Category Archives: Industry Jobs Oil Economics

DOJ Sends Bad Lawyers to Court, Good Thing

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Switchboard operator: Commissioner Koskinen, Loretta Lynch, Jack Lew, you are being paged to answer calls on lines 4,5 and 6.

Remember that pesky IRS targeting scandal that the White House said was phony? Remember groups that applied for tax exempt status were discriminated against at the direction of Lois Lerner? Remember Lerner going to the Department of Justice to get some legal advise when the IRS is actually under the Treasury Department who has lawyers and even the IRS has their own? Well, lawyers in Washington DC appear to have lousy skills at presenting an argument in this case…defense.

The DOJ actually argued it was okay to discriminate for a period of time. Really? Yes, discrimination IS fair….well not so much.

The IRS Goes to Court

The agency suggests it can discriminate for 270 days. Judges gasp.

It isn’t every day that judges on the D.C. Circuit Court of Appeals declare themselves “shocked.” But that happened on Monday when an animated three-judge panel eviscerated the IRS and Justice Department during oral argument in a case alleging the agency delayed the tax-exempt application of a pro-Israel group due to its policy views.

In December 2009, Pennsylvania-based Z Street applied for 501(c)(3) status to pursue its pro-Israel educational mission. In July 2010, when the group called to check on what was taking so long, an IRS agent said that auditors had been instructed to give special attention to groups connected with Israel, and that they had sent some of those applications to a special IRS unit for additional review.

Z Street sued the IRS for viewpoint discrimination (Z Street v. Koskinen), and in May 2014 a federal district judge rejected the IRS’s motion to dismiss. The IRS appealed, a maneuver that halted discovery that could prove to be highly embarrassing. Justice says Z Street’s case should be dismissed because the Anti-Injunction Act bars litigation about “the assessment or collection of tax.” Problem is, Z Street isn’t suing for its tax-exempt status. It’s suing on grounds that the IRS can’t discriminate based on point of view.

The three judges—Chief Judge Merrick Garland,David Tatel and David Sentelle—were incredulous. You say they want a tax exemption, but that’s not the complaint, Judge Sentelle admonished government lawyer Teresa McLaughlin: “They are not in court seeking to restrain the assessment or collection of a tax, they are in court seeking a constitutionally fair process.”

The suit should also be foreclosed, the government argued, because under Section 7428(b)(2) of the Internal Revenue Code groups may sue to obtain their tax-exempt status if no action has been taken for 270 days, and that should be an alternative to Z Street’s approach.

“You don’t really mean that, right? Because the next couple words would be the IRS is free to discriminate on the basis of viewpoint, religion, race [for 270 days]. You don’t actually think that?” Judge Garland said. “Imagine the IRS announces today a policy that says as follows: No application by a Jewish group or an African-American group will be considered until one day short of the period under the statute . . . Is it your view that that cannot be challenged?”

The judges also asked why the government had buried the key precedent in a footnote in its brief. In Direct Marketing Association v. Brohl, the Supreme Court decided that the language of the Anti-Injunction Act did not preclude cases like Z Street’s. In a previous case before the D.C. Circuit, Judge Garland noted, the court also “rejected” the exact arguments the government was making, “so in a way we have already decided every issue before us today, against you.”

Poor Ms. McLaughlin was sent to argue the indefensible so the IRS can delay discovery until the waning days of the Obama Administration. “If I were you, I would go back and ask your superiors whether they want us to represent that the government’s position in this case is that the government is free to unconstitutionally discriminate against its citizens for 270 days,” said Judge Garland.

Ms. McLaughlin replied, “Well, I will take that back.” The Beltway media may be bored, but the IRS scandal is a long way from over.

HUD, the Coming Next Financial Crisis

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Do you know the Castro twins, Julian and Joaquin? Well, both have been fully groomed by powerbrokers in the Obama administration and the mentoring continues. In fact, the twins are rightly classified as the ‘enemies within’.

Julian is the Secretary of Housing and Urban Development and Joaquin is a U.S.Congressman. Julian is especially dangerous and there is chatter about his vying for a vice-presidential run. Meanwhile, Julian is in large measure part of the Latino immigration movement while working his wonder-lust at HUD.

So what about the coming financial crisis? Just think back to the housing crisis, to the toxic mortgages, to the bailouts and the massive layoffs.

The Government Is Definitely Back in the ‘Affordable Housing’ Game

by: John Ligon

More than six years out from a government-driven housing bubble, the chief regulator at the Federal Housing Finance Agency, Mel Watt, and the Department of Housing and Urban Development secretary, Julian Castro are respectively clearing a path to expand the “credit box” for government-backed home loans.

Two recent examples: Fannie Mae recently started a program guaranteeing loans with as little as 3 percent down payments, and, earlier this year, the Federal Housing Administration reduced by 50 basis points the annual mortgage insurance premiums it charges borrowers.

We have been down this path before. Using the U.S. housing finance system to try to achieve political ends of broader and “affordable” housing goals ultimately undermines taxpayer safety and the opportunity to build meaningful equity for homeowners.

After all, it was only less than two decades ago that Andrew Cuomo, then-Housing secretary under the Clinton administration, announced that Fannie Mae and Freddie Mac, the two largest housing finance companies at that time, would be required to buy $2.4 trillion in mortgages over the next 10 years to provide affordable housing for about 28.1 million low- and moderate-income families.

In the same announcement, Cuomo went on to say that “this action will transform the lives of millions of families across our country by giving them new opportunities to buy homes or move into apartments with rents they can afford … it will help ease the terrible shortage of affordable housing plaguing far too many communities.”

To be fair, political leaders in both Democrat and Republican administrations have repeatedly called for arbitrary, vague goals aimed at achieving a “homeownership society” and expanding “affordable housing” even when most qualified homeowners already owned homes.

A great irony, though, is that these affordable housing initiatives have had the exact opposite of their intended impact: These programs encourage higher levels of debt, increased housing prices (and lower affordability) in many markets, and greater risk within the overall housing finance system.

Affordable housing advocates tend to focus on high rental costs and widespread slack in the first-time home purchase market as main justification for expanded government support, but establishing new government credit programs and expanding existing ones has repeatedly failed to fix these problems.

To be sure, there are numerous factors weighing on the overall housing market outlook, and certainly a main influence is the sluggish first-time purchase market. This market, in particular for younger individuals, is hampered by high levels of non-mortgage debt, weak employment and income opportunities, low labor mobility (some held back by federal mortgage modification programs), and high home prices in some metropolitan areas.

Despite any of the best stated intentions to assist individuals with “affordable rent” or “affordable mortgages,” all of this direct and indirect government interference in the housing finance system ultimately biases individuals toward certain market segments and particular types of debt instruments, increasing financial risk to homeowners and taxpayers in the process.

 

Eco-Terrorists Meet Your new Machine Challenge

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States in the West have been experiencing an epic water issue, of this there is no debate. Water use has been regulated and limited for the sake of a fish with no cause for protection and a plant or two that has no value. The consequence is business, farming and daily life suffering restrictions with wide ranging national implications. Every citizen wants to be a good steward of the environment and often is. Sure there are violators, however we have the EPA who has extreme mandates and laws for them right? Yes and they are extreme.

There are radical environmental groups that go so far as to cause civil disobedience all wrapped up under graduated causes of climate change.

California needs water and has for decades so some desalinization machines were purchased to mitigate a problem. No one could decide of the rules of use until now. But the rules of themselves up for a long debate where the solution of using brine or sea water for human use will not be forth-coming anytime soon.

Enter the battle of more bureaucracy, debate, protests, rules and legislative measures. In a nation that is establishing protective classes of people, such is the same with plant life and the Delta smelt, a fish of zero consequence. Who will win? What if that fish eats the plant and corrupts the water supply? The state of California meets it final destiny…more DIRT. Tax rainwater, shower with your dog, but only for 3 minutes. Share towels and socks with other family members to slow down the laundry duty. Hang a scarlet letter on the palm tree for excessive water consumption and ask the DEA and Secret Service to investigate the promiscuous behavior of fish, plants and lizards….wink….

SACRAMENTO, Calif. (Reuters) – California regulators on Wednesday adopted the first statewide rules for the permitting of seawater desalination projects that are expected to proliferate as drought-stricken communities increasingly turn to the ocean to supplement their drinking supplies.

The action, which sets uniform standards for minimizing harm to marine life, was welcomed by developers of the state’s two largest desalination projects as bringing much-needed certainty and clarity to the regulatory approval process.

“It reaffirms that the Pacific Ocean is part of the drinking water resources for the state of California,” Poseidon Water executive Scott Maloni told Reuters after the rule was enacted on a voice vote in Sacramento by the State Water Resources Control Board.

The measure leaves the permitting process in the hands of the state’s regional water boards while establishing a single framework for them to follow in evaluating applications to build seawater treatment plants, expand existing ones and renew old permits.

But regional decisions could now be appealed to the state board for review if opponents of a project felt a permit was wrongly approved.

Before Wednesday’s action, developers and regulators of desalination plants had no specific guidance for meeting federal and state clean water standards, complicating review of the projects, state water board spokesman George Kostyrko said.

Desalination has emerged as a promising technology in the face of a record dry spell now gripping California for a fourth straight year, depleting its reservoirs and aquifers and raising the costs of importing water from elsewhere.

Critics have cited ecological drawbacks, such as harm to marine life from intake pipes that suck water into the treatment systems and the concentrated brine discharge from the plants.

The newly approved plan sets specific brine salinity limits and rules for diffusing the discharge as it is pumped back into to the ocean.

It also requires seawater to be drawn into the plants through pipes that are sunk into beach wells or buried beneath the sea floor, where possible. Such subsurface intakes are viewed as more environmentally friendly.

The Western Hemisphere’s biggest desalination plant, a $1 billion project under construction since 2012 in the coastal city of Carlsbad, California, is due to open in November.

It will deliver up to 50 million gallons (190 million liters) of water a day to San Diego County, enough to supply roughly 112,000 households, or about 10 percent of San Diego County’s drinking water needs, according to Poseidon.

Approval is being sought for a final permit to begin construction of a second plant of similar size in Huntington Beach, south of Los Angeles, next year.

About a dozen much smaller desalting plants have already been built along the coast, state water officials said.

On Tuesday, the state water board enacted California’s first rules for mandatory statewide cutbacks in municipal water use . The emergency regulations, which require some communities to trim water consumption by as much as 36 percent, were approved unanimously just weeks after Democratic Governor Jerry Brown stood in a dry mountain meadow and ordered statewide rationing.

Wells Fargo has no Shame

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Wells Fargo appears to have a history of fraudulent decision-makers and employers. Consider this a public service announcement for those account-holders of Wells Fargo. As noted in the LA Times, the city is suing the big bank.

But this is clearly not the first rodeo for Wells Fargo as in New York in 2013:

QUEENS ATTORNEY AMONG THREE INDIVIDUALS CHARGED IN $3.3 MILLION MORTGAGE FRAUD OPERATION

Defendants Face Up To 25 Years In Prison If Convicted

Queens District Attorney Richard A. Brown, joined by New York State Department of Financial Services Superintendent Benjamin M. Lawsky, today announced that three individuals – including a Richmond Hill attorney and his sister – have been charged with conspiring to commit mortgage fraud and larceny from Wells Fargo Bank by fraudulently obtaining mortgage funds in excess of $3.3 million pertaining to the purchase of six properties – including four in Queens – during a six-month period in 2008. More here.

Then there was a case with Freddie Mac.

WASHINGTON — Wells Fargo & Co. has agreed to an $869 million settlement with Freddie Mac over claims on home loans it sold to the government-controlled mortgage finance company.

The agreement announced Monday by Wells Fargo involves mortgages sold to Freddie before January 2009. Wells said the amount of the agreement was adjusted to reflect credits for previous claims payments, resulting in a cash payment to Freddie of about $780 million. Freddie and its bigger sibling Fannie Mae demanded that Wells Fargo and other big banks buy back mortgages they sold that later soured in the housing bust.

Now there is May of 2015, where the City of Los Angeles has Sued Wells Fargo:

CITY ATTORNEY FEUER FILES LAWSUIT AGAINST WELLS FARGO FOR ALLEGEDLY OPENING UNAUTHORIZED CUSTOMER ACCOUNTS

Complaint Also Alleges Wells Failed to Notify Customers of Unauthorized Use of Personal Information

LOS ANGELES – City Attorney Mike Feuer today announced that his office has filed a civil lawsuit against Wells Fargo, alleging the company has victimized consumers by opening customer accounts, and issuing credit cards, without authorization–then failing to inform customers of the alleged misuse of their personal information or to refund fees for unwanted services.

“Consumers should be entitled to expect that major financial institutions will treat them fairly,” said Feuer. “Our lawsuit alleges that in Wells Fargo’s push for growth the bank often elevated profit over its customers’ legal rights.”

The complaint alleges Wells Fargo’s business model imposed unrealistic sales quotas that, among other things, have driven employees to engage in unlawful activity including opening fee-generating customer accounts and adding unwanted secondary accounts to primary accounts without permission. These practices allegedly have led to significant hardship and financial loss to consumers, including having money withdrawn from customer’s authorized accounts to pay for fees assessed by Wells Fargo on unauthorized accounts and derogatory notes on credit reports when unauthorized fees went unpaid, causing some customers to purchase identity theft protection.

Furthermore, the complaint alleges that Wells Fargo failed to properly inform customers of misuse of their personal information and failed to refund unauthorized fees. Read more here on the press release.

 

 

 

Globetrotters: Who Flew With Hillary’s Planes

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Citizens United has filed yet more lawsuits against the U.S. State Department for being non-responsive on Freedom of Information Act requests to determine who rode with Hillary on her planes during her stint as Secretary of State. The passengers would add puzzle pieces giving clues to Foundation donations, lobbying efforts and backroom deals.

The Clintons are powerbrokers and they work with other domestic and foreign power leaders demonstrating more collusion.

Firm Co-Founded By Hillary’s Campaign Chair Lobbies For Russia’s Uranium One

Chalk it up to a small world or to a tangled web, but Uranium One, the Russian-owned uranium mining company at the center of a recent scandal involving the Clintons and a close Canadian business partner, has lobbied the State Department through a firm co-founded by Hillary Clinton’s 2016 presidential campaign chairman.

Senate records show that The Podesta Group has lobbied the State Department on behalf of Uranium One — once in 2012, when Hillary Clinton was secretary of state, and once in 2015.

Uranium One paid The Podesta Group $40,000 to lobby the State Department, the Senate, the National Park Service and the National Security Council for “international mining projects,” according to a July 20, 2012 filing.

And according to a disclosure filed April 20, Uranium One spent $20,000 lobbying the Senate and State Department on the same issue.

The Podesta Group was founded in 1988 by brothers Tony and John Podesta. Tony Podesta now heads the group while John Podesta, who has not worked for the family business for years but has been involved in plenty of other projects, leads Hillary Clinton toward a Democratic nomination.

Uranium One is significant because it fell under the corporate control of Rosatom, Russia’s atomic energy agency, through a series of transactions approved by Hillary Clinton’s State Department. Rosatom’s acquisition of Uranium One effectively gave Russia control of 20 percent of uranium in the U.S.

How all of that came to pass has fostered questions about how the Clintons operate their charity, the Clinton Foundation.

The Uranium One story starts in 2005 when Canadian mining magnate Frank Giustra and several business partners came to own a small mining company called UrAsia Energy. Clinton flew with Giustra in September 2005 on a private jet to Kazakhstan. There, the mining tycoon negotiated with that nation’s mining agency, Kazataprom, for rights to three mines. After Clinton appeared publicly in support of Kazakhstan’s president, Nursultan Nazarbayev, who had just allegedly won an election with more than 90 percent of the vote, the mining deal was approved.

Months later, Giustra donated $31 million to the Clinton Foundation with a pledge of $100 million more.

In 2007, UrAsia Energy, with its access to Kazakhstan’s lucrative mines, merged with South Africa’s Uranium One in a $3.5 billion deal. Giustra sold his stake in the company soon after, pocketing a tidy profit. But other investors and executives with close ties to Giustra maintained their interests and donated millions more to the Clinton group. As money was flowing to the Clinton Foundation, the State Department, which came under the control of Hillary Clinton in January 2009, approved a series of transactions that allowed Russia’s Rosatom to buy up shares in Uranium One. By June 2009, Rosatom had a 51 percent stake in the company.

With that majority hold, the Russian energy company effectively gained control of 20 percent of the uranium in the U.S.

Rosatom has since taken complete control of Uranium One. And while there is little risk that the metal being pulled out of U.S. soil poses a direct threat to U.S. national security, it does give Russian President Vladimir Putin control of a major source of energy amid cooling diplomatic relations.

Though Uranium One’s corporate progression has the appearance of pay-for-play, the Clintons and Giustra have denied doing anything wrong. In his capacity as Clinton’s campaign chair, John Podesta has gone on the offensive, dismissing the notion that the Clintons have done anything illegal or unethical as a conspiracy theory.

But as evidence of just how complex the Clinton Foundation’s activities are, the website Vox.com published an exhaustive list of 181 Clinton Foundation donors who also lobbied the State Department during Hillary Clinton’s tenure there.

Uranium One is not on the list. Neither is Giustra. Nor is Ian Telfer, one of Giustra’s Canadian associates who is the former chairman of Uranium One. He donated $2.35 million through his Fernwood Foundation to the Canadian wing of the Clinton Foundation, which is set up as a partnership with Giustra.

After it was revealed that the Clinton Foundation had not disclosed some of its foreign donations — such as Telfer’s — the organization announced it would be refiling some of its tax forms.