TBR News May 7, 2015

May 08 2015

The Voice of the White House

        Washington, D.C. May 7, 2015: “Spring is upon us and the warming weather is bringing all kinds of creeps out from under damp logs. These are the usual gross types that long to sit in the Oval Office and are sharpening their claws for the forthcoming elections. Looking over the growing slate of candidates, I have to say I wouldn’t let a single one of them into my house. Nothing of value would be safe and they would leave nasty stains on the furniture. Unfortunately, America has drifted into corruption and incompetence to a degree that would shock even the throughly corrupt and useless Mexican government. Fortunately, rampant Jesus Freaks are not in the running this time but other odd ones are making more noise than a donkey into whose fundament some evil person has just shoved a very hot sweet potato. It doesn’t really matter who sits in the Presidential training potty because the country is run, as it has been for years, by a conglomerate of greedy and throughly vile bankers and heads of large corporations.”


Record number of Americans living abroad renounce citizenship

May 7, 2015


A record number of Americans gave up their US citizenship in the first quarter of 2015, according to IRS data. This is blamed on the taxation of income earned outside the US, along with laws expanding offshore bank account and asset reporting.

A total of 1,335 people renounced US citizenship during the first three months of the year, topping the previous record by 18 percent, according to data compiled by Bloomberg.

The new figure puts 2015 on track to exceed last year’s 3,415 renunciations, which is an all-time record.

The data released by the Internal Revenue Service (IRS) includes the names of those who renounced their citizenship, but not their reasons for doing so. However, it comes as the US government is becoming more aggressive when it comes to the assets of the estimated 6 million Americans who live abroad.

The United States is the only country within the Organization for Economic Cooperation and Development that taxes citizens wherever they reside.

American citizens who live abroad can exclude as much as $100,800 in earned income and can receive tax credits for payments to foreign governments. However, US tax liabilities can apply to children born to Americans abroad. In many cases, there are only partial offsets available for double taxation.

The paperwork involved for US citizens living abroad can be so complex that it requires professional help from accountants and lawyers – resulting in incredibly high fees for a relatively simple tax return.

Although these laws were rarely enforced in the past, scrutiny of US citizens abroad has intensified due to the Foreign Account Tax Compliance Act (FATCA), passed by Congress in 2010.

The law, which took effect in July, requires US citizens with foreign assets in excess of $50,000 to report those assets every year. It also requires foreign financial institutions to report the incomes of their US customers to the IRS.

FATCA also requires US financial institutions to impose a 30 percent withholding tax on payments made to foreign banks which don’t agree to identify and provide information on US account holders.

More than 140,000 banks and other firms have signed up to comply with FATCA. However, the law has prompted some banks to decline doing business with people who have ties to the US. If a bank mistakenly fails to report accounts held by US citizens, they can face steep penalties.

The Obama administration has praised the law as the “global standard” in battling tax evasion, though it has come under fierce criticism from many, particularly from Americans living abroad.

Washington’s tax policies for those living abroad have also put two high-profile personalities in the spotlight.

Eduardo Saverin, a Brazilian-born co-founder of Facebook, gave up his US citizenship in 2012. The billionaire moved to Singapore, where top earners are taxed only 20 percent on their earnings, and where capital gains taxes are not be imposed.

At the time, it was estimated that Saverin’s move would save him $67 million in US federal taxes. However, it was never officially confirmed that his citizenship renunciation was for tax purposes.

Meanwhile, London Mayor Boris Johnson – who was born in New York – said earlier this year that he would give up his US citizenship. The statement followed his settlement of a US tax bill which he described as “absolutely outrageous.” However, his name was not on the list released Friday.


Criminal Cases Mutual Legal Assistance in Criminal Matters Treaties: Mutual Legal Assistance in Criminal Matters Treaties (MLATs) are relatively recent development. They seek to improve the effectiveness of judicial assistance and to regularize and facilitate its procedures. Each country designates a central authority, generally the two Justice Departments, for direct communication. The treaties include the power to summon witnesses, to compel the production of documents and other real evidence, to issue search warrants, and to serve process. Generally, the remedies offered by the treaties are only available to the prosecutors. The defense must usually proceed with the methods of obtaining evidence in criminal matters under the laws of the host country which usually involve letters rogatory.

MLAT Treaties in Force:

The United States has nineteen Mutual Legal Assistance Treaties (MLAT) currently in force: Argentina, Bahamas, Canada, Hungary, Italy, Jamaica, Korea, Mexico, Morocco, Netherlands, Panama, Philippines, Spain, Switzerland, Thailand, Turkey, United Kingdom (Cayman Islands), United Kingdom, Uruguay.


The Computers are Listening

How the NSA Converts Spoken Words Into Searchable Text

May 5, 2015

by Dan Froomkin

The Intercept

          Most people realize that emails and other digital communications they once considered private can now become part of their permanent record.

But even as they increasingly use apps that understand what they say, most people don’t realize that the words they speak are not so private anymore, either.

Top-secret documents from the archive of former NSA contractor Edward Snowden show the National Security Agency can now automatically recognize the content within phone calls by creating rough transcripts and phonetic representations that can be easily searched and stored.

The documents show NSA analysts celebrating the development of what they called “Google for Voice” nearly a decade ago.

           Though perfect transcription of natural conversation apparently remains the Intelligence Community’s “holy grail,” the Snowden documents describe extensive use of keyword searching as well as computer programs designed to analyze and “extract” the content of voice conversations, and even use sophisticated algorithms to flag conversations of interest.

The documents include vivid examples of the use of speech recognition in war zones like Iraq and Afghanistan, as well as in Latin America. But they leave unclear exactly how widely the spy agency uses this ability, particularly in programs that pick up considerable amounts of conversations that include people who live in or are citizens of the United States.

Spying on international telephone calls has always been a staple of NSA surveillance, but the requirement that an actual person do the listening meant it was effectively limited to a tiny percentage of the total traffic. By leveraging advances in automated speech recognition, the NSA has entered the era of bulk listening.

And this has happened with no apparent public oversight, hearings or legislative action. Congress hasn’t shown signs of even knowing that it’s going on.

The USA Freedom Act — the surveillance reform bill that Congress is currently debating — doesn’t address the topic at all. The bill would end an NSA program that does not collect voice content: the government’s bulk collection of domestic calling data, showing who called who and for how long.

Even if becomes law, the bill would leave in place a multitude of mechanisms exposed by Snowden that scoop up vast amounts of innocent people’s text and voice communications in the U.S. and across the globe.

Civil liberty experts contacted by The Intercept said the NSA’s speech-to-text capabilities are a disturbing example of the privacy invasions that are becoming possible as our analog world transitions to a digital one.

“I think people don’t understand that the economics of surveillance have totally changed,” Jennifer Granick, civil liberties director at the Stanford Center for Internet and Society, told The Intercept.

“Once you have this capability, then the question is: How will it be deployed? Can you temporarily cache all American phone calls, transcribe all the phone calls, and do text searching of the content of the calls?” she said. “It may not be what they are doing right now, but they’ll be able to do it.”

And, she asked: “How would we ever know if they change the policy?”

Indeed, NSA officials have been secretive about their ability to convert speech to text, and how widely they use it, leaving open any number of possibilities.

That secrecy is the key, Granick said. “We don’t have any idea how many innocent people are being affected, or how many of those innocent people are also Americans.”

I Can Search Against It

NSA whistleblower Thomas Drake, who was trained as a voice processing crypto-linguist and worked at the agency until 2008, told The Intercept that he saw a huge push after the September 11, 2001 terror attacks to turn the massive amounts of voice communications being collected into something more useful.

Human listening was clearly not going to be the solution. “There weren’t enough ears,” he said.

The transcripts that emerged from the new systems weren’t perfect, he said. “But even if it’s not 100 percent, I can still get a lot more information. It’s far more accessible. I can search against it.”

Converting speech to text makes it easier for the NSA to see what it has collected and stored, according to Drake. “The breakthrough was being able to do it on a vast scale,” he said.

More Data, More Power, Better Performance

The Defense Department, through its Defense Advanced Research Projects Agency (DARPA), started funding academic and commercial research into speech recognition in the early 1970s.

What emerged were several systems to turn speech into text, all of which slowly but gradually improved as they were able to work with more data and at faster speeds.

In a brief interview, Dan Kaufman, director of DARPA’s Information Innovation Office, indicated that the government’s ability to automate transcription is still limited.

Kaufman says that automated transcription of phone conversation is “super hard,” because “there’s a lot of noise on the signal” and “it’s informal as hell.”

“I would tell you we are not very good at that,” he said.

In an ideal environment like a news broadcast, he said, “we’re getting pretty good at being able to do these types of translations.”

A 2008 document from the Snowden archive shows that  transcribing news broadcasts was already working well seven years ago, using a program called Enhanced Video Text and Audio Processing:

(U//FOUO) EViTAP is a fully-automated news monitoring tool. The key feature of this Intelink-SBU-hosted tool is that it analyzes news in six languages, including Arabic, Mandarin Chinese, Russian, Spanish, English, and Farsi/Persian. “How does it work?” you may ask. It integrates Automatic Speech Recognition (ASR) which provides transcripts of the spoken audio. Next, machine translation of the ASR transcript translates the native language transcript to English. Voila! Technology is amazing.

A version of the system the NSA uses is now even available commercially.

Experts in speech recognition say that in the last decade or so, the pace of technological improvement has been explosive. As information storage became cheaper and more efficient, technology companies were able to store massive amounts of voice data on their servers, allowing them to continually update and improve the models. Enormous processors, tuned as “deep neural networks” that detect patterns like human brains do, produce much cleaner transcripts.

And the Snowden documents show that the same kinds of leaps forward seen in commercial speech-to-text products have also been happening in secret at the NSA, fueled by the agency’s singular access to astronomical processing power and its own vast data archives.

In fact, the NSA has been repeatedly releasing new and improved speech recognition systems for more than a decade.

The first-generation tool, which made keyword-searching of vast amounts of voice content possible, was rolled out in 2004 and code-named RHINEHART.

“Voice word search technology allows analysts to find and prioritize intercept based on its intelligence content,” says an internal 2006 NSA memo entitled “For Media Mining, the Future Is Now!”

The memo says that intelligence analysts involved in counterterrorism were able to identify terms related to bomb-making materials, like “detonator” and “hydrogen peroxide,” as well as place names like “Baghdad” or people like “Musharaf.”

RHINEHART was “designed to support both real-time searches, in which incoming data is automatically searched by a designated set of dictionaries, and retrospective searches, in which analysts can repeatedly search over months of past traffic,” the memo explains (emphasis in original).

As of 2006, RHINEHART was operating “across a wide variety of missions and languages” and was “used throughout the NSA/CSS [Central Security Service] Enterprise.”

But even then, a newer, more sophisticated product was already being rolled out by the NSA’s Human Language Technology (HLT) program office. The new system, called VoiceRT, was first introduced in Baghdad, and “designed to index and tag 1 million cuts per day.”

The goal, according to another 2006 memo, was to use voice processing technology to be able “index, tag and graph,” all intercepted communications. “Using HLT services, a single analyst will be able to sort through millions of cuts per day and focus on only the small percentage that is relevant,” the memo states.

A 2009 memo from the NSA’s British partner, GCHQ, describes how “NSA have had the BBN speech-to-text system Byblos running at Fort Meade for at least 10 years. (Initially they also had Dragon.) During this period they have invested heavily in producing their own corpora of transcribed Sigint in both American English and an increasing range of other languages.” (GCHQ also noted that it had its own small corpora of transcribed voice communications, most of which happened to be “Northern Irish accented speech.”)

VoiceRT, in turn, was surpassed a few years after its launch. According to the intelligence community’s “Black Budget” for fiscal year 2013, VoiceRT was decommissioned and replaced in 2011 and 2012, so that by 2013, NSA could operationalize a new system. This system, apparently called SPIRITFIRE, could handle more data, faster. SPIRITFIRE would be “a more robust voice processing capability based on speech-to-text keyword search and paired dialogue transcription.”

Extensive Use Abroad

Voice communications can be collected by the NSA whether they are being sent by regular phone lines, over cellular networks, or through voice-over-internet services. Previously released documents from the Snowden archive describe enormous efforts by the NSA during the last decade to get access to voice-over-internet content like Skype calls, for instance. And other documents in the archive chronicle the agency’s adjustment to the fact that an increasingly large percentage of conversations, even those that start as landline or mobile calls, end up as digitized packets flying through the same fiber-optic cables that the NSA taps so effectively for other data and voice communications.

The Snowden archive, as searched and analyzed by The Intercept, documents extensive use of speech-to-text by the NSA to search through international voice intercepts — particularly in Iraq and Afghanistan, as well as Mexico and Latin America.

For example, speech-to-text was a key but previously unheralded element of the sophisticated analytical program known as the Real Time Regional Gateway (RTRG), which started in 2005 when newly appointed NSA chief Keith B. Alexander, according to the Washington Post, “wanted everything: Every Iraqi text message, phone call and e-mail that could be vacuumed up by the agency’s powerful computers.”

The Real Time Regional Gateway was credited with playing a role in “breaking up Iraqi insurgent networks and significantly reducing the monthly death toll from improvised explosive devices.” The indexing and searching of “voice cuts” was deployed to Iraq in 2006. By 2008, RTRG was operational in Afghanistan as well.

Keyword spotting extended to Iranian intercepts as well. A 2006 memo reported that RHINEHART had been used successfully by Persian-speaking analysts who “searched for the words ‘negotiations’ or ‘America’ in their traffic, and RHINEHART located a very important call that was transcribed verbatim providing information on an important Iranian target’s discussion of the formation of a the new Iraqi government.”

According to a 2011 memo, “How is Human Language Technology (HLT) Progressing?“, NSA that year deployed “HLT Labs” to Afghanistan, NSA facilities in Texas and Georgia, and listening posts in Latin America run by the Special Collection Service, a joint NSA/CIA unit that operates out of embassies and other locations.

“Spanish is the most mature of our speech-to-text analytics,” the memo says, noting that the NSA and its Special Collections Service sites in Latin America, have had “great success searching for Spanish keywords.”

The memo offers an example from NSA Texas, where an analyst newly trained on the system used a keyword search to find previously unreported information on a target involved in drug-trafficking. In another case, an official at a Special Collection Service site in Latin America “was able to find foreign intelligence regarding a Cuban official in a fraction of the usual time.”

In a 2011 article, “Finding Nuggets — Quickly — in a Heap of Voice Collection, From Mexico to Afghanistan,” an intelligence analysis technical director from NSA Texas described the “rare life-changing instance” when he learned about human language technology, and its ability to “find the exact traffic of interest within a mass of collection.”

Analysts in Texas found the new technology a boon for spying. “From finding tunnels in Tijuana, identifying bomb threats in the streets of Mexico City, or shedding light on the shooting of US Customs officials in Potosi, Mexico, the technology did what it advertised: It accelerated the process of finding relevant intelligence when time was of the essence,” he wrote. (Emphasis in original.)

The author of the memo was also part of a team that introduced the technology to military leaders in Afghanistan. “From Kandahar to Kabul, we have traveled the country explaining NSA leaders’ vision and introducing SIGINT teams to what HLT analytics can do today and to what is still needed to make this technology a game-changing success,” the memo reads.

Extent of Domestic Use Remains Unknown

What’s less clear from the archive is how extensively this capability is used to transcribe or otherwise index and search voice conversations that primarily involve what the NSA terms “U.S. persons.”

The NSA did not answer a series of detailed questions about automated speech recognition, even though an NSA “classification guide” that is part of the Snowden archive explicitly states that “The fact that NSA/CSS has created HLT models” for speech-to-text processing as well as gender, language and voice recognition, is “UNCLASSIFIED.”

Also unclassified: The fact that the processing can sort and prioritize audio files for human linguists, and that the statistical models are regularly being improved and updated based on actual intercepts. By contrast, because they’ve been tuned using actual intercepts, the specific parameters of the systems are highly classified.

“The National Security Agency employs a variety of technologies in the course of its authorized foreign-intelligence mission,” spokesperson Vanee’ Vines wrote in an email to The Intercept. “These capabilities, operated by NSA’s dedicated professionals and overseen by multiple internal and external authorities, help to deter threats from international terrorists, human traffickers, cyber criminals, and others who seek to harm our citizens and allies.”

Vines did not respond to the specific questions about privacy protections in place related to the processing of domestic or domestic-to-international voice communications. But she wrote that “NSA always applies rigorous protections designed to safeguard the privacy not only of U.S. persons, but also of foreigners abroad, as directed by the President in January 2014.”

The presidentially appointed but independent Privacy and Civil Liberties Oversight Board (PCLOB) didn’t mention speech-to-text technology in its public reports.

“I’m not going to get into whether any program does or does not have that capability,” PCLOB chairman David Medine told The Intercept.

His board’s reports, he said, contained only information that the intelligence community agreed could be declassified.

“We went to the intelligence community and asked them to declassify a significant amount of material,” he said. The “vast majority” of that material was declassified, he said. But not all — including “facts that we thought could be declassified without compromising national security.”

Hypothetically, Medine said, the ability to turn voice into text would raise significant privacy concerns. And it would also raise questions about how the intelligence agencies “minimize” the retention and dissemination of material— particularly involving U.S. persons — that doesn’t include information they’re explicitly allowed to keep.

“Obviously it increases the ability of the government to process information from more calls,” Medine said. “It would also allow the government to listen in on more calls, which would raise more of the kind of privacy issues that the board has raised in the past.”

“I’m not saying the government does or doesn’t do it,” he said, “just that these would be the consequences.”

A New Learning Curve

Speech recognition expert Bhiksha Raj likens the current era to the early days of the Internet, when people didn’t fully realize how the things they typed would last forever.

“When I started using the Internet in the 90s, I was just posting stuff,” said Raj, an associate professor at Carnegie Mellon University’s Language Technologies Institute. “It never struck me that 20 years later I could go Google myself and pull all this up. Imagine if I posted something on alt.binaries.pictures.erotica or something like that, and now that post is going to embarrass me forever.”

The same is increasingly becoming the case with voice communication, he said. And the stakes are even higher, given that the majority of the world’s communication has historically been conducted by voice, and it has traditionally been considered a private mode of communication.

“People still aren’t realizing quite the magnitude that the problem could get to,” Raj said. “And it’s not just surveillance,” he said. “People are using voice services all the time. And where does the voice go? It’s sitting somewhere. It’s going somewhere. You’re living on trust.” He added: “Right now I don’t think you can trust anybody.”

The Need for New Rules

Kim Taipale, executive director of the Stilwell Center for Advanced Studies in Science and Technology Policy, is one of several people who tried a decade ago to get policymakers to recognize that existing surveillance law doesn’t adequately deal with new global communication networks and advanced technologies including  speech recognition.

“Things aren’t ephemeral anymore,” Taipale told The Intercept. “We’re living in a world where many things that were fleeting in the analog world are now on the permanent record. The question then becomes: what are the consequences of that and what are the rules going to be to deal with those consequences?”

Realistically, Taipale said, “the ability of the government to search voice communication in bulk is one of the things we may have to live with under some circumstances going forward.” But there at least need to be “clear public rules and effective oversight to make sure that the information is only used for appropriate law-enforcement or national security purposes consistent with Constitutional principles.”

Ultimately, Taipale said, a system where computers flag suspicious voice communications could be less invasive than one where people do the listening, given the potential for human abuse and misuse to lead to privacy violations. “Automated analysis has different privacy implications,” he said.

But to Jay Stanley, a senior policy analyst with the ACLU’s Speech, Privacy and Technology Project, the distinction between a human listening and a computer listening is irrelevant in terms of privacy, possible consequences, and a chilling effect on speech.

“What people care about in the end, and what creates chilling effects in the end, are consequences,” he said. “I think that over time, people would learn to fear computerized eavesdropping just as much as they fear eavesdropping by humans, because of the consequences that it could bring.”

Indeed, computer listening could raise new concerns. One of the internal NSA memos from 2006 says an “important enhancement under development is the ability for this HLT capability to predict what intercepted data might be of interest to analysts based on the analysts’ past behavior.”

Citing Amazon’s ability to not just track but predict buyer preferences, the memo says that an NSA system designed to flag interesting intercepts “offers the promise of presenting analysts with highly enriched sorting of their traffic.”

To Phillip Rogaway, a professor of computer science at the University of California, Davis, keyword-search is probably the “least of our problems.” In an email to The Intercept, Rogaway warned that “When the NSA identifies someone as ‘interesting’ based on contemporary NLP [Natural Language Processing] methods, it might be that there is no human-understandable explanation as to why beyond: ‘his corpus of discourse resembles those of others whom we thought interesting’; or the conceptual opposite: ‘his discourse looks or sounds different from most people’s.’”

If the algorithms NSA computers use to identify threats are too complex for humans to understand, Rogaway wrote, “it will be impossible to understand the contours of the surveillance apparatus by which one is judged.  All that people will be able to do is to try your best to behave just like everyone else.”


Massive ‘Islamophobia industry’ flourishes in US

May 5, 2015


          There is a burgeoning industry provoking non-Muslims in Europe and in the US to attack Muslims and other ethnic minorities which is disproportional and only breeds further hatred, Mohammed Ansar, political and social commentator, told RT.

RT: There’s been a whole string of incidents in Europe similar to the attack in Texas, in which two gunmen were killed Sunday outside a controversial art event depicting the Prophet Muhammad cartoons and dedicated to free speech. Has a new threat now arrived in America?

Mohammed Ansar: Clearly what we have seen is that the attacks have been going on in Europe is the opening of a long-held debate around freedom of expression, against freedom to offend. Now we’ve seen this being picked up by what they call the counter-jihadists movement here in America. And there is an estimated $200 million Islamophobia industry now in the US. And so we’ve seen – shortly after the attacks on Charlie Hebdo – there was a stand by the Prophet Mohammed conference at this exact same conference center in Garland, Texas, and now we’ve seen hate preachers who have been banned from coming to Europe like Geert Wilders, Pamela Geller and Robert Spencer, now have something which will ostensibly incite hate and violence. Now we’ve seen a reaction and I think it’s to be deplored on all sides – the right to offend, the right to incite violence and hatred, but also the violence and hatred that ensues. At this time our thoughts and concerns have to be with the families of those people who were slain.

          RT: How do you put an end to such attacks? What is fuelling them in the first place?

MA: The answer to hate is not more hate. The answer to hate has to be to increase love, peace, tolerance and coexistence in society. In the US they have a far more difficult situation. In the UK and in Europe we have Article 10 of the European Convention on Human Rights which talks about the freedom of expression. Much is then held in Article 10, part 2, which talks about limitations on freedom of speech. So we have nation states in Europe who are quite used to putting certain limitations around hate speech, around attacking minority groups and spreading hate and fear and incitement of violence even in the national interest in certain instances. In the US, in their Conventions, they do have a constitutional right to freedom of expression. However we’ve seen three Democratic Congressmen, I think we saw Keith Ellison, Andre Carson, and Joe Crowley who came forward and asked the Homeland Security and also the Secretary of State, John Kerry, to put limitations on this. They said that there is bedrock of freedom of speech in the US; however what we don’t want to have is incitement of violence and hate speech.

RT: Incidents like this do breed hate for Islam, while there are millions of Muslims who are non-violent law abiding citizens all across Europe and in the US. How can governments address those tensions?

MA: Hate preachers like Geert Wilders, Pamela Geller and Robert Spencer will want to give the idea that there are millions of Muslims who have radical and extremist ideas. Muslims have been living, co-existing and integrating in communities. They are in fact the bedrock of the European civilization whether it’s science or learning or education. So I think the first thing we have to do is to stop the provocation and stop the hate speech. There is no kind of apology for the retaliation through violence. So people have the right of freedom of expression. People also have the right not to be limited by taboos of other people in the society. However there is a burgeoning industry now in provoking non-Muslims in Europe and in the US to attack Muslims. And this is disproportional. We saw the argument with Charlie Hebdo before: they are not equal opportunities offenders; they are targeting disproportionally ethnic minorities and Muslims. So I think we have to restate what the ground rules are. You have the right to freedom of expression, freedom of speech. You don’t have the right to incite hate; you don’t have the right to incite violence. And it is certainly far more offensive to respond in violence than it is to have the freedom of expression which some people may find troublesome.

The US is not some sort of an island that ISIS could not reach

The Islamic State has claimed responsibility for an attack at an exhibition in Texas featuring cartoons of the Prophet Mohammed. The announcement was made on the group’s radio station. According to Marwa Osman, political Commentator in Beirut, this could very well be the case.

RT: Do you believe this claim made by Islamic State?

MO: Anything is anticipated from the Islamic State. How hard can it be for the supporters of ISIS who actually abide by the Wahhabi religion not to perform anything that is considered dangerous in any nation? These people have come from all over the world to Syria, to Libya, to the Middle East to fight for some reason- no one knows why. It is obvious when they return back to their homeland it is going to be dangerous and it is going to be risky. Whether it is a provocative event or not, it is going to be risky having them back in their homeland…

RT: With this announcement does this mean that Islamic State is now functioning in the US?

MO: It has been functioning in the US before it even came to the Middle East, before it came to us and brought its terror to us… The US is not some sort of an island that ISIS could not reach. It can simply reach the youth of America via Twitter, Facebook, via social media in general. So it was anticipated, but the event as well was by itself provocative for such groups. They went out and performed their terror. Here we’re talking about two different events that came into one event. The FBI already knew about one of the suspects – his surname is Simpson for the irony. They knew that he was an actual suspect and they did nothing, he was free. Talking about the event, you have people for months planning an anti-Islamic event to bring out certain cartoons against Prophet Mohammed…

RT: What about a US political agenda? Does this work for Washington that ISIS is allegedly in America?

MO: Of course, it is going to work as much as it is working in France after what happened at Charlie Hebdo. It is going to have the same effect on the entire American public, not only on the Islamic public. Though, it’s going to be more of a direct insult, let’s say on the Islamic public in America. Let’s be very frank here: whether we support it or not we’re [Islamic people] going to be targets.

RT: The US military launching Jade Helm 15 over the summer including a series of training, military drills across the south-west with over a thousand special-ops troops. ISIS is also operating in the south-west. Is it time for conspiracy theories to put on their tinfoil hats?

MO: It is not a conspiracy theory. It is planning, it is tactics, it is a full-time strategy that the US is working on which explains what is going on in the Middle East. In some countries they are fighting ISIS, and in the others – they are sending arms for them to fight people or groups who the US thinks that they have certain interest in eliminating from the entire region of the Middle East. It is more obvious in the Middle East than it is in the West. But now when it hits the West’s homeland, people there are going to start thinking about it. Unfortunately the propaganda, the media there is going to play a very good game to convince the public that now ISIS is a big threat and we have to go and fight. And the people will not know whether the US will go and fight or where this fighting will happen.


Ukraine named worst performing economy in 2015- The Economist

May 8, 2015


Ukraine has the fastest falling economy of 2015 according to the British periodical The Economist. The country has seen its GDP shrink by 6.5 percent since last April, with countries like Libya and Macau performing better.

The Ukrainian economy showed the most significant deepening recession compared to the rest of the world, according to the data, published on Wednesday by the head of the analytical department of the Economist Robert Ward. The research compared the one-year GDP growth of countries since April 2014. Libya’s economy dropped by 6.4 percent while Macau which turned out to be the third worst performing economy, experienced a 6 percent GDP decline. Equatorial Guinea came out fourth with a 5.5 percent GDP decline and fifth place went to Russia as its GDP fell by 4 percent.

Greece took fifteenth place, the country’s GDP showed a very slight decrease, according to the Economist.

On Monday, the head of Ukraine’s National Bank Valeria Gontareva said that the country’s economic recession had hit bottom and predicted gradual recovery starting from the second quarter of 2015. Later on Wednesday, the World Bank lowered Ukraine’s economic outlook, projecting the country’s GDP will fall 7.5 percent in 2015.

The Economist also published a ranking of the fastest growing economies in the world up to April, which puts Papua New Guinea on top. Five African countries are among the world’s fastest growing economies. BRICS countries are represented by India at number six and China ranked as the twelfth fastest growing economy.




World Al Qaeda says U.S. strike kills man who claimed Paris killings

May 7, 2015


WASHINGTON- Al Qaeda in the Arabian Peninsula said on Thursday a U.S. air strike had killed the senior figure who issued the group’s claim of responsibility for the Charlie Hebdo attack in Paris, according to a report.

The SITE Intelligence Group quoted al Qaeda as saying in an online video that AQAP ideologue Nasser bin Ali al-Ansi was killed with his eldest son and other fighters in Yemen.

Ansi’s reported death suggests the covert U.S. drone programme against the Yemen branch of the global militant group is continuing, despite the evacuation of American military advisers from the country amid a worsening civil war.

Ansi, an ideologue and former fighter, had appeared in several of the group’s videos. In a message on Jan. 14, he said of the Jan. 7 attack in Paris that the “one who chose the target, laid the plan and financed the operation is the leadership of the organization”, without naming an individual.

A week later he called for lone-wolf attacks in Western countries like America, Britain, Canada and France, as such operations were “better and more harmful”.

In the Paris attack, 17 people, including journalists and police, were killed in three days of violence, including a mass shooting at the weekly Charlie Hebdo, known for its satirical attacks on Islam and other religions.

The attackers, two French-born brothers of Algerian origin, singled out the magazine for its publication of cartoons depicting and ridiculing the Prophet Mohammad. The bloodshed ended on Jan. 9 with a hostage-taking at a Jewish shop in which four hostages and the gunman were killed.

Ansi had also called for Yemeni Sunnis to confront the Houthi militia which has taken over large parts of Yemen since September. Al Qaeda views Houthis as heretics since they belong to a branch of Shi’ite Islam.

SITE cited media as saying Ansi was killed in a drone strike in Mukalla, a city in Yemen’s Hadramawt governorate, in April, along with his son and six other fighters.

Ansi had fought in Bosnia in the 1990s and worked for al Qaeda in the Philippines and Afghanistan.

On April 14 AQAP announced that one of its leaders, Ibrahim al-Rubaish, had been killed by a U.S. air strike. Rubaish was a Saudi national released from the Guantanamo Bay prison camp in 2006.

The United States has poured aid and personnel into Yemen in recent years as part of its war on Islamist militants.

But it withdrew military personnel and pulled out of the al-Anad military base it was using in Yemen last month, as Iran-allied Shi’ite Muslim Houthi fighters advanced, plunging the impoverished country further into chaos.

           (Reporting by Doina Chiacu and William Maclean in Dubai; Editing by Emily Stephenson and Andrew Roche)



Of Snowden and the NSA, only one has acted unlawfully – and it’s not Snowden

With the NSA’s bulk surveillance ruled illegal, the debate on the Patriot Act should be reinvigorated – with Edward Snowden free to join in

May 7, 2015

by James Ball

The Guardian

          On 6 June 2013, the Guardian published a secret US court order against the phone company Verizon, ordering it on an “ongoing, daily basis” to hand over the call records of its millions of US customers to the NSA – just one of numerous orders enabling the government’s highly secret domestic mass surveillance program. Just days later the world learned the identity of the whistleblower who made the order public: Edward Snowden.

Now, almost two years later, a US court has vindicated Snowden’s decision, ruling that the bulk surveillance program went beyond what the law underpinning it allowed: the US government used section 215 of the Patriot Act to justify the program. A US court of appeals has ruled the law does not allow for a program so broad. In short, one of the NSA’s most famous and controversial surveillance programs has no legal basis.

Of Snowden and the NSA, only one has so far been found to have acted unlawfully – and it’s not Snowden. That surely must change the nature of the debate on civil liberties being had in America, and it should do so in a number of ways.

The first is the surprisingly thorny question of what to do with Snowden himself. The whistleblower is in his second year of exile, living in asylum in Russia, as he would surely face criminal prosecution should he return. The nature of the punishment – and pre-trial mistreatment – meted out to Chelsea Manning shows his fears are well founded.

But now the courts have ruled that Snowden’s flagship revelation, the very first and foremost of the programs he disclosed, has no legal basis, who now might challenge his status as a whistleblower?

Certainly not Judge Sack, who in his concurring opinion alongside today’s rulings acknowledged Snowden’s revelations led to this litigation, and likened his disclosures to Daniel Ellsberg’s famous “Pentagon Papers” leak.

If the US government seeks to jail someone who has shown its own security services acting unlawfully, its international reputation will deservedly take a beating. If the US wants moral authority to talk to other governments about whistleblowers and civil liberty, it needs to be brave: it needs to offer Snowden amnesty.

The other actions for the US executive and for Congress are broader. The court of appeals judges very deliberately chose not to consider the constitutionality of NSA bulk surveillance programs, as such questions are currently before Congress with the ongoing debate on how to reform the Patriot Act.

Congress should allow this ruling to reinvigorate that debate, and in a sense the ruling forces it to do so. If Congress want a law that allows phone surveillance on the scale of the NSA’s existing programs, it will have to explicitly create that: gone is the option of trying to push through something near the status quo with a fringe of reform.

For domestic bulk surveillance to continue and be legal, Congress must explicitly vote for it – and then, in time, the judicial branch will consider the constitutional case in earnest.

If Congress sincerely wishes to curb it, it now has substantial backing from the judicial branch to push forward and do that. Reformers finally have the jolt in the arm they needed to prevent the positive impact of Snowden’s revelations dribbling away.

The president could also use this ruling as an opportunity to consider his stance. The line endlessly aired by the administration and its officials is that all surveillance is legal. That line is no longer valid. Rather than just seeking a new script – or as is almost certain, merely appealing against the decision – this could be a great opportunity for some introspection. These surveillance programs are wildly expensive and have very few proven results. Why not look at which ones the US really needs, and whether old-fashioned targeted surveillance might not keep us all as safe (or safer), and freer too?

The final debate is one that is unlikely to happen, but should: the US needs to start considering the privacy and freedom of foreigners as well as its own citizens. The US public is rightly concerned about its government spying on them. But citizens of countries around the world, many of them US allies, are also rightly concerned about the US government spying on them.

Considering Americans and foreigners alike in these conversations would be a great moral stance – but pragmatically, it should also help Americans. If the US doesn’t care about the privacy of other countries, it shouldn’t expect foreign governments to care about US citizens. There’s something in this for everyone.

These are the debates we could be having, and should be having. The judiciary has spoken. The legislature is deliberating. The public is debating. And all of it is enabled thanks to information provided by Edward Snowden.

He should be free to join the conversation, in person.



The Clintons and Their Banker Friends

The Wall Street Connection (1992 to 2016)

by Nomi Prins


          [This piece has been adapted and updated by Nomi Prins from chapters 18 and 19 of her book All the Presidents’ Bankers: The Hidden Alliances that Drive American Power, just out in paperback (Nation Books).]

The past, especially the political past, doesn’t just provide clues to the present. In the realm of the presidency and Wall Street, it provides an ongoing pathway for political-financial relationships and policies that remain a threat to the American economy going forward.

When Hillary Clinton video-announced her bid for the Oval Office, she claimed she wanted to be a “champion” for the American people. Since then, she has attempted to recast herself as a populist and distance herself from some of the policies of her husband. But Bill Clinton did not become president without sharing the friendships, associations, and ideologies of the elite banking sect, nor will Hillary Clinton.  Such relationships run too deep and are too longstanding.

To grasp the dangers that the Big Six banks (JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley) presently pose to the financial stability of our nation and the world, you need to understand their history in Washington, starting with the Clinton years of the 1990s. Alliances established then (not exclusively with Democrats, since bankers are bipartisan by nature) enabled these firms to become as politically powerful as they are today and to exert that power over an unprecedented amount of capital. Rest assured of one thing: their past and present CEOs will prove as critical in backing a Hillary Clinton presidency as they were in enabling her husband’s years in office.

In return, today’s titans of finance and their hordes of lobbyists, more than half of whom held prior positions in the government, exact certain requirements from Washington. They need to know that a safety net or bailout will always be available in times of emergency and that the regulatory road will be open to whatever practices they deem most profitable.

Whatever her populist pitch may be in the 2016 campaign — and she will have one — note that, in all these years, Hillary Clinton has not publicly condemned Wall Street or any individual Wall Street leader.  Though she may, in the heat of that campaign, raise the bad-apples or bad-situation explanation for Wall Street’s role in the financial crisis of 2007-2008, rest assured that she will not point fingers at her friends. She will not chastise the people that pay her hundreds of thousands of dollars a pop to speak or the ones that have long shared the social circles in which she and her husband move. She is an undeniable component of the Clinton political-financial legacy that came to national fruition more than 23 years ago, which is why looking back at the history of the first Clinton presidency is likely to tell you so much about the shape and character of the possible second one.


The 1992 Election and the Rise of Bill Clinton


Challenging President George H.W. Bush, who was seeking a second term, Arkansas Governor Bill Clinton announced he would seek the 1992 Democratic nomination for the presidency on October 2, 1991. The upcoming presidential election would not, however, turn out to alter the path of mergers or White House support for deregulation that was already in play one iota.

First, though, Clinton needed money. A consummate fundraiser in his home state, he cleverly amassed backing and established early alliances with Wall Street. One of his key supporters would later change American banking forever. As Clinton put it, he received “invaluable early support” from Ken Brody, a Goldman Sachs executive seeking to delve into Democratic politics. Brody took Clinton “to a dinner with high-powered New York businesspeople, including Bob Rubin, whose tightly reasoned arguments for a new economic policy,” Clinton later wrote, “made a lasting impression on me.”

The battle for the White House kicked into high gear the following fall. William Schreyer, chairman and CEO of Merrill Lynch, showed his support for Bush by giving the maximum personal contribution to his campaign committee permitted by law: $1,000. But he wanted to do more. So when one of Bush’s fundraisers solicited him to contribute to the Republican National Committee’s nonfederal, or “soft money,” account, Schreyer made a $100,000 donation.

The bankers’ alliances remained divided among the candidates at first, as they considered which man would be best for their own power trajectories, but their donations were plentiful: mortgage and broker company contributions were $1.2 million; 46% to the GOP and 54% to the Democrats. Commercial banks poured in $14.8 million to the 1992 campaigns at a near 50-50 split.

Clinton, like every good Democrat, campaigned publicly against the bankers: “It’s time to end the greed that consumed Wall Street and ruined our S&Ls [Savings and Loans] in the last decade,” he said. But equally, he had no qualms about taking money from the financial sector. In the early months of his campaign, BusinessWeek estimated that he received $2 million of his initial $8.5 million in contributions from New York, under the care of Ken Brody.

“If I had a Ken Brody working for me in every state, I’d be like the Maytag man with nothing to do,” said Rahm Emanuel, who ran Clinton’s nationwide fundraising committee and later became Barack Obama’s chief of staff. Wealthy donors and prospective fundraisers were invited to a select series of intimate meetings with Clinton at the plush Manhattan office of the prestigious private equity firm Blackstone.


Robert Rubin Comes to Washington


Clinton knew that embracing the bankers would help him get things done in Washington, and what he wanted to get done dovetailed nicely with their desires anyway. To facilitate his policies and maintain ties to Wall Street, he selected a man who had been instrumental to his campaign, Robert Rubin, as his economic adviser.

In 1980, Rubin had landed on Goldman Sachs’ management committee alongside fellow Democrat Jon Corzine. A decade later, Rubin and Stephen Friedman were appointed cochairmen of Goldman Sachs. Rubin’s political aspirations met an appropriate opportunity when Clinton captured the White House.

On January 25, 1993, Clinton appointed him as assistant to the president for economic policy. Shortly thereafter, the president created a unique role for his comrade, head of the newly created National Economic Council. “I asked Bob Rubin to take on a new job,” Clinton later wrote, “coordinating economic policy in the White House as Chairman of the National Economic Council, which would operate in much the same way the National Security Council did, bringing all the relevant agencies together to formulate and implement policy… [I]f he could balance all of [Goldman Sachs’] egos and interests, he had a good chance to succeed with the job.” (Ten years later, President George W. Bush gave the same position to Rubin’s old partner, Friedman.)

Back at Goldman, Jon Corzine, co-head of fixed income, and Henry Paulson, co-head of investment banking, were ascending through the ranks. They became co-CEOs when Friedman retired at the end of 1994.

Those two men were the perfect bipartisan duo. Corzine was a staunch Democrat serving on the International Capital Markets Advisory Committee of the Federal Reserve Bank of New York (from 1989 to 1999). He would co-chair a presidential commission for Clinton on capital budgeting between 1997 and 1999, while serving in a key role on the Borrowing Advisory Committee of the Treasury Department. Paulson was a well connected Republican and Harvard graduate who had served on the White House Domestic Council as staff assistant to the president in the Nixon administration.


Bankers Forge Ahead


By May 1995, Rubin was impatiently warning Congress that the Glass-Steagall Act could “conceivably impede safety and soundness by limiting revenue diversification.” Banking deregulation was then inching through Congress. As they had during the previous Bush administration, both the House and Senate Banking Committees had approved separate versions of legislation to repeal Glass-Steagall, the 1933 Act passed by the administration of Franklin Delano Roosevelt that had separated deposit-taking and lending or “commercial” bank activities from speculative or “investment bank” activities, such as securities creation and trading. Conference negotiations had fallen apart, though, and the effort was stalled.

By 1996, however, other industries, representing core clients of the banking sector, were already being deregulated. On February 8, 1996, Clinton signed the Telecom Act, which killed many independent and smaller broadcasting companies by opening a national market for “cross-ownership.” The result was mass mergers in that sector advised by banks.

Deregulation of companies that could transport energy across state lines came next. Before such deregulation, state commissions had regulated companies that owned power plants and transmission lines, which worked together to distribute power. Afterward, these could be divided and effectively traded without uniform regulation or responsibility to regional customers. This would lead to blackouts in California and a slew of energy derivatives, as well as trades at firms such as Enron that used the energy business as a front for fraudulent deals.

The number of mergers and stock and debt issuances ballooned on the back of all the deregulation that eliminated barriers that had kept companies separated. As industries consolidated, they also ramped up their complex transactions and special purpose vehicles (off-balance-sheet, offshore constructions tailored by the banking community to hide the true nature of their debts and shield their profits from taxes). Bankers kicked into overdrive to generate fees and create related deals. Many of these blew up in the early 2000s in a spate of scandals and bankruptcies, causing an earlier millennium recession.

Meanwhile, though, bankers plowed ahead with their advisory services, speculative enterprises, and deregulation pursuits. President Clinton and his team would soon provide them an epic gift, all in the name of U.S. global power and competitiveness. Robert Rubin would steer the White House ship to that goal.

On February 12, 1999, Rubin found a fresh angle to argue on behalf of banking deregulation. He addressed the House Committee on Banking and Financial Services, claiming that, “the problem U.S. financial services firms face abroad is more one of access than lack of competitiveness.”

He was referring to the European banks’ increasing control of distribution channels into the European institutional and retail client base. Unlike U.S. commercial banks, European banks had no restrictions keeping them from buying and teaming up with U.S. or other securities firms and investment banks to create or distribute their products. He did not appear concerned about the destruction caused by sizeable financial bets throughout Europe. The international competitiveness argument allowed him to focus the committee on what needed to be done domestically in the banking sector to remain competitive.

Rubin stressed the necessity of HR 665, the Financial Services Modernization Act of 1999, or the Gramm-Leach-Bliley Act, that was officially introduced on February 10, 1999. He said it took “fundamental actions to modernize our financial system by repealing the Glass-Steagall Act prohibitions on banks affiliating with securities firms and repealing the Bank Holding Company Act prohibitions on insurance underwriting.”


The Gramm-Leach-Bliley Act Marches Forward


On February 24, 1999, in more testimony before the Senate Banking Committee, Rubin pushed for fewer prohibitions on bank affiliates that wanted to perform the same functions as their larger bank holding company, once the different types of financial firms could legally merge. That minor distinction would enable subsidiaries to place all sorts of bets and house all sorts of junk under the false premise that they had the same capital beneath them as their parent. The idea that a subsidiary’s problems can’t taint or destroy the host, or bank holding company, or create “catastrophic” risk, is a myth perpetuated by bankers and political enablers that continues to this day.

Rubin had no qualms with mega-consolidations across multiple service lines. His real problems were those of his banker friends, which lay with the financial modernization bill’s “prohibition on the use of subsidiaries by larger banks.”  The bankers wanted the right to establish off-book subsidiaries where they could hide risks, and profits, as needed.

Again, Rubin decided to use the notion of remaining competitive with foreign banks to make his point. This technicality was “unacceptable to the administration,” he said, not least because “foreign banks underwrite and deal in securities through subsidiaries in the United States, and U.S. banks [already] conduct securities and merchant banking activities abroad through so-called Edge subsidiaries.” Rubin got his way. These off-book, risky, and barely regulated subsidiaries would be at the forefront of the 2008 financial crisis.

On March 1, 1999, Senator Phil Gramm released a final draft of the Financial Services Modernization Act of 1999 and scheduled committee consideration for March 4th. A bevy of excited financial titans who were close to Clinton, including Travelers CEO Sandy Weill, Bank of America CEO, Hugh McColl, and American Express CEO Harvey Golub, called for “swift congressional action.”


The Quintessential Revolving-Door Man


The stock market continued its meteoric rise in anticipation of a banker-friendly conclusion to the legislation that would deregulate their industry. Rising consumer confidence reflected the nation’s fondness for the markets and lack of empathy with the rest of the world’s economic plight. On March 29, 1999, the Dow Jones Industrial Average closed above 10,000 for the first time. Six weeks later, on May 6th,  the Financial Services Modernization Act passed the Senate. It legalized, after the fact, the merger that created the nation’s biggest bank.  Citigroup, the marriage of Citibank and Travelers, had been finalized the previous October.

It was not until that point that one of Glass-Steagall’s main assassins decided to leave Washington. Six days after the bill passed the Senate, on May 12, 1999, Robert Rubin abruptly announced his resignation. As Clinton wrote, “I believed he had been the best and most important treasury secretary since Alexander Hamilton… He had played a decisive role in our efforts to restore economic growth and spread its benefits to more Americans.”

Clinton named Larry Summers to succeed Rubin. Two weeks later, BusinessWeek reported signs of trouble in merger paradise — in the form of a growing rift between John Reed, the former Chairman of Citibank, and Sandy Weill at the new Citigroup. As Reed said, “Co-CEOs are hard.” Perhaps to patch their rift, or simply to take advantage of a political opportunity, the two men enlisted a third person to join their relationship — none other than Robert Rubin.

Rubin’s resignation from Treasury became effective on July 2nd. At that time, he announced, “This almost six and a half years has been all-consuming, and I think it is time for me to go home to New York and to do whatever I’m going to do next.” Rubin became chairman of Citigroup’s executive committee and a member of the newly created “office of the chairman.” His initial annual compensation package was worth around $40 million.  It was more than worth the “hit” he took when he left Goldman for the Treasury post.

Three days after the conference committee endorsed the Gramm-Leach-Bliley bill, Rubin assumed his Citigroup position, joining the institution destined to dominate the financial industry. That very same day, Reed and Weill issued a joint statement praising Washington for “liberating our financial companies from an antiquated regulatory structure,” stating that “this legislation will unleash the creativity of our industry and ensure our global competitiveness.”

On November 4th, the Senate approved the Gramm-Leach-Bliley Act by a vote of 90 to 8.  (The House voted 362–57 in favor.) Critics famously referred to it as the Citigroup Authorization Act.

Mirth abounded in Clinton’s White House. “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the twenty-first century,” Summers said. “This historic legislation will better enable American companies to compete in the new economy.”

But the happiness was misguided. Deregulating the banking industry might have helped the titans of Wall Street but not people on Main Street. The Clinton era epitomized the vast difference between appearance and reality, spin and actuality. As the decade drew to a close, Clinton basked in the glow of a lofty stock market, a budget surplus, and the passage of this key banking “modernization.” It would be revealed in the 2000s that many corporate profits of the 1990s were based on inflated evaluations, manipulation, and fraud. When Clinton left office, the gap between rich and poor was greater than it had been in 1992, and yet the Democrats heralded him as some sort of prosperity hero.

When he resigned in 1997, Robert Reich, Clinton’s labor secretary, said, “America is prospering, but the prosperity is not being widely shared, certainly not as widely shared as it once was… We have made progress in growing the economy. But growing together again must be our central goal in the future.”  Instead, the growth of wealth inequality in the United States accelerated, as the men yielding the most financial power wielded it with increasingly less culpability or restriction. By 2015, that wealth or prosperity gap would stand near historic highs.

The power of the bankers increased dramatically in the wake of the repeal of Glass-Steagall. The Clinton administration had rendered twenty-first-century banking practices similar to those of the pre-1929 crash. But worse. “Modernizing” meant utilizing government-backed depositors’ funds as collateral for the creation and distribution of all types of complex securities and derivatives whose proliferation would be increasingly quick and dangerous.

Eviscerating Glass-Steagall allowed big banks to compete against Europe and also enabled them to go on a rampage: more acquisitions, greater speculation, and more risky products. The big banks used their bloated balance sheets to engage in more complex activity, while counting on customer deposits and loans as capital chips on the global betting table. Bankers used hefty trading profits and wealth to increase lobbying funds and campaign donations, creating an endless circle of influence and mutual reinforcement of boundary-less speculation, endorsed by the White House.

Deposits could be used to garner larger windfalls, just as cheap labor and commodities in developing countries were used to formulate more expensive goods for profit in the upper echelons of the global financial hierarchy. Energy and telecoms proved especially fertile ground for the investment banking fee business (and later for fraud, extensive lawsuits, and bankruptcies). Deregulation greased the wheels of complex financial instruments such as collateralized debt obligations, junk bonds, toxic assets, and unregulated derivatives.

The Glass-Steagall repeal led to unfettered derivatives growth and unstable balance sheets at commercial banks that merged with investment banks and at investment banks that preferred to remain solo but engaged in dodgier practices to remain “competitive.” In conjunction with the tight political-financial alignment and associated collaboration that began with Bush and increased under Clinton, bankers channeled the 1920s, only with more power over an immense and growing pile of global financial assets and increasingly “open” markets. In the process, accountability would evaporate.

Every bank accelerated its hunt for acquisitions and deposits to amass global influence while creating, trading, and distributing increasingly convoluted securities and derivatives. These practices would foster the kind of shaky, interconnected, and opaque financial environment that provided the backdrop and conditions leading up to the financial meltdown of 2008.


The Realities of 2016


Hillary Clinton is, of course, not her husband. But her access to his past banker alliances, amplified by the ones that she has formed herself, makes her more of a friend than an adversary to the banking industry.  In her brief 2008 candidacy, all four of the New York-based Big Six banks ranked among her top 10 corporate donors. They have also contributed to the Clinton Foundation. She needs them to win, just as both Barack Obama and Bill Clinton did.

No matter what spin is used for campaigning purposes, the idea that a critical distance can be maintained between the White House and Wall Street is naïve given the multiple channels of money and favors that flow between the two.  It is even more improbable, given the history of connections that Hillary Clinton has established through her associations with key bank leaders in the early 1990s, during her time as a senator from New York, and given their contributions to the Clinton foundation while she was secretary of state. At some level, the situation couldn’t be less complicated: her path aligns with that of the country’s most powerful bankers. If she becomes president, that will remain the case.


Nomi Prins is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book, All the Presidents’ Bankers: The Hidden Alliances that Drive American Power (Nation Books) has just been released in paperback and this piece is adapted and updated from it. She is a former Wall Street executive.



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