Willed Ignorance: Refusing To Learn The Lessons of the Financial Crisis

In a blink-or-you'll-miss-it story in the business section, the SEC announced that it had reached a $75 million settlement with Citibank to settle subprime claims. As this follows quickly on the heels of the $500 million Goldman settlement, it's worth noting how the differences between these two cases, and their resolution, shows how our regulatory agencies continue to fail to police the finance industry

Goldman Sachs was loudly accused of committing fraud by brokering a transaction between housing bear John Paulson (one of many such transactions he entered into, btw) and a group of banks and hedge funds that wanted to continue going long on housing. Everyone was looking at the same set of numbers, but Paulson was almost alone in concluding that subprime was about to blow up and take out the financial system with it. That's why he's a billionaire today and the Richard Fulds and Stan O'Neils of the world are in disgrace. Goldman's "fraud" essentially consisted of failing to disclose that Paulson was on the short side of the transaction. Somehow this was worth $500 million, plus the usual front-page headlines and microphone pounding.

Citibank, on the other hand...well, check it out
Citigroup agreed on Thursday to pay $75 million to settle federal claims that it failed to disclose vast holdings of subprime mortgage investments that were deteriorating during the financial crisis and ultimately crippled the bank.

The settlement centers on events in the fall of 2007, when Citigroup’s reported losses started to cascade, eventually prompting the federal government to rescue the bank a year later. The case is the first to focus on whether banks adequately disclosed to their shareholders the increasingly precarious state of their finances during the crisis.

It is also the first time the Securities and Exchange Commission has brought charges against high-ranking bank executives over their involvement with subprime mortgage bonds.

The commission singled out two Citigroup executives — Gary L. Crittenden, the former chief financial officer, and Arthur Tildesley Jr., the former head of investor relations — for omitting material information in disclosures to shareholders, according to the complaint.

Mr. Crittenden agreed to pay a $100,000 fine; Mr. Tildesley will pay $80,000.

While we can debate whether Fannie/Freddie, CRA, Jimmy Carter, Alan Greenspan, or whatever "caused" the Crash of '08, I think we can all agree on this basic narrative: banks and other large financial institutions became dangerously over-exposed to subprime loans and other mortgage backed securities. When those securities began to lose value at an alarming rate, many of these institutions became functionally insolvent, or close to it. But, rather than disclose this, these institutions used all manner of accounting trickery and fund raising to try to hide the true state of affairs of their balance sheets. This directly led to the credit crunch and the Crash of '08 as investors and lenders could no longer trust one another and lending/investment activity ceased.

In other words, Citibank has just settled an enforcement action where they were accused of doing the exact thing that caused the credit crunch and wrecked the economy. And, while Goldman may have failed to make a disclosure to a group of sophisticated investors, Citibank was lying to everybody: its regulators, its shareholders, its counter-parties, and the public. Doesn't that seem, I don't know, worse? As the Times notes, the $75 million fine is nothing compared to the $40 billion Citi failed to disclose. (and God knows what might still be lurking in its balance sheet!) The miniscule fines levied against the two Citi executives are likewise a joke. How are they not getting the full Ken Lay treatment?

I'm not going to sit around and read minds, but it sure is odd that the "tough" new SEC seems to have so little stomach to punish activity that was at the heart of the financial crisis while coming down hard on a complex transaction between equals. But, Goldman is politically unpopular, while Citi is a ward of the government. Just a coincidence, I'm sure.

The Government Oil Spill: Coast Guard Liable for Sinking of Deepwater Horizon Rig, Ensuing Chaos

Hot Air has the story on the latest wrinkle in the Deepwater Horizon oil spill. It seems that the Coast Guard's botched response to the initial fire contributed, at least in part, to the sinking of the rig which made a bad situation into (switching to ominous voice) The Worst Oil Spill in American History: Did The Government Cause the Oil Spill

The generally accepted view of the Deepwater Horizon disaster has focused on the blowout preventer and the non-standard procedures BP conducted just before the explosion and fire. However, most of the damage and the main source of the spill came from the collapse and sinking of the DH platform rather than the initial explosion. A new report by the Center for Public Integrity, based on testimony from people on scene and Coast Guard logs, contains evidence that the platform sunk because of a botched response from the Coast Guard, which failed to coordinate firefighting efforts and to have the proper resources to fight the fire:

The Coast Guard is not supposed to participate in firefighting, but instead assign an expert to coordinate the private firefighting efforts of the rig operator and its contractors. The Coast Guard failed to do so, and the result was an uncoordinated, “general response” effort that mainly relied on salt water to extinguish the fires. That is not the most effective way to fight rig fires; the best way is to use foam, which apparently wasn’t on hand. An expert would have known this, but as CPI’s report of the testimony shows, none was assigned:

What can say about this except:

The Coast Guard has apparently been struggling in the face of budget cuts at the hands of the Obama Administration. Has this ever been in the news before? Does anyone remember any public debate about the Coast Guard budget?

The crippling budget cuts President Obama proposed for the Coast Guard also deserve a closer examination. Obama's spending plan reduced the blue water fleet by a full one-third, slashed 1,000 personnel, five cutters, and several aircraft, including helicopters. According to the Center for Public Integrity, the Coast Guard updated its official maritime rescue manual -- advising against firefighting aboard a rig -- just seven months before the Deepwater Horizon explosion. That change in policy came at a time when Adm. Thad Allen warned the budget cuts threatened to turn the Coast Guard into a "hollow force."

At this point, you just have to laugh to keep from crying. Can you imagine anyone running for office on a platform of slashing the Coast Guard's budget? We might be passing massive health care "reform" bills of questionable utility and of even more questionable constitutionality; but when faced with budgeting for federal responsibilities that are actually in the Constitution, the sophisticated Left puts on their green eye shades and play "fiscal hawk" for 5 minutes. This is why Big Government is self-defeating. Taxes and Spending spiral ever upwards, yet the government can't seem to get anything done right.


Cold comfort: we've been through this sort of misprioritization before. The post-Viet Nam Left took power and slashed defense spending; leading to the sort of weakening of America's position in the world, demoralization of the armed forces, and equipment failures resulting in military fiascoes that you would expect. But, President Reagan turned that around - in the face of "what if the Pentagon had to hold a bake sale" style protests, of course - quickly and forcefully. We can turn this around too.

In the mean time, we will have to watch the spectacle of a trillion dollar federal government that struggles to perform its most basic functions.

Wedding Ring Blues: Chelsea Clinton's Big Day

Politico has the details on Chelsea Clinton's $2 million wedding. You may start making smirky comments about the "Party of the Common Man" riiiiiiiiiiiiiight nnnnnnnnnnnnnnnow:
The rehearsal dinner is reportedly taking place at the nearby Grasmere, a 525-acre estate boasting a Federal-period manor house with formal gardens, stucco guest cottages and a large stone barn complex. Another area manse rumored to be serving the family over the weekend will be Glenburn, where the Clintons aresaid to be staying over the weekend. Glenburn is the Rhinebeck home of Eric and Andrea Colombel. Andrea Colombel is the daughter of billionaire financier and longtime Clinton supporter George Soros.

Nice to see the Clintons are able to spend so much money after careers largely spent in "public service." Also nice to see a Soros connection. The Shadow Party lives!

Meanwhile, The Last Honest Newspaper has the juicy details about pre-wedding jitters:
CHELSEA CLINTON in full meltdown mode after severe panic attacks - that new hubby will be a cheater.

Panicky bride-to-be Chelsea Clinton is secretly undergoing emergency prenuptial counseling ordered by her mom Hillary, insiders say.

"Chelsea is a nervous wreck as her wedding approaches. She's terrified that she'll disgrace herself and her family," a Clinton
family friend told The ENQUIRER.

The 30-year-old former first daughter is set to wed Wall Street-er
Marc Mezvinsky in a $1 million dream wedding on July 31 at the Astor Courts, a 50-acre private estate in Rhinebeck, N.Y. But now she's having second thoughts.

"Chelsea never wanted a royal-style
wedding with hundreds of guests. Now, she's scared to death she's going to freak out," said the source.

Panicking, in full meltdown mode, Chelsea reached out to her mother Hillary on her top secret emergency number as she met foreign leaders in Europe.
Gee, what would make Chelsea so sensitive about the possibility her husband might cheat? Remember how people used to say Bill Clinton's cheating never hurt anybody? Yeah, if you don't count his daughter. Nice.

Oh, and I would say the odds of the future Mezvinsky-Clinton straying are sky high. Chelsea may not see them, but there are red flags waving wildly. Let's us count them:

1. Mezvinsky is an investment banker

2. Mezvinsky is an investment banker for Goldman Sachs

3. Mezvinsky spells his name "Marc" with a "c"

4. Mezvinsky looks like he spends his weekends wearing his Yankees baseball cap backwards.

5. His dad is a former big-shot Democrat congressman who was later convicted of fraud. In other words, dad is a charming rogue.

6. His mom is a glamorous news babe who later entered politics as a tax raising liberal Democrat. (What an unusual career arc!) Undoubtedly a major league MILF at Marc's high school.

7. Can you say "separated at birth?"

8. Chelsea's a nice kid (well, woman) but she's got the classic look of the Playa's Wife. Cute enough, but she's also got the combination of loyalty and insecurity that Levi Johnson-types find to serve as their anchor. She might kick him out of the house, but will always take him back.

Criminal Mindless

Two Bay Area women have been arrested for embezzling $2.6 million from their employer, a business software company called Autonomy, Inc. One of the women worked in the payroll department, using her perch to pay unauthorized bonuses to herself and her buddy. And they would have gotten away with it, but for a monumental screw up:

Two Bay Area women were arrested and charged with embezzlement Wednesday after allegedly writing $2.6 million in bonus checks to themselves over a four-year period at a San Francisco software company, prosecutors said.

The investigation started shortly after one of the women, Maria Lourdes B. Dionisio, 46, of Pacifica, filed for unemployment insurance in May after she was fired from the firm for unrelated reasons. Dionisio listed annual pay of nearly $450,000, far above her $63,000 salary, San Francisco District Attorney Kamala Harris said.

Emphasis added, of course. It's almost like she wanted to get caught.

Deflation Studies

Via Instapundit, here's a look at the lurking specters of inflation and deflation. Central bankers are supposedly trading copies of an old book about the Weimar Inflation in an effort to understand the forces that can be set loose if/when highly indebted governments give in to the temptation and let the printing presses rip:

As it happens, another book from the 1970s entitled "When Money Dies: the Nightmare of The Weimar Hyper-Inflation" has just been reprinted. Written by former Tory MEP Adam Fergusson -- endorsed by Warren Buffett as a must-read -- it is a vivid account drawn from the diaries of those who lived through the turmoil in Germany, Austria, and Hungary as the empires were broken up.

Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding. The diary of one young woman described the scene at her cousin’s farm.

"In the cart I saw three slaughtered pigs. The cowshed was drenched in blood. One cow had been slaughtered where it stood and the meat torn from its bones. The monsters had slit the udder of the finest milch cow, so that she had to be put out of her misery immediately. In the granary, a rag soaked with petrol was still smouldering to show what these beasts had intended," she wrote.

Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to undertand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments.

Foreigners with dollars, pounds, Swiss francs, or Czech crowns lived in opulence. They were hated. "Times made us cynical. Everybody saw an enemy in everybody else," said Erna von Pustau, daughter of a Hamburg fish merchant.

Great numbers of people failed to see it coming. "My relations and friends were stupid. They didn’t understand what inflation meant. Our solicitors were no better. My mother’s bank manager gave her appalling advice," said one well-connected woman.

Not sure what anyone needs to "learn" about the social and economic effects of inflation. The history of Weimar Germany is as much a part of the cultural conversation as Kristallnacht or the League of Nations. In other words, well read people know what's going on. Americans over the age of 40 should have some memory of the Great Inflation, even if it has been wiped from the history books. Profligate governments love inflation, but the voters end up hating it and finally rising up and rebelling against the elites who fanned the inflation. Often you end up with a Hitler or - more likely - Juan Peron taking power; but sometimes you get lucky and the inflation leads to Ronald Reagan. Whichever way it works, the people who start the inflation are never in charge when it ends. That's the real risk of inflation for the elites. Even if they don't say this out loud, they know this deep down.

On the other hand, there's deflation, which central bankers profess to fear, yet often fails to arise. Japan's Lost Decade has been the most compelling deflationary episode in the modern era, one that has played out in real time in the second largest economy in the world with the eyes of journalists, policy makers, economists, and the business world upon them. And yet, no one knows what's going on:

The old bogeyman of deflation has re-emerged as a worry for the U.S. economy. Here's something else to fret about: After studying more than a decade of deflation in Japan, economists have slowly realized they have no idea how it works.

Deflation is usually associated with a Great Depression-like drop in demand. Consumer prices, incomes and asset prices fall. Interest rates go to zero, as low as they can go. As prices and incomes fall, the cost to borrowers of servicing debt does not, sucking life out of the economy and pushing prices down further. A bad situation, in short, gets worse.

In 1932, U.S. consumer prices fell 10% and between 1929 and 1933 they fell 27% in all.

But Japan's experience has looked nothing like this. Rather than being deep, destructive and concentrated in a few years, deflation has been a surprisingly mild, drawn-out affair. Consumer prices have been falling in Japan for 15 years, but never by more than 2% in any single year. Japan's deflation has been a morass, but not the destructive downward spiral many economists predicted. Why? And what does it portend for the rest of the world today?

Economists don't have good answers. "We don't know how deflation works," says Adam Posen, a member of the Bank of England's monetary policy committee who has been studying Japan since 1997. "We don't have a way of rationalizing steady, several-year flat deflation," he says.

How can this be? How can we not even have an idea how deflation works? How can we not know what's happening in Japan, which is hardly a mysterious Hermit Kingdom. Where's Paul Krugman? Where's (fill in famous progressive economist here)? Sounds like a good research topic!

The problem, I suspect, is not that we don't know; but that the elites don't want to know. After all, Japan hasn't just had 20 years of deflation. The deflation began with the bursting of a housing bubble exacerbated by (1) a government which propped up its financial sector, rather than allow insolvent banks to fail and (2) engaged in an epic bout of stimulus spending that left Japan with towering debts. Sound familiar? And none of it has worked. At all. In fact, the only things that worked were the Koizumi Reforms, which sought to privatize government entities like Japan Post, among other things. Privatization of government services worked?? Don't want to say that out loud!

And given Japan's experience, isn't deflation preferable to inflation? Japan is still, after all of its troubles, the second largest economy in the world. Japan has remained a wealthy, productive society. Its heavy industries have remained prosperous and innovative (indeed some have obtained a real global reach). They're building robots, for God's sake! Most important, Japan has not suffered the economic and social upheaval that accompanies inflation. This is not to say that Japan's deflation has been a picnic. The Japanese equivalents to Generation X have had their prospects stunted to help "pay" for the profligacy of earlier decades. Jobs are not as permanent or as plentiful as they once were. But, this is not as troubling as a bout of inflation destroying the yen. At least, it shouldn't be.

I'm not going to pretend to understand what monetary policy is better than the other. But it sure is curious that inflation seems to be the default preference for the elites, and the only restraint is their knowledge that the beginning of major inflation would also be the end for them.

DC Babylon: the 50 Most Beautiful People On Capital Hill

Via Althouse, here's a fun slide show of the 50 most beautiful people on Capital Hill.

Mostly, they are the usual collection of twentysomethings. The women's beauty is generally directly linked to their age. The Republican women tend to be more classically beautiful, while the Democratic women tend to look, ah, feisty and "spicy."

Republican guys tend towards clean-cut, shirt tucked in, while the Dem men more likely to rock the rumpled idealist look.

Jesse Jackson Jr., Scott Brown and Kirsten Gillebrand are there too, as is 67-year old Ann Eschoo who, I guess, is the most beautiful old bag on the Hill.

There's a Republican staffer named Bret Manly. Truth in advertising!

There's also another Republican staffer named Hudson Hollister, a name that belongs on Mount Rushmore.

Sherrod Charade: Updates From the Shirley Sherrod Matter

First, an apology: I was sick last week during the most explosive 72 hours of the Shirley Sherrod controversy. By the time I was back on my feet, she'd gotten her phone call from the President (vindication for progressives!) and declared that Andrew Breitbart wanted to go back to slavery (vindication for Breitbart!) Since then the only thing that has happened in public is something that did not happen: namely that Sherrod did not appear on any of the Sunday talk shows after dominating news coverage for the previous week.

Still, the Conservative Noise Machine has come up with some Sherrod news that - in a non-partisan media environment - would be covered by all of the just-the-fact-ma'am pros in the MSM.

First, Dan Riehl has the scoop of the week by finding a videotape of Charles Sherrod giving a speech castigating "the White Man and his Uncle Toms," just the sort of racial healing we look for from our civil rights leaders. Mr. Sherrod is temperamentally similar to his wife; they both prevent a quiet dignified face. But a dignified facade does not equal a dignified interior life. And, if there's one thing we've learned, the Sherrods public faces conceal simmering resentment that they have turned towards exacting racial spoils from the government. (full video is here, in case you are afraid Dan might have left out some juicy "context").

Next, Tom Blumer was the first person to note that the Sherrods became instant millionaires upon entering into a settlement of a class action suit they brought on behalf of black farmers supposedly victimized by USDA discrimination (during the Clinton administration!). Blumer was also quick to note that Sherrod's job at the USDA followed on the heels of the settlement.

Zombie looks at the numbers and finds that the payouts from the settlement exceeds the number of reasonable claimants:

Let’s accept as a point of fact that some African-American farmers were unfairly denied loans by racists in the USDA during the Clinton and Reagan administrations. I’m not casting any aspersions on the validity of the original lawsuit, nor on the courts’ rulings in the case.

But ponder the numbers.

• There are approximately 40,000 African-American farmers in the country.

• Of that 40,000, not all of them have gotten into financial trouble. Some have successful farms.

• Of those who had financial trouble, not all of them sought out loans. Some tried to stay afloat on their own.

• Of those who sought out loans, not all of them sought out loans from the USDA. Some got loans from banks or friends.

• Of those who sought out loans from the USDA, not all of them were denied loans. Some got the loans as requested.

• Of those who were denied loans, not all of them were denied due to discriminatory racial practices.

In the end, a total much much smaller than 40,000 could legitimately claim to be victims of discrimination.

As shown above, it was originally estimated to be no more than 2,000 possible total plaintiffs.

Somehow, that number quickly swelled to 16,000 wronged claimants.

And now, as of February, the government has announced it plans to hand out at least $50,000 each to over 70,000 more claimants, over and above the original 16,000.

That means that the U.S. may be recompensing at least 86,000 African-American farmers for past racial discrimination. But how could that possibly be true if there are only 39,697 African-American farmers in existence nationwide? And if only some subset of them ever applied for a loan and were then unfairly denied a loan?

Zombie notes that the Senate has repeatedly stripped funding for the settlement from its appropriations, something that also did not come up at all last week when Shirley Sherrod had the country's full attention. It's hard not to see the Sherrods' lawsuit for what it is: an attempt to obtain a kind of shadow reparations for past discrimination. The lawsuit might apply to events occurring between 1983-1997, but in the minds of the litigants it is undoubtedly a means of obtaining "justice" for slavery and segregation. A lot of the welfare state is built around this background goal.

I don't agree with the characterization of the Sherrod tape as showing "racism" in the NAACP. The dialog doesn't advance when conservatives can accuse liberals of being racist. It advances when conservatives can point to all the ways that liberalism is built upon racial and economic grievance. While liberals pull out their green eyeshades whenever the Pentagon wants to buy a $600 toilet seat, they turn a blind eye to the trillions in domestic spending that often goes unreported and unremarked. Shirley Sherrod's job at the USDA provided her with over a billion dollars worth of tax payer dollars to disburse at her discretion. The government is filled with people like her, exercising financial power far beyond their competence. That's the true story of Shirley Sherrod, and it's one that is slowly coming out.

Celebrity Prosecutions: the Lance Armstrong Investigation

The Wall Street Journal reports that federal prosecutors are stepping up their efforts to investigate Lance Armstrong for doping, or rather lying about doping. Now, Armstrong has strenuously denied doing anything illegal and moreover he was competing in Tours where doping was not only controversial, but also subject to strict scrutiny resulting in the wholesale disqualification of dozens of riders. But, for whatever reason, no one can rest until Armstrong has been frog-marched past the cameras: Prosecutors Step Up Armstrong Probe
Federal prosecutors handling an investigation into cheating in professional cycling have subpoenaed documents from an arbitration case that sought to prove that Lance Armstrong used performance-enhancing drugs.

The documents contain depositions from former teammates and associates of the seven-time Tour de France champion during a period when a promotions company was trying to prove that Mr. Armstrong employed banned drugs and practices—known as doping—during his cycling career.

Jeffrey Tillotson, the attorney who represented the company, SCA Promotions Inc., in the arbitration hearings, said it received a subpoena for the records on July 16. He is preparing to send the files to the federal prosecutors in Los Angeles who are handling the investigation, he said.

Mr. Armstrong has repeatedly denied doping allegations and has not been charged with any wrongdoing.

I have no idea whether Armstrong was doping or lying about doping or whatever. I do know that the dumb thing to do would be to go all Roger Clemons on everybody, and angrily deny/lie all. Armstrong and his many advisors no doubt know that a quick admission of wrong doing will be a lot more painless than a slow reveal. The fact that Armstrong has remained adamant, combined with the fact that his primary accusers are the classic axe-to-grind types, makes me think that there is nothing there.

Still, prosecutors are absolutely determined to make a case, any case:

Using performing-enhancing techniques in sports is generally not against the law in the U.S. But federal prosecutors could make the case that Mr. Armstrong defrauded investors by accepting sponsorship dollars with the understanding that he would not use the drugs, if they prove that he doped.

Here we have a perfect example of the Apple Rule: the curious phenomenon of media and prosecutors going hammer and tongs against certain high profile white collar suspects, while treating others with the sort of discretion and circumspection normally associated with probate attorneys. If you are a "beloved" figure such as, say, Steven Jobs, then investigations of your company's misconduct - involving the manner in which your pay was calculated such that you were the 4th highest paid CEO of the last decade; sounds like the dread Greed! - are handled quietly and almost obscurely. But if you are someone who has generated any sort of ill will, like, say, Martha Stewart, then you will be hounded into prison.

Many of the high profile prosecutions of the last 10 years have followed this pattern. There were crimes committed at Enron, but there were also a lot of gratuitous and abusive prosecutions, two of which - Arthur Anderson and Jeffrey Skilling - were later overturned by the Supreme Court. But, Enron was (hissss) an energy company. Ted Stevens may have been an unpleasant man, but if prosecutors could not make a case against him without engaging in wide ranging misconduct, they probably shouldn't have tried. But, Stevens was (hissss) a Republican from (hissss) Alaska. Kobe Bryant undoubtedly had sex with that flaky blond in Colorado, but there was no rape, and prosecutors knew about the accuser's slutty behavior even as they were chasing Bryant hither and yon. But, Bryant was a (hissss) basketball player who made no effort to kiss butt in the media. And, Karl Rove never disclosed anything about Valerie Plame and the prosecutor - lionized in the media of course - knew that from the beginning. But, Rove was (hissss) Karl Rove so, you know...

In the years since OJ, it's clear that prosecutors, judges, and juries have decided that a person's celebrity is an aggravating factor in any criminal prosecution. The fact is that you never saw people going to jail over the sort of perjury parsing that sent Martha Stewart to prison and nearly sent Rove. You never saw young women like Paris Hilton and Lindsay Lohan chucked into jail. This isn't to defend these idiots. But, if your notoriety and infamy is going to be taken into account at sentencing, the government really ought to let us know.

More here from Larry Ribstein.

Mob Rule: Obama and Alex Giannoiulias

Kimberly Strassel profiles Democrat Illinois Senate candidate Alex Giannoulias. You may have heard of him. He is a young (34 years old) scion of a Chicago banking family whose lending programs include loans to (dramatic pause) organized crime. Alexi G is also something of a protege of Barack Obama, whom you may have heard of. Sounds like JournaList needs to conduct a message coordination session! Obama's Other Chicago Problem

Mr. Obama continued to swing for Mr. Giannoulias right through the news that the Giannoulias's Broadway Bank had loaned millions to Michael "Jaws" Giorango, a convicted bookmaker, as well as other crime figures. He stuck with him through the news that some of this money had been disbursed when Mr. Giannoulias was the bank's senior loan officer

To paraphrase Democrat House Speaker Mike Madigan, time was, if you were alleged to be connected to the mob, you were done in politics. We live in different times, I guess, since the Democratic primary voters heard the mob story and voted for Alexi G anyway.

His primary opponent, David Hoffman, resurrected the mob story line, leading to new details about Mr. Giannoulias's lending history. He's been under fire for mismanaging the state's college savings program. The Blagojevich trial has rekindled interest in the Senate nominee's older brother, Demetris, who was pushed for a state board position by convicted Obama fund-raiser Tony Rezko. Mr. Blagojevich appointed him in 2004, and then reappointed him a year later, 33 days after Mr. Giannoulias's father donated $10,000 to the Blago campaign.

Then in April federal regulators seized Broadway Bank. Records showed the bank's lending profile changed sharply after Mr. Giannoulias came on full-time in 2002. His lending department doubled down on the risky real estate loans that helped shred the housing market; Broadway piled up losses. Mr. Giannoulias prospered.

Boy! Some guys have all the luck! Or all the $$! One or the other will suffice.

The only question I have: what in the world makes Alexi G a Democrat worthy of the attentions of a US Senator and future president of the United States? Is Alexi a committed Green? Doesn't look like it. Is he worried about "social justice?" Not that I can see. Is he an idealistic progressive who wants to make a difference? He's a banker! Maybe he knows how to make the right noises about spreading the wealth around, but doesn't let that interfere with his lifestyle. Certainly he's got the corrupt urban machine wing of the Democrat Party locked down.

Now I'm sure there are plaintive cries out there: "why would Jesus Delano Lincoln be in bed with a banker with ties to the mob? It makes no sense!" Well, I would refer you to David Horowitz's Shadow Party, which looks at the connections between the mob and the Democratic Party via Clinton operative Harold Ickes who made his name and fortune as a labor lawyer for NYC unions. Now, what word comes to mind when you hear the words "NYC Unions?" Ickes had a lot of unsavory clients, and when the time came for Ickes to fund raise for Democratic causes, he happily tapped those unsavory sources. While unions loudly trumpet their support for progressive causes, their mob infiltration and corruption continue unabated (it was only during the Reagan and Bush 41 administrations that saw sustained attacks on union corruption). Sound familiar?

Alexi G is nothing more than a mobbed up Dollarcrat, someone interested in making a buck off of the intersection between Big Government and Big Business. And, his patron was none other than the Progressive Prince himself. Funny that.

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