Tag Archives: ProPublica

And Even In This, We Find The Simpsons Reference

David E. Sanger and Matthew L. Wald at NYT:

As the scale of Japan’s nuclear crisis begins to come to light, experts in Japan and the United States say the country is now facing a cascade of accumulating problems that suggest that radioactive releases of steam from the crippled plants could go on for weeks or even months.

he emergency flooding of stricken reactors with seawater and the resulting steam releases are a desperate step intended to avoid a much bigger problem: a full meltdown of the nuclear cores in reactors at the Fukushima Daiichi Nuclear Power Station. On Monday, an explosion blew the roof off the second reactor, not damaging the core, officials said, but presumably leaking more radiation.

Later Monday, the government said cooling systems at a third reactor had failed. The Kyodo news agency reported that the damaged fuel rods at the third reactor had been temporarily exposed, increasing the risk of overheating. Sea water was being channeled into the reactor to cover the rods, Kyodo reported.

So far, Japanese officials have said the melting of the nuclear cores in the two plants is assumed to be “partial,” and the amount of radioactivity measured outside the plants, though twice the level Japan considers safe, has been relatively modest.

But Pentagon officials reported Sunday that helicopters flying 60 miles from the plant picked up small amounts of radioactive particulates — still being analyzed, but presumed to include cesium-137 and iodine-121 — suggesting widening environmental contamination.

Instapundit:

MUCH ADO ABOUT NOT MUCH: 7th Fleet repositions ships after contamination detected. “For per­spec­tive, the max­i­mum poten­tial radi­a­tion dose received by any ship’s force per­son­nel aboard the ship when it passed through the area was less than the radi­a­tion expo­sure received from about one month of expo­sure to nat­ural back­ground radi­a­tion from sources such as rocks, soil, and the sun.”

Ed Morrissey:

Still, if that’s the dose received 100 miles away after wind dispersal and dissipation, it’s small wonder that the Japanese are evacuating the area near the plant.  No nation has the history of radiation poisoning that Japan does, and one has to believe that this danger will loom the largest among the people even after the tsunami damage that killed thousands of people.  The government will face a great deal of scrutiny for years to come for its actions in these few days, and they appear to understand that.

David Kopel:

That’s the title of a post on the Morgsatlarge, reprinting a letter from Dr. Josef Oehman of MIT. According to his web page, his main research interest is “risk management in the value chain, with a special focus on lean product development.” Although he’s a business professor and not a nuclear scientist, his father worked in the German nuclear power industry, and the post provides a detailed and persuasive (at least to me) explanation of how the endangered Japanese nuclear power plants work, and why their multiple backup systems  ensure that there will be neither an explosion nor a catastophic release of radiation. The American cable TV channels, by the way, seem to be taking a much more sober approach than they did yesterday, when Wolf Blitzer was irresponsibly raising fear of “another Chernobyl.”

John Sullivan at ProPublica:

As engineers in Japan struggle to bring quake-damaged reactors under control [1], attention is turning to U.S. nuclear plants and their ability to withstand natural disasters.

Rep. Ed Markey, a Massachusetts Democrat who has spent years pushing the Nuclear Regulatory Commission toward stricter enforcement of its safety rules, has called for a reassessment. Several U.S. reactors lie on or near fault lines, and Markey wants to beef up standards for new and existing plants.

“This disaster serves to highlight both the fragility of nuclear power plants and the potential consequences associated with a radiological release caused by earthquake related damage,” Markey wrote NRC Chairman Gregory Jaczko in a March 11 letter [2].

Specifically, Markey raised questions about a reactor design the NRC is reviewing for new plants that has been criticized for seismic vulnerability. The NRC has yet to make a call on the AP1000 reactor [3], which is manufactured by Westinghouse. But according to Markey, a senior NRC engineer has said the reactor’s concrete shield building could shatter “like a glass cup” under heavy stress.

The New York Times reported last week [4] that the NRC has reviewed the concerns raised by the engineer, John Ma, and concluded that the design is sufficient without the upgrades Ma recommended. Westinghouse maintains that the reactor is safe [5].

Boiling water reactors [6], like the ones hit by the Japanese earthquake, are built like nested matroyshka [7] dolls.

The inner doll, which looks like a gigantic cocktail shaker and holds the radioactive uranium, is the heavy steel reactor vessel. It sits inside a concrete and steel dome called the containment. The reactor vessel is the primary defense against disaster — as long as the radiation stays inside everything is fine.

The worry is that a disaster could either damage the vessel itself or, more likely, damage equipment that used to control the uranium. If operators cannot circulate water through the vessel to cool the uranium it could overheat and burn into radioactive slag — a meltdown.

Steve Mirsky at Scientific American

Maggie Koerth-Baker at Boing Boing:

This morning, I got an email from a BoingBoing reader, who is one of the many people worried about the damaged nuclear reactors at Fukushima, Japan. In one sentence, he managed to get right to heart of a big problem lurking behind the headlines today: “The extent of my knowledge on nuclear power plants is pretty much limited to what I’ve seen on The Simpsons“.

For the vast majority of people, nuclear power is a black box technology. Radioactive stuff goes in. Electricity (and nuclear waste) comes out. Somewhere in there, we’re aware that explosions and meltdowns can happen. Ninety-nine percent of the time, that set of information is enough to get by on. But, then, an emergency like this happens and, suddenly, keeping up-to-date on the news feels like you’ve walked in on the middle of a movie. Nobody pauses to catch you up on all the stuff you missed.

As I write this, it’s still not clear how bad, or how big, the problems at the Fukushima Daiichi power plant will be. I don’t know enough to speculate on that. I’m not sure anyone does. But I can give you a clearer picture of what’s inside the black box. That way, whatever happens at Fukushima, you’ll understand why it’s happening, and what it means.

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Filed under Energy, Foreign Affairs

Now That’s What I Call A Document Dump

Wikileaks

Nick Davies and David Leigh at The Guardian:

A huge cache of secret US military files today provides a devastating portrait of the failing war in Afghanistan, revealing how coalition forces have killed hundreds of civilians in unreported incidents, Taliban attacks have soared and Nato commanders fear neighbouring Pakistan and Iran are fuelling the insurgency.

The disclosures come from more than 90,000 records of incidents and intelligence reports about the conflict obtained by the whistleblowers’ website Wikileaks in one of the biggest leaks in US military history. The files, which were made available to the Guardian, the New York Times and the German weekly Der Spiegel, give a blow-by-blow account of the fighting over the last six years, which has so far cost the lives of more than 320 British and more than 1,000 US troops.

Their publication comes amid mounting concern that Barack Obama’s “surge” strategy is failing and as coalition troops hunt for two US naval personnel captured by the Taliban south of Kabul on Friday.

The war logs also detail:

• How a secret “black” unit of special forces hunts down Taliban leaders for “kill or capture” without trial.

• How the US covered up evidence that the Taliban have acquired deadly surface-to-air missiles.

• How the coalition is increasingly using deadly Reaper drones to hunt and kill Taliban targets by remote control from a base in Nevada.

• How the Taliban have caused growing carnage with a massive escalation of their roadside bombing campaign, which has killed more than 2,000 civilians to date.

Spiegel

New York Times

Spencer Ackerman at Danger Room at Wired:

Turns out “Collateral Murder” was just a warm-up. WikiLeaks just published a trove of over 90,000 mostly-classified U.S. military documents that details a strengthening Afghan insurgency with deep ties to Pakistani intelligence.

WikiLeaks’ release of a 2007 Apache gunship video sparked worldwide outrage, but little change in U.S. policy. This massive storehouse has the potential to be strategically significant, raising questions about how and why America and her allies are conducting the war. Not only does it recount 144 incidents in which coalition forces killed civilians over six years. But it shows just how deeply elements within the U.S.’ supposed ally, Pakistan, have nurtured the Afghan insurgency. In other words, this has the potential to be 2010’s answer to the Pentagon Papers — a database you can open in Excel, brought to you by the now-reopened-for-business WikiLeaks.

Now, obviously, it’s not news that the Pakistani Inter-Services Intelligences has ties to the Afghan Taliban, the Haqqani network and Gulbuddin Hekmatyar’s Hezb-e-Islami That’s something that pretty much every observer of the Afghanistan war and the Pakistani intelligence apparatus has known for the better part of a decade.

But as the early-viewing New York Times reports, WikiLeaks presents a new depth of detail about how the U.S. military has seen, for six years, the depths of ISI facilitation of the Afghan insurgency. For instance: a three-star Pakistani general active during the 80s-era U.S.-Pakistani-Saudi sponsorship of the anti-Soviet insurgency, Hamid Gul, allegedly met with insurgent leaders in South Waziristan in January 2009 to plot vengeance for the drone-inflicted death of an al-Qaeda operative. (Gul called it “absolute nonsense” to the Times reporters.)

Other reports, stretching back to 2004, offer chilling, granular detail about the Taliban’s return to potency after the U.S. and Afghan militias routed the religious-based movement in 2001. Some of them, as the Times notes, cast serious doubt on official U.S. and NATO accounts of how insurgents prosecute the war. Apparently, the insurgents have used “heat-seeking missiles against allied aircraft,” eerily reminiscent of the famous Stinger missiles that the U.S., Saudi Arabia and Pakistan provided to the mujahideen to down Soviet helicopters. One such missile downed a Chinook over Helmand in May 2007.

Typically, NATO accounts of copter downings are vague — and I’ve never seen one that cited the Taliban’s use of a guided missile. This clearly isn’t just Koran, Kalashnikov and laptop anymore. And someone is selling the insurgents these missiles, after all. That someone just might be slated to receive $7.5 billion of U.S. aid over the next five years.

That said, it’s worth pointing out that the documents released so far are U.S. military documents, not ISI documents, so they don’t quite rise to smoking-gun level.

Blake Hounshell at Foreign Policy:

I’ve now gone through the reporting and most of the selected documents (though not the larger data dump), and I think there’s less here than meets the eye. The story that seems to be getting the most attention, repeating the longstanding allegation that Pakistani intelligence might be aiding the Afghan insurgents, offers a few new details but not much greater clarity. Both the Times and the Guardian are careful to point out that the raw reports in the Wikileaks archive often seem poorly sourced and present implausible information.

“[F]or all their eye-popping details,” writes the Guardian‘s Delcan Welsh, “the intelligence files, which are mostly collated by junior officers relying on informants and Afghan officials, fail to provide a convincing smoking gun for ISI complicity.”

The Times‘ reporters seem somewhat more persuaded, noting that “many of the reports rely on sources that the military rated as reliable” and that their sources told them that “the portrait of the spy agency’s collaboration with the Afghan insurgency was broadly consistent with other classified intelligence.”

Der Spiegel‘s reporting adds little, though the magazine’s stories will probably have great political impact in Germany, as the Wikileaks folks no doubt intended. One story hones in on how an elite U.S. task force charged with hunting down Taliban and Al Qaeda targets operates from within a German base; another alleges that “The German army was clueless and naïve when it stumbled into the conflict,” and that northern Afghanistan, where the bulk of German troops are based, is more violent than has been previously portrayed.

Otherwise, I’d say that so far the documents confirm what we already know about the war: It’s going badly; Pakistan is not the world’s greatest ally and is probably playing a double game; coalition forces have been responsible for far too many civilian casualties; and the United States doesn’t have very reliable intelligence in Afghanistan.

I do think that the stories will provoke a fresh round of Pakistan-bashing in Congress, and possibly hearings. But the administration seems inclined to continue with its strategy of nudging Pakistan in the right direction, and is sending the message: Move along, nothing to see here.

Stephen F. Hayes at The Weekly Standard:

Expect this story from the New York Times to restart the discussion on U.S. policies and strategies in Afghanistan and Pakistan.

Under the headline “Pakistani Spy Service Aids Insurgents, Reports Assert,” a team of Times reporters summarize and analyze a huge batch of secret U.S. intelligence reports on the war in Afghanistan. Those reports show, in compelling detail, that Pakistan’s ISI (Inter-Services Intelligence) has been actively – and regularly – aiding insurgents fighting Americans in Afghanistan.

[…]

The central claim in the piece is not new. Tom Joscelyn and Bill Roggio have written about ISI’s duplicity for years. See here, here and here for examples.

The Times report – along with the public examination of the trove of WikiLeaks documents – will almost certainly reignite the public debate over the war in Afghanistan, and the Obama administration’s strategy there. The president’s already soft support in his own party will probably soften further. The key question is whether nervous Republicans will join them.

Michael Scherer at Swampland at Time:

The White House has reacted in full damage control mode to the release of classified documents detailing the U.S. military’s struggles in Afghanistan, which the New York Times calls “in many respects more grim than the official portrayal.”

To see the New York Times summary of the documents, click here. To see the Guardian’s coverage, click here. (Advance copies of the documents were provided to both the Times and Guardian, on the condition that they not be released until Sunday.) For more on Wikileaks and its founder, read this excellent New Yorker profile here.

In response, the White House press office is emphasizing two facts. First, the documents concern a time period (2004 to 2009) that precedes the Presidents latest new strategy for Afghanistan. Second, government officials have not exactly been secretive in the past about the connection between the Pakistani ISI and radical elements in the region that are working against U.S. interests. “In the past, there have been those in Pakistan who’ve argued that the struggle against extremism is not their fight, and that Pakistan is better off doing little or seeking accommodation with those who use violence,” President Obama said, when he announced his latest strategy in December of 2009. (Indeed, in recent months, as TIME has noted, there has been some good news on this front, with the Pakistan government, including the ISI, taking more aggressive actions.)

Laura Rozen at Politico:
“It is important to note that the time period reflected in the documents is January 2004 to December 2009,” National Security Advisor ret. Gen. Jim Jones said in a statement Sunday.”On December 1, 2009, President Obama announced a new strategy with a substantial increase in resources for Afghanistan, and increased focus on al Qaeda and Taliban safe-havens in Pakistan, precisely because of the grave situation that had developed over several years,” he continued. “This shift in strategy addressed challenges in Afghanistan that were the subject of an exhaustive policy review last fall.”

Some 180 of the war logs and raw intelligence reports concern previously reported allegations that the Pakistani intelligence services have been providing covert support to Afghan insurgents.

“Taken together, the reports indicate that American soldiers on the ground are inundated with accounts of a network of Pakistani assets and collaborators,” the New York Times reports.

But, the paper cautions, many of the raw intelligence reports and field threat assessments “cannot be verified,” while “many … rely on sources that the military rated as reliable.”

“The records also contain firsthand accounts of American anger at Pakistan’s unwillingness to confront insurgents who launched attacks near Pakistani border posts, moved openly by the truckload across the frontier, and retreated to Pakistani territory for safety,” the paper said.

Adrian Chen at Gawker:

This is going to be huge. And Wikileaks’ strategy to collaborate with mainstream media this time around should heighten the impact of this data. The Guardian is using the log to argue that it presents “a very different landscape” than the one put forward by coalition leaders. Meanwhile, the Times picks out military concerns that Pakistani intelligence is directly aiding insurgents. That “real” journalists are in charge of these reports should move focus off the biases of Wikileaks and Julian Assange—as happened with their “Collateral Murder” video—and onto the leak itself. (Wikileaks agreed to not have any input into the stories built around their leak.)

It’s unclear at this time if this leak is related to the case of army intelligence specialist Bradley Manning, the alleged source of the Apache video. But this leak should cause a similar-sized uproar and deliver a more pointed impact than even that graphic video did. The elaborate packages put together by the Times, Der Spiegel and The Guardian are only the beginning of this story.

Andrew Bacevich at TNR:

The leaks are unlikely to affect the course of events on the ground. However, they may well affect the debate over the war here at home. In that regard, the effect is likely to be pernicious, intensifying the already existing inclination to focus on peripheral matters while ignoring vastly more important ones. For months on end, Washington has fixated on this question: what, oh what, are we to do about Afghanistan? Implicit in the question are at least two assumptions: first, that something must be done; and, second, that if the United States and its allies can just devise the right approach (or assign the right general), then surely something can be done.

Both assumptions are highly dubious. To indulge them is to avoid the question that should rightly claim Washington’s attention: What exactly is the point of the Afghanistan war? The point cannot be to “prevent another 9/11,” since violent anti-Western jihadists are by no means confined to or even concentrated in Afghanistan. Even if we were to “win” in Afghanistan tomorrow, the jihadist threat would persist. If anything, staying in Afghanistan probably exacerbates that threat. So tell me again: why exactly are we there?

The real significance of the Wikileaks action is of a different character altogether: it shows how rapidly and drastically the notion of “information warfare” is changing. Rather than being defined as actions undertaken by a government to influence the perception of reality, information warfare now includes actions taken by disaffected functionaries within government to discredit the officially approved view of reality. This action is the handiwork of subversives, perhaps soldiers, perhaps civilians. Within our own national security apparatus, a second insurgent campaign may well have begun. Its purpose: bring America’s longest war to an end. Given the realities of the digital age, this second insurgency may well prove at least as difficult to suppress as the one that preoccupies General Petraeus in Kabul.

UPDATE: Richard Tofel at ProPublica

Allah Pundit

Jay Rosen

James Joyner

Andrew Sullivan has a round-up

Andrew Exum at NYT

UPDATE #2: Marc Ambinder

Fred Kaplan at Slate

Marc Lynch at Foreign Policy

UPDATE #3: Richard Fernandez at Pajamas Media

Uncle Jimbo at Blackfive

UPDATE #4: Anne Applebaum at Slate

Ed Morrissey

UPDATE #5: Marc Thiessen at WaPo.

Eva Rodriguez responds at WaPo

Thiessen responds to Rodriguez

Michael Scherer at Swampland at Time

Mark Thompson at The League

UPDATE #6: Joshua Cohen and Jim Pinkerton at Bloggingheads

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Filed under Af/Pak, GWOT, New Media

That Missing Ounce Of Prevention

Chris Rovzar at New York Magazine:

The Times takes an exhaustive look this week at the so-called “blowout preventers,” complex devices that wrap oil pipes deep underwater, near where they emerge from the earth, and are designed to shut off leaks in the event of a catastrophe. Specifically, the paper looked at the effectiveness of “blind shears,” contraptions that cut through pipes in times of emergency and seal them off. The shears have to create thousands of pounds of pressure to get through the tough metals of the pipes, and have to create a perfect seal. The devices are incredibly complex and contain many parts that can easily fail and render the enter machine ineffective. It’s not that the oil companies and the government don’t know about these risks — the devices have been tested many times over the past ten years — the problem is that the known problems weren’t compensated for, and in the case of the Deepwater Horizon well currently gushing oil into the Gulf of Mexico, a commonly installed backup blind shear wasn’t even built.

These blind shears are “remarkably vulnerable,” says the Times, and at 5,000 feet underwater, incredibly complicated to fix. As the oil spill worsened, before the Deepwater rig exploded, engineers frantically tried to engage, and then fix, their own failed shear. There would have been a second shear had the Minerals Management Service acted on one of their own studies, which revealed that two of the devices vastly increased the likelihood of avoiding a major spill. Studies in 2002 and 2004 revealed the following:

When the team examined the performance of blind shear rams in blowout preventers on 14 new rigs, it found that seven had never been checked to see if their shear rams would work in deep water. Of the remaining seven, only three “were found able to shear pipe at their maximum rated water depths.”
The Times study is full of a lot of very obscure facts and technology, and while it casts some blame on the “Obama administration,” it’s impossible to imagine that the president himself, or even anyone in the White House, knew anything about these subjects before April 20. Not that this matters when, as the evidence increasingly suggests, the government has systematically failed to protect us and the environment from exactly the disaster that unfolded so quickly this spring.

David Dayen at Firedoglake:

I don’t think there’s any doubt that the explosion on the Deepwater Horizon rig had a man-made cause. We have an eyewitness survivor of the blast now willing to say that the blowout preventer was leaking for weeks before the explosion, and BP and Transocean failed to repair the valve in response, merely shutting it off instead. If they actually repaired it, that would shut down production. The last line of defense, the “blind shear ram,” designed to slice the pipe and seal the well in the event of a disaster, malfunctioned, and BP never had to show proof that the technique would actually work. In fact, the Deepwater Horizon, unlike every new BP well, had only one blind shear ram; two are now standard.

A legitimate Minerals Management Service could have known about the leaking blowout preventer before the blast. It could have acted on the inherent problems with the blind shear ram and the oil industry’s failsafe measures in general (blowout preventers have a 45% failure rate, according to a confidential Transocean report). But we didn’t have a legitimate MMS to deal with this disaster. We have 62 regulators dealing with over 4,000 offshore rigs in the Gulf of Mexico.

Chris Morran at The Consumerist:

According to a memo released by Congressman Ed Markey, BP put a top level estimate on the amount of oil spilling into the Gulf at around 100,000 barrels a day. That’s significantly higher than even the current U.S. Government guess of around 60,000 barrels/day.

A rep for BP tried to downplay the numbers in the document by saying that this was a worst-case scenario estimate, which would apply only if the blowout preventer was completely removed: “Since there are no plans to remove the blowout preventer, the number is irrelevant.”

The rep maintains that, regardless of the amount of crude being pumped into the Gulf waters, the company’s position has always been that it “would deal with whatever volume of oil was being spilled.”

Speaking of the blowout preventer, a worker on the Deepwater Horizon, the offshore oil rig whose collapse killed 11 and kicked off the worst spill in U.S. history, says that he and his employers attempted to notify BP of problems with the blowout preventer weeks before the April 20 disaster.

The blowout preventer has two control pods that work to operate the device that should have stopped the massive amount of leakage into the Gulf. But, speaking to the BBC over the weekend, the worker says that BP ignored warnings from those aboard the rig.

“We saw a leak on the pod, so by seeing the leak we informed the company men,” he recalled. “They have a control room where they could turn off that pod and turn on the other one, so that they don’t have to stop production.”

Marian Wang at ProPublica:

Regulatory reliance on industry, recruitment troubles, and lax enforcement have long plagued the Minerals Management Service, but according to congressional testimony given by the Interior Department’s inspector general, Mary Kendall, the agency’s problems are bigger than that [1]. [PDF]

“The greatest challenge in reorganizing and reforming MMS lies with the culture—both within MMS and within industry,” Kendall told the House Natural Resources Committee in little-noticed comments last Thursday.

Regulations are lacking and are “heavily reliant on industry to document and accurately report on operations, production and royalties,” Kendall said.

A recent example of that? BP’s letter to Sen. Chuck Grassley, R-Iowa, in which the company said that it was “not aware of any MMS practice [2]” [PDF] to demand compliance with a law requiring oil companies to provide proof that blowout preventers’ shear rams could function effectively. (Shear rams are used to stop a blowout by closing off a pipe by cutting through it. But as a great investigation in this morning’s New York Times shows, not only did the shear rams fail on the Deepwater Horizon, but they’ve frequently failed in other blowouts too [3]. The Times cites an industry study showing that in the case of deep-water wells, the shear rams failed nearly half the time. What’s more, as the Times notes, MMS failed too: The agency did not require testing on the shear ram or other key safety equipment.)

The training programs for MMS inspectors are “considerably out of date,” and “have not kept pace with the technological advancements occurring within the industry,” Kendall said.

In the Gulf of Mexico region, there may not be enough inspectors to begin with. According to Kendall, MMS has about 60 inspectors to cover 4,000 facilities, while the Pacific Coast has 10 for 23 facilities. (It’s worth mentioning too, that the frequency of inspections of key safety equipment such as blowout preventers was halved more than a decade ago [4].)

Edward Tenner at The Atlantic:

Remember the Ixtoc I well blowout of 1979, that released about 3.3 million barrels of oil into the Gulf of Mexico over more than ten months? Not many North Americans do — because they were less environmentally conscious, because it occurred in Mexican rather than U.S. waters, because Iran’s Islamic revolution and the Soviet invasion of Afghanistan filled the airwaves and the headlines, or even because many of today’s adults were too young to notice, or even unborn.

And that’s one of the big problems behind the BP oil spill. In 1977 the University College London civil engineers Paul Sibley and Alistair Walker published a paper suggesting that major bridge collapses occurred at approximately 30-year intervals as new designs succeeded old as a result of the failure’s lessons, new generations of designers became increasingly confident in the safety record of their innovations, until they finally pushed them over a tipping point, beginning a new cycle. The civil engineering professor and historian of technology Henry Petroski has developed this idea, which last came to the fore in the Minneapolis bridge collapse of 2007, as discussed here and here. My graduate teacher William H. McNeill coined a mordant phrase for such recurrence of disasters partially as a result of confidence in reforms, the Law of the Conservation of Catastrophe.

Bradford Plumer at The New Republic:

“The last time you saw a spill of this magnitude in the Gulf, it was off the coast of Mexico in 1979. If something doesn’t happen since 1979, you begin to take your eye off of that thing.” That was what a senior administration official recently told a McClatchy reporter, in regards to the Gulf gusher. As it turns out, this is a pattern with engineering accidents, be they bridge collapses or oil-platform blowouts. Disaster strikes, a flurry of safety improvements follow, but then engineers get over-confident in their new innovations, and eventually disaster strikes again.

[…]

As long as we stay addicted to crude, it’s hard to see us escaping this cycle—especially since we’re using up all the “easy” oil, and companies need to keep foraging deeper and deeper into the ocean, continually pushing the boundaries of safety technology.

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Filed under Energy, Environment

First They Went For Hatfill, Then They Went For Ivins…

David Freed at The Atlantic:

The first anthrax attacks came days after the jetliner assaults of September 11, 2001. Postmarked Trenton, New Jersey, and believed to have been sent from a mailbox near Princeton University, the initial mailings went to NBC News, the New York Post, and the Florida-based publisher of several supermarket tabloids, including The Sun and The National Enquirer. Three weeks later, two more envelopes containing anthrax arrived at the Senate offices of Democrats Tom Daschle and Patrick Leahy, each bearing the handwritten return address of a nonexistent “Greendale School” in Franklin Park, New Jersey. Government mail service quickly shut down.

The letters accompanying the anthrax read like the work of a jihadist, suggesting that their author was an Arab extremist—or someone masquerading as one—yet also advised recipients to take antibiotics, implying that whoever had mailed them never really intended to harm anyone. But at least 17 people would fall ill and five would die—a photo editor at The Sun; two postal employees at a Washington, D.C., mail-processing center; a hospital stockroom clerk in Manhattan whose exposure to anthrax could never be fully explained; and a 94-year-old Connecticut widow whose mail apparently crossed paths with an anthrax letter somewhere in the labyrinth of the postal system. The attacks spawned a spate of hoax letters nationwide. Police were swamped with calls from citizens suddenly suspicious of their own mail.

[…]

Surveying the publicly available evidence, as well as documents sent to him by the FBI, Foster surmised that the killer was an American posing as an Islamic jihadist. Only a limited number of American scientists would have had a working knowledge of anthrax. One of those scientists, Foster concluded, was a man named Steven Hatfill, a medical doctor who had once worked at the Army’s elite Medical Research Institute of Infectious Diseases (USAMRIID), which had stocks of anthrax.

On the day al-Qaeda struck the World Trade Center and the Pentagon with hijacked jetliners, Hatfill was recovering from nasal surgery in his apartment outside the gates of Fort Detrick, Maryland, where USAMRIID is housed. We’re at war, he remembers thinking as he watched the news that day—but he had no idea that it was a war in which he himself would soon become collateral damage, as the FBI came to regard him as a homegrown bioterrorist, likely responsible for some of the most unsettling multiple murders in recent American history. His story provides a cautionary tale about how federal authorities, fueled by the general panic over terrorism, embraced conjecture and coincidence as evidence, and blindly pursued one suspect while the real anthrax killer roamed free for more than six years. Hatfill’s experience is also the wrenching saga of how an American citizen who saw himself as a patriot came to be vilified and presumed guilty, as his country turned against him.

“It’s like death by a thousand cuts,” Hatfill, who is now 56, says today. “There’s a sheer feeling of hopelessness. You can’t fight back. You have to just sit there and take it, day after day, the constant drip-drip-drip of innuendo, a punching bag for the government and the press. And the thing was, I couldn’t understand why it was happening to me. I mean, I was one of the good guys.”

Don Foster, the Vassar professor, was among those who set the wheels of injustice in motion. Scouring the Internet, Foster found an interview that Hatfill had given while working at the National Institutes of Health, in which he described how bubonic plague could be made with simple equipment and used in a bioterror attack. Foster later tracked down an unpublished novel Hatfill had written, depicting a fictional bioterror attack on Washington. He discovered that Hatfill had been in Rhodesia (present-day Zimbabwe) during an anthrax outbreak there in the late 1970s, and that he’d attended medical school near a Rhodesian suburb called Greendale—the name of the invented school in the return address of the anthrax letters mailed to the Senate. The deeper Foster dug, the more Hatfill looked to him like a viable suspect.

“When I lined up Hatfill’s known movements with the postmark locations of reported biothreats,” Foster later wrote, “those hoax anthrax attacks appeared to trail him like a vapor cloud.”

In February 2002, Foster tried to interest the FBI in Hatfill, but says he was told that Hatfill had a good alibi. “A month later, when I pressed the issue,” Foster wrote, “I was told, ‘Look, Don, maybe you’re spending too much time on this.’”

[…]

With Hatfill’s face splashed all over the news, strangers on the street stared. Some asked for his autograph. Hatfill was humiliated. Embarrassed to be recognized, he stopped going to the gym. He stopped visiting friends, concerned that the FBI would harass them, too. Soon, he stopped going out in public altogether. Once an energetic and ambitious professional who reveled in 14-hour workdays, Hatfill now found himself staring at the walls all day. Television became his steady companion.

“I’d never really watched the news before,” Hatfill says, “and now I’m seeing my name all over the place and all these idiots like Geraldo Rivera asking, ‘Is this the anthrax animal? Is this the guy who murdered innocent people?’ You might as well have hooked me up to a battery. It was sanctioned torture.”

Hatfill decided to redecorate Boo’s condo as a distraction from the news. He repainted, hung wallpaper, learned to install crown molding. He also began drinking.

[…]

By early 2007, after fresh investigators were brought in to reexamine evidence collected in the anthrax case, the FBI came to believe what Hatfill had been saying all along: he’d never had access to the anthrax at USAMRIID; he was a virus guy. The FBI, meanwhile, began to focus on someone who had enjoyed complete access: senior microbiologist Bruce Edward Ivins.

Ivins had spent most of his career at USAMRIID, working with anthrax. Agents had even sought his advice and scientific expertise early in their investigation of Hatfill. Now they subjected Ivins to the same harsh treatment they’d given Hatfill, placing Ivins under 24-hour surveillance, digging into his past, and telling him he was a murder suspect. Soon Ivins was banned from the labs where he had labored for 28 years. In July 2008, following a voluntary two-week stay in a psychiatric clinic for treatment of depression and anxiety, Ivins went home and downed a fatal dose of Tylenol. He was 62.

Less than two weeks later, the Justice Department officially exonerated Steven Hatfill. Six years had passed since he was first named a person of interest.

As it had done with Hatfill, the press dissected the pathology of Ivins’s life, linking him, however speculatively, to the murders. Ivins was a devout Catholic, which could’ve explained why anthrax was sent to two pro-choice senators, Daschle and Leahy. Reports said that Ivins harbored homicidal urges, especially toward women. He had purportedly been obsessed with a particular sorority, Kappa Kappa Gamma, ever since being rebuffed by one of its members while attending the University of Cincinnati, which could’ve explained why the anthrax letters were mailed from a box near a storage facility used by the sorority’s Princeton chapter. Ivins, of course, was no longer alive to defend himself. But in him, the FBI had found a suspect against whom tangible evidence existed.

Ivins had been the sole custodian of a large flask of highly purified anthrax spores genetically linked to those found in the letters. He had allegedly submitted purposely misleading lab data to the FBI in an attempt to hide the fact that the strain of anthrax used in the attacks was a genetic match with the anthrax in his possession. He had been unable to provide a good explanation for the many late nights he’d put in at the lab, working alone, just before the attacks. Agents found that he had been under intense pressure at USAMRIID to produce an anthrax vaccine for U.S. troops. A few days after the anthrax letters were postmarked, Ivins, according to the FBI, had sent an e-mail to a former colleague, who has never been publicly identified, warning: “Bin Laden terrorists for sure have anthrax and sarin gas,” and have “just decreed death to all Jews and all Americans.” The language was similar to the anthrax letters that warned, “We have this anthrax … Death to America … Death to Israel.”

Following his suicide, some of Ivins’s friends insisted that the FBI had pressured him into doing what Hatfill would not. Ivins’s own attorney, Paul F. Kemp, disagrees. “Dr. Ivins had a host of psychological problems that he was grappling with, that existed long before the anthrax letters were mailed, and long after,” Kemp told me.

Though Hatfill’s apartment in Frederick was less than a quarter mile from Ivins’s modest home on Military Road, and both men worked at Fort Detrick at the same time, Hatfill says the two never met. Hatfill was surprised when the FBI ultimately pinned the anthrax murders on a fellow American scientist.

“I thought it would eventually be proven that al-Qaeda was behind the attacks,” he says.

Scott Shane at NYT:

A former Army microbiologist who worked for years with Bruce E. Ivins, whom the F.B.I. has blamed for the anthrax letter attacks that killed five people in 2001, told a National Academy of Sciences panel on Thursday that he believed it was impossible that the deadly spores had been produced undetected in Dr. Ivins’s laboratory, as the F.B.I. asserts.

Asked by reporters after his testimony whether he believed that there was any chance that Dr. Ivins, who committed suicide in 2008, had carried out the attacks, the microbiologist, Henry S. Heine, replied, “Absolutely not.” At the Army’s biodefense laboratory in Maryland, where Dr. Ivins and Dr. Heine worked, he said, “among the senior scientists, no one believes it.”

Dr. Heine told the 16-member panel, which is reviewing the F.B.I.’s scientific work on the investigation, that producing the quantity of spores in the letters would have taken at least a year of intensive work using the equipment at the army lab. Such an effort would not have escaped colleagues’ notice, he added later, and lab technicians who worked closely with Dr. Ivins have told him they saw no such work.

He told the panel that biological containment measures where Dr. Ivins worked were inadequate to prevent the spores from floating out of the laboratory into animal cages and offices. “You’d have had dead animals or dead people,” he said.

The public remarks from Dr. Heine, two months after the Justice Department officially closed the case, represent a major public challenge to its conclusion in one of the largest, most politically delicate and scientifically complex cases in F.B.I. history.

Gary Matsumoto at ProPublica:

Heine, one of the few scientists at the Army lab with the skills to grow large batches of anthrax, told ProPublica it would have taken around “100 liters of liquid anthrax culture,” or more than 26 gallons, to grow all the dried spores that killed five Americans and infected 17 others.

“He couldn’t have done that without us knowing it,” said Heine.

Other biodefense scientists who didn’t work with Ivins have done the same calculations and reached the same conclusion as Heine.

The FBI declined to comment on this latest challenge to its decision to end one of the most expensive manhunts [2] in the bureau’s 102-year history. In closing the case, the agency said Ivins alone was responsible for the anthrax letters. Ivins committed suicide in 2008.

Many of Ivins’ colleagues and some federal lawmakers protested that the FBI was premature in closing the books on Ivins before the academy had completed its review of the science undergirding the bureau’s case. “To this day, it is still far from clear that Mr. Ivins had either the know-how or access to the equipment needed to produce the material,” said Rep. Jerrold Nadler, D-N.Y., in written remarks published in March [3].

The day Heine and his Fort Detrick colleagues learned of Ivins’ suicide in July 2008, Heine said they conferred and feared the F.B.I. would then blame the attacks on someone who could no longer speak in his own defense. “And the very next day, the bureau named Bruce the mailer,” Heine recalled.

Because of an FBI gag order, Heine said he was unable to discuss these details until he left his job at the United States Army Medical Research Institute of Infectious Diseases, at Fort Detrick, where Ivins also worked developing anthrax vaccines. Heine left in February and is now senior scientist at the Ordway Research Institute, Inc. Center for Biodefense and Emerging Infections in Albany, N.Y.

Heine said his expertise in growing anthrax made him a suspect like Ivins. He said FBI agents gave him a polygraph exam and took statements from him several times between 2001 and 2003. The FBI was never far away, he said. A former scoutmaster, Heine said that on campouts his Boy Scout troop used to keep a “black Suburban watch,” looking for the vehicles driven by the agents keeping Heine under surveillance.

“The FBI went after our weakest link,” Heine said, referring to Ivins and other scientists at Fort Detrick, in Maryland. He called Ivins “fragile” and especially vulnerable to bureau attempts to extract a confession from him.

Andrew Sullivan

Glenn Greenwald:

Andrew Sullivan rightly recommends this new Atlantic article by David Freed, which details how the FBI and a mindless, stenographic American media combined to destroy the life of Steven Hatfill.  Hatfill is the former U.S. Government scientist who for years was publicly depicted as the anthrax attacker and subjected to Government investigations so invasive and relentless that they forced him into almost total seclusion, paralysis and mental instability, only to have the Government years later (in 2008) acknowledge that he had nothing to do with those attacks and to pay him $5.8 million to settle the lawsuit he brought.  There are two crucial lessons that ought to be learned from this horrible — though far-from-rare — travesty:

(1) It requires an extreme level of irrationality to read what happened to Hatfill and simultaneously to have faith that the “real anthrax attacker” has now been identified as a result of the FBI’s wholly untested and uninvestigated case against Bruce Ivins.  The parallels are so overwhelming as to be self-evident.

Just as was true for the case against Hatfill, the FBI’s case against Ivins is riddled with scientific and evidentiary holes.  Much of the public case against Ivins, as was true for Hatfill, was made by subservient establishment reporters mindlessly passing on dubious claims leaked by their anonymous government sources.  So unconvincing is the case against Ivins that even the most establishment, government-trusting voices — including key members of Congress, leading scientific journals and biological weapons experts, and the editorial pages of The New York Times, The Washington Post and The Wall St. Journal — have all expressed serious doubts over the FBI’s case and have called for further, independent investigations.

Yet just as was true for years with the Hatfill accusations, no independent investigations are taking place.  That’s true for three reasons.  First, the FBI drove Ivins to suicide, thus creating an unwarranted public assumption of guilt and ensuring the FBI’s case would never be subjected to the critical scrutiny of a trial — exactly what would have happened with Hatfill had he, like Ivins, succumbed to that temptation, as Freed describes:

The next morning, driving through Georgetown on the way to visit one of his friends in suburban Maryland, I ask Hatfill how close he came to suicide. The muscles in his jaw tighten.

“That was never an option,” Hatfill says, staring straight ahead. “If I would’ve killed myself, I would’ve been automatically judged by the press and the FBI to be guilty.”

Second, the American media — with some notable exceptions — continued to do to Ivins what it did to Hatfill and what it does in general:  uncritically disseminate government claims rather than questioning or investigating them for accuracy.  As a result, many Americans continue to blindly assume any accusations that come from the Government must be true.

emptywheel at Firedoglake:

Remember how one piece of evidence the FBI used to argue that Bruce Ivins was a killer was the purported death threat he made? Eventually, they got his therapist to report on it. But it turns out the purported death threat was against Heine–and the Government asked him, but he refused, to get a restraining order against Ivins. That, plus Heine’s comment about the FBI believing Ivins was “the weakest link,” suggests that Heine really believes they pushed Ivins at a time when he was losing it psychologically.

In any case, the guy they wanted to use to buttress their case that Ivins was dangerous is now out there arguing that he could not be the killer.

John Ballard at Newshoggers:

It’s hard to believe those days will soon be nine years past. Young adults today were still in elementary school at the time and a few years from now a population of voters and community leaders will be in charge who were not even born as these events unfolded. For that reason it is important that Hatfill’s story not simply slip into a pile of footnotes in an otherwise overwhelming narrative of 9/11, because his story is yet another example of how overweening diligence and perverted good intentions can lead to official malfeasance on a scale which leaves innocent survivors with scars for the rest of their lives.

Armchair Generalist:

My two cents, the FBI screwed up because they focused on the technical aspects of the bioterrorism case – what skills might be required, and who stood out in the government as different. That was the wrong approach, and Hatfield paid the price. Using solid detective work that focused on the particular aspects of the criminal case worked – and that led them to Ivins. Hopefully they’ve figured this lesson for future cases – assuming that there’s ever another potential terrorist running around in a US bioresearch laboratory.

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Porno For Regulators

Daniel Indiviglio at The Atlantic:

Senior staffers at the Securities and Exchange Commission were surfing Internet pornography when they should have been policing the financial system. A deeply disturbing SEC memo to Senator Chuck Grassley (R-IA) exposing this problem was reported Thursday night by ABC News. Here are some highlights via the Associated Press:

_A senior attorney at the SEC’s Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

_An accountant was blocked more than 16,000 times in a month from visiting websites classified as “Sex” or “Pornography.” Yet, he still managed to amass a collection of “very graphic” material on his hard drive by using Google images to bypass the SEC’s internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense and received a 14-day suspension.

_Seventeen of the employees were “at a senior level,” earning salaries of up to $222,418.

_The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.

On one hand, two cases in 2007 means that either it wasn’t that widespread of a problem or it hadn’t yet been detected. On the other hand, the fact that this behavior seems to have been so prevalent among senior level employees is particularly troubling. They’re the ones who should have been closely watching the financial industry and leading the way to help prevent the system from collapsing.

A few things should be concluded from this revelation. First, government computers must need better firewalls to block out this content. Second, this is a pretty grim verdict on the effectiveness of regulators. When on the verge of the most major economic crisis in around 80 years, they were watching porn instead of the financial system.

Daniel Foster at The Corner:

It is a generality of American political discourse that, in the wake of crisis, liberals rush to creating new rules and regulations, and conservatives wonder why the current ones weren’t being enforced.

Well here’s a partial answer to the conservative question. While the financial world tumbled and the country fell into an economic abyss, Securities and Exchange Commission officials were surfing for porn.

Ann Althouse:

I wonder what people who read about this are thinking. I’ll bet a lot are outraged — and the GOP is banking on that outrage as it makes this an issue right now (because attacking the SEC is something they want to do for reasons utterly unrelated to porn). But I bet a lot of people — guys — feel really nervous about it because they are looking at porn at work too.

Marian Wang at ProPublica:

Oddly enough, news of the SEC’s porn problem is not a new revelation. In 2008, we reported [4] that the inspector general had discovered the agency’s pornography problem, and it wasn’t limited to just watching the stuff. One SEC employee went so far as to start his own private pornography business using SEC resources, “including Commission Internet access, e-mail, telephone and printer.”

So yes, it’s true that while the nation’s financial system teetered near collapse, senior staffers at a major financial regulatory agency spent hours surfing pornographic websites on the taxpayers’ dime. And it’s true that the agency’s watchdog found 31 serious offenders in the past two and a half years, 17 of whom were senior officials [5] whose salaries ranged from $100,000 to $222,000.

But the new memo also says that in the past five years, the SEC’s Inspector General conducted 33 investigations into SEC employees’ viewing porn at work. And the results of those investigations were routinely reported to Congress, and they’ve been publicly available all this time on the inspector general’s website [6].

We pointed out [4] the porn problem in a semiannual report from April 1, 2008, through Sept. 30, 2008 [7] (PDF). ABC News [8] pointed out similar findings in a report from Oct. 1, 2008, through March 31, 2009 [9] (PDF). Similar reports on porn surfing within the SEC were reported in February, first by The Washington Times [10] then blogged by The Wall Street Journal [11], The New York Daily News [12] and The Huffington Post [13], and later picked up by Gawker [14].

But this time, Republican lawmakers have taken the porn issue as an opportunity to further criticize the regulator [15]. The Associated Press quotes Rep. Darrell Issa:

California Rep. Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, said it was “disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation’s economy on the brink of collapse.” He said in a statement Thursday that SEC officials “were preoccupied with other distractions” when they should have been overseeing the growing problems in the financial system.

Of late, Republicans—and notably, Issa [16]—have criticized the SEC for being influenced by politics, after commissioners voted 3-2 to sue the investment bank Goldman Sachs for defrauding investors. (The two who voted against the civil charges were Republicans, with the two Democrats—and Chairman Mary Schapiro, an Independent—voting in favor.)

David Weigel:

This strikes me as politically wise and logically garbled — the SEC, in the period covered by this investigation, was a mess at many other levels (go read Andrew Ross Sorkin on then-Chairman Chris Cox’s fumbles during the 2008 meltdown), so why attack its old behavior instead of reforming it?

Jacob Sullum at Reason:

To Be Fair, I Bet Working at the SEC Is Pretty Boring

Wonkette:

The funniest scandal of the Great Depression 2008-201? was this SEC guy fapping furiously to a transvestite porn site at work while the Wall Street/America/Earth money scam was collapsing, in August 2008. In one three-week stretch, this unnamed Securities and Exchange Commission guy employed to police the nation’s financial system went to porno sites 1,880 times. Too much? Don’t judge! And now another 30 SEC employees — including senior officials earning up to $222,000 a year — have been investigated in this federal tranny-porn inquiry. How is this Chuck Grassley’s fault?The esteemed twitterer and senator requested the summary of the investigation last night, that’s how! Fap fap fap.

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Filed under Economics, Legislation Pending, The Crisis

The Sacking Of The Vampire Squid

Daniel Foster at The Corner:

Breaking over at the Wall Street Journal:

SEC charges Goldman Sachs with civil fraud in structuring and marketing of CDOs tied to subprime mortgages.

Stay tuned.

Stephen Spruiell at The Corner:

There seems to be some confusion over what the Goldman Sachs-SEC lawsuit is about. This isn’t just about the fact that Goldman sold its clients some bonds and then later bet against them. In my view, that wouldn’t be so bad. Goldman would be playing two independent roles in that story — broker on one side, trader on the other — and following independent strategies to hedge against market risk. Micromanaging investment banks’ hedging strategies could have all sorts of undesirable unintended consequences.

But the fraud alleged here is more serious than that, and it concerns the way Goldman structured and sold a particular bond, a structured product known as a Collateralized Debt Obligation (CDO). These products are not like ordinary stocks and bonds, which are pretty straightforward investments. They’re made up of the cash flows of a variety of underlying assets — in this case, pools of mortgages. There was a heavy demand for these products during the housing boom, and investment banks such as Goldman were under pressure to keep churning them out. The charge against Goldman is that at least one of these products, a CDO called Abacus 2007-AC1, was built to fail.

The outside consultant Goldman hired to select which mortgages would go into the CDO, a hedge-fund manager named John Paulson, is now known as one of the most famous housing shorts ever — he made an estimated $3.7 billion betting that these kinds of mortgage-backed bonds would go bad. So it is pretty disturbing that Goldman would bring him in as an “independent manager” to help it construct a CDO and not disclose this fact to the CDO’s buyers.

It would be like holding a basketball game, letting a Vegas sharp secretly select the players on one of the teams, and then presenting it to the public as a fair game. The sharp would have an incentive to select the worst players for his team and then bet against it. According to the SEC, that is exactly what Paulson and Goldman did

Henry Blodget at Clusterstock:

Based on the scan, we have not seen any screaming smoking guns.  There is certainly evidence that Goldman and Tourre said one thing internally and another externally.  It also appears that the information that was omitted in the external marketing materials would likely have been of interest to investors.

That’s not proof of fraud, but, as represented by the SEC, it looks bad.  Goldman will want to make it go away (read: out of the headlines) as quickly as it can.

Importantly, this is NOT a criminal indictment.  It is a civil lawsuit.  The SEC and Justice Department usually work together, so the absence of a criminal charge suggests that the Justice Department did not feel criminal charges were warranted.

So here’s what’s likely to happen to both parties:

Goldman Sachs will have to write a big check, and then it will be fine: Goldman will likely say the charges have no merit and then, in a month or two, settle with the SEC for a few hundred million dollars (chicken feed).  Goldman will then defend itself against the civil lawsuits that arise from this and probably settle those as well.  There may also be follow-on lawsuits for other CDOs and products Goldman created.  Those, too, will likely be settled or dismissed.  Bottom line: This will cost Goldman some money, but not enough to matter to investors.

Fabrice Tourre will be placed on administrative leave or fired (a.k.a., thrown under the bus).  He will then spend the next couple of years testifying in this and other follow-on civil lawsuits.  The SEC will probably demand a cash settlement from him, too, and boot him out of the industry. Based on our scan of the allegations, Tourre was involved in every aspect of the structuring and marketing of the CDO in question.  The complaint includes snippets of communications in which Tourre describes the CDO one way internally and another way externally.  Again, this is not proof of fraud, but, at least as represented by the SEC, it looks bad.  Tourre will likely want to fight the charges, especially if he thinks they’re b.s., but it will be too risky and expensive for him to do so, so he’ll likely settle.  Having made such public allegations, the SEC will make sure that any settlement produces an appropriately tough-looking headline (thus the fine and industry dismissal).

Felix Salmon:

With this suit, the SEC has finally uncovered the real scandal behind the Abacus deals. The NYT tried, back in December, but it didn’t quite get to the nub of the story — although Paulson was mentioned in the NYT story as someone who was generally short the subprime market, there was no indication that he played any role in structuring the deals. Neither was there any mention of ACA.

The scandal here is not that Goldman was short the subprime market at the same time as marketing the Abacus deal. The scandal is that Goldman sold the contents of Abacus as being handpicked by managers at ACA when in fact it was handpicked by Paulson; and that it told ACA that Paulson had a long position in the deal when in fact he was entirely short.

Goldman Sachs has lost more than $10 billion in market capitalization today, in the wake of these revelations. Good. It can go long markets and it can go short markets. But it can’t lie to its clients. That’s well beyond the pale.

Update: The Abacus pitch book can be seen here.

Naked Capitalism

Jesse Eisinger and Jake Bernstein at ProPublica

Matt Taibbi:

Goldman, Sachs is getting busted, finally, for what to me is one of the most devious and brilliant crimes of the last decade.

I can’t get into this too much because I have other material coming out about it. But the upshot of it is that GS teamed up with a hedgie named John Paulson (no relation) to make the biggest ball of subprime shit they could, got short of it by credit-default-swapping it, then roped third parties into buying it. It’s kind of awesome in a way, and I’m sure it was fun while it lasted.

But now… I’m reminded of the scene in Goodfellas when the cops bust Henry…:

Bye bye, dickhead!

Megan McArdle:

One wants to be cautious about saying that Goldman Sachs is definitely guilty.  Financial crises produce immense political pressure for securities regulators and attorneys general to go head-hunting, and the cases often turn out to be weaker than they seem once the defense gets a chance to speak.  The case against two Bear Stearns hedge fund managers, for example, turned out to hinge on horrific-sounding quotes that had very clearly been ripped out of a context that totally changed the implications. Which just goes to show how heavy the pressure is on prosecutors to make these cases.

But it certainly sounds as if the SEC has the goods here.  Felix Salmon has gone through the pitchbook, and pronounces it free of any indication that a third party with a strong economic interest in the transaction was picking the securities to be included.  I will be interested to hear the defense rebuttal.  It should, at the very least, be entertaining.

Was anyone hurt by it?  That’s less clear–at that point, the market still had a bit of froth left, and people might well have bought the securities if Paulson’s interest had been disclosed.  But that doesn’t matter.  It’s hard to imagine anyone making an argument that Goldman didn’t have an obligation to disclose this information–and the fact that they failed to disclose seems to indicate that Goldman, at least, thought that the information would adversely impact the sale price.

I suspect this case will get a lot of public traction.  At this point, what galls people is not so much the stupid behavior that led to the bailouts, but the blatant self-dealing that seems to have gone on.  Unfortnately, much of that self-dealing is not actually illegal . . . so when we find an example that is legally actionable, the public and the court system are bound to jump on it with both feet.

Atrios

Stephen Gandel at The Curious Capitalist at Time:

So there you have it. Finally, the financial crisis gets its first major fraud case. Investment banks created complex securities that increased the risks of in the financial system. Most then held on to the securities because they didn’t know what they had. Goldman instead came up with an elaborate scheme to lay off the risk on unsuspecting investors. Either way, Uncle Sam had to come in a clean up the mess. As the SEC says, in selling something they knew was worthless, Goldman was no different from the medicine man of old. It’s a fraud as old as time.

The first question was who was damaged here. The answer is all of us. First of all, the investors who bought the securities lost about $50 billion on them $1 billion. (That’s the figure for the deal in question by the SEC. But I believe if you figure in all the deals synthetic deals that Goldman set up the investor loss is much larger.) Those investors were mostly pension funds. Second, Goldman insured these purposefully useless mortgage bonds with AIG. So all of us, taxpayers that is, had to pay up for those losses when AIG had to be bailed out. So this suit is really just a case of the government trying to get its money back from Goldman. That’s something we should see more of.

Two more questions: Does this end Blankfein’s reign as head of Goldman? I think so. It’s a big deal for an investment bank to be charged with securities fraud. And it is not just a coincidence that Goldman would get hit with a fraud case when Blankfein was CEO. Even though he is not named in the complaint, Blankfein is to blame. He pushed the firm to become less of an investment bank and more of a trading behemoth.  And this is the result: A brilliant trade that was so brilliant the Goldman people forgot that it also might be fraud.

Last: So are hedge funds more to blame in the financial crisis than we thought? It certainly looks that way. When the hedge funds went before Congress a year or so ago, they were praised–Paulson included. Now it looks like Paulson masterminded a trade that cost the government tens of billions of dollars. I would hope his next Congressional meeting will be less pleasant.

Lucas van Praag at Goldman Sachs:

The Goldman Sachs Group, Inc. (NYSE: GS) responds to a complaint filed by the SEC today.

The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.

The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.

UPDATE: David Goldman (Spenger) at First Things

Eli Lehrer at FrumForum

Paul Krugman at NYT

Tom Maguire

Marian Wang at ProPublica

UPDATE #2: Goldman settles. Felix Salmon

Naked Capitalism

Daniel Indiviglio at The Atlantic

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The Shootings On Danziger Bridge

Laura Maggi and Brendan McCarthy at New Orleans Times-Picayune:

Admitting a cover-up of shocking breadth, a former New Orleans police supervisor pleaded guilty to a federal obstruction charge on Wednesday, confessing that he participated in a conspiracy to justify the shooting of six unarmed people after Hurricane Katrina that was hatched not long after police stopped firing their weapons.

The guilty plea of Lt. Michael Lohman, who retired from the department earlier this month, contains explosive details of the alleged cover-up and ramps up the legal pressure on police officers involved in the shooting and subsequent investigation. It’s unclear when Lohman’s cooperation with federal authorities began, but he presumably is prepared to testify against the officers he says helped him lie about the circumstances of a shooting he immediately deemed a “bad shoot.”

Lohman, who pleaded guilty in federal court to conspiracy to obstruct justice, admits he failed to order the collection of evidence or canvassing of witnesses, helped craft police reports riddled with false information, participated in a plan to plant a gun under the bridge and lied to investigators who questioned police actions.

A spokesman for NOPD Superintendent Warren Riley said the chief did not have a comment about the guilty plea. Bob Young said Riley stands by the quote he made Tuesday, as news of the guilty plea broke. “We hope that justice is served,” he said then.

First Draft:

Remember the Danziger 7? They were the New Orleans cops accused of murdering people on the Danziger Bridge in the chaotic aftermath of Hurricane Katrina and the Federal Flood. A state court dismissed charges against them in 2008 but the Feds launched their own investigation into the episode and subsequent cover-up.

The case exploded yesterday when the police Captain who investigated the incident pled guilty to obstruction of justice and admitted that it looked like a “bad shoot” from the git go. This is the *perfect* witness for the Feds: he knows all the details and wasn’t one of the shooters.

Justin Elliott at TPM:

In charge of supervising the police investigation, Lohman drafted a bogus 17-page report on the incident, and helped other officers prepare false reports that would agree on a single narrative. When another investigator planted a handgun at the scene, Lohman questioned him to make sure it was “clean.”

Lohman admitted “he knew that the civilians on the bridge had not actually possessed guns, and he knew that the investigator had also falsified statements by the civilians,” according to the government’s press release.

The seven police involved in the shooting itself claimed that they had come under fire after responding to a call that reported two officers had been shot in the area of the bridge, according to an account of the incident from ProPublica. The outlet has been investigating the incident along with the New Orleans Times-Picayune.

After the police shooting, officers arrested Lance Madison — brother of one of the slain men — and booked him on attempted murder charges, alleging he had shot at officers. A grand jury later rejected those charges, according to the Times-Picayune, which has a useful timeline of the case here.

What actually happened, according to the Feds, is this: at least seven officers arrived at the bridge in a Budget rental truck. For unclear reasons, the police opened fire when they encountered on the east side of the bridge a group of six people heading to a supermarket to get supplies. That’s when Brissette was killed; Susan Bartholomew lost part of an arm, and her husband Leonard was shot in the head.

Then the officers traveled to the west side of the bridge and encountered the Madison brothers, who were headed to visit a family member’s dentistry office. Ronald Madison, who lived with his mother and, according to his brother, had the mental capacity of a young child, was shot five times in the back, an autopsy showed.

The police involved in the incident were out of uniform and heavily armed, according to the Times-Picayune. They later claimed that one of the victims had reached for a “shiny object,” according to the New York Times.

The seven officers involved in the bridge shooting were indicted on murder charges in December 2006, but the judge threw out the case in August 2008, citing a prosecutor’s violation of grand jury secrecy. The next month, U.S. Attorney Jim Letten launched a probe of the case.

It’s not clear whether the officers involved in the shooting itself could still face federal charges.

ProPublica:

The autopsy reports show that Ronald Madison, 40, was shot once in the shoulder and five times in the back, while 19-year-old James Brissette was killed by seven gunshots.

The survivors were seriously injured: Susan Bartholomew lost her right arm as a result of the gunfire; Lesha Bartholomew suffered four gunshot wounds; Leonard Bartholomew was shot three times; and Jose Holmes Jr. had to have a colostomy after he was shot in the stomach.

No police officers were injured.

The Police Account

At approximately 9 a.m., police responded to a report that two officers had been shot in the area of Chef Menteur Highway and Downman Road, near Danziger Bridge, according to the NOPD’s report of the incident. Once they arrived, the officers say, they came under fire and began shooting back.

They initially charged Ronald Madison’s brother, Lance Madison, with eight counts of attempted murder, but a grand jury declined to indict him.

The Civilians’ Account

All of the surviving civilians agree on one thing: They didn’t shoot at the police. They’ve filed a string of lawsuits against the police claiming their rights were violated; those suits remain on hold as federal authorities investigate.

According to a suit filed by Holmes, the officers didn’t issue any orders or warnings before firing their weapons, and their vehicle did not have any markings on it to identify them as law enforcement officers. Holmes says he was shot twice in his abdomen by an officer standing over him.

The Aftermath

Investigators assigned to the Danziger Bridge shooting relied heavily on their colleagues’ statements for their 54-page report. Reporters at the New Orleans Times-Picayune haven’t been able to locate two civilian witnesses who were interviewed for the report, or uncover any evidence that these witnesses actually exist. And another key witness, David Ryder, was a fraud. He told police he was a St. Landry Parish sheriff’s deputy, but, in fact, Ryder was a convicted criminal who’d never worked for the St. Landry sheriff.

Vladimir at Redstate:

U.S. Attorney Jim Letten and the Federal Bureau of Investigation have achieved a key break in their investigation of the New Orleans Police Department and the shooting of six civilians (two fatally) during Hurricane Katrina’s chaotic aftermath. According to Letten’s bill of information, none of the victims were armed. Former NOPD Lieutenant Jim Lohman has entered a guilty plea to federal charges of conspiracy to obstruct justice and has agreed to cooperate with the prosecution in its investigation of the other police officers involved in the incident. State charges were filed in 2006 but dismissed in 2008.

Letten is a Republican, and a Bush appointee. His office has taken down some 200 corrupt public officials during his eight year tenure in office, making him perhaps the most trusted figure in the New Orleans area. His retention as U.S. Attorney has been supported by both Sen. David Vitter and Sen. Mary Landrieu.

Ta-Nehisi Coates

UPDATE: Huffington Post

UPDATE #2: More Huffington Post

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