Liberals and Conservatives Are Different

Chris MooneyIn a recent experiment by psychologists Russell Fazio and Natalie Shook, a group of self-identified liberals and conservatives played BeanFest. And their strategies of play tended to be quite different. Liberals tried out all sorts of beans. They racked up big point gains as a result, but also big point losses — and they learned a lot about different kinds of beans and what they did. Conservatives, though, tended to play more defensively. They tested out fewer beans. They were risk averse, losing less but also gathering less information.

One reason this is a telling experiment is that it’s very hard to argue that playing BeanFest has anything directly to do with politics. It’s difficult to imagine, for example, that results like these are confounded or contaminated by subtle cues or extraneous factors that push liberals and conservatives to play the game differently. In the experiment, they simply sit down in front of a game — an incredibly simple game — and play. So the ensuing differences in strategy very likely reflect differences in who’s playing.

—Chris Mooney
The Origin of Ideology

Five Years

Frankly CuriousToday is the fifth anniversary of Frankly Curious. It was on 10 November 2009 that I wrote my first article, Everything Interesting for Everyone Interesting. All things considered, it isn’t a bad article. I was clearly trying a bit too hard, however.

For the first couple of months, I wrote ten or more articles. But after several months, it dropped to a trickle: two or three per month. And then I discovered that I could write about politics and things picked up. But it wasn’t until about two years that Frankly Curious became a dependable daily thing. And then leading into the 2012 election, it became more like an addiction. In fact, in those days, I sometimes did ten articles per day. Now I try to avoid doing more than five articles per day. Anyway, I think the average article lengths are longer now — more in the 700 – 800 word length, and quite often over a thousand words.

Anyway, I’m kind of amazed that this thing is still going. And that it continues to develop. There are more readers every month that passes. It is actually kind of shocking. But I guess it feeds on itself. The more content you create, the more things there are to show up in search results. And having built it, I can’t image allowing it to slip back. Although at some point, I may well have to do that. Or I’ll just die, in which case I don’t care.

By way of celebration, here is David Bowie’s apocalyptic “Five Years”:

Claude Rains Was the Invisible Man

Claude RainsOn this day in 1889, the great actor Claude Rains was born. Most people know him from Casablanca where he was, “Shocked to find that gambling is going on in here!” Or you know him as the corrupt but ultimately decent Senator in Mr Smith Goes to Washington. Or maybe you are a fan of The Rocky Horror Picture Show and you know that, “Claude Rains was The Invisible Man.” That last one was Rains’ first real film role in the James Whale classic.

Rains was well into his forties by the time he made it to Hollywood. By the early 1920s, he was a successful stage actor as well as an acting teacher at the Royal Academy of Dramatic Art. In fact, he taught two of the greatest actors of the century: John Gielgud and Laurence Olivier. By the late 1920s, he had moved to New York, where he was a star on Broadway. He came to Hollywood in 1933 to make The Invisible Man and the rest, as they say, is history.

But maybe not. I think people tend to under-appreciate how important Rains was. He had major parts in 50 feature films, in addition to an active later career in television. And he was the first actor to receive a million dollars for a film, in George Bernard Shaw’s Caesar and Cleopatra with Vivien Leigh. Of course, the film was a flop. But I don’t know why. I haven’t ever seen it. (But I’ve requested it; I’ll let you know.)

Let’s watch a little of Rains’ work. First, here is the trailer for The Invisible Man:

Here is a wonderful scene from Caesar and Cleopatra:

And since I can’t find anything from Notorious, let’s just go with a little Casablanca:

Happy birthday Claude Rains!

Those Radical Conservative Catholics

Ross DouthatI love liberalism in its most general sense. The thing about liberalism is that it is fearless. A liberal is not afraid of change. This probably explains why political conservatives are so effected by fear. It also explains their jingoism and the belief that America must spend as much as the rest of the world combined on its military. This isn’t the thinking of the brave; it is the thinking of the coward. So it just makes sense that God would be very liberal. After all, the universe is constantly changing. And we would have to assume that God is brave.

So when Pope Francis beatified the very liberal “Vatican II” Pope Paul VI, he said, “God is not afraid of new things.” (It was Pope John XXIII who started Vatican II, and Pope Paul VI who completed it.) It’s sad that he had to remind believers about this. But then, let’s face it, it isn’t God that is conservative; it is churches. People get those things mixed up. Churches claim that they have their holy documents and they can’t be questioned, because they don’t want the churches’ authority questioned. It has little if anything to do with what the people in those churches actually believe about God.

Right now, there is a big dust-up in the Catholic Church. Pope Francis just sent the conservative Cardinal Raymond Burke packing. Basically, he made him retire. He moved him from the very important and powerful position at the head of the Holy See’s highest court and put him in a ceremonial position that is normally given to retired cardinals. It was expected. Francis is trying to make the church less hostile to everyone and Burke has been running around saying, “There is a strong sense that the church is like a ship without a rudder.” Burke, you may remember, was the American archbishop who was denying communion to pro-choice Catholic politicians. He’s a real charmer. And humble too!

My great concern is that Ross Douthat be on a suicide watch. Over the last year, the conservative Catholic who (in yet another example of conservative affirmative action) writes for The New York Times has gotten more are more shrill in his concern about schism in the church. Two weeks ago, he wrote, The Pope and the Precipice. What I find interesting is that people like Douthat just take their conservative approach to the church as given. And in Douthat’s case, that’s understandable. He was born in 1979 — a year into Pope John Paul II’s reign. So he’s only known conservative popes. But that isn’t all there is to the Catholic Church, or it would still be burning people at the stake.

Tom Gallagher at the Nation Catholic Reporter call this bunk, Contra Douthat: We Are Not on the Edge of a Precipice. He even asked the rhetorical question, “Is Douthat really threatening the pope and calling for both an insurrection against Pope Francis and a schism?” Well, yes; he is. It isn’t the first time, either. Douthat has made it abundantly clear that the dedication of conservative Catholics to the church is dependent upon the church doing what the conservative Cathlics want.

This is entirely typical of American conservatives in a general sense. We see that political conservatives are patriotic only to their conception of “America.” When it comes to the actual America, they are more interested in talking armed insurrection if their fabled “America” is not honored. It is even more bizarre to see this in religion. But I think it really all comes down to this idea that The Truth™ is defined at some point in the conservative’s life — normally in childhood. And they never get past that and to the mature understanding that all things in life are fluid. (And a brief look at history will show that it is for the best!)

What’s sad and funny is that Douthat approves of Vatican II. Yet there were lots of conservative Catholics just like him who left the church because of it. But Douthat noted that Vatican II was approved overwhelmingly. The problem, as usual, is that Douthat has “a little knowledge.” Shortly after his article appeared, John O’Malley schooled Douthat on the matter:

Yes, they finally passed with that degree of unanimity. But before they reached that point they were so hotly contested and seen as such radical changes in Catholic tradition that the Secretariat for Christian Unity, the body at the council responsible for them, seriously considered withdrawing them from the agenda rather than risk a vote.

If you are interested in the Catholic Church at all, I recommend reading O’Malley’s article. I also suggest reading it if enjoy seeing an immature upstart thwacked up side the head. O’Malley noted that Douthat was equating “conservative” with “orthodox” and that he was implicitly equating “liberal” with “heterodox.” That’s an excellent point. That is exactly what he is doing. Because as usual with American conservatives, Douthat thinks that he defines The Truth™. O’Malley is a different kind of conservative:

Finally, what are we to make of this: “Remember there is another pope still living!”? “Another pope still living!” This sounds like a threat. Are Mr Douthat and the like-minded Catholics for whom he speaks appealing to a pope more to their liking over a pope less to their liking? If so, the statement has a regrettable sinister ring. Or what? Let’s hope that Ross Douthat does not mean his reminder to be as schism-suggesting and radically un-Catholic as it sounds to my conservative ears.

But I’m still worried about Douthat. I thought a lot of stupid things when I was 34. I would hate to lose him. If we are very lucky, he might mature into someone more like Garry Wills.

Update (10 November 2014 11:56 am)

Charlie Pierce has a few choice words for the young Douthat:

If Douthat and the church’s conservatives are feeling a little tender in the nether regions over what’s happened to a crank like Raymond Burke, well, hell, I can sympathize. I have lived through the silencing of Teilhard de Chardin, the betrayal of the promise of the Second Vatican Council, the disciplining of Hans Kung, the witch-hunt against Edward Schillebeeckx, the command that Father Robert Drinan leave the Congress, the condemnation of the Central American liberation theologians, some of whom were the only people standing between the poor and the US-sponsored savagery of the Reagan-era death squads, the way that late St. John Paul II (abetted by then-Cardinal Ratzinger) cracked down on American theologians.  I did not leave the church or threaten schism.

Mitch McConnell’s Cunning Plan

Mitch McConnellJonathan Cohn tried to throw a little cold water on the Republican triumphalism last week, McConnell Didn’t Win Everything. His argument is that the Republicans paid a big price for their win on Tuesday. There are two parts of this. McConnell’s scorched earth “oppose everything” approach to the Obama administration meant that the Republicans had no input into the quite substantial legislative successes of the first two years. We could go further than that and see that Obama now feels he can do rather a lot through executive action because he has no real relationship with with the Congressional Republicans. It isn’t as though they are going to scream any more (or less) regardless of what he does.

The second part of Cohn’s argument is kind of funny: McConnell failed in his primary goal. Remember, McConnell didn’t say, “The single most important thing we want to achieve is to take control of the Senate in six years”; he said, “The single most important thing we want to achieve is for President Obama to be a one-term president.” So even though it has got to be sweet to have this victory that was a long time in coming, it was not the success he had planned.

I think I would go in an even more extreme direction. McConnell has been a complete failure. He didn’t manage to take the Senate in 2010. In 2012, he actually lost seats, even though the fundamentals were good for him. The only way that his cunning plan can be seen as a success is if the Republicans keep the Senate and take the White House in 2016 — a result that is not even likely, much less assured.

Of course, now we have the ever wrong Megan McArdle who wants to know, Does Obama Even Know How to Negotiate? She says that Obama isn’t being nice after “McConnell’s rather gracious remarks.” I mean, can you imagine? McConnell has said publicly that he’s willing to work with the president! Obama should bend over to kiss his ring (and other things). Of course, we know that over the years McConnell has made similar vanilla statements about working together, and they always mean the same thing: if Obama is willing to do exactly what McConnell wants, they have a deal. (In theory.) Obama is just treating him the same way. The difference is that Obama actually has the power to do things by himself.

McArdle’s main argument is that since McConnell isn’t an ideologue, Obama will be able to make deals with him. Scott Lemieux over at Lawyers, Guns, & Money tears this argument to pieces:

The argument stands reality on its head. An ideologue you can potentially negotiate with, but someone who’s opposed in principle to making a deal with you is a different story. The idea that McConnell is going to suddenly drop his blanket opposition to giving Obama any legislative accomplishments now that he’s the majority leader is absurd. And even if Mitch McConnell suddenly turned into a 60s Republican minority leader, the chances that Boehner could deliver the votes for any significant non-budget legislation acceptable to Obama are less than nothing.

The truth is that McConnell’s plan has always been to maximize his power. Critical to that plan is to put a Republican in the White House in 2016. And that means doing what he has done for the last six years: stop the Democrats from doing anything at all. As I’ve discussed in the past, this is probably a bad plan. All the Republicans have really succeeded at is slowing the economic recovery so that by 2016, we will probably have a better economic recovery, making a Democratic win far more likely. But McConnell is not going to change his plan now. And even if he did, it is probably too late.

Economic Populism Only Defense for Fake Kind

Thomas FrankWith Sunday comes another article by Thomas Frank, and I was very interested to hear what he had to say. After all, he sounded semi-hopeful last week when it looked like the Kansas voters might finally have had too much and would through out Sam Brownback from office. Yet the incompetent ideologue managed to stay in office, beating the extremely moderate Democrat Paul Davis by just short of four percentage points. But really, what is there to say? Frank has said as much himself: there is no line in the sand; for much of the American middle class, there is no level of incompetence and the total disregard of the interests of the people that will hurt a politician with an R after his name. In most states, the poor are reliably Democratic. But that’s not true in Kansas; even there they pull the lever for the Republican. Because freedom or innocent babies or something.

Well, this week, Frank doesn’t have anything much to say about Kansas other than to talk about the robo-calls, The GOP’s Poisonous Double-Speak. He lists low turnout first as a reason for the bad election results. But his main interest is the fake-populism of the Republican Party. And I’ll admit, in a general sense, it has been a very big thing. After all, why was the Tea Party — those angry middle-class voters — so dedicated to the interests of the power elite? But I think the reason for this is just that conservative rage is strong and aimed at some diffuse “other.” So they were always going to find a conservative agenda to follow.

Frank’s conclusion is this:

We are living in a new, oligarchic world — an endless downward spiral for the kind of voters who put FDR in the White House four times — and it’s time for the party’s leadership to notice the changed situation. Many of our modern, post-partisan Democrats are about as well adapted to the current climate of economic fury and apprehension as an alligator is to the icy waters of the Arctic. They need to evolve, and quickly.

But I’m afraid we may be in “Old Man Yells at Cloud” territory here. It’s true. Of the two parties, only the Democrats have any kind of claim to economic populism. But it is the Republicans who manage to actually use it as an electoral tool — even if they never come close to it in terms of policy. And it isn’t like the issue hasn’t been out there. Thomas Frank himself has been making this argument. This was more or less the argument he made in 2004 with What’s the Matter with Kansas? And it is exactly the argument he made in 2011 with Pity the Billionaire.

Old Man Yells at CloudWe can rack our brains and try to figure out how the Democrats could use economic populism to its advantage. But I think that is missing the point. It isn’t that the Democrats can’t figure out how to use economic populism. It is that they think they already own the brand of “economic populism” too much for the comfort of their billionaire funders. This always reminds me of a line from The Right Stuff, “Our Germans are better than their Germans.” That is pretty much the Democrats’ line, “Our billionaires are better than their billionaires.” But as far as I can tell, they are only better in that they are pro-choice and pro-gay. In terms of economics, they don’t really seem to be different. And that means economically speaking, the Democratic Party isn’t much different from the Republican Party.

Look: I’m not saying that the parties are the same. Clearly, the Democratic Party is the one we need to work on. But it does need to be worked on. We, the Democratic base, have to force the Democratic Party to take a hard left turn into the heart of economic populism. The Republicans’ fake-populism on economic issues will remain powerful as long as real economic populism is not offered by the Democratic Party.

Education Reform Billie and Mindy Can’t Abide

Linda Darling-HammondIn contrast to European and Asian nations, which fund schools centrally and equally, the wealthiest US school districts spend nearly ten times more than the poorest, and spending ratios of three to one are common within states.

These disparities reinforce the wide inequalities in income among families, with the most resources being spent on children from the wealthiest communities and the fewest on the children of the poor, especially in high-minority communities. This reality creates the disparities in educational outcomes that plague the United States and ultimately weaken the nation.

From the time southern states made it illegal to teach an enslaved person to read, throughout the nineteenth century and into the twentieth, African Americans, Native Americans, and, frequently, Mexican Americans faced de facto and de jure exclusion from public schools throughout the nation and experienced much lower quality education.

These disparities have continued. In 1991, Jonathan Kozel’s Savage Inequalities described the stark differences between segregated urban schools and their suburban counterparts, which generally spent twice as much: places like Goudy Elementary School, which served an African American student population in Chicago, using “15-year-old textbooks in which Richard Nixon is still president” and “no science labs, no art or music teachers… [and] two working bathrooms for some 700 children,” in contrast with schools in the neighboring town of New Trier (more than 98 percent white), where students had access to “superior labs… up-to-date technology… seven gyms [and] an Olympic pool.”

More than a decade later, school spending in New Trier, at nearly $15,000 per student, still far exceeded the $8,500 per student available in Chicago for a population with many more special needs. Nationwide, many cities spend only half of what their wealthier suburbs can spend.

—Linda Darling-Hammond
Educational Quality and Equality
in Divided: The Perils of Our Growing Inequality

Benjamin Banneker

Benjamin BannekerOn this day in 1731, the American astronomer and surveyor Benjamin Banneker was born. He was self-taught and known mostly for his popular almanacs and ephemeris work. The son of a free born black woman and an ex-slave father, he was something of a cause célèbre among the abolitionist movement — both in the United States and overseas. In fact, William Wilberforce discussed Banneker in the House of Commons in his fight to end the slave trade.

Banneker was an outspoken abolitionist. In fact, he used his almanacs to push his ideas on that subject as well as other liberal issues. Included in his 1793 almanac was a correspondence that he had with Thomas Jefferson. It is quite interesting. When he first wrote to Jefferson, Banneker didn’t pull any punches. He confronted Jefferson about his public statements against slavery and his continued private participation and profit in it. Jefferson responded politely.

But what’s most interesting is that in later years, after Benneker was long dead, Jefferson showed how small minded he could be. Clearly, Benneker’s criticisms had stung. In a letter to Joel Barlow, he claimed the letter from Benneker “shows him to have had a mind of very common stature indeed.” Yes, very common of him to mentioned Jefferson’s hypocrisy. Jefferson, being the racist he always was, claimed that Benneker must have been helped in his work by a local Quaker benefactor. There certainly was a mind of very common stature among the two and it certainly wasn’t Benneker.

Happy birthday Benjamin Banneker!

Political Fundamentals Are Not Destiny

Martin LongmanMartin Longman wrote a really thought provoking article over at Washington Monthly that pushes back against the fundamentals obsession of people like me, The Midterm Results Were Not Completely Preordained. I said “thought provoking,” however — not “right.” But the title of his article is right on: fundamentals are not destiny. And even I know that, as much as I may harp on them. Fundamentals tend to swamp everything else, but political scientists only claim that the economic trend in presidential years is responsible for 40% of the election results. That leaves a lot of other things to tip the balance. And that’s even more true in statewide and (especially) local races.

Longman’s first point is striking. He presented a graph of House results in Pennsylvania, Ohio, and Michigan in 2012 and 2014. Even though the Republicans got a much higher percentage of the vote in 2014, they ended up with exactly the same number of house seats in each of the three states. When I saw that I was speechless. But it didn’t take long to come to the same conclusion that he did:

One could look at this as a disappointment for the GOP. They did so much better in 2014 and got no reward for it. The better way to look at it is that what the American people think doesn’t have any influence whatsoever on who winds up controlling the House. The results were the same whether the president was being reelected (as he was in all three of these states) or being disparaged as a drag on the ticket. It didn’t make a difference whether the incumbent governor was being drummed out of office (as in Pennsylvania) or reelected in a landslide (as in Ohio).

And Longman isn’t exactly cherry picking. Currently, there are only 15 House seats nationwide that flipped, and another seven that are too close to call. It does show the pernicious effects of gerrymandering. And for the record, I’m very tired of hearing people claim that pushing all urban areas into as few districts as possible is not gerrymandering. The truth is that we could have laws that would divide states up in the most equitable way possible and we don’t. There is nothing natural about our current state.

The second point is more diffuse, but Longman noted the polls were particularly off on the statewide elections in Appalachia. And yes, the Democrats could be a lot more populist in terms of economics. But the fact was that the media was not interested in reporting these issues anyway. Instead, it was ISIS and Ebola — two issues that implicitly and explicitly made Democrats look weak. (Although note: is there anything to fear from either now? No!)

Something that I think Democrats need to consider very carefully is the party’s brand. By talking more about economics — an issue where even many conservative voters agree with “liberal” policy — the Democrats would not likely have won any more states. But they likely would have done better. And they would have started the generations-long process of winning the ideological debate about these issues. The problem, as I’ve discussed many times before, is that I don’t think the power elite in the Democratic Party want to win this debate. They are happy to talk about abortion and same sex marriage; but economic issues are as much a threat to them as they are to the Republican elites.

Regardless, political parties can’t just focus on the fundamentals — waiting around for the right conditions for them to get into power. For one thing, they would be in no position to exploit the opportunity once they got in power. I think that is largely what happened with the Democratic Party in 2008. Obamacare was fine, but why didn’t the party even start thinking about minimum wage until 2012? But issues like this are not just good policy, they are good politics. And they help — especially in close races. And this year, the Democrats lost almost all of the close races.

Keith Ablow and the Terri Schiavo Syndrome

Keith AblowLet us return to 2005, the year the American voter realized it had made a terrible mistake in the election the year before. You remember, if 2004, the voters were promised that Bush would “Get the fags!” But once re-elected, the voters found they had voted to “Privatize Social Security!” If ever there was a simple example of What’s the Matter With Kansas? it was Bush and his craven use of a conservative social issue to push a conservative economic wet dream. But 2005 also stands as the ultimate example of conservative overreach: Terri Schiavo.

As you may remember, Schiavo was an unfortunate woman in Florida who had a heart attack in her home. Due to lack of oxygen, she had massive brain damage. After 15 years, doctors had diagnosed that she was in a persistent vegetative state — that is to say, she was more or less what we think of as a zombie; she was no longer Terri Schiavo but rather just a body with a functioning brain stem. It was a tragic situation. Her husband wanted to end her suffering and move on with his life; her parents understandably wanted to hang on.

So the parents put together a video tape of their interactions with her. It was cut together from hours of tape, throwing together all the moments when it seemed as though Schiavo was responding to them. I don’t think they were meaning to be dishonest. When the will to believe is strong, one can be convinced of just about anything. I see no villains in the actions of any of the people directly involved. But the Terri Schiavo case did not stay confined with those directly involved.

Bill FristFirst, the Florida Republicans got involved. It passed “Terri’s Law” that allowed Jeb Bush to take control and have Schiavo’s feeding tub reinserted. When the law was found to be unconstitutional, the case ended up at the Federal Level. And that’s when Senate Majority Leader Bill Frist got involved. You see, he is a physician — a heart surgeon. And in one of the great acts of hubris, he countered the doctors’ diagnosis, even though they had actually spent time with Schiavo to determined her condition, “I question it based on a review of the video footage which I spent an hour or so looking at last night in my office.” It was also, of course, an ethical breach. It was clear that he was just saying what was politically expedient and using his medical degree to provide a patina of legitimacy. It amazes me that such actions do not cause doctors to lose their licenses.

But as bad as the 2005 Republican Party was, it really doesn’t hold a candle to the modern Republican Party. And this is especially evident on the RNC propaganda channel known as Fox News. I’ve been reminded a lot of Dr Frist when I’ve heard psychiatrist Keith Ablow who has been on the station for years as part of its “Medical A-Team.” (God help those treated by the “B-Team”!) And in that capacity, he has been psychoanalyzing President Obama, who he has determined has abandonment issues that cause him to hate white people. Here’s a good collection put together by Madia Matters for America:

Remember: this is the kind of stuff coming from the authoritarian conservatives. They have absolute respect for their own leaders and are shocked (“Shocked to find that gambling is going on in here!”) that anyone would even disagree with them. But they automatically treat opposing leaders as though they were common criminals. And Ablow is about the worst that they come. He is more than willing to prostitute his psychiatric degree for political gain. It is hard not to conclude that Ablow would have been one of those Nazi doctors doing “experiments” at the concentration camps. But I can’t say for sure, because just as with Ablow regarding President Obama and Frist regarding Schiavo, I have never met the man.

On Thursday, David Bauder at the Associate Press reported on a little push back, Fox‘s Ablow Regularly “Diagnoses” Obama. It contains a number of quotes from psychiatrists who are bothered by what Ablow does and how it reflects on the profession — something Ablow certainly doesn’t care about. But I was struck with the fact that even people at the crazy Media Research Center have a problem with him. Tim Graham criticized the whole issue of psychoanalyzing the president.

But he bugged me by noting that people on the left said that Bush the younger had “daddy issues.” This is false equivalence. To begin with, people were making a common observation, not a psychological diagnosis. Regardless, it was not psychiatrists coming on television claiming that they were objective scientists and they knew that Bush was invading Iraq because he was trying to prove to the world that his penis was bigger than his father’s.

It speaks poorly of our society that Ablow is not just considered unacceptable. Certainly he would have been at any time before the creation of Fox News. And I really do think that this is an important event. I doubt that Terri Schiavo would have been such a big deal without Fox News and all the rest of the right wing echo chamber. It creates a place where they can all get together and talk themselves into believing anything. And the nation is far worse off as a result.

Corporate Crime Is Not Real Crime — In US

Alayne FleischmannI find this offensive. Last year, JPMorgan Chase made a deal with the Justice Department to pay the largest fine in history, $13 billion, blah, blah, blah. But the big deal is not the fine, because, hell, it’s JPMorgan Chase; the company still made $18 billion that year. I think a major bank robber would be fine with a deal that only required him to pay 40% of the money he made that year. In fact, most regular felons have to pay a lot more than that in restitution. The money means nothing. But here’s the important part: according to the Washington Post, “The Justice Department and JPMorgan are hammering out the final details, including a statement listing what the company did wrong.” Consider our poor bank robber again. Can you imagine what a terrible thing it would be to be forced to admit his guilt?! I mean, the 30 years in jail is nothing compared to that! Of course, JPMorgan might also be open to further legal proceedings — focus on the “might” as in “won’t.” I mean, it’s been a year. Have you read about any indictments?

That was then. On Thursday, Matt Taibbi published a bombshell article, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare. It is about Alayne Fleischmann, a securities lawyer who used to work for JPMorgan Chase. And she tells the inside story of last year’s settlement. In brief: managers at the bank not only knew about the criminal behavior that was going on, they were the ones pushing it.

Matt TaibbiFleischmann worked under the manager for diligence who did not want any of his subordinates to send him email. He wanted everything done verbally, we assume because he didn’t want a paper trail that would lead to him after the bad securities the bank was approving blew up. Fleischmann and other subordinates did not approve many of the mortgages that were in the securities. This meant the securities could not be sold. So the subordinates were put under extreme pressure to okay bad loans.

What I find most interesting about this is that the situation is that the low-level employees like Fleischmann are the ones being set up for the fall. When the securities were shown to be the garbage everyone at JPMorgan Chase knew they were, the managers could feel safe with their bonuses knowing they could always claim that they were the victims of their subordinates who approved bad loans. It is despicable.

Fleischmann stands to lose her license and much more for coming forward because of a confidentiality agreement she signed. And it would be entirely typical of American “justice” that she gets punished while the actual criminals do not. And the criminals are everywhere, even at the very top of JPMorgan Chase:

[I]n early 2007, she sent a long letter to another managing director, William Buell. In the letter, she warned Buell of the consequences of reselling these bad loans as securities and gave detailed descriptions of breakdowns in Chase’s diligence process.

Fleischmann assumed this letter… would be enough to force the bank to stop selling the bad loans. “It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing,” she says. “But when the Justice Department doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.”

In February 2008, less than two years after joining the bank, Fleischmann was quietly dismissed in a round of layoffs. A few months later, proof would appear that her bosses knew all along that the boom-era mortgage market was rotten. That September, as the market was crashing, Dimon boasted in a ball-washing Fortune article titled “Jamie Dimon’s SWAT Team” that he knew well before the meltdown that the subprime market was toast. “We concluded that underwriting standards were deteriorating across the industry.” The story tells of Dimon ordering Boester’s boss, William King, to dump the bank’s subprime holdings in October 2006. “Billy,” Dimon says, “we need to sell a lot of our positions… This stuff could go up in smoke!”

In other words, two full months before the bank rammed through the dirty GreenPoint deal over Fleischmann’s objections, Chase’s CEO was aware that loans like this were too dangerous for Chase itself to own.

Why isn’t Dimon doing years in jail? Because that sort of thing just isn’t done to the likes of him. If he were ripping people off for five bucks by doing three-card monte in the subway, he’d be in jail. But defrauding people out of hundreds of millions of dollars somehow makes a man respectable.

So five years pass and the Justice Department contacts Fleischmann and gets all the goods on JPMorgan Chase. They are going to announce a widespread fraud case against the bank. But then Dimon calls the number three man at Justice and tells him the bank wants to negotiate. So the fraud case is dropped and JPMorgan pays a few billion and admits, “Yeah, some unnamed people misbehaved.” As Dennis Kelleher of Better Markets said, “It would be like charging a serial murderer with a single assault and giving them probation.”

And in the end, that $13 billion figure was a joke anyway:

The deal was widely considered a good one for both sides, but Chase emerged with barely a scratch. First, the ludicrously nonspecific language surrounding the settlement put you, me and every other American taxpayer on the hook for roughly a quarter of Chase’s check. Because most of the settlement monies were specifically not called fines or penalties, Chase was allowed to treat some $7 billion of the settlement as a tax write-off.

Couple this with the fact that the bank’s share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal. What’s more, to defray the cost of this and other fines, Chase last year laid off 7,500 lower-level employees. Meanwhile, per-employee compensation for everyone else rose four percent, to $122,653. But no one made out better than Dimon. The board awarded a 74 percent raise to the man who oversaw the biggest regulatory penalty ever, upping his compensation package to about $20 million.

As for the criminal investigation, well, the Justice Department apparently just dropped it. Fleischmann was not contacted for almost a year. She is understandably skeptical now. Consider what Eric Holder said about holding bank managers accountable, “Responsibility remains so diffuse, and top executives so insulated that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.” As Taibbi commented, “In other words, people don’t commit crimes, corporate culture commits crimes!” In a regular criminal case you would never see this. After a criminal was looking at decades in jail, then the defense could make social pleas. But when it comes to corporate crime and billions of dollars the Justice Department starts there, “They aren’t bad guys!”

As for Fleischmann, it will probably go very badly. If she doesn’t lose her license altogether, she will be blackballed. I’m sure the financial press will pick her life to death. But that’s what happens to ethical people in our society. Other than that, expect JPMorgan Chase to make even more money and for Jamie Dimon to get another raise.

Afterword

Check out the great Democracy Now! interview with both Taibbi and Fleischmann.

Power Elite Know Nothing of America

Divided: The Perils of Our Growing InequalityIn 2001, soon after George W Bush was inaugurated, I called the White House press office for comment on the latest IRS income data. The deputy spokesperson expressed disbelief at the official figures I read, so much so that I asked, “What do you think is the median income shown on tax returns in America?” The answer: $250,000. The actual figure at the time: $28,000.

—David Cay Johnston
Divided: The Perils of Our Growing Inequality