Thursday, December 24, 2009
Bank Presidents and U.S. President
Surfeit begets insolence, when prosperity comes to a bad man.
— Theognis, c. 545b.c.
I hope the President didn’t take it personally. I’m sure no offense was intended. Even though bank presidents have shown they can single handedly almost sink the economy, they can’t control the weather that prevented their making it to the meeting. Of course some people might wonder why they didn’t leave a day earlier. A lot of people who have a morning meeting scheduled with the President of the United States would be very anxious to make sure they were in town the night before so as not to miss the meeting. Such a meeting is heady stuff even for a bank president. My guess is that the men all had good reasons for not arriving in Washington D.C. the night before the meeting and it was not, as some might think, a lack of respect for the President of the United States. A number of factors explain their actions.
One is that it was the middle of the holiday season and a Sunday night two weeks before Christmas is a time when there are lots of holiday parties. It is important for bank presidents to be in attendance to show that even though 12 months ago they were being bailed out by, among others, the people at the parties as well as lots of other people their cheerful demeanors prove that they are not the least bit nervous about the economy or the state of their banks. Another reason they may have waited until Monday to travel to see the President (if they were not partying) was to give them additional time to work for the benefit of customers, employees and shareholders.
Lloyd Blankfein, president of Goldman Sachs (who missed the meeting), was very likely spending the evening doing rough calculations as to how to divide up $16 billion in bonuses among his thousands of employees. That is a complicated calculation. He may also have been working on the speech he would give to his employees to explain why some of them would get bonuses in stock instead of cash.
Citigroup’s Vikram Pandit missed the meeting because Citigroup had a $17 billion stock offering on the same day as the meeting with the President took place. Mr. Pandit spent the day convincing investors they should buy some of the stock that was being offered. Thanks to those efforts Citigroup received $425 million in fees from the offering. In Mr. Pandit’s place Citigroup’s chairman, Richard Parsons was to attend, but having better things to do on Sunday night than spend the night in the capitol he waited until Monday morning to travel and because of weather had to miss the meeting. He may have spent some time Sunday night working on helping those struggling to pay their mortgages who were hoping to qualify under the “Making Home Affordable Program.” In November 2008 Citigroup said its intention was to reach out to 500,000 borrowers who needed help to avoid foreclosure. It said its program might result in $20 billion of mortgage refinancings. As of November 2009 it had fallen a bit shy of its goal. Of all mortgagees who were eligible for modification it had only entered into trial modifications Public 111009 FINAL.PDF with 100,126 homeowners instead of 500,000 homeowners and had only made permanent modifications with 271 borrowers out of the 231,000 who were estimated to be eligible.
John Mack of Morgan Stanley was probably also spending Sunday night trying to figure out how to help those threatened with foreclosure who were in distress. Morgan Stanley’s subsidiary, Saxon Mortgage Services, Inc. had an estimated 80,000 eligible loans and had 35,565 trial modifications going on but as of the end of November had only made 42 of the loan modifications permanent. The rest were still awaiting approval. Of course he might have been toasting the fact that although those numbers are not impressive, when its permanent loans modifications are added to its trial modifications it turns out that 44% of its loans have been modified or are in the trial stage and that, percentage wise, places Public 111009 FINAL.PDF it at the top of all the Servicers in the program.
The “Making Home Affordable Program” has been in place for slightly over a year. The Treasury Department estimates there are 3,299,780 people eligible to participate in the program. As of the end of November only 31,382 have received permanent modifications. The three presidents who missed the meeting are probably keenly ware of the failure of their institutions to do more for those in trouble. They may even feel a bit of guilt about it. Not enough, however, to have made sure they’d get to the meeting with the President on time. And not enough to cause them to forego their large bonuses.
Wednesday, December 16, 2009
Catholic Charities Meet the D.C. Council
He who is near the Church is often far from God.
— Les Proverbes Communs (c.1500)
It was a pretty easy call for Pope Benedict XVI. He expressed outrage over the tales of abuse of children in Ireland. It turns out that when Jesus said, “suffer little children to come unto me” what happened in Ireland was not what Jesus had in mind. The Pope was said to be “deeply disturbed and distressed” by the report of the Independent Commission of Investigation known as the Murphy Report. It examined more than 300 abuse claims in the Archdiocese of Dublin between 1975 and 2004. The 700-page report said that instead of being concerned for the victims of the abuse, the Church was more concerned about “the maintenance of secrecy, the avoidance of scandal, the protection of the reputation of the church and the preservation of its assets.” (The last item is easy to sympathize with since a number of dioceses in the United States have been driven into bankruptcy because of the claims of victims of sexual abuse.)
The Pope said he shares “the outrage, betrayal and shame” felt by the folks in Ireland over the disclosure of years of sexual abuse of children by priests in Dublin that went unpunished even after it was detected by the local police.
According to the Catholic News Service he is going to write a special pastoral letter to the Catholics in Ireland. Archbishop Diarmuid Martin of Dublin said a pastoral letter was “quite a significant document” and would mark the beginning of a whole process aimed at “a very significant reorganization of the church in Ireland.” The Pope probably won’t have to spend a lot of time writing the letter. He can use some of the same language he used in 2008 when describing his distress at sexual abuse by those who work for him (and the Lord) in the United States and Australia.
As pleased as one has to be at the Pope’s willingness to confess error, as it were, one cannot help but feel a touch of sadness that notwithstanding its distress over the Irish scandal, its distress is not enough to cause it to abandon its willingness to abandon the poor and distressed in Washington D.C. now that the D.C. Council has acted.
On December 15, 2009, the D.C. Council voted 11-2 in favor of a bill that legalizes same-sex marriage in the District. Subject to a possible Congressional review within 30 days after its final passage, the District will join the states that recognize same sex marriage. That distresses the Pope and his employees almost as much as sexual abuse of children but, and this is unfortunate, the distress threatens to manifest itself not in a relatively harmless (if “significant document” as Archbishop Martin described it) pastoral letter but in a withholding of support for the poor in the district. (The poor in Ireland can be grateful that the Pope’s disapproval of what went on there is punished by a pastoral letter rather than withholding support from the needy.)
When the possibility of approval of same-sex marriage reared its head in November, spokespersons for Catholic Charities said they might eliminate social service programs that, among other things, help the poor with homelessness and health care. Catholic Charities has long been a significant provider of benefits to those living in the District. According to the Catholic on Line, each year “it serves 68,000 people . . . through a range of services, including shelter, nutrition, counseling, employment and job training services legal and health care assistance, immigration assistance and more.” It has been receiving $18 to $20 million annually for its services.
The bill does not require religious organizations to let same sex couples wed in disapproving churches’ facilities or require the churches to perform the services. However, the church is worried that it might have to give same sex couples employed by the church employee benefits offered to couples in traditional relationships. If the church is seeking peace of mind on this question, rather than political propaganda, it might wish to consult with Nancy Pollikoff, a law professor at American University.
In a thoughtful analysis of the question Ms. Pollikoff observes that the church could opt out of the requirement imposed by the District that requires that heterosexual spouses and same-sex domestic partners receive equal benefits. The church has the option of electing to be subject to federal law rather than the District’s law and federal law does not require employers to treat same sex partners the same as married couples. If the Pope is as concerned about helping the needy as his employees suggest, perhaps he could write a pastoral letter complaining about the District’s actions and permit Catholic Charities to continue their useful work. The new law in D.C. hardly seems to warrant a harsher response than that given the Murphy Report.
Thursday, December 10, 2009
The Blackness of Blackwater
How now, you secret, black and midnight hags! — Shakespeare, MacbethThe good news for Blackwater fans is that things are not as bleak as might at first appear. Blackwater has more lives than the victims of its blunders. Earlier this year, I erroneously suggested that Blackwater might very soon be leaving Iraq since it had been told to leave by the Iraqi government. It turned out that the Iraq government lacked the authority to tell Blackwater what to do. Herewith a brief history.
A congressional report found that Blackwater guards were involved in almost 200 shootings in Iraq between 2005 and 2007. Included among them was a 2007-shooting spree that left 17 Iraqi civilians dead. Following that event Prime Minister Nuri Kamal al-Maliki demanded that Blackwater leave the country. Believing (mistakenly) that he had the authority to determine whether a given contractor could work in Iraq or not he said: “The Iraqi government is responsible for its citizens, and it cannot be accepted for a security company to carry out a killing.” George Bush, who was accustomed to making all the arrangements for the Iraq war, ignored Mr. al-Maliki and extended Blackwater’s contract for another year. Bowed, but not defeated, Iraq did not give up trying to rid itself of the Blackwater scourge.
On January 1, 2009 the new Status of Forces Agreement (SOFA) between the U.S. and Iraq took effect. That agreement provided that Iraq had the “primary right to exercise jurisdiction over United States contractors and United States contractor employees.” On January 28, 2009 Iraq said it would not issue Blackwater a license to continue operating in Iraq. Maj. Gen. Abdul-Karim Khalaf, a spokesman for the Iraqi interior ministry said: “Those companies that don’t have license, such as Blackwater, should leave Iraq immediately.” Alaa Al-Taia, an Interior Ministry official said: “There are many marks against this company, specifically that they have a bad history and have been involved in the killing of so many civilians.” Iraq probably thought that would be the end of Blackwater in Iraq. It was wrong.
The Obama administration said Blackwater is a State Department contractor and SOFA only gives Iraq jurisdiction over contractors “who are in Iraq to supply goods, services, and security in Iraq to or on behalf of the United States Forces . . . .” Expounding on that a State Department diplomatic security official said: “The purpose and mission of the Department of State’s private security contractors is limited to protection of US diplomats and diplomatic facilities only and is defensive in nature.” And so Blackwater continued its work providing “aviation services” in Iraq.
Blackwater worked throughout the spring and early summer and on July 29th its contract was extended by the Obama administration with an agreement to pay it an additional $20 million, bringing the total amount it received for “aviation services” to $187 million and its total for Iraq work to more than $1 billion. The July extension was to end on September 3 when its role was to be assumed by other defense contractors. On September 1 it was learned that its contract would be extended indefinitely to enable the handover of its work to the successor company to proceed more smoothly. When she learned of the extension, Congresswoman Jan Schakowsky of Illinois issued a statement saying: “Given the company’s history of massive abuses and misconduct, I believe it is inappropriate for the United States government to continue doing business with this firm.” One of these days Blackwater will be out of Iraq. It needn’t be depressed at the thought of leaving. That’s because it has Afghanistan at its disposal and Afghanistan is a gold mine for private contractors.
As of March 2009 there were approximately 70, 000 private contractors working in Afghanistan whereas there were only 48,000 U.S soldiers in that country. According to a Congressional Research Study, the ratio of contractors to soldiers is the highest it’s been in any conflict in the history of the United States.
Among the private contractors is, not surprisingly, Blackwater. It provides diplomatic security for State Department people under the name “US Training Center” and does Defense Department work under the name “Paravant LLC. ” Paravant has continued the proud tradition established by Blackwater in Iraq of killing civilians. According to the Nation, one of Blackwater’s subsidiaries in Afghanistan is under investigation for the shooting of two Afghan civilians in May.When Congresswoman Schakowsky learned of its contract in Afghanistan she wrote Secretaries Clinton and Gates urging them “not to award further contracts to Xe [Blackwater’s new name] and its affiliates and to review all existing contracts with this company.” As of this writing she had not received a response. In her concern she was joined by Sonali Kolhatkar, author of Bleeding Afghanistan: Washington, Warlords and the Propaganda of Silence. Commenting on Blackwater’s presence in Afghanistan she said: “If they build the same record of killing civilians in Afghanistan that they had in Iraq, it will cement the Afghan resistance even further against the U.S. occupation.” She’s right. Someone should let the President know.