Chicago Sun Times Editorial: Burris will step aside with tarnished legacy
Copyright by The Chicago Sun Times
July 11, 2009
http://www.suntimes.com/news/commentary/1661567,CST-EDT-edit12a.article
At last, Roland Burris has made a decision as senator that we can endorse wholeheartedly.
He will not run next year for his Senate seat.
Thank goodness.
At least one chapter in the sad show that is Illinois politics can soon come to an end.
You'll remember, of course, that Burris began shredding his own credibility and the legacy of his decades of state service when he accepted the Senate appointment from our radioactive governor, Rod Blagojevich.
Blagojevich anointed Burris, just as the governor was getting tossed from office for allegedly trying to sell that very Senate appointment.
Recall, too, that we have state Democratic leaders to thank, in part, for the initial fiasco, because they were loath to call a special election for the seat when there was a chance a Republican could win it.
So we got Burris. The senator who wasn't.
Way back then, you might not have thought it would be possible for Burris to further damage his reputation.
But as we've come to learn, in Illinois, anything is possible.
And not in a good way.
After his appointment, Burris testified before state lawmakers about how he got the job, but he left out a few facts -- like entire conversations he had with the governor's representatives whom he lobbied for the Senate appointment.
And how the Blagojevich camp hit Burris up for money, too, as he pined for the Senate seat.
Even worse, Burris appeared to agree to "personally do something" for Blagojevich, according to a secret FBI recording of a conversation between Burris and Blagojevich's brother.
Burris had explanations for all this, of course, but they were all pretty lame, when they made sense at all.
On Friday, Burris spoke the truth when he maintained that raising money for the Senate race would be a true burden.
That's believable because no one with even a passing relationship with reality would have given him a dime.
Still, it's not a total loss for Burris.
Now, he can add "U.S. Senator" to the accomplishments already carved on his tombstone.
But at what a cost for him -- and for the state he says he loves so much.
Saturday, July 11, 2009
Washington Post Editorial: Securing the Internet - Recent cyber-attacks highlight the need for administration action.
Washington Post Editorial: Securing the Internet - Recent cyber-attacks highlight the need for administration action.
Copyright by The Washington Post
Saturday, July 11, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100486.html
WHERE IS our cyber-czar?
As recent attacks on government and private Web sites illustrate, cyber-security is a critical national issue. That's why President Obama was right when he moved to create a high-ranking "cyber-czar" to guide the development of cyber-defense. Now, months later, there is work to be done, and there is still no one in place to do it. Mr. Obama's initial notion of a dual-role coordinator reporting to the National Economic Council and the National Security Council may be the problem -- its nebulous authority has scared off even top potential contenders. Attracting someone to this vital job may mean giving the czar clearer authority to monitor and coordinate security efforts that are spread across multiple agencies. But the need for someone to develop a coherent cyber-policy is pressing.
Thousands of cyber-attacks occur every day on private and public networks, jeopardizing the data of more than 280 million people last year. But Mr. Obama's report on cyberspace policy found that "government is not organized to address this growing problem effectively now or in the future. Responsibilities for cyber-security are distributed across a wide array of federal departments and agencies, many with overlapping authorities, and none with sufficient decision authority."
The lack of a guiding vision has implications beyond mere inefficiency. The nation's cyber-defenses are being developed without any structure to guarantee transparency and accountability. So last month, when Defense Secretary Robert M. Gates created a consolidated military Cyber-Security Command, to be headed by the director of the National Security Agency, and this month, when a pilot program began expanding NSA technologies to protect civilian networks, these moves raised questions. Currently, cyber-defense responsibilities are split between the Department of Homeland Security and the Defense Department. But DHS cyber-defenders are becoming increasingly reliant on the capability developed at the Pentagon, a trend that will continue in the persistent absence of any better plan. If Americans don't want the NSA to become the clearinghouse for all cyber-security issues -- a responsibility Mr. Gates does not want, either -- an alternative vision is needed, and soon.
When Mr. Obama first made cyber-security an administration priority, he promised to keep government defenses out of private networks. But the Internet is an interconnected series of networks, making it difficult to determine where private security threats end and public ones begin. To defend against attacks, it may become necessary for the public and private sectors to share information and strategies for dealing with threats. All the more reason to make someone accountable for striking the right balance between liberty,
Copyright by The Washington Post
Saturday, July 11, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100486.html
WHERE IS our cyber-czar?
As recent attacks on government and private Web sites illustrate, cyber-security is a critical national issue. That's why President Obama was right when he moved to create a high-ranking "cyber-czar" to guide the development of cyber-defense. Now, months later, there is work to be done, and there is still no one in place to do it. Mr. Obama's initial notion of a dual-role coordinator reporting to the National Economic Council and the National Security Council may be the problem -- its nebulous authority has scared off even top potential contenders. Attracting someone to this vital job may mean giving the czar clearer authority to monitor and coordinate security efforts that are spread across multiple agencies. But the need for someone to develop a coherent cyber-policy is pressing.
Thousands of cyber-attacks occur every day on private and public networks, jeopardizing the data of more than 280 million people last year. But Mr. Obama's report on cyberspace policy found that "government is not organized to address this growing problem effectively now or in the future. Responsibilities for cyber-security are distributed across a wide array of federal departments and agencies, many with overlapping authorities, and none with sufficient decision authority."
The lack of a guiding vision has implications beyond mere inefficiency. The nation's cyber-defenses are being developed without any structure to guarantee transparency and accountability. So last month, when Defense Secretary Robert M. Gates created a consolidated military Cyber-Security Command, to be headed by the director of the National Security Agency, and this month, when a pilot program began expanding NSA technologies to protect civilian networks, these moves raised questions. Currently, cyber-defense responsibilities are split between the Department of Homeland Security and the Defense Department. But DHS cyber-defenders are becoming increasingly reliant on the capability developed at the Pentagon, a trend that will continue in the persistent absence of any better plan. If Americans don't want the NSA to become the clearinghouse for all cyber-security issues -- a responsibility Mr. Gates does not want, either -- an alternative vision is needed, and soon.
When Mr. Obama first made cyber-security an administration priority, he promised to keep government defenses out of private networks. But the Internet is an interconnected series of networks, making it difficult to determine where private security threats end and public ones begin. To defend against attacks, it may become necessary for the public and private sectors to share information and strategies for dealing with threats. All the more reason to make someone accountable for striking the right balance between liberty,
With Senate Astir, Governor Will Delay Same-Sex Marriage Bill
With Senate Astir, Governor Will Delay Same-Sex Marriage Bill
By DANNY HAKIM
Copyright by The New York Times
Published: July 10, 2009
http://www.nytimes.com/2009/07/11/nyregion/11albany.html?th&emc=th
ALBANY — Gov. David A. Paterson will delay his plan to force a vote on a bill to legalize same-sex marriage until early September because the Senate is too unsettled now to take it up, his spokesman said on Friday.
The governor had vowed three weeks ago to force the senators to take up the matter before they left for their summer break. But the Democrats were struggling to reorganize themselves on Friday, a day after they reclaimed control of the Senate and ended a bitter leadership feud that had halted action in the chamber for more than a month.
“Governor Paterson believes that marriage equality is an important civil rights issue and will be working with Senate leaders to move the process forward,” said the spokesman, Peter E. Kauffmann, adding that the governor was more immediately focused on the state’s dwindling tax revenues.
Mr. Kauffmann said the governor would probably call a special legislative session in early September so lawmakers could close an anticipated hole in the state’s budget.
“At that time,” Mr. Kauffmann said, “he will also work with legislative leaders to include additional issues that were not addressed in regular session, such as unemployment insurance, marriage equality and ethics reform.”
Senate Democrats are unlikely to take up the marriage bill on their own. They remain deeply divided and, in many cases, estranged from one another, after the infighting and personal attacks of the nearly five-week leadership battle.
Democratic leaders said they would return to the capital next Wednesday and Thursday to conclude the legislative session but would avoid the most divisive issues.
“There was a general consensus that we wouldn’t take on extremely controversial bills in the next week,” said Pedro Espada Jr., who was named Senate majority leader on Thursday. He added, “There’s a point that was reached and exceeded in terms of the exhaustion factor for the institution as a whole.”
Notable bills whose fate remains unclear include a measure that would allow Mayor Michael R. Bloomberg to retain control over New York City’s public schools and legislation to expand the city’s rent control laws.
Lawmakers were negotiating with the city on Friday to amend mayoral control legislation supported by Mr. Bloomberg. Senator John L. Sampson, the leader of the Democratic caucus, supports a greater role for parents in the school system.
Mr. Espada said that he expected the Senate to take up the mayoral control measure next week, and that bills intended to bolster rent control laws were likely to be shelved, at least for now. Mr. Espada and other top Democrats have forged close ties to the real estate industry.
On same-sex marriage, several senators said privately that the caucus was reluctant to take it up because of the strident opposition of Senator Rubén Díaz Sr., a Bronx Democrat and Pentecostal minister. With the caucus holding a tenuous single-seat majority, there is a focus on keeping members happy.
“We just got unity,” Mr. Díaz said in an interview when asked about the marriage issue. “Don’t start to un-unify us. Let us have some kind of honeymoon.”
Last month, the governor, a champion of same-sex marriage rights, vowed to make sure that the Senate voted on the issue before breaking for the summer. “It has always been my intention to see same-sex marriage come to the floor,” he said on June 21, adding, “I don’t want there to be any confusion.”
Mr. Paterson declined to be interviewed about his shift in plans.
The Senate stalemate ended on Thursday after Mr. Espada, of the Bronx, abandoned an alliance with the Republicans. He returns to a caucus bitterly divided along racial lines and in the throes of reorganization.
Under a new leadership deal, Mr. Sampson, of Brooklyn, is the effective leader of the Senate and Mr. Espada has the vaguely defined title of majority leader. Malcolm A. Smith of Queens, the former Democratic leader, will remain as Senate president for what senators describe as a transition period.
Other bills that may be taken up include measures to overhaul the state’s embattled ethics oversight panel, the Commission on Public Integrity, and to provide less generous pension benefits to new public workers. Democrats are also negotiating with Republicans, in fits and starts, over rule changes to make the Senate operate more fairly.
“I don’t think we’re going to have a very ambitious agenda,” said Senator Eric T. Schneiderman, a Manhattan Democrat. He added, “Under the present circumstances, with all of the breakdowns in the system and the traumatized personal relationships, I think most of the senators would like to pass the things we have to pass and get out of town.”
The Senate resumed business late Thursday, and senators stayed until about 2 a.m. Friday to pass largely uncontroversial bills.
Senators were in a feisty mood. Some criticized the governor as taking an unusually hard line against them over the last month. And they took the rare step of voting down, by a 35-to-27 vote, a measure backed by Comptroller Thomas P. DiNapoli that would have allowed local governments to borrow state money to pay their pension bills.
The vote was widely seen as a rebuke to Mr. DiNapoli, who had withheld the paychecks and travel vouchers of senators in recent days to try to prod them to end their standoff. There was broad laughter in the chamber after the bill was defeated.
Senators concluded by approving a sales tax increase for New York City, raising the tax by one-half of a percentage point, to 8.875 percent. The stalemate delayed passage of the bill, costing the city an estimated $60 million.
A number of Democrats criticized the measure as unfairly burdensome to the poor. Senator Liz Krueger, a Manhattan Democrat, said the Senate should let the city balance its own budget.
“We, as we know, have our own headaches here running our state government,” Ms. Krueger said. “I’m not sure we’re up to taking on, solving the problems of, every local government.”
Jeremy W. Peters contributed reporting.
By DANNY HAKIM
Copyright by The New York Times
Published: July 10, 2009
http://www.nytimes.com/2009/07/11/nyregion/11albany.html?th&emc=th
ALBANY — Gov. David A. Paterson will delay his plan to force a vote on a bill to legalize same-sex marriage until early September because the Senate is too unsettled now to take it up, his spokesman said on Friday.
The governor had vowed three weeks ago to force the senators to take up the matter before they left for their summer break. But the Democrats were struggling to reorganize themselves on Friday, a day after they reclaimed control of the Senate and ended a bitter leadership feud that had halted action in the chamber for more than a month.
“Governor Paterson believes that marriage equality is an important civil rights issue and will be working with Senate leaders to move the process forward,” said the spokesman, Peter E. Kauffmann, adding that the governor was more immediately focused on the state’s dwindling tax revenues.
Mr. Kauffmann said the governor would probably call a special legislative session in early September so lawmakers could close an anticipated hole in the state’s budget.
“At that time,” Mr. Kauffmann said, “he will also work with legislative leaders to include additional issues that were not addressed in regular session, such as unemployment insurance, marriage equality and ethics reform.”
Senate Democrats are unlikely to take up the marriage bill on their own. They remain deeply divided and, in many cases, estranged from one another, after the infighting and personal attacks of the nearly five-week leadership battle.
Democratic leaders said they would return to the capital next Wednesday and Thursday to conclude the legislative session but would avoid the most divisive issues.
“There was a general consensus that we wouldn’t take on extremely controversial bills in the next week,” said Pedro Espada Jr., who was named Senate majority leader on Thursday. He added, “There’s a point that was reached and exceeded in terms of the exhaustion factor for the institution as a whole.”
Notable bills whose fate remains unclear include a measure that would allow Mayor Michael R. Bloomberg to retain control over New York City’s public schools and legislation to expand the city’s rent control laws.
Lawmakers were negotiating with the city on Friday to amend mayoral control legislation supported by Mr. Bloomberg. Senator John L. Sampson, the leader of the Democratic caucus, supports a greater role for parents in the school system.
Mr. Espada said that he expected the Senate to take up the mayoral control measure next week, and that bills intended to bolster rent control laws were likely to be shelved, at least for now. Mr. Espada and other top Democrats have forged close ties to the real estate industry.
On same-sex marriage, several senators said privately that the caucus was reluctant to take it up because of the strident opposition of Senator Rubén Díaz Sr., a Bronx Democrat and Pentecostal minister. With the caucus holding a tenuous single-seat majority, there is a focus on keeping members happy.
“We just got unity,” Mr. Díaz said in an interview when asked about the marriage issue. “Don’t start to un-unify us. Let us have some kind of honeymoon.”
Last month, the governor, a champion of same-sex marriage rights, vowed to make sure that the Senate voted on the issue before breaking for the summer. “It has always been my intention to see same-sex marriage come to the floor,” he said on June 21, adding, “I don’t want there to be any confusion.”
Mr. Paterson declined to be interviewed about his shift in plans.
The Senate stalemate ended on Thursday after Mr. Espada, of the Bronx, abandoned an alliance with the Republicans. He returns to a caucus bitterly divided along racial lines and in the throes of reorganization.
Under a new leadership deal, Mr. Sampson, of Brooklyn, is the effective leader of the Senate and Mr. Espada has the vaguely defined title of majority leader. Malcolm A. Smith of Queens, the former Democratic leader, will remain as Senate president for what senators describe as a transition period.
Other bills that may be taken up include measures to overhaul the state’s embattled ethics oversight panel, the Commission on Public Integrity, and to provide less generous pension benefits to new public workers. Democrats are also negotiating with Republicans, in fits and starts, over rule changes to make the Senate operate more fairly.
“I don’t think we’re going to have a very ambitious agenda,” said Senator Eric T. Schneiderman, a Manhattan Democrat. He added, “Under the present circumstances, with all of the breakdowns in the system and the traumatized personal relationships, I think most of the senators would like to pass the things we have to pass and get out of town.”
The Senate resumed business late Thursday, and senators stayed until about 2 a.m. Friday to pass largely uncontroversial bills.
Senators were in a feisty mood. Some criticized the governor as taking an unusually hard line against them over the last month. And they took the rare step of voting down, by a 35-to-27 vote, a measure backed by Comptroller Thomas P. DiNapoli that would have allowed local governments to borrow state money to pay their pension bills.
The vote was widely seen as a rebuke to Mr. DiNapoli, who had withheld the paychecks and travel vouchers of senators in recent days to try to prod them to end their standoff. There was broad laughter in the chamber after the bill was defeated.
Senators concluded by approving a sales tax increase for New York City, raising the tax by one-half of a percentage point, to 8.875 percent. The stalemate delayed passage of the bill, costing the city an estimated $60 million.
A number of Democrats criticized the measure as unfairly burdensome to the poor. Senator Liz Krueger, a Manhattan Democrat, said the Senate should let the city balance its own budget.
“We, as we know, have our own headaches here running our state government,” Ms. Krueger said. “I’m not sure we’re up to taking on, solving the problems of, every local government.”
Jeremy W. Peters contributed reporting.
Civil Rights Group Divided Over Gay Marriage
Civil Rights Group Divided Over Gay Marriage
By JENNIFER STEINHAUER
Copyright by The New York Times
Published: July 10, 2009
http://www.nytimes.com/2009/07/11/us/11gay.html?th&emc=th
LOS ANGELES — The Southern Christian Leadership Conference, the 50-year-old civil rights organization founded by the Rev. Dr. Martin Luther King Jr. and others, is seeking to remove the president of its Los Angeles chapter in response to his support of same-sex marriage in California.
The effort by the Atlanta-based organization is meeting stiff resistance in Los Angeles from both the board of the local chapter, whose chairman is secretary of the state’s Democratic Party, and the City Council president.
During the battle last fall over Proposition 8, an amendment to the State Constitution that banned same-sex marriage, the chapter’s president, the Rev. Eric P. Lee, was more than a tangential figure for the opposition. He was front and center at an opposition group’s large rally at City Hall and marched in the blazing sun for 15 miles in Fresno. Many other local African-American pastors prepared mailings featuring church leaders in support of the proposition and linking their views to Barack Obama, then the Democratic nominee for president.
Mr. Lee “was very helpful to us,” said Rick Jacobs, head of the Courage Campaign, a left-leaning political action group in Los Angeles that fought the initiative.
While the Mormon Church raised a great deal of the money in support of the proposition, the role of African-American churches, and their voting parishioners, was not insignificant. The Edison/Mitofsky exit poll in California found that 70 percent of black voters backed the ban, which passed with 52 percent of the vote.
Mr. Lee said that his opposition to Proposition 8 had “created tension in my life I had never experienced with black clergy.”
“But it was clear to me,” he added, “that any time you deny one group of people the same right that other groups have, that is a clear violation of civil rights and I have to speak up on that.”
In April, Mr. Lee attended a board meeting of the Southern Christian Leadership Conference in Kansas City, Mo., and found himself once again in the minority position among his colleagues on the issue of same-sex marriage, but he was told, he said, by the group’s interim president, Byron Clay, that the organization publicly had a neutral position on the issue.
So a month later, Mr. Lee said, he was surprised to receive a call from the National Board of Directors summoning him immediately to Atlanta to explain why he had taken a position on same-sex marriage without the authority of the national board.
Explaining that he was unable to come to Atlanta on such short notice, Mr. Lee then received two letters from the organization’s lawyer, Dexter M. Wimbish, threatening him with suspension or removal as president of the Los Angeles chapter if he did not come soon to explain himself.
Mr. Wimbish did not return calls to his office, nor did the Rev. Raleigh Trammell, chairman of the organization’s national board. A woman who identified herself as Renee Richardson left a voice-mail message for a reporter, saying the organization did not “discuss internal matters.” She did not return follow-up calls.
The issue attracted the attention of the president of the Los Angeles City Council, Eric Garcetti, who wrote to the board in support of Mr. Lee.
Because chapters of the leadership conference operate autonomously and presidents are picked by local boards, it is not clear that the national organization has the authority to remove Mr. Lee from his post, which he has held for two years.
“It’s been our position that the local board hired him,” said Reginald Byron Jones-Sawyer, chairman of the local board and secretary of the California Democratic Party. “And, in fact, we are also the ones that approved his stance on the position of marriage equality. We have asked the national board if we have violated any procedures, and we have not gotten an answer.”
Mr. Lee, the former pastor of In His Steps, an African-American Wesleyan church in Los Angeles that he described as “very conservative,” said he saw failures both in the leadership of the conference (“Dr. King would be turning over in his grave right now,” he said) and the largely white anti-Proposition 8 movement that did not more actively seek the support of church-going African-Americans.
“The black church played a significant role in Proposition 8 passing,” Mr. Lee said. “The failure of the campaign was to presume that African-Americans would see this as a civil rights issue.”
By JENNIFER STEINHAUER
Copyright by The New York Times
Published: July 10, 2009
http://www.nytimes.com/2009/07/11/us/11gay.html?th&emc=th
LOS ANGELES — The Southern Christian Leadership Conference, the 50-year-old civil rights organization founded by the Rev. Dr. Martin Luther King Jr. and others, is seeking to remove the president of its Los Angeles chapter in response to his support of same-sex marriage in California.
The effort by the Atlanta-based organization is meeting stiff resistance in Los Angeles from both the board of the local chapter, whose chairman is secretary of the state’s Democratic Party, and the City Council president.
During the battle last fall over Proposition 8, an amendment to the State Constitution that banned same-sex marriage, the chapter’s president, the Rev. Eric P. Lee, was more than a tangential figure for the opposition. He was front and center at an opposition group’s large rally at City Hall and marched in the blazing sun for 15 miles in Fresno. Many other local African-American pastors prepared mailings featuring church leaders in support of the proposition and linking their views to Barack Obama, then the Democratic nominee for president.
Mr. Lee “was very helpful to us,” said Rick Jacobs, head of the Courage Campaign, a left-leaning political action group in Los Angeles that fought the initiative.
While the Mormon Church raised a great deal of the money in support of the proposition, the role of African-American churches, and their voting parishioners, was not insignificant. The Edison/Mitofsky exit poll in California found that 70 percent of black voters backed the ban, which passed with 52 percent of the vote.
Mr. Lee said that his opposition to Proposition 8 had “created tension in my life I had never experienced with black clergy.”
“But it was clear to me,” he added, “that any time you deny one group of people the same right that other groups have, that is a clear violation of civil rights and I have to speak up on that.”
In April, Mr. Lee attended a board meeting of the Southern Christian Leadership Conference in Kansas City, Mo., and found himself once again in the minority position among his colleagues on the issue of same-sex marriage, but he was told, he said, by the group’s interim president, Byron Clay, that the organization publicly had a neutral position on the issue.
So a month later, Mr. Lee said, he was surprised to receive a call from the National Board of Directors summoning him immediately to Atlanta to explain why he had taken a position on same-sex marriage without the authority of the national board.
Explaining that he was unable to come to Atlanta on such short notice, Mr. Lee then received two letters from the organization’s lawyer, Dexter M. Wimbish, threatening him with suspension or removal as president of the Los Angeles chapter if he did not come soon to explain himself.
Mr. Wimbish did not return calls to his office, nor did the Rev. Raleigh Trammell, chairman of the organization’s national board. A woman who identified herself as Renee Richardson left a voice-mail message for a reporter, saying the organization did not “discuss internal matters.” She did not return follow-up calls.
The issue attracted the attention of the president of the Los Angeles City Council, Eric Garcetti, who wrote to the board in support of Mr. Lee.
Because chapters of the leadership conference operate autonomously and presidents are picked by local boards, it is not clear that the national organization has the authority to remove Mr. Lee from his post, which he has held for two years.
“It’s been our position that the local board hired him,” said Reginald Byron Jones-Sawyer, chairman of the local board and secretary of the California Democratic Party. “And, in fact, we are also the ones that approved his stance on the position of marriage equality. We have asked the national board if we have violated any procedures, and we have not gotten an answer.”
Mr. Lee, the former pastor of In His Steps, an African-American Wesleyan church in Los Angeles that he described as “very conservative,” said he saw failures both in the leadership of the conference (“Dr. King would be turning over in his grave right now,” he said) and the largely white anti-Proposition 8 movement that did not more actively seek the support of church-going African-Americans.
“The black church played a significant role in Proposition 8 passing,” Mr. Lee said. “The failure of the campaign was to presume that African-Americans would see this as a civil rights issue.”
U.S. Wiretaps Were of Limited Value, Officials Report
U.S. Wiretaps Were of Limited Value, Officials Report
By ERIC LICHTBLAU and JAMES RISEN
Copyright by The New York Times
Published: July 10, 2009
http://www.nytimes.com/2009/07/11/us/11nsa.html?_r=1&th&emc=th
WASHINGTON — While the Bush administration had defended its program of wiretapping without warrants as a vital tool that saved lives, a new government review released Friday said the program’s effectiveness in fighting terrorism was unclear.
The report, mandated by Congress last year and produced by the inspectors general of five federal agencies, found that other intelligence tools used in assessing security threats posed by terrorists provided more timely and detailed information.
Most intelligence officials interviewed “had difficulty citing specific instances” when the National Security Agency’s wiretapping program contributed to successes against terrorists, the report said.
While the program obtained information that “had value in some counterterrorism investigations, it generally played a limited role in the F.B.I.’s overall counterterrorism efforts,” the report concluded. The Central Intelligence Agency and other intelligence branches also viewed the program, which allowed eavesdropping without warrants on the international communications of Americans, as a useful tool but could not link it directly to counterterrorism successes, presumably arrests or thwarted plots.
The report also hinted at political pressure in preparing the so-called threat assessments that helped form the legal basis for continuing the classified program, whose disclosure in 2005 provoked fierce debate about its legality. The initial authorization of the wiretapping program came after a senior C.I.A. official took a threat evaluation, prepared by analysts who knew nothing of the program, and inserted a paragraph provided by a senior White House official that spoke of the prospect of future attacks against the United States.
These threat assessments, which provided the justification for President George W. Bush’s reauthorization of the wiretapping program every 45 days, became known among intelligence officials as the “scary memos,” the report said. Intelligence analysts involved in the process eventually realized that “if a threat assessment identified a threat against the United States,” the wiretapping and related surveillance programs were “likely to be renewed,” the report added.
The report found that the secrecy surrounding the program may have limited its effectiveness. At the C.I.A., it said, so few working-level officers were allowed to know about the program that the agency often did not make full use of the leads the wiretapping generated, and intelligence leads that came from the wiretapping operation were often “vague or without context,” the report said.
The findings raise questions about assertions from Mr. Bush and his most senior advisers that the warrantless wiretapping program was essential in stopping terrorist attacks. In January 2006, for example, Mr. Bush said the surveillance program “helped prevent attacks and save American lives.” Former Vice President Dick Cheney has made the same point, most recently in his public defense of the administration’s campaign against terrorism.
The report provided previously undisclosed details about the legal and operational schisms that dogged the program in its five years of existence. The 38-page document released Friday was an unclassified version. The bulk of the findings remain classified in separate reports from each of the five inspectors general, who represent the Justice Department, the N.S.A, the C.I.A., the Defense Department and the Office of National Intelligence.
The inquiry included interviews with about 200 government and private-sector personnel, but a number of key players — including David Addington, a top aide to Mr. Cheney; George J. Tenet, the former C.I.A. director; John Ashcroft, the former attorney general; and John Yoo, a Justice Department lawyer who endorsed the wiretapping program — declined to be interviewed.
Congressional Democrats who had been critics of the program said they found the report’s conclusions disturbing.
“While former Bush administration officials continue to argue that their policies made the country safer,” said Senator Ron Wyden, Democrat of Oregon, “I believe this report shows that their obsession with secrecy and their refusal to accept oversight was actually harmful to U.S. national security, not to mention the privacy rights of law-abiding Americans.”
A statement from Dennis Blair, the current director of national intelligence, said he was committed to “seeing that all surveillance activities protect U.S. national security and comply with the laws of the United States.”
Among other findings, the report concluded that Alberto R. Gonzales, as attorney general, provided “confusing, inaccurate” statements about N.S.A. surveillance activities to lawmakers in 2007, but did not “intend to mislead Congress.” Mr. Gonzales had said that a dispute between the White House and Justice Department lawyers in 2004 did not relate to the wiretapping program but rather to “other” intelligence activities.
The report states that at the same time Mr. Bush authorized the warrantless wiretapping operation, he also signed off on other surveillance programs that the government has never publicly acknowledged. While the report does not identify them, current and former officials say that those programs included data mining of e-mail messages of Americans. That was apparently what Mr. Gonzales was referring to in his Congressional testimony.
The investigation stopped short of assessing whether the wiretapping program violated the law requiring court-ordered warrants before wiretapping Americans’ communications. But the report faulted the administration for what it called a failure to conduct adequate legal review of the program at its inception.
The report said that Mr. Yoo, of the Justice Department’s Office of Legal Counsel, gave the White House his first legal opinion endorsing the wiretapping in November 2001, weeks after it had begun, and that his boss, Jay Bybee, was not even aware of the program’s existence.
Moreover, Mr. Ashcroft gave his legal authorization to the program for the first two and a half years based on a “misimpression” of what activities the N.S.A. was actually conducting. In March 2004, a showdown occurred in Mr. Ashcroft’s hospital room when top Justice Department officials refused to sign off on the legality of the program and threatened to resign. The report said that the White House had the program continue by having Mr. Gonzales, then the White House counsel, sign the authorization.
What the report described as flawed legal opinions by Mr. Yoo and efforts to circumvent the Foreign Intelligence Surveillance Court, the secret court that approves intelligence wiretaps, “jeopardized” the Justice Department’s relations with the court, the report said. The panel also recommended that the Justice Department examine criminal cases that grew out of the program to determine if prosecutors had complied with federal judicial requirements to disclose information to defendants.
In 2008, Congress restructured the federal surveillance law, the broadest such overhaul in three decades. The inspector generals’ report said the new law “gave the government even broader authority to intercept international communications” than did the original program. That same measure also gave legal immunity to the telecommunications companies that cooperated in the wiretapping program.
By ERIC LICHTBLAU and JAMES RISEN
Copyright by The New York Times
Published: July 10, 2009
http://www.nytimes.com/2009/07/11/us/11nsa.html?_r=1&th&emc=th
WASHINGTON — While the Bush administration had defended its program of wiretapping without warrants as a vital tool that saved lives, a new government review released Friday said the program’s effectiveness in fighting terrorism was unclear.
The report, mandated by Congress last year and produced by the inspectors general of five federal agencies, found that other intelligence tools used in assessing security threats posed by terrorists provided more timely and detailed information.
Most intelligence officials interviewed “had difficulty citing specific instances” when the National Security Agency’s wiretapping program contributed to successes against terrorists, the report said.
While the program obtained information that “had value in some counterterrorism investigations, it generally played a limited role in the F.B.I.’s overall counterterrorism efforts,” the report concluded. The Central Intelligence Agency and other intelligence branches also viewed the program, which allowed eavesdropping without warrants on the international communications of Americans, as a useful tool but could not link it directly to counterterrorism successes, presumably arrests or thwarted plots.
The report also hinted at political pressure in preparing the so-called threat assessments that helped form the legal basis for continuing the classified program, whose disclosure in 2005 provoked fierce debate about its legality. The initial authorization of the wiretapping program came after a senior C.I.A. official took a threat evaluation, prepared by analysts who knew nothing of the program, and inserted a paragraph provided by a senior White House official that spoke of the prospect of future attacks against the United States.
These threat assessments, which provided the justification for President George W. Bush’s reauthorization of the wiretapping program every 45 days, became known among intelligence officials as the “scary memos,” the report said. Intelligence analysts involved in the process eventually realized that “if a threat assessment identified a threat against the United States,” the wiretapping and related surveillance programs were “likely to be renewed,” the report added.
The report found that the secrecy surrounding the program may have limited its effectiveness. At the C.I.A., it said, so few working-level officers were allowed to know about the program that the agency often did not make full use of the leads the wiretapping generated, and intelligence leads that came from the wiretapping operation were often “vague or without context,” the report said.
The findings raise questions about assertions from Mr. Bush and his most senior advisers that the warrantless wiretapping program was essential in stopping terrorist attacks. In January 2006, for example, Mr. Bush said the surveillance program “helped prevent attacks and save American lives.” Former Vice President Dick Cheney has made the same point, most recently in his public defense of the administration’s campaign against terrorism.
The report provided previously undisclosed details about the legal and operational schisms that dogged the program in its five years of existence. The 38-page document released Friday was an unclassified version. The bulk of the findings remain classified in separate reports from each of the five inspectors general, who represent the Justice Department, the N.S.A, the C.I.A., the Defense Department and the Office of National Intelligence.
The inquiry included interviews with about 200 government and private-sector personnel, but a number of key players — including David Addington, a top aide to Mr. Cheney; George J. Tenet, the former C.I.A. director; John Ashcroft, the former attorney general; and John Yoo, a Justice Department lawyer who endorsed the wiretapping program — declined to be interviewed.
Congressional Democrats who had been critics of the program said they found the report’s conclusions disturbing.
“While former Bush administration officials continue to argue that their policies made the country safer,” said Senator Ron Wyden, Democrat of Oregon, “I believe this report shows that their obsession with secrecy and their refusal to accept oversight was actually harmful to U.S. national security, not to mention the privacy rights of law-abiding Americans.”
A statement from Dennis Blair, the current director of national intelligence, said he was committed to “seeing that all surveillance activities protect U.S. national security and comply with the laws of the United States.”
Among other findings, the report concluded that Alberto R. Gonzales, as attorney general, provided “confusing, inaccurate” statements about N.S.A. surveillance activities to lawmakers in 2007, but did not “intend to mislead Congress.” Mr. Gonzales had said that a dispute between the White House and Justice Department lawyers in 2004 did not relate to the wiretapping program but rather to “other” intelligence activities.
The report states that at the same time Mr. Bush authorized the warrantless wiretapping operation, he also signed off on other surveillance programs that the government has never publicly acknowledged. While the report does not identify them, current and former officials say that those programs included data mining of e-mail messages of Americans. That was apparently what Mr. Gonzales was referring to in his Congressional testimony.
The investigation stopped short of assessing whether the wiretapping program violated the law requiring court-ordered warrants before wiretapping Americans’ communications. But the report faulted the administration for what it called a failure to conduct adequate legal review of the program at its inception.
The report said that Mr. Yoo, of the Justice Department’s Office of Legal Counsel, gave the White House his first legal opinion endorsing the wiretapping in November 2001, weeks after it had begun, and that his boss, Jay Bybee, was not even aware of the program’s existence.
Moreover, Mr. Ashcroft gave his legal authorization to the program for the first two and a half years based on a “misimpression” of what activities the N.S.A. was actually conducting. In March 2004, a showdown occurred in Mr. Ashcroft’s hospital room when top Justice Department officials refused to sign off on the legality of the program and threatened to resign. The report said that the White House had the program continue by having Mr. Gonzales, then the White House counsel, sign the authorization.
What the report described as flawed legal opinions by Mr. Yoo and efforts to circumvent the Foreign Intelligence Surveillance Court, the secret court that approves intelligence wiretaps, “jeopardized” the Justice Department’s relations with the court, the report said. The panel also recommended that the Justice Department examine criminal cases that grew out of the program to determine if prosecutors had complied with federal judicial requirements to disclose information to defendants.
In 2008, Congress restructured the federal surveillance law, the broadest such overhaul in three decades. The inspector generals’ report said the new law “gave the government even broader authority to intercept international communications” than did the original program. That same measure also gave legal immunity to the telecommunications companies that cooperated in the wiretapping program.
Governator plays it cool over IOUs - Interview: Schwarzenegger on California’s finances
Governator plays it cool over IOUs - Interview: Schwarzenegger on California’s finances
By Matthew Garrahan and Lionel Barber in Sacramento
Copyright The Financial Times Limited 2009
Published: July 10 2009 22:37 | Last updated: July 11 2009 02:04
http://www.ft.com/cms/s/0/43e64f02-6d82-11de-8b19-00144feabdc0.html
Arnold Schwarzenegger faces the fight of his life. The “Governator”, best known for slugging it out in Hollywood blockbusters as an indestructible cyborg, displays steely confidence as he battles California’s worsening budget crisis.
As some of America’s biggest banks on Friday stopped accepting IOUs issued by the cash-strapped state in lieu of money, Mr Schwarzenegger defended his handling of the crisis and denied playing a high-stakes poker game with political opponents over California’s finances.
“It’s not about who blinks first,” he told the Financial Times in a Bedouin-style smoking tent outside his office. “It’s not a game of chicken.”
California, which would be the world’s eighth-biggest economy were it a country, began its fiscal year last week without a budget because of political gridlock.
Mr Schwarzenegger, its governor, is at loggerheads with Democrats in the state legislature who oppose making reform of the state’s welfare and social services system part of a budget deal. He insisted the changes were vital to keep borrowing in check.
Bank of America, Wells Fargo and JPMorgan had set a time limit on accepting the IOUs, which California has been forced to print as it faces a $26bn deficit.
But it emerged late on Friday that Citigroup had agreed to extend its deadline for accepting the IOUs until July 17.
Bill Lockyer, California’s treasurer, said: ”Citi made a difficult but responsible decision. As for the other banks, their refusal to continue accepting IOUs is disappointing. I continue to believe they would better serve their customers and the taxpayers of California if they continued to accept the IOUs.”
That limit expired on Friday, raising questions over how much the IOUs are worth and how people will be able to cash them .
California is reeling from the collapse of the housing market and the economic slump. Unemployment is running at more than 11 per cent, well above the national average.
California governor under fire on budget
By Lionel Barber and Matthew Garrahan in Sacramento
Copyright The Financial Times Limited 2009
Published: July 10 2009 22:37 | Last updated: July 10 2009 22:37
http://www.ft.com/cms/s/0/7ed29362-6d84-11de-8b19-00144feabdc0.html
It was hotter than usual in Sacramento this week but the rising temperature had nothing to do with the balmy California summer.
The state is grappling with its worst fiscal crisis and Arnold Schwarzenegger, its governor, is taking heat from political opponents over his refusal to strike a budget deal that addresses a $26bn (€19bn, £16bn) deficit.
Disabled protesters chained their wheelchairs together outside the Sacramento capitol building to voice their dismay at cuts in social programmes. Public services are being slashed and the state has had to issue thousands of IOUs because it cannot afford to pay its bills.
But in the Bedouin-style smoking tent outside Mr Schwarzenegger’s office, the governor shows no sign of losing his cool.
He regularly retires to the tent to meet visitors and smoke his favourite cigars. Sipping an espresso, he tells the Financial Times that he is trying to force the state legislature to reform its benefits system. He is insisting on new measures to tackle welfare abuse, which he says is rampant, before he signs a budget.
Democrats in the state legislature are not playing ball. They want him to deal with the budget first before trying to negotiate a reform package that deals with welfare. However, the governor has tried several times to reform the state government but has always been blocked or defeated in the state assembly. Frustrated, he has decided to dig in his heels. “If you can’t get them to cut down the costs of government when the state is facing such a financial crisis then it’s never going to happen,” he says. “If we don’t make these changes [the deficit] will keep increasing.”
California is the most populous US state, home to 12 per cent of Americans. Yet the state’s CalWorks welfare-to-work programme provides financial assistance to 1.3m people, equivalent to 30 per cent of the country’s total welfare recipients.
Mr Schwarzenegger argues it is time to tackle this imbalance and bring the state into line with the rest of the US. He says his reforms will save $1.5bn a year by 2012.
This will not close the ballooning deficit. But that, Mr Schwarzenegger suggests, is beside the point: he has heard the same arguments about delaying reform since he was elected governor. “It’s always the same. ‘Let’s do it legislatively and not do at the same time as the budget.’ But then nothing happens.”
The longer the stand-off between Mr Schwarzenegger and the Democrats continues, the worse California’s predicament becomes. Its credit rating has been cut to near junk status, giving it the worst rating in the US. Unemployment is running at 11 per cent, well above the national average, while state employees have been told to take three days of unpaid holiday each month to preserve cash.
Democrats in the state legislature have accused Mr Schwarzenegger, who leaves office at the end of next year, of being more interested in his legacy than in fixing the state’s finances. He brushes such criticism aside, calling it “Kabuki . . . I pay no attention to it.”
One side will have to back down before the state can begin working towards financial stability but Mr Schwarzenegger dismisses the idea that he is playing a high-stakes game of chicken. “It’s not about who blinks first,” he insists. “It’s not a game of chicken.”
Still, the two sides continue to take shots at each other. He accused the Democrat-controlled legislature this week of wasting time by debating agricultural issues. “They’re debating over the definition of honey. And a week ago they debated over cow tails and, a few weeks before that, they debated over should we have a blueberry commission. I think it’s ridiculous.”
Contrary to what his rhetoric might suggest, six years sitting in the governor’s chair have taught him how to work with Democrats. His chief of staff and economic adviser are Democrats, as is his wife, Maria Shriver. He also found a kindred spirit in John Burton, a Democrat and the former president pro tem of the state senate. The two shared a fondness for Austrian pastries. “He would jam his foot in the door and if he had the Apfelstrudel and Schlagsahne under his arm I knew how much it would cost to do a deal.”
With the state government paralysed and thousands of IOUs being issued every day, Mr Schwarzenegger’s outlook has hardened. Outwardly, at least, he appears less willing to compromise. But he still seems to be enjoying himself, which is surprising given that he has sacrificed six years of a lucrative acting career that had been paying him $30m a film.
He has no regrets. “My whole life I always fought for things that were about me; my body, my muscles, my career, my make-up, my hair . . . you know, how much money I make . . .
“But now, this is about something much bigger than me: California. I’m just passing through. I’m one of the guys that passes through here. And this is what makes it terrific and rewarding to fight for this, because it’s the right thing to do.”
By Matthew Garrahan and Lionel Barber in Sacramento
Copyright The Financial Times Limited 2009
Published: July 10 2009 22:37 | Last updated: July 11 2009 02:04
http://www.ft.com/cms/s/0/43e64f02-6d82-11de-8b19-00144feabdc0.html
Arnold Schwarzenegger faces the fight of his life. The “Governator”, best known for slugging it out in Hollywood blockbusters as an indestructible cyborg, displays steely confidence as he battles California’s worsening budget crisis.
As some of America’s biggest banks on Friday stopped accepting IOUs issued by the cash-strapped state in lieu of money, Mr Schwarzenegger defended his handling of the crisis and denied playing a high-stakes poker game with political opponents over California’s finances.
“It’s not about who blinks first,” he told the Financial Times in a Bedouin-style smoking tent outside his office. “It’s not a game of chicken.”
California, which would be the world’s eighth-biggest economy were it a country, began its fiscal year last week without a budget because of political gridlock.
Mr Schwarzenegger, its governor, is at loggerheads with Democrats in the state legislature who oppose making reform of the state’s welfare and social services system part of a budget deal. He insisted the changes were vital to keep borrowing in check.
Bank of America, Wells Fargo and JPMorgan had set a time limit on accepting the IOUs, which California has been forced to print as it faces a $26bn deficit.
But it emerged late on Friday that Citigroup had agreed to extend its deadline for accepting the IOUs until July 17.
Bill Lockyer, California’s treasurer, said: ”Citi made a difficult but responsible decision. As for the other banks, their refusal to continue accepting IOUs is disappointing. I continue to believe they would better serve their customers and the taxpayers of California if they continued to accept the IOUs.”
That limit expired on Friday, raising questions over how much the IOUs are worth and how people will be able to cash them .
California is reeling from the collapse of the housing market and the economic slump. Unemployment is running at more than 11 per cent, well above the national average.
California governor under fire on budget
By Lionel Barber and Matthew Garrahan in Sacramento
Copyright The Financial Times Limited 2009
Published: July 10 2009 22:37 | Last updated: July 10 2009 22:37
http://www.ft.com/cms/s/0/7ed29362-6d84-11de-8b19-00144feabdc0.html
It was hotter than usual in Sacramento this week but the rising temperature had nothing to do with the balmy California summer.
The state is grappling with its worst fiscal crisis and Arnold Schwarzenegger, its governor, is taking heat from political opponents over his refusal to strike a budget deal that addresses a $26bn (€19bn, £16bn) deficit.
Disabled protesters chained their wheelchairs together outside the Sacramento capitol building to voice their dismay at cuts in social programmes. Public services are being slashed and the state has had to issue thousands of IOUs because it cannot afford to pay its bills.
But in the Bedouin-style smoking tent outside Mr Schwarzenegger’s office, the governor shows no sign of losing his cool.
He regularly retires to the tent to meet visitors and smoke his favourite cigars. Sipping an espresso, he tells the Financial Times that he is trying to force the state legislature to reform its benefits system. He is insisting on new measures to tackle welfare abuse, which he says is rampant, before he signs a budget.
Democrats in the state legislature are not playing ball. They want him to deal with the budget first before trying to negotiate a reform package that deals with welfare. However, the governor has tried several times to reform the state government but has always been blocked or defeated in the state assembly. Frustrated, he has decided to dig in his heels. “If you can’t get them to cut down the costs of government when the state is facing such a financial crisis then it’s never going to happen,” he says. “If we don’t make these changes [the deficit] will keep increasing.”
California is the most populous US state, home to 12 per cent of Americans. Yet the state’s CalWorks welfare-to-work programme provides financial assistance to 1.3m people, equivalent to 30 per cent of the country’s total welfare recipients.
Mr Schwarzenegger argues it is time to tackle this imbalance and bring the state into line with the rest of the US. He says his reforms will save $1.5bn a year by 2012.
This will not close the ballooning deficit. But that, Mr Schwarzenegger suggests, is beside the point: he has heard the same arguments about delaying reform since he was elected governor. “It’s always the same. ‘Let’s do it legislatively and not do at the same time as the budget.’ But then nothing happens.”
The longer the stand-off between Mr Schwarzenegger and the Democrats continues, the worse California’s predicament becomes. Its credit rating has been cut to near junk status, giving it the worst rating in the US. Unemployment is running at 11 per cent, well above the national average, while state employees have been told to take three days of unpaid holiday each month to preserve cash.
Democrats in the state legislature have accused Mr Schwarzenegger, who leaves office at the end of next year, of being more interested in his legacy than in fixing the state’s finances. He brushes such criticism aside, calling it “Kabuki . . . I pay no attention to it.”
One side will have to back down before the state can begin working towards financial stability but Mr Schwarzenegger dismisses the idea that he is playing a high-stakes game of chicken. “It’s not about who blinks first,” he insists. “It’s not a game of chicken.”
Still, the two sides continue to take shots at each other. He accused the Democrat-controlled legislature this week of wasting time by debating agricultural issues. “They’re debating over the definition of honey. And a week ago they debated over cow tails and, a few weeks before that, they debated over should we have a blueberry commission. I think it’s ridiculous.”
Contrary to what his rhetoric might suggest, six years sitting in the governor’s chair have taught him how to work with Democrats. His chief of staff and economic adviser are Democrats, as is his wife, Maria Shriver. He also found a kindred spirit in John Burton, a Democrat and the former president pro tem of the state senate. The two shared a fondness for Austrian pastries. “He would jam his foot in the door and if he had the Apfelstrudel and Schlagsahne under his arm I knew how much it would cost to do a deal.”
With the state government paralysed and thousands of IOUs being issued every day, Mr Schwarzenegger’s outlook has hardened. Outwardly, at least, he appears less willing to compromise. But he still seems to be enjoying himself, which is surprising given that he has sacrificed six years of a lucrative acting career that had been paying him $30m a film.
He has no regrets. “My whole life I always fought for things that were about me; my body, my muscles, my career, my make-up, my hair . . . you know, how much money I make . . .
“But now, this is about something much bigger than me: California. I’m just passing through. I’m one of the guys that passes through here. And this is what makes it terrific and rewarding to fight for this, because it’s the right thing to do.”
On Wall Street: Credit crisis is far from over - 'Green shoots' turn to weeds
On Wall Street: Credit crisis is far from over - 'Green shoots' turn to weeds
By Aline van Duyn
Copyright The Financial Times Limited 2009
Published: July 10 2009 19:52 | Last updated: July 10 2009 19:52
http://www.ft.com/cms/s/0/8f9c785c-6d7f-11de-8b19-00144feabdc0.html
Looking for a souvenir of the credit crisis?
The Museum of American Finance, located on Wall Street, sells a set of five posters from its credit crisis exhibit.
“Depicts key events from February 2007 through early March 2009 and also features an overview of the crisis, important terms and explanations of key moments.” At just $12, it is an affordable gift, too.
The problem with such posters is that they suggest the crisis is over.
But it is not, a fact that is starting to dawn on many investors. Until recently the market tone was being set by talk of “green shoots” and economic recovery. Now, there is more talk of weeds – or even manure when the state of the US economy is described.
That the crisis is not over is also clear from comments by policymakers.
Take, for example, the launch this week of the investment funds that will juice up returns with cheap loans from the US government and buy assets such as troubled mortgage-backed securities that banks may want to sell. The programme – the public-private investment programme (PPIP) – has been scaled back considerably, and a plan to use it to buy loans as well as securities backed by loans – called legacy securities or assets – has been iced. “While utilisation of legacy asset programmes will depend on how actual economic and financial market conditions evolve, the programmes are capable of being quickly expanded if these conditions deteriorate,” the Treasury said. “Thus, while these programmes will initially be modest in size, we are prepared to expand the amount of resources committed.”
So, what could make things worse?
Well, they are the same culprits that caused the problems in the first place: continued falls in house prices and the rapidly accelerating drop in commercial real estate values.
Another crucial element is unemployment. The hundreds of billions of dollars of losses notched up in the banking system due to the property price collapses have come before households start to really feel the effects of job losses.
These continue to accelerate, and it is clear that will mean more defaults on mortgages, credit cards and other loans. Already, the rise in defaults on supposedly safe, so-called “prime” mortgages is causing big concerns.
At a Congressional hearing on Thursday there was scepticism over the International Monetary Fund’s decision to mark up growth forecasts for the world economy this week and its hints that it might reduce estimates for bank losses. Rising commercial real estate losses could easily derail these estimates, it was emphasised.
As problems like these continue, so do the requests for more government backing and money. In the case of commercial real estate, the inability to get new commercial mortgages could make losses even bigger. For example, properties whose owners default cannot be sold on to new investors if they cannot get financing.
Property developers and realtors say they may get some benefits from existing plans – such as the PPIP – but they want more. The wish-list includes a federally backed credit facility and tax cuts.
Remember the uproar about AIG bonuses? How much public backing will there be for spending taxpayer dollars to help real estate developers?
There is already plenty of criticism over plans such as the PPIP, not least because taxpayers take so much of the risk and large investment firms seem to get so much of any gains.
Shifting problem assets from banks to investors may boost banks’ balance sheets, but that will not get money into the hands of people who have mortgages to pay.
The issue is not so much whether schemes such as the PPIP are expanded. The issue is the potentially huge losses down the road. Fights over who takes the hit – individuals, companies, banks, investors, taxpayers – loom.
The days of new emergency programmes, and more acronyms, are not over yet. By the end of the year the museum’s credit crisis gift set is bound to have been expanded.
aline.vanduyn@ft.com
By Aline van Duyn
Copyright The Financial Times Limited 2009
Published: July 10 2009 19:52 | Last updated: July 10 2009 19:52
http://www.ft.com/cms/s/0/8f9c785c-6d7f-11de-8b19-00144feabdc0.html
Looking for a souvenir of the credit crisis?
The Museum of American Finance, located on Wall Street, sells a set of five posters from its credit crisis exhibit.
“Depicts key events from February 2007 through early March 2009 and also features an overview of the crisis, important terms and explanations of key moments.” At just $12, it is an affordable gift, too.
The problem with such posters is that they suggest the crisis is over.
But it is not, a fact that is starting to dawn on many investors. Until recently the market tone was being set by talk of “green shoots” and economic recovery. Now, there is more talk of weeds – or even manure when the state of the US economy is described.
That the crisis is not over is also clear from comments by policymakers.
Take, for example, the launch this week of the investment funds that will juice up returns with cheap loans from the US government and buy assets such as troubled mortgage-backed securities that banks may want to sell. The programme – the public-private investment programme (PPIP) – has been scaled back considerably, and a plan to use it to buy loans as well as securities backed by loans – called legacy securities or assets – has been iced. “While utilisation of legacy asset programmes will depend on how actual economic and financial market conditions evolve, the programmes are capable of being quickly expanded if these conditions deteriorate,” the Treasury said. “Thus, while these programmes will initially be modest in size, we are prepared to expand the amount of resources committed.”
So, what could make things worse?
Well, they are the same culprits that caused the problems in the first place: continued falls in house prices and the rapidly accelerating drop in commercial real estate values.
Another crucial element is unemployment. The hundreds of billions of dollars of losses notched up in the banking system due to the property price collapses have come before households start to really feel the effects of job losses.
These continue to accelerate, and it is clear that will mean more defaults on mortgages, credit cards and other loans. Already, the rise in defaults on supposedly safe, so-called “prime” mortgages is causing big concerns.
At a Congressional hearing on Thursday there was scepticism over the International Monetary Fund’s decision to mark up growth forecasts for the world economy this week and its hints that it might reduce estimates for bank losses. Rising commercial real estate losses could easily derail these estimates, it was emphasised.
As problems like these continue, so do the requests for more government backing and money. In the case of commercial real estate, the inability to get new commercial mortgages could make losses even bigger. For example, properties whose owners default cannot be sold on to new investors if they cannot get financing.
Property developers and realtors say they may get some benefits from existing plans – such as the PPIP – but they want more. The wish-list includes a federally backed credit facility and tax cuts.
Remember the uproar about AIG bonuses? How much public backing will there be for spending taxpayer dollars to help real estate developers?
There is already plenty of criticism over plans such as the PPIP, not least because taxpayers take so much of the risk and large investment firms seem to get so much of any gains.
Shifting problem assets from banks to investors may boost banks’ balance sheets, but that will not get money into the hands of people who have mortgages to pay.
The issue is not so much whether schemes such as the PPIP are expanded. The issue is the potentially huge losses down the road. Fights over who takes the hit – individuals, companies, banks, investors, taxpayers – loom.
The days of new emergency programmes, and more acronyms, are not over yet. By the end of the year the museum’s credit crisis gift set is bound to have been expanded.
aline.vanduyn@ft.com
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