Posts Tagged ‘Economy’

There’s a new sheriff in town at the SEC.

WASHINGTON (AP) – The Securities and Exchange Commission on Thursday named a former federal prosecutor as its new enforcement chief to lead the embattled agency’s drive to strengthen its pursuit of financial fraud.

Robert Khuzami has been a top legal official on Wall Street at investment firm Deutsche Bank since 2004. Before that he worked for 11 years in the U.S. attorney’s office in Manhattan and prosecuted insider trading cases, Ponzi schemes and other financial crimes.

Khuzami, 52, replaces Linda Thomsen, the SEC enforcement director since May 2005. Her departure was announced last week.

Thomsen became a lightning rod for criticism over the SEC’s failure to detect the $50 billion Ponzi scheme allegedly run by money manager Bernard Madoff, despite red flags raised to the agency staff by outsiders over the course of a decade.

The naming of Khuzami by new SEC Chairman Mary Schapiro came two days after the agency accused Texas billionaire R. Allen Stanford in a civil lawsuit of a “massive” $8 billion fraud that lured investors with sham promises of double-digit returns on certificates of deposit.

Besides leading several major financial fraud cases, Khuzami also prosecuted the “Blind Sheik” Omar Ahmed Ali Abdel Rahman in what was then the largest terrorism trial in U.S. history following the 1993 bombing of the World Trade Center in New York. Ten defendants were convicted of operating a terrorist organization responsible for the bombing, the assassination of Jewish Defense League founder Meir Kahane, and planning bomb attacks on law enforcement and other high-profile targets.

Other than Patrick Fitzgerald, I can’t think of another prosecutor who would scare me more if I were under investigation.

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The Hill’s Aaron Blake looks at the short and long-term political implications of the stimulus bill, with an eye on 2010.

The stimulus package has emerged as the first major campaign issue of the 2010 election cycle, and a Republican Party eyeing a return to the majority is going all-in.

The near-universal GOP opposition to the stimulus means that, for 2010 at least, Democrats own the result. Republicans, meanwhile, are in the awkward position of banking on it, at least electorally, to fail.

In the end, only three Republicans voted for the stimulus package — all in the Senate — while 11 Democrats voted against it — all in the House.

The only senator who is up in 2010 to break party ranks was Arlen Specter (R-Pa.), who is in the unenviable position of dealing with both a blue-trending state and a conservative backlash over the vote.

Potential primary opponents like former Rep. Pat Toomey (R-Pa.) and businessman Glen Meakem bristled at Specter’s vote and now have new motivation to challenge him next year.

“I really thought he was trying to avoid a primary challenge, and it’s very clear to me from this vote that he is really not anymore,” Meakem said, adding: “I think leading conservatives are going to coalesce around a candidate here in the next month or two.”

Another candidate with plenty riding on the vote is potential Senate candidate Rep. Heath Shuler (D-N.C.), who has taken to criticizing Democratic leaders over their conduct.

Shuler drew a sharp rebuke from Senate Majority Leader Harry Reid (D-Nev.) after he said Reid and House Speaker Nancy Pelosi (D-Calif.) “failed” to make the package bipartisan.

Shuler is considered a top potential challenger to Sen. Richard Burr (R-N.C.) in 2010. And even if Shuler stays in the House, he could face a tough race in a very conservative district.

Unlike Shuler, many of those breaking ranks on the stimulus vote are safe, including several Blue Dog Democrats and Republican Maine Sens. Olympia Snowe and Susan Collins.

Blue Dog member Allen Boyd (D-Fla.) is facing a primary challenge from state Sen. Al Lawson, meaning his vote could be a liability. In announcing his intentions Wednesday, Lawson signaled that the vote would be front-and-center in the race.

The Republicans’ strategy is clear: they want the Democrats to own this bill if it fails. But if the economy is in recovery by Election Day, the whole thing will blow up in their face, and the Democrats can label them as obstructionists who voted against the economic recovery. We’ll see who gets the last laugh in about 19 months from now.

If you needed any more evidence that the heyday of unregulated excess in American capitalism is over, check out this report in the Wall Street Journal.

Public anger over taxpayer-funded financial bailouts is prompting Congress to look for ways to better police the billions of dollars being injected into the same Wall Street firms that many critics believe caused the current economic crisis.

Sens. Charles Schumer (D., N.Y.) and Richard Shelby (R., Ala.) are sponsoring a bill to hire hundreds of new Federal Bureau of Investigation agents and Securities and Exchange Commission investigators to investigate financial fraud. The Senate Judiciary Committee is holding a hearing Wednesday to highlight the issue.

The proposal would provide $80 million to hire 500 new FBI agents and $10 million to add new federal prosecutors and $20 million for 100 new SEC employees. All are going to be focused on investigating white-collar crime, including mortage and financial fraud that many believe helped cause the current global crisis.

The increase in resources is intended to remedy cuts that were made after the Sept. 11, 2001 terrorist attack, which prompted federal law enforcement to focus more on terrorism.

Schumer says the FBI’s mortgage and financial fraud unit has 348 agents, down from 1,000 following the Savings and Loan crisis in the 1980s and 1990s.

If this happens, there will be some very nervous business executives on Wall Street and throughout America, and white collar defense attorneys in the private sector will make an obscene amount of money defending their clients. I would also expect big business to lobby heavily against this proposal and will promise to do a better job at policing itself, but the political reality is that the uproar over the economy and the multiple taxpayer-funded bailouts have Congress and the American people in a very foul mood. They won’t be very sympathetic.

598k

Posted: February 6, 2009 in Economy
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Just got the following Breaking News email from CNN:

U.S. unemployment rose by 598,000 to 7.6 per cent in January, Labor Dept. reports, the worst monthly job loss since 1974.

Update: Including the newest figures, the U.S. economy has lost 3.6 million jobs since the recession began in December 2007.

This story in the Washington Post is unbelievable. If this had happened in the private sector, people would have been fired immediately.

This exchange really captures the severity of it all:

“Isn’t that a terrible way to look after the taxpayers’ money and to make purchases anywhere?” Sen. Richard C. Shelby (R-Ala.), ranking member on the Senate Banking Committee, said at a hearing on oversight of the bailout.

Warren replied, “Senator, Treasury simply did not do what it said it was doing.”

“In other words, they misled the Congress, did they not?” said a visibly flustered Shelby.

When a Republican senator is openly accusing the Bush Treasury Department of misleading Congress, you know it’s bad.

With the obscene amounts of money being proposed for the economic stimulus, CNN’s Christine Romans effectively states the obvious: billions are no longer enough.

It’s Official

Posted: December 1, 2008 in Economy
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The United States is in a recession:

NBER Makes It Official: Recession Started in December 2007

Official recession watchers at the NBER said today that the U.S. is recession, and it began in December 2007. Here is the text of their statement.

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.