Tuesday, August 17, 2010

Tea Party RE: Net Neutrality, Unclear on the Concept...

Tea Partiers Say Net Neutrality Hurts Freedom
Evan McMorris-Santoro | August 16, 2010, 8:42AM

The tea party, a movement whose success on the grassroots level is in many ways attributable to the power of free and open Internet communications, is joining the growing conservative crusade against the FCC's plan to enforce net neutrality on internet service providers. According to one tea partier involved in the effort, the movement is opposing net neutrality because "it's an affront to free speech and free markets."

The push toward an Internet regulated by corporations rather than government seems to be a new part of the tea party agenda, with fears mounting that the Obama administration's push for net neutrality is, essentially, the next cap-and-trade, government health care takeover or any of the myriad other socialist plots of the past year and a half.

As The Hill's Sara Jerome reports, "35 Tea Party groups" across the country have joined a coalition of conservative groups calling on the FCC "not to boost its authority over broadband providers through a controversial process known as reclassification." The coalition recently sent a letter to the FCC calling on the government agency to keep its hand off the Internet.

One of the groups who signed the letter was the Fountain Hills Tea Party in Arizona. Like many, many grassroots tea party groups across the country, Fountain Hills has a Ning social networking site, as well as a more traditional homepage, both key to communicating with members. Supporters of net neutrality often suggest that it's smaller sites like these that would suffer the most under the tiered Internet plan ISPs are expected to establish if no government rules require them to treat all Internet traffic equally.

Much like the Netroots movement, the tea party's communication and information dissemination is fueled by online tools. In addition to Ning, tea partiers are avid tweeters, skypers, YouTubers and Facebookers. Yet their seeming embrace of an Internet divvied up and defined by corporate deals puts them at odds with their Internet-savvy colleagues on the left, who have clamored for net neutrality for years.

Peter Bordow, a leader of the Fountain Hills Tea Party, told me that he's not completely ready to make a firm judgment on net neutrality yet, but he leans toward opposing it. He has some experience with the issue, having provided Internet services to customers in the past. (The letter to the FCC is signed by Jeff Cohen, another leader of Fountain Hills. But Bordow told me that his group "did not, as an organization, sign any position or opinion letter of any kind regarding net neutrality.")

"To be completely honest, I have seen and heard fairly compelling arguments on both sides of this issue," he said Friday. "As a former ISP owner, and strong believer in the free market, I tend to oppose legislation that gives appointed bureaucrats the power to tell (and enforce) how companies design and deliver their services to their customers."

In an email, Bordow broke down his concerns as a web-friendly tea partier when it comes to net neutrality:

It is possible (and may in fact even be predictable) that this ability to selectively throttle traffic could be used to "unfairly" limit certain traffic (Internet destinations) to users. I just don't think it is the Government's responsibility (or within their enumerated powers) to legislate powers to appointed bureaucrats to decide "what is fair".
History shows us again and again that whenever the power to decide "what is fair" is given to Government officials and/or appointed bureaucrats, there is far more propensity and opportunity for abuse of this power. It is only when free citizens and the free market are able to flex their collective purchasing muscle that we can be sure that this power is not abused.

So there you have it: on balance, tea partiers would rather leave companies in charge of the Internet because, as Bordow says, that's safer than another government bureaucracy. Indeed, Jamie Radtke, a leader of the Virginia Tea Party Patriot Federation and another signatory on the letter, told The Hill's Jerome that the Obama administration push for net neutrality was the same kind of government encroachment the tea party movement opposes on fronts like health care and direct intervention in the economy. Radtke said to expect the tea party to become a vocal part of the opposition to net neutrality rules as the debate continues to heat up.

"I think the clearest thing is it's an affront to free speech and free markets," Radtke told the paper. "There are so many assaults on individual liberties -- the EPA, net neutrality, cap-and-trade, card-check; the list goes on -- that sometimes the Tea Party doesn't know where to start its battles."

Check out the letter sent to the FCC (as first published by The Hill) here:

Tuesday, August 3, 2010

$19.4 Million in pay, $100k in fines for CitiBank Exec.

Where Are The Prosecutions?

SEC Lets Citi Execs Go Free After $40 Billion Subprime Lie

Saturday 31 July 2010
by: Zach Carter | AlterNet | News Analysis

What is the penalty for bankers who tell $40 billion lies? Somewhere between nothing and a rounding-error on your bonus.

The SEC just hit two Citigroup executives with fines for concealing $40 billion in subprime mortgage debt from investors back in 2007. The biggest fine is going to Citi CFO Gary Crittenden, who will pay $100,000 to settle allegations that he screwed over his own investors. The year of the alleged wrongdoing, Crittenden took home $19.4 million. That’s right. Crittenden will lose one-half of one percent of his income from the year he hid a quagmire of bailout-inducing insanity from his own investors. That’s it. No indictment. No prison time. Crittenden doesn’t even have to formally acknowledge any wrongdoing.

In 2007, as financial markets were freaking out about the subprime situation, Citi repeatedly told its investors that it owned just $13 billion in subprime mortgage debt. It was true—if you didn’t count an additional $40 billion in subprime debt that the company was also holding onto.

Citi’s CEO at the time, Chuck Prince, has not been charged with anything. As Yves Smith emphasizes, all of the top financial officers of every major corporation are responsible for the accuracy of their quarterly financial statements. Lying on those statements is a federal crime. This is the sort of thing that securities fraud cases are built around.

The SEC’s own statements about what went on at Citi are damning. If the agency can make this kind of information public, they ought to be pursuing criminal prosecutions. The SEC says that senior Citi management had been collecting information about the company’s subprime situation as early as April 2007, but repeatedly cited the $13 billion figure to investors over the next six months, waiting to acknowledge the additional $40 billion in subprime debt until November 2007. The SEC also says that Crittenden knew the “full extent” of Citi’s subprime situation by September at the latest, but the company continued to cite $13 billion in earnings reports through October.

Citi’s subprime shenanigans had consequences for taxpayers, pushing the company to the brink of total collapse and prompting one of the biggest bailouts of 2008.

Phil Angelides and the Financial Crisis Inquiry Commission deserve a lot of credit for highlighting the absurdity of Citi’s actions in a hearing on April 7 of this year (the key passage starts on page 368 of this pdf transcript). Angelides’ line of questioning revealed that even Citi’s board knew that the subprime exposure was much greater than what the company was claiming in public. Citi’s board at the time included Robert Rubin, former Treasury Secretary and architect of much of the deregulation that lead to the current crisis who took home $120 million for his work at Citi.

Either the SEC or the Justice Department could be pursuing criminal cases against Citi executives. What does it take to get the Justice Department’s attention on a financial fraud case? You have to launder $380 billion in drug money, and even then, DOJ lets you off with a slap on the wrist. The DOJ caught Wachovia doing just that, and the bank is getting off with a minor fine that won’t even make a dent in it’s second-quarter profits.

The Citi settlement is worse than a get-out-of-jail free card for Crittenden, Prince and their cohorts. The SEC actually fined Citi’s shareholders $75 million for the alleged wrongdoing of their executives. For some varieties of corporate misconduct, like Wachovia’s drug money laundering, hitting shareholders with the fine is appropriate. Wachovia’s money laundering operations directly enriched the company and its shareholders. This was not the case with Citi’s subprime scandal. Citi’s executives were hurting their own shareholders. Instead of meting out serious punishment to those executives, the SEC is fining Citi’s shareholders, the very people wronged in the incident.

This deference to the elites who wrecked the economy just keeps playing out. When Bank of America lied to its shareholders about billions of dollars in bonus payments it was about to make, the SEC decided to fine BofA shareholders and let the firm’s executives off the hook. The decision-makers at Wachovia who allowed the firm to funnel drug money despite repeated warnings by whistleblowers have not been indicted. Nobody at Washington Mutual has been indicted despite clear evidence of rampant mortgage fraud at the firm. Lehman Brothers’ repo 105 accounting scam is going unpunished, as are similar schemes at other banks including Bank of America. After much public relations flogging, the SEC let Goldman Sachs off easy.

More than 1,100 bankers went to jail in the aftermath of the savings and loan crisis. Massive financial crises simply do not occur without widespread fraud. The failure to prosecute that fraud poses systemic risks for the global economy. With too-big-to-fail behemoths dominating the financial landscape, the prospect of prison is the only serious check on executives interested in cannibalizing the economy for personal gain. If the SEC and the Department of Justice continue to let executives get away with outrageous acts without even taking the case to court, our financial system is doomed to repeat the same excesses and abuses we’ve seen over the past decade. If Crittenden did what the SEC claims he did, he screwed over his own investors and scored a huge bonus in the process. Everybody on Wall Street understands the implications: breaking the law is a great way to make a lot of money. When a class of elites can thumb its nose at the law with impunity, the result is not only a threat to the efficiency of our economy, but a threat to the basic functioning of our democracy.

Zach Carter is AlterNet's economics editor. He is a fellow at Campaign for America's Future, and a frequent contributor to The Nation magazine.