What Kind of Whistleblower Would You Be?

I’m not sure what to think about this Snowden guy.  I tend to think the government certainly has an obligation to hold secrets when it comes to national security and yet obviously the American people deserve to know, and I think participate in, the process by which we give up so many of our legal rights in order to acquire that sense of security.

Diane Feinstein thinks he should be tried for treason and John Boehner calls him a traitor.

Political opinion in the US was split with some members of Congress calling for the immediate extradition from Hong Kong of the whistleblower, Edward Snowden. But other senior politicians in both main parties questioned whether US surveillance practices had gone too far.

Dianne Feinstein, chairman of the national intelligence committee, has ordered the NSA to review how it limits the exposure of Americans to government surveillance. But she made clear her disapproval of Snowden. “What he did was an act of treason,” she said.

House Speaker John Boehner defended the NSA programs and their congressional oversight, saying he had been briefed on the programs and that Americans were not “snooped on” unless they communicated with a terrorist in another country.

“He’s a traitor,” Boehner said of Snowden in an interview with ABC News. “The disclosure of this information puts Americans at risk, it shows our adversaries what our capabilities are, and it’s a giant violation of the law.”

Daniel Ellsberg believes Snowden’s leak is the most important example of whistleblowing in history.

In my estimation, there has not been in American history a more important leak than  Edward Snowden’s release of NSA material – and that definitely includes  the Pentagon Papers 40 years ago. Snowden’s whistleblowing gives us the possibility to roll back a key part of what has amounted to an “executive coup” against the US constitution.

For the president then to say that there is judicial oversight is nonsense – as is the alleged oversight function of the intelligence committees in Congress. Not for the first time – as with issues of torture, kidnapping, detention, assassination by drones and death squads –they have shown themselves to be thoroughly co-opted by the agencies they supposedly monitor. They are also black holes for information that the public needs to know.

Ellsberg seems to think this event will give Americans both the incentive and proof  we need to rise up against this “surveillance state”.   Ha, based on the polling I’ve seen this week and comments from both government officials and public forums I’ve been reading, most people don’t really care that much or simply accept it’s the trade off  for being safe.

And it seems to me we have two different kinds of justice being handed out for whistleblowers.  Thanks to Dodd/Frank (don’t get me wrong, I know it’s a crappy bill) the SEC has newly enacted protections for financial whistleblowers and the government has reaped the benefits to the tune of   millions of dollars.

In just its first year, the whistle­blower program already has proven to be a valuable tool in helping us ferret out financial fraud,” then-SEC Chairman Mary L. Schapiro said in November 2012. “When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources.”

The SEC’s Investor Protection Fund awarded the Commission’s first Whistleblower Award Program recipient in 2012, but the case and individual haven’t been made public. The Fund represents monetary sanctions received from settlements of SEC cases, including penalties, disgorgement, and interest. The balance at the end of fiscal 2012 was $453 million.

And on the opposite end of the spectrum Obama appears to undermine his own support of protections for whistleblowers, at least in the area of National Security.

The federal appeals court granted another hearing on May 24, and the Obama administration rushed out a memo asking the Director of National Intelligence and the Office of Personnel Management to quickly come up with a litmus test for deciding which federal positions can be classified as being “sensitive,” citing a 2010 OPM proposal that aimed to dramatically expand the number of national security employees.

Whistleblower advocates say the court ruling and the president’s memo spell a major rewiring of the Whistleblower Protection Enhancement Act. “It’s not that OPM and DOJ are arguing that whistleblowers in sensitive positions shouldn’t have access to protections. It’s an unintended consequence that they have not tried to prevent,” says Angela Canterbury, public policy director at the Project on Government Oversight, where I used to work. “The Obama administration is undermining the same protections they [formerly] supported.

There are at least five whistleblowers who’ve come up against the heavy hand of the Obama Administration via the DOJ recently.

The Obama administration has waged a war on government whistleblowers. So here are 5 whistleblowers who have been under attack by a president who once said that official whistleblowers were “often the best source of information about waste, fraud, and abuse in government.

Check out the Thomas Drake case:

4. Thomas Drake

A former executive at the National Security Agency, Thomas Drake exposed details about the agency’s Trailblazer Project. For this, he was charged under the Espionage Act, though the government’s case against him spectacularly failed.

Drake became concerned about the Trailblazer Project’s cost–at $1 billion, it was way more than the NSA should have been paying for a program they could have instituted in-house. He was also concerned it would violate the privacy of Americans. But Trailblazer, which was supposed to analyze intercepted communications, was chosen to be the NSA’s vehicle for surveillance anyway. Drake disclosed details about the NSA’s wastefulness to a Baltimore Sun reporter.

The government initially threw the book at him, but their case collapsed. As Marcy Wheeler explained in The Nation: “The Department of Justice had been pursuing Drake for alleged violations of the Espionage Act that might have sent him to prison for up to 35 years. But the government withdrew the evidence supporting several of the central charges after a judge ruled Drake would not be able to defend himself unless the government revealed details about one of the National Security Agency’s telecommunications collection programs.” Drake was eventually convicted on the misdemeanor charge of exceeding authorized use of a computer.

I’m really curious what all of you think of the whistleblower issue in particular, but of course I’m also wondering if anyone thinks there’s a reverse of the surveillance state possible.  Is surveillance state too strong of a descriptive?  Do you think Obama is really to blame or is it just the result of an overzealous government at all levels since 9/11?

Morning Report – NFIB Small Business “confidence” 6/11/13

Vital Statistics:

 

Last

Change

Percent

S&P Futures 

1625.6

-16.5

-1.00%

Eurostoxx Index

2661.6

-57.8

-2.13%

Oil (WTI)

94.47

-1.3

-1.36%

LIBOR

0.272

-0.002

-0.69%

US Dollar Index (DXY)

81.46

-0.186

-0.23%

10 Year Govt Bond Yield

2.26%

0.05%

 

Current Coupon Ginnie Mae TBA

101.2

-0.2

 

Current Coupon Fannie Mae TBA

99.55

-0.5

 

RPX Composite Real Estate Index

203

0.6

 

BankRate 30 Year Fixed Rate Mortgage

4.06

   

 

Thought I had posted this earlier, but it looks like it didn’t take

Markets are lower after the Bank of Japan left policy unchanged. Bonds and MBS are heavy again, with the 10 year yielding 2.26%

Part of the issue with the weakness in the bond and MBS market is convexity-related hedging. Convexity hedging is coming out of the mortgage REITs primarily, but also anyone who holds mortgages as an investment and hedges the interest rate risk. The “inside baseball” explanation of what is going on: Mortgage REITs are finding that as rates increase, the duration of their mortgage backed securities increases. This means they have to either sell MBS or Treasuries to rebalance their hedge.” The punch line: selling begets more selling. And that is partly why the 10 year and MBS cannot get out of their own way.

The NFIB Small Business Optimism report ticked up to 94.4 in June, the highest level in a year, and the second highest reading since the recession started in 2007. That is the good news. The bad news? The number is still very weak, and only slightly higher than the post-recession average.  The biggest headaches for small business?  Taxes, Government regulations / red tape, and poor sales. In that order. The elephant in the room is obamacare. The report highlights one of the big disconnects happening right now, with the S&P 500 near record levels. The big multinationals are doing fine, but small business is barely growing with population. Since small business is half of the economy, it explains why we can have record levels in the S&P 500 and “meh” economic growth.If multinational profits correspond to 4% GDP growth, and the small business sector profits correspond to 0% GDP growth, you get 2% growth as an average number. 

Traders are well aware of the “fat finger” phenomenon. This happens when you are entering an order and accidentally hit two keys at once, turning an order to buy 100,000 shares into an order to buy 1,200,000 shares. Well, we have a fat head error. And no, I am not talking about the one where a guy ordered a Tom Brady Fathead poster for his office and got Tebow instead. 

Remember eminent domain? It’s baaaack. Or at least advocates have some new ammunition – a paper by Cornell law professor Robert Hockett. He argues that municipalities should, in partnership with investors, “condemn” underwater mortgage notes, pay mortgagees “fair value” and systematically write down principal. Of course any municipality that pursues this will effectively be cutting their citizens off from Fannie Mae / Freddie Mac / Ginnie Mae loans.

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