As Martin O'Malley from Maryland campaigns across the US as a progressive politician full of love for the middle-class and poor---take a look at what Maryland society is being brought to ---and don't look at mainstream media. The NAACP and Maryland AFL-CIO have always supported this raging neo-liberal so we know O'Malley is Clinton neo-liberal. Look at Baltimore, his home base to see what his politics really is.
Today I will look at civil liberties----Let's think about NDAA first to see the autocratic creep at the Federal level that then moves to state level.
Below you see the Federal actions that spur the state and local actions thee several years of Clinton neo-liberal Obama's terms. This one policy stance should have been focus of education by all progressive groups at all levels but you hear nothing about NDAA especially in cities like Baltimore where much of the policy plays out. It is not class or race exclusive---it takes everyone's civil liberties away. You see how Maryland as a whole is taking this NDAA stance to its extreme under O'Malley.
There are two issues found in the two articles below---Obama continuing the movement of power to the Executive Office as is happening in Maryland with the Governor and Mayor/County Executive---and then ending Magna Carta, habeas corpus, and Due Process protecting Americans from being jailed without charge or legal redress. As we know, Baltimore already does this.
Let's be clear---Republicans are not making Obama and Congressional neo-liberals do this---it is not OK because Bush did it----it has little to do with protecting the American people from terrorism. It creates the same conditions in the US as exist in nations like Iran and China where people can be picked up and disappear with no ability for justice. As the article states below, the broad definition of terrorism leaves the door to anyone saying or doing something deemed against the government can be handled as a terrorist. In China---political dissidents are jailed and sent to re-education camps by this definition. So, the ACLU may shout against it at the national level but there is no education of it in Baltimore or Maryland and the ACLU is partnered with pols like O'Malley installing these policies. If the Maryland ACLU shouts against Baltimore's child curfew laws but do not tie them to the Federal NDAA are they really doing their job? Of course not. You tie it to Clinton and Obama neo-liberalism and people know not to support neo-liberals if they do not like totalitarian policies like this. Instead what we see on social media are people that are Democrats shouting that if Bush behaved like this Obama can.
THIS IS THE SINGLE MOST IMPORTANT CIVIL LIBERTIES ISSUE AND I BET MOST PEOPLE DO NOT KNOW IT BECAUSE NO SUPPOSEDLY LEFT-LEANING ORGANIZATIONS ARE EDUCATING ABOUT IT.
Please stop saying Republicans did it so why can't Democrats for goodness sake---neo-liberals are working as hard as Bush neo-cons to end all civil rights and civil liberties.
Obama’s Signing Statement on NDAA: I have the power to detain Americans… but I won’t
67258440 Aaron Dykes
January 1, 2012
As Americans look upon the treacherous legislation passed under NDAA 2012, it it should first be remembered that the very bill President Obama threatened to veto was controversial due to the language the Obama White House itself pressured Congress to add to the bill, according to Sen. Carl Levin.
Second, signing statements are not law, and are not a Constitutional power granted to the executive branch; any reassuring (or troubling) language within has no binding status– though it may shed light on the intent/character of the chief executive. However, the statement itself does not indicate any deviation of intent from the law as written and signed.
From Wikipedia: The Constitution does not authorize the President to use signing statements to circumvent any validly enacted Congressional Laws, nor does it authorize him to declare he will disobey such laws (or parts thereof). When a bill is presented to the President, the Constitution (Art. II) allows him only three choices: do nothing, sign the bill, or (if he disapproves of the bill) veto it in its entirety.
Obama’s use of signing statements has clearly shown his willingness to continue the George W. Bush legacy– not only of torture and illegal detainment, but in the dangerous trend of de facto rule by “executive fiat.” Worse, such signing statements put in place a precedent for future presidents to follow– or expand upon.
Further, Barack Obama has continued to backslide on his campaign promise not to use signing statements and executive orders to circumnavigate legislation signed into law. RELATED (Feb. 2010): Obama Breaks Yet Another Key Campaign Promise on Executive Orders, Signing Statements
After the legislation cleared Congress, the ACLU commented that signing the bill “will damage both his legacy and American’s reputation for upholding the rule of law,” while executive director of the Human Rights Watch blasted the President for being ‘on the wrong side of history,’ noting that “Obama will go down in history as the president who enshrined indefinite detention without trial in US law.”
Presidential candidate Ron Paul went even further, declaring that the NDAA bill begins the official establishment of martial law in the United States (see video).
You see in this article the Patriot Act and NDAA passed through a Congress controlled by Clinton neo-liberals with unanimous votes. They try to make you feel they are protecting us from terrorists with this legislation but the creep of NSA and global corporate tribunals and a FED and Wall Street openly stealing all public wealth takes the definition of terrorism where it needs to go.
The article below does a good job of bringing out what the real intent of NDAA is and how it will be used. Now, if you are the NAACP or ACLU----if you are a labor union leader tasked with labor and workplace rights----don't you think educating on where these policies go and the neo-liberal mission of centralizing power to global corporations is important? OF COURSE IT IS THE TOP ISSUE FOR DISCUSSION.
Yet, in Maryland we hear these groups shouting against individual problems----the curfew, the brutality, the stealing of homes, and growing militarization in communities----but we do not hear the tie to Clinton and Obama and neo-liberalism that leads to all of this and that all of Maryland pols are Clinton neo-liberals and Bush neo-cons DETERMINED TO DO ALL OF THE ABOVE. Rather, all of these 'progressive groups' support Clinton neo-liberals every election at all levels.
GET RID OF LEADERSHIP THAT DOES NOT EDUCATE ON PUBLIC POLICY AND THAT STAYS TIED TO CLINTON/OBAMA NEO-LIBERALS. DON'T VOTE REPUBLICAN BECAUSE TAKING AWAY CIVIL RIGHTS AND LIBERTIES IS A REPUBLICAN POLICY STANCE.
For those that want to pretend the 2014 elections handing control of Congress to the Republicans is now the reason for all of this autocratic policy -----here is the last NDAA passed by a Senate and Obama before this transition. Take a look at who voted for this and you will see the Clinton neo-liberals set to install Trans Pacific Trade Pact. All of this securitization and NSA spying is tied with taking the US to an end of sovereignty and moving it to a ward of the Global Corporate Tribunal and Court.
What state is ground zero for NSA and Homeland Security, and all that is surveillance and spying? Maryland. Johns Hopkins is the top institution for this. Who supported Clinton neo-liberal O'Malley working for Johns Hopkins and this NDAA policy? National labor unions and justice organizations!
Bigger, Badder NDAA 2014 Quietly Passed the House and Senate – and It Is On the Way to Obama’s Desk
The Daily Sheeple
December 21st, 2013
While everyone is distracted with the holiday festivities, Congress has been hard at work, screwing us over in the name of national security.
Yesterday the 2014 National Defense Authorization Act was fast-tracked through the Senate, with no time for discussion or amendments. And you know, its Christmastime, so they just passed it so that they could recess for the holidays. The new version of the NDAA has already been quietly passed by the House of Representatives.
It authorizes massive spending, including $527 billion in base defense spending for the current fiscal year, funding for the war in Afghanistan, and funding for nuclear weapons programs.
The indefinite detention allowed by the original NDAA is still here, and it’s actually worse now, because there are provisions that will make it easier for the government to target those who disagree. Section 1071 outlines the creation of the “Conflict Records Research Center”, where the unconstitutionally obtained information that the NSA has collected is compiled and shared with the Department of Defense. The information, called in the wording “captured records,” can be anything from your phone records, emails, browsing history or posts on social media sites.
The New American reports in detail on the expansion of powers:
For two years, the NDAA included provisions that purported to authorize the president of the United States to deploy the U.S. military to apprehend and indefinitely detain any person (including an American citizen) who he believes “represent[s] an enduring security threat to the United States.”
Such an immense grant of power is not only unconscionable, but unconstitutional, as well.
Regardless of promises to the contrary made every year since 2011 by President Obama, the language of the NDAA places every citizen of the United States within the universe of potential “covered persons.” Any American could one day find himself or herself branded a “belligerent” and thus subject to the complete confiscation of his or her constitutional civil liberties and to nearly never-ending incarceration in a military prison.
Finally, there is in the NDAA for 2014 a frightening fusion of the federal government’s constant surveillance of innocent Americans and the assistance it will give to justifying the indefinite detention of anyone labeled an enemy of the regime.
Section 1071 of the version of the 2014 NDAA approved by the House and Senate committees this week expands on the scope of surveillance established by the Patriot Act and the Authorization for the Use of Military Force (AUMF).
Section 1071(a) authorizes the secretary of defense to “establish a center to be known as the ‘Conflict Records Research Center.’” According to the text of the latest version of the NDAA, the center’s task would be to compile a “digital research database including translations and to facilitate research and analysis of records captured from countries, organizations, and individuals, now or once hostile to the United States.”
In order to accomplish the center’s purpose, the secretary of defense will create an information exchange in cooperation with the director of national intelligence.
Key to the functioning of this information exchange will be the collection of “captured records.” Section 1071(g)(1), defines a captured record as “a document, audio file, video file, or other material captured during combat operations from countries, organizations, or individuals, now or once hostile to the United States.”
When read in conjunction with the provision of the AUMF that left the War on Terror open-ended and the prior NDAAs’ classification of the United States as a battleground in that unconstitutional war, and you’ve got a powerful combination that can knock out the entire Bill of Rights.
Finally, when all the foregoing is couched within the context of the revelations regarding the dragnet surveillance programs of the NSA, it becomes evident that anyone’s phone records, e-mail messages, browsing history, text messages, and social media posts could qualify as a “captured record.”
After being seized by the NSA (or some other federal surveillance apparatus), the materials would be processed by the Conflict Records Research Center created by this bill. This center’s massive database of electronic information and its collaboration with the NSA converts the United States into a constantly monitored holding cell and all its citizens and residents into suspects. All, of course, in the name of the security of the homeland. (source)
One thing that was omitted is the amendment on the prosecution of sexual assaults in the military. So, we can all be locked up indefinitely for crimes that haven’t been proven, but they don’t care so much if military members continue to rape other military members.
The final compromise, fashioned by the leaders of the House and Senate Armed Services committees, leaves out Democratic language that would have eased restrictions on transferring Gitmo detainees to the United States — a provision that would have helped the administration achieve its goal of shuttering the facility.
It also does not include a controversial amendment by Sen. Kirsten Gillibrand to remove decisions about prosecuting sexual assault from the military chain of command. The New York Democrat says she’s secured a commitment from Reid to bring her proposal to the floor as a stand-alone measure next year. Although she may get her vote, the legislation is not expected to survive in the Republican-controlled House.
Thursday’s defense bill also sidesteps the debate over Iran. Senators who wanted to offer amendments imposing tougher sanctions were blocked because of the bill’s fast-track process, which supporters said was necessary to get it finished before the end of the year. So Iran sanction hawks’ efforts will have to wait until next year. Movement now toward stricter sanctions, the White House has warned, would undermine its ongoing negotiations to curb Iran’s nuclear program.
Senate Minority Leader Mitch McConnell (R-Ky.) suggested Reid had fast-tracked the defense bill because he “can’t stomach” a politically uncomfortable Iran vote. (source)
If you’re wondering who this year’s enemies of the Constitution are, here is the roll call from the Senate yesterday.
source: Activist Post
Unsurprisingly, there is little hope that President Obama will fail to sign this into law.
Under the new and “improved” NDAA, I’m a belligerent for writing this, and you’re a belligerent for reading this. God help you if you email someone about it or share it on Facebook. We’re all going to be busted as belligerents under this one.
See you at Gitmo or the FEMA camps!
This article would seem concerning all by itself but given Maryland reputation of having parents dragged from school meetings by police and Baltimore's completely autocratic police state----you see this incident is simply one in a long line in Maryland. O'Malley of Maryland is the Clinton neo-liberal running as a progressive that works for the rights of people and against those bad banks. O'Malley is the face of NSA, spying, surveillance, NDAA, and militarized policing.
I was 6 years old when I walked a mile to and from school every day and I loved it. It is good for youth to feel confident in their ability to navigate and be held responsible. Now, some people may think---walking alone for a mile? Are they crazy? Are you kidding? We are hearing in Maryland and especially Baltimore---keep your children inside if you want them to be safe. As poverty deepens and injustice increases with suspended Rule of Law and Equal Protection people are going to get angry and desperate. Maryland police are interjecting themselves to decide where and when people need to be walking freely on the street. Whether it is Baltimore where black citizens are subjected to stop and frisk and unconstitutional interactions with police thanks to Martin O'Malley----or whether it is privatizing all public space and making public gathering and protesting harder and harder.....the creation of the environment of fear and lack of trust is what autocratic societies thrive on. As this article states---the attacks and dangers for children are overblown in general----cities do indeed need to deal with this. Do we deal with this by making parents feel their only choice is to keep children inside? Of course not.
Parents are being given police records and Department of Protective Services records for what are often ordinary routines in people's lives. We already have a culture of children locked to technology keeping them sequestered to individual play----this breaks up the notion of society.
Maryland’s Free-Range Kids Under Fire Again For Playing Alone In Park
“Free-Range Kids” Rafi and Dvora Meitiv are back in the news after being detained by police for over five hours for the “crime” of playing alone in a park.
By Kit O'Connell @KitOConnell | April 15, 2015 Washington Post
Danielle and Alexander Meitiv let their children, 10 and six, walk home alone from a park a mile away from their house. Now, Montgomery County is investigating the couple for child neglect. The Meitiv family of Silver Springs, Maryland, is back in the news again, just months after their first run-in with police for the “crime” of letting their children play on their own.
Danielle and Alexander Meitiv’s parenting style was first called into question by authorities late last year. Their two children, Rafi, age 10, and Dvora, age 6, had been given permission to walk home alone from a park about a mile from their home. The police picked up the pair when they were roughly halfway home. Child Protective Services soon got involved, insisting on a full investigation into the children’s lives.
“They have proven they are responsible,” Danielle Meitiv told the Washington Post at the time, citing similar trips to a nearby library and convenience store.
CPS determined it had found what it called an “unsubstantiated” case of neglect, meaning it would keep a file open on the family for the next five years. The Meitiv’s said they would continue to allow their children to play alone.
The Post is now reporting that Rafi and Dvora were detained by police on Sunday after playing alone in a park.
On Monday, Danielle Meitiv reported via Facebook that, “The police coerced our children into the back of a patrol car and kept them trapped there for three hours, without notifying us, before bringing them to the Crisis Center, and holding them there without dinner for another two and a half hours. We finally got home at 11 pm and the kids slept in our room because we were all exhausted and terrified.”
Meitiv told the Post’s Petula Dvorak, “The cops said they would drive them home, then kept the kids in the patrol car for three hours. Wouldn’t even let them out to use the bathroom.”
According to the county police spokesman, the matter remains under investigation.
The case of the Meitiv family highlights the broader national debate on the changing role of parental authority. While so-called “helicopter parents” exert ever-increasing control over their children’s lives, others recall childhoods spent wandering freely through urban and suburban neighborhoods and argue that kids who grow up this way are more independent and better adjusted to adult life.
In a Post editorial following the first incident with police, Meitiv wrote:
“When did Americans decide that allowing our kids to be out of sight was a crime? … Crime rates across the United States are as low as they’ve been in my lifetime. Stranger abduction, the bogeyman of most parental fears, has always been exceedingly rare. Far more hazardous are the obesity risks and idleness we subject children to if we do not allow them to run outside and play.”
Kim Kinzie, writing on the popular website Free-Range Kids, argues that over-protective parents create more problems than they solve: “It becomes a vicious circle — we can’t leave them alone because when we’re with them we think, ‘Boy, if we weren’t here, they could never handle this stuff by themselves!’ We forget that when we were young, we too made plenty of dumb decisions and wasted a lot of time (that wasn’t really wasted) and muddled through to the point where we are competent folks today.”
Yet authorities seem to be increasingly siding with the helicopter parents. Kari Anne Roy, a children’s book author from Austin, Texas, found her parenting under repeated investigation because she let her six year old play alone in her yard, as reported by The Free Thought Project in September 2014.
In the end, she was told by a CPS investigator: “Just don’t let them play outside.”
People may not know that Baltimore has completely defunded most revenue support from communities outside the city center and diverted the money to building a Johns Hopkins global corporation and global campus. The city is crumbling, the citizens left with no employment because public policy brings people paid cheaply to the city to work. They spent the last several years closing schools, public recreation, and public health. So, are we surprised that crime and violence is up and children are left with nothing to do but find trouble? Of course not. All of this comes from Johns Hopkins' neo-conservative policies passed by Baltimore City Hall and Maryland Assembly in a Democratic city and state....well,not really Democrats--
What this article does not tell us is they went on step further with this curfew law----they extended it to day time and tied it to truant children because when you close community schools and send children for miles away from home on city buses that run as they do in Panama----children often choose not to do that every morning. I tell you----Baltimore City Hall builds the highest barriers to a child's ability to succeed and then sends in the stick to make a child or parent simply want to leave Baltimore.
OH, WAIT---THAT IS THE GOAL OF RAWLINGS-BLAKE AND CITY HALL GUIDED BY JOHNS HOPKINS.
If you think---good, we need to get rid of the poor in Baltimore then you must be pleased as punch as having lost your Medicare/health care, your pensions and retirement, your jobs and savings from massive corporate fraud and corruption BECAUSE IT IS BEING DONE FOR THE SAME REASON. What is happening in Baltimore and Maryland may be extreme--but this is growing all around the nation because Clinton neo-liberalism is about ending our rights as citizens and giving this autocratic control to corporations just as is happening. Who supports Clinton neo-liberals every election? The same ministers, Historic Black Colleges, politicians, and labor unions that we see come out to protest this loss of civil liberties. The children are out in the street because they have no activity at home or inside a safe community center. Many underserved homes have no computers. Parents should be controlling their children but have a long history with Child Protective Services and losing custody over child abuse. The belief in connecting parents to counseling rather than fine is not to be believed because that is what community centers in these underserved communities that were closed provided. This repressive approach to a social problem created by public policy is NOT HOW DEMOCRATS OPERATE----
THIS IS THE PROBLEM----IF YOUR GROUP IS NOT EDUCATING--THEN YOUR LEADERSHIP IS CAPTURED TO CLINTON NEO-LIBERALISM.
Baltimore passes extremely strict youth curfew
Published time: June 04, 2014 20:44 Get short URL Reuters / Lucy Nicholson
The Baltimore City Council voted to impose one of the strictest youth curfew laws in the country on Monday, much to the dismay of neighborhood groups, civil-rights activists and public-safety experts.
Mayor Stephanie Rawlings-Blake has promised to sign the bill, which passed 13-2 Monday night as boos and chants of “no new curfews” rained down on the council, WBAL-TV reported. The new curfew requires children under 14 to be off the streets year-round by 9 p.m. Children 14 through 16 will be able to stay out until 10 on school nights and 11 p.m. on weekends and over the summer. This will replace the current curfew law, which allows all children and teens under 17 to stay out until 11 p.m. on weeknights and midnight on weekends.
"This is about taken them out of harm's way before a situation materializes where their being on the street becomes a law enforcement concern," Rawlings-Blake said, according to WBAL-TV.
The bill also extends the daytime curfew hours. The current law reads, “No minor under the age of 16 may remain in or about any public place or any establishment between the hours of 9 a.m. and 2:30 p.m. on any day during which the minor is required to be in school.” The new curfew will be 7:30 a.m. to 3:00 p.m.
Police will bring youths found in violation of the new time limits to a year-round youth connection center, but they will not be handcuffed or arrested. “This is not a criminal enforcement act by the police," Rawlings-Blake said on Monday, according to WBAL-TV.
Once there, they will be interviewed by officials, who will then contact the children’s parents or guardians. If the officials deem it safe, the violators will be returned home; otherwise they will be placed in the care of Child Protective Services, the Baltimore Sun reported. Parents will face a fine of $30 to $500 (up from the current $300), which could be waived if the family participates in counseling sessions provided by the city. The city hopes to open nine such youth connection centers in schools and recreation centers, one for each police district in Baltimore, according to WBAL-TV.
Tassie Makranczy, a Baltimore resident who teaches high school elsewhere in Maryland, applauded the move. “I’m really happy this passed. Underage kids out late at night when they have no need to be have been, and continue to be, a serious problem in Baltimore. A lot of the crime is being done by underage kids who have no business being out on the streets that late at night,” she said in a phone interview with RT.
“In my neighborhood, the big problem is kids out on the street way past late, making a lot of noise. They’ll be dressed all in black, walking down the middle of the street when I’m driving at 11 o’clock at night. It’s dangerous for them and it’s dangerous for me,” Makranczy continued. “Most of the crime being done in my neighborhood is being done by underage kids, like cars being broken into or a couple homes being broken into.”
But not everyone is happy with the new curfew. The anti-curfew contingent notes that the current law is often not enforced. And the American Civil Liberties Union of Maryland campaigned actively against the proposal.
“What these laws do is give the ability to officers to stop any young-looking person who is outside at a certain time and ask what they’re doing, ask for identification. It affects not only those who are explicitly covered by the curfew, but reaches older adolescents and young people as well,” Sonia Kumar, ACLU Maryland staff attorney, told NBC News.
“Police aren’t social workers,” Kumar added. “When we’ve talked to young people about their interactions with police, they’ve told a very different story about the nature of those interactions that suggest that in fact these situations will quickly escalate in ways that this bill’s supporters are choosing to ignore.”
Interaction between kids and police is a big concern for others as well. "There's already a huge amount of police brutality, with adults being targeted, but now police are going to have the green light to do the exact same thing to young people," opponent Colleen Davidson, a youth organizer of a group called Fist, told WBAL-TV
But Makranczy disagrees. “I think most decent teenagers would understand there is no reason to be out that late, unless they are trying to be in trouble,” she said. “The vast majority of kids who are being picked up now are already trained from a young age to avoid the cops or are heading down the path to be criminals anyway.”
Councilman Brandon Scott, who introduced the bill, thinks increased interaction will be a positive thing for the Charm City’s youth. “This is something that's going to help us connect the younger kids that are out on the streets that need the resources they need for their families,” he said to ABC2. “Even though we've had a curfew for over 20 years in the City of Baltimore but having school kids out at 11 p.m. during the school night is just too late."
Both supporters and opponents agree that the jurisdiction needs to provide youths resources, instead of just getting in trouble for being out after hours. The ACLU proposed an alternative to the curfew bill last Thursday, which would make the proposed youth connection centers more “youth-friendly, not associated with law enforcement or curfew violations, and have explicit, intentional policies to avoid unintentionally criminalizing youth,” as well as increase the availability of safe activities, work to identify target populations and high-impact solutions and more effectively use existing tools, including the current curfew.
“The city needs to give them some sort of things for kids to be doing,” Makranczy said. “There are a lot of working-class families where the parents are working second shift or sleeping, so we need city-wide programs to address that.”
The connection to Clinton neo-liberals in the 1990s deregulating and dismantling Federal oversight and accountability while creating global Wall Street was the first step in what I call three moves ---US as first world to second world nation. Bush/Obama allowing massive corporate fraud move the nation's wealth to the top was the second step------installing structures that end US Sovereignty and control of policy and law enforcement via Trans Pacific Trade Pact is the third step to third world status. All of this was one big plan with Clinton neo-liberals and Bush neo-cons making these moves. The biggest terrorist to the US was Alan Greenspan and the FED working with Wall STreet.
In Baltimore, we watched as 3 candidates for Governor of Maryland were allowed to participate and we watched as black leaders backed Anthony Brown vs Doug Gansler----both raging Clinton neo-liberals all tied to this massive corporate fraud. No doubt the people doing this profited off of subprime loan sales and Baltimore Development real estate 'deals'. When you look at the loss of civil rights and liberties---these are the policies that show which pols are working for global corporations. THIS WAS THE WORST TERRORIST ATTACK IN US HISTORY AND THREATENED THE VERY EXISTENCE OF THE US.
It is also the face of Baltimore's poverty and unemployment----it is the face of lost civil rights and liberties as Clinton neo-liberals and Bush neo-cons make no secret they do not recognize the US Constitution----they work under Trans Pacific Trade Pact.
YOUR NATIONAL LABOR AND JUSTICE LEADERS HAVE KNOWN THIS FOR DECADES FOLKS-----AND IT COULD HAVE BEEN STOPPED IN ITS TRACKS IN 1990s IF PEOPLE HADN'T ALLOWED THEMSELVES BE BOUGHT BY CLINTON.
Neo-liberals could care less about civil rights or liberties---they are only interested in wealth and power for the few richest in the world----the Global Corporate Tribunal. When I talk to black leaders in Baltimore asking them to stop supporting Clinton neo-liberals posing progressive----they are clear they will support one of the 'three' chosen by the Maryland Democratic Party.....knowing they are connected to Clinton/Obama.
We placed a great big X on the rooftop of Baltimore's Morgan Chase building in Harbor East so the Baltimore Police helicopters can find the criminals and terrorists----but they spend all their time running down people who steal formula from grocery stores and electronics from cars.
'This behaviour is criminal. We are talking about deliberate concealment of financial transactions that aided terrorism, nuclear weapons proliferation and large-scale tax evasion; assisting in major financial frauds and in concealment of criminal assets; and committing frauds that substantially worsened the worst financial bubbles and crises since the Depression.
And yet none of this conduct has been punished in any significant way'.
Heist of the century: Wall Street's role in the financial crisis Wall Street bankers could have averted the global financial crisis, so why didn't they?
In this exclusive extract from his book Inside Job, Charles Ferguson argues that they should be prosecuted 'When did Wall street know there was a bubble and that they could game it?'
Photograph: Eric Thayer/Reuters/Corbis Charles Ferguson
Sunday 20 May 2012 15.00 EDT Last modified on Saturday 4 October 2014 10.52 EDT
Bernard L Madoff ran the biggest Ponzi scheme in history, operating it for 30 years and causing cash losses of $19.5bn. Shortly after the scheme collapsed and Madoff confessed in 2008, evidence began to surface that for years, major banks had suspected he was a fraud. None of them reported their suspicions to the authorities, and several banks decided to make money from him without, of course, risking any of their own funds. Theories about his fraud varied. Some thought he might have access to insider information. But quite a few thought he was running a Ponzi scheme. Goldman Sachs executives paid a visit to Madoff to see ifthey should recommend him to clients. A partner later recalled: "Madoff refused to let them do any due diligence on the funds and when asked about the firm's investment strategy they couldn't understand it. Goldman not only blacklisted Madoff in the asset management division but banned its brokerage from trading with the firm too."
UBS headquarters forbade investing any bank or client money in Madoff accounts, but created or worked with several Madoff feeder funds. A memo to one of these in 2005 contained the following, in large boldface type: "Not to do: ever enter into a direct contact with Bernard Madoff!!!"
JPMorgan Chase had more evidence, because it served as Madoff's primary banker for more than 20 years. The lawsuit filed by the Madoff bankruptcy trustee against JPMorgan Chase makes astonishing reading. More than a dozen senior JPMorgan Chase bankers discussed a long list of suspicions.
The Securities and Exchanges Commission has been deservedly criticised for not following up on years of complaints about Madoff, many of which came from a Boston investigator, Harry Markopolos, whom they treated as a crank. But suppose a senior executive at Goldman Sachs, UBS or JPMorgan Chase had called the SEC and said: "You really need to take a close look at Bernard Madoff. He must be working a scam."
But not a single bank that had suspicions about Madoff made such a call. Instead, they assumed he was probably a crook, but either just left him alone or were happy to make money from him.
It is no exaggeration to say that since the 1980s, much of the global financial sector has become criminalised, creating an industry culture that tolerates or even encourages systematic fraud. The behaviour that caused the mortgage bubble and financial crisis of 2008 was a natural outcome and continuation of this pattern, rather than some kind of economic accident.
This behaviour is criminal. We are talking about deliberate concealment of financial transactions that aided terrorism, nuclear weapons proliferation and large-scale tax evasion; assisting in major financial frauds and in concealment of criminal assets; and committing frauds that substantially worsened the worst financial bubbles and crises since the Depression.
And yet none of this conduct has been punished in any significant way.
Total fines on the banks for their role in the Enron fraud, the internet bubble, violation of sanctions against countries including Iran and money-laundering activities appear to be far less than 1% of financial sector profits and bonuses during the same period.
There have been very few prosecutions and no criminal convictions of large US financial institutions or their senior executives. Where individuals not linked to major banks have committed similar offences, they have been treated far more harshly.
Goldman Sachs blacklisted Madoff, but didn’t alert the authorities. Photograph: Bloomberg/Bloomberg via Getty Images The Obama government has rationalised its failure to prosecute anyone (literally, anyone at all) for bubble-related crimes by saying that while much of Wall Street's behaviour was unwise or unethical, it wasn't illegal. With apologies for my vulgarity, this is complete horseshit.
When the government is really serious about something – preventing another 9/11, or pursuing major organised crime figures – it has many tools at its disposal and often uses them. There are wiretaps and electronic eavesdropping. There are undercover agents who pretend to be criminals in order to entrap their targets. There are National Security Letters, an aggressive form of administrative subpoena that allows US authorities to secretly obtain almost any electronic record – complete with a gag order making it illegal for the target of the subpoena to tell anyone about it. There are special prosecutors, task forces and grand juries. When Patty Hearst was kidnapped in 1974, the FBI assigned hundreds of agents to the case.
In organised crime investigations, the FBI and government prosecutors often start at the bottom in order to get to the top. They use the well-established technique of nailing lower-level people and then offering them a deal if they inform on and/or testify about their superiors – whereupon the FBI nails their superiors, and does the same thing to them, until climbing to the top of the tree. There is also the technique of nailing people for what can be proven against them, even if it's not the main offence. Al Capone was never convicted of bootlegging, large-scale corruption or murder; he was convicted of tax evasion.
A reasonable list of prosecutable crimes committed during the bubble, the crisis, and the aftermath period by financial services firms includes: securities fraud, accounting fraud, honest services violations, bribery, perjury and making false statements to US government investigators, Sarbanes-Oxley violations (false accounting), Rico (Racketeer Influenced and Criminal Organisations Act) offences, federal aid disclosure regulations offences and personal conduct offences (drug use, tax evasion etc).
Let's take the example of securities fraud. Where to begin?
When did Wall Street insiders know there was a really serious sub-prime mortgage bubble, and that they could game it? Many of the clever ones knew by about 2004, when Howie Hubler at Morgan Stanley first started to bet against the worst securities with the approval of his management. But you can only make money betting against a bubble as it unravels. As long as there was room for the bubble to grow, Wall Street's overwhelming incentive was to keep it going. But when they saw that the bubble was ending, their incentives changed. And we therefore know that many on Wall Street realised there was a huge bubble by late 2006, because that's when they started massively betting on its collapse.
Here, I must briefly mention a problem with Michael Lewis's generally superb financial journalism. In his book The Big Short, Lewis leaves the impression that Wall Street was blindly running itself off a cliff, whereas a few wild and crazy, off-the-beaten-track, adorably weird loners figured out how to short the mortgage market and beat the system. With all due respect to Mr Lewis, it didn't happen like that. The Big Short was seriously big business, and much of Wall Street was ruthlessly good at it.
To begin with, a number of big hedge funds figured it out. Unlike investment banks, however, they couldn't make serious money by securitising loans and selling CDOs (collateralised debt obligations), so they had to wait until the bubble was about to burst and make their money from the collapse. And this they did. Major hedge funds including Magnetar, Tricadia, Harbinger Capital, George Soros, and John Paulson made billions of dollars each by betting against mortgage securities as the bubble ended, and all of them worked closely with Wall Street in order to do so.
In fairness to Mr Lewis, it is true that in several major cases – most notably Citigroup, Merrill Lynch, Lehman and Bear Stearns – senior management was indeed disconnected and thus clueless, allowed their employees to take advantage too long and therefore destroyed their own firms.
But cluelessness was most definitely not an issue with the senior management of Goldman Sachs, JPMorgan Chase and Morgan Stanley. As we saw, Morgan Stanley started betting against the bubble as early as 2004. Conversely, JPMorgan Chase mostly just remained prudently above the junk mortgage fray. Goldman Sachs, though, was in a class by itself. It made billions of dollars by betting against the very same stuff that it had been making billions selling only a year or two before.
Almost all the prospectuses and sales material on mortgage-backed bonds sold from 2005 until 2007 were a compound of falsehoods. And as the bubble peaked and started to collapse, executives repeatedly lied about their companies' financial condition. In some cases, they also concealed other material information, such as the extent to which executives were selling or hedging their own stock holdings because they knew their firms were about to collapse.
In some cases, we have evidence of senior executive knowledge of and involvement in misrepresentations. For example, quarterly presentations to investors are nearly always made by the CEO or chief financial officer of the firm; if lies were told in these presentations, or if material facts were omitted, the responsibility lies with senior management. In other cases, such as Bear Stearns, we have evidence from civil lawsuits that senior executives were directly involved in selling securities whose prospectuses allegedly contained lies and omissions.
The Rico Act provides for severe criminal (and civil) penalties for operating a criminal organisation. It specifically enables prosecution of the leaders of a criminal organisation for having ordered or assisted others to commit crimes. It also provides that racketeers must forfeit all ill-gotten gains obtained through a pattern of criminal activity, and allows government prosecutors to obtain pre-trial restraining orders to seize defendants' assets. Finally, it provides for criminal prosecution of corporations that employ Rico offenders.
Bernard Madoff confessed to operating a giant Ponzi scheme. Photograph: Timothy A Clary/AFP/Getty Images Rico was explicitly intended to cover organised financial crime as well as violent criminal organisations such as the mafia and drug cartels. A great deal of the behaviour that occurred during the bubble would appear to fall under Rico statutes. Moreover, pre-trial asset seizure is a widely and successfully used technique in combating organised crime, and asset seizures now generate more tha $1bn a year for the US government. However, there has not been a single Rico prosecution related to the financial crisis, nor has a single Rico restraining order been issued to seize the assets of any individual banker or any firm.
It is important to note here that these asset seizures would not merely represent justice for offenders but for victims as well. US law allows seized assets to be used to compensate victims. In this case, the potential economic impact of seizures could be enormous.
Finally, personal conduct subject to criminal prosecution might range from possession and use of drugs, such as marijuana and cocaine, to hiring of prostitutes, employment of prostitutes for business purposes, fraudulent billing of personal or illegal services as business expenses (sexual services, strip club and nightclub patronage), fraudulent use or misappropriation of corporate assets or services for personal use (eg use of corporate jets), personal tax evasion and a variety of other offences.
I should perhaps make clear here that I'm not enthusiastic about prosecuting people for possession or use of marijuana, which I think should be legal. In general, I tend to think that anything done by two healthy consenting adults, including sex for pay, should be legal as well.
But the circumstances here are not ordinary. First, there is once again a vast disparity between the treatment of ordinary people and investment bankers. Every year, about 50,000 people are arrested in New York City for possession of marijuana – most of them ordinary people, not criminals, whose only offence was to accidentally end up within the orbit of a police officer. Not a single one of them is ever named Jimmy Cayne, despite the fact that the marijuana habit of the former CEO of Bear Stearns has been discussed multiple times in the national media (his predecessor in the job, Ace Greenberg, called him a "dope-smoking megalomaniac").
There is also a second, even more serious, point about this. If the supposed reason for failure to prosecute is the difficulty of making cases, then there is an awfully easy way to get a lot of bankers to talk. It is a technique used routinely in organised crime cases. What is this, if not organised?
As time passes, criminal prosecution of bubble-era frauds will become even more difficult, even impossible, because the statute of limitations for many of these crimes is short – three to five years. So an immense opportunity for both justice and public education will soon be lost. In some circumstances, cases can be opened or reopened after the statute of limitations has expired, if new evidence appears; but finding new evidence will grow more difficult with time as well. And there is no sign whatsoever that the Obama administration is interested.