting. Records show he directed her to solicit community comments from a list of people he identified as supportive of his staff and how city hall spent taxpayer funds.

We finally get a local reporter who cares about these local issues and reports the facts. So what happens? The overstaffed and lazy city government calls her in for a “talk” and the reporting stops. This is why newspapers are dying, although on a very small scale. Still, this is where that reporter was learning her career and this is what she learned. What a shame.

What Corruption in detail looks like

Wednesday, July 23rd, 2008

UPDATE: John McCain has come out with a good op-ed on the topic that should be reprinted widely. Unfortunately, it looks as though Bush has given up and will sign the pork fest bailout bill. I guess he is ready for next January and President Obama.

That’s not a very good headline but the Paul Gigot article today in the Wall Street Journal tells the story of Freddie Mac and Fannie Mae with the names named. It can’t be any clearer how the Washington insiders kept the ball rolling.

Angelo Mozilo was in one of his Napoleonic moods. It was October 2003, and the CEO of Countrywide Financial was berating me for The Wall Street Journal’s editorials raising doubts about the accounting of Fannie Mae. I had just been introduced to him by Franklin Raines, then the CEO of Fannie, whom I had run into by chance at a reception hosted by the Business Council, the CEO group that had invited me to moderate a couple of panels.

Mr. Mozilo loudly declared that I didn’t know what I was talking about, that I didn’t understand accounting or the mortgage markets, and that I was in the pocket of Fannie’s competitors, among other insults. Mr. Raines, always smoother than Mr. Mozilo, politely intervened to avoid an extended argument, and Countrywide’s bantam rooster strutted off.

I remember reading those editorial page pieces and wondering why nothing happened. Now we know.

In late 2001, I got a tip that Fannie’s derivatives accounting might be suspect. I asked Susan Lee to investigate, and the editorial she wrote in February 2002, “Fannie Mae Enron?”, sent Fannie’s shares down nearly 4% in a day. In retrospect, my only regret is the question mark.

Mr. Raines reacted with immediate fury, denouncing us in a letter to the editor as “glib, disingenuous, contorted, even irresponsible,” and that was the subtle part. He turned up on CNBC to say, in essence, that we had made it all up because we didn’t want poor people to own houses, while Freddie issued its own denunciation.

The insiders turned up the pressure by complaining to Dow-Jones executives, Mr. Gigot’s bosses.

At the time, Wall Street’s Fannie apologists outdid themselves with their counterattack. One of the most slavish was Jonathan Gray, of Sanford C. Bernstein, who wrote to clients that the editorial was “unfounded and unsubstantiated” and “discredits the paper.” My favorite point in his Feb. 20, 2002, Bernstein Research Call was this rebuttal to our point that “Taxpayers Are on The Hook: This is incorrect. The agencies’ debt is not guaranteed by the U.S. Treasury or any agency of the Federal Government.” Oops.

Mr. Gray’s memo made its way to Wall Street Journal management via Michael Ellmann, a research analyst who had covered Dow Jones and was then at Grantham, Mayo, Van Otterloo & Co. “I think Gray is far more accurate than your editorial writer. Your subscribers deserve better,”

Paul Gigot, who was not then the editor of the op-ed page, is not deterred although Congress is busy feeding at the trough and does not want to hear any bad news.

I also received several interventions from friends and even Dow Jones colleagues on behalf of the companies. But I was especially startled one day to find in my mail a personal letter from George Gould, an acquaintance about whom I’d written a favorable column when he was Treasury undersecretary for finance in 1988.

Mr. Gould’s letter assailed our editorials and me in nasty personal terms, and I quickly discovered the root of his vitriol: Though his letter didn’t say so, he had become a director of Freddie Mac. He was still on the board when Freddie’s accounting lapses finally exploded into a scandal some months later.

The companies eased their assaults when they concluded we weren’t about to stop, and in any case they soon had bigger problems. Freddie’s accounting fiasco became public in 2003, while Fannie’s accounting blew up in 2004. Mr. Raines was forced to resign, and a report by regulator James Lockhart discovered that Fannie had rigged its earnings in a way that allowed it to pay huge bonuses to Mr. Raines and other executives.

Remember that Raines was a Bill Clinton appointee, even though this was now the Bush administration. They still had enough politicians in their entourage to stave off the final reckoning, though. Republicans were every bit as complicit in the fiasco.

Such a debacle after so much denial would have sunk any normal financial company, but once again Fan and Fred could fall back on their political protection. In the wake of Freddie’s implosion, Republican Rep. Cliff Stearns of Florida held one hearing on its accounting practices and scheduled more in early 2004.

He was soon told that not only could he hold no more hearings, but House Speaker Dennis Hastert was stripping his subcommittee of jurisdiction over Fan and Fred’s accounting and giving it to Mike Oxley’s Financial Services Committee. “It was because of all their lobbying work,” explains Mr. Stearns today, in epic understatement. Mr. Oxley proceeded to let Barney Frank (D., Mass.), then in the minority, roll all over him and protect the companies from stronger regulatory oversight. Mr. Oxley, who has since retired, was the featured guest at no fewer than 19 Fannie-sponsored fund-raisers.

Bipartisan financial malpractice. And the taxpayers will be bailing them out.

Or consider the experience of Wisconsin Rep. Paul Ryan, one of the GOP’s bright young lights who decided in the 1990s that Fan and Fred needed more supervision. As he held town hall meetings in his district, he soon noticed a man in a well-tailored suit hanging out amid the John Deere caps and street clothes. Mr. Ryan was being stalked by a Fannie lobbyist monitoring his every word.

On another occasion, he was invited to a meeting with the Democratic mayor of Racine, which is in his district, though he wasn’t sure why. When he arrived, Mr. Ryan discovered that both he and the mayor had been invited separately — not by each other, but by a Fannie lobbyist who proceeded to tell them about the great things Fannie did for home ownership in Racine.

When none of that deterred Mr. Ryan, Fannie played rougher. It called every mortgage holder in his district, claiming (falsely) that Mr. Ryan wanted to raise the cost of their mortgage and asking if Fannie could tell the congressman to stop on their behalf. He received some 6,000 telegrams. When Mr. Ryan finally left Financial Services for a seat on Ways and Means, which doesn’t oversee Fannie, he received a personal note from Mr. Raines congratulating him. “He meant good riddance,” says Mr. Ryan.

That wasn’t enough.

about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a mere seven basis points on mortgages. In return for this, Fannie was able to pay no fewer than 21 of its executives more than $1 million in 2002, and in 2003 Mr. Raines pocketed more than $20 million. Fannie’s left-wing defenders are underwriters of crony capitalism, not affordable housing.

And we will bail them out because “they are too big too fail.” Why did a Republican Speaker cooperate in this debacle ? The GOP paid the price in 2006 but the rest of us will be paying for years.

Apologies to the WSJ but I was afraid that piece was behind the subscription wall and it is too important to hide. Everyone should read it.

Here’s what they were saying a year ago. Pretty funny, eh ?