Monthly Archives: December 2010

Washington budget cuts raise questions about higher education quality and accessibility

Francesca Cauce, a high school junior in Miami, is considering attending the University of Washington in 2012 and paying out-of-state tuition. Yet her aunt, Ana Mari, the UW’s Dean of the College of Arts and Sciences, worries that further cuts in higher education funding, as forecast in Gov. Chris Gregoire’s proposed budget, will erode academic excellence for an institution already stretched beyond its capacity.

 “As the College that serves the largest number of students, we’ve worked very hard in the last few years to continue to provide students with an excellent education, despite having fewer faculty and teaching more students,” said Cauce, who is the Earl R. Carlson Professor of Psychology. 

“I’m not sure how much more we can stretch without compromising quality.  We’ve done this by reducing our course offerings, and increasing class sizes. Our faculty has done this with a great deal of care.”

 Many of Cauce’s colleagues share that view.  Although the budget would reduce state support of higher education by about 4.2 percent, or $220 million, and the UW would lose an estimated $190 million over the 2011-13 biennium, the university’s Bill and Melinda Gates Chair in Computer Science and Engineering, Ed Lazowska, believes that is only the tip of the iceberg.

 “It’s important to be clear about the enormous shift in funding that is taking place,” he said.  “UW’s state funding for the 2007-09 biennium was $792 million, or roughly $400 million a year.  State funding for the 2011-13 biennium, as proposed by the Governor, would be $451 million, or roughly $225 million a year – a total cut of nearly 50 percent in a four-year period.  Tuition has risen considerably, but not nearly by this amount,” Lazowska added.

 Elson Floyd, president of Washington State University, the state’s other research university, worries that if current trends continue, more profound longer-term changes are in store for higher education statewide.  “If the Governor’s budget is enacted, we would have to engage in a fundamental restructuring of Washington State University.  That would include looking carefully at departments, schools, programs, and at all of the services we provide,” Floyd said.

 “I remain concerned about the larger issue of providing higher education to a broad cross-section of Washingtonians.  The pattern of double-digit tuition increases, which continues under this budget proposal, poses real dangers to both access and affordability.  I believe that policy is not sustainable in the long run.”

 Floyd sees more troubling implications for WSU’s reputation as the state’s land-grant institution.  “Under this budget, by the end of the upcoming biennium, we would have seen a 49 percent drop in our state appropriation over a four-year period.  It is simply impossible to maintain our current array of programs in this financial situation,” he said.

 As state education leaders brace for the next round of major budget cuts, some find consolation that state aid for lower-income students would be increased by $92 million. 

 “We’re very pleased that the Governor has protected student financial aid, and especially the state need grant, although there is a cut in work-study funds,” said Norm Arkans, UW spokesman. 

“That’s crucial for keeping access open and higher education affordable, especially as tuition increases in double-digit increments.  We do not anticipate that the University’s diverse population of students from all backgrounds would be adversely affected, as long as we can maintain adequate student financial aid from all sources.”

Floyd adds a caveat, however.  “Under this budget, WSU would have to reduce the number of enrollments with a significant impact on the number of Washington students admitted.  That would hamper the ability of our state’s students to obtain a baccalaureate degree at a public university.”

 For university faculty like Lazowska, recent and proposed budget cuts for higher education translate to loss of opportunity for students at a time when the state’s economy needs more students from high-impact fields such as computer science and engineering.

 “In 2007, UW Computer Science and Engineering was funded for the first enrollment increase that had been granted since 1999.  The 2009 budget cut took away all of that funding, and more.  We had not yet hired many of the faculty, staff, and teaching assistants, so we abandoned those positions, and ramped down the enrollment increases that we had initiated.  Thus, in Computer Science and Engineering, one of the highest-impact programs at the UW and in the state, the only enrollment increase that had been funded since 1999 – and more – was blown away,” Lazowska said. 

 “Who gets hurt because of this loss opportunity?  To be honest, it is not the large companies such as Microsoft and Google and Amazon.com – they recruit nationally.  It is the smaller companies, such as startups, which must recruit from the local workforce.  And it is the kids who grow up here, because they are denied the opportunity to become educated for these great jobs,” he added.

 Other university administrators, like Resat Kasaba, Stanley D. Golub Chair and Director of the UW Henry M. Jackson School of International Studies, fear that budget reductions will compromise the UW’s broader mission.  “We are bound to be affected by decisions that aim to cut the university’s budget.  The Jackson School prides itself in offering a variety of courses where students are expected to become involved in research and writing.  It will be increasingly difficult to supervise such projects, which may force us to alter what we teach and how we teach.”

 One of the nation’s premiere schools for international studies, including its renowned China, Korea, Japan and Southeast Asian Studies programs, the Jackson School relies on teaching professionals who have real-world experience in foreign policy, Kesaba explained.  “With shrinking resources, we will probably find it increasingly difficult to attract such people.  Without the insight of these people who have firsthand experience in public service, our students will miss out on an essential part of their training in international affairs.”

 Cauce sounds a further cautionary note.  “There is very little room left for stretching.  I am very concerned about what this next round of cuts will bring,” she said.  “You can go downhill very, very quickly, then going back uphill is a lot harder.  The University of Washington is an exceptional institution, and the UW, and the College of Arts and Sciences, provides not only our students, but taxpayers throughout the state, one of the very best investments they can make.  Our graduates not only, by and large, stay in the area, and help our businesses and employers by filling critical positions, they create businesses and employment opportunities for others,” she said.

Arkans notes that shrinking state appropriations for higher education will be felt at the classroom level.  ”What the reduced budget leads to are fewer course offerings, larger class sizes, especially in quiz sections staffed by teaching assistants, fewer advisers to guide students through their programs and in the worst cases, longer time-to-degree as required courses become harder to get into.”

Cauce agrees, but is somewhat more sanguine: “The assessments we’ve done generally show that even while students have less flexibility in arranging their schedules, and they often like the bigger classes yet, student learning hasn’t suffered appreciably.”

 The Governor’s projected higher education budget would foreshadow other austerity measures that could blunt the state’s academic institutions.  As Arkans is quick to point out, Gov. Gregoire’s budget cuts would mean drastic measures such as differentiated tuition pricing.  [The state’s overall budget only subsidizes a fraction of the UW’s overall budget, which is primarily earmarked for faculty and staff salaries, he said.] 

 With regard to differentiated tuition, Arkans was asked if a Governor’s task force on higher education would consider such a measure.  “In theory, yes,” he said.  “We’ve looked at this in a preliminary way and would be interested in a tuition model that includes differentiated tuition.  We would also, of course, need the necessary leeway from the legislature, as it establishes tuition policy under current law.”

 WSU President Floyd feels such a strategy is wise.  “I have always believed in the importance of allowing the governing boards of an institution the flexibility to make decisions regarding tuition.  Clearly there are some high-demand areas in which opportunities for employment following graduation are enhanced, including engineering, business, nursing, and the health sciences generally,” he said.  “Particularly in times of severe budget constraint, it is appropriate to allow institutions the flexibility to work with internal and external stakeholders and make their own tuition decisions.”

 Ana Mari Cauce points out that the budget figures understate the enormity of the impact to the UW as well as the state’s other public universities such as WSU and Western Washington State University.

 “I do not think that it’s entirely accurate to see the cut to the University of Washington as just 4.2 percent,” she said.  “In total, the cut to the UW is somewhere between 25 percent and 29 percent.  The 4.2 percent figure is based on looking at increased tuition as a replacement for state funds. “

 “Because of tuition increases [projected at 11 percent in 2011 and 2012], the UW will not feel the full and crippling effects that would come with a cut over 20 percent, but we shouldn’t ignore that there has been a growing shift away from ‘public support’ of higher education,” she added.  “In addition there are a number of other indirect or hidden cuts to the University of Washington, including proposed pension and salary cutbacks or furloughs.”

 Arkans is concerned that more and more, families will have to pick up the slack in helping with their children’s already overstrained financial challenges.  “What has been happening is that the burden for paying for college has shifted from the state to students and their families.  In the short term, this has helped to stem the potential damage.  It is not a sustainable strategy for the long term, however.

 WSU President Floyd is upbeat, however, that his university remains undeterred in upholding its obligations as a land-grant institution.  “We remain clear about our mission as the state’s land-grant research university.  That mission will not be compromised, but the ways we fulfill it will be markedly different.”

 Still, it is undeniable that tuition hikes are merely a short-term stopgap and will not make up for the looming deficits in higher education funding.  ”The Governor’s budget is the first of several budgets that we’ll see in the coming months,” Cauce explained.  ”I do think it gives us all a pretty good sense of just how painful an all-cuts budget will be not only for the University of Washington or for higher education, but for social services, health services, and K-12 education.”

Lazowska considers the specific impact to the UW College of Computer Science and Engineering alone, one of the nation’s top ten schools in the field.

 “Computer Science and Engineering is one of ten departments in the College of Engineering.  The high water mark for our university support was approximately $10.6 million a year.  Our university support this year is $9.2 million a year.  In other words, we have lost approximately $1.4 million annually in the past couple of years, at the department level – about 13 percent.” he said.

Cauce offers some constructive advice.  ”Times are very, very tough, and I think we understand that cuts in higher education are inevitable.  But, I do think that we can avoid some of the worst consequences of the cuts if the state not only allows us to increase tuition, but also more flexibility in a number of other areas such as capital streamlining reporting, purchasing and other government-mandated processes,” she said.  ”These changes will save us money, and somewhat mitigate the impact of the cuts.”

“The College of Arts and Sciences will work diligently and creatively to adapt to the cuts we receive in a manner that will have the least negative impacts on students as possible.  But, how much this is possible will depend on how well we can work with the legislature to offset the worse impact of the cuts.  It isn’t about money, but also about allowing the University more flexibility to manage the resources it has in a manner that will best allow us to maintain quality.”

 At the end of the day, Ana Mari Cauce still believes in the value of a University of Washington degree.  ”I have a niece, Brynn, and nephew, Tim, who both got their undergraduate degrees at the UW in English and Geography about 5 or 6 years ago. Both are gainfully employed — she’s a screenwriter, and he is an urban planner — and doing very well.”

Asked if her niece, Francesca, should attend the University, Cauce did not skip a beat. “I can honestly encourage her to do so.  I continue to be very proud of the education we can offer our students.”

 

 Collin Tong is a Seattle freelance journalist and frequent contributor to the PostGlobe.  He was a Michele Clark Fellow at the Robert C. Maynard Institute for Journalism Education.

Road to Damascus

Darkness on the Edge of Town

The Road to Damascus

U.S. Combat operations in Iraq are over. But for millions of refugees, former soldiers suffering injuries and PTSD, and an entire generation of young people in the Middle East, there’s no end in sight. The tragedy of the war continues in shattered lives, displacement, violence and instability.

What does life after the Iraq war look like in the Middle East, and in the U.S.?

CLP journalists are in the Middle East (and have been for a couple of  months) looking for answers and exploring the human impact of our generation’s war through experimental, transparent storytelling.

PostGlobe will feature some of their work in the coming days and weeks. This is the third post in this series. To see the first post, go here. To read the second post, go here.

 

Darkness on the Edge of Town

 

Iraq is booming. Well at least Northern Iraq (or more specifically KRG. Formal name: The Kurdish Regional Government. Informal name: The Other Iraq). It’s a stunningly hopeful place; its cities humming with construction sites, sleek new cars with import tags still hanging from the rearviews, and suburban housing developments named “American Village”(and “British Village” and “Italian Village”).

Yesterday I took the day off and visited some malls here in Erbil, the capital city of KRG—and, believe me, it takes a full day off because there are so many damned malls to visit. It seems like across from every newly-opened mall boasting a “family fun center” or a “hypermart” or a “6-D movie theater” is the skeleton of a new more epic mall, surrounded by cranes and swathed in banners promising everything short of trips to the moon (coming soon, I’m sure).

“Erbil is the new Dubai” is the favorite quote of young people I’ve met here. They don’t seem to have absorbed the “Dubai as cautionary tale” narrative yet, I guess…

“Hey, we’ve got oil!” declared the 30-year-old owner of the first Ford dealership in KRG when I asked him if he thought the development was sustainable. At first I was struck by how naive and even reckless he sounded, but then I considered what it would feel like to be 30 years old and riding the upswing here. After generations of violence and oppression to feel like this was your time, your chance to build a nation that could transcend all the despair that shaped your parents’ and grandparents’ lives.

This was a new feeling for me as I window-shopped at United Colors of Benetton and sipped a latte outside of a Costco-sized grocery store: Mega-malls and Ford Expeditions as expressions of freedom! Consumption equals the politics of hope!

It’s easy to get lulled into a false sense of happy endings here. And, as an American who by my very nationality bears a deep responsibility for what has happened and what will happen in Iraq, it is tempting to see KRG as some sort of underreported guilt antidote.

But there is another story here, a darkness and uncertainty that’s impossible to ignore. Street signs pointing toward Mosul (about 50 miles away), Kirkuk (about 50 miles in the other direction) and Baghdad remind me that the “other, other Iraq” is within reach and still suffering.

Displaced people, many of them ethnic Kurds from war-torn regions of the country, have made their way here to camps and rental homes and relatives’ apartments with stories of terror and death that left me speechless when I interviewed them.

And then there’s embattled Kirkuk. Sitting in a province estimated to represent 4 percent of the world’s oil resources by U.S. officials (who are always happy to speculate on these matters), Kirkuk is considered a part of KRG by Kurds and seen by Baghdad to be a crucial resource for the entire country. A census that would have determined the majority ethnicity in Kirkuk (and thus potentially rights to the region) was postponed this week. A move that aims to keep violence over the region from breaking out, but also served to remind me that things are far from settled in booming and beautiful Iraqi Kurdistan.

On the trip from Sulaymaniyah (a city in KRG’s southeast) to Erbil, we took a shortcut that found us on the outskirts of Kirkuk. Oil fires flickered occasionally on the side of the road and the distant city glowed under a thick layer of clouds burning in a red and orange sunset. Half-built housing developments, meant to ensure return for displaced people from the region, sat lonely and defiled by garbage—a ghostly inverse of the confident, red-tiled housing developments of Erbil.

Before we breezed past, we stopped on a little hill to take a picture and two men came up to our Kurdish friend, their hands touching their foreheads and then gesturing toward Kirkuk in frustration as they spoke urgently to him. “They told me to apologize to you. They are embarrassed that you, as visitors, have to see Kirkuk this way,” said Tahseen. “They want to make sure you know it wasn’t always like this—they want you to know it was once a beautiful city.”

 

The Seattle-based Common Language Project is a nonprofit multimedia journalism organization with a mission “to engage, educate and inform Americans of all ages on the crucial human issues of our time through innovative and accessible journalism.”

Monkey lust and the rise of branding

The disintegration of long-form journalism that, so far, has found its apex in Twitter feeds, didn’t start with the Web. Breaking up text with photos, graphics, pull quotes, white space, subheads, bullets and charts began before the Web popularized the Internet. And, I believe, had more to do with the urbanization of Americans and the rest of the world than the influence of the Internet, but that’s another story. 

 Whatever the reason, USA Today fired off its first outrageously cluttered edition in 1982. As a designer of news pages in the 1990s, I had use of a host of computer programs that were adopted earlier at smaller papers — Quark Express, Photoshop, Freehand and Illustrator — that made building newspaper pages a lot of fun. The Society for News Design fired up and started handing out awards for visually cool and provocative pages that conveyed information in a nontraditional format. Story telling through  full-page graphics became dream assignments for designers. Photos got bigger; text got broken; and stories got shorter. 

 

Cue the Monkeys 

 A 2005 study by researchers at Duke University was widely reported on as showing that male rhesus monkeys would “pay” to view pictures of female monkeys’ privates and the faces of high-status monkeys. You know, the newspapers kidded, “boys will be boys.”

 But like many stories done a disservice by mainstream media, the most important aspect of this study and one that provides a strong clue to the growing power of “branding” was ignored.

 While the study did say, “Male rhesus macaques sacrificed fluid for the opportunity to view female perinea and the faces of high-status monkeys but required fluid overpayment to view the faces of low-status monkeys.” The key words are “high-status” and “low-status.” Physical beauty (at least the anthropomorphized kind)  is an extension of lord-knows-what complex social human evaluation system (since beauty has no objective standard).

 The authors admitted that there may have been “facial cues” that aided in the monkeys’ desire to study certain peers over others but those facial cues (such as a willingness to stare down any other monkey) were indicative of social status. Primarily, they said, one monkey’s knowledge of another monkey’s social status played the key role in decisions to study, obsessively, and to click on the links that led to pictures and video of certain monkeys instead of the sustenance of food and drink.  

 ”Our data demonstrate that monkeys value visual information according to its apparent utility for guiding adaptive social behavior in the wild. … Wild male macaques closely monitor the status and fighting ability of males in other groups, and both male and female primates appear to look more frequently at high-status animals. Our results indicate that primates engage in such monitoring because it yields social information of measurable value.”

  

Okay, now the yoga stretch

 As information becomes more fractured, more like 140 character lines of raw assertion, source credibility becomes more important. Credibility is a form of social status. The immediate association between a name/identifier and social status is branding. Badda Bing.

 All of us old-school journalists (most of whom are liberal) are constantly faced with the conundrum of Fox News. As in, Why the hell did Fox News become so popular? So absurdly powerful?

 The monkey study reasons that those monkeys that studied photos of high-status peers did so to learn how to become high-status themselves or simply function better in the wilds of their social world. Conservatives in America prior to Fox News were not getting the information and points of view they needed from status-strong sources to become more socially important among the people they wanted to gain status with … until Fox News. 

 The heart-breaker is that right and wrong, truth and falsity suffer in this realm. But the bright side is that they were probably delusions to begin with. Whatever the answer is, this disintegration of story will make those organizations and people with the strongest, most resilient brands the winners in the ultra-social fabric of Web 2.0.

 

Jake Ellison worked in newspapers for 22 years, 10 at the Seattle Post-Intelligencer until it closed in 2009. He now works in marketing.

PREVIOUSLY BY JAKE ELLISON

 

‘Quick! Follow that mentally disabled child’ and other journalistic dilemmas

What’s in a name? The saving of an important cultural institution — journalism

Big J journalism and the great corporate elections of 2010

Mr. Speaker of the House, just who is an American?

Where things stand: Foreclosure paperwork scandal

 

Some struggling homeowners are currently getting a temporary reprieve [1] from foreclosure sales and evictions during the holiday season, but that doesn’t mean [2] all foreclosure cases have stopped moving through the courts — and it doesn’t mean we’re done covering the developments in the foreclosure scandal either. Here’s where things stand:

Earlier this year, the discovery of sloppy documentation practices across the mortgage servicing industry caused many banks — first GMAC, then Bank of America, JPMorgan Chase and others — to temporarily freeze foreclosure sales as they conducted reviews of their document processing procedures. Mortgage servicers — often divisions within large banks — handle the day-to-day collection of mortgage payments. They’re also supposed to provide loan assistance to struggling homeowners. Banks cast the problems as procedural mistakes but asserted that the underlying information in key foreclosure documents was accurate and did not result in any wrongful foreclosures. (As we’ve noted, banks and foreclosure defense attorneys disagree on what constitutes a wrongful foreclosure [3].)

One by one, they resumed some or all foreclosures and are re-filing the questionable documents, but attorneys for homeowners have said that the fixes have been inadequate and the result has been “more of the same [4].” Last week, the Daily Business Review reported that new rules in Florida to remedy the problem of robo-signers — bank employees who had signed foreclosure documents without verifying their accuracy — had given rise to “robo-verifiers [5]” who simply go through the motions of double-checking the documents.

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(Joe Raedle/Getty Images)

Iowa’s Attorney General Tom Miller, the point man on a 50-state joint investigation of the foreclosure scandal and mortgage servicing industry, has said that a quick settlement with banks and loan servicers is unlikely and that settlements would be worked out “one bank at a time [6].” He’s also said that criminal charges are a possibility. “We will put people in jail [7],” Miller told homeowners and advocates in Des Moines earlier this month. The states’ joint investigation remains ongoing, and some states [8] have separately sued [9] banks for deceiving homeowners fighting foreclosure.

On the federal level, the status of the investigation by the Office of the Comptroller of the Currency and other banking regulators is less clear [10]. The OCC, the Federal Reserve and the FDIC are currently divided [11] over new rules proposed by the FDIC that would rein in the bank abuses that may be causing improper foreclosures, according to the Huffington Post.

Last week, a group of more than 50 economists, analysts and academics wrote a letter [12] to these federal regulators, urging them to establish national standards for servicing. In the letter, they said that servicing fraud presents problems for investors, homeowners and the U.S. economy. They also urged regulators to compel servicers to grant loan modifications and principal reductions — or reducing the amount owed by homeowners — when economically possible.

We’ve noted, however, that for about half of the country’s mortgages, the chances for principal reductions are slim. That’s because the Federal Housing Finance Agency, the regulatory agency for government-controlled Fannie Mae and Freddie Mac, does not permit them to grant principal reductions, even though doing so could save the mortgage giants money in the long term [13] and help homeowners whose mortgage debts have come to exceed what their home is currently worth. (Read our primer [14] for more on how Fannie and Freddie — together with their approved foreclosure law firms — contributed to the foreclosure mess.)

Reuters also reported that the Senate adjourned last week without confirming a new head [15] for Fannie and Freddie’s regulator. Republican Sen. Richard Shelby put a hold on President Obama’s nominee, Joseph Smith, voicing concerns that Smith would support changing the rules to allow Fannie and Freddie to grant principal reductions.

The Senate also adjourned last week without appropriating $35 million [16] that had been authorized by the Dodd-Frank financial reform bill for funding legal aid for homeowners fighting foreclosure. That means the money — which legal experts including Miller had said was desperately needed [17] — wasn’t actually set aside for use.

Though foreclosures continue to speed through courts in some states [18] ($), in recent months some judges have increasingly questioned banks bringing foreclosure cases in court, forcing them to prove their legal standing to foreclose.

New Jersey’s Supreme Court Justice Stuart J. Rabner last week issued an order calling on six major mortgage lenders and loan servicers to appear before the court next month [19] and demonstrate why the state should not suspend their foreclosure actions, the Associated Press reported. And earlier this month, a justice on New York’s supreme court testified before House lawmakers that he’s seen problems in foreclosure cases “on a recurrent basis [20]” and that questions of legal standing have become “a pervasive issue.”

But it’s also worth mentioning that foreclosures work differently depending on the state. Most states are “non-judicial foreclosure” states, meaning they don’t even require foreclosure actions to go before a judge. Bloomberg noted that in these states, banks can more easily and quickly [21] process foreclosures, and homeowners have less recourse to fight back.

This article appeared originally at ProPublica

The year in Wall Street investigations

It’s been over three years since credit markets started shaking with the early tremors of the subprime crisis, and two years since that spread into a marketwide collapse. Prosecutors, regulators, Congress and journalists have spent the year uncovering the financial shenanigans that brought the market to its knees. It’s been marked by a few blockbuster settlements and more revealing investigations — as well as by some noticeable inaction in the reckoning.

Let’s start at the ground level, with selling risky mortgages to homeowners. Nobody symbolized the subprime market — from its growth to its downfall — better than former Countrywide CEO Angelo Mozilo. This fall, the Securities and Exchange Commission reached a $67.5 million settlement [1] with Mozilo in its only major case against a financial executive. The SEC charged Mozilo with praising Countrywide to investors while internally doubting its lending standards. As part of the settlement, Mozilo admitted no wrongdoing.

Moving up the finance chain, we come to the banks that sold mortgage deals to investors. Much of the scrutiny focuses on a type of mortgage deal called collateralized debt obligations, or CDOs, which are essentially bundles of other mortgage bonds that were sold off to investors.

Though nearly every bank [2] is rumored to be under investigation, the year was marked by one major case looking at the CDO business. In April, the SEC accused Goldman Sachs of creating a mortgage deal [3] that was designed to fail. The SEC’s argument was that Goldman’s hedge-fund client helped design the deal specifically to bet against it — without Goldman explaining the relationship to investors. In July, Goldman settled for $550 million (or about two weeks’ worth of profit [4]), admitting a “mistake” but no wrongdoing.

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(Michael Loccisano/Getty Images)

The idea of betting against deals lies at the center of a number of other investigations as well. The SEC is looking into [5] whether JPMorgan Chase allowed a hedge fund named Magnetar to choose assets for a mortgage deal without disclosing Magnetar’s role in selecting what went into the deal. As ProPublica reported in April with the radio programs This American Life and NPR’s Planet Money, Magnetar encouraged banks to put together riskier deals [6] and bought the riskiest bond slices that otherwise may have been unsold. Magnetar then bet against some of those deals [7], standing to make far more by shorting its losses on those risky slices if the housing market went south.

U.S. prosecutors are also looking into whether Morgan Stanley created a series of CDOs that its own trading desks bet against [8], the Wall Street Journal reported in May. A few months later it reported on how Deutsche Bank also bet against the souring housing market at the same time [9] it was marketing new mortgage deals.

The SEC is also looking into whether Citigroup improperly encouraged an independent manager to stuff a deal with leftover pieces [10] of other deals that it couldn’t sell in the market. In September, ProPublica and NPR’s Planet Money reported on self-dealing [11] among CDOs, showing how banks structured deals to buy portions of each others’ [12] often leftover inventory of hard-to-sell pieces. This created a daisy-chain of investments [13] that manufactured demand, thereby prolonging the housing bubble. The SEC has said it is investigating [14] one independent management firm and looking into about 50 others.

The year ended with rumors of mass settlements [15], where banks and the SEC settle broadly over their CDO practices rather than battling over individual deals, according to the Wall Street Journal.

Deal-by-deal fights may flame up in courts, however, with investors pushing banks to buy back sour deals, egged on by new evidence [16] that banks may have known the mortgages underlying the deals were flawed. With such complicated shenanigans going on behind the scenes, investigators also want to know how banks hid their exposure to these risky securities from investors. The investigations are looking into various tactics, from general misstatements, like the Citigroup’s $75 million settlement [17] with the SEC for not disclosing $40 billion in subprime risk, to accounting maneuvers that moved certain deals off bank balance sheets.

In the spring, a court-appointed examiner in the bankruptcy of failed investment bank Lehman Brothers shined a light on a practice known as “Repo 105,” where Lehman moved $50 billion in assets off its books right before it had to submit investor reports. Last week, the New York attorney general filed civil charges against the accounting firm Ernst & Young [18], saying it had “substantially assisted” Lehman’s “house-of-cards business model” that misled investors. Executives from the now-bankrupt Lehman have not been charged.

Despite revelations coming up and down the financial spectrum, there have been no major criminal charges and almost no civil charges against executives. And while the SEC and some government prosecutors have been active, federal bank regulators have so far been quiet [19].

This all comes as Congress passed the Dodd-Frank financial reform bill this summer, seeking to overhaul the oversight of everything from mortgage securities to how banks make bets with their own money. As regulators hammer out the rules of the reforms, the devil may lie in the hotly contested [20] details.

This story originally appeared at ProPublica

Seattle Film Guide: Dec 31-Jan 6 Last Year’s Movies Dominate The New Year

Seattle Film Guide: Dec 31-Jan 6


Opening This  Week

Made in Dagenham


Limited Runs 

Nine Nation Animation  (NWFF, Jan 1-6)

Salt of this Sea (Grand Illusion, Jan 2-6) “A sad and engrossing look at a haunted landscape.” – NY Times

 

Now Playing

127 Hours  “franco’s performance transforms, encompassing both universes” dan kois, the weekly

Black Swan   Click here for Bill White’s PostGlobe Review

Burlesque   “a hodgepodge of busby berekeley plots, with none of the depression-era style or social critique” karina longworth, the weekly

Chronicles of Narnia: The Voyage of the Dawn Treader  “the film is loaded with overt messages about faith and prayer” lindy west, the stranger

The Fighter   ”feels like it’s barreling toward full-on greek tragedy, and it has its painful patches, but ultimately -forgive me – the film pulls a lot of punches” lindy west, the stranger

The Girl Who Kicked the Hornet’s Nest  Bill White Reviews it for Seattle PostGlobe

Gulliver’s Travels   Warning.  This movie contains Jack Black.

Harry Potter and the Deathly Hallows   I tried to watch the first one of these things, but it was like “Mary Poppins” with a bad color scheme and no songs. The I tried again with the fourth installment, but kept dropping off to sleep.  This last bit is split into two parts, the first for the winter holidays, and the rest for summer, but I doubt if that will be the end of the little bugger.  Somebody is sure to start again with the first book and another gaggle of kid actors to run through the whole mess again.

How Do You Know  “brave odd-duck of a romantic comedy”  ella taylor, the weekly

I Love You Phillip Morris ”a totally innocuous little  based-on-a-true-love-story movie of moderate entertainment value” lindy west, the stranger

The King’s Speech   Read Bill White’s PostGlobe review here

Little Fockers     ”a zero, worthy of neither hatred nor praise” matt luby,  the stranger

Love & Other Drugs  ”the most egregious four-quadrant pander-party of the past year”  eric hynes, the weekly

Megamind 3D  ’While not as desperately, tragically hip as the Shrek franchise, this manic comic book spoof is so busy trying to show that it’s in on the joke that it often forgets to include the actual, you know, jokes,’ andrew wright, the stranger

Rabbit Hole  “Let the healing process begin!” grant brissey, the stranger

Rare Exports: a Christmas Tale“in its own way, it never stops believing in santa claus” mark olsen, the weekly

Social Network  ”Thankfully, (director David) Fincher doesn’t seem to have a Big Message.” Paul Constant, The Stranger

Tangled” a cute film, and its humor is slightly wittier than your average princess movie” megan seling, the stranger 

The Tempest  ”in julie taymoor’s hands, shakespeare’s the tempest becomes a listless feminist parable” ernest hardy, the weekly

The Tourist  Johnny Depp and Angelina Jolie do who knows what

Tron: Legacy 3D   ”more about mouse house showmanship than depth of character, nuanc

True Grit    ”the lack of contractions gives everything an alien cadence” paul constant, the stranger

Yogi Bear Were I forced to attend an infantile 3D picture this week, i would definitely choose Yogi Bear over Tron Legacy. No contest. 

 

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End your year right by supporting independent journalism

We’ve come a long way since a hearty band of laid-off Seattle Post-Intelligencer journalists created seattlepostglobe.org. As we approach our second birthday, we ask for your continued help by making a tax-deductible donation before 2010 slips away.

We know you value strong, local, independent sources of news and commentary. Pieces like these, all written by former P-I staffers and published at PostGlobe this year: 

 

  • Eric Ruthford’s compelling special report on abused and exploited teens.  And his comprehensive two-part series on King County’s 10-Year Plan to End Homelessness, with photos by Mike Kane.
  • Larry Johnson’s take on issues around the world

The nonprofit Seattle PostGlobe is devoted to independent reporting for changing times. We focus on social justice journalism that links Seattle to the world, including issues and countries often ignored by mainstream media.

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Waking to a nightmare: Is it better to be a ‘slave’ in America than be home in Mexico?

From the moment we realize that life goes hand-in-hand with a lifestyle, vague notions of the American Dream hover in the background. Embraced or rejected, they are almost impossible to escape.

Yet the definition of that dream varies. Newspaper columnists opine about the holy grail of middle-class values. Pop culture praises an ever-mounting inventory of possessions. But when the phrase was coined, back in 1931, it spoke merely to the concept of opportunity – that through hard work, anyone had the chance to build a better life. Joaquin Martinez, a young man on his way to becoming a leader for farmworkers up and down the West Coast, could be seen as a poster-child for this bootstraps ideal. But he considers the dream almost laughable.

Lyden Story
Joaquin Martinez, 18, and his younger brother, whom he cares for like a father.

As a teen in Lynden, Wash., a rural community in the northwestern corner of the state, he certainly didn’t give it much thought. After a bumpy start as a transfer student at Lynden High, Martinez had impressed his teachers as a self-possessed youth who ran with the high-achieving kids and more than deserved his leadership role. True, he was absent from wrestling practice every now and then. But no one was much troubled by this. Martinez seemed merely to be negotiating the usual hurdles of life as a teenager.

Not until a Saturday morning two years ago did all the assumptions fall away, throwing the 16-year-old into a collision with his future.

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Farmers go to court today to try to stop all minimum-wage workers from getting a pay hike

Over the past 25 years, Erasto Garcia has picked cherries, asparagus, apples and grapes on Eastern Washington farms.

Farmers pay him by the bushel or tub, but whatever the rate they pay, the state guarantees that workers like Garcia get no less than minimum wage.

When Garcia started picking crops, the minimum hourly wage was $3.35. It’s now up to $8.55, thanks to a law state voters passed in 1998 to raise the wage each year with inflation.

Garcia looked forward to a 12-cent raise, to $8.67 an hour beginning on Jan. 1. But he and 142,000 other minimum-wage workers in the state — cashiers, waitresses, child care providers and more — won’t get the raise if the Washington Farm Bureau wins a lawsuit headed to court Dec. 29 in Kittitas County.

FULL STORY…