Monday, June 30, 2008
Sunday, June 29, 2008
"Milberg LLP, indicted two years ago in one of the highest-profile prosecutions ever of a law firm, will escape charges as part of a settlement with the government announced Monday. The firm will pay $75 million and admit wrongdoing. . ... Milberg acknowledges that after it became aware of the government's investigation, it failed to conduct an independent internal investigation and delayed taking adequate action to prevent the conduct in the future. ... "The settlement with Milberg reflects the seriousness of what was probably the longest-running scheme ever conducted by a law firm,' U.S. Attorney Thomas P. O'Brien said in a statement", my emphasis, WSJ, 17 June 2008.
"If there's a moral in this week's felony settlement by class-action lawsuit giant Milberg Weiss, it's this: Prosecutors should keep digging into tort-bar practices. The details are even worse than the headlines. ... In short, Milberg was a corrupt enterprise that perpetrated a vast fraud on our system of justice", Editorial at the WSJ, 18 June 2008.
What is the "prohibited conduct"? Suing say, drumroll please, Goldman Sachs? Who is BS? Is he a DOJ alumnus?
O'Brien and I live in alternative universes. What would have been an "independent internal investigation" that would have convinced the DOJ to let Milberg be? Who should have conducted it? A law firm with large corporate clients? What was Milberg's real crime? Not having enough, or perhaps any, "former" AUSA partners? Milberg gets to admit wrongdoing. Why wasn't it treated the same way the SEC treats most real miscreants? Why was Milberg charged and Mayer Brown, given a pass, my 22 and 27 December 2007 posts? I could go on and on.
I draw a different lesson from the Milberg saga. A law firm must hire AUSAs to ensure job opportunities for existing AUSAs. If Milberg was a "corrupt enterprise" what does the DOJ think of the Tobacco Research Council, the large tobacco companies and their law firms? No matter what Milberg did, the DOJ would have "gotten" it. Even if it cost the DOJ hundreds of millions. With all its imperfections, the world's Milbergs are a threat to: the SEC, DOJ and large corporate miscreants.
Saturday, June 28, 2008
Friday, June 27, 2008
Thursday, June 26, 2008
Wednesday, June 25, 2008
Tuesday, June 24, 2008
Monday, June 23, 2008
I agree with Willens, there is no substance to this arrangement. Anschutz, pay up.
Sunday, June 22, 2008
Saturday, June 21, 2008
Friday, June 20, 2008
"Vietnam effectively devalued its currency by almost 2% Tuesday to bring official exchange rates closer to black-market rates, which have fallen sharply as Vietnamese investors buy dollars to escape soaring inflation. ... The central bank ... also increased its main interest rate for dong-denominated loans to 14% from 12% in a bid to tamp inflationary pressure", WSJ, 11 June 2008.
Amazing. Dung sounds like Hank Paulson. When Dung steps down, one can't help but wonder if there's a Goldman Sachs Managing Directorship waiting. The Vietnamese want to support their stock market so do not increase interest rates. Helicopter Ben similarly supports US banks. There's an old Polish saying: "Communist, capitalist, fascist, it all makes no difference. When the Germans and Russians get together it's bad for us". In today's context: "Communist, capitalist, fascist, banker, formerly communist, it makes no difference. When the monetary manipulators are are work, it's bad for the working class". I remember the Brits in 1967 saying they would not devalue the Pound. Sure. See my 27 September 2007 and 12 May 2008 posts.Two days after Dung's speech, Vietnam devalues the Dong by 2%. Not enough. More's coming.
Thursday, June 19, 2008
The NYT failed to add, "and creates an expected rich payday for the prosecutor when he leaves the DOJ as the system will continue and he'll get his payoff from future deferred prosecutions by future AUSAs". Neat. See my 17 and 31 January, 28 February and 12 March 2008 posts.
This is a joke. One Weiss "crime" was doing the SEC's job for it. This is the thanks he gets. Among other things Weiss was charged with racketeering. Frenkel, how do you analogize Weiss actions to those of a say, Ken Lay or Andrew Fastow? Who is the victim? Another Weiss "crime": Milberg Weiss did not have any $2 million-a-year partnerships to hand out to former AUSAs.
Wednesday, June 18, 2008
Tuesday, June 17, 2008
"Even as Moody's Investors Service was handing out triple-A ratings last year on a huge number of securities tied to mortgages, a senior Moody's analyst involved in rating them was warning about the housing market and asking if the ratings were too optimistic. In late 2006 and early 2007, the Moody's Corp. unit continued to rate new [CDOs] even as the analyst, Eric Kolchinsky, aired his concerns to his colleagues and his boss, people familar with the matter said. ... As the credit crunch drags on, regulators and lawmakers are pressing for answers on why ratings firms gave investment grade ratings to subprime bonds and [CDOs] and didn't respond more aggressively to signs of trouble. ... Kolchinsky, a managing director, was one of many people involved in the discussions. He specifically took his concerns to his boss at the time, Yuri Yoshizawa, a group managing director at Moody's, who said she would take Mr. Kolchinsky's point of view under consideration, according to people familar with the matter. Mr. Kolchinsky wasn't available to comment, according to a spokesman. ... 'We all wanted to downgrade as soon as possible, but we wanted to downgrade based on information we could rely upon,' says Ms. Yoshizawa. For example, she says, the firm studied the performance of each subprme securitization it had rated instead of making what she calls a 'blanket cut.' ... Moody's also might have been seen as doubting its own ratings on subprime mortgages if the CDO group expressed doubts on mortgage-backed CDOs. A Moody's spoksman says that 'vigorous discussion among analysts is encouraged and expected in ratings committees,' so debates about CDOs 'would not be unsual.' He added that 'commerical considerations do not influence our ratings,'" WSJ, 7 June 2008.
It's good S&P works in the public interest. It cut MBIA and Ambac's ratings after the muni bond market concluded their guarantees are worthless. I await public apologies to William Ackman, long-time MBIA nemesis. Right. See my 19 and 20 December 2007 and 17 January 2008 posts. I never "understood" the monolines business, see my 30 October, 8, 18, and 30 November and 8, 13 and 15 December 2007 posts. Apparently the S&P and Moody's geniuses never understood it either. Hey guys, for a mere $10 million I'll "splain" it to you. Waddayasay? I got it: the S&P and Moody's geniuses read Marilyn Cohen's Forbes article, my 16 May 2008 post. Who needs these guys? Shut 'em down.
Monday, June 16, 2008
Sunday, June 15, 2008
Saturday, June 14, 2008
"When Paul Volker declared several weeks ago that the world was in a 'dollar crisis,' his successors at the [Fed] made their private disapproval very clear. This week ... Bernanke raised the white flag over Mr. Volker's point by declaring his own public concern 'that the dollar remains a strong and stable currency.' ... The Fed has monopoly power over dollar creation, and concern for its value ought to go without saying. ... The question now is whether the Fed will follow up its new words with action. ... But the Fed chief signaled that he isn't about to tighten monetary policy any time soon because current 'policy seems well positioned to promote moderate growth and price stability over time.' ... The Fed-inspired commodity boom has sent food and energy prices soaring, while wage gains invariably lag. ... The Fed's dollar indifference has sent an inflation shock through those dollar-linked economies. This week alone, we''ve read about price riots in Vietnam, inflation hitting 10.1% in Kuwait, Abu Dhabi contemplatating price or wage controls, South Korean and Indonesian central bankers considering rate hikes, and the Chinese letting the yuan rise ever higher to curb inflationary pressure imported from the U.S. The result has been the largest decline in America's global economic influence since the 1970s. ... Changing the value of the dollar means reducing the supply of, or increasing the demand for, dollars", my emphasis, Editorial at the WSJ, 5 June 2008.
The Fed's assault on the dollar continues unabated. Anyone who believes in Fed "independence" should note the Fed is part of the Bush adminstration. The Fed has "no choice but to talk tough". Got gold? Get more. Rogoff is apparently another economist who doesn't read the newspapers. Hey Rogoff, did you notice the recent prices of: wheat, corn, soybeans, copper, oil, gold, silver, platinum, nickel, lead, iron ore, zinc and natural gas? See my 21 November 2007 post.
Poor Harvard kids, having to hear this nonsense. As for "inflation", it's whatever number Uncle Sam wants it to be. "Productivity" is a residual, less inflation, more productivity.
Friday, June 13, 2008
"An agreement between New York state Attorney Geneal Andrew Cuomo and the three major bond-rating firms will overhaul the way they collect fees and aims to improve the way mortgage-backed securites are rated. ... Moody's Corp. Chief Executive Raymond McDaniel, at a separate briefing, said the settlement is a 'very constructive development' for bond-rating firms and an 'important step' for 'restoring confidence' in the credit markets. ... Mr. Cuomo's settlement ... does deal with what many critics say has been a chronic problem with bond ratings: They are paid for by the entities being rated. ... Under the accord, the firms would get paid for their review, even if they aren't hired to rate the deal. That is designed to make ratings firms less reliant on getting the ratings assignment from bond issures. Ratings firms will also have to disclose the fees they collect in these securities. ... The settlement also requires that rating firms review due-diligence reports on loans that go into the securities in an effort to better equip them to understand what is in the mortgage securites they are rating. ... Christopher Cox, chairman of the [SEC] said in a statement: 'I am most appreciative of the efforts of the Attorney General Cuomo and his staff to consult with the Commission and coordinate their efforts in a way that is consistent with the Commission's pending rulemaking for credit-rating agencies'," my emphasis, WSJ, 6 June 2008.
This deal stinks. It will not fix the ratings agencies. See my 10 June 2008 post, Bert Ely's got the right idea. The "deal" reminds me of the tobacco industry "settlement", that cost the tobacco industry nothing, but cartelized it. Few people understand the tobacco industry deal was in substance, a group of state attorneys general levying an excise tax on cigarettes. I remember reading a good analysis of the deal by a Stanford University law professor in the WSJ.
There is nothing in Cuomo's settlement for investors. Consider McDaniel's comment, it's a "very constructive development" for Moody's. I agree, McDaniel, that's exactly why it's of no help to investors. Further, the defender of investors' interests, Chris Cox endorsed it. 'Nuff said.
DL's got it!
Thursday, June 12, 2008
Wednesday, June 11, 2008
Tuesday, June 10, 2008
Monday, June 9, 2008
"Carol Ernst, whose 59-year-old husband Bob died of heart problems after taking the drug Vioxx for nine months, must be wondering what it takes to win a verdict in a damages suit these days. ... On Thursday, a three-judge appellate court panel in Houston found that the expert testimony presented in the trial on behalf of the plaintiff did not prove Vioxx caused his death. The judgment was overturned, and Ernst will receive nothing. She and her lawyer, Mark Lanier, intend to appeal. ... More and more Texans are learning that trust is misplaced in a court system inclined at the higher levels to protect the interests of business over consumers. ... Rather than encouraging Merck to do what's right, the 14th Court's decision in the case risks emboldening the company to rely on judicial friends in high places to overrule judges and send widows home empty-handed", my emphasis, Editorial at the Houston Chronicle, 1 June 2008.
No, WSJ, the one-two punch was delivered to the 7th Amendment. Double jeopardy? That only applies in criminal cases. Even there, the concept of "dual sovereignity" applies. Huh? A bank robber may be charged by the state and federal government for the same action. Similarly a street level drug dealer. Why is an incorporated drug dealer exempt from state tort suits? This is one of the worst pieces of WSJ special pleading I've read in a long time. Get out your crying towel for Merck. The most I can see is: FDA "approval" is just expert opinion which is admittable for jury consideration, like other expert opinion. That drug companies can use FDA approval to immunize themselves against lawsuits is insane in my opinion. On what basis can the FDA grant sovereign immunity? This is another example of Bush adminstration ignoring state's rights when it suits big business. I have no more confidence in the FDA than the SEC, OFEHO or the DOJ.
I agree with the Chronicle. ML, if you want to win your appeal, figure out how to frighten the Texas Supreme Court into reinstating the verdict. The facts and law in your appellate brief won't matter. Saying stuff like "clearly erroneous standard" may sound nice in law school, but in the real world means nothing. If the judges who hear the case believe their failure to reinstate the verdict will make the public lose faith in "the system" they will reverse and figure out their rationalization later. That's the way it really works as Oliver Wendell Holmes taught us.