Private equity, public inequity

Why does it matter that Gabriel Gomez (R-private equity) took a $280,000 tax deduction on the facade of his home? Don't we all try to squeeze every last dime off our tax bills? Isn't that the good ole American way?

No, and here's why.

The Town of Cohasset values Gomez's property at a little more than $2,000,000. (Go here and search for parcel 27-094.  It's actually not his any more, as he sold it for $1 to his wife in 2008.) This value matches up with Zillow's current estimate, which makes Zillow's 2005 estimate of value credible. Zillow has tended to inflate the market anyway, which would work to Gomez's advantage.

Taking Zillow's 2005 number of $2.3 million, Gomez's tax deduction was over 12% of the total value of his property, pretty extreme. It gets worse when you realize he's valuing the appearance of the facade only, not the twelve bedrooms or the five bathrooms or the land.

Then, it turns out, as the Boston Globe reports, that Gomez's alteration of the facade was already restricted by a town bylaw and thus not his to donate.

One specialist in conservation easement law, Scott Knott, a tax partner in The Ferraro Law Firm in Washington, D.C., said that if easements mandated by local laws are already in place, homeowners have nothing to claim as a tax deduction.

“The key is the valuation of the easement and if there is already a restriction on the property, the value is not diminished by the easement,’’ said Knott. “The value of any easement that has the same restriction already in place is zero.’’

If you want to go all Fifth Amendment on me, you're too late to make the town's bylaw a taking. Gomez bought the house in 2004, well after the establishment of the Cohasset historical district in 1996. So Gomez bought the property with restrictions already on it, and those restrictions necessarily would have figured in the price he paid for it. (Of course, living in a historic district generally raises property values instead of lowering them.)

OK, Gomez's spokesman said, but now he can't sue for relief if the Cohasset Historical Commission won't let him make a change. Except, he can still seek relief in court.

Like Ann Romney's tax deductible horse hobby, this is an outrage of sharp abuse of the tax code. No legitimate public purpose is served by it, just the enriching of the already wealthy out of the public treasury.

This is who Gabriel Gomez became by descending into private equity. Don't the plutocrats already have enough people in Congress - especially in the Senate - whose avowed purpose is to help the wealthy grab even more of the nation's income?

We in Massachusetts took a brave step forward in electing Elizabeth Warren. Gabriel Gomez would work to destroy every single thing that Warren is accomplishing in Washington.

We simply must reject Gomez's candidacy and elect Ed Markey.

Goldman sacks

Rape and pillage is the order of business at Goldman Sachs, says a now former insider. But we all knew that already. This company, to which both parties cravenly outsource the Department of the Treasury, was thoroughly exposed as double-dealing and untrustworthy in the aftermath of the Bushist financial crisis. The SEC:

Robert Khuzami, Director of the Division of Enforcement [at the SEC, said,] "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

That privatization of a Cabinet post, until proven otherwise, is why no one - no one! - went to jail over this allegedly legal billion-dollar fraud, for which Goldman Sachs's contracted vig was a paltry $15 million.

Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion.

The SEC's complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.

If you're going to lead a life of crime, white collar crime is the way to go, and the rigged game of Wall St. has the highest reward-to-risk ratio. Hell, if your fraudulent investments go sour in a big enough way, the Secretary of the Treasury will insist the middle class bail you out - without clawing back your immense and undeserved bonuses.

The SEC didn't even seek prison, only civil penalties. The Wall St. billionaires have written the securities laws so that their fraud is often only moral, not legal.

Now to Greg Smith's conscience. Where was he when it mattered? Raking in the dough that he's probably planning to retire on...

If you read his claim of conscience, the first thing you'll notice is what a piece of self-serving bullshit it is, even if its headline is true. I don't know about you, but I was not in need of reading a puffed up resume of all Smith's selections and glory and value. He was almost chosen to be a Rhodes Scholar. Whoop-de-doo.

It sounds to me as though the fundamental problem of Wall St. is overweening self-regard that leads to smash and grab ethics and short-termism. Masters of the universe, bitches! That's how they view the world.

Smith is a terrible writer who won't put himself at risk to do more than generalize. He'd have to violate confidentiality to illustrate his piece with names, dates, and deals, and that would put his retirement at age 33 or so at risk. No way!

He's not so much whistle-blowing as horn-tooting.

Update: Satire!

Securitization Excuse Confabulator

We live in a nation where financial crimes are not punished enough to deter them in the slightest:

So to recap: a unit of Citigroup, having repeatedly violated the same laws and having repeatedly violated the SEC’s own cease-and-desist orders and injunctions, is dragged into court one more time for committing a massive fraud.

And what does the SEC do? It doesn’t even bring up Citi’s history of ignoring the SEC’s own order, slaps the bank with a fractional fine, refuses to target any individuals, allows the bank to walk away without an admission of wrongdoing, and puts a cherry on the top by describing the $160 million heist not as a crime, but as unintentional negligence.

And it's not as though Citigroup is the only home of thoroughly institutionalized fraud. All of its competing syndicates do it too:

According to a New York Times analysis, nearly all of the biggest financial companies — Goldman Sachs, Morgan Stanley, JP Morgan Chase and Bank of America among them — have settled fraud cases by promising that they would never again violate an antifraud law, only to have the S.E.C. conclude they did it again a few years later.

Time to turn this over to the Organized Crime Task Force and pursue a few juicy RICO cases.

(h/t John Cole at Balloon Juice)

Deadbeats

America's banking system is a cesspool of complete corruption.

• Mortgage originators wrote not just a few but many fraudulent mortgages.
• Mortgage originators knew they'd built a house of cards and continued to add to it.
  
• Banks fraudulently packaged bad mortgages as securities.
• Banks took vig off investment profits and pushed losses onto their customers.
  
• Banks pushed mortgage originators to write even more bad mortgages.
  
• Banks fraudulently sold securities.
• Private rating agencies fraudulently risk-rated securities.
• Banks illegally transferred securities, sometimes more than once.
• Banks have failed to maintain clear chains of title.
  
• Banks have foreclosed on properties they don't own or can't prove they own.
  
• And on people who are current with their payments.
• Banks have broken into houses they don't own and changed the locks.
  
• Banks have created perjury factories to sign affidavits blindly or to attest to the authenticity of plainly fraudulent documents.
• Banks have taken multiple tries to get their fraudulent lies right.
• Banks have seen the profit potential in the foreclosure crisis they created, and they're profiting from it.
  
• Courts have utterly failed to seek justice, particularly in the Republican-dominated state of Florida.
• When banks have failed, bankers have raided their assets.
• When banks have failed, other banks have demanded FDIC reimbursement of their losses, even though they can't prove their claims.
  

All of this fraud took place because of willful forgetting of the lessons of financial misconduct that did so much damage culminating in the Great Depression. Bluntly: You can't trust bankers with banking. They will screw the economy for their own personal fortunes every goddamn time.

In fact, they're already lobbying heavily to leave failed institutions in place so it's easy to defraud us all again immediately. The moguls in this bullshit paper economy have no shame at all. You think poor people feel entitled? Pikers!

Many victims of banker fraud accept it meekly. They haven't let themselves be driven around the bend by the outrageous stacking of the deck in favor of malevolent, immoral institutions. I would expect some to be unstable enough and armed enough and angry enough to find the home of one of the people in the whole vast chain of fraud and burn it to the fucking ground. I'm not advocating that; I'm just surprised it hasn't happened.

It's a mark of the unmerited success of the Randian Republican narrative that those who have been defrauded still think they're the deadbeats. They've absorbed the bullshit narrative of the right that our economy magically gives everyone exactly what they deserve, so the rich must deserve their bailed out fortunes and the defrauded must deserve to have next to nothing - and to pay for those bail outs from that next to nothing.

It beggars belief that Ayn Rand's superman producers are so obviously stinking crooks and the real deadbeats. They didn't produce anything but successful fraud. And we're not supposed to tax them because that would discourage their hard work and innovation!

It's pretty obvious that financial innovation has been a synonym for fraud. It's pretty obvious that lots of employees of financial institutions should go to jail for their frauds. Yet there's no groundswell of justified anger, and it would certainly be more justified than the petulant, fact-free ranting of the teabaggers.

I would have thought that someone would be talking about egalitarian revolution by now. But no, the wingnut media machine is still blaming the victims.

(h/t to many liberal blogs, especially Eschaton)

Trillions lost, Krugman gives in to lame pun

A world gone Madoff...

Here's the money (ha) paragraph:

At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.

Blind pigs

CNN follows up yesterday's Republican election felon story with a Democratic (or, more accurately, progressive) election felon story. Naturally, obeying the prime journalistic directive (find and report an equivalence even if it's a false one), CNN buries today's lead:

A report from the nonpartisan Brennan Center for Justice at the New York University Law School supports his claim. Researchers reviewed voter fraud claims across the country and found that most were caused by technical glitches, clerical errors or mistakes made by voters. One other finding: A person is more likely to be struck by lightning than to impersonate another voter at the polls.

The report is here (PDF). See also truthaboutfraud.org.

So, even if the GOP can find something, anything wrong with Democrats voting once in a great while, the fact that they're not cowering inside on sunny days shows that they are not really interested in lowering the risk of voter fraud. After all, getting struck by lightning is quite a bit worse than an occasional fraudulent vote.

Again, the liberals are right: The GOP only wants to suppress votes that, statistically, it won't get.

Click image for full R.J. Matson/Roll Call cartoon.

Alleged

I'm all for punishing the guilty. But first you have to find them.

Every election cycle, the Republicans place a story about massive voter fraud. Up till now, it has always been the stories that are frauds. Instead of thousands of illegal votes, there have been a handful, maybe a dozen.

This story will probably turn out the same way. If not, full force of law.

Meanwhile, the media should be more skeptical.

Update: Ask and ye shall receive:

ACORN spokesman Brian Kettenring said that in most cases the bogus registrations were flagged by ACORN supervisors during a review, brought to the attention of the local officials when they were submitted, and ACORN fired "probably a couple of dozen" employees who fabricated them. Under most state laws, the organization must submit every card an employee collects, he said.

(h/t Philosoraptor)

Consumer protection racket

No, not Ralph Nader.

Egregious laxity with your credit card information? No fine if you'll agree to auditing! Don't do it again, big fella.

Ironclad rule: Republicans are not watching out for anyone in your income class. You're not a CEO, are you?