One of the few things presidential candidate John McCain was indisputably correct about in 2008 was that Securities and Exchange Commission Chairman Chris Cox deserved to lose his job. That, of course, didn't happen. President Bush retained full confidence in Cox, who had pushed deregulation throughout his terms in Congress. Cox defended his "steady leadership" at the SEC, saying he's most proud of not panicking during the crisis, but many believe that Cox did next to nothing in terms of proactive market regulation and enforcement. (What do you expect of someone who is close, close friends with Art Laffer and who loves Ayn Rand?) Here's a one paragraph review of the carnage that occurred during Cox's chairmanship:
During [Chris Cox's] tenure, the SEC has watched as all the investment banks it oversaw collapsed, were swallowed up or got out of their traditional line of business. The agency, meanwhile, was on the sidelines while the Treasury Department and Federal Reserve worked to bail out the financial sector. And the SEC, by its own admission, failed to detect an alleged $50 billion fraud by Bernard L. Madoff that may be the largest Ponzi scheme in history.
Now, is Cox entirely responsible for all those disasters? Of course not. But it is incontestible that he left the SEC a helluva lot worse off than when he found it, and did little good during a time of maximum financial peril. (Cox was appointed after William Donaldson, who had a history of siding with the Democratic members on the SEC rather than the Republicans.) The SEC's mission, by the way, includes acting “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” During his term the SEC web site stated: “As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.”
I'm sure Cox would say he did the best he could given what he knew at the time, and he instructed the SEC to use all the tools at their disposal to root out the bad stuff. Unfortunately, it seems, they misinterpreted that directive:
The Securities and Exchange Commission is the sheriff of the financial industry, looking for crimes such as Bernard Madoff's Ponzi scheme, but a new government report obtained by ABC News has concluded that some senior employees spent hours on the agency's computers looking at sites such as naughty.com, skankwire and youporn as the financial crisis was unfolding.
Report exposes financial regulators surfing for porn on government time."These guys in the middle of a financial crisis are spending their time looking at prurient material on the Internet," said Peter Morici, a professor at the University of Maryland and former director of the Office of Economics at the U.S. International Trade Commission.
"It's reckless, and indicates a contempt for the taxpayer and the taxpayer's interest in monitoring financial markets," Morici said.
Instead of monitoring Lehman Brothers these porn-dog SEC accountants and lawyers were watching "Lay-man Brothers". Instead of monitoring Goldman Sachs, they were watching "Goldman's Sack". "Bare Stearns" instead of Bear Stearns... I could go on forever. Oh, you want more? Alrighty then: instead of Morgan Stanley, Katie Morgan. Instead of Merryl Lynch... um... uh... Stormy Daniels. (Ok, I guess I couldn't really go on forever. Speaking of which, how in the hell do you watch porn for eight hours straight? I get bored after eight minutes.)
Chris Cox deserves a good chunk of blame (although there's much to go around-- and not to just fellow Rand-y Republicans like Alan Greenspan). He was the wrong person at the SEC during the worst possible crisis. And dozens of senior level people at the SEC spent a shocking amount of time downloading massive amounts of porn, during the height of the biggest U.S. financial meltdown since the Depression.
Heartfelt condolences to Troy of Gulfsails, whose uncle perished in the explosion on the Gulf Coast oil rig (which had been burning since Tuesday and has now collapsed into the Gulf). My thoughts go out to Troy and all the other families affected by this disaster.
"Yeah, it's interesting. People will say anything when they have the cloak of anonymity. It's sort of like terrorism. We don't know where to aim our bombs so we can't go after a country because there is no one place to focus on. It's the same thing with the internet, you don't know who to go after."
-- Columnist Kathleen Parker, comparing anonymous bloggers to terrorists on Face the Nation.
"[What's the difference between] email and a pager?"
-- Supreme Court Justice John Roberts, during oral arguments in the case of City of Ontario v. Quon [Update: in the comments Maitri says the quote was actually sensible, in context, so YRHT will retract the qow, apologize to the Chief Justice, and make a substitution].
"So it is no accident that modern liberalism finds it so easy to resort to physical violence because, given its roots and having lost the intellectual battle, bullying is all it has left besides trying to cloak its real motives and to deceive the public into thinking it is something that it is not (as expertly done in the 2008 elections). Scan the headlines; you’ll find that violent protests of political figures and institutions in recent years always have been the work of the left (you never see the right trashing Starbucks, shouting down and threatening speakers, or using force). You don’t see this from the right because it wins arguments through reason, not depending on emotive appeals that today substitutes for the use of fact and logic by the left that thus tempts it to extend the natural violence voiced in liberalism into practice."
-- Professor Jeffrey Sadow, asserting that the "French Quarter Fracas" attack (presumably by anarchist thugs) reveals liberalism's "true self". On the 15th anniversary of the Oklahoma City bombings, Sadow links liberalism to an isolated attack by thugs on the radical fringe, yet absolves conservatism of like acts.
Matt Taibbi channels his inner HST-- or does he always do that?-- and comments on the NFL Draft:
This is about as dark and freaky as our sanitized modern American mainstream culture ever openly admits to being. These are bloodless corporate enterprises using advanced scientific and economic metrics to measure the material worth of human flesh down to the half-pound, the 16th of an inch. Which would be horrifying and morally repulsive under normal circumstances, but when added to a strong rooting interest in your home team, can become for certain people one of those guilty pleasures you just can’t give up because you enjoy it so much, like jerking off while hanging yourself in the shower.
Frankly, I'd take shower-stall onanism over the NFL draft any day, because the draft mostly bores me. For fans, it's a pointless exercise to don a guru hat and act overly surprised or disappointed about selections of athletes whose future value to a team is mostly unpredictable (until years later when we either get to righteously complain or quietly reverse our initial opinions.) Yay. Big fun.
But Taibbi is right about the "dark and freaky" aspect of draft evaluations. The push to quantify a player's potential via batteries of physical and psychological tests has entered absurd dimensions. The tests supposedly "reduce risk" for the football team corporations, but in my view the emphasis on them has become its own psuedoscience. For example, I read that one of the psychological tests asks players if they "prefer tall women". Answering YES means one thing for the "profile", answering NO means another. However, some test-takers answered YES, but crossed out the "t" in "tall". Clever! But how do you properly grade that? Does it skew the final score? Does it raise a red flag? Do teams have phrenologists on staff to offer second opinions?
Yesterday USA TODAY had a story on Florida State University Rhodes Scholar Myron Rolle, who studied medical anthropology at Oxford last year, and who plans to become a neurosurgeon after playing in the NFL.
Whoops. Big Red flag.
To some in NFL circles, the former Florida State star's decision to put football on hold for a year while studying at one of the world's foremost academic institutions — not to mention his plans to become a neurosurgeon — indicates a lack of commitment to the game...
Now Rolle must fight the "too-smart-for-the-NFL" stigma, and downplay his intelligence and his post-NFL career plans. He might've been a first round pick last year, but he decided to graduate and take advantage of his Rhodes Scholarship. NFL scouts view this decision as a "character issue" for Rolle, because it shows his lack of commitment to football. Also, some scouts view Rolle's intellect as a "hindrance", fearing he will overthink things during the game.
So, kids, the lesson here is this: if you want to be a football hero, don't be too smart. And if you are cursed with smarts, please have the good sense not to study at Oxford for a year or discuss your fancy post-NFL career plans. Teams will question your character, and rate you lower because of your intellect.
To continue with the high-toned nature of today's postings, I bring you this news, courtesy of Stinque:
An anal vibrator believed to be a bomb caused the California Highway Patrol to briefly evacuate its South Lake Tahoe area office on April 7.
Here's a relevant quote. Guess from which movie it sources. (I said guess, not google. If you know it, refer to it cleverly in the comments for others in-the-know, without naming it. Keep the game going for as long as possible. Bonus points for being sincerely wrong.):
A: My suitcase was vibrating?
B: Nine times out of ten, it's an electric razor but, every once in a while... it's a dildo. Of course, it's company policy never to imply ownership in the event of a dildo. We have to use the indefinite article "A dildo", never "Your dildo".
Stopping the pirates of Somalia hasn’t been easy. But when the navies of the world have repelled or killed the hijackers, it’s often involved three elements: helicopters, drones and trained snipers. The U.S. Army is working on a weapon which combines all three.
It’s called the Autonomous Rotorcraft Sniper System [ARSS]. It mounts a powerful rifle onto highly stabilized turret, and fixes the package on board a Vigilante unmanned helicopter...
If memory serves, two years ago the Russians unveiled a non-lethal heli-drone prototype during a speech by Gary Kasparov, in an attempt to intimidate the chess legend/freedom fighter. But the technology was deemed... premature.
Speaking of chess and surprises, I've been doggedly trying to make the Schliemann defense work in blitz games. Paul Morphy wouldn't approve, but 3. Bb5 f5 (?!) often leads to wild positions and frenzied exchanges. Unfortunately, the end results have been sort of like Mary Tyler Moore's attempts to pronounce "Schlichting" in Flirting with Disaster: fun, but not entirely successful.
Washington is suddenly looking very unkind to the firm that used to be known as "Government Sachs."
Couldn't happen to a nicer bunch of "great vampire squid[s] wrapped around the face of humanity, relentlessly jamming [their] blood funnels into anything that smells like money."
Last week the Securities and Exchange Commission filed civil fraud charges against Goldman [Sachs] related to the late stages of the subprime mortgage scandal, when some Wall Street firms were creating complex products like "synthetic CDOs" for the sole reason of shorting them and making money on their almost certain failure.
Bankster greedheads. Deregulate them at your peril.
But, to think that it's in anyone's interest to monitor ash-spewing volcanoes, to help planes route around polluted clouds that will shut down their engines, is crazy talk. Right, Governor Jindal? That sort of wasteful "science" attempting to mitigate billions of dollars in negative commercial impact is for Socialists who don't know how to pray-- right?
What did the volcano-monitoring foe say to the stimulus?
Sometimes I don't publish drafts of posts. I write them and wait for an opportune or relevant moment, but sometimes time passes and I just forget about them. Today the T-P did a front page story on Michael B. Smuck's "failed" enterprises, and all the local investors who feel scammed. I wrote the following post on 12/13/07, after the MBS filed for bankruptcy. It's not some revelatory piece, and hasn't been polished or edited, but it offers additional background to the nola.com story. If I don't publish it now, I probably never will: ===
MBS Cos., one of the largest multifamily property owners in the country, is delinquent, in default or in danger of becoming so, on more than $900 million in loans. For Michael B. Smuck (the MBS in the company name), that means he is in danger of seeing his apartment empire dissipate for the second time in his nearly 30-year real estate career.
Based in the New Orleans area [Metairie], MBS Cos. owns and operates more than 65 apartment complexes totaling about 17,000 units - all in Texas. ... PNC Financial Services Group originated almost all of the loans made to MBS Cos., about 90% of MBS's total loan exposure. Most of those loans are no longer on PNC's books because they were off-loaded into commercial mortgage backed securities (CMBS), which were then sold in the public markets and the risks spread to hundreds, if not thousands, of individual investors.
Well, that offloading was vewwy, vewwy kwevah, wasn't it? Except that now the banks have trouble gauging their exposure to these toxic securities-- no one's willing to disclose, so now all the banks won't lend to one another due to concerns about "counter-party risk". But that's another story.
So, back to Smuck. What accounts for all the delinquencies, deferred maintenance, impending foreclosures, and lack of cash flow in his vast property portfolio?
You guessed it! According to the article, Da Katricians are to blame:
Victimized by Hurricane Katrina
Smuck's current troubles can be traced back to Hurricane Katrina in 2005, the worst natural disaster in U.S. history. The firm repoThe hurricane devastated the coastal areas of Alabama and Louisiana and wiped out MBS Cos. headquarters and operations in Metairie, LA. The firm reportedly lost everything, including property and tenant files. Many of its employees (two-thirds by some estimates from individuals CoStar contacted for this story) left the area altogether. Smuck's companies, including MBS Management, which manages many of the complexes, seemingly never fully recovered.
Following the hurricane, Smuck made many of his vacant apartment units, particularly in the Houston area, available to displaced and homeless Gulf Coast refugees. Those residents have been paying low rents subsidized with money coming from the U.S. Federal Emergency Management Agency (FEMA). While that may have helped MBS increase occupancy at some of its units, it also likely prevented it from maximizing the properties' income streams.
Over the course of this year, FEMA has stopped issuing checks to displaced Katrina victims, cutting a source of revenue for some of MBS Cos.' properties.
Dem Katricians will gitcha every time!
Ahh, that good-hearted Smuck simply overextended himself on housing Katrina victims-- that was his big mistake. But what accounted for his previous bankruptcy?
Smuck is no stranger to adversity. In the 1980s, he built a huge portfolio of apartment properties in the Louisiana and Texas through the syndication of limited partnerships. His company at the time, Equity Group, was the largest real estate syndicator in New Orleans, controlling nearly 20 limited partnerships.
Those deals began to unravel following the closing of the limited partnership tax loopholes in the infamous Tax Reform Act of 1986. Many of the partnership properties, largely garden-style apartment complexes, were either deeded back to mortgage holders, foreclosed upon or placed into Chapter 11 to prevent foreclosure.
All of the factors that landed MBS in its solvency crisis remain unclear. Officials at the Texas Apartment Association and its chapter in Houston note that MBS apartment complexes received numerous evacuees of hurricanes Katrina and Rita in late 2005, but not proportionately more than other apartment operators.