Category Archives: Media watch

Private Equity Miscreant Freeman Spogli Illustrates Investor and SEC Cowardice

Gretchen Morgenson of the New York Times released an important story over the holiday period on how a mid-sized private equity firm, Freeman Spogli, with $4 billion under management, was found to have made serious violations of its investment agreement. The SEC’s fund examination unit stated that Freeman Spogli, in two of its older funds, FS Equity Partners V (“FS V”)and FS Equity Partners VI (“FS VI”), looked to have repeatedly violated of fee-sharing agreements and to have operated as an unregistered broker-dealer. It asked for Freeman Spogli to make full restitution of the failure to reduce management fees and provide evidence that required reimbursements that looked to have been, um, ignored were actually made.

While Morgenson has done a fine job of presenting the facts of the case, we beg to differ with her as to some of the inferences she draws. She sees this case as a real step forward for investors. We see it as showing how loath both investors and the SEC to take serious action even in the face of clear-cut evidence of misconduct.

Bill Black: Obama and Holder Choose Banksters Over Whistleblowers

Yves here. At this point, the Obama administration’s fealty to banksters is a “dog bites man” story. Nevertheless, it’s useful to catalogue particular incidents to show how consistent its behavior is. The latest case study is its shoddy treatment of whistleblowers.

NYTimes Dealbook’s Dishonest Salvo at Elizabeth Warren Over Calling Out an Unqualified Nominee for Treasury Post

Even though Andrew Ross Sorkin and his mini-empire, the New York Times Dealbook, are reliable defenders of their Big Finance meal tickets, they’ve managed to skim above, if sometimes just barely above, abject intellectual dishonesty. But Dealbook has published not one but three pieces in as many weeks in defense of an unacceptably weak Obama Administration nominee for an important Treasury post, the Under Secretary of Domestic Finance.

The candidate is Antonio Weiss, a Lazard mergers and acquisitions professional who was elevated to head of investment banking in 2009. There’s no doubt that Weiss is accomplished. The non-trivial problem, as Elizabeth Warren and others have pointed out, is that Weiss’ experience and skills have absolutely nothing to do with the Treasury role.

What is striking is the way that Sorkin and his colleagues have launched what amounts to a media war against Warren in defense of Weiss, and have shameless resorted to a drumbeat of Big Lies in the hope that their messaging will stick. The fact that they can’t even mount a proper case on its merits speaks volumes about Weiss’ qualifications for the job.

Bill Black: Mortgage Appraisal Fraud is Baaack…Because Bank Execs Profit From It

Yves here. Financiers and their media amplifiers keep trying to blame their bad conduct, like mortgage appraisal fraud, on powerless customers, so people like Bill Black have to keep swatting down their misrepresentations. Sadly, this crisis topic is back all too soon due to lack of regulatory vigilance.

Bill Black: The New York Times Thinks Jailing Banksters Would Cause a “Bind”

Yves here. Bill Black continues to heap well-deserved scorn on efforts to defend New York Fed president William Dudley’s revealing performance in Senate testimony last week. In its efforts to pretend that the New York Fed can’t possibly be expected to regulate, the Grey Lady goes beyond the usual hoary canard that jailing banksters is just too hard (as in trying to say that what they perpetrated didn’t break any laws, when plenty of writers, such as Charles Ferguson, long form in Predator Nation, and yours truly, among plenty of others, have cited both legal theories and fact sets that show the reverse). The additional bogus claim is….drumroll…that keeping banks out of criminal and improper conduct is somehow inconsistent with making sure they “operate successfully”. In other words, the Times is effectively saying that banks have become so dependent on criminal and near-criminal conduct as profit sources that regulators dare not deprive them of that out of fear of weakening their financial performance.

Bill Black: Why the New York Fed Isn’t Trustworthy

Yves here. Readers may recall that we criticized the New York Times’ reporting on an important story on a criminal investigation underway involving both Goldman and New York Fed employees. A Goldman employee who had worked at the New York Fed and his boss were fired because the ex-Fed staffer allegedly had obtained confidential bank supervisory information. A New York Fed employee was also fired immediately after the Goldman terminations. The piece was composed as if the intent was to be as uninformative as possible and still meet the Grey Lady’s writing standards. Readers were left in the dark as to where the two Goldman employees fit in the organization and what the sensitive information was.

Bill Black dug through later news reports, did some additional sleuthing, and based on is experience as a regulator, concluded that there is no way the Goldman employee, Rohit Bansal, didn’t recognize that he was misusing confidential bank supervisory information. That matters because whether or not breach is criminal hinges on whether he “willfully” broke the law.

Russia Can Survive An Oil Price War

Yves here. This article is an important sanity check on the impact of the current oil price war on Russia. We’ve seen similarly skewed conventional wisdom on the Saudis: “No, they can’t make it on a fiscal budget basis at below $90 a barrel,” completely ignoring the fact that the Saudis clearly believe it is in their long-term interest to suffer some costs to inflict pain on some of their enemies, and render some (a lot) of shale oil and alternative energy development uneconomical, which increases their ability to extract more in the long term from their oil asset.

Why is Anyone Surprised that Abenomics Failed?

In case you managed to miss it, there’s been a fair bit of hand-wringing over the fact that Japan has fallen back into a recession despite the supposedly heroic intervention called Abenomics, whose central feature was QE on steroids.

But Japan of all places should know that relying on the wealth effect to spur growth has always bombed in the long term.

The Upshot’s ObamaCare “Interactive” Explainer in the New York Times: A Critique

Taking some swipes at visualizations and analysis based on Enroll America data.

Slugfest Over Taibbi Exodus From First Look Fails to Address Editorial Meddling Doubts

As reader Christopher put it, this got ugly fast.

Yesterday, Glenn Greenwald, Laura Poitras, Jeremy Schill, and John Cook issued a joint “inside story” on why Matt Taibbi left First Look. Let us note that it is pretty much unheard for journalists to report on personnel matters at their own employer, particularly so rapidly after a story breaks. The reason for the haste, and the focus on l’affaire Taibbi, appears to be to get out in front of an article coming out in New York Magazine about their patron, Pierre Omidyar.

The real issue, as we discussed in our earlier post, is whether this account supports the claim made in Omidyar’s press release about Taibbi’s departure: that it has nothing to do with editorial independence. As we’ll discuss, this story does not lay that issue to rest; in fact, it attempts to draw a bright shiny line between “corporate” matters like overall direction, editorial philosophy, mix of stories, as well as routine matters like expense controls, and “editorial freedom”. The distinctions aren’t that tidy. The degree of retrading of Taibbi’s deal with Omidyar and ongoing pressure to keep refocusing a shifting mission looks like bad faith. And one reads between the lines that Omidyar might have cooled on Taibbi’s plans to venture out of satire into more costly and more disruptive investigative reporting.

Matt Taibbi Leaving First Look

Matt Taibbi has been missed. He went into a writing black hole when he decamped from Rolling Stone to Pierre Omidyar’s wannabe media empire, First Look in February. But when the billionaire’s news venture was launched, the press was sloppy in reporting on Omidyar’s financial commitment. It was widely depicted as a $250 million venture, when the tech titan never committed anywhere near that amount of funding. Admittedly, it takes time to get a new publication going, but the lack of any apparent progress was becoming noteworthy. From the outside, it looked like the project might be going pear-shaped, and it appears it did.

Revolt Starting in UK Over Private Equity Secrecy

Mirabile dictu, is a revolution against private equity secrecy starting on the other side of the pond, meaning in of all places, finance-dominated England?

Jamie Dimon: U.S. Must Create a “Safe Harbor” Where JPM’s Corruption Is Not “Punished”

Yves here. The irony is delicious. Chief bank apologist Andrew Ross Sorkin accidentally elicited a damning admission from JP Morgan chieftan Jamie Dimon. But that also reveals Dimon’s confidence that he is a member of a protected class, which sadly happens to be true.

Why is the Boston Globe Covering Up for Gubernatorial Candidate Charlie Baker? (Updated)

Boston’s paper of record is effectively covering up for Massachusetts gubernatorial candidate Charlie Baker by failing to cover a growing pay to play scandal in New Jersey, with Baker as one of its central figures. David Sirota has been doing impressive sleuthing, and his latest report, which we’ll cover shortly, reveals that Chris Christie is persistine in his effort to hide information that presumably implicates Baker.