Pluralistic: 15 May 2021

Originally published at: https://pluralistic.net/2021/05/15/how-to-rob-a-bank/


Today's links



Newsom's California fiber dream (permalink)

Friday morning, California Governor Gavin Newsom unveiled an audacious budget whose crown jewel is a plan to pump $7b into medium-haul fiber links that will link every community in the state, no matter how remote or rural.

https://www.eff.org/deeplinks/2021/05/governor-newsoms-budget-proposes-historic-investment-public-fiber-broadband

If passed – it needs a simple majority in the legislature – this will make California home to America's most extensive state broadband network, and reverse decades of ISP lobbying against the provision of modern telcoms infrastructure to replace 20th century copper lines.

The plan uses state money to bring fiber to the town limits, then creates a pool of low-cost, long-term loans – repayable over 30-40 years – that local governments tap to build their local fiber grids, according to their local needs, under local management and ownership.

And, as with the electrification effort of the New Deal, the plan creates an expert agency that can advise towns on designing those networks and train local people on maintaining them.

This is the patient money the market won't provide. Fiber broadband investment is future-proofed and may supply all Californians' digital needs into the 22nd Century (!), and telcos – who balk at investments that take a mere 10 years to pay off – don't make those bets.

Take Frontier, whose bankruptcy revealed how they chose NOT to make $800m in profit building out rural fiber because the analysts whose judgments controlled its share-price disapproved of long-term investment (Frontier's execs were paid in stock).

https://www.eff.org/deeplinks/2020/04/frontiers-bankruptcy-reveals-cynical-choice-deny-profitable-fiber-millions

ISP monopolists have fought with increasing desperation to prevent Americans from accessing fiber. From fairy tales about 5G (which needs fiber!) to fanciful ideas about satellite service (slow, asymmetrical and unable to get any faster without repealing the laws of physics).

The truth is, we know how to make fast, future-proof data networks: fiber.

https://www.eff.org/wp/case-fiber-home-today-why-fiber-superior-medium-21st-century-broadband

Americans pay some of the highest charges for some of the lowest broadband speeds in the rich world, and California is among the worst US states. Newsom's plan will sweep California into the 21st century, and not just the big cities – the whole state.

Asia's rich countries – China, South Korea – have laid a billion fiber lines. The world is already designing applications for symmetrical gigabit connections and beyond. Without fiber, California doesn't just face a digital divide – it faces a speed chasm.



The S&L crisis perfected finance crime (permalink)

When the Great Financial Crisis hit, suddenly there was a lot of talk about the Savings & Loan crises of the 1980s and 90s. I was barely a larvum then, and all I knew about S&Ls I learned from half-understood dialog in comics like Dykes to Watch Out For and Bloom County.

As the GFC shattered the lives of millions, I turned to books like Michael W. Hudson's THE MONSTER to understand what was going on, and learned that the very same criminals who masterminded the S&L crisis were behind the GFC gigafraud:

https://memex.craphound.com/2011/03/07/the-monster-the-fraud-and-depraved-indifference-that-caused-the-subprime-meltdown/

Hudson's work forever changed my views of Orange County, CA, a region I knew primarily through Kim Stanley Robinson's magesterial utopian novel PACIFIC EDGE, not as the white-hot center of the global financial crime pandemic.

https://memex.craphound.com/2015/01/15/pacific-edge-the-most-uplifting-novel-in-my-library/

That realization resurfaced today as I read the transcript of UMKC Law and Econ prof Bill Black's interview with Paul Jay on The Analysis, when Black says, "Orange County is the financial fraud capital of the world, not America, the world."

https://www.youtube.com/watch?v=jFH5-5D5_Lc

Black is well-poised to tell the tale of the S&L crisis. He served as a bank regulator during the crisis, and his notes on the "Keating 5" meeting were the turning point for public and Congressional attention to the crime:

https://theanalysis.news/economy/the-best-way-to-rob-a-bank-is-to-own-one-bill-black-pt-1/

In 1998, he finished a criminology doctorate at UC Irvine (in Orange County!) on the S&L frauds, entitled "The Best Way to Rob a Bank is to Own One," a title he used for his 2005 book (updated in 2013) on the scandal:

https://utpress.utexas.edu/books/blab2p

The S&L crisis shares a lot in common with today's financial crimes, but it had one key difference: ultimately (with Black's help), more than 30,000 criminal referrals were made against the bankers involved in the crisis, and more than 1,000 were convicted of felonies.

The story of the S&L crisis is both a roadmap for holding finance criminals to account (a roadmap we threw away and forgot about) and a roadmap for committing gross acts of financial crime with impunity (which the finance sector studied carefully and keeps close its heart).

Black calls finance a "crimogenic environment," in where deregulated institutions become pathogenic, "like a cesspool that produces lots of bacteria and viruses and such and causes lots of infections."

The S&L crisis began with the Carter-Ronald deregulatory blitz. Both presidents assumed that because S&Ls (a kind of bank) in California and Texas were doing really well after deregulation, that meant CA and TX had nailed it and their example could be expanded nationwide.

In reality, the rosiness of the California and Texas S&Ls' books was the result of "control fraud," when a person who controls the bank is stealing from it.

Black likens this to a homeowner who commits insurance fraud – an ultimate insider, who knows the code to de-activate the alarm system and also knows just where the most valuable items are kept.

The major control fraudster of the S&L crisis was Charles Keating, a "top 100 granter" who was among the 100 highest donors to Reagan and Bush I. Keating has stolen a vast fortune from Lincoln Savings, and he was able to trade some of that loot for political cover.

Keating hired Alan Greenspan (!) to lobby for him, and Greenspan suborned five senators (the "Keating Five") who threatened regulators with dire consequences if they didn't stop digging into S&Ls.

This was also a priority for Reagan, whose plan for vast tax-cuts for the wealthy might stumble if it the public found out that the US government needed billions to bail out these walking-dead fraud zombies.

Reagan turned to Ed Gray, a PR guy, to run the S&L operation. Gray was hand-picked by the S&L's trade association, and they told him flat out that he was there to make S&Ls look good – not to blow them up by investigating their balance-sheets.

The problem is that Gray – who was a hardcore Reaganite partisan and deregulation true believer – was honest, and the fraud was so obvious. The Texas S&Ls were originating fraudulent loans to build housing tracts that didn't exist.

When Gray went out to look at these building sites, he just found endless rows of desolate concrete pads – he called them "Martian landing pads" – and abandoned ruins. These were the collateral on billions in loans!

Gray is a believer in sound finance, and this is undeniable evidence that deregulation has led to catastrophically unsound practices, so he starts imposing regulation on the S&L sector.

Keating pulls strings to sideline Gray, but Gray keeps pushing. Keating gets the leadership of both parties in the House to sponsor legislation ordering him to stop. He keeps going.

Donald Regan – an ex-Marine who went from CEO of Merrill Lynch to Reagan's Chief of Staff – leans hard on Gray, but Gray won't stop.

The Office of Management and Budget swears out a criminal complaint against Black for closing too many S&Ls. He won't stop.

They go after Gray's guy in Texas, Joe Selby, a former acting Comptroller of the Currency with impeccable credentials, demanding that Gray fire Selby. Democratic Speaker Jim Wright says Selby should be fired because he's gay. Gray won't budge.

Homophobia turns out to be a powerful weapon for criminal impunity. Keating sued Black and the Federal Home Loan Bank of San Francisco, claiming the bank's gay employees had conspired against Keating because Keating was an evangelical Christian.

Gray took finance crime seriously. He had two priorities: one, eject anyone committing fraud from working at any financial institution, and; two, criminally and civilly charge those former execs and take back all the money they stole and ruin them financially.

Black and colleagues took this to heart, making thousands of criminal referrals. When law enforcement refused to act on these, they started publishing their referrals, and newspapers published stories about how none of these criminal referrals were leading to prosecutions.

Gray eventually gets sidelined by a "team player," the disgraceful Danny Wall, who studiously ignores all the crime that has been uncovered. But then Bush I replaces him with Tim Ryan, whose marching orders are to root out finance crime.

Ryan ultimately made over 30,000 criminal referrals over the S&L scandal, and brought prosecutions against elite criminals, including Neil Bush, the son of the President of the United States of America.

Black: "Tim Ryan sacrificed his career for the public knowingly…he’s been unemployable since."

And as for Bush I, his first major legislative priority became the removal of financial crime from the jurisdiction of independent watchdogs, so this would never happen again.

This is as far as the interview gets (it's part one of nine!), but it's already answering some of the most important questions the Great Financial Crisis raised, like, "Why didn't any of the bankers who stole trillions from the world go to jail?"

(Image: Dykes to Watch Out For strip #90 (1990), "The Solution," Alison Bechdel))



Big Pharma's vicious battle against universal covid vaccination (permalink)

Last week, the Biden administration broke with decades of US policy when it supported a patent waiver on covid vaccines. It was the first time in generations that the US Trade Rep acted on behalf of the people, rather than corporate greed.

https://pluralistic.net/2021/05/10/comrade-ustr/#vaccine-diplomacy

Taking steps to make vaccines universally and immediately available isn't just the right thing to do – vaccine apartheid is slow-motion genocide – it's also the smart thing to do. Billions of unvaccinated people present quadrillions of chances for the virus to mutate.

Don't listen to the unscientific claims that viruses "tend to become less virulent" over time. Remember, the mechanism by which super-lethal strains go extinct is that they kill all their hosts (that's us, folks).

Likewise, ignore the racist lie – peddled by morally bankrupt corporate shills like Howard Dean – that brown people in poor countries can't make vaccines.

https://pluralistic.net/2021/04/08/howard-dino/#the-scream

Making mRNA vaccines is miraculously efficient, requiring less than 1% of the capital and materials of conventional vaccine production and less than 10% of the time to retool for new vaccines:

https://coronavirus.medium.com/manufacturing-mrna-vaccines-is-surprisingly-straightforward-despite-what-bill-gates-thinks-222cffb686ee

The pharma industry knows this, but it's willing to make a bet that it can outrun vaccine resistance, rolling the dice on the human race to further its shareholders' fortunes. For months, they've been carpet-bombing DC with anti-waiver lobbyists.

https://pluralistic.net/2021/04/27/bruno-argento/#pharma-death-cult

When the Biden admin sided with human survival over profit, it sent shockwaves through corporate America. Even Bill Gates – who more-or-less singlehandedly killed every effort to make a universal, public domain vaccine – changed his tune.

https://www.geekwire.com/2021/gates-foundation-reverses-position-covid-vaccine-patent-protections-mounting-pressure/

But pharma isn't done. They have redoubled their efforts to prevent the Global South from making its own vaccines, even if that means that the 2.5 billion poorest people on Earth won't be vaccinated until 2023/4.

Writing in The Intercept, Lee Fang reports on leaked documents from pharma lobbyists and powerful lawmakers that show how influence-peddlers are going to war to defend the right of multinational corporations to risk our species in the name of higher returns to capital.

https://theintercept.com/2021/05/14/covid-vaccine-waiver-generic-phrma-lobby/

Take the memo that Jared Michaud of PHRMA circulated to colleagues on Wednesday, identifying Buddy Carter (R-GA) and Vern Buchanan (R-FL) as the chief water-carriers for the industry's agenda, describing a letter that uses anti-China rhetoric to oppose the waiver.

Michaud also suggests that Senator Tom Scott (R-SC) might be biddable and serve pharma's interests in the Senate, "but this is not yet final."

Michaud, meanwhile, laid out a set of talking points to circulate to lawmakers. These lean heavily on the idea that Chinese and Russian companies will gain unfair advantages over US firms and implies that China has tricked poor countries into fronting for its interests.

Another talking points memo, marked CONFIDENTIAL and identified in its PDF metadata as originating with PHRMA's Meg Van Etten, makes a series of nonsensical arguments about vaccines depending on exclusive rights, conspiculously failing to mention billions in public subsidies.

Taken together, these internal PHRMA lobbying memos bear a striking resemblance to the letter GOP lawmakers sent to Biden. It's a rare glimpse into the direct pipeline industry has into officialdom, whereby they get to serve as ghost-writers for our "public servants."

The pharma industry spends $24m+/year lobbying Congress and is a leading source of campaign contributions. They have been on the wrong side of history since the AIDS epidemic, where they led the fight to punish Nelson Mandela for demanding access to anti-retroviral medicine.

The scariest thing about pharma's influence isn't how much money they spend, it's about how kack-handed and infantile their action is.

I'll never forget the smirk on the PHRMA rep's face at WIPO when literature from public interest groups went missing and turned up hidden in the toilets.

https://pluralistic.net/2021/04/13/public-interest-pharma/#gates-foundation

Running around screaming "China! China! China!" is just…idiotic. I mean, some very smart people with doctorates in chemistry and related fields work for the pharmaceutical industry.

But clearly, when pharma sends people to DC, they're not sending their best. They're sending liars and cheats. They're sending genocidal maniacs. And some, I assume, are good people.



This day in history (permalink)

#20yrsago Vegas outcall services phreak each others' phoneshttps://www.securityfocus.com/news/205

#15yrsago Gmail downgraded, no longer cracks PDFs https://web.archive.org/web/20060603055956/https://akira.arts.kuleuven.ac.be/andreas/blog/archives/2006/05/gmail-cripples-drmed-pdf-files-view-as-html-functionality.html

#10yrsago Walter Jon Williams uses pirate ebooks to rescue his backlist http://www.walterjonwilliams.net/2011/05/crowdsource-please/

#5yrsago Algorithmic cruelty: when Gmail adds your harasser to your speed-dial https://lizdenys.com/journal/articles/inboxs-accidentally-abusive-algorithm.html

#1yrago Tear gas ice-cream https://pluralistic.net/2020/05/15/out-here-everything-hurts/#612strike

#1yrago Whistleblower warns of massive mortgage fraud https://pluralistic.net/2020/05/15/out-here-everything-hurts/#cmbs

#1yrago A people's vaccine https://pluralistic.net/2020/05/15/out-here-everything-hurts/#accesstomedicine

#1yrago Google's GDPR reckoning https://pluralistic.net/2020/05/15/out-here-everything-hurts/#noyb

#1yrago Understanding Qanon https://pluralistic.net/2020/05/15/out-here-everything-hurts/#q



Colophon (permalink)

Today's top sources: Naked Capitalism (https://www.nakedcapitalism.com/).

Currently writing:

  • Breach, a Little Brother short story about pipeline protests. Friday's progress: 352 words (352 words total).
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  • A nonfiction book about excessive buyer-power in the arts, co-written with Rebecca Giblin, "The Shakedown." FINAL EDITS

  • A post-GND utopian novel, "The Lost Cause." FINISHED

  • A cyberpunk noir thriller novel, "Red Team Blues." FINISHED

Currently reading: Analogia by George Dyson.

Latest podcast: How To Destroy Surveillance Capitalism (Part 06) https://craphound.com/nonficbooks/destroy/2021/05/10/how-to-destroy-surveillance-capitalism-part-06/
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"When life gives you SARS, you make sarsaparilla" -Joey "Accordion Guy" DeVilla

On that topic of Charles Keating there is the lengthy rebuttal (over 500 hundred pages with somewhat small print (especially quotes, which are almost always smaller in books ) and only words to paint the picture, was written by his hired then auditor Jack D. Atchison. In addition to the Legal Extortion: The War Against Lincoln Savings and Charlie Keating book Jack has written Circling the Drain: America’s Middle Class which is co-authored by Michael D Atchison. That is a (figuratively) a rabbit hole and to further the hole is to see the C-SPAN archive of the hearings.

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