Category Archives: Energy Agenda

Early Solution to Islamic State was Ignored

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Those people in Syria, those rebels that everyone thinks are all jihadis need to rethink the early days. The matter was ignored, dismissed and exploited. Now between Syria, Iraq, Libya, Jordan, Turkey and Lebanon, the enemy has won by doing their own exploitation.

The cost of life and treasure grows with no real end in sight as explained by the White House and the Pentagon.

Rebels: Obama administration ignored early plan to stop Islamic State

 ISTANBUL — Two months before Mosul and other cities in northern Iraq fell to the Islamic State last June, representatives of a Syrian rebel group called on the new U.S. special envoy for Syria with an outline of a plan to stop the extremists.

The group urged the U.S. to shift its focus to eastern Syria, where the Islamic State had emerged from Raqqa and other towns under its control and begun military operations to capture Deir el Zour province.

If Islamic State fighters seized the region’s oil and gas resources, they’d gain enough power to destroy the U.S.-backed rebel forces across northern Syria and link the swath of territory they held in Syria to that under their control in Iraq’s restive Anbar province

“Ultimately,” they said in a written memo, using a common abbreviation for the Islamic State, “this will lead to an expansion of ISIS to reach neighboring countries as well . . . bringing it closer to establish the Islamic State in Iraq and Syria.”

But the presentation April 17 to special State Department envoy Daniel Rubinstein was stillborn. The plea for immediate financial support for moderate forces in the east, backing for a rebel offensive in Aleppo that would divert Islamic State forces, and relief and medical supplies in the east went unanswered.

“Two or three million dollars would have changed the whole thing,” said a rebel official who was at the meeting and spoke only on the condition of anonymity because he was discussing a diplomatic exchange. “But we never heard back from them.”

That’s been the pattern. Moderate rebels, despite their battlefield setbacks, have unique assets, such as ground-level intelligence about the locations and movements of the Islamic State, a grasp of local politics and the drive to expel foreign-led forces from their country. But they’ve failed to gain traction with the Obama administration for their plans to fight the terror groups, and recently they’ve had trouble even getting a hearing.

The Islamic State didn’t follow quite the path that Syrian rebel officials had predicted, conquering Mosul before Deir el Zour. But the rebels were right that the extremists’ takeover of eastern Syria would speed the demise of the moderates by radicalizing the battlefield, opening the border with Iraq to free movement of arms and manpower, and providing the Islamic State with income from the sale of oil and gas.

Syrian opposition leaders doubt that the U.S.-led intervention can defeat the extremists.

“You cannot defeat terrorism by airstrikes alone,” said Hadi al Bahra, the president of the Syrian Opposition Coalition. “There must be a strategy in place.”

It should entail “full coordination” between U.S.-led airstrikes and ground forces, military pressure on the Bashar Assad regime and a commitment to enable moderates to establish a governing system in Syria, Bahra said.

“They listen,” he said of U.S. officials. “But they do not respond.”

The State Department had no comment on the April meeting. “We do not discuss details of our diplomatic contacts and outreach,” said spokesman Michael Lavallee.

The administration also has tried to choke off complaints from rebel officials and commanders, threatening a total aid cutoff if they’re quoted in the news media, rebel officials said. For this reason McClatchy isn’t naming its rebel sources. (A State Department official told McClatchy: “We have not heard of such a warning.”)

The meeting with Rubinstein, an intelligence expert who took over from former Ambassador Robert Ford in March, was only one of numerous such efforts.

In early May, the then-president of the opposition coalition, Ahmad Jarba, made a presentation about fighting the Islamic State to Michael Lumpkin, the assistant secretary of defense for special operations and low-intensity conflict.

Jarba emphasized that the battle for eastern Syria was “important to Iraq as well” and called for “real alliance . . . to fight this common cancer,” according to notes of the meeting made available to McClatchy.

“We need a strategic partnership to fight terrorism,” he said at the meeting. “We need logistical support and weapons to help the Free Syrian Army fight the Islamic State on the Iraqi border as well.” The Free Syrian Army is an umbrella group of moderate forces fighting the Assad regime.

Lumpkin replied that Defense Secretary Chuck Hagel was supportive of their efforts against the Syrian regime and al Qaida, and predicted there would be many more meetings “as we work together to end this challenge to us both,” according to the visitors’ notes.

The Pentagon confirmed that the meeting took place May 8 and addressed the “threat of extremists groups” such as the Islamic State. It said Lumpkin had affirmed U.S. support for Jarba’s efforts to build the capacity of the moderate opposition.

But there was no further response, Syrian opposition officials said.

One attendee at the meeting expressed surprise that Lumpkin didn’t ask about rebel strategy.

The former chief of staff of the Free Syrian Army – a post stripped of most power because the U.S. disburses covert aid to individual rebel commanders rather than through a general staff – said he’d taken maps and a five-page outline of the first phase of a strategic plan with him, as well as a separate file for the battle against the Syrian regime. “But no one asked me for any of these,” Gen. Abdul-Ilah Albashir said.

Interviewed in late September, he told McClatchy the Americans had shown no interest and that he didn’t volunteer his plans: “They don’t even say hello to us. How can we share these things with them?”

On May 14, Jarba and other rebel officials spent a half-hour with President Barack Obama at the White House, but the Islamic State threat didn’t appear to be a priority. The White House said they reviewed the “risks posed by growing extremism in Syria and agreed on the need to counter terrorist groups on all sides of the conflict.”

Even after the fall of Mosul on June 10, the U.S. showed little interest in rebel plans. Nour Kholouf, a defected Syrian army general who served as Syrian Opposition Coalition defense minister until recently, said in early July that he’d developed plans to expel the Islamic State in stages from Syrian territory but he couldn’t get an appointment with American officials.

The most detailed strategy proposal of all was produced by one of the most effective of the rebel groups during the summer and given in August to U.S. and other intelligence officials in the Turkish border town of Reyhanli. But it has yet to be presented formally to the rest of the U.S. government.

The 30-page plan, which centers on the use of mobile strike forces, proposes to clear the Islamic State from Syria within 12 to 18 months, rebel officials said. It calls for air, ammunition, logistics and other support, including intelligence.

It would require communications equipment to replace the walkie-talkies now obtained from Best Buy or Radio Shack. And it requires stepped-up support in the rebels’ battle to defend their control over much of Aleppo, Syria’s biggest city, from which they’d draw much of their manpower.

“It lays out city by city the force movements and the different tactics: which cities to enter first, how to enter each city, how to overcome the IS resistance at checkpoints and from suicide bombers,” said one rebel official.

Rebel officials said they hadn’t been able to get an appointment with U.S. defense officials.

One obvious candidate would be U.S. Army Maj. Gen. Michael Nagata, who’s in charge of training and equipping a force of 5,000 Syrian rebels under a $500 million program.

But Nagata has yet to meet a commander of the Free Syrian Army, according to a knowledgeable rebel official. White House spokesman Alistair Baskey said Nagata and his team were “free to meet with members of the moderate Syrian opposition as they deem fit in order to advance their train and equip program.”

Has any such meeting taken place? The U.S. Central Command task force that deals with the new program “is taking a deliberate and careful approach toward direct engagement with members of the Syrian opposition,” said Maj. Tiffany Bowens, a spokeswoman.

The Central Command turned down McClatchy’s request for an interview with Nagata.

Though Rubinstein is one U.S. official who’s always available to meet, rebel officials said they saw him as a dead end. Rubinstein, whom several rebel officials have nicknamed “the complaint box,” listens to all and never responds, they said. “I think they empty it into the trash at the end of every day,” said one rebel official.

In November, after the Nusra Front, the al Qaida affiliate in Syria, pushed rebel forces out of their bases in Idlib province, Rubinstein gave a cool reception to rebel officials, according to three who met with him.

“It was an absolutely horrifying meeting,” said one attendee.

“How did it happen?” this official quoted Rubinstein as asking. “The tone was not one of ‘This is an emergency,’ but more, ‘How did you guys get beat?’ ” the official added.

The official said an aide to the envoy then asked them: “So what’s your strategy now? Is everything lost?” When told that the forces needed to regroup and obtain more resources, “No, that’s not a smart strategy,” the aide was quoted as saying. “Your strategy is to look at what your resources are and plan accordingly.”

With even the most effective fighting groups saying they’re receiving one-tenth the ammunition they need to sustain their two-front battle, the message seemed to be that the rebels should prepare to abandon the fight.

In December, the U.S. government cut salaries for a large part of the rebel forces, McClatchy has reported. The U.S. government has refused to comment.

The State Department turned down McClatchy’s request for an interview with Rubinstein.

“Unfortunately, the current strategy being implemented results in the increase of terrorism,” said Bahra, the businessman who heads the Syrian Opposition Coalition. “Some battalions are not being supplied with anything: food, clothing, fuel, what they need for survival. You are pushing them to be the prey to any extreme terrorist organization that offers assistance.”

He added: “But no one is listening.”


															

		
		
	





	
		



	
	


		
		

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


							

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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.



															

		
		
	





	
		



	
	


		
		

			
			
Boehner’s Office Tallying the Obama Lies


							

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One may really need a calculator to tabulate the lies from Obama, but at least a staffer has been assigned to keep current. While political correctness is part of the verbal DNA in Washington calling lies ‘Pinocchios’, one must understand that no legislator in decades has used the word ‘lie’ out of the whole political deference thing as lies and omissions are as common pork laden bills.




The State of the Union Speech is coming up, so keep your own tally for 2015.




The President’s Year in Pinocchios


December 31, 2014|Matt Wolking –


In 2013, President Obama’s promise that “If you like your health care plan, you can keep it,” was named Politifact’s “Lie of the Year.” In 2014, amid a mountain of stumbles and scandals, his rhetoric wasn’t received any better.


In May, the White House claimed President Obama first heard about secret waiting lists and deaths at the VA on the news, despite evidence to the contrary. CNN’s Drew Griffin said this was absurd, and more of the administration’s sloppy spin prompted National Journal’s Ron Fournier to ask, “How Dumb Does Obama Think We Are?”


It was a prescient question considering comments made by frequent White House visitor and ObamaCare architect Jonathan Gruber, who said “the stupidity of the American voter” was “critical to getting the thing to pass” and bragged repeatedly about helping the president pull one over on the public. When asked about this, President Obama pretended he didn’t know that guy and denied misleading Americans about the law.


His unilateral action was another lowlight. President Obama said 22 times that he couldn’t ignore or create his own immigration law – and then he did. Just like his reasoning for rejecting the Keystone pipeline, his explanations for his flip-flop on executive action didn’t fool anyone.




And that was, of course, just one of these four things he hid from Americans until after the November election.


Looking back on 2014, from the continued cover-up of the IRS scandal, to all the president’s missing hard drives, to his dishonesty regarding the national debt, to the administration’s bogus ObamaCare enrollment numbers, there’s a clear pattern of hiding the truth and misleading Americans.


Indeed, fact checkers had a field day with President Obama this year. The Washington Post alone awarded him a total of 47 Pinocchios, plus one Upside-Down Pinocchio (the worst possible rating).


Here they are, in chronological order:


    

  • “Unprecedented inspections help the world verify every day that Iran is not building a bomb.” (Two Pinocchios, 2/6/14)
    • 

  • “We’ve got close to 7 million Americans who have access to health care for the first time because of Medicaid expansion.” (Four Pinocchios, 2/24/14)
    • 

  • “We didn’t have billions of dollars of commercials [for ObamaCare] like some critics did.” (Two Pinocchios, 4/4/14)
    • 

  • “Today, the average full-time working woman earns just 77 cents for every dollar a man earns … in 2014, that’s an embarrassment. It is wrong.” (Two Pinocchios, 4/9/14)
    • 

  • “Thirty-five percent of people who enrolled through the federal marketplace are under the age of 35.” (Two Pinocchios, 4/22/14)
    • 

  • “[Republicans’] willingness to say no to everything — the fact that since 2007, they have filibustered about 500 pieces of legislation that would help the middle class just gives you a sense of how opposed they are to any progress[.]” (Four Pinocchios, 5/9/14)
    • 

  • “I want to announce a few more steps that we’re taking that are going to be good for job growth and good for our economy, and that we don’t have to wait for Congress to do. They are going to be steps that generate more clean energy, waste less energy overall, and leave our kids and our grandkids with a cleaner, safer planet in the process.” (Two Pinocchios, 5/16/14)
    • 

  • “At the beginning of my presidency, we built a coalition that imposed sanctions on the Iranian economy, while extending the hand of diplomacy to the Iranian government.” (Three Pinocchios, 6/2/14)
    • 

  • “When you talk about the moderate opposition [in Syria], many of these people were farmers or dentists or maybe some radio reporters who didn’t have a lot of experience fighting.” (Three Pinocchios, 6/26/14)
    • 

  • “So far this year, Republicans in Congress have blocked every serious idea to strengthen the middle class.” (Three Pinocchios, 7/15/14)
    • 

  • “If Congress fails to fund it [the Highway Trust Fund], it runs out of money.  That could put nearly 700,000 jobs at risk.” (Two Pinocchios, 7/16/14)
    • 

  • “Keep in mind, I wasn’t specifically referring to ISIL [as a jayvee team].” (Four Pinocchios, 9/3/14)
    • 

  • “Over the past eight years, the United States has reduced our total carbon pollution by more than any other nation on Earth.” (Two Pinocchios, 9/25/14)
    • 

  • “If we hadn’t taken this on, and [health insurance] premiums had kept growing at the rate they did in the last decade, the average premium for family coverage today would be $1,800 higher than they are.  Now, most people don’t notice it, but that’s $1,800 you don’t have to pay out of your pocket or see vanish from your paycheck.  That’s like a $1,800 tax cut.” (Two Pinocchios, 10/17/14)
    • 

  • “Health care inflation has gone down every single year since the law [ObamaCare] passed, so that we now have the lowest increase in health care costs in 50 years–which is saving us about $180 billion in reduced overall costs to the federal government and in the Medicare program.” (Three Pinocchios, 11/6/14)
    • 

  • “We’ve created more jobs in the United States than every other advanced economy combined since I came into office.” (One Pinocchio, 11/11/14)
    • 

  • “Well, actually, my position hasn’t changed [on immigration executive action].” (Upside-Down Pinocchio, 11/18/14)
    • 

  • “Understand what this [Keystone XL pipeline] project is. It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else.” (Three Pinocchios, 11/20/14)
    • 

  • “If you look, every president — Democrat and Republican — over decades has done the same thing. George H.W. Bush — about 40 percent of the undocumented persons, at the time, were provided a similar kind of relief as a consequence of executive action.” (Three Pinocchios, 11/24/14)
    • 



– See more at: http://www.speaker.gov/general/president-s-year-pinocchios#sthash.8H0npCgI.dpuf

															

		
		
	





	
		



	
	


		
		

			
			
Regulation Nation, Another 75,000 pages


							

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While the insatiable Obama White House “pen and phone” machine has been spewing costly and draconian regulatory edicts at a fast and furious pace since taking power six years ago, it seems that the Holiday season has featured an even larger than usual number of wild decrees. Late last month, for example, as Americans were occupied with Thanksgiving, the Obama administration emitted what has been widely decried as the most costly single regulation in American history.




The so-called “ozone rule,” which estimates suggest could cost as much as $270 billion per year and put millions of American jobs at risk under the guise of further regulating emissions of the natural gas, was formally put forward the day before Thanksgiving. Lawmakers decried the timing of the massive regulation, suggesting the scheme was released during the holidays so “stupid voters” — as ObamaCare’s architect infamously described the American people — would be distracted with other matters.


Another major regulation imposed by the Obama administration in recent weeks surrounds the so-called “coal ash” rule regulating waste produced by electricity generation. The new scheme, finalized shortly before Christmas, could cost over $20 billion. Senator James Inhofe (R-Okla.), presumably the next chairman of the Senate Environment Committee, blasted the plot as “a continuation of the president’s war on fossil fuels.” Among other concerns, he said the new regulations would “make states and utility companies vulnerable to new regulatory costs and expensive litigation.”


Other costly regulations in the pipeline include the Obama EPA’s radical bid to severely curtail emissions of CO2. The natural gas, which makes up a fraction of one percent of all the “greenhouse” gases present naturally in the atmosphere, is exhaled by humans and is described by scientists as the “gas of life.” Still, the White House and the United Nations continue their outlandish campaign to demonize the essential molecule as “pollution,” even threating to shackle humanity to a draconian global CO2 regime under the guise of stopping “global warming.”




Next year, meanwhile, the Obama administration is plotting to unleash yet another deluge of federal regulations targeting everything from fracking to power plants. State governments, lawmakers, and citizens have been fighting back, but so far, the White House shows no signs of backing off or even slowing down the pace when it comes to devastating decrees to pummel the economy and the American taxpayer. More “climate” decrees are coming, too, with the White House even threatening to impose a UN carbon regime on America without obtaining Senate ratification.


Separately, as The New American reported this month, the Obama administration’s increasingly dangerous and anti-constitutional usurpations of power have been accelerating. Despite White House attempts to dupe the American people by claiming it has imposed fewer “executive orders” than previous presidents, the administration was recently exposed by USA Today concealing most of its unilateral decrees by calling them “presidential memoranda” instead of orders. Obama has issued more than any president in history, doing everything from purporting to change federal law to even attacking the American people’s God-given rights using illegitimate executive edicts.


With the sprawling regulatory leviathan growing perpetually more costly and oppressive, critics say the American people’s elected representatives and the courts must both take action. “Congress should examine how executive agencies are exceeding key authorities granted to them and both narrow the substantive grants that are most subject to abuse and improve administrative procedures on multi-billion dollar regulations,” wrote attorneys Todd Gaziano and Mark Miller with the pro-liberty Pacific Legal Foundation in a recent Forbes column about the need to regulate what constitutes a regulation. “Until then, the courts must police these two areas, particularly in the rulemaking context.”


While Republican lawmakers have become adept at loudly complaining about the administration’s non-stop executive power grabs and regulations on the campaign trail, so far, they have done virtually nothing to stop it. In fact, despite all of the promises to rein in the Obama administration’s “imperial” presidency if elected to Congress, victorious Republicans, who already dominated the House of Representatives, recently passed a massive spending bill fully funding virtually every decree the White House has spewed since coming to power through next September.


In other words, GOP lawmakers, sent to Washington by outraged voters in November to stop Obama, gave up their most powerful tool to restrain the administration for almost a full year — before the new members could be seated, and for no good reason. The solution to the growing regulatory lawlessness, though, remains simple: Congress can and should defund the decrees and the unconstitutional agencies behind them before Obama’s “fundamental transformation” of America is complete. The complete article is here.

															

		
		
	





	
		



	
	


		
		

			
			
The Secret Back Channels to Putin


							

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Add sanctions. Remove sanctions. Amend sanctions. Call the old-timers, try anything. Why? Putin is on the rocks financially but remains defiant. Why is the White House attempting to reset relations again? Could it be that Russia has more clandestine missions planned that includes the Baltic States or Europe?




(Reuters) – Russian President Vladimir Putin said in a televised New Year’s address on Wednesday that the “return home” of Ukraine’s Crimea peninsula to Moscow’s control would forever remain an important chapter in Russia’s history.




Putin is facing the biggest challenge of his 15-year rule as the Russian economy is sliding sharply into recession, hurt by Western sanctions over the Ukraine crisis and falling prices for oil, Russia’s chief export.


***


Inside Obama’s Secret Outreach to Russia




By 




President Barack Obama’s administration has been working behind the scenes for months to forge a new working relationship with Russia, despite the fact that Russian President Vladimir Putin has shown little interest in repairing relations with Washington or halting his aggression in neighboring Ukraine.


This month, Obama’s National Security Council finished an extensive and comprehensive review of U.S policy toward Russia that included dozens of meetings and input from the State Department, Defense Department and several other agencies, according to three senior administration officials. At the end of the sometimes-contentious process, Obama made a decision to continue to look for ways to work with Russia on a host of bilateral and international issues while also offering Putin a way out of the stalemate over the crisis in Ukraine.


“I don’t think that anybody at this point is under the impression that a wholesale reset of our relationship is possible at this time, but we might as well test out what they are actually willing to do,” a senior administration official told me. “Our theory of this all along has been, let’s see what’s there. Regardless of the likelihood of success.”


Leading the charge has been Secretary of State John Kerry. This fall, Kerry even proposed going to Moscow and meeting with Putin directly. The negotiations over Kerry’s trip got to the point of scheduling, but ultimately were scuttled because there was little prospect of demonstrable progress.




In a separate attempt at outreach, the White House turned to an old friend of Putin’s for help. The White House called on former Secretary of State Henry Kissinger to discuss having him call Putin directly, according to two officials. It’s unclear whether Kissinger actually made the call. The White House and Kissinger both refused to comment for this column.




Kerry has been the point man on dealing with Russia because his close relationship with Russian Foreign Minister Sergei Lavrov represents the last remaining functional diplomatic channel between Washington and Moscow. They meet often, often without any staff members present, and talk on the phone regularly. Obama and Putin, on the other hand, are known to have an intense dislike for each other and very rarely speak.


In several conversations with Lavrov, Kerry has floated an offer to Russia that would pave the way for a partial release of some of the most onerous economic sanctions. Kerry’s conditions included Russia adhering to September’s Minsk agreement and ceasing direct military support for the Ukrainian separatists. The issue of Crimea would be set aside for the time being, and some of the initial sanctions that were put in place after Crimea’s annexation would be kept in place.




“We are willing to isolate the issues of Donetsk and Luhansk from the issue of Crimea,” another senior administration official told me, naming two regions in Eastern Ukraine under separatist control. “If there was a settlement on Donetsk and Luhansk, there could be a removal of some sanctions while maintaining sanctions with regard to Crimea. That represents a way forward for Putin.”


Meanwhile, Kerry has been proposing increased U.S.-Russian cooperation on a wide range of international issues. Earlier this month, he invited Lavrov to a last-minute diplomatic confab in Rome to discuss the the Israeli-Palestinian conflict.


After one meeting with Lavrov in Paris in October, Kerry announced that he had discussed potential U.S.-Russian cooperation on Afghanistan, Iran, North Korea, Syria and Yemen. But the apparent warming was overshadowed by Lavrov’s quick denial of Kerry’s claim that Russia had agreed to assist in the U.S.-led coalition against Islamic State in Iraq.


Kerry has seemed more enthusiastic about mending ties with Russia than Obama himself. After the president gave a blistering critique of Russian behavior in a major United Nations speech, saying that “Russian aggression in Europe recalls the days when large nations trampled small ones in pursuit of territorial ambition,” Kerry urged Lavrov to ignore his boss’s remarks, according to Lavrov. “Kerry said we have so many serious things to discuss that of course that was unfortunate, let’s not focus on that,” Lavrov told Russian reporters.


State Department officials insist that Kerry is clear-eyed about the challenges of trying to work with Russia, but that he believes there is no other responsible option than to see what can be accomplished.


“Secretary Kerry is not advocating internally or with Russia for a reset in the relationship, and in fact in meetings he has taken a strong and at times skeptical stance,” one senior State Department official told me. “As the nation’s chief diplomat he is simply always exploring ways to make relationships more productive.”


There is also a belief among many both inside the State Department and the White House that sanctions are working. The Russian economy is tanking, albeit due largely to collapsing oil prices and not targeted punishments. One senior administration official argued that absent the sanctions, Putin might have been even more aggressive in Ukraine. Moreover, this official said, the sanctions need time to work and might yet prove to have greater effect on Putin’s decision-making in the months ahead: “We’ll see how they feel as their economy continues to deteriorate and the Ukrainian economy refuses to collapse.”




If the Russians are getting ready to cave, they aren’t showing it. Putin remains defiant and Russian military assistance to the Ukrainian rebels continues. The Russian leadership has been rejecting Kerry’s overtures both in public and private. Diplomatic sources said that Lavrov has refused to even discuss Kerry’s conditions for partial easing of sanctions. And Putin has made a hobby of bashing the U.S. in public remarks.


To many of the administration’s critics, especially Republicans on Capitol Hill, pursuing engagement with Moscow is based on naivety and wishful thinking.


“It’s a strategy worthy in the finest tradition of Neville Chamberlain,” incoming Senate Armed Services Chairman John McCain told me. “I think the Russians are doing fine. Meanwhile, what price has Vladimir Putin paid? Very little.”


The legislative branch has also been active on Russia this year, but its efforts run counter to the administration’s policy and sometimes have the indirect effect of putting more roadblocks in front of the Obama-Kerry push to find a way forward.


On Dec. 18, Obama reluctantly signed a bill authorizing new Russia sanctions and military aid to Ukraine that was overwhelmingly passed by Congress. Afterward, the White House awkwardly said that the legislation did not signify any change in policy.


And this week, the State Department sanctioned four more Russian officials, but not over Ukraine. The officials were added to a list of human rights violators under the Sergei Magnitsky Act of 2012, named after the anti-corruption lawyer who died in a Russian prison. In response, the Russian foreign ministry issued a statement saying that the Magnitsky Act sanctions “place in question the prospects for bilateral cooperation in resolving the situation surrounding the Iranian nuclear program, the Syrian crisis, and other acute international issues.”


These latest punishments show that it may be impossible to de-link the problems in the bilateral relationship from the opportunities, as the Obama administration wants to do. They also show that there will always be chances for those in Washington and Moscow who want to stoke the tensions to do so, jeopardizing any progress.


Some experts believe that any plan to warm U.S.-Russian relations is unlikely to succeed because it doesn’t have the full support of either president.


“It’s very clear that between the Putin Kremlin and the Obama White House there is a very bad chemistry. Its not a question of simply distrust, it’s a question of intense dislike between the two leaders,” said Dimitri Simes, president of the Center for the National Interest.


Also, some experts feel, placing the diplomacy in the Kerry-Lavrov channel dooms its outcome, because the Russians know that Kerry himself has no power to make major decisions and Lavrov has to be careful not to be seen as cozying up to the U.S.


“The more Kerry creates a perception he has a special relationship with Lavrov, the more he puts Lavrov in a difficult position with officials in his own capital, starting with Putin,” said Simes. “It’s clear that when Kerry deals with Lavrov and hopes that because they have overlapping interests, that would allow cooperation where useful, that is not a model of relationship that Putin is prepared to accept.”


Obama has made it clear that in his last two years in office he is prepared to make big moves on foreign policy even if they face political or legislative opposition, such as normalizing relations with Cuba or pursuing a nuclear deal with Iran. But when it comes to Russia, he is unwilling to place his own credibility behind any outreach to his nemesis Putin.


The administration’s cautious engagement with Moscow is logical: Why not seek a balance in a complicated and important bilateral relationship? But by choosing a middle ground between conciliation and confrontation — not being generous enough to entice Russia’s cooperation yet not being tough enough to stop Putin’s aggression in Eastern Europe — Obama’s policy risks failing on both fronts.