Putting a twist on this coverage model, it appears as if Senator Chris Dodd has a problem. Aside from pure partisan politics in the midst of an economic tsunami, Dodd’s personal relationships with many financial companies has run its course. I do not mean to say that Dodd and these individuals may not maintain an ongoing relationship, but the fact is a number of financial firms which supported Dodd over the years are either bankrupt, merged, or wards of the state. (Freddie, Fannie, AIG, Citi)

Bloomberg reports:

The Democrat has less than half the campaign cash he had at a comparable point in his last re-election bid, when he faced far fewer hurdles. Last year, he emptied an account built up largely through financial-company employees’ donations to pay for a presidential run; now, he has to replenish his coffers even as the firms his panel regulates struggle with losses and back away from their one-time champion turned critic.

How does a career politician go about learning some new tricks after 30 plus years of feeding at the same trough? Let’s see where things stand currently in Dodd’s campaign coffers.

Dodd began the year with $670,654 on hand; by contrast, he had about $1.6 million at the same point in his last Senate race. He ended up spending $5.7 million for his 2004 election after raising a total of $7.1 million, according to the Washington-based Center for Responsive Politics.

Additionally, Dodd will not be able to placate these financial firms as he will be forced to play the populist card in his campaign.

Perhaps Senator Dodd should have done what any quality salesperson does: broaden his product knowledge, diversify the client base, and work a little harder for the rank in file as opposed to playing the political games with management. A previous piece I wrote, How Wall Street Bought Washington, deals with this topic. Now Bloomberg reports Dodd’s AIG Ties, Cash Shortage Threaten Re-Election Bid.

LD

The first round winners were determined by your votes and revealed last night on the Nocturnal Warrior Show on No Quarter Radio. You can listen to that here. We did a review of last night’s so-called press conference followed by the tournament results. The show includes the scores, a review of the next round matchups and all sorts of commentary that we just can’t fit here.

Remember, your votes determine the winners. We are asking you to look at each matchup and determine for yourself who is the bigger ass in each matchup (We are not asking who has the biggest ass, although that may have helped Oprah and Donna Brazile in round one). Without further ado here we go:

ROUND TWO

White House Bracket

6th Seed Rahm Emanuel vs. 3rd Seed Dick Cheney

Capitol Hill Bracket

Media Bracket

At-Large Bracket

There you have it. Just use the polls as set up at No Quarter to determine your votes. The Polls will be open until midnight Friday. This weekend, we will reveal the “Sweet Sixteen,” and open up the voting. The “Sweet Sixteen” winners will be announced on next Tuesday night’s Nocturnal Warrior Show where we will break down the Elite Eight.

Feel free to add your comments about the matchups below. The key is to have as much fun with this as possible!

No kidding. You can’ make this shit up. Apparently, in the future, we won’t recognize who they are. Let’s call it the Wall Street rendition of the witness protection program.

NEW YORK, March 22 (Reuters) – Workmen rolled up their sleeves at American International Group Inc (AIG.N) this weekend to take down the most prominent sign at the downtown Manhattan offices of the embattled insurer that has become the scorn of America.

A spokesman said the company had decided to replace the large AIG sign — outside the entrance to its property-casualty offices — as part of its plan to change that operation’s name to AIU Holdings Ltd.

The move is designed to “distinguish these well-capitalized businesses from AIG,” said a second spokesman.

In what is probably the closest thing to a truthful remark from AIG’s AIU’s Fed-Selected CEO we have heard in a month, the man finally admitted what a thieving, morally-bankrupt sack of crap this company truly is.

“I think the AIG name is so thoroughly wounded and disgraced that we’re probably going to have to change it,” Liddy told a U.S. House of Representatives subcommittee last Wednesday.

Funny, I kind of get the feeling that the move is to Disappear the name “AIG”. I am sure they are all hoping that angry mobs won’t be able to find their thieving asses any longer.

I get the distinct feeling that in the near future, Geithner, Paulson and Bernanke may be borrowing three sets of those groucho glasses. Barring that possibility due to a run on purchases of these props caused by the rest of their Goldman-Sachs and other Wall Street friends, they can always temporarily go for the bag over the head routine until novelty companies restock. The photo above is a custom-made bag earmarked for Chris Dodd, whose wife seems to have had previous employment ties to AIGan AIU-owned business.

From “Dodd’s Wife a Former Director of Bermuda-Based IPC Holdings, an AIG Controlled Company,” Real Clear Politics, March 23, 2009, by Kevin Rennie:

Jackie Clegg Dodd introduces her husband Presidential candidate US Senator Chris Dodd to the Democratic Convention at Skyline High School. Photo by Scott G. Winterton / Deseret Morning News July 14, 2007.

No wonder Senator Christopher Dodd (D-Conn) went wobbly last week when asked about his February amendment ratifying hundreds of millions of dollars in bonuses to executives at insurance giant AIG. Dodd has been one of the company’s favorite recipients of campaign contributions. But it turns out that Senator Dodd’s wife has also benefited from past connections to AIG as well.

From 2001-2004, Jackie Clegg Dodd served as an “outside” director of IPC Holdings, Ltd., a Bermuda-based company controlled by AIG. IPC, which provides property casualty catastrophe insurance coverage, was formed in 1993 and currently has a market cap of $1.4 billion and trades on the NASDAQ under the ticker symbol IPCR. In 2001, in addition to a public offering of 15 million shares of stock that raised $380 million, IPC raised more than $109 million through a simultaneous private placement sale of 5.6 million shares of stock to AIG – giving AIG a 20% stake in IPC. (AIG sold its 13.397 million shares in IPC in August, 2006.)

Clegg was compensated for her duties to the company, which was managed by a subsidiary of AIG. In 2003, according to a proxy statement, Clegg received $12,000 per year and an additional $1,000 for each Directors’ and committee meeting she attended. Clegg served on the Audit and Investment committees during her final year on the board.

IPC paid millions each year to other AIG-related companies for administrative and other services. Clegg was a diligent director. In 2003, the proxy statement report, she attended more than 75% of board and committee meetings. This while she served as the managing partner of Clegg International Consultants, LLC, which she created in 2001, the year she joined the board of IPC. (See Dodd’s public financial disclosure reports with the Senate from 2001-2004 here.)

Dodd is likely more familiar with the complicated workings of AIG than he was letting on last week. … Read all.

Ahem. No doubt he is.

P.S. If, the first time I mention her name, you click on the link, you’ll be treated to an interesting story about Dodd’s long courtship of Jackie, as well as the story of her Utah Valley family’s solid Mormon and Republican roots from the Deseret Morning News newspaper in Utah.

It’s that time of year. If you are one of the lucky Americans still working in an office atmosphere, you probably have been inundated with bracket contests tied to the NCAA Tournament. I love the tournament and watch those games religiously, but here at No Quarter we deal with more serious fare and not everyone is a sports fan. So on Tuesday night’s edition of the Nocturnal Warrior Show on No Quarter Radio, we created a tournament of our own. You can listen to the show here (I highly recommend it; it was one of our better efforts.)

We revealed a field of 64 participants vying for the No Quarter Trophy. Our National Champion will be the person you pick as the Biggest Ass on the American Political Landscape.

We’ve broken the field in four brackets seeded 1 through 16 and have determined the matchups accordingly. All you have to do is tell us who you think is the winner of each matchup.

This will be a round by round affair. You can list your winners in the comment sections here or e-mail them to me at nocturnalwarriorshow@gmail.com. First-round winners will be announced on next Tuesday night’s Nocturnal Warrior Show. Feel free to submit all of your logic for making your picks.

So without further ado, here are the matchups.

White House Bracket
1st Seed Barack Obama vs. 16th Seed Bill Clinton
8th Seed Joe Biden vs. 9th Seed Robert Gibbs
5th Seed George W. Bush vs. 12th Seed Lawrence Summers
4th Seed Timothy Geithner vs. 13th Seed Susan Rice
6th Seed Rahm Emanuel vs. 11th Seed Jimmy Carter
3rd Seed Dick Cheney vs. 14th Seed Colin Powell
7th Seed David Axelrod vs. 10th Seed Eric Holder
2nd Seed Michelle Obama vs. 15th Seed Condoleeza Rice

Capitol Hill Bracket
1st Seed Nancy Pelosi vs. 16th Seed Christopher Dodd
8th Seed Charles Rangel vs. 9th Seed Mitch McConnel
5th Seed Chuck Schumer vs. 12th Seed Claire McCaskill
4th Seed John Boehner vs. 13th Seed Norm Coleman
6th Seed Edward Kennedy vs. 11th Seed Rolan Burris
3rd Seed Barney Frank vs. 14th Seed Eric Cantor
7th Seed Joe Lieberman vs. 10th Seed John Kerry
2nd Seed Harry Reid vs. 15th Seed Larry Craig

Media Bracket
1st Seed Keith Olbermann vs. 16th Seed Katie Couric
8th Seed William Kristol vs. 9th Seed Dick Morris
5th Seed Ann Coulter vs. 12th Laura Ingraham
4th Seed Rachael Maddow vs. 13th Seed Markos Moulitsos
6th Seed David Shuster vs. 11th Seed Ariana Huffington
3rd Seed Maureen Dowd vs. 14th Seed Rush Limbaugh
7th Seed Joe Klein vs. 10th Seed David Broder
2nd Seed Andrew Sullivan vs. 15th Jamal Simmons

At Large Bracket
1st Seed Chris Matthews vs. 16th Eliott Spitzer
8th Seed Rod Blagoevich vs. 9th Seed William Ayers
5th Seed Caroline Kennedy vs. 12th Seed John Edwards
4th Seed Donna Brazile vs. 13th Jeremiah Wright
6th Seed Bill Richardson vs. 11th Seed Michael Steele
3rd Seed Tom Daschle vs. 14th Seed Bobby Jindal
7th Seed Howard Dean vs. 10th Seed Alan Greenspan
2nd Seed Oprah Winfrey vs. 15th Seed Tim Kaine

There, you have it.. Just post up or e-mail us your first round picks and we will pare the field down. Have fun with this!!!

And so now, we have finger pointing between senators and representatives, the Department of the Treasury, and the White House. Do I even need to tell you that the White House is COMPLETELY blameless in this?? Oh, you know Obama is taking ZERO responsibility for the tax payers, many of whom have lost their own jobs, not just paying to keep these companies afloat, but giving them BONUSES!!!

Oh, yes – Obama is just railing away, despite his Chief of Staff actually working on the whole piece that had the bonuses in it. Oh, wait – that was two minutes ago. That story has already changed to make everything, absolutely everything, Chris Dodd’s fault. Except – Oh Wait – now we find out that Tim Geithner, the man who can’t even be bothered to download Freakin’ TURBO TAX, has admitted that Dodd was ASKED to put in this little loophole. By the Treasury Department. Oops!

So, um, Chris – how happy are you now that you threw your support to Obama?!?! Hahahahahaha! I mean, karma’s a bitch, ain’t it??

Anywho – the whole issue is discussed fully in the video below (H/T to SusanUnPC for the heads up on the video, and Cheneywatch for the video). Pay special attention to Charles Krauthammer:

Well, I gotta say, I think he makes a pretty good point, and not just because he talks about my team, the New York Yankees! Anyway – yes, in the scheme of things, it is not that much money. But I think what bugs people about it all, besides it being OUR taxpaying dollars, is the hubris of it all.

More importantly, though, is the manner in which the Democrats went about this. They have forgotten that when they are solely in power, they will solely take the blame, too. Rightly so, in this case, I think we can agree. Pelosi crafted this pork-laden stimulus bill, any number of top Democrats, they rammed it through, claiming all kinds of horrors would befall us if they didn’t, then Obama sat on it for a couple of days so he could finish up his SECOND vacation (he’s now on his third – in two months), then jet off to Denver to sign it. Yes, I can see why it was so important for them to use fear mongering tactics, then sit back and relax. And apparently, even THEN, no one bothered to read the damn thing. So we get loopholes like the one Dodd, or Emanuel, or Pelosi, or Reid, or Geithner, or WHOEVER the hell it really was, to allow bonuses for people at AIG. That kind of thing just doesn’t sit very well with a lot of people. Still, it is, as Krauthammer was implying, a smokescreen for the BIGGER issues at hand, at which we should be looking, and that is the proposed Budget, the Economy, and the billions in earmark projects for which we are paying.

Well, wait – let me ask you, in this completely scientific way: Are YOU mad that your money is going to pay these other people’s bonuses, especially at a company that you have already given around $173 BILLION dollars? Yes? Well, David Axelrod doesn’t think you are. I am not kidding. That is his latest message: that the American people don’t give a crap about stuff like this. Greg Sargent had this at The Plum:

Come on, guys, can’t we get the message straight on this one?

Yesterday I noted that Rahm Emanuel had said that Obama saw the AIG fiasco as a “big distraction” from efforts to fix the economy. Later in the day, Obama walked that back, asserting that the public was right to be “angry” about the whole mess and right to find it “consuming.”

Today, another senior Obama adviser, David Axelrod, is throwing in his lot with Rahm and the AIG-isn’t-a-huge-deal camp:

“People are not sitting around their kitchen tables thinking about AIG,” Axelrod said. “They are thinking about their own jobs.”

So are people upset about this, or aren’t they? Actually, people are thinking about the AIG disaster. Yesterday’s Gallup poll found that a big majority is very upset about it. Only 11% said they are “not particularly bothered” by it.

Again, this just seems weird politically. Why pretend that folks aren’t pissed off about this at a time when Republicans are moving aggressively to paint Obama as too passive on the issue and position themselves as the outraged and heroic defenders of the taxpapers?

Update: David Kurtz says: “I honestly don’t get what up-side they see politically in taking this tack.” He suggests that it’s “tone deaf.” Agreed on both counts.

I agree on both counts, too, in case you are keeping score.

Has it really only been two months of this guy? Good grief. I wonder who’s going to have to take the fall for Obama next? Hmmm, maybe that new pup the girls are getting (and so much for the whole shelter dog thing – I think we all knew that was just words, too)…

Honestly, I’m getting motion sickness from all of this…

(FROM LARRY JOHNSON–This is big trouble for Dodd and Timmy Geithner. Geithner lied as well about his role in this fiasco. You cannot have a liar at the top of Treasury and hope to be taken seriously.)

Larry Johnson called me and told me he’d seen this video of Sen. Christopher Dodd (D-Conn.) admitting that he secretly fixed the bill, taking out amendment language (written by Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine)) that would have prevented bonuses in excess of $100,000. From CNN’s story:

– After denying having anything to do with crafting language in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses, Sen. Christopher Dodd admitted that he and the Treasury Department were responsible for the loophole. … Read all.

Yesterday, the Liar-Pants-On-Fire hemmed and hawed like this:

This is the Chris Dodd of yesterday, which I had titled in the drafts as:

Government is buying you off.

If anyone is going to raise an angry mob, and scream *off with their heads!* at anyone, it is the American people on Washington. The fault lies with Washington. Those who granted the bailouts, those who wrote the loopholes for those bonuses, those who didn’t monitor what was happening with the bailout money, and those who claimed to know what was happening with the money, and granted even more bailout money. Watch this video.

That’s not to say there aren’t some at AIG guilty of mismanagement, or that some big wigs worked with the Treasury Department to ensure those bonuses remained. They have some responsibility in this financial mess, but we elect Congress, and the President, to spend our money wisely. They failed. They lied. And they are trying to cover it up, and create distractions.

Mob rule in Washington.

The bad guys aren’t those at AIG. The bad guys are in Washington. They are lying, covering up, and creating distractions (see my post obama hypocrisy watch). They are either the most corrupt or the most stupid people, ever.

Case in point – this little tidbit of Breaking News!

At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.

Rep. John Lewis, chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece.

Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.

Washington is granting all these bailouts, with tax payer’s money, and these companies owe MILLIONS in back taxes. Stop the insanity!!!

Here is a bonus video, which touches on some of what I wrote about the other day, in my piece president bamboozler.

For Obama it’s politics over principle.

March 16, Tapper went after Gibbs on what the Obama admin knew, and when they knew it.

“TAPPER: You guys first found about these bonuses last week?

GIBBS: I think that’s true, based on what I read in the newspaper.”

March 17, Tapper reported that WH officials knew about the bonuses two weeks ago.

“It wasn’t until Thursday, March 5, 2009, administration sources told ABC News, that officials of the Federal Reserve Bank of New York informed officials of the Treasury Department of the full extent of the $165 million in bonuses pending for the controversial Financial Products Subsidiary.

This was three days after the Obama administration had already announced a new commitment of an additional $30 billion for AIG.”

And March 16, Tapper reported: White House Says It’s Confident It Knows What Happened to Previous AIG Billions

“From White House press secretary Robert Gibbs’ briefing two weeks ago, when $30 billion in additional funds were announced for AIG. AIG had at this point designated $165 million in retention bonuses for officers of the Financial Products subsidiary, as well as an additional $121.5 million in executive bonuses.”

Salon.com reports that the WH is trying to make Dodd the fall guy. The dishonest “Blame Dodd” scheme from Treasury officials

“It was Obama officials, not Dodd, who demanded that already-vested bonus payments be exempted.”

FOX just reported, “Dodd’s original amendment did not include that exemption, and the Connecticut Senator denied inserting the provision.

“I can’t point a finger at someone who was responsible for putting those dates in,” Dodd told FOX. “I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.”

“Because of negotiations with the Treasury Department and the bill Conferees, several modifications were made,” Dodd Spokesperson Kate Szostak in a response to FOX Business.

There is a lot of finger pointing, covering up, and faux outrage being thrown around. But one thing seems obvious. This is yet another instance, where Dodd and Obama were top recipients of donations from companies that caused major financial problems for America. Coincidence?

So, what’s a new President to do, when he finds himself in hot water, and completely in over his head, facing dropping poll numbers, and a growing number of outraged Americans?

Appear on Jay Leno, of course.

UPDATE: Surprise, surprise surprise…Dodd admits he did insert the loophole to protect bonuses. But Obama made him do it!!

Don’t miss these other NQ stories:
AIG Contracts a Brain Freeze
White House Panics at the Mob Marching on AIG
Just The Facts, Barack
Top Ten Reasons Obama is Appearing on Jay Leno

I was struck a month ago by the incriminating statements put forth by Senator Chuck Hagel and CIA head Leon Panetta, which I highlighted on February 16th in Legalized Bribery. Those statements bluntly indict our massive system of lobbying, political fundraising, and the quality of those running for elected office! In light of that article, I am more and more convinced that our elected officials have turned their offices into massive for profit machines at the expense of our public well being.

I commend the authors of this report, Roger Weissman and James Donahue, for taking the time and making the extensive effort to expose the truth. The full report, 231 pages in length, spares no detail. In studying it, I found the information and analysis riveting. Let me try to summarize it for you.

The report chronicles in real detail how Wall Street showered Washington with $1.7 billion in campaign contributions and $3.4 billion upon lobbyists over the last ten years. That money went from the lowest members of Congress to the President of the United States. 55% of the contributions went to Republicans and 45% went to Democrats. Yes, a truly bipartisan effort.

The authors are beyond thorough in laying out how the . . .

financial sector showered campaign contributions on politicians from both parties, invested heavily in a legion of lobbyists, paid academics and think tanks to justify their preferred policy positions, and cultivated a pliant media — especially a cheerleading business media complex.

The report highlights the electricity crisis in California in 2000 and the Enron debacle as precursors of our current situation.

They quote FDR in his statement, “our enemies of today are the forces of privilege and greed within our own borders.” The same clearly holds true today.

Where were our leaders with the vision and foresight to protect the public? Feeding at the Wall Street trough!! Let’s review what the $5.1 billion bought Wall Street and who in Washington facilitated the process. Later I will highlight a number of politicians who collected substantial amounts of these dollars.

Part I : What Did the Money Buy?

1. the repeal of the Glass-Steagall Act which separated commercial and investment banking activities. This act came out of the Great Depression. Former Fed chair Paul Volker supported Glass-Steagall in the late 90’s and still does today. The expected repeal of this Act allowed for the merger of Citibank and Travelers Insurance even before the formal repeal. President Clinton, Treasury Secretary Robert Rubin, Congressman Phil Gramm, and Fed Chair Alan Greenspan were the primary supporters of this repeal.

2. the allowance of off-balance sheet accounting which promoted the increased leverage in banks.

3. the executive branch rejects financial derivative regulation. The CFTC (Commodities Futures Trading Corp), led by Brooksley Born’s effort, sought to exert regulatory control over derivatives. The CFTC was squashed by Robert Rubin and Alan Greenspan. Then Deputy Treasury Secretary Larry Summers told Congress that CFTC proposals would cast regulatory uncertainty over a thriving market. Aside from Rubin, Greenspan, and Summers, Senator Richard Lugar and SEC Chair Arthur Levitt also supported the Clinton administration’s lack of regulatory oversight.

4. Congress also blocked financial derivative regulation through legislation engineered by Senator Phil Gramm.

5. in 2004, the SEC succumbed to massive lobbying by Wall Street allowing for voluntary regulation. This acquiescence is the grossest example of the inmates running the asylum. In 1975, the SEC ruled that debt to net capital ratios had to be less than 12 to 1. This “voluntary regulation” led by Goldman Sachs and then CEO Henry Paulson allowed investment banks to develop their own net capital requirements. Merrill Lynch went to a 40:1 ratio. Then SEC chair Chris Cox acknowledged this voluntary regulation was a complete failure!

6. the bank self-regulation goes global.

7. the total failure to police the mortgage banking industry and its predatory lending. People may never have heard of outfits such as Aames Financial, Delta Funding, Ameriquest, Long Beach, and many more. These firms propagated massive frauds in lending to unqualified borrowers. They need to be brought to justice.

8. the federal government preempted a number of state consumer protection laws which would have mitigated a lot of the predatory lending.

9. the government allowed for purchasers of loans to escape accountability. Only the original mortgage lender would be liable for the predatory and illegal features embedded in the mortgages. This immunization of the investment banks eliminated their legal exposures and facilitated the continuation of fraudulent lending practices.

10. Fannie Mae and Freddie Mac expand their footprints into the non-prime mortgage market. Many politicians fed from the Freddie and Fannie troughs, but nobody more than Chris Dodd and Barack Obama.

11. the merger mania in the banking industry has led to institutions now deemed “too big to fail.” This report believes these institutions should now be treated like highly regulated public utilities.

12. the debacle that played out with the rating agencies only further facilitated this mess. These agencies were and still are massively conflicted.

Part II: Who Paid What and Who Collected How Much 1998-2008?

– Commercial Banks spent $154 million in campaign contributions and $383 million on lobbyists.

— Accounting Firms spent $81 million in campaign contributions and $122 million on lobbyists.

— Insurance Companies spent $220 million in campaign contributions and $1.1 billion on lobbyists!!

— Investment Banks spent $512 million in campaign contributions and $600 million on lobbyists.

A very large percentage of the lobbyists were former government officials!!

While the report makes a number of recommendations, a few strike me as self-evident and vitally necessary:

1. derivatives must be regulated.
2. limited leverage within financial institutions
3. revise the compensation system for financial institutions so timing of reward is linked to elimination of risk
4. consumer advocacy groups

The list of politicians receiving the largesse runs approximately 80 pages and covers the Presidency to seemingly every member of Congress. I was also struck by the consistency of contributions received during each election cycle by Senators Schumer (D-NY) and Dodd (D-CT). Schumer represents the Wall Street territory while Dodd has been a longtime senior ranking official on the Senate Banking committee.

As I perused the financial data specifically for 2008, I paused and reflected on the fact that these institutions were, and to a large extent still are in dire financial straits. While in the process of receiving government support, they had made or were making campaign contributions. As the government has haphazardly reviewed expenditures at these organizations, let’s shed the floodlight right back on these campaigns. It is not difficult to track campaign contributions to politicians back to taxpayer funds injected into these firms. In light of that, I know it will never happen but I believe the political campaigns should return those dollars to the public. Who received how much money in 2008? While not totally comprehensive, my back of the envelope analysis shows the following:

Barack Obama: $3.9 million
John McCain: $2.1 million
Hillary Clinton: $2.5 million
Rudolph Giuliani: $1.1 million
Chris Dodd: $650k
Mitt Romney: $1.060 million
Rham Emanuel: 160k

President Obama, Madame Secretary and gentlemen, please make those checks payable to “American Taxpayer” and let’s begin to return some integrity to our political process.

Where’s the media to shed light on this travesty? Oh yes, they are compliant and cheerleading.

Robert Rubin, he’s our man, if he can’t do it, Greenspan can,
Alan Greenspan, he’s our man, if he can’t do it, Paulson can,
Henry Paulson, he’s our man, if he can’t do it, Dodd can,
Chris Dodd, he’s our man, if he can’t do it, Gramm can,
Phil Gramm, he’s our man, if he can’t do it, Obama can…

Uh, oh!! We got real problems!!

LD

**Cross-posted from my blog, Sense on Cents. Come by and visit!

Ben Bernanke’s testimony over the past two days gives us our best clue yet about where the administration and the Fed are going with bank rescue. And the answer seems to be … nowhere.

Simon Johnson and James Kwak read it the same way I do:

This is another sign of the serious brainpower that has been expended on finding ways to avoid or minimise government ownership of banks, and to avoid the slightest possibility of offending shareholders – shareholders whose shares have positive value primarily because of the expectation of a further government bail-out.

And The Economist’s Free Exchange puts it bluntly:

At this stage, I joked, I’d be just as happy with them just saying, “We have a strategy, we will continue to inject capital to prop up zombie banks indefinitely. That’s pretty much the whole plan and we’re counting on it bringing the financial sector back to life someday, somehow”. Is it just me or is that pretty much what Ben Bernanke said yesterday?

No, it’s not just you.

Well, that’s good to know. I mean, it seems like a whole bunch of us have been saying this makes no sense, and we don’t want our hard-earned taxpaying dollars going down the drain, but we felt like voices crying out in the wilderness. Perhaps we are not alone afterall:

I’d add a political-economy point. Here’s Noam Scheiber, in the new TNR economics blog:

Yesterday afternoon I spoke to a senior Democratic aide in the Senate who repeatedly emphasized that, the way things stand now, it would be almost impossible to get another cent for the banks. Congress has “bailout fatigue,” the aide said.

Indeed. As long as capital injections are seen as a way to bail out the people who got us into this mess (which they are as long as the banks haven’t been put into receivership), the political system won’t, repeat, won’t be willing to come up with enough money to make the system healthy again. At most we’ll get a slow intravenous drip that’s enough to keep the banks shambling along.

More and more, it looks as if we’re headed for the decade of the living dead.

I couldn’t have said it better myself. But like I said, I’m not a major economist who won a Nobel Peace Prize. Krugman is and did, so I’m gonna listen to him.

So speaking of banks wanting more money, guess who is back at the trough asking for more money from us, the taxpayers I’ll give you a hint – it’s an alphabet company. Yep – you got it, AIG:

Hell freakin’ yeah, they’re back. Some nerve, too, if you ask me, especially after their lavish spending ways. They want us to continue to subsidize them when tey have not demonstrated any fiscal restraint or responsibility?? Are you kidding me?

And while I am on this topic, it is high past time for the Democrats to stop blaming this situation totally on the Republicans. I can understand WHY they are trying to convince everyone that they had absolutely NOTHING to do with this, but the reality is that they have been in charge of BOTH Houses of Congress for over two years now. Where was their oversight of the SEC, in its non-existent oversight of people like Bernie “Made-Off”? Where were they when Franklin Raines ran Fannie Mae into the ground (and Raines, who left in disgrace, was one of Obama’s advisers)? Where were they when Jim Johnson ran Freddie Mac into the ground (and we know where Tim Johnson is – he was on Obama’s Veepstakes Search)?

So, yeah – Bush was horrible – we know that. But for the past 2 years, the DEMOCRATS have been the ones in charge of the purse-strings and the oversight, so stop the blame game, start taking some responsibility, and STOP HANDING OUT OUR MONEY LEFT AND RIGHT!!! Enough already!!

And that ESPECIALLY goes for you, Nancy Pelosi, with this new $410 BILLION dollar package chock-full of pork the House is proposing!! ENOUGH!!!

While there is tremendous volatility in the markets and commensurate anxiety as a result, there were some major stories and developments that got less play but deserved more.

Allow me to expound. Robert Shiller, a highly distinguished Economics Professor at Yale Univeristy and co-designer of the Case-Shiller Home Price Index spoke this morning on Bloomberg News. Shiller is the preeminent expert on trends and developments in housing. He made the following assessments:

1. Glad to see that Obama is making an effort to support housing but has serious concerns about the effort.

2. $75 billion allocated for loan modification is not nearly enough to make a truly meaningful impact. (remember there is another $200 billion allocated for Freddie and Fannie to refinance mortgages).

3. No plan or proposal for those holding Jumbo mortgages leaves a large part of the market without benefits. Those homes will likely hang over the market.

4. Shiller believes we may very well see a second wave of speculation in housing. He has this opinion because he thinks some buyers will try to “bottom fish” the market. He believes our view of housing as an investment vehicle as opposed to a means of shelter and comfort needs to change!

5. He finds it impossible to make a forecast on the housing market given the great uncertainties about the impact of the stimulus proposal and banking plans.

6. While he welcomes the Obama adminsitration’s efforts, he cautioned that this economic downturn led by housing will not be over quickly.

7. Confidence is badly needed and will only return when our government and global governments are able to develop strategic and robust long term planning.

What do I think of Shiller’s comments? I think he is stating that Obama’s housing plan is well intended but given that we can not distinctly segment the housing market by sectors that it will have a marginal impact. Additionally I think he is being cautious in stating that Americans need to change their mindset about homes being piggy banks. I measure his comments next to former Australian Treasury Secretary Keating and I see the same message; this downturn will take considerable time to turn around!

I also listened to the cult-like NYU Professor Nouriel Roubini today as well.
He offered the following:

1. Strong possibility of a sovereign default in the Euro zone. He singled out Ireland, Greece, Iceland, Spain, Italy and Belgium as countries with the most issues within their banking sectors. He does believe that if only one or two countries expose their problems that the balance of the European Union will support them. He did not offer an opinion if the contagion is so massive and spreads. He did highlight the fact that Western European banks have outsized exposures to emerging Europe and the emerging markets elsewhere in the world. He singled out Estonia, Latvia, Lithuania, Belarus, and Ukraine as the countries with the greatest issues.

2. In the United States he thinks the prospects of a temporary nationalization of a major bank or banks may happen very soon. He does think the Obama administration’s moves so far (bank plan, housing) are in the right direction but do not go far enough.

3. Roubini does believe that the United States has moved quicker to address our issues than either Europe or Japan.

4. On the housing front he thinks that we will eventually have to move to a “principal reduction” program in order for it to be effective.

5. How will we pay for all this? Everybody’s taxes will be going up although not right away. We will also have to deal with increasing inflation.

Away from these two titans, there was a lot of rumbling in the markets and from Washington about bank nationalization. While Ken Lewis, CEO of Bank of America was all over the news defending BofA and how nationalization should not be a topic of conversation, I saw and heard nothing from anybody at Citibank. The market believes that Secretary Geithner will be out next week with more details about his Financial Stability Plan (hopefully it goes better this time) and there is an outside chance he releases something over the weekend.

From Washington I heard conflicting viewpoints on nationalization from Senator Dodd. Dodd was panned on Bloomberg at one point. I will admit he makes for a very easy target.

LD

I couldn’t resist weighing in on Frank Rich’s latest lefty missive to poke another stick in the eye of Republicans, even though it is obvious there is plenty of blame to go around regarding our current economic crisis. Rich begins his rant:

Here’s a bottom line to keep you up at night: The economy is falling faster than Washington can get moving. President Obama says his stimulus plan will save or create four million jobs in two years. In the last four months of 2008 alone, employment fell by 1.9 million. Do the math.

The abyss is widening. Of the 30 companies in the Dow Jones industrial index, 22 have announced job cuts since October. Unemployment is up in all 50 states, with layoffs at both high-tech companies (Microsoft) and low (Caterpillar). The December job loss in retailing is the worst since at least 1939. The new-home sales rate has fallen to its all-time low since record-keeping began in 1963.

What are Americans still buying? Big Macs, Campbell’s soup, Hershey’s chocolate and Spam — the four food groups of the apocalypse.

The crisis is at least as grave as the one that confronted us — and, for a time, united us — after 9/11. Which is why the antics among Republicans on Capitol Hill seem so surreal. These are the same politicians who only yesterday smeared the patriotism of any dissenters from Bush’s “war on terror.” Where is their own patriotism now that economic terror is inflicting far more harm on their constituents than Saddam Hussein’s nonexistent W.M.D.?

Antics? Anything like Nancy Pelosi’s antics in blaming the entire economic crisis on the Republicans last Fall – even though Democrats opposed more stringent banking regulations and are likewise neck deep in the Fannie/Freddie scandal? Look, I don’t pretend to be an expert in this field. Far from it. But as a taxpayer, it is painfully obvious that predatory lending practices, greed from many sectors and delusional ‘it’s a never ending party’ behavior from many in power in the private and public sector are to blame for the situation in which we find ourselves. This is all the more painful and frustrating because many of us show up, pay our bills on time, did not behave recklessly and would never dream of cheating anyone – but we are now having to foot the bill for crooks.

On the one hand, Frank Rich is stating that Obama’s solution is not enough but then criticizes Republicans for opposing it. Uh, here’s a hot flash – a lot of Americans are real worried about handing this money over to someone who spent 6 million on faux Grecian columns for a one night stand, had the most expensive inauguration party in history, and spent over $100 on a piece of imported Kobe beef. No – it’s not the only thing we focus on – but it is a good indicator of attitude and mindset. It is cause for worry because it represents a pattern of behavior.

Rich further states:

The House stimulus bill is an inevitably imperfect hodgepodge-in-progress. Obama’s next move, a new plan to prevent the collapse of America’s banks, may prove more problematic still, especially given the subpar record of the new Treasury secretary, Timothy Geithner, in warding off calamity while at the New York Fed.

Let’s talk about that. It is further indicative of a pattern of behavior that Tim Geithner, a tax evader, is now in charge of the Treasury. And Tom Daschle, another tax evader with a lobbyist wife, almost squeaked by with a cabinet post as well, till it got too hot in the kitchen and he had to withdraw his nomination today. The Deputy Secretary of Defense was a lobbyist for Raytheon. So President Obama’s administration is a case of do as I say, not as I do? Whatever happened to cleaning up the dirt in Washington? Why should we trust these guys to spend our money wisely?

Rich insultingly says:

No one should expect the Republicans to give the new president carte blanche, fall blindly into lock step or be “post-partisan.” (Though that’s exactly what the G.O.P. demanded of Democrats with Bush: You were either with him or with the terrorists.) …But you might think that a loyal opposition would want to pitch in and play a serious role at a time of national peril.

So what is “pitching in” comprised of, in his view – just capitulating without debate on one of the biggest spending bills ever? Is just ‘lying down and taking it’ the way to go? Look, I am no Republican and most probably never will be, but just as I didn’t like one party rule under the Republicans in 2001-2006, I feel no greater comfort now with President Obama arrogantly saying “well, I won,” and Speaker Pelosi passing this pork filled stimulus bill in the House, without one ounce of bi-partisan support. So much for reaching across the aisle. Mr. Rich continues:

The current G.O.P. acts as if it — and we — have all the time in the world. It kept hoping in vain that the fast-waning Blago sideshow would somehow impale Obama or Rahm Emanuel. It has come perilously close to wishing aloud that a terrorist attack will materialize to discredit Obama’s reversals of Bush policy on torture, military tribunals and Gitmo. The party’s sole consistent ambition is to play petty politics to gum up the works.

Uh, no. I certainly don’t want to see anything horrible happen to our country so I can say “I told you so.” And anyone who does ought to rethink that position. Simultaneously, I will not be cowed into spending almost a trillion dollars out of fear – which sounds suspiciously like what the Republicans did to us when demanding that we support the Iraq war. Mr. Rich conveniently forgets that if the Democrats want to trumpet themselves as the party that occupies the moral high ground, then they have to act like it. That means the Dems don’t get to bully moderates and conservatives by branding them as people who want the country to fail just for not driving off a cliff after Nancy Pelosi and her stimulus package.

Mr. Rich also complains that Republicans:

“posture in public about their determination to take action, then do nothing while more and more Americans cry for help.”

But even Paul Krugman, the only sane man left at the NYTimes apparently, disagrees with Mr. Rich touting the Obama Administrations plans. Take a look at his editorial, Bailouts for Bunglers:

Question: what happens if you lose vast amounts of other people’s money? Answer: you get a big gift from the federal government — but the president says some very harsh things about you before forking over the cash.

Am I being unfair? I hope so. But right now that’s what seems to be happening.

Just to be clear, I’m not talking about the Obama administration’s plan to support jobs and output with a large, temporary rise in federal spending, which is very much the right thing to do. I’m talking, instead, about the administration’s plans for a banking system rescue — plans that are shaping up as a classic exercise in “lemon socialism”: taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right.

When I read recent remarks on financial policy by top Obama administration officials, I feel as if I’ve entered a time warp — as if it’s still 2005, Alan Greenspan is still the Maestro, and bankers are still heroes of capitalism………..

It is worthwhile to note Paul Krugman felt Hillary Clinton had far better plans for the economy and health care. Oh, but then Rich excoriated Hillary — I guess she’s not one of those good Democrats he’s always touting. Then Mr. Rich pulls the following statement out of the air:

The more disturbing problem is that the party has zero leaders and zero ideas. It is as AWOL in this disaster as the Bush administration was during Katrina.

Which party is Mr. Rich talking about above – it’s hard to tell.

The answer to everything is not to throw money at the problem – the private sector has already proven they cannot manage money responsibly. You will pardon me if I don’t want to write them any more big checks while they use the dough to redecorate their offices with no oversight in sight. And the Dems offered no oversight once they took back Congress in 2006. What makes you think that this one party control is going to offer any now? Their new Treasury Secretary sort of forgot to pay his taxes. Oops.

Like Rich, I do not necessarily think Republicans are “the party of good ideas.” But if Mr. Rich wants to complain about that, he should take it up with his favorite new President – after all, Obama is the one quoted as saying they are.

Rich says Republicans just want “bigger tax cuts, particularly for business and the well-off.” Actually, no. In the Forbes Magazine editorial, Grand New Party: Steele In Their Spines, Reihan Salam details what some Republicans are proposing:

Not only have Republicans opposed this ill-conceived free-for-all–they’ve actually floated a number of more attractive alternatives, including a steep payroll tax cut, a sharp increase in the child tax credit, and offering state governments loans instead of grants. The first would represent an immediate economic boon to all American workers and businesses, the second would benefit hard-hit families, and the third would force state governments to spend responsibly rather than shovel money out the door. If Republicans keep moving in this direction, by backing similarly smart policies on fighting climate change and rising health care costs, President Obama and Congressional Democrats will have a real fight on their hands.

Spending responsibly sounds good to me. If it’s a loan one has to pay back, one is a little more concerned with not pissing it away on drapes. Accountability. Transparency. Where is it coming from in this new pure as the driven snow administration when Daschle was behind closed doors yesterday apologizing for his $112,000 tax embarrassment and trying to sneak through the confirmation process.

What happened to the new way of doing business in Washington?

By the way, this is the same bunch who dis-invited paraplegic Sen. Max Cleland from making a campaign appearance on behalf of Obama because Cleland did occasional lobbying work on behalf of a company that helps paraplegic veterans. M’kay. They did it because Plouffe and Co. did not want to open Obama up to any criticism for any “lobbying ties.” So they shamefully dissed a hero of the Democratic Party, but Geithner and Daschle’s tax evading antics are okay? Daschle was forced to withdraw or create a huge embarrassment for the Obama Administration. The Dems were still pushing for him as of yesterday. Go ahead, Mr. Rich, please keep scolding the Republicans. You are drawing on a weak hand.

I am the first to say that President Bush was a disastrous leader and the spending he incurred as a result of the war and more, while telling us to “go shopping” was a disgrace. But as to the rest, the only two I recall really making a noise about the housing crisis were Hillary Clinton and John McCain. Where was Chris Dodd, head of the banking committee; or Kerry, who is complaining about the stimulus package now? Or Barney Franks?

Here is something else Republicans are proposing — see what you think about this:

Senate Republicans circulated a sweeping plan to drive down the cost of mortgages by expanding the federal government’s role in the industry, officials said Monday night…

The emerging proposal also relies on a bigger and more widely available tax break for homebuyers than is now available, those officials added as Senate Republicans staked their claim to a different type of economic recovery measure than Democrats and the administration favor.

In the Capitol, Republicans said their goal was to change the bill, not to block it. “Nobody that I know of is trying to keep a package from passing,” said Sen. Mitch McConnell of Kentucky, the Republican leader…”We need to fix housing first,” he said.

Officials said the GOP was coalescing behind a proposal designed to give banks an incentive to make loans at rates currently estimated at 4 percent to 4.5 percent. Fannie Mae and Freddie Mac, which were seized by the federal government in September, would be required to purchase the mortgages once banks have made them to consumers.

Officials said loans to credit-worthy borrowers on primary residences with a mortgage of up to $625,000 would qualify, including those seeking to refinance their current loans.

Separately, Republican officials said they intended to press for a $15,000 tax credit for homebuyers through the end of the year. Current law permits a $7,500 tax break and limits it to first-time homebuyers.

Reihan Salam puts it well when he points out:

As David Brooks has ably described, the stimulus package represents an awkward marriage of long-term Democratic objectives, like pouring more money into higher education and green energy and big-ticket infrastructure projects, and short-term measures that governments at all levels will have an extremely difficult time absorbing. Many of these long-term objectives are very worthy ones that Republicans should embrace as well, particularly efforts to upgrade our physical infrastructure. Yet the speed with which this measure has been pursued means that spending discipline has gone out the window. State governments that receive billions of dollars will have no way to evaluate the efficacy of spending, and so we will find, two or three years hence, that vast sums were wasted, and indeed that vast sums fell into the wrong hands.

We don’t need any more waste. I don’t pretend to have the answer. I don’t know that Republicans do either. But Mr. Rich is very remiss in his attempts to portray President Obama, Nancy Pelosi or Tim Geithner as people who are serious in wanting to fix our problems since we heard nary a peep from them when all of this was transpiring in the first place.

We cannot afford to dawdle, but to dismiss serious debate and pretend that a more judicious oversight is not required is more irresponsible than taking no action at all. While obstructionists are not needed, neither are rabble-rousers and demonizers the likes of Mr. Rich. It is ironic that Mr. Rich’s editorial also makes sure to lambaste Rush Limbaugh. The two have more in common than he realizes.

With the dissolution of the investment banking model, the massive injections of government capital, and potential indictments of major Wall Street icons in the offing, I looked forward to some very juicy testimony. The results were beyond disappointing. The public deserves so much better.

Mary Schapiro may end up being the best SEC commissioner ever, but let’s make her earn a few stripes before anointing her. It’s not as if there isn’t enough material.

Let me provide a little background before I propose my line of questioning for Ms. Schapiro.

FINRA, the Financial Industry Regulatory Authority, was formed as a result of the merger between the regulatory arms of the NYSE and NASD. While there is another securities industry watchdog, SIFMA (Securities Industry and Financial Markets Association), that body is more a trade association or good cop.

FINRA is supposed to be the real watchdog or the bad cop.

Before I dig into any organization, I always look for its mission and means of funding. FINRA has the following mission:

1. industry regulation
2. industry dispute resolution
3. industry investor education foundation

As the largest non-governmental regulator of securities firms, FINRA regulates activities of the United States’ securities industry for all registered dealers on all exchanges and over-the-counter markets.
It is a tax-exempt membership corporation. Up to this point everything seems copacetic.

As I looked into FINRA’s Annual Report published for year end 2007, I was blown away. FINRA has assets of close to $3 billion, liabilities of $850 million, and shareholder equity of $2.1 billion dollars.

How many instructional and educational videos can you make with that kind of money?

The WSJ did yeoman work yesterday in highlighting that under Ms. Schapiro, the number of cases and collection of fines by FINRA has diminished by 30% and 36% respectively.

The WSJ did not expose any info, though, from FINRA’s financials. The $2.1 billion in equity in this tax exempt entity that paid Ms. Schapiro $3 million dollars is invested in a variety of sectors, including common equities, fixed income, private equity, hedge funds, and fund of funds!!! Additionally, as of the end of 2006, FINRA acknowledged that the assumed portfolio held a cool $647 million dollars in Auction Rate Securities!!!

For those not familiar with Auction Rate Securities, this sector of the market totally imploded last Spring leaving institutional and individual investors holding the bag. While many institutional investors were made somewhat whole via settlements from the larger broker-dealers, many individual investors remain holding the bag as smaller broker-dealers, who did not necessarily underwrite these securities but did distribute them, have not been forced to make clients whole. WOW!!!

Are you kidding me!!?? The main regulator of the financial industry happens to be an investor in securities which virtually every Attorney General in the country is going after every Wall Street institution for improper marketing and distribution!! Are we looking at gross negligence, ignorance, incompetence or all of the above?? The question that MUST be answered is what has FINRA done with these Auction Rate Securities. Do they still own them? Did they liquidate them? If so, when and at what price? How was the sale negotiated? So many questions.

Over and above that, given that Ms. Schapiro is the chief executive of FINRA, don’t you think it would have been appropriate for her to address which hedge funds, fund of funds, and private equity shops were in FINRA’s portfolio? FINRA’s Annual Report categorically states its’ investment committee addresses any potential conflicts of interest. The public deserved to have this topic openly addressed during Ms. Schapiro’s hearing. WHY? For the simple reason that FINRA is feeding from the very same trough it is supposed to be regulating.

I am not impugning Ms. Schapiro’s integrity or reputation. However, the public deserves to know the full extent of the relationship between the inmates and the warden, especially if they were growing some vegetables in the same garden.

Why wasn’t this line of questioning aggressively postured, especially in light of the massive capital injections?

To be perfectly frank, seeing Senator Dodd questioning Ms. Schapiro leaves me scratching my head. Where is the real leadership, who will ask the hard questions and demand answers?

LD

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[Ed. Note: We are pleased that the excellent Flopping Aces blog has reprinted Larry Doyle's article above, and we invite your readers to visit the blog and to read the comments posted under Larry Doyle's article there.]

“When you’re watching this gauzy, feel-good commercial, just remember that it was paid for with broken promises. Senator Obama signed a piece of paper committing to public financing of his campaign.

Twice he looked the American people in the eye and said he would sit down with me before he abandoned public financing.

He didn’t mean a word of it.

When it was in his interest to break his promise, he tossed it aside like it didn’t mean a thing.

He is the first candidate since Watergate to abandon the public financing system, and his campaign is now being flooded with hundreds of millions of dollars in undisclosed and questionable donations.”

This smacks of a man trying to buy the Presidency. Obama’s campaign has spent one billion dollars.

Are his supporters really foolish enough to believe that this outrageous amount of money came from small donations over the internet? Apparently so.

Someone named ‘Marie’ on the Nielsen website wrote the following:

“Obama’s money comes from small contributions donated mainly through the internet by regular people who choose to donate. If he chooses to spend it on an infomercial then he’s spending it on behalf of his supporters. It has therefore nothing to do with a corrupt government or ‘buying the election’.”

I almost fell off my chair at the naïveté and ignorance of this statement.

Barack Obama has received more Wall Street money than any other candidate. He has received more Fannie/Freddie lobbying money than anyone in the Senate, save Senator Chris Dodd (D), Chair of the Senate Banking Committee. To use one of Senator Obama’s favorite phrases, ‘the notion that’ his base, without the help of a bunch of millionaires or billionaires, would have the kind of money required, and would be so inclined to donate a billion dollars on their own in this horrible economy, is preposterous.

Even Matthew Mosk of the Washington Post reported yesterday that Obama [Is] Accepting Untraceable Donations:

Sen. Barack Obama’s presidential campaign is allowing donors to use largely untraceable prepaid credit cards that could potentially be used to evade limits on how much an individual is legally allowed to give or to mask a contributor’s identity, campaign officials confirmed.

Faced with a huge influx of donations over the Internet, the campaign has also chosen not to use basic security measures to prevent potentially illegal or anonymous contributions from flowing into its accounts, aides acknowledged. Instead, the campaign is scrutinizing its books for improper donations after the money has been deposited.

But at the rate he is spending it, he could not afford to scrutinize these donations – surely he cannot afford to return any of that money. It is long gone.

The Obama organization said its extensive review has ensured that the campaign has refunded any improper contributions, and noted that Federal Election Commission rules do not require front-end screening of donations.

They have refunded the donations? How would we know? How would the FEC know? Perhaps he has returned a few, but read on and see that it is highly doubtful that this problem has been solved. Government agencies seem reluctant to question him about much of anything.

In recent weeks, questionable contributions have created headaches for Obama’s accounting team as it has tried to explain why campaign finance filings have included itemized donations from individuals using fake names, such as Es Esh or Doodad Pro. Those revelations prompted conservative bloggers to further test Obama’s finance vetting by giving money using the kind of prepaid cards that can be bought at a drugstore and cannot be traced to a donor.

The problem with such cards, campaign finance lawyers said, is that they make it impossible to tell whether foreign nationals, donors who have exceeded the limits, government contractors or others who are barred from giving to a federal campaign are making contributions.
…
The Obama campaign has shattered presidential fundraising records, in part by capitalizing on the ease of online giving. Of the $150 million the senator from Illinois raised in September, nearly $100 million came in over the Internet.

Consider:

…[T]he case of Mary T. Biskup, a retired insurance manager from Manchester, Mo., who turned up on Obama’s FEC reports as having donated $174,800 to the campaign. Contributors are limited to giving $2,300 for the general election.

Biskup, who had scores of Obama contributions attributed to her, said in an interview that she never donated to the candidate. “That’s an error,” she said. Moreover, she added, her credit card was never billed for the donations, meaning someone appropriated her name and made the contributions with another card.

There is nothing in this story stating whether that $174,800 was refunded to the phony donors and rejected. This is horrifying. And here is the Obama campaign’s cavalier response:

When asked whether the campaign takes steps to verify whether a donor’s name matches the name on the credit card used to make a payment, Obama’s campaign replied in an e-mail: “Name-matching is not a standard check conducted or made available in the credit card processing industry. We believe Visa and MasterCard do not even have the ability to do this.

Surely, you must be joking. Uppity Woman posted an excellent story, My Contributions to the Obama Campaign Under Fictitious Names Sunday night, complete with screenshots of Obama’s donation page.

It was possible for her to make donations under the names Bill Ayers, Osama bin Laden, John Galt and Saddam Hussein under the same credit card – and the charges went through. Attempts to do the same on both Hillary Clinton’s and John McCain’s donation pages were rejected.

R. Rebecca Donatelli, who handles online contributions for the McCain operation and the RNC, said security measures have been standard in the GOP nominee’s fundraising efforts throughout the campaign. She said she was “flabbergasted” to learn that the Obama campaign accepts prepaid cards.
…
“They have opened the floodgates to all this money coming in,” said Sean Cairncross, chief counsel to the Republican National Committee. “I think they’ve made the determination that whatever money they have to refund on the back end doesn’t outweigh the benefit of taking all this money upfront.”

How can anyone determine the source of these donations – and since he has all but spent it all, with outrageous ad buys like the one last night, how is he ever going to give it back if these donations were found to be fraudulent?

Answer – he’s not.

No one would begrudge anyone their fundraising prowess, but something does not pass the smell test. He has outspent John McCain six to one and yet this is very much a tied horse race, no matter how much the cooked polls pretend otherwise.

Does anyone really think that if Obama had kept his word and accepted public financing, subjecting his campaign to a level playing field, he would still be in this race? Makes one wonder. Obviously, Senator Obama and his campaign manager, David Axelrod, must not have had much confidence in his chances either – otherwise he would not have gone back on his word in order to super-size his way into the Presidency.

Let us hope the voters are not fooled.