Eideard

…The Obama administration is poised to require drug companies to disclose the payments they make to doctors for research, consulting, speaking, travel and entertainment. Many researchers have found evidence that such payments can influence doctors’ treatment decisions and contribute to higher costs by encouraging the use of more expensive drugs and medical devices…

The Times has found that doctors who take money from drug makers often practice medicine differently from those who do not and that they are more willing to prescribe drugs in risky and unapproved ways, such as prescribing powerful antipsychotic medicines for children.

Under the new standards, if a company has just one product covered by Medicare or Medicaid, it will have to disclose all its payments to doctors other than its own employees. The federal government will post the payment data on a Web site where it will be available to the public.

Manufacturers of prescription drugs and devices will have to report if they pay a doctor to help develop, assess and promote new products…Royalty payments to doctors, for inventions or discoveries, and payments to teaching hospitals for research or other activities will also have to be reported…

Allan J. Coukell, a pharmacist and consumer advocate at the Pew Charitable Trusts, said: “Patients want to know they are getting treatment based on medical evidence, not a lunch or a financial relationship. They want to know if their doctor has a financial relationship with a pharmaceutical company, but they are often uncomfortable asking the doctor directly…”

Although the Congressional Budget Office does not predict immediate savings, it has said that, “over time, disclosure has the potential to reduce spending,” by reducing instances of overprescribing.

The law also requires drug and device companies to report the amount of “any ownership or investment interest” held by doctors or their immediate family members, other than holdings of publicly traded stocks.

The administration intends to apply the same disclosure requirements to doctor-owned companies that distribute medical devices. Such companies allow doctors to benefit financially from sales of devices they use in surgery.

The same political Sluggos who refused to support oversight of investment banks and sleazy sub-prime investments want us to presume that the ethics missing from Wall Street – are completely in place among millionaire doctors. Frankly, if you walk through their country clubs, I think you would have a hard time telling one from the other. Maybe the doctors have cleaner hands because it’s required of their craft.

But, corporate payoffs and kickbacks are not the sort of business practices that have ever inspired confidence in honesty in my lifetime.

The financial markets need regulation the way a nuclear-power plant needs a cooling agent for its radioactive fuel rods. If safety rules are enforced and the heat of the rods is properly controlled, the result can be clean, abundant energy. But if that cooling process is neglected, there could be a meltdown.

Similarly, capital requirements are the cooling agent of risk-taking in the economy. And just as nuclear fuel will always be reactive, people will always be greedy. We need to enforce rules to balance natural greed with capital requirements so that greed can create productive risk-taking and competition — not short-term extraction. Here are five possible ways to do that.

Make Swaps Public: In Las Vegas, you need to have actual money to gamble — your own money — and if you lose, you pay. But since 2000, banks, industries and consumers have been free to take on system-threatening levels of debt (to the point of financial meltdown) without facing any requirement to risk a significant amount of their own money…

To end this insanity, the American people must demand an end to the anachronistic “dark market” for credit insurance, or swaps, and insist that they be moved to an exchange where the risks that we all now bear can be visible to all. All trades on the exchange must be required to meet capital requirements (or some equivalent inhibitor of risk) to stop this reckless behavior for good…

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As much space as they deserve
Daylife/Getty Images used by permission

All of the post-mortems on the CNBC Republican debate focused on the sad, but hilarious, senior moment Gov. Rick Perry suffered when he couldn’t remember the third federal agency he wants to eliminate.

…But what also stood out as perplexing — and stunning — was how all of the candidates were unwilling to hold Wall Street accountable for the deplorable economic condition the nation continues to find itself in.

When the housing crisis was raised, Mitt Romney and most of the others chose to unleash their rage on the consumers and the financial reform bill that was passed after the crisis hit, instead of on the shady practices of Wall Street…

The favorite GOP bogeyman is Fannie Mae and Freddie Mac, the government-backed housing lenders. Yet anyone with half a brain knows that those institutions brought on Democrats and Republicans on their payroll in order to ensure that Congress would let them continue practices as usual.

During the debate, Newt Gingrich was asked about the $300,000 he was paid by Freddie Mac in 2006, which he said was for “advice.” He was quick to say he did no lobbying on behalf of Freddie Mac, but we all know that his presence, along with other former politicians and political strategists from both parties, greatly helped the company prevent congressional scrutiny…

What Gingrich and the other candidates absolutely refused to do was tell the public that one of the biggest proponents of an aggressive home ownership plan in America was President George W. Bush…

It is beyond clear that we got into this huge mess because we were too lax in holding banks accountable. Getting rid of the Glass-Steagall Act, thus allowing commercial banks and investment banks to merge, was a disaster.

Not a single GOP candidate said we should put the provision separating those activities back in place…

In no way can I remove the role the consumer played in the economic debacle, but for the GOP candidates to act like we had too many regulations, and that’s why Wall Street bankers lost their minds, is deplorable…

How in the world can we trust that any of these candidates will care about the Average Joe, Jane, Jose, Jimmy, Janice or Jamila if they are elected president, when they won’t even hold Wall Street accountable in a debate?

Roland Martin pretending that we’re just discovering that the Republican Party is a wholly-owned subsidiary of the US Chamber of Commerce is a bit disingenuous.

Anyone hear a moderator ask if anyone understands evolution, BTW?

Commissioner Ray Kelly, Chief Charles Campisi – ultimately responsible

Seven narcotics investigators are convicted of planting drugs on people to meet arrest quotas. Eight current and former patrol officers are charged with smuggling guns into the state. Another is charged with making a false arrest, apparently as a favor for his cousin. Three more are convicted of robbing a perfume warehouse.

All these cases involved New York City police officers and unfolded or were resolved in recent months. But beyond the fact of criminal charges against those sworn to protect the public, they all had another thing in common: Each case was uncovered by an outside agency, not the Internal Affairs Bureau of the New York Police Department, the unit responsible for unearthing and investigating officers’ wrongdoing.

This spate of unrelated corruption prosecutions, and what some see as the Internal Affairs Bureau’s spotty record of uncovering major cases involving crooked officers, raise questions about the department’s ability to police itself, said nearly a dozen current and former prosecutors who have handled corruption cases, as well as some current and former Internal Affairs supervisors and investigators.

Several of them blamed a lack of effective outside oversight of the department’s anticorruption program, characterizing the monitoring as weak at best in recent years, with monitors having neither the political will to press the department nor support from City Hall. They also cited low starting salaries for new officers, poor morale, recruits drawn from a smaller pool of qualified candidates and a hidebound Internal Affairs Bureau bureaucracy.

RTFA. If you’re as cynical as I am, there will be no surprises. You might have expected better from one of the best police departments in the country – or experience may have suggested to you that coppers, today, sometimes join the force as just another kind of civil service gig. And they spend their time staying out of the way of trouble – or looking for a take.

Doesn’t have to be that way, of course. I had kin in the NYPD. They were honest and hard-working. They also knew officers who weren’t. Cripes, I had one co-worker join the force in a major Connecticut city – he told me it was a guarantee he could get drugs for free.

A 31-year old man – Kweku Adoboli – has been arrested by City of London Police on suspicion of fraud in connection with an alleged rogue trading incident that has cost Swiss bank UBS around $2 billion.

The Zurich-based bank uncovered the incident in the past 24 hours. Shares in UBS plunged nearly 10% after it revealed the loss, which could push the bank into the red for the current financial quarter.

The City of London Police confirmed they had arrested a 31-year old man at 3.30am in central London on “suspicion of fraud by abuse of position”. The police did not identify the individual who remains in custody, but sources say he is Adoboli. The force has begun an investigation…

The bank would not comment but Adoboli is understood to work in its equity division and on a trading desk called Delta One that was involved with its exchange traded funds business. ETFs are complex financial instruments that comprise a basket of investments intended to mimic a market’s movements while Delta One traders try to make huge profits on tiny differences between prices. It is understood that the entire trading desk, including Adoboli’s supervisor John Hughes, has been sent home while the investigation continues…

On the third anniversary of the collapse of Lehman Brothers, the Swiss bank said: “UBS has discovered a loss due to unauthorised trading by a trader in its investment bank. The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011.”

It added that “no client positions were affected”…

So, erm, while every banker I know is whining about more and deeper regulation being put in place by governments trying to prevent the sort of corruption and deceit that initiated our Great Recession – UBS, the leading Swiss bank in a nation of bankers, manages to lose $2 billion through one man’s hanky-panky. Not exactly confidence inspiring.

Chinese authorities have arrested 989 people accused of making and selling clenbuterol, blamed in a recent tainted-pork scandal, an official said Monday.

Xu Hu, a senior official in the Ministry of Public Security, said the arrests came after police busted a criminal ring involved in the manufacture and sale of clenbuterol in 63 cities nationwide, Xinhua reported. The illegal drug is used as an additive in pig feed to help burn fat and make pork meat leaner but is poisonous to people consuming the tainted meat…

The clenbuterol-tainted pork scandal, which came to light in March, has heightened consumer concern across the country, forcing authorities to come down hard on violators. The scandal is one of the latest in a string of cases that have raised serious questions about the safety and reliability of Chinese food and other products, and have hurt China’s image overseas.

Xu said in the latest crackdown police seized 2.75 tons of clenbuterol and closed six illegal laboratories, 12 production lines, 19 processing and storage sites and 32 “underground” factories, Xinhua said.

The Chinese government should stop sitting around waiting for a reincarnation of Upton Sinclair to visit a manifestation of national and global anger over adulterated food.

Sending a couple thousand coppers in to bag sleazy operators is what you have to do when you haven’t a useful, productive level of regulatory bureaucrats – in the best meaning of the word. That’s more than overdue.

I’m sorry, Congressman, you’re small-minded, too!
Daylife/Reuters Pictures used by permission

Elizabeth Warren, it’s not you they hate. It’s what you represent. You want to be an honest cop when so many before you in Washington have looked the other way and pretended that the banking industry could police itself.

I can’t think of a better reason why this presidential adviser shouldn’t be the new chief of an unfettered Consumer Financial Protection Bureau…

As the debate about Warren — and what she stands for — rages on, here’s a look at why the banks despise the idea of her as a strong regulator:

Weak consumer regulation was the norm, but banks love the status quo – Prior to the Dodd-Frank financial reform law, which established the consumer bureau, there simply was no real consumer watchdog over banks…

Mortgage abuses were rampant – More than three years after the biggest financial meltdown since 1929, we’re still trying to unravel what the banks did to foul up the global financial system. Did the banks fudge mortgage documents simply to grease the way to securitizing loans? Did they trigger foreclosures even when homeowners were paying their bills? Did they push people into bad loans they knew they would default on? If any or all of these things were true, it certainly wasn’t because the banks were over-regulated…

Credit abuses are rampant – Take a look at your credit card disclosure statement. Do you have any idea how much you will owe if you’re late or lose your job and can’t pay? This is not a mystery to the banks, who have conceived elaborate formulas for charging you more money for credit…

Junk fees are abundant – You ever wonder what all those fees are that creep into your mortgage closing statement? They seem to come out of nowhere. A lot of them are negotiable or completely unnecessary…

Making simple math simple again – Do you know what a LIBOR index is and “lifetime maximum rates?” The banks don’t want you to know this because this is how much your monthly payment can climb based on a variable index. If the index goes up, so does your payment…

So nothing personal Elizabeth Warren.

It’s not the way you dress or the fact that you teach at Harvard and have been an advocate for banking customers. Or that you’re “so bloody disagreeable,” as one former Wall Street banker put it. It’s just that you’re so darned honest about banking abuses and are one of the best people in the country to enact change.

Bravo! RTFA. I probably disagree with John Wasik as often as I agree – about economics, investing, finance. That’s why it’s called the dismal science. This opinion piece is about honestly and competence. Something Congress knows little about – and cares even less.

Federal courthouse in Newark, NJ

A New Jersey man was sentenced to 14 years in prison for running a $140 million scheme that defrauded credit unions on loans sold to Fannie Mae, and led to bankruptcy for his mortgage company.

Michael McGrath, 47, had pleaded guilty in June 2009 to two counts of conspiracy, including one to commit mail and wire fraud and one to commit money laundering. The defendant had run U.S. Mortgage Corp, a Pine Brook, New Jersey, lender and broker that filed for Chapter 11 protection in February 2009, and was a principal at its CU National unit serving credit unions.

At a hearing in the Newark, New Jersey federal court on Thursday, U.S. District Judge Katharine Hayden also…ordered restitution in a sum to be determined, but which prosecutors expect will exceed $136 million. McGrath also forfeited $14 million of previously seized or frozen assets.

Federal prosecutors said McGrath admitted to conspiring with others from January 2004 to January 2009 to fraudulently sell credit union loans, and use proceeds to finance U.S. Mortgage’s operations and investments for himself.

The Montclair, New Jersey resident also admitted to diverting funds that should have been paid to credit unions on mortgage loans he sold to Fannie Mae, which prosecutors said helped offset his own bad mortgage investments…

Four credit unions are still pursuing civil litigation against Fannie Mae to recover more than $64 million of loans they originated, and which they say were sold fraudulently to the mortgage financier via U.S. Mortgage, court records show.

… Fannie Mae said it had no duty to investigate, and that none of the “red flags” that Picatinny said should have been found at U.S. Mortgage involved loans it bought.

“Fannie Mae buys millions of notes each year,” the filing said. “Its business would grind to a halt if it had to investigate every signature on every note.”

Perish the thought that a government-insured corporation like Fannie Mae live up to the due diligence required of ethical banks and mortgage lending institutions.

Readjusting priorities, recalling standards dropped by the wayside of corporate greed are tasks still awaiting the green flag in American financial circles. Honesty was not made an out-of-date instruction set by its absence from American business software.

The Obama administration’s much-anticipated report on redesigning the government’s role in housing finance, published Friday, is not solely a proposal to dissolve the unpopular finance companies Fannie Mae and Freddie Mac.

It is also a more audacious call for the federal government to cut back its broadly popular, long-running campaign to help Americans own homes. The three ideas that the report outlines for replacing Fannie and Freddie all would raise the cost of mortgage loans and push homeownership beyond the reach of some families.

That fact is already generating opposition in Congress and among groups like community banks and consumer advocates.

But administration officials said they had concluded the country could no longer afford to sustain its commitment to minting homeowners. Better to help some people rent…

Which was the conclusion Clinton should have considered IMHO instead of lowering the bar, diminishing due diligence in mortgage loan requirements. Couple that with Republican deregulation, removal of oversight in combination with their bubbas on Wall Street designing mythical investment instruments for private trades – and you’re looking at the roots of the Great Recession.

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The dead have no voice in our politics
Daylife/Reuters Pictures used by permission

BP and its partners made a series of cost-cutting decisions that ultimately contributed to the oil spill that ravaged the Gulf of Mexico coast over the summer, the White House oil spill commission said on Wednesday. In its final report on causes of the largest offshore oil spill in U.S. history, the commission said BP and its collaborators on the doomed Macondo well had lacked a system to ensure their actions were safe.

“Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),” the report said.

Created by President Barack Obama in the midst of the BP spill, the panel is the first government-sanctioned group to wrap up its probe of the causes of the drilling disaster…

Although the commission lacks authority to establish policy or punish companies, its conclusions could have a bearing on future criminal and civil cases relating to the spill…

The commission’s report ultimately blamed management failures for the April 20 explosion that ruptured the Macondo well and unleased millions of barrels of oil into the Gulf.

The commission also concluded the Gulf spill was not an isolated incident caused by “rogue industry or government officials”.

“The root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur,” the report said.

The report offers no surprises. Neither will the responses, I fear.

We wil get to watch Congress in action as both sides work at avoiding doing anything of importance.