We All Have a Stake in the Stock Market, Right? Guess Again

(THIS ARTICLE IS COURTESY OF THE NEW YORK TIMES)

 

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Wall Street’s volatility is merely a spectator event for most Americans, whose wealth is not held in stocks.CreditSam Hodgson for The New York Times

Take a deep breath and relax.

The riotous market swings that have whipped up frothy peaks of anxiety over the last week — bringing the major indexes down more than 10 percentfrom their peak — have virtually no impact on the income or wealth of most families. The reason: They own little or no stock.

A whopping 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. And that includes everyone’s stakes in pension plans, 401(k)’s and individual retirement accounts, as well as trust funds, mutual funds and college savings programs like 529 plans.

“For the vast majority of Americans, fluctuations in the stock market have relatively little effect on their wealth, or well-being, for that matter,” said Edward N. Wolff, an economist at New York University who recently published new research on the topic.

Both Republicans and Democrats have promoted the idea that a rising stock market broadly lifts Americans’ fortunes. When there was a parade of market rallies, President Trump asked, “How’s your 401(k) doing?”

There was a move toward democratizing stock ownership in the 1980s and 1990s, with the advent of individual retirement accounts, but the busts of 2001 and 2007 scared off some middle-class investors.

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Of course, any financial loss can be scary and painful. Indeed, the less you have, the more each dollar counts. And market gyrations could foreshadow deeper problems that signal the end of a nine-year boom and short-circuit the economic recovery.

But the day-to-day impact on most people’s overall wealth is minimal.

“It’s far from where you think that it would be, given the rhetoric,” said Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis.

A look at some fundamentals may provide a clearer perspective.

Stock ownership is the exception.

Roughly half of all households don’t have a cent invested in stocks, whether through a 401(k) account or shares in General Electric. That leaves half the population with some exposure to financial market whims, but as Mr. Boshara said, “some exposure can be 100 bucks.”

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Who’s in the Market

Households with each type

of stock investment

Households’ stock

investment, by value

Stock as a share of

households’ total assets

50

%

50

%

50

%

Pensions

40

40

40

$5,000

or more

$10,000

or more

30

30

30

$25,000

or more

20

20

20

Direct holdings

Mutual funds

10

10

10

Trust funds

’89

’98

’07

’16

’89

’98

’07

’16

’89

’98

’07

’16

“If you look at where the money is really held, it’s among the top 10 percent,” he said. “And if you break it down by age, race and education and parental education, you’ll see the disparities are even larger.” Parents who lack a four-year degree and, later on, their children are much less likely to have a direct stake in the stock market than college graduates; blacks and Hispanics are much less likely than whites.

“It’s too bad such a small percentage of the population has any real or meaningful ownership stake in equities, given their historic and current growth,” Mr. Boshara said.

Most households had less than $5,000 in total holdings in 2016, the most recent year analyzed by Mr. Wolff. Despite the slow recovery in housing prices, the wealth of middle-class Americans is still concentrated in their homes, which remain their single most valuable asset.

For 9 out of 10 households, even a shift in value of 10 percent — enough to qualify as a “market correction” — would “at most, have a 1 or 2 percent impact on their wealth holdings,” Mr. Wolff said.

If anything, foreign multinational and other investors would feel more of a pinch, since they own 35 percent of all United States corporate stock, up from 10 percent in 1982. That share of the pie exceeds the single slice owned by taxable American shareholders, defined benefit plans, defined contribution plans, or nonprofit institutions, said Steven M. Rosenthal, a senior fellow at the nonpartisan Urban-Brookings Tax Policy Center.

Don’t confuse the Dow with the economy.

The stock market and the underlying economy are distinct. The two interact, but they do not proceed in lock step or even respond to each other in predictable ways. Certainly, market instability can undermine both consumer and business confidence and restrain spending and investment. And market bubbles, swelled by overextended borrowing, can explode, wreaking losses and stalling growth.

Still, valuations of assets and the country’s economic health — as determined by productivity, employment, investment, spending, housing values, production capacity, growth and more — are two different kettles.

The Stock Market Isn’t the Economy. Here’s How They Can Shape Each Other

Stock markets have recently fallen over fears that economic growth is too strong. Here’s why, and one way how steep, sustained sell-offs could end up hurting the economy.

“If all that happens is the stock market decreases or increases in value, but no real fundamentals change,” C. Eugene Steuerle, an economist at the Urban Institute who served in the Reagan administration, said, “then there are actually a lot of winners, not just losers.”

“Older people can buy less stock,” because the returns from their investment are smaller, Mr. Steuerle said, “but young people can buy more on the cheap,” which sets them up for bigger gains down the road.

Attention, discount shoppers,” Michelle Singletary, a personal financial columnist for The Washington Post, advised on Thursday. “The recent stock market dive is like a holiday weekend sale.”

The economy still seems solid.

When it come to evaluating the economy’s fundamentals, assessments come in a Revlon rack of shades. Economists warn that mounting debt, as a result of the costly $1.5 trillion tax package, threatens economic stability over the longer run, as private investment is crowded out and interest payments balloon. Productivity growth is anemic and labor participation rates are low by historical standards.

Still, the signs of strength — at least for the next couple of years — are impressive.

Unemployment is near record lows, total output is rising at a faster rate, bond yields are up, oil prices have increased, and consumer and business confidence remain high. Every major economy around the world is growing in concert, simultaneously propelling and reinforcing a positive cycle.

After all, one of those indicators — a January jobs report that showed healthy payroll expansion and a jump in yearly wage growth — is what help set off the stock market tumult last Friday.

Trump Says Hurricane-Stricken Puerto Rico Is In ‘Deep Trouble’

(THIS ARTICLE IS COURTESY OF TIME.COM NEWS)

 

President Trump Says Hurricane-Stricken Puerto Rico Is In ‘Deep Trouble’

Sep 25, 2017

President Donald Trump posted a trio of tweets Monday night that appeared to center on Puerto Rico’s fiscal debt, as the devastated U.S. territory struggles to recover from powerful Hurricane Maria.

After commending the recovery of Texas and Florida — which were lashed by Hurricanes Harvey and Irma, respectively — Trump tweeted Monday: “Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble.”

Trump continued, “It’s old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars owed to Wall Street and the banks which, sadly, must be dealt with.”

“Food, water and medical are top priorities – and doing well,” Trump added.

Hurricane Maria, the strongest storm to hit Puerto Rico since 1928, killed 16 people and left millions without power or communications when it battered the island last week. Beset by food and water shortages, Puerto Rico Governor Ricardo Rosselló issued a statement appealing for help for his “essentially devastated” island.

“My petition is that we were there once for our brothers and sisters, our other U.S. citizens, now it’s time that U.S. citizens in Puerto Rico are taken care of adequately, properly,” Rosselló wrote Sunday. On Monday, he called for greater federal aid and appealed to Congress to pass a relief package and treat Puerto Rico like any other U.S. state, Politico reports.

According to the Associated Press, 3.4 million U.S. citizens in the territory are without adequate food, water and fuel. Communications are still lacking and electrical power may not be fully restored for a month.

Trump’s response, which appeared to put the issue of the island’s bank loans before emergency supplies, provoked consternation among some diplomats. “Is the President of the United States saying that the mammoth hurricane damage is Puerto Rico’s fault?” posed Samantha Power, the former U.S. ambassador to the U.N.

Before the Category 4 storm struck, Puerto Rico was suffering from a $73 million debt crisis, that had left agencies like the state power company broke.

The U.S. Federal Emergency Management said aid was getting to the island, and that the agency had more than 700 staff on the ground in Puerto Rico and the U.S. Virgin Islands, delivering diesel, food and water to communities, reports AP.

A new, liberal tea party is forming. Can it last without turning against Democrats?

(THIS ARTICLE IS COURTESY OF THE WASHINGTON POST)

A new, liberal tea party is forming. Can it last without turning against Democrats?

Angry Utahns pack Chaffetz’s home state town hall
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Rep. Jason Chaffetz (R-Utah) got a frosty reception in his home state on Feb. 9, at a town hall. Angry constituents packed a high school auditorium, grilled the high-ranking congressman with questions and peppered him with boos and chants while protesters amassed outside.(Jenny Starrs/The Washington Post)
February 11 at 4:50 PM
Grass-roots movements can be the life and death of political leaders.It’s a well-worn story now about how John A. Boehner, then House minority leader, joined a rising star in his caucus, Rep. Kevin McCarthy, in April 2009 for one of the first major tea party protests in the California Republican’s home town of Bakersfield.

A little more than six years later, after they surfed that wave into power, the movement consumed both of them. Boehner was driven out of the House speaker’s office and McCarthy’s expected succession fell apart, leaving him stuck at the rank of majority leader.

Democrats are well aware of that history as they try to tap the energy of the roiling liberal activists who have staged rallies and marches in the first three weeks of Donald Trump’s presidency.

What if they can fuse these protesters, many of whom have never been politically active, into the liberal firmament? What if a new tea party is arising, with the energy and enthusiasm to bring out new voters and make a real difference at the polls, starting with the 2018 midterm elections?

Boycotts and outrage: A new normal on Capitol Hill?

Republicans were forced to reschedule votes for key cabinet picks after Democrats intensified their opposition to President Trump’s nominations. (Video: Alice Li, Whitney Leaming/Photo: Getty/The Washington Post)

The women’s marches that brought millions onto streets across the country the day after Trump’s inauguration — spurred organically through social media — opened Democratic leaders’ eyes to the possibilities.

With a 10-day recess beginning next weekend, House Minority Leader Nancy Pelosi (D-Calif.) has instructed her members to hold a “day of action” in their districts, including town halls focused on saving the Affordable Care Act. The following weekend, Democratic senators and House members will hold protests across the country, hoping to link arms with local activists who have already marched against Trump.

“It was important to us to make sure that we reach out to everyone we could, to visit with them, to keep them engaged, to engage those that maybe aren’t engaged,” Rep. Ben Ray Luján (D-N.M.), chairman of the Democratic Congressional Campaign Committee, told reporters at a Democratic retreat in Baltimore that ended Friday. The trick is to keep them aiming their fire at Republicans and Trump, not turning it into a circular firing squad targeting fellow Democrats.

“Now we want people to run for office, to volunteer and to vote,” Luján added.

It’s too early to tell which direction this movement will take, but there are some similarities to the early days of the conservative tea party.

In early 2009, as unemployment approached 10 percent and the home mortgage industry collapsed, the tea party emerged in reaction to the Wall Street bailout. It grew throughout the summer of 2009 as the Obama administration and congressional Democrats pushed toward passage of the Affordable Care Act.

Many of the protesters were newly engaged, politically conservative but not active with their local GOP and often registered as independents. Their initial fury seemed directed exclusively at Democrats, given that they controlled all the levers of power in Washington at the time; the protesters famously provoked raucous showdowns at Democratic town halls over the August 2009 recess.

Senate Minority Leader Charles E. Schumer’s first brush with the anti-Trump liberal movement came in a similar fashion to Boehner and McCarthy’s Bakersfield foray in 2009. Originally slated to deliver a brief speech at the women’s march in New York, Schumer instead spent 4 1/2 hours on the streets there, talking to people he had never met. By his estimate, 20 percent of them did not vote in November.

That, however, is where Schumer must surely hope the similarities end.

By the spring and summer of 2010, the tea party rage shifted its direction toward Republican primary politics. One incumbent GOP senator lost his primary, Sen. Rand Paul (R-Ky.) defeated the Kentucky establishment favorite, and three other insurgents knocked off other seasoned Republicans in Senate primaries (only to then lose in general elections).

One force that helped the tea party grow was a collection of Washington-based groups with some wealthy donors, notably the Koch-funded Americans For Prosperity, who positioned themselves as the self-declared leaders of the movement. For the next few years, they funded challenges to Republican incumbents, sparking a civil war that ran all the way through the 2016 GOP presidential primaries.

Boehner could never match the rhetorical ferocity of the movement. He was perpetually caught in a trap of overpromising and under-delivering. Republicans never repealed Obamacare, as they derisively called the ACA, and they could not stop then-President Obama’s executive orders on immigration. Boehner resigned in October 2015.

Democrats want and need parallel outside groups to inject money and organization into their grass roots. There are signs it is happening: The thousands of activists who protested at a series of raucous town halls hosted by Republican congressmen over the past week were urged to action in part by sophisticated publicity campaigns run by such professional liberal enterprises as the Indivisible Guide, a blueprint for lobbying Congress written by former congressional staffers, and Planned Parenthood Action.

What is less clear is whether such energy and resources will remain united with Democratic leaders — or will be turned on them, as happened with the tea party and the Republican establishment, if the activist base grows frustrated with the pace of progress.

There have been some signs of liberal disgruntlement toward Democratic leaders. Pelosi and Schumer (D-N.Y.) were jeered by some in a crowd of more than 1,000 that showed up at the Supreme Court two weeks ago to protest Trump’s executive order travel ban. Marchers showed up outside Schumer’s home in Brooklyn, demanding he “filibuster everything” and complaining that he supported Trump’s Cabinet members involved in national security.

But there are two key differences between the conservative and liberal movements: their funding, and their origins. Some anti-establishment liberal groups have feuded with leaders, but they are poorly funded compared with their conservative counterparts. And the tea party came of age in reaction not only to Obama but, before that, to what the movement considered a betrayal by George W. Bush’s White House and a majority of congressional Republicans when they supported the 2008 Wall Street bailout.

There is no similar original sin for Democrats, as the liberal protests have grown as a reaction to Trump, not some failing by Schumer and Pelosi.

Schumer remains unconcerned about the few protesters who are angry at Democratic leaders. “I think the energy’s terrific. Do some of them throw some brickbats and things? Sure, it doesn’t bother me,” Schumer said in a recent interview.

How the liberal activists respond to early defeats may be the next sign of which direction the movement takes. Their demand that Schumer block Trump’s Cabinet is impossible to satisfy, because a simple majority can confirm these picks. All Schumer can do is drag out the debate, which he has done to an unprecedented degree.

The stakes will be even higher for the Supreme Court nomination of Judge Neil Gorsuch, whose lifetime appointment still requires a 60-vote supermajority to reach a final confirmation vote. A Trump victory on Gorsuch might deflate the liberal passion, and some think that was the main ingredient missing for Democrats in 2016.

“We just didn’t have the emotional connection,” Pelosi told reporters in Baltimore. “He had the emotional connection.”

Trump Has Already Betrayed The Working Class: He Has Proven He Is A Fraud And A Con

(This Article Is Courtesy Of The Huffington Post)

Trump Has Already Betrayed The Working Class

Donald Trump has betrayed the American working class. He is a fraud and a con.

12/08/2016 01:58 pm ET | Updated 1 hour ago

DREW ANGERER VIA GETTY IMAGES

They voted for him in droves. In a remarkable political shift, the white working class who have seen their wages decline over decades thanks to shameless pandering to Wall Street and big business by both political parties, finally gave up on the Democrats and threw their lot in with billionaire businessman Donald Trump.

Some have tried to argue that the switch didn’t really have to do with economics but the numbers say otherwise. According to CNN exit polling, voters earning under $30K shifted towards Trump by 16 percent. Trump won 79 percent of those who said the economy was poor. Even Trump’s embrace of white nationalism is after all a form of economic protectionism. If you feel there’s a limited pie, then you’ve got a better shot at your slice if you don’t have to compete against those “other” people. With his pick for Labor Secretary though Trump revealed exactly what kind of President he’s going to be for those who had any doubts. Trump is not going to save the working class, he’s going to destroy it.

Meet your next Labor Secretary Andrew Puzder. He is the CEO of Hardee’s and Carl’s Jr. He thinks to Make America Great Again, we need to pay workers less or ideally, give their jobs to robots. I’m not kidding. In an interview with Business Insider, Puzder explained that he thought getting the workers out of the restaurant biz would be a great thing because robots are:  “…always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.”

Oh human beings and their unreasonable desire to earn enough to live AND not be discriminated against. It’s all so inconvenient for corporate CEO’s like Puzder. We should just relegate these service jobs to the dustbin of history the way we already did with so-called “old economy” jobs. You know, the kind that actually allowed you to eat, buy a house, and pay the bills all at the same time. #MAGA.

By choosing Puzder for Labor Secretary, Trump has thrown his lot in with those who view workers as commodities to be used and discarded when they are inconvenient

 Now virtually no one aspires to a fast food job. Folks like Puzder who want to keep wages at their current level of roughly $18K per year like to pretend fast food jobs are just starter jobs for teenagers. I mean, these aren’t the sort of jobs that you are expected to raise a family on, right? Well, this is as much of a fantasy as the idea that Trump is a working class hero. Seventy percent of fast food workers are older than 20. The average age of a fast food worker is 29.

The reason for this is simple: low-paying service jobs are what our economy creates now even as middle class jobs decline. A majority of jobs lost during the Great Recession were middle-income jobs. A majority of those gained were low wage. Food service prep, cashier, and sales clerk are the three most common jobs in the country employing some 10 million plus American workers. If you automate those three jobs, what will replace them? Low-paying service work may not be ideal but it beats the heck out of no jobs at all. People who view the loss of these 10 million jobs as a great thing are the same type of people who drive through the derisively named “Rust Belt” and see “creative destruction” and “progress” instead of destroyed communities and destroyed lives.

Lest you think Puzder’s worker contempt is out of step with Trump’s supposed populism, Trump himself begs to differ. In a typically whiny and petty reaction to criticism, Trump tweeted this week that Carrier’s union workers themselves were responsible for the company deciding to ship jobs overseas.

He tweeted: “If United Steelworkers 1999 was any good, they would have kept those jobs in Indiana. Spend more time working-less time talking. Reduce dues.” Puzder shares Trump’s “blame the worker” mentality and has no sympathy for workers seeking to earn a higher wage. Speaking with Business Insider, he blamed his own push towards automation on wage growth.  In Puzder’s world, it’s not his fault if Hardee’s workers are replaced with robots even though as CEO of the company he is in fact the one making exactly that decision.

Of course, Trump’s working class hero schtick was always a complete sham.

 The fault really lies with all of those high on the hog living workers with their $18K per year incomes and the advocates who would outrageously push to make those wages higher. You will not be surprised to learn then that one of Puzder’s favorite pastimes is penning Wall Street Journal op-eds on why lifting the minimum wage would just be dreadful. Typical line: “Does it really help if Sally makes $3 more an hour if Suzie has no job?” Exactly. So why not get rid of the minimum wage altogether and pay Sally the 50 cents per hour that you apparently think she’s worth?

I’ll tell you why. Because once long ago, we decided as a nation that we valued our workers.  We believed that we would all prosper if American workers earned enough to buy the goods and services they produce. We decided that workers shouldn’t toil for 40 hours a week and still live in poverty. Visionaries like Henry Ford understood this, and FDR, and the labor leaders who fought to birth the great American middle class which used to be the envy of the world. You want to make America great again? Try connecting with that American past.

By choosing Puzder for Labor Secretary, Trump has thrown his lot in with those who view workers as commodities to be used and discarded when they are inconvenient or when those workers become a penny more costly than a touch screen computer. He has thrown his lot in with those who view a future of endless Gilded Age inequality as inevitable. By choosing Andy Puzder as Labor Secretary, Donald Trump has betrayed the American working class. He is a fraud and a con.

Of course, Trump’s working class hero schtick was always a complete sham. The man rails against companies shipping jobs overseas while he makes his own schlocky crap in Mexico and Bangladesh for God’s sake. He stiffs contractors. He buys his steel from China. He illegally busts unions at his gaudy casinos! It is time for those of us who actually care about workers and see them as human beings rather than an expense item on the balance sheet, to stop licking our wounds and start fighting for those who will suffer the most under President Trump.

Congress Learned Nothing From 2008 Wall Street Crash: Put These Thieves In Prison!

(THIS ARTICLE IS COURTESY OF THE WALL STREET JOURNAL AND THE NEW YORK TIMES)

John Stumpf, chief executive of Wells Fargo, testified before the House Financial Services Committee on Thursday regarding the bank’s unauthorized customer accounts. Credit Al Drago/The New York Times

WASHINGTON — He is forfeiting at least $41 million in pay. He vows that his bank will drop its sales incentive program — blamed for prompting bankers to set up illegal and unauthorized bank and credit card accounts to meet their sales goals — by the end of the week, not in January, as he had previously promised.

But at a hearing Thursday before the House Financial Services Committee, nobody was impressed. If anything, the House lawmakers who interrogated John G. Stumpf, the chief executive of Wells Fargo, were even angrier and more hostile than their Senate counterparts who questioned him last week, before either of those steps had been taken.

One by one, Democrats and Republicans alike took turns ripping apart Mr. Stumpf and what took place at the bank he leads. They denounced the actions as “theft,” “a criminal enterprise,” identity fraud, an outrage and a devastating blow to the entire banking industry.

But that was not all of Wells Fargo’s bad news for the day.

Also on Thursday, the Office of the Comptroller of the Currency fined Wells Fargo $20 million for violating rules on lending to members of the military, including a rate cap on how much interest can be charged to service members on active duty.

In a separate action, Wells Fargo agreed to pay $4 million to resolve a Justice Department investigation into improper seizures of vehicles owned by soldiers who fell behind on their loans.

“In those instances where some service members did not receive the appropriate benefits and protections, we did not live up to our commitment and we apologize,” the company said in a statement. “We have been notifying and fully compensating customers and will complete this work in 60 days.”

The news did not play well with members of the House committee, who spent more than four hours on Thursday questioning and castigating Mr. Stumpf about the misdeeds under his leadership.

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“It appears that the company just can’t make it through even this congressional hearing without us learning more and more information about what is going on at Wells Fargo,” Representative Maxine Waters, a Democrat of California, said as word began to spread of the coming sanctions over military lending.

But Mr. Stumpf — whom the members of the House committee personally blamed for the persistent and widespread misdeeds — stuck to the same script he has used throughout the crisis. The problem, he explained, was an ethical lapse among the 5,300 employees, most of them low-level bankers and tellers, who had been fired for their actions since 2011.

At the hearing on Thursday, Mr. Stumpf apologized repeatedly for his bank’s failings and repeated his earlier pledge — given last week to the disgruntled Senate Finance Committee — to accept “full responsibility” for them. But he again rejected lawmakers’ attempts to cast the scandal as a consequence of broader failings in Wells Fargo’s leadership and corporate culture.

“I led the company with courage,” Mr. Stumpf said, while admitting that the company “should have done more sooner” to address the problem of unauthorized accounts being created by employees in the names of real customers.

MULTIMEDIA FEATURE

What Wells Fargo’s C.E.O. Told Congress

Nine days ago, the leader of Wells Fargo faced a skeptical Senate committee for more than two hours. Today, he was denounced for more than four hours at a House panel.

OPEN MULTIMEDIA FEATURE

After the Senate hearing and before the House hearing, the board of directors of Wells Fargo agreed to claw back $41 million of Mr. Stumpf’s unvested stock awards, deny him his annual bonus and strip away a portion of his $2.8 million base salary. Mr. Stumpf said he approved of the decision. Carrie L. Tolstedt, who until recently ran the Wells Fargo retail banking operation, will lose $19 million in compensation.

Confronted by the lawmakers with evidence that the practice of setting up phony accounts to meet sales goals might have gone back much further than the bank has admitted, perhaps to 2007, Mr. Stumpf said that Wells Fargo was continuing to investigate the extent of the problem, how far back it stretched and who knew.

But those steps did not appease the lawmakers. Several called for Mr. Stumpf’s resignation, and others asked why he shouldn’t be jailed, like a bank robber.

“Something is going wrong at this bank, and you are the head of it,” said Gregory Meeks, Democrat of New York, adding, “You should be fired.”

Mr. Stumpf replied, “I serve at the pleasure of the board.” Mr. Stumpf is the board chairman.

Mr. Meeks, at times pounding the table for emphasis, asked if Mr. Stumpf would have set free someone who had robbed a Wells Fargo Bank, then simply apologized and taken responsibility. Criticizing Wells Fargo’s “criminal activity,” Mr. Meeks said: “Your bank, Wells Fargo, has given the entire financial services industry a black eye.”

“To the American people, this kind of feels like déjà vu all over again,” said Representative Jeb Hensarling, the Texas Republican who is chairman of the committee. “Some institution is found engaging in terrible activities. There is a headline, fine, and yet no one seems to be held accountable.”

As Mr. Stumpf testified, a video screen on the hearing room’s wall displayed a scroll of more than a dozen fines Wells Fargo has paid in recent years, totaling more than $10 billion. The list included penalties for subprime loan abuses, discriminating against African-American and Hispanic mortgage borrowers, and foreclosure violations, among others.

Mr. Hensarling asked whether such fines are simply the “cost of doing business.”

Mr. Stumpf answered no, adding, “I don’t want our culture to be defined by these mistakes.”

Wells Fargo has been in crisis mode since it acknowledged this month that its employees had, over the course of several years, opened as many as 1.5 million bank accounts and 565,000 credit card accounts that may not have been approved by customers. The company agreed to pay $185 million in penalties and fines to settle cases brought by federal regulators and the Los Angeles city attorney.

Wells Fargo has said it is contacting all of the customers who may have been affected. So far, the bank has contacted 20,000 customers with questionable credit cards. About a quarter of them have said that they did not apply for the card or could not remember if they had, Mr. Stumpf said at the hearing.

He also said that Wells Fargo would eliminate its product sales goals for retail bankers by the end of the week, accelerating the bank’s previously announced plan to drop them by the start of next year. Ex-employees say those sales goals led to intense pressure on workers to cheat to fulfill unrealistically high quotas.

Mr. Stumpf carried with him a binder filled with material to help him form his answers, and he consulted it repeatedly as lawmakers questioned him about how many customers with potentially unauthorized accounts had been affected in their own home states. He reeled off the answers: Texas, 149,857; Missouri, 1,191; Delaware, 4,255.

The plight of Wells Fargo workers who lost their jobs for not meeting sales goals came up several times during the hearing, with lawmakers citing personal experiences from their constituents. Representative Nydia M. Velázquez, Democrat of New York, asked how many workers Wells Fargo had fired for falling short.

“My understanding is that people should not be fired, terminated for missing sales goals,” Mr. Stumpf answered. “I’m not saying it didn’t happen. We’re doing a review of whatever, whoever might have been terminated for that.”

As for those who did take the fall for the illegal account openings, Representative Brad Sherman, a Democrat of California, was particularly acerbic. “You fired 5,300 people,” he said at the hearing. “You took 5,300 good Americans and turned them into felons.” It is time, he concluded, to break up the big banks.

Sounds Like The Defense Department And Wall Street Share The Same Bed

 

Task And Purpose

 (This article is courtesy of 2016 Tribune Co. Distributed by Tribune Content Agency L.L.C., Washington Bureau Sept. 5th, 2016)
 (6 OUT OF 11 SOUNDS LIKE ABOUT 15 MILLION DEAD AMERICANS TO ME, HOW ABOUT YOU?)
The Missile Defense Agency's Flight Test 06b Ground-Based Interceptor launches from Vandenberg Air Force Base, Calif. on June 22, 2014.
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Boeing Collects $2 Billion In Bonuses For Missile Defense System That Doesn’t Work

By

DAVID WILLMAN, TRIBUNE WASHINGTON BUREAU

on September 5, 2016

T&P ON FACEBOOK

 

Boeing collected nearly $2 billion in bonuses from the Pentagon for the Ground-based mid-course Defense system even though the interceptors failed to destroy their targets.

From 2002 through early last year, the Pentagon conducted 11 flight tests of the nation’s homeland missile defense system.

In the carefully scripted exercises, interceptors of the Ground-based mid-course Defense system, or GMD, were launched from underground silos to pursue mock enemy warheads high above the Pacific.

The interceptors failed to destroy their targets in six of the 11 tests — a record that has prompted independent experts to conclude the system cannot be relied on to foil a nuclear strike by North Korea or Iran.

Yet over that same time span, Boeing Co., the Pentagon’s prime contractor for GMD, collected nearly $2 billion in performance bonuses for a job well done.

The Pentagon paid Boeing more than $21 billion total for managing the system during that period.

A ground-based interceptor lifts off from Vandenberg Air Force Base.

A Times investigation also found that the criteria for the yearly bonuses were changed at some point to de-emphasize the importance of test results that demonstrate the system’s ability to intercept and destroy incoming warheads.

Early on, Boeing’s contract specified that bonuses would be based primarily on “hit to kill success” in flight tests. In later years, the words “hit to kill” were removed in favor of more generally phrased benchmarks, contract documents show.

L. David Montague, co-chair of a National Academy of Sciences panel that documented shortcomings with GMD, called the $2 billion in bonuses “mind-boggling,” given the system’s performance.

Montague, a former president of missile systems for Lockheed Corp., said the bonuses suggest that the Missile Defense Agency, the arm of the Pentagon that oversees GMD, is a “rogue organization” in need of strict supervision.

The cumulative total of bonuses paid to Boeing has not been made public before. The Times obtained details about the payments through a lawsuit it filed against the Defense Department under the Freedom of Information Act.

The newspaper also reviewed Boeing-related contract documents obtained independently of the lawsuit.

A spokesman for the missile agency, Chris Johnson, said that despite the GMD system’s record in flight tests, Boeing had “earned” its bonuses “based on the criteria specified in the contract.” He said the payments “complied with all appropriate acquisition regulations.”

“These types of contracts allow regular and consistent evaluation by the government, and fees are paid only when companies meet clearly defined targets,” Johnson said in an emailed statement.

A spokesman for Boeing, Dexter Q. Henson, referred questions about the bonuses to the missile agency while defending the company’s work on GMD.

Boeing “has met contractual requirements and a variety of incentives across a wide range of program objectives,” Henson said by email.

“As the lead contractor, we have partnered with the Missile Defense Agency in the development and operation of the only homeland defense system that can defeat long-range missile attacks,” he said.

The GMD system, which became operational in 2004, is intended to thwart a “limited” nuclear strike by a non-superpower. It has cost taxpayers more than $40 billion to date.

In the event of an attack, interceptors at Vandenberg Air Force Base in Santa Barbara County, Calif., and Fort Greely, Alaska, would burst from their silos and begin a fiery ascent toward the upper atmosphere.

The interceptors are  rockets, each with a 5-foot-long “kill vehicle” at its tip. The kill vehicle is designed to separate from its rocket in space, fly independently at 4 miles per second and crash into an enemy warhead.

GMD’s roots go back to the Clinton administration, when concern began to mount over the spread of ballistic missile technology. In 2002, President George W. Bush ordered “an initial set of missile defense capabilities” to be put in place within two years.

To accelerate deployment, then-Defense Secretary Donald H. Rumsfeld exempted the missile agency from the Pentagon’s standard procurement rules and testing standards.

The Pentagon’s own Operational Test and Evaluation office has documented serious deficiencies in the system. So have other government agencies and independent experts.

In a report in February, the Government Accountability Office, a nonpartisan investigative arm of Congress, said the system’s performance in tests has been “insufficient to demonstrate that an operationally useful defense capability exists.”

Screen Shot 2016-09-04 at 5.50.43 PM

The test failures are unsettling given that the exercises are meticulously orchestrated. Personnel operating the GMD system know ahead of time approximately when the targets will be launched and from where, as well their expected speed and trajectory — information they would not have in an actual attack.

Given the system’s weaknesses, four or five interceptors would have to be launched for each incoming enemy warhead, according to current and former officials familiar with the missile agency’s projections.

As a result, the system’s arsenal of 30 operational interceptors — four at Vandenberg and 26 at Fort Greely — could be quickly depleted by an attack with multiple missiles.

A study by three physicists with expertise in missile defense, released in July by the Union of Concerned Scientists, concluded that “the GMD system is simply unable to protect the U.S. public.”

The Times asked the Missile Defense Agency in March 2014 for information on bonuses paid to GMD contractors. Boeing objected to release of the data, and the agency denied the newspaper’s request, saying disclosure might reveal “trade secrets and commercial or financial data.”

The Times then sued in federal court last year, asserting that the public had a right to know about the payments. The government’s lawyers later agreed to release the information if Boeing would not intervene in the litigation “or otherwise take steps to prevent disclosure.”

Boeing eventually acquiesced, and the Defense Department settled the suit with a single-page letter listing the sum total of bonuses paid to Boeing from Dec. 31, 2001, to March 1, 2015.

The figure: $1,959,072,946.

The government also agreed to pay $15,000 to cover the Times’ legal costs.

The missile agency’s chief of staff, David P. Bagnati, made the initial decision to withhold the bonus data, according to a 2014 email from the Pentagon’s Freedom of Information office.

Johnson, the agency spokesman, said this week that Bagnati “made the determination on the advice of agency legal counsel” and would have no further comment.

Boeing holds two contracts to manage GMD. Under their terms, the company is reimbursed for its direct costs in overseeing the system and for some of its indirect costs, such as executive salaries and other overhead.

The bonuses come on top of that and can account for all or a significant part of a contractor’s profit.

One of Boeing’s GMD contracts also provides a 3 percent base fee, independent of any bonuses, for some aspects of the work, according to the missile agency.

The Missile Defense Agency's Flight Test 06b Ground-Based Interceptor launches from Vandenberg Air Force Base, Calif., June 22, 2014.

Under the contracts, bonuses are awarded annually and can be up to 100 percent of specified pools of money.

The Defense Department letter that settled the Times’ lawsuit said the Boeing bonuses fell into three categories. Ninety-five percent of the total sum was designated as “award fees.” The rest was described as “incentive cost” fees and “incentive performance” fees.

The precise criteria for bonuses could not be obtained for each of the relevant years. However, documents on file with the Defense and Treasury departments show that the missile agency at some point altered a central criterion.

At issue was what would make a flight test count as successful for bonus purposes. Boeing’s prime contract dated Jan. 1, 2001, states that “the primary performance criteria” were whether the interceptor destroyed its target during the test — an outcome described as “HTK success.” (HTK is short for “hit to kill.”)

The maximum “award fee” for a given year was 15 percent of the contract value. During the first phase of the contract, up to 60 percent of the award fee pool was based on “HTK success criteria.”

Later contract documents, dated August 2011, list various bonus criteria related to preparing for and carrying out the next scheduled flight test. Successful “mission execution” was worth 30 percent of the award fee pool. But actually destroying the target — “hit to kill” —was no longer specified.

Asked for an explanation, Johnson, the agency spokesman, said:

“In recent contract terms, the words ‘hit-to-kill’ have been changed to support the more detailed documented objectives of each respective flight test. For intercept flight tests conducted under the current design and attainment contract, a successful intercept remains a key performance objective.”

In 2010, the missile agency granted Boeing a contract extension worth more than $1 billion.

The Defense Department’s inspector general later raised questions about the extension — including bonus payments — saying that agency officials lost an opportunity to save millions of dollars by failing to wait for an audit they had requested.

The controversy centered on the GMD “Core Completion” contract. (The inspector general’s report, released in 2014, did not name Boeing, but other records show that the company held this contract.)

According to the report, the missile agency asked the Defense Contract Audit Agency to scrutinize the contractor’s proposed costs and other terms. The audit was due Feb. 15, 2010, but the auditors asked for an additional month, the report said.

Yet the missile agency signed the contract extension March 10, 2010 — five days before the auditors were to deliver their findings.

The inspector general concluded that if agency officials had waited to see the audit, they “could have negotiated a significantly lower contract value and saved the government millions of dollars in reduced fees” — a reference to bonuses, which are based on the total contract value.

Johnson said officials chose not to wait “because we had sufficient data to reach a determination of a fair and reasonable price for the contract.”

He added that his agency “has incorporated several substantial changes to our procedures” to make better use of future audits.

The missile agency and its lead contractors have sought to put a positive spin on the system’s performance. This year, after a flight test on Jan. 28, the agency and several contractors, including Boeing, issued news releases declaring the test a success.

In fact, as the Times reported July 6, a thruster stopped working during the exercise, causing the kill vehicle to fly far off its intended course.

The thrusters, which help steer the kill vehicle, have a history of performance problems. In the Jan. 28 exercise, a kill vehicle equipped with a new thruster model was supposed to make a close fly by of a target.

None of the press releases acknowledged the malfunction — nor did the missile agency’s director, Vice Adm. James D. Syring, in three subsequent appearances before congressional panels.

Neither Syring nor the contractors have said publicly why they stayed silent.

Whatever their rationale, by characterizing the test as a success, the agency and the contractors may have bolstered the prospects for performance bonuses, according to missile defense specialists.

Is Ted Cruz (A) Anti-Christ? Or Is He Simply A Fraud And A Hypocrite?

 

Texas Senator Ted Cruz has first gone around the state of Texas and now the whole country lying to all he meets by saying he is a practicing Christian when he is by no means any such a thing. Lying, yes lying, plus add in other qualities like a fraud, and a thief. O, and let us not forget that as Mr. Trump said  about Mr. Cruz  when he refereed to him as a “very nasty person”, and Mr. Trump ought to know that quality very well, he has made a lifetime of being nasty to people for the purpose of his own personal gain. The Republican establishment chastised Mr. Trump for those comments even though they all know that he spoke truthfully about Mr. Cruz. The very recently retired Republican House Speaker  (John Boehner) shortly before he retired last year called Mr. Cruz “the biggest ass-hole in the Congress”. But then again when another now former Republican Senator Mr. Bob Dole was their Presidential Candidate they keep quiet that within the Senate he was known as ‘Mr. Nasty’. How does a political party whom claims the highroad claiming to be the most Christian Party put forth and then back people whom they know are very hate-filled people?

 

Just like ‘we the people’ have learned that Hillary Clinton is an habitual liar and that there is no way to trust anything that comes out of her mouth, Ted Cruz is proving to be the same. Mr. Cruz ran his Texas Senate campaign as him being this staunch conservative Christian yet it has been proven that he  is a liar to the core of his being. He told all the people of Texas how he was the outsider whom was not beholding to the Wall-Street Bankers, that he was a poor man whom had to mortgage all they had to come up with the money to fund his Senate campaign, liar! He received a little over one million dollars from two Wall-Street bank, the biggest was for $700,000.00 from the very bank that his wife worked at. You did hear that correctly. Then by law and by Senate rules when he was elected to the Senate he had to tell them all of the loans that he had (because the people have a right to know whom they/he is beholding too) there too, he lied. He didn’t mention those loans from the Wall-Street Banks because it would have shown the people of the great state of  Texas that he was a liar and a fraud. Now in the first political pony show that was held in Iowa yesterday his personal staffers were calling up other people’s staffers telling them that his Christian opponent Dr. Ben Carson had suspended his campaign when he had done no such a thing. Cruz is the only candidate that pulled this dirty trick. It is said that all is fair in war and politics but this itself is a lie if you are really a Christian. Cruz knew very well that if Dr. Carson did drop out of the race that he (being he claims to be such a Christian) would pick up a lot of Dr. Carson’s Christian voters, thus helping himself and hurting a person whom is an actual Christian.

 

If a person is truly a Christian we are supposed to try our very best to walk after the heart of God, not be an habitual liar, fraud, thief, law-breaker, and a hypocrite. There is no way that a person whom is a Christian (we must try our best to walk that walk of light everyday of our lives) would ever be considered by those whom know him well as the “biggest ass-hole” in the Congress. Mr. Cruz has proven himself to be little more than an apostasy, at best. At worst, he is one of the Anti-Christs trying to fill the seat of the current Demon that sits in the Oval-Office right now. We the people deserve a lot better human being in the White House than this fraud and habitual liar. Is it possible for Mr. Cruz, Mr. Obama, or Mrs. Clinton to ever speak the truth to the people? They seem to be three of the worse overall quality people who the U.S. Senate has had to offer up as Presidential candidates since, well, Bob Dole.  I don’t mind these folks running for public office because we are all suppose to have that right here in America. My issue with some of these evil characters is when they are claiming to be a Christian when it is very plain that they are capable of anything, no matter how dirty or illegal or unethical they perform their lives. People like Mr. Cruz will say or do anything it takes to win, and friends that is not walking after the heart of Jesus. I believe that Mr. Cruz is a person whom will just make our country even more gridlocked because he refuses any comprise on anything. I am  a conservative Christian person but I am also a realist, if our country, our people, are to prosper and if the Nation is to be strong we can not have a person in the Oval Office whom will never negotiate or compromise in the effort to get our Nation back on our feet again.  This will not with such an habitual liar as Mr. Cruz in the Captains Chair.

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