Putin Kinda Showing Bravado

Posted on January 2, 2015January 2, 2015 by Denise Simon

Putin’s Russia is financially feeble for sure, and he is well aware of 2015-2016 being a rebuilding era as he works to restructure economic and banking stability. In the meantime, he has dispatched air assets around the globe challenging the West while ordnance is clearly visible on his aircraft. What is Putin’s objective? While Russia is financially wounded, he will never stop showing his muscle and might.

Yes, Russia’s Military Is Getting More Aggressive

by James T. Quinlivan

On Dec. 12, a Russian military jet came dangerously close to a Scandinavian Airlines passenger plane in international airspace near southern Sweden. Reportedly, the Russian aircraft was flying without its transponder active when the Swedish military detected it. The Swedes notified civilian air traffic control, which then diverted the civilian jet. A collision was avoided.

Immediately after the December incident, the Russians denied that their aircraft was anywhere near the passenger jet. But the near miss in the skies over Scandinavia was only the latest incident in a consistent pattern of Russian provocations and “who-me?” denials. In March 2014, a Russian reconnaissance aircraft came close enough to an SAS airliner departing from Copenhagen to require the airliner—carrying more than 100 passengers—to maneuver to avoid a collision.

For years, Russian aircraft have been doing fly-bys of European neighbors, largely without much public notice. But as Russia’s relations with the United States and Europe have deteriorated in recent months following Moscow’s annexation of Crimea and support for the rebels in eastern Ukraine, these incidents in the skies seem to have taken on a new urgency—they may even herald a revival of Cold War-era tactics.

Moscow’s aggressive behavior is intended as an intimidating display of the Kremlin’s strength, and perhaps even a reminder of Russian nuclear capability. But overreaction is the wrong response: These are annoying provocations, not serious dangers to Western Europe. As such, they should remind the United States and Europe that Russia’s credible nuclear threats still spring from relative weakness—not strength. A new military doctrine issued by the Kremlin last week may look aggressive toward NATO and the West, but Putin is still more bark than bite.

After a hiatus that began in 1991, Russian aircraft returned to long-distance operations in 2007 with venerable Tupolev Tu-95 “Bear” bombers flying long-distance legs toward the United States coastline, near island bases in the Pacific, even intercepting American carrier task forces at sea. Over the last year, tactical aircraft have gradually been integrated into these flights, progressing in the last few months to short-range provocations of Russia’s neighbors with fighter jets and intelligence aircraft.

Over the last year, tactical aircraft have gradually been integrated into these flights, progressing in the last few months to short-range provocations of Russia’s neighbors with fighter jets and intelligence aircraft.

The recent spate of incidents with Russian aircraft over the Baltic have made headlines and prompted comments from Western officials. A recent report (PDF) by the European Leadership Network documented almost 40 incidents involving Russian aircraft or ships between March and November 2014 and pointed out that they were both more frequent and involved more risk than in previous years.

These provocations show no sign of abating. In November, Russian Defense Minister Sergei Shoigu announced that Russia would send bombers to the Gulf of Mexico and the Caribbean. This sounds dramatic, but it merely extends the practice of sending Bear bombers on long-range flights toward Canada and the United States. In June, for example, Russian bombers with tanker and fighter escorts appeared off Alaska, where Canadian and American fighters intercepted and escorted them. The bombers continued as far south as northern California and produced a few “nuclear-capable bombers buzz California” stories in the media. During the September NATO summit in Wales, two Bear bombers ostentatiously flew up past Iceland to Greenland toward points from which Russia would have launched cruise missiles against American targets if the Cold War ever turned hot.

That some of Russia’s most provocative flights came during the NATO summit might not be a coincidence. NATO’s own use of airpower demonstrated its utility as a threat and helped put Moscow on the policy course it is pursuing today. Now largely forgotten in the West, the Kosovo War in 1999, when the United States and its NATO allies bombed Serbian targets to protect ethnic Kosovars, is remembered in Russia for two things, both of which are directly relevant to understanding why Moscow is provoking its neighbors.

First, after President Boris Yeltsin warned the West not to push Russia, the United States and NATO never sought permission from the United Nations to begin bombing. The NATO campaign humiliated Moscow and contributed to Yeltsin’s resignation at the end of 1999. Second, U.S. and NATO airpower waged what the Russians subsequently described as a “contactless war” in which airpower savaged Serbian military, paramilitary, and regime targets with opposing ground troops never coming into contact.

The ramifications of the Kosovo War are still being felt. When Yeltsin resigned in December 1999, he turned over power to his prime minister, Vladimir Putin. And Putin, who is famous for holding grudges, remembers both the pain and the possibilities shown in the Kosovo War as he has attempted to rebuild Russian power and its sphere of influence.

Putin, who is famous for holding grudges, remembers both the pain and the possibilities shown in the Kosovo War as he has attempted to rebuild Russian power and its sphere of influence.

In the wake of the Kosovo War, the Russian military viewed NATO as aggressive and believed the alliance could intervene in another regional conflict and wage “contactless war” against a weakened Russian military. Under the catchphrase “de-escalation of military action,” Russian military theorists developed the concept of using nuclear weapons to bring a stop to conventional fighting before complete defeat. A series of large exercises beginning with Zapad-99 in 1999 were designed around scenarios of NATO intervening with advanced military forces into local conflicts in Russia’s “near abroad,” such as Belarus and Kaliningrad, the Russian enclave between Lithuania and Poland. In the exercises, the conflicts escalated into major regional wars with Russian conventional forces losing to mass air attacks with precision weapons, as had the Serbs in Kosovo.

These exercises involved long-range aircraft including the Tupolev Tu-22 “Backfire” theater-range system and the Bear simulating attacks at depth—as well as concurrent launches of intercontinental ballistic missiles and submarine-launched ballistic missiles, which flew to the Kamchatka test range. At the time of the Zapad-99 exercise, then-Defense Minister Igor Sergeyev stated that the exercise involved nuclear weapons when conventional weapons had failed. These exercises demonstrated to the West that “de-escalation of military action” by nuclear use was more than a theoretical concept.

By 2000, nuclear weapons took a greater prominence in Russia’s formal military doctrine, which stated (PDF) nuclear weapons could be used in situations “critical to the national security of the Russian Federation.” New doctrine also opened the possibility of nuclear first-use. Most outside observers agreed that the many weaknesses of Russia’s military, the West’s conventional ability and U.S. willingness to execute “contactless war,” and the Russian regime’s fragility all gave credibility to the Kremlin’s threat of a nuclear response in the case of a conventional defeat.

Russia’s 2008 border war with Georgia demonstrated two important new considerations for Moscow. First, reorganized Russian ground forces built around contract soldiers rather than conscripts demonstrated greater skills and overall military capability than the forces that had failed in Chechnya in the late 1990s. These units are manned at higher levels as “permanently ready forces” than the rest of Russia’s military and do not depend on the mobilization of reservists or additional conscripts to deploy to operations. The experience of defeating the Georgians gave the Russian military greater confidence that they could fight and win a local war. Second, NATO showed no interest in involving itself in the Georgian war as it had in Kosovo, which signaled to the Russians that the West is not always itching for a fight.

Russia issued a new military doctrine (PDF) in 2010 that seemed to reduce the role for nuclear weapons. The doctrine retained the possibility of nuclear first-use but said Russia would consider nuclear use only in situations in which “the very existence of the state” is under threat—a higher bar than “critical for national security,” the language used in the 2000 doctrine. Nuclear deterrence only works when both sides have a clear understanding of what is being deterred. The formal change in Russia’s doctrine communicated that Moscow recognized less need for rapid recourse to nuclear measures.

The new military doctrine that President Putin signed on Dec. 26 is based on a four-month effort that began in September to revise the 2010 military doctrine. The tone of the latest document is much more defensive than the previous doctrine, with a heightened concern about NATO buildups on territories contiguous to Russia, as well as evolving forms of warfare such as information warfare and ballistic missile defenses. At the same time, the doctrine shows increased Russian interest in improving its own ability to use precision conventional weapons. But the central question of when Moscow might feel compelled to use nuclear weapons seems unchanged from the position laid out in the 2010 doctrine.

How should the West think about these provocative flights over the Baltic in light of understanding Russia’s nuclear threat? Certainly, the long-range flights replicate Moscow’s Cold War behavior, and the sight of a Bear bomber flying over the Arctic—or soon the Gulf of Mexico—sends a message. But it has little to do with how war would be waged or initiated today. The flights by themselves are not plausible nuclear threats, even when they simulate bombing runs or cruise missile releases, nor does the new doctrine show an increased Russian willingness to resort to nuclear weapons.

But with no U.S. or NATO forces present in Ukraine (and rarely in the Black Sea), the flights—particularly the Baltic fly-bys—represent one of the few situations where NATO and Russian forces could come into direct contact and potentially conflict. The integrated flights of bombers and fighter aircraft in the Baltic are visibly more aggressive than the long patrols by larger aircraft. The flights also intend to embarrass and intimidate. The Baltic states—Latvia, Lithuania, and Estonia—are the primary targets, but the traditionally neutral and patient Swedes and Finns have also been imposed upon by Russian intrusions. Indeed, Swedish politicians have been provoked to such an extent that they are considering joining NATO.

Indeed, Swedish politicians have been provoked to such an extent that they are considering joining NATO.

And yet with all of these provocations, the military balance in Europe has not appreciably changed since the Kosovo War. The Russian flights show increased confidence in the capabilities of Russia’s air force and its slowly modernizing tactical aircraft inventory. The new Sukhoi Su-34 “Fullback” only appeared in these flights beginning in late October and represents Russia’s latest generation of tactical strike aircraft. But Russia still has relatively few of these planes and—along with the improved accuracies of other air-delivered munitions that can be carried by the older aircraft—they are only a small down payment on the improved precision capabilities envisioned in the new Russian military doctrine.

Meanwhile, the United States and its NATO allies have improved their capabilities to use precision conventional weapons and penetrate defenses against conventionally organized ground forces. And despite all of Moscow’s improvements, including reorganized brigades built around contract rather than conscript soldiers and explorations of “hybrid warfare” involving special forces in Crimea and eastern Ukraine, the core of the Russian military remains conventionally organized. From 1960 to 2000, the NATO supreme commander was always an American Army general, reflecting the centrality of the ground war in a possible NATO-Warsaw Pact confrontation. In the time since the Kosovo War, the supreme command has included American Air Force generals as well as American admirals reflecting a change in the way NATO would use military power in a confrontation with Russia. The current supreme commander, U.S. Air Force Gen. Philip Breedlove, personifies the important role air power in any new NATO-Russian conflict.

Still, there are military dangers to the Russian flights and the incursions. Russian fighters routinely fly armed with air-to-air missiles, as do the aircraft that intercept them. It’s not difficult to imagine a pilot with an itchy trigger finger or an intimidating fly-by that gets too close—at which point many things could go wrong.

Perhaps more concerning is the casual, almost careless display of power in Putin’s Russia. The Russian practice of flying military aircraft in the Baltic without filing flight plans or using transponders—making the aircraft both unexpected by and invisible to civilian air traffic control—shows a reckless disregard for human life. Indeed, these alarming events, such as the incidents with civilian airliners in March 2014 and December 2014, are not simply due to faulty procedures or the actions of rogue or inadequately trained aviators. These kinds of near-misses will continue as long as President Putin wants them to.

In a news conference in early November, Gen. Breedlove said of the provocative Russian flights that they “do not add to or contribute to a secure and stable situation, these kinds of demonstrations, and so they are problematic.” That’s a rhetorical start. But NATO will have to continue to craft a response to the new Russian aggression.

In the meantime, NATO can only be responsible for its own side. Russian flights will continue to be intercepted to demonstrate that they are not likely to achieve much if they were hostile. They will also have to be intercepted to show that Russia’s neighbors are not willing to be intimidated, and to demonstrate that NATO will share the burden of their defense and air sovereignty. Over the last year, the British, Canadian, Danish, Dutch, French, German, Polish, Portuguese, and Spanish air forces have contributed to the Baltic Air Policing mission. As Gen. Breedlove emphasized in November, the intercepts have been carried out “in a professional manner with professional intercepts by fully capable NATO defenders to escort the Russians while they were in the airspace.”

Perhaps, by increasing communication and cooperation with Finland and Sweden, NATO can demonstrate to Russia that these air incidents are only increasing the number of opposing states rather than driving a wedge between NATO allies.

James T. Quinlivan is a senior operations research analyst at the nonprofit, nonpartisan RAND Corporation.

FBI Warning: Copy Cat Assassinations

Posted on January 1, 2015January 1, 2015 by Denise Simon

The FBI has issued a National Situational Information Report (NSIR) to law enforcement around the country warning of “copy cat assassinations” following the murder of two New York Police Department (NYPD) officers in December. The report, which was issued days before Christmas and posted online by a lodge of the Chicago Fraternal Order of Police, states that the “recent murders of New York City Police Officers Wenjian Liu and Rafael Ramos have spawned numerous threats” against law enforcement personnel. The report states that Ismaaiyl Brinsley, the man who reportedly shot the two NYPD officers, claimed to be part of a nationwide group planning to kill police officers:

“As of November 2014, USPER Ismaaiyl Brinsley, responsible for the shooting of two New York City Police officers on 20 December 2014, claimed to be a member of an unidentified group that was “going to get a lot of cops in Florida, Las Vegas, and California for New Year’s.” Ismaaiyl Brinsley also discussed travel plans via Amtrak with two other individuals known as “Larry” and FNU LNU (NFI) [First Name Unknown Last Name Unknown (No Further Information)].”

Brinsley, who was initially identified in the media as a member of the national prison gang the Black Guerrilla Family, was later said to have no connection to the gang. However, the day before the murders were committed, the Baltimore FBI office issued a bulletin stating that they had received “reliable information” that members of the gang were planning to target white law enforcement officers to “send a message.” The FBI NSIR mentions this as well as information that indicates the “Heartless Felons Gang, an Ohio street gang, gave its members orders to kill white police officers in the Cleveland area to avenge black lives taken by white police officers.”

Several online threats against law enforcement are also documented in the FBI NSIR including statements made by a man on the East Orange New Jersey Police Department’s Google plus page that he wanted to kill law enforcement officers. The Department of Homeland Security questioned another man at his home in Memphis, Tennessee after he posted online that he was “heading to New York City to kill two more police officers.” The man allegedly wrote “Good Job #F-K12 Kill em all i’m on my way to NY now #shootthepolice 2 more going down tomorrow.” No charges were ultimately filed as the man stated he was intoxicated when he wrote the post.

The FBI NSIR also includes a YouTube comment made by a man later identified as Jeremiah Perez of Colorado Springs:

“SINCE DARREN WILSON our group has killed 6 retired sheriffs and cops……because of this event we will hunt two more in colorado this week…..for every innocent citizen that cops kill WE, VETERANS WILL KILL RETIRED HELPLESS COPS……..we already started and MORE TO COME NOW…….join us and kill any cop or any retired cop !!!!!!! MORE PEOPLE HAVE BEEN KILLED SINCE THE PROTEST !!! THEY DONT CARE, SO NOW REAL HEROS WILL HUNT THEM ALL !!! fuck ISIS, COPS ARE THE REAL ENEMIES OF FREEDOM LOVING AMERICANS and TIME TO STRIKE BACK IN ALL OUT WAR IS NOW !!”

The comment ultimately led to the man’s arrest on federal charges under 18 USC §875, using interstate communications to convey threats of injury against an individual. A criminal complaint written against Perez and posted on the Department of Justice’s website states that the FBI was alerted to Perez’s comment after Google voluntarily notified law enforcement because of the comment’s threatening content. The complaint includes the entire notice provided to the FBI by Google, which states that “based on the content of a post/comment to a YouTube video on Google Plus Social Media, Google Inc. believes that there presently exists an emergency involving imminent death or serious bodily injury to a person or persons, and that immediate disclosure to you of certain information is required to avert the emergency.” After obtaining a search warrant based on the IP address provided by Google, the FBI seized Perez’s computer and interviewed him. He admitted posting the comments and stated that his comments “were the result of misplaced frustration and a way of experimenting with words.”

Forensic examination conducted by the FBI of Perez’s computer revealed a number of other posts to YouTube and other websites using the screen name “Vets Hunting Cops,” including searches that were conducted for the following terms:

“Kill Sara Palin, Kill Barack Obama, Kill Cory Gardner, Kill Darren Wilson, Find and Kill Darren Wilson, Kill Fox Pundints, Fox News Headquarters, Kill Fox News Racist, Kill Bill O’Reilly, Fox News Headquarters gets bombed, Someone Kill Fox News, Kill the Cops, Beaver Creek City Police Department, How to Find Somebody on YouTube, How to Find Somebody’s IP Address Through YouTube, Kill Ted Cruz, Kill M itch McConnell, Calls to Assassinate GOP Leaders, Google Maps for Fox News Headquarters, Hunt Darren Wilson’s Family, St. Louis Police Officer’s Association, Darren Wilson Prosecutor, Locate Bill O’Reilly’s house.”

Perez reportedly admitted to FBI agents that he had conducted the searches, but said that he had no intention of following through with the actions he was researching. Perez now faces up to five years in prison.

p. 2

Full report here.

Think and Plan Carefully about Flying

Posted on January 1, 2015January 1, 2015 by Denise Simon

Al Qaeda’s Latest ‘Inspire’ Magazine Dedicated to Bombing Airliners, Inspiring Lone Wolf Attacks

By: Anthony Kimery, Editor-in-Chief

“Destination airport, and Guess What’s on the Menu?” is the title to the opening spread of the cover story about how to bomb passenger planes in the slick, professionally designed new issue of Inspire magazine published by Al Qaeda in the Arabian Peninsula (AQAP). Releasing the digital magazine on Christmas Eve is unlikely a coincidence; it’s the 5th anniversary of Umar Farouk Abdulmutallab’s Christmas Day 2009 bombing attempt on Northwest Airlines Flight 253 as it was on its landing approach to Detroit Metropolitan Wayne County Airport.

The entire issue is devoted to inspiring lone wolf jihadists in the US and the West, and especially urges attacks on commercial passenger planes. A lengthy section provides detailed instructions on how to build a new bomb AQAP purports can be “hidden” not only on aircraft, but also to blow up other targets with the intent of causing ripples throughout US and Western economies.

“Previously,” Ibrahim wrote, “we have presented Muslims with different weapons, including bombs and tactics … Now we are obliged to give our ummah something special. Something unique that can easily be prepared at home — that is the reason we have taken a long period to produce this issue. Here, we give the Muslim ummah a bomb recipe that America fears it might reach the hands of other Mujahideen in other fronts.”

“However, what America didn’t expect is that this recipe is going to be in the reach of all Muslims around the world,” Ibrahim said, noting, “It will circulate in the social media and Muslims will translate it into different languages. Some will be pleased and pass on the message; while others will be inspired and most importantly make the bomb.”

The article, Open Source Jihad (OSJ), was written by “AQ-Chef,” presumably Ibrahim Hassan Tali Al Asiri, AQAP’s premier bomb maker who the Department of State issued a $5 million bounty for on October 14, 2014. At the same time, the State Department announced a total bounty of $45 million for information leading to the locations of the eight key leaders of AQAP. The department authorized rewards of up to $10 million for information leading to the location of Nasir Al Wahishi and up to $5 million each for information leading to the locations of Qasim Al Rimi, Othman Al Ghamdi, Shawki Ali Ahmed Al Badani, Jalal Bala’idi, Ibrahim Al Rubaysh, Ibrahim Al Banna and Al Asiri.

Named targets include American, United, Continental and Delta airlines, as well as British Airways, EasyJet, Air France and Air France KI. Other objectives include “direct economic targets” and high-profile “economic personalities” like former Federal Reserve Chairman Ben Bernanke (the current issue of Inspire says he’s the current chairman, raising questions about when the current issue was produced – Bernanke stepped down in February) and “wealthy entrepreneurs or company owners” like Bill Gates.

Titled Neurotmesis: Cutting the Nerves and Isolating the Head (Neurotmesis is a Greek word meaning “to sever the nerves”), the latest issue of Inspire is very similar to the previous issue, as it focuses on instigating Muslims to carry out lone wolf attacks against the US. The focus on attacking the US is signaled in a letter by Yahya Ibrahim, the magazine’s editor-in-chief.

The article details ways to “breaching airport security,” “making the hidden bomb,” and various “field tactics” related to selecting targets and executing an attack. AQAP dedicated the OSJ section to individuals who had previously attempted to blow up airlines, including Ramzi Yusuf, Abdulmutallab and Richard Reid (the shoe bomber).

Beginning the 37-pages of instructions for how to build “The Hidden Bomb,” AQAP said, “On the dawn of 2010, media agencies reported that a Nigerian youth boarded an American plane, Delta, carrying with him a unique bomb. He nearly blew the plane up. His name is ‘Umar Al Fârouq. Prior to that, a Mujahid blew himself in the castle of the Saudi Prince, Muhammad bin Naif.”

“The Mujahid’s name was Abdallâh ‘Asiri. The aim was to assassinate the prince, but the prince survived. Both men used bombs similar in design.”

“Initially, what we faced as a main problem was: How can a lone Mujahid acquire the required explosive materials. For several months, we conducted a number of experiments. As a result we came up with these simple materials that are readily available around the globe, even inside America – and this is our goal.

“We spared no effort in simplifying the idea in such we made it ‘another meal prepared in the kitchen’ so that every determined Muslim can prepare.”

AQAP claims the “hidden bomb is 2.5x as powerful as ‘Umar Fârouq’s bomb, and 3x as powerful as the military-grade F1Russian grenade,” adding, “American security organs do not know what they do not know.”

Following the instructions for building “the hidden bomb,” AQ-Chef provides a missive on “Field Tactics” for how to use the bomb to blow up a jetliner. He said, “I assume you have now prepared your hidden bomb after you have been convinced by the importance of this operation both politically and militarily. What is left is identifying the target that will achieve the greatest success, Biidhnillâh — a success that will crush the enemy’s economy. We have sketched the targets as a part of a complete program we have presented to the Lone Mujahid.”

Continuing, he said, “So as to achieve the greatest success, it is necessary for the person responsible and his motives to be publicized. This is what we call ‘the Message.’ It is obvious that most Martyrdom Operation’s executors are Mujahideen. Some say these operations have become the Mujahideen’s signature. But after the plane has exploded, how can the world know that a martyrdom seeker is behind this explosion?

“To achieve that,” he wrote, “you can write a timing email before departure in such the email is sent a day or two after you have carried out the operation. The timing service is available in the net. Write down who you are and what your motives are.

Continuing, he concluded, “The news of this bomb spread like wildfire. It worried many security personnel. At the time, we did not publish the bomb recipe for many reasons. But now we have decided to release it as part of a complete program for the Lone Mujahid (Neurotmesis). Biidhnillâh, it will achieve its goals as anticipated.”

In a question and answer “interview” with AQ Chef, he said, “Unlike a lab, a kitchen is found in every house. Moreover, if a Mujahid can prepare a bomb from materials used in the kitchen instead of lab materials and use cooking utensils instead of lab apparatus, then we have a double success and we have overcome the security hurdle. Therefore, a larger number of Mujahideen can carry out Jihādi operations.

“You will notice in this issue specifically we have focused on the kitchen,” he noted. “Generally, we are trying as much as possible to move the lone Mujahid from the lab to the pharmacy and from the pharmacy to the kitchen.”

Asked if he believes “airport security can deal with this bomb?” Al Asiri presumably responded, saying, “We said security has imaging devices. They could detect the bomb. But these devices cannot be included in all airports due to cost reasons and the harassment they cause. Then these bombs are not only used in airports, but they are also used in assassinations as the brothers clarified in their program (Neurotmesis). Nevertheless, I say to the heads of the US intelligence in general, by the Help of Allāh, many airplanes will be ‘crashing.’ Hereby, I call the National Transportation Safety Board, ‘Do not weary yourself of investigation, the US Department of Homeland Security will take over the job because of a simple reason: This jihādi work belongs to the ‘Global Lone Jihād Movement.’”

“Hereby, Inspire magazine is committed to arm Muslim individuals — as well as Muslim groups as is in this issue — in their Jihâd on America.”

Eric Holder: ‘They’re Too Big to Jail’

Posted on January 1, 2015January 1, 2015 by Denise Simon

Make the stockholders pay….it will fade away.

This is a long but important read/interview. There are key names and revealing nefarious deals. Don’t be fooled that this is not going on again today.

Matt Taibbi and “The $9 Billion Witness” Who Exposed How JPMorgan Chase Helped Wreck the Economy

In holiday special, we feature a Democracy Now! broadcast exclusive interview with Alayne Fleischmann, the whistleblower who helped the Justice Department force JPMorgan Chase to pay one of the largest fines in American history for its role in the financial crisis. She is featured in a Rolling Stone piece by recently returned Matt Taibbi, who also joins us. Fleischmann details how she witnessed “massive criminal securities fraud” in the bank’s mortgage operations. Taibbi’s investigation is headlined “The $9 Billion Witness: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking.”

Transcript

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We’re talking about “The $9 Billion Witness: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking.”

JUAN GONZÁLEZ: Well, a year ago this month, the Justice Department announced the banking giant JPMorgan Chase would avoid criminal charges by agreeing to pay $13 billion to settle claims that it had routinely overstated the quality of mortgages it was selling to investors. When the toxic mortgage securities started turning bad, investors lost faith in the banking system, and a housing crisis turned into the 2008 financial crisis that led to millions of home foreclosures. New York Attorney General Eric Schneiderman unveiled the settlement last November.

ATTORNEY GENERAL ERIC SCHNEIDERMAN: Not only will Chase have to pay the largest settlement ever levied against a financial institution, but it has admitted in our statement of facts that its own employees, employees of Bear Stearns and employees of Washington Mutual made material misrepresentations to the investing public about a large number of residential mortgage-backed securities that they issued prior to the crash in 2008. This settlement is a major victory in the fight to hold accountable those who were responsible for that crash.

AMY GOODMAN: Soon after the JPMorgan Chase deal was reached, U.S. Attorney General Eric Holder discussed the bank’s misdeeds during an interview with NBC News’ Pete Williams.

ATTORNEY GENERAL ERIC HOLDER: It packaged loans that it knew did not pass its own stated due diligence test. We have a whistleblower who indicated that she expressed concerns about what the strength of these mortgage-backed securities were, and they put them out there to the market and said that they were perfectly fine, when in fact they were not.

PETE WILLIAMS: So, to be clear, you’re saying that JPMorgan’s conduct here contributed to the housing collapse?

ATTORNEY GENERAL ERIC HOLDER: Not only the conduct of JPMorgan, it was the conduct of other banks doing similar kinds of things that led directly to the collapse of our economy in 2008 and in 2009.

JUAN GONZÁLEZ: During that interview, Attorney General Eric Holder mentioned the role of an unnamed whistleblower from JPMorgan Chase who aided the Justice Department’s case against the bank. Well, until this week, that whistleblower, Alayne Fleischmann, a securities lawyer who worked for JPMorgan, had never spoken publicly about what she witnessed inside the bank. That changed yesterday when Rolling Stone magazine published a major new piece by Matt Taibbi headlined “The $9 Billion Witness: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking.”

AMY GOODMAN: In the article, Alayne Fleischmann criticizes not only JPMorgan’s banking practices, but how government regulators at the Holder Justice Department responded to the bank’s lawbreaking. Today, in her first televised interview, Alayne Fleischmann joins us here on Democracy Now!, along with Matt Taibbi, who has closely covered the financial crisis for years. His latest book, Divide: American Injustice in the Age of the Wealth Gap, has just come out in paperback.

And we welcome you both to Democracy Now! for the hour.

MATT TAIBBI: Thanks for having us on.

AMY GOODMAN: So, Alayne Fleischmann, start at the beginning. Why did you decide to come forward? And how did you end up at Chase?

ALAYNE FLEISCHMANN: Sure. For a long time, I was expecting it to come out. I’ve been talking to the government for two-and-a-half years now. And first it went through the SEC. Then it went through the Civil Division of the DOJ. And at some stage after watching all of these major banks have deals that actually the facts get wiped away, I started to feel that if I don’t come forward, there’s a real chance of that happening here, too.

In terms of JPMorgan Chase, I started there in March 2006 at sort of the height of the boom. When I started, everything seemed normal. I didn’t really realize some of the things that were happening in the background. And then things started to change in about May, a couple months after I had been there.

JUAN GONZÁLEZ: Well, what—when you went to work there, what specifically was your job? And if you could walk us through how you began to realize the huge problem that the bank was a part of?

ALAYNE FLEISCHMANN: Sure. I started as what they call a deal manager. Basically, we coordinate between all these different groups when we’re bringing in these loans, that are then going to be sold to investors. I first noticed that there was a problem when they brought in a new person to do our diligence, which is just the review of the loans themselves to make sure they’re of good quality. As soon as he came in, we suddenly—this wall sort of came down between myself and the group that was doing this review, and you couldn’t get information that you would normally get. On top of that, there was immediately a sort of a no-email policy. He wouldn’t send emails, and we weren’t allowed to send him emails. He would actually come out and yell at you if you sent him an email.

AMY GOODMAN: What was the reason?

ALAYNE FLEISCHMANN: It was never given, which was extremely worrisome, because normally the reason why you have a compliance and diligence department is to actually have written policies about what you’re doing, to be able to explain to people how you’re making your decisions. So it’s exactly the opposite of what you would normally expect.

JUAN GONZÁLEZ: And when you say to review the quality of the loans, if you could—

ALAYNE FLEISCHMANN: Sure, yes.

JUAN GONZÁLEZ: —for people who are not aware—you were, in essence, certifying that these individual loans could be packaged into a group of securities to then be sold to investors in a huge package, right? But you had to go through every individual loan? Was that—

ALAYNE FLEISCHMANN: Yeah, that’s pretty much what happens. It’s really that you’re taking the actual loan files, that was done between the lender and the borrower, and looking at them to make sure everything looks right. Does this person have enough money to pay off their loan? Do they have the sort of history where we think that they’re going to pay this loan? And if we find that they don’t, then we’re actually not supposed to purchase the loans, and certainly shouldn’t be selling them to other investors without at least telling them there’s something wrong with them.

AMY GOODMAN: And so, what was the smoking gun for you?

ALAYNE FLEISCHMANN: Everything about—what really started happening—in particular, it became apparent in October—was that sometimes we had deals coming in where even though I wasn’t even the person looking at the loans, you could tell from where I was that something was wrong with them. The GreenPoint deal, which is what Matt talks about in his article, even when the loans came in, they were very, very old, which usually you try to actually pull these loans and sell them within two to three months—these loans were going back to close to the beginning of the year. If you work in the industry, you know immediately what that means, is either they couldn’t sell them, because the buyers were telling them they weren’t any good, or, even worse, they’d been sold and then had missed a bunch of payments, so they had actually been sold back to the originator. Any of those loans you wouldn’t normally sell to investors as regular loans.

JUAN GONZÁLEZ: Now, Matt, you’ve referred in your article to these loans as basically selling old, beat-up used cars—

MATT TAIBBI: Right.

JUAN GONZÁLEZ: —as if they were new. Could you explain that?

MATT TAIBBI: Yeah, that’s exactly what Alayne is talking about. Essentially, what the bank was doing was they—you know, there are companies out there, these mortgage lenders, like a company that might be familiar to people is, like, Countrywide—in this case, it was an originator called GreenPoint—they would go out into neighborhoods, and during this boom period, they were giving mortgages to anybody and everybody with a pulse, essentially. They were especially low-income neighborhoods. They were offering these very advantageous loans to people, whether they could afford the houses or not. They were buying huge masses of these loans. And then they were—

JUAN GONZÁLEZ: They were called like “liar’s loans,” or stated income where no one even checked whether the person had the income to actually pay it off.

MATT TAIBBI: That’s exactly right. That’s exactly right. That was the verbiage, “liar’s loans.” The FBI warned that there was going to be an epidemic of these liar’s loans way back in 2004. The industry ignored these warnings. The government ignored these warnings. And there was this huge influx of these stated income loans, where people could just say that they made an enormous amount of money, and nobody would check.

So the bank buys all these loans, and then what they were doing is essentially throwing them into big pools, making hamburger out of them, and then selling that hamburger to pension funds, insurance companies, hedge funds, all kinds of investors. Typically ordinary people were the people on the other end buying this stuff. They were investing in these securities, and often they didn’t even know it.

What Alayne was involved with was making sure that these loans were of good quality, so that pension funds, when they bought these securities, weren’t buying something that was going to blow up on them a year later. And what she found was that they were buying loans that were of very dubious quality, that were extremely risky, and that should not have been made into that hamburger.

AMY GOODMAN: Journalist Matt Taibbi and JPMorgan Chase whistleblower Alayne Fleischmann. We interviewed them in November”:http://www.democracynow.org/2014/11/7/matt_taibbi_and_bank_whistleblower_on, when Matt Taibbi’s article, “The $9 Billion Witness,” came out in Rolling Stone. Stay tuned for part two of our interview.

[break]

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González. In November, Juan and I interviewed JPMorgan Chase whistleblower Alayne Fleischmann and reporter Matt Taibbi. His piece in Rolling Stone is headlined “The $9 Billion Witness: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking.” It was the first time Alayne Fleischmann appeared on television. Attorney General Eric Holder appeared on NBC News just after the JPMorgan Chase settlement was reached over a year ago, in November of 2013. He was questioned by NBC’s Pete Williams.

PETE WILLIAMS: What about those who say, “Well, the message here is, if you do wrong, you just pay for it and move along”?

ATTORNEY GENERAL ERIC HOLDER: This was not simply something that JPMorgan simply signed a check and smilingly said, “This is a good deal for us.” This inflicts pain on that institution.

PETE WILLIAMS: But is this, in essence, a sort of template? We can expect to see other settlements now?

ATTORNEY GENERAL ERIC HOLDER: I certainly think that the way in which this case has been settled is a template of what we can expect, both in terms of getting maximum amounts of money and then using that money so that we get it to people who suffer the greatest amount—that is, either investors or homeowners.

AMY GOODMAN: That’s Attorney General Eric Holder. Alayne Fleischmann, let’s take it back a step. When you started to alert your colleagues and your supervisors at JPMorgan Chase, what did they say?

ALAYNE FLEISCHMANN: Well, what happened was the transaction, at one point, just stopped. It turned out that 40 percent of the loans in this deal had problems with them. When we tried raising this issue with our superiors, what actually happened is they just started yelling at the diligence managers who were clearing the loans, sort of yelling, berating them, making them do reports over and over again. And it became clear that, although they wouldn’t say it, it was going to be like that until they would clear the loans. So what actually happened is these loans started being cleared, but basically just by sort of the brute force of what was going on there.

I raised it first with a managing director and an executive director, and couldn’t get any response. After that, I decided the best possibility would be to write a letter to another managing director that actually laid out everything I was seeing. I used the GreenPoint deal as an example, which is why the letter specifically says exactly who was doing what all over this deal. But it also lays out general problems in our diligence that the salespeople were being involved, which isn’t normal, and that there seemed to be a lot of pressure on diligence managers to clear loans that shouldn’t have been purchased or sold.

JUAN GONZÁLEZ: And the importance of putting it down in a—

ALAYNE FLEISCHMANN: Yeah.

JUAN GONZÁLEZ: —putting all the facts down in a letter, what that meant inside the company?

ALAYNE FLEISCHMANN: Yeah. Well, what it used to be is that the way that you could stop these things from happening was, if you write a memo that lays out what’s happening, the management won’t go forward, because they realize that if they do, there’s going to be this evidence of what happened.

JUAN GONZÁLEZ: There’s going to be a paper trail of the—mm-hmm.

ALAYNE FLEISCHMANN: Yeah. The big worry with these settlements and the way they’re being done—and I’m not the only whistleblower in these cases—is that you have these emails and these memos, but nothing happens. A fine gets paid, and then all of the facts and who did what gets washed away. So, as a whistleblower, you’re thinking, “I did all of this, and the DOJ has all of this, but for some reason they’re not going forward on it.”

AMY GOODMAN: So, what happened when you went outside the company? How did you go outside?

ALAYNE FLEISCHMANN: Well, one issue I had is that although I warned not to securitize the loans, there was no way—I was blocked off, especially after I had raised complaints, from being able to see any of the data or the diligence process, which right there shows that something was wrong. So, after I left JPMorgan, I actually had no idea, for a full four years, that the loans had been securitized. On one hand, I was worried they would, but I really thought no one would ever actually securitize those loans.

MATT TAIBBI: This is an important distinction—

ALAYNE FLEISCHMANN: Yeah.

MATT TAIBBI: —because Alayne had no idea that a crime had been committed until she had concrete knowledge that the loans had actually been resold to somebody else. They’re certainly allowed to buy as many bad loans and as many risky mortgages as they want. It’s not until they go to some investor and represent to them that these are, you know, AAA-rated securities or whatever, or highly rated securities, that they’re actually committing fraud. And so, she had no way of knowing that. Even after she was laid off from the company, she had no knowledge of what actually happened. So she couldn’t actually report the crime yet, because she only saw one half of the deal.

JUAN GONZÁLEZ: And you were laid off in—at the beginning of 2008, right?

ALAYNE FLEISCHMANN: Eight, yeah.

JUAN GONZÁLEZ: Yeah, actually before the crash. Already there was turmoil—

ALAYNE FLEISCHMANN: Yeah.

JUAN GONZÁLEZ: —in the home loan market, but there was not—the crash had not happened.

ALAYNE FLEISCHMANN: Right.

JUAN GONZÁLEZ: And so that the bank, when Jamie Dimon and other leaders later said that they had no realization that the market was tanking as fast as it could, at least your memos were certainly indicating to them that there were major problems in their portfolios.

MATT TAIBBI: Well, what’s funny is they actually said two completely opposite things. There was an article in Fortune magazine later in 2008 in which they report that Jamie Dimon, the CEO of the company, knew as early as October of 2006 that the industry was rife with underwriting problems, all the things that Alayne is talking about. The company was aware of this, and there are quotes in which the CEO is telling his subordinates, “We’ve got to get out of these investments, because this whole thing can go up in smoke.” And then, meanwhile, so Chase is selling its own investments in these kinds of mortgages, but they’re taking these same mortgages and selling them to investors and not telling them that they have these concerns. Later, when they testify in front of the Financial Crisis Inquiry Commission in 2010, Dimon said exactly the opposite. He said, essentially, “Well, we had no idea that these things were happening. We got caught up in the fact that housing prices were just going continually upward.”

AMY GOODMAN: So, talk about the settlement. What happened next?

MATT TAIBBI: Well, so, the settlement happened in—I guess, a year ago about this month. And what’s interesting about it is, Alayne, by that point, had already talked to civil investigators in the U.S. Attorney’s Office in Sacramento, and she talked to some very talented lawyers there who seemed very anxious to press this case. And they were about to release a very detailed civil complaint against Chase in September of last year, and just hours before that press conference, when they were going to announce that, reportedly, Jamie Dimon, again, the CEO of Chase, called up the assistant attorney general, asked to renegotiate, and they canceled the press conference, and they went back into negotiations. And a few months later, they had a settlement in which they paid a lot of money, but none of the facts came out in that.

AMY GOODMAN: Just like if you were in trouble, you could make that call.

MATT TAIBBI: Yeah, I could call up—yeah, I could call up the mayor or the president and have a court case go away. I mean, that’s exactly what happened in this case, is they basically put in a phone call to the very top of the criminal justice system.

JUAN GONZÁLEZ: And what happened to your contacts with the Justice Department, if you could talk about that, that process? How detailed did they want to get into the information that you had?

ALAYNE FLEISCHMANN: Well, my first contact, it was actually after four years. I was working in Calgary, and I got a call from the SEC.

AMY GOODMAN: Because you come from Canada.

ALAYNE FLEISCHMANN: Yeah. He introduced himself as an investigator from the Enforcement Division. And as I sort of paused for a minute, jokingly, he then said, “You weren’t expecting to hear from me, were you?” And after that, they set up my first interview with the SEC, which was very short. It was only maybe an hour, hour and a half. They were only interested in one deal. And even though I kept bringing up GreenPoint and they had the letter that I had written, they weren’t actually interested in that. And the SEC settlement was based on that other deal.

And then, it wasn’t until later, about December 2012, that I first met with the DOJ investigators. And it was very clear that this was going to be very different. As soon as they walked in, you could tell they knew these securities up and down, and they were really anxious to go forward with it and felt very comfortable going forward with the case. So, in that meeting, it was a very detailed meeting, sort of hours of going through how the process works and what happened. And then I had an actual deposition in about May of 2013, where they nailed down a lot more of that.

And you could see at that stage—first, I got to find out for the first time ever how many of these loans had actually gone into—had been sold to investors in sort of one pool, and it was hundreds of millions of dollars’ worth of them, with nothing actually disclosed about the problems with the loan. And then, second, I got to really see what their case was, and they clearly realized they had an incredible case there.

AMY GOODMAN: Testifying before the Senate Judiciary Committee in 2013, Attorney General Eric Holder suggested some banks are “too big to jail.”

ATTORNEY GENERAL ERIC HOLDER: I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large. Again, I’m not talking about HSBC; this is just a more general comment. I think it has an inhibiting influence—impact on our ability to bring resolutions that I think would be more appropriate.

AMY GOODMAN: Matt Taibbi, respond to what Attorney General Eric Holder has testified.

MATT TAIBBI: Well, again, I mean, it’s a crazy thing when the leading law enforcement official in the nation comes out and says, “Well, some companies are just so big that we can’t prosecute them no matter what they do.” In that case, he was speaking—he was testifying in the wake of a settlement the government had entered into with HSBC, which is the biggest bank in Europe and the biggest bank in Great Britain, which had admitted to laundering over $800 million for a pair of Central and South American drug cartels. And if you can’t send someone to jail for laundering $800 million of drug money, you know, because the company is too big, clearly something is very seriously wrong. But yet, this became sort of the unofficial official policy of the Justice Department. And this greatly affected the way they dealt with companies like JPMorgan Chase, like Citigroup, like Bank of America. They tried to find a way to effect some kind of resolution that didn’t involve criminal charges, didn’t involve penalties to individuals, and also didn’t put the facts of any of what they had actually done out into the public.

JUAN GONZÁLEZ: And in that vein, this is—you know, it’s the old Monopoly board game all over again, get out of jail free. Instead of paying $200 to get out of jail, you pay $2 billion to get out of jail. But the amounts of money that these governments are getting as a result of this—I mean, I just checked with the New York state comptroller. New York state alone, this year, is getting out of its bank settlements with Wall Street a windfall of $5 billion. That’s just New York state. Other states are getting their share, and of course the federal government is getting huge infusions. And so, they suddenly have all this cash. And then they also had this other stuff that you’ve talked about, which is consumer relief—

MATT TAIBBI: Right.

JUAN GONZÁLEZ: —apportions. So, the governments actually get cash settlements, but then they supposedly negotiate additional money for the citizens, a consumer relief. Could you talk about that?

MATT TAIBBI: Well, OK, there’s a couple of things here. First of all, these settlements, they always come up with a big number, but the number is always actually—when you actually look at the accounting, it turns out to be smaller than they announce. In the case of the Chase settlement, the number they announced was $13 billion. But there’s a couple of really important factors here. One is that $7 billion of that—it’s $7 billion, right?—was tax-deductible, which means that all of us, American citizens, anybody who pays taxes, actually picked up the check for about $2.4 billion worth of the settlement. So we paid part of that settlement, which is crazy. I mean, the ordinary person, if we get a speeding ticket, we can’t deduct that when we go to pay our taxes. But these people cratered the world economy, and they get to write a tax deduction for it.

Four billion dollars of the settlement was what they call consumer relief. And what this really boils down to, I mean, there’s some loan forgiveness, where they’re allowing people to pay less principal towards their home loans, but mostly it comes down to letting people have a little extra time to pay off their payments. And it’s not always the bank that is actually doing that; it’s often the investors in those loans who are actually giving the relief. So, it’s not really the bank paying $4 billion. It’s just a number.

AMY GOODMAN: I want to turn to President Obama speaking in September, when Attorney General Eric Holder announced that he would resign.

PRESIDENT BARACK OBAMA: He’s helped safeguard our markets from manipulation and consumers from financial fraud. Since 2009, the Justice Department has brought more than 60 cases against financial institutions and won some of the largest settlements in history for practices related to the financial crisis, recovering $85 billion, much of it returned to ordinary Americans who were badly hurt.

AMY GOODMAN: Matt Taibbi, your response?

MATT TAIBBI: Well, I mean, the first thing I would say is, OK, they brought a bunch of settlements and they collected a bunch of money, but there isn’t a single individual, in this entire tableau, who is actually individually paying any kind of penalty for any of these misdeeds. All of that money came out of the pockets of shareholders. No executives had to pay a fine. No executives had to do a single day in jail. There were not even charges filed against any individuals. And—

AMY GOODMAN: What was the actual crime you feel Jamie Dimon committed that you feel he should be in jail for?

MATT TAIBBI: Well, I can’t stand here and tell you that Jamie Dimon committed a crime. But certainly there are people in these companies, and in cases like Alayne’s case, who would be targets of criminal fraud prosecutions, and probably at a lower level than Jamie Dimon. I think it would be hard to prove, although who knows? Because they didn’t try. In a normal drug case, what you would do is you would take everybody who was guilty, and you would try to roll them up the chain and see how far you could go. And that’s exactly what they did not do in this case. They didn’t aggressively go after everybody. They didn’t follow every lead. Instead, they just sort of went into a back room, decided on a number and made the whole thing go away. And yes, that is a kind of justice, it’s a kind of resolution, but I think it’s insufficient.

JUAN GONZÁLEZ: In fact, as you note in your article, after the settlement agreement with JPMorgan Chase, the stock of the company went up dramatically, the stock price of the company went up dramatically, and Jamie Dimon ended up getting a huge raise from his board of directors.

MATT TAIBBI: Yeah, yeah, in the first weeks after the settlement was announced, the market capitalization of JPMorgan Chase went up 6 percent, which translated into about $12 billion worth of value. So that’s most of your settlement right there. Actually, it’s more than almost—more than the entire settlement, if you look at it as a $9 billion settlement. And yes, Jamie Dimon, just a few weeks after being dinged for the largest regulatory fine in the history of capitalism, got a 74 percent raise by the board of—by the Chase board.

AMY GOODMAN: Well, earlier this year, Democratic Senator Elizabeth Warren criticized the size of Jamie Dimon’s salary.

SEN. ELIZABETH WARREN: In 2013 alone, JPMorgan spent nearly $17 billion to settle claims with the federal government, claims relating to its sale of fraudulent mortgage-backed securities, its illegal foreclosure practices like robo-signing, its manipulation of energy markets in California and the Midwest, and its handling of the disastrous London Whale trade. And at the end of the year, JPMorgan gave its CEO, Jamie Dimon, a 75 percent raise, bringing his total compensation to $20 million. Now, you might think that presiding over activities that resulted in $17 billion in payouts for illegal conduct would hurt your case for a fat pay bump, but according to The New York Times, members of the JPMorgan board of directors thought that Jamie Dimon earned the raise, in part—and I’m quoting here—”by acting as chief negotiator as JPMorgan worked out a string of banner government settlements.”

AMY GOODMAN: That was Senator Elizabeth Warren. I’d like Alayne Fleischmann, the whistleblower within JPMorgan Chase, to respond. I mean, do you think part of what you exposed to the government earned Jamie Dimon this increase of 75 percent?

ALAYNE FLEISCHMANN: And I suppose it—the question is whether you’re concerned about making money or whether there’s criminal activity going on at the bank. There’s actually an excellent website called JPMadoff.com with some lawyers who were involved in the Madoff case, where they’ve been tracking, actually, all of JPMorgan’s fines for fraud and illegal activity. And they’re actually at $29 billion now in the last four years alone. So, the question that needs to be asked is: How is it that you can be a CEO, over $29 billion worth of fines, and get a raise? It also clearly shows that there’s no deterrent to all of these fines. It’s just happening over and over again. And if there aren’t any individuals held accountable, there’s no reason for any of them to actually stop doing these very serious crimes.

JUAN GONZÁLEZ: Well, and not only that, if all of those fines are continually occurring—

ALAYNE FLEISCHMANN: Yeah.

JUAN GONZÁLEZ: —where are the crimes that are the basis of being fined?

ALAYNE FLEISCHMANN: Well, yeah, and so that’s one of the really important points, too, is there’s very little difference between civil securities fraud and criminal securities fraud, or even how you can do this as a wire fraud case. Once you have that strong of a civil fraud case, the only real difference is that you need a little more intent level—they had to have really intentionally been doing the fraud—and you have to prove it to a higher standard. You know, you have to show beyond a reasonable doubt that this is what they were doing. But when you look at these cases, these are some of the easiest white-collar crime cases that you’re ever going to see.

And one of the things that I think has been sold to the public is, well, these are really complex and difficult, or we don’t really know who did what. First, in my case, and what I’ve seen in these other cases, there are all sorts of documents that show exactly who was making the decisions and who knew what. The idea that they’re too complex, you know, these securities themselves that are sold to investors are complex, but the fact that the investors were lied to about the quality of the loans, that’s actually really easy. And the fact that obviously if you have people who can’t afford their loans, there’s going to be no money coming out of these loans, is also something that’s not a difficult thing to understand.

AMY GOODMAN: Alayne Fleischmann, why didn’t you go to the press back then? And what made you decide to do it now?

ALAYNE FLEISCHMANN: Yeah, I, for a long time, believed that this come out, that the government would do their investigation and come forward with it. It’s actually taken a really long time for me, because for me it’s a little bit of an incredible thing to believe. But after watching all of these cases over and over again, at some stage I’m in the position where if I keep silent and the statute of limitation runs, or they do one of these agreements where they whitewash everything, then it’s too late, which is what’s happened over and over again so far. So, I’m trying to change the pattern and come out first, so that they have to either follow these properly, the way they would for any other criminal defendant, or explain why they’re not doing it.

JUAN GONZÁLEZ: And, Matt Taibbi, the reality that all—despite all the claims of the Obama administration that they’ve pursued all these civil cases, that they never really went after the people who practically wrecked the world economy, and how that relates into this election result that we just had, where obviously Americans across the board, from Democrats to Republicans to Independents, are still furious about their economic situation and the failure of holding these people accountable?

MATT TAIBBI: Yeah, I think it’s hard not to make a connection between the total lack of enthusiasm that we saw for the Democratic Party this past week and, for instance, their behavior in pushing investigations of the financial services community. And we saw it with the Occupy protests. I talk to people on Wall Street all the time. I mean, all my sources come from Wall Street. And they all say the same thing, that Barack Obama had an incredible opportunity in late 2008, just after he took office. With his communication skills, he could have gone to the American people and explained to them exactly what happened and said, “This is why the economy is bad. This is why you’re losing your job. There was massive criminal activity. It’s not just an accident.” And then he could have gone and put a few people in jail and really put some teeth behind those words. Instead, they swept it all under the rug. And people, even if they don’t completely understand what happened, they sense that nothing was done. And I think it’s important to understand that.

AMY GOODMAN: I presume, Alayne Fleischmann, that you had a confidentiality agreement when you left JPMorgan Chase. Are you violating that? What made you decide to take the risk?

ALAYNE FLEISCHMANN: Yeah, and there are different arguments about whether I am or am not violating it, because of the criminal nature of what I’m bringing forward. For me, at some stage, it’s just sometimes you’re involved in something that’s bigger than you personally. Even right now, there are still all sorts of suits out there by private investors, retirement funds, pension plans, trying to get their money back. And they don’t—in a lot of cases, they don’t know that I have information. So I actually now have, in my email, contacts coming in, asking for help from me, so that they can get this money that was really stolen from their investors, these retirees, back to those people. So, for me, that’s more important than anything that’s going to happen to me.

AMY GOODMAN: Are you concerned about repercussions?

ALAYNE FLEISCHMANN: At some stage, I think I decided that this was more important. And at the end of the day, I’ll be OK. You know, I’ll figure something out, and I’ll get through this. But I think we’re at a stage where unless a lot of people start coming forward and say, “We care about this. We now know what’s happening, and we want someone to do something about it,” that this is all just going to pass into history.

AMY GOODMAN: The government contacted you again this summer?

ALAYNE FLEISCHMANN: Yeah, in August they contacted me.

AMY GOODMAN: That call that they made.

ALAYNE FLEISCHMANN: Yeah.

AMY GOODMAN: And do you feel this can reopen, this information, these cases?

ALAYNE FLEISCHMANN: I did meet with them, and I was happy to see that it was an enthusiastic group. The concern I have is that what we’ve seen is that even when they’re really strong cases—you look at the JPMorgan-Madoff case, HSBC—they still, no matter how strong it is, they just get hushed away. So, yeah.

MATT TAIBBI: And this is an important distinction, too, is that it’s often not the line investigators who are the problem. The people who actually work these cases, the career prosecutors who are doing this digging, oftentimes they’re very talented and aggressive lawyers who really know what they’re doing. The problem is, the political wing of the Justice Department can take those cases and do whatever they want with them. And we saw, in Alayne’s case and in many other cases, that they take these excellent investigations, and then they just turn them into these slap-on-the-wrist settlements. And that’s what she’s worried about, I think.

JUAN GONZÁLEZ: I just wanted to close by asking you about how you would judge the tenure of Eric Holder in—now, obviously, that he’s going to be leaving—in terms of his particular role in going after these banks, and just this whole idea of bankers being able to call directly to the Justice Department to negotiate their deals and stop prosecutions at the lower levels.

MATT TAIBBI: Well, you know, it’s funny. For years now, I’ve been covering a lot of this stuff. And I’ve spoken to a lot of people in law enforcement. And there are really two types of people that I talk to who are prosecutors. One is the kind of old-school law enforcement type that want to get the bad guy at all costs, and they’re really career civil servants who just want to do their jobs and want to see justice happen. And then there’s this new kind of person who’s appearing in government now, who comes out of the corporate defense sector. These are people who grew up as corporate lawyers defending companies like Chase and Bank of America. And that’s who Eric Holder is, very pointedly. He spent a long time at a company called Covington & Burling. And this type of lawyer, this type of law enforcement official, is much more interested in coming up with a settlement that everybody feels good about when they walk out of the room, as opposed to the old-school kind of justice where the bad guy gets his or her comeuppance in the end. And I think his tenure was very representative of a big sea change in the way we do white-collar crime in this country.

AMY GOODMAN: That was Rolling Stone reporter Matt Taibbi and JPMorgan Chase whistleblower Alayne Fleischmann. She’s featured in Matt Taibbi’s article, “The $9 Billion Witness.” They appeared on Democracy Now! in November. It was Alayne Fleischmann’s first-ever television interview. When we come back, we speak with Matt Taibbi about his book, The Divide: American Injustice in the Age of the Wealth Gap. This is Democracy Now! We’ll be back in a minute.

Diplomatic Suicide, Iran Celebrates

Posted on December 30, 2014December 30, 2014 by Denise Simon

WASHINGTON (AP) — While President Barack Obama hasn’t ruled out the possibility of reopening a U.S. Embassy in Iran, Republicans say the Senate will vote within weeks on a bill to impose more sanctions on Tehran over its nuclear program.

Obama was asked in an NPR interview broadcast on Monday whether he could envision opening an embassy there during his final two years in office.

“I never say never,” Obama said, adding that U.S. ties with Tehran must be restored in steps.

Washington and its partners are hoping to clinch a deal with Iran by July that would set long-term limits on Iran’s enrichment of uranium and other activity that could produce material for use in nuclear weapons. Iran says its program is solely for energy production and medical research purposes. It has agreed to some restrictions in exchange for billions of dollars in relief from U.S. economic sanctions.

Then…..

Iran Is Getting Away With Murder

Achieving a nuclear deal with Tehran is hugely important. But stopping Iran from slaughtering innocent Syrians is a worthy goal.

Jeffrey Goldberg

In an interview in late 2006, I asked then-Senator Barack Obama to talk about the challenges to rational deterrence theory posed by the behavior of rogue states. “Whatever you want to say about the Soviets,” Obama answered, “they were essentially conservative. The North Korean regime and the Iranians are driven more by ideology and fantasy.”

Earlier this year, I asked Obama the following question: “What is more dangerous: Sunni extremism or Shia extremism?”

His answer was revealing, suggestive of an important change in the way he has come to view the Iranian regime. He started by saying, as would be expected, “I’m not big on extremism generally.” And then he argued—in part by omission—that he finds the principal proponent of Shiite extremism, the regime in Tehran, more rational, and more malleable, than the main promoters of Sunni radicalism.

“I don’t think you’ll get me to choose on those two issues,” he said. “What I’ll say is that if you look at Iranian behavior, they are strategic, and they’re not impulsive. They have a worldview, and they see their interests, and they respond to costs and benefits. And that isn’t to say that they aren’t a theocracy that embraces all kinds of ideas that I find abhorrent, but they’re not North Korea. They are a large, powerful country that sees itself as an important player on the world stage, and I do not think has a suicide wish, and can respond to incentives. And that’s the reason why they came to the table on sanctions.”

Since becoming president, Obama has made the argument that Iran could be induced, cajoled, and pressured into compromise, a view that has been proven provisionally, partially, correct: Sanctions, plus Obama’s repeated (and, to my mind, at least, credible) threat of military action, convinced Iran to temporarily halt many aspects of its nuclear program in exchange for limited sanctions relief. But Obama and his international partners have been less successful at bringing Iran to permanent denuclearization.

A long-term, verifiable arrangement that keeps Iran perpetually a year or more from nuclear breakout is surpassingly important for the national security of the United States (as Obama noted in this interview); for the health and safety of America’s friends in the Middle East; and for the cause of nuclear nonproliferation in the world’s most volatile and dangerous region. Over the past year, the two sides of international nuclear negotiations have apparently moved somewhat closer to each other, and when the second round of talks came to an end without achieving a deal, both sides agreed that yet another negotiation extension was in order. As Iran and its interlocutors move into what stands to be the fateful year for these negotiations, a credible deal does not look to be achievable; so far, at least, the Iranians seem unwilling to make the truly creative concessions necessary to meet the West’s minimum requirements.

Especially if a deal is ultimately proven to be unachievable, another question will arise: Is the price the U.S. has paid to reach this elusive deal too high? An admirable aspect of Obama’s foreign-policy making is his ability to coolly focus on core issues to the exclusion of what he considers to be extraneous matters. This is also, however, a non-admirable aspect of his policymaking, in particular when the subject at hand is Iran’s role in supporting the killer Assad regime in Syria.

Obama seems to believe that a nuclear deal is, in a way, like Casaubon‘s key to all mythologies: Many good things, he believes, could flow from a nuclear compromise. In an interview last week with NPR’s Steve Inskeep, the president suggested that a nuclear agreement would help Iran become “a very successful regional power that was also abiding by international norms and international rules.” This, he said, “would be good for everybody. That would be good for the United States, that would be good for the region, and most of all, it would be good for the Iranian people.”

This is a wonderful notion, the idea that the end of Iran’s isolation could lead it to moderate its more extreme impulses. But there isn’t much in the way of proof to suggest that Iran’s rulers are looking to join an international order whose norms are defined by the United States and its allies. In fact, there is proof of something quite opposite: Iran seems as interested as ever in becoming a regional hegemon, on its own terms. And its supreme leader, and his closest confidants, have made it clear, over and over again, that he is not interested in normalizing relations with the United States.

Across the greater Middle East, Iran’s efforts to extend its influence have been blunt and brutal: It supports Shiite insurrections in Yemen and Bahrain; it attempts to manipulate Lebanese politics through its Beirut-based proxy, Hezbollah; it intervenes in Gaza and against the already-fading hope for a two-state solution to the Israeli-Arab crisis; and certainly its unceasing threats to eradicate a fellow member-state of the United Nations, Israel, suggest that Iran’s supreme leader, Ayatollah Ali Khamenei, has a vision for Iran that differs from Obama’s.

But nothing underscores the Iranian regime’s imperialistic, hegemonic nature more than its support for the Assad regime in Damascus. Without Iran’s assistance, Assad would have fallen a long time ago. The death toll in Syria is more than 200,000; half of Syria’s population has been displaced. These dark achievements of the Assad regime would not have been possible without Iran. Thousands of Hezbollah and Iranian Revolutionary Guard Corps troops and advisers, plus Iranian weaponry, have made all the difference for Assad. As a recent study by the Middle East Institute states:

It is no longer accurate to describe the war in Syria as a conflict between Syrian rebels on the one hand and Bashar al-Assad’s regime forces “supported” by the Iranian Revolutionary Guards (IRG), Hezbollah, and Iraqi militias on the other. Most major battles in Syria—along the frontlines of regime-held areas—are now being directed and fought by the IRG and Hezbollah, along with other non-Syrian Shi‘i militias, with Assad forces in a supportive or secondary role. …

One result of this heavy Iranian involvement in the war in Syria has been a change in the nature of the relationship between the Syrian and the Iranian regimes. From historically being mutually beneficial allies, the Iranian regime is now effectively the dominant force in regime-held areas of Syria, and can thus be legally considered an “occupying force,” with the responsibilities that accompany such a role.

There was no commensurate effort made by opponents of Assad to help those Syrians who were trying to overthrow him. President Obama called on Assad to go, but kept the U.S. on the sidelines through the first years of the Syrian civil war, for reasons he has explained in many places, including here.

Today, the U.S. and its allies are fighting in the Syrian theater, but they are fighting Assad’s putative enemies, the Sunni extremists of ISIS, not Assad and his Iranian allies. And yet ISIS is a derivative problem of a larger crisis: Without Assad—which is to say, without Iran—there would be no ISIS “caliphate” in Syria in the first place. The midwives of ISIS are Assad, Hezbollah chief Hassan Nasrallah, and Ayatollah Khamenei.

If Assad had been overthrown early in the civil war, a more moderate, multi-confessional Syrian government could have plausibly emerged to take its place. The early rebels, who frightened the Assad regime to its core, were not seeking to build a cross-border caliphate on a foundation of medieval cruelty; they were simply seeking to remove Assad’s boot from their necks. As the Assad regime, with Iran’s invaluable help, recovered from the first blows of the rebellion, many Sunni Syrians, seeking help everywhere but finding it mainly among radicals, became radicalized themselves. This was an explicable, if not justifiable, reaction to the mortal threat posed by what they saw as a massed Shiite threat.

Earlier this year, in a conversation about the Obama administration’s Middle East strategy, Senator John McCain brought me up short when he criticized the president for launching attacks on a symptom of the Syrian civil war, ISIS, rather than its root cause. He told me that the U.S. should be battling the Assad regime at the same time it attacks Sunni terrorists. I asked him the following question: “Wouldn’t the generals say to you, ‘You want me to fight ISIS, and you want me to fight the guys who are fighting ISIS, at the same time? Why would we bomb guys who are bombing ISIS? That would turn this into a crazy standoff.’”

McCain answered: “Our ultimate job is not only to defeat ISIS but to give the Syrian people the opportunity to prevail as well. … If we do this right, if we do the right kind of training and equipping of the Free Syrian Army, plus air strikes, plus taking out Bashar Assad’s air assets, we could reverse the battlefield equation.”

There is even less reason to believe today that the Free Syrian Army, such as it is, is capable of fighting the Assad regime (and ISIS) effectively. So at this late stage, McCain’s policy prescriptions may be unrealistic. But his diagnosis of the core problem seems tragically accurate.

“I don’t think ISIS would exist if Bashar al-Assad had been removed two or three years ago,” McCain told me when we revisited the question earlier this month. “He was on his way out until the Iranians brought in 5,000 Hezbollah fighters, and the Iranian Revolutionary Guard Corps came in, to train Assad’s troops and provide them with weapons, including the barrel bombs, which are horrible weapons of war.”

McCain argues that the Obama administration has avoided confronting Assad in part for fear that doing so would alienate Assad’s patrons in Tehran, the same men who are in charge of the nuclear file. “The whole theory hinges on a major breakthrough in the nuclear talks, that once they get their deal, Iran will stop funding Hamas, stop supporting Hezbollah, stop destabilizing Yemen, that they’ll join us in fighting extremism. So they have to get a nuclear deal at all costs, and not do anything in Syria. This is just so farfetched it’s delusional.”

I wouldn’t go so far as to call proponents of this theory delusional, but let’s say that they are not approaching the issue of leverage in an effective way. Gary Samore, a former Obama administration official who was in charge of the National Security Council’s Iran nuclear file, told me this month that he would use Iran’s deep exposure in Syria to U.S. advantage.

“Confronting Iran forcefully in Syria and Iraq increases chances for a nuclear deal because Iran will only meet our nuclear demands if it feels weak and vulnerable,” Samore wrote in an email. “Conversely, Iran’s sense that it is winning in Syria and that it is indispensable in Iraq decreases chances for a nuclear because the Supreme Leader won’t make nuclear concessions if he feels strong and ascendant.”

Is it likely that Obama will move toward a policy of containing Iran in Syria, and away from his more accommodationist stance? Arab states that count Iran as an enemy and the U.S. as a friend have asked him repeatedly over the past two years to treat Iran as a root cause of the Syrian catastrophe. But Obama appears focused solely on achieving a nuclear deal with Iran, in part because he seems to believe that Iran is ready to play the part of rational and constructive actor, rather than extremist would-be hegemon. I hope he’s right, and I hope he achieves a strong nuclear deal, but I worry that he is empowering an Iranian government that isn’t about to change in any constructive way. In the meantime, the Iranian regime continues to get away, quite literally, with murder.

Then there is the economic outlook for the Middle East and Iran and the tribal sects.

Likewise in Iraq, which like Iran has a Shiite majority, Tehran’s consolidated influence since the U.S. troop withdrawal in 2011 has contributed to sectarian polarization and left the government dependent on Iranian-backed militias to fight the Sunni extremist group Islamic State.

With Iran’s economy crippled by the double whammy of international sanctions and falling oil prices, Syria and Iraq will become even more of a burden in 2015.

In the end, Mr. Khamenei’s two big projects could merge into one during 2015 or diverge. A nuclear deal with world powers could open the door to further cooperation with the U.S. in Iraq and Syria. But failure to strike such a deal could spark new tensions on all fronts between Iran and the international community.