As the article stated yesterday---costs for PIP are not going up----there is simply more fraud and corruption lifting the costs as with Medicare and Medicaid.  We are reforming Medicare and Medicaid because the health industry fraud sucked the Trusts dry.  That is what is happening with PIP.  The insurance and health industries are inflation costs by fraud with soaring profits and then claiming PIP needs to be dismantled because it is too costly.....same as Medicare.  So, rather than having the costs of your health care covered with this auto insurance that is required by law---you are now going to be pushed into Medicaid which now mostly covers only preventative health care.  This eliminates yet another outlet for health coverage for the working and middle-class while insurance and health industry profits soar.

Notice the Maryland Assembly is about to end PIP and push Maryland citizens into the most private and profit-driven health system in the nation---Medicaid and preventative care.  The No Fault auto premiums are no small payment---as many times as people use it the total premium amounts paid often covered costs.

Think that at the same time, your rates go higher and higher for simply being in an accident no matter it wasn't your fault.  That is what deregulating the insurance industry looks like.  It gives them the ability to charge anything they want as laws are on the books requiring you to have some kind of insurance.  Deregulating while making insurance mandatory----watch that disposable income disappear with rate hikes.

Tort-based auto insurance means the ambulance-personal injury lawyers that you see on TV will be the only recourse for paying medical bills and we all know these lawyers pocket most of the money won in the lawsuit with the plaintiff often receiving pennies on the dollar.  So, this will cost health care more and that money will go to lawyers and it will come from taxpayer Medicaid.
So, now the insurance, the health care, and lawyers are getting a cut money that always went to actual care for the patient who will be bankrupt and/or left with little access to care.

THESE ARE NEO-LIBERAL AND NEO-CON POLICIES MOVING ALL MONEY TO CORPORATE PROFIT ON THE BACKS OF THE AMERICAN PEOPLE.

All Maryland pols are neo-liberal and neo-cons doing all of the above.

'Rates did go down initially'---before the fraud and corruption sent them soaring.

PIP and No-Fault Auto Insurance Reform

More and more states are abandoning the PIP/No-Fault form of auto insurance in favor of a tort-based set of laws. PIP/No Fault originated in the 1930s as an alternative to the often slow and expensive process of litigating claims. The intent was to speed up the process by shifting the dispute resolution from the courts to the insurance companies. In theory, this was supposed to reduce insurance rates—and rates did go down initially.

By the mid-70s, almost 20 states had some form of no-fault insurance laws. However, over time, rates again rose until "No-Fault" states had higher rates than tort-based states. Beginning in 1980, states started repealing their no-fault laws, and now only nine states (Florida, Hawaii, Kansas, Massachusetts, Missouri, Minnesota, New York, North Dakota and Utah) have mandatory no-fault laws. Eleven states plus the District of Columbia have hybrid laws (Arkansas, Delaware, Kentucky, Maryland, New Jersey, Oregon, South Carolina, South Dakota, Texas and Virginia), which are a combination of no-fault and tort systems.

The pendulum seems to be swinging back to tort-based auto insurance. What does this mean for you as a policyholder?

The Good News

Tort-based systems, in theory, give you more choices for medical payments and could save you substantial amounts of money. As an example, depending on the insurance company and coverages selected, those with Colorado car insurance (the most recent state to revert to a tort-based system) could see savings of 10 percent to 30 percent, according to several recent Denver Post articles.

The Choices

PIP, or Personal Injury Protection, is still available (in most cases), should you wish (or need) to pay for it. If you choose to drop this coverage, or if you are already under a tort-based system and don't have this coverage, you can still purchase it with most policies to cover medical expenses. However, coverage will be limited, with a general ceiling of $50,000. This additional coverage, if purchased, will pay expenses incurred by you and your immediate family for injuries resulting from an at-fault auto accident.

Since many drivers are uninsured or underinsured, it is essential that you understand the ramifications of this and make an informed decision about the "Uninsured/Underinsured Motorists" coverage option.

What if?

What happens if you are at fault? Your auto policy should pay the other person's claims. Companies normally negotiate this with each other. If you have insufficient coverage, you may have to go to court—thus displaying the tort aspect of the law. Either you or your health insurance company will pay medical expenses for you and your family once those expenses exceed your auto policy coverages.

What if you are injured by another driver who is at fault? Generally, the two auto insurance companies will work together to determine fault and pay benefits accordingly. This resolves the problem in most cases. If not, or if the amounts paid are insufficient, it may be necessary to resort back to the court system to recover damages.

What if the other driver is at-fault and has no (or inadequate) insurance? Your insurance company normally covers your medical expenses. This protection is provided under the uninsured/underinsured motorist coverage. If you do not have this coverage, your health insurance usually pays the bills, or you can sue the other party.

Consider the "Deductible Gap"

Generally, under a tort system, medical payments from your own policy are limited. However, in most cases you can choose "additional medical payments" and "Uninsured/Underinsured Motorists" coverage as part of your auto insurance policy.

After years of rising rates, many people may choose to forgo any additional coverages. Adding these coverages creates financial strain if you have high-deductible health insurance, or no health insurance at all. However, there is a potentially huge gap between the amount paid under a tort-based policy and your health insurance deductible. If you have no insurance, the out-of-pocket costs could be staggering. If you are not at fault in the accident, the tort-based system allows you to go to court to receive compensation for these costs, as well as for pain and suffering. But you must do so within a specified time period, and a lot of out-of-pocket expenses may be involved.

What does this mean for health insurance?

As more costs are shifted to the health insurance system, your insurance costs are likely to rise. This also means more people will be without health insurance.

So, what is next?

This is a good time to look at your health insurance to make sure you will have adequate coverage if you drop your PIP/No-Fault coverage. Don't wait until you're in an unpleasant situation to find out if you need more insurance. Be prepared!

_______________________________________________

This is when PIP was working in the interest of citizens and government coffers.  Insurance corporations were earning profits in the millions while the Uninsured auto insurance pool was bursting at the seams with revenue. 

NOW, HOW CAN WE DIVERT THE MONEY PAID INTO THIS FUND FOR HEALTH CARE INTO PROJECTS THAT BENEFIT DEVELOPMENT CORPORATIONS.

This is when a good program was targeted for fraud and corruption just as with the other Federal programs Medicare and Federal Housing Authority.  Working well for citizens, leaving government coffers flush to handle future events, allowing millions in profits to be earned---BUT THAT WAS NOT ENOUGH.  You see the article below was written in 1993----HERE COMES NEO-LIBERAL CLINTON TO DEREGULATE ALL THAT HE CAN SEE......this is the deregulation that sent all of this surplus in the Maryland Automobile Insurance Fund to development corporations like Johns Hopkins in Baltimore.  There's Donald Schaefer funneling money from Transporation Trusts and now MAIF to balance the budget with the public's designated money.  Baltimore Development paraded all kinds of working class and poor out to praise Schaefer who was behind creating Baltimore Development Corporations to funnel all the city's revenue from where it was to go----to where they wanted to send it.

You see the insurance corporations were able to move more and more people into MAIF clearing its rolls of all but the best of drivers.  It went from helping low-income people to subsidizing the costs of these auto insurance corporations.  It was gutted of its funds for pet projects.  I know Ravens fans love their stadium----but most of the fans are the ones no longer affording auto insurance because of the subsidy.  Note that the Uninsured Motorist insurance had high premiums and should have paid all health care costs when needed.

Remember, this was done through fraud and corruption because this money was not to be fungible.  It needs to come back to this government coffer.


I KNOW---LET'S SEND THIS PIP MONEY TO BUILD THE NEW FOOTBALL FIELD.----M AND T STADIUM AND BALANCE THE BUDGET WITH IT.

MAIF's embarrassment of riches

March 04, 1993|
By Frank A. DeFilippo  Baltimore Sun

THE Maryland Automobile Insurance Fund has a big-time problem. It's rich. So rich, in fact, that other state agencies are itching to get their hot little hands on MAIF's $118 million surplus.

MAIF's been approached about financing a new football stadium in Baltimore. Sen. George W. Della Jr. of Baltimore has sponsored a bill that would shift $50 million of MAIF's money to the general fund. And the Schaefer administration is pilfering $5.4 million from MAIF to help balance the budget.

MAIF is Maryland's state-run insurer of last resort. Any Maryland motorist who's turned down by at least two commercial insurers is automatically MAIFed.

MAIF's rates aren't cheap. Depending on how bad a motorist's record is, the driver's age and ZIP code, bare-bones coverage can range from $2,559 to a stick-it-to-'em high of $8,677 a year.

That MAIF should be suffering such an embarrassment of riches during a time of budget cuts and deficits is an embarrassment itself. MAIF's $118 million surplus is larger than the $100 million budget shortfall that's being plugged with keno proceeds and other money.

In theory, at least, MAIF is supposed to be non-profit. It was created in 1973 as an antidote to the no-fault insurance craze at the time, kind of an everybody's-fault approach. It's run by a board of trustees and receives no state funds, nor are its assets part of the state treasury. To settle claims, MAIF has the power to attach salaries and seize property.

Over the years, the commercial insurance companies in Maryland have pumped $137 million into MAIF. In effect, good drivers subsidize the insurance of bad drivers. In 1980, MAIF had 30,000 policies. Today it has 135,000.

Much of MAIF's excess is due to changes in the way it does business as well as some shrewd investments. At the same time MAIF has reduced rates over the past three years, it's also lowered awards. MAIF is also now doing all of its work in-house instead of farming it out to free-lance adjusters and collectors.

So it should come as no surprise that the Schaefer administration's pie-slicers approached MAIF about lending the Maryland Stadium Authority $100 million to help finance a new football stadium if Baltimore wins one of two NFL expansion franchises.

There are serious legal questions about whether the Stadium Authority has a funding mechanism for another stadium if the city is awarded a team. Because of a change in the tax code, the use of tax-free bonds to finance stadiums expired at the end of 1990.

The authority argues, though, that it's confident that it can float tax-free bonds because there have been a number of test cases around the country that might allow it.

Moreover, the authority has a bonding limit of $220 million, of which it has already used $170 million to build the new baseball stadium. The authority will pocket another $30 million over three years from lottery proceeds -- on top of the $50 million in bond money left over from the ballyard -- a total of $74 million. But a new topless football stadium will cost about $130 million. Put a lid on it, and it'll cost millions more.

So here's the catch: If the authority can't float tax-free bonds, it will have to go to market with bonds at a much higher interest rate. But before it can go to market with bonds, the authority will need the General Assembly's approval to increase its bonding capacity. This could hoist the total bond package over the spending affordability limit. Allowing this is action the legislature is reluctant to take.

It's for this reason that Gov. William Donald Schaefer is bypassing the spending affordability limit and proposing the use of transportation bonds to finance improvements to Baltimore's Convention Center. Now he's trying to scoot around the spending limit again just in case there's a football team in the city's future.

So drive carefully. Get MAIFed, and the premiums you pay could wind up helping to finance some government geegaw.

Frank A. DeFilippo writes every other Thursday on Maryland politics.

_______________________________________

Here we are just a handful of years later and what the first article stated was in fact true in Maryland----it was the hybrid model Maryland adopted that sent auto insurance money to lawyers and doctors.

Now, they are working to end hybrid and make it all tort.  People not being able to afford strong health coverage will be preyed upon -----80% of the American people.
Again, another public program that worked fine for the people gutted and dismantled by neo-liberals and neo-cons.  Profit over people every time

Again, we are at the height of Reagan/Clinton's deregulation frenzy.
I wonder if those voters wanting small government wanted to be pushed out of driving because they can no longer afford car insurance? 

Your Public Trusts are being gutted by small government and deregulation.

Why car insurance is so high Law suits: System encourages excessive litigation, raises premiums $130 to $150 a year

.December 23, 1996  Baltimore Sun

WANT TO LOWER your car-insurance premiums? It could happen -- if legislators in Annapolis stop catering to powerful special interests. More than 60 percent of your premium covers liability. Of that amount, 19 percent could be saved if excessive litigation and fraudulent claims were eliminated.Sadly, state legislators yawned at the problem when a gubernatorial commission sought reforms this year. Too many of them want to please trial lawyers and doctors who vigorously fight for the status quo. These special interests know that lower insurance premiums would come out of their pockets.


_________________________________________


I have talked about AIG spinoff HighStar and its connection with the Ivy League schools like Johns Hopkins.  The subprime mortgage fraudulent loans were insured here with the idea that HighStar would break from AIG with the equity and leave taxpayers to pay 100% on the dollar for the fraudulent Credit Default Swaps.   This article does a good job doing this.  Geithner was the NY FED chief that watched as trillions of dollars of fraud ran through the mortgage industry and did nothing about it----he aided and abetted the massive fraud.  What many people may  not know AIG was more a Life Insurance agency with this HighStar hedge fund sucking all its profits into their bank accounts.  Indeed, the taxpayer bailout of AIG saved the shareholders and those insured by CDS-----but it left an AIG still in business and limping along saying it is healthy when indeed it is not.  AIG Life Insurance advertises on Free TV---you know , where you get life insurance with no checkup.  Like you get a house without having a job. 

SAME THING.  THIS IS THE SUBPRIMING OF LIFE INSURANCE.

They are simply selling as many policies as they can and gaining those monthly payments knowing the coming economic collapse will bankrupt them again.

You are guaranteed to get back what you put into this Life Insurance plan-----OH REALLY????  They will spin that Life Insurance money off as they did with HighStar----probably to HighStar just as the economy is ready to crash.  THEN WE WILL HEAR----WE CAN'T PAY YOUR PREMIUMS BACK!

They will keep doing this with every business sector until you and I get rid of the neo-liberals and neo-cons that have allowed this corporate system to be deregulated with no oversight and accountability.

AIG's Collapse: The Part Nobody Likes to Talk About

Hester Peirce JUN 16, 2014 12:00pm ET

  Earlier this month, American International Group announced the departure of Robert Benmosche, the CEO who led the company through most of its recovery from the financial crisis. Now that the company’s postcrisis chapter is underway, it is worth taking a fresh look at AIG’s downfall and rescue and the implications for reform.

The standard AIG story lays all the blame for the company’s problems on AIG Financial Products—an allegedly unregulated, irresponsible, derivatives dealer hiding within an otherwise solid insurance company.

Former Treasury Secretary Timothy Geithner repeats this traditional line in his recent book, where he recounts how an aggressive “hedge fund-like subsidiary called AIG Financial Products” brought the otherwise healthy insurance company to its knees and ultimately drove it into the Fed’s welcoming arms. Former Federal Reserve chairman Ben Bernanke made a similar claim when he told Congress how angry he was about AIG’s Financial Products unit—“a hedge fund attached [to] a large and stable insurance company.” And former Commodity Futures Trading Commission Chairman Gary Gensler, with typical dramatic flair, explained that AIG’s “subsidiary, AIG Financial Products, operating out of London, brought down the company and nearly toppled the U.S. economy.”

This widely repeated narrative ignores or downplays a critical aspect of AIG’s downfall--the insurer’s securities lending program run for the benefit of its regulated life insurance subsidiaries.

An endnote in Geithner’s tome explains that securities lending was one of “AIG’s major liquidity needs” at the time of its rescue. As I describe in a recent working paper, the company got itself into hot water by lending securities from its life insurance companies’ portfolios. AIG took the cash collateral it received for these short-term loans and—in a departure from insurance industry practice—invested much of it in longer term, illiquid residential mortgage-backed securities.

The securities lending program grew from about $10 billion at the end of 2001 to over $80 billion by the end of 2007. When borrowers stopped renewing the loans, returned their securities, and asking for their cash back, AIG was in a bind—the borrowers’ cash was tied up in reinvestments. 

To meet borrowers’ demands, AIG lent more securities and used the cash collateral from new borrowers to return to existing borrowers. This solution only aggravated the problem. When CEO Robert Willumstad took the reins of AIG in June 2008, the cash drain from securities lending worried him more than AIG Financial Products’ liquidity needs.

Losses from the securities lending program threatened the viability of a number of AIG’s regulated life insurance subsidiaries. To save them from falling below minimum capital requirements, AIG pumped billions of dollars into these units.

Government rescue money was critical to this recapitalization effort. Taxpayer funds were also critical in meeting securities borrowers’ demands for cash. Securities lending counterparties received $43.8 billion in the last quarter of 2008, comparable to $49.6 billion in collateral postings and payments to AIG’s derivatives counterparties.

As consequential as it was to AIG in a time of crisis, nobody likes to tell the securities lending part of the story. First, it doesn’t feed as nicely into the vilification of derivatives that laced crisis narratives and fueled calls for an intense derivatives regulatory regime. Second, the fact that heavily regulated insurance companies got into trouble does not support the call for greater reliance on government regulators. Finally, the rescue of a deeply troubled company is less defensible than the rescue of a healthy insurance company with a troubled derivatives subsidiary.

The Fed’s contention that its loan was adequately secured rested on the supposition that apart from the derivatives unit, AIG was sound. The banks that went in to AIG in September 2008 to assess whether it was worth rescuing concluded that it was not.

As one of the private bankers subsequently explained, “The value of the company in its entirety was not necessarily sufficient to cover the liquidity need that the company had.”

Geithner recounts in his book that—looking for confirmation that a loan to AIG would comply with the legal requirement that “the Fed can only lend against reasonably solid collateral”—he asked Warren Buffett “what he thought about the earning power of AIG’s traditional insurance subsidiaries.” Buffett “was pretty positive about their underlying value, which made [Geithner] more confident that [the Fed] could meet the legal test of being secured to [its] satisfaction.” Buffett’s words of assurance to Geithner weren’t matched by a willingness to put his own money on the line; he refused AIG’s overtures to invest during 2008.

AIG was on the verge of filing for bankruptcy when the Fed stepped in with a better deal for shareholders and creditors. The government subsequently re-rescued the company by devoting additional taxpayer funds to it and softening the lending terms. At any of these re-rescue points, the government could instead have let the company go through bankruptcy.

By continuing to prop up AIG, the government shielded the company from the toughest regulator of all—the markets. AIG’s problems were not confined to one unregulated corner; problems also arose in full view of insurance regulators. Rather than assuming the Fed will be better than AIG’s other regulators, we ought to allow the truly superior regulator—the market—to do its job.







_____________________________________________
I spoke yesterday about Life Insurance corporations being the most leveraged and ready to collapse of the insurance industry but guess what is the next in line of threatened insurance corporations-----

THAT'S RIGHT----WORKMAN'S COMP.

They have been allowed to create the same over-leveraged financial status that will have them bankrupt with this coming economic collapse.  No more worker's compensation----

THAT'S HOW YOU GET RID OF THE NEW DEAL SAY NEO-LIBERALS AND NEO-CONS!  BLOW THEM UP AS WE DID THE HOUSING MARKET WITH FRAUD AND CORRUPTION!

Coming after more public wealth and no public justice in place to protect or give us recourse....that is what neo-liberals and neo-cons have been building these few decades-----Clinton and Obama taking the people's party and handing it to Wall Street.  Run and vote for labor and justice in all Democratic Primaries!  WE CAN REVERSE THIS!

Rapidly writing new contracts for worker's comp that they could not afford----sound familiar?

IMPLODING ALL OF THE NEW DEAL PROGRAMS TO PROTECT THE AMERICAN PEOPLE DURING HARD TIMES.

After Tower Group collapse, lingering concerns about industry’s reserve adequacy

By Adam Cancryn and Saurabh Nair, SNL Financial Posted: May 6, 2014

...................................................

Most of the concern centers on long-tailed commercial lines, particularly workers’ compensation. Claims behavior takes longer to develop than in other sectors, making it more difficult to tell how much money should be set aside even years after a policy is written. Misjudging those reserving needs can be disastrous. SeaBright Holdings Inc. sold in 2013 after reserve charges pressured its operations, and Meadowbrook’s stock dropped nearly 35% from 2012 through 2013 amid several quarters of reserve charges. Tower Group served as the highest-profile example of reserving gone wrong, with its shares losing more than 80% in the six months before it hastily agreed to a sale.

Those companies ran into problems with business written during a softer market between 2007 and 2011, when they grew their books rapidly just as the rates being charged for coverage were at their most inadequate. When claim costs far outstripped the rates they originally charged, the insurers had to quickly build up their loss reserves. Analysts now consider the 2010 accident year one of the worst performers of the cycle, attributing the troubles to low prices and more expensive claims driven by high unemployment.

“The troubles they have now is on stuff they wrote years ago,” Keefe Bruyette & Woods analyst Robert Farnam told SNL.

The 10 workers’ comp insurers with the greatest adverse development in 2013 reported an aggregate $702.6 million in charges. SeaBright and Meadowbrook did not make that list. Tower Group was also absent, as it has not yet submitted all of its filings, but it said in February that its U.S.-taxed subsidiaries recorded $269.2 million of 2013 reserve charges.

Despite the issues, the sector continues to steadily release reserves. Companies argue that Meadowbrook and Tower Group in particular are isolated situations, driven just as much by reckless growth as the broader industry conditions. The rest of the industry, they contend, was more prudent in writing business during the soft market, leaving it with less risk and the ability to make up for a few unfavorable accident years with better results from other parts of their books of business. The insurers themselves are also working with much more detailed data than analysts and outside actuaries, they say, allowing them to most accurately evaluate their reserves.

“We look at it on a much more granular basis, and we think we have certainly better information,” W. R. Berkley Corp. Vice President of External Financial Communications Karen Horvath told SNL. Analysts have singled out W.R. Berkley’s reserving position as one of the more concerning in the industry, predicting that its quarterly releases would soon slow. But the company in the first quarter released about $25 million, extending a string of favorable reserve development that dates back to 2007.

Even so, skeptics are not quite willing to accept insurers’ assurances as fact. They worry that companies are already drawing down their reserves for the 2012 and 2013 accident years to supplement earnings or balance out problems in earlier years, without enough data to be sure about how those most recent years will ultimately perform.

“There is just no way a company would know or have the type of certainty under which they would be able to release reserves from some of the most recent business,” said Standard & Poor’s credit analyst Siddhartha Ghosh, who warned that the workers’ comp sector will eventually have to strengthen reserves significantly. “We don’t think that’s a prudent way of addressing reserves.”

He pointed to the previous market cycle, when workers’ comp companies released $12.4 billion of reserves between 1994 and 2000 and then had to scramble to add back $10.6 billion from 2001 to 2005 to make up for their overconfidence.

The sector’s fortunes over the next several years will depend heavily on whether insurers can keep raising prices, analysts said. The workers’ comp business is still not reliably profitable despite recent pricing actions, and low interest rates continue to pressure investment income. If companies can continue to move their prices considerably and consistently higher over the next couple years, the new premium should be enough to cover costs. If the rate hikes falter and claims from recent policies start piling up, though, the reserving actions that insurers used to buoy earnings for so long could stick them with a deficit that will take years to fill.

“It’s a simple equation,” Ghosh said. “The premium coming in has to be higher than the losses going out.”

________________________________________________
This is a pretty good analysis of the coming bond market crash.  Notice it states that the insurance market will be taken out----Life Insurance the first to go.  See why you are seeing all those Life Insurance ads requiring no medical checkup or anything-----

THEY ARE SIMPLY GOING TO POCKET THOSE MONTHLY PREMIUMS.

This was written in 2013 acting as if the crash would come in 2014 but Bernanke allowed the QE bond bubble machine to continue another year and Yellen is now having to address it as the FED is leveraged out.  The crash will come soon......the FED is simply manipulating the inevitable.

'The most vulnerable are those who can least afford to suffer losses: Seniors who are approaching or in retirement, who have shifted large amounts of their money into fixed income investments.

Your tax-free municipal bonds could tank.

Your annuities and other insurance policies could turn to dust.

Your money invested in bank and insurance company stocks could vanish right before your very eyes'.

All of this is pretty important----yet, we do not hear a thing about it from media, labor or justice, our pols---and all of these national leaders know it is coming.  Their policies created this mess and labor and justice leaders are constantly backing neo-liberals.  It is important to have Governors and Mayors that will work through this in the people's interest and not corporate interest.

This article is not
hyperbole---it will happen.I did edit out his marketing ---

The Next Great Bubble about to Collapse

Martin D. Weiss, Ph.D. | Saturday, January 19, 2013 at 7:30 am

130 Senator Orrin Hatch warns that the bubble has the power to “destroy the retirement savings of millions of Americans.”

Famed economist Leonard E. Burman of Syracuse University is warning the U.S. Senate of “disastrous consequences for ourselves and the rest of the world.”

Goldman Sachs … Bank of America … Morgan Stanley … Royal Bank of Scotland … JPMorgan … and Oppenheimer Funds are all warning that it could bankrupt millions of investors.

Congressman Ron Paul says, simply, “this country will be ruined.”

These and many other authorities are talking about the greatest financial bubble in human history:

A bubble that is now more than EIGHT times larger than all the stock exchanges in the United States combined.

A bubble so massive, it is four times larger than the dot-com bubble of the 1990s and the housing bubble of the 2000s combined.

Now that bubble has begun to burst.

As it implodes, it will launch interest rates into the stratosphere … crush the feeble U.S. economy … destroy major U.S. banks and insurance companies … drive your cost of living through the roof, threaten your standard of living and financial security … and push the U.S. government to the very brink of financial collapse.

But the best defense is a strong offense -- and this crisis will also create windfall profit opportunities for a select group of investors who make the right moves now.

Just a few days ago, Weiss Research analyst Tom Essaye hosted a special online summit meeting to explain exactly how, and I’ll give you a transcript of the meeting in a moment.

In our online summit, he was joined by Safe Money editor Mike Larson and Real Wealth editor Larry Edelson. Here’s the transcript…

The Next Great Bubble about to Collapse
with Tom Essaye, Mike Larson and Larry Edelson — abridged transcript

Tom Essaye: If there’s anyone who knows how to capitalize on bursting bubbles, it’s our firm, Weiss Research.



For nearly a year now, I’ve been sounding the alarm again; NOT for the bursting of a bubble in the tech sector or housing sector … but in a market that is many times larger than all the stock exchanges in the United States COMBINED.


Debt is created in the bond market. That’s where the government goes to borrow money. So do states and local governments. Companies, too.

Borrowers sell bonds — or notes and bills — that guarantee investors a certain rate of interest or “yield” over time.

Since the turn of the century, the U.S. bond market has simply exploded in size — adding $20.7 trillion in new debt.

But now, despite massive new initiatives by the U.S. Federal Reserve, the meteoric rise in prices that characterized the debt market since the turn of the century has sputtered, stalled and is now dead in its tracks.

Millions of investors all over the world — including many of the world’s richest central banks — have started to stampede for the bond market’s exit.

And now, we’re beginning to see the first cracks appearing in this massive bubble.

This chart of the PIMCO Total Return Bond Fund is a perfect picture of the bubble in the bond market — and also the beginning of the crash.

On the left side of the chart, you can see the bubble in the bond market being inflated.

On the right-hand side, you can see how prices just plunged well below their support levels.

And just look at this chart of the iShares Municipal Bond ETF: It just fell off the proverbial cliff, giving back every penny it gained since last July!

But this crash has barely begun. The last few Treasury auctions showed that bidding from foreign central banks is plunging to the lowest level in years.

In addition, U.S. investors are starting to turn bearish on Treasuries. A recent report from a top industry watchdog showed that nearly 20% of all Treasury investors have started to cut back their holdings.

Even Fitch — the normally conservative ratings firm — is warning that a massive bubble has been created in the bond market.

This is huge. Bubbles are like an enormous Ponzi scheme: They collapse when the money stops flowing in.

The moment that happens, it’s over. And it’s beginning to happen right now!

As this bubble — the greatest bubble mankind has ever seen — implodes, the consequences will be devastating for millions of unprepared investors, just like the tech bubble was and just like the housing bubble was.

The most vulnerable are those who can least afford to suffer losses: Seniors who are approaching or in retirement, who have shifted large amounts of their money into fixed income investments.

Your tax-free municipal bonds could tank.

Your annuities and other insurance policies could turn to dust.

Your money invested in bank and insurance company stocks could vanish right before your very eyes.

THESE ARE SOME OF THE THINGS TO WATCH FOR AND THINK ABOUT THESE NEXT MONTHS AS THE BOND MARKET PREPARES TO COLLAPSE.  I WANT PEOPLE TO KNOW THAT AS WITH THE SUBPRIME MORTGAGE LOAN COLLAPSE YOUR POLS NOT ONLY KNOW IT IS GOING TO HAPPEN----THEY ARE CREATING THE CONDITIONS FOR THE CRASH.  THAT IS BECAUSE THEY WORK FOR GLOBAL CORPORATIONS AND PROFIT.  GET RID OF THEM!



Keep in mind the entire financial system of frauds is based on tricking people, or allowing others to trick people into taking on more debt than they can handle knowing the end result will be a collapse in market that leaves people/government unable to pay the debt. With the subprime mortgage fraud the banks targeted low-income homeowners not only to gain control of real estate in urban areas but to target the Federal Housing Authority and its taxpayer payments of fees and loans.  This coming municipal/sovereign debt fraud collapse targets again government coffers and taxpayers as corrupt neo-liberal politicians load the states and cities with debt knowing this crash in 2015 is a sure thing.  Public officials take an oath to serve and protect the Constitution and citizens and none of this meets this oath.  They are aiding and abetting a crime by knowingly placing the public in harms way.  Remember, we can build Baltimore schools by simply ending the billion in fraud and corruption each year so there is plenty of taxpayer money for these infrastructure projects.  It is the leverage needed to implode the state and city economy.

AGAIN, WE CAN REVERSE THIS----WE SIMPLY NEED TO ELECT POLS THAT REBUILD RULE OF LAW AND OVERSIGHT AND ACCOUNTABILITY.  EASY PEASY.

I want to make sure people understand that all of this was known years ago---below you see in 2011 financial analysts were advising to prepare for the collapse.  During that time think how many credit bond and leveraging deals have been made in Maryland and Baltimore---including the big $1 billion deal to rebuild public schools.  I was shouting and writing to show the public knew this was malfeasance so we are under no obligation when the crash comes to hand everything to investment firms as they plan.  We must have Rule of Law to provide that protection.  This is why these elections are critical these next few election cycles and it is why Maryland was willing to allow systemic election violations for Governor to make sure the right person was in place to protect the fraud when this collapse comes.

Keep in mind the FED controls when this crash occurs to the extend of ending QE and allowing the manufactured  inflation be replaced by real inflation numbers . This will create the environment for mass exodus from the bond market and she has no way to stop this as it has maxed and is now unable to be contained.  She may delay it, but it will come and it appears likely 2015 will be the longest she can delay.  Inflation which is now thought to be 5% or so will jump to some of the highest levels in US history and it is all because of FED policy and Congress and Obama passing laws that made municipal bond markets artificially attractive.  They sold our bond market to the world just as they sold toxic subprime mortgage loans to the world.  They earned trillions and the American people lost everything as will happen this time around.


This article refers to the last time the FED considered ending QE in 2011.... as we know Bernanke decided to extend the death sentence and allow Yellen to handle the collapsing economy. 

SHE WILL HAVE NO CHOICE AS THE FED IS MAXED IN DEBT AND INFLATION IS NOT CONTAINABLE. IT'S ONE BIG PONZI SCHEME.

O'Malley and the Maryland Assembly sold citizens out statewide and Rawlings-Blake and Baltimore City Hall sold citizens out locally as they did during the subprime mortgage loan fraud.

The Coming Bond Market Crash: The Three Moves Every Investor Must Make

• By Martin Hutchinson, Global Investing Specialist, Money Morning  ·   July 1, 2011 
  

Since last November, the U.S. Federal Reserve has been buying U.S. Treasury bonds at a rate of about $75 billion a month. That's part of Fed Chairman Ben S. Bernanke's "QE2" program, under which the central bank was to buy $600 billion of the government bonds.

But QE2 ended yesterday (Thursday), meaning the Fed will no longer be a big buyer of Treasury bonds.

So starting today (Friday), the U.S. Treasury needs to sell twice as many Treasury bonds to end investors as it had been.

But the problem is, who's going to buy them?

Not China, which is diversifying its trillions in assets to get as far away from the U.S. dollar as fast as it can.

Not Japan, which is trying to rebound from its March 11 earthquake, tsunami and nuclear disaster - and is focusing all its spending on reconstruction.

And - as we've seen -neither is the Bernanke-led Fed.

I'm telling you right now: We are headed for an epic bond market crash. If you don't know about it, or don't care, you could get clobbered.

But if you do know, and are willing to take steps now, you can easily protect yourself - and even turn a nice profit in the process.

Let me explain ...

A Timetable for the Coming Crash I'm an old bond-market hand myself - my experience dates back to my days at the British merchant bank Hill Samuel in the 1970s - so I see all the signs of what's to come.

Having the two biggest external customers of U.S. debt largely out of the market is a huge problem. Unfortunately, those aren't the only challenges the market faces. The challenges just get bigger from there - which is why I'm predicting a bond market crash.

Latest Comment^ It is 2013, QE3 is out so maybe his timing is off but with all the printed mon…

Steadily rising inflation is one of the challenges. Inflation is a huge threat to the bond markets, and is almost certain to create a whipping turbulence that will ultimately infect the stocks markets, too.

Many pundits will tell you that if investor demand for bonds declines, and investor fear of inflation increases, bond-market yields could increase in an orderly fashion.

But I can tell you that the bond markets don't work like that. Price declines affect existing bonds as well as new ones, so the value of every investor's bond holdings declines. And with many of those investors heavily leveraged - especially at the major international banks - the sight of year-end bonuses disappearing down the Swanee River as bonds are "marked to market" will cause a panic. That's especially true when end-of-quarter or end-of-year reporting periods loom.

That's why we can expect a bond market crash at some point. If you ask me to make a prediction, I'd say that September or December were the most likely months for such a crash.

A Boxed-In Bernanke One sad - even scary - fact about what I'm predicting is that Fed Chairman Bernanke won't be able to do much about it ... though he'll certain try.

Consumer price inflation is now running at 3.6% year-on-year while producer price inflation is running at 7.2%. In that kind of environment, a 10-year Treasury bond yielding 3% is no longer economically attractive. Since monetary conditions worldwide remain very loose, inflation in the U.S. and worldwide will trend up, not down.

The bottom line: At some point, the "value proposition" offered to Treasury bond investors will become impossibly unattractive. When that happens, expect a rush to the exits.

If Bernanke attempts "QE3" - a third round of "quantitative easing" - he will have a problem. If other investors head for the exits, Bernanke may find that the U.S. central bank is as jammed up as the European Central Bank (ECB) currently is with Greek debt: Both will end up as the suckers that are taking all the rubbish off of everyone else's books.

There's a limit to how much Treasury paper even Bernanke thinks he can buy. And if everyone else is selling, that "limit" won't be high enough to save the bond market.

With Bernanke buying at a rapid rate, the inflationary forces will be even stronger, so every Bureau of Labor Statistics report on monthly price indices will be marked by a massive swoon in the Treasury bond market.

Eventually, there has to be a new head of the Fed - a Paul A. Volcker 2.0 who is truly committed to conquering inflation. Alas, it won't be Volcker himself since, at 84, he is probably too old.

But it might be John B. Taylor, who invented the "Taylor Rule" for Fed policy. The Taylor Rule is actually a pretty soggy guide on running a monetary system. But it has been flashing bright red signals about the current Fed's monetary policy since 2008.

However, since a Fed chairman who is actually serious about fighting inflation would be a huge burden for current U.S. President Barack Obama to bear - and could badly hamper his chances for re-election, any such appointment is unlikely before November 2012.

How to Profit From the Bond Market Crash

Given that reality, it's likely that Bernanke will attack any bond market crash that occurs ahead of the presidential election just by printing more money; there won't be any serious attempt to rectify the fundamental problem, meaning inflation will continue to accelerate.

For you as an investor, this insight leads to two conclusions that you can put to work to your advantage. The scenario I've outlined for you will be:

Very good for gold and other hard assets. Challenging for Treasury bonds; prices will remain weak no matter how vigorously Bernanke attempts to support them.

So what should you do with this knowledge? I have three recommendations.

First and foremost, if Bernanke were not around, I would expect gold prices to fall following a bond market crash. But since he's still at the helm at the Fed, I expect him to do "QE3" in the event of a crash. And that means gold - not Treasury bonds - would become an investor "safe haven."

You can expect gold prices to zoom up, peaking at a much higher level around the time Bernanke is finally replaced. Silver will also follow this trend. So make sure you have substantial holdings of either physical gold and silver or the exchange-traded funds (ETFs) SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).

Second, if you want to profit more directly from the collapse in Treasury bond prices, you could buy a "put" option on Treasury bond futures (TLT) on the Chicago Board Options Exchange (CBOE). The futures were recently trading around 94, and the January 2013 80 put (CBOE: TLT1319M80-E) was priced around $4.50, which seems an attractive combination of low price and high leverage.

Finally, if you don't already own a house, you should buy one - and do so with a fixed-rate mortgage. A U.S. Treasury bond market crash will send mortgage rates through the roof, so today's rates of about 4.8% will represent very cheap money, indeed. Even if house prices decline by 10%, a 2% rise in mortgage rates would increase the monthly payment (even accounting for a 10% smaller mortgage), by a net 11.8% (the payment on a $100,000 mortgage at 4.8% is $524.67; that on a $90,000 mortgage at 6.8% is $586.73).

Needless to say, the same benefits apply to rental properties financed by fixed-rate mortgages: With lower home ownership and rising inflation, rents are tending to rise significantly.

There's a storm coming in the Treasury bond market. But by recognizing its approach, we can turn the bond market crash to our advantage.

_________________________________________________

HMMMMMM.....reduce reserve funds and raise public debt.....all to augment the billions of dollars lost to the Maryland economy to fraud each year.

The debt takes the form of state leverage for projects and services----they have even leveraged the public pension funds all with no indication that 2015 will bring a major recession/depression.  DIDN'T SEE THAT COMING YOUR NEO-LIBERALS AND NEO-CONS WILL SAY!

All that leverage supposedly balanced the state budget and O'Malley pretended to be saving public sector jobs and pensions all while knowing this economic crash will lead to huge layoffs and end public sector pensions.  Labor union leaders know this dynamic and still go with the neo-liberals doing it!  As we all know each year since this 2010 article the public debt and leverage has increased.  Again, Republicans in other states are doing the same thing so do not listen to Maryland Republicans playing this card---they would do the same.

Maryland Governor’s Budget Cuts Reserve Payments, Boosts Debt

by Patrick Temple-West JAN 20, 2010 8:44pm ET Bond Buyer


WASHINGTON — Maryland Gov. Martin O’Malley yesterday released a proposal for the state’s fiscal 2011 budget that would reduce reserve fund contributions and increase public debt by 7.1% over fiscal 2010.



Below you see what is only the tip of the iceberg with tax credits that commit a level of tax forgiveness for decades that starves our government coffers.  O'Malley cut higher education aid and public transportation funding to pay for just a few of these corporate subsidies all in the name of jobs.  Well, when the bond market crash comes and the jobs are gone because of the recession global corporations will still be receiving tax breaks as they do business/make profits overseas. 

WHO CARES ABOUT LEVERAGE AND STATE DEBT WHEN THE IDEA IS TO MAXIMIZE PROFITS FOR GLOBAL CORPORATIONS.

We'll just cut more services, programs, sell public assets, and let global corporations handle the business of government that now has no revenue.
I'm not going to format since one can just look down very quickly to see all of the development is done with tax credits. They all are supposed to create jobs and help low-income people all of which will be killed by the coming economic crash from the credit leverage in these very policies.  Attracting global corporations to Maryland is the answer to jobs and a strong economy say neo-liberals-----only it does the opposite.  Most of these tax breaks will go to large corporations.

$2 million in tax credits for creating 10 poverty jobs......hmmmmmm.

Maryland Department of Business & Economic Development

economic development and the creation of jobs. MVF targets emerging technology-based businesses including biotechnology, information technology, telecommunications, software development and advanced materials.• Challenge Investment Program – $650,000 to ten start-up firms.• Enterprise Investment Fund – $2.2 million – three new firms and follow-on funding to five companies.Federal IncentivesCommunity Development Block Grant Program – Economic DevelopmentThis program assists local governments in implementing commercial and industrial economic development projects. Approved program funds are disbursed to eligible local jurisdictions as conditional grants and used for public improvements for business start-up or expansion or business loans. Projects must create jobs with the majority targeted to individuals from low to moderate income or eliminate blight conditions that impede commercial and industrial development. Fund uses include acquiring fixed assets, infrastructure and feasibility studies. • CDBG-ED funds of $2.2 million supported seven closed projects to create or retain 185 full-time jobs. Three projects worth $1.3 million were approved, representing 129 new or retained jobs.Maryland Economic Adjustment FundMEAF assists small businesses with upgrading manufacturing operations, developing commercial applications for technology, or entering new economic markets. Eligible businesses include manufacturers, wholesalers, service companies and skilled trades. Funds can be used for working capital, machinery and equipment, building renovations, real estate acquisition and site improvements. •Four Maryland Economic Adjustment Fund projects totaling $703,000 were approved and five transactions totaling $726,500 were closed.Tax Credit ProgramsOne Maryland Tax Credit Program Businesses can qualify for up to $5.5 million in income tax credits under the program when they invest in an economic development project in a “qualified distressed county.” Qualified Distressed Counties currently include: Baltimore City, Allegany, Dorchester, Garrett, Caroline, Somerset and Worcester. The business must create at least 25 new full-time positions at the project within 24 months of the date the project is placed in service. The business must be engaged in an eligible activity and incur eligible project or start-up costs. • FY2009 – 3 final certificates of eligibility issued for businesses that created 219 new jobs.Job Creation Tax CreditEncourages businesses to relocate to or expand in a Maryland Priority Funding Area by providing income tax credits based on new jobs created. Subject to various restrictions and conditions including location, wage levels and number of jobs created the credit may be for 2.5% up to $1,000 per job or 5% of annual wage up to $1,500 per job. • FY2009 – 7 final certificates of eligibility issued for businesses that created 307 new jobs.Enterprise Zone ProgramBusinesses located in a maryland enterprise Zone may receive income and real property tax credits in return for creating jobs. Local governments apply to the Department to designate Enterprise Zones. The ten-year real property tax credit reduces taxes on property improvements for ten years. The income tax credit for creating new jobs is$1,000 per new worker; for hiring economically disadvantage employees, up to $6,000 per new employee (over three years).• As of June 2009, there were 29 Enterprise Zones and two focus areas. • FY2010– 753 businesses will receive property tax credits totaling $26.3 million.– State share to reimburse localities will be $13.1 million, assuming the State’s full obligation is met.– Credits are based on real property investments totaling $1.945 billion.AGENCY MISSION & ACTIVITIES (contintued)
_____________________________________________

Here you see for whom neo-liberals and neo-cons in Maryland work---as they say we do not need to bring money home to pay taxes and  build infrastructure---we have plenty of business overseas thanks to O'Malley's 8 years of sending all of Maryland's revenue to building global structures for development.  We are exporting education and health care businesses none of which grows jobs in Maryland.

This is why neo-liberals are not concerned about the coming economic crash----it will not hurt these global corporations and it will provide excuses to hand more public operations/assets to these global corporations.  Dulaney and neo-liberals are trying as hard as they can to repatriate global tax requirements in schemes to build infrastructure.  Remember, if they paid taxes we would have the money for infrastructure.  Domestic businesses pay taxes so the answer is GET RID OF GLOBAL CORPORATE CONTROL OF YOUR ECONOMY!  Dulaney is a Clinton investment banker who knows banks owe tens of trillions of dollars in fraud but does not seem to want to offer that solution.  Buying Treasury bonds when the bond market is preparing to collapse?  REALLY MR DULANEY?

Raise your hand if you know the answer is to get rid of global corporations from the Maryland economy rather than pretending to need to beg them for their taxes!!!!!  EVERYONE.  Raise your hand if you understand that tax breaks in exchange for bond purchases just when the bond market is ready to collapse will simply allow corporations to enter a bond market at the bottom for tremendous profits just as happened in 2008 with the stock market crash.  THAT'S WHAT THESE POLICIES ARE ALL ABOUT!

Everyone knows as well that the main avenue for recovering those tens of trillions of dollars in corporate fraud is HIGHER CORPORATE TAXES but as this article shows neo-liberals and neo-cons only intend to lower corporate taxes....you know, its all about job creation.

Md. Companies Have Billions in Assets Overseas Business Top News — 28 March 2014 By Fola Akinnibi
Capital News Service

6 WASHINGTON – The president’s budget, released in early March, called for the creation of a national fund to finance repair of the nation’s crumbling roads, bridges and other infrastructure — an idea also proposed by a freshman Maryland congressman.

Rep. John Delaney, D-Potomac, wants to fund infrastructure repair by bringing home billions of dollars in foreign earnings from U.S.-based corporations.  The congressman said he has been long concerned about decaying infrastructure.

Delaney’s Partnership to Build America Act would create a new way to pay for these repairs. Corporations would provide the money by buying bonds in The American Infrastructure Fund.

In exchange, they would be allowed to bring back money locked up overseas without paying the full 35 percent corporate tax rate.

Delaney’s bill could come as a relief to corporations with large foreign operations that have deferred paying U.S. corporate taxes on their overseas earnings indefinitely. For example, 10 Maryland-based multinational corporations, including Columbia-based MICROS Systems Inc. and Baltimore-based Under Armour Inc., are holding a combined $3.5 billion overseas, according to filings with the Securities and Exchange Commission.

While it would mean a major tax savings, none of the 10 publicly held Maryland companies contacted would comment on the proposed legislation.

One expert said there’s little incentive to bring the funds back with so much business opportunity overseas. Instead, it makes sense for U.S. companies to let the overseas funds stay put and postpone a U.S. tax bill.

“It’s better to defer,” said Michael Faulkender, a finance professor at the University of Maryland’s Smith School of Business.

Further, the Delaney proposal is out of sync with many plans to overhaul the U.S. tax code, he said. “Every proposal on the table is for the corporate tax rate to go down, not up.”

Rich Badmington, W.R. Grace & Co.’s vice president of global communications, said most of the Columbia chemical company’s revenue comes from international operations. The company plans to continue investing in those operations.

“We are able to do that without bringing cash back to the U.S. because we are continuing to invest,” Badmington said. “(Research and development) is a function that requires continuing investment and we have quite a lot of that outside the U.S.”

President Barack Obama’s latest budget plan called for the creation of a government-owned entity to finance infrastructure projects. Delaney said the president’s support for something similar to his bill was “great,” and said it shows how much momentum the bill has.

“We’re very optimistic about it, we have strong bipartisan support,” Delaney said.

The bill has 57 co-sponsors in the House and 12 in the Senate, including Sens. Lindsey Graham, R-S.C., and Michael Bennet, D-Colo., head of the Senate Finance Committee’s Taxation and IRS Oversight subcommittee. Hearings have not been scheduled for the bill.

Under the tax code, corporations can avoid paying taxes on foreign earnings as long as the money is being permanently reinvested overseas. When the corporations decide to bring these funds back home, a process called “repatriation,” the money then is subject to U.S. taxes.

Originally, the tax exemption was meant to help U.S. corporations compete overseas, said Mitchell Kane, a tax professor at New York University’s School of Law. Companies claimed paying taxes in two countries would put them at a disadvantage and the government responded with the exemption, he said.

The plan was to have the companies pay foreign taxes, which in many cases are lower than the U.S. tax rate, and then pay U.S. taxes when the money was repatriated. After this process, the company would receive a credit for any foreign taxes paid, Kane said.

Allowing such an exemption has created an incentive for companies to keep their money overseas and defer the U.S. corporate tax, said Jane Gravelle, an economist with the Congressional Research Service. But parking money offshore isn’t a long-term solution for companies, she added.

“They may think they can hold their breath forever and borrow money,” Gravelle said. “How long are they going to be able to do that? Shareholders eventually want dividends.”

This exemption could result in $265.7 billion in lost revenue for the federal government through 2017, according to a 2013 report by Congress’ Joint Committee on Taxation.

For now, however, companies aren’t likely to repatriate without a major tax discount.

W.R. Grace has more than $1.1 billion held overseas and would have to pay $149.7 million in taxes if it was repatriated, according to SEC filings. That money will remain overseas, except in instances where repatriation would result in minimal or no U.S. taxes, the company said in its most recent SEC filing.

MICROS Systems, a Maryland-based computer hardware and software producer, has about 61 percent of its cash and cash equivalents, $385.8 million, held internationally with no plans to repatriate, according to the company’s most recent filings with the SEC.

Maryland-based apparel company Under Armour has $95.2 million, or 27 percent, of its cash and cash equivalents held overseas with no plans to bring it back.

Spokespersons from MICROS and Under Armour could not be reached for comment.

Other companies have begun to repatriate their foreign funds, which Kane said could help cover corporate expenses. McCormick & Company, a spice, herbs and flavoring manufacturer, repatriated $70 million in 2012, according to the company’s most recent SEC filings. Even still, most of the company’s cash is held in foreign subsidiaries, the filings said.

A spokesperson for McCormick and Co. could not be reached for comment.

Some of the largest U.S. corporations make about half of their money internationally, Delaney said. The bill is just a way to get some of it back.

“It creates a way for some of that money to come back, which is good for our economy,” Delaney said. “And it creates this large-scale infrastructure fund, which is good for our country.”

Instead of government funding, the American Infrastructure Fund would raise cash through a $50 billion bond offering. Companies would buy the bonds at a 1 percent fixed interest rate and a 50-year term, in exchange for a chance to repatriate a certain portion of overseas earnings tax-free for every dollar spent on bonds.

A bond to repatriation ratio would be determined by an auction and could result in companies paying an effective 12 percent tax rate, Delaney said. Money raised in the bond sale could then be leveraged and loaned to state and local governments for projects.

The auction process will benefit both the infrastructure fund and the corporations, which will be able to find a price that is right for them, Delaney said.

“We’ve talked to them and they’re very supportive of it,” he said.

The American Business Conference, Associated Equipment Distributors and Terex Corporation are among those supporting the bill.

Tech giants and pharmaceutical corporations have lobbied for a repatriation holiday since the 2004 American Jobs Creation Act allowed them to repatriate at a discounted rate. Because of the intellectually-based capital that these companies thrive on, it is sometimes easier for them to keep assets overseas.

For example, Apple has $124.4 billion held overseas, according to the company’s most recent SEC filing.

The 2004 bill reduced repatriation taxes to 5.25 percent if corporations promised to invest the money at home. The one-year holiday is widely regarded as a failure because it spurred an increase in repatriation, but not an increase in jobs or investments, according to a report by the Congressional Research Service.

“The argument was that it would be a stimulus” to the U.S. economy, Gravelle said. “Most people who studied this found out it was being used to repurchase shares.”

Share repurchases are a common way to boost stock prices.

Corporations used the money to pay stockholders dividends and pay off debts, which doesn’t make for a good stimulus, she continued.  Instead, the holiday created a “moral hazard” and companies have parked money overseas, waiting for the next holiday, Gravelle said.

Delaney’s bill has short-term benefits but doesn’t address the larger problems with the tax code, Faulkender said. Corporations will want to move more and more operations overseas if they can find discounts on U.S. taxes, he added.

“If you signal that firms are going to realize a lower tax rate, even after repatriation, on their foreign operations than on their domestic operations, you’re going to incentivize even more offshoring,” he said.

“I don’t think that’s good for the U.S. economy.”

THE NEXT FEW DAYS I WANT TO TALK ABOUT THE COMING ECONOMIC COLLAPSE IN 2015.  I WILL START BY REMINDING PEOPLE WANT CAUSED THE 2008 CRASH AND SHOW HOW THE TWO ARE TIED TO TRANSFERRING ALL WEALTH TO THE TOP AND USING THE EXCUSE OF GOVERNMENT DEBT TO DISMANTLE OUR DEMOCRATIC STRUCTURES.  NEO-LIBERALS AND NEO-CONS WILL TAKE IT ALL!


I want to encourage people to pay attention to a subject that bores everyone but is the source of the looting of US government coffers and individual's pockets.  The Federal Reserve and Wall Street frauds. We need to know all of this CAN be reversed.  The economy is closer to collapse yet again by the same people playing the same games and all of it illegal.  So, let's review what caused the crash of 2008 to see how it relates to what will bring the economy down in 2015. Remember, these economic policies started when Reagan/Clinton took the Republican and Democratic Parties to neo-liberalism.  The goal back then was to dismantle all of the public structures built for strong 1st world country to create the wealth inequity that goes with empire-building. The same was happening in Europe and the UK.  This is why Maryland has no public justice or oversight and accountability today----all of this boom and bust is no accident----it is all about wealth redistribution to the top.

Clinton deregulated and broke the Glass Steagall to set the stage for this explosive growth of US corporations with no overight and Bush simply allowed for an 'anything goes' environment.  Reagan/Clinton/Bush working with Alan Greenspan and Wall Street.  Greenspan/Geithner allowed open fraud and corruption in the financial markets and Bush made sure the US Justice Department and financial agencies aided and abetted these crime.  The goal was transferring real estate from citizens to the banks through foreclosure so to control development especially in urban centers like Baltimore as well as sending trillions of dollars in government funding for these subprime loans to the banks.  

  'We didn't see that coming' said Greenspan. Meanwhile, neo-liberals at the state and local levels were allowing the subprime mortgage fraud go wild. This same thing happened in Europe as subprime mortgage loans filled their economy as well.  It was Obama's job to make sure the money stayed with those committing the fraud.

The constant portrayal of this Visigoth looting as creating homeownership for low-income people -----knowing a collapse would send people into foreclosure-----shows the social pathology driving Wall Street and neo-liberals and neo-cons.

IT IS NOT LEGAL FOR ANYONE TO ALLOW OPEN FRAUD AND CORRUPTION AND GREENSPAN WAS ALLOWED TO JUST FADE AWAY FOR ONE OF THE GREATEST CRIMES IN HISTORY.

This was no maestro---he simply used people's faith in government and Rule of Law and sold people in investing in a system he knew would blow up making most people losers.  Think what is happening today---media is telling you the market is strong, politicians are throwing pensions into it and we all know it is getting ready to crash....and in 2015 we will hear O'Malley and Rawlings Blake who are loading the state with debt just as they oversaw the subprime mortgage fraud----'I didn't see that coming'!
WELL, WE SEE IT COMING AND IT IS INFUSED WITH PUBLIC MALFEASANCE AND FRAUD.

Alan Greenspan: Public Enemy Number One

By Stephen Lendman Global Research, October 27, 2008

With so many good choices, it’s hard just picking one. But given the gravity of today’s financial crisis, one name stands out above others. The “maestro,” as Bob Woodward called him in his book by that title. The  “Temple of Boom” chairman, according to a New York Times book review. Standing “bestride the Fed like a colossus.” Now defrocked as the “maestro” of misery. Alan Greenspan. From August 11, 1987 to January 31, 2006, as head of the private banking cartel euphemistically called the Federal Reserve. That Ron Paul explains isn’t Federal and has no reserves.

It represents bankers who own it. Big and powerful ones. Not the state or public interest. It prints money. Controls its supply and price. Loans it out for profit and charges the government interest it wouldn’t have to pay if Treasury instead of Federal Reserve notes were issued. People, as a result, pay more in taxes for debt service. The nation is more crisis-prone. Over time they increase in severity. The current one the most serious since the Great Depression. Potentially the greatest ever. The result of Greenspan’s 18 year irresponsible legacy.

He championed deregulation and presided over an earlier version of today’s crisis. The Reagan-era savings and loan fraud. It bankrupted 2200 banks. Cost taxpayers around $200 billion and for many people their savings in S & Ls they thought safe.

In the 1990s, he engineered the largest ever stock market bubble and bust in history through incompetence, subservience to Wall Street, and dereliction of duty. In January 2000, weeks short of the market peak, he claimed that “the American economy was experiencing a once-in-a-century acceleration of innovation, which propelled forward productivity, output, corporate profits, and stock prices at a pace not seen in generations, if ever….Lofty stock prices have reduced the cost of capital. The result has been a veritable explosion of spending on high-tech equipment….And I see nothing to suggest that these opportunities will peter out anytime soon….Indeed many argue that the pace of innovation will continue to quicken….to exploit the still largely untapped potential for e-commerce, especially the business-to-business arena.”

A week later, the Nasdaq peaked at 5048. Lost 78% of its value by October 2002. The S&P 500 49% from its March 2000 high to its October 2002 bottom. Individual investors were left high and dry as a result. For Mr. Greenspan, it was back to engineering multiple bubbles with 1% interest rates and a tsunami of easy money.

He advocated less regulation, not more. Voluntary oversight. The idea that markets work best so let them. Government intervention as the problem, not the solution. In the mid-1990s, he told a congressional committee:

“Risks in financial markets, including derivative markets, are being regulated by private parties. There is nothing involved in federal regulation per se which makes it superior to market regulation.”

On October 23 before the House Government Oversight and Reform committee, he refused to accept blame for the current crisis, but softened his tone and admitted a “flaw” in his ideology. Confessed his faith in deregulation was shaken. Said he was in a “state of shocked disbelief.” Unclear on what went wrong. Not sure “how significant or permanent it is,” and added:

– “We are in the midst of a once-in-a century credit tsunami (requiring) unprecedented measures;”

– “This crisis has turned out to be much broader than anything I could have imagined;”

– “fears of insolvency are now paramount;”

– significant layoffs and unemployment are ahead;

– a “marked retrenchment of consumer spending” as well;

– containing the crisis is conditional on stabilizing home prices;

– at best, it’s “still many months in the future;”

What went wrong with policies that “worked so effectively for nearly four decades,” he asked? Securitizing home mortgages. “Excess demand” for them, and failure to properly price them he answered. Unmentioned was unbridled greed. The greatest ever fraud. No oversight, and a predictable crisis only surprising in its magnitude and how it grew to unmanageable severity.

Greenspan is now softening on regulation but barely enough to matter. Too little, too late by any standard, and only to restore stability after which chastened investors “will be exceptionally cautious.” In the end, in his view, “This crisis will pass, and America will reemerge with a far sounder financial system.” Until another Fed chairman repeats his mistakes. Creates a crisis too big to contain. Destroys unfettered capitalism as we know it. Changes the world irrevocably as a consequence. Unless this time is the big one and does it sooner.

In March 1999, Greenspan was optimistic at the end of a robust decade (that James Petras calls “the golden age of pillage”) with no worries about new millennium meltdowns. He addressed the Futures Industry Association and said it would be “a major mistake” to increase rules on how banks assess risks when they use derivatives. He added: “By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.” By a compounded 20% rate throughout the decade. Around 30% alone by banks in 1998. And, according to Greenspan, “The reason that (derivatives) growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risk….the value added of derivatives themselves derives from their ability to enhance the process of wealth creation (and) one counterparty’s market loss is the (other’s) gain.”

Overall, they’ve increased the standard of living of people globally, he claimed. In fact, they contributed to global crises in the 1990s. Hot money in, and meltdowns when it exited. The problem is derivatives work well in bull markets, but are disastrous when they’re down. Going up they do nothing for ordinary people, but during downturns receding tides sink all boats and all in them and aren’t the zero sum game Greenspan suggested.

Worst of all are so-called credit default swaps (CDSs). The most widely traded credit derivative. In the tens of trillions of dollars. A $43 trillion market, according to PIMCO’s Bill Gross. The International Swaps and Derivatives Association (ISDA) estimates it at $54.6 trillion. Down from $62 trillion at yearend 2007. Others place it higher, but key is what they are and how they’re used. They resemble insurance (on risky mortgages), but, in fact, are for little more than casino-type gambling. Unregulated with no transparency in the shadow banking system that dwarfs the traditional one in size and risk.

Gross describes it this way. It “craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever.” CDSs are at the center of shadow banking, and Gross and others warn about possible financial Armageddon if things begin collapsing.

A “Cheerleader for Imprudence”

That, according to James Grant, editor of Grant’s Interest Rate Observer. Greenspan’s “biggest mistake was inciting people to do imprudent things.” He called him “marble-mouthed” for his “Greenspeak” and not simply admitting he “was as blind as those (he) pretended to lead. This sense of security that people invested in the idea of perfect control by an all-knowing brain at the top, that idea’s been shattered.”

In July, Grant was outspoken in a Wall Street Journal op-ed titled “Why No Outrage?” He quoted Mary Elizabeth Lease from the Populist era haranguing farmers to “raise less corn and more hell.” He asked why today’s financial victims aren’t protesting Fed policy “of showering dollars on the (monied) people who would seem to (least) need them.” Where are the “uncounted improvident?” Have they “not suffered (enough) at the hands of what used to be called The Interests? Have the stewards of other people’s money not made a hash of high finance? Where is the people’s wrath?” In the wake of the “greatest (ever) failure of ratings and risk management.”

Greenspan’s Fed cut interest rates to 1%. “House prices levitated as mortgage underwriting standards collapsed.” He claimed earlier that property appreciation was a sign of prosperity and a strong economy and “while home prices do on occasion decline, large declines are rare.” Most homeowners experience “a modest but persistent rise in home values that is perceived to be largely permanent.”

Especially, according to Grant, at a time that “credit markets went into speculative orbit, and an idea took hold. Risk….was yesterday’s problem.” It led to “one of the wildest chapters in the history of lending and borrowing.” As a consequence, an $8 trillion home valuation wealth bubble and an unprecedented oversupply of unsold properties. Now in even more  oversupply as owners default. Are foreclosed on or simply walk away from unaffordable underwater assets. They sit empty with no one to buy them except for those able in distressed sales.

The whole episode criminal and avoidable had the Fed used its authority under the 1994 Home Ownership and Equity Protection Act. It authorized the central bank to monitor abuses and intervene, if necessary, to prevent abusive lender practices. It failed to do it.

The result was predictable. People and the economy in crisis. Greenspan orchestrated it. His successor Bernanke did nothing to curb it. Wall Street was on a roll until it crashed. Huey Long once compared JD Rockefeller to “the fat guy who ruins a good barbecue by taking too much.” Wall Street thrives on it. Fed largesse enables it. The problem is their indigestion affects everyone. A stomachache spreading round the world. How bad it’ll get and where it stops nobody knows. Blame it on Greenspan. Our “former clairvoyant,” according to Grant.
___________________________________________


Below you hear the same talk as we did in 2006-2007 as the subprime mortgage market began to implode and again it was the FED policy and the Obama Administration/Congress that fueled this crash just as it was Greenspan and Bush with the subprime mortgage loans.

Where last fraud centered on redistributing real estate to the few----this fraud centers on using credit bond and municipal debt to create the excuse to privatize all that is public and end public sector pensions and benefits.  The 2015 crash will be so deep with no help from the Federal government still holding $17 trillion in debt from the last massive corporate fraud that the US economy will look like Greece and Spain.  It will place the US in the same double-disaster as Europe---subprime loan fraud/sovereign debt fraud.

As the article below states-----hold on to your hats as the market sees a mass exodus from the bond market!!!

Where this article makes it sound that Yellen is being a 'dove'....she has no options....the FED under Bernanke did what the FED under Greenspan did......fed the bond market bubble until there was no return.  Remember, Wall Street wants people back in the stock market and blowing up the once safest place to invest, the bond market, will do that.  Soon, everyone will be fleeing the bond market as it collapses right back to the stock market.  They are making trapped rats of our pension system and giving us no opportunity for a stable economy.


THAT'S A NEO-LIBERAL/NEO-CON FOR YOU!!!!!  GET RID OF THEM!!!

Fed Officials Trying to Warn Bond Markets
July 15th, 2014
in contributors

by EconMatters, EconMatters.com

The Purpose of Complacency Talk

The Fed officials have been coming out in speeches the last couple of weeks with rhetoric about 'complacency' and other such code words for chasing risk ahead of what the Federal Reserve knows is going to be an abrupt change in monetary policy over the next six months.


Follow up:

The Fed is concerned because they know they want an orderly transition in markets and not causing major dislocations in markets by massive selloffs. However, the getting is so good with interest free money that participants are going to push this edge they have in markets right up until the last possible exit minute.

So despite the fact that QE ends in October with no more bond buying by the Fed, the 10-Year is still sitting at 2.50% with participants making money hand over fist with the borrow at 15-25 basis points and investing in yield instruments with massive leverage trades that has been so popular and irresistible by investors looking for 'free money arbitrage' opportunities.



An Orderly Unwind

The problem that the Fed has rightly identified is that they are not going to get an orderly exit at this pace, the unwind is going to be massive, jarring, and definitely not 'orderly'! The Bond markets, take the 10-year yield could literally have a 25 or 35 basis point move over a 24 hour period that would wreak a lot of havoc on fund flows, asset classes and financial markets.

This turmoil in the bond market could really be disastrous because the Fed participants realize the bond market isn't being priced currently where the Fed is moving to in terms of monetary policy. The Fed should be alarmed because the unwind is setting up for a possible 100 basis point move in two months' time frame type of fund dislocation and reallocation of capital, and that is going to be problematic for markets!



But the Fed only has themselves to blame for this predicament as in this case you cannot have your cake and eat it too! Janet Yellen cannot be so dovish at Fed news conferences given her reputation as a dove among doves, and get any respect from market participants; the trade is going to be all-in and one-sided without the slightest regard for the risks associated with being so aggressive.

In short, Janet Yellen has encouraged the one thing that Fed governors should always avoid being so 'transparent' that market participants go full boar on a trade, one-sided, highly levered, unhedged, and nothing could possibly happen with this dovish a Fed Chairperson at the helm trade! In a nutshell they have become too 'complacent' or they have taken her dovishness for granted.

Pigs at the Bond Trough

The pattern has been quite clear in Bond Markets wait until after the 200k plus Employment Report blows the 10-Year up to 2.70%, and come in and buy bonds like there is not tomorrow with huge leverage, until they have to get out of the way of the next CPI, GDP or Employment Report - as this process has repeated itself over the last four months of financial markets. The Levered Yield Trade has been the trade of the year so far in 2014 - the strategy of investing in anything with yield from over-valued utilities, pricey bonds and even stodgy low growth Big Caps with some semblance of a dividend yield!

Janet Yellen cannot have her Dovish Cake, and eat it too in the form of an "Orderly Unwind"!

So the Fed has to realize that sending out the mignons of the Fed isn't going to counteract Janet Yellen's dovishness. If they want markets to start unwinding trades ahead of policy adjustments that are coming and not wait until the last possible minute, then Janet Yellen herself is going to have to send a shot across the monetary bow so to speak!

She is going to have to come out with a hawkish tone to garner some healthy respect for normalization of fed policy by markets. She is dovish we get that, but the Fed is about to change monetary policy, and much sooner than is currently priced into many asset classes, and it is going to take some considerable time if participants started repositioning today to unwind many of these massive positions in markets, any sense or orderliness necessitates a little at a time versus all at once!

Janet Yellen has got to start talking hawkish to get this process started otherwise her worst fear is going to materialize in spades as market participants are all going to wait until the last minute trying to make that last dollar on the yield trade, and cause huge market turbulence when they all try to get out at once!


The Data Indicate 1st QTR 2015 Rate Hike at the Latest!

The Employment numbers, the inflation numbers, and the risky valuations in financial markets all point to the Fed needing to start raising rates sometime in the first quarter of next year. This is much sooner than Janet Yellen's Dovish talk has markets pricing in with their forecast for late in 2015 for the first rate hike.

Market participants are far too levered up, all on the same side, and well behind the monetary normalization curve of when the first rate hike is actually going to occur. This is a recipe for disaster, and that seminal light bulb moment in financial markets when everybody realizes, that moment in Margin Call where the analyst drops the ear-buds out saying internally holy shit, that they need to liquidate everything right now. In other words, the entire market all hits the sell button at the same time!

_______________
Wall Street and the FED thinks the steps towards stabilizing the economy have been a success and they are ready for the coming crash.  What's not to like---the American people lose all their wealth as the richest wealth soars.

Below you see an article that shows the progression of the plan.  Goldman Sachs was key to the financial frauds in the US but were key in bringing down the European social society.  They targeted especially Greece and Spain with fraudulent financial instruments loading these nations with huge sovereign debt having the goal of imploding the economies forcing the dismantling of social society.  Why this is important to Americans today? It is these same tactics are now coming to the US.  We experienced the subprime mortgage fraud in the US as they did in Europe but Europe was brought down harder because a second fraud----sovereign/municipal debt fraud ----completely emptied their government coffers.  This is why Europe is in deeper distress than the US.  Well, the time is now for the sovereign debt fraud in the US and it looks like levered municipal bond debt, mortgaged tax debt, and state and local money tied to development that cannot be afforded. 

THIS MASSIVE DEBT BUILDUP ON THE BACKS OF OUR GOVERNMENT IS WHAT CREATED IN EUROPE THE DEEPEST OF RECESSIONS.

This happened in Europe between 2001 and 2007 and now it is being done here in the US between 2008 and 2015.  The subprime mortgage fraud was about taking the American people's wealth-----this coming municipal bond leverage fraud is about taking the government wealth as happened in Europe.

Goldman Sachs and DeutscheBank both created fraudulent financial instruments that allowed government officials to hide their national debt so more debt could be taken.  None of this is legal and Goldman Sachs knew it was breaking the law.  So Greece and Spain were made to look like the government budgets were balanced when they were ever deeper in debt.  Making these governments look like they were AAA mirrored making subprime mortgage loans look AAA.  These government officials in Greece and Spain took more and more credit and distributed money to friends and off-shored it until these economies imploded from debt.  Europe's TROIKA then came in to make the Greek and Spanish people pay for the fraud just as is happening in the US with the subprime mortgage and other financial frauds.  You see Europe's Draghi and his connection to Goldman Sachs overseeing the crisis just as Tim Geithner did in the US.

THE KEY WORDS HERE ARE HIDING SOVEREIGN DEBT TO LOAD MORE DEBT TO MAKE THE IMPLOSION SO DEEP AS TO FORCE THE DISMANTLING OF GOVERNMENT ASSETS.

That is what happened in Europe.  Subprime mortgage fraud and sovereign debt fraud.  Today, the US economy is ready to implode from sovereign/municipal bond debt.  Maryland is ground zero for this.  O'Malley and Maryland Assembly and Baltimore City Hall has loaded the state and city with so much leverage in credit bonds and tax deals that when the crash comes in 2015 the public will be stuck with debt so large----just as Greece and Spain---that the recession will be deep and the debt too large, forcing the privatization of all that is public. 

THIS IS A PLAN---NOT SIMPLY GREED OR BAD POLICY.  'MARYLAND HAS A 'AAA' RATING FROM MOODY'S YOU SAY'-----you mean the same Moody's that gave subprime mortgage loans the same AAA? 

Maryland's economy is one great big shell game.  This is not a Democrat vs Republican issue because Republicans are doing the same in their states.  It is a complete breakdown of Rule of Law and a rush to take what you can.  The article below is long but please glance through to see how Goldman Sachs worked to implode Greece's economy and think about what is happening in Maryland!
Another long article but please glance through.

EU Ignores Falsification of Greek Public Finance Data
Posted on 18 December 2011 by admin by Guest Author ECB Watch

This is a companion to another article to be published Draghi Nomination Based on Deception.  Here, we address the broader issue of the falsification of Greece’s public finance data.   We will look into Eurostat audits (Walter Radermacher), the ECB’s willful hindrance against the release of records (Jean Claude Trichet), Goldman Sachs’ communication (Gerald Corrigan), and the actions of the European parliament (Sharon Bowles), the Commission (Olli Rehn) and the European Securities and Markets Authority (Verena Ross). Click on cartoon for larger image.

Summary

Eurostat ran a series of audits of Greece’s public finances from 2009 to 2010, including for the swap transactions contracted with Goldman Sachs in 2001. These were used to misrepresent, by a few % relative to GDP, the extent of debt and deficits. Eurostat says it only became aware of it in early 2010: this calls for an explanation because news of the contentious transactions broke in 2003. According to the final audit, in 2010, the window dressing scheme initiated in 2001 was significantly restructured in August 2005. Soon after, Goldman Sachs sold its position for cash to the National Bank of Greece. This 2005 modification of the 2001 contract resulted in a 81% increase in the amount of concealed debt, in the accounts of 2006, relative to the initial amount. According to the same audit, Greece willfully misled Eurostat in 2008, when the contracts were still in effect (in fact, they will be until 2037). The national accounts of Greece were regularized by Eurostat in November 2010.

Spokesman for the bank Gerald Corrigan testified before the British parliament in February 2010. He personally vouched that the letter of the law was obeyed in the 2001 deal, suggesting that it was EU’s fault for allowing a loophole in its regulations. To minimize the perception of wrongdoing he reminded the audience that similar practices were age-old and common in the industry. Yet he stonewalled the questions of whether specific countries, Portugal and the UK, respectively, were clients that fell under this category. His leaving out the 2005 restructuring in his testimonial is an odd oversight.

He [Gerald Corrigan] personally vouched that the letter of the law was obeyed in the 2001 deal, suggesting that it was EU’s fault for allowing a loophole in its regulations. In April 2010, former prime minister of Belgium Guy Verhofstadt spearheaded a hearing, Greece : the moment of truth. It was held by the Economic and Monetary Affairs Committee of the EU Parliament under Sharon Bowles’ chairmanship. There appears to be a disconnect between the objective and what Sharon Bowles delivered, as we argue further down in relation to ESMA, but another indication of it is that the deposition of the spokesman for Goldman Sachs, Gerald Corrigan, bears no relation to the stated topic (the word Greece is not to be found).  This is perhaps an indication of a disconnect between the objective and what Sharon Bowles delivered. We will argue it further below in relation to ESMA. In November 2010, Jean Claude Trichet obstructed the release, requested by Bloomberg, of ECB documents detailing the swap transactions. In May 2011, he went as far as vetoing a legal claim, made by Bloomberg, to reopen these archives. Was his justification, preventing acute market risks, satisfactory?

In August 2011, the Commissioner for Economic and Monetary Affairs, Olli Rehn, to appease the concern of an MEP about the possible connection of Mario Draghi to the falsification of Greek public finance data, misrepresented the evidence contained in a November 2010 Eurostat audit report as to this connection. Recall that Mario Draghi’s hearing in June, just before a vote by the European parliament on his nomination, was, and remains to this day, controversial due to discrepancies between his defense on this issue and verified facts.

The legislative branch, in the U.S., has gone to great length to learn from the mistakes of the financial crisis.  In addition it came with evidence based recommendations to pursue criminal investigations that were or have been carried out by federal agencies and the department of justice.  In fairness, this process has been stymied by powerful interest groups.  Even so, Europe’s response, in comparison, for the case studied here, which is a significant chapter of the Greek debt crisis, looks unfavorable. The hearing Greece : the hour of truth may well have been a pretense, as hinted at. We now argue it further. The Commission and the European parliament would have had the authority to commission ESMA to investigate the matter.  Neither Olli Rehn nor Sharon Bowles, it seems, has taken this step.  Had it been the case, ESMA would have had the authority, if the conclusion of the investigation called for it, to bring a legal case against any alleged perpetrator of fraud, or delegate that task to national authorities.  Instead, ESMA’s stated priorities, under the leadership of its new Executive Director, Verena Ross, are the single rule book, production and analysis of data, and supervising credit rating agencies…

Note : we now use the EU institutions’ convention that ECON stands for Economic and Monetary Affairs.

Eurostat audits

Eurostat is the statistical office the EU Commission, whose current Director General is Walter Radermacher. In Eurostat parlance, a methodological visit is an audit that is undertaken in cases where the Eurostat identifies substantial risks or potential problems with the quality of the data.   There were a series of methodological visits to Greece. They began in 2009 and continued through 2010. Three major reports were produced, one on 29 October 2009, the second on 8 January 2010 and the third in November 2010.  According to the last one, a series of failings in the institutional arrangements and practical compilation of Greek public finance data. We skimmed through the January report and read the November 2010 report.  Only the latter addresses the contentious Greek swaps transaction.  It concluded as follows: Taking into account the work carried out [i.e. corrections to misreported data], as described in this report, the latest debt and deficit data for Greece now gives, in Eurostat’s view, an essentially reliable picture, [including for] fiscal data for the years 2006-2009. It is, therefore, an important report as it represents Eurostat’s final opinion on the issue of the Greek swaps contracted with Goldman Sachs.

Greece patently misled it in 2008, claiming that it neither engaged in FOREX swaps, nor in off market swaps. Eurostat’s summary of its dealings with Greece as pertaining to these swaps would be hard to reconcile, prima facie, with the blithely reported claim that the transactions were legal.  First, Eurostat says that At the beginning of the year 2010, it became known that Greece had entered in 2001 into currency off-market swap agreements with Goldman Sachs, using an exchange rate different from the spot prevailing one. This is strange, however, because the scheme was reported in 2003 by Risk.net.  Perhaps not coincidentally, notes the article, Greece’s credit rating by one of the three major credit rating agencies was raised, that year, from A to A+.  Second, Eurostat says that Greece patently misled it in 2008, claiming that it neither engaged in FOREX swaps, nor in off market swaps. These are exactly the type of transactions agreed between Greece and Goldman Sachs in 2001 and, as we see next, were actively managed thereafter. Eurostat’s audit says that in August 2005 a significant restructuring of the swap contract took place. The maturity of the swap was extended from 2019 to 2037.   This, together with other modifications, resulted in an increase in the amount of undisclosed Greek debt data, for the portion that is imputable to the deal, from 2.830 bn euros in 2001 [1] to 5.125 bn euros in 2006. It’s a 81% increase. Eurostat adds that [a]lmost at the same time, GS sold its rights and obligations to the National Bank of Greece (NBG, a bank completely privatised in November 2004). As a side note, Mario Draghi was appointed head of Bank Italy in 2006, ending his employment at Goldman Sachs. The latter had begun in 2002, when Goldman Sachs was reportedly the lead manager of Greece’s debt underwriting. His denial of any connection to the deal in a hearing before the ECON Committee in June 2001 remains controversial to this day.

There is no question that the 81% increase in the debt hiding scheme, in 2006, is imputable to the August 2005 modification: the restructuring operations implemented in 2005 and 2008 were in fact the explicit recognition of an increase of the liability (principal amount of the loan) to be recorded as debt of Greece. To complete our coverage of the swap transactions, let us quote Eurostat: [t]he swap was marginally restructured again in late 2008 [and was] securitised in February 2009 via a Special Purpose Vehicle (Titlos) that paid EUR 5.5 billion to the NBG. There is no question that the 81% increase in the debt hiding scheme, in 2006, is imputable to the August 2005 modification : the restructuring operations implemented in 2005 and 2008 were in fact the explicit recognition of an increase of the liability (principal amount of the loan) to be recorded as debt of Greece. The corresponding amount, 5.125 bn euros, persisted until 2007. The 2008 modification pushed it to 5.4 bn euros, and 2009 saw a decrease to 5.281 bn euros. We think the decrease is the result of an amortization scheme kicking in after a grace period of two years mentioned in the report. In 2010, Eurostat assigned these amounts as additions to government debt for the years 2006—2009. Goldman Sachs’ communication

Goldman Sachs Managing Director Gerald Corrigan testified before the House of Commons on February 22, 2010. This came to our attention in an article by Finfacts Ireland, and the transcript is contained in the document Too important too fail, too important to ignore (March 2010).  In question 295, for short Q295, he is asked [H]ave banks like Goldman’s not accentuated sovereign risk in countries like Greece by arranging loans for securitisation against future revenue streams that do not appear on the books or currency swaps that have not been calculated at normal exchange rates? To which, Corrigan personally vouches that the transactions were legal : [It] is very clear to me, based on the investigation that I have done over the past few days, that those transactions were very much consistent and comparable with the standards of behaviour and measurement used by the European Community.  There was nothing inappropriate. They were in conformity with existing rules and procedures when they were entered into. To back it up, he cites a consultation with Eurostat: When those transactions were entered into personnel from Goldman Sachs consulted with the appropriate authorities at Eurostat, as did, as I understand it, the Government of Greece and, again, there was no indication whatsoever that those transactions were not in line with existing practices, policies and guidelines.

Goldman Sachs identified a flaw in EU rules, in 2001, and exploited it—opportunity.  He [Corrigan] has not explicitly answered the question i.e. whether it increased sovereign risk —harm— but, absent his denial, it was implicitly conceded. Finally, he shifts blame on the EU not having stringent enough rules:  I should also say that those guidelines and standards were modified in 2007 which suggests that perhaps they were more liberal than they should have been back in 2001. In other words, Goldman Sachs identified a flaw in EU rules, in 2001, and exploited it—opportunity.  He has not explicitly answered the question i.e. whether it increased sovereign risk —harm— but, absent his denial, it was implicitly conceded.  The rest of his answer is laced with the mitigating factors that these practices have been around for decades, if not centuries and not limited to Goldman Sachs and Greece—rationalization.   However, when asked to confirm whether a similar deal was contracted with Portugal (Q296) and Great Britain (Q297), he dodged and could not confirm, respectively, reiterating the above rationalization in each case. The white elephant in the room, in this hearing, is the August 2005 significant restructuring of the swap contract.”  That’s keeping in mind that Greece is alleged by Eurostat to have misled it in 2008 about the existence of such transactions.  Although Goldman Sachs was no longer the counter party in 2008, it suggests that this modification has gone under the radar from August 2005 until Eurostat looked into the matter in 2010.

Let’s review some traits in Corrigan’s answers. He hinted at what we labeled an opportunity and had recourse to the same rationalization multiple times. These are two of the three factors that fall under the definition of the Fraud Triangle.   This is merely superficial but, unfortunately, there is a significant legal precedent attesting of unethical business practices at this company:   Goldman Sachs paid half a billion dollars to settle SEC charges that it misled investors in a subprime mortgage product (ABACUS) just as the U.S. housing market was starting to collapse.  The third factor is a motive.  The transaction generated hundreds of millions of dollars for the firm according to a press release by Bloomberg, EU seeks Greek swaps disclosure after ministry probe.  The ratio of the upper estimate of the fees (200 millions euros) to the amount of Greek debt masked under the 2001 deal (2.830 bn euros) is 7.1%. The key deal maker, Antigone Loudiadis, made a substantial fortune from the deal in just one year, reported the Wall Street Journal in 2010, and enjoyed a career boost thereafter.  Incidentally, she made controversial headlines again, reported Bloomberg in May 2011, as CEO of Rothesay Life, as regards to death derivatives.

He [Corrigan] hinted at what we labeled an opportunity and had recourse to the same rationalization multiple times.  These are two of the three factors that fall under the definition of the Fraud Triangle. Zero Hedge reported that, on the same day as Corrigan’s testimonial, the bank issued a communique. It essentially summarizes his arguments, with a few more figures but, again, makes no mention of the 2005 restructuring. Finally, Gerald Corrigan’s written statement does not address any of the above. Obstruction by Jean Claude Trichet

First, Bloomberg filed a request with the ECB in November 2010 to have access to ECB internal documents detailing the contentious transactions.  It was denied.   Second, Bloomberg contested the decision at the EU’s General Court in Luxembourg in December 2010.   Third, the ECB asked the General Court to dismiss the lawsuit, in May 2011, just one month before Mario Draghi’s nomination, apparently using a veto prerogative.  That’s one month before the nomination of the next ECB President whose possible role in the falsification of Greek debt as Goldman Sachs VP from 2002 to 2005 was raised by Simon Johnson as early as February 2010. Fourth, Bloomberg reacted in June 2011 with these words : The European Central Bank allowed itself to be deceived by a default in the making and now refuses to share with the taxpaying citizens it represents the details of the deception.  Secret and opaque financing got Europe into a mess that can only be resolved by the transparency of full disclosure.


The European parliament

As a member of the UK’s Liberal Democratic Party, Sharon Bowles is also affiliated with the Alliance of Liberals and Democrats of Europe, in short ALDE.   In March 2010, the former prime minister of Belgium and group leader of ALDE, Guy Verhofstadt, made a proposal to to promptly convene a public hearing of all those implicated in the falsification of Greek public accounts. He followed up with a declaration on 14 April 2010, reported in a press release known as Greece: the moment of truth, for Sharon Bowles to ask Director General of Eurostat to explain how accounts could have been legally modified and what measures were taken in the aftermath to prevent such actions. This was supposed to be discussed in a hearing, the same day, titled The fiscal crisis in the European Union – lessons from Greece.  According to the ECON Committee’s final draft programme, its participants were Sharon Bowles (moderator), Olli Rehn, Walter Radermacher, Gerald Corrigan, and a representative from a financial derivatives organization (ISDA), Richard Metcalfe.  We did not find the transcript of the hearing at EU Parliament’s portal, which is unfortunate, but we did find the deposition of Gerald Corrigan.  It contains insights on two subjects and nothing more.  The first is perspective on government debt management, such as the benefits of issuing debt through primary dealers.  The second is facilitating derivatives market surveillance, which recounts the initiatives of the financial industry policy group chaired by Corrigan, the Counterparty Risk Managment Policy Group (CRMPG).  This hardly addresses Guy Verhofstadt’s injunction, quoted in the press release Greece: the moment of truth : The chairman of Goldman Sachs in the US in particular should justify his bank’s speculation against Greek sovereign debt and the motivation of the investment bank which did not seem to be entirely based on economic considerations.

“widespread misreporting of deficit and debt data by the Greek authorities during in November 2004, [...] and on five occasions between 2005 and 2009.“  Eurostat audit January 2010 The topic reemerged in a parliamentary debate about Quality of statistical data in the Union and enhanced auditing powers by the Commission, on 15 June 2010. To frame it, we suppose, Sharon Bowles posted on 4 June 2010 the question of “whether any [Member States] have submitted falsifications or false data or statistics either intentionally or by neglect?”  The January 2010 audit had already answered that question for Greece: widespread misreporting of deficit and debt data by the Greek authorities during in November 2004, [...] and on five occasions between 2005 and 2009.” “In short, there is circumstantial evidence that the chair of the ECON Committee, Sharon Bowles, around 2010, was lagging behind Eurostat’s methodological visits to Greece. To conclude this section, former PM of Belgium Guy Verhofstadt’s high hopes, Greece : the moment of truth, in April 2010, may have fallen flat; that is, the EU parliament failed to deliver an account of who did what?


The Commission

In ECON Commissioner Olli Rehn‘s words spoken during the aforementioned 15 June 2010 debate, the closest match to Sharon Bowles’ question was As is well known, the Commission has undertaken in-depth work on Greek statistics over several years. The amended regulation should, in future, better mitigate the risk of fraud or manipulation of statistics, or of any other kind of irregularity.  Yesterday, there was a new development concerning Greece.  You will know that Moody’s decided to downgrade Greek bonds yesterday. On 21 July 2011, a parliamentary question was addressed to him, on the subject of Appointment of Mario Draghi as President of the European Central Bank.  This question was : Does the Commission have information on Mario Draghi’s involvement, whilst he was Goldman Sachs’ European vice-chair, in the dealings between the bank and the Greek Government over the concealment of accountancy fiddles? Olli Rehn’s answer, on 22 August 2011, was that transactions in derivatives between the Greek debt agency and Goldman Sachs dated back to 2001, implying that the President of the ECB had no connection to them. This is one of the two arguments presented by Mario Draghi before the ECON Committee in June, just before the vote on his nomination, that were found to be unsatisfactory.  Olli Rehn backs up his claim by citing the November 2010 Eurostat audit.  This is perplexing because the audit reveals that the terms of the contract between Goldman Sachs and the Greek Ministry of Finance were modified in August 2005.   This modification resulted in an 81% increase in the amount of debt concealed through this type of scheme.  Presumably, Mario Draghi still worked at Goldman Sachs at the time, since his term of office at the Central Bank of Italy started in January 2006.

In short, in August 2011, the Commissioner for ECON either misled the MEP (Willy Meyer) having some concern about Mario Draghi’s past at Goldman Sachs, or had superficial knowledge of the Eurostat audit he cited as evidence in defense of Mario Draghi’s reputation.

Has justice run its normal course?

Let’s try to understand by looking at a comparable case, the United States, where the financial lobby is nonetheless powerful. The above mentioned settlement with the SEC in July 2011 marked the end of a civil lawsuit that had begun in April 2010.  On 30 April 2011, Reuters reported that federal prosecutors in New York had begun a criminal investigation into other transactions, upon referral by the SEC.  In parallel, the Senate Permanent Subcommittee on Investigations, for short PSI, was investigating the financial crisis. It’s outcome, a bipartisan report, known as the Levin-Coburn report, was released in April 2011.  According to the Wall Street Journal, it asked for bank regulators to examine mortgage-related securities to identify any possible legal violations and use Goldman Sachs as a case study in implementing conflict prohibitions. October 2011, the aforementioned federal investigation, in New York, reportedly materialized with $1bn lawsuit against the bank, using evidence of investment bank abuses from the Levin-Coburn Report: Timberwolf was cited in a scathing U.S. Senate panel report in April that faulted Goldman, Deutsche Bank AG and others for hawking debt they expected to perform poorly..

Is the system of government fundamentally different in Europe, in this respect?  Of course not.  The equivalent of the SEC, in the EU, is the European Securities Markets Authority, for short ESMA, formerly the CESR.   It has only recently been granted enforcement authority known as level 4 of its governing procedure. Yet, it can issue a recommendation to a national authority[to carry out legal action].  To do so, ESMA must first carry out an investigation.  According to the same provision (level 4), the European parliament (Sharon Bowles), or the Commission (Olli Rehn) can request ESMA to get it under way.

The falsification of Greek debt, based on what was said thus far, and the fact that Goldman Sachs did not disclose it (See February 2010 Bloomberg article),  presumably constitutes a fairly obvious breach of their fiduciary duty as a primary dealer—a privileged position in the market.  Is anyone aware of Sharon Bowles or Olli Rehn launching an investigation into this scheme?  Let’s try to find out.

But in view of what precedes, there is reason to suspect that authorities have turned a blind eye to the problem. [referring to the falsification of Greek debt] In October 2011, a new Executive Director of ESMA, Verena Ross, was nominated, with the ECON Committee’s approval.  She gave a keynote speech to that effect in October 2011, in which she laid out her vision of the future focus of the work [of ESMA]. A lot has to do with harmonizing rules and processes across member states [2].  None of it addresses the glaring priority of bringing to justice the suspected perpetrators of financial crime.  If Verena Ross’ speech is to be taken at its word, the future focus of ESMA has a negative connotation:  turn the page and pretend that financial crime never happened.  In fairness, there were reports of a possible probe into this bank’s activities by the UK’s FSA and Bafin in Germany in the first half of 2010, but nothing specific about the falsification of Greek debt that we are aware of.  There was, however, a specific reference to that effect, in the US, by Fed Chairman Bernanke in the same period.   We can’t be certain that these investigations have stalled, or were put to rest.  But in view of what precedes, there is reason to suspect that authorities have turned a blind eye to the problem. Some financial experts allege a broader cynical scheme undertaken by the bank, that is reminiscent of its practices in the subprime crisis.  Essentially, these are hedging and speculative bets using insider knowledge of Greek public finances.   Let’s briefly review the literature.  In February 2010, two authors, Marshal Auerback and L. Randall Wray alleged that From 2001 through November 2009 [...] not only did Goldman and other financial firms help and encourage Greece to take on more debt, they also brokered credit default swaps on Greece’s debt—making income on bets that Greece would default.  No doubt they also took positions as the financial conditions deteriorated—betting on default and driving up CDS spreads. Corroborating evidence and analysis can be found in the following articles, listed in in chronological order : What about Greece and Goldman Sachs (Diplomatic World, Spring 2010), Clearing the air: Goldman Sachs and Greece (Hellenesonline, January 2011) and Goldman bet against entire European nations —who were clients— the same way it bet against its subprime mortgage clients (Washington’s blog, July 2011).



Notes

[1] The masking scheme is the combination of two sets of swaps. In the first set, a currency swap neutralizes Greece’s currency risk resulting from preexisting foreign denominated debt:  In 2001 a series of off-market cross-currency swaps were effectively linked to underlying debt instruments issued on foreign markets. This would have been standard practice, except for this clause:  the contracts were not based on the prevailing spot market rates of exchange [such that] the Greek government debt was de facto [immediately] reduced by EUR 2.4 billion by the conversion process. The second contains off-market interest swaps that are equivalent to a promise by Greece to make a stream of payments to Goldman Sachs.  This second set was designed to offset the gain for Greece resulting from the first set, such that its impact on debt and deficit, we must assume, would be gradual and slow.

I like to refresh people's memory every now and then as to what I mean when I repeat -------recover corporate fraud of tens of trillions of dollars from last decade.  Many people do not know the US Treasury was literally fleeced by US corporations and especially the banks in massive fraud and this is what caused the economic collapse of 2008 and the national debt of $17 trillion now. 

SIMPLY REINSTATING RULE OF LAW AND RECOVERING THIS FRAUD WOULD PAY OFF THE NATIONAL DEBT AND MAKE GOVERNMENT COFFERS AT ALL LEVELS FLUSH WITH MONEY.

The citizens of America and our government are not impoverished----we've been looted and we have politicians in office protecting that stolen money.  That is what neo-liberals and neo-cons do----they work for corporate profit and wealth at the expense of labor and justice.  Do you hear your incumbent or candidate shouting---RECOVER TENS OF TRILLIONS OF DOLLARS IN CORPORATE FRAUD?  NOT A PEEP IN MARYLAND.

ALL CANDIDATES FOR GOVERNOR OF MARYLAND ARE NEO-LIBERALS AND NEO-CONS EXCEPT CINDY WALSH FOR GOVERNOR.

I am not even touching the surface with these posts as fraud hits every industry in the US.  My mention of the subprime loan fraud and the banking industry does not even mention the tens of trillions of dollars in all kinds of other financial frauds this past decade-----THE NUMBERS ARE HUGE.

Remember, all your pols know these frauds happened.....they know recovery is not that hard......and they know the people charged with justice----the Maryland Attorney General Gansler and Governor O'Malley for just two-----are aiding and abetting these crimes.  YET THEY GET THE STAGE AT ELECTION FORUMS AND DEMOCRATIC EVENTS!

OH, THAT'S WHY CINDY WALSH FOR GOVERNOR OF MARYLAND IS NOT ALLOWED IN ANY OF THE REINDEER GAMES!

HEALTH INDUSTRY FRAUDS IN THE TRILLIONS OF DOLLARS LAST DECADE

Let's take a look at what both government watchdogs and public policy organizations calculate to be a conservative look at how much money was stolen and from which agencies.  Since I just spoke of health care and corporate universities, below you see the health care fraud for the health industry at $200-400 billion each year.....that is billions of dollars stolen from Medicare and Medicaid in Maryland each year.  Which hospitals handled most of these patients?  Johns Hopkins and UMMS in Baltimore.  It does not take a rocket scientist to know the institutions handling most of the poor and seniors is where these frauds occur.  Padding fee for service is rampant and happening all over Maryland but it is not fee for service that is the problem as much as the fact that there is absolutely no oversight and accountability in these Federal programs.  They are being allowed to be gutted with fraud.

So, as your neo-liberal in Congress, the Maryland Assembly, or Baltimore City Hall pretend they have to gut social services, public services, public employees and their pensions and wages.......WE ALL KNOW IT IS THE FRAUD AND CORRUPTION.  THIS IS WHY CINDY WALSH FOR GOVERNOR OF MARYLAND IS NOT MENTIONED AT ALL IN THIS PRIMARY!  All the other candidates are involved in this system and will keep the status quo and that is why they have the place in the media.


Below you see a well-researched paper on health fraud.  Notice that the amount of fraud back in 1998 was $250 billion a year.....THAT WAS BEFORE CORPORATE FRAUD WENT ON STEROIDS IN THE 2000s


'It is clear to see why Americans consider this the biggest cause, when health care fraud was estimated to cost approximately $100 billion to $250 billion per year in 1998, or 10 percent to 25 percent of total health care spending'

An Undergraduate Honors Thesis by
Emily Fisher

April 2008

ABSTRACT
Health care fraud is an important and visible factor associated with increasing health care costs in the United States. Medicare and Medicaid contribute to a vast majority of those cost sand therefore must be heavily scrutinized. This thesis will investigate the types of fraud, who commits them, and why the health care system is more susceptible to fraud. More specifically, the problems and complications of current fraud investigation for Medicare and Medicaid are examined. This thesis will then evaluate how successful these initiatives were in reducing health care fraud and explore new suggestions for preventing health care fraud in the future.

________________________________________________
The amount of fraud in the subprime mortgage fraud was in the trillions and we have received a few hundreds of billions in settlement----I should say the US Justice Department settled for that much and much of the money was sent right back to those committing these frauds and not those defrauded.  The point was at the time of this first settlement that $25 billion was a postage stamp of a settlement meant only to try to keep the public from continuing legal recourse for the rest of the fraud.  Maryland was ground zero for this fraud as we are still seeing the repercussions across Maryland and the major tool for the fraud, MERS operated right here in the Washington suburbs of Maryland and Virginia.  It was a Maryland court that ruled MERS did not break law when EVERYONE KNOWS MERS BROKE LAW.  This ruling simply needs to be appealed to ever higher courts to negate that corrupt ruling.

The thing to remember is those developing this massive scheme targeted low-income specifically for the availability of taxpayer-backed FHA loans that had taxpayers paying all kinds of attorney fees, title fees, down payments----the whole nine yards on loans everyone knew would fail.  At each stage fraud and corruption was involved no matter how much they tell you it cannot be proven or an individual cannot be found----THE EVIDENCE IS ALREADY COLLECTED AND INDIVIDUALS HAVE BEEN FOUND.  THE POLS ARE LYING TO YOU AND ME.

Maryland is a mess because this fraud was allowed to go wild even as 50 states attorney general shouting this mortgage system was full of fraud back in 2005.  All that had to be done is for government officials to educate and warn people to stay away----instead the marketing increased.  This was O'Malley working for Baltimore Development and Johns Hopkins in Baltimore as these frauds had a second goal----clearing out the urban center of working and middle-class homeowners so big developers could own all real estate----which is what is happening now. 

TRILLIONS OF DOLLARS IN SUBPRIME MORTGAGE FRAUD HAS YET TO BE RECOVERED AND THAT IS BILLIONS OF DOLLARS FOR MARYLAND ALONE.

New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner

By Alan Pyke on August 13, 2013 at 2:57 pm

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Share on email Thanks to forged documents, banks can’t prove that they own trillions of dollars in mortgages, according to recently unsealed court documents relating to a lawsuit the government decided to settle out of court for $95 million in 2012. The evidence gathered by Lynn Szymoniak, a Florida resident who fought off a wrongful foreclosure after three years of legal wrangling, could invalidate ownership claims to the homes in question. Yet foreclosures based on these documents continue to be approved.

The unsealed documents indicate Szymoniak, whose career as an insurance fraud investigator may have helped her piece together the complex web of documentary evidence, found invalid documentation underlying at least $1.4 trillion in mortgage-backed securities. The “robosigning” form of mortgage fraud – where banks forged documents that are legally required to transfer the ownership of a given mortgage – was ostensibly settled in the 2012 National Mortgage Settlement. Szymoniak received $18 million for her role as an expert whistleblower who helped build the pool of evidence used to achieve settlements over robosigning and retained the ability to press ahead to a trial with the banks that weren’t party to the government’s settlement, which she plans to do.

Other evidence of widespread mortgage fraud has recently surfaced. Researchers looked at just one mortgage lender that was a major player in the subprime bubble. They found fraudulent misrepresentations of 9 percent of all loans sold off to financial firms seeking to package up loans into mortgage-backed securities, and in 93 percent of those misrepresentations, the lender knew it was lying about the nature of mortgages it was passing along. The researchers stress that the actual fraud rate is likely higher, as they only searched for two specific forms of misrepresentation.

Despite the growing mountain of evidence of fraud in both mortgage securitization and foreclosures, the federal government’s response has been feeble. The 2012 settlement has failed to stop bank abuses. A much-touted program to provide relief to homeowners failed to serve nearly as many as intended, and half of the mortgages modified under it are back in default. And over the weekend, the Justice Department admitted it had dramatically inflated its successes in a yearlong task force targeting mortgage abuses.

______________________________________________

The entire online college business is one big fiasco meant to undermine the US higher education system that is ranked #1 in the world but is failing because of defunding and privatization schemes like this one.  Maryland is ground zero for these online colleges that simply have as a goal of forcing 80% of Americans into a substandard system of higher education that is cheap and poor quality.......which is why most students drop out!

If you listen to Maryland's data it will no doubt say these online courses are thriving because-----all data in Maryland is skewed.


Harvard, MIT Online Courses Dropped by 95% of Registrants

www.bloomberg.com

About 95 percent of students enrolled in free, online courses from Harvard University and the Massachusetts Institute of Technology dropped them before getting a completion...

The amount of for-profit education fraud is also in the trillions and it is infused with millions of student loans that are now subjecting these students to predatory education loan collection.  These students were lured to these programs and government officials knew they were bogus and allowed trillions of education dollars be funneled into these fraudulent programs and now they say-----there's no money for higher education funding for financial aid and grants for the working and middle-class students.....BECAUSE TRILLIONS OF DOLLARS IN FOR-PROFIT EDUCATION FRAUD HAS NOT BEEN RECOVERED!  Our students are being held captive to fraudulent loans and Obama has the US Department of Education run by Wall Street collection contractors.

I want to emphasize that none of what Obama and neo-liberals in Congress said would happen in accountability happened.  In Maryland all of these for-profits listed in this article are still filling the Maryland airwaves with advertisements and have facilities operating and no accountability has happened.  Instead, Maryland citizens are straddled with this fraudulent student debt and our government revenue stolen in the trillions of dollars!

The article below is long but please glance through!


'The for-profit predatory colleges, in their mad dash to suck up as much as they can in Title IV funds, Pell grants, and other government subsidies, thus enriching their investors at the expense of students, prey on and then wolf down the most disadvantaged students they can find'.

Neoliberalism and the For-Profit, Predatory Educational Industry: You Can't Regulate a Criminal Enterprise

Thursday, 23 September 2010 11:55 By Danny Weil,

t r u t h o u t | Report | name.


You might have been following Secretary of Education Arne Duncan and his department's attempts to reign in the for-profit universities and colleges for their criminal activities. Perhaps you recognize some of these for-profit universities and colleges, for they are well known due to their marketing and are heavily traded on the stock market - DeVry (ticker: DV), Grand Canyon Education (LOPE), as Apollo Group (APOL), ITT Educational Services (ESI), Kaplan (WOP) and Strayer Education (STRA). There are literally thousands of these schools in existence and most are online schools with office fronts that act as administration centers for the whole for-profit syndicate.

The Department of Education (DOE), after a 2010 Government Accounting Office (GAO) sting operation that unveiled the vile tactics of 15 of these predatory institutions, says it wants to adopt new regulations that would rein in the for-profit educational industry. Yet, this is not the first time the "industry" has been caught with its pants down and its fists full of dirty money. Earlier, in 2009, another GAO investigation was launched and similar acts of criminality were found (United States Government Accountability Office, Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid, August 2009,).

Under Title IV of the Higher Education Act, any school can receive federal taxpayer funds in the form of student aid if it offers courses of study such as certificates, associate degrees, bachelor degrees, graduate degrees or professional degree programs. Proprietary schools offer a small percentage of bachelor degrees, but a substantial percentage of certificate degrees. Overall, the proprietary sector receives the smallest percentage of Title IV funds, 19 percent, as compared with the public and nonprofit, which is 48 percent and 33 percent, respectively. Although the majority of enrollees in these colleges are in four-year programs, the two-year proprietary schools account for a significant percentage of the proprietary customer base.



The Crime Scene

Before we discuss the proposed new regulations due to take effect on November 1, 2010, it is important to understand the for-profit college and university venture industry as a virtual crime scene. For that is what it is. When one begins to think about the for-profit educational industry as a larcenous crime scene then it becomes ludicrous to even consider regulations of what are criminal acts; at the same time, it also becomes apparent how the for-profits work, and the human lives they decimate and destroy in the name of education when their sole motive is profit.

Any "cop on the beat" knows that when a crime scene is found, the first thing that is necessary is to put yellow tape around the area so that no evidence is tampered with and the crime scene can remain "clean and intact" for purposes of critical investigative scrutiny. Imagine yourself a detective arriving on the for-profit crime scene. The yellow tape is all around the "industry" carnage and now you must bend down and get yourself under the yellow tape and enter into the crime zone in an attempt to gather and bag evidence, obtain information and collect any clues as to how the perpetrators operate and who they might be. Looking around inside the circumference of yellow tape, one sees the following evidence of larceny, fraud, misrepresentation and theft:

• Federal aid to students at for-profit colleges jumped from $4.6 billion in 2000 to $26.5 billion in 2009. Publicly traded, higher education companies derive three-fourths of their revenue from federal funds, with Phoenix University at 86 percent, up from just 48 percent in 2001 and approaching the 90 percent limit set by federal law. And the fact of the matter is that, although the default rate is climbing through the roof (see: "Predatory for-profit colleges and universities: the escalating default rate for student loans," July 13, 2010), the predator colleges continue to enroll more and more students knowing they cannot and will never be able to pay their loans.

• What is being sold as education for "debt" are such phony degrees as Homeland Security degrees - cost $80,000 a year for a bachelors degree; or try $30,000 to get a "Surgical Technical" degree at Kaplan University that is itself fraudulent. Culinary and arts "education" is being peddled for more than $50,000! A whole swath of surveillance and criminal justice "degrees" are being auctioned off for as much, if not more ("Drive-by predatory colleges put students into debt purgatory and deficits into the stratosphere," April 11, 2010, Weil, Danny).
• Kaplan, the for-profit predatory college whose name keeps popping up when one looks at fraud, misrepresentation, larceny of Title IV funds, theft of student funds, recruitment practices that parallel the military and many other issues such as poor professors, pre-packaged curriculum and failing colleges, has tried to privatize part of the Community College System in California.
• Kaplan College in Pembroke Pines suspended enrollment following the federal investigation covered in the 2010 GAO report referenced above. They stopped enrolling new students after federal investigators uncovered incidents of high pressure and potentially fraudulent and misleading sales tactics.
• A second Kaplan campus in Riverside, California, did the same thing. They also put new admissions on hold pending the results of an internal investigation ("Kaplan College suspends admissions at Pembroke Pines campus following federal investigation, Scott Travis," Sun Sentinel, August 5, 2010).
• Students were enrolled in the CHI/Kaplan Surgical Technology Program year after year, but they were purposefully not being told by Kaplan and their personnel that, in all likelihood, externship sites, required for the SurgTech program would not be available. If verified from further investigations, the practices amount to concealment fraud, overt misrepresentation and possible theft of Title IV funds. CHI/Kaplan upper management, well aware of the lack of externship sites needed to permit students to complete their program, continued for years to recruit and enroll students in a program whose tuition costs approached nearly $24,000 a year. When the fraud was detected, the college then engaged in illegal practices designed to reduce the number of enrollees by forcing students out on technicalities. Hundreds of students were unable to finish their programs and had their personal lives and credit history ruined ("Whistleblower Exposes How Kaplan University Cheats Low-income Minority students and The Washington Post Benefits," April 18, 2010).
• Kaplan is hardly alone in its hyperbolic predation. Corinthian College and the notorious Phoenix University have paid millions in whistle blower fines under Qui tam suits brought against the colleges.
• The Apollo Group Inc., the company that owns the University of Phoenix, fraudulently misled investors in 2004 about student recruitment policies. The panel ordered the company to pay shareholders about $280 million (January 17, 2008, The New York Times, "Fraud by University Owner Is Found").
• Jurors said Apollo officials "knowingly and recklessly" made false statements in a news release, a filing with the Securities and Exchange Commission and four conference calls with market analysts. By doing so, jurors said, Apollo violated federal securities laws (ibid).

The Washington Monthly found that in late 2009:

"The students who are flocking to these schools are mostly poor and working class and they rely heavily on student loans to cover tuition. According to a College Board analysis of Department of Education data, 60 percent of bachelor's degree recipients at for-profit colleges graduate with $30,000 or more in student loans - one and a half times the percentage of those at traditional private colleges and three times more than those at four-year public colleges and universities. Similarly, those who earn two-year degrees from proprietary schools rack up nearly three times as much debt as those at community colleges, which serve a similar student population. Proprietary school students are also much more likely to take on private student loans, which, unlike their federal counterparts, are not guaranteed by the federal government, offer scant consumer protections, and tend to charge astronomical interest - in some cases as high as 20 percent" ["The subprime student loan racket," Washington Monthly, Stephen Burd].

The criminal activity is not simply constrained to for-profit universities and colleges, as they like to refer to themselves. In December of 2009, the owners of the Business Computer Training Institute, or BCTI in Oregon, agreed to pay $3.2 million to settle six lawsuits by former students who attended its two Oregon campuses.

The lawsuits accused BCTI of fraud and unfair business practices, saying it lured students with inflated job-placement claims, but failed to provide the education it promised. The school closed in March 2005 under regulatory pressure ("Settlement with ex-students in Oregon," The Oregonian, Brent Hunsberger).

Then, there is ITT Educational Services, which reported in 2009 that new student enrollment increased 27.2 percent to 27,738 in its third quarter. With private sector lending still in decline, the for-profit educator is increasingly funding growth through an internal loan program not much different than a payday loan center. As a result, growth metrics looked impressive for ITT at the quarter that ended September 30, 2009:

• Total revenue per student increased 4.5 percent to $4,852 per student, helped by a five percent hike in tuition fees implemented in March 2009. Looking to 2010, management expects to raise tuition another 4 to 5 percent.
•  The third-quarter operating margin improved 437 basis points to 36.1 percent, or $122.7 million, helped by lower advertising rates and more effective lead conversion rates (into enrolled students). ("Lessons not learned at ITT Educational Services," November 8, 2009, David Phillips, BNET online.)

As BNET online noted back in 2009, the notion of ITT lending money to students who then pay them back the money with interest through an internal loan program is shylocking:

"With a 10 percent unemployment rate in this country, the for-profit education industry is a playground for those in need of dreams. Do not be mislead by ITT's numbers, as the trail of money starts and ends back at ITT itself. Federal loan programs are falling short, so the company is dipping into its own coffers to help students cover this widening tuition gap. Up to 65 percent of its students need private lending, and analysts estimate that $100 million to $120 million in loans and scholarship assistance will need to come from ITT's internal lending program." [ibid]

Student Victims as Prey

The for-profit predatory colleges, in their mad dash to suck up as much as they can in Title IV funds, Pell grants, and other government subsidies, thus enriching their investors at the expense of students, prey on and then wolf down the most disadvantaged students they can find.

The for-profit predatory colleges sign up as many "borrowers" as they can - even pounding on homeless shelters to recruit bodies, looking for drug addicts they can enroll from recovery programs and all of this with debilitating consequences for borrowers who miss payments and borrowers' families. They set up at welfare offices, hang out at laundromats in low-income neighborhoods, recruit at public housing units, and their "recruiters" patrol the streets of distressed neighborhoods in automobiles or on foot looking for vulnerable working class bodies they can register for government cash.

As I noted at Dailycensored.com back in July of this year:

"You see, such disadvantaged students are desirable for the for-profit colleges because they qualify for federal grants and loans, which are largely responsible for the prosperity of the predators, the more bodies the colleges can 'ranch' the more money they make. When the students default and go back to alcoholism, drugs abuse, lock-down programs, mental institutions, prisons or the streets, you the taxpayer pay the government 97 percent of the loan, for you are covering the bet the students will graduate and pay their loan obligations, a bet not even Las Vegas would touch" ("For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector's stock: the next big economic bubble").

Many of the student-victims see the ads these syndicates run perpetually on TV hawking the educational degrees and the consumer life they promise to deliver. They promise the student this degree or that degree will bring them out of poverty or help them gain some of the material wealth they see on TV and in ads throughout their young lives. ("Stimulus Wreckage," Matt Smith, September 30, 2009 www.sfweekly.com.) They advertise themselves as conveyor belts to successful jobs in the middle of the Second Great Depression, spending as much as 50 percent of their revenue on marketing alone.

Many of the schools exclusively prey on low-income people and many candidates find out information about proprietary schools from presentations given or brochures left at food stamp offices, welfare offices or at low income housing projects. Cars with large signs on the doors have also been known to drive through housing projects slowly, like ice cream trucks (United States Government Accountability Office, "Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid," August 2009).

The schools employ recruiters, who also attend staged or legitimate "job fairs," in an attempt to attract the unemployed, who they can then cannibalize at the fair itself. One young woman I recently talked to at the Phoenix University told me she was recruited this way. At a job fair, she was approached by an "academic counselor," who aggressively got her to the school's "financial aid counselor" the same day. These are drive-by schools, "disaster schools" without a doubt, and their tactics are ruthless, their owners are without conscience and their profits sheets are bulging.

The Public as Victims

According to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com:

"Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today - both federal and private - total some $829.785 billion.

"The growth in education debt outstanding is like cooking a lobster. The increase in total student debt occurs slowly but steadily, so by the time you notice that the water is boiling, you're already cooked. (August 9, 2010, Mary Pilon, "Student-Loan Debt Surpasses Credit Cards").

By Kantrowitz's estimations there is $605.6 billion in federal student loans outstanding and $167.8 billion in private student loans outstanding. His tabulations show that $300 billion in federal student loan debts have been incurred in the last four years; this, while Americans were asleep and the corporate media purposely concealed the story (ibid). The bad news: none of the debt is dischargeable in bankruptcy and, therefore, will be paid by the general taxpayer.

According to The Chronicle of Higher Education, "one in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions." ("Government vastly undercounts defaults," Field, K., July 11, 2010.)

Corinthian Colleges, another large, publicly traded player in the predatory, subprime, education market, announced in July 2010 that more than half of the loans it makes to its students will go bad. No problem, the college still makes profits for its investors and CEO's. Like most of the predatory institutions, it gets its money from government Pell grants and Title IV funds ("The Chronicle of Higher Education, Why do you think they're called for-profit," July 30, 2010).

The Phoenix University (the Apollo Group) is saddled up this year alone to receive $1 billion dollars from Pell Grants, not to mention the other $4 billion it will get from Title IV funds (ibid).

This means that government taxpayers will be on the line to cough up the money already siphoned off by the for-profit predatory schools as defaults spiral out of control and bankruptcy eludes students as an option.

The Community and State Colleges as Victims

The community colleges of the state of California, reeling from debt, entered into a memorandum of understanding this year which would have allowed students to take courses at Kaplan University, the private, online school. When the manure began to ripen, and it was discovered that the "units" would not be transferable to UC or Cal State campuses, the deal was canceled. (Larry Gordon, "Community colleges cancel deal with online Kaplan University," Los Angeles Times, August 26, 2010)

The plan, basically contracting out education for profit, was intended in part to offer students at the state's 112 community colleges a way to take courses that might have been canceled or overcrowded because of state budget cuts. But some faculty, concerned about getting entangled with a proprietary school, especially one like the notorious disaster college Kaplan, revolted. Kaplan, in its efforts to commodify education, planned to charge students a whopping $646 for a three-credit class, compared with $78 at a community college. Why? This is part of their business plan and how they take Title IV money (90 percent of their money comes from Title IV government monies).

Walmart recently announced a deal with the for-profit American Public University System (hardly public, the stock is traded daily on the New York Stock Exchange and is the brainchild of Jim Etter ("The Chronicle of Higher Education, Why do you think they're called for-profit," July 30, 2010). The "university" is better known as the American Military University, which has developed into a publicly traded, for-profit behemoth that now sucks in veterans, either those in active duty or retuning from war. The university is also the home of Larry Forness, the "professor," who lectured students on the best means of using torture, such as injecting Muslims with pig blood ("Does the American Military University (AMU) teach torture to its students or has it taught torture in the past?" WikiLeaks, March 29, 2010). Now, with the veteran market cornered, the American Public University seeks to train nine-dollar-an-hour employees for Walmart under the auspices of higher education, using government funds and especially Title IV monies.

With the current economic devastation sweeping the nation like locusts, more and more students, through visible high-level marketing, are being seduced to attend for-profit colleges. The words to the song are always the same: you need an education; we offer the best-buy in online degrees; you can do the work at your home; times are tough; to get ahead, additional and high-paying work skills are needed to thwart off individual economic collapse; and on and on. The message is very clear; there is no systemic economic problem under the current economic regime that cannot be staunched with a good, for-profit education. Insipid individualism and the commodification of education itself are now joined in a fervent embrace. All of this creates the opening for the predatory, proprietary college system, while it leaves in its wake an economic devastation for public institutions and student lives.

November 19, 2009, California Community Colleges Chancellor Jack Scott (who forged the failed deal with Kaplan) delivered the keynote speech at the opening session of the Community Colleges League of California Annual Convention and Partnership Conference in Burlingame, California.

Chancellor Scott's speech, Living in Difficult Times, addressed the issue of the growing numbers of students crowding into community colleges and how, in these lean financial times, college leaders must find creative ways to do more with less funding. Focusing on the irony of the situation, Scott noted, "At the same time our funds have been reduced, our enrollments have surged."

This fall, statewide enrollment increased at California community colleges by more than 3 percent while the funding was cut by eight percent. Colleges reported, at the time of fall registration, 95 percent of course sections were completely filled, with many students on waiting lists and some turned away with no classes available.

As Peter Phillips from Project Censored reported late last year:

"Higher education has been cut in twenty-eight states in the 2009-10 school year and further, even more drastic cuts, are likely in the years ahead. California State University (CSU) system is planning to reduce enrollments by 40,000 students in the fall of 2010. The CSU Trustees have imposed steep tuition hikes and forced faculty and staff to take non-paid furlough days equal to 10 percent of salaries. Our current budget crisis in California and the rest of the country has been artificially created by cutting taxes on the wealthiest people and corporations. The corporate elites in the US, the top 1 percent, who own close to half the wealth, are the beneficiaries of massive tax cuts over the past few decades. While at the same time working people are paying more through increased sales and use taxes and higher public college tuition." ["The Higher Education Fiscal Crisis Protects the Wealthy," November 22, 2009.]

Countless numbers of Californians are flocking to the community colleges for job-retraining after losing their jobs in the economic downturn. Community colleges are also becoming increasingly popular because the California State University and University of California campuses are full and far too expensive; more veterans are utilizing the GI Bill benefits, and the economy is forcing many to look for affordable higher education options. (Paige Marlatt Dorr, director of communications
California Community Colleges)

When public social institutions like colleges and universities collapse and when veterans return with GI Bills and no public institutions to attend, this is all good news for the predatory colleges, their owners and shareholders. For, as public colleges turn away students in droves due to financial collapse, it means more and more students will flock to the for-profit college centers in hopes of receiving an education and this, of course, means that like vampires, the schools can get their hands on more public monies - the GI Bill funds, Pell Grants, Title IV funds - all this while public institutions starve.

Ah, the beauty of privatization, the free market. But it's hardly free as stated earlier, not with the large default rates in the billions that are shouldered by hard-working Americans who are forced to pay them. The only thing that is free is the public funds transferred to private coffers of these predatory institutions that see only an exchange value in education. The proprietary schools are now like privatized pike in a public lake.

Creating the Material Conditions for the Private Ownership of the Means of Educational Production: The Role of the Neoliberal State

Acting as a collection agency, the federal government collects taxes from ordinary citizens and then distributes the money to proprietary colleges through a middle man, usually Wells Fargo or Sallie Mae. A student must enroll and be accepted at one of the proprietary schools before they can receive Title IV funds in the form of grants, loans or campus-based aid through Sally Mae, Wells Fargo, or any other third party. The schools themselves must also be "approved" by the DOE in order to participate in receiving the Title IV funds. This means the schools must be licensed or otherwise legally authorized to provide higher education in the state they are located in; they must be accredited by an agency recognized for this purpose by the secretary of the US Department of Education and they must be deemed eligible and certified to participate in the federal student aid programs by the Department of US Education (United States Government Accountability Office, "Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid," August 2009).

This is what is referred to in government parlance as the "triad" - the threshold colleges must meet for government funding. It is the DOE, now under the tutelage of Duncan, that must oversee this entire process and ensure that only eligible students receive Title IV monies in accordance with the triad mandates. The DOE, FSA, manages and administers student financial aid assistance under the Higher Education Act passed in 1965, also known as Title IV. The programs include: William D. Ford Federal Direct Student Loan Program (Direct Loan Program), the Federal Family Education Loan Program (FFELP), the Federal Pell Grant Project (Pell Grant), the Campus Based Aid Program or the Federal supplemental Educational Opportunity Grant (FSEOG), Federal Work Study (FWS) and the Federal Perkins Loan Program (administered directly by the Financial Aid office at each school). In 2008 alone, Title IV funds provided more than $85 billion dollars in student aid of which roughly 16 percent went to the proprietary schools and colleges. That's a lions share by any estimates, especially if you look at the 64 percent default rate, which is and will eventually be paid by taxpayers.

Currently, there is what is called a "90/10 rule" which applies only to proprietary schools. What this means is that at least 10 percent of student tuition must come from means other than student-loan funds. And then there was the "50 percent rule," which required a proprietary school to offer no more than 50 percent of its courses online. These rules were enacted to address rampant fraud among proprietary schools in the 1970s and 1980s. However, in February of 2006, the 50/50 rule was repealed in a reconciliation act passed by Congress. The bill, SB1932 passed the house by a slim margin, 216 to 214, but it then went on to slide through the senate. Now, the schools can offer all their classes online and this means no need for brick and mortar. Most are now "ghost schools," or disaster colleges that reside in office buildings and hardly offer any campus life other than vending machines and computers.

As to the 90/10 rule, which simply mandated that ten cents of every dollar the proprietary school took in had to be from another source other than the federal government, it, too, has been drastically eroded if not vitiated. In July of 2008, long before the $787 billion stimulus, the federal government increased its guaranteed educational loan limits by $2,000 per student. Why? According to Business Week, they were worried that privately funded lending would dry up in the recession, but one of the shocking implications of this move directly benefited the proprietary colleges. Now, with the federal government increasing its guaranteed educational loan limits by $2,000 per student under the new Obama rules, these monies are "counted" as part of the 10 percent by the proprietary schools, creating an accounting mish mash - a paper shuffling accounting system with no transparency and where no one can actually really trace the percentages.

Borrowers must begin repayment after dropping below half-time enrollment, according to the rules of Title IV. Usually, the default rate can be seen after nine months, or 270 days, when the borrower, in this case the student, has not obtained cessation of the debt through myriad and complicated processes, or, in the case of some students referred to deferment or forbearance due to hardship or disability (United States Government Accountability Office, "Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid," August 2009).

The social policies of the neoliberal capitalist state are responsible for laying the groundwork for creating the material conditions for the private ownership of the means of educational production. This is no surprise. Take the current "stimulus" passed by the Obama administration.

According to an article in Business Week, a web site that covers the rapidly declining state of public education:

 "Career-oriented schools such as the University of Phoenix, a unit of publicly traded Apollo Group (APOL), have been benefiting from lean times as adults scramble for credentials they hope will help them find work. The stimulus enacted last month will accelerate this trend by providing an additional $15 billion in Pell Grants for students over the next two years. Apollo, which received more than three-quarters of its $3.1 billion in revenue from federal student aid in the fiscal year that ended Aug. 31, is well positioned to take advantage of the stimulus. Its Phoenix unit already is the biggest recipient of government student aid. In its most recent quarter, which ended Nov. 30, Phoenix boosted ad spending by 24 percent, to $88 million. Its enrollment rose in the quarter by 18 percent, to 385,000 students, who study at campuses in 39 states as well as online." ["For-Profit Colleges: Scooping Up the Stimulus," March 12, 2009, by Ben Elgin and Jessica Silver Greenberg.].

In a letter dated November 19, 2008, to Henry Paulson, then secretary of the US Department of Treasury, the American Association of Collegiate Registrars and Admission Offices along with the American Association of State Colleges and Universities, the Consumers Union, The National Consumer Law Center, the Project on Student Debt, the National Association for the College Admission Counseling, US Public Interest Research and the United States Students Association all wrote to urge Paulson to reconsider his plan to unleash the Bush stimulus monies for private student loans. They implored Paulson in the letter, noting that:

"Most students and families do not use private student loans to pay for college, nor should they." [Letter to Paulson, November 19, 2008, by the American Association of Collegiate Registrars and Admission Offices along with the American Association of State Colleges and Universities, the Consumers Union, The National Consumer Law Center, the Project on Student Debt, the National Association for the College Admission Counseling, US Public Interest Research and the United States Students Association]

The correspondence to Paulson indicated that only 8 percent of students currently use standard bank loans to attend university. This changed now that the banks are flush with money and looking for profitable investment strategies and new investment "opportunities." What could be better than to offer subprime loans to desperate young people looking for an education and a way to maintain civilian life? Yet, the fact is private loans are risky and expensive and lack the protections, oversight and regulations of safer federal loans. Furthermore, providers of private student loans already receive special treatment in bankruptcy at the borrower's expense. But the students don't; their loans are nondischargeable in bankruptcy.

The letter to Paulson went even further, noting the signing groups, unlike federal loans, have no real protections for borrowers and co-signers. And there is no limit to how high the interest rate can climb. The letter notes that private student loans are like subprime mortgages where the lowest income borrower is saddled with the highest interest rates and the worst terms. Not only this, but the letter goes on to point out that in cases of unemployment, disability or periods of no income - even death, their families have few options for relief (ibid).

The loans are impossible to discharge in bankruptcy courts, unlike other forms of consumer debt such as credit cards. As the associations indicated in their letter to Paulson, someone who racks up thousands of dollars buying skis on a credit card can get relief through bankruptcy. Yet, in the case of, say, a teacher saddled with private loans from the proprietary schools who can't work due to disability - she has no way out. The use of bailout monies now put the lenders' investments, or usury, in a privileged category at the expense of students and consumers.

It is criminal that billions of taxpayer dollars are allowed to be spent enabling lenders to continue to make these high risk loans, which then become defaults picked up by taxpayers. But, unfortunately, this is precisely what is going on; for Paulson, of course, didn't listen to the various gate-keeping organizations intent on protecting the public interest, nor did he care; he was more focused on bailing out his friends, not public citizens who have to work for a living. He doled out federal monies despite fervent warnings to major banks, for private student loans, just as he bailed out AIG and Goldman Sachs. The Fed bailed out the lenders of these student loans by allowing them to use subprime student loan assets as collateral for accessing federal funds. Now, the proprietary schools have another venue for slopping up funds headed for debt - thanks again to the actions of the federal government. This is legal crime committed during broad daylight hours, but, of course, no mention of it was reported in the corporate press.

But the story begins long before the stimulus bailout and Obama even thought about entering government. The DOE under George W. Bush and Rod Paige used government deregulation in an effort to help create a system of debt peonage for students, while offering larger and very profitable business opportunities to their friends, the proprietary colleges. Today, we see the chickens have come home to roost as Wall Street continues to find ways to bilk the American people and the corporate media continues to hide the crime scene. Kaplan College, for example, is owned by The Washington Post, a blood bank providing more than 62 percent of the paper's revenue ("Kaplan University: Blood Bank for the Washington Post," July 27, 2010). You can hardly count on them to run a story on the private ownership of the means of educational production.

As Sam Dillon, reporter for The New York Times, reported as early as March 2006:

"The power of the for-profits has grown tremendously," said Representative Michael N. Castle, Republican of Delaware, a member of the House Education and Workforce Committee who has expressed concerns about continuing reports of fraud. "They have a full-blown lobbying effort and give lots of money to campaigns. In 10 years, the power of this interest group has spiked as much as any you'll find."

Sally L. Stroup, the assistant secretary of education who is the top regulator overseeing higher education, is a former lobbyist for the University of Phoenix, the nation's largest for-profit college, with some 300,000 students.

Two of the industry's closest allies in Congress are Representative John A. Boehner of Ohio, who just became House majority leader, and Representative Howard P. McKeon, Republican of California, who is replacing Mr. Boehner as chairman of the House education committee.

And the industry has hired well-connected lobbyists like A. Bradford Card, the brother of the White House chief of staff, Andrew H. Card Jr.

The elimination of the restriction on online education, included in a $39.5 billion budget-cutting package, is a case study in the new climate. Known as the 50 percent rule, the restriction was one of several enacted by Congress in 1992 after investigations showed that some for-profit trade schools were little more than diploma mills intended to harvest federal student loans.

Since then the industry has grown enormously, with enrollment at such colleges outpacing that at traditional ones. In 2003, the last year for which statistics were available, 703,000 of the 16.9 million students at all degree-granting institutions were attending for-profit colleges. (March 1, 2006, New York Times, "Online Colleges Receive a Boost From Congress," Sam Dillon.)

Regulating the Criminal Enterprise

With the deficit growing astronomically due to two illegal wars, the bloated defense budget, bailouts to Wall Street and the costs of subsidizing the for-profit predatory colleges and universities, there was little the neoliberal state could do in light of the criminal activities of the private educational complex, but attempt to regulate the industry.

The new proposed rules by the DOE, due to be passed sometime in November 2010, would supposedly grant the DOE stronger authority to stop these for-profit "colleges" and schools from making false or misleading statements about financial charges. They do this regularly as the GAO report reveals and as the whole sordid history of the industry has shown. They also lie about the expected employability of their graduates, many claiming they can place students in gainful employment when, in fact, they cannot. The DOE also wants the predatory for-profit colleges, universities and schools to be barred from paying recruiters based on how many students they brought in. That's the practice now, and you can read about the whole recruitment corralling of students in an article I wrote back in 2009 entitled: "Private Predatory Colleges: How the neoliberal Alchemists Turn Debt into Profit and Citizens into Fools".

However, the most important and currently onerous "regulation" proposed for the for-profit educational industry would cut off federal aid to for-profit programs that repeatedly saddle students with debt that is defined as unaffordable under a new formula that takes earnings into account. This is the "gainful employment" rule that will drive a stake through the heart of many for-profit colleges and universities if it is passed in November of this year. The rule is all about assuring that the for-profits are offering an educational service that will prepare graduates for gainful employment. The problem - there is no employment.

It has long been believed by politicians and corporations that education is little more than a training ground for capitalist labor to eventually be exploited. Simmering education down to gainful employment is not a novel idea when one is laboring under these assumptions. Rather than see the entire enterprise of for-profit colleges as criminal, which it is, the government now seeks to rein in some of the "abuses" they see in the system they helped create. Regulating the material conditions for private ownership of the means of educational production can only come from starving the insidious institutions that fail to comply by withholding government subsidies. While certainly a start, the whole notion is problematic, for it leaves the predatory industry intact when anyone who has studied the crime scene can see that this criminal enterprise cannot be regulated; it must stopped. However, even this small bit of "rhetorical" regulatory posture has the billion dollar, for-profit industry on the offensive.

Corporations Fight the Neoliberal State Regulations With Faux, AstroTurf Groups

The for-profit, cybernetic educational industry has come forth on record, calling the illegal practices uncovered by the GAO a case of "bad apples." Kaplan officials said they found the disclosures "sickening." In a joint statement from Donald E. Graham, chairman and chief executive of The Washington Post Co., and Andrew S. Rosen, chairman and chief executive of Kaplan Inc.:

"They violate in every way the principles on which Kaplan is run. We will do everything in our power to eliminate such conduct from Kaplan's education institutions."

Similar to the movie "Casablanca," Graham, like the actor Claude Rains, seems surprised "gambling" is going on at Rick's Place. Yet, while the government is getting ready to step in and put into place policies that will allow the industry to continue its ownership of the educational means of production, albeit regulated, the for-profits are now busy building a faux revolution, akin to Dick Army's Freedom Works; or the fake coalitions put to together by the Koch brothers to fight any regulation of the coal industry; or the "Parent Revolution" out of Los Angeles controlled by Green Dot, a charter school CMO, which recruits parents to work for charter school legislation by disassembling public education. What these groups have in common is that they are heavily supported by legions of right-wing cash.

The New York Times of September 7, 2010, noted that:

"For-profit colleges have increased their lobbying against proposed Education Department rules to cut off federal financial aid to programs whose students take on too much debt for training that provides little likelihood of leading to a well-paying job" [For-profit colleges step up lobbying against new rules, New York Times, September 7, 2010.]

In addition to making personal visits to Capitol Hill, executives for many of the colleges have recently provided their employees with "personalized," standardized, form letters urging them to send them to Washington to fight the new regulations. They have also started a campaign to get their students to speak out against the new "gainful employment" regulation. Sound like the phony health care groups set out to battle Obama's health care reform? You betcha!

So far, The New York Times has found that the DOE has received about 45,000 letters on the proposed "gainful employment" rule within the last month.

John Sperling, the born-again Christian fundamentalist and founder of the nation's largest for-profit college, the University of Phoenix, emailed every member of Congress, seeking help opposing the regulations, and attached a sample letter to be sent to Education Secretary Duncan, asking him to withdraw them. He has conveniently married his new-found, fundamentalist religion with market fundamentalism.

Graham, the chairman and chief executive of The Washington Post Company, which receives 62 percent of its revenue from its various Kaplan educational businesses, visited Sen. Tom Harkin, Democrat of Iowa, whose Health, Education, Labor and Pensions Committee is holding hearings on the for-profit education industry. His goal: stop the regulations.

But the heavy, billion dollar players have done more than just urge employees and students to come out for their for-profit cause. The Education Management Corporation, the second-largest, for-profit company in the industry, hired DCI Group, a public relations firm, to contact its employees for information that could be used to create a "personalized" letter, which would then be delivered back to the employee for signature, along with a stamped, addressed envelope aimed straight at the DOE. ("Astroturf U: Goldman's For-Profit College Battles Obama Crackdown," Mother Jones, Andy Kroll, September 2, 2010.)

The AstroTurf group also drafted and is offering pre-crafted letters that students can use to send to their Congressmen. Mother Jones reported that:

"Some of the letters show little familiarity with the proposed regulations. For example, an Education Department official said, students at a particular school sent in dozens of hand-written letters asking for continued aid to for-profit colleges, but never mentioning the regulations. He said he called a letter-writer to ask whether the letter was intended as a comment on the regulations, and was told, 'This is what the school asked us to write.' He would not identify the school." [ibid]

This is not unusual and echoes the practices of many of these predatory colleges who have their professors write student papers so students can remain enrolled and thus beneficiaries of the federal dollars that end up in the coffers of the blood banks.

EDMC also has a web site, the Higher Education Action Center, guiding students or employees to oppose the regulations, offering their own "pre-crafted" letters. Argosy, a unit of EDMC, said last month in an email soliciting more comments that more than 2,000 people had used the site in the previous week.

The Real Problem Is the Private Ownership of the Means of Educational Production

Beginning in the Bush years, or actually before, the neoliberal state worked diligently to provide the material conditions allowing for the enormous growth of education for profit. In doing so, it has now created its own Frankenstein of debt and default that seeks refuge in the pockets of ordinary taxpayers. The for-profit industry, armed with billions of dollars and working off the disaster economics that has left the public sector unable to keep libraries open, let alone provide a decent opportunity for students to gain universal access to education, is now enabled with lobbyists and private firms to fight Washington tooth and nail against their proposed regulations. But this is hardly the point. For the regulations promise to leave intact a criminal enterprise that is not just a collection of bad apples, but is a rotten barrel of despair, financial ruin for students and moral outrage, not to mention the source of costs that will be thrown on the backs of ordinary Americans as students find there is no "gainful" employment under the economic policies of market fundamentalism and Wall Street crimes, and the defaults quicken. What all this means is that taxpayers may be on the hook for close to one trillion dollars or more.

Summary

I spoke to a young man of about 30 years old in my last sojourn at the Phoenix Institute in Oakland. When I asked him how his classes were going, he told me that they were going well, but he was living in his car with no job. However, he indicated, a bit animated, with the federal monies for school he received not only does he have the use of the computers and a warm place to go, but he can clean up in the office bathroom. This is privatized homelessness under Title IV that is parading as privatized education.

The free-market policies ruthlessly pursued through the calamitous corporatization over the last 30 or more years have imposed crushing and profound changes onto the lives of children and working adults. On National Public Radio, November 23, 2009, a student at one of these proprietary colleges was interviewed. She reported that she now pays $300 dollars per month to service her federal loans and that her parents had to take second jobs just to help her pay for her proprietary education. Currently, she cannot find a job, so her answer: she will borrow more money now to go on to graduate school, for in this way, she will not default on her loans, meaning wage garnishment, withheld social security and an inability to rent or buy a home. Debt peonage and a lack of public and civic life are forcing her and her family into the brutal margins of society (NPR, "All things considered," November 23, 2009).

Each and every day I receive letters and emails from students asking me what they can do to stop the predation. These are students whose lives are now ruined; they cannot get credit, they cannot involve themselves in any financial life and they cannot rent apartments or go to school.

Whistleblowers, known as Former Disgruntled Employees (FDE's) have written me telling me of the ghastly policies they have witnessed and/or participated in, but they dare not use their names or they will find that the power and authority of these for-profit dungeons of despair will literally blackball them from the industry overnight. I have spoken with countless lawyers who have told me they have no resources to fight the billion dollar industry attorneys.

There is no "college experience" at these proprietary schools; there are not even libraries at most of these schools or facilities where students can meet. At many of the proprietary schools that offer a "campus," one finds the colleges really languish in grimy storefronts in large office buildings along side other businesses, like insurance companies, mortgage outfits and financial institutions that share the office building rent. Usually the administration office of the "campus" is comprised of simply a desk and rows of computers; the food services are vending machines dominated by Pepsi and Coca Cola and the class rooms are rented to corporations when not in use by the proprietary school. At the Phoenix Institute's "campus" in Pasadena, California, the college sits in a large office building that shares tenancy with the Rand Corporation, harbored on the upper level floor. The college also makes $25,000 - $30,000 per month just renting out the classrooms when they are not in use (interview with former Phoenix employee).

As I chronicled back in 2009, for-profit predatory colleges for years marketed to the disenfranchised, the down and out, the sub prime students and, thus, they make up the "fringe economy" of other such predators like cash loans, payday loans, title loans for cars, check-cashing scams and the like. These "operations of higher predation" have been caught recruiting students at housing projects, welfare office, unemployment offices, laundermats in poverty stricken areas and, now, yes, the true down and out - the homeless and often drug addicted segments of our population, mostly minority. They actually enter homeless shelters where they rabidly prey and feed on the underclass of America ("For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector's stock: the next big economic bubble," July 19, 2010, dailycensored.com).

As any crime fighter knows, you cannot regulate larceny. What needs to be done is to build a sustainable economy that can provide a quality, public school experience for our nation's children. However, as long as education is boiled down to training for a capitalist society in ruins, this can hardly expect to take place. As the public sector diminishes due to the disaster capitalism of the last 30 years, we can only hope to see a few changes in the form of regulations. Until then, look for this storm to pass, as once regulations are passed, paying to get around them becomes part of the business plan as it always has been. In the interim, look for the for-profit educational scam that was and has been allowed to exist thanks to the partnership between business and the neoliberal state to be the next big financial bubble just waiting to burst.


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Below is a long article but please glance through it.  I am posting articles from the 2000s because it is then we know Reagan/Clinton started dismantling oversight and accountability in the name of smaller government.  Republican voters were sold on small government because they were told social programs would be axed-----but what global corporate pols had in mind was small government as a way to unleash unlimited fraud and corruption====just as exists overseas in developing worlds.  These US corporations steal much of overseas development money and now they are doing it here in America thanks to neo-liberals and neo-cons suspending Rule of Law.
 The actual amounts of defense industry fraud is in the trillions of dollars and the Wikileak documents exposing the defense industry expenditures that mainstream journalists will not investigate but international investigative journalists are show the absolute looting of our US Treasury by defense industry contractors just as happened in health care, the financial industry, the for-profit education industry, and the housing industry.  At each step your politicians knew it was happening and could have shouted loudly and strongly but you do not hear a word beyond a few soundbites at the time of an exposure.  MARYLAND IS KING OF THE FLEECING OF TAXPAYER MONEY FROM ALL LEVELS OF GOVERNMENT and this is why the poor are being made third world in poverty and the working and middle-class are seeing their taxes climb and fees and fines galore.


Obama is continuing to make it 'easier for contractors' and Trans Pacific Trade Pact simply tries to make all of this ignoring of US law legitimate by re-writing the Constitution without all that bothersome Citizens as Legislators,  Equal Protection, and Rule of Law stuff



"According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld admitted.  $2.3 trillion — that's $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.


'The Clinton-Gore Administration

From its beginning, the Clinton-Gore Administration has pushed for changes to make things easier for contractors through its Acquisition Reform program in the Defense Department. The initiative was the culmination of a long process of working closer with industry and its campaign contributors undertaken by the Democratic Party when it began targeting corporate campaign contributions more aggressively in the 1980s.

The defense industry succeeded beyond its wildest dreams in winning endorsement of its proposals after the 1992 presidential election. Their plans proved to be in the right place at the right time when Vice President Gore was looking for new changes to make through his Reinventing Government initiative. Industry wishes were compiled by a Congressionally-created committee known informally as the "Section 800 panel," which was industry-dominated. 19 The panel's report was completed soon after the Clinton-Gore Administration took office. Its recommendations helped shape the Reinventing Government plan, which was put together under a tight deadline and needed new proposals quickly'.



Defense Waste & Fraud Camouflaged As Reinventing Government
September 1, 1999 Table Of Contents

Executive Summary
Introduction
The Problem: Pentagon Waste Returns
Why We Need Oversight - 618% Overpricing
Acquisition Reform 101
A Detailed Study: Getting Good Prices Without Acquisition Reform
Acquisition Reform's Claims: Confusing What the Government Buys With How It Buys
The Cause: Why and How Is This Happening?
Today's "Acquisition Reform:" Rolling Back Yesterday's Reforms
Important Procurement Reforms of the 1980s and Their Current Status
Counterattack in the 1990s
The Clinton-Gore Administration
The Congress
Acquisition Reform - Not Really Adopting the Free Market
Monkeying with Oversight: Hear No Evil, See No Evil, Speak No Evil
Penny Wise, Pound Foolish
Acquisition Reform: "Streamlining" Dollars from Our Pockets
Paying for Luxury Hotels Again
Accepting Data That Need Not Be "Current, Accurate, and Complete"
The $435 Hammer That Won't Go Away
The Solution: How to Stop De-Inventing the Wheel
Appendix
Endnotes



Executive Summary

Overpriced spare parts horror stories from the 1980s taught us how to prevent fraud, and led to useful reforms. By the 1990s, however, defense industry interests dovetailed with Vice President Gore's Reinventing Government campaign, and new policies bypassed some of the earlier reforms.

In the name of adopting "commercial" practices, the Administration's defense Acquisition Reform effort has gone beyond cutting red tape into throwing out important protections against contractor abuse that are needed even in a more commercial environment. For example, a new greatly expanded definition for a "commercial" product has exempted many more purchases from normal oversight.

The problem has predictably begun to appear in the form of more overpriced parts stories:

• AlliedSignal corporation was found to have overcharged the government for spare parts by as much as 618%. The government overpaid on the overall contract with AlliedSignal by 54.5%.

• Prices were inflated by more than 1,000 percent on a variety of spare parts. For example, the Boeing price for a commercially-available $24.72 "spoiler actuator sleeve" was $403.39 - a markup of 1,532 percent. Another contractor charged $714 for an electric bell worth $46.68.

The cause - Acquisition Reform's new policies, including drastic staff cuts to oversight agencies:

• The AlliedSignal cases provide examples of the government paying more for spare parts under the new "commercial" rules than it paid under the earlier reforms. As the Defense Department's Office of the Inspector General has noted, the loose definition of commercial items "qualifies most items that DoD procures as commercial items" [Emphasis added].

• A Defense Department Inspector General's report indicates how adopting commercial practices has come to mean subservience to contractors and blind acceptance of their claimed costs and prices: "contracting officers shall require information ... when necessary to determine price reasonableness for commercial items, but there is a strong DoD [Department of Defense] preference not to use that mechanism and the Government has not asserted its right to have the data." [Emphasis added.]

• Despite highly favorable dollar returns on taxpayer investment in oversight agencies, many of them have been gutted by personnel cuts. For example, the Defense Contract Audit Agency saves almost $10 for each dollar invested, but staff positions have been cut by 19% from Fiscal Year (FY) 1993 to FY 1997. As of 1998 the Administration scheduled it to suffer a total loss of more than 3,000 staffers - a 44% cut - over the period FY 1990 to FY 2002.

• The Administration has pushed defense corporate mergers, at a time when Acquisition Reform has failed to create adequate competition, a key requirement for the government to benefit from commercial markets. As a Department of Defense Inspector General noted, "If anything, the risks may be greater today because there is such market dominance by a few very large suppliers. In this environment, getting cost information and maintaining audit rights is a prudent business practice. Failure to do so will be very costly for the Department and ultimately the taxpayer." [Emphasis added.]

The solution lies in making use of what we have already learned about preventing contractor abuse:

• Restore meaning to the definition of "commercial."

1) Restore the definition of commercial as actual sale of items to the general public, not just to the government.

2) Restore the definition of commercial to mean substantial sales in a large free market.

3) Restore the definition of "competitive bidding" to be at least two bidders.

• Clarify that the government can and should still negotiate actively for some commercial items.
  
  
• Restore the use of cost or pricing data where prices are not set by a true free market.
  
  
• Preserve funding for the auditors, investigators, and independent rule-setting Boards like the Cost Accounting Standards Board.
  
  
• Defend the False Claims Act against industry assaults.
  
  
• Improve price-based contracting by increasing competition and reversing the trend of mergers leading to fewer competing contractors.

Following Pentagon acknowledgment of "readiness" problems, and after the war in Kosovo, defense budgets - and procurement spending - are being increased sharply. For this reason it is especially imperative for us not to forget what we already know about good acquisition reform - there is no need to re-invent the wheel. If we do forget, the budget surpluses the Defense Department is enjoying will quickly be frittered away on overpriced weapons and parts, and the taxpayers' money will, once again, be wasted.

Introduction In the 1980s, as military spending boomed, numerous stories of waste in weapon buying surfaced in the media. The Project on Military Procurement, as the Project On Government Oversight was then known, along with others, brought to light $7,600 coffee makers, $435 hammers, and $640 toilet seats billed by unscrupulous defense contractors. The cases were disturbing because they implied that if such prices were being paid for simple items whose prices citizens understood, the total overcharging for complex weapons as a whole was enormous.

As a result of these revelations, measures were taken to tighten up oversight of defense contractors. Then, in the 1990s, the defense industry counterattacked, arguing that these reforms had gone too far. By 1994, with a Congress hostile to government regulation, and an Administration adopting a particularly accommodating relationship with business, the rhetoric of acquisition "reform" and "reinventing government" was used to justify moving beyond cutting red tape into bypassing key earlier reforms. For example, a new greatly expanded definition for a "commercial" product has exempted many purchases from normal oversight.

The results of these changes have already begun to show, with cases of gross overcharging for spare parts surfacing once again. The cause is an "Acquisition Reform" effort conducted by the Department of Defense (DOD) and supported by some in Congress. Acquisition Reform unabashedly seeks to reduce oversight of contractors and replace it with "trust," and has dovetailed with Vice President Gore's "Reinventing Government" campaign. The problem is that by going so far in reducing oversight, the reforms have thrown the baby out with the bathwater, resulting in cases of 618% overpricing again.

We already know how to protect against defense contractor abuses. We have been through many previous rounds of hyped reform initiatives that blew a lot of hot air but did not do much. But pushing the new "Acquisition Reform" too far and bypassing proven checks and balances now could actually make the situation worse - it is leading to de-inventing the wheel, not re-inventing it.

This report first looks at recent cases of defense contractor overcharging. It then examines the elements of Acquisition Reform that have caused the problem in more detail. The report concludes with suggestions for remedies.



The Problem: Pentagon Waste Returns Why We Need Oversight - 618% Overpricing Evidence of the results of loosening oversight is beginning to surface. A Department of Defense January 1999 report reveals that defense money is again being wasted on spare parts, as it was in the 1980s. In the report by the DOD Inspector General (IG), AlliedSignal corporation was found to have overcharged the government for spare parts by as much as 618%. The government overpaid on the overall contract with AlliedSignal by 54.5%. The irony is that these parts were bought under the new, much-touted "commercial" price system promoted by the Administration and Congress. According to the January 1999 investigation by the Inspector General: 1

The government "paid Allied prices that were higher than fair and reasonable in FYs [Fiscal Years] 1996 and 1997 when compared to the noncommercial prices paid to Allied in previous years." The parts included items such as gearshafts, wheels, nuts, bearings, seals, filters, and valves.

The Defense Department "paid a 54.5 percent premium for commercial parts from Allied" - in other words, were overcharged by more than 50%.

For parts that AlliedSignal did not even make itself, but merely bought from original manufacturers or dealers and then sold to the government, some items were variously marked up by as much as 294%, 325%, and 618%.

The Defense Department paid an even higher average markup in Fiscal Year (FY) 1997 (60.1%) than it did in FY 1996 (45.8%). It appears that in this case an Acquisition Reform "learning curve" is not being realized.

Defenders of the acquisition system argue that the government paid higher prices because the prices included more stocking services - but the Defense Department failed to use the services.

The Defense Department report blacks out the names of specific spare parts that were grossly overpriced. (See p.12 of Appendix A) Although contractors routinely claim such information is "proprietary," the real effect is that the public cannot easily find out how much they are overpaying for items they might recognize.

The Inspector General report on AlliedSignal followed 1998 IG reports of overcharging under "commercial" contracts with Boeing and Sundstrand corporations. The earlier reports (see "Acquisition Deform: A Study in Hasty Deregulation," Project On Government Oversight Alert, October 1997) found that:

Prices were inflated by more than 1,000 percent on a variety of spare parts. For example, the Boeing price for a commercially-available $24.72 "spoiler actuator sleeve" was $403.39 - a markup of 1,532 percent. 2

Sundstrand billed the government $6.1 million for parts that were worth only $1.6 million. 3 

Boeing charged $5 million for parts that were worth $3.2 million in the competitive market. 4

A contractor charged $76 for 57¢ screws. 5

Another contractor charged $714 for an electric bell worth $46.68. 6

The Inspector General found that higher prices were paid for "commercial" items than had been paid earlier because: 7

• although Acquisition Reform allowed the Sundstrand items to be purchased under loose "commercial" item rules, in fact "there was no competitive commercial market to ensure the reasonableness of the prices";
  
  
• Sundstrand "refused to provide DLA [Defense Logistics Agency] contracting officers with 'uncertified' cost or pricing data for commercial catalog items";
  
  
• items were defined as commercial as long as they were merely "offered for sale, lease, or license to the general public" (emphasis added); and
  
  
• in the Boeing case, "contracting officers accepted Boeing commercial catalog prices as fair and reasonable without adequate support for price reasonableness, even when DoD was the 'primary' customer procuring significantly larger quantities than other commercial customers and there was no competitive commercial market to ensure the price integrity. The contracting officers made no attempt to exert the leverage that a major customer ought to be able to exert to negotiate significant discounts, as is common commercial practice." 8

The DOD IG notes that the loose definition of commercial items "qualifies most items that DoD procures as commercial items" (emphasis added), with the result that:

"This opens up a major loophole for sole-source vendors to charge prices that cannot readily be evaluated for reasonableness. This concern will continue to grow as more companies merge and the aerospace industry becomes more of a sole-source environment." 9

Similarly, items under the loose definition can be merely "of a type" sold to the public, rather than a product that actually is sold to the public.

Acquisition Reform 101 The widely-promoted "Acquisition Reform" initiative emphasizes buying more products for the government on a "commercial" basis. "Commercial item" purchases bypass many of the protections and oversight put in place to prevent the infamous overcharging by defense contractors that occurred during the defense spending increases of the 1980s. The 1980s reforms included tougher Truth in Negotiations Act enforcement, re-establishment of the Cost Accounting Standards Board, strengthening of the False Claims Act, and passage of the Competition in Contracting Act.

The report on AlliedSignal provides examples of the government paying more for spare parts under the new "commercial" rules than it paid under the old rules. This is the opposite of what Acquisition Reform is intended to achieve. According to the Inspector General, the government "paid higher prices for commercial spare parts on the Allied corporate contract when compared to previous noncommercial prices for the same items."10

Astoundingly, government officials have been sent to training courses on commercial item acquisition run by the defense industry and taught by executives from AlliedSignal and Sundstrand! (See Appendix B)

Hinting that Acquisition Reform may have gone too far, the Inspector General report noted that if the government could not make commercial buying work as intended in the contract with AlliedSignal, it "will need to revert back to the previous buying practice of negotiating better prices for the spare parts ...."11

A Detailed Study: Getting Good Prices Without Acquisition Reform The government offices designing Acquisition Reforms have done precious little analysis of the actual effect of Acquisition Reform so far. Fortunately, a military officer undertaking an academic study has completed one of the few in-depth analyses to date comparing prices paid by commercial firms and by the government.

This study by Major Joseph Besselman examined a large number of DOD electronic, engine, and software commodity purchases. (See Appendix C) In contrast to the conventional wisdom that "commercial" prices are lower than what the government has obtained in the past, the report found that when the government is allowed to negotiate prices, and when the government has access to the manufacturer's cost data, it performs better than the commercial sector - obtaining even lower prices than commercial firms making similar purchases:

"Overall, weighted price difference analysis reveals the DoD outperformed the average commercial sector organization using commercial wholesale prices by 41.5 percent." 12

This key finding even held up when the government's costs of employing extra oversight and contracting people to gather cost data and negotiate prices is included:

"This research's case studies provide evidence that cost and pricing data enhances the DoD's buying position in high dollar value procurements, even when the costs of collecting that data are considered."13

The study sums up with guidance for how Acquisition Reform can avoid oversimplifying the real world in its enthusiasm for reducing oversight:

"The DoD's leadership needs to more realistically evaluate its push towards 'one size shoe fits all' public policy decisions as it tries to commercialize its operation to a greater degree. This research suggests that buying commercial items off commercial price lists will cost the taxpayer more money. Uniformly eliminating in-plant oversight personnel that collect cost and pricing data will adversely affect the DoD's purchasing power. Cost and pricing data is a valuable commercial sector tool the DoD buyer should exploit under the appropriate circumstances." 14

Government procurement practices are not all bad, and can successfully use commercial practices without necessarily abandoning other protections that have proven effective in preventing overpricing.

Acquisition Reform's Claims: Confusing What the Government Buys With How It Buys Reduced to its substance, Acquisition Reform is about changing the way the government buys goods and services, not changing what the Government buys. Acquisition Reform proponents argue that by changing how the Government buys, a lot of money can be saved. Yet, they produce little evidence to bolster their arguments - such as examples of prices lowered because of savings. In some of the instances where they do present "evidence," it is apparent that they have actually changed "what" they were buying instead of "how." In other words, it is an apples-and-oranges comparison.

For example, Steven Kelman, the Administration's former chief "point person" on acquisition reform as head of the Office of Federal Procurement Policy from 1993-97, tells stories of how the Government saved large sums by allegedly changing the way it purchased shipboard telephones. According to Kelman, under Acquisition Reform the Navy was able to reduce shipboard telephone costs from $400 to $20 per unit. When asked how the Navy did this, Kelman answered that they went from using custom telephone specifications (or "mil specs") to buying regular commercial phones. While this might be laudable if the phones really did not need to have special capabilities for a naval combat environment, it really has nothing to do with the "how" part of the buying process. Instead, what was changed was the "what" part - it was decided that commercial phones were capable of the job. It is like saying you reduced the price of a car from $40,000 to $20,000, but omitting the fact that you stopped buying Cadillacs and started buying Chevrolets.

Another instance comes from one of the most famous Acquisition Reform stories - the image of Vice President Gore smashing an allegedly overpriced ashtray on the David Letterman Show. The story was that by purchasing commercial ashtrays instead of using lengthy and almost unintelligible custom government specifications for these ashtrays, a lot of money could be saved. The Vice President pointed out to the television audience that ashtrays were only one example of Government custom specifications run amuck. But, what he failed to explain was that this was not a "how" to buy issue, it was a "what" to buy issue. Of course, it probably made no sense to continue purchasing custom made ashtrays (or chocolate chip cookies or t-shirts). But, it wasn't a procurement or contracting procedure change that made for all of the allegedly big cost savings. It was a decision to buy cheaper, standardized ashtrays, instead of the custom models.

According to Acquisition Reformers, the Government can save a lot of money if it changes the "how" part of the buying process. But, most of what the contractors (and their supporters in Congress and the Administration) want changed are exactly the parts of the "how" to buy process that ensure fair and reasonable contract pricing and value to taxpayers.


The Cause: Why and How Is This Happening? Today's "Acquisition Reform:" Rolling Back Yesterday's Reforms In the 1990s, the defense industry has taken up the offensive against what it saw as overbearing procurement reforms of the 1980s. Most of these reforms, however, were useful protections for the taxpayer against contractors that had already taken advantage of us in the 1980s. The reforms, including 35 procurement reform initiatives ordered by the Secretary of Defense in 1983, have had positive results: a DOD Inspector General report notes that "Implementation of the Competition in Contracting Act, enacted in 1984, and the 35 spare parts procurement initiatives resulted in dramatic increases in reported competitive procurements and savings from 1985 to 1988."15

Former DOD Inspector General Eleanor Hill noted the dangers of rolling back these reforms:

"We remain concerned about suggestions to limit or repeal controls that have been proven effective over time, such as the False Claims Act, the Truth in Negotiations Act, the Cost Accounting Standards, the statute that prohibits contractors from charging unallowable costs, and the Defense Contract Audit Agency. We believe that these controls have been critical to maintaining the Government's ability to adequately protect its interests in the acquisition area."16

Some of the key reforms targeted by the defense industry and their current status are described in the table.



 Important Procurement Reforms of the 1980s and Their Current Status Reform Purpose Status Today False Claims Act Strengthened 1986: The False Claims Act was originally Civil War-era legislation intended to halt war profiteering. Amendments to the Act in 1986 increased the penalties for fraud and encouraged whistleblowers to come forward when they were aware of defrauding of the government. The law has been under heavy assault by the defense industry. Industry claims that "innocent disagreements" are being prosecuted as fraud. The Defense Department has flirted with pushing changes to the Act, and has worked with industry to gather information to support weakening the law. DOD and the industry have repeated the theme that companies are deterred from doing business with the government for fear of alleged excessive vulnerability to fraud lawsuits. The Department of Justice, however, has strongly rebutted claims that the False Claims Act is burdensome and needs amending. Justice noted in a response to the claims of the Defense Policy Advisory Committee on Trade (DPACT), an industry group that, for example, "DPACT provides no support beyond mere assertion for the proposition that False Claims Act liability has any substantial effect on defense industry profits or on the industry's relationship with DOD. Moreover, analysis of the data available to us shows no such effect 17

So far, strong resistance from Congressional supporters of the False Claims Act such as Senator Charles Grassley (R-IA) and from the Department of Justice - bolstered by the fact that billions of dollars have been recovered for the taxpayers - have kept efforts to weaken the law at bay, but industry attempts to overturn the strengthened law continue.

Truth in Negotiations Emphasis 1980s: The Truth in Negotiations Act (TINA) requires that contractor data submitted to the government to be current, accurate, and complete. Enforcement and emphasis on TINA were boosted in the 1980s. Congress kept a close eye on the issue, and the General Accounting Office (GAO) did many reports that emphasized the importance of TINA. The Federal Acquisition Streamlining Act and the Federal Acquisition Reform Act (Clinger-Cohen Act) exempted so-called commercial item contracts from TINA. Using false and misleading logic, Acquisition Reform proponents have tried to link application of TINA and application of Cost Accounting Standards, suggesting that anywhere TINA does not apply, neither should the Cost Accounting Standards. Procurement Integrity Statute Created

1988: Amendments to the Office of Federal Procurement Policy (OFPP) Act attempted to prevent the types of corruption that were exposed by Operation Ill Wind. The scandal revealed that contracting officials were selling source selection information - the strengths and weaknesses of competing bids based on the proposals under review - so that their associates could strengthen their own proposals when they went into negotiations. The Amendments pulled together a variety of laws that prohibited revealing information to contractors and required that officials and contractor employees sign statements saying they were aware of the integrity laws.

In response to industry criticism that the legislation merely duplicated other laws, and was unnecessarily burdensome, the paperwork was simplified in the 1990s.

Cost Accounting Standards Board Reestablished

1988: The OFPP Act Amendments also re-established the Cost Accounting Standards (CAS) Board. The CAS Board sets accounting rules designed to achieve uniformity and consistency in the accounting practices contractors must follow when pricing contracts or submitting bills to the government. The original CAS Board was terminated in 1980 when Congress failed to continue its funding (after heavy defense industry lobbying to abolish the Board).

After a steady drumbeat of industry pressure, by 1999 the Board has been "demoted" as an organization within the Office of Management and Budget, Board Members and staff are largely being bypassed, a government-industry review panel has proposed dramatically raising the dollar thresholds for applying the Standards among other limitations on the Board's rules, and DOD-inspired legislation has been submitted to allow exemptions from the rules for any contract or any contractor.

Competition in Contracting Act Passed

1984: Several factors were behind the important Competition in Contracting Act. First, an influential GAO report concluded that only a small share of contracts were being competed, and noted that competed contracts brought down prices sharply. Also, scandals involving spare parts overcharging were caused in part by markups as prime contractors supplied parts to the government that were actually produced by subcontractors. Finally, the small business community lobbied to be able to sell more to the government directly.

The Act opened up competition by requiring contracts to be "fully and openly competed." The Defense Department's ability to choose whomever it wanted for a contract was narrowed.

The Act has been weakened. Technically, full and open competition is still in place, but now only to the extent that it is "consistent with efficiency." In many cases, the competition requirement is now just for a "reasonable opportunity to be considered" for a contract.

The rules have been bypassed in part by expanding another form of contracts, those in which specific deliverable products are not specified exactly in the contract, but the contractor is available to perform services or produce products if called upon. Major weapon contracts are not usually of this form. The new form of contracts - which are more like "supplier agreements" or "licenses to sell to the government" - were exempted by the Federal Acquisition Streamlining Act of 1994, so that requirements for full competition are much less robust.

Penalties Increased for Disallowed Costs

1985: The 1985 DOD Authorization Act increased the penalties for costs submitted for reimbursement by contractors that the government determines are not valid claims.

The statutes are currently still on the books, but are under industry criticism, since the industry feels the statute excessively "criminalizes" what they see as "civil" violations.


Counterattack in the 1990s Industry has lobbied hard to reverse or bypass many of the reforms of the 1980s. In the climate of cutting back government of the 1990s, both Congress and the Administration have pushed for loosening of oversight over defense contractors.

Part of the rationale for the reforms developed out of the overpriced spare parts scandals of the 1980s. The scandals were often the result of line items in "cost-plus" contracts - the type of contracts in which the government pays all of a contractor's permitted costs in executing a contract, plus an amount of profit on top. (Often the profit was set as a percentage of the total costs, creating an even stronger incentive to the contractor to push the direct costs as high as possible.)

The bad name that these cost-based contracts gave to defense procurement helped lead to official enthusiasm for price-based contracts - contracts based on a fixed price, agreed beforehand. The commercial world usually operates with price-based contracts. For example, a person contracting with a builder to construct a house would have to be pretty crazy or very rich to use a cost-based contract that allowed the builder to spend whatever he or she wanted, with a guaranteed profit on top. Instead, in the commercial world, a contractor has to keep down costs, or the expected profits will drop, or even disappear.

The new enthusiasm for price-based contracting had perfect timing to mesh with the new buzzwords of adopting best commercial practices and privatization popularized by the Clinton-Gore Administration and the Congress in the 1990s. Unfortunately, though, what Acquisition Reform began pushing was price-based commercial contracting without the normal constraints, appropriate incentives, and oversight. Price-based contracting does not work if it just means accepting whatever price a contractor asks.

Acquisition Reform has interfered with keys to getting good price-based contracts - the government's ability to bargain hard, to get the information it needs from a contractor to verify that prices are fair, and to analyze costs to make sure they are based on what things should cost, not what they did cost before, which may have been illegitimate itself. This is nothing new - the procurement system was documented suppressing government access to contractor cost data at least three decades ago. (see Appendix D) But now the effort to blind the government is much broader and has progressed much farther.

Above all, good price-based commercial contracting relies on a healthy level of competition. Yet many of the overpricing problems that have come to light under the new "commercial" Acquisition Reform rules involve inadequate competition. Much of the savings obtained in the 1980s were attributable to strengthened competition, including techniques such as "breaking out" the purchase of component parts from the prime contractor, who often does not make the parts, but purchases them from subcontractors and adds a large markup. Acquisition Reform's failure to promote adequate competition has been sorely compounded by the Clinton Administration's zealous promotion and subsidy of mergers in the defense industry, 18 which has drastically reduced the number of competitors in each sector of the industry.

It is only the lavish, unquestioning kind of price-based contracting that industry wants. But if Acquisition Reform is to work for the taxpayer and not solely for private contractors, it will have to adopt the normal kind of commercial price-based contracting, the kind that is not subservient to industry, but rather corroborates industry claims in a non-adversarial but informed fashion.

The Clinton-Gore Administration From its beginning, the Clinton-Gore Administration has pushed for changes to make things easier for contractors through its Acquisition Reform program in the Defense Department. The initiative was the culmination of a long process of working closer with industry and its campaign contributors undertaken by the Democratic Party when it began targeting corporate campaign contributions more aggressively in the 1980s.

The defense industry succeeded beyond its wildest dreams in winning endorsement of its proposals after the 1992 presidential election. Their plans proved to be in the right place at the right time when Vice President Gore was looking for new changes to make through his Reinventing Government initiative. Industry wishes were compiled by a Congressionally-created committee known informally as the "Section 800 panel," which was industry-dominated. 19 The panel's report was completed soon after the Clinton-Gore Administration took office. Its recommendations helped shape the Reinventing Government plan, which was put together under a tight deadline and needed new proposals quickly.

The approach of the Reinventing Government initiative was to blame the very procedures that were put in place to prevent waste and fraud, saying they were actually adding to the problem. As the first "National Performance Review" in September 1993 stated:

"In recent years, our national leaders responded to the growing crisis with traditional medicine. They blamed the bureaucrats. They railed against "fraud, waste, and abuse." And they slapped ever more controls on the bureaucracy to prevent it.

But the cure has become indistinguishable from the disease. The problem is not lazy or incompetent people; it is red tape and regulation so suffocating that they stifle every ounce of creativity." 20

Cutting out red tape is an undeniably worthy goal, and the National Performance Review identified many areas for improvement. The original report acknowledged that protections were usually put in place for good reason, but argues they got out of control:

"But not one inch of [government] red tape appears by accident. In fact, the government creates it all with the best of intentions ....

Because we don't want employees or private companies profiteering from federal contracts, we create procurement processes that require endless signatures and long months to buy almost anything."21

The difficulty in cutting red tape comes in deciding what really is red tape, and what are vital protections to prevent waste. Unfortunately, the defense industry took the wisdom of the Reinventing Government campaign and pushed it much too far, persuading its allies in Congress and the Administration to apply it where it benefits them alone. The industry has pushed to apply liberalized rules for "commercial" products to non-commercial products too - for example in attacking the Cost Accounting Standards, which apply only to non-commercial products.

If there is a common element to the various defense "Acquisition Reform" initiatives, it might be a reliance on trusting contractors to do the right thing, rather than keeping an eye on them with close oversight. The evidence is beginning to mount that -- as might be expected with reforms that weaken the government's ability to discover, correct, and deter contractor abuses -- these elements of Acquisition Reform are backfiring.

Receiving industry's views is necessary, as long as the relationship does not become too close, and government does not start working for private industry's interests rather than the public's interest. Just one example of how closely industry is involved in developing policy for the Clinton Administration is provided by a case of having industry representatives on the distribution list "for your review and coordination" of a government internal policy review. (See Appendix E)

In building their case for reducing oversight, contractors have claimed that the rules are excessively burdensome, and the Defense Department argues that, as a result, a lot of companies do not want to contract with the government. But the Department's claim about deterred companies is not very persuasive: leading the lobbying charge of contractors against these sensible rules are the largest existing defense companies, who have shown little reluctance to bid for government contracts - including Lockheed Martin, Northrop Grumman, Raytheon, Boeing, and associations that represent the major defense contractors, such as the Aerospace Industries Association. If the changes were really to benefit up-and-coming new competitors in the defense industry, why would the existing contractors push the changes so hard? The Defense Department has mentioned few companies that are refusing to do business with the government.

Furthermore, the defense industry has been highly profitable recently compared to other industries, raising questions about the claims that defense work is so burdensome, unprofitable, and unappealing that companies are deterred from doing it. According to a PaineWebber report, "Profit margins in the defense industry are at the highest levels in history; operating margins have increased from 6% in 1990 to over 12% in 1997." 22

The Administration has touted billions of dollars of savings from Reinventing Government and Acquisition Reform, saying they overshadow the new stories of overpriced spare parts. But even those claims have been challenged in a recently-released General Accounting Office (GAO) report, which points out substantial unsupported and double-counted "savings" in its examination of some of the claims. The GAO's conclusion regarding the claims of the National Performance Review (NPR), as the Reinventing Government effort is also known, was: "NPR claimed savings from agency-specific recommendations that could not be fully attributed to its efforts. OMB generally did not distinguish NPR's contributions from other initiatives or factors that influenced budget reductions at the agencies we reviewed." 23

The Congress The Administration's efforts got a boost when anti-regulation sentiment swept the Congress after the 1994 election. Congress expanded the Administration's initiatives with the Federal Acquisition Streamlining Act of 1994 and the Federal Acquisition Reform Act of 1996 (known as the Clinger-Cohen Act - one of its sponsors, Senator William Cohen, soon became Secretary of Defense.) (See Appendix F for a summary of legislative changes.)

The new laws made it easier for the government to buy "commercial" items, but they ended up making it too easy, by defining "commercial" too broadly. The original idea was to ease the government's ability to buy "off-the-shelf" items whose prices could be trusted because they were set by a free market. But the definitions are so broad that "sole-source" items bought from just one company, or items bought by the government alone, can count as commercial items and avoid normal rules. Items such as the C-130J military transport aircraft - a far cry from simple items like ashtrays, bolts, and hammers - have been declared "commercial" purchases.

In practice, contractors can claim a wide variety of products are "commercial" in order to stop government contracting officials challenging them on their high prices. A DOD Inspector General investigation found in one case that, "the contractor has declined to offer prices or provide cost data. The contractor is now claiming all the spare parts are commercial items, thus making it difficult, if not impossible, for DLA [Defense Logistics Agency] to negotiate fair and reasonable prices for the sole-source spare parts." 24

The laws allow contractors to sell "commercial" items without having to provide or certify cost and price data to prove that their prices are fair. The problem is that there is not always a single true "commercial price" to rely on if cost data is denied. In particular, so-called "catalog prices" or "list prices" sometimes are not the best commercial prices available. Discounts are usually available for large orders, for example, and the government often makes very large orders yet cannot use its purchasing power under the new system.

Acquisition Reform - Not Really Adopting the Free Market Acquisition Reform is drastically reducing access to cost data, reducing the number of government oversight personnel, and discouraging proactive price negotiating. Acquisition Reform proponents apparently believe that declaring something "commercial" creates market forces out of thin air - so that oversight is no longer needed and all the old rules and procedures can be thrown out.

An element of Acquisition Reform is that it is being used to discourage contracting officers from aggressively negotiating for discounts below "list" and "catalog" prices. There are various reasons why discounts from list prices may be justified, but the most basic is simply a discount for large purchase volumes. Again, this practice is not only a common large commercial firm practice, but also something almost every consumer shopper is familiar with - if you buy in bulk, you pay a lower price.

A simple analogy from our daily lives also illustrates that "commercial" prices are not set in stone. As most car buyers know, you do not necessarily have to pay whatever price the dealer puts on the sticker. Consumers trying to save money find out the "dealer invoice" price - that is, the seller's cost data - and can use that to bring down the exorbitant sticker price. Acquisition Reform, however, pretends that consumers and companies in the commercial marketplace do not gather cost data, and so it limits the government's ability to get the best out of commercial markets.

A June 1999 General Accounting Office study has found that under the new policies and procedures, government contracting officials were not challenging contractors' prices sufficiently:

"The price analysis performed by contracting personnel were often too limited to ensure that prices were fair and reasonable. For example, some contracting personnel believed that when the offered price was the same as the catalog or list price, it could be considered a fair and reasonable price. In several cases, contracting personnel did not use pertinent historical pricing information contained in contract files that should have raised questions about the reasonableness of offered prices. ... Finally, many contracting officers were not documenting in the contract file how they determined that a price previously paid for an item was fair and reasonable and, therefore, could be relied on in evaluating the currently offered price." 25

The legislation and the Administration's policy have blinded contracting officials: when the officials are not buying "off the shelf" items where prices are truly set in the commercial marketplace, they are effectively restricted (and subtly discouraged) from negotiating down from so-called "commercial" prices offered by defense contractors. 26At the same time, contractors no longer have to provide certified cost information to prove that their prices are fair, even when the items are being acquired on a sole-source basis. A DOD IG investigation found that:

"Acquisition reform legislation and the FAR [Federal Acquisition Regulation] still provide that contracting officers shall require information other than cost or pricing data which includes uncertified cost or pricing data when necessary to determine price reasonableness for commercial items, but there is a strong DoD preference not to use that mechanism and the Government has not asserted its right to have the data." 27[Emphasis added.]

Acquisition Reform defenders seem to pick and choose which parts of "commercial practices" to adopt. In particular, they have discouraged gathering cost data from suppliers, even though it is a practice often followed by large commercial companies. Large companies that buy from small companies have the leverage and the "market power" to get the smaller company to prove that its prices are reasonable. So should the government.

In addition to changing the rules, Acquisition Reform has used a variety of bureaucratic changes to reduce monitoring of the defense industry. The following sections look in more detail at how the Administration has made large-scale cutbacks in government personnel who negotiate, monitor, and oversee defense contracts.

Monkeying with Oversight: Hear No Evil, See No Evil, Speak No Evil A deep reduction in the number of auditors, investigators, and other government personnel who oversee defense contractors is underway. Congress has cut budgets of oversight agencies, and in 1994 ordered the elimination of 272,900 positions throughout the government over several years.28 The likely cost of this reduced oversight will be more fraud and higher prices for the government. Until contractors improve their performance record and eliminate fraud, oversight remains crucial for protecting the public purse. DOD Inspector General Eleanor Hill noted in 1998, "As personnel reductions in the acquisition workforce have occurred, we have also seen reduction in programs for fraud prevention, detection, and reporting." 29

The problem with simply trusting defense corporations - "contractor self-oversight" and "contractor self-governance," as it has been called - is that the contractors have not yet earned that trust. As the DOD IG says:

"While we understand the many benefits of the new emphasis on Government/industry teamwork, the Department should not assume that procurement fraud no longer occurs. To the contrary, our criminal investigators report that their proactive undercover efforts regularly reveal significant fraudulent activity. ... Many advocates of drastic changes in Government acquisition practices are unaware of, or choose to ignore, the fact that procurement fraud remains a threat to the DoD and the U.S. taxpayer." 30(Emphasis added.)

A report by the Project On Government Oversight found that the defense industry returned more than $850 million to the government just to settle fraud cases under the False Claims Act from 1994 to 1996. 31

Penny Wise, Pound Foolish Investment in oversight performed by agencies such as the Defense Contract Audit Agency, the Defense Contract Management Command, the DOD Inspector General's office, and the General Accounting Office produces a highly favorable return for the taxpayer. But large reductions in the DOD acquisition workforce and in these agencies in particular have already taken place, and more are planned. For example:

Defense Contract Audit Agency (DCAA) - Conducts audits of Department of Defense contracts.

"We used to get hundreds of [criminal case] referrals from DCAA. Now I think I can count them on one hand." - William Dupree, head of the Defense Criminal Investigative Service. 32

Saves almost $10 for each dollar invested. 33 Produced documented savings of $3.7 billion and an additional $2 billion in unallowable costs that contractors would otherwise have charged in 1997. 34

Staff positions cut by 19% from FY 1993 to FY 1997. 35 Scheduled to suffer an additional loss of more than 3,000 staffers, a 44% cut, from FY 1990 to FY 2002. 36

Defense Criminal Investigative Service (DCIS) - Part of the DOD Inspector General's office, detects, investigates and prevents fraud, waste, abuse, and other improper acts in the Defense Department.

"... there aren't any inspectors anymore. Because we're 'working with industry.' ... That's part of the problem: where will it unfold and how will it unfold if you've got the government almost in concert with the contractor?" - William Dupree, Defense Criminal Investigative Service 37

Recovered $466 million in FY 1996-97 fraud investigations. 38

Overall DOD Inspector General staff, which includes Defense Criminal Investigative Service, cut 21% from FY 1994 to FY 1997. 39 Planned cuts of 35% from FY 1995 to FY 2001, including a 37% cut in auditors and 26% in investigators. 40

Defense Contract Management Command (DCMC) - Manages defense contracts, including analysis, review, fraud investigation, and quality assurance assessments of contracts.

"Instead of workforce adjustments being a logical consequence of business process reengineering, the personnel reductions appear to have become a reform goal in and of themselves." - Eleanor Hill, Department of Defense Inspector General 41

Referrals of fraud cases by the Defense Logistics Agency, which includes the Defense Contract Management Command, have dropped by 47% since 1995. 42

80% cut in personnel at the Defense Logistics Agency's Office of General Counsel responsible for pursuing fraud cases.43 Total DCMC personnel cut 27% from FY 1993 to FY 1997. 44 Quality assurance staff at DCMC cut 54% from FY 1990 to FY 1996. 45

General Accounting Office (GAO) - Audits, investigates, and assesses defense and other government programs.

GAO's work "contributes to many legislative and executive branch actions that result in significant financial savings and other improvements in government operations." - GAO's 1999 "Status of Open Recommendations" report

Examples of GAO savings: "six GAO products on concurrency [buying designs while still testing them] and risk in the F-22 program were important influences on DOD actions to decrease concurrency, which included reducing the number of initial production aircraft from eight to six annually resulting in measurable savings of about $1.7 billion." Similarly, "the House and Senate Committees on Appropriations conferees reduced DOD's fiscal year 1998 operations and maintenance request by $199.3 million, based on funds we identified to be in excess of requirements." 46

GAO has been chopped a third in size from FY 1992 to FY 1996, losing almost 2,000 staffers. 47

Cost Accounting Standards Board (CAS Board) - Sets basic accounting rules for contractors covering $125 billion per year in noncommercial contracts - about $90 billion in defense.

"If anything, the risks may be greater today because there is such market dominance by a few very large suppliers. In this environment, getting cost information and maintaining audit rights is a prudent business practice. Failure to do so will be very costly for the Department and ultimately the taxpayer." - Eleanor Hill, Department of Defense Inspector General 48

Estimated to save the government over $6 billion a year. 49

The Office of Management and Budget (OMB) has made a variety of bureaucratic changes to weaken the Board and its small staff, and legislation to make further changes is under consideration in Congress. 50 At Congressional direction, a Panel has reviewed the Board. (See Appendices G and H.) The Panel suffered from blatant conflict of interest - half of its members were from industry, including Northrop Grumman, which has paid $3.3 million in recent years to settle fraud claims against it under the False Claims Act, 51 and AlliedSignal, which was recently found by a Defense Department Inspector General investigation to have grossly overcharged the government for spare parts. Not surprisingly, the Panel recommended weakening of the Board's Standards. (See Appendix I)

It does not normally make sense to cut back on highly profitable activities. Drastically cutting oversight personnel blinds the government in its oversight of tens of billions of dollars of contracts each year. This serves only to make the government and the taxpayer highly vulnerable to exploitation by an industry with a blemished track record. There can be non-monetary costs, too: in August 1999 a draft GAO report found that the Defense Security Service, which conducts background checks for security clearances, had a backlog of half-a-million cases. Officials cited as one cause the Administration's Reinventing Government personnel cutbacks at the agency - since 1989 the staff was slashed from 4,080 employees to 2,466. 52

Unfortunately, Vice President Gore's National Performance Review regards oversight personnel as part of the problem:

"As we pare down the systems of overcontrol and micromanagement in government, we must also pare down the structures that go with them: the oversized headquarters, multiple layers of supervisors and auditors, and offices specializing in the arcane rules of budgeting, personnel, procurement, and finance. We cannot entirely do without headquarters, supervisors, auditors, or specialists, but these structures have grown twice as large as they should be." 53

But auditors, investigators, and other oversight personnel - who produce large net savings for the taxpayer - should not necessarily be lumped together with general management personnel. Again, Reinventing Government plans took steps in the right direction, but then were pushed too far.

The ideological goal of reducing oversight to work more "in concert" with the defense industry may explain the rush to cut staffs without doing sufficient monitoring and assessment of whether more oversight can be done with less personnel. The situation is made all the more dire by the increasing demands being put on oversight agencies. In the next few years they will have to deal with:

• A planned increase in the amount of spending on procurement contracts.

• New requirements to balance the federal government's accounting books.

• A newly-mandated outsourcing of work formerly performed by the government, which will increase the number of contracts, and hence management and oversight requirements.

• A hampering of competition by the recent wave of defense mega-mergers. Competition used to be a silent ally in keeping contractors from playing games with the rules.

Acquisition Reform: "Streamlining" Dollars from Our Pockets Another illustration of how Acquisition Reform has gone off track is the Administration's proposals to start "streamlining" other contracting rules called the contract cost principles. 54 The initiative demonstrates the inconsistency of Acquisition Reform in claiming that it is merely trying to adopt commercial practices, but actually is asking for an even sweeter deal for industry.

Paying for Luxury Hotels Again The cost principles are used, for example, to determine which costs that a contractor wants to bill to the government under a contract are "allowable," or payable (e.g., salaries, material), and which are "unallowable" (e.g., costs of alcoholic beverages, club memberships).

Publicly, this streamlining is supposed to be about "Civil-Military Integration" - the merger of defense and commercial industries - which is supposed to bring technical and cost benefits. However, this latest initiative merely removes long-standing ceilings placed on defense contractor travel and relocation costs billed to the government. These ceilings - which ironically are based on commercial indices - limit contractors to the same reimbursements that Federal employees can receive for hotels, meals, and moving expenses.

Since the amounts that Federal employees may be reimbursed are set at standard commercial rates, however, contractors are already limited to operating as the commercial world does. The new initiative, however, wants to eliminate any constraints, and let contractors charge even more than commercial standards. The ceilings were originally put in place to curb abuses such as claims for luxury hotel suites and excessive meal costs while performing government contracts. (See Appendix J)

If the cost principles are weakened, horror stories about luxurious executive lifestyles at taxpayer expense are likely to come up once again. A recent GAO report notes how contractors charging travel rates much higher than the Federal standards contributed to excessive Department of Energy travel expenditures. Acquisition Reform should not be about making it easier for corporate officials to bill the taxpayer for $300-a-night hotel rooms. 55

Accepting Data That Need Not Be "Current, Accurate, and Complete" A final example of the heedless attitude prevalent in the Acquisition Reform era is that the Federal Acquisition Streamlining Act and the Clinger-Cohen Act now allow use of cost or pricing data that oftentimes is not required to be "certified." Such uncertified contractor cost or pricing data is that which "need not be current, accurate, and complete," and is therefore far less useful for determining whether prices charged to the government are fair or not.

Accuracy of cost information is not a trivial matter: yet another investigation by the DOD Inspector General, this time a not-yet-released study, was reported in June 1999 to have found millions of dollars worth of overcharging by AlliedSignal - and attributed them to the flawed, inaccurate, and outdated pricing information provided by the company. The IG reportedly concluded that at least $53 million could be saved through the year 2005 with better data. 56

In an Orwellian attempt to confuse the situation, uncertified cost data is now referred to in the government as "information other than cost or pricing data" and certified data is referred to as "cost or pricing data." Since uncertified data apparently cannot be relied upon, when submitting cost data, contractors should be required to certify the data.

The $435 Hammer That Won't Go Away Rocked by the spare parts horror stories of the 1980s, the Pentagon searched for some cover. They found it in the theories of a Harvard professor, Steven Kelman. Professor Kelman's theory was that the spare parts horror stories were a myth, and were caused by an accounting procedure called the "equal allocation of overhead." At the time, however, the equal allocation claim was exposed as bearing no relationship to reality.

Now, more than a decade later, Acquisition Reform advocates are turning to the same hoax, and astonishingly, Professor Kelman shows up as a major architect of Acquisition Reform - he was head of OMB's Office of Federal Procurement Policy during the early Clinton Administration. A December 1998 National Journal article quoting Kelman led with the alleged revelation that a famous defense scandal story from the Reagan years - the $435 hammer - was a "myth." By implication, all the other horror stories of overpricing were myths too. (See Appendix K)

According to this hoax, the outrageous overcharging of the day had a simple and innocuous accounting explanation: simple items like hammers had an amount of company "overhead" expenses allocated to them equal to the amount allocated to much more complex and expensive items. Allocating large amounts of overhead "equally," rather than in proportion to actual value, would naturally lead to bizarre outcomes like $435 hammers.

Unfortunately this convenient explanation was simply not backed up by the facts: contractors did not use such bizarre procedures - in fact they would not be permitted by Cost Accounting Standards. In the 1980s the Project On Government Oversight (then known as the Project on Military Procurement) worked extensively on Defense Department overcharging scandals and rebutted the equal allocation hoax when it first appeared. Simple examination of the data showed that allocation of the alleged equal amount of overhead as Kelman claimed would mean that many cheaper items found on contract price lists would actually have a negative price once the "overhead" was taken away. (See Appendix L) The Project On Government Oversight pointed out that the proponents of the hoax actually never produced cases of the "equal allocation of overhead," and in fact the Air Force was forced to admit there were no cases. (See Appendices M and N)

Pentagon whistleblower Ernest Fitzgerald traces the history of the "equal allocation" hoax in his 1989 book The Pentagonists. Fitzgerald presciently foretells that, "Doubtless in the future other writers as gullible as George Will and Professor Kelman will front for the Pentagon again." Who would have known that the original author of this hoax would return in the White House more than a decade later?

The Solution: How to Stop De-Inventing the Wheel Acquisition Reform is not necessarily what it sounds like - it is not reform in the old sense of tightening protections against contractor overcharging. To the contrary, it has focused on weakening or bypassing controls - and claiming that the free market will protect the government. But the real world is more complicated, and policies should be revised to take into account the complexities of the free market, and the necessary and desirable contracting and accounting procedures that aid the government in negotiating with large and powerful defense contractors. The following proposals, including suggestions for legislative changes, could help ensure that the new reforms do not come at the cost of crippling previous reforms:

Restore meaning to the definition of "commercial." Commercial status should only apply to items that are bought and sold widely in true free market. This would require:

1. Restore the definition of commercial as actual sale of specific items to the general public, rather than the loosened definition of a commercial item as one not necessarily sold to the public, but merely "offered for sale."
2. Also, restore the definition of commercial to mean a large free market -- one that has a substantial level of sales. The Federal Acquisition Reform Act (Clinger-Cohen Act) watered down standards defining a substantial level of commercial sales, and if there is not a large market with numerous buyers and sellers, the "prices" set by contractors should not necessarily be relied upon for government purchases.
3. Finally, restore the definition of "competitive bidding" to require at least two bidders. The current alternative says that there is competition even if there is only one bid, as long as others could have bid. The phrase "sole-source commercial" is also an oxymoron - commercial exemptions should not apply when the supplier has a monopoly.

Clarify that the government can and should still negotiate actively for some commercial items. Make clear that government contracting officers have full authority to pursue the best commercial price by negotiating down from "list" prices. Commercial prices are sometimes negotiable to other companies and individuals, so there is no need or rationale to prevent the government from negotiating in such cases too. Make clear that the "commercial price" is not necessarily whatever a contractor chooses to claim or list in its catalog, but rather the price that the government or a company could negotiate, based particularly on the normal commercial practice of bulk discounting.

Restore the use of cost or pricing data where prices are not set by a true free market. Since commercial firms large enough to have "buying power" collect cost data from their suppliers, allowing the government to do so also is merely following best commercial practice. The data obtained should be "certified" data.

Preserve funding for the auditors, investigators, and rule-setting Boards like the Cost Accounting Standards Board. Many of the oversight officials save us far more than they cost. To keep cutting back on their numbers is to throw away money.

Defend the False Claims Act against industry assaults. The False Claims Act provides increased protections against fraud. It continues to be a target for industry lobbying. It, and the other reforms put in place to prevent abuses, should be strengthened and not weakened.

Improve price-based contracting by increasing competition and reversing the trend of mergers leading to fewer competing contractors. Ensure that adequate competition exists wherever possible, and where it cannot, negotiate vigorously based on cost analysis of what products should cost now, not extrapolations of what was paid (or overpaid) in the past.

If the Administration and Congress are serious about using Acquisition Reform to adopt best commercial practices, they need to focus more on the most basic ones - such as testing and developing products fully before buying them - and to give government officials the ability to make use of all best commercial practices, even when it means that defense contractors do not get everything they want.

Following Pentagon acknowledgment of "readiness" problems and after the war in Kosovo, defense budgets - and procurement spending - are being increased sharply. For this reason it is especially imperative for us not to forget what we already know about good acquisition reform - there is no need to re-invent the wheel. If we do forget, the budget surpluses the Defense Department is enjoying will quickly be frittered away on overpriced weapons and parts, and the taxpayers' money will, once again, be wasted.

STEALING THE WORKING-CLASS HOMES THROUGH FRAUD AND THEN FORCING THEM OUT OF THE CITY IN POVERTY----WOW.

PUBLIC LAND IN BALTIMORE IS DISAPPEARING AS OUR PUBLIC SPACES ARE NOW SIMPLY EXTENSIONS OF CORPORATE HEADQUARTERS AND THEIR LANDSCAPING.

WE DON'T NEED PUBLIC HOUSING------WE NEED PEOPLE OWNING THEIR OWN HOMES AS REHABS IN BLIGHTED COMMUNITIES.  NO ONE IN THE CITY BENEFITS FROM THE FRAUD AND CORRUPTION IN BALTIMORE'S HOUSING DEVELOPMENT.

WHEN I WATCH AS BALTIMORE JUSTICE LEADERS SUPPORT ANTHONY BROWN OR DOUG GANSLER----KNOWING BOTH ARE THE FACE OF THE INJUSTICE IN BALTIMORE HOUSING AND COMMUNITY DEVELOPMENT----


We all know that the subprime mortgage fraud was designed to move massive amounts of public money to the top and to place much of the nation's real estate into the hands of the few.  We all know trillions of dollars in subprime mortgage fraud occurred and we have received no justice.  For those continually saying people bought houses that were too expensive---most people caught in this fraudulent scheme did nothing wrong.  The house flippers and working class buying McMansions was rare.  The people caught in this fraud were working/middle class people simply taking that second mortgage knowing they would pay it off years down the line. They were couples who bought a house a little more than they could handle with the idea of climbing the income ladder to afford what would be their life's investment.  THEY DID THIS BECAUSE THEY DID NOT KNOW MASSIVE FRAUD WAS OCCURRING AND WAS SCHEDULED TO TAKE DOWN THE ECONOMY.  So, the average person is not the cause of this housing crisis.  Let's look at Baltimore to see how all of this was a long-range plan that said

'TO HECK WITH GENTRIFICATION----WE ARE SIMPLY GOING TO LIE, CHEAT, AND STEAL THIS REAL ESTATE FROM THE CITIZENS OF BALTIMORE AND MARYLAND'.

It is Baltimore Development Corporation run through Johns Hopkins who contrived and enriched themselves on targeted housing fraud.  I showed the connection to the AIG spin-off HighStar that allowed all the fraud to occur and then had the US taxpayers pay 100% on the dollar for bets AIG made on loans they knew were fraudulent.  Maryland is still seeing huge foreclosures from these frauds as more and more real estate falls back into he hands of the people perpetrating the frauds.

SECOND PHASE OF THE MASSIVE CAPTURE OF WEALTH IN EUROPE AND THE US-----RECONSTRUCTING SOCIETY TO THE NORM OF 99% OF PEOPLE LIVING IN POVERTY.

This is called THE NEW ECONOMY------neo-liberals like to call it THE 21ST CENTURY ECONOMY.  It is a continuation of moving all that is public to the top through public private partnerships but it extends to the remaining public property and assets.  So, public parks, public gardens, public housing property, government buildings, government facilities are now all being taken private.  Know that $1 billion in public school construction connected to the same Wall Street that committed massive fraud and owes billions to the State of Maryland?  It is designed to send all those school buildings to private hands----national charter chains-----when the economy crashes and that will happen very soon.

THE SECOND PHASE OF SOCIAL TRANSITION IS PRIVATIZATION OF ALL PUBLIC PROPERTY AS WELL AS SERVICES.

Here in Baltimore that means housing and property is being handed over to connected people for nothing----well, not for nothing.  They are being paid for loyalty as this whole takeover happens.  This mirrors what US development and military do overseas when they hand a war lord a billion dollars to distribute buying people to work against the interests of the people they serve.  SAME THING HAPPENING IN AMERICAN CITIES -----THIRD WORLD FRAUD AND CORRUPTION.  Buying loyalty to protect against the majority of people getting mad as heck. 

We have an organization that calls for land banks---they are saying this private non-profit is working to help the public keep land that the Baltimore City Hall is handing away as fast as it can.  What it is doing is taking what is not privatized and placing it into a Land Trust supposedly for the people in these communities.  It is simply going to be held from public use until the powers that be are ready to use it.  It's being sold as helping to protect public land while it takes it private in these private Land Trusts.   WE ARE UNDER ATTACK BY NON-GOVERNMENTAL ORGANIZATIONS (NGOs) that have worked overseas doing the same thing and now they are in the US in the real estate grab of the century.  For those that think urban areas and blight need this kind of action consider this----simply using the subprime mortgage fraud settlement of $1 billion would have rehabbed entire communities with more settlement from banks to come.  Instead---all this land is being given to the banks.  The working class and poor pushed out----are the ones who paid the taxes for decades supporting this city before Johns Hopkins made employment impossible for most in the city through public policy like outsourcing and importing labor from out of state. 

THIS IS WHAT JUSTICE FROM MASSIVE FRAUD LOOKS LIKE AND IT KEEPS HOME-OWNERSHIP IN THE HANDS OF WORKING/MIDDLE CLASS.

Instead, these people are being forced out of lifelong communities by landlords that fleeced them and now are charging too much rent and are being allowed to be slum landlords.


Land banking

From Wikipedia,

Land banking is the practice of aggregating parcels of land for future sale or development.

While in many countries land banking may refer to various private real-estate investment schemes, in the United States it refers to the establishment of quasi-governmental county or municipal authorities purposed with managing an inventory of surplus land.

Definition

Blighted Land in Philadelphia Land Banks are quasi-governmental entities created by counties or municipalities to effectively manage and repurpose an inventory of underused, abandoned, or foreclosed property. They are often chartered to have powers that allow them to accomplish these goals in ways that existing government agencies can not. While the land bank "model" has gained broad support and has been implemented in a number of cities, they are implemented differently so as to best address both municipal needs and the state and local legal context in which they were created.[1]

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People in Baltimore are being told that consolidating this land into parcels will allow them to maintain control from those predatory government officials sucking huge tracts of land and handing them out in pay-to-play schemes.  What you see company store scenarios where people who used to work for a public space now work for these quasi-governmental spaces.  IT IS VERY CREEPY PEOPLE.  Instead of having a public community garden that stays in public hands and is managed by public employees the people work on land that is not theirs, policy controlled by the private non-profit that is simply making use of the land until future development and in all cases-----the same people making away with all the land now, will be the same people coming back for these Land Trusts later with the people never having title.  Imagine if citizens of Baltimore were made the landowners of these gardens and could actually build a business of their own?

  WE NEED TO STOP THIS RIDICULOUS INSISTENCE THAT LAND NOT BE OWNED BY EVERYONE.  CAN YOU IMAGINE WHAT HANDING PARCELS OF PROPERTY IN BLIGHTED NEIGHBORHOODS TO THE PEOPLE LIVING IN THOSE NEIGHBORHOODS-----PERHAPS FARMING IN THE CITY ON THEIR OWN LAND ARE BUILDING A BUSINESS THEY ACTUALLY OWNED? 

Land Trusts work to keep people from owning their own land and developing it the way they want to.  Look out 4 decades from now when Baltimore development has expanded and that land will be extremely valuable and it will to handed to the same people lying, cheating, and stealing everything in sight.....Baltimore Development, Johns Hopkins, and their crony corporate pols.

Look below how this neo-liberal approach to maximizing profits while keeping your hands on the real estate.  They have been doing this in China for these few decades.  This is from a Chinese real estate developer.


Neo-Liberalism land market in China, a case study of development of Mo'ganshan District, Shanghai

Neo Liberalismeverything's priced, everything's commodity, no government intervention
sooo…optimize the value of everything? at least two parties r both happy
(they also assume, land market will put the best function in its best-fit location, such as the offices in the middle of the city, then the residential further aways, bcoz location is so important that u need to occupy the most accessible center of the city with the functions generates the most money)

This policy is not democratic----it is not equal protection-----no Bill of Rights----it is not a healthy social structure as we are hearing all across the country.  It places most people in the position of never gaining wealth---of always being marginalized and we are talking of 70% of Americans now at poverty and those numbers growing.  So, WAKE UP MIDDLE-CLASS-----THIS IS THE FUTURE BEING BUILT FOR YOUR CHILDREN AND GRANDCHILDREN.  You may think its fine for the poor but we are all being made poor as neo-liberalism creates third world !




Richard Roman: Use mortgage settlement money for victims

By / Guest columnist | January 26, 2014

Attorney fees in indigent defense cases prompted the question: "What's the price of justice?"

Unilaterally increasing the fees is not the answer. The Texas Constitution does not empower judges to burden taxpayers with increases in indigent defense expenditures.

Taking money from innocent homeowners victimized by the subprime mortgage crisis to pay for indigent defense is not justice.

El Paso families have been impacted by unexpected medical bills, layoffs and the government shutdown. Many fell behind on their mortgages. Dealing with less-than-compassionate banks was no help. Some banks were guilty of questionable practices.

Recently, Texas Attorney General Greg Abbott's office settled mortgage lawsuits filed in E1Paso courts. Millions of dollars of relief were obtained for homeowners. Yet in December 2013, Abbott explained how settlement funds were used to fund Texas Indigent Defense Programs. Documents obtained through open records requests verified that foreclosure settlement funds were deposited into the Texas Judiciary Fund.



The U.S. Department of Justice and a group of state attorneys general recently settled with mortgage servicers to assist struggling homeowners.

Last November a $13 billion settlement that JP Morgan Chase reached with government regulators was touted as the "largest settlement with a single entity in American history."

The Los Angeles Times said that of the $13 billion, $7 billion was tax deductible and $4 billion was from a "separate" settlement (the Federal Housing Finance Agency). The remaining $2 billion was for promoting "lending in low-income communities." Eligible borrowers should begin receiving calls in March.

As for Texas, state Sen. Jose Rodriguez recently stated, "In the best of all possible worlds, the state ought to raise taxes to adequately fund civil legal services and indigent defense, but we all know that the state is not willing to do that at this time."

This funding debate is not limited to Texas.

New York Gov. Cuomo is in a dispute with the Working Families Party and New York Attorney General Eric Schneiderman over who gets $600 million from a foreclosure settlement Schneiderman negotiated with JP Morgan Chase. He argues his office has sole discretion over the money and it should go to homeowners. Cuomo said he and the Legislature should decide.

"This money should go where it's needed most - to underwater homeowners victimized by Wall Street's subprime crisis," said Working Families Party National Director Dan Cantor.

Critics argued that putting it in the state's general fund short-changes those who lost their homes in the mortgage crisis because the funds could be used for any purpose. They said that "similar settlements in the past, including those entered into by Cuomo when he was attorney general, stayed within the AG's office. None were this size, however".

An El Paso task force was created to look at indigent defense issues. Perhaps a task force should be formed to study "innocent" homeowner relief.

There was an unjustified $2 million increase in private reimbursements for indigent defense this year. An additional $500,000 is being sought for the remainder of the fiscal year. County Judge Veronica Escobar said the county will "pull the money from our contingencies if we are forced to do it."

The Council of Judges has been asked to reconsider their vote to raise attorney fees. Attorneys should be fairly compensated for their indigent defense work. However, money secured from mortgage litigation should go where it's needed most - to innocent homeowners victimized by the subprime mortgage crisis, not towards funding indigent defense.

Gov. Cuomo and Attorney General Schneiderman appear to have settled their dispute over how New York will use mortgage settlement funds.

Perhaps Texas and El Paso County can do the same.

_______________________________________
What we are seeing outside Baltimore and Maryland is an increase of public space and public gardens.  Expanding these designations into blighted areas allows for a feeling by citizens that they are invested in these properties.  Add to this dimension the use of subprime mortgage fraud to rehab tons of blighted homes for the people living in the community and VOILA-----YOU HAVE URBAN RENEWAL THAT BRINGS EVERYONE INTO THE PICTURE.

What Baltimore is doing is opposite of this.  It is clawing back public space----re-designating public space for these activities as Land Trusts under non-profits or handing them to private individuals who simply sit on the property until they are ready to develop all the while having a community garden with sweat equity having to leave at a moments notice.

THIS IS THE THIRD WORLD-----THIS IS A COMPANY TOWN APPROACH THAT JOHNS HOPKINS PUSHES BECAUSE IT WANTS TO CONTROL ALL LAND AND POLICY IN THE CITY.


Public Harvest: Expanding the use of public land for urban agriculture in San Francisco
Linked by Michael Levenston




SPUR offers 11 recommendations to expand and coordinate the city’s institutional support, increase funding and provide more access to public land.

By SPUR – San Francisco Planning and Urban Research Association
April 2012, 36 pages

Excerpt – Executive Summary:

Urban agriculture has captured the imagination of many San Franciscans in recent years. Two dozen gardens and farms have sprouted across the city since 2008, and in 2011 the city changed its zoning code to permit urban agriculture in all neighborhoods. Interest in urban agriculture stems from its numerous benefits. City farming and gardening provides San Franciscans with vibrant greenspaces and recreation, education about fresh food and the effort it takes to produce it, cost savings and ecological benefits for the city, sites that help build community, and a potential source of modest economic development. But the city will not fully capture these benefits unless it responds to the growing interest and energy behind the issue.



The demand for more space to grow food is strong. Surveys since 2005 have consistently demonstrated long waiting lists at many of the city’s community gardens. In most cases, residents must wait more than two years to get access to a plot. The launch of more than 20 new urban agriculture projects in the past four years, some of which are communally managed and involve greater numbers of people than traditional plot-based gardens, is another indication that the current amount of land dedicated to urban agriculture is insufficient.

The challenge ahead is matching residents’ interest with public resources. Private land and private funding alone are not sufficient to meet the demands for urban agriculture space in our dense city. Instead, the city must improve its existing programs and expand the availability of public land, funding and institutional support.

Currently, at least seven city agencies provide monetary support and 11 agencies provide land to city gardeners and farmers. Though well-intentioned, their support is largely uncoordinated, understaffed and, as a result, inefficient. While city funding for urban agriculture has increased during the past five years, it has decreased from a peak a decade earlier and is in the middle range when compared to other large American cities.

For San Francisco to reap the many benefits of urban agriculture, SPUR recommends that the city expand and coordinate its institutional support, increase funding and improve funding efficiency, and provide more access to public land.


________________________________________
This is what we know is happening.  The very people committing the frauds are now getting the Federal money to buy and build the land vacated be residents victimized by these mortgage frauds and the economic collapse caused from the massive fraud.  We all want development in Baltimore but we want Rule of Law and Equal Protection driving that development. 

THIS IS NOT A THIRD WORLD PROPERTY GRAB.

Baltimore has hundreds of millions owed from the postage stamp mortgage settlement and billions more when the rest of justice in these frauds are gained.  It has $700 million owed just from the court award for the state underfunding Baltimore City schools which needs to go into this rehabbing process.  The Federal and State money sent to Enterprise Zone development that never met the requirement of low-income housing has hundreds of millions of dollars coming to these communities. 

THERE IS PLENTY OF MONEY TO HAND HOME-OWNERSHIP TO LARGE NUMBERS OF WORKING CLASS AND POOR IN BALTIMORE.  THERE IS PLENTY OF PROPERTY TO BE HANDED TO THESE SAME COMMUNITIES IN PUBLIC PARKS AND GARDENS.

It is to no one's benefit other than the few connected to this massive fraud and corruption in Baltimore City land grab to allow a few to amass control of large parcels of land.  Having huge development corporations owning entire communities-----REALLY????? 

WAKE UP PEOPLE----THIS IS THIRD WORLD DEVELOPMENT BY PEOPLE ENRICHED FROM THIRD WORLD MASSIVE FRAUD!

The Chicago Reporter / By Angela Caputo 13 COMMENTS

Federal Dollars Help Gentrifying Neighborhoods, Not Most Distressed Communities The federal program designed to help blighted communities recover from the foreclosure crisis, helps gentrifying communities more than those that need financial support.


May 24, 2014  |           The following was originally published in  The Chicago Reporter. 

The house at 4419 N. Kimball doesn’t have much curb appeal. It’s an aluminum-sided, American foursquare on a narrow lot with a patch of grass for a front yard that’s barely big enough for a folding chair.

Two years ago, it sat empty — a casualty of the foreclosure crisis, one of thousands of single-family houses and apartment buildings left vacant across Chicago. But the building’s prospects started looking up in 2011 when it was acquired through the federally-backed Neighborhood Stabilization Program.

Money poured into the Albany Park house. New hardwood floors were hammered into place and granite countertops were installed in the kitchen. The private developer was contracted to rehab the house by a nonprofit organization. That nonprofit was hired by the city to oversee the program. When it hit the market, the three-bed, two-bath home — with stainless-steel appliances, two-car garage, small backyard and a bonus room in the basement —  sold for $187,000. And the public was handed a $594,359 bill.

Chicago began receiving program money in 2009, roughly a year after the housing market crashed. In the six years since, the city has collected $169 million — of which $140 million went to rehabbing and demolishing homes. Phil Ashton, an urban planning professor at the University of Illinois at Chicago, says the federal aid “was never enough money to put a dent in the foreclosure problem.” It was, however, the first big chunk of federal money sent to Chicago to address the vacant properties left in the wake of the foreclosure crisis. And in the city’s poorest neighborhoods, where vacant homes can be bought for the price of a car, the hope was that it would go a long way.

But records obtained through the Freedom of Information Act show the city spent money on buildings with luxury finishes in gentrifying areas while distressed properties in some of the city’s hardest hit neighborhoods were left to languish. In their grant proposal to the U.S. Department of Housing and Urban Development, city officials pledged to rehab 2,800 units, a combination of apartments, condos and single-family homes. Less than one-third were completed.

Darlene Dugo, a regional vice president for Mercy Housing Portfolio Services, the nonprofit hired by the city to manage the program, chalks up the shortcoming to unforeseen circumstances. “We thought that you’d only need to put in $60,000 per unit but when we got into the properties, we found that they were gut rehabs,” she said.

Gut rehabs that, in many cases, were finished off with “condominium-grade finishes” like stainless steel appliances and granite counter tops, luxuries that Dugo says are standard in some of the neighborhoods her organization was tasked with targeting.

“We want to make sure we’re putting out a product that has sustainability,”Dugo added. “We want to give them the finishes they deserve.”

A tale of two neighborhoods

If ever there was a place in need of foreclosure relief, it’s Roseland, a beat up corner of Chicago’s Far South Side where the owners of tidy, single family homes are losing the battle over blight.

Roseland ranks third in the city for likely vacant residential properties, according to our analysis of foreclosure-related vacancies dating back to 2008. There are nearly 700 empty houses and apartment buildings sprinkled along blocks filled with tiny homes on wide lots. Central Roseland is the  hardest hit corner of the community, and no matter how hard neighbors try to maintain a semblance of order — potting plants and manicuring their lawns — their attempts are overshadowed by boarded up houses and weed-strewn lawns.

LEAVING THE PUBLIC AND PUBLIC SECTOR GOVERNMENT COFFERS IN DEBT CREATED BY MASSIVE CORPORATE FRAUD ACROSS ALL INDUSTRIES=====THIS IS THE TOP PRIORITY FOR ALL AMERICANS REPUBLICAN OR DEMOCRAT----DO YOU HEAR YOUR CANDIDATE SHOUTING THIS!?



I spoke earlier of how US graduates are experiencing the highest level of unemployment after graduation in modern history and student loan debt has placed many in the hands of a Department of Education run by Wall Street credit collection businesses making these loans as predatory as credit cards.  We know global corporations and their pols are deliberately keeping the US economy stagnant because high unemployment moves Americans deeper into poverty and keeps them desperate for jobs.  This entire industry of internships with VISTA and Teach for America is designed to steer youth from starting careers and gaining wealth to doing the job of what was the public sector.  This is killing the middle-class and it creates a system of indenture for our children.  Remember, the US had a strong economy before Reagan/Clinton neo-liberalism because our economy was driven by domestically with small and regional businesses and strong wages and benefits that allowed families to have disposable income-----THE OPPOSITE OF WHERE NEO-LIBERALISM TAKES US.


I want to talk more about our children and college grads with student loans.  First, let's look to how the 1% actually marketed college students into college debt at the same time privatizing student loans from Federal loans to Wall Street loans.  Remember, the students feeling this loan debt are the working/middle class and poor.  The cost for college is going up for these students as the cost for the affluent goes down.  The goal in education reform in America right now is a tiered system that keeps the working/middle class and poor out of strong 4 year universities and tracked into the cheapest higher education opportunities like community college and online degrees.  After all, education is wasted on 90% of Americans say the 1%!

Below you see how student loan debt worked just as subprime loan debt.....a complete relaxing of terms for loans when loans were made private.  Mind you, student loans when Federal were a well-run and public interest.  George Bush and public media pushed the idea last decade that your child must get a masters degree or above to land a job at the same time they were building the global structures that would crash the economy and hand off power to global corporations everyone knew would create this stagnant job market.  IT WAS DELIBERATE.  So, loading people with debt knowing the economy will crash---sound like the subprime mortgage fraud?  You betcha.  Meanwhile they were raising the price of tuition to build the corporate structures that took universities from academics for US students to being corporations marketing and recruiting students from around the world.
So, once again, it is the working/middle class desperate for financial relief falling into the hands of predatory lending because there is no public justice or oversight and accountability protecting the American people.

The poor are being used simply to funnel public money to for-profit higher education with high tuition mostly paid by taxpayer money and no receiving no benefit in employment for the most part.  Same as subprime mortgage loans.  In both the subprime mortgage scam and this for-profit mortgage scam the goal is simply to move public money to the same people at the top while loading debt onto citizens. 

This is happening because all of the public sector designed to protect the public and provide stability have been dismantled.

Of course it is the TV stations geared toward low-income audiences loaded with these loan predators.  I called the Maryland Attorney General about the level of fraud and predatory advertizement on media in America and was told they did not get involved until millions of dollars were lost to these frauds.

1. Student loan debtors targeted by fraudsters- MSN Moneymoney.msn.com/...student-loan-debtors-targeted-by-fraudsters   CachedThose shackled with student loan debt are increasingly being targeted by scams and shady companies promising relief.
   
   
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   Remember, a corporate nation seeks revenue from its citizens to be used to maximize profits for corporations.  That's why trillions of dollars in corporate subsidy and corporate fraud are making profits soar as neo-liberals pretend there is a government debt and deficit---tens of trillions of dollars in corporate fraud recovery would pay all government debt.
   
   We know in Baltimore the government has now become predatory on its citizens for revenue as massive amounts of corporate subsidy take all public revenue.  That's what is happening with our children and student loans.  Corporate bankruptcy allows corporations to shed almost all debt-----no bankruptcy for a social good---student loans.  Ideally, higher education should be free for goodness sake.
   
   STOP VOTING FOR CORPORATE POLITICIANS IN PRIMARIES----WE MUST REBUILD THE DEMOCRATIC PARTY WITH LABOR AND JUSTICE CANDIDATES!
   
   We are being led to believe that Congressional democrats are doing all they can and are thwarted at every turn by republicans on these issues.  The problem is who the President appoints as head of Department of Education----in this case Arne Duncan who is privatizing the heck out of this agency-------and the failure to pursue massive for-profit education fraud.  Doing just that would greatly reduce pressure on students and families.
   
   DO YOU HEAR YOUR POLS SHOUTING THIS?  IN MARYLAND ALL POLS ARE CORPORATE AND WORK FOR WEALTH AND PROFIT AND NOT PUBLIC JUSTICE.
   
   

Obama Student Loan Policy Reaping $51 Billion Profit

Posted: 05/14/2013 11:18 pm EDT  |  Updated: 05/15/2013 3:49 pm EDT  Huffington Post

1. 
   Figures made public Tuesday by the Congressional Budget Office show that the nonpartisan agency increased its 2013 fiscal year profit forecast for the Department of Education by 43 percent to $50.6 billion from its February estimate of $35.5 billion.
   
   Exxon Mobil Corp., the nation's most profitable company, reported $44.9 billion in net income last year. Apple Inc. recorded a $41.7 billion profit in its 2012 fiscal year, which ended in September, while Chevron Corp. reported $26.2 billion in earnings last year. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo reported a combined $51.9 billion in profit last year.
   
   The estimated increase in the Education Department's earnings from student borrowers and their families may cause a political firestorm in Washington, where members of Congress and Obama administration officials thus far have appeared content to allow students to line government coffers.
   
   The Education Department has generated nearly $120 billion in profit off student borrowers over the last five fiscal years, budget documents show, thanks to record relative interest rates on loans as well as the agency's aggressive efforts to collect defaulted debt. Representatives of the Education Department and Congressional Budget Office could not be reached for comment after normal business hours.
   
   The new profit prediction comes as Washington policymakers increasingly focus on soaring student debt levels and the record relative interest rates that borrowers pay as a potential impediment to economic growth. Regulators and officials at agencies that include the Federal Reserve, Treasury Department, Consumer Financial Protection Bureau and Federal Reserve Bank of New York have all warned that student borrowing may dampen consumption, depress the economy, limit credit creation or pose a threat to financial stability.
   
   At $1.1 trillion, student debt eclipses all other forms of household debt, except for home mortgages. It's also the only kind of consumer debt that has increased since the onset of the financial crisis, according to the New York Fed. Officials in Washington are worried that overly indebted student borrowers are unable to save enough to purchase a home, take out loans for new cars, start a business or save enough for their retirement.
   
   Policymakers also are worried about the effect that high interest rates on outstanding student debt may have on the broader economy. Congress sets interest rates on federal student loans, with rates fixed on the majority of loans at 6.8 and 7.9 percent.
   
   But as the Federal Reserve attempts to lower borrowing costs for everyone from households and small businesses to large corporations and Wall Street banks, student borrowers have not been able to benefit.
   
   Compared to a benchmark interest rate -- what the U.S. government pays to borrow for 10 years -- student borrowers have never paid more, increasing the burden of their student debt as wage increases and yields on investments and bank accounts fail to keep up with the relative increase in student loan interest payments.
   
   President Barack Obama recently asked Congress to tie federal student loan interest rates to the U.S. government's borrowing costs. In a possible sign of congressional intent, leading Democratic senators on Tuesday proposed legislation that would keep existing interest rates on some student loans for the neediest households fixed at 3.4 percent, rather than allowing them to revert back to their original 6.8 percent rate.
   
   The legislation, dubbed the "Student Loan Affordability Act" and proposed by Senate Majority Leader Harry Reid (D-Nev.), Sen. Patty Murray (D-Wash.), Sen. Jack Reed (D-R.I.), and Sen. Tom Harkin (D-Iowa), aims to help a small subset of future student borrowers who take out loans over the next two years. The bill does nothing for existing student debtors.
   
   "Today's figures from the CBO underscore the urgent need for Congress to prevent the July 1 interest rate hike and address the crushing debt placed on students," said Tiffany Edwards, spokeswoman for Democrats on the House Education and Workforce Committee.
   
   Rohit Chopra, the Consumer Financial Protection Bureau official overseeing the regulator's student debt efforts, has warned policymakers to not focus solely on future borrowers.
   
   “The whole student loan problem is a problem that should be of deep concern to this body,” said Richard Cordray, CFPB director, during testimony last month before the Senate Banking Committee. “These are young people that we should care a great deal about.”
   
   “They’re the ones with the ambition, aspirations and dreams, and they're getting saddled with debt that they don't understand,” Cordray said of student borrowers. “It's holding them back and it's making them unable to rise and succeed and become leaders in our society.”
   
   He added: “It's a significant problem and we're going to be doing everything that we can to address it at the bureau.”
   
   The CFPB has been focusing on helping existing borrowers refinance high-rate debt or modify the terms of their loans. In a report earlier this month, the CFPB lamented that borrowers are unable to refinance their obligations after they have graduated from college and secured well-paying jobs.
   
   "Corporate entities, homeowners, and many others have been able to refinance debt at quite low rates, and student loan borrowers are wondering why they can't do the same," Chopra said.
   
   The CFPB suggests that increased concentration in the student loan market may inhibit refinancings and debt workouts. Lenders and the Education Department profit when borrowers pay higher rates than they otherwise would in a normally-functioning market.
   
   Unlike traditional lenders, though, the Education Department's profits are barely dented by loan defaults. For loans made in 2013 that eventually default, the department estimates it will recover between 76 cents and 82 cents on the dollar. Bankruptcy rarely discharges student debt.
   
   The Education Department's collection efforts are aided by loan default specialists, including NCO Group Inc., a company owned by JPMorgan.
2.  The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation's most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.
   
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   We all know that the massive frauds of last decade were centered in large extent in neo-liberal states----from New York to California, from Maryland to Illinois.  Nancy Pelosi's district in California is ground zero for for-profit education fraud and the subprime mortgage fraud for instance.  Maryland has record subprime mortgage frauds and foreclosures and for-profit education frauds because it allows these corporations to come to Maryland and openly prey on the public.  Republicans of course do the same, but the democratic party is the people's party and tasked with protecting labor and justice.
   
   
   Insider Trading by Congress throughout these massive corporate frauds was exposed and Congressional response was----to pass a law that Congress cannot be charged with Insider Trading and to make sure Rule of Law remains suspended with no public justice.....which by the way is itself illegal in a Equal Protection/Rule of Law nation.
   
   THIS IS THE PROBLEM FOR STUDENT LOAN DEBT AND REINSTATING RULE OF LAW AND REBUILDING PUBLIC JUSTICE IS THE SOLUTION.  SEE WHY CINDY WALSH FOR GOVERNOR OF MARYLAND AND HER JUSTICE PLATFORM CANNOT GET MEDIA AIRTIME IN MARYLAND AND ESPECIALLY BALTIMORE WHERE ALL THIS FRAUD RUNS RAMPANT?
   
   Keep in mind this one corporation mentioned in this article is the very tip of a massive iceberg in fraud in the education/financial  industry and NOT ONE WORD IS MENTIONED OF THE NEED FOR JUSTICE FOR THE PUBLIC.
   
   
   

TruthOut.org / By Danny Weil
 For-Profit Education Fraud Tied to Political Elite

A bipartisan group of the nation's political leaders have close ties to for-profit college scams. Now, an $11 billion lawsuit is forcing some of them into the spotlight.

         On Friday, April 13, 2012,

1. 
   The lead plaintiff in the class-action suit, Chinea Washington, claims The Art Institute of California, Hollywood, led her to believe that federal grants and loans would cover the entire $89,000 cost for a bachelor's degree in interior design.
   
   In November 2011, after three years of study, Washington was provided notice by the "college" that she had reached the federal loan/grant aggregate limit of $52,340 and that it would cost $37,000 to complete the degree. Washington dropped out with $52,160 in debt. Because The Art Institute's credits are not transferable, Washington has been swindled out of $52,000 and three years of her life.
   
   The only way to describe $89,000 for a four-year degree with non-transferable credits from a non-academic college is as a fraud and a swindle, and that characterization possibly fails to convey the frustration and downright victimization students like Washington must feel.
   
   Like subprime mortgages, for-profit colleges are a scam driven by payment of commissions to sales staff known as recruiters. The payment of commissions to high-pressure salespeople is so central to the scam that the umbrella trade group for for-profits, the Association of Private Sector Colleges and Universities (APSCU), has sued the federal government to overturn its ban on incentive pay.
   
   It cannot be stated strongly enough: for-profit colleges could not engage in the ongoing exploitation of students and theft of federal money without the direct cooperation and assistance of the federal government in what can only be termed an immoral economy. The same forces that demonize everything government does or attempts to do are busy feeding from the government trough. The hypocrisy is untenable, the federal subsidies unfathomable and the lack of criminal prosecution unconscionable.
   
   For-profit colleges are a kickback scheme where politicians enact favorable legislation and regulations that allow for-profit colleges to maintain access to student loans and grant money. The for-profit colleges then "give" a small cut of the federal money back to the politicians to enact favorable legislation.
   
   In the cases of Senator Snowe and Sen. Dianne Feinstein (D-California), their husbands have operated under the cover of their wives as they directly benefited, and continue to benefit from, their positions as shareholders in for-profit college companies. Snowe and Feinstein are accomplices in the ongoing evisceration and defrauding of citizen taxpayers and students, which explains the pair's complete silence on this matter.
   
   The so-called ruling class of government officials and elected politicians, to which Feinstein and Snowe clearly belong, is little more than a gaggle of white-collar criminals which facilitates and benefits from the diversion of taxpayer money into private coffers. It all takes on the appearance of legitimacy. Unfortunately, this is not a victimless crime. Like Washington, thousands of students who attend these subprime institutions are left with tens of thousands of dollars of nondischargeable debt which ends up ruining their lives.
   
   There is a vast network of former and current government officials who actively participate in the for-profit college swindle. Some of the conspirators are well known, and include: Mitt Romney, Rep. Virginia Foxx (R-North Carolina), John Kline (R-Minnesota), Alcee Hastings(D-Florida), Trent Lott (R-Mississippi), Lamar Alexander (R-Tennessee), Steve Gunderson (R-Wisconsin), Virginia Democratic Party Chairman Brian Moran, Snowe, Feinstein, Nancy Pelosi (D-California), and John Boehner (R-Ohio). The group also includes Obama administration officials and supporters such as Lanny Davis, Anita Dunn, Hilary Rosen, Anthony Miller and Charles Rose.
   
   
2. Courthouse News reported a class-action lawsuit by students filed in federal court against the Art Institute of California and its owner, Educational Management Corporation (EDMC). As reported in Truthout, Sen. Olympia Snowe's (R-Maine) husband, former governor of Maine John McKernan, is chairman of the board of EDMC and a former CEO of the company.  The company also faces an $11 billion false claims lawsuit by the federal government and 11 states.
   
   _______________________
   Not surprisingly we have solutions to student loan debt that work to maximize bank profits and protect education industry profits----and we have other policies that may work to the public's advantage.  This is what needs to happen.
   
   Bankruptcy needs to happen because this entire decade was about predatory lending---handing money out that should not have been given.  Banks have a fiduciary responsibility to make sure loans will be repaid.  So, discharge all private student loans in bankruptcy and make the banks take the losses.  They can then go after the for-profit education industry for massive fraud. 
   
   There is a problem with bankruptcy if the Federal and state governments never try to address the fraud.  The for-profit industry keeps the fraud and Wall Street comes back to hit the American people for their losses.  So, we must have Rule of Law address the fraud while pursuing bankruptcy.  You are hearing only the bankruptcy mantra.
   
   The Loan Forgiveness policy pushed by Obama is yet another attempt to corner the student into a repayment program that will be bad for the student in the long run.  It is also designed to hit the working/middle class with full debt payment----because $20,000 over 10 years would be paid in full while Ivy League school debt of $100,000 to $250,000 would be largely forgiven after ten years.  It is not a coincidence that over the last decade Ivy League parents have largely used private student loans to pay tuition rather than cash. 
   
   Tying the working/middle-class to this Forgiveness policy that as this article shows is infused with restrictive requirements is not good for the public.
   
   

Bankruptcy, Not Forgiveness, for Student Loans
Inside Higher Ed  
December 7, 2012 By Jenna Ashley Robinson

While many approaches have been taken to the problem (trying to cut university costs, for example), there seem to be just two proposals for lessening the burden on the students themselves. These are to allow the loans to be discharged in bankruptcy or to forgive the loans altogether. Both have been the subject of Congressional bills.

Only one of these has the proper long-term incentive effects, and even it should be hedged with some restrictions: restoring limited bankruptcy protection. That is, students should be allowed to get out of their student loan burden as part of bankruptcy proceedings, just as they are able to get out of car loans now. However, this option should be restricted to private loans and should be allowed only after a set amount of time, such as 5 or 7 years, as it was prior to 2005.

While Senator Dick Durbin (D-Ill.) has proposed the idea of restoring bankruptcy protection for borrowers of private student loans several times, it has gone nowhere. Instead, there’s a growing chorus in favor of loan forgiveness. U.S. Representative Hansen Clarke (D-Mich.) introduced H.R. 4170, the Student Loan Forgiveness Act of 2012, earlier this year.

The law would allow students to pay just 10 percent of their discretionary income for 10 years, whatever their total loan amount; then, the remaining debt would be canceled. This is the “10-10 standard.”

In addition, under this bill, the current 3.4 percent cap on undergraduate student loan interest rates (enacted by Congress as a temporary measure) would be made permanent. Private borrowers whose educational loan debt exceeded their income would be allowed to convert their private loan debt into federal Direct Loans, and then enroll in the “10-10” program.

A critical part of the bill is to reward graduates for entering public service professions -- like teaching and firefighting -- with even greater forgiveness. Already, under the Public Service Loan Forgiveness, some graduates can have their loans forgiven if they work in public service for ten years. Few students use the current programs, however, because the rules dictating structure of repayment are relatively restrictive, as Inside Higher Ed recently reported.

The Clarke bill would lower the public service requirement to five years. Similarly, medical graduates would be rewarded for working in underserved communities by reducing the service requirement to 5 years from its current 10 years.

While this bill would benefit the small proportion of students who have extremely high debt levels, it would enormously distort incentives for students and universities -- causing larger problems in the long run.

The problem is that loan repayments will be the same whether students borrow cautiously to attend a state school or borrow extravagantly to attend an exclusive private university. Their payments will be capped at 10 percent of discretionary income for ten years. Because future students will know about the option of loan forgiveness, it will destroy any incentive for them to borrow prudently. They will have no reason to consider the varying costs of higher education.

Their unfettered willingness to borrow will have a ripple effect. Because the federal government will ante up (until it runs out of money), more and more money will flow to the schools through these loans, spurring them to continue to raise tuition and minimizing pressure on cutting costs. (Greater demand typically leads to higher prices.) Students would be simply middlemen -- passing government largesse on to colleges and universities that can’t stop their habit of seeking revenue wherever possible.

Limited bankruptcy protections would send a better message to both graduates and lenders. In 2005, Congress prohibited private student debt from being discharged through bankruptcy, except in rare cases. Government student loans have not been subject to bankruptcy protection since 1976, when Congress exempted them following reports that new doctors and lawyers were filing for bankruptcy to avoid paying student loans.

Indeed, if bankruptcy were available, many young graduates -- who often have no major assets such as a house or a car -- would be tempted to walk away from loan obligations. The federal government lends money to any student who meets minimum standards; it does not evaluate whether the student is likely to pay the money back.

Thus, restrictions are needed to make bankruptcy “work.” First, there should be a waiting period before students become eligible for bankruptcy protection -- perhaps five years after beginning to make payments on student loans.

Second, only loans from private lenders would be dischargeable through bankruptcy. The famous cases of student debt in the $100,000-plus realm tend to include large amounts of private loans. Lenders were able to rely on federal laws preventing bankruptcy -- so the sky was the limit. Federal loans, on the other hand, are capped at $31,000 for dependent undergraduates and $57,500 for independent undergraduates.

By making private loans dischargeable in bankruptcy, there would also be a ripple effect -- a good one. Lenders would become much more cautious. They would actually consider the likelihood that the student would be able to pay back the loan. Instead of relying on government policy to guarantee their profits, banks would have to return to time-tested, responsible banking practices. In the end, fewer students would take private loans and total debt would decrease.

Current student loan policy has led young people down the wrong path -- away from frugality and prudence to profligacy. It’s time to start sending better signals.




December 7, 2012 By Jenna Ashley Robinson

Student loan debt is soaring.

Since 1999, average student loan debt has increased by more than 500 percent, and in 2010, it exceeded outstanding credit card debt for the first time in history. Total outstanding student loan debt, by some counts, exceeded $1 trillion this year.

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We want to be clear----the target of people of color happened with this for-profit education scam as was the subprime loan scam.  It is the middle-class who feels the brunt of inflated university tuitions created from corporatized universities.  So, corporate pols are allowing the government coffers to be soaked with the frauds against the low-income families and then killing the middle-class with corporatized university tuition and unregulated loan amounts.

Again, this was not only a republican policy-----it is a neo-liberal policy.  All of this began with Clinton and deregulation and global market building that allowed banks and corporations the power to become unaccountable and large enough to effect the entire nation.  IT WAS DELIBERATE AND IT INVOLVES CONGRESSIONAL PROFITEERING.

So, Clinton teed the loaded golf ball, Bush took a huge whack sending that loaded ball all over the course and into the rough, and Obama came along and declared the loaded ball lost and simply dropped a new ball on the course as if the first ball was never loaded.

SUSPENDED RULE OF LAW AND DISMANTLING OF OUR PUBLIC JUSTICE SYSTEM HAS BEEN HAPPENING SINCE CLINTON-----AND IT ALL TIES TO TRANS PACIFIC TRADE PACT THAT ENDS OUR ABILITY AS CITIZENS TO PROTECTION UNDER LAW.

Keep in mind in Maryland, TV stations aimed at low-income are still saturated with for-profit education industry advertizements from the very institutions shown to be defrauding and offering little value to students and taxpayers.  For-profit schools run continuous advertizement while receiving most of their money from taxpayer aid.  It is not that we do not want low-income to have the aid-----we want to be sure these programs help them----that is what a democracy and democratic party does!
Below is a great article ====it is long, but try to glance through. Remember, Obama ran on holding the for-profit education industry accountable and this article refers to steps taken by Obama in addressing this-----

THAT NEVER HAPPENED.  THEY WATERED DOWN THESE POLICIES TO HOLD THE INDUSTRY ACCOUNTABLE AND HAVE NEVER RECOVERED THE FRAUD.

The Subprime Student Loan Racket

With help from Washington, the for-profit college industry is loading up millions of low-income students with debt they'll never pay off.

By Stephen Burd   Washington Monthly
 
At the age of forty-three, Martine Leveque decided it was time to start over. For several years, she had worked in the movie business, writing subtitles in Italian and French for English-language films, but her employer moved overseas. She then tried her hand at sales, but each time the economy dipped sales tumbled, along with her income, and as a single mother with a teenage son, she wanted a job that offered more security. She decided to pursue a career in nursing, a high-demand field where she could also do some good.

While researching her options online, Leveque stumbled on the Web site for Everest College, part of the Corinthian Colleges chain, which pictured students in lab coats and scrubs probing a replica of a human heart and a string of glowing testimonials from graduates. “Now I know exactly where I am going. And now I’m making very good money,” enthused a former student named Anjali B. The school, near Leveque’s home in Alhambra, California, offered a Licensed Vocational Nursing program that would take her just one year to complete. When Leveque contacted the admissions office, she was told she would receive hands-on training from experienced nurses in state-of-the-art labs with the most modern equipment—including a recently purchased $30,000 mannequin that could simulate the birthing process. She also says recruiters told her that she would be able to do rotations at the University of California, Los Angeles Medical Center, one of the nation’s best hospitals.

Leveque was intrigued, though she was initially put off by the $29,000 tuition. But the school’s recruiters assured her there was nothing to be concerned about: Everest had an exceptional track record of helping students find employment—they claimed the typical Everest College LVN graduates landed a job paying between $28 and $35 an hour straight out of school. And the school would arrange a financial aid package to cover her costs.

In the end, Leveque decided to enroll. The day she came in to fill out her paperwork, she says, the recruiters rushed her through the process and discouraged her from taking the forms home to look over. They told her that she would be taking out private loans in addition to federal loans that are traditionally used to pay educational expenses, but did not explain what the terms of those loans would be. “They just kept telling me that ‘we’re with you,’ and that they would try to get me the maximum amount of federal loans allowed,” she says. Only later did she learn that those private loans—which made up 42 percent of her “financial aid” package—carried double-digit interest rates and other onerous terms*.

To make matters worse, the program did not come close to delivering on the promises that had been made. The instructors had little recent medical experience. Instead of really teaching, she says, they usually just read textbooks aloud in class and sometimes offered students the answers on tests ahead of time. On the rare occasions when Leveque and her class were given time in the lab, she found that the equipment was broken down and shoddy—except for the expensive new mannequin, which no one knew how to use. Instead of the promised rotations at UCLA Medical Center, her clinical training consisted of helping pass out pills at a nursing home. (A spokeswoman for Corinthian Colleges denied many of Leveque’s allegations, insisting that the company does not condone cheating, that all LVN instructors at Everest College have “at least the minimum qualifications” set by the California Board of Vocational Nursing, and that UCLA Medical Center “is not and has never been” one of the school’s official clinical training sites.)

Since graduating in 2008, Leveque has been unable to find a nursing job, perhaps because she never learned how to perform basic tasks such as giving shots. Instead, she works as an occasional home health care aid earning at the most $1,200 a month—not enough to pay her rent on the cramped apartment she shares with her sister and son or keep gas in her car, much less pay off her student loans. As a result, her loan balance has ballooned to approximately $32,000, and she has no idea how she will ever pay it off*. “My credit is ruined,” Leveque says. “I made one mistake, and I will be paying for it for the rest of my life.”

Leveque’s story is far from unique. Each year, more than two million Americans enroll in for-profit colleges, also known as proprietary schools, and their popularity has only grown since the financial crisis. While traditional four-year colleges are struggling with dwindling student bodies and budget gaps, proprietary schools are reporting record enrollments as the newly unemployed try to retool their skills so they can wade back into the job market. Some of the largest for-profit chains say their numbers have doubled over the last year.

The students who are flocking to these schools are mostly poor and working class, and they rely heavily on student loans to cover tuition. According to a College Board analysis of Department of Education data, 60 percent of bachelor’s degree recipients at for-profit colleges graduate with $30,000 or more in student loans—one and a half times the percentage of those at traditional private colleges and three times more than those at four-year public colleges and universities. Similarly, those who earn two-year degrees from proprietary schools rack up nearly three times as much debt as those at community colleges, which serve a similar student population. Proprietary school students are also much more likely to take on private student loans, which, unlike their federal counterparts, are not guaranteed by the federal government, offer scant consumer protections, and tend to charge astronomical interest—in some cases as high as 20 percent.

These figures are all the more troubling in light of these schools’ spotty record of graduating students; the median graduation rate for proprietary schools is only 38 percent—by far the lowest rate in the higher education sector. What’s more, even those students who make it through often can’t find jobs. The reason for this is simple: while some proprietary schools offer a good education, many more are subpar at best. Thus large numbers of students leave with little to show for their effort other than a heap of debt. Not surprisingly, students at proprietary schools are far more likely to default on their loans than those at other colleges.

The appalling treatment of disadvantaged students at the hands of proprietary schools ought to be a national scandal, especially at a time when America desperately needs more college graduates to stay competitive. But the problem has barely registered in Washington. That’s partly because the proprietary school lobby has enough clout among lawmakers on both sides of the aisle to keep the issue quiet. But Congress and the Obama administration have also had their hands full advancing other higher education reforms—in particular, legislation to kick private lenders out of the federally subsidized student loan program. This will create tens of billions of dollars in cost savings that will go toward larger Pell grants for low-income students. But that measure, vital as it is, affects only lending within the federal student loan program. It leaves untouched the private loans that are increasingly being foisted on students like Leveque and the loosely regulated schools that are profiting as a result.

The for-profit higher education sector is no stranger to scandal. In the 1980s and early ’90s, it came to light that hundreds of fly-by-night schools had been set up solely to reap profits from the federal student loan programs, in part by preying on poor people and minorities. The most unscrupulous of them enrolled people straight off the welfare lines, and got them to sign up for the maximum amount of federal student loans available—sometimes without their knowledge or consent.

The rampant abuses caught the attention of the news media, sent shockwaves through Capitol Hill, and led to a year-long, high-profile Senate investigation led by Senator Sam Nunn, the Georgia Democrat. The standing-room-only hearings had all the trappings of scandal, with trade school officials pleading the Fifth and a school owner, who had been convicted of defrauding the government, brought to the witness table in handcuffs and leg irons.

Key lawmakers considered kicking all trade schools out of the federal student aid programs—a virtual death sentence given the institutions’ heavy reliance on these funds. But Congress ultimately stepped back from the brink and instead strengthened the Department of Education’s authority to weed out problem institutions. Under the new rules, for-profit colleges had to get at least 15 percent of their tuition money from sources other than federal loans and financial aid. Also, if more than a quarter of a school’s students consistently defaulted on their loans within two years of graduating or dropping out, the school could be barred from participating in federal financial aid programs. The idea was to get rid of those schools that were set up solely to feed on federal funds and didn’t provide the meaningful training students needed to get jobs and pay off their debt. As a result, during the 1990s more than 1,500 proprietary schools were either kicked out of the government’s financial aid programs altogether or withdrew voluntarily. In an effort to rein in abusive recruiting tactics, in 1992 Congress also barred schools from compensating recruiters based on the number of students they brought in.

These changes shook up the industry. The old generation of trade schools gradually died off and were replaced by a new breed of for-profit colleges—mostly huge, publicly traded corporations. The largest, the Apollo Group, owns the University of Phoenix, which serves more than 400,000 students at some ninety campuses and 150 learning centers worldwide. Others include the Career Education Corporation, which serves 90,000 students at seventy-five campuses around the world, and Corinthian Colleges, which serves 69,000 students at more than 100 colleges in the United States and Canada.

Not only did these companies promise that their schools would be more responsive to the needs of students and employers than the previous generation, they also said they would be more accountable to the public because, as publicly traded companies, they were heavily regulated. “We’ve seen a fire across the prairie, and that fire has had a purifying effect,” Omer Waddles, then the president of the Career College Association, told the Chronicle of Higher Education in 1997. “As our sector has weathered the storms of recent years, a stronger group of schools is emerging to carry, at a high level of credibility, the mantle of training and career development.”

In reality, the new breed of schools had quite a bit in common with their predecessors; in some cases, they even operated out of the same buildings and employed the same personnel. What’s more, rather than making them more accountable, the fact that they were publicly traded created a powerful incentive for them to game the system. After all, to keep their stock prices up and investors happy, the schools had to show that they were constantly expanding, which meant there was intense pressure to get students in the door and signed up for classes and financial aid.

With so much at stake, these schools quickly found ways to skirt the new rules. To get around the caps on student loan default rates, for instance, many of them began hiring agencies to help former students get forbearances or offering lines of credit so alums could make their student-loan payments—but only during the initial two-year window, when defaults were counted against the school by the Department of Education. After that, students were left to wrestle with the debt on their own. As for the rule requiring schools to get at least 15 percent of tuition from nongovernment sources, it had some unintended consequences. Rather than, say, enrolling people who could afford to pay some tuition out of pocket, many schools started pushing students to take out private student loans.

Previously, this kind of loan had gone exclusively to graduate and professional students pursuing careers in high-paying fields like law and medicine. The financially needy students who attend for-profit institutions couldn’t qualify for them because of their less-than-stellar credit records, their lousy graduation rates, and their spotty record of finding work in their field. But this began to change around 2000. At the time, college tuition was skyrocketing—a trend that has only accelerated—and federal grants and loans weren’t keeping pace. To fill the gap, financial aid officers started cutting deals with lenders to bring in private loan money. In the case of proprietary colleges, most of the large publicly traded chains forged arrangements with Sallie Mae, the nation’s largest student loan company. (Once a quasi-government agency like Fannie Mae, it became entirely private in 2004.) In exchange for pots of private student loan funds that they could dole out at will—meaning without regard for students’ ability to repay the debt—the schools gave Sallie Mae the right to be the exclusive provider of federal student loans on their campuses. Lenders vie fiercely for this privilege because federal loans are guaranteed by the government, meaning the Treasury pays back nearly all the money if the borrower defaults. Thus lenders get to pocket generous fees and interest and bear almost no risk.

Sallie Mae clearly understood that these private loans were going mostly to subprime borrowers who might not be able to pay them back; in 2007, Senate investigators uncovered internal company documents showing that executives expected a staggering 70 percent of its private student loans at one for-profit school to end in default. Investigators concluded that Sallie Mae viewed these loans as a “marketing expense”—a token sum to be paid in exchange for the chance to gorge on federal funds.

From the schools’ perspective, it didn’t much matter whether students would be able to pay off their debt any more than it mattered if they stuck with the program or graduated with the skills they needed. As long as students were enrolled long enough to be considered a “start,” meaning that they attended classes for a week or two, the schools got to keep some of the money, and they got to include students in their official enrollment tally, which gave Wall Street the impression they were expanding. Having a cache of private loan funds to dole out also allowed the schools to clinch the deal right away—no need to grind through a stack of forms or wait for a third party to approve the loan application. Thus recruiters could lock students in before they experienced buyer’s remorse.

At best, the George W. Bush administration and the Republican-led Congress turned a blind eye to these schemes. At worst, they made it easier for the schools to carry them out. In his first term, Bush packed the Department of Education with allies of the proprietary colleges. Before becoming the assistant secretary for post-secondary education, for example, Sally Stroup worked as a lobbyist for the University of Phoenix. Under her leadership, the agency took the teeth out of regulations that were designed to rein in abuses of the 1990s, including the incentive-compensation ban for recruiters.

Not surprisingly, many schools began resorting to hard-sell tactics to bring students in. In 2004, the Department of Education found that corporate bosses at the University of Phoenix routinely pressured and intimidated their recruiters to put “asses in the classes.” At some of the campuses, enrollment counselors who didn’t meet their targets were sent to the “Red Room,” a glassed-in space where they worked the phones under intense management supervision. What’s more, in recent years dozens of former students have filed suits alleging they were misled about classes and programs proprietary schools offered, as well as about their prospects for graduating and getting jobs in their fields of study. While the seriousness of the abuses vary, in some cases they amount to outright fraud, with recruiters pressuring students to sign up for classes that don’t actually exist or to enroll in programs where the instructors lack even basic expertise in the field. The push to get students in the door also created more pressure to steer people into private loans.

The frenzy only intensified after Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. This made it almost impossible for those who took out private student loans to discharge them in bankruptcy and, not surprisingly, turned the private student loan market into a much more appealing target for lenders.

s a result of these changes, private loan borrowing has skyrocketed. In the last decade alone, it has grown an astounding 674 percent at colleges overall, when adjusted for inflation. The growth has been most dramatic at for-profit colleges, where the percentage of students taking out private loans jumped from 16 percent to 43 percent between 2004 and 2008, according to Department of Education data.

The spike in private loan borrowing is dismal news for students. Unlike traditional student loans, which have low, fixed interest rates, private educational loans generally have uncapped variable rates that can climb as high as 20 percent—on par with the most predatory credit cards. Private loans also come with much less flexible repayment options. Borrowers can’t defer payments if they suffer economic hardship, for instance, and the size of their payment is not tied to income, as it sometimes is in the federal program. Private loans also lack basic consumer protections available to federal loan borrowers. With a traditional federal student loan, for example, if a borrower dies or becomes permanently disabled, the debt is forgiven, meaning they or their kin are no longer responsible for paying it off. The same goes if the school unexpectedly shuts down before a student graduates. But none of this is true of private loans. Also, because it is so difficult to discharge private student loans in bankruptcy, when students take them out to attend schools that provide no meaningful training or skills they can find themselves trapped in a spiral of debt that they have little prospect of escaping.

Theresa Sweet, a thirty-three-year-old California resident, took out about $100,000 in private loans between 2003 and 2006 to study photography at the Brooks Institute in Santa Barbara, which is owned by the Career Education Corporation. At the time, she says the Brooks recruiters—who have frequently been accused of misleading students—told her that graduates of their photography program typically made at least $60,000 straight out of school. In fact, since graduating three years ago she has been unable to find paid work in her field, and, while she has managed to get forbearances on her student loans, the interest has continued to stack up. She now owes more than $200,000.

Looking back, Sweet admits that she was naive in trusting the recruiters. But she can’t help but wonder how she ever qualified for the loans in the first place, especially given that when she applied she was unemployed. “If it were me, I never would have loaned me the money,” she says. “Who in their right mind would lend $100,000 in unsecured debt to an art major?”

Like Sweet, graduates of proprietary colleges often struggle to find jobs in their fields. This is because, in many cases, they don’t get the skills they need to compete. After all, it’s far easier and less expensive for schools to boost enrollment numbers through aggressive advertising and recruitment than to expend the resources to build quality schools. Corinthian and Career Education, which own the schools Leveque and Sweet attended, have faced the most damning allegations when it comes to educational quality and steering students into shady private loans. Other chains have better reputations on these fronts, among them the University of Phoenix and DeVry University. But even they have a spotty record of graduating students.

or awhile it looked like the meltdown on Wall Street, and the ensuing credit crunch, would put an end to predatory lending at for-profit schools. In 2008 Sallie Mae quit offering subprime private loans to students at for-profit colleges because the astronomical default rates had helped throw its stock price into a nosedive. But the proprietary college industry has found a way around this roadblock, namely making private loans directly to students, much the way used-car lots loan money to buyers rather than going through a third party. For example, in a recent earnings call with investors and analysts, Corinthian said that it plans to dole out roughly $130 million in “institutional loans” this year, while Career Education and ITT Educational Services Inc., another for-profit chain, have reported that they expect to lend a combined total of $125 million.

These loans could prove to be even more toxic than the private ones offered by Sallie Mae. This is because some schools are packaging them as ordinary consumer credit, which has even fewer built-in safeguards than private student loans, especially when it comes to disclosure requirements. This makes it easier for schools to mislead borrowers about the terms of the debt they are taking on. In one class-action lawsuit filed earlier this year, former students of Colorado-based Westwood Colleges allege they were duped into borrowing institutional loans at a staggering 18 percent interest. According to the complaint, the college’s corporate bosses advise their admissions officers to sign students up for these loans without revealing how costly they are going to be. Thus borrowers don’t learn about the steep interest until after they leave school and receive their first loan bill. Worse, the lawsuit alleges that some students have been signed up for loans without their permission.

Jillian L. Estes, a Florida lawyer who represents the plaintiffs in the case, says she has been approached by two dozen former Westwood admissions representatives who admit that they deliberately avoided telling students about the terms of these loans. “They knew they’d never be able to enroll these students if they were up front with them,” Estes explains. (In their written response to the lawsuit, Westwood College officials offered a “categorical rejection” of the allegations brought by Estes and her clients.)

Significantly, many proprietary schools are pushing institutional loans even when they know students won’t be able to pay them off; Career Education and Corinthian Colleges only expect to recover roughly half of the money they distribute through their institutional lending programs, according to communications with shareholders. Why would they lend knowing they won’t get the money back? Because any loss is more than offset by federal loans and financial aid dollars, which, despite the surge in private educational lending, still fund the bulk of tuition at proprietary schools. Say a student gets a $60,000 federal financial aid package and supplements it with a $20,000 institutional loan. The school comes out $40,000 ahead even if the borrower ultimately defaults. Plus, getting students in the door pumps up enrollment numbers, which makes for happy shareholders.

Meanwhile, as the credit crunch eases, traditional lenders may well go back to making private loans to proprietary school students, especially given the changes afoot in the industry. President Obama aims to get rid of the program that allows lending companies to collect lucrative fees and interest for serving as the middleman on federal student loans and instead have the government offer the loans directly. Once forced out of the federal student loan program, traditional lenders will have a powerful incentive to seek profits by wading deeper into the private student loan market, and for-profit schools, with their exponential growth, could once again be an appealing target.

The good news is that the Obama administration seems more inclined than its predecessor to stand up against the abuses of proprietary schools. In May, the Department of Education revealed that it was considering reversing changes the Bush administration made to weaken the incentive-compensation ban. It is also thinking about adding teeth to the rules requiring proprietary colleges to show that graduates are finding “gainful employment” in their field and cracking down on schools that willfully mislead prospective students. “Our overall goal at the Department of Education in post-secondary education is to make sure that students … have the information they need to make good choices,” Robert Shireman, the deputy undersecretary of education, told financial analysts and investors during a conference call earlier this year.

These proposals are a good start, but more steps will be needed. For starters, the Department of Education should publish the data that it already collects on the number of students at each school who default over the lifetime of their loans. At the moment, it only releases the number who default during the first two years after leaving college, which is of limited value, not only because this is such a short time span, but also because the rates can be easily manipulated by schools.

Just publishing lifetime default rates would give prospective students a clearer picture of the risks of enrolling in a particular school. But the impact would be far greater if Congress used this data, along with graduation rates, to weed out abusive institutions; ideally, any school that failed to meet a certain threshold should be kicked out of the federal financial aid programs.

At the same time, Congress should require companies that offer private student loans to give the same kinds of flexible repayment options and consumer protections as are available through the federal student loan program, including allowing borrowers to repay their loans as a percentage of their income. Lawmakers also need to revisit changes Congress made to the bankruptcy code in 2005, which make it exceeding difficult for financially distressed borrowers, including those with private student loans, to discharge their debt in bankruptcy.

These changes would go a long way toward helping people like Martine Leveque escape their mountains of debt and ensuring that future students don’t wind up in the same situation. It would also guarantee that taxpayers don’t go on bankrolling giant companies that profit by exploiting those who are struggling to build better lives.
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I want to end by emphasizing----if you look at media you will think Obama and Congress tried to reform this industry-----it was the courts that stopped them for example.  Yet, simply enforcing Rule of Law and recovering trillions of dollars in fraud from this industry would have put them all out of business!  THAT IS HOW YOU TAKE CARE OF THIS PROBLEM.....WE DO NOT NEED NEW LAWS----WE NEED RULE OF LAW.

You will see the long list of for-profits that stole the trillions of dollars and they are still going strong in Maryland.  What you do not hear is that they are killing union apprenticeship programs----the best in the world at training for all kinds of workplace employment -----being dismantled by these for-profit schools----which is the point.  Both republicans and neo-liberals are trying to kill unions and labor and these privatizations do just that.

SEE WHY THE MEDIA CONTROLS SO COMPLETELY WHICH CANDIDATES FOR GOVERNOR GET AIRTIME?  ALL CANDIDATES EXCEPT CINDY WALSH HAVE BEEN SILENT AND WILL CONTINUE TO IGNORE MASSIVE FRAUD AND CORRUPTION!

The SEC allowed US banks to leave GAAP accounting principles for an International Accounting Principles that place the protections on shareholder wealth and not the public.  As you see below, so many accounting frauds are happening now.  Accounting is a dry subject but it is behind all of the loss of control in fraud and corruption.  Please take time to glance through these postings, especially the last one!

DO YOU HEAR YOUR POL SHOUTING THAT OBAMA AND NEO-LIBERALS ARE DISMANTLING ACCOUNTING REGULATIONS JUST AS CLINTON DEMANTLED BANK REGULATIONS MAKING IT HARDER FOR THE PUBLIC TO CONVICT IN ACCOUNTING FRAUD?

I want to take a few days to look at the state of US banks several years after the massive frauds were discovered and brought down the US economy.  Bank of America and Citibank were to too largest pushers and processors of subprime mortgage loans and Citibank's CEO Robert Rubin was of course Bill Clinton's finance chief when all of the bank deregulation and breaking of Glass Steagall occurred.  It is reasonable to assume the overall plan to blow up the US real estate market was in full swing as Clinton was creating the structures for what is now global Wall Street.  The reason Citi and BOA are of importance is that they are the ZOMBIE banks....the ones that Rule of Law would have required be nationalized and taken into bankruptcy so that all assets could be sent back to creditors and victims of mortgage fraud. 

THIS IS WHAT RULE OF LAW REQUIRED BECAUSE OF THE UNQUESTIONABLE PROOF OF MASSIVE AND SYSTEMIC FRAUD.

That of course did not happen and we have yet to get justice with these two banks.  Mind you, Wells Fargo and the other big banks are equally guilty but CITI and BOA need to go.  Most economists agree that nationalizing these banks to recover fraud would not have had much more of an effect on the economy than the current stagnant and crippled economy we have today.  The second piece to this of which I've spoken earlier is that the movement of US private and public pensions from the then safety of the bond market to the stock market in 2007-2008 was done to buoy these collapsing banks.  Many of US pension money is still attached to the worst of criminal banks.  Rather than bring these banks into bankruptcy and transfer lost pension wealth to worker's, the pensioners are being told the gains of the BULL market these few years has made up the losses----only, it hasn't.

Below you see that yet another illegal game was played at the time of the crash simply to make these banks appear viable.  The idea was pretend they are OK and they can go overseas to amass new profits.  The idea was to allow the FED policy of QE take trillions of dollars of those bad loans off bank accounts to make them look healthier----the FED with $4 trillion in debt has been heard to say they will pass all that debt from fraudulent loans over to the US Treasury-----AKA, THE TAXPAYER.  The FED has reached its limit of debt that can be sustained, the massive transfer of bundled foreclosures has mostly finished (round two of the massive subprime mortgage fraud) so talk moves to reversing the policies that allowed these banks to hide debt and look healthy.

GOODBYE PENSION GAINS FROM THE LAST SEVERAL YEARS----IT WAS ALL FRAUD AND MISREPRESENTATION YET AGAIN.  JUST AS THE WALL STREET RATING AGENCIES GOT OFF SCOTT FREE FOR FRAUDULENTLY GIVING 'AAA' RATINGS TO THESE SUBPRIME LOANS---NOW BANK OF AMERICA AND CITIBANK WILL BE ALLOWED TO REVERSE THE ACCOUNTING TRICKS THAT FALSIFIED THEIR VALUE FOR YEARS AFTER THE CRASH-----ALL INVOLVING FRAUD AND CORRUPTION.

'And how did it err? It says that it properly raised its reported capital levels to offset the reported loss caused by unrealized changes in the valuation of the securities it had issued. But it also raised the capital levels to offset losses that had been realized, something it should not have done. The realized changes came when securities issued by the bank were paid at maturity or repurchased at an earlier date.

That mistake improperly increased its reported capital.

Bank of America did not explain how that the error came to happen or how it was repeated year after year. Nor did it explain why the error was discovered when the first-quarter financial statements for this year were being prepared'.

What all the US big banks did-----BOA and CITI especially ----was to leave the GAAP accounting principles method of recording debt and used an accounting model that allowed it to hide all the subprime mortgage loan and other debt making it look healthier than it was.  You then watch TV commercies toting BOA and CITI as strong and profitable banks as they expanded overseas when in fact they had enormous debt.  Again, these banks were allowed to provide false information to investors to attain business just as happened with the subprime loans.

ALL OF THIS IS FRAUD AND ALL OF THIS PLACES THE PEOPLE'S WEALTH AND INVESTMENTS IN CONSTANT RISK.



Generally Accepted Accounting Principles (United States)

From Wikipedia

Accounting standards have historically been set by the American Institute of Certified Public Accountants (AICPA) subject to Securities and Exchange Commission regulations.[4] The AICPA first created the Committee on Accounting Procedure in 1939, and replaced that with the Accounting Principles Board in 1959. In 1973, the Accounting Principles Board was replaced by the Financial Accounting Standards Board (FASB) under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Council serving to advise and provide input on the accounting standards.[5] Other organizations involved in determining United States accounting standards include the Governmental Accounting Standards Board (GASB), formed in 1984, and the Public Company Accounting Oversight Board (PCAOB).

Circa 2008, the FASB issued the FASB Accounting Standards Codification, which reorganized the thousands of US GAAP pronouncements into roughly 90 accounting topics[6]

In 2008, the Securities and Exchange Commission issued a preliminary "roadmap" that may lead the United States to abandon Generally Accepted Accounting Principles in the future (to be determined in 2011), and to join more than 100 countries around the world instead in using the London-based International Financial Reporting Standards.[7] As of 2010, the convergence project was underway with the FASB meeting routinely with the IASB.[8] The SEC expressed their aim to fully adopt International Financial Reporting Standards in the U.S. by 2014.[9] With the convergence of the U.S. GAAP and the international IFRS accounting systems, as the highest authority over International Financial Reporting Standards, the International Accounting Standards Board is becoming more important in the United States.
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Just to show how widespread these accounting frauds were----look below at the systemic nature of these frauds.  Remember, Enron and its collapse resulted by massive frauds by its accounting firm and back then----Rule of Law held Enron and the accounting firm accountable.  That hasn't happened since.

DEREGULATION HAS MADE A WILD WEST OF ALL CORPORATE BEHAVIOR AND THIS HAS OUR ECONOMY AT THIRD WORLD LEVELS OF CORRUPTION.

So, Wall Street banks were allowed to hide massive amounts of debt with accounting tricks and when the FED did the 'STRESS TESTS'  that famously allowed banks to exit government control due to BAILOUT in 2009-2010....it was all a lie.


16 Financial Shenanigans That Got Companies Into Tons Of Trouble

Eric Platt and Lucas Kawa Nov. 20, 2012,

Accounting improprieties, disclosure failures, and outright misrepresentations have gotten companies into trouble since the beginning of business. These are the accusations that Hewlett-Packard has made against software company Autonomy.

As the HP story continues to unfold, we are reminded of some past instances when confusing financial and accounting principles got some big companies on the front page for all of the wrong reasons.

In the recent past, companies have been busted for employing questionable accounting tricks, financial engineering, complicated risk metrics, and outright fraud in an effort to hide losses are inflate profits.


Special Purpose Vehicle (SPV) Definition: An SPV is a legal entity typically used to serve as a counterparty with the main corporation. In finance it often used for securitization, but it has also been used to hide risky corporate behavior/transactions and conceal corporate relationships.

Case: The most notorious case of special purpose entities being used to distort a company's obligations is Enron, which filed for bankruptcy in 2001. Enron used SPVs to lower the appearance of its debt load and overstate earnings and equity. 

Mark to Market (MTM) AP

Definition: MTM is an accounting measure that values accounts to the current environment. Firms use mark-to-market accounting when the value of an asset or liability moves over time.


Case: Bear Stearns, the now defunct investment bank purchased by JP Morgan, reported in June and July of 2007 that its two main hedge funds (the Bear Stearns High-Grade Structured Credit Fund and High-Grade Structured Credit Enhanced Leveraged Fund) had to mark down nearly all their value, sparking concerns of contagion in the financial crisis. Banks across Wall Street suffered huge paper losses thanks to MTM.


Repo 105 AP Images/ Kristy Wigglesworth

Definition: Repo 105 is an accounting trick that defines a short-term loan as a sale. A company can then use that cash to lower liabilities before paying back the loan with interest. Generally in the repo market, companies will not exchange collateral because the time period is very short.

Case: Lehman Brothers masked extensive liabilities right before quarter-end by using this Repo 105 tactic. The company ultimately filed for bankruptcy and was sold off to different institutions (with most U.S. operations going to Barclays). 

Expense Recognition ABetterBagofGroceries.com

Definition: Under generally accepted accounting principals, expenses should be recognized when incurred — not necessarily when the payment is made. This is known as the expense recognition principle.

Case: Diamond Foods allegedly shifted payments to walnut growers to later periods to offset costs during its fiscal 2011 year, inflating earnings as it entered negotiations with Proctor & Gamble. The stock transaction depended heavily on Diamond's share price.

Revenue Recognition haccamopooly/flickr

Definition:  Under  generally accepted accounting principals, revenue should be recognized when the company delivers or performs the task it will be paid for — not necessarily when the payment is received. This is known as the revenue recognition principle. However, exceptions do apply.

Case: Xerox settled with the SEC in 2002 for accelerating revenue recognition of equipment sales by more than $3 billion, which increased pre-tax earnings by $1.5 billion. The company, which was supposed to record revenues both upfront and over a period of time (for servicing equipment over its usable life), moved those service revenues to the time of purchase.

Misrepresented Cash Flows Definition: The statement of cash flows is the third major financial statement, which tallies cash generated and spent by a company during a fiscal period. This portion of the financial statement of an earnings release is one of the best ways to gauge a company's solvency and actual performance.


Case: WorldCom used its cash flows statement to hide expenses by marking operating costs, which should have been booked as expenses, as capital investments. Under that plan, WorldCom inflated cash flow by $3.8 billion and posted quarters of positive performance when it really lost money.

Channel Stuffing Krispy Kreme

Definition: Channel stuffing is a practice where a distributor ships retailers excess goods that were not ordered to increase the accounts receivable portion of their balance sheet. Generally, the retailers then ship back the goods and the company must mark them as returns.

Case: Krispy Kreme allegedly sent franchises double their usual shipments at the end of financial quarters so the company could meet Wall Street forecasts. In 2005 the company said it would restate past financial statements.

Hiding Losses in Acquisitions HK-DMZ on flickr

Definition: Companies can pay high prices for financial advice during a merger, and some have used that guise as a method to cover prior losses. 

Case: Japanese technology giant Olympus announced it had been hiding losses on securities investments for years by using the cover of acquisitions. When new CEO Michael Woodford called attention to strange payments made in 2008, he was subsequently fired.

Round Trip Trading alan5o5 via Flickr

Definition: This is practice where a firm trades an asset and then buys it back many times to inflate its transaction volume. However, the market-manipulation has no impact on profit (although it will bolster top line results).

Case: Dynegy was forced to pay the SEC $3 million after it was found conducting round trip trades with special purpose entities. According to the SEC, Dynegy's "overstatement of its energy-trading activity resulting from 'round-trip' or 'wash' trades — simultaneous, pre-arranged buy-sell trades of energy with the same counter-party, at the same price and volume, and over the same term, resulting in neither profit nor loss to either transacting party."

Smoothing Earnings Definition: This is a practice where a firm smooths net income by using GAAP techniques to level off fluctuations between periods.


Case: Freddie Mac understated earnings by more than $5 billion over three years to keep earnings consistent and investors happy. According to The New York Times, Freddie Mac lost $111 million during a period it announced net income of nearly $1 billion. Freddie Mac only reported half of what it reported it earned during the third quarter of the year, stating that it earned about $1 billion rather than $2 billion.


Churning Definition: A practice by brokerage houses where they excessively trade securities to generate commission — even when the trades do not benefit the account holder. Similarly, the practice has been conducted by insurance companies by moving clients from one policy to another.

Case: MetLife, just one of a number of insurance companies found guilty of the practice, settled with state regulators and set aside billions for claims that it moved clients from one policy to another, to generate high premiums.

Bartering Boonsri Dickinson, Business Insider

Definition: A transaction where two companies (or people) agree to trade goods or services with each other without the use of currency. 

Case: AOL was investigated by the SEC and Justice Department for inflating revenue by using barter trades for online advertising and recognizing the trade as a sale in the period leading up to the merger with Time Warner.

Tax Evasion Philly News

Definition: Pretty simple: an illegal practice where a person or company does not pay the correct tax liabilities owed to the government.

Case: Crazy Eddie, a discount electronics retailer, evaded taxes for years before going public by "skimming and under-reporting income." This was just one of the practices the company used to bolster results. 

Back Dating Employee Stock Options Lara604 / Flickr

Definition: The process where a company offers options to an employee at a date before the actual date the option was made. Companies have done this so they can set better exercise prices to the employee (generally pushing the option into the money).

Case: Apple came under scrutiny for back dating options to employees and forced then-CEO Steve Jobs and other Apple executives to pay $14 million, plus attorney fees. 

Goodwill Impairments Howard Lake

Definition: Although not illegal, companies have come under pressure from investors for overstating goodwill — which bolsters the balance sheet. Goodwill represents a company's intangible assets (its brand, customer relations, etc.) and often arises during a merger or acquisition.

Case: Green Mountain came under fire for its accounting of goodwill during its acquisition of Van Houtte and how its jump in assets was mainly attributable to that line item on the balance sheet. 

Value at Risk (VAR) Chris McGrath/Getty Images

A sign on the outside of a Chase bank branch in New York City.

Definition: A tool used by financial institutions that estimates probable losses based on historic trends, prices and volatility. Firms generally report VAR data at quarter-end, with confidence intervals, and for periods stretching from one day to two weeks.

Case: JP Morgan is under intense scrutiny after reporting a $2 billion loss after publishing a VAR of just $76 million a quarter earlier for its entire credit portfolio. At that pace, the entire JP Morgan unit could have lost as much as $76 million in value in any given day (to a 95 percent confidence interval).
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Remember, these pensions were deliberately thrown into the stock market as it crashed just to buoy these big banks.  This is fraud and public malfeasance on the part of public pensions.  What will double-down on these losses if the fact that all the gains from the stock market these few years are masked by hidden debt----no real gains.

Pension fund managers were part of sending these pensions into a crashing market and as of yet very little justice has come from all these massive pension losses.  Below you see movement by pension funds to recover losses but as of yet-----the same small settlements bring nearly nothing back.  When Bank of America is forced to stop using the accounting methods hiding its debt-----stock values will fall once again.  This article highlights the ongoing fraud as these foreclosure proceedings were handled as badly.

KEEP IN MIND THIS IS NOW HAPPENING IN THE OBAMA ADMINISTRATION AND A DEMOCRATIC MAJORITY IN THE SENATE AS ARE ALL POLITICIANS ARE SILENT.  CAN YOU IMAGINE IF ALL OF CONGRESS SHOUTED LOUDLY TO GIVE CITIZENS JUSTICE ----- THAT IT WOULD HAPPEN.

This is how we know we have corporate pols running as democrats-----NEO-LIBERALS.

Biggest US Pension Funds Get Into Fraudclosure Fray, Demand Banks "Immediately Examine Foreclosure Practices"

Submitted by Tyler Durden on 01/09/2011 20:13 -0400


  More bad news for the BofA/Wells syndicate. After on Friday two of the biggest mortgage lenders in the world were hit with bad news out of the Massachusetts supreme court, today it is seven of the nation's major pension funds, between them representing nearly half a trillion in capital, which are demanding that "the boards of directors of Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo immediately undertake independent examinations of the banks’ mortgage and foreclosure practices." The coalition of pension funds called for the banks’ Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter. The coalition members’ insistence on immediate action reflects the urgency of their concerns over mishandled mortgages. But Jim Cramer on Friday said there was no urgency, and no reason to be concerned, and that this is nothing but a buying opportunity for the lemmings which jut got one step closer to the cliff.
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Let's be clear----there were trillions of dollars in subprime mortgage fraud.  The number of homes in America involved was massive.  The reason this fraud was allowed to continue and goes without justice is the goal of this entire scheme was to remove the American people from homeownership----

THE EQUITY WE THE PEOPLE GAINED OVER DECADES OF SAVING AND INVESTMENT.

    I want people who are still losing their homes to foreclosure....and Maryland is ground zero for this.....that damages to the US economy from this massive fraud need to extend to families facing long term unemployment and are now losing their homes.


Remember, all US big banks are still responsible for massive fraud but BOA and CITIBANK were the ringleaders.

Bank of America: Too Crooked to Fail The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?


By Matt Taibbi March 14, 2012 10:55 AM ET
Rolling Stone

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.

All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.


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Here you see while Bank of America was known to be in debt of a trillion or more in US fraud....it took its bailout money and expanded overseas where it invests in more high-risk and leverage as much as before the crash.  As this article shows, the Chinese are creating the environment that will hasten a collapse in our US economy this year.


Bank of America advises China default contracts to hedge debt storm Chinese bond yields have already risen to the highest in a decade yet markets remain “complacent” about the implications Bank of America's Bin Yao says markets have underestimated the risk of a monetary squeeze
 Photo: EPA By Ambrose Evans-Pritchard

2:15PM GMT 13 Dec 2013



Bank of America has advised clients to take out default insurance against Chinese debt, warning that monetary tightening by China’s central bank risks setting off a bout of serious credit stress in 2014.

Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

He recommends buying credit default swaps (CDS) on five-year Chinese debt as the easiest way to “hedge the China tail risk”. These contracts spiked to 266 after the Lehman crisis and again to 206 during the ‘hard-landing scare’ of late 2011. They have since settled down to stable levels, trading this week near 66.

Bin Yao said the markets have underestimated the risk of a monetary squeeze. The central bank has already raised interest rates by three quarters of a point over the last year. Rising yields are pushing the shadow banking system closer to the brink. “We find trust loans especially troubling,” he said.

Short-term debt issuance by trust companies has jumped to $320bn from almost zero two years ago. A new study by the China Academy of Financial Research warned that the trusts face a redemption shock after promising returns of 10pc to 15pc that may be impossible to deliver.


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The American accounting system GAAP is just too burdensome with all of the defined rules that allowed accounting fraud to be easily investigated and prosecuted.  That is why we need to go with this International Accounting Standard.  In order to successfully break from any ability of the public to prosecute fraud as happened with Enron and Aurthur Anderson Accounting, the ability of Americans to file lawsuits for accounting irregularities must be curtailed.


So, they are doing to the accounting sector what was done with the financial deregulation by adopting this International system with much weaker and broadly defined rules.

MIND YOU----THIS IS OBAMA AND A MAJORITY CONTROLLED CONGRESS ALLOWING THIS.  THE SECURITY AND EXCHANGE COMMISSION IS ACTING WITHOUT ANY THOUGHT OF PUBLIC INTEREST.  THAT IS A NEO-LIBERAL FOR YOU!

DO YOU HEAR YOUR POLS SHOUTING AGAINST THIS????

The Dark Side of Global Accounting Standards

Expect loose standard-setting in the oil and gas industries and a ton of litigation if convergence hurtles down its current track, critics say.

• David M. Katz    CFO
  

  If the Securities and Exchange Commission on Thursday votes as expected and allows non-U.S. issuers here to report their financials in line with International Financial Reporting Standards without reconciling them with Generally Accepted Accounting Principles, the United States will have crossed a point of no return in the movement toward a single set of global accounting standards, some experts feel.

But that doesn’t mean that many key players won’t cross that line without a fair amount of kicking and screaming.

Speaking at a roundtable discussion on global accounting standards at New York University’s Stern School of Business on Monday, Charles Niemeier, a member and former acting chair of the Public Company Accounting Oversight Board, said that he was “a bit troubled by the speed” of the SEC’s march toward the convergence of U.S. and international accounting standards. “If we eliminate reconciliation, what have we done? I have some fear that we’re crossing the Rubicon — that we’ve lost leverage in order to get closer [to global uniformity].”

Leverage by U.S. regulators and standard-setters to push for rigor in converged standards could be lost, as well as the clout to hold individual companies to international rules, Niemeier told CFO.com. At the roundtable, the audit firm overseer disputed a basic premise of the proponents of convergence: that if the international standards are adopted in the United States, it would produce a clearer system based on solid principles rather than rule-based minutiae. “Some say Europe is principles-based. I beg to differ. It’s younger,” he said, suggesting that much of the detail in GAAP is justified by long-standing experience. Some speakers said that IFRS lacks the detail provided under GAAP to provide adequate financial reporting in a number of specific industries in the United States, particularly oil and gas and insurance.

By contrast, critics of U.S. GAAP’s complexity, including the SEC’s own advisory committee, consider industry specific guidance to be one of the U.S. accounting system’s major flaws.

At the same time, many roundtable participants worried that the U.S. legal system — also blamed for the complexity of U.S. GAAP — might trip up global accounting standards too. Under the U.S. legal system, they said, auditors feel they must adhere closely to preset rules in order to avoid being sued. In order for IFRS to take hold in the United States, there needs to be “a change in the way we look at litigation in America, where it’s a mark of honor to sue someone,” said Stern accounting professor Seymour Jones at the roundtable.

Even a decision by the SEC to recognize the International Accounting Standards Board (which sets IFRS) as a bona fide standards setter could get tested in a U.S. court, according to Stanley Siegel, an NYU law professor. “Nothing is going to stop an American litigant who has bought shares in an American company or a Brazilian company” issuing stock in the United States from questioning the validity of the SEC’s choice of IASB under Section 108 of the Sarbanes-Oxley Act, he said. (Sarbox 108 enables the SEC to designate a standard setting body’s accounting principles as “generally accepted.”).

Indeed, many seem to feel that the SEC is moving ahead too swiftly and without adequate planning for what truly looms as a major step in the direction of converged international accounting standards. Even Financial Accounting Standards Board chairman Robert Herz, perhaps convergence’s prime U.S. spear carrier feels that “a national plan” for convergence needs to be in place before target dates are set. “Before you get to a timetable,” the key players need to determine “what are the tasks to be done.” High on the plan’s priority list should be educational and regulatory requirements. Underscoring the point about education, Nieimeier said in an interview that few people at PCAOB understand IFRS.

Nevertheless, convergence seems to be proceeding apace. While the SEC has been promoting the idea of installing a single set of international standards for about 20 years, the notion has gone into high gear in the last year, according to John White, the director of corporation finance at the SEC.

The reconciliation proposal, which White and SEC Chief Accountant Conrad Hewitt will present to the commission on Thursday, would create the unprecedented existence of “two co-existing financial reporting systems in the U.S.,” White said at a Financial Executives International conference in New York earlier this week. In developing the proposal, he said, the commission had three questions to answer:

• Is there a satisfactory convergence process in place?

• Are International Financial Reporting Standards being consistently and faithfully applied?

• Is IASB up to the job of setting global financial accounting strictures?

The commission is apparently satisfied enough with the answers to go ahead with at least the first step. The percentage of public issuers in the United States that will be affected is modest, however. Just 1,100 companies out of the 11,000 entities that report their financials to the SEC are foreign issuers, and only 200 of them use GAAP. Of the remaining 900 foreign companies required to file a GAAP reconcilation report, up to 180 may qualify to take advantage of the proposal if they file their financial reports using the IASB’s version of IFRS.

As I showed last blog on private sector pensions, most pension portfolios had pension investments in the bond market because previously the bond market was stable and a safe investment.  You can see from this snippet from an article that a deliberate move of private sector pensions in this massive Pension Benefit Guaranty Corp happened as the stock markets crashed in 2008. 

THIS WAS DELIBERATE AND PUBLIC MALFEASANCE WITH 1/2 OF PENSION VALUE LOST FROM THE FRAUD AND LOSS OF GAINS FROM THE BULL MARKET THAT FOLLOWED.




Pension Benefit Guaranty Corp.

'The PBGC regularly updates its investment strategy. In 2004, it chose to invest heavily in bonds.[6] Under new leadership, the agency in 2008 shifted a substantial portion of its assets into stocks.[7] Because of the market decline, PBGC's equity investments lost 23% during the year ending September 30, 2008.[8]'

Today we want to look at public pensions and know that the same thing happened at state and local level as these public pensions also were thrown into a crashing market in 2007.  So, it was Bush/Obama who made sure Federal pensions were used as fodder and in Maryland it was Baltimore City and Maryland public agency heads that made sure they hit the stock market as the crash was occurring.  THIS IS FACT.  When we hear corporate NPR/APM tell us that all of American savings and retirements were lost and now they have nothing going into their old age and have to work until they drop-------THEY ARE LYING TO YOU.

DO YOU HEAR YOUR INCUMBENT SHOUTING TO BRING PENSION FRAUD BACK TO FEDERAL, STATE, AND LOCAL PUBLIC PENSION FUNDS?  EVERYONE OF THEM KNOWS THIS HAPPENED! 

As I have said before pensions were underfunded for decades with the idea that they would be eliminated.  This move in 2007-2008 was designed to cripple pension funds and to buoy the Wall Street banks that were crashing.  Throwing the American people's pensions into bank stocks allowed these investment firms to earn billions of dollars more.  I want to emphasize that the same is about to happen this year as pensions are now being used in a sovereign/municipal bond fraud as this market is now ready to implode.  EVERYONE KNOWS THIS!

It was not only the losses to these pensions at the time of the collapse, it involves all of the gains those pensions would have had in the following BULL market.  You heard about Wall Street making great gains these few years----pension gains worked with 1/2 the value and they will again lose most value with this next collapse.  The rich are moving their investments out of US stocks while pensions are used to buoy the economies overseas and state and city credit bond schemes.


YOUR UNION LEADERS AT STATE AND NATIONAL LEVEL SHOULD BE TAKING THIS TO COURTS AND IF WE HAD A FUNCTIONING PUBLIC JUSTICE ERIC HOLDER AND DOUG GANSLER WOULD BE FIGHTING FOR PENSION JUSTICE.  THEY ONLY WORK FOR SHAREHOLDER LOSSES AND WE KNOW SHAREHOLDERS PROFIT ON PENSION LOSSES.

WHAT KIND OF PUBLIC ADMINISTRATION GOES BACK TO THE SAME PEOPLE WHO DEFRAUDED THE AMERICAN PEOPLE TO MANAGE RETIREMENT SAVINGS?



May 28 2013 | 12:10pm ET  FIN Alternatives


A Maryland public pension fund has a new hedge fund consultant and a pair of new private equity managers.


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ORGANIZATIONAL STRUCTURE STATE RETIREMENT & PENSION SYSTEM

BOARD OF TRUSTEES Nancy K. Kopp, State Treasurer, Chair (chosen by Board in June, 1-year term)
Peter V. R. Franchot, Comptroller of Maryland, Vice-Chair (chosen by Board in June, 1-year term)
Appointed by Governor with Senate advice & consent to 4-year terms: Robert R. Hagans, Jr., 2015; Harold Zirkin, 2015; Thurman W. Zollicoffer, Jr., Esq., 2015; David S. Blitzstein, 2016; Linda A. Herman, 2017; F. Patrick Hughes, 2017.


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As we know Governor O'Malley was central in all public pension losses first at the level of city and then state.  We know as well he is a great big Wall Street pol who based his entire political career moving the public's wealth to the top earners.  While states handle these shortfalls in pensions victimized by massive fraud and corruption by cutting what the people receive.......O'Malley/Brown pulls their regular routine of saying one thing and doing another.  Pension contributions were cut from what the article below suggests.  Remember, this coming economic crash will gut all these pensions again especially how they are currently invested.  Above you see the State of Maryland went immediately to the Wall Street investment firms who fleeced the public in 2007/2008 to hand our pensions for investment again.  O'Malley/Brown doubled-down on Wall Street financial instruments right after this crash from massive Wall Street fraud acting as nothing had happened.  SEE WHY BROWN IS THE DARLING OF MARYLAND 1%?

The LIBOR frauds, stock transaction frauds, and illegal stock management fees all took lots of money from the people's pensions, both public and private and has yet to get justice.  A governor would be shouting this if he/she worked for the public and not wealth and profit. 

DO YOU HEAR ANY OF THE CANDIDATES FOR GOVERNOR SHOUTING AS CINDY WALSH FOR GOVERNOR OF MARYLAND HAS FOR YEARS?

Governor Martin O'Malley Announces Plans to Put Pension System on Path to Sustainability

ANNAPOLIS, MD (January 21, 2010) – Governor Martin O’Malley outlined plans today to address Maryland’s unfunded pension and retirement liabilities and begin to put the public system on a path of sustainability.  In introducing the FY 2012 budget proposal today, Governor O’Malley committed approximately $1.5 billion to the pension system next year, nearly $1 billion more than in FY 2003.

“Some of the toughest choices we face in this legislative session are the choices we make to fix our pension system,” said Governor O’Malley.  “We owe it to our police officers, teachers and other hardworking state employees and we also owe it to our children and our taxpayers, to find a sustainable way forward that protects our commitments and maintains fiscal responsibility.  This is a bill that we have to pay and all of us have a vested interest in finding the most fair and equitable way to keep our pension commitments.”

Governor O’Malley has outlined the basic principles on which pension reform is based:

1. Continue to maintain a public system as a critical component of recruiting and retaining the best teachers.
2. Improve the funding level in the State and Teacher retirement system.
3. Reduce the pension and retirement liability, and therefore, we must ask current and future members of the system to contribute more to strengthen the system and preserve benefits.
4. Identify certain milestones so as our economic circumstances change, we can revisit some of these reforms.

Find the Governor’s full pension reform presentation here.

In each of his first four years, Governor O’Malley has submitted budgets that fully funded the State’s required pension contribution.  But despite rapid increases in this contribution, the funded status of the pension system has dropped from 95% ten years ago to a project 59% next year. 

The Governor’s proposed reforms will allow the state to reinvest more than $1 billion into the retirement system over the next six years.  These reforms will achieve 80% funding of the pension system by FY 2023 and require bi-annuals reports assessing the financial health of the pension system, including recommendation for adjustments to state funding and/or future benefits.

Current employees and retirees The Governor’s proposed pension reform has no impact on current retirees and no impact on benefits already earned by active or former employees and teachers.

For benefits earned for service in FY 2012 and future years, active employees and teachers are offered a one-time choice between:

1. Continue to pay 5% of salary towards retirement with adjusted benefit (1.5% benefit multiplier for each future year of service rather than current 1.8% benefit multiplier).
2. Increase contribution to retirement from 5% to 7% of pay and continue to earn benefits at the current level (1.8% benefit multiplier for each future year of service).

Future employees and teachers New employees will automatically be required to contribute 7% of salary and receive a 1.5% benefit multiplier.  In addition, year of benefit vesting will move from the current five years of service to ten years.  Early retirement age will increase from the current 55 to 60, and the benefit will be calculated on the highest five years of salary rather than the highest three years.  Finally, cost of living adjustments will be based on investment benchmarks.

In addition, the Governor announced plans to direct the appropriate Compensation Commissions to review pensions for elected officials for sustainability and fairness.

Health benefits Almost half of the unfunded liability associated with retiree health benefits relates to Maryland’s prescription drug benefit.  For current retirees, the proposes reform plan establishes a state-run Medicare Part D-like plan that mirrors the federal program but fills the current coverage gap.  In 2020, the plan transitions these retirees to Medicare Part D coverage in 2020 when the coverage gap is phased out. 

For active employees, the proposed plan aligns co-pays with national trends and raises out-of-pocket caps from $700 to $1,000 for individuals and $1,500 for couples.

The current unfunded liability of retiree health insurance stands at $16 billion.  After the proposed reforms, that figure drops by almost 50%.


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The articles below show that states actually having public justice and unions working for their membership are exposing massive statewide fraud and demanding justice.  The same conditions here in Maryland have silence from both politicians and union leaders.

I bet if a governor was elected who shouted out for justice-----labor and justice would shout as well. 

STOP ALLOWING SYSTEMIC FRAUD AND CORRUPTION END DEMOCRACY IN MARYLAND AND AMERICA!
Take a look below at the other raging Wall Street pol thinking of running for President in 2016 with O'Malley.  Now, the State of New York Attorney General was the one responsible for holding Wall Street banks accountable and as we all know------CUOMO LET THEM ALL KEEP THE LOOT. 

Below you see Cuomo feeling the pain of the people he was elected to protect but didn't.  WHAT, FRAUD IN THE PUBLIC PENSION SYSTEM?
Cuomo declared his candidacy for the Democratic nomination for New York State Attorney General in 2006
He won the general election against the Republican nominee, former Westchester District attorney, Jeanine Pirro on November 7, 2006, winning 58% of the vote.


NEEDLESS TO SAY ALL OF THE BRAVADO IN THE ARTICLE BELOW USED TO GET HIM ELECTED GOVERNOR NEVER MATERIALIZED IN CONVICTIONS OR RECOVERING FRAUD.  IT WAS AN ELECTION YEAR SCAM JUST AS THE CONGRESSIONAL FINANCIAL REFORM BILL HAS TURNED OUT TO BE.

Hedge Fund Donor List Raises Question: Is Cuomo "Governor 1% ...www.wnyc.org/blogs/empire/2012 Between June 1, 2007 and December 21, 2011, hedge fund employees, founders and their families have given Cuomo more than ...

WHY DO YOU NOT HEAR ABOUT MARYLAND'S PENSION FRAUD THAT WERE AS BAD AS NEW YORK AND CALIFORNIA?  DOES MARYLAND HAVE A PUBLIC MEDIA?  NO!


Systemic Fraud at Public Pension Funds?

New York's Attorney General Andrew M. Cuomo said on Friday that his office was issuing more than 100 new subpoenas to investment firms and intermediaries who brokered deals with public pension funds, in the latest expansion of his corruption investigation:

Mr. Cuomo said a preliminary review by his office found that as many as half of the intermediaries in pension fund transactions in New York State and New York City were not properly licensed and registered with a broker-dealer, as required by federal securities laws. Failing to register could violate both federal securities laws and the Martin Act, a sweeping state securities law.

“The troubling pattern of unlicensed agents highlights yet another systemic weakness in New York’s pension fund, creating a situation which is fraught with peril and prone to abuse,” Mr. Cuomo said in a statement.

He also conferred with the offices of 35 other attorneys general Friday afternoon by teleconference. The pension corruption inquiry has raised questions about public investment practices in other states, in particular New Mexico and California.

Afterward, Mr. Cuomo said the group had “decided to create a multistate task force to explore pension fund abuse.”

Mr. Cuomo’s office has been working with the Securities and Exchange Commission, which is conducting a parallel investigation. Federal investigators are also reviewing public investment transactions in New Mexico, and the S.E.C. is reviewing pension transactions in California.

Among the firms being scrutinized in the latest round of Mr. Cuomo’s inquiry is Wetherly Capital Group, according to people with knowledge of the inquiry. Investigators are scrutinizing whether employees of Wetherly and other firms were properly licensed when they arranged deals with pension funds in New York.

Wetherly is a Los Angeles-based placement agent firm run by Dan Weinstein, a prominent Democratic fund-raiser. In a statement, Wetherly said it was fully registered with the Financial Industry Regulatory Authority and the S.E.C.

Wetherly has come under scrutiny in California for paying a firm affiliated with Hank Morris, a top aide to Alan G. Hevesi, the former New York State comptroller, as part of an investment deal it brokered for Calpers, the giant California pension fund.

Another California firm being scrutinized in the latest round of the investigation is Gold Bridge Capital, which has acted as a placement agent on at least one deal involving the New York State pension fund.

The inquiries by Mr. Cuomo and the S.E.C., under way for two years, have focused on the millions of dollars that friends, relatives and aides of Mr. Hevesi’s gained by selling access to the $122 billion New York State pension fund. Mr. Morris and David Loglisci, another former top aide to Mr. Hevesi, have been indicted on a variety of corruption-related fraud charges, and Raymond B. Harding, the former head of the state Liberal Party, has also been charged in the case. All three have pleaded not guilty. Mr. Hevesi has not been charged.

The inquiries took on more national relevance on Thursday when Mr. Cuomo charged a top consultant to pension funds around the country, Saul Meyer, with a fraud-related felony. Mr. Meyer and his firm, Aldus Equity, which is based in Dallas, were also charged in a civil complaint by the S.E.C. Both Mr. Meyer and Aldus denied wrongdoing.

The new phase of the inquiry focuses on lobbyists, political consultants and others who brokered deals between investment firms and the New York pension funds but were not properly registered to do so.

In a preliminary investigation, Mr. Cuomo’s office found that from 2003 to 2006 — the period when Mr. Hevesi was comptroller — 22 of the 45 intermediaries used in deals at the state pension fund were not registered. In the New York City pension funds, 17 of 41 intermediaries were unregistered in deals from 2003 to this year, a review found.

While acknowledging that there could be exceptions, Mr. Cuomo said during a separate teleconference with reporters on Friday, “If you’re brokering a security, you need to be regulated.”

Thomas P. DiNapoli, the New York State comptroller, and William C. Thompson Jr., the New York City comptroller, both said this week that they would move to ban placement agents from deals with their pension funds.

Mr. Cuomo also highlighted a shortcoming in state lobbying rules, which do not require lobbyists to register with the state’s Commission on Public Integrity when they appear before the state comptroller.

The increased scrutiny on placement agents in recent years has led to concerns that lobbyists and political consultants are trying to find ways to perform similar services without registering as placement agents.

In 2007, Mr. DiNapoli met with the chief partner of the private equity firm InterMedia Partners, Leo J. Hindery Jr., and Roberto Ramirez, a lobbyist and former colleague of Mr. DiNapoli’s from the Assembly. The goal for the meeting was to convince the state comptroller’s office to increase its investment with InterMedia, which it later did. A spokesman for Mr. Ramirez has said he was not paid by InterMedia and appeared only as a friend of Mr. Hindery’s.

Mr. Cuomo would not say which lobbyists or consultants were being scrutinized, but said the intersection of unregistered agents and the pension fund was potentially “the Wild West of government relations.”Mr. Cuomo also said that pension kickbacks are a national problem:


New York state's criminal probe of kickbacks paid by companies eager to manage its $122 billion state pension fund has exposed "a national network of actors" whose schemes are ongoing, state Attorney General Andrew Cuomo said on Thursday. "This is all across the nation, and it's continuing today," the Democratic attorney general said on a conference call.

The probe, which began two years ago, has fixed the spotlight on the use of placement agents hired by investment firms to open the doors of the New York State Common Retirement Fund. Cuomo said he is also is scrutinizing lawyers and lobbyists.

The investigation is another effort to stamp out graft and the practice of "pay to play," which involves giving gifts or campaign donations to win public contracts. So far the probe has looked into the web of relationships and business contracts involving money managers, politicians and pension officials spanning the country from New York City and the state capital, Albany, to Texas, New Mexico and California.

On Thursday, the U.S. Securities and Exchange Commission, which is working with Cuomo, charged that Dallas-based Aldus Equity Partners won New York pension business because of "its willingness to illegally line the pockets of others."

The state pension fund had aimed to hire more women and minority-owned investment firms and had begun talks with one. But Aldus was chosen, Cuomo said, when the minority-owned firm "allegedly refused to pay kickbacks to Morris and another associate."

Aldus, a private equity firm, says it manages over $5 billion, and the probe already has cost Aldus clients in New Mexico and New York. Cuomo said Aldus also is active in Louisiana, Oklahoma, Texas, California, and New York City.

ANOTHER VIEW OF GIVE AND TAKE

Both Cuomo and the SEC charged that Saul Meyer, an Aldus founder, paid about $320,000 to a shell company owned by Henry Morris, a top fund-raiser for New York's former state comptroller. This led the New York state pension fund's then-chief investment officer, David Loglisci, to invest $375 million with Aldus from 2004 to 2006.

Demonstrating the power that Morris wielded over pension investments, Cuomo said Morris told a Meyer intermediary: "Tell that little peanut of a man that I can take business away as easily as I provided (it)."

Lawyers for Morris and Loglisci, who were indicted in March, say they are innocent.

On Thursday, Meyer was charged with a state securities felony and released on $200,000 bail. His lawyer Paul Shechtman said: "Time and evidence will show that Saul Meyer did nothing wrong."

Aldus knew that Morris was "working both sides of the deal," Cuomo said, by marketing funds for investments in the Aldus/NY Emerging Fund in which Morris had a 35 percent stake.

Aldus Equity lawyer Matthew Orwig faulted the SEC for acting before finishing its probe, calling the threatened legal action "appalling and careless with the law and with people's reputations." Aldus partners said they were disappointed by the "unexpected legal developments."

Aldus could face more legal peril. The New York state pension fund is weighing legal remedies against Aldus and Meyer after ending its investment with the firm. New York City pensions could cut ties with the firm, while New Mexico's governor called on the state Education Board to drop its contract with Aldus a day after ordering the state investment officer to do so.

Cuomo said that while Meyer was seeking more business with New York's pension fund, he helped Daniel Hevesi, a son of Alan Hevesi, the former state comptroller whose oversight of the state pension fund is being probed, earn a $250,000 fee on a New Mexico pension deal.

Alan Hevesi's lawyer Bradley Simon has said the former comptroller "has not been charged with any misconduct with respect to mismanagement of the New York state pension fund."

Bloomberg reports that L.A. pension is baffled by fees paid to firm in probe:


Los Angeles retirement plan managers say they’re baffled over fees paid by Quadrangle Group LLC to a key player named in New York’s pension fund kickback probe for helping the private equity firm land work in California. Quadrangle paid Searle & Co. $150,000 in connection with the Los Angeles Department of Fire and Police Pensions fund’s $10 million investment with the New York firm, which was co- founded by Steven Rattner before President Barack Obama appointed him to oversee the auto industry rescue.

Searle employed Hank Morris, a political adviser accused by New York State Attorney General Andrew Cuomo and the U.S. Securities and Exchange Commission of using the Greenwich, Connecticut, brokerage to collect “sham” placement fees from firms that manage New York pension plan money.

After the SEC this month said Quadrangle paid Morris a “finders fee” related to a New York pension fund investment, Quadrangle told the Los Angeles fund that it also had paid placement fees to him for work there. The Los Angeles fund publicly disclosed the fee April 24.

“We don’t know how or why a placement fee related to our investment in Quadrangle was made,” Michael Perez, the general manager of the Los Angeles pension, said in written responses to questions from Bloomberg News.

‘Shocked’ at News

Perez said the fund’s investment in Quadrangle was arranged through Pension Consulting Alliance Inc., which evaluates investments on its behalf. Allan Emkin, that company’s founder and managing director of its Los Angeles office, said it didn’t have any contact with Searle or Morris and worked directly with Quadrangle. Emkin said he had been unaware that Searle was paid a fee in connection with the deal.

“We were shocked when we heard about it,” Emkin said in a telephone interview.

Morris, who faces a civil SEC complaint and criminal charges by Cuomo, has denied wrongdoing. Quadrangle and Rattner haven’t been charged. Adam Miller, a spokesman for Quadrangle, declined to comment. Searle referred calls to Peter Anderson, an attorney, who didn’t respond to requests for comment.

The SEC has asked the Los Angeles fund and two of its board members for information about investment decisions and firms tied to the New York probe.

Cuomo said today that New York was formalizing agreements to coordinate its investigation with authorities in California, as well as with Connecticut, Illinois and New Mexico.

Los Angeles Connection

“We are disclosing a national network of actors, who often acted in concert,” Cuomo said. “They collaborated, they often partnered and victimized states and taxpayers all across the country.”

The SEC and Cuomo today charged Saul Meyer, the managing partner of one of the firms in the New York probe, Aldus Equity Partners, with paying Morris to secure investment business with New York. Aldus has served for more than a year as a private equity consultant to the Los Angeles pension fund. Meyer met with the fund’s board at least once, city records show.

Morris, the one-time chief fundraiser and political adviser to former New York City Comptroller Alan Hevesi, has been charged by the SEC with collecting $15 million in kickbacks from money managers doing business with New York’s pension fund. The SEC says the kickbacks were masked as placement fees and that he “rarely, if ever” provided legitimate services.

Quadrangle hired Morris as a placement agent before winning a $100 million investment from New York, the SEC said in an April 15 complaint. The firm paid Searle $1.125 million, and 95 percent of that went to Morris, the SEC said.

The Los Angeles pension approved investments in 10 private equity funds linked to the New York investigation, according to an April 2 memo to the board. Two of the investments were later canceled. Aldus Equity Partners, which was drawn into the New York probe, also advised the fund on private equity investments.

I have already written about the Mother of all stealth scams. Nothing like a huge financial crisis to bring out all the cockroaches. This hardly surprises me and remember my dire warning: Madoff was the tip of the iceberg. There will be many more fraudsters that will get nabbed in the next few years.

Just how systemic is fraud in the financial industry and at public pension funds? We don't know, but when you mix greedy placement agents with public pension fund managers who control billions, the potential for kickbacks is huge.

What can pension funds do to stop abuse before it happens? First, they should segregate duties so the person(s) making the investment has to pass through several checks, including an internal auditor, before the decision is cleared. Importantly, there should also be clear segregation of duties between those making the investment decisions and the finance professionals valuing them.

Second, pension funds need to beef their whistleblower policies so people are encouraged to report abuse. This is one of the most effective ways to stop fraud. Maybe there should be a direct link between public pension fund employees and the state's Attorney General's office or the provincial or federal Auditor General's office.

Third, have your fraud procedures verified by a certified fraud examiner (read more on CFEs by clicking here). This should include someone who scrutinizes travel/meal/entertainment expenses to make sure there is no abuse going on when some hedge fund or private equity manager is trying to woo a pension fund manager to invest with them.

Fourth, there should be tight rules governing the relationships between investment managers and the funds they invest with. If you are investing billions with Fund Z, then you should not be allowed to go work for them for a period of five years after you leave a public pension fund. This is just common sense, but you'd be surprised how common sense often falls by the wayside.

Fifth, all board decisions should be made public so they are open to scrutiny. Several of the large U.S. state plans already do this. For example, Alaska's Permanent Fund publishes its board schedule, their minutes and their consultants on their website.

Finally, on the legal front, I would ban all placement agents and place tight rules on pension consultants who recommend funds to pension funds. Do not underestimate the abusive practices of pension consultants and the potential for fraud with them. They are the gatekeepers at most U.S. pension plans.

It truly is the Wild West out there, but I am glad to see the Attorney General of New York is pursuing the pension probe and trying to clean up public pension funds.

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Corrupting public officials is a crime so as the public officials who we know were involved in these frauds are exposed we know these investment firms buying favor committed these crimes too.  You have yet to hear of these private equity people charged and prosecuted because that takes public justice.  Whether it is blowing up the Federal Housing Agency with fraud, the Federal Student Loan Agency with fraud----we are being told by Moody's and S and P -----the rating agencies that were ground zero for all of this fraud-----that public and private pensions are just not viable anymore.

OH REALLY????????

If your incumbent politician goes after the people's pensions as the problem------if your incumbent is silent about all of this, they are neo-liberals working for wealth and profit.  These pensions are not a burden on the public-----all fraud recovery comes from these corporations.

I listened to a Governor's Forum on Education (to which I was not invited obviously) where Heather Mizeur says that the way to fund school building in Maryland is to have public employees give back some of their pensions.  THIS IS THE PHONY PROGRESSIVE IN THIS GOVERNOR'S RACE!


Monday, March 14, 2011

Corruption at CalPERS?

Marc Lifsher and Stuart Pfeifer of the Los Angeles Times report,


Scathing report alleges corruption at CalPERS:
In a scathing report, a former chief executive of the California public employee pension fund was accused of pressuring subordinates to invest billions of dollars of pension money with politically connected firms.

A 17-month investigation also found that Federico Buenrostro Jr. — along with former pension fund board members Charles Valdes and Kurato Shimada — strong-armed a benefits firm to pay more than $4 million in fees to consultant Alfred J.R. Villalobos, who later hired Buenrostro.

The report, prepared for the California Public Employees' Retirement System by Washington law firm Steptoe & Johnson, comes amid widening attacks on public employee pension funds in California, Wisconsin, Iowa and other states for providing lavish benefits that cash-strapped governments can no longer afford.

The findings of insider dealings at CalPERS could provide fresh ammunition to Republican lawmakers here who want Democratic Gov. Jerry Brown to convert traditional pensions with guaranteed payments for life into 401(k)-type plans that rely heavily on employees' own contributions.

"Fixing California's pension problem is difficult enough without the stench of corruption and collusion that saps public confidence and gives taxpayers a reason to withhold support," said Dan Pellissier, president of Californians for Pension Reform, a group that is pushing a 2012 ballot initiative that would diminish state employee pension benefits.

Shimada, Buenrostro, Valdes and Villalobos either declined to comment or did not return calls.

Buenrostro served as CalPERS chief executive for six years, leaving in August 2008. The day after quitting, he went to work for Villalobos — a former CalPERS board member and deputy Los Angeles mayor who acted as an agent for investment firms seeking CalPERS money. The report said Villalobos hired Buenrostro with a $300,000 annual salary and gave him a Lake Tahoe condominium.

While at CalPERS, Buenrostro repeatedly "inserted himself in the investment process in a manner inconsistent with prior practice at CalPERS, pressing its investment staff to pursue particular investments without evident regard for their financial merits," the report said.

It said Buenrostro intervened with staff on behalf of Aurora Capital Group of Los Angeles to obtain investment money. Buenrostro told subordinates that Aurora was politically powerful, and that Aurora principal Gerald Parsky served on a state commission dealing with public employee benefits, the report said.

Aurora was a Villalobos client, and Buenrostro told CalPERS staffers that he would represent it once he went to work with Villalobos, the report said.

The report also noted that Buenrostro often intervened on behalf of favored private equity funds that staff called "friends of Fred."

Staffers ultimately complained about Buenrostro to the board, and those complaints "became a basis for the board's efforts to replace him as CEO," the report said.

CalPERS is the nation's largest public pension fund, with $228 billion in assets, providing benefits to about 1.6 million state and local government employees, retirees, spouses, children and other beneficiaries.

In May 2010, the California attorney general sued Villalobos and Buenrostro, accusing them of scheming to enrich themselves through self-dealing and other misconduct in seeking CalPERS investment money on behalf of clients.

According to the report, one of those investment funds — Apollo Global Management — asked Buenrostro to sign documents acknowledging that CalPERS was aware of so-called placement agent fees it was paying to Villalobos.

Several CalPERS investment officers refused to sign the disclosures, the report said — but Buenrostro did, using pasted-on letterhead to make them look more official.

Buenrostro made "representations regarding placement agent fees and related deal documents that are either demonstrably false or sufficiently suspect," the report said.

The report, citing Buenrostro's ex-wife and an unnamed girlfriend, described Buenrostro as "a puppet" of Villalobos, who the report said earned more than $50million in placement agent fees.

During his six years as head of CalPERS, Buenrostro received many valuable gifts from people and firms with financial interests in doing business with CalPERS, the report said.

When he was married in 2004, he allowed Villalobos to host the wedding at his Zephyr Cove, Nev., home. Buenrostro also traveled with Villalobos and Valdes to the Middle East and Asia — with Villalobos picking up much of the costs, the report said.

"Buenrostro does not appear to have ever disclosed these gifts or recused himself from any CalPERS matters based on any of these apparent relationships," the report said.

Valdes also pressured CalPERS investment staff to do business with Villalobos' firm, Arvco Capital Research, the report said.

In September 2000, Valdes was close to being ruled out of order for raising his voice in support of a Los Angeles real estate investment firm, CIM Group, the report said. CalPERS staff had recommended a smaller investment than originally proposed. Arvco and Villalobos received a $9-million commission on the investment transaction.

CIM also provided Academy Awards tickets to Valdes and other CalPERS people, the report said. Valdes attended in 2005 and 2006 but did not report the gifts on state financial disclosure documents.

The report also provided new details about CalPERS dealings with Medco Health Solutions Inc. before the firm was awarded a $26-million contract to provide drug benefits to members.

In May 2004, Villalobos hosted a meeting at his Lake Tahoe home with Medco CEO David Snow. Buenrostro attended.

"Soon after the May 2004 meeting at the Villalobos home, Medco agreed to retain Villalobos as a consultant and pay him $4 million," the report said.

Villalobos received a final check for $1 million immediately after the CalPERS board approved the contract, according to the report, and also received a $20,000-a-month retainer until sometime in 2009.

Last year Villalobos filed for personal bankruptcy protection, citing nearly $5million in debts to Nevada casinos. It was his second personal bankruptcy.

The report recommended that CalPERS improve accountability and reduce the risk of future abuses, including providing additional training to board members so that board business is not conducted in clandestine meetings with managers, and prohibiting the release of sensitive CalPERS information outside the organization.

This is a perfect example of serious governance gaps leaving a fund vulnerable to fraud. There is absolutely no accountability when this type of abuse goes on at the highest level. And trust me, it's not hard for a couple of guys at the top to collude and award sweet contracts to some consultant, hedge fund manager or private equity manager in return for "future favors". When you're in charge of billions, power gets to your head and you start thinking you're invincible.


This type of fraud makes me sick to my stomach. It's not common but it's going on a lot more often than people want to admit. How do I know? Let's just say I've seen things that made my skin crawl. It doesn't matter whether the investment officer has a CFA, FRM, PhD, etc., if they're crooked, they're crooked and they'll do whatever it takes to profit by abusing the power they have within a pension fund. And it's not just the large funds; in fact, some of the worst abuses happen in dinky city pension plans where corruption is rampant.

That's why I believe you have to properly compensate senior pension officers to deter this type of corruption. But that's not enough because some people are so sleazy, so greedy, they'll look to game the system and will stop at nothing to profit by abusing their power. One of the best ways to root out corruption is simply to segregate duties and implement iron clad whistleblower policies where employees can anonymously inform board members or better yet, the FBI or RCMP. That should make these idiots think twice before they abuse their power at a public pension fund.

Finally, this is a particular case that in no way reflects what's going on at CalPERS now. I think it's disgusting that some would use this report as "ammunition" to break up CalPERS or to dissolve other public pension funds. Get the governance right and you can root out corruption at most public and private pension funds.

PLEASE TAKE A LOOK AT WHAT IS BEING DONE WITH PENSIONS AND RETIREMENT TO KNOW MUCH OF IT INVOLVES FRAUD AND CORRUPTION THAT CAN BE REVERSED WITH RULE OF LAW.  WE SIMPLY NEED TO HAVE PEOPLE IN OFFICE THAT WANT TO WORK FOR PUBLIC JUSTICE TO RESTORE MUCH OF PENSIONS AND RETIREMENTS LOST!

ALL OF MARYLAND CANDIDATES FOR GOVERNOR EXCEPT CINDY WALSH WILL WORK FOR WEALTH AND PROFIT! 

Are your labor leaders shouting about this?

Below you'll see what looks pretty boring but please glance at all the articles.  What I am showing is how private pensions shed decades ago should now be receiving lots of money from these corporations that are now earning billions of dollars each year.  The bankruptcy laws placed most of private sector pensions into the Federal Agency below with the requirements that the corporation do its due diligence and the Federal government work in the public interest.  What we see is public malfeasance by the government and a failure to collect needed revenue for these pension funds.  Without justice, all of this is being left to implode with debt just as we see happening with public pensions.

I want to look at what has been allowed to happen these several years of Obama and neo-liberal control of government....it is worse than with George W Bush.  These mergers

DO NOT MEET ANTITRUST LAW AND ARE ILLEGAL AND CAN BE MADE NULL AND VOID.  MERGERS MUST BE APPROVED ACCORDING TO PUBLIC INTEREST.

So, as much as Obama and his administration simply want to say all of these global market deals are in the public interest----they are not.  The same is happening in Maryland with O'Malley and Maryland Assembly saying all of these state contracts are creating jobs and revenue.....when they are not.

WE CAN REVERSE THESE POLICIES BECAUSE THEY ARE NOT LEGITIMATE.  IF YOU KEEP ALLOWING YOUR POLS TO ACT ILLEGALLY AS IF THE US CONSTITUTION DOES NOT EXIST----IT WILL NOT EXIST AND YOU WILL NOT BE A CITIZEN.

Republicans are doing the same so the answer is not to vote for another party-----the answer is to shake these neo-liberals out of the people's democratic party!

Today, I look at private pensions lost during the corporate bankruptcy years that started with Reagan/Clinton as a way to eliminate all labor gains.
**********************************************************


Regarding merger and acquisitions creating global corporations in the US:

THIS IS ONE EXAMPLE OF AN INDUSTRY AND HOW NEO-LIBERALS ARE ALLOWING RULE OF LAW TO BE IGNORED AT CONSUMER/CITIZEN EXPENSE:

I am listening to corporate NPR/APM explain the latest merger this time with airlines Delta and UK's Virgin. At the same time NPR/APM tells us that this merger is being passed by US antitrust laws and it is proper because it enhances quality and service for US consumers and it increases competition. OH, REALLY???????

CONSOLIDATION AND BECOMING A GLOBAL FORCE IS GOOD FOR THE CONSUMER? YOUR TAX MONEY IS GOING FOR THIS KIND OF PROGRAMMING.

We all know consolidation has been joined with price-fixing giving US consumers no choice but to pay whatever the market will bear. That is Wall Street for SOAKING CONSUMERS FOR ALL THEIR WORTH. This has nothing to do with antitrust.....free markets....are competition to lower prices. Instead, airlines have reconfigured their cabins so that coach passengers look like sardines paying unnecessary fees, no food and lots of delays and time schedule problems----you know----like Maryland Transit Authority. They do this because Americans have no choices and this shows that all of these mergers and acquisitions break US Commerce law protecting the public. Below you see these laws state these consolidations are limited as to whether they BENEFIT THE CONSUMER. These deals are illegal. Obama and your neo-liberal pols ran in 2008 on the platform of holding corporations accountable and stopping the merger and acquisitions and then they ignored this.

THIS IS NOT DEMOCRACY, IT IS NOT LEGAL, AND YOUR INCUMBENT IN MARYLAND IS PART OF THIS BECAUSE IT INVOLVES ALL OF MARYLAND'S ECONOMY.

I want to make another point with this Delta/UK Virgin merger deal. Delta, as with all US airlines all went through bankruptcy just to shed labor union contracts and wages and benefits. All have come out of these bankruptcies earning billions of dollars in profit while labor benefits sit in a Federal agency created just to hold these legally binding contracts. Health care benefits that include strong quality care are now being handled in this Federal agency as though these plans were the equivalent of Medicaid. Taxpayers are footing the costs of these corporation's health care contracts while they grow to earn billions in profits. This is good they say because shareholder wealth is soaring.

The answer to all of these legal labor contracts being shed and creating cost for the taxpayers is to provide the lowest quality and access of health care to these millions of US citizens.

THE REAL COST BELONGS BACK WITH THESE CORPORATIONS THAT CAN NOW EASILY MAKE THEIR CONTRACT COMMITMENTS.

Antitrust law in America:

United States antitrust law is a collection of federal and state government laws, which regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The main statutes are the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. Second, they restrict the mergers and acquisitions of organizations which could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.

The Federal Trade Commission, the US Department of Justice, state governments and private parties who are sufficiently affected may all bring actions in the courts to enforce the antitrust laws. The scope of antitrust laws, and the degree they should interfere in business freedom, or protect smaller businesses, communities and consumers, are strongly debated. One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.[1]

____________________________________

Now, all of the soaring fuel costs were created by Wall Street market manipulation and if we had Rule of Law reinstated all of these gains would have been stopped and no soaring fuel prices would have occurred. Remember, Wall Street used market manipulation of fuel on and off for a decade having the US consumer as an ATM machine anytime oil corporations around the world had market slowdowns. This is not free market and it is illegal. Who owns all these oil corporations? Bush/Cheney and it is these same people who are the shareholders of these now global corporations. So, you gut the profits of a healthy corporation to restructure it for maximized profit----the Bains Capital approach.

Labor contracts are just like any business contract. Every time your neo-liberal says the state or city must honor its contracts it signs with businesses-----this is what makes Rule of Law and Equal Protection. It is also what makes antitrust laws work as it makes no sense to have businesses able to gut another simply to eliminate a competitor. So, Bush/Cheney wanted to consolidate the airline industry into global corporations and they allowed their oil corporations to manipulate the markets to create the environment to do this.

THIS IS ALL ILLEGAL AS IT FAILS IN ALL ASPECTS OF RULE OF LAW, EQUAL PROTECTION, AND ANTITRUST.

When your neo-liberal says -----the people in power make the laws-----that does not allow them to decide the US Constitution and Rule of Law is NULL AND VOID. They cannot selectively enforce the laws they want.

STOP ALLOWING NEO-LIBERALS AND NEO-CONS TO OPENLY SUSPEND RULE OF LAW AND IGNORE THE US CONSTITUTION. LABOR UNIONS SHOULD BE TAKING ALL OF THIS TO COURT.

We do not say-----well, the courts are fixed because we want all of this on record for when they are not fixed. Remember,

WHEN A GOVERNMENT SUSPENDS RULE OF LAW IT SUSPENDS STATUTES OF LIMITATION!

Below, you see Delta was competing with smaller airlines and the economy was running as it should. Costs were contained by competition and lots of businesses were in the mix. Then, the illegal activity of the fuel market took down the smaller businesses, allowed larger businesses to use fuel costs as an excuse to enter bankruptcy to shed labor contracts and amazingly using fuel as hostile takeover is now past.

Delta Air Lines files for bankruptcy

No. 3 airline hit by fuel costs, low-fare competitors; No. 4 Northwest follows it into bankruptcy.

September 15, 2005: 9:55 AM EDT
By Chris Isidore, CNN/Money senior writer

NEW YORK (CNN/Money) - Delta Air Lines filed for bankruptcy, making it one of two major carriers to seek protection from creditors Wednesday.

Delta (Research), the nation's third-biggest airline, has been hurt by the recent spike in jet fuel prices and growing competition from lower-cost, low-fare carriers. Less than half an hour after Delta's filing, Northwest Airlines also filed for protection from creditors.

Delta and Northwest followed United Airlines (Research) and US Airways (Research) into bankruptcy. United, the No. 2 airline, has been in bankruptcy court for almost three years. US Airways has been in bankruptcy court twice since the Sept. 11 terrorist attacks that shook the airline industry.

With those four major airlines and some smaller ones already in bankruptcy, nearly half of the industry's capacity is on carriers operating under bankruptcy court oversight.

Delta said it expects to keep flying while it seeks to cut costs and reorganize, so the immediate impact on flyers should be minimal. It is also expected to keep its frequent flyer program intact. But some smaller cities now served exclusively or primarily by Delta could be hurt as the airline trims its operations going forward.

The Atlanta-based airline, which has not had a profitable quarter since 2000, filed under Chapter 11 of federal bankruptcy laws. In Chapter 11, a company is protected from creditors while it tries to reorganize.

Analysts said this year's spike in jet fuel prices forced Delta's bankruptcy filing.

"Hurricane Katrina was probably the last straw," Ray Neidl, analyst with Calyon Securities, said shortly before the widely expected bankruptcy filing. "Nobody could have predicted $60-, $70-a-barrel oil. Things just developed that were uncontrollable factors."

But Delta's problems predate not only the hurricane, but the Sept. 11, 2001 terrorist attacks. The company has lost some $6.1 billion since the start of 2001 from its airline operations, according to First Call, which tracks corporate earnings.

Some analysts said that Delta waited longer than some of its rivals to trim costs. It did not win cost concessions from its pilots union until last October, after paying them the highest wages in the industry under a contract reached months before the Sept. 11 attacks.

"They are another example of a company that started out in a relatively stronger financial position than their peers, and they felt they were in better position to survive a shakeout," said Philip Baggaley, Standard & Poor's senior airline credit analyst. "They didn't pursue cost-cutting as aggressively as they would have if they were heading toward bankruptcy early in the (industry's) downturn."

The airline has nearly 60,000 employees and flies about 340,000 people daily in its mainline operations, which includes Delta, the Delta Shuttle and Song, its attempt to compete in the growing low-fare market.

Another problem for Delta is that it has less international traffic than the nation's other big carriers. That means it faces competition on more routes from low-fare carriers such as AirTran, JetBlue and Southwest than some of its rivals.
Scramble to cut costs

Delta had been scrambling through the strong summer travel season to cut costs and raise cash.

Last week it completed the sale one of its feeder airlines, Atlantic Southeast Airlines, for $425 million. It also announced it was cutting flight capacity at its Cincinnati hub by 26 percent.

But these and other cost-cutting moves made over the last year could not stem losses, which are forecast by analysts to extend into 2007. The company has not reported a quarterly profit, excluding special items, since 2000.

Delta flirted with a bankruptcy filing in October 2004, before getting the Air Line Pilots Association to agree to cut wages by about a third � a move that saved about $1 billion a year. The airline also cut some 5,000 jobs in the year ending in June, aside from the sale of Atlantic Southeast.

Its second quarter payroll costs were 18 percent below a year earlier, as the company spent nearly $300 million less on salary and benefits.

But soaring fuel costs caused ongoing losses. Delta's cost per gallon soared 50 percent in the second quarter from a year earlier, and has kept climbing.

The increased costs came as Delta and other carriers found it difficult to win higher fares from passengers, who have more options with the growth of low-fare rivals.

The average fare Delta received from passengers fell 1 percent in the second quarter from a year earlier, even as the proportion of empty seats on Delta jets fell.

The final cash crisis came when the bank that was processing the airline's Visa and MasterCard ticket purchases started holding back money as protection in case of a bankruptcy filing. The airline warned in August that such a move by the bank could cost $650 million by the end of October, straining its already thin cash reserves.

________________________________________

Why did a US airline and US regulators allow a merger that gave a majority ownership to another country? 49% for Delta to Virgin's 51%? Because that takes this US airline out of US corporate oversight and on to UK corporate oversight and the UK has complete deregulation and corporate tax protection. So, a major US business was handed to a global corporation that will not follow US laws. Is that consumer friendly and does that meet US labor protections?

NOT AT ALL. SO, THIS MERGER SHOULD NOT BE ALLOWED.

The reasoning is that the London-New York commuters will see a benefit while the rest of the US will not. Remember, the Federal government cannot simply ignore Rule of Law and allow all of this and neither can the courts. It doesn't matter who is in charge-----EQUAL PROTECTION AND RULE OF LAW DOES NOT CHANGE. This means all of this can be reversed when Rule of Law is reinstated.

All Things Travel: Delta-Virgin Atlantic Merger Could Mean Changes For Boston Flights

By Bob Weiss, CBSBoston.com Travel Contributor July 8, 2013 5:29 PM

BOSTON (CBS) — Sir Richard Branson, the world’s best-known man in aviation, now has a new partner.

Delta Air Lines now owns 49 percent of Virgin Atlantic Airways and that means more changes will most likely happen on Boston’s number one international route.

British Airways, Delta and Virgin offer six daily flights from Logan to London’s Heathrow Airport this summer.

British Airways flies more than 50-percent of passengers flying to the UK. The flights are important for both business and leisure travelers. Great Britain also sends more visitors to New England than any other European country.

Under the new arrangement, the new code-sharing agreement will allow Delta to sell seats on Virgin flights by the end of the year. Virgin passengers will be able to connect to Delta flights in the U.S.

Delta passengers will be able to earn miles on Virgin Atlantic flights.

Delta operates in Terminal A at Logan Airport while Virgin uses Terminal E. Whether Virgin will transfer its operations to Terminal A remains to be seen. Delta is a member of The Sky Team Alliance.

The agreement gives Delta the chance to expand at Heathrow Airport where more gates will now be available. That is especially important for its New York operations; Delta is also a partner with Air France and their flights to Paris.

Next year the merger between American and US Airways should be completed. At that time, US Airways will move from the Star Alliance to the Oneworld Alliance that includes British Airways. This summer American dropped their flights to London and BA increased its service.

Alliances and code-sharing agreements are important for frequent business travelers that like to accrue mileage points for family leisure travel.

Virgin America, which is a separate company, will continue to fly routes from Boston to the West Coast. The airline was the first to offer Wifi on its flights.

Delta has been upgrading its Business Class service that now includes flat beds. Virgin features an Upper Class product. Both airlines have been increasing their on-board entertainment options.

Virgin Atlantic has its U.S. headquarters in Norwalk Connecticut.

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Virgin America is simply a global airline corporations taking spaces at all airports that the smaller airlines used to have. This is what antitrust laws are supposed to stop. This consolidation is leading to less choice which allows price-fixing and is all anti-consumer no matter how many times corporate NPR/APM tells you this is all about the US consumer.

ALL IT TAKES IS A PRESIDENT WHO REINSTATES RULE OF LAW AND APPOINTS A HEAD OF THE TRADE COMMISSION. HILLARY, BIDEN, CUOMO, AND O'MALLEY ARE READY TO KEEP THE GLOBAL GRAVY TRAIN RUNNING. MAYBE BERNIE SANDERS WILL NOT.

I KNOW CINDY WALSH FOR GOVERNOR OF MARYLAND WILL BE TAKING THESE ISSUES TO COURT! DO YOU HEAR YOUR LABOR LEADERS TAKING THIS TO COURT?

Why the American Merger Deal Could Make Virgin America a Big Winner

BY Ted Reed | 03/05/14 - 10:35 AM EST

DALLAS (TheStreet) -- Six-year-old Virgin America saw a big opportunity when the Justice Department required divestitures from American (AAL_) and US Airways in return for allowing them to merge.

Virgin America already has won the right to operate six daily round trips at New York's LaGuardia Airport and four at Washington Reagan National, using slots that American and US Airways were required to divest.

On Wednesday, the San Francisco-based carrier said it will seek two gates at Dallas Love Field that American was required to divest. Delta (DAL_) and Southwest (LUV_) are also seeking the two Love Field gates. Southwest already occupies 16 of the 20 Love Field gates.

Virgin America said that if it is awarded the gates, it would begin new service from Dallas to LaGuardia and National. Arguably, that represents a convincing case to the Justice Department that consumers would derive maximum benefit from the merger.

In particular, Love Field-National service by a new low-fare entrant would provide an alternative to American service on what became hub-to-hub flying in the merger, when Dallas Fort Worth International Airport and Washington National became hubs for the same airline. Hub-to-hub flying is typically an area where ticket prices are high.

Like LaGuardia and National, Love Field is a desirable and constricted close-in airport. It is just six miles from downtown Dallas. In October, flight restrictions imposed in 1979 will be lifted. Southwest has already said it would add flights to LaGuardia and National. Delta has said it will add LaGuardia and LAX if it gets the two gates.

Some observers questioned whether the Justice Department got all it could when it challenged the American/US Airways merger in August. The settlement was announced in November, two weeks before the parties were scheduled to go to trial.

Launched in 2007, Virgin America has built a niche as a hip, technologically advanced West Coast carrier. After moving last year to slow growth, it has started to show profits: In the third quarter, it produced net income of $37.5 million and an operating margin of 11.5%. It is said to be preparing for a public offering.

Virgin said Wednesday that if it wins the gates it would serve Chicago, Los Angeles and San Francisco as well as LaGuardia and National. It already serves Los Angeles and San Francisco from Dallas Fort Worth International Airport, but that service would end in October and Virgin would limit its Dallas operations to Love Field.

In a press release that seemed to summarize the case it will make to the Justice Department, Virgin America said it "would be the only carrier at Love Field to offer guests three classes of service, Wi-Fi, in-seat power outlets and touch-screen seatback entertainment (including live TV) on every flight." It said it "operates a new fleet of Airbus A320-Family aircraft, which are significantly quieter than the commercial aircraft currently in use at Love Field."

Also, Virgin said it "would provide vigorous competition in a market where at present one carrier controls 80% of the gates."

As part of the press release, Virgin CEO David Cush declared: "As the last major airline launched in the U.S., we've seen firsthand what happens when new entrant airlines have a chance to come into markets where a few big airlines dominate -- service improves and fares drop.

"The opening of access to these slot-constrained and gate-constrained airports is an infrequent occurrence at best, and we hope to have the opportunity to expand our network and continue doing what we do best: deliver the best product in the domestic skies, and inject sorely needed fare competition in business markets where it is currently lacking," Cush said.

When Virgin America entered the San Francisco-Chicago market in 2011 and the San Francisco-Dallas market in 2010, fares dropped in each market at the time by more than 30%, the carrier said. After Virgin America entered Newark Liberty International Airport in April 2013, fares to San Francisco and Los Angeles dropped by more than a third, the carrier said. Newark, San Francisco and Los Angeles are all United (UAL_) hubs.

__________________________________________


Pension Benefit Guaranty Corp.

Eastern to let federal agency pay out retirement benefits

September 19, 1990|By New York Times News Service

Eastern Airlines cleared a critical hurdle yesterday in its attempt to reorganize under bankruptcy laws by reaching an agreement to have Pension Benefit Guaranty Corp., a federal agency that oversees pension plans, take over the payment of the retirement benefits of Eastern employees.

But to satisfy the agency's concerns, Continental Holdings Inc., the parent of Eastern Airlines, must secure the payments with its assets -- a liability that some officials said could total more than $500 million-plus interest because of a shortage in the financing of the pension plan.

This could strain Continental's finances when the carrier is making progress toward building itself into one of the nation's leading carriers.

Continental's liability could beless, however, depending upon how much the assets in the pension fund earn from interest on investments.

Martin R. Shugrue Jr., Eastern's court-appointed trustee, called the settlement yesterday a "major milestone on the way to the reorganization of Eastern under Chapter 11."

Since he took over the airline in April, Mr. Shugrue has struggled to win back customers by offering low fares and promotions to stem the carrier's losses.

The agreement is good news for the 51,000 former and current Eastern workers, whose pensions are now guaranteed in full.

James B. Lockhart, the executive director of the federal pension agency, said yesterday that the settlement would "protect retirees and the insurance program from one of the largest potential losses we faced -- almost three-quarters of a billion dollars before today's agreement."

__________________________________________

As you see below this Federal agency that supposedly works in the interests of American citizens really has allowed these pensioners to lose all of the value of their pensions. I read a few years ago that individuals having their pensions in this agency were receiving Medicaid-level care. We see as well, as with public sector pensions.....these funds were shifted into the Wall Street stock market just at the time the market crashed. Now, the Pension Benefit Guaranty Corporation has almost $300 billion in pension liabilities and has been imploded with debt just as public pensions and 401Ks were.

None of this meets the terms of labor contracts, terms of these bankruptcy agreements, and we can be sure that corporate contributions from airlines in this case are not happening.

ALL OF THIS IS ILLEGAL!

The Affordable Care Act is designed to send all of these plans to private state health systems where all Federal responsibility for public health, from this pension benefit guaranty corporation to Medicare will end and all of what was strong, well-funded health plans will become Medicaid for All. The coming economic crash will make the level of debt for these pensions unsustainable----WHICH IS THE POINT.

ALL POLITICIANS/LABOR AND JUSTICE LEADERS KNOW THIS AND ALL MARYLAND POLS ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFIT. THEY ARE PROMOTING THESE CONDITIONS. STOP ALLOWING A NEO-LIBERAL DNC CHOOSE YOUR CANDIDATES. RUN LABOR AND JUSTICE IN ALL PRIMARIES.

Pension Benefit Guaranty Corp.

'The PBGC regularly updates its investment strategy. In 2004, it chose to invest heavily in bonds.[6] Under new leadership, the agency in 2008 shifted a substantial portion of its assets into stocks.[7] Because of the market decline, PBGC's equity investments lost 23% during the year ending September 30, 2008.[8]'

According to commentator Nicholas Brannick, "Despite the appearance of protection for the PBGC's interest in the event of termination, the Bankruptcy Code frequently strips the PBGC of the protection provided under ERISA. Under ERISA, termination liability may arise on the date of termination, but the lien that protects the PBGC's interest in that liability must be perfected [to be protected in bankruptcy]". Nicholas Brannick, Note: At the Crossroads of Three Codes: How Employers Are Using ERISA, the Tax Code, and Bankruptcy to Evade Their Pension Obligations, 65 Ohio St. L.J. 1577, 1606 (2004). The retention of title as a security interest, the creation of lien, or any other direct or indirect mode of disposing of or parting with property or an interest in property is a "transfer" for purposes of the U.S. Bankruptcy Code (see 11 U.S.C. § 101(54)). Some transfers may be avoidable by the bankruptcy trustee under various Code provisions. Further, under ordinary principles of bankruptcy law, a lien or other security interest that is unperfected (i.e., a lien that is not valid against parties other than the debtor) at the time of case commencement is generally unenforceable against a bankruptcy trustee. Once the bankruptcy case has commenced, the law generally stays any act to attempt to perfect a lien that was not perfected prior to case commencement (see 11 U.S.C. § 362(a)(4)). Thus, the PBGC with a lien that has not yet been perfected at the time of case commencement may find itself in the same position as the general unsecured creditors.

No insurance for defined contribution plans

One reason Congress enacted ERISA was "to prevent the 'great personal tragedy' suffered by employees whose vested benefits are not paid when pension plans are terminated."[19] When a defined benefit plan is properly funded by its sponsor, its assets should be approximately equal to its liability, and any shortfall (including benefit improvements) should be amortized in a relatively short period of time. Before ERISA, employers and willing unions could agree to increase benefits with little thought to how to pay for them. A classic case of the unfortunate consequences of an underfunded pension plan is the 1963 shutdown of Studebaker automobile operations in South Bend, Indiana, in which 4,500 workers lost 85% of their vested benefits.[19] One of ERISA's stated intentions was to minimize underfunding in defined benefit plans.

Defined contribution plans — by contrast and by definition — are always "fully funded." Thus Congress saw no need to provide insurance protection for participants in defined contribution plans. The Enron scandal in 2001 demonstrated one potential problem with defined contribution plans: the company had strongly encouraged its workers to invest their 401(k) plans in their employer itself, violating primary investment guidelines about diversification. When Enron went bankrupt, many workers lost not just their jobs but also most of the value of their retirement savings. Congress inserted trust law fiduciary liability upon employers who did not prudently diversify plan assets to avoid the chance of large losses inside Section 404 of ERISA, but it is unclear whether such fiduciary liability applies to trustees of plans in which participants direct the investment of their own accounts.

REMEMBER, THE GOAL OF NEO-LIBERALISM IS TAKING THE US FROM A FIRST WORLD SOCIAL DEMOCRACY TO A THIRD WORLD AUTOCRATIC PLUTOCRACY.  THAT MEANS INSTEAD OF MODERN DAY AMERICA THEY LOOK TO MEDIEVAL EUROPE----THE DARK AGES ----FOR THEIR SOCIAL MODEL.  THE MASSES IMPOVERISHED, HEAVILY TAXED WAITING FOR THE GENTRY TO SPONSOR PUBLIC PROJECTS WHILE THE CHURCH HANDLES THE POOR---AND NOT SO WELL!

Today's blog looks at billionaires as benevolent philanthropist.

This is indeed where neo-liberals are going.  The next phase after -'we have all the money and will do as we please' - is building the image of billionaire as benevolent philanthropist----you know----THE MEDICIs.  You could feel sorry for the delusions of grandeur from a moneyed-class equal to mafia-cartels, but this is life and death and fighting for democracy in America.  We are seeing in US media a build-up of image of billionaires for social good.  As they starve public coffers by fraud and tax evasion they are being allowed to 'donate' for the common good and corporate tax deductions.

Meanwhile, you and I have moved back to the vision of the US as first world social democracy. HMMMMM...did I see 900,000 registered democrats in Maryland?  Do you really think they want to go with neo-liberalism and Medicis?

I DON'T THINK SO!!!  SEE WHY IT IS SO IMPORTANT TO KEEP CINDY WALSH FOR GOVERNOR OF MARYLAND OUT OF ELECTION COVERAGE AND OFF THE CAMPAIGN TRAIL!

What I am seeing and hoping to build with my candidacy is a structure around crony democratic politics in Maryland and the US.  We do not need party machines and media money for campaigns.  We need labor unions and justice organizations, churches and university political groups to network for the candidate working for labor and justice.  Simple community networking and education about the need to ignore the onslaught of media campaign advertising by neo-liberal candidates with corporate war chests.

ALL OF MARYLAND CANDIDATES FOR GOVERNOR ARE NEO-LIBERALS EXCEPT CINDY WALSH.  SHAKE THE BUGS FROM THE RUG------GET RID OF CORPORATE CONTROL OF THE DEMOCRATIC PARTY.

Regarding Basu's singing of praises for US billionaires and funding of basic research:

NEO-LIBERALS MAKING BILLIONAIRES LOOK WARM AND FUZZY AS THEY PUSH AMERICAN CITIZENS TO CHARITY!  

Who doesn't like a billionaire made rich from the massive corporate frauds of last decade exploding shareholder wealth from looting the US Treasury and American people.  A billionaire that parks hundreds of billions of dollars in revenue off-shore to avoid paying taxes and who is guilty of more hundreds of billions of dollars in tax fraud and tax evasion.  A billionaire that backs basic research that will earn his corporation trillions of dollars in profit at the expense of public health and interest.  God bless those billionaires say Basu and corporate public media.  Who needs those trillions of dollars stolen from the public that funded basic research in public universities and gave the development benefits to the public rather than private patenting to soak the public as consumer.  WHAT AMERICAN PATRIOTS THESE BILLIONAIRES ARE!  Sound like the North Korean Great Leader propaganda?  YOU BETCHA!

Let's look at the tax policies at the Federal, state, and local level that that allow this fleecing of the US Treasury beyond an IRS that has been gutted of employees to keep from doing investigations of hundreds of billions of dollars in corporate tax fraud that when recovered will make state and local universities flush with cash in education Trusts and grants and public research funding.

YOU SEE, IT IS THE MONEY THAT MADE THESE BILLIONAIRES RICH THAT IS NOW MISSING FROM THE ECONOMY BRINGING DEBT AND DISMANTLING OF PUBLIC SECTOR SERVICES AND PROGRAMS.  UNIVERSITY TUITION TOO HIGH----BLAME THAT BILLIONAIRE.

Do you get a sick feeling in the pit of your stomach when a corporate CEO from the likes Starbucks receives all kinds of media coverage for 'donating' to veterans charities because he is upset with the conditions for veterans at VA hospitals around the country?  Let's see how Starbucks evades paying corporate taxes and bring that back to fund all the public VA hospitals.


Starbucks wakes up and smells the stench of tax avoidance controversy


Cafe chain executive to face questions from MPs, while protesters plan to turn branches into creches and refuges

    Simon Neville and Shiv Malik    
    The Guardian, Sunday 11 November 2012    

Starbucks
Police protect a Starbucks branch during an anti-cuts march last month after the company's low tax bill was revealed. Photograph: Suzanne Plunkett/Reuters

On an average day its outlets are a hive of social activity, hosting everything from business meetings to reading groups looking for that all-important appointment with a morning caffeine rush, approvingly overlooked by a branded community bulletin board. But Starbucks should be careful what it wishes for.

The direct action group UK Uncut plans to turn dozens of the coffee empire's UK branches into creches, refuges and homeless shelters to highlight the chain's tax avoidance tactics.

The announcement of the action comes on the day a Starbucks executive faces questions from the House of Commons public accounts committee over why the company paid no corporation tax in the UK during the past three years, despite senior US management trumpeting the company's profitable operations in Britain.

MPs will also question management representatives from Google and Amazon, both of which have faced criticism for basing their European operations in countries that have lower tax rates such as Ireland and Luxembourg.

In his appearance before the committee, Starbucks' chief financial officer, Troy Alstead, will attempt to repair the company's reputation, which, according to research by YouGov, continues to suffer because of the controversy.

In a similar session last week, MPs accused HM Revenue & Customs (HMRC) officials of having cosy relationships with big businesses. Speaking about the arrangements with Starbucks, the Conservative MP Richard Bacon said: "It smells – and it doesn't smell of coffee. It smells bad."

UK Uncut has said it will start targeting Starbucks on the Saturday following the autumn statement by the chancellor, George Osborne, on 8 December. The campaign group is attempting to draw a link between government cuts, in particular those that affect women, and tax avoidance by multinational businesses.

Sarah Greene, a UK Uncut activist, said funding for refuges and rape crisis centres faced cuts unless companies paid their fair share of tax. HMRC estimates around £32bn was lost to tax avoidance last year.

Greene said the government could easily bring in billions that could fund vital services by clamping down on tax avoidance, but was instead "making cuts that are forcing women to choose between motherhood and work, and trapping them in abusive relationships".

The group, which rose to prominence after staging a sit-in at Vodafone stores, Sir Philip Green's Topshop and Fortnum & Mason, turned its attentions to Starbucks last month after an investigation by Reuters discovered the company had paid only £8.6m in corporation tax since launching in the UK 14 years ago, despite cumulative sales of £3bn.

Longstanding Uncut campaigner Anna Walker said the group wanted to "galvanise the anger" that women were feeling: "We've chosen to really highlight the impact of the cuts on women this time. So there is going to be a real focus on transforming Starbucks into those services that are being cut by the government … [such as] refuges and creches," she said.

Walker said the campaign group had been in touch with women's groups across the country in the lead-up to the direct action event and believed that, along with a pre-established network of activists, dozens of the company's coffee shops were likely to be targeted.

"Starbucks is a really great target because it is on every high street across the country and that's what UK Uncut finds really important: people can take action in their local areas," she said. "We're really hoping that women who are impacted by the cuts, who are seeing their Sure Start centres where their kids go being reduced in services, and people who use refuges, [will] be involved."

Several international organisations have faced criticism over their UK accounts, with Amazon, eBay, Facebook, Google and Ikea all paying little or no corporation tax despite large British operations.

However, according to pollsters at YouGov's BrandIndex, Starbucks has suffered the deepest damage to its image.

The organisation, which records the strength of companies' brand identities, revealed Starbucks' cachet plummeted following the tax revelations and continues to languish at near-record lows.

Its "buzz" score, which measures the number of negative and positive comments customers have heard, hit -16.7. That is only slightly higher than the lowest levels it hit during the most heated point of the controversy last month, at -28.6. A year ago its rating was at +3.1.

By comparison, Google and Amazon – both due at the select committee – have seen their ratings seemingly unaffected.

UK BrandIndex director Sarah Murphy said: "A brand's buzz score typically recovers quite quickly following a spate of bad press, but we aren't seeing that with Starbucks, which is quite unusual. Its scores started to level out around the end of last month, but whatever modest recovery Starbucks has made could well be in jeopardy if this story flares up again in the media."

The coffee store chain insists it pays the correct level of taxes. The group chief executive, Howard Schultz, has said in a statement: "Starbucks has always paid taxes in the UK despite recent suggestions to the contrary.

"Over the last three years alone, our company has paid more than £160m in various taxes, including national insurance contributions, VAT and business rates."

However, MPs will no doubt point out that VAT is paid by the customers at point of sale and collected by Starbucks.

Margaret Hodge, who chairs the public accounts committee, told parliament last month that Apple, eBay, Facebook, Google and Starbucks had avoided nearly £900m of tax. The prime minister, David Cameron responded to the claim by saying: "I'm not happy with the current situation. I think [HMRC] needs to look at it very carefully. We do need to make sure we are encouraging these businesses to invest in our country as they are but they should be paying fair taxes as well."

A spokeswoman for Starbucks said on Sunday: "While the subject of tax law can be extremely complex, Starbucks respects and complies with tax laws and accounting rules" in each of the 61 countries where we do business, including the UK – a market that we remain committed to for the long term. We've posted the facts about our tax practices in the UK on our website .

"Starbucks' economic impact in the UK spans far beyond our stores and partners (employees). We spend hundreds of millions of pounds with local suppliers on milk, cakes and sandwiches, and on store design and renovations. When you take into account the indirect employment created by Starbucks' investments in the UK, the company's extended economic impact to the UK economy exceeds £80m annually.

"We hope that UK Uncut will respect the wellbeing of our partners and customers, and recognise the value that we add to the economy, creating jobs and apprenticeships, as well as paying our fair share of taxes in the UK."
________________________________________

How does a US global corporation go from being called a tax cheat and immoral in overseas press.....which is far more free and fair than a US state-run corporate media......to being the good guys in America donating all that money for tax write-offs instead of paying US taxes that would flood government coffers with revenue?

 NEO-LIBERALS AND NEO-CONS CONTROL US MEDIA AND HAVE MADE IT US CHAMBER OF COMMERCE ALL THE TIME.  THE US MEDIA IS NOW EQUAL TO ROMANIA AS FREE PRESS.  ERGO, BASU'S LOVEFEST.

We all know that as all US commerce becomes consolidated and owned by the same few people at the top we will not be able to police US global corporations overseas and while they stagnate our US economy for growing profits overseas, all that wealth generated overseas does nothing for US yet we have the global headquarters ruling over all government and public policies and taxpayers subsidizing corporate wealth.  The article above on the state of US corporations doing business in the UK paying no taxes is mirrored in America.  The difference, the American people are electing the very neo-liberals turning their heads to this massive fraud and allowing media to ignore all of this.

EUROPE IS SEEING MORE ACCOUNTABILITY BECAUSE ITS CITIZENS HIT THE STREETS AND VOTE BAD POLS OUT OF OFFICE.



Starbucks, Google, Amazon accused of 'immoral' tax avoidance ...


www.csmonitor.com/.../1203/Starbucks...immoral-tax-avoidance   

Starbucks, Google, and Amazon were among the major multinational corporations accused by lawyers of exploiting British tax laws to move UK-made profits ...
__________________________________________

Sending money stolen through tax fraud and shareholder wealth created by massive corporate fraud of US Treasury to charity just to write the donation off future taxes-----WHAT A GUY-----HOWARD SCHULTZ!  Mind you, I have a history of Starbucks and its beginning in Seattle even having a Starbuck's green Jeep in my enthusiasm for fair trade coffee.  THOSE DAYS ARE LONG GONE.

Do you know the entire GI Bill would be flush with money if Starbucks paid its corporate taxes and shouted to end massive corporate fraud?

THE LEVEL OF DISGRACE IN PUSHING AMERICAN VETERANS TO HAWKING FOR CHARITY IS UNMEASURABLE.


Starbucks CEO To Donate $30 Million To Support PTSD Research For Veterans


The Huffington Post  | by  Melissa McGlensey

Posted: 03/21/2014 6:18 pm EDT Updated: 03/21/2014 6:59 pm EDT

Starbucks Starbucks Coffee Howard Schultz Charity Military Veterans Veterans Video Impact News

Starbucks CEO Howard Schultz is making a large donation to help U.S. veterans.

Schultz spoke to CBS Evening News on Wednesday and announced his plan to allocate most of the $30 million donation toward researching solutions to brain trauma and post-traumatic stress disorder.

PTSD affects between 11 and 20 percent of military members who served in the Iraq and Afghanistan wars, according to the Department of Veterans Affairs.

Schultz told CBS that veterans often don't get the treatment or understanding they need and deserve.

"The truth of the matter is, and I say this with respect, more often than not, the government does a very -- a much better job of sending people to war than they do bringing them home, " he stated. "They're coming home to an American public that really doesn't understand and never embraced, what these people have done."

Schultz has shown support for troops in the past. Last year, Starbucks announced its initiative to hire 10,000 veterans and spouses of active military in five years.

The unemployment rate among post-9/11 veterans dropped to 9.0 percent last year, down from 9.9 percent the year before, according to the Bureau of Labor Statistics. This number is about 1.6 percentage points above the civilian population.
____________________________________________

Bill Gates was given the 'good billionaire' logo by neo-liberals trying to push the Buffett 'billionaires need to pay what their secretary pays in taxes' at a time when the US needs billionaires to pay what they paid before the Reagan/Clinton era-----60-70% tax rate -----to bring back the massive frauds and swing the pendulum back to flush government coffers and a first world society.  This is not targeted tax policy-----

IT IS SIMPLY RULE OF LAW AND JUSTICE BRINGING TENS OF TRILLIONS OF DOLLARS IN CORPORATE FRAUD BACK TO US TREASURY AND PUBLIC TRUSTS.

As Basu pretends that Bill Gates created the Gates Global Health Initiative for the good of mankind the first thing that comes to mind is that African and Asian PHARMA developed and patented by the Gates foundation has Bill Gates, Obama, and Clinton lobbying hardest this past decade to dismantle all of public health and protections of generic manufacturing and subsidy of PHARMA around the world with the Trans Pacific Trade Pact.  It is Bill Gates building a PHARMA corporation that seeks to maximize profits by gutting all public health protections for medicine around the world.  WHAT A GUY-----BILL GATES THAT GOOD BILLIONAIRE!

While in Washington State I attended Microsoft shareholder meetings that had stockholders angry that Bill was moving all Microsoft money to a trust that was then spending billions of dollars in Pharma and health care products in Africa and Asia.  Warren Buffett moved his billions to this new economy as well.  WHILE BEING TOUTED AS PHILANTHROPISTS THEY WERE SIMPLY GUARDING MONEY FROM TAXATION UNDER THE GUISE OF PRIVATE NON-PROFITS WHILE THEY BUILT WHAT THEY KNEW WAS THE NEXT ECONOMIC ENGINE-----HEALTH AND EDUCATION.  This was at the end of Reagan and the beginning of Clinton when the transition to privatization of public health and education to create the next Wall Street markets were made.

RAISE YOUR HAND IF YOU THINK A BILLIONAIRE USING PRIVATE NON-PROFITS AND THE GUISE OF PUBLIC HEALTH TO SHIELD MONEY FROM TAXATION ALL TO CREATE AND PATENT PHARMA TARGETING A DEVELOPING WORLD THEY WANT TO MAKE A MARKET IS A GOOD GUY------NO ONE!!!!

Bill Gates is the face of Race to the Top and education privatization for the same reason-----creating private education businesses centered online and developed by Microsoft and other tech institutions.  The Industrial Philanthropists built the public structures of public universities, libraries, and K-12 and Bill Gates Foundation seeks to tear them down for profit.  WHAT A GUY-----BILL GATES!

Keep in mind that all these excuses of republicans defunding the IRS or Wall Street regulatory agencies made by neo-liberals are a farce.  Look to neo-liberal Maryland where fraud and corruption is king to see a dismantled and unfunded oversight.

RECOVERING CORPORATE FRAUD PAYS FOR ITSELF, NO REPUBLICANS OR TAXPAYER MONEY NEEDED.  THAT FIRST BILLION IN RECOVERY PAYS FOR THE NEXT TRILLION DOLLARS IN RECOVERY!



Microsoft, HP skirted taxes via offshore units: U.S. Senate panel

By Kim Dixon

WASHINGTON Thu Sep 20, 2012 7:12pm EDT


A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012. REUTERS/Rick Wilking

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012.




(Reuters) - Microsoft Corp and Hewlett-Packard Co pushed back against claims by a U.S. Senate panel on Thursday that they used offshore units and loopholes to shield billions of dollars in profits from U.S. taxes.

Calling tax avoidance rampant in the technology sector, the Senate's Permanent Subcommittee on Investigations said tech companies used intellectual property, royalties and license fees in overseas tax havens to skirt taxes.

The panel subpoenaed internal documents from the companies and interviewed Microsoft and HP officials to compile its report, which uses the companies as case studies.

"The tax practices and gimmicks range from egregious to dubious validity," Democratic Senator Carl Levin, chairman of the panel, said at a news conference.

Officials at HP and Microsoft strongly denied any wrongdoing, noted tax officials had not objected to the structures and said there were valid reasons for tax planning.

Senator Tom Coburn, the top Republican on the panel, signed onto the new report but blamed Congress.

"Tax avoidance is not illegal. Congress has created this situation," Coburn said, criticizing the complex tax code and the 35 percent corporate tax rate, among of the world's highest, though few companies pay that statutory rate.

The subcommittee said that from 2009 to 2011, Microsoft shifted $21 billion offshore, almost half its U.S. retail sales revenue, saving up to $4.5 billion in taxes on goods sold in the United States.

This was accomplished, the report said, by aggressive transfer pricing, where companies value intra-company movement of assets. Corporate units must use a fair market price to value transfers, but critics say they are manipulated to minimize tax.

The report also said the software giant shifts royalty revenue to units in low-tax nations, such as Singapore and Ireland, avoiding billions of dollars of U.S. tax.

Levin said one Microsoft Singapore unit was legally headquartered in Bermuda and had no employees. Levin asked Microsoft's tax vice president, William Sample, if the reason was to cut its tax bill. "Yes, that is correct," Sample said.

Sample also said several offshore units employ hundreds of workers, which Levin noted was a tiny fraction of its workforce.

IRS CITES CHALLENGE

Internal Revenue Service officials are not allowed to comment on specific taxpayers, but Chief Counsel William Wilkins said enforcing transfer pricing law "has been the IRS's most significant international enforcement challenge."

U.S. companies have at least $1.5 trillion in profits sitting offshore. Most say they are keeping them there to avoid U.S. tax. Of the top 10 companies with the biggest offshore cash balances, five are in the technology sector.

"The high-tech industry is probably the No. 1 user of these offshore entities to transfer intellectual property," Levin said.

The panel said Hewlett-Packard funded U.S. operations with a stream of intra-company loans, using an exception in the law for short-term loans, to avoid billions of dollars in taxes.

Levin said more than 90 percent of HP's cash was sitting offshore, as opposed to about 65 percent of revenue coming from countries outside the United States.

An HP spokesman said in a statement that the hearing was a politically motivated attack.

"We are disappointed to see what appears to be a politically motivated attack on one of America's largest employers," HP spokesman Michael Thacker said before the hearing.

Lester Ezrati, an HP tax vice president, said HP used cash faster in the United States for valid reasons including that certain payments like pensions must be made with U.S. cash.

"HP has an overall strategy to minimize expenses and that is what generates where the cash is located," and "one of those expenses is taxes," Ezrati said.

REPATRIATED PROFITS TAXABLE

Under tax law, foreign profits are subject to U.S. tax when they are "repatriated," or brought into the United States, usually in the form of a dividend.

One internal document released by the panel suggested that HP routinely brought money into the U.S. without paying U.S. tax. An HP presentation noted that "without planning, repatriation of foreign earnings could lead to tax payments."

Loans by the foreign units to a related U.S. entity are considered a dividend for tax purposes but there is an exception for loans that are repaid within 30 days, according to the committee's tax experts.

HP set up a complicated series of short-term loans starting in 2008 to these businesses that were continuous without gaps, to get around that provision, the panel found.

Big companies have lobbied for a tax holiday to let them bring offshore profits into the United States at a reduced tax rate, arguing that the profits are trapped offshore. That effort has fallen flat amid reports suggesting such a program would cost the government significant revenue and not produce U.S. jobs.

The report on transfer pricing "mocks the notion that profits of U.S. multinationals are 'locked-up' or 'trapped' offshore," Levin said.

The subcommittee also criticized accounting giant Ernst & Young for blessing HP's practices.

Ernst & Young partner Beth Carr said that the firm stands firmly behind its auditing for HP.
_________________________________________

Below you see from 2002-2005 Bill Gates was positioning himself for the coming Affordable Care Act health legislation and privatization and making of global health corporations.  Keep in mind that mental health pharma was just given a boost in rewriting the Psychiatric definition of what constitutes depression. increasing government subsidy of more depression PHARMA as Gates moves to Prozac.  Medicare and Medicaid will now pay for depression medicine for what we all know is common sadness.

Bill Gates was simply moving his wealth to what he knew would be the new markets created by privatization of public health and education-----AFFORDABLE CARE ACT AND RACE TO THE TOP.

ALWAYS WORKING FOR THE PUBLIC'S INTERESTS THOSE GOOD BILLIONAIRES!  NEO-LIBERALS----WORKING FOR WEALTH AND PROFIT AND THIRD WORLD QUALITY OF LIFE.  HOW DO THEY RUN AS DEMOCRATS?

Below you see a blogger that obviously attended the same Microsoft shareholder meetings I did.

created 04/07/2005 - 07:35, updated 31/08/2006 - 14:01 by cybe


Bill Gates is [alledgedly] giving 95% of his wealth for africa ......

I wonder if he is diversifying his investments and has bought shares in the pharmaceutical industry so he is just transferring his money into a new business venture whilst "looking" as though he is giving it away.

The Real Way to Health is a completely different one:- "Healing in His Wings"

Three articles below:

Bill Gates sells MSFT, takes Prozac
Bill Gates and Big Pharma
Bush's bogus AIDS offer, and why Bill Gates is making it worse.
The Gates And Buffet Foundation Shell Game

 


Bill Gates sells MSFT, takes Prozac

By Andrew Orlowski in San Francisco
http://forms.theregister.co.uk/mail_author/?story_url=/2002/09/09/bill_gates_sells_msft_takes/

Published Monday 9th September 2002 19:48 GMT

Bill Gates has sold almost half a billion dollar's worth of Microsoft stock this year, and begun to invest heavily in big pharma. In the second half of this year he bought 2.5 million shares in Eli Lilly, manufacturer of Prozac, and also made major investments in Merck and Pfizer, notes /Information Week/.

The 9 million shares Gates relinquished represent only a tiny proportion of Chairman Bill's MSFT holdings, or about 1.36 per cent.

Eli Lily's patent on Prozac expired a year ago, but the company has sought to widen its appeal, combining its with other drugs and marketing it as a kind of MSG of anti-depressants.

"Companies are getting a lot more creative in ways to sustain the product lifespan of drugs," a J.P. Morgan told The Street.

In sickness and in wealth, big pharma remains the most profitable industry in America. No doubt Gates took comfort in the Bush administration's indulgent attitude towards the inflated prices charged by the pharmaceutical industry. Although nine out of ten drugs fail clinical tests, the industry - which argues that high prices are needed to justify R&D - spends two and half times as much on marketing than on research, according to Families USA .

(I'll defer to our very own Thomas C Greene, who covered the industry in detail).

A crack about anxiety-inducing computer software would simply be too cheap, so we won't dream of making it here.


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We must be very careful to follow where these last few years of US global corporation has led under Obama and neo-liberals in Congress.  Remember, between the FED policy and trillions in fake job stimulus money that was just used to expand US global corporations overseas, the US has allowed global corporations to create a global network of empire that looks just like this one below.  IT IS HORRENDOUS.

So, as Basu tells us on corporate 'public' media WYPR that billionaires are doing good in their bequests to basic research, the entire world knows what kind of empire Bill Gates is building!


'Blackwater, Monsanto and Gates are three sides of the same figure: the war machine on the planet and most people who inhabit it, are peasants, indigenous communities, people who want to share information and knowledge or any other who does not want to be in the aegis of profit and the destructiveness of capitalism'.

A Link Between Monsanto, Blackwater & Bill Gates?

By majestic on January 3, 2011 in News

There’s an unlikely story circulating on various underground news sites claiming that the controversial biotech company Monsanto has acquired infamous mercenary outfit Blackwater (now trading as Xe Services). The report apparently first appeared in La Jornada, one of Mexico City’s leading daily newspapers, described by Noam Chomsky as “the one independent newspaper in the whole hemisphere.” Pravda has translated the original Spanish text written by Silvia Ribeiro into English. From my reading of the Jeremy Scahill article that seems to form the basis of the report, the most you can deduce is that Monsanto hired the creeps at Blackwater to do dirty work for them, but the rumor keeps circulating, so could there be a grain of truth somewhere in this story?:

A report by Jeremy Scahill in The Nation (Blackwater’s Black Ops, 9/15/2010) revealed that the largest mercenary army in the world, Blackwater (now called Xe Services) clandestine intelligence services was sold to the multinational Monsanto. Blackwater was renamed in 2009 after becoming famous in the world with numerous reports of abuses in Iraq, including massacres of civilians. It remains the largest private contractor of the U.S. Department of State “security services,” that practices state terrorism by giving the government the opportunity to deny it.

Many military and former CIA officers work for Blackwater or related companies created to divert attention from their bad reputation and make more profit selling their nefarious services-ranging from information and intelligence to infiltration, political lobbying and paramilitary training – for other governments, banks and multinational corporations. According to Scahill, business with multinationals, like Monsanto, Chevron, and financial giants such as Barclays and Deutsche Bank, are channeled through two companies owned by Erik Prince, owner of Blackwater: Total Intelligence Solutions and Terrorism Research Center. These officers and directors share Blackwater.

One of them, Cofer Black, known for his brutality as one of the directors of the CIA, was the one who made contact with Monsanto in 2008 as director of Total Intelligence, entering into the contract with the company to spy on and infiltrate organizations of animal rights activists, anti-GM and other dirty activities of the biotech giant.

Contacted by Scahill, the Monsanto executive Kevin Wilson declined to comment, but later confirmed to The Nation that they had hired Total Intelligence in 2008 and 2009, according to Monsanto only to keep track of “public disclosure” of its opponents. He also said that Total Intelligence was a “totally separate entity from Blackwater.”

However, Scahill has copies of emails from Cofer Black after the meeting with Wilson for Monsanto, where he explains to other former CIA agents, using their Blackwater e-mails, that the discussion with Wilson was that Total Intelligence had become “Monsanto’s intelligence arm,” spying on activists and other actions, including “our people to legally integrate these groups.” Total Intelligence Monsanto paid $ 127,000 in 2008 and $ 105,000 in 2009.

No wonder that a company engaged in the “science of death” as Monsanto, which has been dedicated from the outset to produce toxic poisons spilling from Agent Orange to PCBs (polychlorinated biphenyls), pesticides, hormones and genetically modified seeds, is associated with another company of thugs.

Almost simultaneously with the publication of this article in The Nation, the Via Campesina reported the purchase of 500,000 shares of Monsanto, for more than $23 million by the Bill and Melinda Gates Foundation, which with this action completed the outing of the mask of “philanthropy.” Another association that is not surprising.

It is a marriage between the two most brutal monopolies in the history of industrialism: Bill Gates controls more than 90 percent of the market share of proprietary computing and Monsanto about 90 percent of the global transgenic seed market and most global commercial seed. There does not exist in any other industrial sector monopolies so vast, whose very existence is a negation of the vaunted principle of “market competition” of capitalism. Both Gates and Monsanto are very aggressive in defending their ill-gotten monopolies.

Although Bill Gates might try to say that the Foundation is not linked to his business, all it proves is the opposite: most of their donations end up favoring the commercial investments of the tycoon, not really “donating” anything, but instead of paying taxes to the state coffers, he invests his profits in where it is favorable to him economically, including propaganda from their supposed good intentions. On the contrary, their “donations” finance projects as destructive as geoengineering or replacement of natural community medicines for high-tech patented medicines in the poorest areas of the world. What a coincidence, former Secretary of Health Julio Frenk and Ernesto Zedillo are advisers of the Foundation.

Like Monsanto, Gates is also engaged in trying to destroy rural farming worldwide, mainly through the “Alliance for a Green Revolution in Africa” (AGRA). It works as a Trojan horse to deprive poor African farmers of their traditional seeds, replacing them with the seeds of their companies first, finally by genetically modified (GM). To this end, the Foundation hired Robert Horsch in 2006, the director of Monsanto. Now Gates, airing major profits, went straight to the source.

Blackwater, Monsanto and Gates are three sides of the same figure: the war machine on the planet and most people who inhabit it, are peasants, indigenous communities, people who want to share information and knowledge or any other who does not want to be in the aegis of profit and the destructiveness of capitalism.

* The author is a researcher at ETC Group


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I watched a TV commercial that had UnderArmour CEO standing on an African mountaintop stating that he wants to use his billions to help the poor worldwide.  This is the same CEO who demands his UnderArmour headquarters in Baltimore be given tax-free status starving Baltimore City government coffers of money that would go to underserved communities and public schools.  

IF THAT ISN'T OBSCENE ENOUGH-----UNDERARMOUR USES THE FACT THAT THE VETERANS ADMINISTRATION HAS BEEN DISMANTLED AND NEO-LIBERALS ARE PUSHING VET CHARITY TO SUPPORT VETS.

So, rather than paying taxes that would support a strong, public supported VA, he is making profits off of his athletic brand and 'donating' money to vet charities for corporate tax write-offs.  WHAT A GUY-------BILLIONAIRE PROFITS OFF OF VETS FORCED TO SEEK CHARITY IN LIEU OF VETERAN'S BENEFITS!

Below you see yet another corporation that is ground zero for making the American people impoverished and yet finding time to 'donate' to help the poor.

THIS IS NEO-LIBERALISM WHERE WEALTH AND PROFIT CREATE AN AUTOCRATIC SYSTEM MODELED ON MEDIEVAL EUROPE-----THEY CALLED IT THE DARK AGES.



UNDERARMOUR---GlassDoor

 “Employee survey results were poor”
Director (Former Employee)
Baltimore, MD

I worked at Under Armour full-time for more than 3 years

Pros – Successful brand w/ currently valuable stock

Cons – Don't just go by these anonymous reviews. In a recent survey of all employees, findings were that an overwhelming majority feel "disengaged", "overworked" , "underpaid", and "under appreciated". What was the founder's response when he pulled Directors into a room? Instead of saying "here's what we're going to do", he said "it's your problem. You fix it." Needless to say there's extremely high turnover. Those that do stay wish they were somewhere else.

Advice to Senior Management – Listen to employee issues and do something about. Currently you're doing neither.

No, I would not recommend this company to a friend – I'm not optimistic about the outlook for this company

__________________________________________

TAX CREDITS FOR HIRING VETS IS LIKE ENTERPRISE ZONE TAX CREDITS FOR HIRING THE UNDERSERVED ------AS IN BALTIMORE'S INNER HARBOR THESE CONTRACTS ARE ALL IGNORED AND THE JOBS ARE FILLED WITH FRAUD AND WORKPLACE ABUSE.

All across the country veterans are being hired into the worst of jobs and working conditions as corporations get tax credits for simply hiring.  Those fighting to keep public military positions are being harassed and denied civil liberties and workplace safety.  Remember, the Bush Administration made military service contracts NULL and VOID requiring national guard and military to serve extended service tours knowing these troops would be battle weary and did while dismantling Va facilities.  AS Obama does the same, O'Malley travels overseas to recruit Veterans to substandard online degrees and career colleges.



UNDERARMOUR
Shop the Wounded Warrior project

Between August 2012 and December 2014, Under Armour® will make a donation of over $1 Million to Wounded Warrior Project™ benefitting injured service members and their families.
__________________________________________

The neo-liberals spent all last decade shouting against the abuses of the US troops by neo-conservatives and now neo-conservatives are blaming neo-liberals for the outrageous move to dismantle all that is public veterans administration.

TAG TEAM OF GLOBAL CORPORATE POLS----STOP ALLOWING A NEO-LIBERAL DEMOCRATIC LEADERSHIP CHOOSE YOUR CANDIDATES---RUN LABOR AND JUSTICE IN ALL PRIMARIES!

Below you see the same labor and justice conditions that existed under Bush are now super-sized under Obama and neo-liberals in Congress.  Do you hear your incumbent shouting out against the deliberate attack of public sector workers in order to get them to quit and be replaced by private contractors and to protect yet more people breaking the US laws from prosecution?

General News 3/1/2014 at 17:57:53
    
Veterans Speak Out Against a Debilitating Federal Workplace Harming the Health of America's Returning Military

By Ward Jordan

opednews.com


(WASHINGTON, DC)   --  In a recently released statement veterans, members of The Coalition For Change, Inc. (C4C), called for the U.S. Congress and the Obama administration to stop the political power play and to mandate that federal supervisory and management officials face discipline for willfully breaking civil rights and whistleblower-protection laws.

"The unrestrained retaliatory actions the VA supervisors take against subordinate employees cripples the agency's healthcare system and stifles many employees from exposing unfair customs, unsafe conditions and unlawful practices," said Oliver Mitchell, a U.S. Marine Corps veteran and a former employee with the Veterans Affairs' Greater West Los Angeles Medical Center Imaging Service, Radiology Section. While serving as a Patient Services Assistant, Mitchell received "excellent" performance ratings.   "Things changed rapidly after I refused an order to purge patient documents," Mitchell explained.   "The harassment started and VA officials detailed me repeatedly after I filed a whistleblower complaint with the Office of Special Counsel (OSC)."

According to Mitchell, both the VA's Office of Inspector General and the OSC failed to properly pursue the matter even after hearing Mitchell's submitted audio tape of employees discussing how to destroy veteran patients' records.   "Although I declined to purge patient records, VA officials hired another employee to delete valid MRI requests from the system as a means of reducing the backlog," said Mitchell, now homeless after being constructively removed from the U.S. Veterans Affairs pursuant to terms put in a settlement agreement.

"The constructive discharge is a popular tactic used in discharging complaining parties," said Janel Smith, a disabled Air Force veteran and the Vice President of the Coalition For Change, Inc. (C4C).

Ralph Saunders, a U.S. Marine Corps veteran and a former employee with the VA's New Orleans Medical Center, agreed that reprisal against employees who file complaints is a daunting problem.   According to Saunders, VA personnel once destroyed his medical documents and subjected him to endless reprisal after he filed an Equal Employment Opportunity (EEO) complaint against a manager who had denied him requested time off from work to accommodate his wife's heart-surgery operation. Saunders prevailed in his discrimination complaint (Saunders v Shinseki, Case Number 200L-0629-2004-100828).

Unequivocally, the Equal Employment Opportunity Commission (EEOC) found managers (Cassandra Holiday, Jeanette Butler, and Linda Cosey) guilty of "abusing the rules" and "retaliating against Saunders for his protected EEO activity."   The EEOC also found "evidence that officials retaliated against other employees who filed EEO complaints."   Saunders, who had worked sixteen years with the VA before officials targeted him for removal from federal service, is presently challenging the VA on a settlement-breach issue.

"Retaliation by rogue VA managers is destroying the lives of men and women who served honorably on active duty in the U.S. Armed Forces," said Isaac Decatur, a U.S. Navy veteran, who after eighteen years with the department was fired from Veterans Affairs' Durham, North Carolina, office after filing an EEO complaint (Decatur v Shinseki, 0120073404).

"I wrote to President Obama about the VA's failure to take discipline against the supervisors who engaged in the blacklisting of employees and who the EEOC found guilty of discrimination," said Decatur. "My letter to the President spurred a reply letter from the EEOC in which the federal agency, charged with enforcing federal laws prohibiting employment discrimination, openly asserted: While EEOC orders agencies to consider; we have no authority to issue discipline."

"Some of these VA managers need to face conspiracy criminal charges for destroying veterans' records and engaging in various illegal activities," said Chauncey L. Robinson, who served in the Persian Gulf War. Robinson reported that he has been waiting twenty-one years for the VA to process his claim for Post-Traumatic Stress Disorder (PTSD) and a heart condition. "VA officials destroyed my records," said Robinson, who joined other veterans in a class-action lawsuit that asserts the VA has been systematically violating veterans' due process for decades (Gary Kendall v Eric A. Shinseki, Secretary of Veterans Affairs Case No. CV07-103-S-EJL).

"The ill-treatment of VA's workforce harms the well-being of VA's employees as well as the veterans deserving of timely health care and benefits," said Al Hunt, III, a Gulf War veteran and a former VA supervisor with the New Orleans Medical Center. Hunt explained that he was forced to resign from the VA due to discriminatory practices and harassment. "I refused to be complicit in a managerial scheme to write-up and fire black veterans who bravely served our country solely because they had exposed civil rights abuses in the VA workplace," Hunt said.

"Internal federal workplace dysfunction will continue to adversely impact public programs and services until supervisors and managers are held accountable for violating civil rights and whistleblower-protection laws."  said Tanya Ward Jordan, the President and Founder of the volunteer support and advocacy group, C4C.

-------------------------------------------------------
About The Coalition For Change, Inc. (C4C)
The Coalition For Change, Inc. (C4C) is a Washington, DC-based volunteer organization comprised of present and former federal employees who have been injured or ill-treated due to workplace race discrimination and /or reprisal.  C4C recently produced a YouTube video to expose how an internal broken workplace system harms the public. The video is entitled -- Veterans Affairs Dishonoring America's Veterans and Civil Servants.

__________________________________________________



Below is possibly more than you want to know about Bill Gates as US corporate lobby to end public health and capture health patents and curb generics but it is one of the best overviews.  Keep in mind this was written in 2011 and we now know TPP is worse than this article shows.

Bill Gates and Warren Buffett placed hundreds of billions of dollars into trusts under the guise of private non-profits and health care that are now these very patents and intellectual rights protections sought for the PHARMA and health industry.  So, rather than paying taxes and allowing the public do the research to produce these PHARMA results as it always has, these billionaires privatized the research and seeks patents and protections on what would be a trillion-dollar PHARMA industry in developing worlds.

AS BILL GATES SAID AT THE 1990s SHAREHOLDER MEETING QUESTIONING HIS MOVING OF ALL THAT MONEY INTO TRUSTS RATHER THAN REINVESTING IT IN TECH INNOVATION-----'WE ARE MOVING TO AFRICA AS THE NEXT MARKET AND WE HAVE TO MAKE IT LIVABLE FOR US EMPLOYEES BEING SENT THERE TO WORK.  Meanwhile, all of the African citizens that were helped by these research and development activities are now seeing funding disappear and are not feeling to advantages of all that patented research.  



Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011


How the Trans-Pacific Partnership Agreement Threatens Access to Medicines


The eighth round of closed-door negotiations for the Trans-Pacific Partnership (TPP) agreement will be held in
Chicago from September 6-15, 2011. Negotiations during this round are expected to be substantial, as the
current nine negotiating countries, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United
States and Vietnam, plan to present the outlines of an agreement at the Asia Pacific Economic Cooperation
(APEC) Leaders’ meeting in Honolulu, November 8-13 2011.1
According to the United States Trade Representative (USTR), “U.S. involvement in the TPP is predicated on the
expansion of the agreement to include more economies across the Asia-Pacific region,”2 and should “set the
standard for 21st-century trade agreements going forward.”3 It is therefore expected that the norms that emerge
from these negotiations will serve as a baseline for future trade agreements, potentially impacting a much wider
group of countries, including developing countries where MSF has medical operations and beyond. For
example, Japan and South Korea are reportedly currently considering joining the TPP.
TPP negotiating parties are under no obligation to subject their negotiating positions to public scrutiny; only the
final agreed-upon text will be made publicly available. However, a leaked draft of the U.S. position, now
available to the public,4 indicates that the U.S. is demanding aggressive intellectual property provisions that go
beyond what international trade law requires. Furthermore, the U.S. position represents a major retreat from
previous U.S. commitments to global health, including the 2007 bipartisan New Trade Policy, in which
Congress and the Bush administration agreed to abide by important public health safeguards in future trade
agreements.


1. INTELLECTUAL PROPERTY AND ACCESS TO MEDICINES
Vital Importance of Affordable Medicines
Affordable, quality generic medicines are a critical component of treatment programs. About 80% of the HIV
medicines that MSF uses are generics, and MSF routinely relies on generic drugs to treat TB, malaria, and a
wide range of infectious diseases. In fact, all the major donors and leading international treatment providers,
including the Global Fund to Fight AIDS, Tuberculosis and Malaria, The U.S. President's Emergency Plan for
AIDS Relief (PEPFAR), UNITAID and UNICEF, rely on quality affordable generic drugs for the programs they
support. PEPFAR, which purchases 80-90 percent of its ARVs drugs from generic suppliers, has reported
significant savings through the purchase of generic medicines.5
The first generation of HIV drugs have come down in price by 99 percent over the last decade, from
U.S.$10,000 per person per year in 2000 to roughly $60 today, thanks to generic production in India, Brazil and
Thailand, where these drugs were not patented. This dramatic price drop has been instrumental in helping scale
up HIV/AIDS treatment for more than six million people in developing countries. About 80 percent of donorfunded
anti-AIDS drugs and 92 percent of drugs to treat children with AIDS across the developing world comes
from generic manufacturers.


1 http://www.ustr.gov/tpp
2 http://www.ustr.gov/about-us/press-office/press-releases/2010/june/ustr-ron-kirk-comments-trans-pacific-partnership-talk
3 http://www.ustr.gov/about-us/press-office/press-releases/2009/november/ustr-news-kirk-comments-trans-pacific-partnership
4 Leaked TPP IPR chapter (http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)
5 http://jama.ama-assn.org/content/304/3/313.short



Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011

Public Health Safeguards Threatened
Since the creation of the World Trade Organization (WTO) and the conclusion of the Agreement on Trade
Related Aspects of Intellectual Property Rights (TRIPS) in 1995, the most comprehensive multilateral
agreement on intellectual property to date, developing countries have struggled to strike a balance between
protecting public health and making their patent laws TRIPS compliant. Patents and other intellectual property
(IP) regulations pose significant barriers to access to life-saving medicines, and flexibilities in patent systems are
recognized as important public policy tools in the fight to protect public health interests. Even developed
countries like the U.S. have utilized TRIPS-compliant legal flexibilities to protect public health and other
national interests.
The WTO 2001 Doha Declaration on TRIPS and Public Health was signed to reaffirm that the TRIPS
Agreement does not and should not prevent members from taking measures to protect public health, and that it
can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public
health and, in particular, to promote access to medicines for all.

 These commitments were reaffirmed and
strengthened in the 2008 World Health Organization (WHO) Global Strategy and Plan of Action on Public
Health, Innovation and Intellectual Property.
However, over the last decade, many developing countries have come under pressure in trade negotiations not to
use TRIPS flexibilities and to implement even tougher rules than those set out in TRIPS – these are known as
“TRIPS plus.” The U.S. and the European Union routinely use bilateral and regional trade agreements to limit
or circumvent developing countries’ abilities to implement the Doha Declaration and safeguard public health.
The U.S. and the E.U. both have large pharmaceutical industries lobbying for stricter patent regulations, and
these interests not only tip the balance away from public health protections and threaten access to medicines, but
also work to counter the efforts of global health programs.


In fact, studies have shown that U.S. bilateral and regional free trade agreements (FTAs) have already
undermined access to medicines in developing countries. For example, Oxfam found in a 2007 study6 that
during the five-year period since Jordan implemented TRIPS plus measures included in the U.S.-Jordan FTA,
medicines prices rose 20 percent, without any corresponding benefit in terms of domestic innovation or access
to new products. In addition, the Center for Policy Analysis on Trade and Health (CPATH) found in a 2009
study7 that once Guatemala enacted data exclusivity, on the basis of the Dominican Republic-Central America-
United States (CAFTA-DR) FTA, prices for some medicines rose significantly – even though just a handful of
medicines were under patent protection.
Recognizing the damaging effects that trade agreements have had on public health, the Bush administration and
the U.S. Congress signed a bipartisan agreement on May 10th, 2007, known as the 2007 New Trade Policy to
scale-back the harshest IP protections in order to strike a better balance between protection of IP and public
health needs. The agreement specifies that the USTR should modify its intellectual property demands in trade
agreement negotiations so that important public health safeguards are included. Yet in several meetings with
U.S. civil society, the USTR has stated on the record that they are considering options in the TPP that would
shift U.S. policy away from the 2007 New Trade Policy.
MSF is concerned that the U.S. demands for the TPP negotiations threaten to roll back vitally important public
health safeguards in developing countries, creating a fundamental contradiction between U.S. trade policy and
U.S. commitments and priorities on global health.
Medical Innovation Threatened
MSF is also concerned about the effects that intellectual property norms have on innovation for essential
medical technologies. The USTR presents its efforts to demand stronger regimes for intellectual property
protection in developing countries as a tool to protect innovation. MSF recognizes the importance of innovation

6 http://www.oxfam.org/en/policy/bp102_jordan_us_fta
7 http://www.cpath.org/sitebuildercontent/sitebuilderfiles/cpathhaonline8-25-09.pdf
8 http://waysandmeans.house.gov/media/enewsletter/5-11-07/07%2005%2010%20New%20Trade%20Policy%20Outline.pdf


Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011

and the need to finance research and development. We are a humanitarian medical organization that needs and
welcomes biomedical innovation to better treat our patients. However, the reality is that intellectual property
protection in the medical field keeps prices high and limits access to treatment, and furthermore does not
stimulate innovation for many of the diseases affecting people in developing countries, where patients have
limited purchasing power. By seeking greater and higher intellectual property norms in developing countries,
the U.S. government is perpetuating a failed business model that links innovation costs to high prices, and does
not address the innovation needs of developing countries.


2. THE TRANS-PACIFIC PARTNERSHIP AND ACCESS TO MEDICINES

The TPP negotiations are being conducted in secret, so MSF other interested stakeholders don’t have access to
the U.S. or other countries’ demands. However, according to a leaked draft of the U.S. position, now available
to the public at http://keionline.org/node/1091, as well as correspondence and discussions between Congress and
the USTR, the U.S. is expected to demand the following TRIPS plus measures to be included in the

Intellectual Property Chapter of the TPP:


a) Broadening the scope of patentability: the U.S. wants to make it easier to patent new forms of old
medicines that offer no added therapeutic efficacy for patients
The TRIPS agreement includes important flexibilities for governments to decide what type of “innovation”
deserves to be protected by patents in a given country. Essential terms such as ‘novelty,’ ‘inventive step,’ and
‘industrial applicability’ are left undefined as standards to be best determined by individual governments within
the context of existing national legislation and circumstances.
However, the U.S. is seeking to erode this flexibility by requesting that TPP partners introduce new rules that
would severely limit the ability of each country to define what is ‘patentable.’

For example, the U.S. proposal for the TPP requests the patenting of a “new form, use, or method of using” an
existing product - even if there is no increase in efficacy. This technique, known as “evergreening,” allows
pharmaceutical companies to obtain or extend monopoly protection for old drugs simply by making minor
modifications to existing formulas. Evergreening significantly delays the arrival of more affordable generic
medicines onto the market.
Novartis has been battling the Indian government on its implementation of this flexibility since 2006, when its
patent for the cancer drug imatinib mesylate (Gleevec) was rejected on the grounds it was based on a drug
compound that already existed. Having lost its case in 2007 and the patent appeal in 2009, Novartis is now
attempting to ensure the words ‘therapeutic efficacy’ are interpreted in a way that allows even small changes to
an old medicine – such as imatinib mesylate – to be patentable10.
Additionally, the US seeks to require that parties make patents available on plants and animals, as well as
diagnostic, therapeutic and surgical methods for the treatment of humans or animals despite the fact that Article
27 of the TRIPS Agreement explicitly allows for the exclusion of these inventions from patent protection11.
Aside from the serious ethical concerns for surgeons performing procedures on patients, this text is not even
compatible with the U.S. policy not to enforce patents against medical professionals.

b) Restrictions on pre-grant patent oppositions: the U.S. wants to make it harder to challenge unjustified
patents
The TRIPS agreement allows countries and third parties (including generic companies and civil society organizations such as patient groups) to file an opposition to the granting of a patent - either before it has been


 Article 8.1, Leaked TPP IPR chapter (http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)
http://www.msfaccess.org/about-us/media-room/press-releases/drug-company-novartis-tries-weaken-indian-patent-law-protects
 Article 8.2, Leaked TPP IPR chapter (http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)
 http://keionline.org/node/1216


Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011

granted (pre-grant opposition) or after (post-grant opposition). Patent opposition procedures have been
successfully used in several countries to prevent patents being granted undeservedly.
For example, in June 2008 the Indian patent office rejected a patent for the hemihydrate (syrup) form of
Nevirapine (NVP), a widely-used antiretroviral (ARV) treatment, based on pre-grant oppositions by civil society
groups. The price of NVP has decreased dramatically over the past years as a result of generic competition.
Similarly, the Indian patent office rejected the patent application for Tenofovir Disoproxil Fumarate (TDF), an
important HIV drug highly recommended by the World Health Organization (WHO), and Darunavir (DRV), a
third-line ARV, based on pre-grant oppositions.
Patent oppositions are an essential public health safeguard that can accelerate the entry of generic competition,
improve the patent system through public participation, and help reduce over-patenting.
However, the U.S. government is now seeking to clamp down on this flexibility and prevent pre-grant oppositions in TPP partner countries,13 making it more costly and cumbersome to oppose a patent. In addition, patent offices will not have the benefit of the expertise of opponents/competitors to the applicant who may be
able to identify inaccuracies in the application before a patent is approved.


c) Imposing new forms of IP enforcement: the U.S. wants to allow customs officials to seize shipments of drugs on mere suspicion of IP infringement and to increase damages for IP infringement
The TRIPS agreement allows for governments to have a great amount of flexibility when designing the mechanisms that the country will allow for the enforcement of IP rights. However, the U.S., through the TPP and other tools (e.g. ACTA14), is demanding that countries enforce IP rights with new forms of enforcement beyond what TRIPS requires.
For example, the U.S. is requesting that TPP countries grant customs officials the ex officio right to detain
shipments of medicines at the border, even in transit, if the goods are suspected of being counterfeits or if they
are considered “confusingly similar” to trademarked goods.
Under TRIPS, “counterfeit” products are defined as those resulting from criminal – and not civil – trademark
infringement, which occurs knowingly and on a commercial scale. The U.S.’s proposed TPP IP chapter allows border officials to rely on a different, more lenient standard - “confusingly similar” – in order to seize consignments. This standard conflates pure commercial trademark disputes, which do not represent a threat to
public health or patent rights, with criminal offenses, such as production of counterfeit, falsified or substandard
medicines.

In fact, customs and border officials are often not fully trained or equipped to make accurate assessments with
regard to intellectual property infringement and may be overzealous in the protection of brand name companies.
For example, during 2008 and 2009, at least 19 shipments of generic medicines from India to other countries
were impounded while in transit in Europe on grounds that the shipments were suspected of infringing patent
rights. In one instance, German customs authorities wrongfully seized a drug shipment of “Amoxicillin” on the
suspicion that it infringed the brand name “Amoxil” – the cargo was detained for four weeks while further
investigation took place, eventually revealing that there was no trademark infringement. In another instance,
the Dutch customs authorities seized a shipment of the AIDS drug abacavir sulfate while it was en route (via
Europe) from India to a Clinton Foundation project in Nigeria.

 Article 8.7, Leaked TPP IPR chapter (http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)
The Anti-Counterfeiting Trade Agreement (ACTA) would impose limits on price-reducing generic competition and jeopardize the free flow of legitimate medicines across borders.


 Article 14.4, Leaked TPP IPR chapter (http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)
16 http://www.doctorswithoutborders.org/publications/reports/2011/2011Special301MSF_Final.pdf
17 http://www.doctorswithoutborders.org/publications/reports/2011/2011Special301MSF_Final.pdf
18 http://www.bmj.com/content/340/bmj.c2672.extract
19 http://www.twnside.org.sg/title2/IPR/pdf/ipr13.pdf
20 http://www.safemedicines.org/nigeriabound-hivaids-drugs-seized-in-netherlands.html


Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011

In addition, under the U.S.’s proposed TPP regulations, shipments that are legitimate in the country of origin
and the country of ultimate destination would still be subject to detention in the transit country. Unwarranted
interception of legitimate in-transit pharmaceutical supplies can undermine legitimate trade in generic
medicines.

Furthermore, the U.S. is requesting TPP countries to mandate that judicial authorities consider valuing damages
based on “the suggested retail price or other legitimate measure of value submitted by the right holder” in cases
of infringement of intellectual property rights,” a mechanism that strongly favors the rights holder and
increases damage amounts. Each country should have the flexibility to individually determine the appropriate
measure for damages for IP infringement.

d) Expanding data exclusivity: the U.S. is seeking to expand a backdoor way to grant monopoly status
Data exclusivity is a TRIPS plus provision that restricts access to essential clinical trial data pertaining to the
safety and efficacy of drugs. Data exclusivity measures prevent generic manufacturers from using existing
clinical research to gain regulatory approval of their medicines, forcing them to perform duplicate clinical trials
or wait for the “data monopoly” period to end.
In the absence of data exclusivity measures, when a generic manufacturer applies to register and sell a version of
a previously-registered medicine, they only have to provide data showing that their product is equivalent to the
original. The drug regulatory authority relies on the clinical trial data provided by the original manufacturer to
evaluate the safety and efficacy of the generic drug.
The introduction of data exclusivity provisions essentially creates a new system for granting monopolies by
blocking registration of generic medicines until the data exclusivity period ends, even if the patent monopoly
has already ended or been overcome, for example with the use of a compulsory license. Under these terms,
generic competition is stifled not only for old medicines no longer under patent protection, but also for new
medicines that don’t warrant patent protection.
Data exclusivity prevents the registration of generic versions of a medicine for many years (the U.S. is asking
for up to 12 years of data exclusivity for some classes of drugs), unless the generic manufacturer repeats the
necessary clinical trials. This is not only extremely costly, but also arguably unethical, as it forces duplication
of clinical trials for patients and animals in order to prove something that is already known.
In addition, while there are clear methods and procedures by which patents can be challenged and overcome –
such as patent oppositions and compulsory licenses – rules governing data exclusivity for pharmaceutical test
data do not always provide the same public health safeguards.
Although it is not yet clear what the U.S. demands for data exclusivity will be for the TPP, the U.S. has
traditionally pressed for a minimum term of five years, similar to U.S. law for certain products. However,
Pharmaceutical Research and Manufacturers of America (PhRMA) has been aggressively lobbying for the TPP
to require 12 years of data exclusivity for a subset of pharmaceutical drugs, called biologic (also called
biosimilar or biopharmaceutical) drugs.

In August 2011, several members of the House of Representatives,
led by Rep. Henry Waxman, urged president Obama to refrain from negotiating any provisions on exclusivity
for biologics in the TPP, noting that a 12-year exclusivity period would impede the ability of Congress to
achieve the administration's proposal that the exclusivity period for biologics be reduced to seven years, as
reflected in the FY2012 budget proposal, without running afoul of U.S. trade obligations. It is also unclear if
the U.S will allow the public health safeguards for data exclusivity specified in the 2007 New Trade Policy.


 Article 12.3 (b), Leaked TPP IPR chapter (http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)
 http://www.who.int/medicines/services/expertcommittees/pharmprep/QAS04_093Rev4_final.pdf
 http://www.pharmalot.com/2011/05/phrma-wants-12-years-data-protection-in-tpp-talks
 http://www.waxman.house.gov/UploadedFiles/TPP_Biologics_Letter_08-04-11.pdf
Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011


e) Requesting patent term extensions: the U.S. is seeking to keep generic competitors out of the market,
for longer
The TRIPS Agreement requires patents to last 20 years. Although it is not yet clear what the U.S. demands for
patent term extensions in the TPP will be, the U.S. is expected to seek to extend the monopoly patent period in
order to compensate for administrative delays in the regulatory process, even though the 2007 New Trade Policy
made patent extensions optional for countries negotiating trade agreements with the U.S. Such extensions delay
the entry of generic medicines, punishing patients for bureaucratic delays.

f) Requesting patent linkage: the U.S. is seeking to turn drug regulatory authorities into ‘patent police’
Patent linkage provisions prevent drug regulatory authorities from approving new drugs if they could potentially
infringe existing patents. Such provisions effectively require drug regulatory authorities, which are responsible
for evaluating the safety, quality, and efficacy of medicines, to take on the responsibility of policing patents, an
area normally under the purview of separate patent authorities. Linking drug registration and patent status can
delay generic entry into the market and is an aggressive TRIPS plus measure.
The 2007 New Trade Policy made patent linkage optional for countries negotiating trade agreements with the
U.S. Most countries in Europe do not impose linkage between patent status and drug registration. If a linkage
obligation is included in the TPP, it will impose on developing countries more restrictive conditions for the
registration of generic medicines than are found in Europe3. OBAMA ADMINISTRATION BACKTRACKING ON U.S. COMMITMENTS TO ACCESS TO
MEDICINES

The TPP is the first trade agreement negotiated under the Obama administration. Leaked U.S. positions and
correspondence and discussions between Congress and the USTR indicate that the U.S. is prepared to walk
away from its previous public health commitments, including the 2007 New Trade Policy.


The bipartisan May 10th, 2007 New Trade Policy,25 signed by the Bush administration and U.S. Congress,
specified that the USTR should modify its intellectual property demands in trade agreement negotiations so that
important public health safeguards are included. The 2007 New Trade Policy aims to scale-back the harshest IP
protections for developing countries in order to strike a better balance between protection of IP and public health
needs. Although it did not go far enough, it was a step in the right direction. In particular:26
 Patent linkage provisions were made voluntary (whereas they had been mandatory in previous US trade
agreements).
 Patent term extension provisions were made voluntary (whereas they had been mandatory in previous
US trade agreements).
 Data exclusivity was limited to five years for new chemical entities; concurrent periods of exclusivity
were mandated, and public health exceptions were allowed to ensure governments could still implement
public health safeguards such as compulsory licenses.
When the 2007 New Trade Policy was announced, the House Ways and Means Committee called it “a
fundamental shift in U.S. trade policy.”27 However, the U.S. pharmaceutical industry has been aggressively
lobbying against the 2007 New Trade Policy being applied to the TPP negotiation countries.

USTR has stated
that they are considering options in the TPP that would shift U.S. policy away from the 2007 New Trade Policy
and toward greater protection of intellectual property rights for brand-name pharmaceutical companies in the
25 http://waysandmeans.house.gov/media/enewsletter/5-11-07/07%2005%2010%20New%20Trade%20Policy%20Outline.pdf
26

 For an analysis of the May 10 agreement, see: Fabiana Jorge. New U.S. trade policy: A turning point?. Journal of Generic Medicines
(2007) 5, 5–8. doi:10.1057/palgrave.jgm.4950093. Available at: http://www.palgrave-journals.com/jgm/journal/v5/n1/abs/4950093a.html
27 http://waysandmeans.house.gov/media/enewsletter/5-11-07/07%2005%2010%20New%20Trade%20Policy%20Outline.pdf

Doctors Without Borders/Médecins Sans Frontières (MSF) Campaign for Access to Essential Medicines
TPP Issue Brief - September 2011


Several Members of US Congress have also warned against this possibility and written to the
Obama administration to demand that it uphold the 2007 New Trade Policy28.