Eideard

The move by the governors — Christine Gregoire of Washington, a Democrat, and Lincoln Chafee of Rhode Island, an independent who used to be a Republican — injected new political muscle into the long-running debate on the status of marijuana. Their states are among the 16 that now allow medical marijuana, but which have seen efforts to grow and distribute the drug targeted by federal prosecutors.

“The divergence in state and federal law creates a situation where there is no regulated and safe system to supply legitimate patients who may need medical cannabis,” the governors wrote Wednesday to Michele M. Leonhart, the administrator of the Drug Enforcement Administration.

Marijuana is currently classified by the federal government as a Schedule I controlled substance, the same category as heroin and L.S.D. Drugs with that classification, the government says, have a high potential for abuse and “no currently accepted medical use in treatment in the United States.”

Which shows how out of touch with reality our federal government can be.

The governors want marijuana reclassified as a Schedule II controlled substance, which would put it in the same category as drugs like cocaine, opium and morphine. The federal government says that those drugs have a strong potential for abuse and addiction, but that they also have “some accepted medical use and may be prescribed, administered or dispensed for medical use.”

Such a classification could pave the way for pharmacies to dispense marijuana, in addition to the marijuana dispensaries that operate in a murky legal zone in many states.

“What we have out here on the ground is chaos,” Governor Gregoire said in an interview. “And in the midst of all the chaos we have patients who really either feel like they’re criminals or may be engaged in some criminal activity, and really are legitimate patients who want medicinal marijuana.

“If our people really want medicinal marijuana, then we need to do it right, we need to do it with safety, we need to do it with health in mind, and that’s best done in a process that we know works in this country — and that’s through a pharmacist…”

Ms. Gregoire noted that many doctors believe it makes no sense to place marijuana in a more restricted category than opium and morphine. “People die from overdose of opiates,” she said. “Has anybody died from marijuana?”

Pigheaded is still considered a requisite quality in determining who gets to run for political office in the United States. Along with obedience to party hacks, public allegiance to 19th Century ethics and unwillingness to learn from either science or experience.

Congress and the White House’s stubborn reliance on information and policies decades out of date is considered a moderating force for good. In reality, the result is a continual drag on opportunities for the United States to keep up with advances in knowledge and sensible practices.

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?

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.

The deadly wave of food-borne illness in Europe, caused by a rare form of E. coli bacteria, could finally push the United States to take long-delayed steps to protect the food supply in this country from a similar group of toxic organisms.

Food-safety advocates hope the federal government will act soon to ban the sale of ground beef if it contains any of six dangerous strains of E. coli that have increasingly been found to cause illness in the United States — a step that regulators have been considering for at least four years in the face of stiff industry opposition.

Considering for four years? That means negotiating with lobbyists for four years.

The outbreak in Europe could also bring more scrutiny of the produce industry. Investigators believe the outbreak was caused by contaminated vegetables, but they have not been able determine which type. So far, the authorities say, more than 1,700 people have been sickened, including 6 Americans, and at least 18 people have died.

For now, the focus in this country is on beef, since E. coli lives in the guts of cows.

In January, the United States Department of Agriculture drafted a much-anticipated proposal to regulate six forms of toxic E. coli in meat, in addition to the most common form, O157:H7, which is already regulated. But the proposal has been stalled at the federal Office of Management and Budget, which typically reviews proposed regulations, and officials could not say when it would be made public.

The details of the proposal have been kept secret until a final version is settled on, but there is wide expectation in the food industry and among food-safety advocates that it would either ban the sale of ground beef containing those strains or call for testing and other controls…

The industry has also often pointed to evidence that illnesses associated with the lesser-known forms of E. coli have tended to be less severe. But the German outbreak is now one of the most severe on record.

“For the people who argued that the non-O157s are not as virulent, they’ve just lost that argument,” said Dr. Richard Raymond, a former head of food safety for the U.S.D.A…

RTFA for more details on e.coli associated with beef – and a bit more info about what may be coming from the FDA next year on new regulations covering produce.

One year ago the offshore drilling rig Deepwater Horizon erupted in a torrent of oil, gas, drilling mud, and flames, claiming the lives of 11 men and setting off an 87-day environmental nightmare. The explosion also triggered an equally ferocious barrage of rhetoric in the nation’s capital. A frantic burst of congressional hearings emerged as the immediate oversight response. As usual, they were full of sound and fury—sadly but not surprisingly—signifying nothing.

The New Orleans Times-Picayune reports that 101 oil-spill-related bills were introduced in the 111th Congress, which came to a close in 2010. Exactly zero were enacted into law. Another 15 have been introduced so far this year—none of which has been acted upon by its committee of jurisdiction.

This is an abject failure on the part of the legislative branch when obvious fixes remain on the table. Mandated liability limits for economic damages incurred by local residents are shamefully low and no mechanism is in place to ensure any fines BP or other responsible parties are forced to pay would actually be returned to a region still devastated by the companies’ negligence…

Now, with the 112th Congress…House Republicans have stomped on the gas pedal. The first set of oil-related bills marked up by the now Republican-controlled House Committee on Energy and Natural Resources were three introduced by that body’s chairman, Rep. Doc Hastings (R-WA). Rep. Hastings’s bills would dramatically accelerate the permitting process in the Gulf of Mexico and require the secretary of the interior to open portions of the heretofore untouched outer continental shelf in the Atlantic, Arctic, and Pacific Oceans to more drilling…

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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.

When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down…

“Loans that have zero down payment perform worse than loans with down payments,” said Mathew Scire, a director of the Government Accountability Office’s financial markets and community investment team. “And loans with down payment assistance” — “perform worse than those that do not.”

An analysis filled with logical fallacies.

But the surprise is the support these loans have received, even from critics of exotic mortgages, who say low down payments themselves were not the problem, except when combined with other risk factors like adjustable rates or lax underwriting.

Say “lax underwriting” out loud several times and genuflect in the direction of Countrywide Financial. Or as the process is referred to in community banking, “liar loans”.

Moreover, they say, the housing market needs such nontraditional lending, as long as it is done prudently.

“This is subprime lending done right,” said John Taylor, president of the National Community Reinvestment Coalition, an umbrella group for 600 community organizations, and a staunch critic of the lending industry. “If they had done subprime this way in the first place, we wouldn’t have these problems.”

At Harvard’s Joint Center for Housing Studies, Eric Belsky, the director, said the loans might be the type of step necessary to restart the housing market, because down payment requirements are keeping first-time home buyers out.

“If you look at where the market may get strength from, it may very well be from first-time buyers,” he said. “And a very significant constraint to first-time buyers is the wealth constraint.”

Wealth constraints are the all-American bugaboo. The wealthy of this nation and their flunkies in the Republican and Democrat parties fear someone with little or no income qualifying for the benefits they claim as a god-given imperative. They apply to everything from welfare to unemployment insurance, healthcare to mortgages.

The Party of NO is to become the Tea Party, Young Guns, John Wayne in a hip-hop video and, of course, the kindly caring face of liars and hypocrites like John McCain and Sarah Palin playing the lead roles in Little Poorhouse on the Prairie.

The votes are in. By a tally of 60-38, the Senate voted to end debate on the final version of financial reform legislation, A final vote on the Dodd-Frank bill that emerged from the conference committee reconciling the House and Senate versions of the proposed law later today is a mere formality. The President will then sign it and the bill will become the law of the land.

It will be years before we can evaluate whether the bill is a success or not. Perhaps the most optimistic way to view it is as merely a first step towards real reform. But any further progress will be slow, especially if the GOP makes significant gains in the House and Senate this November. Liberals may not like the Dodd-Frank bill, but the vast majority of Senate Republicans simply despise it.

Understand that the Republican Party – whether controlled by traditional American conservatives, which it is not, or nutball racist chickenhawks – is 100% beholden to the most reactionary Wall Street ideologues.

The Democrats who think that the bill won’t prevent another crisis believe it is too weak. Any improvements that would have made the bill stronger would have been even more vociferously opposed by Republicans. McConnell’s complaint about 2300 pages of new regulations skips merrily over the reason why new rules are necessary — because the country just went through the worst financial crisis in three generations.

The current crop of Senate Republicans are sticking to the same old story line they’ve been pushing since the 1970s: Regulation is bad. Their awesome pigheadedness demonstrates a remarkable effort to be consistent in the face of all evidence provided by actual reality. The best thing about the passage of bank reform is that these troglodytes failed to stop it.

Continuing deregulation, oversight by country club dance partners, would have extended the corruption and cronyism that laid the foundation of the Great Recession we’re still so slowly working our way out of.

More of the same might have guaranteed more silver in the pockets of the Judas GOP. It would given the rest of us more – and more frequent – opportunities to populate our local soup kitchen.