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Fannie and Freddie Fire Their Own Inspector General

2009-11-10T23:19:02Z

There is no independent auditor overseeing the federal agency responsible for some $6 trillion in home mortgages, because the Department of Justice's Office of Legal Counsel ruled that the agency's inspector general didn't have authority to operate, according to internal memos obtained by the Huffington Post.

The ruling came in response to a request from the Federal Housing Finance Agency itself -- which means that a federal agency essentially succeeded in getting rid of its own inspector general.

The FHFA is home to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which are jointly responsible for purchasing or guaranteeing more than 80 percent of new mortgages issued since the middle of 2008, according to FHFA numbers.

In September, the Department of Justice ruled that FHFA Inspector General Ed Kelley did not have authority to investigate wrongdoing or other abuses related to the agency, according to an internal DOJ Office of Legal Counsel memo signed by Deputy Assistant Attorney General Daniel Koffsky.

The ruling was made on complicated technical grounds. The current agency was created by a 2008 act that abolished the Federal Housing Finance Board and replaced it with the FHFA. FHFB employees automatically became FHFA employees and retained their "same status, tenure, grade, and pay."

The IG for the new agency, according to the law, needed to be appointed by the president and confirmed by the Senate, but Kelley argued that the purpose of keeping the employees in the same positions was to make sure the agency could continue to operate and that therefore the law applied to him, too.

Kelley still works for the FHFA, but in a non-independent "internal auditor" position in which he must report to the agency head. A message left with FHFA wasn't returned.

On Monday, HuffPost called the main number listed on the FHFA website for people who want to report "a violation of any law, rule or regulation, gross mismanagement, a gross waste of funds, an abuse of authority, or substantial and specific danger to public safety or complaints regarding the programs and operations of the agency."

The phone rang.

"Ed Kelley," said the voice on the other end of the line.

Kelley now heads the Office of Internal Audit and he said he has two employees: an office administrator and a person who oversees the contractors who review financial records. He estimated his budget for contractors was between $100,000 and $150,000.

As IG, he ran into trouble the way most independent investigators do -- by investigating things people didn't want investigated.

Kelley's office had been working with SIGTARP Neil Barofsky, the Special Inspector General overseeing the bank bailout -- the Temporary Asset Relief Program -- when the agency head challenged his authority to operate and asked the FHFA General Counsel's office to look into it.

"I hate to use the word challenge, because the question they raised was whether the statute was clearly established at the Office of the Inspector General," said Kelley.

He declined to get into the specifics of investigations that were cut short. "I don't really want to get into some of these, but obviously there are some programs out here. There's the TARP IGs that are heavily involved in looking at criminal activity surrounding the Make Home Affordable program and different other aspects in the programs they've rolled out [to address] foreclosures and so forth," said Kelley.

"Many of those are projects that would be worth jointly investigating between the TARP office and the IG's office here at FHFA." Kelley's office was starting to do just that when "the question of whether or not we were legally the IG's office came up, and we had to withdraw," he said.

In late February, Barofsky warned that the mortgage modification plan was vulnerable to already existing fraudulent foreclosure rescue schemes. On April 6, he announced that progress was being made as part of a multiagency crackdown.

A month later -- less than four months after Obama's inauguration -- the FHFA started questioning Kelley's legal status. An internal memo -- which HuffPost did not get from Kelley, originally dated May 12, 2009 and updated on June 23, provided the FHFA's opinion that Kelley had no authority to conduct such investigations.

"It's a serious gap in oversight," Barofsky told HuffPost of Ed Kelley's loss. "It does impact what we do. Ed was a member of our TARP IG council and a partner in our investigative work." Barofsky said he still investigates areas of FHFA, but his mandate only covers "a sliver of what they do."

"Fannie and Freddie are awfully big," Barofsky said. "The idea that the agency responsible for conservatorship of Fannie Mae and Freddie Mac doesn't have an inspector general should be a serious cause of concern."

The agency put the blame on the law as written. "Congress did not intend for FHFA to have an Acting or interim IG pending the confirmation of a [presidentially-appointed] IG," writes Janice Kullman, assistant general counsel, in the memo, which was approved by Isabella Sammons, deputy general counsel, and forwarded to General Counsel Alfred M. Pollard.

It's been 16 months since the law took effect.

Obama has yet to nominate a new IG. Kelley said he'd heard that a few candidates were being vetted and wouldn't comment on whether he was one. He guessed there might be a nomination within the next month.

"Given the uncertainty at FHFA, it did not become clear until mid-September that the Inspector General's office required a new nominee," said a White House spokesman. "We are currently working actively to nominate an individual to the position as soon as possible. The process of announcing nominees does take some time given the rigor of the process to ensure that important positions like this one are filled by the highest quality people."

But if that's the case, the White House has been vetting candidates without consulting Sen. Chris Dodd (D-Conn.), the chairman of the Banking, Housing and Urban Affairs Committee. Dodd told HuffPost Monday night that he was unaware that FHFA had no IG and promised to look into the matter.

In the meantime, Kelley has essentially put a halt to investigations.

"We're in an internal audit office, versus an office of the inspector general, and there's a big difference between the two," he said. "An internal audit office operates at the pleasure of the head of the agency... At the end of the day, no matter how independent I am in conducting myself, we have an organizational independence problem, which anybody who looked at it, if people have problems with what we said, we would probably be viewed as not being independent, and probably not being very reliable."

In practice so far, Kelley said, no one has interfered with him as an internal auditor -- but he knows that could change at any moment. "Now, in terms in actuality of whether I'm independent, I feel like I can do what I need to do. I don't feel the discomfort, but that's until the first time you have a disagreement with the head of the agency. And over the years, I've certainly had my share of those. So at this point, there's nothing at the internal audit office I would want to do, that I feel like I can't do. But there are some things I wouldn't attempt at the internal audit office," he said.

The mortgage industry is one of the most susceptible to fraud, yet one of the areas Kelley said he doesn't get into is criminal investigation.

"We don't have the authority to do criminal investigations," he said. "It's the very reason why they set up IG offices themselves, [as opposed to] internal audit offices."

Fannie and Freddie are burning through cash at a staggering rate. Fannie reported a loss of $18.9 billion in the third quarter of 2009, four billion more than it lost the second quarter.

FHFA requested $15 billion from Treasury to plug the hole.

What's it spending money on?

"The company continued to concentrate on preventing foreclosures and providing liquidity to the mortgage market during the third quarter of 2009, with much of our effort focused on the Making Home Affordable Program," boasts the press release accompanying the announcement of the massive loss. "As of September 30, 2009, approximately 189,000 Fannie Mae loans were in a trial period or a completed modification under the Home Affordable Modification Program."

Those are the precise programs that Kelley was looking into when his own agency shut him down.

Job Openings Near Record Lows

2009-11-10T22:46:10Z

WASHINGTON — Job openings are at rock-bottom levels, according to government and private surveys released Tuesday, a trend that could keep the unemployment rate high even as layoffs slow.

Small businesses in particular are reluctant to add workers as they struggle to obtain credit. Many are pushing their current employees to produce more. Economists say small businesses account for about 60 percent of new jobs.

Still, there are some pockets of hiring as demand for information technology and sales professionals grows, according to government reports and job search Web sites. And there are signs that companies are adding more human resources personnel, which could signal more hiring down the road.

"We've seen a real spike in the hiring of contract recruiters," said Phil Haynes, managing director of AllianceQ, an employers' association that includes companies such as Starbucks Corp., Bank of America Corp. and Intuit Inc. "The recruiters come before the jobs."

But overall, it's a tough time to be out of work. There are about 6.1 unemployed workers, on average, competing for each job opening, a Labor Department report shows. That's down slightly from 6.2 last month, the most since the department began tracking job openings nine years ago.

It's a sharp increase from only 1.7 workers per opening when the recession began in December 2007.

The department's Job Openings and Labor Turnover survey said employers advertised about 2.5 million job openings at the end of September, up slightly from the previous month. That's down from a peak of 4.8 million openings in June 2007.

Layoffs are slowing a bit. Employers cut a net total of 190,000 jobs in October, the government said last week, much lower than the average of about 700,000 a month in the first quarter of this year. But until companies are willing to hire, the unemployment rate is likely to keep rising from its current level of 10.2 percent, the highest in 26 years.

The increase in joblessness came even as the economy grew by 3.5 percent in the July-September quarter, the strongest signal yet that the recession is over.

Many economists worry the U.S. will experience a jobless recovery. That happened after the last two recoveries in 1991 and 2001, when the unemployment rate didn't peak until 15 months and 19 months, respectively, after those recessions ended.

The National Federation of Independent Business said Tuesday that small companies remain skeptical about the recovery. Its Index of Small Business Optimism rose 0.3 points to 89.1 last month, the third straight increase but still below the 94.6 reading in December 2007.

Small businesses are reluctant to hire or invest in expansion, the monthly survey found. Sixteen percent of the survey respondents plan to cut jobs over the next three months, while only 9 percent plan to hire.

"Overall, the small business job machine is still in reverse," said William Dunkelberg, NFIB's chief economist.

Many small businesses also are still having a hard time getting loans, the report said.

Ray Pinard, the CEO of Boston-based 48HourPrint.com, was able to borrow to buy additional printing equipment but said it took much longer to find a lender than the last time the company needed a loan in 2007.

The additional equipment may eventually require more workers, but not anytime soon. "As we ramp up the volume on the equipment, we'll try to use existing personnel first," Pinard said.

Still, some companies are looking to increase revenue by hiring more sales people.

The Conference Board's Help Wanted Online report, released last week, found that sales jobs saw the largest increase in vacancies among the 10 largest occupations, with a jump of about 11 percent. But overall, total jobs posted fell by 83,200 last month to nearly 3.3 million, the business research group said.

Opel Solar Inc., an 8-year-old solar panel designer based in Shelton, Conn., and Toronto, Ontario, has added six positions this year as the government's stimulus package helped companies and communities get funding for solar projects.

Opel has one active opening, in sales, and will probably add one or two additional positions soon, vice president Pat Agudow said.

In addition, the information technology sector has been slowly adding jobs in recent months. According to the Labor Department's employment report last week, the computer systems sector added about 4,500 jobs in October.

Tom Silver, senior vice president for North America at Dice.com, a job site for technology professionals, said that job postings are increasing in two large technology markets – Silicon Valley and New York City – as well as some smaller locations, such as Austin, Texas, and Charlotte, N.C.

New York-based job postings have risen 16 percent so far this year, he said, while they are up 6 percent in Silicon Valley.

"For the first time in more than a year, recruiters and hiring managers have more confidence in the underlying business climate," he said.

___

AP Business Writer Tali Arbel in New York contributed to this report.

Vonage CEO, Mark Lefar, Gets Big Boost In Perks Even As Company Stock Tanks

2009-11-10T22:36:58Z

What a year it has been [for Vonage] under Lefar. When he joined the company, Vonage stock was trading at around $1.50 and a little over a year later it's trading at around $1.40.

So what does the Vonage board decide to do? Well, reward Lefar, of course.

Donald Trump Selling His Old Boeing 727

2009-11-10T21:50:32Z

Donald Trump has suffered some financial setbacks over the past year. But have things gotten so bad that he'll soon be forced to to fly commercial? Or is he just trading up? That remains an open question, but Trump did put his prehistoric Boeing 727 up for sale yesterday.

Elkhart Coroner Blames High Suicide Rate On Recession

2009-11-10T21:18:50Z

As part of its Bearing Witness 2.0 project, the Huffington Post is rounding up a few of the best local stories of the day.

In Elkhart, Ind., coroner John White has linked the rising suicide rate to the continuing economic recession, reports MSNBC's JoNel Aleccia. As many as 24 people have killed themselves this year in the Northern Indiana region, and over a quarter of them can be directly tied to recent job loss or financial hardship. Elkhart has suffered more than any other county with more than 25,000 residents, according to a stress map from the Associated Press released in May.

One woman shot herself in the head the day after her car had been repossessed, her home already on the brink of foreclosure. "This was a vivacious, very strong woman, and she was taken to her knees because of money," said her daughter.

Anecdotal evidence suggests that the recession has caused higher suicide rates nationwide, but a data lag prevents full analysis -- the most recent national data only go up to 2006.

*********

A little over a year ago in Tavares, Fla., four-day-old Chase Jucha had to undergo open-heart surgery, reports the Orlando Sentinel. His parents, Brian and Jessica, were uninsured, and got emergency Medicaid to help save his life. Then, as Chase was recovering -- exactly a year after his surgery -- Brian had a headache that turned out to be a tumor twice the size of a golf ball, and he had to undergo brain surgery. And then Jessica lost her job at a childcare center in September.

The Juchas have been receiving help from their church, the First Baptist Church of Tavares, whose 200 parishioners have already donated more than $1,800 to help the family, which also has another three-year-old son, Bradley. Brian, a landscaper, is also out of work. "Our desire was to be able to make sure their day-to-day and week-by-week needs were going to be met," said Rev. Tom Keisler. "They're a wonderful couple. This really hit everybody hard."

Donations can be made by contacting the church.

*********

A homeless shelter in Fayetteville, Ark., has seen a record number of homeless veterans, reports 40/29 TV. There's been "a huge increase, and we didn't think it could get any higher," said Jon Woodward, executive director of the Seven Hills Homeless Center. The center reports that about half of its patrons are veterans, caught in the midst of high unemployment and unable to transfer their battlefield experience into civilian employment and a stable home. "The challenge is just like anybody looking for jobs," said Terry Jaggers, of the Department of Workforce Services in Fayetteville. "There's just not that many jobs available."

*********

Peter Whoriskey reports for the Washington Post about a region of North Carolina that has had more jobs outsourced to other countries than just about anywhere else in the nation. Local workers are struggling to switch careers in a job market already strained by high unemployment and the lingering recession.

Many laid-off employees cannot enroll in a federal program designed to re-educate workers for new kinds of jobs, because their unemployment checks aren't enough to support them long enough to earn a degree or training certification. "The people in the think tanks keep saying we are going to become -- what's the term? -- an 'information and services' economy," said Allan Mackie, manager of the local North Carolina Employment Security Commission office. "That doesn't seem to be working out too good."

*********

In Michigan, the high number of foreclosed houses threatens to throw off totals for the 2010 census, which could rob the state of a congressional seat, reports Catherine Jun of the Detroit News. Massive unemployment across the state has caused many to move away, and even more to lose their homes.

HuffPost readers: Seen a compelling local story? Have a neighbor going to bizarre lengths to get through the recession? Tell us about it! Email jmhattem@gmail.com.

Derivatives Just "A Sophisticated Form Of Gambling," U.S. Senators Say; Propose Bill Allowing State Gambling Laws To Apply

2009-11-10T21:09:19Z

Three U.S. Senators described the complex and little-understood world of derivatives trading as "a sophisticated form of gambling," proposing legislation that would enable state gambling regulators and attorneys general to examine the practice.

Senators Maria Cantwell (D-WA), Ron Wyden (D-Ore.) and Bernie Sanders (I-VT) sent out a press release on Tuesday, describing the need for more oversight of the market in derivatives, which are contracts that can act as insurance against a future event, or as just a simple bet.

"The derivatives market has done so much damage to our economy and is nothing more than a very high-stakes casino - except that casinos have to abide by regulations," wrote Cantwell. "Even in Las Vegas at the Blackjack tables, both the House and the player have to have capital behind their bets. But we allow Wall Street to continue to operate in the dark..."

Their bill specifically removes a nine-year-old directive that specifically preempted state law from applying to derivatives contracts. It was part of the Commodity Futures Modernization Act -- the law that essentially allowed for the tremendous growth in the unregulated derivatives market.

The now-$600 trillion market is, for the most part, largely without strong federal regulation. In the wake of last year's near-breakdown of the entire financial system -- brought about in part by derivatives contracts that didn't have sufficient collateral backing them up -- Congress has promised reform. Cantwell, though, has been among the most vocal advocates.

The proposed bill would essentially add another cop to the beat. For those derivatives contracts without federal oversight, rather than derivatives dealers being subject to federal regulations, state regulators would also be empowered to go after those contracts and trades that are unregulated.

One such example can be found in derivatives contracts dealing with foreign exchange. The four major proposals tackling derivatives -- offered by the White House, House Financial Services Committee Chairman Barney Frank (D-Mass.), House Agriculture Committee Chairman Collin Peterson (D-Minn.), and Senate Banking Committee Chairman Chris Dodd (D-Conn.), respectively -- specifically provide an exemption for these types of derivatives contracts whereby two parties exchange agreed-upon amounts of two currencies, either doing this over time or at a later date.

Gary Gensler, the head of the federal agency responsible for regulating derivatives -- the Commodity Futures Trading Commission -- specifically asked Congress to not add in this loophole to the various proposals.

"The concern is that these broad exclusions could enable swap dealers and participants to structure swap transactions to come within these foreign exchange exclusions and thereby avoid regulation," Gensler warned in an August letter to members of Congress. Those who drafted the bills didn't listen.

While the Cantwell-Wyden-Sanders bill doesn't address the lack of federal regulation, it does enable state regulators to provide oversight.

"[Cantwell's] preferred position is a strong federal regulatory environment without loopholes," said her spokesman John Diamond. "This bill establishes a regulatory minimum."

What To Look For In A Bank Account

2009-11-10T20:42:43Z

By Vonda Sines, Associated Content

With so many alternatives, you need to know what to look for in a checking or savings account to find the best deal. Asking the right questions can quickly narrow your choices.

If opening a new bank account is on your to-do list, you have a dizzying range of accounts from which to choose. With so many alternatives, you need to know what to look for in a checking or savings account to find the best deal. Asking the right questions can quickly narrow your choices.

Fees

Most banks offer several types of free checking accounts. You'll want to ask about the fine print though. Is there a fee if your balance drops below a certain amount? How about charges if you use an ATM at a competitor's bank?

While banks try to bundle services into packages such as a checking and a savings account plus a safety deposit box thrown in, some of these so-called freebies might merely come with discounted fees. Does "free" mean you're required to use direct deposit? Are you limited in the number of checks you can write per month? Will the bank print your checks free? It's important to ask yourself whether the package or account offered will really work for you.

You'll also want to compare fees for services such as stop payments, wire transfers, cashier's checks, money orders and returned items. Electing to get a paper statement in the mail might cost you, too.

Interest

Who wouldn't want to earn interest on a free checking account? While this offer sounds tempting, sometimes the minimum balance required is so high, an interest-bearing checking account isn't worth it. Seemingly high interest rates on savings accounts might also require an astronomical minimum daily balance.

Convenience

Online banking fully meets the needs of some customers. Others want branches with convenient hours in their neighborhood or close to work. If telephone banking sounds appealing, ask which services are offered that way, and if there's a charge.

If you're interested in having bills automatically paid from your account, the American Bankers Association advises asking whether this convenient feature is available and what it costs. Also verify whether you'll get a debit card or an ATM card, and ask how direct deposit works. If you want overdraft protection on the account, find out your options. If you're interested in a joint account, ask what it takes to open one, and ask about the rights and obligations of each party.

Beyond Banks

The primary way banks strengthen their bottom line is by increasing service charges and varying interest rates. According to AARP, you might want to skip banks and consider opening an account at a credit union instead.

Most credit unions offer similar products and services as those available at banks, but with lower fees. Sometimes they impose no fees at all. This is because members actually own the credit union. All earnings come back to them as high dividends on savings and investment accounts, lower interest rates on loans, and reduced or absent fees on their services.

Accounts at federal and most state-chartered credit unions are insured by the National Credit Union Administration (NCUA).

Ralph Cioffi, Matthew Tannin Verdict: Ex-Bear Stearns Hedge Fund Managers NOT GUILTY On All Fraud Charges

2009-11-10T20:30:40Z

NEW YORK — Two Bear Stearns executives who ran hedge funds that collapsed after betting heavily on the shaky subprime mortgage market were acquitted Tuesday of lying to investors – a defeat in the government's bid to punish fraud exposed by the financial crisis.

A jury in federal court in Brooklyn deliberated about eight hours over two days before finding Ralph Cioffi and Matthew Tannin not guilty of conspiracy and other charges in an alleged scheme that cost 300 investors about $1.6 billion and nearly caused the demise of Bear Stearns itself. The firm avoided bankruptcy in a rescue buyout by JPMorgan Chase & Co.

Both men had been charged with three counts of securities fraud and two counts of wire fraud. Cioffi was also charged with insider trading.

After the verdict, some jurors told reporters that they concluded the evidence against Cioffi and Tannin was flimsy and contradictory. Other suggested the pair were being blamed for market forces beyond their control.

"How much can two men do?" said Aram Hong.

Said Serphaine Stimpson: "They were scapegoats for Wall Street."

Tannin left the courtroom without comment. His attorney, Susan Brune, said, "We are thrilled for Matt and for his family." Cioffi said only, "I'm happy."

In a statement, U.S. Attorney Benton Campbell said, "We are disappointed by the outcome in this case, but the jurors have spoken and we accept their verdict."

During a monthlong trial, prosecutors relied on a series of e-mails they alleged revealed behind-the-scenes alarm at the hedge funds as investments in complex, high-risk securities tied to the subprime market began to slide.

"The subprime market looks pretty damn ugly," Tannin wrote to Cioffi in April 2007. If Bear's internal reports were accurate, Tannin suggested, "I think we should close the funds now," and "the entire subprime market is toast."

The situation became so dire that Cioffi pulled $2 million of his own cash from the fund, but the pair still told investors that they should stay in and that the outlook was good, prosecutors said. He also was accused of hiding news that one worried investor had decided to pull out $57 million from the funds.

Based on a credit analysis, "there's no basis for thinking this is one big disaster," Cioffi told investors in a recorded conference call with investors that was played for jurors.

The defendants "lied to their investors. They defrauded their investors. The misled their investors," prosecutor James McGovern said in his closing argument. "And it's time for them to be held accountable."

Defense attorneys sought to convince the jury that the e-mails were taken out of context. Cioffi and Tannin, they said, had no motive to steer investors off a cliff, and were honest with them about the volatility of the market.

Prosecutors failed to show that the managers "knew what the future held and they hatched a criminal scheme to lie to investors," Brune said in closing arguments.

Added Brune: "This is a case that is built on hindsight bias."

Median Home Prices Fall In 3Q

2009-11-10T20:24:15Z

A real estate group says home prices fell in eight out of every 10 U.S. cities in the third quarter of this year as heavily discounted distressed sales made up 30 percent of all deals.

But home sales continued their climb, with quarterly sales outpacing the second quarter and the previous year's figures, the National Association of Realtors said Tuesday.

The median sales prices of existing homes declined in 123 out of 153 metropolitan areas compared with the same period a year ago. Prices rose in the other 30 cities.

The national median price clocked in at $177,900, or 11 percent below the third quarter last year.

"The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas," said Lawrence Yun, the group's chief economist, in a statement. "But we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market."

Prices in Fort Myers, Fla., plunged 40 percent to $98,000 from a year ago, the worst in the nation. Las Vegas saw its median price tumble almost 35 percent to $138,500 year-over-year.

The largest price gain, by contrast, was in Cumberland, Md., where prices jumped 19 percent to $122,100. Davenport, Iowa, followed with an increase of 14 percent to $115,600.

The federal tax credit of up to $8,000 for first-time homebuyers helped boost sales in the third quarter. U.S. home sales grew in 45 states from the second quarter, with 28 states posting double-digit gains.

Total quarterly sales hit a seasonally adjusted annual rate of 5.3 million, up more than 11 percent from 4.76 million in the second quarter.

President Barack Obama signed a bill last week extending and expanding the federal tax credit. Now, buyers who have owned in their current homes for at least five years are eligible for tax credits of up to $6,500. First-time homebuyers – or anyone who hasn't owned a home in the last three years – would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.

Jeffrey Picower, Madoff Associate, Leaves Fortune To Charity

2009-11-10T20:04:07Z

NEW YORK — A man who made billions of dollars off Bernard Madoff's Ponzi scheme signed a will leaving the bulk of his fortune to charity, but the gift's ultimate size may depend on legal wrangling over how much of the money rightfully belongs to cheated victims.

Jeffry Picower, 67, a prominent philanthropist, drowned after suffering a heart attack in the swimming pool of his Palm Beach, Fla., mansion on Oct. 25.

Unlike some other Madoff investors, he died a rich man. The trustee unraveling Madoff's financial web said Picower withdrew some $7 billion from his Madoff accounts over the decades – well more than he invested.

That money is now known to have been stolen from other people, and Picower's widow said in a statement this week that the family wished to return some of it through "a fair and generous settlement" that might help overcome some of the "devastation" wrought on Madoff's victims.

The exact amount of that settlement is still unknown.

Madoff trustee Irving Picard has sued claiming victims are entitled to get back all $7 billion. The family has argued that under New York law, it should only have to return bogus profits they earned in the past six years, or around $2.4 billion.

On Tuesday, the family's lawyer, William D. Zabel, said the Picowers might be open to paying "more than the law would require them to, in order to help the victims of scheme."

Yet the family also made clear that it is trying to protect its own charitable projects. In a will signed on Oct. 15, Picower said he wished to donate most his multibillion-dollar estate to a new philanthropic foundation, minus $200 million for his widow, Barbara, $25 million for his daughter, Gabrielle, and additional millions for grandchildren and other friends and relatives.

The foundation, the will said, would be "for broad charitable purposes," although Picower suggested it spend half its money on medical research.

He also gave $25 million to the Picower Institute of Learning and Memory at the Massachusetts Institute of Technology, $1 million each to the New York Public Library, the Harlem Children's Zone and the Nurse-Family Partnership in Denver, Colo. and $4 million to a group of Parkinson's disease research scientists. Picower had Parkinson's disease.

Lawyers for Picard have argued in court papers that Picower must have realized that the "implausibly high" returns he was getting from Madoff's operation were the result of fraud.

Barbara Picower said in her statement that it was "a great tragedy that my husband Jeffry's sudden and untimely death prevented him from seeing the full restoration of his reputation for honesty, integrity and professional achievement."

Zabel said he couldn't discuss how much the family might ultimately be willing to pay in a settlement because the two sides have been in negotiations. Zabel added that the Madoff case has been "an albatross" for the family, and weighed on Picower personally before his death.

Faith-Based Investors Target Members Of U.S. Chamber Of Commerce

2009-11-10T17:56:44Z

Prominent faith-based institutional investors are pressuring several of the Chamber of Commerce's biggest members -- including Merck, Walmart, McDonald's, AT&T, IBM and General Electric -- to state publicly if they agree with the chamber's campaign to defeat health care reform.

All of the 36 companies have agreed to "embrace health care principles that are now inconsistent with the anti-reform stance of the U.S. Chamber of Commerce on health care legislation," reads the press release from the 275-member Interfaith Center on Corporate Responsibility (ICCR).

The three dozen targeted companies are (in alphabetical order): Aetna; American Express; AT&T; Bristol-Myers Squibb; Cardinal Health; Cisco Systems; Duke Energy; DuPont; Eli Lilly; Exxon Mobil; General Electric; General Mills; Goldman Sachs; Home Depot; IBM; Kellogg; Kohl's; Manpower; Marriott; McDonald's; Medco; Merck; Peabody; Pepsi; Pfizer; Safeway; Staples; Starbucks; Target; 3 M; UnitedHealth Group; United Technologies; Verizon; Walmart; Wellpoint; and Xerox.

The letter to the companies reads:

"Does the U.S. Chamber of Commerce speak for [your corporation] when it opposes healthcare reform? As members of the faith community and concerned investors we have been troubled by the efforts of the U.S. Chamber of Commerce to undermine efforts to curb global warming. We are equally concerned that the same tactics seem evident in the Chamber's attempts to undermine efforts to bring about a just health care system available to all citizens. Given the position that the Company has taken in endorsing core precepts for healthcare reform, we are asking you in this letter to communicate in a clear public voice whether or not the Chamber has your 'proxy' when it comes to healthcare reform policy...

As shareholders in major companies threatened by a broken health care system, we are united in our view that that the status quo in health care is unsustainable. It has runaway cost increases, presents great risk for employers as well as employees and leaves millions uninsured ... Given the current campaign of the Chamber of Commerce, we ask you to provide answers to these questions: (1) Does the Company agree with the Chamber's campaign in opposition to health care reform? (2) Will the Company publicly distance itself from the Chamber's position in opposition to health care reform? (3) What are the Company's plans to contribute in a constructive way to the health care debate going forward?"

Last month, the Huffington Post asked readers to send along names of members of the Chamber of Commerce.

Washington Times: Obama Preventing Lobbying Transparency

2009-11-10T17:56:33Z

In an editorial today, the Washington Times assails against President Obama for encouraging "lobbyists to stop admitting they are lobbyists."

The paper points to the president's executive order earlier this year that bans lobbyists from being appointed to executive branch positions. Following the order, 1,400 federal lobbyists withdrew their government registrations and the number of newly-registered lobbyists has decreased, according to an analysis by the Office of Management and Budget Watch and the Center for Responsive Politics.

But, as the Times points out, fewer registered lobbyists does not mean that there are fewer special interests working to influence policy.

Mr. Obama's has focused only on the registered influence peddlers, but, despite the reform, his administration has hired a number of former lobbyists, both registered and not, for key positions. Deputy Secretary of Defense William J. Lynn lobbied for defense industry giant Raytheon Co., and Treasury Chief of Staff Mark Patterson represented Goldman Sachs' interests. Deputy Health and Human Services Secretary William V. Corr is the former executive director of the Campaign for Tobacco-Free Kids.

Last month, the Times reported on the White House's preferential treatment toward big campaign donors, who the paper claimed receive special access to senior officials and private visits in exchange for six-figure bundling contributions or $30,000 personal donations. Among them is top New York bundler Robert Wolf, CEO of United Bank of Scotland Americas, who President Obama took with him on a golf outing in Martha's Vineyard this summer.

From the Times's editorial today:

Although there is nothing inherently wrong with lobbyists or former corporate officials serving the president, transparency is the only tool to assure that former lobbyists put the public good over private gain.

John Paulson: How The Hedge-Fund Manager Made $15 Billion Betting Against The Housing Market

2009-11-10T17:54:11Z

In a span of just three years, hedge-fund manager John Paulson went from practically unknown to practically unparalleled. After a series of smart bets against the housing market made Paulson's hedge fund billions of dollars--including days where it made more than $1 billion--he earned a place alongside George Soros and Warren Buffett as an oracle of investing.

Severance Packages Provide False Sense Of Comfort

2009-11-10T17:16:19Z

The long-term jobless rate hits its highest point on record. More than a third of those who are out of work have been looking for more than six months, making this category of unemployed the biggest since the Bureau of Labor Statistics began tracking it in 1948.

Overall, companies have been eliminating or trimming severance packages. For those who do receive severance, the median pay allotted is 12.5 weeks' salary, down from 21.8 weeks a decade ago, according to outplacement firm Challenger, Gray & Christmas.

Why Does Dunkin' Donuts Lobby The Federal Reserve?

2009-11-10T16:58:12Z

Financial firms have long lobbied the Federal Reserve, high-minded maker of monetary policy. But the Fed's foray into lending during the financial crisis this year has opened it up to lobbying from niche industries like recreational boat manufacturers, rental car companies, and -- Dunkin' Donuts?

Indeed. Dunkin' Brands, parent company of Dunkin' Donuts and Baskin-Robbins, began lobbying the Fed in the second quarter of this year, according to lobbying disclosure reports filed with Congress.

The New York Times reported in June that economists were uneasy with the Fed's role as a credit allocator, because decisions to favor one industry or another can be seen as political, and the Fed is supposed to be insulated from such pressure.

The number of special interests that reported lobbying the Fed shot up from 102 to 143 from the second to third quarters of 2008, as the Fed prepared to announce its Term Asset-Backed Securities Loan Facility (TALF), which lends money to investors who buy asset-backed securities from lenders in order to keep credit flowing to borrowers. When it was announced last November, the program was for securities collateralized by student loans, auto loans, credit card loans and loans guaranteed by the Small Business Administration. The program officially launched in March, and was expanded to include commercial mortgage-backed securities in July.

So what does Dunkin' want from the Fed, exactly?

In a statement to the Huffington Post, Dunkin' Brands emphasized the fact that its franchises across the country are small businesses, and said its lobbying is on behalf of its franchises and "our nation's entrepreneurial spirit."

"While financing is still available for strong brands such as ours, for the small business community as a whole, gaining access to credit has been challenging and this has limited opportunities for entrepreneurs to go into business for themselves," said Cicely Simpson, top lobbyist for Dunkin' Brands. "On behalf of our nation's entrepreneurial spirit and in honor of our more than 2,200 franchisees, Dunkin' Brands has engaged in conversations with the Federal Reserve, the Administration, and Congress to ensure that they are aware of the credit needs of small business owners."

Simpson was not made available for a conversation, but LobbyBlog wanted to know more. What exactly was on the table during Dunkin's conversation with the Fed -- Donuts? Ice cream?

Joking aside, economists queried by LobbyBlog confirm that there is, in fact, something funny about Dunkin' lobbying the Fed.

"It's a sign of how different the world is, of how much more involved the Federal Reserve is now in specific credit allocation," said Brookings Institution fellow Doug Elliott. Elliott supports the TALF program but is one of those economists who is wary of the Fed's lending role.

"When it was just doing things that affected the economy as the whole there wasn't as much reason to lobby them, but if they're now doing things that provide help to certain categories and not others, then you have a lot of reasons to go lobby them."

Dunkin' Brands has spent $680,000 lobbying the government since last year, according to the Center for Responsive Politics. The two quarterly filings that reported the Fed had been contacted (along with the Congress and the Treasury) on Dunkin's behalf accounted for $60,000 of that total.

Fed critic Robert Auerbach was baffled.

"I just don't understand what the Fed could do for them," he told the Huffington Post. "The regulator of the banking system should not intercede for any particular investor. That should be up to private banks."

Fed officials declined to comment.