McCain and Keating-Five Scandal

This 90-sec video is worth the watch.



This isn't the only time McCain has tried to influence regulators. Remember Vickie Iseman? McCain tried to strong-arm Federal Communications Commissioners on behalf of Paxon Communications for whom Iseman was a lobbyist.

Sources:

HuffPolitics YouTube Channel video.

Bush's Attempt to Stack the Federal Court with OperativesS

The US Attorney Firing Scandal is back in the news (Read: the Election Fraud and Federal Judge-Stacking Courts Scandals). Most of the news is about who knew what and when, and focuses on the firings and the cover. Little is said about the underlying motives.

The Deeper Attorney Firings Plot is about high-level election rigging and attempts to stack the courts with political operatives. (It's easier to become a federal judge if you have the "credentials" of being a US Attorney.)

The key example of this was Rove's man Timothy Griffin who was briefly installed to replace US Attorney Bud Cummins in Little Rock, Ark. Griffin is a key Bush operative, involved in voter-role purging via caging lists and the 2000 Florida operation. Griffin is now the focus of inquiries about Bush's attempt to use an obscure provision of the USA PATRIOT Act to permanently install Griffin as an interim U.S. attorney without being confirmed by the Senate.

Murray Waas reports:

One senior Bush administration official told me that White House staffers talk about their "nightmare scenario" in which any one of the three currently internal DOJ probes "spins out of control" and leads to the appointment of a special prosecutor with broad authority.

Let the nightmare begin.

Sources:

Huffington Post, U.S. Attorney Scandal Probe Enters White House Circle, Murray Waas, August 7, 2008.

Thanks for the lead to the article from LibHom's Blog.

Keating Five Belies McCain's Record

In his reponse to the New York Times article regarding lobbyist Vickie Imesman, McCain said:

At no time have I ever done anything that would betray the public trust nor make a decision which in any way would not be in the public interest and would favor anyone or any organization. As chairman of the Commerce Committee, there were hundreds of issues, including many telecommunications issues, that came before the committee. I had to make decisions on those issues, and I made those decisions. Sometimes they were agreed with, sometimes they were not.

Sometimes they were agreed with, sometimes they were not? Aside from being senseless, one has to wonder, does McCain mean to say "sometimes they were above board and sometimes they were not?" The evidence presented below proves that sometimes McCain favored private interests at the expense of the public, contrary to his statement above.

Two well-documented cases belie the claim McCain is upstanding. The first has a historic name, and the second involves lobbyist Vickei Iesman.

The first goes by the name of the Keating Five, of which McCain was one of the five. In short, the Keating Five crimes involved five US Senators who tried to influence regulators on behalf of wealthy Savings and Loan magnate Charles Keating during the 1980s version of today's mortgage and financial crisis. It's as illegal as trying to influence a judge's decision. The point. McCain cannot claim a long unblemished career; he's central to a famous influence peddling scandal.

The second more recent case goes by the name Paxson Communication. In the Paxson case, there is written evidence that McCain clearly violated ex parte rules barring outside pressure on Federal Communications Commission (FCC) decisions, like trying to influence a judge. What makes it even more improper is that McCain did this as chairman of the Senate Commerce Committee, which has jurisdiction over the FCC, its chartering legislation and its budget. Being in government myself, when the Senator of the committee that approves your budget asks you to jump, you don't wait to ask "how high," you immediately jump as high as you can.

The Issue:

At issue in the Paxson case was Paxson's desire to gain commercial control over a public TV station in Pittsburg, PA. It was a small-time issue, which makes it even more suspicious that Chairman McCain would take a personal interest. The reason for his personal interest was that the now-famous Vicki Iseman was lobbying Chairman McCain on behalf of Paxson.

What McCain Did Wrong:

First, McCain took sides on an issue in favor of a private organization contrary to the public interest. Second, he did so by trying to pressure the "judges" in the case, members of the FCC. There was an issue of the clock running out on Vickie Iseman's client Paxson. McCain wrote letters directly to each FCC commissioner inquiring about their votes, and asking them to respond by a specific date. FCC Commissioner Tristani wrote McCain saying, in diplomatic terms to the man who controlled the FCC budget:

“In that letter, you requested that each commissioner advise you in writing by the close of business today whether we have acted upon these applications. Respectfully, I cannot comply with your request, in order to preserve the integrity of our processes. It is my practice not to publicly disclose whether I have voted or when I will be voting on items in restricted proceedings prior to their adoption by the full commission.”

It's not only Tristani's practice, it's the law. She knew that McCain's actions were illegal. According to Angela Campbell, director of the Institute for Public Representation at Georgetown University Law Center, McCain's actions were formally proven to be a violation:

... on December 20th, we actually filed a complaint with the Federal Communications Commission’s general counsel, alleging that he had violated the rules, and we asked for them to act on it right away. They did not. However, eventually, in August of 2000, they did rule that the senator had violated the rules.

So, McCain's claims of high integrity are probably no better than any other Senator. Given his fame in the Keating Five scandal, his record is probably worse than most.

Update:

John McCain's campaign has denied the Sentor met with Paxson Communications in 1999; however, Lowell Paxson has contradicted this statement. McCain's Paxson Problem.

Sources:

The Arizona Republic, The Keating Five, Dan Nowicki, Bill Muller, March 1, 2007, AZCentral.com.

DemocracyNow!, Behind the John McCain Lobbying Scandal: A Look at How McCain Urged the Federal Communications Commission to Act on Behalf of Paxson Communications, February 22, 2008.

Paxton, Paxon

Subprime Scandal: Don't Blame the Victims

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It's so predictable. Soon you'll be hearing politicians and corporate media pundits repeat the following over and over:

"We feel bad that people are loosing their homes to foreclosure, but they should have known better than to take on more debt than they could afford."

Many of the people who are loosing their homes will go along with this half-truth and drop their heads in guilty shame. They won't realize that they are victims of the The cancer stage of capitalism.[1]

Wealth has been consolidating into the hands of fewer people and corporations over the past few decades starting with policies of the Regan administration. It continued through policies of the Clinton (DLC) Administration, including support of corporate globalization and the 1996 Telecommunications Act. Then, the dot-com bubble burst and corporate corruption, symbolized by Enron, resulted in capital flight from Wall Street. This forced investment wealth to find a new home, and much of it fled to real estate; not just buying property, but investing in mortgage backed securities. Now, not only are subprime mortgage holders feeling pain, but pensions, university endowments, insurance companies and some of the largest commercial banks that are over-invested in the real estate bubble are soon to feel the pain (40 mortgage companies have recently filed for bankruptcy).

Corporate-sponsored Congressional deregulation of the financial and real estate industries allowed the real estate and associated finance industrial complex to run amok (get corrupt). Not only did money run to real estate, but money was created from thin air in the form of people taking out loans literally on top of loans on top of artificial equity, which fueled more speculation until this iterative cycle inflated an artificial real estate bubble of historic proportions. This led to artificially high real estate prices; how many of us have heard friends say, "I couldn't even afford to buy the house I live in. Glad I bought it when I did." Predatory lenders continued to lull people into signing mortgage loans for these over-priced homes. Profit-driven lenders convinced people that these exotic mortgages were the norm, and the only way anyone could afford to buy a home these days, suggesting that "every one's in the same boat."

So, is it really fair to blame people caught in default for over-priced homes, and simply look the other way from Congress, Bush's regulatory agencies, Wall Street, get-rich-quick scammers and the corporate media that has watched this travesty unfold without saying anything? Is the media really that clueless, or are they just part of the keep-quiet inside crowd?

One more prediction; it's certain that several members of Congress on both sides of the isle are implicated in this mess, just like the Savings and Loan tripple-scandal of the 1980s. The first scandal was the corporate-sponsored Congressional deregulation of the Regan era. The second scandal was the corporate corrupt exploitation of the deregulated markets. The third scandal was that Congress hid their blame buy bailing out the irresponsible industries with government bonds. That resulted in tax payers not only paying for the binge of the S & L scammers, but paying interest on the government bonds to.... those who are wealthy enough to buy the bonds... including those who profited from the S & L scams.

Will the public ever learn? We need to put some people in jail, regardless of their political affiliation.

Notes:

1. This is a reference to John McMurtry's book, The Cancer Stage of Capitalism. The US economy has evolved to a stage in which few tangible products are created. Instead, accumulated capital is moved around in speculative activities that are disconnected from the real economy. This can result in many dislocations, such as commodity prices being driven up by hedge funds, hitting small farmers with prices that don't make "economic" sense and threatening their existence.
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Real Estate House of Cards Teetering

We all know the stories: Super hot real estate over the last five years has attracted inexperienced investors, some rehabbing and selling, some buying vacation homes, some buying to rent and resell. As the market peaked over the summer 2006, these investors are starting to exit the market; those who bought late are facing losses, particularly for rehabbers.

You don't need to be an analyst to recognize the next story. It goes like this, "I couldn't even afford to buy the house I'm living in." Raise your hand if you've heard that one in recent years. Ah, but the mortgage companies came to the rescue with innovative loan instruments, the most well known being interest-only ARMs. They are only affordable if the value of the home increases to enable a future refinancing. Those who bought recently are just plain out of luck. These are "subprime" mortgages, and in today's world of high finance, in which anything can be bundled and sold as a "bond," we now have mortgage-backed securities.

Add these stories together and you have a lot of people trying to sell real estate at the same time. Enter the principle of "supply and demand," in this case a double-wammie of massive supply of houses for sale combined with little demand to buy those houses. I anticipate housing prices to continue to decline further in 2007.

But guess what? Many large banks, 401k investors, and pension funds have invested in these "mortgage-backed securities," which increasingly are sold with very little documentation of their risk. So, in addition to teetering real estate market, many of our financial institutions are sitting on top of these houses of cards.

While much of today's financial news is focused on stock markets, the jitters are triggered by the stories outlined above. Here's what's being reported by an AP business writer:

HSBC Holdings PLC, Europe's largest bank, said it suffered $10.6 billion in losses in 2006 on bad loans from its U.S. subprime mortgage operations.

Companies involved with subprime mortgages, already dragged down by concerns that too many people are defaulting, were kicked down further when New Century Financial Corp., the second-largest subprime lender, said late Friday that a federal prosecutor and the New York Stock Exchange are conducting investigations into its stock movements. New Century fell $10.09, or 69 percent, to $4.56.

Also spooking investors was Fremont General Corp.'s announcement Monday that it is planning to sell its subprime residential real-estate lending business. Fremont fell $2.82, or 32.4 percent, to $5.89.

The burgeoning subprime worries also hurt banks and homebuilders Monday: National City Corp. and Washington Mutual Inc. fell more than 3 percent, while Toll Brothers Inc., D.R. Horton Inc., and Centex Corp. all lost more than 4 percent.

Ouch! I'm betting there is more bad news to come. My prediction is that there will be a nasty crash and the government will "solve the problem" by bailing out compainies that are too big to let them fail. The bail out will fall on the shoulders of the tax payers, and a small number of the inside crowd will walk off with millions as they have in the past (read "Savings and Loan Scandal." There were two scandals: The common one in which S & L scammers gammed the system, and the one in which Congress hid their complicity and put the burden of the bail out on the tax payer.)
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