Mendocino County Today: March 7, 2013

THE SHERIFF'S DEPARTMENT is investigating a woman who may be responsible for Monday morning's Fircrest apartment fires in Ukiah. She may also have set structure fires in Merced, as many as a dozen fires there altogether, with perhaps as many as 13 more arsons occurring in the Ukiah area (at least two of which were vehicle fires). The suspect, estimated to be between 25 and 30 years old, has been a resident of Fircrest, the apartment complex on South State Street where some 50 residents were burned out of their homes Monday. She has denied setting the Fircrest fire but has a history of being the first person to report a number of the fires where she just happened to be present.

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5TH DISTRICT SUPERVISOR Dan Hamburg's wife, Carrie, has died. Mrs. Hamburg had been ill for some time with cancer. Carrie Hamburg was much admired by many people in Mendocino County as an unfailingly kind and friendly person active in a range of liberal causes.

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PERIPHERAL TUNNEL PLAN WILL HURT TRINITY RIVER ALSO. By Dan Bacher

The Bay Delta Conservation Plan (BDCP) to build the peripheral tunnels not only threatens the Chinook salmon, steelhead and other fish species of the Sacramento and San Joaquin rivers, but also the fish and communities of the Trinity River, the largest tributary of the Klamath River.

“The project will harm Trinity County and Trinity River interests by drawing down Trinity Lake even more," said Tom Stokely of Mt. Shasta, a former Trinity County natural resources planner now with the California Water Impact Network (C-WIN, online at http://www.c-win.org). "There is absolutely no protection for Trinity River interests from this project. Water export amounts and fishery protection flows are being put off until after the project is constructed, a ʻplumbing before policyʼ decision to misinform the public about the true costs and benefits."

"Cost estimates are significantly underestimated," stated Stokely. "While Peripheral Tunnel proponents claim that the beneficiaries of the project will pay for it, they are planning on substantial subsidies from state and federal taxpayers amounting to billions more borrowed dollars. There are much more cost effective, job-producing and locally-based ways of providing water supply reliability including recycling, conservation, stormwater capture and groundwater desalination.”

You can find out more about the threat posed to the Trinity River and the Sacramento-San Joaquin River Delta by the tunnels at a showing of a documentary film and slide show in Weaverville, California in April. Safe Alternatives for our Forest Environment (SAFE, online at http://www.safealt.org/) is sponsoring “Over Troubled Waters”, a documentary about the Sacramento-San Joaquin Delta that will premiere at the Weaverville Fire Hall, 125 Bremer Street on Tuesday April 2 at 6:30 p.m. Admission is free.

Stokely will give a slide show with a question and answer period to discuss the implications of Governor Brownʼs “Peripheral Tunnels” project on Trinity County and all of California.

The documentary, “Over Troubled Waters," by Restore the Delta (http://www.restorethedelta.org/) and the C-WIN slideshow are part of a statewide public education effort to stop the building of Peripheral Tunnels. In this visually rich documentary, Ed Begley Jr. narrates the story of how the people of the Delta are fighting to protect the region they love and to encourage saner, sustainable water policies for all the people of California

Larry Glass, President of Safe Alternatives for our Forest Environment (S.A.F.E.), emphasizes, "Trinity County is a major and uncompensated source of much of this water and so Trinity should have significant say about how much water should be taken and and how that water should be used. These considerations must be important parts of this effort and the overall education of the California public before decisions are made to borrow billions for questionable projects such as the Peripheral Tunnels."

On July 25, 2012, Governor Brown and Interior Secretary Ken Salazar announced a controversial plan to drill two 30ʼ-40ʼ diameter tunnels 150 feet for 35 miles under Californiaʼs Delta to siphon northern California water to San Joaquin Valley agribusiness and Southern California cities, according to Stokely. Previous plans to build a “Peripheral Canal” were defeated by two thirds of California voters in 1982 during Brownʼs first tenure as governor of California.

Kayla Carpenter, a Hoopa Valley Tribe member who is pursuing her PHD in linguistics at U.C. Berkeley, attended a rally with members of the Winnemem Wintu and Pit River Tribes and other Delta advocates at the State Capitol to protest the BDCP on the same day that Governor Brown and Secretary Salazar unveiled their "water conveyance" plan. Carpenter emphasized that "the peripheral tunnels plan is tied up with Trinity River water going south."

“The Trinity is pumped into the Sacramento via Whiskeytown Reservoir and we already have to fight hard to get water that we should be getting by law for fish," said Carpenter. "A bigger tunnel to suck California dry isn’t going to help our fish.”

The peripheral canal or twin tunnels won't create any new water - they will only take more water from the Delta and Trinity River, at a tremendous cost to fish, fishermen, Indian Tribes and family farmers. "If I took a cup of snow from Washington, DC back home with me and dumped it in the Delta, it would create more new water than the peripheral canal," quipped Congressman John Garamendi (D-Walnut Grove).

The peripheral tunnels will likely lead to the extinction of Central Valley salmon, Delta smelt, longfin smelt and other imperiled fish species. For more information, you can read the briefing paper by the Bay Institute and Defenders of Wildlife: http://www.bay.org/assets/BDCP%20EA%20Briefing%20Paper%2022912.pdf

The link to the event press release is: http://www.c-win.org/content/c-win-presents-documentary-over-troubled-waters-weaverville-fire-hall-april-2.html

Safe Alternatives for our Forest Environment (SAFE) is dedicated to promoting healthy ecosystems through education, community involvement, organizing, demonstrations, activism and legal remedies. For more information, go to: http://www.safealt.org/

The California Water Impact Network (C-WIN) promotes the equitable and environmental use of California's water, including instream uses, through research, planning, public education, and litigation. For more information, go to: http://www.c-win.org

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A GREAT MANY PEOPLE around the county were rightfully shocked and horrified by the recent excellent and hard-hitting PBS documentary, The Untouchables.

http://video.pbs.org/video/2327953844/

The documentary looked at the problem of high-ranking Wall Street crooks going unpunished in the wake of the financial crisis. The PBS piece certainly rattled some cages, particularly in Washington, in a way that few media efforts succeed in doing.

Now, two very interesting and upsetting footnotes to that groundbreaking documentary have emerged in the last weeks.

The first involves one of the people interviewed for the story, a former high-ranking executive from Countrywide financial who turned whistleblower named Michael Winston. You can see Michael's segment of The Untouchables at around the 4:20 mark of the piece. The story Winston told during the documentary is essentially an eyewitness account of the beginning of the financial crisis.

When I spoke to him last week, Winston was still as amazed and repulsed by what he saw at Angelo Mozilo's crooked subprime mortgage company as he was when he worked there. Winston, who had worked for years at high-level positions at companies like Motorola and Lockheed before joining Countrywide in the 2000s, described a moment in his first months at the company, when he rolled into the parking lot at the company headquarters.

"There was a guy there, a well-dressed guy, standing next to a car that had a vanity plate," he said. "And the plate read, 'FUND'EM.'"

Winston, curious, asked the guy what the plate meant. The man laughed and said, "That's Angelo Mozilo's growth strategy for 2006." Here's how Winston described the rest of the story to PBS – i.e. what happened when he asked the man to elaborate:

"What if the person doesn't have a job?"

"Fund 'em," the – the guy said.

And I said, "What if he has no income?"

"Fund 'em."

"What if he has no assets?" And he said, "Fund 'em."

Later on, Winston would hear that the company's unofficial policy was that if a loan applicant could "fog a mirror," he would be given a loan.

This kind of information is absolutely crucial to understanding what caused the subprime crisis. There are people out there still willing to argue that the government somehow "forced the banks to lend" to unworthy applicants. In reality, it was unscrupulous companies like Countrywide that were cranking out loans en masse, knowing that these loans would be unloaded down the line, first to banks and then to sucker investors like pension funds and foreign trade unions, almost as soon as they were created.

Winston was a witness to all of this. Eventually, he would be asked by the firm to present false information to the Moody's ratings agency, which was about to give Countrywide a negative rating because of some trouble the company was having in working a smooth succession from one set of company leaders to another.

When Winston refused, he was essentially stripped of his normal responsibilities and had his corporate budget slashed. When Bank of America took over the company, Winston's job was terminated. He sued, and in one of the few positive outcomes for any white-collar whistleblower anywhere in the post-financial-crisis universe, won a $3.8 million wrongful termination suit against Bank of America last February.

Well, just weeks after the PBS documentary aired, the Court of Appeals in the state of California suddenly took an interest in Winston's case. Normally, a court of appeals can only overturn a jury verdict in a case like this if there is a legal error. It's not supposed to relitigate the factual evidence.

Yet this is exactly what happened: The court decided that the evidence that Winston was wrongfully terminated was insufficient, and then from there determined that the "legal error" in the original Winston suit against Bank of America and Countrywide was that the judge in the case failed to throw out the jury's verdict:

In short, having scoured the record for evidence supporting the jury's verdict on the issue of causation, we have found none. It follows that the trial court erred in denying defendants' motion for judgment notwithstanding the verdict.

"I was flabbergasted," Winston says now. "Think of all the hard work the jury did, and [the court] overturns it just like that."

While it's impossible to say just exactly what a fair financial award should be for a person who reports bad corporate activity to the public, it's certainly true that when these whistleblower suits end in failure, it has a chilling effect on other people thinking about coming forward. Not many people are willing to risk their jobs if they think it will cost them every last dime in the end. This is just one more example of how hard it is for whistleblowers to come out even, even if they win jury trials.

That decision came down on February 19th, and is the first of the two interesting post-Untouchables footnotes.

The other involves some of the comments made by the head of the Justice Department's Criminal Division, Lanny Breuer, who said (as he has on other occasions, including after the recent non-prosecutions of HSBC and UBS for major scandals) that his Justice Department has to weigh the financial consequences of bringing prosecutions. Quoting from the PBS show, Breuer explained:

“But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there's some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it's a factor we need to know and understand.”

When Breuer said that, it raised a serious red flag on the Hill. A number of people in positions of power wanted to know just what “experts” people like Breuer had consulted with before deciding not to press charges in certain cases. Iowa Republican Senator Chuck Grassley and Ohio Democrat Sherrod Brown, specifically, sent Attorney General Eric Holder a letter <http://www.brown.senate.gov/newsroom/press/release/sens-brown-grassley-press-justice-department-on-too-big-to-jail>asking a number of questions.

Among other things, the two Senators wanted to know if certain companies had been designated “Too Big to Jail.” Then they had a series of very obvious and reasonable questions about those “experts”:

4. Please provide the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.

5. Please provide any compensation contracts for these individuals.

6. How did DOJ ensure that these experts provided unconflicted and unbiased advice to DOJ?

Well, at the end of last week, on February 27th, the Department of Justice sent Brown and Grassley a letter in return. The letter is, to describe it very generously, not terribly informative.

Most of the letter is just a long list of the many wondrous accomplishments the DOJ has secured under Eric Holder's watch, including felony manslaughter convictions against BP, or “fraud convictions for a board member of Goldman, Sachs,” or the ongoing LIBOR investigation, or the prosecution in the Stanford Ponzi case. But the rest of the letter totally ignores the Brown/Grassley questions, particularly on the matter of which experts were and are being consulted.

On those questions, the DOJ would say only that “it is entirely appropriate for prosecutors to hear from subject matter experts at relevant regulatory authorities” and that …

“When the Department consults with relevant regulatory authorities, or hears from companies who are targets of the Department's investigations and their counsel regarding potential collateral consequences of enforcement actions, neither those agencies nor the target companies receive any compensation from the Department.”

That is one hell of a slippery piece of language. It's great that the Department of Justice is not paying, say, HSBC to consult with them on the question of whether or not HSBC should be prosecuted. What a relief! But that doesn't mean they're not paying someone else for that kind of advice.

The DOJ similarly blew off naming any individual experts and they refused absolutely to turn over information about any compensation they may have paid out to whomever it is who is whispering in their prosecutorial ears.

The two Senators late last week issued a blistering answer to the DOJ letter, saying, “the Justice Department's response is aggressively evasive,” and that “the Department's only clear response was that it speaks to regulators and the banks themselves.”

The Department of Justice is now saying that it misunderstood the two Senators, that it didn't know that they were asking for the actual names of those experts. Moreover, the Department claims it is working on answers to those queries.

In the meantime, Eric Holder is appearing before the Judiciary Committee this Wednesday, and it will be interesting to see how he handles questioning from Senator Grassley. It may get ugly before the answers actually come out, but it seems that someone is finally determined to get some real information. (—  Matt Taibbi. Courtesy, Rollingstone.com)