Monday, August 26, 2013

Barker's Newsbites: Monday, August 26, 2013


As we move towards the end of the Summer of 2013...

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4 comments:

William R. Barker said...

http://www.nationalreview.com/corner/356752/va-employees-get-bonuses-despite-massive-backlog-inefficiency-andrew-johnson

Two-thirds of employees at the Department of Veteran Affairs, which has been the subject of widespread criticism for its excessive delays in providing veterans their benefits, received bonuses at the end of 2011 for “excellent” or “outstanding” performance.

* UNFRIGGIN'BELIEVABLE...

The VA’s regional office in Oakland, Calif., gave about 90% of its employees bonuses despite having to temporarily shut down operations to retrain its underperforming workers and, in a Baltimore office, about 40% of workers receive a bonus despite the office’s having the longest wait time nationally, according to a News21 investigation. (Yet, at the Sioux Falls, S.D., office, which processes claims up to four times more efficiently than Oakland, less than a tenth of its employees saw a bonus, the same investigation found.)

* POLITICALLY CONNECTED vs. NOT POLITICALLY CONNECTED?

According to the report, the department’s performance standards encourage workers to push aside more complicated claims and process easier ones to ensure their job security and qualify for extra pay through a points system.

One employee told News21 that the current process “breeds cheating,” as employees resort to “survival mode” and work only on easy claims at the expense of backlog claims. “Your backlog is over here. But your points are in this direction. How stupid is that?” one employee said.

August 26, 2013 at 3:12 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424127887323407104579034680037579034.html?mod=WSJ_Opinion_AboveLEFTTop

Governor Jerry Brown on Friday called a "state of emergency" in San Francisco because a distant wildfire threatens the city's electricity supply.

Like so many other emergencies in California, this one is government-made and a warning about its green political obsessions.

The Rim Fire, which is slashing and burning through the Yosemite region, forced the San Francisco Public Utilities Commission to shut down two Hetch Hetchy hydropower plants and the transmission lines that power its municipal buildings. (While a government shutdown in San Francisco might have salutary effects, the city's hospital, port and airport would also be affected. Hence the emergency.)

The utility commission assured residents over the weekend that it doesn't anticipate service interruptions because it can purchase power on the open market — though so far at a $600,000 premium.

The bigger disaster, according to the utility, is that it "has been unable to generate and transmit clean, greenhouse gas-free hydroelectric power" and must rely on natural gas-fired plants. This contravenes the utility's 100% renewable-energy goal.

The utility procures 97% of its power from Hetch Hetchy's 400-megawatt hydroplants via roughly 150-mile transmission lines. New-generation renewables such as solar and biogas supply a mere 10 megawatts of municipal power because they require more space and capital to bring to scale.

Trouble is, long transmission lines are at high risk to disruption in natural disasters.

Most San Francisco residents and businesses get their power from PG&E, a private utility, so they don't have to worry about this risk now. But they shouldn't rest easy. Renewables make up 20% of PG&E's portfolio and under California law must comprise a third by 2020, and many state politicians want a 100% goal like San Francisco's.

To hit the renewable mandate, utilities are building long transmission lines to deliver power from distant solar and wind projects to population centers. Most large-scale solar plants in California are being built in dry, sunny desert and valley regions. Wind farms are concentrated in the mountains. Both are fire-prone.

Take San Diego Gas & Electric, which last year completed a 120-mile transmission line from Imperial County wind and solar farms at a cost of $1.9 billion. According to a 2008 draft Environmental Impact Report, "there were 33 reported power outages resulting from 16 distinct wildfire or lightning events" between 1986 and 2005 along an existing transmission line running through the valley.

The Little Hoover Commission, the state's oversight agency, warned last year that the closure of the San Onofre nuclear plant leaves Southern California "vulnerable to brownouts during heat waves" or "if a wildfire took out a key transmission line."

California has usually had excess generating capacity to pick up the slack when transmission lines are downed. However, the excess capacity is declining as more renewables come online and gas-fired plants, which are located along the coasts near cities, are retired.

California may soon have a lot more fires to put out if Sacramento blazes ahead with its renewable mandates.

August 26, 2013 at 4:52 PM
William R. Barker said...

* TWO-PARTER... (Part 1 of 2)

http://online.wsj.com/article/SB10001424127887324108204579021281811801484.html?mod=WSJ_Opinion_LEFTTopOpinion

Dodd-Frank was drafted by congressional backroom gnomes and whooped through Congress by a Democratic Party in full control of both houses.

Like ObamaCare, the other great "achievement" of the two years of progressive power, the bill was too long for even a cursory reading by most of those who voted for it.

The legislation runs to 849 closely packed pages.

According to an analysis by the Davis Polk law firm, it mandated 398 new regulations to be crafted by bank regulators — a task fraught with confusion and nowhere near complete three years later.

As if the Federal Reserve, Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Housing Finance Agency and the National Credit Union Administration weren't enough, Dodd-Frank created another regulator, the Consumer Financial Protection Bureau. This creature is unique in that it is largely free of either executive or congressional oversight.

It doesn't depend on congressional appropriations for its funding, which comes from Federal Reserve resources.

Some lawyers say it is an unconstitutional delegation by Congress of its legislative powers.

(*RAISING MY HAND*)

This hasn't stopped the bureau from wheeling and dealing, making rules, twisting arms, plotting civil actions and levying fines on designated malefactors involved in lending or even borrowing advice. The law firm Gibson Dunn, in a lengthy compliance guide, notes that "The CFPB has authority to regulate any 'covered person,' defined as anyone who engages in offering or providing a consumer financial product or service." That covers a whale of a lot of territory.

To implement its sweeping mandate the bureau is compiling a huge database of financial information. (And we're worried about the NSA...?)

Empowered as it is to threaten anyone from J.P. Morgan CEO Jamie Dimon to the lowliest financial adviser in Paducah, this agency has great potential for political misbehavior. It already has made it clear that it is into things like "disparate impact," which can damn a lender if he doesn't meet the right racial quotas.

Such populist thinking inspired the Clinton administration in the 1990s to campaign for "affordable housing." The Department of Housing and Urban Development lowered the standards under which Fannie Mae and Freddie Mac could insure loans, and regulators strong-armed banks into writing mortgages for applicants with low credit ratings. That led to a tsunami of mortgage-backed securities laced with subprime mortgages that flooded into world markets.

* BUT THE SUBPRIME MORTGAGES WE'RE TALKING ABOUT WERE MORE OFTEN SPECULATIVE MORTGAGES AND USING ONE'S (SUPPOSED) EQUITY AS A RENEWABLE PIGGY BANK.

* FOLKS... YES... PEOPLE BUYING THEIR FIRST HOME AND BEING FINANCED TO SPEND MORE THAN THEY COULD AFFORD WAS INDEED A PART OF THE HOUSING MELTDOWN, BUT IT WAS THE "WALL STREET" ASPECT OF THE HOUSING MARKET THAT REALLY DID IT IN.

* EITHER WAY... GOVERNMENT DID LITTLE TO STOP THE BUBBLE AND INDEED - TO THE CONTRARY - DID MUCH TO INFLATE IT VIA REGULATORY POLICIES AND TAX POLICIES!

* TO BE CONTINUED...

August 26, 2013 at 5:18 PM
William R. Barker said...

* CONCLUDING... (Part 2 of 2)

The 2008 financial crisis resulted after home prices peaked and began to decline when banks and other investors began to realize that the mortgage backed securities they were holding were poisoned by large numbers of mortgage loans with negative collateral and subject to default. The populist politicians who forced the banks into these investments blamed the banks. This set the stage for Dodd-Frank.

* AGAIN... "FORCED" UNWISE FIRST HOME MORTGAGES... OFTEN TRUE... BUT THE REFINANCING... THE SPECULATION... THE BANKS, WALL STREET, THE RATINGS AGENCIES, THE REAL ESTATE AGENT ASSOCIATION... FREDDIE, FANNIE, SALLY... THE GOVERNMENT ITSELF... THERE ARE FEW "GOOD GUYS" IN THIS SAGA.

Clearly it has occurred to the other bank regulators that the CFPB is a competitor for power and political influence. To protect their turf and obtain maximum publicity, they are mostly going after the big banks, particularly those 29 global entities designated under Dodd-Frank as "Systemically Important Financial Institutions."

(A SIFI label gives a bank lower borrowing costs because it designates it as "too big to fail" and thus sheltered by taxpayer money - a Dodd-Frank disclaimer notwithstanding.)

CEO Robert Wilmers of the northeast regional M&T Bank MTB told his shareholders in March about an M&T study that showed that fines, sanctions and legal awards against the six largest U.S. based banks soared to $29.3 billion last year. This is more than double the $13.9 billion of 2011 and dwarfs the $9 billion of the 10 years preceding 2011.

These institutions are paying for [Dodd-Frank] "protection" by serving as piggy banks for regulators.

* IT'S ALL A MASSIVE SHELL GAME FOLKS... AND SINCE THE GOVERNMENT IS THE ONE WITH THE POWER... THE GUNS... THE COURTS... THE PRISONS... ONE MUST RECOGNIZE THAT WHILE THE OLIGARCH DO INDEED BRIBE THE POLITICIANS, THE POLITICIANS CHOOSE TO TAKE THE BRIBES AND ARE THUS RESPONSIBLE FOR THE RESULTS.

Jamie Dimon, who was one of the most vocal critics of Dodd-Frank, has been paying dearly for calling parts of the law "idiotic." Reuters quotes consultants Graham Fisher & Co. as estimating that J.P. Morgan paid $8.5 billion in fines from 2009 through 2012.

* AND, YET... DID ANYONE GO TO JAIL...?

* WOULDN'T YOU THINK THAT PEOPLE RESPONSIBLE FOR DOING SUCH DAMAGE TO THE AMERICAN ECONOMY THAT THE FINES WERE IN THE BILLONS WOULD ALSO BE CRIMINALLY LIABLE FOR... er... SOMETHING... SOME CRIME...?

The Journal reported on Aug. 19 that the onslaught may force the company to absorb legal losses of $6.8 billion in excess of its reserves for those costs.

* CRY ME A RIVER! THEY'LL MAKE IT UP ON THE FEES AND COMMISSIONS THAT WILL BE GENERATED VIA FUTURE CRONY "CAPITALISM."

The New York Times, utilizing a leak most likely from the Securities and Exchange Commission, recently broke an "exposé" of Morgan's alleged hiring of two politically-connected wunderkinds in China. News flash: Cutting deals with local authorities and Communist Party mandarins has been the required way of tapping into the big Chinese market since Deng Xiaoping opened the doors decades ago.

* THEIR MANDARINS... OUR MANDARINS... OUR OLIGARCHS...

(*JUST SHAKING MY HEAD*)

Obviously, none of this regulatory overkill is breaking the banks, at least not the giants. By and large they are doing well, Morgan especially. But the idea gnaws that this situation cannot be healthy for either the economy or the culture of the U.S.

The legislative and regulatory assault has done serious damage to the public image of a vital private industry. If dubious prosecutions continue to mount, they could backfire on the regulatory agencies and further diminish sinking public confidence in government.

Ask the folks at the IRS.

August 26, 2013 at 5:18 PM

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