Friday, June 5, 2015

The NSA and the TSA

Secrecy and a free, democratic government don’t mix. Harry S. Truman

The week beginning June 1 was an exciting week for national security. The most exciting thing, of course, was that the Senate got back from its Memorial Day holiday and began working on a Sunday which is highly unusual. It did it because it knew it had less than 24 hours to complete work on an urgent piece of legislation. (It was so urgent that Members of the House finished their work before going on vacation. Senators decided to vacation first and legislate second.) The urgent matter pertained to preserving the right of government spies to collect Americans’ phone records in bulk.

Many Americans and members of Congress had no idea that the government was collecting phone records in bulk because that was a secret. It would still be a secret were it not for Edward J. Snowden. He let us know that unbeknownst to most of us inside and outside of government, the NSA had been collecting information about millions of Americans’ phone calls. A few members of Congress who served on committees dealing with national security knew of the practices but they believed their obligation to maintain confidentiality trumped any obligation they had to protect citizens from the NSA’s spying.

When Mr. Snowden disclosed the NSA’s activities, people in and out of Congress were furious. They were furious that it was going on and many of them were equally furious at Edward J. Snowden for alerting them to the practice. They said he was guilty of treason. That did not, however, keep them from demanding that the bulk collection of phone records be stopped.

The senators came back to work after their vacation with almost 18 hours left to protect the country from acts of terrorism. But then a strange thing happened. They couldn’t agree on how to deal with the bulk collection of phone records and at midnight on May 31, the NSA lost its authority to collect Americans’ phone records in bulk. It was blocked because of the actions of Senator Rand Paul who was concerned about the mass gathering of information about U.S. citizens by the NSA. As he said, when filibustering against proposed action by the Senate to permit the NSA to continue its bulk collection of phone records: “We already don’t catch terrorists with collecting all the data. So should we put television monitors in every house to try to prevent terrorist attacks? There is a zero sum game here that leads us down a slippery slope to where there would be no freedom left.”

Senator John McCain was a big supporter of the bulk collection of phone records by the NSA and was upset by Mr. Paul’s concern for the privacy rights of American citizens although that is not quite how he said it. He said Mr. Paul, (who hopes to become the next president) places “a higher priority on his fundraising and his ambitions than on the security of the nation.” Senator McCain said, without offering any evidence to support his statement, that letting the Act lapse “really does raise the risk to the public. It does eliminate one of the tools that the intelligence community has to identify homegrown terrorists.” Mr. McCain probably was unaware that on January 12, 2014 the Washington Post reported that an analysis of 225 terrorism cases inside the United States since 9/11 concluded that the bulk collection of phone records had “no discernible impact on preventing acts of terrorism.”

On June 2 the Senators put aside their differences and decided to follow the lead of the House and take the bulk collection of phone records away from the NSA and give it to the phone companies. (A side benefit of the act passed by the House is that the secret activities of the Foreign Intelligence Surveillance Court will become more transparent.) Those changes are applauded by those who like to see government’s intrusions into the private lives of its citizens curbed.

On the very same day that the Senate decided to act to protect civil liberties there was a report from the Inspector General that federal undercover agents had been testing the security of TSA checkpoints at the country’s airports. The report said that the agents made 70 attempts to get through airport security carrying fake bombs or fake weapons and successfully passed through security 67 times without being detected. One agent even had a fake bomb strapped to his back that was not detected in a pat down. One possible explanation for the ability of the agents to get through security is that the TSA inspectors are so sophisticated that they can distinguish between fake bombs and fake weapons. The other explanation is that they are not very good at what they do. That is the accepted explanation and within hours after the disclosure of the lapses, the acting head of TSA was removed from office and a replacement appointed.

It’s a pity that those managing TSA recognize the need to protect citizens travelling by air from terrorists whereas many members of Congress have a hard time recognizing the importance of protecting citizens from the erosion of their civil rights.

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Thursday, May 28, 2015

Three clicks and you're out

“Home! And this is my room—and you’re all here! And I’m not going to leave here ever, ever again, because I love you all! And—Oh, Auntie Em—there’s no place like home!”

Words spoken by Dorothy upon returning to Kansas from the Land of OZ.

— L.Frank Baum, The Wizard of Oz

Had she known she would not have clicked her heels three times. That was the number of clicks it took to transport her from the Land of Oz back home to Kansas. If she had known what Kansas would become, she would have stayed in the Land of Oz. While there, after all, she played a vital role in the Cowardly Lion getting courage, the Scarecrow brains and the Tin Woodman a heart. None of those qualities is possessed by most of the legislators in the Kansas state legislature. There is only one character from the Wizard of Oz who would be happy in Kansas today-the Wizard. As he acknowledged, when his true identity was discovered by Dorothy and her friends, “I am a humbug.” That does not, of course, mean that he couldn’t be as good a governor as Sam Brownback who is now serving. But this isn’t about Sam or the Wizard. It’s about the state legislature.

Kansas legislators have distinguished themselves by demonstrating through their actions that they lack brains, hearts and courage. On April 16, 2016 Governor Sam Brownback signed the Hope, Opportunity and Prosperity for Everyone Act, known as the HOPE Act. Although it applies to everyone in Kansas, a reading of the Act discloses that it affects only a few. The few it affects are families on welfare. One of the legislators (who sounded like the Tin Woodman might have sounded before he got a heart) explained the Act’s purpose. It is to make sure, said he, “that Kansans have a high quality of life. And you don’t have high quality of life if you don’t have a job.” The law doesn’t provide employment but it includes work and job training requirements for those on welfare. It also provides that lifetime benefits for those on welfare are limited to 36 months, a powerful incentive to get work since the alternative is no benefits and no means of support. The legislation helps welfare recipients by spelling out the kinds of things for which welfare benefits cannot be used. If those prohibitions were not enumerated, welfare recipients might squander the $300 a month that they receive on some of the proscribed items not realizing that buying those things are not in their best interest. The legislative summary enumerates the things for which welfare funds may not be used. The funds may not be used in a “liquor store, casino, gaming establishment. . .nail salon, lingerie shop. . . vapor cigarette store, psychic or fortune telling business, movie theater, swimming pool, cruise ship . . . .” Since the average welfare recipient in Kansas receives less than $300 per month, it is unlikely he or she will be able to book a cruise. However, as every conscientious legislator knows, one can’t be too careful and people on welfare may be ignorant as well as poor and might squander their benefits had the statute not included guidance. Helping people on welfare spend their money wisely was not the Kansas legislature’s only contribution to good governance.

On May 19, 2015, it was reported that the legislature had decided to make itself the arbiter of Kansas Supreme Court decisions. In 2014 the legislature passed a law that took away from the Missouri Supreme Court the right to control the budgets and leadership of local courts because the legislature wanted that control to be local. A Kansas judge sued to invalidate that law and the case is now pending. If successful, control of all state courts would be returned to the Kansas Supreme Court which would be in accordance with the Missouri Constitution The legislature is less concerned with whether its actions are constitutional, than with the fact that the Supreme Court might take it upon itself to find the legislature’s actions to be unconstitutional. Accordingly, as part of the budget it adopted in 2015 it included language that provides that if the 2014 law is “stayed or is held to be invalid or unconstitutional” certain provisions of the budget, including funding for the courts “are hereby declared to be null and void.” The legislators, who don’t get the separation of powers idea, intend with this language to encourage the courts to rule in favor of the 2014 legislation lest they lose all funding including for salaries of all employees, including judges.

Wherever Dorothy now is, she is probably trying desperately to click her heels three times. That is what it took to get her from Oz to Kansas. It might work in reverse. It would certainly be worth a try. If any of my readers is visiting Kansas and observes citizens jumping up and down trying to click their heels three times, offer them a word of encouragement. They need and deserve iit.

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Thursday, May 21, 2015

Banks and Punishments

And watten penance will ye drie for that, Edward, Edward?
A Scottish Ballad about a man who killed his father

Occasionally people inquire as to the different treatment of different kinds of persons in our legal system. As the U.S. Supreme Court has explained, corporations are persons just like my readers. The only difference between a corporate person and a human person is that when a human person breaks the law, the human person depending on the offense, may go to jail. When a corporate person breaks the law, the corporate person may be punished, but is never sent to jail.

The question that arises out of this disparate treatment is how do “three strike laws” work when a corporate person is a repeat offender. Three strike laws provide that if a human person has three offenses (misdemeanors or felonies, depending on how a state statute is drafted) the human person is sentenced to life in prison. The question is relevant these days because in the past years there have been many occasions on which large banks have been assessed fines in the millions, and frequently, billions of dollars for corporate misconduct. Almost all the large banks that have been fined are repeat offenders. There are two reasons they are never sentenced under “Three Strike Laws.” The first is big banks are corporate persons and corporate persons cannot be sent to jail. The second is, when big banks misbehave, their misconduct, no matter how egregious, is almost always dealt with as a civil matter. Events of May 20, 2015 were the exception. On that date the Department of Justice, the Federal Reserve and other enforcement agencies announced that 5 big banks had agreed to pay more than $5 billion in fines to settle criminal charges that they had worked together to manipulate international interest and foreign currency exchange rates. Among the banks that acknowledged criminal conduct and agreed to pay large fines was JPMorgan Chase. It agreed to pay $550 million for its criminal conduct. being charged with criminal conduct was an almost unheard of event for the bank although its conduct before then was anything but exemplary.

In November 2013 JPMorgan Chase paid $13 billion in fines and penalties for its non-criminal misdeeds. The Wall Street Journal described those fines as “the biggest combination of fines and damages extracted by the U.S. government in a civil settlement with any single company.” That fine was in addition to $7 billion the bank had paid in the preceding months as punishment for other misdeeds. Those combined fines were for a variety of acts of misconduct that, had they been criminally charged and engaged in by a human person, would very likely have earned them a life sentence under “Three Strike Laws.”

JPMorgan’s next demonstration of how it could skirt the law to its own advantage occurred as a result of its dealing with debtors who had taken bankruptcy. Those people thought they could not be dunned for debts that were discharged in bankruptcy. They were wrong. JPMorgan Chase (and Bank of America) figured out how to profit from those discharged debts even though they could not collect them from the former debtors. The banks bundled debts that had been discharged in bankruptcy and sold them to unscrupulous debt collectors who led the discharged debtors to believe they owed the money and were required to pay the debts that had been discharged. When this practice was first reported in late 2014 it was disclosed that the justice department was investigating the practice to see if the banks had violated the law. In one of the cases brought by individual plaintiffs against the banks, Judge Robert Drain, who was hearing the civil cases, stated that if the facts alleged by the debtors were proved at trial, he would consider referring the matter to the U.S. attorney for criminal prosecution of the banks. Sale of discharged debts we have now learned was not the only way unscrupulous banks made money from debts that had been discharged in bankruptcy.

In 2014 Bank of America paid $16.7 billion in a settlement with the Justice Department arising out of questionable mortgage practices. Pursuant to the terms of the settlement Bank of America agreed, among other things, to provide $7 billion in mortgage relief in the form of loan modifications or forgiveness to some of its customers who owed it money. In May 2015 it was disclosed that it attempted to fulfill part of its obligations by providing debt relief to debtors whose debts had been discharged in bankruptcy and, as a result, were no longer owed by the debtor. It got caught and will no longer use that ruse to fulfill its obligation.

The May 20, 2015 settlement is unusual in that the banks admitted criminal conduct, admissions that did not accompany payment of the earlier billions in fines paid by JPMorgan Chase and other banks. Alan Goelman, the trading commission’s head of enforcement, said of the May 20 settlement: “There is very little that is more damaging to the public’s faith in the integrity of our markets than a cabal of international banks working together to manipulate a widely used bench mark in furtherance of their own interests.” An observer might conclude that equally disturbing are the practices of the large banks in furtherance of their own interests that have resulted in payment of billions in fines but no criminal convictions of the corporate person or the human persons running the banks. Lesser criminal types should be so lucky.

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