Category Archives: Whistleblower

Examples of POTUS Power Over Agencies

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Primer: CFPB Director: PHH Corp. took kickbacks for mortgage insurance referrals

Requires firm to pay $109M to the CFPB

FAS: Congressional authority to establish federal agencies with independence from political control is under scrutiny in a case pending before the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). At issue in PHH Corp. v. CFPB is whether the Consumer Financial Protection Bureau’s (CFPB) structure violates the constitutional principle of separation of powers. The CFPB is headed by a single director who enjoys a certain amount of protection from removal by the President, and the agency is funded outside of the annual appropriations process. As elaborated below, PHH claims that the restrictions on the President’s power to remove the Director improperly encroach on the executive power vested in the President under Article II of the Constitution, and that the combination of insulation from executive control and independence from yearly congressional appropriations violates separation of powers by shielding the agency from “democratic accountability.”

The Constitution divides the power of the federal government among the legislative, judicial, and executive branches. While the text does not contain a “separation of powers” provision, the Supreme Court has recognized a separation of powers principle that underlies the constitutional division of the federal government’s authority. Among other things, this doctrine prevents one branch of government from impermissibly encroaching on the powers of another or inappropriately delegating its own authority to another branch of government. These limits, in turn, shape the structure of federal agencies that exercise governmental power.

For example, a recurring theme in separation of powers cases is the extent to which Congress may impose restrictions on the President’s power to remove executive officers. Article II of the Constitution vests the executive power in the President, and the President is authorized to keep executive officers accountable by removing them. However, the Supreme Court has recognized that this power is not absolute. In Humphrey’s Executor v. United States, the Court held that Congress could establish independent agencies overseen by officers whom the President could only remove for “good cause.” The Court upheld similar restrictions on the President’s authority to remove lower-level officials in Morrison v. Olson. In Free Enterprise Fund v. Public Company Oversight Board, however, it invalidated the combination of these two otherwise permissible features – removal restrictions on both the principal and certain inferior officers within a single agency – as violating Article II’s vesting of executive power in the President because it improperly impeded his “constitutional obligation to ensure the faithful execution of the laws.”

Another constitutional provision that informs separation of powers is Article I’s prohibition on drawing money from the Treasury unless authorized by “Appropriations made by Law.” Congress thus has the “power of the purse” and controls the funding of executive branch agencies. While the Court has not faced a challenge to an independent agency receiving funds outside of the annual appropriations process, various federal entities, such as the Federal Reserve Board, are currently funded through their own earnings, rather than through the appropriations process.

The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, which consolidated and expanded federal regulation of consumer financial products. Broadly, the Act gave the CFPB rulemaking, supervisory, and enforcement power over certain financial institutions. It also bestowed rulemaking and enforcement power under various consumer financial protection statutes, and more generally the authority to deter unfair, deceptive, or abusive practices by regulated entities. In this case, the Director of the CFPB concluded that a mortgage lender, PHH, violated the Real Estate Settlement Procedures Act, imposed injunctive relief to prevent further violations, and required PHH to disgorge “kickback payments” it had received in violation of the Act. PHH appealed the decision to the D.C. Circuit, claiming that, among other things, the agency’s structure violates separation of powers.

The legislation establishing the CFPB provided the agency with a structure intended to ensure independence from the political influence of Congress and the President. The CFPB is headed by a single Director who is appointed by the President to a five-year term and removable by the President only for cause. Although established within the Federal Reserve System, the agency is considerably independent from the Federal Reserve Board’s authority, and the Federal Reserve Board is barred from intervening in the CFPB’s decisions or directing its employees. However, a supermajority of the Financial Stability Oversight Council—of which the Chairman of the Federal Reserve is a voting member—may veto CFPB regulations that would put the safety of the banking system or the financial system’s stability at risk.

Finally, the agency is funded via a transfer from the Federal Reserve System’s earnings, rather than through annual appropriations.

PHH argues that the combination of these features insulates the agency from “democratic accountability” and violates separation of powers. First, PHH claims that while Humphrey’s Executor upheld removal restrictions for nonpartisan,  multi-member expert boards, its logic does not support upholding the restrictions here because the CFPB is headed by a single director and is not intended to be “non-partisan.” Further, PHH argues that just as the combination of two otherwise-permissible removal restrictions in Free Enterprise violated separation of powers, the marriage of removal restrictions with an independent funding stream is entirely unprecedented and grants the agency novel freedom from both presidential and congressional control. In response, the CFPB disputes PHH’s reading of Humphrey’s Executor, arguing that the Court upheld removal restrictions for agency heads because of the functions the officers performed, which mirror the duties of the CFPB Director. In addition, the CFPB distinguishes the principles announced in Free Enterprise – in that case, two otherwise-permissible removal restrictions combined to impede the President’s power under Article II. Here, in contrast, “each branch retains its constitutional powers” because the removal restriction does not reduce Congress’s authority over appropriations under Article I, and the independent funding mechanism does not hamper the President’s Article II duty to execute the law.

At oral arguments before a panel of the D.C. Circuit, Judge Kavanaugh, who has articulated a broad reading of Free Enterprise in the past, questioned CFPB’s counsel about the nature of the agency’s independence. In particular, he focused on whether restrictions on the President’s removal power were permissible for agencies headed by a single director. He noted that historically, most removal restrictions for independent agencies applied to multi-member commissions, rather than agencies with a single head. The justification being, he noted, that while typical agency heads must be subject to presidential control, removal restrictions are appropriate for a multi-member board because it is nonpartisan or bipartisan.

 

Resolution of the case may have important implications for the structure of the executive branch and the scope of presidential control over “independent” agencies. Several other agencies, whose principal officers enjoy removal protection, are also headed by a single director, including the Social Security Administration, the Office of Special Counsel, and the Federal Housing Finance Agency. Further, given the D.C. Circuit’s exclusive jurisdiction to hear challenges to a variety of federal agency actions, the court’s reading of Free Enterprise will be an important guidepost concerning future challenges to agency structural features.

 

At the DC Airport? I thought this was a Joke

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Hat tip to CNN… and it seems that airport security and TSA may have bigger issues than we know or they will admit.

 

CNN Finds Somali War Criminal Working Security at DC Area Airport

FreeBeacon: CNN has found an alleged war criminal from Somalia now working in the United States as an airport security guard.

Yusuf Abdi Ali was a commander during the Somali Civil War during the 1980s and has been accused of ordering the torture and executions of civilians in what has been called a genocide.

When CNN found out that he was living and working in the United States, they sent a crew to his workplace, Dulles International Airport in Northern Virginia, just minutes from Washington, D.C. The film crew found a man matching Ali’s description working security and began asking him questions.

“What’s your name?” a CNN producer asked.

“Ali,” the guard responded.

“Yusuf Ali,” the producer said.

“Yeah,” Ali said.

“Where are you originally from?” the producer asked.

“Somalia,” Ali said.

CNN correspondent Kyra Phillips reported that Ali came to the United States from Canada with the assistance of his wife who helped him secure a visa into the United States. Ali was deported from Canada due to his past, but that did not prevent him from being able to get into the United States.

Phillips also reported that Ali has been removed from his position as a security guard and that his past did not come up during a background check.

****

In 2014:

One of the two Americans killed while fighting for the Islamic State (ISIS) terrorist organization in Syria had worked at the Minneapolis-St. Paul International Airport cleaning planes before he went overseas to become a jihadist, an investigation has revealed.

Abdirahmaan Muhumed, 29, who died in the same battle as Minnesota native Douglas McCain, was employed by Delta Global Services, a cleaning company owned by Delta Airlines. Two former employees confirmed they’d worked with Muhumed, who had been married three times and was the father of nine children. While earlier this year, the airport’s cleaning contract was taken over by Airserv, another contractor, Muhumed would have had to had security clearance to work for Delta. More here from NewsMax.

This past April: 

ClarionProject: Brussels airport is partially reopening today for the first time since it was hit by twin suicide bombs on March 22 in attacks that killed 35 people.

The airport reopening was delayed by a strike called by police officers who de3maqnded extra security measures. Specifically they requested checks at the main entrance to the departure lounge. Authorities feared this could create bottlenecks going into the airport.

A group of police officers wrote an open letter to the press criticizing alleged security failings at Zaventem airport. They alleged that 50 ISIS supporters are still working at the airport.

Some people suspected of having fought in Syria came to the airport as “false tourists”. We reported their presence but we do not know if anything was done with that information, the letter read according to the Daily Mail.

The officers complained about people who worked at the airport whom they allege celebrated the Paris attacks.

“When we checked these people, we were surprised more than once. It was men with a radical ideology and a long police history,’ they said.

‘Even today, there are at least 50 supporters of the Islamic state who work at the airport. They have a security badge and have access to the cockpit of a plane”

 

Hillary Campaign Desperate Weekend Memo

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Campaign Chairman: Clinton Knows Email Setup Was A “Mistake”

Buzzfeed: John Podesta sent hundreds of top Clinton supporters a memo over the weekend following the critical IG report on the former secretary of state’s email setup.

   

In a memo to top supporters, Hillary Clinton’s top official sought to clarify the campaign’s response to a new report from the State Department inspector general and move past a controversy that has dogged the candidate now for 15 months.

The 600-word letter from John Podesta, Clinton’s chairman and longtime adviser, addresses the IG report’s various findings, but comes back to a single point again and again: that Clinton knows the use of a personal email server was a “mistake.”

“And she has taken responsibility for that mistake,” Podesta wrote to several hundred of the campaign’s most active supporters and financial backers.

The memo, obtained by BuzzFeed News, went out by email over Memorial Day weekend, five days after the release of the highly critical IG report. The investigation, separate from an ongoing FBI inquiry, concluded that Clinton failed during her tenure as secretary of state to comply with record-keeping policies.

In the days after the IG’s findings became public, Clinton made appearances on four television networks to push back on the report as nothing new. “There may be reports that come out, but nothing has changed,” she said. “It’s the same story.”

(The IG report included some new details of how Clinton’s email arrangement was set up, including correspondence from within the State Department.)

The Podesta memo takes a more contrite posture, reminding backers three separate times that Clinton has called the email setup a mistake and continues to do so in the wake of the IG report. “The secretary has once again acknowledged this was a mistake,” Podesta writes. “If she could go back, she’d do it differently.”

Podesta also takes up one of the report’s key findings: that Clinton’s email practices did differ significantly from past secretaries of state, contrary to the candidate’s frequent argument that, broadly, her email use was not “unprecedented.”

Clinton used a non-government account to conduct State Department business, as did former secretary of state Colin Powell. But no other former secretary of state has maintained government correspondence on a private home-based server.

Although Clinton argued again in a Univision interview on Wednesday that her use of a personal account was “not at all unprecedented,” the memo from Podesta alludes to the distinct aspects of her arrangement. At the time, he writes, “she believed she was following the practices of other secretaries and senior officials.”

The IG report concluded that Clinton had an “obligation” to discuss such an arrangement with State Department officials, including for security reasons, but found “no evidence” that she “requested or obtained guidance or approval to conduct official business via a personal email account on her private server.”

The report came as an unwelcome development for Clinton’s campaign, just days before officials expect to clinch the Democratic nomination when polls close on June 7. The email scandal, dragging into its second year, has not helped Clinton fight the perception that she is untrustworthy or too often mired in controversy.

“We understand the questions about Secretary Clinton’s email practices,” Podesta writes in his memo. But, he adds, “voters will look at the full picture of everything she has done throughout her career. We have faith in the American people.”

Read the full memo below:

To: Interested Parties
From: John Podesta, Campaign Chair
Date: May 28, 2016

As Hillary Clinton nears the point where she will officially clinch the Democratic nomination for President, we intend to spend the coming months focused on the issues of greatest concern to the everyday lives of working families.However, we know that our opponents will continue to try to distract us with attacks, including on issues like Secretary Clinton’s use of personal email while at the State Department.

Since last year, Secretary Clinton has said her use of a personal email server was a mistake. And while there have been ongoing reviews of this matter, the completion of the Inspector General’s examination gets us one step closer to resolving this.

While the rules surrounding use of a personal email account were clarified after Secretary Clinton left office – and the Inspector General recommends the State Department take measures to even further clarify them – the Secretary has once again acknowledged this was a mistake. And she has taken responsibility for that mistake – including in many interviews she’s done since the report’s release.

What she thought would be a convenient way to communicate with family, friends and colleagues – by using one email account for both her work related and personal emails – has turned out to be anything but convenient. If she could go back, she’d do it differently.

Parts of the report underscore what Secretary Clinton has said all along about her email practices as Secretary of State. For instance, the report confirms Secretary Clinton’s email account was well-known by many State Department officials throughout her tenure, and there is no evidence of a breach of her email server.

Had Secretary Clinton known of any concerns about her email setup at the time, she would have taken steps to address them. She believed she was following the practices of other Secretaries and senior officials.

What has also been missed in a lot of the discussion is that the report brings to light the longstanding and systemic problems in the government’s electronic recordkeeping systems.

Secretary Clinton believed her emails to and from officials on their state.gov accounts were automatically captured and preserved in the State Department’s electronic system.

It was not until the Department contacted her in 2014 that she learned this was not the case. And since then, she has taken unprecedented steps to ensure public access to her emails — providing the Department with all of her work-related emails, totaling 55,000 pages, and calling for their release.

Secretary Clinton also agrees with the Inspector General’s recommendations that electronic recordkeeping practices and policies need to be upgraded. Printing out 55,000 pages of emails is not a good use of time or resources, nor should it be the standard for preserving records given technology available to us today.

There is a lot at stake in this election. This week Donald Trump officially clinched enough delegates to become the Republican nominee. That means an unqualified loose cannon is within reach of the most powerful job in the world.

While we understand the questions about Secretary Clinton’s email practices, we are confident that voters will look at the full picture of everything she has done throughout her career. We have faith in the American people. They know we have to be focused on solutions that will make a real difference in people’s lives.

Hillary Clinton will continue to dedicate her campaign to getting results on behalf of America’s working families. She rejects the strategy of pitting Americans against each other in favor of an approach that recognizes how much stronger we are when we come together. With your help, we will take that message across the country and earn a great victory this November.

Public School Costs/Results

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It would be important for all owners of real estate regardless of whether there are school aged children to ask some hard questions of the respective school system. Chicago is a symptom of a big problem where results are quite questionable.

The Real Cost of CPS Borrowing: District Now Owes $38,000 per Student

ManhattanInstitute: By all accounts, Chicago Public Schools has made significant academic progress over the last 15 years. Since 2003 the district’s proficiency rates on the National Assessment of Educational Progress exam have more than doubled in math and have nearly doubled in reading.

But this progress is now threatened by severe financial mismanagement. The district faces a budget crisis driven by the rising cost of past, unpaid bills that is crowding out spending on today’s teachers and students.

CPS’ budget crisis was not created overnight. For more than a decade, the district has struggled with a widening structural budget deficit. Since 2001, inflation-adjusted spending per pupil increased by nearly 40 percent. In 2001, CPS spent close to $12,000 per student; in 2015, $16,432. Yet revenue has not kept pace: CPS per-pupil revenue has not matched per-pupil spending, with revenue falling short, on average, by $1,000 per pupil since 2001. More recently, the revenue gap has widened to nearly $3,000 per year.

CPS has papered over its annual shortfalls by borrowing vast sums from bond markets. As a result, CPS bonds are now rated as “junk” and the district has to pay a huge premium to get anyone to buy them (three times the rate for benchmark government bonds).

What’s more, by failing to make the necessary pension contributions, CPS has borrowed even larger amounts from its current and former teachers through the pension fund—today the district owes the fund billions upon billions. CPS owes bondholders and the pension fund more than $38,000 for every student, up from less than $10,000 in 2001.

Rising debt service costs are beginning to take a real bite out of district resources. And CPS has scrambled to keep pace while protecting classroom spending. Since 2011, CPS has made nearly three-quarters of a billion dollars in budget cuts “away from the classroom,” with administrative and programmatic spending hit especially hard. Nevertheless, from 2001 to 2015, annual per-pupil inflation-adjusted spending has been hit hard as well:

  • Spending on textbooks has declined by 36 percent.
  • Spending on classroom supplies has fallen by nearly 60 percent.
  • Budgets for elementary school sports (coaching stipends and equipment) have been cut by the millions.
  • Annual per-pupil spending on capital repairs and replacement has dropped by 55 percent.

Because the majority of a school district’s spending is on salaries and benefits, there is only so much that can be cut beyond that. Which is why Chicago’s teachers are feeling the budgetary pressure. Since 2001, CPS teacher salaries, as a share of total CPS spending, have fallen by more than 10 percentage points, while pension contributions have jumped, from 2 percent of total CPS spending to more than 10 percent.

Teachers’ retirement benefits have also been reduced. Changes for new teachers instituted in 2011 represent an average total compensation cut of about 10 percent compared with teachers who began working before the changes took effect. For career teachers the drop is even larger—representing a reduction of more than 40 percent of the total potential benefit value.

There are only three ways to right CPS’ sinking financial ship: Secure additional revenue, reduce teachers’ retirement benefits, or cut services for current students. Start with revenue. Given that the Legislature is mired in a long-running budget standoff, securing significant additional state aid seems unlikely. Raising more local revenue faces another constraint: Chicago’s property tax increases are capped at the rate of inflation.

As for cuts to retiree benefits, the Illinois Supreme Court has prohibited pension reductions for all but future hires, thereby disallowing even the modest changes to teachers’ benefits. For these reasons, major service cuts to Chicago’s public schools—however undesirable—appear most plausible.