Wednesday, October 28, 2009

Rovian Tactics: Now Rahmian?

Who did the Democrats have on The Ed Show to state the CIA lied to Congress? Rep. Jan Schakowsky (D-IL), a member of the House Select Committee on Intelligence.

This is the same Jan Schakowsky implicated in a Turkish spying scheme. It's unclear whether testimony from ex-CIA agent Sibel Edmunds about a compromised female Congresswoman is true. That would require an investigation, something neither political party seems capable of doing.

However, Ed Schultz specifically mentioned Rovian tactics in his diatribe with Rep. Schakowsky. He stated that Karl would frequently have the worst offenders making accusations, going on the offensive. What does one call a compromised Jan Schakowsky talking about the CIA on television? If it's not Rovian, is it Rahmian or Podestan?

Monday, October 26, 2009

Benedick Durbin Calls for "Showdown" with Wall Street

Senator Dick Durbin (D-IL) received over $1 million from the security & investment industry during his political career. He voted for Gramm-Leach-Bliley in 1999. Yet, on a Chicago protest stage he called for a "showdown" with Wall Street.

Senator Durbin should show how Wall Street lined his pockets. He should tell the crowd his strategy for maintaining wealth during the shock of severe financial crisis. How might that impact his followers?

Sunday, October 25, 2009

Government Has Banker Pay Shifting to Stock

NBC's Meet the Press hosted Erin Burnett and Andrew Ross Sorkin. They spoke on executive pay curbs for banks taking government bailout money. Both indicated the new regulations have little teeth. Compensation will shift from salary and huge cash bonuses. It will likely involve stock compensation, with no caps.

Does anyone at the Fed or Treasury recall widespread stock option cheating over a 10-12 year period? Stock options were considered a pure form of executive incentive compensation. Yet, management cheated on nearly 30% of stock options via backdating. The practice was at least unethical and often illegal according to SEC regulations. Very few cheating CEO's were charged with a crime, even fewer went to jail. Most settled up, returning their ill gotten gains.

Cash bonuses drove risky behavior, imperiling America's financial system.

Prior to that, stock option incentive pay drove widespread unethical behavior.

Therefore, stock compensation is the answer? Wrong, incentives are the problem. A return to quality, founded on profound management, is needed.

Optimizing pay for executives, suboptimizes the system for everyone else, including customers.

Friday, October 23, 2009

More Health Care Corporafornication

Huge pension fund CALPERS has a captive investment vehicle targeting health care reform. Bloomberg reported:

Calpers is the sole investor in Health Evolution Partners, a two-year-old private-equity firm in San Francisco run by David Brailer, a first-time money manager and former aide to President George W. Bush. Brailer, 50, coordinated Bush’s planning for an electronic health-records network; Calpers is counting on him to earn its members 20 to 30 percent returns. “What Brailer and Calpers are doing is unique and possibly revolutionary,” said Robert Galvin, chief medical officer of General Electric Co., which buys health care for 152,000 U.S. employees. “We hadn’t seen capital going into opportunities to both provide new treatments and also promote efficiency and quality.”

Guess who will pony up another $1 billion for medical innovation? You, the taxpayer. How many of David Brailer's firms end up with tax credits or Treasury loans as a result of health reform?

Brailer’s White House work was one reason the California pension system bet on someone who had never run a fund, said Calpers portfolio manager Mike Dutton, who helps oversee $42.3 billion in private-equity commitments.

“We wanted deep medical and policy expertise, working with our existing private equity but positioned a little different,” Dutton said.

Obama loves incentives and is a big fan of private equity.

Calpers officials expect Health Evolution Partners to return 20 percent to 30 percent a year, said a person familiar with the system’s decision making.
That's one big sweet spot. How much of those grand returns will come on the taxpayer's back? Union pensions acting like private equity underwriters (PEU's)? Reform is clearly deform.

Bayh's 10,000 Reasons to Vote

Susan Bayh, WellPoint board member and wife of the Indiana Senator, flipped her stock options between 2004 and 2007. This practice made the Bayh family over $1.2 million.

Senator Evan Bayh will vote on health care reform. The Bayh family holds over 10,000 shares of WellPoint in phantom stock. How will the good Senator vote?

Note: Susan Bayh's SEC summary table shows her serving on the board of Anthem, not WellPoint. Detailed stock activity below the box shows the firm as WellPoint.

Thursday, October 22, 2009

FBI's Going "Long Term" Gives Blogger Hope

Ex-White House Homeland Security Adviser Frances Townsend weighed in on the arrest of a Boston area terror suspect.

"It shows that the FBI is becoming more patient and investing long-term resources into these investigations, which is what is required," said Frances Fragos Townsend, a former senior counter-terrorism and Homeland Security advisor to President George W. Bush.

"This is the sort of long-term investigation that shows that the FBI has changed its mind-set and culture, and that it sees itself not just as a law enforcement agency but as an intelligence and counter-terrorism agency that has the mandate to prevent the next attack and not simply investigate it after it occurred."
More patient, investing long-term resources into investigations? That gives me renewed hope, given my questions to the FBI are nearly four years old. They involve Frances Townsend and her investigatory malpractice in the Hurricane Katrina Lessons Learned report.

My questions are on record, all in English. I'd like to add one more:

8. Was the appointment of Jeb Bush to the Board of Tenet Healthcare a quid pro quo for omitting Memorial Medical Center and its 35 deaths after Katrina from the White House Lessons Learned report? Tenet hired lobbying firm Quinn Gillespie in 2006. It lobbied the Executive Office of the White House on "corporate governance changes."
Who knew the investigation butcher, Frances Townsend, would renew my hopes? Recall, Fran left office not wanting to face a subpoena. Her private sector job involves risk management. Did it come from reward management?

Update: The Justice Department will hold a police officer accountable for a corrupt investigation on Hurricane Katrina deaths. Are they hot on the trail of Fran's malpractice?

Tuesday, October 20, 2009

I Doubt, Senator McCain!

This morning on CSPAN Senator John McCain said surely no one doubted that medical malpractice reform wouldn't drive down health care costs. He cited the experience of California and Texas, two states that undertook reform.

I live in West Texas. My health insurance premium increased almost 10% two months ago. That's not a cost decrease. For that reason I must be a no one, because I doubt your words, John McCain.

To show what a small world it is, Senator McCain mentioned Dr. Dan Stultz, my former boss. Dr. Stultz is head of the Texas Hospital Association, not the Texas Health Association referred to by the Senator from Arizona. I'm sure he got something right in his remarks on the Senate floor.

White House Moves Business Forward?

Politico reported:

White House officials have been meeting face-to-face with business leaders to circumvent the Goliath of industry-oriented lobbying, contacting the heads of at least 55 companies since June.

Did those meetings come courtesy of The Brunswick Group's Business Forward, the blue version of the U.S. Chamber of Commerce? How much did those 55 companies pony up for face to face meetings with White House officials?

Note: The Brunswick Group represents the greed/leverage boys of Wall Street.

Monday, October 19, 2009

Congress Rides to Rescue with Treasury Magic

With the swipe of the legislative wand, Congress continues changing the bleak financial landscape in favor of the big money boys. Treasury and the IRS announced:

Special servicers can at any time reduce the interest rate or extend the term of securitized loans held in real estate mortgage investment conduits (REMICs) and investment trusts.
Old rules required default, triggering massive tax penalties and credit derivatives (credit default swaps).

Congress gifted REMIC's with nonprofit, tax exempt status in 1986.

REMICs are special-purpose investment vehicles used to pool mortgage loans and mortgage-backed securities. Securities or debt financings structured as REMIC trusts can be accounted for as a sale of assets and removed from an originating lender's balance sheet, exempting the trust from federal taxes. Under the old rules, modifying commercial loans after they were placed in a REMIC pool triggered a 100% tax penalty and potential loss of tax-exempt status. Fearing the worst, servicers would either not return borrowers' phone calls or advise them to call back after entering default.

Who knew Goldman Sachs and other company sponsored SIV's were the moral equivalent of safety net hospitals or churches?

Any unilateral changes in loan terms would've jeopardized their nonprofit status. Not any more, the big money boys can have their cake and eat it too.

This Congressional spell is but the latest magical gift. Others include:

1. A $25 billion tax break for firms buying back their debt for pennies on the dollar (Obama stimulus plan)

2. The $1 billion in tax credits or Treasury loans for innovative health care firms in the Baucus Health Reform Bill.

3. Including legacy CMBS's under TALF.

I'm sure there are many more. These are the few this part-time blogger has run across.

Congressional Corporafornication, the red and blue gift that keeps on giving. Even the Federal Reserve Bank is pitching in on commercial mortgage redo's.

Wednesday, October 14, 2009

America's Sovereign Debt Fund Goes Health Care

The Baucus health reform bill mirrors his stimulus package, i.e. it has booty for the PEU boys (private equity underwriters). The America's Healthy Future Act has $1 billion in tax credits or Treasury loans for firms investing in new therapies to prevent, diagnose, and treat acute and chronic diseases. The criteria include:

1. Qualifying investments would include those made during 2009 and 2010.
2. Total of $1 billion would be allotted for the program over the 2-year period.
3. Eligible companies who are unable to utilize the credits would have the option to receive such credits in the form of Treasury loans.
How many Carlyle Group affiliates will line up for a chunk of the $1 billion? How many CCMP Capital Adviser companies will benefit from Max's insertion? CCMP was White House Health Czar Nancy-Ann DeParle's previous employer.

If Max Baucus has a bill, rest assured it provides numerous corporafornication opportunities. His stimulus package included $25 billion in tax breaks for firm's buying back debt for pennies on the dollar. That was Carlyle's signature strategy at the time.

Don't watch Baucus sausage making, if you want to keep your lunch down.