Tuesday, September 30, 2008
Here I go again, with my answer to Carthago delenda est, "Got gold? Get more".
Monday, September 29, 2008
Thank you CS for a superb report from Oblast New York (ONY). Thanks too for paying IA an eight-figure fee for ONY's Henry Paulson as Che Guevarra T-shirt concession. Other concesssions available include: Los Angeles, San Diego, Dallas, Austin, Pittsburgh, Miami, Orlando, San Antonio, Chicago, Detroit, Atlanta, San Francisco-San Jose, and Philadelphia. Concession fees are only payable in one-ounce gold bullion coins: Krugerrands, Maple Leafs, Chinese Pandas and American Eagles. Note to Comrade Richard Fuld: I understand you have about $400 million. For only 400,000 one-ounce bullion coins I'll give you the concessions for all US Oblasts except ONY which CS has. I'm sure, for a very large fee, you could induce CS to sell you her concession. One issue CS. You write, "the only limitation the $700 billion balance sheet figure". CS, that's $700 billion today. The "law" will be amended in one year to read, "$1.4 trillion"! Excepting that, a superb job CS. So superb, you need not go to the gulag for at least a year. Heil Hitler! Excuse me, wrong dictatorship. Long live the proletariat and death to the capitalist running dogs.
Thank you Comrade Buchanan (CB) for your observations from Oblast Washington. An IA war story. About ten years ago as I walked down Los Angeles's Sunset Boulevard near Vine Street in front of the Border's book store, a camera crew interviewed people about some issue. The woman with the microphone walked over and asked my political affiliation. I answered, "I'm a Robert Taft Republican". She looked at me in horror and she and the cameraman walked away. IA's "present sense impression", the woman was not taken aback by the word "Republican", but she had not heard of Robert Taft. My guess: she went to a "J" school and knew virtually no American history. Here's a link to CB's article: http://www.chron.com/disp/story.mpl/editorial/outlook/6012931.html.
The Plan is MLEC multiplied nine times, see my 18 October 2007 post, http://skepticaltexascpa.blogspot.com/2007/10/use-your-own-money.html. The financial statements must be phony. Who will "audit" them? The Big 87654 which "audit" Freddie, Fannie, Citigroup, etc. Where are the Big 87654 when you need them? They should each have released a position paper at 9:00 AM 22 September 2008 stating the plan requires using phony financial statements and they will not be party to it. Well Mark Olson? What's your opinion? What do I suggest? Since 14 October 2007, I have favored "a 25-year moratorium on any GS executive working for the Treasury or Fed", http://skepticaltexascpa.blogspot.com/2007/10/party-like-its-1929.html. I now extend that from GS to include: Merrill, Morgan Stanley, Lehman, Citigroup and Bank of America. We can't afford these clowns in Washington doing favors for their cronies at the public's expense.
I thought some Mafia quotes would be appropriate. "Mafia is a process, not a thing. Mafia is a form of clan-cooperation to which it's individual members pledge lifelong loyalty. ... Friendship, connections, family ties, trust, loyalty, obedience--this was the glue that held us together", Joe Bonnano.
"Everybody has a price", Jimmy Hoffa.
"I never lie to any man because I don't fear anyone. The only time you lie is when you are afraid", John Gotti. Hank "Treasury" Paulson, Wall Street mob made member is very afraid.
"In Bensonhurst, that was it, becoming a made guy. It's all we kids ever talked about. ... I never saw the other side of it until I in, and then it's too late and you just do your work", Sammy, "The Bull" Gravano. Poor Paulson, he's in so deep. he can't get out. He needs to be put in the federal witness protection program.
"Other kids are brought up nice and sent to Harvard and Yale. Me? I was brought up like a mushroom", Frank Costello.
"Goodfellas don't sue goodfellas. Goodfellas kill goodfellas", Salvatore Profaci. More mafia quotes are avaliable at http://www.geocities.com/mafiason_99/Quotes.html?200825. Why Mafia quotes? Look at Paulson's actions. They remind me of a Russian word, "mafiozny", literally "mafianess". Here's a link to my 4 December 2007 post, which helps explain what's going on: http://skepticaltexascpa.blogspot.com/2007/12/bloodless-coup-continues-4.html.
Sunday, September 28, 2008
Saturday, September 27, 2008
Friday, September 26, 2008
Thursday, September 25, 2008
Wednesday, September 24, 2008
Connie Yu, are you listening yet? Come home. Go to work for Exxon USA!
Tuesday, September 23, 2008
Monday, September 22, 2008
"Many in Washington have described Russia's attack on Georgia as a turning point in international affairs. ... The attack on Georgia will go down not as the dawn of a new era of Russian power but as a major strategic blunder. ... The truth is, we're not in the 19th century, where the Russian intervention would have been standard operating procedure for a great power. ... Its actions are deplorable but the reaction to them--worldwide--is a sign of how much the rules have changed. ... The problem is not that Russia has been integrated into a world order that has failed to deter it, but rather that the country reamins largely unintegrated--and thus feels it has little to lose by breaking the rules", my emphasis, Fareed Zakaria (FZ) at Newsweek, 8 September 2008.
"'At no time did the U.S. attempt to train or equip the Georgian armed forces for a conflict with Russia,' [LTC Robert Hamilton] says. ... Even so, Newsweek has learned, NATO didn't bother to formally assess any of the new members' defense needs before they joined. 'The attitude was, the more the merrier,' says retired U.S. Air Force Gen. Charles Wald, deputy commander of U.S. forces in Europe through the early years of this decade. 'NATO didn't really look at the Article 5 part of it'," Newsweek, 15 September 2008.
Black humor? Do I detect racism afoot? I remember the Washington, DC school district banned the use of the word, "niggardly". Ouija board? Who needs one if you have a hermetically sealed mayonnaise jar? I may have grown up with Spengler. He talks of the mafia in Bensonhurst and NY's parking problems. I thought for decades it would be a pleasure to get rid of the UN and its army of rude "diplomats" armed with "DPL" and "FC" plates double-parking all over NY! Bensonhurst, no way; Bay Ridge! Yeah, Colonial Road in the 90s! Brilliant, I never thought of a motorized wheelchair brigade! Go Spengler. I add, domestic policy too! Victor Davis Hanson, please read this. I suggested "showing the Russians" with my "Paulson-Gates-Rice" position swap, 15 September 2008 post.
What really happened FZ? Your illusions were blasted into oblivion by Czar Putin's tanks. Grow up. That's how the world works. Read Thomas Hobbe's Leviathan, 1651. You might learn something. Nations exist in a "state of nature". What is it you don't understand? What does FZ think we should do with Russia, send it to bed without any supper? Put Russia in detention? Keep Russia after school? FZ, read Oliver Wendell Holmes comments at my 25 April 2008 post.
I return to 1960 and Katanga's revolt against the central Congo government in Leopoldville. The USSR backed Patrice Lumumba. Moise Tshombe, backed by Belgium and certain Western interests, led Katanga's revolt. The US airlifted a UN force into the Congo to fight for Lumumba. At times, the UN forces fought Tshombe's. The US backed another group, Joseph Kasavubu's and wanted to keep the Congo, now Zaire, intact. In 1963 the UN forces defeated Tshombe's reuniting the Congo. I remember thinking at the time: what is Ike doing? Why are we involved in a civil war on the other side of the Atlantic, fighting on what seems to be the USSR's side against our "ally" Belgium? I now add, in "reassembling" the Congo, we established a precedent opposed to our treatment of Kosovo.
Didn't look at Article 5 of NATO. Amazing.
"The most revolutionary notion in commerce today is one of the oldest. If you want something, you may actually have to pay for it. We are quickly reverting from a borrow-and-buy model to the old school cash-and-carry model our grandparents knew. ... But widespread consumer credit is really a 20-th century phenomenon. ... It was this behavior--the endless willingness of lenders to lend and borrowers to borrow--that kept the consumer economy humming uninterrupted from the early 1990s, straight through the brief recession of 2001, until the credit meltdown of 2007. ... The tightening of credit is forcing more people to confront these uncomfortable choices", Daniel Gross at Newsweek, 8 September 2008.
"At the Democratic National Convention, Sen.Ted Kennedy echoed the view of many that health care is a 'right' that demands universal insurance. This is a completely understandable view and one that is, I think, utterly wrong. ... But the central problem is not improving coverage. It's controlling costs. In 1960, health care accounted for $1 of every $20 spent in the U.S. economy; now that's $1 of every $6, and the Congressional Budget Office projects that it could be $1 of every $4 by 2025. ... Greater health spending should not have the first moral claim on our wealth, because its relentless expansion is slowly crowding out other national needs. ... We need more realism on health care. There is a basic moral and political dilemma that most Americans refuseto acknowledge. What we all want for ourselves and our families--access to unlimited care paid for by someone else--may be ruinious for us as a society", Robert Samuelson (RS) at Newsweek, 15 September 2008.
At 7:12 PM on 9 September 2008, here in Houston, Michael Savage (MS), radio talk show host, likened today's US to Germany's Weimar Republic. He said our "currency is built on quicksand". Eventually Americans will realize MS is right. When they do, it's "watch out for bonds and all other US dollar denominated paper". I think a closer analogy is 1780s France. Book recommendation: Anatomy of Revolution, 1965, by Crane Brinton (CB), 1898-1968. CB was a Harvard history professor. Ugh. As the Master said, "Therefore by their fruits you will know them", Matthew 7:20 (NKJV).
Eventually, when Asia's peasants stop subsidizing American consumption, we will be faced with the choice: who will we let die? It's coming. Bet on it.
At 5:12 PM on 11 September 2008 MS said, "The one investment bank that runs the world", referring to Goldman Sachs. People are waking up. I've posted on the "Bloodless Coup" since 13 November 2007, http://skepticaltexascpa.blogsot.com/2007/11/bloodless-coup-continues.html
Sunday, September 21, 2008
Saturday, September 20, 2008
Friday, September 19, 2008
"Gordon Crovitz defuses several concerns over IFRS. Grounded in principles, U.S. [GAAP] has been accreting guidance, exceptions and amendments for at least 75 years. That it often looks like a book of arcane rules is not coincidental--preparers, auditors, litigators, and to some extent users demanded it. ... But I say go for it! ... Although IFRS is obviously deficient, auditors must stand up to clients much more under IFRS than they did in the past. And I do take issue with Mr. Crovitz's assertion that IFRS will make it easier for companies 'to do the right thing.' That option was always open through voluntary disclosures and alternative presentations, sometimes with auditors' blessings, suggesting that getting companies to want to do the right thing is a major part of the problem", my emphasis, James Largay (JL) letter to the WSJ, 10 September 2008.
Who is GC kidding? The Big 87654 must figure they can use IFRS to lobby for more lawsuit protection. The Big 87654 want to serve investors? Really? Why can't they do that now? Another selling point to the Fortune 500: possible Boards of Directors lawsuit exemption. "Professional judgment"? Does PW use that now? You know what Adam Smith said at a time like this: "people of the same trade ...". IFRS was adopted by more than 100 countries. So? My mother used to say, "If everyone else is jumping off the Brooklyn Bridge are you going to jump too"? This is bandwagon propaganda, GC and this "argument" would have been shredded in my fifth-grade class. Yes, GAAP frequently does not reflect economic reality. So? Will IFRS be better? I wonder if GC used a PW "resource person" who should have told him, disclosure is no substitute for measurement. Imagine, CPAs have Statements of Financial Accounting Concepts. Such statements exist? Yes. Current GAAP uses concepts? Yes. What's really going on here?
"To find anything comparable to crowds' euphoric reactions to Obama, you would have to go back to old newsreels of German crowds in the 1930s, with their adulation of their fuehrer, Adolpf Hitler. With hindsight, we can look back on those people with pity, knowing how many of them would be led to their deaths by the man they idolized. ... A leader does not have to be evil to lead a country into catastrophe. Inexperience and incompetence can create very similar results, perhaps even faster in a nuclear age, when even 'a small country'--as Senator Obama called Iran--can wreak havoc anywhere in the world, when they are led by suicidal fanatics and supply nuclear weapons to terrorists who are likewise suicidal fanatics. Barack Obama is truly a phenomenon of our time--a presidential candidate who cannot cite a single serious accomplishment in his entire careeer, besides advancing his own career with rhetoric. He has a rhetorical answer for everything. ... Those who studied the years leading up to World War II have been astonished by how many people and how many countries failed to see what Adolf Hitler was getting ready to do. Will future generations wonder why we slept? ... Yet what are we talking about? Taxing and spending policies, socking it to the oil companies and rescuing people who gambled on risky mortgages and lost. Are we serious? Are we incapable of adult foresight and adult responsibility? ... But what does Obama have besides talk--and adoring crowds?," Thomas Sowell (TS) at nationalreview.com, 16 September 2008.
Numbers? Call a CPA. Blackouts, how dare you? Racist! Why not? There's a movement afoot in Dallas to rename "black holes" since the name is racist. I kid you not. We should not expect more from Obama, a man who is "as non-scientific as the most muddled philospher", see my 22 December 2007 post, http://skepticaltexascpa.blogspot.com/2007/12/us-injustice-system-at-work.html.
Thursday, September 18, 2008
It sould be nice if Chris Cox would ask himself why a "second SEC" is necessary. What's wrong with the SEC he heads?
I doubt Butler & Tzolov (B&T) did this without their Credit Suisse supervisors knowledge. This sounds like another Joe Jett fiasco and B&T are the designated scapegoats.
Compare the Feds' treatment of brokers with that of the state regulators.
"The students at Powell Point Elementary [PPE] report to the school gym before 8 a.m. for their morning exercises. ... 'First time!' they answer. By that, the students mean they will pass the state-mandated TAKS exam in reading, writing, math and science on their first attempt. ... Powell Point, which dates back to 1904, is among the oldest historically black schools in Texas. ... About half the children are black, half are Hispanic, and nearly all come from poor families. The median household income in Kendleton [location of PPE] is $21,562. ... Kendleton ISD and Powell Point had earned the state's 'academically unacceptable' rating for two straight years when [Mildred] West [principal of PPE] arrived", Houston Chronicle, 7 September 2008.
"While our 'coverage' of the [Olympic] games appeared in real-time, the actual competition took place over the past several years, via international exams such as the Trends in International Mathematics and Science Study (TIMSS) and the Program for International Student Assessment (PISA). ... But it's particularly depressing to glance at the events where the U.S. flopped completely. By far our worst showing was for out lowest-performing students. The [US] placed 38th in the world in terms of getting our 15-year-olds over PISA's most basic achievement level in science. The [US] has 15 times more students than Finland does performing below this level, and more than three times as many as our Canadian Neighbors. ... Consider the latest reflections in the Wilson Quarterly from Jay Matthews, the crackerjack veteran Washington Post education reporter. He writes that 'there is scant evidence that test scores have much to do with national economic performance. ... Perhaps Matthews should acquaint himself with Eric Hanushek's recent research on this very topic. ... Though the analysis was complicated, Hanushek's key finding was simple: The level of cognitive skills of a nation's students has a large effect on its subsequent economic-growth rate. ... Hanushek et. al. close with this warning: ... 'the situation at the K-12 level should spark concerns about the long-term outlook for the U.S. economy.' ... Simply put, we're living on borrowed time", Michael Petrilli & Amber Weber (P&W) at nationalreview.com, 8 September 2008.
Amazing. Asians average 105 IQ, Caucasians, 100; Negroes and Hispanics about 85. Are these results unexpected? Not by me. As to Asians being discriminated in college admissions, I have seen them called "New Jews". The state test result improvements may be illusory? Hardly. The states showing improvement just adopted my 1965 suggestion. See my 1 September 2008 post.
Today's SAT may tell us something else: our educational standards are falling faster than most people realize. Average critical reading and mathematics scores were: 502 and 515. Let's compare this 1017 to 1960's SAT. Why? Because test takers ethnic composition changed. I estimate 95% of 1960 SAT test takers were caucasian. ... SAT test takers average IQ has fallen by about 6 points or .4 SD in the last 48 years. How did CEEB handle this in scoring today's exam in addition to "recentering" it about 10 years ago? I estimate today's 1600 is about 1450 on the 1960 exam.
Charles Murray (CM), remember him, calls things like NCLB, "educational romanticism". "The [US] Congress acting with large bipartisan majorities, at the urging of the President, enacted as the law of the land that all children are to be above average. ... There are no examples of intensive in-school programs that permanently raise intellectual ability during the K-12 years. ... When Congress passed the 1964 Civil Rights Act, it included a mandate for a nationwide study to assess the effects of inequality of educational opportunity on student achievement. ... Before Coleman's team set to work, everybody expected that the study would document a relationship between the quality of schools and academic achievement of the students in those schools. To everybody's shock, the Coleman Report instead found that the quality of the schools explains almost nothing about difference in academic achievement. ... To put it another way, we have every reason to think--and already did when the [NCLB] Act was passed--that the notion of making all children proficient in math and reading is ridiculous. ... The effects of the triumphant Civil Rights Movement gave a special reason for white elites in the 1960s to start ignoring the implications of intellectual limitations. ... Elite white guilt made it impossible to say that a lot of black children were going to fail in school and there's nothing anybody could do about it. ... People are unwilling to talk about those differences in public, but it is a classic emperor's-clothes scenario waiting for someone to point out the obvious", my emphasis. Here's a link to this May 2008 New Criterion article: http://www.newcriterion.com/articleprint.cfm/The-age-of-educational-romaticism-3835.
Steve Sailer (SS) has a 29 June 2008 Vdare post about how to improve our schools. I endorse SS's propsals. Here's a link: http://www.vdare.com/sailer/080629_schools.htm. Hugh McInnish seconded SS's position, proposing a new way to measure school achievement at Vdare, 2 July 2008, http://www.vdare.com/mcinnish/080702_iq.htm. I proposed McInnish's measure 40 years ago!
Here's an application of SS's proposal. "Almost two-third's of the students in Dallas's 225 schools are Hispanic, while 29% are African American and 5% are non-Hispanic white, WSJ, 20 August 2008. Dallas Independent School District (DISD) has a 25.8% dropout rate. So? Is this "bad"? If 65% of DISD's kids are Hispanic, we add the 29% Negro and get 94% with an average 85 IQ. Using Arthur Bestor's citerion, my 1 September 2008 post, only about 37.4% should be able to graduate from high school. How does DISD graduate 74.2%? What does DISD teach anyway?
I ask Lenin's 1902 question, "What is to be done"?
I again ask Lenin's 1902 question. I note P&W do not refer to Lynn and Vanhanen's work. As to Finland's good results, the blogosphere is all over it. Here are two posts from vdare.com: http://www.vdare.com/sailer/070319_diversity.htm and http://www.vdare.com/guzzardi/080307_vfl.htm.
Was this forseeable? "A great many people are anxious about having children. I hear about this concern frequently from young men and women pasing through Harvard--more than ever before in my three and a half decades here. ... Though populations in South America and Africa and the Indian subcontinent continue to grow at an alarming rate, the U.S. media direct their attention increasingly to labor shortages in industrial societies and to shrinking school populations in affluent American suburbs", "IQ and Falling Birth Rates", R.J. Herrnstein, Atlantic, May, 1989, Vol. 263, No. 5, page 73. "If the French worry about fertility was characterized as mainly quantitative, the British worry was mainly qualitative. ... But [Prime Minister lee Kuan Yew of Singapore] is an exception, for few modern political leaders dare to talk in public about the qualitative aspect of low fertility. We know why this is, and it has less to do with whether or not we have a fertility problem that with the unacceptability of talking about the subject. In our century the Nazis made selective fertility an emblem of National Socialism, with malevolent consequences that need not review here. Hence to even mention fertility in relation to nation or race have become taboo. ... My subject is differences among groups within the population: how these differences affect fertility and how that, in the long run, may affect the society's economic well-being. ... The evidence shows that prior to transition [to an industrialized society] women of high status had higher fertility than those of low status", 74. "With only rare exceptions, according to the evidence [Robert] Retherford has assembled, the fall in fertility during the transition is thus not just a fall but also a redistribution. ... No species can survive in the long run, however, if its female fertility falls below what demographers call the replacement rate", 75. "Much research suggests that the less intelligent people are, the less they are likely, on average, to be influenced by the delayed consequences of their behavior. ... Differential reproduction shifts a population toward the characteristics of the more prolific parents for all traits in which parents and children resemble each other, for whatever reason. Are brighter women, in fact, having few children than less bright women in the [US]? ... The decline would be larger in the black population than in the white, because black women show a steeper fertility differential in relation to IQ", 76. "Whether or not one approves of it, education and intelligence are thus correlated--but they are not identical. ... Occupational success in modern societies is linked to education. ... Therefore, one line of reasoning goes, the key to productivity and individual achievement is education--rather than individual traits that predict educational success. ... The [US] has decisively left the competition behind in sending its population to school. ... Sending more people to school has no doubt produced benefits in the quality of American life, but instead of an educated populace, we find widespread illiteracy and its mathematical equivalent, innumeracy. Many Americans are going to school more but, apparently are learning less. ... For the present, however, the fact is that the expansion of schooling has not done the job we expected it to do, and its disappointments are evident not just in the classroom", 78. "What are the implications? First, at this point in our history merely sending more people to school for more years seems to offer little benefit to economic performance. ... Second, we should be conscious of how public policy interacts not just with education but also with other influences on the intellectual quality of the population, such as the differential in the fertility rates for women of different intelligence. ... Whatever else we may want to infer from that fact, we ought to bear in mind that in not too many generations differential fertility could swamp the effects of anything else we may do about our economic standing in the world", 79. When Herrnstein wrote that, 19 years ago, he was a Harvard professor. Differential fertility is real. Negroes fertility gradient, for whatever reason, is steeper than that of caucasians. This implies that, over time, black and white IQs and achievement test results should diverge, all other things being equal! For shame, I agree with a deceased Harvard man! The popular media's most significant recent treatment of this issue was 2007's movie, "Idiocracy". That's where the US is going if we continue on our current path, the opinions of our "educationalists" notwithstanding.
Wednesday, September 17, 2008
Jesse at Jesse's Cafe Americain, 7 September 2008, translates Henry Paulson's "newspeak" into English at http://jessescrossroadscafe.blogspot.com/2008/09/text-of-paulsons-statement-on-freddie-html. Thank you Jessee.
Francine McKenna has some choice words about F&F at her Re: The Auditors, 8 September 2008. Here's a link: http://www.retheauditors.com/2008/09/fannie-mae-freddie-mac-takeover-now.html.
"The government's planned takeover of [F&F], ... came together after advisers pouring over the companies' books for the Treasury Department concluded that Freddie's accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter. ... Then, last week, advisers from Morgan Stanley hired by the Treasury Department to scrutinize the companies came to a troubling conclusion: Freddie Mac's capital postion was worse than initially imagined, according to people briefed on those findings. The company had made decisions that, while not necessarily in violation of accounting rules, had the effect of overstating the companies' capital resources and financial stability", my emphasis, Gretchen Morgenstern and Charles Duhigg at the NYT, 7 September 1008.
I'll add a few things. According to each's proxy statement, Fannie, Freddie and Morgan Stanley (MS) paid Deloitte & Touche (D&T), PriceWaterhouse (PW) and D&T: $49, $73 and $47 million in audit fees last year. Amazing. What did D&T and PW do for that money, assuming MS is correct and F&F still have accounting problems? What does the SEC do? What do those useless idiots, pardon me, upstanding public servants at the PCAOB do? How can this continue? Hey Mark Olson (MO), why don't you beat up ten 97-pound weakling CPA firms to show us how macho your PCAOB is? Do you push 80-year old, 5' 2" 110-pound ladies to the ground when you're feeling "bad" MO? Yeah, you MO. Try that with Sara Palin and see what happens. She'll probably fill you with lead. Will MS fire D&T for failing to detect accounting problems at FNM? Or will MS recommend FNM keep D&T as D&T's "failure to find the problems" shows D&T will "play ball" when told? Stay tuned for the continuing soap opera.
Tuesday, September 16, 2008
"The [DOL], charged with enforcing the federal law protecting corporate whistleblowers at publicly-traded companies, has been dismissing complaints on the technicality that workers at corporate subsidiaries aren't covered. The government has ruled in favor of whistleblowers 17 times out of 1,273 complaints filed since 2002, according to department records. Another 841 cases were dismissed. ... Sen. Patrick Leahy, a Vermont Democrat who helped craft the whistleblower provision--part of [SARBOX]--says the law was meant to cover workers in corporate subsidiaries. 'Otherwise, a company that wants to do something shady, could just do it in their subsidiary,' he said. ... Another pending case involves UBS AG, the Swiss bank. The plaintiff, Timothy Flynn, alleged that in June he was suspended from his job as a UBS financial adviser for cooperating with a Massachusetts investigation of the bank's sales of auction-rate securities. Mr. Flynn's attorney, Jason Archinaco, says the [DOL] has asked him to show that the UBS unit that employed his client was covered under the act. ... According to Sen. Leahy, the provision was written to be 'interpreted as broadly as possible.' ... Gregory Jacob, the [DOL's] chief legal officer, has asked the review board to uphold the November decison [in a Siemens case], according to filings in the case. ... Nearly all of Siemens AG's approximately 400,000 employees work at its business units, according to Siemens AG's 2007 SEC filings", Jennifer Levitz at the WSJ, 4 September 2008.
"Two U.S. senators accused the [DOL] of violating the 'spirit and goals' of a federal law aimed at protecting employees who report corporate wrongdoing, and called on the agency to stop rejecting claims from workers at subsidiary companies. ... Sen. Leahy and Sen. Grassley, who wrote those provisions, said that, 'there is simply no basis to assert' that employees of the subsidiaries of publicly traded companoes aren't covered under that acrt, as the department has asserted in numerous recent cases. ... But the [DOL] said, 'We are confident we are correctly enforcing the statute, and do not believe the text of Sarbanes-Oxley was written supports the broader reading that employees of subsidiaries are automatically covered.' Tom Devine, legal director of the Government Accountability Project, a nonprofit group that promotes whistelblower rights, called the department's stance, 'dysfunctional,' saying: 'This one is a no-brainer. There is nothing in the law that allows for that type of loophole.'," my emphasis, Jennifer Levitz at the WSJ, 10 September 2008.
Now class, let's have a lesson in The Law. Laws are interpreted among other things, by using the "Maxims of Jurisprudence". You can find them at California's Civil Code, Sections 3510-3548. Here are some which might help the DOL's legal geniuses interpret SARBOX: "One who grants a thing is presumed to grant whatever is essential to its use", 3522:" "The law respects form less than substance", 3528; "The law never requires impossibilities", 3531; "An interpretation which gives effect, is preferred to one which makes void", 3541 and "Interpretation must be reasonable", 3542. Let's apply these to the instant situation by using reductio ad absurdum. Suppose we have Fortune 500 Inc. (F500), a publicly-held company with $50 billion in sales, $75 billion in market cap and 100,000 employees. F500, now forms a holding company and 100 subsidiaries. It transfers 99,998 employees, all save the CEO and COO to the subsidiaries. Did F500 just exempt 99.998% of its employees from SARBOX whistle-blower provisions? The DOL thinks so. See, you too can be an attorney. Where's the (In)Justice Department on this? Why haven't the DOL employees who adopted this SARBOX interpretation been indicted as justice obstructors, 18 USC 1505? What does "Justice" do anyway? Why haven't the UBS attorneys who apparently encouraged this DOL SARBOX interpretation been indicted as accessories after the fact to witness retaliation, 18 USC 3, 1513? Of course not, they're just "zealous advocates". Who needs the DOL? The Bush administration's "Justice" is blind. To crimes by well-heeled miscreants! This is almost enough to make you want an Obama victory.
Among the things lawyers do to engage in statutory interpretation is look for similar laws, reasoning "by analogy". Does anyone at the DOL or DOJ think a criminal defendant could have a securities fraud indictment dismissed based on his working for a F500 subsidiary? A federal district court judge hearing this, would probably laugh and ask defense counsel if he needs medical attention. What's the SEC's position on this? Are subsidiaries of SEC registrants exempt from SARBOX? I'm a CPA and no client has ever asked me! What's the DOJ's position? Well, Michael Mukasey, will you indict anyone at the DOL as an accessory after the fact, 18 USC 3, to SARBOX violations? Or is it now the DOJ's position that federal securities laws do not apply to persons employed by SEC registrants' subsidiaries?
Now Elaine Chao, AB Mount Holyoke, MBA Harvard, Secretary of Labor, as this is a "no-brainer", will Michael Mukasey indict you you for hundreds of counts of accessory after the fact to witness retaliation, 18 USC 3, 1513? With that academic pedigree, will you now claim to be stupid? Oh, and all the attorneys representing "Fortune 500 Inc." who pushed this? If Uncle Sam built and filled say, a new, 2,500-inmate federal prison just to house these clowns, the incidence of corporate fraud would likely drop 90%. Can you imagine, "NY Big Law" partners telling clients, "Gee, that's really nice. But I can't help you perpetrate a crime, not even for 5,000 billable hours at $900 per. If we get caught I will go to prison and be disbarred. I studied law at Harvard and later learned the value of my license from Lucky Luciano. Sorry, no can do".