Archive for October, 2010
Wall Street’s last decade is full of assorted criminals and villains that will never be held to account. It’s simply not plausible that so many well-meaning, law-abiding people made so many innocent mistakes that, purely by coincidence, just happened to fatten their bonus pools. Of course, apologists remain. Over and over again, the propagandists responsible for propping up the hollow façade that remains of Wall Street tell us that “nobody saw this coming.”
It doesn’t matter that that lie has been deconstructed and exposed over and over and over again. The zombie lie lives on, because Wall Street needs it to. Which is why I’m not the least bit confident that Christine Richard’s Confidence Game (Wiley, 2008) will change things very much, notwithstanding its compelling narrative, meticulous reporting and unassailable documentation.
Did I mention its compelling narrative? Because this book hooks you right from the start. Take it from someone that knows what it is to walk into a lion’s den to deliver an unwanted message… It’s a hair-raising experience. And that’s how the book begins: Bill Ackman, the whistleblower, walks into the offices of MBIA, the overbearing villain in this book, to tell them they are a fraud and he knows it. And the story gets better from there…
Confidence Game tells the story of a bright hedge fund manager that saw his spot, went all in, faced down the best sharks on Wall Street and emerged with a billion-dollar payout. Typically, this would be the story of a villain, right? Not in this case.
Bill Ackman looked at the emperor and saw that he was naked back in 2002. He loudly proclaimed as much. And all the emperor’s horses, and all the emperor’s men on Wall Street ran interference. For the next six years. Before all was said and done, Ackman was investigated by Elliot Spitzer, the New York State Insurance Commissioner’s Office and the SEC. Ackman stood firm in the face of the onslaught, and for his travails, walked away with $1.1 billion dollars.
How did it happen? Well, a whole book was written on the subject, but in a nutshell, Ackman realized that a pillar of the bond-insurance racket (it was a racket), MBIA, had shuffled some paperwork to conceal their potential liability. They had severely underpriced their insurance contracts and could only sustain themselves so long as the economy continued to grow. Ackman’s evidence was ironclad, and he was generous in terms of sharing his information. After all, he had a reason to be – he had bet against MBIA and fully expected their share price to fall when the information he uncovered penetrated the market.
That’s where things began to go wrong.
The market didn’t want to accept the information Ackman was providing. Instead, they were downright hostile to it. Market participants (investment banks that built the bond deals MBIA insured) knew that if MBIA suffered, they’d suffer as well. That’s the abstract argument. In the real world, these bankers saw that if Ackman got any traction, their bonus pools would dry up overnight as their industry crashed. So they ignored Ackmen. For six years.
For six years the deals continued, getting bigger and bigger. Ackman looked on with unruffled confidence. He kept whaling away at the borg, until one day, the system fell apart. And Ackman was left standing on a pile of money.
If Wall Street or its regulators had listened to Ackman when he first chirped, the canary in the coal mine may have prevented what may go down in history as the world’s most devastating financial crisis. Ackman would have earned less than 1% of what he ultimately gained, but mainstreet would almost definitely be better off today.
Of course, the shame of all of this is that none of it has changed Wall Street. The bankers got their bonuses, even after being bailed out. They learned that trickery, lies, deceit, intentionally feigned ignorance and any other unethical behavior required to protect their bonus pools is what pays in the end. Bill Ackmans and Bethany McLeans will come and go, but the titans of finance will always be with us.
disclosure: i get a lot of free books. if i read one and like it, i’ll sometimes review it. that’s because i liked the book and think you should read it too because you will like it too, and also because i like getting free books.
I’ve been following Greenwald’s media criticism and want to add a couple of things:
- For most of the war, the military brass and civilian leadership told us that they didn’t do bodycounts whenever they were asked to estimate the number of dead. That’s been proven to be a lie by this document dump. Yet still, a overwhelming majority of our press either actively defend the military against Wikileaks, or, at a minimum, stay silent with regards to the fact that they were flatly lied to. It seems to me that any professional reporter that is worth a damn would be outraged that they were misled into misleading their readers. Their job is to provide consumers of their product with useful information; they should be appalled at being used as unwitting dupes in the Pentagon’s quest to spread propaganda. Has anyone witnessed such outrage?
- Given the fact that these casualty reports were systematic, what of all the embeds? None of them saw soldiers in the field producing body counts? If not, were the embeds strictly managed in such a way as to constitute little more than propaganda opportunities? If the reporters did see these counts, why weren’t questions asked when the brass and civilian leadership said no counts existed?
- Now that we know that the United States military cooperated with Iraqi torture teams, are any reporters asking the President, or House or Senate Armed Forces Committee members if they are disturbed by the revelation? Is anyone asking if the President or Committees are going to do anything about it? Aren’t these pretty basic questions?
This is an anti-Democratic year and Texas is a very conservative state. So why isn’t Rick Perry cruising to re-election with approval ratings in the 60s or even the 70s?
Though it’s rarely discussed, one possibility is an undercurrent of unspoken discomfort with Rick Perry among Texas conservatives – discomfort that may partially be attributed to years of detailed rumors circulating in Texas and national political circles that Governor Rick Perry is gay.
In recent years, several prominent Texas news organizations have mucked around trying to get to the bottom of this matter. The Austin-American Statesman even went so far as to run a lengthy story about its investigation into the rumors of a troubled marriage, pronouncing, in essence, that there was nothing to report.
Maybe that pronouncement emboldened Perry to work harder to macho his image. He boasted of an odd incident in which he killed a coyote with hollow point ammunition (his security detail was strangely absent that day). He’s asserted that he’s a “big tough guy,” and he posed with his “Come and Take It” boots on the cover of Newsweek Magazine. Recently, Perry went so far as to say: “We’re creating more jobs than any other state in the nation. … Would you rather live in a state like this, or in a state where a man can marry a man?”
Yet, the rumors of gay relationships persist, and occasionally flare.
During the Texas gubernatorial primary, Kay Bailey Hutchinson’s campaign caused a bit of a stir when it was discovered that they had embedded meta tags in their campaign web-site that optimized it for searches including the terms “gay,” and “Rick Perry”. In non-nerd speak, this means that when those terms were Googled, Kay Bailey Hutchinson’s campaign website was one of the first results.
As I began looking into this, I repeatedly heard detailed rumors of a past gay relationship between the Governor and his former Secretary of State, Geoff Connor. A version of this story included Perry’s wife, Anita, catching Connor and Perry in the act and screaming at him the next day from her office phone. The most common retelling has it that the Governor was caught, struck a quick (and expensive) deal with his wife that allowed him to avoid an immediate trip to divorce court, and swore everyone involved to secrecy.
I also learned of a new rumor making the rounds. Several sources told me they had heard that the Governor is in a current gay relationship with one of the two (male) chefs that Perry he keeps on staff at the tax-payer funded ($10,000 a month) temporary governor’s mansion.
What’s interesting, given the longevity and evolving nature of these rumors, is that as far as I can tell, no media outlet has ever publicly asked the Governor the simple question: “Are you gay?”
To my mind, this isn’t an offensive question, any more than someone’s religious affiliation or military service record. Some people are gay, some aren’t. Of course, if the rumors prove true, the fact that Rick Perry has done so much to misrepresent who he is, possibly has a paid lover, the chef, on the state payroll, and the hypocrisy regarding his public persona would all conspire to make this a matter of extraordinary public interest.
Around the time he became Governor, he denounced and denied the rumors that he and his wife were divorcing. But he never mentioned the rumors having to do with his sexual orientation – the supposed reason for the rumored divorce. This loose thread still flutters in the wind.
I thought it would be worth asking Texas conservatives whether or not they had knowledge of these rumors, if they would continue to support Perry if the rumors proved true, and if they believed those that hold the public’s trust owe a duty of honesty with regard to these matters to their constituents. Who better to ask than all 250 Republican Party County chairs?
I harvested the chairs’ names and contact information from the Texas GOP’s website, then called through the entire list. I was straightforward with who I was and that I was looking into the question of Governor Perry sexual orientation.
I spoke with 100 out of the 250 chairs. More chairs hung up on me as I approached the end of the list, and I suspect that by that time, either the state GOP or the Perry campaign heard of what I was doing and demanded chairs avoid me.
Despite that, many were open to talking, and they were candid with their thoughts. The results were interesting:
1.) About a third of the chairs said that they were aware of the rumors.
2.) 15 thought Perry should publicly and unequivocally state his sexual orientation. There are:
• Bosque County – Tom L. Bratcher
• Brazos County – Paul Rieger
• Concho County – Beth Grounds
• Crane County – Tom Currie
• Crosby County – Edward Merrick
• Edwards County – Annette Cox
• Gregg County – Keith Rothra
• Harrison County – Chad L. Sims
• Hunt County – David Hale
• Jones County – Isaac Castro
• Karnes County – Jason Jansky
• Kenedy County – Lorraine Burns
• Kent County – Maggie Barnes
• Lamar County – John Kruntorad
• Lamb County – Charlotte Cain
• Crosby County’s Merrick said that public servants, “… if they are worth anything, will be honest about who they are.”
• Mr. Jansky, of Karnes County, said, “I don’t think anyone appreciates a secret life, whether you are killing hookers or banging guys.”
3.) 2 chairs said they wouldn’t support the Governor if he was gay. They are:
Paul Rieger – Brazos County
Kathy Riffe – Sherman County
4.) 19 Chairs said they would support the governor even if he was gay. Larry May, Chairman of Nolan County, said, “I’d vote for a perverted Republican before a liberal every time.” They are:
• Beth Grounds – Concho County
• Tom Currie – Crane County
• Annette Cox – Edwards County
• David Hale – Hunt County
• Betty Stiles – Aransas County
• Yvonne Dewey – Brazoria County
• Jean Ellis – Colorado County
• Robert Ford – Falls County
• Kerry Pratt – Floyd County
• Steve Murphy – Frio County
• Tony Salinas – Jim Hogg County
• Anne N. Rose – Kimble County
• John Quigley – Kinney County
• Duane Rawson – Mills County
• Walter D. Wilkerson – Montgomery County
• William Knight – Moore County
• Barbara Upham – Palo Pinto County
• Larry Brumley – Panola County
• John Tyson – Randall County
It isn’t clear what the Governor fears when it comes to addressing these persistent rumors. Public opinion polls reveal ever-increasing tolerance for gays (and even gay marriage). For the first time, the American military is developing plans to recruit, train and deploy openly gay soldiers. In my view, this is a healthy discussion for Texas to have, allowing the matter to move to being settled, once and for all.
I will continue researching this developing story and will continue reaching out to others in the state’s Republican Party and social conservative circles. I’ll do so not only to see if anyone in the party might know anything, but also to gauge their reaction upon hearing this information.
That said, if Governor Perry wants to close this matter once and for all, he should simply answer the question: “Governor, are you gay?”
Several days ago, my friend Howie Klein reported at his blog, Down With Tyranny, that Mike Pence was spreading the John Boehner/Lisbeth Lyons story.
Normally, I’d not feel the need to respond to what others write, but this case is different. First, I can’t have people assuming that Howie got his information from me, because implicit to that assumption would be the fact that I can’t keep confidences with my sources. Second, to the extent that people may read the two blogs and put together the idea that Howie got his information from me, they would be ill-informed. And since I think I am in the business of more fully informing the public, allowing that misunderstanding to fester cuts against what I am trying to accomplish with StarkReports.com.
Look, I’m obviously a partisan. And the idea that Mike Pence may be circulating these rumors makes for some pretty satisfying and delicious palace intrigue. But, as much as I wish it were so, Mike Pence was not a source for my reporting.
With that said, as fate would have it, I ran into Representative Pence at a Robert Hurt campaign event over the weekend. I was able to ask him if he was spreading the story. He looked down, pursed his lips and shook his head as if to deny. Most people I know would have taken that as a flat denial, and I’m certain that’s how it was intended.
But here’s another secret… In law school, when you are taking depositions, you are taught that the answers to “yes or no” questions must be spoken. I’m not sure if that is because a court reporter cannot record “witness nodded their head in the affirmative” or “witness shook head to indicate the negative” or if it is because sworn testimony must be spoken aloud for it to be a matter of record. Anyway, Washington has definitely jaded me. I have extreme difficulty accepting anything our elected leaders say as gospel; I’m a natural (extreme) skeptic. So all I can do is report what happened and let y’all make up your own mind.
But one more time, for the record: Mike Pence was not a source for my story; until yesterday, he and I had never discussed John Boehner and/or Lisbeth Lyons in any context whatsoever.