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.

THE INSURANCE INDUSTRY IS THE NEXT VEHICLE FOR PREDATORY FRAUD AND GUTTING OF PUBLIC WEALTH. FOR OVER A DECADE CONGRESS HAS LOOSENED POLICY TO ALLOW INSURANCE CORPORATIONS TO OPERATE LIKE BANKS WITH THE MONEY THEY COLLECT.  THEY ARE NOW USING THEM WITH LEVERAGING SCHEMES AND COMPLETE DISREGARD TO THE SAFETY OF YOUR FUNDS.  A CRASH IS COMING THAT WILL CAUSE THESE CORPORATIONS TO GO INTO BANKRUPTCY JUST AS AIG INSURANCE DID IN 2008.  PLEASE CONSIDER THAT PLACING YOUR MONEY IN THESE POLICIES WILL RESULT IN THE SAME FRAUD AND USE OF FUNDS AS FODDER AS HAS HAPPENED WITH OUR PENSIONS. 


IFAwebnews.com > National >

P&C industry enjoys portfolio boost from soaring stocks in 2013

P&C industry enjoys portfolio boost from soaring stocks in 2013
By IFAwebnews Staff Posted: May 30, 2014

When Republican pols say they are going to rebuild oversight and accountability they mean they are going to stop all that Food Stamp or pension fraud by employees faking injury.  They do not mean they are going to stop the billions of dollars in corporate fraud from corporate fleecing of consumers and policy holders.  Neo-liberals simply say nothing and let it all continue because their goal is to empty government coffers to restructure for Trans Pacific Trade Pact and global tribunal rule.

I have shown so much data that shows the billions of dollars in corporate fraud and yet this corporation working for the insurance industry states that 90% of insurance fraud is by the consumers or 'non-professional' fraudsters.  That's the 99% for you and me.  Given that most Americans were pushed into poverty with last decade's massive corporate fraud, no doubt some average Americans are looking for ways to survive the stagnant jobless economy.  Insurance corporations might want to join the fight to get rid of neo-liberals and neo-cons so we can rebuild a domestic economy and citizens have jobs to and consume.

Insurers continue to count the cost of soaring fraud

July 2012  Experian Identity and Fraud


'The vast majority of fraud – more than 90 per cent - is being carried out by consumers or ‘non-professional’ fraudsters, so-called first-party fraud'.

Below you see what is really happening----insurance corporations are creating reasons to get rid of all consumer protections regarding policies that create some level of cost protection.
You will notice that this article refers to pushing the cost of business onto Medicaid and the public as does health care reform.  Yet another move to send most Americans to Medicaid-level of care for all health care.

Is insurance fraud causing auto No-Fault premiums to rise, or are insurance companies price-gouging and trying to hide the truth?


February 20, 2012 by Steven Gursten

Insurance lawyer says truth is not what the insurance industry would like public to believe

There is a lie being spread by the auto No-Fault insurance industry in Michigan -- a lie that our auto insurance premiums are more expensive due to insurance fraud.

This from an insurance industry that is making record-breaking profits– and on the heels of a $1 billion raise. The insurance industry would love to divert attention away from its own profits and find something – anything – to blame the cost of our premiums on.

In a recent press release from the Property Casualty Insurers Association of America (PCI), the group stated that fraud is “forcing” drivers into paying more for their auto insurance, especially in states like Michigan:

Soaring medical bills, high attorney fees and rampant fraud and abuse are forcing drivers in (several of the nation’s largest states including Michigan) to pay significantly more for auto insurance than they should,” said Paul Blume, senior vice president of state government relations for PCI. “Over the last several years, fraud rings and abuses of the system have cost consumers over $1.6 billion in New York and Florida alone. This amounts to a “fraud tax” on hardworking citizens and the cost trends in these states are unsustainable.”

This fraud and abuse argument couldn’t be farther from the truth. The insurance industry always lumps Michigan into its paint-with-a-broad brush approach. Yet the insurance industry has not produced actual cases of No-Fault insurance fraud in Michigan.

Yes, there have been widely publicized abuses occurring in other states. Yes, I will be the first to say there are some No-Fault insurance lawyers who are too aggressive today, and from time to time I blog about these excesses as well.

But unlike what is happening in some states, in Michigan the insurance companies are making record-breaking profits. In other words, the real cost driver of auto insurance remains an insurance industry that is almost entirely unregulated in what it can charge Michigan drivers who are forced by law to purchase No-Fault insurance.

Want to really curb insurance fraud? I’d start with empowering our insurance commissioner to regulate clearly excessive premiums that insurance companies charge here in Michigan. And then watch the cost of No-Fault insurance premiums plummet.

There is no reason why insurance companies should make more money off the backs of Michigan drivers in this state than they do in any other state in the US.

And fraud goes two ways. If we are really serious about fraud, then why not start tackling the insurance company IME industry of cut-off doctors that find nothing wrong with anyone, and that always deny people their PIP benefits, no matter how serious the injuries?  THAT'S WHAT WE ARE TALKING ABOUT!

There will always be accusations by the insurance industry’s spin doctors, but so far these accusations have been without any factual support. In fact, this report from the National Crime Insurance Bureau puts Michigan at the lower end of questionable claims.

Let’s control excessive insurance industry profits before we pass No-Fault “reform” Meanwhile, this same insurance industry wants to increase profits even more. There is a huge push by the insurance industry for No-Fault “reform” that would eliminate vital insurance protections. In exchange for the suggestion of lower premiums (they refuse to promise), drivers would be able to choose lower amounts of PIP insurance coverage that provide limited No-Fault (PIP) benefits – including levels clearly insufficient if someone is seriously injured in a car accident, truck accident or motorcycle accident.

These auto accident victims would simply be pushed onto Medicaid. And taxpayers will be stuck footing the bill.

So while the deep-pocketed insurance industry is aiming to take away our most important insurance protections – touted by the insurance industry itself as the best No-Fault system in the nation — I’d look to the insurance industry first as the reason why our No-Fault insurance premiums are so expensive.

It’s not because there’s rampant insurance fraud in Michigan. And it is not because of the cost of medical care or No-Fault attorney fees, as the insurance industry spin-doctors would like us to believe.

It is because, again, Michigan is one of the only states that does not allow our insurance commissioner the power to regulate excessive profit-gouging by our own auto insurance companies. To put it simply, our insurance is high because the insurance industry makes it that way, in order to charge more and make higher profits in Michigan than in any other state in the country!

- Steve Gursten is one of the nation’s top insurance attorneys handling auto accident lawsuits. He is head of Michigan Auto Law and president of the Motor Vehicle Trial Lawyers Association. Steve frequently writes about Michigan auto insurance and insurance company abuse, and is available for comment.

Related Information:

Help save Michigan No-Fault: Write your representatives


Charade over “savings” from Michigan No-Fault “reform” has finally stopped

Michigan No-Fault insurance resource center

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (888) 996-0279 for a free consultation with one of our Michigan insurance attorneys.
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This is a great article written last decade by New York's Attorney General Spitzer known to be actually fighting for corporate responsibility at the time.  This shows the degree of fraud and corruption that existed before the economic crash of 2008------everyone knew AIG insurance corporation was loading itself with fraudulent debt----and it shows what exists today as no attempts to change this environment have happened.  In fact, neo-liberals Obama and Congress are making it worse.

So, when insurance corporations paint consumers as driving fraud in order to hide profiteering and fraud by these very corporations-----you have a free-for-all as regards Rule of Law and accountability.  The American people are being required by law to buy these No Fault Insurance plans-----or with Affordable Care Act----the Catastrophic Care policies with rates that just keep rising.  You cannot escape them unless you opt out of driving and/or accessing health care.......WHICH IS THE POINT.

I actually cried when Spitzer was brought down with prostitution charges.  You can believe these charges came to light to get rid of him although his behavior was unexcusable.  The point now is that this corporate fraud is going to soar with Trans Pacific Trade Pact seeking to end all US Constitutional rights of WE THE PEOPLE.


This is only a partial post of this article----you should check out the whole article.


  State Attorney Generals And Other Agencies ?Investigate? Insurance Industry "Widespread Fraud And Corruption" Charges

Extent Of Government Agencies Insurance Industry Investigations, Results
[Notes: the "Headlines" lists (below) tell the extent of the investigations for each agency.
"Articles Library" following the headlines lists (farther below) includes the articles full text.]




Introduction - AGs Investigations, Results (various states)

On October 14, 2004,

NY Attorney General Eliot Spitzer Announced A Lawsuit Brought Against Marsh & McLennan Companies, "The Nation's Leading Insurance Brokerage Firm", For "Fraud, Bid-rigging and Antitrust Violations".  The following Major Insurance Companies AIG, Hartford, ACE, and Munich American Risk Partners" were named in the Complaint as Participants." AG Spitzer said, "The insurance industry needs to take a long, hard look at itself."  "If the practices identified in our suit are as widespread as they appear to be, then the industry's fundamental business model needs major corrective action and reform." "There is simply no responsible argument for a system that rigs bids, stifles competition and cheats customers," he added, "alleging that it steered unsuspecting clients to insurers with whom it had lucrative payoff agreements, and that the firm solicited rigged bids for insurance contracts."  "The Attorney General's office has uncovered extensive evidence showing that it distorts and corrupts the insurance marketplace and cheats insurance customers." "Marsh, at times, solicited fake bids" "even as it claimed in public statements that its "guiding principle" was to always consider its client's best interests." The "immediate victims of the illegal practices were ... mainly large corporations seeking property and casualty coverage, but also small and mid-size businesses, municipal governments, school districts and some individuals." In a press conference, Attorney General Spitzer indicated, as referenced by the title of his Press Release, "Investigation Reveals Widespread Corruption In Insurance Industry", that as the investigation continues, it could proceed further into property & casualty, expand into auto, health and other areas of insurance. "Trust me," Spitzer said upon filing his complaint against Marsh, "this is Day 1".




Introduction - National Association of Insurance Commissioners (NAIC) and States Departments Of Insurance (DOIs) Investigations, Results (if any) [also includes other related state and federal agencies as may be applicable].

It Is Proven Extremely Doubtful For Most DOIs, If Any, To Investigate Or Take Real Criminal Action Against Insurance Companies That They Are Supposed To Regulate, Which Historically They Have Had A Warm And Cozy Relationship With For 150 Years. If Ever, There Has To Be A Legal Action Taken And/Or Criminal Conviction First Before DOIs Might Take Any Meaningful Action, If Any, ... And That Is To Justify Their Reason For Being. Instead state DOIs' do occasional "Market Conduct Examinations" which is no more than fluff for the Press and to deceptively show state citizens that they are supposedly doing their jobs and to justify their Agency's reason for being and to protect their jobs. EXPECT the usual politically correct announcements of alleged cooperation with state Attorney General Probes, an alleged task force set-up to investigate that we will never hear from again ... and then, even after Attorney General investigations and criminal prosecutions take place, expect no actions from the state DOIs and NAIC. This section nonetheless will cover their deceptions and announcements of their intent to cooperate with state Attorney General probes (esp. as they have all of the state insureds complaints, etc.) even though they won't share these files or information or ultimately will not cooperate with their state Attorney General's investigation ... this section also includes comments, studies and reports from FBIC and outside industry experts.

Unfortunately, based on decades of industry knowledge and experience, one should not expect any meaningful new investigative or prosecutorial results from the NAIC or state DOIs with exception of a token prosecution from a few states DOIs … who know in cases that if they don't prosecute, NY Attorney General Spitzer's office will. Otherwise, expect "the usual deception, cover-up, well disguised lack of 'real' and 'meaningful' cooperation or actions in most if not all cases. Expect their appearances of going through the exercises to satisfy the media, possibly a few meaningless fines from insurance companies which usually each state DOI gets to keep, along with a meaningless company warning or reprimand and/or temporary suspension of an employee (with pay) ... But in the whole grand scheme of things, any actions will be meaningless and have no measurable effect or contribution toward reform and the final results ... in fact expect just the opposite and maintenance of the status quo.

The truth of the matter is the NAIC’s and state DOIs’ historical record of duplicitous rhetoric, consistently staunch, pro-insurer allegiance and secretive anti-consumer positions being well disguised to the contrary for decades as they deceptively continue to portray themselves as champions of the consumer and protectionists of the people. This deception has been well maintained under a strict industry non-transparent cloak of secrecy tightly hidden behind a wall of silence made possible by decades of successful industry legislative lobbying affording them unnecessary special laws and an exemption from federal laws that are exclusive only to the insurance industry.  Regardless, in the interest of objectivity, FBIC will look to report the announcements along with outcomes and results of the NAIC and state DOI investigations and cooperation with state Attorney General offices which NONE are expected ... and then let you be the judge. The investigations are indicated as of this writing and date have just begun ... 

The NAIC's and individual states DOIs' past three decades actions and track record strongly indicates a strong biased favoring of insurers versus a near total lack of actions in the protection of consumers from the unscrupulous and unlawful actions by many of the country's largest and most powerful national interstate insurers which are indicated as bad faith insurers. From research, experience and input from the many thousands of Americans, FBIC knows not to expect any meaningful actions or any real cooperation by the NAIC or individual states DOI commissioners and the Departments they oversee. Instead, FBIC expects the usual politically correct press releases from them espousing the same rhetoric and hyperboles in the past, indicating the alleged actions they are supposedly taking to investigate the insurers related criminal activities. According to their alleged usual routine, they will issue these periodic press releases to the media which espouse and give the implication that investigations are underway, active, and ongoing. As usual they hope their press releases will be adequate enough to stave off the persistence of the Press looking for interviews and more specific details. Their preferred modus operandi in between press releases is the exact opposite, that is to run and hide quietly behind their vaulted tightly closed doors and remain as quiet as possible. But when given no choice by a persistent reporter for the Press, their canned routine is to comment only on their last press release, no more and no less.  When cornered and really pressured into a corner for comment, the occasional use of the "we never comment on ongoing investigations" appears to be most suitable.

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Below is a stat that has a broad range.....actually most government watchdogs place the amount at $400 billion a year and rising.  This amount is staggering and it is why neo-liberals and neo-cons are claiming that the Medicare Trusts will be empty in just a decade.  IT WAS LOOTED BY THE HEALTH INDUSTRY AND FRAUDULENT INSURANCE CLAIMS.  Then, neo-liberals allowed these same health institutions write the Affordable Care Act privatizing all public health and deregulating and making global corporations of our health care.

Please stop allowing neo-liberals to control the Democratic Party.  The people's party is the one that should put protecting public wealth first.


Industry Execs Targeted for Health Fraud
Posted in Health Insurance , Medicaid , Medicare

June 1st, 2011


Health care fraud, especially in the areas of Medicare and Medicaid, is known to be costly. In fact, the government is said to lose between $60 billion and $2 trillion to fraud every year.

We Must Stop the Rampant Fraud in the Health Care Industry

www.huffingtonpost.com/rep-bernie-sanders/we-must-stop...  

Jun 29, 2009 · What we have seen over the last several decades is the systemic fraud perpetrated by private insurance companies, private drug companies, and private for ...
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I am shouting about this corporate fraud because it is expanding into insurance industries like LIFE INSURANCE.  If you watch free TV the commercials are on Life Insurance corporation after another.  They are using the decline in American people's wealth as the scare tactic behind buying LIFE INSURANCE.....you don't want to leave your family with your expense.  This is the same industry that used AIG to bring down the economy and take millions of people's homes through the subprime mortgage fraud.  We got your house, now come to us to protect you after you die......OH REALLY?????

What they are doing is setting the stage for the exact economic collapse that took AIG into bankruptcy unable to pay its debt and having US taxpayers paying 100% of insurance bets on subprime mortgage loans.  Only this time, it will be Life Insurance.  They are taking all that equity you and I are paying each month and using it to leverage 1,000 times what they can afford and guess what?  AN ECONOMIC COLLAPSE IN THE BOND MARKET IS JUST AROUND THE CORNER.  They will be taken into bankruptcy with your equity disappearing.

NEO-LIBERALS IN CONGRESS ACTUALLY PASSED LEGISLATION ALLOWING INSURANCE CORPORATIONS TO ACT AS BANKS WITH THE POLICY INSTALLMENTS----LEVERAGING BEYOND WHAT CAN BE COVERED.

ALL OF MARYLAND'S POLS ARE NEO-LIBERALS AND NEO-CONS.

This is a partial clip of a great look at how the insurance industry is being allowed to become as entwined and leveraged as the financial industry creating the same conditions of too-big-to-fail and propensity to collapse.

Systemic Risk and the U.S. Insurance Sector

By J. David Cummins and Mary A. Weiss
Temple University




Systemic Risk and the U.S. Insurance Sector

Abstract

This paper examines the potential for the U.S. insurance industry to cause systemic risk events that spill over to other segments of the economy. We examine primary indicators that determine whether institutions are systemically risky as well as contributing factors that exacerbate vulnerability to systemic events. Evaluation of systemic risk is based on a detailed financial analysis of the insurance industry, its role in the economy, and the interconnectedness of insurers. The primary conclusion is that the core activities of the U.S. insurers do not pose systemic risk. However, life insurers are vulnerable to intra-sector crises because of leverage and liquidity risk; and both life and property-casualty insurers are vulnerable to reinsurance crises arising from counterparty credit exposure. Non-core activities such as derivatives trading have the potential to cause systemic risk, and most global insurance organizations have exposure to derivatives markets. To reduce systemic risk from non-core activities, regulators need to develop better mechanisms for insurance group supervision.


By way of preview, the analysis suggests that the core activities of insurers are not a major source of systemic risk. However, there are several sources of exposure to intra-sector crises, which could potentially spill over into the broader economy if sufficiently severe. For example, a substantial proportion of insurers have very high exposure to one or a few reinsurance counterparties, suggesting the possibility of a reinsurance spiral that could lead to substantial financial deterioration. In the life insurance industry, the high leverage of the life insurers, exposure of surplus to reinsurance defaults, and insurer investment in mortgage backed securities raise concerns about sectoral stability.


MEANWHILE-----

While they are leveraging themselves to the point of collapse-----they have a new revenue source-----SELLING YOUR PERSONAL INSURANCE DATA....a profit bonanza.  So, too-big-to-fail and emergency bailouts with bankruptcy clearing all that need to pay consumer LIFE INSURANCE policies and VOILA-----you have AIG all over again.

THAT'S WHERE NEO-LIBERALS AND NEO-CONS ARE TAKING US!

All of that data you send in that is supposed to be confidential?  FORGET ABOUT IT-----IT IS EARNING INSURANCE INDUSTRIES BILLIONS OF DOLLARS AS A PRODUCT.


How the Insurance Industry Should Leverage Big Data

  Posted February 27, 2014


The Insurance Industry generates vast amounts of data, from legacy systems, call centre dialogues to customer records and it is multiplying rapidly. It is time for the insurance companies to start getting access to all this available data and start analysing it. In this video, Laura Hay – National Leader Insurance KPMG, talks about the massive potential of Big Data, Mobile and Predictive Analytics for the Insurance industry.

Here in Baltimore the media and watchdogs expose scandals and corruption all the time and nothing happens.  If you go to a Baltimore Board of Estimates meeting you will see no one protesting anymore because the Board has worn down all of the contractors seeing what is widespread bid rigging and inflation.  I was at a meeting where an out of state contractor's bid was so much lower and he was as qualified and was incredulous as he was turned away from protest.  People no longer go to the meetings because they are so closed to justice there is no way through normal public channels to seek justice.  This is what happens on the state and Federal level as well.  Now that global corporations are getting contract bids from all levels of government and subcontracting ----they are the only ones pocketing all of this fraud and corruption.  Local contractors are left to the status of subcontractor having to bid so low as to not be able to earn a profit.  They then lower the standards for their workers so everyone is effected by this massive and systemic fraud.  Let's take a look again today at a local fraud and then national.  Remember, your pols are creating these conditions.  They could shout loudly, place pressure on the people in the process or the Attorney General to give due process and equal protection but the laws they are passing moves to further keep the public from accessing justice. 

NEO-LIBERALS ARE WORKING FOR GLOBAL CORPORATIONS AND NOT YOU AND ME!  STOP VOTING FOR THE SAME INCUMBENTS AND RUN FOR POLITICAL OFFICE!

Below you see how our public utilities are being corrupted by this privatization push.  My concern for Smart Meters is they are set to gather data to sell and that the goal will be to ration water and electricity.  Even greater than that is that the process has already been filled with fraud and corruption.  California, Texas, and Arizona were ground zero for this privatization and installation of Smart Meters and tons of articles exist speaking of billing inflation-----the high cost of the product and installation----all when the public system we used for a century has worked just fine until the last decade when public employees were fired and bills were 'estimated'. 

When global corporations commit fraud----no one goes after them.  Imagine a $600 utility bill and how you would get that back?  Well, those already exposed to this are shouting -----YOU DON'T GET IT BACK AND YOUR STATE WILL NOT HELP YOU!

In Maryland, O'Malley and the Maryland Assembly are so neo-liberal as to pass laws that fine you for opting out and making those fines grow too costly to have a choice.  They say----YOU WILL CONNECT---WE WANT THAT DATA!

Another Attorney General exposes "smart" meter scam
Written by Donna Hancock
Date: 04-22-2013
Subject: Big Brother
Sent from at reader:

“What the record sadly lacks is a discussion of competing considerations regarding the program or the necessity of the program and its costs as related to any net benefit to customers.”
~ Michigan Attorney General Bill Schuette

Warren Woodward

55 Ross Circle

Sedona, Arizona 86336

928 204 6434

April 20, 2013

Arizona Corporation Commission (ACC)

Docket Control Center

1200 West Washington Street

Phoenix, Arizona 85007

Re: Docket # E-00000C-11-0328

Commissioners;

           In addition to both the Attorneys General of Illinois and Connecticut, the Attorney General of Michigan has also issued a statement calling into question the efficacy of “smart” meters and the “smart” grid.

           Salient excerpts:

·         “A net economic benefit to electric utility ratepayers from ... smart meter programs has yet to be established.”

·         “Any assumption that large numbers of residential customers will have the time, ability and motivation to attend to, and act upon daily or even hourly changes in their electrical is questionable.”

·         “What the record sadly lacks is a discussion of competing considerations regarding the program or the necessity of the program and its costs as related to any net benefit to customers.” [italics in original]

           The Michigan Attorney General's statement (enclosed and available online here: http://efile.mpsc.state.mi.us/efile/docs/17000/0408.pdf) reinforces what I have said repeatedly: the only benefit of the “smart” grid is to utilities, not ratepayers. Utilities are gaming the system through their 8 to 10% guaranteed rate of return on so-called “capital investments”.

           Of course another part of the scam is the proven over-billing of “smart” meters. California's KION/FOX35 TV did a three month side-by-side comparison of a “smart” meter and a calibrated mechanical analog meter. After three months the “smart” meter showed an extra 37 kilowatt hours. The test is consistent with anecdotal over-billing reports I receive from Arizonans. Do the math. I calculate a similar rip-off in Arizona would net APS over $20 million more per year. (“PG&E Smart Meter Side By Side Test Final Results” – http://www.kionrightnow.com/Global/story.asp?S=14016659)

           What a miserable pity for Arizona ratepayers that the ACC never followed through on its 2007 decision that called for the costs and benefits of the “smart” grid to be considered. Indeed, “What the record sadly lacks is a discussion of competing considerations regarding the program or the necessity of the program and its costs as related to any net benefit to customers.”

           When will it be admitted that the ACC made a colossal mistake by allowing the utilities to install “smart” meters without any regulatory oversight or examination? How much more ratepayer money will be wasted on this utility scam, while the already bloated salaries of APS executives are set to double and triple? (“APS offering executives potential bonuses for 2013” - http://www.bizjournals.com/phoenix/news/2012/12/28/aps-offering-executives-potential.html?ana=yfcpc)

Sincerely,

 Warren Woodward

Cc: Governor Jan Brewer, Attorney General Tom Horne


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I had a friend run into these problems where late water bills end in your house being placed for auction.  The City Hall allows citizens homes to be handed to an investment firm buying the debt.  My friend asked 'DO YOU WANT MY HOUSE' to which the City Council person said----yes they do.  It's in a valuable section of the city.  The article below is from 2012 but it is still happening today.  Nothing has changed.

Baltimore uses fraud and corruption to take people's houses from them and it of course hits those struggling financially as it is.  WHEN GOVERNMENT PREYS ON THE PUBLIC FOR REVENUE RATHER THAN COLLECT IT FROM CORPORATIONS----

You have a neo-liberal or neo-con working City Hall.  GET RID OF THEM!

FOR IMMEDIATE RELEASE         Contact: Lester Davis Monday, March 5, 2012        410-396-4804 (office)   443-835-0784 (mobile)
Council President Young Calls for Moratorium on Placing Liens Against Properties Based Solely on Unpaid Water or Sewer Charges
Legislation comes after audit reveals dozens of homes were placed under lien based on estimated water bills


BALTIMORE, MD –City Council President Bernard C. “Jack” Young has taken the bold step of calling for a moratorium on listing properties in the City’s annual tax sale based solely on unpaid water or sewer charges.

Council President Young will introduce a resolution at tonight’s City Council meeting requesting a moratorium on placing liens on properties with unpaid water or sewer charges. The moratorium would be in place for a two year period, or until the Departments of Public Works and Finance are able to create a viable and fair system for billing the more than 400,000 city and Baltimore County customers served by DPW. Tonight’s resolution will be followed on Monday, March 26, 2012, by the introduction of an ordinance that would enforce the moratorium through a change in city law.

Council President Young’s legislation was prompted by a recent audit that found widespread problems with the integrity of the billing system used by the Department of Public Works to charge residents for water and sewer usage.

Some of the troubling findings from the audit include:

• 38,000 customers in Baltimore City and Baltimore County were over-billed, resulting in refunds totaling more than $4 million.
• More than 18,000 properties were billed based solely on estimates, with no actual meter readings for a year or longer.
• More than 2,600 customers were billed based solely on estimated meter readings for at least 4 ½ years.
• Efforts by customers to correct these billing issues by requesting actual meter readings often resulted in the customers subsequently being over-billed.
• $31.7 million, or 25 percent, of the total adjusted water billings for the year examined resulted from estimated billing.

Council President Young has a history of working to solve long-standing problems with the city’s water billing system. As recently as 2010, Council President Young supported legislation by Maryland State Sen. James Brochin that sought to stop the forced sale or foreclosure of properties due to unpaid water or sewer bills. Council President Young has also introduced legislation in the City Council to address this persistent problem.

“I’ve encountered too many constituents on fixed incomes, who routinely have to choose between feeding their families and buying needed medication or paying improperly estimated water bills, which if left unpaid have the danger of forcing them into homelessness,” Council President Young said. “It’s time we do something serious to remedy this situation, which has driven too many Baltimoreans further into poverty.”

In May 2010, 851 properties were included in the city’s tax sale based solely on estimated readings for one or more years. Some of these bills were for just hundreds of dollars, and a DPW review suggested that in at least one instance a property would not have been eligible for the tax sale if actual readings, instead of estimates, had been used.

Ms. Lelia Ellerbe, who has lived at Alameda Place in North Baltimore for 18 years, said that she recently contacted Council President Young’s office after growing increasingly suspicious about inflated water bills. Ms. Ellerbe said her research showed that nearly a dozen of her neighbors had received identical water bills over several billing cycles, despite differences in their water consumption.

“If you’re on a fixed income, a discrepancy with your water bill could be extremely detrimental,” Ms. Ellerbe said.

Placing unnecessary financial burdens on families during difficult economic times is harmful and unacceptable, but overcharges on water and sewer bills are especially dangerous because the charges, if left unpaid, are routinely converted into liens against the properties. The liens can then be sold or foreclosed on, which could lead to a family losing its home because of an unpaid water or sewer bill.

Click here for a copy of Council President Young’s resolution
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If corporations are not paying taxes, getting all kinds of subsidy, and committing huge frauds-----we need the working and middle-class paying lots of fines and fees to state and local government.  That is what speed cameras is about.  In Baltimore it became so corrupt and fraudulent that thousands of people were ticketed without cause and we could not get City Hall to turn off the cameras.  It took a huge upswell of citizen rage to have these faulty cameras turned off.

Again, a public employee used to do just fine randomly setting up speed zones to keep citizens aware.  THAT IS ALL THAT IS NEEDED.   Now, you have no idea when an infraction happens and almost no way to fight it.

The reason all this exists is no oversight and accountability and no public justice makes the conditions for a free-for-all in corporate operations.  Remember, all these businesss getting these contracts are global corporations.

This article is long but it does a great job at showing how massive the corporate grab for money has become.

Speed Cameras: A Scam the Motorist Cannot Win

It's all about the revenue

May 9, 2013 by Doug Gill

So glad we are all better drivers these days. No cell phone calls, no texting, no smoking with the snowflakes present, mandatory seat belts, helmet laws, the crackdown on drunk drivers, sobriety checkpoints, red light cameras, work zone cameras, speed cameras – why, getting behind the wheel these days is the motoring equivalent of being a babe in its mama’s arms.

Well, one may think that is so – especially the way the elected ninnies tout all the “safety” regulations they’ve enacted, particularly when it comes to traffic surveillance.
But the truth? Well, the reality belies what our lawmakers are shoveling, as 2012 saw the highway death total climb faster than at any time since 1975.

Yet, fudged safety stats notwithstanding, the real truth about traffic cameras lies not in the amount of lives saved and accidents avoided, but in the enormous amount of revenue it supplies both the camera manufacturer and the jurisdictions that embrace these forms of policing for profit.

And in most instances the profits roll in whether the cameras are accurate or not… and these contraptions are proving to be anything but precise.

The evidence of that inaccuracy is overwhelming. In mid-April, Baltimore City became the latest jurisdiction to join the ever-growing list of cities/municipalities that are revamping, reevaluating or in some cases eliminating their revenue-generating speed camera programs.

The Department of Transportation issued a news release saying Baltimore City has temporarily suspended use of its red light and speed cameras because “the devices haven’t been accurate.”
Of course, that explanation reeks of dishonesty; if accuracy was the true reason for shelving the automated cash-snatchers they would have been abandoned six months after implementation.

As of April 1, more than 580 communities had welcomed some form – red light, speed, work zone – of traffic enforcement cameras. And while 29 states currently have no camera enforcement laws on the books, only 12 states have banned the use of speed cameras.
Seven states currently prohibit red light cameras.

According to the National Conference of State Legislatures, 66 bills related to photo enforcement have been presented nationwide so far in 2013.

But at the same time, the critical chorus against these boxed money-grabs is growing exponentially.

In New York, the same state senate that nearly always accepts Gov. Andrew Cuomo’s Liberal credit card put the kibosh on a plan for cameras in New York City, prompting Emperor Michael Bloomberg to throw a hissy and announce that the next time a speeder kills a kid it will be the legislature’s fault.

Shocking, I know: Bloomberg desperate to support for-profit businesses other than his own.

In Ohio, Judge Robert Ruehlman ordered the Elmwood Place township to halt usage of the cameras saying they are “a scam” and described the issuing of thousands of $105 citations as a “high-tech game of 3-Card Monty.”

Similar rulings have ignited debate from sea to strobe-flashing sea, and Baltimore’s actions are now at the forefront of the discussions.

Not only did the city suspend use of the cameras, officials also agreed to nullify more than 6,000 tickets that had been mailed to the alleged violators.

Total cost? Over 300 grand. In the last fiscal year the city’s speed cameras – just the speed cameras – generated $19 million.

Gesture, meet token.

Obviously, the business partnerships between camera companies and cities willing to deliberately tweak their speed limits, camera locations and caution lights for maximum ticket profits, rather than for safety, are thriving in spite of symbolic damage control.
“The cameras have never really fully been tested,” Gene Simmers, a retired Maryland State Highway Administration employee, told CBS Philadelphia. Simmers was referencing a state report that found the cameras were not tested as many times as they should have been and that the type of speed detection equipment used by the cameras in highway work zones was not approved by the International Association of Chiefs of Police.

Pennsylvania media is interested in the thoughts of a former SHA employee because the state legislature in Harrisburg had been considering expanding the automated enforcement programs.

Now, thanks to some of the laughable examples of Baltimore City’s camera follies, even AAA Mid-Atlantic has joined the anti-camera chorus.

“It wasn’t even moving and it got a ticket,” AAA spokesperson Jenny Robinson told CBS News, referencing a Baltimore delivery truck that was issued a citation for traveling 57 miles-per-hour in a 25-mph zone even though video from the camera showed the truck was nearly at a standstill.
“That’s one example of the concerns that we have with automatic enforcement,” Robinson continued. “If it’s not accurate then there’s no point in using it.”
But there is a point in using them, and that purpose is to continue reaping the benefits of the $6 billion per year that Americans pay for speeding violations.

According to an extensive investigation by The Baltimore Sun we’ve learned – through the former camera company’s own admission – that the error rate for these devices exceeds five percent. And more than 1.6 million tickets have been issued since 2009.
And the city nullified 6,000.

“The troubles with Baltimore’s speed camera system have raised the eyebrows of motorists, legislators and traffic safety advocates,” wrote AAA spokesperson Ragina Averella, “and have truly called the integrity of the city’s entire program into question.”
But it’s not just Baltimore. Prince George’s County is taking action to stop Fairmount Heights from issuing any camera citations because the town appears to be in violation of a state law that allows photo enforcement only in school zones and requires that cameras are properly announced via signage.

In Laurel, the city is under fire for circumventing state requirements for independent calibration of the cameras.

Dozens of other national jurisdictions are waking up to elected officials trying to follow the lead of former D.C. mayor Adrian Fenty who, in 2010, accelerated the revenue-vs-safety debate when he raised traffic fines – in one instance from $50 – $125 – to help balance his city’s budget.
And why not? In a report released by AAA one camera on one stretch of the District’s New York Avenue raised $11 million in two years.

That kind of cash comes in mighty handy when you need to grease the lobbyists that help government skim the taxpayer.

If the actions of Fenty and other such kindred governmentals don’t offer proof enough of automated enforcement offering no more than a direct line to your wallet, witness the actions of the Maryland Legislature during the just-concluded General Assembly sessions.
Delegate John Cluster (R – Baltimore County) introduced a bill that would have imposed a daily calibration check on the cameras. Delegate Jon Cardin’s (D – Baltimore County) legislation would have forced the courts to impose a $1,000 fine on the camera company if it were found that a citation was issued erroneously. Delegate Frank Conaway (D – Baltimore City) wanted those who maintain the speed enforcement systems to pay a $250 penalty to the motorist who received said erroneous ticket.

Various speed camera bills were introduced by Sen. James Brochin, Sen. E.J. Pipkin, Del. Carolyn Howard and Del. Mike Smigiel and they not only addressed accuracy and effectiveness, but some also called for outright elimination of the program.
When the confetti dropped (made from shredded taxpayer dollars) in early April to signal the end of the session not a single traffic camera bill had passed, including a final version that would have placed stricter limits on where local governments could put speed cameras, required appointments of ombudsmen to hear complaints, and strengthened language prohibiting governments from entering into new contracts under which they paid private companies for each ticket issued.

Noting the bill’s failure, Sen. Brochin told the Baltimore Sun that the final product would have helped protect Maryland drivers from abuses of the camera system.
Of course, Marylanders are use to having elected officials that continually fail to do the right thing – even if it is our own fault for sending the same repeat offenders back to Annapolis.

No amount of information – no amount of facts counteracting the myths of these devices – will prevent lawmakers from trumping-up the safety angle while gorging at the predatory revenue trough.
“We’ve been able to achieve a pretty significant reduction in traffic fatalities,” Gov. Martin O’Malley weighed in on the safety aspects of traffic cameras in Maryland. “I think part of that has to do with better technology and all of us taking it a little slower. We are saving a lot of lives and reducing traffic fatalities.”

Well, save for that pesky spike in 2012 – and even though he ignored the numbers that showed fatal crashes on state highways dropped in 2006, 2007 and 2008.

State wide use of speed cameras wasn’t authorized until 2009.

In Baltimore the focus remains on getting the cash IV back into the arm of the motoring public. In January the city switched from its current camera provider – Xerox State & Local Solutions – to Brekford, a Maryland-based “upstart” in the industry that has been contracted to install/replace 72 speed cameras throughout the city. In addition to costing $2.2 million, the contract will allow a vendor to share in the proceeds of the fines collected – for every $75 traffic ticket generated by the cameras and collected by the city, Brekford is rebated $21. For every $40 ticket, Brekford gets $11.20.
Also of interest is an April 19 report by Baltimore Brew that notes that members of Brekford’s board include Douglas DeLeaver, a former chief of the Maryland Transit Administration (MTA) Police; Jessie Lee Jr., executive director of the National Organization of Black Law Enforcement Executives (which has longstanding ties to the Baltimore City Police Department).

The Brew also reported that the head of Brekford’s speed camera division, Maurice Nelson, was hired from Montgomery County’s automated traffic enforcement program.
In addition, the $2.2 million was handed over to Brekford even though that company’s “clerical mistakes” (and software compatibility issues) are what resulted in an undisclosed number of erroneous tickets given out to motorists.
And, Brekford scored all the repeat business without having to jump through the hoops of competitive bidding.

“We decided it was not practical to seek competitive bids on these additional cameras,” Timothy M. Krus, the city’s chief purchasing agent said in response to City Comptroller Joan Pratt questioning the process.

When it comes to the cameras themselves as well as the government officials who vote to authorize them, it becomes more apparent that Judge Reuhlman’s said it best: automated traffic enforcement is “a scam the motorist cannot win.”

TO REBUILD OUR ECONOMY AND DEMOCRACY WE NEED TO REINSTATE RULE OF LAW AND REBUILD OVERSIGHT AND ACCOUNTABILITY.  DO NOT BELIEVE THE SMALL GOVERNMENT MANTRA. 

Trillions of dollars are still being lost every year from our Federal, state, and local government coffers from fraud and corruption.  It is simply being redirected from public programs and into the pockets of connected corporations.  Obama has been as committed to dismantling all government oversight and accountability and placed Wall Street people in our public agencies to do that redirecting of public funds.  It's like having an invading army looting your Treasury.
When a neo-liberal calls for Open Government they do not mean public transparency----they mean selling the public's data to whatever corporation can use it.

Neo-cons don't even try to disguise that they do not recognize our rights as citizens to privacy and equal protection from this fleecing of our government coffers and personal wealth.  Maryland has pretty much dismantled all of public justice.

Let's take a few days to see the scope of this looting.  It is not only one corporate industry....the financial industry drives it but there is literally a free for all.

Feds Transparency Website Can’t Account for $619 Billion

By: Rachel Blevins Aug 7, 2014

In the midst of the Obama administration’s attempt to implement the Digital Accountability and Transparency Act, a recent government audit shows that $619 billion is missing from 302 federal programs.

The Transparency Act was passed by Congress last year to “expand the amount of federal spending data available to the public.”

USASpending.gov was originally created as a way to make government spending more transparent. However, a report from the Government Accountability Office revealed that only 2% to 7% of the recorded spending data in 2012 is “fully consistent with agencies’ records.”

The report stated that the Office of Management and Budget (OMB) should implement more oversight of the spending data from federal agencies, and that until it does, “any effort to use the data will be hampered by uncertainties about accuracy.”

Jamal Brown, a spokesman for the OMB, made a statement insisting that the OMB is “committed to federal spending transparency and working with agencies to improve the completeness and accuracy of data submissions.”


According to USA Today, The Department of Health and Human Services was one of the 302 federal agencies, which failed to report money it had spent. This agency “failed to report nearly $544 billion, mostly in direct assistance programs like Medicare.”

The Department of the Interior neglected to report $5.3 billion it had spent, due to the fact that it claimed its accounting systems “were not compatible with the data formats required by USASpending.gov.”

USA Today also reported that for more than 22% of federal awards, “the spending website literally doesn’t know where the money went.”

The chairman of the Senate Homeland Security and Government Affairs Committee, Senator Tom Carper, acknowledged the problem saying, “We live in a world in which information drives decisions, and given the budget constraints that our government faces, we need reliable information on how and where our money is being spent.“

____________________________________________________


The health data once protected under HIPPA is now an open market.  States are selling public health data they now consider a new revenue source.  Johns Hopkins has a huge computer network that does nothing but receive and process data from around the state and from NSA networks.  All the money made from this data is pocketed as profit.  We see all kinds of efforts at protecting data----at the same time we have credit cards using fingerprints for easy access....liking simply signing is too hard.  Hackers access this data and now identity theft will include people's fingerprints. 

DIDN'T COMMIT THAT CRIME------WE HAVE YOUR FINGERPRINTS THAT SAY YOU DID!  JUST THINK HOW THAT CAN BE USED BY AN AUTOCRATIC LEADERSHIP.

I won't go into the national fingerprinting goal of Republicans for decades to say that is what this will do---I want to look at how people's money is being made more vulnerable and we are being forced at some point to use these technologies.
It was said this year that Wall Street and the NSA stated hackers like Snowden and Anonymous are making it impossible for NSA systems to keep data secure and our businesses systems are tens of thousands time more vulnerable to people around the world wanting to steal our money.  They do not secure these systems they build---they simply build and sell them. 

There is no thought given to societal implications.


Discover testing fingerprint payments

November 26, 2012|By Becky Yerak | Tribune staff reporter

Discover Financial Services Inc. employees will be able to pay by finger at their Riverwoods headquarters' cafeteria and convenience stores as they become the first to test a new payment system.

Discover, which is working with French biometrics firm Natural Security on the project and which plans to get the pilot underway in the next three months, has previously used hundreds of its employees to test new technologies including various "contactless" payments, in which credit cards are simply tap. It plans to test the fingerprint payment system with 300 to 350 employees.

Discover employees who want to participate will register at an on-site kiosk, which will read an index fingerprint and assign a number to it. Each employee will also receive a key fob with a chip that includes information about their individual credit-card account as well as their fingerprint.
 
To complete a purchase, the user will place his or her finger on a fingerprint reader near checkout, with the key fob kept nearby, such as in a pocket or purse, for the transaction to go through. One security benefit to the process is that it guarantees that the fob or credit card and its owner are at the same place at the same time. It could also be faster and more convenient as people won't have to fumble around with their credit cards.
 
The credit-card company's test comes a few years after U.S. grocer Jewel abandoned its program with Pay by Touch, which got about $300 million in debt and equity financing from investors. 

In 2006, Pay by Touch said about 10,000 Chicagoans had signed up for its fingerprint-payment program. A year later, some creditors tried forcing the owner of Pay by Touch into involuntary bankruptcy as its finances went into disarray. By 2008, the Pay by Touch machines were removed  from Jewel stores.
 
Troy Bernard, Discover's global head of emerging payments, said his company is working on several payment technologies that could come to fruition both in the short- and long-term.
 
"Biometrics falls into long-term solutions," Bernard said, acknowledging potential concerns about both biometrics as well as the barrier to entry of making someone register for something.

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You see below Wall Street is selling this as a means to cut down on identity theft but as this article states----it will be just as vulnerable with much more of your identity to steal.  So, you have a credit card stolen----you close the account.  You have a biometric credit card stolen and they have you for life.

Monkeetech announces iris-based credit card fraud prevention ...www.biometricupdate.com/201306/...based-credit-card-fraud...   Cached

Monkeetech has announced the development of a new (patent-pending) iris scan biometric credit card fraud prevention system, called EyeWatch.

Your Biometric Identity Proof Positive

By Jake Stroup Identity Theft Expert

One way that shows a lot of promise in trying to combat identity theft is implementing biometric identification. You can see this on television crime shows like CSI, NCIS, etc. Biometrics include fingerprints, facial recognition, voice patterns, retinal scans, DNA, the list goes on.

Although it has been a scapegoat for many identity thefts, in many ways technology has provided some of the most solid defenses against the rising tide of identity theft. RFID tags, data encryption and innovations along those lines have gone a long way to helping us secure our personal information. The Federal government is even considering using biometric ID cards to combat illegal immigration. In fact, it's easy to make the argument that the problem isn't in the technology but in our lack of interest in protecting personal information.

Victims of identity theft report that it can take three to five years, or even longer to fix an identity theft problem. Keep in mind, you can get a new credit card in two weeks, once you have all the information to the bank or credit issuing authority. But who's going to the issue you a new set of fingerprints if they get stolen?

The idea of somebody stealing your biometric information isn't as farfetched as you might hope. It has already been shown how simple it would be to plant false DNA evidence. This article even goes so far as to say, "Any biology undergraduate can perform this."

In the end we will probably see the same problems arise, and some think the problem may get even worse. This is because the way biometrics work isn't really any different from credit cards.

What's The Difference? It's easy to think of credit in terms of the plastic cards in our pocket, since we can touch them, and that makes it more real. But this isn't the case. Today, credit is really nothing more than a long string of numbers stored in a computer somewhere. When you swipe your card at the local Wal-Mart, the information stored on your card is converted into a number as well and sent to your bank. If the numbers match up you get to walk home with a bag full of goodies.

  Biometric identification works in a similar manner, but you're using your fingerprint instead of a card. It will still be turned into a string of numbers and run through a computer network. In the end does it really matter where the string of numbers comes from when an identity thief gets hold of it?

Despite the predictions of some experts, a database is still just a database. A hacker can still steal data from a computer or network, it doesn't matter if that data is a credit card number, or a digital voice print.

As far as security is concerned, many experts agree that maintaining "token" forms of identification are probably superior. Token identification is a card, password, PIN etc. – something that can be canceled, or changed if it is lost, misplaced or stolen. On the other hand biometric identification can't be lost, misplaced, or loaned to a friend, but it can't be replaced if it's compromised, either. This, combined with certain privacy issues (tracking, profiling, consumer-related privacy issues etc.) are making experts give serious consideration to whether or not biometrics are a viable option on a large scale.

It's easy to understand why this brings a sense of security, since no two fingerprints are the same. On the surface it seems like a secure form of identification. But security doesn't come from knowing that you are you, security only comes from knowing the information associated with your name is accurate, no matter what database that information might be in. In other words, if an identity thief managed to convince a fingerprint scanner that they were you, they will probably not come back to court if they manage to get released on bail/bond. In that situation, proving who you are won't help.

Biometrics have a few quirks of their own, though. For example, some states have started implementing a "no–smiles" policy for driver's licenses. This is because those states are now using facial recognition software to stem the flow of driver's license fraud. But the software might get confused if the subject smiles.

Furthermore, advocates like to say it's impossible to duplicate (for example) a fingerprint, but that's already been proven wrong. In fact, it's easy to do with a simple laser printer, and a little bit of spit.

But the biggest consideration is that a biometric identity system is only going to be as good as the information that's put into it in the first place. In other words, your fingerprint won't tell anyone who you are, all it can really do is keep you from using somebody else's identity once you are in that system. In fact, identity theft expert John Sileo said, "If we implement biometrics without doing our due diligence on protecting the identity, we are doomed to repeat history — and our thumbprint will become just another Social Security Number."

And that would be a grim future indeed.
____________________________________________

The American people need to look at the Bush/Obama years as the USSR Perestroika where all the common public wealth was divided between a few connected families.  That is what is happening now.  We had our Maryland Attorney General Doug Gansler who worked hard to see Maryland citizens got as little money from massive subprime mortgage fraud as possible making the small payments made into charitable contributions and tax write-offs just as the article below says.  That has happened to all settlement money.  Most of the money goes back to the government which then hands it to corporate subsidy.

I think Gansler was actually surprised when he received 5% of Democratic votes for Maryland governor as if people don't know.  He did almost beat Anthony Brown with 12% of the Democratic vote.  For some reason people just don't like this systemic fraud and corruption.

REMEMBER, WHEN A GOVERNMENT SUSPENDS RULE OF LAW AND DUE PROCESS---IT SUSPENDS STATUTE OF LIMITATION.


'We have seen this pattern - creating the appearance of punishing wrongdoing while actually leaving the bank basically unscathed and unchanged in its practices - over and over again from the Obama administration in the last few years'.


Friday, 22 August 2014 05:29


Bank of America's $16.6 Billion Mortgage Fraud Agreement Is Another Public Relations Stunt

MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT


BuzzFlash at Truthout has written many commentaries on how the Obama administration has been - and continues to be - quite lenient with Wall Street when it comes to financial malfeasance. In particular, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have assiduously avoided, for the most part, any serious institutional or personal criminal responsibility for massive fraud committed by banks too big to fail and other mega-financial institutions. 


The settlement this week between the DOJ and Bank of America for its role in the financial fraud that busted the economy in 2008 (including its acquisition of the scam company it acquired, Countrywide Financial) is yet another example of a large fine that looks like punishment, but amounts to much, much less than meets the eye. Indeed, that is the assessment of an August 21 article in the "Dealmaker" section of The New York Times (NYT): 

"The real financial cost to the bank could be considerably lower," said Laurie Goodman, a specialist in housing at the Urban Institute. "This is helping consumers, but it may not be costing the bank."

The actual pain to the bank could also be significantly reduced by tax deductions. Tax analysts, for instance, estimate that Bank of America could derive $1.6 billion of tax savings on the $4.63 billion of payments to the states and some federal agencies under the settlement. Shares of Bank of America jumped 4 percent on Thursday, suggesting investors believe that the bank could take the settlement in stride.

"The American public is expecting the Justice Department to hold the banks accountable for its misdeeds in the mortgage meltdown," said Phineas Baxandall, an analyst with the U.S. Public Interest Research Group, a consumer advocacy organization. "But these tax write-offs shift the burden back onto taxpayers and send the wrong message by treating parts of the settlement as an ordinary business expense."

Given that we are talking about a dominant Wall Street bank and financial behemoth, the takeaway sentence from The New York Times is: "Shares of Bank of America jumped 4 percent on Thursday, suggesting investors believe that the bank could take the settlement in stride." When a bank's stock goes up after what initially appears to be a huge fine, you know that it is nothing more than a slap on the wrist.

We have seen this pattern - creating the appearance of punishing wrongdoing while actually leaving the bank basically unscathed and unchanged in its practices - over and over again from the Obama administration in the last few years.

It is true that at least one part of the Bank of America settlement could benefit mortgage holders desperately in need of readjusting the terms of their home loans. That is good:

The consumer relief is expected to help tens of thousands of homeowners across the country. Most notably, the deal could result in Bank of America forgiving billions of dollars in mortgage principal. Unlike the other settlements, a person briefed on the matter said, the Bank of America plan could involve cutting the principal on loans insured by the Federal Housing Administration, a move that will primarily help low- and moderate-income borrowers.

However, as The New York Times points out, this relief is coming much too late for the large number of people who lost their homes to foreclosure in the six years since 2008. It would have assisted tens of thousands more individuals and families if the DOJ had forced Bank of America years ago to be more flexible with underwater mortgage holders. 

The Times notes that the restructuring of loans will have little impact on the finances of Bank of America:

At issue is how much of the cost of the $7 billion in "soft dollars," or help for borrowers, the bank will bear under the settlement. Some of the relief the bank will provide involves cutting the principal of a loan to make it easier for the borrower to pay. The dollar amount of that reduction gets credited toward what it needs to fulfill the settlement. But Bank of America wrote down many of its troubled mortgages years ago. And investment firms, not Bank of America, may now own some of the loans that get written down, potentially shielding the bank from a financial hit. 

Taking a closer look at the Bank of America fine, The New York Times finds that at least half of the $16.8 billion dollars is in the form of soft money or tax breaks. There are also additional financial offsets.

In what has become a traditional part of any DOJ settlement with a bank too big to fail, unnamed DOJ sources are promising to pursue charges against individual executives. Of course, the indictments never appear, but the statements make for good politics with a citizenry that wants to see some personal accountability for fraudulent bank practices.

It is clear now, with a little over two years left in the Obama presidency, that one of his key legacies will be casting little more than a wink and a nod at Wall Street's violations of the law, including a failure to prosecute any high-ranking officials for the illegal and deceptive practices that led to the near-collapse of the United States economy.

_______________________________________
As we watch Wall Street go from billions to trillions of dollars in wealth much from fraud-----the American people are being soaked with fees, fines, and taxes to make up for the government revenue stolen.  Students are deliberately left unemployed//underemployed and mid-life adults are left with no retirement because of the crash and stagnation.  Obama has placed the Department of Education in the hands of Wall Street to treat citizens most in need as if a predator.  Old student loans for a few thousands of dollars grows with thousands of fees and fines in just a few years????


Retirees' Social Security checks garnished for student loans Many had forgotten of old loans

Author: By Patrick M. Sheridan Published On: Aug 24 2014 11:33:31 AM CDT   Updated On: Aug 24 2014 06:30:52 PM CDT

What's surprised Cohen lately is the increasing number of gray-haired people walking in his doors with a problem: A portion of their meager Social Security benefits are being taken by the government to pay for old student loans they had mostly forgotten about.

It's a growing national trend. Last year, 156,000 Americans had their Social Security checks garnished because of student loans they had defaulted on. It's tripled in number from 47,500 in 2006, before the Great Recession. That's according to analysis done by the U.S. Treasury for CNNMoney.

Like Cohen, other groups have noticed the increase too. A leading nonprofit group that works with students on repaying loans, American Student Assistance, has worked this past year with over 1,000 Americans who have had their social security payments garnished to repay outstanding student loans. That's a sharp increase from 200 people in the previous year.

For retirees, any cuts to their Social Security benefits really hurts.

"Social Security means survival. It means food, shelter, medication," said Cohen, a Connecticut attorney, who works with people on debt collection harassment and student loan repayments.

What's worse is that even if the unpaid student loan was small, the amount they owe now is usually a lot larger because of compounding interest rates.

Retired Americans can start collecting Social Security benefits at 62. However, the folks that Cohen has worked with are in their 70's and 80's.

The amount taken from these checks isn't small. The average Social Security monthly check is $1200, the typical amount taken is $180.

Very few student loans can be refinanced and many people have outstanding loans with interest rates locked at over 7%, even though rates have fallen in recent years to below 3%.

Repayment terms on student loans are extremely rigid. They are rarely forgiven even in bankruptcy and people can have their wages garnished if they default.

The issue caught the attention of Senator Elizabeth Warren, who introduced a bill earlier this year to allow millions of people like Anderson to refinance their student loans. However, the bill was blocked in June.

Social workers are also seeing an increase in the number of people with mental and health issues having their Social Security disability checks garnished.

"I had a Korean War veteran in his 80's who had taken out a student loan for his son and then began having health problems. The government took money from his Social Security disability checks - money that he needed to buy medications," said Deanne Loonin, a director at the National Consumer Law Center, which works to provide economic security to low income and disadvantaged people, including the elderly.

According to the government data, the total amount garnished from social security checks last year came to $150 million.

• Copyright 2014 by CNN NewSource. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
  ___________________________________________

While seniors have their SS seized, the IRS has been allowed to be dismantled and defunded so it is now being fleeced just as Medicare and Medicaid Trusts are.  They make it sound like average people are the avoiders but most of this is corporate tax fraud.


Neo-liberals and neo-cons are simply allowing all public wealth to be gutted and stolen.  We see it to a large extent in Baltimore with Baltimore Development Corporation and Johns Hopkins leading the culture of corruption in the city.

This creates a culture of non-compliance.  Nations like Greece and Italy have never been able to develop structurally because of the massive tax evasion gutting government revenue.  That is what is happening here.....strangling all sources of revenue to justify AUSTERITY.  For people that want less IRS you need to know---the working and middle class will take more and more of the burden of revenue no matter the talk of reduced taxes.

ALL OF MARYLAND'S POLS ARE NEO-LIBERALS
IRS Funding Cut Days Before Report Shows $330 Billion In Uncollected Taxes Posted: 04/11/2011 6:03 pm EDT Updated: 06/11/2011 5:12 am EDT Huffington Post

• 
  

WASHINGTON -- As part of the budget deal hashed out on Friday evening, lawmakers agreed that no additional federal funds would be used to hire new IRS agents.

Then on Monday, the Government Accountability Office publicly released a study showing that, as of the end of fiscal year 2010, roughly $330 billion in federal taxes had never been paid -- an amount that, if collected, would represent nearly nine times the amount of savings as the budget itself.

The dual developments aren’t shocking. Despite evidence that a single dollar spent on enforcing the tax code could result in up to ten dollars in revenue, politicians, naturally, are reluctant to align themselves with tax collectors. And yet, the sacrificing of funds for IRS agents in the continuing resolution deal underscores a particular problem that seems bound to confront fiscally conscious lawmakers.

“Cutting back on IRS enforcement could easily cost the treasury much more in revenue than it saves,” said Chuck Marr, Director of Federal Tax Policy at the Center on Budget and Policy Priorities.

The GAO report, which looks specifically at the issue of passport holders who have failed to pay their full share of taxes, underscores Marr’s point. Titled “Federal Tax Collection: Potential for Using Passport Issuance to Increase Collection of Unpaid Taxes,” the study labels poor enforcement of tax laws and the tax code as a “high-risk” hole in government policy. In fiscal year 2008, passports were issued to about 16 million individuals. Of those, more than 224,000 owed more than $5.8 billion in unpaid federal taxes.

A good chunk of the evasion, the GAO concluded, was committed by individuals with “substantial personal assets” including multi-million-dollar homes and “luxury cars.” One passport recipient bought a house for $2 million and another property for $1.5 million despite owing $1 million in federal taxes.

“If you look, you can find records of most capital gains income,” said Rob Shapiro, former U.S. Undersecretary of Commerce. “People deposit it in their bank accounts or the institutions may issue reports if it is capital gains on stock transactions. So it is not hard to pick it up if you have the manpower to look for it. And again, given that the salary of an IRS agent is at least as high as the average salary in America, the fact that there is a ten-to-one ratio for the returns on auditing tells you that [tax evasion] is coming from the high-income brackets.”

Regardless of who the worst evaders are, the GAO concludes that “IRS enforcement of federal tax laws is vital,” not just to pinpoint the offenders but to promote “broader compliance.” And what do the study’s authors cite as a compelling reason to beef up IRS functions? A “federal deficit” that “continue[s] to mount.”

Indeed, several close observers of the budget debate have wondered exactly how lawmakers can shudder at going after tax evasion while simultaneously preaching fiscal responsibility on the stump. Marr, for one, noted that Congress has already disbanded a tax reporting provision in the president’s health care reform law that would have resulted in stronger compliance. That was scuttled for politically obvious reasons: the paperwork it placed on small businesses was deemed well beyond burdensome. But the decision to deny funding for more IRS agents doesn’t have such an easy-to-distill an explanation.

“Hiring more IRS agents would have allowed the Obama administration to enforce its agenda, insofar as its agenda is to make sure that people don't cheat on their taxes,” wrote Jonathan Cohn in The New Republic.

Obama has made buffing up the IRS a relative hush-hush plank of his tax reform agenda. Upon entering office he advocated for more funds for the agency, and as part of his 2012 budget, he proposed a 9.4 percent increase so that it could hire roughly 5100 new employees. The proposal, which pivoted off of previous studies that reached similar conclusions as the GAO's, was met with somewhat frenzied pushback from conservative circles -- the specter of black-suited tax collectors roaming the streets undoubtedly on the mind. And almost immediately, the suggested increase in IRS funds became a target of cut-happy legislators.

I want to spend one more day shouting to the middle-class to WAKE UP!!!!!!  STOP LOOKING AT THE TV NEWS AND THINKING THIS MILITARIZED POLICING AND SPYING IS ONLY HURTING THE WORKING CLASS AND POOR.

The small government of neo-liberals and neo-cons gutted oversight and accountability and public justice.  We want to be clear----when equal protection disappears everyone is hurt but women and people of color the most.  The middle-class is seeing its life savings and investments shredded by fraud and corruption linked to this outsourcing of the public sector.  The unemployment in the US is at around 36% and is called a permanent fixture because that 36% is the middle-management that gave oversight and accountability to corporations and government.  All of this plays hard on people of color and the working class in the form of poverty issues, but it opens as well to the fact that 80% and soon 90% of American people will fall into this category.  Republican voters must see that small government effects all people's rights as citizens-----not just the poor and/or people of color.  It will come to your family!

WE MUST FIGHT AGAINST THIS ILLEGAL ATTACK ON OUR CONSTITUTIONAL RIGHTS AS CITIZENS, EQUAL PROTECTION UNDER RULE OF LAW, AND OUR BILL OF RIGHTS.

Baltimore City State's Attorney does not even have a white collar criminal unit and no funds to build one.  Rawlings-Blake and City Hall are overseeing a systemic fleecing of government coffers and have no interest in public oversight and accountability.  Baltimore City is one of a few governments not having routine audits -----it all happens because Johns Hopkins controls public policy and revenue in the city and does not want oversight and accountability.  They want only to control the symptoms of the poverty this creates.

Baltimore City Will Hire 2 New Prosecutors To Reduce Violence

July 11, 2013 7:01 PM

Mike Hellgren WJZ general assignment reporter

BALTIMORE (WJZ) — A new plan of action. The recent spike in city violence sparks local and federal lawmakers to enact a new plan of action.

The mayor, police commissioner and U.S. attorney appoint two special prosecutors to target violent offenders.

Mike Hellgren has more on the new partnership.

These two new experienced prosecutors are veterans of the system. They have not yet been selected; background checks are underway now. They will have the full resources of the federal government.



I shared with everyone that Maryland's Attorney General Doug Gansler ran with an agenda item being dismantling the prosecutor's office assign to provide oversight and justice from government malfeasance and corruption.  This office was created as a result of the Agnew years.  Well, fraud and corruption never left and the attorneys running for these state's attorney and Attorney's General offices simply ignore and defund agencies tasked with public justice.  There is so much business fraud in Maryland against citizens that people have to work hard to find an honest contractor and then watch them like a hawk-----just because these public justice agencies are dismantled.  These are the same agencies that protect people's civil rights as with police brutality and unconstitutional policing.  So, THIS AFFECTS EVERYONE FOLKS!

THINK WHICH GROUPS IN MARYLAND BACK NEO-LIBERALS LIKE ANTHONY BROWN AND DOUG GANSLER ----AND REPUBLICAN HOGAN WILL DO THE SAME-----LABOR AND JUSTICE LEADERS IN MARYLAND BACK THE VERY POLS DOING THIS DAMAGE.  MARYLAND HAS NO LABOR AND JUSTICE LEADERS THAT ARE NOT CAPTURED BY THIS PROCESS.

People need to see that the white collar crime that empties the Baltimore City coffers----and this happens all across Maryland----is directly related to the crime and violence in low-income communities.  If billions are stolen by Baltimore Development Corporation and Johns Hopkins through fraud and corruption then cuts to social services and community programs occur.  If Johns Hopkins writes policy that floods the city labor market with immigrants who are then fleeced of their wages ----or workers brought from out of state to work in Baltimore -----high unemployment drives crime and violence.  The middle-class in Baltimore are being hit with car/home break ins/robberies because people are not able to be employed.  RAIDING CITY COFFERS WITH FRAUD AND CORRUPTION AND THEN BRINGING LABOR TO BALTIMORE WHO ARE THEN FLEECED OF WAGES-----all involving suspended Rule of Law and public justice.  THIS WILL AFFECT EVERYONE.

IT IS NOT ONLY THE UNCONSTITUTIONALITY OF POLICING--IT IS THE SUSPENSION OF RULE OF LAW FOR ALL WHITE COLLAR CRIME.

This report simply shows the pattern that exists throughout Baltimore City government.  If you look at the report on SAIC from yesterday and the corruption in that Hopkins corporation the problems are the same.  If you go further and look at the structure for Wall Street financial instruments filling our financial industry with fraud-----it is all the same model.  Creating multiple layers of service and responsibility and then claim it is all too complicated to audit.  Baltimore does not have a revenue problem----the revenue is being stolen and diverted to the same people.

IInside City Hall: What a federal audit tells us about city spending Baltimore ranks at the bottom of cities audited by HUD's Inspector General. Where, exactly, did the $9.5 million in homeless funds go?

Mark Reutter December 5, 2012 at 7:11 am


Homeless men and women sit near the city’s Harry and Jeanette Weinberg homeless shelter at 620 Fallsway.

Calling for audits has become a popular pastime at City Hall.

Mayor Stephanie Rawlings-Blake wants one to look at Comptroller Joan Pratt’s Municipal Telephone Exchange office, while Pratt is calling for numbers crunchers to sift through the contracts of the Mayor’s Office of Information Technology.

Councilman Carl Stokes has called for audits of all city agencies, something the mayor and majority of the City Council don’t want to do. But the mayor and Council did agree over the summer to audit selective agencies beginning in year 2014.

Given all the fuss, wouldn’t it seem that when an audit does appear, elected officials would rush to find out what it says about how the city spends money?

Such a report arrived last month. The Inspector General of the U.S. Department of Housing and Urban Development (HUD) released an audit of Baltimore’s use of $9.5 million for homeless programs awarded under President Obama’s 2009 Recovery and Reinvestment Act.

A Crash Nobody Heard

City Hall seems to be pretending that this audit does not exist, like the proverbial tree that fell in the woods with a crash nobody heard.

There’s been no comment about the report by top officials, not least by Mayor Rawlings-Blake, whose Office of Human Services and Homeless Services Program stand accused of ineptitude and mismanagement by HUD’s auditors.

The report says that the city did not properly monitor the homeless funds, paid sub-providers based on a preset formula rather than on actual expenditures, lost track of money in several instances, and paid city staffers according to estimates, not on the actual time they spent on grant activities.

Calling 100% of Baltimore’s homeless expenditures “unsupported” by required documentation, HUD’s Inspector General is recommending that the city either provide proof that its homeless payments were legit or return the dough – all $9,472,118 – to the federal government.

The Inspector General faulted Baltimore’s homeless program.

“Baltimore Was Delinquent”

While Rawlings-Blake and her staff haven’t publicly responded to the audit, the Homeless Services’ rebuttal to HUD was published in the report.

It’s revealing. The city admits that it violated federal regulations because it did not have the staff to ensure compliance and because it found the program’s regulations too complicated.

“The City of Baltimore was delinquent in monitoring the program’s sub-providers as required because we lacked resources to conduct an appropriate level of monitoring, both fiscally and programmatically,” Kate Briddell, director of Homeless Services, wrote.

She acknowledged a number of management infractions. Among them: “the fiscal director improperly directed the fiscal staff to draft funds . . . to reimburse itself,” the Board of Estimates approved a homeless contract “in error,” the language of another contract “was not amended in title or terms to accommodate” the federal program, and funds “that appear to be drawn” improperly from one account were in fact used without documentation for a related program.

After making these admissions, Briddell went on to deny that they had any real consequences. “[W]hile some of the paperwork was not completed or kept in a standard we would like, no waste, fraud or abuse was conducted during the course of administering this project,” she wrote.

Briddell’s statement was flatly contradicted by her own acknowledgment that the Prisoner’s Aid Association of Maryland did not properly handle $270,550 in homeless funds – HUD claims the group was double billing the government for clients they had placed in emergency housing.

Perhaps that’s why HUD’s reply to Briddell begins so bluntly: “We disagree with the city’s statements.”

At the Bottom of Cities Audited


To check whether other cities shared Baltimore’s managerial shortcomings, The Brew reviewed a dozen HUD audits of city and county governments that also received funds under the Homelessness Prevention and Rapid Re-Housing Program.

Compared to Baltimore’s 100% “unsupported” expenditures, HUD’s Inspector General found that less than 1% of the funds spent by New York City, Houston and San Francisco to be “unsupported” or “ineligible.” The exact percentages were: New York (0.6%), Houston  (0.48%) and San Francisco (0.7%).

The Los Angeles Housing Department was also audited. HUD found $29,004 of the $29.4 million awarded was not properly documented, or less than 0.001%.

Even the worst offenders – Buffalo with 6.6% unsupported documentation and Newark with 8.5% unsupported, according to HUD – look like like fiscal angels compared to Charm City.

HUD certified in its audit of Baltimore that it followed generally accepted government auditing standards.

Coming Back for More

The lack of sufficient internal controls has been a longstanding criticism of Baltimore government.

City departments, including the Mayor’s various offices handling criminal justice, CitiStat operations, information technology, health and human services, are budgeted a certain amount of funds for the fiscal year beginning July 1.

But the practice of letting departments come back for more funds during the year, through supplemental appropriations approved by the Board of Estimates, undercuts fiscal discipline, critics say.

This coupled with the lack of oversight by the City Council – the Budget and Appropriations Committee chaired by Councilman Helen Holton has yet to reconvene a hearing concerning agency spending last year – and the necessary checks and balances are absent.

Farming Out Responsibility

A larger issue brought out by the HUD audit was the lack of programmatic oversight by the city. The Mayor’s Office of Human Services did not even hand out the homeless grants. The task was farmed out to its fiscal agent, the United Way of Maryland.

That process split up management functions, which effectively meant that nobody was minding the store and determining whether the sub-providers were actually fulfilling the needs of the homeless as well as meeting the requirements of HUD.

Until effective accountability is instilled at the top, the future audits promised for city agencies are likely to suffer the same fate as the HUD homeless audit – official silence from those in charge, leading to more public cynicism about the workings of local government.
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Below you see the supposed Democratic candidate for Maryland Attorney General.  If you look at the issues you will never see or hear the words----massive corporate fraud and government corruption as any justice candidate's platform.  You see selected justice issues that are always aimed at low level criminals such as scammers targeting senior citizens.  The subprime mortgage fraud targeted seniors and the parking ticket settlement was a disgrace yet Frosh never mentioned the injustice---he instead looked at individual solutions to foreclosures.  The fact that Maryland was the source of the fraud----MERS operated out of Frosh's Montgomery County as well as Virginia's Washington beltway----Maryland was the hardest hit by subprime mortgage fraud-----and it is the state with the highest number of foreclosures happening even now.  All of this shows there is no public justice at work in this particular case.  I choose Frosh and his statement on protecting seniors as a way to show how these issues mean nothing.  Sure, there are scammers targeting seniors but that exists because there is absolutely no public justice agency in place preventing these predations.  Maryland TV programming is filled with businesses that scam people.  Our local and state agencies of Licensing and Regulation DLLR is a skeleton crew and this is what allows for contractors to act criminal at will.  Frosh never mentions this and will not do anything to change this.

If you listen to Republican candidate for Governor Hogan he will use the fraud and corruption issue but as with Frosh-----he means he will look at low-level scams like Food Stamp and Pension fraud and never mentions the systemic culture of corporate fraud and government corruption.  So, don't vote for a Republican just because neo-liberals have made the Democratic Party so corrupt.....

GET RID OF THE NEO-LIBERALS!  THEY ARE ONLY PROTECTING WEALTH AND PROFIT AND WILL NOT HOLD POWER ACCOUNTABLE.

Neo-liberals always talk about gun violence and control but they are the ones implementing the policies that kill labor and justice....creating the conditions for this increase in crime and violence.  So, if a candidate simply shouts a mantra of gun control and gun violence without shouting that the Maryland Assembly and Baltimore City Hall passes policy that creates the conditions for crime and violence----he/she will do nothing about solving these problems.  Now, FROSH is definitely better than Jon Cardin but the point is Maryland never has a candidate for public justice that will provide public justice.

Google  'Frosh and government corruption and corporate fraud' and you will get nothing.

THE GOVERNOR HAS THE ABILITY TO CREATE SPECIAL TASK FORCES AND PRESSURE MARYLAND AGENCIES TO ENFORCE LAW-----

neo-liberals like Brown will protect the fraud and corruption----Cindy Walsh for Governor will fight and reverse it!


PETER FROSH FOR MARYLAND ATTORNEY GENERAL


Issues Protecting Kids Online


Information technology has made our world more connected and productive than ever before. Unfortunately, the anonymity and freedom of the Internet have also created greater opportunities for crime, exploitation, and abuse. As a father of two daughters, I know firsthand the threats the Internet brings into the lives of young people today. Through that expe...

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Protecting Seniors Our seniors deserve the respect and care that they have earned throughout their lifetime. Maryland's senior population will only continue to rise in the coming years. As a result, the number of crimes against seniors will also increase. Far too often, scam artists perceive senior citizens as vulnerable and relatively wealthy due to their ability to access...

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Making Maryland Safer Protecting people - it’s what I have done in the courtroom and in the legislature. My number one priority as Attorney General will be keeping Maryland families safe. I have been a leader in keeping Maryland families safe by: Leading the fight for the Firearm Safety Act, landmark gun safety legislation that will prevent gun violence and save thousan...

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Protecting Maryland's Environment We know that the beauty of our state isn’t just something we enjoy, but it is also one of the things that make our economy strong. Responsible and sustainable utilization of our natural resources should be a guiding principle for Maryland businesses and individuals. Everywhere I go, Marylanders tell me they want clean water to drink and clean air to...

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Protecting Maryland Consumers As a young man, I was taught the importance of justice and fairness, and to stand up for those who can’t stand up for themselves. I have carried those values with me throughout my career in public service: championing laws to protect children from ingesting harmful chemicals in baby bottles and formula; expanding the Attorney General’s power t...

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The only oversight in Maryland comes from the Federal government and as we all know Eric Holder and Obama have made it their top priority to get rid of that with the help of Congress.  You see below that all of the agencies tasked with oversight and transparency are the ones cut in the attack of small government.  THAT IS ALL THESE NEO-LIBERALS AND NEO-CONS CARE ABOUT---HIDING THE FRAUD AND CORRUPTION TRAIL.

This is third world.  It is what Trans Pacific Trade Pact does----eliminates a sovereign nation's ability to limit corporate profit in any way.  I had a young black Republican in Maryland tell me WHAT'S THE MATTER WITH PROFIT?  Well, you are being sold a bill of goods if you do not understand the power of Rule of Law and Equal Protection and Bill of Rights in everyone's life.


Continued cuts to legislative branch budget hurt transparency, accountability, and capacity

. by Matthew Rumsey

• policy

July 9, 2013, 4:16 p.m.


This morning, the House Appropriations Committee's Legislative Branch Subcommittee marked up its FY 2014 funding bill, agreeing to a plan that would cut funding for Congress and legislative support agencies well below FY 2013 levels, and even beneath sequestration levels for most offices.

Committee leadership claimed that cuts were necessary to "lead by example" and help get the government's "fiscal house in order," but, in reality, the cuts will likely limit accountability, access to information, and the ability of Congress and the legislative support agencies to do their jobs efficiently and effectively. The shrinking budgets could also make it more difficult for Congress to implement a number of important transparency initiatives.

Specifically, the plan would continue several years of cuts to House operations and the Government Accountability Office that have diminished the capacity of both bodies.

The GAO exists to help Congress fulfill one of its most important functions, overseeing and improving the accountability and efficiency of the federal government, and pays for itself many times over through the cost savings that it identifies every year. Unfortunately, Since major budget cuts began three years ago the GAO has lost more than 14% of its staff and seen its ranks fall to the lowest staffing level since 1935. The GAO cannot continue to identify waste, fraud, and abuse in the federal government and help to save taxpayers billions of dollars every year if its budget keeps shrinking.

Meanwhile, the House has cut individual office budgets by more than 17% over the past few years, reducing Representatives' ability to understand and enact complex policy, communicate openly and efficiently with constituents, perform oversight, and do the job of governing that they were elected to do. Unfortunately, Congressional staffs have been shrinking since the late 1970's. These cuts will most likely accelerate that trend and further diminish Congress' policy expertise and ability to conduct oversight.

Finally, limited budgets could make it harder for Congress to move forward with important transparency reforms, including opening Congressional Research Service reports and reports from the Executive branch to Congress to the public.

The Senate Appropriations Committee is scheduled to mark up their Legislative Branch funding bill on Thursday. Hopefully they will push for funding necessary to ensure that Congress and its support agencies can do their jobs effectively.

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The same forces dismantling public justice for citizens in poor communities is that dismantling oversight and accountability in government and corporations.  The idea is that chaos and unaccountability allows the few in the autocracy to control everyone else----and that is what people in third world nations live with every day.  When my friends dread having to find a contractor to do simple work because everyone is fleecing consumers---the middle-class are losing  rights as the people in poor communities enduring 'stop and frisk', home invasions, zero tolerance, and now youth curfews......loss of citizenship.

EVERYONE NEEDS TO WAKE UP TO THE CULTURE OF CRIMINALITY WE HAVE IN GOVERNMENT AND CORPORATIONS.

Below you see the political culture of neo-liberals and neo-cons.....O'Malley is the mirror of Cuomo and both are raging Wall Street neo-liberals----Clinton's farm team.  If you have leadership in government openly committing fraud as you do today---you have no Rule of Law being enforced anywhere.

I went to the Baltimore Comptroller's office for FOIA request on a statement made by Mayor Rawlings-Blake during a Board of Estimates meeting.  The mayor's lawyer Nilson was there and stated out loud that the FOIA would be used against the people included in a lawsuit to which the BOA employee stated.....well, we can lose that information.  This is so pervasive that a lawyer feels no problem with suggesting that information disappear.  You can just see how this behavior is mirrored in the Baltimore City Police Department.

UNCONSTITUTIONAL CONDUCT!  PROVE IT!

Wednesday, Jul 23, 2014 09:30 AM EST  Salon


Report: Andrew Cuomo under federal investigation for allegedly thwarting ethics inquiries

The governor of New York and possible future presidential candidate may have tried to shield his donors Elias Isquith

According to a new bombshell report in the New York Times, New York Gov. Andrew Cuomo, widely expected to coast to reelection this fall and long rumored to have presidential ambitions, is under federal investigation for allegedly trying to thwart his own anti-corruption commission after it began looking at his political allies.......


Why Is the Cuomo Administration Automatically Deleting State Employees' Emails?

Wednesday, 13 August 2014 10:23 By Theodoric Meyer, ProPublica | Report
Governor Andrew Cuomo (Photo: Diana Robinson / Flickr)New York Gov. Andrew M. Cuomo’s administration — which the governor pledged would be the most transparent in state history -- has quietly adopted policies that allow it to purge the emails of tens of thousands of state employees, cutting off a key avenue for understanding and investigating state government.

Last year, the state started deleting any emails more than 90 days old that users hadn't specifically saved — a much more aggressive stance than many other states. The policy shift was first reported by the Albany Times Union.

A previously unpublished memo outlining the policy raises new questions about the state's stated rationale for its deletions policy. What's more, the rules on which emails must be retained are bewilderingly complex – they fill 118 pages – leading to further concern that emails may not be saved at all.

"If you're aggressively destroying your email, it looks like you're trying to hide something," said Benjamin Wright, a Dallas lawyer who has advised companies and government agencies on records retention.

ProPublica obtained the memo through a public records request.

In the June 18, 2013, memo, Karen Geduldig, the general counsel of the state's Office of Information Technology Services, described New York's decision to automatically delete emails as a way to cut down on the state's "enormous amount of email data."

But the state implemented the policy as part of a move to Microsoft's Office 365 email system, which offers 50 gigabytes of space per email user — enough to store hundreds of thousands or even millions of emails for each state worker. The state's version of Office 365 also offers unlimited email archiving.

The Office of Information and Technology Services declined to comment on the record. An official in the office said even though the state can store large quantities of email, it can still be difficult to manage.

"Just because you have a big house doesn't mean you have to shove stuff in it," the official said.

Geduldig's memo also pointed out that some federal government agencies and corporations automatically purge employees' email. "Such a system will aid the State in improving its email management," Geduldig wrote.

But many states take a different tack.

Florida, for instance, requires state employees to keep routine administrative correspondence for at least three years, and emails dealing with policy development for at least five years. Connecticut requires employees to keep routine emails for at least two years. Washington State requires workers to keep emails dealing with public business for two years, and emails to and from top officials for four years. Those states also do not automatically delete email.

"It shouldn't be an automatic process," said Russell Wood, the records manager for the Washington State Archives. "There should be some point of review in there."

Emails that qualify as "records" are supposed to be preserved under New York's policy. But determining which emails qualify and which don't — a task left up to individual state employees — can be mind-numbingly complicated.

The state's rules include 215 different categories of records — including two separate categories dealing with office supplies.

"We don't think it's plausible at all that agency personnel are going to meticulously follow" those rules, said John Kaehny, the executive director of the good-government group Reinvent Albany. If the rules for preservation aren't followed, emails will be purged by default.

The length of time emails are required to be kept varies by category. Any emails related to "human rights training," for instance, must be kept for six years. Emails concerning "agency fiscal management" must be kept for three years. Emails about "the development of internal administrative policies and procedures" must be kept for a year, but emails "used to support administrative analysis, planning and development of procedures" can be deleted as soon as they're "obsolete," according to the rules.

The governor's office has its own rules detailing which emails must be saved, with 55 categories, from emails of weekly reports to emails "related to Native-American affairs." Anything that doesn't fall into one of the categories "should be deleted" once they've been opened, the governor's office advises.

There is no internal or external watchdog to make sure the rules are being followed, Kaehny said.

The state also doesn't have a standardized system for preserving emails that do have to be saved, according to the Office of Information Technology Services official. State workers can save their emails by printing them out, pasting them into Microsoft Word documents or placing them in a special folder in the email program itself.

"Everyone does it differently, and some people are still learning how to do it," the official said.

Emails related to potential litigation and freedom of information requests are not supposed to be deleted under New York State's policy. But Karl Olson, a San Francisco lawyer who has represented news outlets including the Los Angeles Times in freedom of information lawsuits, said that deleting emails after such a short period of time might mean they're gone by the time reporters need to request them.

"It may take a while for evidence of misconduct to bubble to the surface," Olson said.

Emily Grannis, a fellow with the nonprofit Reporters Committee for Freedom of the Press, said New York's automatic deletion policy "strikes me as inconsistent with the goals of [freedom of information] laws, and to have such a short timeframe is particularly troubling."

Government agencies often adopt deletion policies to help protect themselves from potential lawsuits and freedom of information requests, said Mark Diamond, the chief executive of Contoural, a records management consulting firm. Getting rid of emails after 90 days, though, risks deleting correspondence that employees might need down the road. "I don't think it's a well thought-out strategy," he said.

Cuomo's aides have also developed a reputation for using their personal email accounts to conduct state business — a move that can make it more difficult to seek the emails under the state's freedom of information law. The Cuomo administration has denied that it does so, but a ProPublica reporter and others have, in fact, received such emails from officials.

New York isn't the only state that destroys unsaved email after 90 days.

California's governor's office, for instance, has automatically deleted employees' sent and received email after 90 days for more than a decade. But the office also requires employees to save far more than in New York, including official correspondence, memos, scheduling requests and other documents.

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.

As you will see below Cindy Walsh for Governor of Maryland received 6,500 votes or 1% of the democratic vote. Antony Brown supposedly won this race with only 12% of registered democratic voters. My campaign with just a little media coverage---with access to major venue coverage----would have easily won.


I want to thank those of you having voted for me.  It is not in vain as I take this election result to court these votes prove I had support and was active in this race.  As you see with today's post.....the entire Maryland election process is corrupt and the election rigging willful and deliberate.  I should have no problem with winning in court, but if corruption extends to this Maryland Circuit Court----I will appeal.  Meanwhile, I am preparing to file in Federal Court the case against the organizations committing these election violations and the primary candidates that participated knowing my campaign was being illegally excluded.


Cindy Walsh for Governor of Maryland has proven that with the final vote showing the supposed winner Anthony Brown at 12% of registered democratic voters to Cindy Walsh’s 1%-----I could have easily won this election with just a moderate media exposure and participation in the forums and debates that should have included me.  I could have easily won with a platform of ending corporate fraud and government corruption and holding global corporations at bay while building an domestic economy in Maryland driven by small and regional businesses.  It is this platform that motivated the exclusion from this primary race.

St. Mary’s College performs what looks to be the most academic and reliable polling in the State of Maryland yet it too uses methods that diminish accuracy like automated calling and small cohorts for extremely low polling figures.  As you can see below, St. Mary’s does not post its polling model even as it says the information is coming so we do not know how they randomized, what the protocol for failed calling attempts was, etc.  The other polling agencies like Gonzalez, Sun, Washington Post use models that make polling data irrelevant.  The percentages that make it to media for each candidate always include those methods with higher margin of error and ‘likely’ voter cohorts.  Again, it is not cost or time that figures into these choices of polling methods because a handful of people working just a few hours can call 1,000 voters.  It is a willful and deliberate attempt to use polling data to manipulate the election process.

 

Welcome To INSIGHTS

 

The Maryland Poll or MPoll, our Blog INSIGHTS, and Hosted Blogs

Professor Susan Grogan

April’s MPoll results are in!

 Download Graphs of the MPOll‘s Results.

You are on the Welcome (Home) Page of INSIGHTS, The Maryland Poll’s  blog.   The Maryland Poll , a.k.a. the MPoll, was conceived from two years of research toward starting a public opinion polling research center within St. Mary’s College of Maryland’s Political Science Department.  My professional reasons were to develop a pedagogical model incorporating more technology and involving more public service in my political science classes as well as steering my own professional career in that direction.  (Personal reasons may have included a knee-jerk response to certain members in the House of the US Congress who absurdly continue to insist that ‘we don’t do science in political science.‘)

Much of our activity will involve gathering together public opinion data  from polls conducted within and about Maryland.  We will also conduct our own MPolls.  We conducted our first poll from April 10 – 13 and the results were published April 18, 2014.  Polls are planned for the fall semester during the Maryland 2014 Gubernatorial Election.

Thus, the project is multidimensional.  As mentioned, the MPoll will conduct polls.  INSIGHTS, MPoll’s blog, will gather polling data and will provide straightforward commentary as nonpartisan as is possible.  As another aspect of our public service mission, INSIGHTS will also publish background information on polling and how to interpret polling data.  The idea is that, in addition to professional commentary, INSIGHTS will offer the necessary background the layperson would need to analyze polling data.

We could say that commenting provides another useful measure of public opinion.  INSIGHTS as well as Hosted Blogs are open for comments that further the discussion by presenting a more diverse range of opinions and ideas about public opinion and political goings-on that affect or attempt to influence the opinions of persons residing in or near Maryland.  Most often, the primary demographic of concern will be eligible voters.

All comments will be moderated.  Not all comments will be accepted.  In most cases, it likely will be that we are too overwhelmed at the moment to respond but we also hope to maintain a reasonable level of decorum.

 

About Candidates v. Polls

Coming soon.  We should have content up by the end of January on most of this site.

Thank you for your patience.

About Interpreting Polls Coming soon.  We should have content up soon on most of this site.

Thank you for your patience.

About Polling Techniques Coming soon.  We should have content up soon on most of this site.

Thank you for your patience.

As I show elsewhere in the evidence provided, the various polls greatly exaggerated the candidates favored to win.  When the public is shown these irrelevant stats it creates the apathy for voting for a candidate they would actually want.  Psychologically, it is known that voters tend to follow the front-runner and this is why the exaggerated figures for Brown, Gansler, and Mizeur were created with manipulated polling standards like margin of error and selected polling groups of ‘likely’ voters.  Can you imagine when voter turnout hits 10-20% how small and homogenous that polling pool of likely voters become?  Why would polls include all republican candidates even as they barely polled and not all of the democratic candidates?

The media identified the apathy of voters as ‘not caring’ but we know the apathy is from an inability to exact change to a system voters know is rigged.

 

Undecided voters dominate in new gubernatorial poll

April 23, 2014|By Michael Dresser  Baltimore Sun

 

The poll strongly tracks previous surveys of the race and shows little sign that any candidate is gaining significant ground. For instance, a poll released by The Baltimore Sun in February showed Brown with 35 percent, Gansler with 14 percent and Mizeur with 10 percent.  On the Republican side Hogan polled at 13 percent and Craig at 7 percent.

The methodologies of the two polls were significantly different. Unlike the St. Mary’s poll, The Sun's poll used live callers and concentrated on 500 likely voters rather than all registered voters. The college’s automated poll surveyed 954 registered voters and had a margin of error of 3.17 percentage points.

 

Look at this media representation of the Maryland democratic primary race for governor.  The polling numbers are so skewed it is a mockery of the election process.  Again, the use of likely voters, a subset so small as to be useless in attaining actual polling data.  Is it illegal for media and polling agencies to deliberately skew these polling data in a way that willfully and deliberately damages the campaign of other candidates?  Yes, it is.  It is also illegal for organizations participating in these election events to use these polling data everyone knows are skewed.  I can assure this court, Cindy Walsh for Governor of Maryland gave the larger venues participating in this primary election this information on polling as the primary progressed.  Allowing these polls saying Brown was polling at 46% of likely voters right before the primary election and ending with 12%  of registered democratic voters -----this is a crime.  It takes away all voter enthusiasm to participate and tells prospective candidates and those like me that this system is so corrupt you will not have a chance.  There is no way the Maryland Election Board does not have staff with enough knowledge on polling methodology to know these polls were willfully and deliberately misleading the Maryland voters and skewing the primary election.  As you will see below Cindy Walsh for Governor of Maryland received 6,500 votes or 1% of the democratic vote. Antony Brown supposedly won this race with only 12% of registered democratic voters. My campaign with just a littlemedia coverage---with access to major venue coverage----would have easily won.

 

 

Maryland Politics

Lt. Gov. Brown holds commanding lead over Democratic rivals in Maryland governor’s race

•  
•  

From left, Attorney General Douglas F. Gansler, Del. Heather R. Mizeur (Montgomery) and Lt. Gov. Anthony G. Brown, the Democratic candidates for governor of Maryland. (Matt Mcclain/AP)

By John Wagner and Peyton M. Craighill June 10   Washington Post

Maryland Lt. Gov. Anthony G. Brown holds a commanding lead over his Democratic rivals for governor, according to a new Washington Post poll, two weeks before a primary election that most voters are not following closely and that is likely to attract a low turnout.

Though nearly half of likely voters say they could still change their minds, the poll found backing for Brown across a broad demographic range — and deep support among fellow African Americans — and showed that Brown voters are firmer in their allegiance than those siding with the other candidates. With scant evidence that attacks on Brown’s management skills, particularly his handling of the state’s health insurance exchange, have damaged him, the poll shows no obvious path to victory for the other Democratic hopefuls in the June 24 primary.

Statewide, 46 percent of likely Democratic voters support Brown, while 23 percent back Attorney General Douglas F. Gansler and 16 percent support Del. Heather R. Mizeur (Montgomery), according to the poll.

Analysts said Brown’s lead is formidable in the race, in which early voting starts Thursday.

“Absent a gigantic mistake from the Brown campaign, this is probably over,” said Donald F. Norris, chairman of the public policy department at the University of Maryland Baltimore County. “I think the only strategy left for a candidate in Gansler’s situation is to attack, attack, attack, and that’s likely to backfire.”



If Gansler is too aggressive, Norris reasoned, he could strike voters as desperate and wind up driving voters to Mizeur as an alternative.

 

 

Here's the breakdown of votes in the primary as of 2:26 a.m. Wednesday, according to the Maryland Board of Elections, with 1982 of 1988 precincts reporting:

Republican
Larry Hogan/Boyd Rutherford: 43.01 percent
David Craig/Jeannie Haddaway: 29.12 percent
Charles Lollar/Ken Timmerman: 15.51 percent
Ronald George/Shelley Aloi: 12.36 percent

Democrat
Anthony Brown/Ken Ulman: 51.29 percent
Doug Gansler/Jolene Ivey: 24.23 percent
Heather Mizeur/Delman Coates: 21.71 percent
Cindy Walsh/Mary Elizabeth Wingate-Pennacchia: 1.4 percent
Charles Smith/Clarence Tucker: 0.72 percent
Ralph Jaffe/Freda Jaffe: 0.65 percent




The following results are from early voting (June 12 to 19), as reported by the Maryland Board of Elections.

Democrat
Anthony Brown/Ken Ulman: 57.71 percent
Doug Gansler/Jolene Ivey: 20.82 percent
Heather Mizeur/Delman Coates: 19.4 percent
Cindy Walsh/Mary Elizabeth Wingate-Pennacchia: 1.05 percent
Ralph Jaffe/Freda Jaffe: 0.51 percent
Charles Smith/Clarence Tucker: 0.51 percent

Republican
Larry Hogan/Boyd Rutherford: 42.79 percent
David Craig/Jeannie Haddaway: 31.95 percent
Charles Lollar/Ken Timmerman: 13.74 percent
Ronald George/Shelley Aloi: 11.53 percent

If you look at all of the election result coverage it almost always refers to the percentage won of votes casted and not percentage of total registered voters.  You see below the extremely low percentage of registered voters who actually voted.  As the group at St. Mary’s College stated in the article on polling…..the problem is the failure to educate the voters.  This speaks to the inclusion of all candidates and platforms and it speaks to the election venues available to the citizens of Maryland.  The fact that there is not a Maryland State election platform that allows all candidates access to forums and debates all over the state shows the capture of this election system.  The fact that organizations tasked with the mission of free and fair election oversight, like the Maryland League of Women Voters, use the same arbitrary polling guidelines and front-runner status and openly work to make sure a candidate with a certain platform does not have videotaped exposure on its website shows a captured election system.  When the University of Maryland is telling me it uses a 15% polling threshold and Maryland Public Television and Maryland League of Women Voters uses 10% and they all are allowing all republican candidates mostly polling lower than these thresholds in all forum events while excluding democratic candidates because of platform-----you have a captured election system.  As I pointed out, the private non-profits that are taking over this duty all express prejudice and as I have proven, do it in ways that are illegal and violate election law.  The law states that the voters have the right to go to the polls with freedom and intellect to participate as an educated electorate.  Denying viable candidates the right to exposure and access to major forums and debates whether on media or tied to a 501c3 event willfully and deliberately damages a candidate’s campaign and works to keep people from this ballot intellect.

I ask that you look as well at the final percentages of registered voters for each candidate to see how this actual count compares with the polling numbers given to us all through the governor’s race.  Don’t forget that we just came through the most media campaign advertisement blitz of the primary election period so these percentages would be a peak.  You will notice that these percentages are closer to the St Mary’s poll in April where most of the candidates barely broke 10% and many were around 5%.  These are the polling numbers used by major venues to exclude Cindy Walsh for Governor of Maryland and the arbitrary nature is obvious.  I would say that it is obvious as well that some polling agencies provided polling numbers that were so inflated and unreal as to set the stage for some candidates being labelled front-runners and meeting guidelines.  Again, this kind of polling is so irrelevant and excludes candidates who are relegated to the ‘undecided’ and ‘other’ category that it fails to meet the Supreme Court ruling about identifying candidates as viable or strongly supported by the public.

 

2014 Primary Election Results - Maryland Governor

UPDATED 2:22 PM EDT Jun 23, 2014

 

Governor - Dem Primary

June 25, 2014 - 08:26AM ET

Maryland - 2033 of 2033 Precincts Reporting - 100%

 
Name    Party   Votes     Vote %



Brown, Anthony   Dem  235,974   51%
Gansler, Douglas  Dem  111,444   24%
Mizeur, Heather Dem  99,84  22%
Walsh, Cindy  Dem  6,441   1%
Smith, Charles  Dem  3,296  1%
Jaffe, Ralph    Dem   2,995  1%



Governor - GOP Primary

June 25, 2014 - 08:26AM ET

Maryland - 2033 of 2033 Precincts Reporting - 100%

 
Name  Party  Votes   Vote %



Hogan, Larry    GOP   89,100  43%
Craig, David   GOP   60,357   29%
Lollar, Charles  GOP    32,155  16%
George, Ron  GOP    25,613    12%


Read more: http://www.wbaltv.com/politics/2014-primary-election-results-maryland-governor/26550226#ixzz35eavyG7j


Brown ---------236,000 of 2,000,000 registered democratic voters =  12% of the vote

Gansler ------- 111,500 of 2,000,000 registered democratic voters =  6% of the vote

Mizeur -------  100,000 of 2,000,000 registered democratic voters =   5% of the vote     

Walsh -------  6,500 of 2,000,000 registered democratic voters =  1% of the vote

 

23% of registered democrats voted

 

 

 

Hogan ------  89,000 of 1,000,000 registered republican voters =  9% of the vote

Craig ------- 60,500 of 1,000,000 registered republican voters =  6% of the vote

Lollar ------ 32,000 of 1,000,000 registered republican voters =  3% of the vote

George ----- 26,000 of 1,000,000 registered republican voters =   3% of the vote

 

21% of registered republicans voted.

 

Please look at these final election results with the actual percentage of registered voters per candidate to see the 12% of voters for Brown to see these figures have been super-sized from the start.  There is no reasonable explanation that after the last few weeks of concentrated campaign advertisement and after several months of media saturation of this one candidate that he only garners 12% of registered democratic voters ----other than democratic voters did not want this candidate that is now declared primary winner with 12% of the voters.  Meanwhile, Cindy Walsh for Governor of Maryland is not far behind with 1% of the vote and completely censured in the media and major forum and debate venues.

The expedited nature of this election process denies me the ability to subpoena all of these polling tools to verify the voracity of methods.  I would as well have used the subpoena to have an official set of guidelines for forums and debates from the institutions I have quoted.  I feel confident because of the irrelevant methods we do see and the extreme inflation of the polls to the reality of the election that I have proven the invalidity of polling as a method of exclusion and identifying a candidate as viable, a front-runner, or having strong public support.  Everyone in this primary race knew these polling figures and methods allowed this inflation of percentages as did the organizations using polling to exclude arbitrarily.  As the final results show only one candidate meets the 10% polling requirement of Maryland Public Television and Maryland League of Women Voters and none meet the polling requirement of University of Maryland’s 15% polling.  If this court allows these polling agencies to arbitrarily inflate results to effect the conduct of these elections, the election process in Maryland will remain corrupt and disillusioned voters left with no government agency protecting free and fair elections.

The court must recognize the systemic fraud and corruption in this democratic primary system at all levels of operation and rule this primary election result invalid and recognize that replicating the primary with the system without reform would be impossible.  I will be requesting in my Federal Court lawsuit against the defendants listed that the Federal government place an oversight decree on Maryland Elections Board and the Maryland Democratic Party and monitor the behavior of elections in the state over several election periods until all entities involved in the election process understand and develop good standards of operation while participating in elections.  The candidates in the democratic primary are all guilty of Federal election law and as such will be tried under felony indictment.  This should give this Maryland Circuit Court further reason to declare this democratic primary void with no second primary.

Cindy Walsh for Governor of Maryland did all that was possible to identify, report, mitigate, and seek resolution to the violations listed in this complaint.  I should not be denied my place in this election for governor.  Since I had the ability in February 2014 to register as a general election candidate for governor with the Green Party, I request that this be allowed now by suspending this one time the requirement to file for this general election status by February 2104.  I request the court assess financial penalty to those government agencies assigned to protect elections and my rights as a candidate to include candidate filing fees for myself and my Lt Governor and for the costs of electioneering over the course of several months.

 

Polls Potential Democratic primary match-ups [hide]Primary trial heats for 2014 gubernatorial race

Poll

Anthony Brown

Doug Gansler

Heather Mizeur

Undecided

Margin of Error

Sample Size



Brown-Ulman Internal Poll conducted by Garin-Hart-Yang
(September 11-15, 2013)

43%

21%

5%

31%

+/-4.0

608


Gonzales Research/Marketing Strategies Poll
(October 1-14, 2013)

41%

21%

5%

33%

+/--

403



Baltimore Sun Poll
(February 8-12, 2014)

35%

14%

10%

40%

+/-4.4

500



Washington Post Poll
(February 13-16, 2014)

32%

15%

9%

39%

+/-3.5

1,002



The Maryland Poll
(April 10-13, 2014)

27%

11%

8%

54%

+/-3.17

954



WPA Opinion Research
(May 6-7,2014)

34%

20%

7%

40%

+/-4.9

400










AVERAGES

35.33%

17%

7.33%

39.5%

+/-1.86

644.5

Note: The polls above may not reflect all polls that have been conducted in this race. Those displayed are a random sampling chosen by Ballotpedia staff. If you would like to nominate another poll for inclusion in the table, send an email to editor@ballotpedia.org

NEO-LIBERALISM IS A WAR AGAINST WOMEN AND CHILDREN AS POVERTY DEEPENS AND BROADENS AND OUR US CONSTITUTIONAL RIGHTS AND EQUAL PROTECTION ARE SUSPENDED.



I will talk about elections in Maryland today and Friday and then return to the policy issues.  Maryland can easily have free and fair elections but it must have leadership that creates this environment.  Whether republican or democrat if all candidates in a race cannot get name recognition and their platform to the public through 501c3 to balance the onslaught of private media ads and coverage----there will be no elections.  I hear Sarbanes, Cardin, Cummings, and Mikulski all of Baltimore pushing for early voting, for getting out the vote, and for campaign finance reform and all of them are the face of the democratic system in Maryland that allows such blatant censure of candidates-----   AND THIS HARMS ELECTIONS THE MOST.  THESE ARE NEO-LIBERALS FOLKS---NOT DEMOCRATS!

Let's look at Maryland political organizations and how they work within this captured system.  First, let's look at neo-liberalism and how it moves towards third world society and how women and people of color are harmed most in third world poverty and then ask----why are these organizations saying they support women and people of color supporting neo-liberals and allowing captured elections?



________________________________________________

The Maryland State office of the League of Women Voters controls all of the branches and they have partnered throughout this primary with events they know break the election laws.  They themselves use this poll number guideline and break it whenever necessary.  The League allows this arbitrary election process.

It has as its mission protecting elections and advocating for women in the election process but has told Cindy Walsh---we accept all of the republican candidates and neo-liberals.

THIS IS A CAPTURE OF A VITAL ORGANIZATION WITH LEADERSHIP WORKING FOR NEO-LIBERALS AND NOT PUBLIC JUSTICE.  WE NEED TO SHAKE UP LEADERSHIP ALIGNED WITH GLOBAL CORPORATIONS.


Mission:

The League of Women Voters,

a nonpartisan political organization, encourages informed and active participation in government, works to increase understanding of major public policy issues, and influences public policy through education and advocacy.

Watch the MPT/LWVMD Republican and Democratic Gubernatorial Debates On-Line

The one-hour debates between Republicans Ron George, Larry Hogan, Charles Lollar, David Craig and Democrats Anthony Brown, Doug Gansler, Heather Mizeur can be seen at http://www.mpt.org/debate/
___________________________________________

Below you see what the most pressing issue in Maryland is-----fraud and corruption and not one political organization, justice organization, or candidate mentions it-----and if that candidate does----they are censured.  Remember, these frauds hit women and children the hardest----people of color as well so if an advocacy group is not making this their top issue in selecting a candidate to endorse----THEY HAVE LEADERS WORKING WITH NEO-LIBERALS.

THIS IS WHAT NEO-LIBERALISM HAS DONE TO GOVERNMENT AND CORPORATIONS:

Maryland Corruption Risk Report Card Center for Public Integrity

Rank among 50 states: 40th  

Overall grade: D-

Click a category to see detailed scores and notes.

Public Access to Information F

Political Financing C

Executive Accountability F

Legislative Accountability F

Judicial Accountability D+

  State Budget Processes C-

State Civil Service Management D-

Procurement D-

Internal Auditing C+

Lobbying Disclosure D-

  State Pension Fund Management F
 Ethics Enforcement Agencies D

State Insurance Commissions F

Redistricting D-
 

Click here to share this report card on your site The story behind the score

In Maryland’s “clubby” Capitol, there’s little transparency, procurement policies are byzantine, and audit results are often ignored. Read more from SII State Reporter Christian Bourge
__________________________________________________

Maryland ranked fifth nationally in mortgage fraud incidents ...
Maryland Among Top States with Most Fraud Complaints ...
***********************************************************
Top States in Internet Fraud Complaints
Complainants per 100,000 People
(rank state per 100,000 people)
Maryland 121.67     is #7.
****************************************************************

America's 10 Worst States for Fraud - DailyFinancewww.dailyfinance.com/.../americas-10-worst-states-for-fraud 


Maryland has the fifth highest rate of fraud regarding debt collection at 56.2 complaints per 100,000 population. In the identity theft category, ...
***********************************************************************

THE CANDIDATES IN MARYLAND MAKING OVERSIGHT AND ACCOUNTABILITY AND PUBLIC JUSTICE CENTRAL---WHO SHOUT OUT AGAINST GLOBAL CORPORATIONS IN THEIR PLATFORM ARE THE ONES NOT INCLUDED IN THESE ELECTION EVENTS.


It's important to know that neo-conservatives are the same as neo-liberals and this is why the right has created the Tea Party.  Labor and justice are still at opposites with Tea Party in many ways, but we both know that global corporations are killing our democracy and US Constitutional rights.  Here in Maryland all pols are working for global corporations------ and we are taking the democratic party back to the people.  The reason republican voters are just as mad at neo-cons is that the economy of today is not free-market----is is naked/crony capitalism---- the opposite of free-market and George Bush is equally responsible for it as Clinton and now Obama.

For those thinking Heather Mizeur is not a neo-liberal----why is she in every forum and not speaking to any of the issues my campaign brings forward?  She has talking points.

No matter your political stance everyone knows that the corporate and government systems are full of fraud and corruption and this is the crony of naked capitalism-----no regulation---no oversight or accountability.  The US Constitution is built on Rule of Law and Equal Protection so none of what is happening is legal.

Below you see the goal of neo-liberalism-----third world status for even the formerly first world Western nations.  Neo-cons/neo-libs = third world society.  Clinton is the face of neo-liberalism as he dismantled all of the protections against corporate power knowing it would end democracy and our rights as citizens.  Bush ran with it----and Obama is now protecting the massive movement of wealth to the top mostly through systemic corporate fraud. 

'WE SEE NO FRAUD' SAY NEO-CONS AND NEO-LIBERALS BECAUSE PEOPLE HAVE NO RIGHTS OF PROTECTION.

Global Capitalism, Third World Development:

Is the Sweat Shop the Destination or
the start of a Take Off into Self-Sustained Growth?


In a deregulated world, the sweat shop is not a step on the road to 'economic development', it is the destination of most Third World people who aspire to Western-style economic development.

Western economic forces, given free rein, lead to people living lives of borderline starvation, of endemic poverty, with the few who control access to finance and resources, or who can become involved in international corporate activity, able to maintain wealthy lifestyles 43.



Neo-liberalism is dead as people realise markets need regulation
Date May 6, 2009

Chris Bowen

'It's very clear we're in the middle of a paradigm shift. We are witnessing the end of the neo-liberal project."


Remind Me Again How Neo-Cons Are ''Conservatives''
... by Josh Robinson Posted September 03, 2012
_________________________________________________

CINDY WALSH CREATED CITIZENS OVERSIGHT MARYLAND-----MARYLAND PROGRESSIVES SPECIFICALLY BECAUSE I SAW MARYLAND PROGRESSIVE AND OTHER PROGRESSIVE GROUPS WERE CONTROLLED BY NEO-LIBERALS.

THERE IS NOTHING PROGRESSIVE ABOUT NEO-LIBERALISM.

Each election since I moved to Maryland I have had to watch as groups calling themselves 'progressive' all back the most neo-liberal of candidates.  There is not a person in Maryland that does not know Anthony Brown is O'Malley and O'Malley is Clinton and all are neo-liberals.  EVERYONE KNOWS THIS.  There is nothing progressive about neo-liberalism----it is autocratic and repressive so when people try to call a neo-liberal progressive----THEY KNOW THEY ARE NOT SPEAKING TRUE. 

THE REASON BROWN, GANSLER, AND MIZEUR POLLED AT NEAR 10% THROUGHOUT THESE PRIMARIES IS THAT EVERYONE KNOWS THEY ARE NEO-LIBERALS.  IT TOOK A BOGUS POLL TO MOVE THOSE POLLING NUMBERS UP----AND THESE GROUPS KNOW THAT.

Every year Progressive Maryland chooses neo-liberals as their choice and never mention the main problems in Maryland----dismantled public justice, no oversight and accountability, and global corporate control of our economy----and never shout against an election system rife with violations.

NEO-LIBERALISM IS NEVER PROGRESSIVE FOLKS!

PROGRESSIVE MARYLAND & ELECTIONS

Progressive Maryland exists to advocate for and improve the lives of working families in Maryland and reduce income inequality. In order to accomplish our goal of turning progressive legislation into progressive laws, we need legislators who share our values. This means Progressive Maryland must actively engage in the political process to ensure the most effective, most progressive legislators are sworn in. For more than a decade, our organization has worked hard to achieve electoral success. We examine closely the records of candidates for office, get to know them, educate them on our issues, and obtain their commitment through candidate questionnaires to support measures we intend to push for in the upcoming legislative sessions. We endorse candidates who are authentically supportive of working families, promote their candidacies, and aggressively work to get them elected. In some cases, we go door-to-door in priority races, and we work the polls on Election Day. Engaging in the process in this fashion ensures that elected officials will be accessible to us and allow us every opportunity to present our perspective on priorities. It also helps to guarantee the votes we need to make Maryland a leader among progressive states. Our track record speaks for itself.In 2010, 90 percent of candidates we endorsed won election. In 2006, we helped elect over 90 endorsed candidates.

OUR ENDORSEMENT PROCESS

All candidates registered with the Board of Elections are emailed at the address listed with the State Board of Elections an invitation to seek Progressive Maryland’s endorsement, with a link to our electronic questionnaire. Completed questionnaires for all candidates are made available to Progressive Maryland Board members prior to recommendations being made, and copies of the completed questionnaires for all candidates are posted online on the Progressive Maryland website. Before ProgressiveMaryland employs our organizational resources to support candidates, we apply rigorous standards for our endorsement process based on more than a decade of on-the-ground electoral experience. An endorsement requires supermajority 2/3 support of our board of directors. We take into account the level of support for ProgressiveMaryland's full range of priority issues and how they have translated their support with action in their communities.
For incumbents, we consider an individual's voting record and their leadership on passing legislation and advancing key policies that improve the lives of working families. We also weigh viability by examining objective metrics of public support for a candidate.Progressive Maryland’s final candidate recommendations are posted online, as soon as the recommendation process is completed. To view the completed questionnaires for every candidate who applied for our endorsement, visit: http://progressivemaryland.org/endorsements/2014/Have any other questions about Progressive Maryland’s endorsement process?  

Please do not hesitate to contact Kate Planco Waybright at kate@progressivemaryland.org

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As I said----neo-liberals know they are killing all of the public justice and equal protection and that largely hits people of color and women so they are deliberately giving this push the face of the very people hurt most by it.  This is why we had Obama and now they are gearing up for Hillary.  Hillary will be sold as the woman's candidate----the glass ceiling breaker as Obama was but we know both Obama and Hillary are the face of neo-liberalism and Trans Pacific Trade Pact (TPP).

Remember, in Maryland it was Cummings, Sarbanes (Sr), Cardin, and Hoyer that voted with Clinton for NAFTA and breaking the Glass Steagall wall to create this global market and corporations.  They did it knowing these corporations would become unaccountable and take over our democracy.  Well, this next Presidential election is about bringing neo-liberalism full circle with Hillary bringing in TPP.

Note the long list of women in Congress supporting Hillary and neo-liberalism.  That is what is reflected by Maryland's women and justice organizations doing the same.

IF YOUR JUSTICE ORGANIZATIONS ARE PRETENDING HILLARY IS ABOUT SENDING A WOMAN TO BREAK A GLASS CEILING ------THEY NEED TO GO!

The politicians below are not progressives-----they are neo-liberals!

January 28, 2014, 06:00 am


Dems' 2016 endorsement list starts here
By Jasmine Sachar and Bob Cusack

  The following congressional Democrats have endorsed Hillary Clinton’s possible presidential bid in 2016:

CLINTON BACKERS

Senators who have endorsed Clinton (19)

Tammy Baldwin (Wis.)

Barbara Boxer (Calif.)

Maria Cantwell (Wash.)

ADVERTISEMENTDianne Feinstein (Calif.)Kirsten Gillibrand (N.Y.)

Kay Hagan (N.C.)

Heidi Heitkamp (N.D.)

Mazie Hirono (Hawaii)

Tim Kaine (Va.)

Amy Klobuchar (Minn.)

Mary Landrieu (La.)

Claire McCaskill (Mo.)

Barbara Mikulski (Md.)

Patty Murray (Wash.)

Charles Schumer (N.Y.)

Jeanne Shaheen (N.H.)

Debbie Stabenow (Mich.)

Elizabeth Warren (Mass.)

Sheldon Whitehouse (R.I.)

House members who back Clinton  (41)

Robert Andrews (N.J.)

Tim Bishop (N.Y.)

Joaquín Castro (Texas)

David Cicilline (R.I.)

Joseph Crowley (N.Y.)

Danny Davis (Ill.)

John Delaney (Md.)

Lois Frankel (Fla.)

Gene Green (Texas)

Raúl Grijalva (Ariz.)

Luis Gutiérrez (Ill.)

Janice Hahn (Calif.)

Colleen Hanabusa (Hawaii)

Alcee Hastings (Fla.)

Brian Higgins (N.Y.)

Mike Honda (Calif.)

Steny Hoyer (Md.)

Sheila Jackson Lee (Texas)

Hank Johnson (Ga.)

Jim Langevin (R.I.)

Sandy Levin (Mich.)

John Lewis (Ga.)

Nita Lowey (N.Y.)

Stephen Lynch (Mass.)

Carolyn Maloney (N.Y.)

Doris Matsui (Calif.)

Gregory Meeks (N.Y.)

Grace Meng (N.Y.)

Jim Moran (Va.)

Jerrold Nadler (N.Y.)

Richard Neal (Mass.)

Chellie Pingree (Maine)

Cedric Richmond (La.)

Tim Ryan (Ohio)

Jan Schakowsky (Ill.)

Allyson Schwartz (Pa.)

David Scott (Ga.)

Terri Sewell (Ala.)

Louise Slaughter (N.Y.)

Dina Titus (Nev.)

Frederica Wilson (Fla.)

This list was last updated at 12:30 p.m on 5/6/14

DO YOU HEAR YOUR POLS AND CANDIDATES IN PRIMARIES SHOUTING ANY OF WHAT MY WEBSITE WRITES AND MOST EVERYONE KNOWS IS THE TRUTH?  IF NOT, THEY ARE NEO-LIBERALS AND NEO-CONS.  SEE WHY CINDY WALSH FOR GOVERNOR OF MARYLAND IS CENSURED IN MARYLAND MEDIA?

Below you see an article that let's you know the Wall Street banks are still as systemically criminal as they were before the crash and Obama----they have not been held accountable and there are no laws changed to protect us no matter how much neo-liberals pretend they there are.  Trans Pacific Trade Pact has as a center-piece that banks will be completely deregulated globally which means here in the US they will continue the fleecing and ignoring of US law without consequence and all neo-liberals are building the structures that allow TPP to take hold-----ESPECIALLY HERE IN MARYLAND!  So, what the people need is a Public Banking system that allows those wanting to escape this criminal financial system and receive a reasonable interest return on savings to go.  Public Banks will also take those low-wage earners that neo-liberals serve up to payday and check cashing systems----and mainstream banks openly killing with illegal fines and fees-----and give them a safe place to cash checks and deposit their money.  Lastly, a state would not want to support a known criminal system like Wall Street by allowing state revenue to bring profits to Wall Street banks with state revenue deposits in these banks.  We certainly wouldn't want the state entering any contracts with banks we know were still systemically criminal and soaking the public of hundreds of millions of dollars in Maryland every year.

ONLY A NEO-LIBERAL AND A NEO-CON WOULD DO THAT.  THIS IS HOW YOU KNOW WHICH CANDIDATES WORK FOR GLOBAL CORPORATIONS AND WHICH FOR PUBLIC INTEREST.


The first thing Maryland's pols did after the crash-----mortgage the state and local government with all kinds of Wall Street financial instruments all knowing an economic crash bigger than 2008 is coming. 

FOR THOSE THINKING THIS IS SOCIALISM------STOP ALLOWING THESE TERMS TO CONFUSE SIMPLY PUBLIC PROTECTIONS AND US CONSTITUTIONAL RIGHTS TO EQUAL PROTECTION!!!!!  I KNOW MARYLAND REPUBLICANS LIKE CINDY WALSH.

The first thing a legitimate government would have done after the economic crash in 2008 is establish a public banking system in the state to protect citizens from a criminal financial system until we can reform this system.

I think Ezra Klein was the most honest of mainstream media as to the scandal that is Wall Street.  Not surprisingly he left Washington Post recently----probably too much truth in journalism.  News journals and public policy and government watchdogs all call Wall Street systemically criminal and yet Congress, Maryland Assembly, and Baltimore City Hall still has Wall Street front and center of all business transactions.  These banks should have been nationalized, investigated, fraud recovered, and downsized to regional banks.  THAT WOULD HAVE BEEN RULE OF LAW AND EQUAL PROTECTION.  Then, they would have been sold to begin life as new private banking interests.  The banking executives would be in jail and those implicated in these massive fraud banned from the financial industry for life.  THAT WOULD HAVE BEEN RULE OF LAW AND EQUAL PROTECTION.



Wonkbook: The financial system was systemically corrupt

• By Ezra Klein Washington Post
  
• July 20, 2012 at 7:27 am

Very few banks came out of the financial crisis looking good. But JPMorgan and Barclays were in that elite club. Their apparent rectitude raised the possibility -- as JPMorgan CEO Jamie Dimon said over and over again -- that what we'd had were a few bad banks, not a hopelessly corrupted financial system. Fast forward a couple of years, and JPMorgan and Barclays are not looking so good anymore. And the particular way in which they're not looking so good points to the fact that we did, indeed, have a hopelessly corrupted financial system.

If you haven't been following the Libor scandal, read Dylan Matthews' great primer. But if you refuse to do even that, here it is in a few sentences: Libor is the rate at which banks lend to each other. It's considered a measure of how safe the financial system is. As such, many banks use it as a benchmark to set the rate on the consumer debt you and I buy -- they start with the Libor rate and then they add on whatever they think our risk is. But there's something odd about Libor: It's a rate the banks report themselves. And, in recent weeks, we've found out Barclays was lying about it.

In recent days, however, we've found out that it wasn't just Barclays lying about it. Everybody was lying about it. Citigroup was lying about it. German banks were lying about it. We know a number of banks -- though we don't know exactly who -- are talking to the feds about a settlement. We know HSBC, Deutsche Bank and JPMorgan Chase are being investigated.

On Wednesday, Lloyd Blankfein, CEO of Goldman Sachs, was asked about Libor. "The biggest impact is once more undermining the integrity of a system that has already been undermined substantially. There was this huge hole to dig out of in terms of getting trust back and now it's that much deeper."

Remember when Ronald Reagan said "trust, but verify"? Well, we've spent the last few years verifying. And when it comes to the financial system, the lesson is not to have too much trust.

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Now, I am always skeptical of of all new private non-profits because of the neo-liberal practice of using non-profits as 'progressive posers'.  So, I do not know if the Public Banking Institute is the good guy----but the policy is right on.  Vermont has adopted Public Banking and there is a completely guideline to rolling these structures out that I would use here in Maryland.  Remember, if you do not have Rule of Law and you leave the public justice system dismantled----even public banking will become corrupt.  Look at MECU to see public funds used in questionable deals.

We must starve Wall Street not feed it.  When the Maryland Assembly and Baltimore City Hall send public pensions to Wall Street in the guise of 401Ks-----used as fodder by Wall Street even more than pension funds......you know you have pols working for global corporations and not you and I.

  LET'S LISTEN TO A CRIMINAL WALL STREET RATING AGENCY LIKE MOODY'S AND STANDARD AND POOR WHO TELL US TO CUT BACK PUBLIC PENSIONS BECAUSE THEY WERE VICTIMS TO 1/2 OF THEIR VALUE STOLEN IN FRAUD AND PUBLIC MALFEASANCE SAY THESE NEO-LIBERALS.


This is not socialism-----it is public justice and equal protection!



Why Public Banking? Large Private Banks Are Fleecing America.  What are YOU going to do about it?


The Public Banking Institute (PBI) is actively enrolling leading organizations to participate in a national coalition to create a network of public banks. These banks can be capitalized from several sources, including public employee and other labor pensions, with the core deposits coming from tax and other revenues from city/county/state governments. 

Organizations supporting this coalition include large associations and established organizations in the following areas: independent business, labor, new economy, food systems, religious institutions, and others. These organizations will be announced soon.

We will focus campaigns for public banking in 5-7 targeted areas that have a good chance of succeeding with teams already formed on the ground. Once we score some victories, we can expand to other areas. 

We propose the immediate formation and funding of a coalition that will create public banks with specific focus on key states, such as Oregon, Washington, Montana, Vermont and Hawaii, and cities and large counties in other states (California, Illinois, Pennsylvania, New Jersey, and others).

Our Vision We envision a network of sustainable state and local publicly owned banks that create affordable credit as an alternative to the current unsustainable, high-risk, centralized private banking system.This network of public banks will provide affordable credit to local communities, which are able to develop their economies and create well-paying jobs and provide the livelihoods needed for working families.

Localization of credit is key to restoring the financial security that our communities and middle class once enjoyed – and to providing communities new tools to address economic, racial, and social inequities.


Do you share this vision?  Then join us!  

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The American people want to get rid of global corporate dominance and rebuild the domestic economy of small and regional businesses to drive Maryland's economy.  Until we receive justice from Wall Street-----that will take a decade or more----we need to provide the safety of public banking.  It meets the requirements of focusing on domestic economy-building in that lending would be centralized to just that----local business ownership and home-ownership------JUST WHAT WALL STREET AND YOUR NEO-LIBERAL IS TRYING TO KILL!

WALL STREET IS HOLDING THE US ECONOMY HOSTAGE TO STAGNATION AND NO FINANCIAL INVESTMENT THAT IS NOT EXPANDING GLOBAL CORPORATE CONTROL AND YOUR POL IS MAKING SURE OF THIS!

Keep in mind public banking can be taken by fraud and corruption as much as private-----look at Spain and Greece to see a public banking system that captured politicians imploded with fraud and corruption.....so, the goals of this group sound good----but if we are not rebuilding public justice and equal protection-----it will be used against us as well.

IF A GROUP IS NOT SHOUTING THAT RULE OF LAW IS SUSPENDED AND NEEDS TO BE REBUILT WHILE OFFERING THESE PUBLIC SOLUTIONS---THEY ARE WORKING AGAINST THE PUBLIC INTEREST.

Vision

We envision a network of sustainable state and local publicly owned banks that create affordable credit as an alternative to the current unsustainable, high-risk, centralized private banking system and that provide affordable credit to local communities, which are able to then develop their economies and create well-paying jobs and provide the livelihoods needed for working families. Localization of credit is key to restoring the financial security that our communities and middle class once enjoyed – and to providing communities new tools to address economic, racial, and social inequities.

Pledge We support public banking as a solution to provide affordable credit to individuals, municipalities, students and businesses and pledge to advocate for and promote public banking whenever possible. 

General Plan We have been building on the research, education and grassroots organizing fom the last 20 months. Our path for the Public Banking Coalition is to take what we have learned and create a model of public banking at every level of public governance. 



Build the coalition- This movement needs political power. Political power will come from organizations, workers, students, businesses, and influential individuals organizing and talking to decision makers from a position of strength.

• Core staff is currently traveling the country gaining partners and growing support.
• The Public Banking Coalition needs to establish base agreements and ways and means for reaching and activating membership as well as helping lift voices in local communities.
• Identify target states, counties and cities in which success is most likely and focus our efforts.

Educate at the national level

• Create a media campaign to reach and educate people that public banking is an attractive and real possibility; media will be intensified in our target areas.
• Over 2.6 million people have viewed one video from our first national conference. 
• Conduct feasibility studies demonstrating how public banking can work in specific localities.

Train at ground Level 

• Each of our target areas needs educated and activated leadership to make the right contacts in the right places in local communities, business and government, as well as provide opportunities for the electorate to get involved.
• Publish a legislative guide, training presentations, and handouts to aide local public banking initiatives.
• Hold local public forums that educate and grow public banking efforts.

Open the next public bank

• Move a legislative body to say yes!
• Create banks through initiatives, going directly to the electorate where possible and advisable.
• Publish research on the legal requirements, structure, and daily operations of existing and proposed public banks and financing systems.
• Hire banking professionals, with accountability to the people through oversight from elected officials and respected parties who are required to conduct business in a transparent and public process.

Strategy  Build national narrative for public banking through press releases and online campaigns (with active assistance of many groups including The Agenda Project) while focusing on grassroots organizing to establish public banks in key states (Oregon, Washington, Montana, Vermont and Hawaii), counties in California, Illinois and Pennsylvania and in the District of Columbia.

Roadmap Documents  

Roadmap -- Final 060213.doc click to download

Roadmap -- Presentation 060213.doc click to download   Objectives The objectives of the national Public Banking Coalition include:

1. Position public banking as a compelling and legitimate alternative to the private banking monopoly;
2. Fund and publish studies that accelerate the creation of public banks;
3. Frame the media narrative so more people understand the possibility and benefits of public banking; and,
4. Work through established organizations to organize and educate local and state groups who advocate for and establish a public bank in their respective area.

Projects to be funded: The Public Banking Coalition is soliciting funding for the following projects:

• Measuring the counter-cyclical impact of the Bank of North Dakota from 2008 - 2010
• Determining the velocity of money in North Dakota and the connection between the new money created by BND and the state's $40B GDP
• Projecting the impact (on those who are unbanked or underbanked) of a US Postal Savings Bank in a sampling of states
• Developing the technical specs for a dual-currency (USD and local currency) payment system on a mobile platform
• Identifying the conversion rate, and its baseline valuation, for public bank-issued currency
• Projecting the economic impact on locally generated food and energy with funding from a public bank in targeted states and counties
• Researching and writing the case study of the extent to which the Sparkassen banks funded the upsurge in local energy production in Germany

Open Letter to Philadelphia City Council Members



PA Project- PBI Letter to PHL Council 04.2513 (1).pdf click to download Use this letter as a template for your county supervisors!

Petition  Sign a petition to all State and County Public Finance Officeholders


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This article gives a good overview of private banking's takeover of all finance in Canada----one of the most progressive nations in the world.  It was done in Canada just as it happened in the US and Europe---global corporate pols took over political parties pretending to be people's candidates when they were not.    Blair in the UK pretended to be Labor Party---Clinton in the US pretended to be progressive democrat----and in Spain and Greece even the Socialist Party was taken by neo-liberal posers.  This was a huge political takeover orchestrated by Wall Street.

As you see below, Canada has the mechanism we need in the US---the public bank---to take back control of economic functions from private banking.  EASY PEASY.

IT IS NOT SOCIALISM ----IT IS EQUAL PROTECTION FOR THE PUBLIC.   



Oh Canada! Time to Bring Back Your Public Banking System

.April 27th, 2012

- See more at: http://www.helladelicious.com

In December 2011, this charge was echoed in a lawsuit filed in Canadian federal court by two Canadians and a Canadian economic think tank. Constitutional lawyer Rocco Galati filed an action on behalf of William Krehm, Ann Emmett, and COMER (the Committee for Monetary and Economic Reform) to restore the use of the Bank of Canada to its original purpose, including making interest free loans to municipal, provincial and federal governments for “human capital” expenditures (education, health, and other social services) and for infrastructure. The plaintiffs state that since 1974, the Bank of Canada and Canada’s monetary and financial policy have been dictated by private foreign banks and financial interests led by the BIS, the Financial Stability Forum (FSF) and the International Monetary Fund (IMF), bypassing the sovereign rule of Canada through its Parliament.

Today this silent coup has been so well obscured that governments and gamers alike are convinced that the only alternatives for addressing the debt crisis are to raise taxes, slash services, or sell off public assets. We have forgotten that there is another option: cut the debt by borrowing from the government’s own bank, which returns its profits to public coffers. Cutting out interest has been shown to reduce the average cost of public projects by about 40%.

Game over: we win.

Ellen Brown is an attorney, president of the Public Banking Institute, and author of 11 books. Her websites are http://WebofDebt.com, http://EllenBrown.com, and http://PublicBankingInstitute.org. In her latest book, “Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free,” she shows how the power to create money has been usurped from the people and how we can get it back.

- See more at: http://www.helladelicious.com/diy/2012/04/oh-canada-time-to-bring-back-your-public-banking-system/#sthash.D3Cmz7En.dpuf


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       So, how does Wall Street stop the current calls for public banking and get hold of the next public agency it wants to implode?  Post Office banking!  Just look at the neo-liberals flying to this policy.  Remember, the Post Office is not in financial trouble----it is simply having all of its revenue-making operations privatized and there is that hundreds of billions in pension pre-payment. 

THE POST OFFICE IS FINE ON ITS OWN AND DOES NOT NEED BANKING TO HELP IT!

Think about this----neo-liberals and neo-cons started this public private partnership policy with the Federal Housing Agency by creating Fannie and Freddie.  FANNIE AND FREDDIE IMPLODED THE FHA WITH FRAUD AND CORRUPTION.  Then neo-liberals and neo-cons created Sallie Mae privatizing Federal Student Loans and imploded that with fraud and corruption.  Now, neo-liberals are working to end these two Federal agencies that were working fine before these partnerships and helped low-income people for decades with strong quality service.

TAKE A WELL-WORKING OPERATION AND BLOW IT UP WITH FRAUD AND CORRUPTION---THE BAINS CAPITAL APPROACH TO KILLING A FEDERAL AGENCY!

Neo-liberals and republicans have worked for decades to dismantle the Post Office.  It was not only the republicans--neo-liberals as well.  With a super-majority of democrats in 2009 why did they not take 10 minutes to end pension pre-funding that is killing the Post Office?  It was on their radar and they didn't because they intend to end this service.  No, what neo-liberals and republicans do is place the Post Office in the business that is filled with fraud and corruption AND IT WILL IMPLODE THE POST OFFICE.  We have a credit union system that was built to do just what neo-liberals aer now calling for the Post Office to do and these credit unions are now operating just like WALL STREET BANKS.  If you notice it is again the low-income used as an excuse to take this great public agency into harms way----Freddie was created to give low-income people more opportunities to own homes.....Sallie Mae was created to give low-income people more opportunity at student loans and in both cases low-income people and taxpayers were fleeced in fraud.

DON'T ALLOW NEO-LIBERALS TO STEAL THIS ISSUE.  WE NEED A PUBLIC BANKING SYSTEM AND IT NEEDS TO STAND ALONE. 

Democrats say struggling post office branches could dabble in banking

By Bernie Becker - 02/05/14 06:00 AM EST  The Hill Blog


 Congressional Democrats are coalescing behind the idea of allowing local post offices to fill gaps in the banking business.

They say the move would be a victory for both the cash-strapped U.S. Postal Service and for low-income communities that are often underserved by the major banks.

The idea gained steam after the Postal Service’s inspector general said in a report last week that the USPS could likely add billions of dollars a year to its coffers by offering prepaid cards or loans to the 68 millions adults who currently get little or no services from banks.If the Postal Service partnered with banks to offer more services, those customers would then have an alternative to the often hefty fees charged by payday lenders and other banking alternatives, the inspector general said.

Rep. Elijah Cummings (Md.), the top Democrat on the House Oversight Committee, had released legislation to give the USPS more authority to open new revenue streams like check cashing even before the inspector general’s recommendations.

In recent days, Sen. Elizabeth Warren (D-Mass.), the populist champion embraced by progressive groups, endorsed the idea in a Huffington Post op-ed.

“There’s a lot of low-income people who no longer have banking access, who need the opportunity to cash a check or do modest kinds of banking,” Sen. Bernie Sanders (I-Vt.), another backer of the idea, told The Hill. “So I think there is an opportunity there.”

But to the banking industry and congressional Republicans, the idea is far from the win-win that Democrats and the inspector general claim.

GOP lawmakers argue that local post offices shouldn’t be given more leeway to compete with private-sector companies because of a host of inherent advantages it would have — including generally being exempt from a host of taxes. 

“There are unique things that the Postal Service can offer. But being your local loan shark is not one of them,” said Rep. Jason Chaffetz (R-Utah).

“To try to sell T-shirts, coffee and give you a bridge loan — I don’t think is going to solve the problem the post office has,” Chaffetz added.

Advocates for the banking industry dismiss the idea that they’re afraid of the competition and argue that an agency bleeding cash should hardly be allowed to wade into financial services.

“This is the worst idea since the introduction of the Edsel,” said Camden Fine, the chief executive of the Independent Community Bankers of America.

“They can’t even deliver your mail on time. The track record speaks for itself,” Fine added. “If this was about competition, give me all the sloppy competitors I can get.”

The debate is part of a broader argument among lawmakers and stakeholders about how to best put the agency — which has racked up more than $25 billion in losses over the last three years — on more solid financial footing.

Lawmakers and outside groups have for years sought to craft postal reform proposals that would strike a balance between making cuts to an agency that has seen plunging mail volume in recent years, and giving the USPS access to new revenue streams.

Top Republican lawmakers have generally been more willing to let the Postal Service roll back its Saturday delivery. But liberals and postal unions have pushed back on those and other cost-cutting ideas, and sought to give the agency the opportunity to expand its business portfolio.

The last major postal reform bill, which was enacted in 2006, bars the Postal Service from offering new products that aren’t mail-related in most cases.

But the inspector general report issued last week suggests that the USPS — which already sells money orders — could explore new financial services options within its existing authority.

In all, the Postal Service inspector general says that customers underserved by banks spent about $89 billion on interest and fees on alternative services in 2012, or roughly $2,400 per underserved household. The USPS could bring in close to $9 billion — far more than its 2013 losses of $5 billion — if it got just a tenth of the interest and fees now going elsewhere.

The options raised by the inspector general include partnering with banks to offer prepaid cards that consumers could use to pay bills or take out cash, and to offer products that encourage consumers in low-income areas to boost their savings.

Customers with the prepaid postal cards could also have access to smaller loans, instead of having to seek out a payday lender.

The inspector general argued that the Postal Service is well suited for banking, given that it has more than 35,000 locations around the country.

At the same time, roughly 2,300 banks closed in 2012, the inspector general noted — with the vast majority of closures since the fiscal crisis coming in areas below the median household income level.

Rep. Stephen Lynch (D-Mass.), a senior member of the House Oversight Committee, said he sympathized with the concerns voiced by banks and the GOP.

“I understand the skepticism. I share it,” Lynch said. “But I think there might be a way to address the needs of some of those under banked communities.”

Leading postal reform proposals also weigh in on the idea.

A House GOP measure, crafted by Oversight Committee Chairman Darrell Issa (R-Calif.), would require that Congress approve any new non-postal products offered by the USPS.

On the other side of the Capitol, a bipartisan Senate measure, to be considered by the Homeland Security panel this week, would give the USPS wide latitude to explore non-postal offerings.

But the bill from Sens. Tom Carper (D-Del.) and Tom Coburn (R-Okla.) would also allow the agency’s regulator to weigh in on whether the USPS has the authority to offer certain products.

Either way, banking officials said they will continue their efforts to limit the Postal Service’s work on financial services.

Advocates for the industry say there are plenty of banking options for customers in low-income areas, and that there’s no guarantee the sorts of services the Postal Service might offer would be profitable.

Plus, Richard Hunt of the Consumer Bankers Association noted that federal regulators had effectively forced some banks to not offer a sort of advance loan that he said could be similar to what the Postal Service offers. Consumer groups have slammed that advance loan, which would be tied to a customer’s paycheck.

“We’re not monolithic. We have 7,000 competitors, and credit unions,” Hunt told The Hill. “There’s nobody in the Postal Service right now that’s experienced in the banking sector.”



Democrats say struggling post office branches could dabble in banking

________________________________________


Thursday, May 30, 2013

Cameron hands UK Post Office to Goldman Sachs
Britain Plans I.P.O. for Postal Service LONDON –

Britain is preparing to privatize Royal Mail, the country’s postal service, whose origins date to 1516 and the carrying of post for Henry VIII and the Tudor court.
The government said on Wednesday that it had appointed Goldman Sachs and UBS as the lead banks to manage a planned initial public offering on the London Stock Exchange later this year. Barclays and Bank of America Merrill Lynch will also work on the sale. The planned offering could value Royal Mail at about £3 billion ($4.5 billion), according to some analysts.
The government has been considering a sale of Royal Mail for years, but plans became more concrete over the last year when the company’s finances started to improve. Pressure is also growing on the government to find additional savings to reduce the budget deficit. Like other postal services, Royal Mail was hurt as more people swapped handwritten letters for e-mail. But earnings have improved recently, and the company reported that profit more than doubled for the year ended March 31 as more people shopped online and received their purchases by post.
The sale of the service, which was opened to the public by Charles I in 1635, would be the biggest privatization in Britain since the railroads in the 1990s. Royal Mail is one of Britain’s largest employers, and the government plans to set aside about 10 percent of Royal Mail’s shares to be held by its workers.
http://dealbook.nytimes.com/2013/05/29/britain-plans-i-p-o-for-postal-service/

Comment by Road Hog -

I blogged about this a few years ago.

This is where neo-liberals in Congress are going with this Post Office as bank policy.  Believe me, republicans have been trying to do this for decades so they are not against it----it is a Wall Street policy.  The UK Postal System---one of the oldest in the WEST has been completely captured into a global corporate structure.


Post Office announces plans to launch current account Customers want 'simplicity, transparency and good value for money', says Post Office director of financial services

• Hilary Osborne
• The Guardian, Wednesday 10 April 2013
• 
  

The Post Office is set to launch a current account market this spring. Photograph: Philip Toscano/PA Post Office has announced plans to re-enter the current account market with a new banking deal for consumers over the next few weeks. Details of the account are scant, but it is thought that the combination of a well-known brand and a large branch network could make it a serious challenger to the big four banks, particularly when new rules making it easier to switch accounts come into force later this year.

Nick Kennett, director of financial services at Post Office, said that research into the current account market had suggested customers primarily want "simplicity, transparency and good value for money".

He added: "With over 11,500 branches, which is more than all the UK banks combined, we can provide this through the most convenient and accessible retail network in the UK."

Post Office already offers a range of financial services including savings, credit cards and travel money, and recently introduced in-branch mortgage advice for consumers. Kennett said that the launch of a current account was part of the "significant transformation" of the brand.

The account will initially be launched in a small number of branches, before a wider-roll out next year.

Kevin Mountford, head of banking at comparison website MoneySupermarket, said the launch was "big news" for consumers. "The fact that the Post Office is a popular trusted brand, already has a large savings account portfolio, and has over 11,500 branches throughout the country means it can be a serious challenger in the current account market," he said.

Michael Ossei, personal finance expert at uSwitch.com, said the banks should see Post Office as "a serious threat", with those in rural areas especially likely to be attracted by its branch network.

However, Andrew Hagger, director of Moneycomms.co.uk, cautioned that more detail is needed, pointing out that the excitement surrounding Marks & Spencer's entrance to the market last year quickly subsided when it emerged the accounts had fees of up to £20 a month.

This is not the first foray into current account banking by Post Office, which was the home of the state-owned Girobank for two decades until its sale to Alliance & Leicester building society in 1990. At that point, it was the sixth-largest provider of current accounts in the UK. It comes at a time when competition in the market is heating up, with Tesco and Virgin Money known to be working on their own launches, and existing providers enhancing their deals to attract consumers.

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.