Holder loses cool during House hearing when asked about Fast and Furious

A visibly frustrated Attorney General Eric Holder slammed the table when responding to a question about Operation Fast and Furious during a Tuesday budget hearing before the House Appropriations Subcommittee on Commerce, Justice, Science and Related Agencies.

“That was a fundamentally flawed program, fundamentally flawed,” Holder said of Fast and Furious. “And, I think that I can agree with some of my harshest critics that there are legitimate issues that need to be explored with regard in which the way Fast and Furious was carried out.”

“But, I think one thing that also has to be understood is that once this was brought to my attention” — Holder said before slamming his hand on the committee room table he was sitting at — “I stopped it. I stopped it.”

During an interview with Fox News host Megyn Kelly shortly after Holder’s comments, House Oversight Committee Chairman Rep. Darrell Issa — the lead congressional investigator into the Fast and Furious scandal with Sen. Chuck Grassley — said he and others in Congress don’t think Holder is telling the full truth.

“Well, certainly one of the reasons we doubt the legitimacy of that claim is, on Feb. 4 [2011], we received what was in fact an untruthful, a lie, a false letter that has now been retracted,” Issa said. “Lanny Breuer, one of his chief aides and number three at Justice, was in Mexico lobbying for more gun-walking. Additional evidence shows that [U.S. agent] Jaime Zapata was killed with a similar program weapon. In other words, this was a policy change that happened and continued up until fairly recently. We need to get to the bottom of it.”

In addition, Issa said that if Holder wants to show he’s cooperating with the congressional investigation and is interested in really ending gun-walking, he’d fork over the rest of the lawfully-subpoenaed documents he’s still hiding from Congress. (RELATED: Full coverage of Eric Holder)

“The inspector general at Justice has 80,000 pages and we have 6,000 pages, but even in those 6,000 pages we find damning evidence that high-ranking people in Justice knew all along and not only didn’t stop this program, but believed in it,” Issa said.


Fast and Furious was a program of the Bureau of Alcohol, Tobacco, Firearms and Explosives, overseen by Holder’s DOJ. It sent thousands of weapons to Mexican drug cartels via straw purchasers — people who legally purchased guns in the United States with the known intention of illegally trafficking them somewhere else.

At least 300 people in Mexico were killed with Fast and Furious weapons, as was Border Patrol agent Brian Terry. The identities of the Mexican victims are unknown. Allegations have surfaced that U.S. Immigration and Customs Enforcement agent Jaime Zapata was also killed with Fast and Furious weapons. Many members of Congress have demanded Holder’s resignation or firing over the scandal, arguing that he either should have known about it, or did know about it and is trying to cover up the evidence. They also point to how nobody has been held accountable for the operation more than a full year after the DOJ provided false information to Congress, and even longer since Terry was murdered.

As the two lists don’t perfectly overlap, 103 members of the House have called for Holder’s resignation, signed an official resolution of “no confidence” in Holder, or both. Three U.S. senators, two sitting governors and all major Republican presidential candidates have called for Holder’s resignation or firing, too.

During the hearing, Holder also took a stab at the George W. Bush administration, implying that previous attorneys general were briefed on operations similar to Fast and Furious. “In spite of what other attorneys general might have done with briefings that they got, when this attorney general heard about these practices, I said to the men and women at the United States Department of Justice, to the field, to Main Justice, ‘This ain’t going to be the way we conduct business. Stop it.’”

During the Bush administration, there were similar programs: Operation Wide Receiver, the Hernandez Case, and the Medrano case. According to the report released by Democrats on the House Oversight Committee, in Wide Receiver and the Hernandez case — which former Attorney General Michael Mukasey reportedly was briefed on — Bush administration officials attempted to coordinate with Mexican law enforcement. In the Medrano case, it’s unclear whether or not an attempt at coordinating with Mexico was made, according to the Democratic report.

In Fast and Furious, though, Obama administration officials and Congressional Democrats have admitted they made no attempt to coordinate with Mexican law enforcement. The attempts Bush administration officials made to work with Mexican law enforcement, and the Obama administration’s lack of such efforts, is a detail Holder and his allies have downplayed in their comments on the scandal.

Madoff-invested charities contributed $365k to Media Matters

Media Matters for America accepted funding from at least three foundations whose money “grew” under the fraudulent stewardship of the now-incarcerated Bernard Madoff. One of those foundations was backed by a man many believe was in cahoots with the legendary financial criminal.

Madoff’s Wall Street empire crumbled in late 2008 after federal authorities were tipped off to his multibillion-dollar Ponzi scheme.

Among those institutions that saw their fortunes evaporate were foundations that had placed their trust and investments in Madoff’s surreal enterprise. Three of those philanthropies contributed money to Media Matters in 2008, at least one of which may have even been complicit in Madoff’s scheme.

The Picower Foundation, which The New York Times referred to as “one of the nation’s leading philanthropies,” shuttered its $1 billion enterprise after Madoff’s arrest. Barbara Picower, who co-founded the charity with her late husband, investor Jeffry M. Picower, told the Times in December 2008 that Madoff’s “act of fraud has had a devastating impact on tens of thousands of lives as well as numerous philanthropic foundations and nonprofit organizations.”

But Jeffry Picower was one of Madoff’s single largest beneficiaries, and many believe he was hardly an unwitting victim of the Madoff scheme. According to Rick Stone, an attorney representing a purported class of Madoff victims, Picower could even be seen as a more nefarious actor than Madoff.

Picower was “a bigger fraudulent actor than Madoff himself because Madoff — at best estimate — he and his family, took $800 million out of the scheme,” Stone told The Daily Caller. ”And we know that Picower took at least $7 billion out of this scheme.”

Stone added that he believes “there was some understanding between the two of them that was based upon Picower’s control of Madoff.”

Madoff’s management of Picower’s investments dated back to the 1970s. According to reports, Picower’s investments ultimately yielded him $7.8 billion from the scam, even though he had put in only $619 million. Jeffry Picower died of a heart attack in late 2009, and Barbara Picower agreed in 2010 to hand over $7.2 billion of her husband’s estate to Madoff’s victims, the largest forfeiture of wealth in U.S. history.

Records show The Picower Foundation gave Media Matters $100,000 in 2008.

Stone said the foundation was “largely funded by illegal proceeds of the Madoff scheme” and that in an “ideal world” Media Matters and other beneficiaries of the foundation would give back the money they received from it. But he admitted the prospects of that are unlikely.

“If I were in their shoes I wouldn’t [give back the money] unless I got sued, ” he explained, “and they won’t get sued.”

“It’s too late in the game for them to get sued. That have certain defenses as a secondary recipient of the money. So I just don’t see it happening.”

The largest donation to Media Matters from the three Madoff-invested foundations was a $250,000 contribution from the Justice, Equality, Human Dignity and Tolerance (JEHT) Foundation. JEHT was a politically progressive charity with a focus on reforming the U.S. justice system. It was among the foundations that quickly collapsed as their millions vanished following Madoff’s arrest.

Another foundation that provided support to Media Matters while investing in Madoff’s scam was The Enfranchisement Foundation, which provided the left-wing group with a $10,000 contribution in 2008. That particular foundation “focuses on breaking the cycles of poverty and intolerance in the United States as well as on women’s issues.” It endured beyond Madoff’s collapse.

Though it received Madoff-exposed funds, Media Matters hardly went easy on the fraudster after his arrest. At least one Media Matters blogger placed blame for the collapse of the American economy at his feet.

In a March 3, 2009 blog post, Media Matters Senior Fellow Eric Boehlert rebutted claims by CNBC’s Jim Cramer that Obama’s then-proposed budget would lead to “unprecedented ‘wealth destruction.’”

“Sorry,” Boehlert declared, “but longtime Wall Street heroes like Bernie Madoff, and Street icons AIG and Citicorp, have probably destroyed more wealth in the last four months than any administration will ever be responsible for.”

For its part, Media Matters has never offered any indication of whether it has returned — or would return — the $100,000 it received from The Picower Foundation, which was funded by a man many believe was complicit in the fraud.

Media Matters did not respond to questions regarding this report, and has not responded to numerous requests by TheDC for comment since the beginning of the “Inside Media Matters” investigative series.

Occupy Wall Street bank statement shows $99,000 balance, expenses for housing, property damage, bail

The Daily Caller has obtained a copy of a December 2011 bank statement mailed to Occupy Wall Street, the anti-capitalist protest group whose leaders’ rallying cry positions them as defenders of America’s less-privileged “99 percent.” But the organization’s bank balance in December may instead re-cast the occupiers as defenders of the $99,000.

The bank statement was mailed to the organization at a box rented in a UPS Store on Fulton Street in lower Manhattan. On the Dec. 30 closing date, Amalgamated Bank reported $99,549.58 in the account, including $23,120 in deposits during that month alone.

Amalgamated is owned by the Workers United labor union.

TheDC has also obtained copies of two December statement pages from a second bank account owned by an Occupy Wall Street-affiliated organization called Friends of Liberty Park. Those pages show records of nine checks and ten cash withdrawals, all signed by Pete Dutro, the group’s leader and Occupy Wall Street’s financial manager at the time.

While the materials clearly reflect two separate bank accounts, only the last two digits of their nine-digit account numbers are different. TheDC has redacted its copies of the documents to remove those account numbers.

Sources who provided TheDC with copies of the bank statements also provided a copy of meeting minutes from a Feb. 17 gathering of an Occupy Wall Street subgroup called “OWS Reform.” Notes taken during the meeting include an observation that the Friends of Liberty Park account “went from $310,168.74 at 12/01 to $147,040.15 at 12/30,” reflecting a loss of more than half the account’s value during the month of December.

“Why not call an independent auditor and have them go over the books?” the minutes ask. Criticizing the movement’s self-anointed finance officers, they complain that a lack of access to the movement’s bank accounts “gives them hierarchy in a supposedly leaderless movement.”

“The issue is people don’t trust accounting.”

Dutro, 36, is now a New York City tattoo artist. His LinkedIn profile lists “Finance at Occupy Wall Street” as a “former” occupation.

Cash withdrawals from the Friends of Liberty Park account in December totaled $115,500. While one $7,500 withdrawal was cryptically earmarked for “Edmonton” and another $17,000 was removed from the account for “kitchen” and “sanitation,” most of the expenses were for food and “petty [cash].”

Two withdrawal slips — one for $4,000 — included notes reflecting the the cash was for “bail.”

Expenses paid by check in December include $9,310 to two Manhattan churches for “housing” and $8,564 to Lisa Guido for “t-shirts.”

Guido, according to an October online profile of t-shirt printers in the Occupy movement, is the lead volunteer in the Occupy Wall Street Screenprinting Lab. Slogans on t-shirts displayed on a Flickr Web page belonging to the lab include “Corporations are not people,” “Don’t buy, Let’s occupy” and “Fight back world wide: Capitalism is the crisis.”

Friends of Liberty Park paid Dr. Shay K. Bey $508 on December 20 for what the check writer called “damaged property.” Bey lives in a historic building adjacent to Marcus Garvey Park in Harlem.

Another check, for $7,400, went to Zak Solomon Miller, a 2009 University of California Berkeley graduate whose Facebook profile identifies him as an Occupy Wall Street employee.

That check’s memo field describes the payment as being related to “GA” [general assembly] and “DA” [direct action] expenses on December 13. An online summary of that day’s Occupy Wall Street general assembly notes the approval of a $7,400 expenditure “for supplies for D17 [December 17, 2011] Action.”

Alinsky-tied group awarded $56 million federal loan for health insurance project

A Saul Alinsky-tied group has been awarded a $56 million federal loan to start up a nonprofit health insurance company -- one of several organizations across the country this week tapped to launch a new network of insurers under the sponsorship of the federal health care overhaul.

The Wisconsin group, Common Ground Healthcare Cooperative, was awarded the funding on Tuesday. According to the Department of Health and Human Services, the group is expected to provide coverage statewide within five years after starting on a smaller scale in early 2014.

But Americans for Limited Government President Bill Wilson questioned the group's credentials -- given its affiliation and lack of experience in the insurance field.

"The indisputable fact is that Common Ground was an outgrowth of the Alinsky operation in Chicago," Wilson said. "We're not giving money to a group with experience in health care issues or in setting up exchanges. ... We're handing the money to people who have been trained by arguably the single most expert individual on community organizing in the last 100 years."

Common Ground, a Milwaukee group that dates back to 2004, is an affiliate of the Alinsky-founded Industrial Areas Foundation.

Alinsky, who died in 1972, is regarded as the godfather of community organizing but has also emerged as a bogeyman of the right. Republican presidential candidate Newt Gingrich has weaved Alinsky's name into his campaign message, repeatedly hammering President Obama as an "Alinsky radical." Like Alinsky, Obama traces his political and activist beginnings to the Chicago world of community organizing.

Alinsky, author of "Rules for Radicals," began as a trained archeologist and criminologist but made his name by working with low-income minority communities for better working and living conditions -- with a distinctly anti-establishment message which called on the masses to seize power from those who held it.

Common Ground, which focuses on social issues in the Milwaukee area, does claim experience in the health care field. The group's top three issues, according to its website, are education, foreclosures and health care.

Common Ground Healthcare Cooperative, an offshoot which technically is independent from Common Ground, is new. According to state records, it incorporated in August 2011, just a few months before the loan applications were due. The group announced its formal launch on Tuesday, along with the $56 million loan decision.

In a statement, the group said it would bring a "new approach to affordable, quality health insurance." The organization said it researched possible health insurance solutions for three years before deciding to apply for the Affordable Care Act funding.

"As a small business owner, I grew tired of the exorbitant increases in health insurance costs with no real additional value. Common Ground Healthcare is a solution to the region's cry for help," board President Bob Connolly said in a statement.

The statement said the organization would start enrolling people in fall 2013 and plans to hire 30 employees over five years.

A representative from the group has not responded to a request for comment from FoxNews.com.

The federal loans announced this week were worth a total of nearly $640 million. Six other organizations in seven states received them. The money is meant for the creation of so-called Consumer Operated and Oriented Plans, which will serve as nonprofit, cooperative-style insurance groups which will offer an alternative to other private plans. The goal is to eventually fund one of these groups in every state and the District of Columbia.

The latest loans will cover start-up costs and cash reserve requirements. Start-up money must be repaid with interest over five years -- the "solvency loans" must be repaid within 15 years. The Centers for Medicare & Medicaid Services stressed in its announcement that the funds can only be tapped "incrementally as milestones are met," and that the program has "extensive provisions to protect against fraud."

CMS said the loans were awarded "on a competitive basis through external and independent expert objective reviews," and following approval by officials with private insurance experience.

But Wilson said some of the other groups awarded appear to have more experience in the field than the Wisconsin organization. He said his group would file a Freedom of Information Act request to the government to find out more about the process.

Wilson described the transaction as a "huge wad of money in a swing state."

Republican Rep. Dave Camp's office also complained that another group, the Freelancers Union, was awarded more than $340 million via federal loans in three states as part of the same program.

In a statement, Camp questioned whether the group was even eligible, describing the loan as a "reward" for "political friends."

Justice gives up sting case over foreign bribes

In an embarrassing setback, the Justice Department gave up Tuesday on its high-profile prosecution of nearly two dozen businessmen charged in the first undercover sting the government used to enforce a 35-year-old law against foreign bribery.

U.S. District Judge Richard Leon granted the department's motion to dismiss all charges against 16 defendants still facing trial after the case fell apart in its first two courtroom tests. Ten defendants went through two lengthy trials, but jurors did not convict a single one.

The defendants were military suppliers arrested at a 2010 trade show in Las Vegas where they anticipated picking up checks for sales to outfit Gabon's presidential guard. But no officials from the central African nation were really involved in the purported deal invented by the FBI.

Leon called the dismissal "the end of a long and sad chapter in the annals of white collar" prosecution. He said he had concerns from the start over the way the men were investigated, charged and prosecuted and the government's handling of its star witness.

"I for one hope that this very long and I'm sure very expensive ordeal will be a learning experience" leading to better prosecutions under the 1977 Foreign Corrupt Practices Act, Leon said. He said he hoped everyone involved in the trials, including the defendants who could have faced a decade or more in prison if convicted, could now move on with their lives.

Afterward outside the courtroom, defendant Marc Morales said he was "just happy to move on with my life and spend time with my family" after enduring a four-month trial that ended last month. But he said the case cost him his job as a vice president of ammunitions supplier Allied Defense Group and that he spent "more than I had" on his defense.

David Krakoff, attorney for Morales' co-defendant John Mushriqui, said the Justice Department's request to dismiss the case despite the substantial resources it invested ends his client's "two-year nightmare."

"It's really hard to take on the government, but when you believe in your innocence and fight for your freedom, these cases can be won," Krakoff said.

Morales and Mushriqui were two of seven defendants whose trials ended with a hung jury and were facing a second trial. Three others were acquitted, with nine additional defendants awaiting an initial trial. Three other defendants had pleaded guilty in the case, and Leon said he would schedule hearings soon to consider the status of their cases.

Prosecutors did not say much during the brief hearing in which Leon dismissed the case. In a two-page motion filed earlier in the day, they wrote that the case should end because of the outcome of the first two trials and the substantial resources that would be needed to continue. "The government respectfully submits that continued prosecution of this case is not warranted under the circumstances," they concluded.

Their case was based on the Foreign Corrupt Practices Act that was enacted among the reforms after the Watergate era in response to Securities and Exchange Commission investigations but had fallen into infrequent use since that scandal. Enforcement picked up in the last years of President George W. Bush's administration, as more companies did business abroad and senior corporate officials had to certify financial statements under laws passed in response to corporate accounting scandals. FCPA prosecutions grew even more under the Obama administration — from seven individuals charged and more than $27 million in criminal fines collected in 2004-2005 to more than 50 charged and nearly $2 billion collected in 2009-2010.

But the sting operation was the largest prosecution yet of individuals under the law and the round-up in Las Vegas got front-page coverage in the nation's leading newspapers. The FBI captured the businessmen with the help of an inside informant, Richard Bistrong, who would become part of the case's downfall.

Defense attorneys were critical of the FBI's reliance on the informant, an executive of a Florida body armor company who they called a sociopathic liar with a devious mind. They said he was able to persuade federal agents to let him plead guilty to a single bribery count for more than $4.4 million in bribes to officials at the United Nations and overseas even though he had a history of bribery, embezzlement, tax evasion, drug use and solicitation of prostitutes.

Prosecutors acknowledged Bistrong was a criminal and a scoundrel. But working with the FBI, he lured the defendants to be part of a $15 million deal to outfit Gabon's presidential guard from head to toe in new gear. The catch was that they would have to prepare two invoices — one written out to the broker for the real value of the deal and the other written out to the Gabonese government with a 20 percent commission added for the broker and the defense minister.

But defense attorneys say he never used words like "bribe" or "kickback" to make clear the payment was illegal. Prosecutors said the defendants clearly knew that sending $1.5 million in public money to line a defense minister's pocket was wrong, but jurors had their doubts.

Morales was one of seven defendants whose trials ended with a hung jury and were facing a second trial. Three others were acquitted, with nine additional defendants awaiting an initial trial. Three other defendants had pleaded guilty in the case, and Leon said he would schedule hearings soon to consider the status of their cases.

Prosecutors did not say much during the brief hearing in which Leon dismissed the case. In a two-page motion filed earlier in the day, they wrote that the case should end because of the outcome of the first two trials and the substantial resources that would be needed to continue. "The government respectfully submits that continued prosecution of this case is not warranted under the circumstances," they concluded.

Their case was based on the Foreign Corrupt Practices Act that was enacted during the Watergate era in response to Securities and Exchange Commission investigations but had fallen into infrequent use since that scandal. Enforcement picked up in the last years of President George W. Bush's administration, as more companies did business abroad and senior corporate officials had to certify financial statements under laws passed in response to corporate accounting scandals. FCPA prosecutions grew even more under the Obama administration — from seven individuals charged and more than $27 million in criminal fines collected in 2004-2005 to more than 50 charged and nearly $2 billion collected in 2009-2010.

But the sting operation was the largest prosecution yet of individuals under the law and the round-up in Las Vegas got front-page coverage in the nation's leading newspapers. The FBI captured the businessmen with the help of an inside informant, Richard Bistrong, who would become part of the case's downfall.

Defense attorneys were critical of the FBI's reliance on the informant, an executive of a Florida body armor company who they called a sociopathic liar with a devious mind. They said he was able to persuade federal agents to let him plead guilty to a single bribery count for more than $4.4 million in bribes to officials at the United Nations and overseas even though he had a history of bribery, embezzlement, tax evasion, drug use and solicitation of prostitutes.

Prosecutors acknowledged Bistrong was a criminal and a scoundrel. But working with the FBI, he lured the defendants to be part of a $15 million deal to outfit Gabon's presidential guard from head to toe in new gear. The catch was that they would have to prepare two invoices — one written out to the broker for the real value of the deal and the other written out to the Gabonese government with a 20 percent commission added for the broker and the defense minister.

But defense attorneys say he never used words like "bribe" or "kickback" to make clear the payment was illegal. Prosecutors said the defendants clearly knew that sending $1.5 million in public money to line a defense minister's pocket was wrong, but jurors had their doubts.

Growing Solyndra Green Scandal Is Just One of Many

Corruption: Outrageous bonuses and White House stonewalling guarantee that the Solyndra scandal, in which betting on green lost taxpayers $535 million, won't go away. But Solyndra is no isolated failure.

With 24 million Americans either without any job or underemployed, and 7 million claiming jobless benefits, the latest Solyndra news of wasted stimulus funds and noncooperation with Congress is sure to make taxpayers' blood boil.

Nearly two dozen employees of the solar panel maker that got a $535 million federal loan guarantee shortly before bankruptcy got $368,500 in bonuses Wednesday from a federal bankruptcy judge — in spite of the company failing to disclose it gave several of the raises of as much as 70% months earlier, after it went bankrupt.

The Washington Times noted a lawyer representing fired Solyndra workers has argued the company's liquidation benefits few beyond Argonaut Ventures, part of a foundation run by Obama fundraiser George Kaiser.

Considering that suspicious connection, no wonder the White House defied the Feb. 21 deadline to provide 12 categories of Solyndra documents to the House Energy and Commerce Committee.

But President Obama's counsel has complained that the committee's request for documents was "an unreasonable burden on the president's ability to meet his constitutional duties."

What a betrayal of Obama's elaborate promise upon taking office to "work together to ensure the public trust and establish a system of transparency, public participation, and collaboration" because "Transparency promotes accountability" and "Information maintained by the federal government is a national asset."

Other Solyndras are coming to light, the latest being Sapphire Energy. Its pond-scum-based biofuel still costs over $26 a gallon, but that doesn't matter when your executives give almost solely to Democrats.

The Washington Free Beacon reports that after $104.5 million in stimulus and other Energy and Agriculture Department funds for a New Mexico facility, it can boast just 36 new jobs. UC Berkeley's Energy Biosciences Institute says it'll take a decade before we know if algae-based fuel can compete with gas.

The Washington Post recently found "$3.9 billion in federal grants and financing flowed to 21 companies backed by firms with connections to five Obama administration staffers and advisers."

Revelations of Obama's green waste and corruption may have only just begun.

Barofsky Says Mortgage Settlement More of a Subsidy than Punishment

Earlier this month, the Justice Department reached a $25 billion settlement with the nation’s five largest mortgage servicers – Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC).

The agreement was supposed to punish the banks for hundreds of thousands of forged affidavits.

But Neil Barofsky says that it’s more of a subsidy than punishment.

Barofsky is the former Inspector General for the Troubled Assets Relief Program and former Assistant U.S. Attorney in Manhattan.

He’s currently at NYU Law School’s Center on the Administration of Criminal Law.

Barofsky told the Financial Times last week that the settlement was “scandalous” and that “it turns the notion that this is about justice and accountability on its head,”

In an interview with Bloomberg Television yesterday, Barofsky said that the settlement will be $3 billion to $5 billion in cash up front.

“The rest will be in credit – the mortgage servicers are going to earn credit by reducing principal in loans that either they own or that they service for private investors,” Barofsky said.

What will they get credit for?

“They are actually going to get credit for mortgages that are modified by the government’s HAMP (Home Affordable Modification Program),” Barofsky said. “In essence, that means the banks are going to get credit for mortgages that they modify – which the taxpayers are paying them to do.”

“They are going to modify a mortgage – it will reduce the principal on a mortgage – and during the course of that modification, they are going to receive taxpayer dollars. Money out of your pocket and my pocket will go to the servicers – and they will get credit on a settlement that is supposed to punish them. And they will have a chance to make money off of it because of taxpayer subsidies.”

“This was supposed to punish the banks for this massive fraud where there were hundreds of thousands, maybe millions of forged affidavits that hit the court system around this country over the last couple of years, and this thing that is supposed to be a deterrent and supposed to bring accountability? It’s not doing any of that.”

“One estimate is that the banks saved $25 billion by cutting corners, by doing this. And now the punishment is – we are going to subsidize your meeting your obligations under this agreement. It’s crazy.”

Barofsky says that the alleged wrongdoing saved the banks up to $25 billion.

When asked why the deal was cut now – Barofsky said – “election year politics that’s what this is all about.”

“The administration, the state attorneys general, more than a year ago decided this was how they were going to attack the problem,” Barofsky said. “Not by doing in depth investigations but by entering into high profile negotiations conducted in large part by press release and in the press. And over time, the balance of power shifted away from the government and toward the banks. The banks gained ever more leverage. And by the time we got out to here in the early months of 2012, there was a desperation, a need to have a settlement for political purposes. And that is what you are seeing.”

Documents show Obama’s FCC used regulatory muscle to destroy LightSquared’s competition

The Daily Caller has obtained documents, emails and communications showing how President Barack Obama’s Federal Communications Commission demolished wireless broadband company LightSquared’s competition through a pattern of regulatory decisions apparently aimed at establishing an “open-access” Internet in the United States.

The FCC successfully green-lighted LightSquared’s corporate formation in 2009 by allowing Wall Street hedge fund Harbinger Capital Partners to purchase majority ownership in satellite company SkyTerra. A major obstacle that still remained in LightSquared’s way was competitor GlobalStar.

GlobalStar had a similar operation to the one LightSquared was building at the time. A major difference, though, was GlobalStar’s already-orbiting satellites, and the broadband Internet access it was already providing to Americans in rural areas of the country.

GlobalStar leased terrestrial spectrum to Open Range Communications, a company that provided broadband Internet access to customers in underserved parts of rural America. Open Range’s business model depended on a 2008 loan, worth $264 million, from the U.S. Department of Agriculture’s Rural Utilities Service.

In 2008 the FCC gave GlobalStar a 16-month waiver from so-called “gating” rules, which required it to guarantee that its satellite service would be continuously available everywhere it offered broadband service, and also required it to maintain spare satellites in case of an urgent need. GlobalStar had said the issues its system faced would be fixed when it could launch 24 new satellites, which it planned to do by July 1, 2010.

The waiver was meant to allow GlobalStar and Open Range to continue building their networks while GlobalStar fixed those issues. Open Range depended on GlobalStar for its continued operation.

Then, the unthinkable happened: On April 6, 2009 an earthquake struck L’Aquila, Italy, damaging a factory that made component parts essential to GlobalStar’s satellites. The factory closed, reopening eight months later in early December 2009. (RELATED: Documents: LightSquared shaping up as the FCC’s Solyndra)

A Scandal Revisited

Some years ago, Thomas Mallon wrote a thoughtful essay about the responsibilities involved in placing real people into imagined, novelistic settings. Fictional history, he said, is justified "when the facts have been lost to time, and when a time has been lost to the facts." Mr. Mallon's own historical novels—including "Henry and Clara" (1995), about the young couple sharing the presidential box at Ford's Theater on the evening of Lincoln's assassination, and "Bandbox" (2004), about Jazz Age New York—have honored this precept in various ways. "Watergate" does, too, though it introduces a third variable: what to do when important facts are still matters of conjecture.

What emerges from "Watergate" is an acute sense of how much we still don't know about the events of June 17, 1972. Who ordered the break-in of the Democratic National Committee headquarters at the Watergate complex in Washington? What was its real purpose? Was it purposely botched? How much was the CIA involved? Who erased the 18½ minutes from President Nixon's Oval Office tapes? And how did a politician as tough and canny as Richard Nixon allow himself to be brought down by a "third-rate burglary"?

Your guess is as good as mine. Mr. Mallon's guesses are sometimes over the top but never less than entertaining. "Watergate" demonstrates how a novelist can peel back layers of personality and motivation that historians must leave undisturbed. It also shows Mr. Mallon at times intruding on events more than his long-ago essay on historical fiction would probably endorse.

"Watergate" is a vivid and witty novel with a large cast of principal and supporting players. CIA Director Richard Helms is "slippery even for a spy." Vice President Spiro Agnew is "sleek as a seal in a circus, comfortable in his body and expensive suit, and always beautifully groomed." Democratic nominee George McGovern is the kind of candidate "for whom [Chicago Mayor Richard] Daley didn't even want to turn out the living." During after-work cocktails, political aide Charles Colson "would serve Nixon a new harebrained scheme as if it were just another ice cube or olive." Attorney General (and cabinet utility hitter) Elliot Richardson is appropriately priggish and sour. "Tea, please," he says to a waiter coming around with coffee.

"Watergate" begins with the break-in and ends with Nixon's resignation. Some of the interim events are straightforwardly narrated; some are embellished (a surreal birthday party for Art Buchwald); and some are made out of whole cloth woven at the Mallon mills (a lonely Nixon accompanying himself on the piano and singing the theme from the film "High Noon").

Mr. Mallon conveys the atmosphere of the White House and of Washington in the early 1970s and nails down many details. He casts his net so wide that even this reviewer, a peripheral White House aide at the time, manages a cameo appearance.

The most perceptive and wittiest members of Mr. Mallon's cast are the women, some participants in the unfolding story, some observers: Pat Nixon, Rose Mary Woods, Martha Mitchell, Alice Roosevelt Longworth and Dorothy Hunt (the wife of burglar E. Howard Hunt). Unfortunately, the novel's sole fictional female, a character named Clarine Lander, never rings true. This mysterious, multi-motivated Southern belle is so magnolia-steeped that she even writes in drawl, spelling darling as darlin'. If you buy her presence in a world populated by historically real people, her machinations may give "Watergate" a welcome ironic twist and answer otherwise puzzling riddles. But if you are able to resist her charms, you may find her initially incredible and ultimately annoying.

Considering that "Watergate" is about the scandal that done him in, Richard Nixon is a surprisingly tangential character. By the time he realizes that, unlike most campaign scandals, this one isn't going to go away after the election, he is hopelessly entangled in a piecemeal coverup and scrambling to figure out what happened and who was responsible. Although Nixon is often dismissed as a Uriah Heep, in this novel he is more like Mr. Micawber: hoping against hope that something will turn up. As Nixon resigns the presidency, he remains baffled, "unsure, even now, what Watergate really was. . . . He would forever be able to hear himself on the tape: confused, groping, taking the first approach that came to mind; dooming himself."

Mr. Mallon's early historical novels were extrapolations. But like "Fellow Travelers," his 2007 novel about the McCarthy era, "Watergate" seems more—to use a Nixonian word—an incursion. Mr. Mallon manipulates his characters to suit his story, even descending into a kind of melodrama that is ill-suited to the Watergate events of history, which were dramatic enough in themselves.

In his essay about writing historical fiction, Mr. Mallon said that "one cannot libel the dead, but one can refrain from distortions as hurtful as they are preposterous." He expressed sympathy for Thomas Dewey's son because a 1990s movie about Depression-era mobsters suggested that the upright Dewey was corrupt. How, then, can Mr. Mallon justify subjecting Pat Nixon's daughters and grandchildren to the creation and elaboration of a fictional adultery on her part? Aside from having no basis in fact, it seems a trite device and is unworthy of Mr. Mallon's otherwise sophisticated sense and sensibility.

For all his research and imaginative latitude, Mr. Mallon all but ignores perhaps the most fascinating of all the Watergate players: John Dean. Assigned to find out whether anyone on the White House staff had been involved with Watergate, Mr. Dean failed to mention that he was the only such individual and then proceeded to turn on his colleagues and his boss. Nowadays he is a hero for many and a villain for some. Only a novelist could do justice to the Dean story and the workings of his mind. It is disappointing that Mr. Mallon merely finesses him.

Obama administration is a lobbying firm for illegal aliens, says Congressman

U.S. Immigration and Customs Enforcement (ICE) last week announced the appointment of a public advocate to handle complaints and questions about the administration’s immigration enforcement policies.

This new position will serve as a point of contact for illegal and criminal immigrants in deportation proceedings as well as NGOs and other community and advocacy groups. However, not everyone is celebrating this latest announcement.

"The [Obama] administration all too often acts more like a lobbying firm for illegal [aliens] than as an advocate for the American people," said Republican Congressman Lamar Smith (R-TX).

"As our first Public Advocate, Andrew Lorenzen-Strait will work to expand and enhance our dialogue with the stakeholder community," said ICE Director John Morton. "We want the public to know that they have a representative at this agency whose sole duty is to ensure their voice is heard and their interests are recognized, and I'm confident Andrew will serve the community well in this capacity."

Lorenzen-Strait has served with ICE since 2008, first as an advisor and analyst on policies related to immigration enforcement, detention and juveniles and most recently, as the senior advisor for Enforcement and Removal Operation's (ERO) detention management division.

House Judiciary Committee Chairman Lamar Smith loudly criticized the creation of this new position, another "czar" that doesn't require the U.S. Senate requirement of "Advise and Consent."

“It’s outrageous that the Obama administration has appointed a taxpayer-funded activist for illegal and criminal immigrants who are detained or ordered deported," said Chairman Smith.

“This is just further proof that the Obama administration puts illegal immigrants ahead of the interests of Americans. The Obama administration’s lack of immigration enforcement allows illegal immigrants to steal jobs away from American workers and now their in-house lobbyist for illegal immigrants costs U.S. taxpayers more money. Illegal immigration already costs U.S. taxpayers billions each year," Rep. Smith pointed out.

U.S. Immigration and Customs Enforcement said the advocate will "serve as a point of contact for individuals, including those in immigration proceedings, NGOs and other community and advocacy groups, who have concerns, questions, recommendations or other issues they would like to raise," according to officials.

ICE, which part of the Homeland Security Department, announced that Andrew Lorenz-Strait will be the first advocate.

“This is also another example of the Obama administration sidestepping Congress to fulfill its campaign wish list. When Congress created the Department of Homeland Security, it created an ombudsman for immigrants in the legal immigration process but declined to create one for illegal immigrants. The President cannot continue to willfully ignore the laws and intent of Congress," said Lamar.

“Who will advocate for American taxpayers and workers? And who will advocate for the victims of crimes these illegal immigrants have committed? Based on their record, it seems this administration won’t,” added Lamar.

Knox: "Family in jail for Holder's crime"

In the year and two months since the story was first reported that the Obama Administration had concocted a scheme to send U.S. guns across the border to Mexican drug cartels for the purpose of creating bogus gun statistics that would help it make a case for massive new firearms control laws, not a single government official has been forced to pay for his or her crimes. Eric Holder lied to Congress concerning his role in the scandal and has yet to face consequences. But innocent citizens have paid dearly.

Two federal agents were shot to death with the guns the government placed into the hands of Mexican criminals. Hundreds of Mexican citizens living near the southern border have been murdered with those guns. Scores of U.S. citizens in the region have also been murdered. And those firearms continue to show up at numerous crimes scenes in the American Southwest.

In addition, one family--gun store owners--has been sitting in a New Mexican jail for over six months without bail under federal charges for doing nothing more than cooperating with ATF officials in what they were told was a sting operation aimed at catching Mexican drug criminals.

Rick and Vicky Reese, and their two sons Ryin and Remington, owned a gun store in Las Cruses, New Mexico. They were all arrested six months ago on federal weapons violations and charged with selling guns to traffickers whom they allegedly knew would take the firearms across the southern border to criminals.

A judge ruled that the entire family be held without bail. A judge further ruled that the family could not be represented by the same lawyer, that each had to secure their own separate personal counsel. This will cost the family at least $100,000 in retainer fees, which they cannot pay due to the fact that the government seized all of their assets. And to add insult to injury, although young Remington Reese, 19, was slated to be released into the custody of his grandparents, a judge ruled that he must continue to be held due to a 'flight risk.'

But Remington suffers from severe health issues and thus, his 'flight risk' is very low.

Jeff Knox, writing at WND today, picks up the story:

While I don’t personally know the Reese family, I have spoken with a number of people who do, and the reports are almost universally supportive. The Reeses are by all accounts well respected and liked within the Deming-Las Cruces area where they had lived for over 20 years, running a successful gun store for the past 17.

Rick Reese had planned to retire from the business and close the store at the end of 2011 in order to make a run for sheriff of Luna County. Son Ryin was in the process of opening a store of his own in Las Cruces when the family was arrested. In fact, the ploy used by the ATF to effect their arrests was to call Rick and ask him to bring Ryin and the family down to the ATF offices to discuss Ryin’s application for a Federal Firearms License. The ATF office presumably has metal-detectors at the entrances, so it would be an easy way to ensure that the Reeses were unarmed at the time of their arrests.

But the bombshell evidence against the Obama Administration was contained in a nugget of information Terri Reese disclosed to the court:

Something else that came out in this hearing is the fact that Terri contacted the ATF about someone she suspected of engaging in straw purchases. It turned out the person she was reporting was working for the feds. The prosecutor dismissed the report as being a cover move by Terri after she learned that the family was being investigated.

Could this, then, be the real reason that Terri Reese is being held without bail? She pointed the finger at a thug that federal agents had used to conduct the Fast and Furious scheme.

Knox further states that the contrast between the manner in which the Reese family is being treated and the Administration's handling of federal agents and bureaucrats who lied, cheated, deceived, and committed crimes is chilling.

Holder simply moved corrupt ATF officials out of Phoenix and gave them cushy jobs in the Justice Department. Meanwhile, the lowly gun store owners who thought they were cooperating with the ATF in good faith sit in jail, and hundreds of others are dead.

Ethics committee recusals latest saga in bungled Waters investigation

In an unprecedented move, six members of the House Ethics Committee recused themselves from the investigation of California Democratic Rep. Maxine Waters Friday. Five of the six are Republicans.

“Both the Committee and [Attorney William] Martin recognize that recusal is an extremely rare occurrence and should not be sought without careful consideration by the Members,” Alabama Republican Rep. Jo Bonner, the committee’s chairman, wrote in a letter to House Speaker John Boehner Friday.

“While the Members believe that they each can render an impartial and unbiased decision in any proceeding related to this matter, the Committee takes this extraordinary measure — in this unique circumstance — to further the best interests of the House and to permit this matter to be brought to a conclusion,” wrote Bonner.

The recusals are the latest chapter in a book full of nightmares for the committee’s seemingly cut-and-dry investigation of Waters, who allegedly set up a meeting between OneUnited Bank and U.S. Treasury officials in 2008. The bank, where her husband was a board member at the time of the meeting, later received $12 million in taxpayer bailout money.

The investigation began in August 2010 when the committee charged Waters with violating House rules. Waters is a senior member of the House Financial Services Committee and has denied any misconduct.

In July 2011, almost a year after first charging Waters, Politico obtained internal documents showing partisan infighting among committee members, politicizing the probe. Less than two weeks later, the committee hired an outside counsel, attorney William Martin, to continue the inquiry. (RELATED: More on the Waters inquiry)

Nearly six months and $300,000 later, the committee voted to extend Martin’s contract until July 2012, citing “unavoidable delays.” Martin, who has reportedly reviewed tens of thousands of documents, has been granted $50,000 to $500,000 until July to spend on the investigation.

Thus Martin could possibly spend up to $800,000 in taxpayer funds looking into the Waters case, with no sign that investigation is close to wrapping up.

The members recusing themselves are Bonner, California Rep. Linda Sanchez, Texas Rep. Michael McCaul, Texas Rep. Michael Conaway, Pennsylvania Rep. Charles Dent and Mississippi Rep. Gregg Harper. All but Sanchez are Republicans.

Obama Shafts Responsible Homeowners

Hey, look, it’s manna from heaven! If you lost your home to foreclosure, Barack Obama is going to see that you get a check for some 2,000 bucks. Free!

And not only that. If you still own your home but it’s worth a lot less than you owe on it, he’s got even better news for you. The President, in league with the Nation’s attorneys general, has gotten the banks to agree to reduce what you owe.

Isn’t that wonderful?!? Why, it’s almost like getting free money. What a wonderful deal our leaders have arranged.

Of course, it’s only wonderful for people who bought more house than they could afford, got over their heads in debt and are looking for someone to rescue them from their mistakes. And it’s also a pretty good deal for the five huge financial institutions that are participating, as I’ll explain in a moment. They’ll get bailed out of their mistakes, too.

That’s who benefits. Now, let me tell you who loses. For the most thrifty and responsible among us, the deal stinks.

My friend Gary Bauer of Campaign for Working Families used an analogy that makes what happened crystal clear. Consider the case of two families who both bought a home on the same street several years ago. Both homes cost $200,000. Couple No. 1 saved for years and denied themselves many extras so they would have $40,000 for a down payment. And over the years, they faithfully made every mortgage payment on time, even though the value of their home fell below what they paid for it.

Couple No. 2 had no savings and couldn’t put anything down. But they were able to get a no-money-down mortgage with an adjustable interest rate. As the economy tanked and their interest rate rose, they found it impossible to make their mortgage payments. They listened to the liberal rhetoric telling them it wasn’t their fault and stopped making mortgage payments altogether.

Now comes the “fairness” President, announcing that the couple that sacrificed and made all their payments on time will get nothing. While the couple that wasn’t as prudent or responsible will have the size of their mortgage and their interest rate on it reduced. If they have been evicted already, they will get a check for $2,000.
So the thrifty and responsible homeowner gets nothing. But in fact he gets worse than nothing. Because when the dust settles, his home will have fallen in value just as much as the other guy’s.

No wonder financial analyst Dick Bove told CNBC viewers that this is “the mortgage deal from hell.” He said that the biggest lesson to learn from all of this is that “only fools meet their financial commitments.” He further said, “If you’re going to do something which is going to reduce the value of existing homes where people are making their payments, every American should stop making his payments on his mortgages, send a letter to the Attorney General in his state and say ‘I qualify to have my principal reduced because I’m not going to make any more payments on my house.’”

Boy, won’t that make America a better place?

But if this is such a bad deal, why were five big banks so eager to join it? You will not be surprised to learn that this is as much a bank bailout deal as it is a help-the-homeowner deal.

David Stockman, Ronald Reagan’s budget director, put it succinctly. “This is ultimately at the end of the day a bailout for JP Morgan and Wells Fargo” and other big underwriters of second mortgages and home-equity loans.

When a foreclosure takes place, these obligations become worthless. With refinancing, they won’t. It’s that simple.

Where is the money for this $25 billion bailout coming from? Ally/GMAC, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo will each put up $5 billion. The President’s plan, Stockman says rightly, is “the worst kind of crony socialism.”

Pacific Investment Management Company, better known as Pimco, owns a ton of mortgage debt. Scott Simon, the head of mortgage investments there, says of the $250 billion in their Total Return Fund, about half is in mortgage debt.

“A lot of the principal reductions would have happened on their loans anyway,” Simon says. “And they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”

Simon didn’t mince any words about the morality, or lack of it, with the deal. “You tell your kid, ‘you did something bad, so I’m going to fine you $10. But if you can steal $22 from your mom, you can pay me with that.’” That’s the sort of deal our “fairness” President has foisted on us.

While I’m on the subject of rotten deals, let me say a few words about Obama’s budget for the coming year. It’s a lulu. Forget about the reduction in Federal spending that the overwhelming majority of Americans wants to see. Obama’s budget calls for a 0.2 percent increase in Federal spending, for a total of $3.8 trillion. Our gross domestic product is $13.3 trillion.

Obama wants to spend almost one-fourth of all the money made by all of the production in this country. Every time a dollar changes hands for anything, Washington wants to take a quarter of it. (And if ObamaCare ever gets fully implemented, that ratio is sure to go higher. Pray that never happens. Or better yet, work like blazes to make sure we get a House and Senate this November that will make sure it doesn’t.)

Federal revenues, according to the estimates of Obama’s budget boys, won’t begin to pay for all the money they want to spend. The estimated deficit for the year will hit be $1.33 trillion. That would make four years in a row of annual deficits over $1 trillion.

I don’t plan to write much more about Obama’s budget proposals, because there’s little or no chance Congress will approve them.

While the President’s budget is dead on arrival, that’s not the case with his class-warfare, politics-of-envy, tax-the-rich rhetoric. You can expect a flood of the latter in the coming months. I’m very afraid it might be enough to get that “crony socialist” re-elected this fall.

Until next time, keep some powder dry.

Homeland Security secretary: 'We aren't sitting there monitoring social media'

Homeland Security Secretary Janet Napolitano said agency officials do not weed through the tweets of incoming foreign travelers in an attempt to spot potential terrorists.

“We aren’t sitting there monitoring social media looking for stuff, that’s not what we do,” said Napolitano at a House Homeland Security Committee hearing on Wednesday.

Napolitano’s comments were in reference to a recent incident in which Department of Homeland Security (DHS) officials detained and questioned two British travelers at the Los Angeles airport after one tweeted their intent to, “destroy America.”

Napolitano said that the tweet was taken into account when deciding whether to deport the two British nationals, but that officials were made aware of the tweet from a tip. She said that more information, which was top-secret, was considered before making an ultimate decision.

“In that instance there was a tip and the tip led to a secondary inspection of the individuals and that governed the judgment on exclusion not just the Twitter, or tweet,” said Napolitano.

“I’m really not at liberty to say all of the reasons. I think the impression was left that [Customs and Border Protection] is just sitting around wandering the blogosphere looking for things and that is not what CBP does. They do, however, when they receive a specific tip, have an obligation to follow it up.”

The two Brits were later deported back to England, despite attempts to explain the tweet as a joke in which the term “destroy” was slang for “party,” according to the Daily Mail.

The tweet, posted by one of the travelers one week before his arrival, read: “Free this week for a quick gossip/prep before I go and destroy America?”

K Street: More shakedown than bribery?

K Street is typically understood as a lever with which business manipulates government, but it's often the opposite -- a tool government officials and former government officials use to manipulate business. Similarly, when you tie together Big Government, the revolving door, campaign contributions, fundraising, and lobbying, the result looks less like business as puppet master, but politicians and their cronies running a racket.

Chuck Schumer for instance, told hedge funds they weren't sufficiently political, and so hedge funds and private-equity firms started pouring tons of money into lobbying and campaign contributions. Then he deployed his banking staffer to K Street where she quickly picked up hedge-fund and PE clients before becoming a top bundler for Schumer.

Former Obama White House aide Anita Dunn is carrying out a different sort of racket, according to Patrick Howley at the Free Beacon:

As White House communications director, Dunn helped President Obama criticize hedge funds as a key factor of the financial collapse—and she has continued that criticism, at least in public, ever since.

An industry outsider who was pitched on Dunn’s proposal told the Washington Free Beacon that he was surprised to see the former Obama official involved in the effort. “First we see Dunn attack us on television,” he said, “and then she tells us to hire her to head off the exact attacks that she herself is hurling at us. The entire thing begins to stink like a protection racket.”

McLean/Clark’s promotional packet for their campaign, entitled “Hedge Funds and a New Vision for Public Affairs,” was sent to hedge-fund professionals. According to the packet, the campaign seeks to counteract the damage that the media and politicians have done to the hedge-fund industry in the public discourse.

McLean/Clark claims they will employ an unprecedented media strategy forcing state and federal politicians to “think twice” about attacking hedge funds, and will provide lawmakers “political cover” for defending the hedge-fund industry. Dunn’s headshot is prominently featured on the list of principals for McLean/Clark’s project.

This isn't so different from the Great Health-Care Cashout, in which the staffers who wrote ObamaCare go to work for the companies most affected by it. When the top staffers for Dodd and Frank cashed out to consult/lobby for the firms affected by Dodd-Frank I wrote of Dodd's chief counsel:

Imagine if she had written a bill shrinking government's role in finance -- then financial firms would have less need for a lobbyist or revolving-door consultant. Imagine a bill that set new rules in stone rather than igniting lengthy, high-stakes regulatory processes -- what use would she be to future clients?

The biggest fuel for the revolving door is government growth.

Media Matters memo called for hiring private investigators ‘to look into the personal lives’ of Fox employees

A little after 1 p.m. on Sept. 29, 2009, Karl Frisch emailed a memo to his bosses, Media Matters for America founder David Brock and president Eric Burns. In the first few lines, Frisch explained why Media Matters should launch a “Fox Fund” whose mission would be to attack the Fox News Channel.

“Simply put,” Frisch wrote, “the progressive movement is in need of an enemy. George W. Bush is gone. We really don’t have John McCain to kick around any more. Filling the lack of leadership on the right, Fox News has emerged as the central enemy and antagonist of the Obama administration, our Congressional majorities and the progressive movement as a whole.”

“We must take Fox News head-on in a well funded, presidential-style campaign to discredit and embarrass the network, making it illegitimate in the eyes of news consumers.”

What Frisch proceeded to suggest, however, went well beyond what legitimate presidential campaigns attempt. “We should hire private investigators to look into the personal lives of Fox News anchors, hosts, reporters, prominent contributors, senior network and corporate staff,” he wrote.

After that, Frisch argued, should come the legal assault: “We should look into contracting with a major law firm to study any available legal actions that can be taken against Fox News, from a class action law suit to defamation claims for those wronged by the network. I imagine this would be difficult but the right law firm is bound to find some legal ground for us to take action against the network.”

Frisch went on to call for “an elaborate shareholder campaign” against News Corporation, the parent company of Fox News: “This can take many forms, from a front group of shareholders, to passing resolutions at shareholder meetings or massive demonstrations are [sic] shareholder meetings.”

Given the leaky nature of electronic communications, it’s unusual to see the term “front group” used approvingly in office email. Yet Frisch continued: “We should also hire a team of trackers to stake out private and public events with Fox News anchors, hosts, reporters, prominent contributors and senior network/corporate staff.” (RELATED: More stories in the ‘Inside Media Matters’ investigative series)

Preparing his bosses for the potential cost, he added that, “If we need to buy tickets for events that these people will be speaking at, so be it.”

The memo goes on to suggest new and unusual ways to harass Fox News: “detailed opposition research” on the network’s staff and executives, attacks against Fox News employees on Facebook and other social media, mailing anti-Fox News literature to their homes and placing “yard signs and outdoor advertising in their neighborhoods.”

At one point, Frisch suggests putting “a mole inside of” the network.

The cloak-and-dagger tactics seemed to make Frisch jumpy. “Fox is likely to retaliate,” he wrote. Media Matters should find “ways to protect the privacy of our employees and the security of our office.”

David Brock apparently took this warning seriously. By the next year, Media Matters had two security guards in the office, and Brock’s personal assistant was carrying a holstered Glock to protect him.

How many of these tactics did Media Matters actually engage in? Sources inside the organization either don’t know or won’t say, although one did confirm that Media Matters dispatched trackers to events featuring Fox News employees, including to at least one where News Corporation chairman Rupert Murdoch spoke.

What’s clear is that Media Matters believed it had many allies in the media and the left-wing political world. “We should consider sponsoring some of the top progressive blogs,” Frisch wrote. “They are upset with MMFA for not putting more money into the blogosphere and this would be a good opportunity to mend fences.”

Ditto for various other parts of the Democratic coalition: “We should work hard to enlist LGBT, Hispanic, African American, Women, Religious Leaders and Groups against Fox News.”

In another section, Frisch suggests convincing liberal film documentarian Michael Moore to make “a major documentary about Fox News and Fox News personalities.”

In at least two places, the memo makes suggestions that in retrospect look like prescient predictions. The first concerns Rupert Murdoch: “Murdoch’s problems in the U.K. (hacking the cell phones of prominent Brits) are hardly known to U.S. news consumers. We should do our best to bring embarrassing Murdoch news to the attention of his U.S. audience.” The effort appears to have succeeded.

Finally, the memo suggests that drones in the Media Matters research department ought to ghost-write an extended hit on the network: “[W]e should write a book under David’s name that savages Fox News and Fox News employees. The market for this is likely huge.”

Is it? We’ll see next week, when that book is released.

Inside Media Matters: Sources, memos reveal erratic behavior, close coordination with White House and news organizations

This is the first in a Daily Caller investigative series on Media Matters For America. Daily Caller reporters Alex Pappas and Will Rahn contributed to this report.

David Brock was smoking a cigarette on the roof of his Washington, D.C. office one day in the late fall of 2010 when his assistant and two bodyguards suddenly appeared and whisked him and his colleague Eric Burns down the stairs.

Brock, the head of the liberal nonprofit Media Matters for America, had told friends and co-workers that he feared he was in imminent danger from right-wing assassins and needed a security team to keep him safe.

The threat he faced while smoking on his roof? “Snipers,” a former co-worker recalled.

“He had more security than a Third World dictator,” one employee said, explaining that Brock’s bodyguards would rarely leave his side, even accompanying him to his home in an affluent Washington neighborhood each night where they “stood post” to protect him. “What movement leader has a detail?” asked someone who saw it.

Extensive interviews with a number of Brock’s current and former colleagues at Media Matters, as well as with leaders from across the spectrum of Democratic politics, reveal an organization roiled by its leader’s volatile and erratic behavior and struggles with mental illness, and an office where Brock’s executive assistant carried a handgun to public events in order to defend his boss from unseen threats.

Yet those same interviews, as well as a detailed organizational planning memo obtained by The Daily Caller, also suggest that Media Matters has to a great extent achieved its central goal of influencing the national media.

Founded by Brock in 2004 as a liberal counterweight to “conservative misinformation” in the press, Media Matters has in less than a decade become a powerful player in Democratic politics. The group operates in regular coordination with the highest levels of the Obama White House, as well as with members of Congress and progressive groups around the country. Brock, who collected over $250,000 in salary from Media Matters in 2010, has himself become a major fundraiser on the left. According to an internal memo obtained by TheDC, Media Matters intends to spend nearly $20 million in 2012 to influence news coverage.

Donors have every reason to expect success, as the group’s effect on many news organizations has already been profound. “We were pretty much writing their prime time,” a former Media Matters employee said of the cable channel MSNBC. “But then virtually all the mainstream media was using our stuff.”

The group scored its first significant public coup in 2007 with the firing of host Don Imus from MSNBC. Just before Easter that year, a Media Matters employee recorded Imus’s now-famous attack on the Rutgers women’s basketball team, and immediately recognized its inflammatory potential. The organization swung into action, notifying organizations like the NAACP, the National Association of Black Journalists, and Al Sharpton’s National Action Network, all of which joined the fight.

Over the course of a week, Media Matters mobilized more than 50 people to work full-time adding fuel to the Imus story. Researchers searched the massive Media Matters database for controversial statements Imus had made over the years. The group issued press release after press release. Brock personally called the heads of various liberal activist groups to coordinate a message. By the end of the week, Imus was fired.

Media Matters soon became more sophisticated in its campaigns against non-liberal cable news anchors. Lou Dobbs, then of CNN, was a frequent target.

“As part of the Drop Dobbs campaign,” explains one internal memo prepared for fundraising, “Media Matters produced and was prepared to run an advertisement against Ford Motor Company on Spanish Language stations in Houston, San Antonio, and other cities targeting its top selling product, pick-up trucks, in its top truck buying markets.”

Ford pulled its advertising from Dobbs’s program before the television ad aired, but Media Matters kept up its efforts, working primarily with Alex Nogales of the National Hispanic Media Coalition, and with the League of United Latin American Citizens, the Mexican American Legal Defense and Educational Fund and other self-described civil rights groups.

In November of 2009, Dobbs left CNN. “We got him fired,” says one staffer flatly.

“Certainly Media Matters deserves a lot of credit for the work they did,” Nogales said in an interview. “They’re very effective.”

Glenn Beck, the former Fox News Channel host, drew the ire of a wide spectrum of liberal groups while his program aired nationally. But according to several people who watched the process from the inside, it was Media Matters that orchestrated much of the opposition to Beck.

“We called it ‘fingerprint coverage,’” explains one former staffer, “where you know it was the result of your work.” As an example, he cites the left-wing group Color of Change, co-founded by the controversial former White House “green jobs” czar Van Jones, which received much of the credit for pressuring advertisers to drop their sponsorship of Beck’s show. But in fact, he says, Media Matters developed the campaign that cowed Beck’s sponsors.

Media Matters, according to its 2010 tax filing, gave a $200,000 grant to Citizen Engagement Laboratory, Color of Change’s parent group. The purpose of the grant, according to the document, was for a “campaign to expose Glenn Beck’s racist rhetoric in an effort to educate advertisers about the practices on his show.”

High profile though these victories against conservatives were, Media Matters has perhaps achieved more influence simply by putting its talking points into the willing hands of liberal journalists. “In ‘08 it became pretty apparent MSNBC was going left,” says one source. “They were using our research to write their stories. They were eager to use our stuff.” Media Matters staff had the direct line of MSNBC president Phil Griffin, and used it. Griffin took their calls.

Stories about Fox News were especially well received by MSNBC anchors and executives: “If we published something about Fox in the morning, they’d have it on the air that night verbatim.”

But MSNBC executives weren’t the only ones talking regularly to Media Matters.

“The entire progressive blogosphere picked up our stuff,” says a Media Matters source, “from Daily Kos to Salon. Greg Sargent [of the Washington Post] will write anything you give him. He was the go-to guy to leak stuff.”

“If you can’t get it anywhere else, Greg Sargent’s always game,” agreed another source with firsthand knowledge.

Reached by phone, Sargent declined to comment.

“The HuffPo guys were good, Sam Stein and Nico [Pitney],” remembered one former staffer. “The people at Huffington Post were always eager to cooperate, which is no surprise given David’s long history with Arianna [Huffington].”

“Jim Rainey at the LA Times took a lot of our stuff,” the staffer continued. “So did Joe Garofoli at the San Francisco Chronicle. We’ve pushed stories to Eugene Robinson and E.J. Dionne [at the Washington Post]. Brian Stelter at the New York Times was helpful.”

“Ben Smith [formerly of Politico, now at BuzzFeed.com] will take stories and write what you want him to write,” explained the former employee, whose account was confirmed by other sources. Staffers at Media Matters “knew they could dump stuff to Ben Smith, they knew they could dump it at Plum Line [Greg Sargent’s Washington Post blog], so that’s where they sent it.”

Smith, who refused to comment on the substance of these claims, later took to Twitter to say that he has been critical of Media Matters.

Reporters who weren’t cooperative might feel the sting of a Media Matters campaign against them. “If you hit a reporter, say a beat reporter at a regional newspaper,” a Media Matters source said, “all of a sudden they’d get a thousand hostile emails. Sometimes they’d melt down. It had a real effect on reporters who weren’t used to that kind of scrutiny.”

A group with the ability to shape news coverage is of incalculable value to the politicians it supports, so it’s no surprise that Media Matters has been in regular contact with political operatives in the Obama administration. According to visitor logs, on June 16, 2010, Brock and then-Media Matters president Eric Burns traveled to the White House for a meeting with Valerie Jarrett, arguably the president’s closest adviser. Recently departed Obama communications director Anita Dunn returned to the White House for the meeting as well.

It’s not clear what the four spoke about — no one in the meeting returned repeated calls for comment — but the apparent coordination continued. “Anita Dunn became a regular presence at the office,” says someone who worked there. Then-president of Media Matters, Eric Burns, “lunched with her, met with her and chatted with her frequently on any number of matters.”

Media Matters also began a weekly strategy call with the White House, which continues, joined by the liberal Center for American Progress think tank. Jen Psaki, Obama’s deputy communications director, was a frequent participant before she left for the private sector in October 2011.

Every Tuesday evening, meanwhile, a representative from Media Matters attends the Common Purpose Project meeting at the Capitol Hilton on 16th Street in Washington, where dozens of progressive organizations formulate strategy, often with a representative from the Obama White House.

In the past several years, Media Matters has focused much of its considerable energy on the Fox News Channel. The network, declares one internal memo, “is the de facto leader of the GOP and it is long past time that it was treated as such by the media, elected officials, and the public.” At the end of September 2009, Burns made the case publicly in an interview on MSNBC.

Fox, he said, “is a political organization, and their aim is to destroy a progressive policy agenda.”

Less than a month later, in language that could have been copied directly from a Media Matters press release, White House communications director Anita Dunn leveled almost precisely the same charge, dismissing Fox as “more a wing of the Republican Party.”

Were the lines of attack coordinated? “To my knowledge, there wasn’t coordination,” says a source. But at times there has seemed to be a kind of mind meld between the Obama political team and Media Matters.

During the 2008 presidential campaign, for example, author Jerome Corsi wrote a highly critical book about the Democratic candidate, titled “The Obama Nation.” The Obama campaign responded immediately with a detailed memo. The title of that memo, “Unfit For Publication” (a play on Corsi’s 2004 book, “Unfit for Command,” about then-presidential candidate Senator John Kerry), was the same title used by Media Matters just weeks before in a similar memo about the same book.

The irony of Brock’s relationship with the White House is that at certain points he has been openly hostile to Barack Obama, especially in conversations in social settings. Described by some who know him as a passionate and emotional Hillary Clinton supporter, many Democrats believe Brock maintained regular contact with the highest levels of Clinton’s campaign and its advisers.

As late as 2010, Brock was still exchanging personal emails with longtime Hillary Clinton consigliore Sidney Blumenthal, in which the two seemed to grouse about Obama and bond over their shared connection to Hillary.

The intensity of the 2008 campaign, say those who knew Brock at the time, seemed to exacerbate his bouts of what appeared to be mania, a condition from which he had apparently suffered for some time. In 2002, the Drudge Report reported that Brock had “suffered a breakdown” the year before and was treated in the psychiatric ward of Sibley Memorial Hospital in Washington.

During a 2008 meeting of the left-wing umbrella group Democracy Alliance outside San Diego, Brock’s unusual behavior drew considerable attention. According to a fellow attendee, “David completely lost his shit. He started getting incredibly aggressive. He alienated important people in the progressive movement, like John Podesta [of the Center for American Progress] and Anna Burger [of the Service Employees International Union]. Lots of drama. There were a lot of conversations about David’s mental health.”

Two years later, at another Democracy Alliance meeting shortly after the 2010 election, Brock behaved in a way one prominent liberal who was there described as “erratic, unstable and disturbing.” Brock’s aggression, this person said, was “hard to ignore and noticed by a number of people,” generating “quite a bit of concern” about his condition. A number of demonstrably odd media appearances Brock made around this time only reinforced those concerns.


All of this, sources say, has caused anxiety for prominent Democrats. Brock’s profile has risen recently, mostly due to American Bridge 21st Century, the political action committee he founded and runs. Brock boasted loudly and in public that American Bridge would be an answer to Karl Rove’s American Crossroads GPS, a claim some found unsettlingly grandiose.

At some point, Brock received a prescription for his condition. “Some days he’d come in and you could tell he was on his meds because he would just sit in his office alone and not engage with staff,” says a coworker. Other days, “he’d be intensely engaged. He’d get manic, very reckless and grandiose. You’d see this level of self-confidence in him that would spiral.”

Last spring, some at Media Matters headquarters and in other parts of the progressive world were caught off guard by an interview Brock gave to Ben Smith at Politico, in which he promised to wage “guerrilla warfare and sabotage” against Fox News. “It was insane,” says a coworker. “David was totally manic at the time. We were all shocked.”

Friends say Brock, who has publicly admitted drug use in the past, was working obsessively and staying out late with compatriots. “They’d close [local bars] and party till six in the morning,” said one.

A number of people in Brock’s orbit believe he was regularly using illegal drugs, including cocaine. “It’s not like he was trying to keep it a secret,” says a female friend of Brock’s.

Sources back at the Media Matters offices describe an atmosphere of tension and paranoia. “Many of us lived in fear that at any point we could be fired,” one said. Brock believed he had received credible death threats, and employed a two-man security detail, at least one of whom was armed and acted as his driver. A new security system was installed in his house. He became concerned that one of his bodyguards was plotting against him.

By 2010, Brock’s personal assistant, a man named Haydn Price-Morris, was carrying a holstered and concealed Glock handgun when he accompanied Brock to events, including events in Washington, D.C., a city with famously restrictive gun laws. Price-Morris told others he carried the gun to protect Brock from threats.

Late in 2010, other Media Matters employees learned about Price-Morris’s gun, and he was fired due to their objections. No public announcement was made.

According to one source with knowledge of what happened next, Brock was “terrified” that news of the gun would leak. “George Soros and a lot of groups connected to gun control are funding this group, and they wouldn’t be too happy that an employee of Media Matters was carrying a gun, especially when it was illegal in D.C.”

Meanwhile, Brock became rigid and harsh with his employees — “viciously mean,” in the words of someone who witnessed it. “He spent a lot of time ripping up researchers. It was abusive. I never understood why more people didn’t quit.” One staffer recalls Brock saying he would like to fire a researcher for being physically repugnant. “David definitely does not like ugly people.”

At times, Brock would become crazed with intensity, “obsessively” involving himself in research: “There was a point at which he would pore over every single piece of research we put out, 10 or 15 dense items a day. He would line-item all of it.”

David Saldana, the former deputy editorial director at Media Matters, concedes that under Brock’s leadership, “there were very harsh penalties for getting things wrong. And justifiably so. … There was no room for weakness. Things had to be gotten right.”

The atmosphere in the office was considerably more tolerant on non-editorial matters. “There were these two folks who got caught [having sex] in the communications war room on the weekend,” said one employee.

“People came in, and lo and behold there were two of their colleagues doing the nasty on a desk.” Neither one was fired.

Foreign donations are a risk in super PAC setting

Money pouring into the presidential election from super political action committees and nonprofit campaign groups appears so far to be strictly American in origin, donated by U.S. companies, unions and millionaires. But it's easier than ever to conceal the source of money and the identities of contributors, making conditions ripe for illegal donations from foreigners, overseas companies or governments attempting to help a favored candidate for the White House.

"Clearly it is more difficult to enforce the ban on foreign spending when the source of the money is not publicly disclosed," said Trevor Potter, head of the Campaign Legal Center and former chairman of the Federal Elections Commission. Potter is the attorney advising television comedian Stephen Colbert, who set up his own super PAC to illustrate absurdities of how money affects U.S. elections.

Foreign political donations have been outlawed since 1966, and a brief U.S. Supreme Court order last month upheld the ban for foreigners living in the U.S. as well as corporations and individuals abroad.

At the same time, a landmark Supreme Court ruling in 2010 — known as the Citizens United case — enabled corporations and other well-financed donors to give money to political committees that avoid direct coordination with campaigns. The decision led to super PACs, and later court and government rulings gave the groups more latitude by allowing donors to make unlimited donations with minimal disclosure requirements.

Election law experts said the result is an environment that could breed foreign money abuses by political committees willing to knowingly violate the law or by foreign donors who covertly funnel money to favored U.S. candidates and causes.

"The new reality presented by the decision in Citizens United and the rise of super PACs raises concerns about the challenge of discovering such illegal activity," said Cynthia L. Bauerly, an FEC commissioner who ran the agency last year.

FEC guidelines warn that groups failing to use reasonable methods to identify foreign donations can be liable for prosecution. The guidelines suggest scrutinizing passports and addresses as well as check and credit card donations for any evidence of foreign origins.

Bauerly said the FEC is alert for any signs of foreign donations. But she acknowledged "the potential for circumventing the existing rules."

President Barack Obama raised the issue during his 2010 State of the Union speech, warning about the Citizens United ruling: "I don't think American elections should be bankrolled by America's most powerful interests, and worse, by foreign entities."

An Associated Press review of donations made to major super PACs last year found no evidence so far of foreign donations. But there were repeated instances in which contributions could not be clearly traced because donors masked themselves behind vague corporate entities or because the super PACs failed to provide clear information.

A new study by U.S. PIRG and another research organization, Demos, found that 6.4 percent of super PAC donations since 2010 were "untraceable" because of vague or masked information about the sources of the money. It also found that six of the 10 largest super PACs accepted such untraceable donations — including the pro-Romney group Restore Our Future; Priorities USA Action, a committee backing Obama; American Crossroads, a major Republican super PAC; and its Democratic party rival, American Bridge 21st Century.

Just this week, Restore Our Future said it would amend its latest financial report to clarify the source of a $250,000 donation from Glenbrook LLC of Redwood City, Calif. The campaign said it would attribute the money instead as separate, $125,000 gifts from a couple with ties to Altamont Capital Management LLC, a northern California private equity firm.

Bill Burton, a former Obama administration official who co-founded Priorities USA Action, dismissed concerns about foreign donations to his super PAC. "We vet all our donors and make sure we comply with all the appropriate laws," Burton said.

The other major political groups declined to publicly explain their procedures, but super PACs typically ask donors to sign disclaimers and provide documents attesting that their money doesn't come from foreign sources. Credit billing services can automatically flag foreign credit cards and addresses. Political groups also employ lawyers and researchers who scrutinize unknown or suspicious donors.

Obama's own re-election effort was embarrassed this week by a New York Times report that $200,000 in bundled donations to his campaign was linked to Chicago relatives of a criminal fugitive with business operations in Mexico. The Obama campaign quickly returned the money.

The case was different in that the suspicious Obama donations went to the president's re-election campaign, not to an affiliated super PAC. And there was no clear evidence that the donations were illegal or that any of the $200,000 had been directly funneled from the fugitive's Mexican business interests.

But the case shows the difficulties facing any political organization or oversight agency in scrutinizing donors tied to hidden foreign interests.

"It's a legitimate concern and there's no foolproof way to guard against it," said Lawrence M. Noble, a former FEC general counsel during the Clinton administration.

Many of the largest super PACs also operate nonprofit groups, which do not have to publicly disclose the identities of their own donors. Under tax rules governing charities, the nonprofits are regulated by the Internal Revenue Service, not the FEC. As long as they carefully limit their political activities, they have to disclose donors' identities only to the IRS, not the FEC or the public.

American Crossroads, Priorities USA Action and American Bridge 21st Century all have hybrid super PAC and nonprofit operations; Restore Our Future is a super PAC only. The two GOP-leaning super PACs amassed a total of nearly $80 million in 2011, including $31 million in donations to Crossroads' nonprofit, Crossroads GPS. The hybrid super PACs supporting Obama totaled $13 million, but Obama signaled this week he wants them to bolster fundraising to compete with the Republicans.

Election law experts who grappled with the last major foreign donation scandal in the 1990s said there are too many similarities between that era and the current rise of the super PACs. Joseph Sandler, a longtime Democratic Party election lawyer, said both periods have featured massive amounts of available campaign money, political organizations eager to stock their war chests and lax regulations unable to curb abuses.

In the years leading up to the 1996 presidential campaign, fundraisers working for Chinese government interests took advantage of those weaknesses to funnel hundreds of thousands of dollars in illegal donations to the Democratic National Committee and the Clinton-Gore re-election campaign. The scandal spawned Senate and House investigations and led to criminal prosecutions that convicted 22 defendants.

Sandler, who worked on internal DNC reforms afterwards, said super PACs appear ripe for similar abuses.

"I think there's a consensus that we don't want foreign nationals influencing our elections," he said. "What I'd be worried about now is the same big money and failed vetting that we saw in the late '90s. All the warning signs are there."

The Hopelessness of Insider Trading Prosecutions

Rep. Bachus faces insider-trading investigation ... The Office of Congressional Ethics is investigating the chairman of the House Financial Services Committee over possible violations of insider-trading laws, according to individuals familiar with the case. Rep. Spencer Bachus (R-Ala.), who holds one of the most influential positions in the House, has been a frequent trader on Capitol Hill, buying stock options while overseeing the nation's banking and financial services industries. The Office of Congressional Ethics, an independent investigative agency, opened its probe late last year after focusing on numerous suspicious trades on Bachus's annual financial disclosure forms, the individuals said. OCE investigators have notified Bachus that he is under investigation and that they have found probable cause to believe insider-trading violations have occurred. – Washington Post

Dominant Social Theme: You see! The US justice system is equitable after all ... Even congressmen are not immune from being prosecuted ...

Free-Market Analysis: Insider trading is important to prosecute, we are told, because it makes the markets less "fair." Someone with access to information that someone else doesn't have is taking advantage of those people and somehow making a profit at their expense.

This "law" has never made much sense, but most laws and regulations make little or no sense. In fact, every law and regulation is a price fix, forcing people to do certain things under penalty of imprisonment or worse.

Thus every law fixes a price, mandating a transfer of wealth from those who made it to those who didn't and don't really know what to do with it. Central banking itself is nothing but a massive price-fixing and wealth-transfer operation.

In the case of central banking, the wealth flows from ordinary citizens and savers to the richest among us. The proximate rationale for this wealth transfer is that the financial system itself will implode if the biggest banks and financial firms are not propped up.

But this justification is nonsensical. The West is facing an outright depression because a handful of elite bankers have propped up their cronies using the phony rationale that certain entities are "too big to fail."

They are NOT too big to fail. Central banking monopoly funny money has stimulated Western economies to absurd heights, causing first a boom and now a terrible bust. Yet the insolvent companies themselves have been propped up once more with the same fiat currencies.

As a result, lenders have no idea who is really solvent and what industries are healthy and what industries are not. This is no hypothetical issue, either. The US government has propped up failing General Motors with billions. It is seen as a company on the "comeback" but is it really? Who can tell?

Nobody knows who to do business with and as a result the system is effectively frozen, with lenders refusing to lend and companies refusing to hire.

The current inflationary depression is a direct result of central banking policies. And yet central banking in the US and abroad is the "law of the land." Why is something so destructive not only legal but nestled at the heart of Western industrial economies?

Well ... because the Anglosphere power elite that is trying to take over the world wants it that way. Central banks are integral to their schemes because central banks provide the funding for them.

But stock markets are important, too. Stock markets allow the elites to monetize their financial and industrial promotions while sucking money out of the middle classes – ever the historical enemy of the elites.

This is one reason why stock markets must be seen as "fair." If they are not, then middle classes will not "invest." Another reason that elites need stock markets to be accepted is that they provide a rhetorical antidote to inflation.

Central banks are inflation makers and if the elites cannot suggest a solution then people will grow even angrier at the system. And they are plenty angry. It has occurred to many of them, especially in the US, that the dream of retiring wealthy with a portfolio of solid "investments" is more of a mirage than a reality.

In fact, the idea of stock market investing for many is nothing but a kind of dominant social theme. People have been stampeded into the stock market through a clever manipulation of fear and greed. And now that Western-style is being viewed with more skepticism than almost ever before, it is time to trot out new memes.

The biggest of these memes is the resentment-of-the-wealthy meme. This promotion seeks to redirect people's anger at being lied to into a healthy hatred (from the top elites' point of view) of powerful people generally and especially financiers.

Ironically, many of these powerful people work for the top elites in one capacity or another. But when it comes to protecting the larger enterprise, those great central families that want to run the world are quite unsentimental about sacrificing their enablers and associates, especially lower level pols and bankers.

And thus the insider-trading meme has been powered up. It is likely another stick to use to beat lower-echelon elites upside the head. Beat hard enough to create a din that drowns out the larger systemic problems. That's the plan anyway.

We're not sure it's going to work in this era of Internet activism. The Internet Reformation, as we call it, has enlightened many about the Way the World Really Works. Class envy is one more tool in an increasingly empty toolkit but it may not be an effective one this time round.

Certainly the concept of insider trading is a fairly insubstantial one. It doesn't stand up to even a breath of scrutiny. Markets OPERATE on insider information. Everyone seeks it and everyone tries their best to trade it on it.

Trading advantages can be found in numerous ways. Some people are simply mathematically inclined and are better at stock trading than others. Some market participants may have the funds to buy top-end charts and graphs that show market trends more clearly.

And what about the Wall Street firms themselves that have the wealth and savvy to buy top-of-the-line computers and hire the best minds to run them? What about companies that write proprietary software or operate systems that utilize artificial intelligence?

All of the above constitutes forms of insider information that gives people access to insights that others do not have. Some of this information is a good deal more powerful than run-of-the-mill public-company "insider info."

Insider information was not even penalized 50 years ago. Today, it's big news in the US and throughout the West – and is becoming an issue in China as well. But what this focus really tells us is that the legal and regulatory structure surrounding the financial markets is breaking down.

When nonsensical laws are put into practice and enforced brutally but with little intrinsic logic, then one can begin to predict the larger marketplace itself is in systemic jeopardy.

In fact, this is true. Western equity markets are being manipulated mercilessly these days – often by trading cliques that have penetrated government and seek to line their own pockets by legally trading via extra-curricular authority. The US "plunge protection" team is a good example of this.

Insider trading is an entirely bankrupt and indefensible legal paradigm. But its ubiquitousness based on a foul brew of ignorance and class envy is a harbinger of much worse to come. One simply cannot legislate fairness.

Conclusion: When states and cultures set down this path – often at the behest of manipulative elites seeking to present a sense of fairness that doesn't exist – the larger fabric of civil society is surely jeopardized. Societies organized around lies inevitably rot and topple.