By Justin Elliott, ProPublica

Recently, we wrote about former Pennsylvania Gov. Ed Rendell's connections to the natural gas industry after he published a pro-fracking op-ed in The New York Daily News.

Following our story, Rendell's column — which called on New York officials to lift a ban on the drilling technique — was updated to disclose that he is a paid consultant to a private equity firm with natural gas investments.

Rendell assured us in an interview before the first story that despite his role with the private equity firm, he had no "pecuniary interest in the natural gas industry doing well."

But the story doesn't end there. One entity that indisputably has an interest in the industry is Rendell's longtime home outside of politics: the law firm Ballard Spahr of Philadelphia.

Rendell is currently special counsel at the firm, and is a member of its energy and project finance and environment and natural resources practice areas, his spokeswoman said.

The firm touts its work "on the forefront" of the development of the Marcellus Shale, the formation under Pennsylvania and other states from which a vast quantity of natural gas is now being extracted.

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In his weekly address, the president urged Congress to strike a compromise deal to avert $85 billion in automatic cuts.

What we've accomplished thus far:

"Over the last few years, Democrats and Republicans have come together and cut our deficit by more than $2.5 trillion through a balanced mix of spending cuts and higher tax rates for the wealthiest Americans. That’s more than halfway towards the $4 trillion in deficit reduction that economists and elected officials from both parties say we need to stabilize our debt."

"I believe we can finish the job the same way we’ve started it – with a balanced mix of more spending cuts and more tax reform. And the overwhelming majority of the American people agree – both Democrats and Republicans."

What's at risk if the House and the Senate fail to act on a budget that offers a balanced path going forward:

"But the budget process takes time. And right now, if Congress doesn’t act by March 1st, a series of harmful, automatic cuts to job-creating investments and defense spending – also known as the sequester – are scheduled to take effect. And the result could be a huge blow to middle-class families and our economy as a whole."

"If the sequester is allowed to go forward, thousands of Americans who work in fields like national security, education or clean energy are likely to be laid off. Firefighters and food inspectors could also find themselves out of work – leaving our communities vulnerable. Programs like Head Start would be cut, and lifesaving research into diseases like cancer and Alzheimer’s could be scaled back. Small businesses could be prevented from getting the resources and support they need to keep their doors open. People with disabilities who are waiting for their benefits could be forced to wait even longer. All our economic progress could be put at risk."

"And then there’s the impact on our military readiness. Already, the threat of deep cuts has forced the Navy to delay an aircraft carrier that was supposed to deploy to the Persian Gulf. As our military leaders have made clear, changes like this affect our ability to respond to threats in an unstable part of the world. And we will be forced to make even more tough decisions in the weeks ahead if Congress fails to act."

Is there an option besides the sequester? Of course!

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Video: Warren Buffett - Unpretentious Billionaire

Businessman and investor Warren Buffett was born on August 30,1930, in Omaha, Nebraska. Investing by age 11, Buffett was running a small business at 13. Buffett later started the firm Buffett Partnership in Omaha, with huge success. In 2006, Buffett announced that he would give his entire fortune away to charity (Estimated at $62 Billion), the largest act of charitable giving in United States history.

Buffet would like the government to pick his pocket a little more, thank you very much. Pushing back against tax hawk Grover Norquist, Warren Buffett wrote in a New York Times op-ed column that in recent years, the wealthiest Americans, himself included, have been “leaving the middle class in the dust.” The idea that those same thick-walleted investors would start hoarding cash and bullion under the floorboards if taxes were nudged up a little is ludicrous, Buffet writes: “The ultrarich, including me, will forever pursue investment opportunities.” Buffett suggests a minimum tax of 30 percent on incomes between $1 million and $10 million and 35 percent on incomes above $10 million.

From the op-ed:

Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.

So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.

And, wow, do we have plenty to invest. The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust.
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All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path. Nothing less is acceptable.

In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him.

Meanwhile, White House aides are scrambling to animate Obama voters as the president prepares to square off with congressional Republicans over tax increases for the wealthiest Americans. Supporters are being asked to record YouTube videos of themselves arguing for tax hikes on the most well-off of the well-to-do, and emails explaining the president’s position were sent to activists in the past week. It’s all an attempt to kick the Obama campaign machine into gear.

The Rev. Jesse Jackson has been arrested in a group of protesting northern Illinois workers during an act of civil disobedience in Freeport.

Jackson was taken into custody Wednesday with about a dozen workers. He is expected to be released later in the day.

Sensata Technologies is owned by Bain Capital and in the process of moving its Freeport manufacturing operations to China. That'll cost Freeport 170 jobs.

WIFR:

Jackson spent most of the afternoon in "Bainport”, the make-shift campsite that's been home to Sensata employees and their supporters for the last 40 days. Things took a turn around 4:00 p.m. when Jackson and about a dozen workers decided to march onto company property, before being arrested by police.

You may remember the plant is scheduled to close the day before the election, because around 170 jobs are being relocated to China. Today, Jackson said workers were humiliated because they've had to rain their Chinese replacements. He says he hopes his arrest will get Sensata management to the negotiating table. He hoped to convince them to keep the plant open.

“When these workers lose their jobs, they lose their homes, they lose their cars. Their kids cannot stay in school, they lose their hope. We are fighting for the integrity of the American worker, we're fighting for an even playing field,” said Jackson.

Sensata emerged as a flashpoint in the controversy over Republican presidential candidate Mitt Romney’s ties to Bain this summer, with the company’s employees pleading publicly with Romney to help save their jobs from being outsourced to China. Not only does Romney stand to profit from the outsourcing of these jobs to China through the stock he still owns in the company, his 2011 tax returns show that he got a huge tax break by moving Sensata stock to a charity organization he controls -- and that he continues to profit from Bain’s offshore holdings and tax avoidance strategies.

A caravan of about 50 former workers and supporters headed to the fire department where the people who were arrested are to be released.

These American workers all have one thing in common: Bain Capital laid them off and outsourced their jobs. They've traveled from all over the country to gather outside the debate tonight and demand that Mitt Romney answer their questions about how he ran Bain, and how he'll run the country.

With Election Day on the horizon, a Bain-owned company in Freeport, IL, is moving out equipment as it shuts down operations in the U.S. to ship 170 jobs overseas. On Monday, workers and community members blocked the loading dock for a second time to prevent equipment from being removed from the plant. Three community members -- including the daughter of a Sensata worker -- were arrested when they refused to move after the company called the police.

The company -- Sensata -- emerged as a flashpoint in the controversy over Romney’s ties to Bain this summer, with the company’s employees pleading publicly with Romney to help save their jobs from being outsourced to China. Not only does Romney stand to profit from the outsourcing of these jobs to China through the stock he still owns in the company, his 2011 tax returns show that he got a huge tax break by moving Sensata stock to a charity organization he controls -- and that he continues to profit from Bain’s offshore holdings and tax avoidance strategies.

Sensata workers are certainly not alone watching their jobs sail off to China, or to have wealthy American businessmen profit by investing in those companies:

NYT:

The tale of Asimco Technologies, an auto parts manufacturer whose plants dot eastern China, would seem to underscore Mitt Romney’s campaign-trail complaint that China’s manufacturing juggernaut is costing America jobs.

Nine years ago, the company bought two camshaft factories that employed about 500 people in Michigan. By 2007 both were shut down. Now Asimco manufactures the same components in China on government-donated land in a coastal region that China has designated an export base, where companies are eligible for the sort of subsidies Mr. Romney says create an unfair trade imbalance.

But there is a twist to the Asimco story that would not fit neatly into a Romney stump speech: Since 2010, it has been owned by Bain Capital, the private equity firm founded by Mr. Romney, who has as much as $2.25 million invested in three Bain funds with large stakes in Asimco and at least seven other Chinese businesses, according to his 2012 candidate financial disclosure and other documents.

“How is it China’s been so successful in taking away our jobs?” he(Romney) asked recently. “Well, let me tell you how: by cheating.”

That was Mitt Romney the candidate for president. Mitt Romney the millionaire, or is it billionaire --trust him, you'll never know for certain -- that Mitt Romney is calling the American people "suckers."

Some day I would like to see people who do everything they can to avoid paying taxes ostracized as the unpatriotic, selfish, leeches they are.

By Cora Currier, ProPublica, Sept. 26, 2012

Mortgage giant Freddie Mac did not keep homeowners trapped in high-interest loans in order to boost profits on billions of dollars' worth of complex financial bets it had made. That's the conclusion reached in a report released today by the inspector general that oversees the agency in charge of Freddie Mac.

Last January, ProPublica and NPR reported that Freddie had dramatically expanded its holdings of mortgage-backed securities that would profit if homeowners stayed in their existing high-interest-rate loans. At the same time, the company had taken steps that made it harder for homeowners to refinance at lower interest rates. Our report stated that there was no evidence of a coordinated attempt to bet against homeowners' ability to refinance. The inspector general's report concludes that there was none.

But the inspector general left a key stone unturned: It did not independently evaluate the firewall within Freddie Mac designed to keep Freddie's investment arm from profiting from insider information about the mortgage giant's plans to tighten or loosen homeowners' access to credit. Instead, the inspector general relied on the word of employees it interviewed and conducted no further investigation. It also reported that the agency that oversees Freddie has not tested the firewall's integrity.

Freddie Mac and its sister company Fannie Mae were bailed out by taxpayers after the financial crisis and are now controlled by the Federal Housing Finance Agency. Freddie and Fannie guarantee most of the mortgages in the U.S., and they have a mission to make home loans more affordable. But Freddie also has a massive investment portfolio and has to protect against losses. Sometimes, those two goals can conflict.  

Beginning in 2010, Freddie Mac expanded its portfolio of a particular kind of mortgage-backed security known as an "inverse floater." The company offered investors a relatively safe bond with a floating interest rate. It then kept on its books what is called an "inverse floater," which pays out the highest returns if borrowers stay in their mortgages. When interest rates dropped (as they did during that period), Freddie Mac stood to profit on its inverse floaters, because the rates being paid by the pool of borrowers were higher than the prevailing market rates. Inverse floaters lose that advantage the more that homeowners in the pool refinance at the lower rates. 

The report says that Freddie's investment wing increased its holdings in inverse floaters merely because investors were demanding the floating rate bonds linked to them — not because of any strategy to exploit homeowners trapped in high-interest-rate mortgages.

Freddie Mac has an  "information wall" designed to separate the employees running Freddie Mac's investment strategy from those designing and carrying out its policies that impact the mortgage market, such as programs aimed at helping people refinance or making it more difficult for them to do so. The inspector general's report says that it found "no evidence" that the wall had been breached.

Yet, the inspector general noted that FHFA has not conducted any independent testing of Freddie's information wall. And the inspector general limited its own investigation of the wall to interviewing Freddie executives and FHFA officials and reviewing policy documents. The inspector general "did not independently evaluate the efficacy of Freddie Mac's information wall policy," the report states.

The report emphasizes that there are indeed "tensions between policies aimed at homeowners refinancing and Freddie Mac's retained investments." But it says that such tensions are not unique to inverse floaters but are "inherent throughout [Freddie and Fannie's] various business lines."

At the end of 2011, Freddie held about $5 billion worth of inverse floaters, according to the report, or less than one percent of its $653 billion investment portfolio.

The report also notes that the company hedges to balance its interest-rate risk, meaning that it places many different bets so that no matter whether interest rates rise or fall, its investments will be close to "net flat" — stay roughly the same, recording neither large profits nor large losses. Freddie does not try to balance the risk of each individual investment, but rather hedges "on its portfolio as a whole."   The report explains:

In the context of inverse floaters, although Freddie Mac may on the one hand benefit from a trend of low interest rates and reduced prepayments by homeowners, on the other hand, Freddie Mac's other investments may equally suffer from such a trend. Thus, the end result, if perfectly hedged on interest rates, is that Freddie Mac's overall position will remain the same regardless of prepayments.  

The inspector general did not independently evaluate Freddie's hedging strategies. When ProPublica and NPR first reported on these deals, it was unclear what kind of hedging, if any, Freddie Mac had performed.

The company is also supposed to be reducing its investment portfolio as part of the terms of its government bailout. In a footnote, the inspector general's report mentions that Freddie Mac told the Securities and Exchange Commission that selling the floating rate securities was a way to reduce its balance sheet. But most Freddie and FHFA officials interviewed by the inspector general said that reducing its balance sheet was not the motivation for Freddie to create inverse floaters, even if that was the result.

Separately, the way Freddie structured the inverse floaters leaves Freddie with nearly all of the risk of the assets that no longer show up on its balance sheet. The reason: As the guarantor of the mortgages that back the securities, Freddie is already on the hook if the homeowner defaults. With inverse floaters, it also retains the risks that homeowners might refinance and that overall interest rates might rise. Indeed, independent analysts told ProPublica and NPR in January that Freddie may actually have increased its risk, because inverse floaters are illiquid and hard to sell.

In its written response to the inspector general's report, the FHFA did not address Freddie Mac's statements to the SEC. When contacted by ProPublica, an FHFA spokesperson declined to comment.

The report said that FHFA issued misleading statements to the public on when it ordered Freddie to stop creating inverse floaters. According to the report, in the spring of 2011, the FHFA began a review of Freddie Mac's mortgage securities operation, in large part to determine whether the company held too many complex and risky mortgage products, including inverse floaters.

But an executive at Freddie didn't suspend inverse floaters and certain other complex securities deals until January 6, and FHFA didn't explicitly order Freddie Mac to stop selling inverse floaters until January 30, 2012, after ProPublica's story was published. In fact, according to the report, that day marked "the first time that FHFA's senior leadership met to discuss the Agency's position with respect to inverse floaters."

By then, however, Freddie had long since stopped selling floating rate securities — not because of any order from FHFA but because the market for them dried up in spring 2011 when Federal Reserve chairman Ben Bernanke indicated that interest rates would remain low for at least another year.

That's not how FHFA described what happened after our story broke. In a statement released in response to ProPublica and NPR's reports, the agency said that staff met with Freddie in December 2011 and came to an agreement then to suspend inverse floater trades. The inspector general's report concludes that statement was misleading: "prior to January 2012, neither Freddie Mac nor FHFA made a decision to halt Freddie Mac's creation and investment in inverse floaters; the market for reciprocal floating rate bonds simply disappeared. Had the market reappeared and Freddie Mac found the economics were again profitable, [Freddie] would have been free to structure floating-rate and inverse floating-rate investments."

In a response to the report, the FHFA disputed the inspector general's reading of the public statement, saying that it did not claim "that there was a specific, well-articulated FHFA policy and agreement" in December. The agency also emphasized that it did not take a position on inverse floaters only in reaction to media reports. While acknowledging that "the key stakeholders" had met together for the first time on January 30th, the day ProPublica and NPR released their original stories, the FHFA emphasizes that it had been in communication with Freddie on inverse floaters over the previous year.

The inspector general's report was requested by Senator Robert Menendez, D-NJ, last January, after our story brought the issue to light.

Members of Occupy Los Angeles say that recent efforts to clean the "skid row" area of the city are actually a ploy to eventually rid the area of its homeless population, so that a powerful group of lobbyists can begin efforts to help their clients realize plans to redevelop the area into profitable businesses.The CCA is a business group that lobbies city and state government to grease the wheels for development in downtown LA. They represent local businesses, as well as large corporations, such as Chevron, Walmart, Verizon, JP Morgan Chase & Co., Wells Fargo and Bank of America .

Police say that any property not placed in the city provided storage facility during the cleaning operations must be mobile, and kept moving all day long, until the one of the Injunctions kicks in at 9pm and people are allowed to sleep. At 6am, they must begin moving around again until the night. You can hear police explain in the video above "You cannot return to where you were, and you cannot stay where you are now." Come 9pm, the homeless have to find a new spot to sleep for the night because they are not allowed to return to the "cleaned" areas, and then each day the process begins again.

Occupy Los Angeles, LA CAN, Occupy the Hood, and Occupy Skid Row have all kept a presence in the area to protest the efforts of CCA, with Occupy LA reporting over this past weekend. From Occupy LA's website:

First thoughts written last night: ”4 Arrests in Midnight LAPD Raid on CCA Siege – Occupy Los Angeles – three of my best friends and roommates, and an unknown 4th man ARRESTED. Charges unknown. Police orchestrated tactical raid with 25+ cops, pepper spray out and batons were swinging. Captain Frank (at a compañera’s trial yesterday) pointed at her and said, “Don’t I know you?”. Another police officer told a fifth occupier that “You’re getting arrested tomorrow.”

I couldn’t move, trapped inside a tent and seeing silhouettes of gum-chewing cops, fidgety and in war-mode. LAPD’s true colors emerging.

You want to talk targeted kidnappings and terror? Cops were laughing as they pushed and hit us. Laughing as they sent 3 snatch squads and took my friends in the dead of night.”

We’re traumatized and enraged. Three of my roommates were snatched by LAPD last night. Bails are $50,000, $25,000, and $10,000…. they’ve been some of the most visible organizers with the siege on the Central City Association (1%’s lobby here in Los Angeles) for nearly a month. They have all been harassed, intimidated, brutalized, and arrested by the LAPD before. They have all been occupying for months and are inspiring in their defiance and rejection of the oppressive status quo.

The arrests began over alleged chalk drawings, despite the 9th circuit court decision of Mackinney vs. Neilson that states, “No chalk would damage a sidewalk.”

LA Activist reports on the situation:

Since May 29, occupiers and homeless advocates have camped out each night in front of the CCA’s offices in downtown, as part of an ongoing “siege” protest that was originally only meant to last seven days. The action was coordinated by Occupy Los Angeles, Occupy the Hood, Occupy Skid Row and the Los Angeles Community Action Network.

Obviously, occupiers, who would prefer government to be free of corporate influences, are ideologically opposed to the lobby group. In fact, one could say the CCA is Occupy LA’s local archenemy.

Heather Meyer, an occupier who has been camping out in front of the CCA, said the lobby is “behind everything that is oppressive.” She cites as an example the groups opposition to the recently passed “Responsible Banking” ordinance, which requires banks doing business with the city to turn over information on loans and foreclosure activity and making it readily available to the public.

“They are the lobbyists for the one percent,” she said. “They are the epitome of money in politics.”

The CCA has done more than support bankers to irritate occupiers. The CCA also successfully opposed community efforts to block the construction of a Walmart in Chinatown. They helped kill a city ordinance that would have required hotels to keep their employees 90 days after a change of hotel ownership, according to their website.

As further evidence of the power the lobbyists at CCA wield, the report cites CCA announcing their intentions earlier this year to further lobby for more police resources for the skid row area. The LAPD soon after announcing 40 more officers being sent in to patrol despite there only being a “minor uptick in reported crime” in a neighborhood that “still reports some of the lowest crime levels in the city,” according to the Downtown News.

To explain the decision to respond so strongly to a minor uptick in crime, the LAPD stated:

In recent months, the department has been fielding more complaints from residents and businesses about aggressive panhandling and people sleeping on the sidewalk during the day, he said.

“We are having an increase in quality of life issues and we don’t want to lose any ground that we’ve gained in that area,” Perez said. “We want to stop the problem before it explodes. We’re just being proactive in our analysis and response to the area and understanding it.”

Interestingly enough, it sounds as if the increase in complaints began around the time CCA announced it would begin lobbying for more police...

If you continue to read the Downtown News article, it really does a great job of making skid row sound bad. I've seen it, it's a depressing and disturbing area that seems like you've crossed some great divide into an undeveloped nation. So many people with nowhere else to call home. Then it finishes with a quote from CCA's CEO:

“There hasn’t been an area in the entire county of Los Angeles that has not benefited from making Downtown come alive,” said Schatz. “When people are sleeping on the streets… it affects our ability to continue to attract investment and continue to make this Downtown thrive.”

As I read that quote, it didn't sound to me as if what happens to the people of skid row was a priority, or even a concern at all.

I'll keep you posted on any updates on the situation.

JPMorgan Chase has disclosed $2 billion in lossesfrom a trading group’s credit investments, causing the bank’s share price to plummet in after-hours trading.

Via:

Jamie Dimon, the chief executive of JPMorgan, blamed “errors, sloppiness and bad judgment” for the loss, which stemmed from a hedging strategy that backfired.

The trading in that hedge roiled markets a month ago, when rumors started circulating of a JPMorgan trader in London whose bets were so big that he was nicknamed “the London Whale” and “Voldemort,” after the Harry Potter villain.

The losses are expected to take a toll on the bank’s larger earnings, with the corporate group expected to lose $800 million in the second quarter, the company said today in its quarterly securities filings. JPMorgan had previously estimated that it would report a net income of roughly $200 million. The final report will depend on if the company can recover, though Dimon said things could “easily get worse.”

Via:

Given Dimon’s resistance to the ban and new regulations, “he’s got a lot of egg on his face right now,” said Craig Pirrong, a finance professor at the University of Houston. “Any chance they had of getting a relative loosening of Volcker rule, anything of that nature, that’s out the window.”
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“It’s classic Wall Street hubris, which we’ve seen so many times before,” said Simon Johnson, a former chief economist at the International Monetary Fund who now teaches at the Massachusetts Institute of Technology. “What’s particularly ironic here is that Jamie presents himself, and is believed by others to be, the king of risk management.”

In an emailed correspondence, Senator Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations and co-author of the Merkley-Levin language establishing the Volcker Rule, issued the following statement Thursday in reaction to news that JP Morgan had suffered a $2 billion trading loss:

“The enormous loss JP Morgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making. Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards to implement the Merkley-Levin language to protect taxpayers from having to cover such high-risk bets.”

Congratulations! You have your own bank, as in the Yes Men strike again...

Note: A "phishing" site warning may appear when you click on the link, but you don't need to worry, it isn't. Just click on the "ignore" option and proceed to the site, and if you have a moment to report the phishing tag as being false that would be great.

In a personal letter on the website from the CEO of Your Bank of America, Brian Moynihan (I'm sure we can get someone else to fill that spot soon enough!):

Dear Fellow American,

Welcome to your Bank of America.

Today, it's time to acknowledge that our Bank isn't working anymore—not just for the market, but for people, our real customers. We've paid $8.58 billion in relief to borrowers and $3.24 billion in fines. We face lawsuits and claims from citizens, companies, and state and local governments. There is even a petition with the Federal Reserve to break up our bank, adding yet more uncertainty to our position. Finally, we've found ourselves front-and-center in the national foreclosure crisis, and deep in unpopular investments like coal, at a time when climate change is a growing societal concern.

As a result, our company’s shares have fallen precipitously, and now trade at one-fifth their 2008 price. Our Bank may, in fact, soon need help keeping afloat—and much as in 2008, you, the American taxpayer, will be asked to provide that assistance.

The institutions you rescued in 2008 have continued much as they always were, engaging in the same practices that brought our economy so close to collapse. To make sure that this time around, things turn out differently, we at Bank of America are launching a forum in which you, the American taxpayer, can prepare for the time that you own us. By sharing ideas, and reading and rating the ideas of others, you can begin charting a course for this Bank—your course.

And when the day comes that you, the American taxpayer, own this Bank, you will be ready to make it a Bank for America—one that brings benefits not to the privileged only, but to all of our customers, and to all of our stakeholders too.

Welcome to your Bank of America.

Brian T. Moynihan
Chief Executive Officer
President

Be sure to visit Your Bank of America soon -- while it's still there -- and submit your ideas in the ideas section.