Opinion

Stories I’d like to see

Lying to the SEC, A-Rod’s contract, and everybody gets hacked

Steven Brill
Feb 5, 2013 12:47 UTC

1.      Suppose a college applicant did this?

Here’s a story that seems so bizarre that it might be good material for a Tom Wolfe re-do of The Bonfire of the Vanities rather than worth the time of a serious non-fiction reporter – except that it’s apparently true. According to this New York Times report last month, Egan-Jones, an “upstart credit ratings firm,” has been:

barred for 18 months from issuing certain government-recognized ratings after the firm made misstatements on an application with the government. The S.E.C. said the firm had exaggerated its record when it applied for a government designation in July 2008. The firm said then that it had performed 150 ratings of asset-backed securities and 50 ratings of governments, when it actually had performed none at that time, according to the agency…. Under the terms of the penalty, Egan-Jones is barred [for 18 months] from rating asset-backed and government securities issuers as a so-called nationally recognized statistical rating organization….For other categories of ratings, Egan-Jones will still have the government designation.

Huh? “Exaggerated” its record? A firm applying for the SEC seal of approval as a provider of honest securities ratings seems to have completely fabricated its resume, saying it had done 200 ratings when it had done zero. And the SEC puts them in the penalty box for just 18 months for some ratings and lets them keep right on providing other ratings?

There must be more to this story. Maybe the fabrications on the application were an accident, or the work of a prankster who snuck into the Egan-Jones offices and took over a keyboard. Or maybe the SEC announcement of the “settlement” was a prank. If not, can the SEC explain what an applicant would have to do to be barred permanently from winning a designation? And why did it take five years for the SEC to deal with this?

2. Is A-Rod’s contract as hollow as his bat?

The recent round of charges that faded Yankee star Alex Rodriguez may be implicated in another scandal involving performance enhancing drugs (PEDs) has generated press speculation that the Yankees will use the charges as a way of freeing them from A-Rod and the $114 million left to pay over the next five years on his contract. But according to this ESPN story, “Rodriguez might be in little danger of having his contract voided, even if the charges turn out to be true. There is no precedent to successfully void a contract in baseball over PEDs.”

Newt’s new gigs, following the Sandy money, and hedge-fund matchmakers

Steven Brill
Jan 29, 2013 13:05 UTC

1.     Newt’s new gigs:

One of my favorite side stories of last year’s presidential campaign had to do with the details that emerged about all the money Newt Gingrich had been making in recent years from speeches, books and lobbying (which he insisted was merely consulting or “advocacy”). As I wrote at the time , Gingrich’s release of his tax returns (when he was taunting Mitt Romney to do the same) was so intriguing because most of his $3.1 million in 2011 income was derived from something called Gingrich Holdings Inc. This was the clearinghouse for his various activities, and it presented him ample opportunity to get tax breaks by routing all kinds of personal expenses through his private corporation. It was an only-in-Washington success story.

With his losing campaign having diminished whatever luster Gingrich might have had, it would be interesting to see whether and how he and his wife, Calista, have revived Newt Inc. Washington seems to be a place where even the politicians pushed furthest to the sidelines can make a good living off of who they once were, who they know and, in the case of books and speeches, their true believers. Gingrich post-2012 puts that theory to a new and interesting test.

What kind of gigs has the former speaker lined up? Where has he been making the rounds trying to land “consulting” retainers? Who’s turned him down and who’s signed him up?

The next terrorist attack, Obama’s Medicare cuts, and the gun lobby

Steven Brill
Jan 22, 2013 16:03 UTC

1. The next terrorist attack may turn your lights out for weeks:

Or it may cause a dozen planes to crash at once because the air traffic control system goes haywire. Or it could play havoc with our email, e-commerce, use of credit cards, and the stock markets. Or do all of the above.

Because I’m on the Department of Homeland Security’s press release list, I’m forever seeing announcements of one DHS official or another speaking at some conference on protecting our critical infrastructure. Last week, DHS’s “National Protection and Programs Directorate (NPPD) Office of Emergency Communications Region IV Coordinator” spoke at one in Tampa, and two other officials will be speaking at conferences on Jan. 23. The problem is that while there are endless forums about the threats, little is being done to deal with them.

Following the September 11 terrorist attacks, many news organizations went back and looked at the scant attention paid to a commission chaired by former Senators Gary Hart and Warren Rudman that delivered a report to the Bush Administration on Jan. 31, 2001, warning that if the country didn’t start shoring up its intelligence and defenses, “America will become increasingly vulnerable to hostile attack on our homeland, and our military superiority will not help us.” Last fall, a series of measures to protect our critical infrastructure – everything from the power grid to electronic systems enabling air traffic control – failed to make it out of Congress despite warnings from Homeland Security and Pentagon officials that, as with the Hart-Rudman prediction, a devastating cyber-attack on our infrastructure was now a matter of when, not if.

A working legislature, post informant life and Wal-Mart’s guns

Steven Brill
Jan 15, 2013 04:30 UTC

A legislature that works:

Maybe it’s because I live in New York and have to read all the time about what may be the world’s two most dysfunctional legislative bodies – in Albany and Washington. But I wish a reporter for a national news organization would try to find the country’s best state legislature. A place where Democrats and Republicans actually work together. A place where money isn’t everything, and where everything isn’t done at the 11th hour, or later, followed by an orgy of self-congratulation.

We’ve got 50 states. They can’t all be governed by lawmakers who embarrass their constituents. Which ones function well, and why? What conflict-of-interest, campaign-spending or other rules do they have that help keep things in line? What makes them different, and how can we export their success to the rest of our capitals?

The afterlife of a Wall Street rat:

“Mr. Wang’s lawyer said his client is ‘isolated and broke’ following his cooperation.”

Medicare meddling, the guns of Westchester, and Al Gore’s payday

Steven Brill
Jan 8, 2013 13:09 UTC

1)   Fiscal cliff Medicare meddling:

According to this report in the New York Times, last-minute negotiations on the fiscal cliff included new congressionally imposed limits on what Medicare will pay for “nonemergency ambulance transportation of kidney dialysis patients” and “would reduce Medicare payments … for stereotactic radiosurgery, complete course of treatment of cranial lesion(s) consisting of one session that is multi-source Cobalt-60 based.’”

Yes, Congress really does get that far down in the weeds when it comes to dictating how Medicare doles out more than $500 billion a year. This includes, for example, overseeing the payments Medicare allows, by state, for designated categories of ambulance rides (“critical,” “emergency,” “air evacuation,” etc.).

There are two obvious stories here: What scandalous overpayments or abuses in those nonemergency kidney dialysis ambulance trips triggered this intervention, and who in Congress pushed for it? Similarly, what’s the story behind those Cobalt-60 treatments?

How far can the Chinese firewall stretch?

Steven Brill
Dec 31, 2012 18:11 UTC

1.    Media tug of war in China:

Last week, my daughter sent me this amazing Bloomberg.com story, accompanied by graphics and  clickable family trees, that unraveled how the “princeling” ancestors of China’s “Eight Immortals” – the generals and party leaders who built the communist superpower – now control the country’s leading industrial and financial conglomerates. The New York Times has also been on the case, detailing in articles like this one and this one how those controlling China’s national and regional governments have showered favors on their entrepreneurial relatives.

Then, last Friday the Times added a report describing heightened Internet blocking measures that Chinese authorities are taking to keep these kinds of stories about Chinese crony capitalism and other scandals from being seen online in China. The new efforts to firewall information that would embarrass the ruling class even include trying to block offending content from reaching the virtual private networks (VPNs) used by corporations to ensure the privacy and security of the information their employees transmit around the world.

It’s all fascinating, important stuff. But it’s only the opening rumble of what could be one of the major business and political stories of 2013. After all, this is the kind of information that threatens to overturn the implicit deal with the citizenry that the Communist Party rulers have depended on for the last two decades: let us rule and we won’t act like Communists when it comes to giving you economic opportunity.

The NRA playbook, Obama’s pot dilemma, and HSBC’s money laundering

Steven Brill
Dec 18, 2012 12:41 UTC

1. Getting the NRA’s massacre playbook:

In the wake of the Newtown, Connecticut, massacre, we’ve been reading a lot about school lockdowns and other emergency drills. Here’s an idea for some original reporting about a different kind of emergency drill: Reporters ought to get sources inside the National Rifle Association, or people who deal with the organization, to reveal the playbook the NRA must have developed by now to make sure the group can swing into action whenever there’s an outbreak of mass gun carnage.

Is there an email or phone list in place so that the first crisis team conference call can be convened quickly? Who’s on it in addition to NRA staff? Gun company executives? Lobbyists? Pollsters? PR people?

Is there a set script for the initial comment (such as “Now is not the time to talk politics”) followed by a sequenced set of later responses? How does the response evolve from the first days into the first week and then the second? Who is designated to make decisions about when to start responding to press inquiries and whether to do the Sunday talk shows, who should be the spokespeople and what the talking points should be?

Athletes’ charities; American lawyers and Bangladesh’s sweatshops; the fate of workplace screwups

Steven Brill
Dec 11, 2012 12:46 UTC

1.    Looking at athletes’ charities:

I was at a dinner last week in which the featured speaker was New York Yankees shortstop Derek Jeter. Jeter spent much of the time talking about Turn 2, the foundation he and his family established soon after he joined the Yankees. It sponsors programs intended, as its mission statement explains, to get kids in impoverished communities “to turn away from drugs and alcohol and ‘Turn2’ healthy lifestyles.” There was also a video about the charity’s work and the hands-on involvement of Jeter, his parents and his sister.

It was impressive, and the foundation’s latest publicly available tax return (for 2010) supports that first impression. A relatively modest charity with about $3.4 million in assets, Turn 2 used those assets to spend about $200,000 more than the $2.3 million it received from investment income and contributions. The biggest contribution was almost $600,000 from Jeter; the rest came from donors such as Gatorade, Nike and the Yankees. The money went to support a wide variety of after-school and summer sports clinics and other youth programs in New York, Tampa (where Jeter has a home and the Yankees train) and Kalamazoo, Michigan (where Jeter’s family lives).

Jeter, his sister and their parents draw no salaries, and the highest salary, $101,000, goes to a non-relative listed as the foundation’s full-time president.

Ad technolology that may threaten newspapers; winners and losers of the fiscal cliff

Steven Brill
Nov 20, 2012 12:51 UTC

1. Another threat to newspapers’ business models?

This article in the New York Times last Friday and this one in the National Journal pinpoint two important developments in the media business that could collide to pose yet another threat to the financial viability of journalism.

The Times article describes the rise of “programmatic advertising,” in which new online tracking technologies allow an advertiser to follow a consumer whose profile fits the advertiser’s targeted demographics wherever the consumer goes online rather than just make an educated guess about the websites that consumer is most likely to visit.

Before programmatic advertising, if an upscale restaurant chain decided that its best prospects were well-to-do men who live in major metropolitan areas and travel a lot, it might buy ads in the business sections of high-end newspapers or on business travel sites. Now the restaurant chain can follow those targeted people to any website they visit. It doesn’t have to buy ads on the sites where the target is most likely to be found but can instead simply bid on an electronic ad exchange to buy the cheapest ad that will reach someone with those demographics no matter where he or she goes (a gossip site, for example).

The clown-show economics of storm-hit utilities, and in search of open primaries

Steven Brill
Nov 13, 2012 12:42 UTC

1.   My Alaska-Hawaii electricity repair team:

It’s 10 o’clock and the lights are out. Do you know where your local utility actually lives?

I have already written that New York State Electric and Gas — the incompetent, uncaring electric company that services our home in northern Westchester County, New York ‑- is not exactly a community utility. It is part of a Spanish energy conglomerate. Nonetheless, when a repair crew finally arrived six days after Hurricane Sandy hit and I chatted up the guys who were about to climb our poles, I was amazed to hear that one was from Hawaii and the other two from Alaska. That they had come that far seemed so absurd that I asked to see their driver’s licenses.

Adding to this theater of the absurd was the fact that the truck they were driving was owned by something called Michels Company and had come from Syracuse, New York. That’s about 250 miles from our house. And they had been commuting all week on that truck to the repair jobs in our neighborhood from a motel in Kingston, New York – which is 72 miles away.

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