Tuesday Reads

Good Morning!

Well, I hate to keep having to read about states out to get women’s health clinics, but here we go again!

The Texas Legislature approved a bill Monday that would both compel the state to push the Obama administration to convert Texas’s Medicaid program into a block grant and defund abortion providers like Planned Parenthood.

The omnibus health bill also includes a number of other controversial provisions, including plans to save $400 million over the next year by increasing the use of Medicaid managed care.

The legislation now goes to the desk of Gov. Rick Perry, who has been generally supportive of both the Medicaid reforms, as well as anti-abortion language.

Here’s so more details on the Texas situation from the Dallas News.

The bill would deny $34 million to Planned Parenthood from family planning grants, curb abortions at public hospitals and promote use of adult stem cells from the patient’s own body in new medical treatments.

“Early in the session, I didn’t dare dream that we could make the gains this bill would accomplish,” said Joe Pojman of Texas Alliance for Life.

Also, under the bill, Texas could join Georgia and Oklahoma in creating a health care compact. Under the proposal, if Congress approved, the states could agree to cap the federal government’s contribution to several health care programs, including Medicaid and Medicare. In return, they would be freed from current federal laws on eligibility and benefits.

Meanwhile, Planned Parenthood is suing to prevent Kansas from implementation of its law meant to shut down abortion clinics as well as Planned Parenthood.

Planned Parenthood is asking a federal court to block Kansas from cutting off its federal funding, after winning a similar injunction Friday in Indiana.

Planned Parenthood of Kansas and Mid-Missouri filed a lawsuit Monday that seeks to prevent Kansas from implementing a provision of the state budget that would cut off federal funding.

According to the group’s brief, Kansas blocked federal money from going to organizations that specialize in family planning without also providing primary and preventive care. The provision would cut off funding to all Planned Parenthood clinics, even those that do not provide abortions, the group says.

This is really getting serious folks!  States are trying all kinds of things because they know think the courts might rule in their favor.  The amount of money going to defend nuisance laws in these states must be astounding.

The President is signalling that a ‘significant’ deal with the Republicans might be in the works about the federal budget and deficit.  Better check your passport status!  It’s likely we’re about to get fleeced and you may want to head for a country that appreciates its middle class for a stay!

President Barack Obama plunged into deadlocked negotiations to cut government deficits and raise the nation’s debt limit Monday, and the White House expressed confidence a “significant” deal with Republicans could be reached. But both sides only seemed to harden their positions as the day wore on, the administration insisting on higher taxes as part of the package but Republican leaders flatly rejecting the idea.

Obama and Vice President Joe Biden met with Senate Majority Leader Harry Reid, D-Nev., for about 30 minutes at the White House, and then met with Senate Republican leader Mitch McConnell of Kentucky for about an hour in the early evening.

White House spokesman Jay Carney said Obama reported after the morning session that “everyone in the room believes that a significant deal remains possible.” But Carney also affirmed that Obama would only go for a deficit-reduction plan that included both spending cuts and increased tax revenue, an approach that Republicans say would never get through Congress.

  There’s an interesting post up at the Harvard Law School Forum on Corporate Governance and Financial Regulation called “Too Big to Fail or Too Big to Change“.  It points to failure of the SEC and the DOJ to hold corporations and their officers responsible for malfeasance.  It suggests that institutional investors may have to use the courts to fill the void.

It has increasingly fallen to institutional investors to hold mortgage lenders, investment banks and other large financial institutions accountable for their role in the mortgage crisis by seeking redress for shareholders injured by corporate misconduct and sending a powerful message to executives that corporate malfeasance is unacceptable. For example, sophisticated public pension funds are currently prosecuting actions involving billions of dollars of losses against Bank of America, Goldman Sachs, JPMorgan Chase, Lehman Brothers, Bear Stearns, Wachovia, Merrill Lynch, Washington Mutual, Countrywide, Morgan Stanley and Citigroup, among many others. In some instances, litigations have already resulted in significant recoveries for defrauded investors.

Historically, institutional investors have achieved impressive results on behalf of shareholders when compared to government- led suits. Indeed, since 1995, SEC settlements comprise only 5 percent of the monetary recoveries arising from securities frauds, with the remaining 95 percent obtained through private litigation as demonstrated by several examples in the chart at right.

Institutional investors must continue to lead the charge and prosecute fraud to send a strong message that such misconduct will not be tolerated and to guarantee that shareholders are fairly compensated for their losses. Both the courts and Congress have recognized that meritorious private securities litigation is “an indispensable tool with which defrauded investors can recover their losses[,]…promote public and global confidence in our capital markets and help to deter wrongdoing.” While originally intended as a supplement to government regulation, recent events demonstrate that institutional investors may now be the entities best positioned to protect investors’ rights. Without such protection, and if Wall Street bankers are permitted to profit from their frauds without a proportionate retributive response, we may be fated to repeat the same economic calamity that has defined our generation.

The local sheriff is now investigating the Prosser ‘defensive chokehold’  at the request of Wisconsin Capitol Police Chief.

The state Capitol Police Chief, Charles Tubbs, said Monday that he is turning over the case to local law enforcement.

“After consulting with members of the Wisconsin Supreme Court, I have turned over the investigation into an alleged incident in the court’s offices on June 13, 2011 to Dane County Sheriff Dave Mahoney,” Tubbs said in a statement. “Sheriff Mahoney has agreed to investigate this incident and all inquiries about the status of the investigation should be made with the Sheriff’s Department.”

Mahoney issued a concurrent statement declaring that he has directed detectives to investigate the incident.

“Beginning today, detectives will work diligently to conduct a thorough and timely investigation,” Mahoney said. “Because this case is in the very early stages, no further information is available at this time.”

The Wisconsin Center for Investigative Journalism first revealed the June 13 incident on Saturday, reporting that Prosser put his hands on Bradley’s neck during debate over the legality of the “budget repair bill,” which the court’s conservative majority ruled is legal in a 4-3 decision June 14.

Reaction on the Web — where partisans have been arguing Wisconsin politics for months — was swift.

At ThinkProgress, Ian Millhiser surmised four ways Prosser can be legally removed from office.

“Should the allegations against Prosser prove true, it is tough to imagine a truer sign that our political system has broken down than if the calls to remove him from office are not unanimous,” he wrote.

Natural disasters in our country have triggered concern about nuclear facilities.  The latest facility to be jeopardized is Los Alamos nuclear weapons lab in New Mexico.  Add this to the two nuclear power plants in Nebraska surrounded by the flooded Missouri River.

The Los Alamos nuclear weapons lab in New Mexico has been shut down for the day due to a fast-moving wildfire that is endangering the lab and surrounding area. The fire began around 12 miles southwest of Los Alamos, charring about 6,000 acres. Fire officials say none of the fire is under control yet. Lawrence Lujan of the Santa Fe National Forest said, “We have homes and we have the labs, so it’s a very, very big concern, not only locally, but nationally and globally.”

Cristina Fernández de Kirchner--Argentina’s president–has announced she’ll run for a second term in office in October.

Her announcement marks the beginning of Argentina’s presidential election campaign. Ms Fernández is in good shape to secure another term. She is comfortably ahead in the opinion polls, thanks in large part to Argentina’s strong economic performance: GDP grew by an annualised 10% in the first quarter of 2011, due in no small measure to growing international demand for soya, now the country’s biggest export.

Ms Fernández faces no challenges from within her governing Peronist Party. And despite months of attempts to form a coalition of opposition, her political adversaries remain hopelessly split. Her strongest opponents are likely to be Eduardo Duhalde, a former president, and Ricardo Alfonsín, the son of a former president. But her biggest problems lie elsewhere.

One is a corruption scandal surrounding the Association of Mothers of the Plaza de Mayo, a group of women campaigning to discover what happened to their children under Argentina’s military dictatorship between 1976 and 1983. Ms Fernández and her husband allied themselves to the group, providing them with millions of dollars of state funds with which to build houses for the underprivileged and without seeking any guarantees. The Mothers have now been caught up in a fraud investigation, which some think could cause problems for Ms Fernández.

One last bit of good news! Southern Right Whales Return to New Zealand After a Century of overhunting and being on the brink of extinction.

Southern right whales were once a common sight along the coast of New Zealand, though in the 19th century overhunting brought the species to the brink of extinction. But now, after a decades of being virtually non-existant off New Zealand’s shores, wildlife experts are seeing endangered right whales finally returning to their ancestral calving grounds — offering hope that the whales’ are rediscovering a ‘cultural connection’ to this region after a century-long hiatus.

Before they were brought to near-extinction by whalers who considered them to be the best whale species to target — hence the ‘right’ in their name — southern right whales are thought to have numbered in the tens-of-thousands in the waters off New Zealand. In the decades that followed, however, the few surviving whales limited their calving grounds to the sub-antarctic regions to the south, despite the fact that closer to the New Zealand mainland had ancestrally been where they raised their young.

But recently a team of researchers from the University of Auckland and New Zealand Department of Conservation made a remarkable discovery; right whales seemed to be heading home.

“With the increase in numbers observed around the Auckland Islands over the last decade, we think that some individuals are re-discovering the former primary habitat around the mainland of New Zealand,” researcher Scott Baker tells The New Zealand Herald.

What’s on your reading and blogging list today?


Obama and the Enhanced Status Quo

monopoly smoke ringsWe were promised changed. What we are getting is perpetuation of the status quo. Let’s try this headline at the Guardian on for size “Goldman Sachs to make record bonus payout”.

Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm’s 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Staff in London were briefed last week on the banking and securities company’s prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm’s second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company’s shares in January, has already made a $1bn gain on his investment.

The bold part says it all. There continues to be a systematic elimination of competition from merger mania in the financial sector which has created two classes of too-big-to-fail institutions. We now have those that function completely with government funding and those that function by funding candidates for government. Goldman Sachs is benefiting immensely from both.

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Banking on the Backroom Deal

While, GM’s bankruptcy and Chrysler’s emergence from bankruptcy grab front page headlines, yesterday’s banks withlogo-mr-monopoly issues are positioning themselves at the table to discuss future financial regulation. This comes as some of the premier researchers in financial economics look for systemic solutions. As you know, I’m a huge advocate for finding new regulations that promote transparency of process and recognize the importance of fiduciary responsibility when the financial industry takes on risk. Harvard’s Oliver Hart and University of Chicago’s Luigi Zingales, both NBER researchers, have just produced A New Capital Regulation For Large Financial Institutions. I want to review some of their findings and suggestions in conjunction with two more mundane articles.

The first of these articles is an astounding piece on Alternet that finds information suggesting Larry Summers has been taking kickbacks from big troubled banks. Another article is in today’s NY Times that shows how the banks have been spending a good year–even as they took TARP funds and cheap money from them FED–girding for a fight on forthcoming regulations.

I would think that the big lesson from the last few years is this is not time to go back to business as usual. However, the mindset of those making major decisions in the White House (Treasury Secretary Geithner and CEA head Summers) is this is just a glitch and there’s no chance anything like this could happen again. In other words, we don’t need to look for systemic problems, we just need to send the patients home with some aspirin and they can call back in the morning. This aspirin prescription has been particularly expensive. It is either utterly naive or completely disingenuous to think that pouring money into financial institutions and waiting this out is going to prevent any future occurrence of financial meltdowns. We need to be prepared to offset what may be an elaborate hoax to convince that nothing really needs to change systematically and a major congressional influence- and administration influence- buying spree by the big banks. Even as we see Dow de-list Citibank, we see evidence that Citibank possibly manipulated its stress tests results through Summers.

If the Alternet article is correct, Summers should be in trouble and the trustworthiness of the large institutions should be questioned by a congressional committee. This sure looks like pay-to-play to me. (HT to Dr. BB for the link.) The post by Mark Ames is a must read.

Last month, a little-known company where Summers served on the board of directors received a $42 million investment from a group of investors, including three banks that Summers, Obama’s effective “economy czar,” has been doling out billions in bailout money to: Goldman Sachs, Citigroup, and Morgan Stanley. The banks invested into the small startup company, Revolution Money, right at the time when Summers was administering the “stress test” to these same banks.

A month after they invested in Summers’ former company, all three banks came out of the stress test much better than anyone expected — thanks to the fact that the banks themselves were allowed to help decide how bad their problems were (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)

The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Larry Summers onto your board, large banks will want to invest as a favor to a politically-connected director.

Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Larry Summers. It turns out now that those two banks have continued paying into Summers-related businesses.

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