california

Meg Whitman's Shady Goldman Sachs Past -- Is It California's Future?

Richard Eskow — Fri, 26 Mar 2010 00:51:22 -0400

Just when you thought you'd had enough of Goldman Sachs running things -- and running them into the ground -- along comes Meg Whitman. Most Californians know she's using her fortune to run for governor. They probably don't know that she was once on the board of Goldman Sachs, and most likely still would be if she hadn't been cited for a practice one law firm describes as "essentially ... an illegal bribe ... to corporate leaders." Then came the Congressional investigation, and the investor lawsuit, and ... well, it was probably best to just leave the board.

What kind of business relationship can Californians expect their state to have with Goldman Sachs and firms like it if Meg Whitman becomes governor? Here's a clue: In a report called "Corporate cash boosts Whitman," the Associated Press reported that "The biggest donations came from New York investment bankers, hedge fund managers, attorneys and others." If there's one thing these guys know it's how to prime the pump.

Not that Whitman's old pals at Goldman haven't already been profiting off California's misery. They were hired to manage some multibillion dollar state bond offerings but, as reported in the Los Angeles Times, millions in fees didn't stop Goldman from secretly undermining California's credit rating. That hurt the very sales they were hired to manage. As the Times states, the firm "urged some of its big clients to place investment bets against California bonds" by "proposing a way for ... clients to profit from California's deepening financial misery."

California bucks keep rolling in anyway, despite that little bit of backstabbing ... and despite the fact that, unlike other major banking institutions, Goldman refuses to support reinvestment for low-income communities in the state. (By contrast, Bank of America's put in a trillion dollars.) Still, California clients have rewarded Goldman Sachs with billions of dollars in business, amounting to seven percent of the firm's 2008 revenues.

No wonder they call it the "Golden State."

Whitman profited from a practice called "spinning," which a professor specializing in financial fraud and corruption calls a "quasi-kickback." As the Sacramento Bee explains:

"(Spinning) involved offering a company's executives and board members personal shares in IPOs as a reward for giving the investment firms corporate business. Investment firms initially denied that was their motive, but later agreed to ban the practice.

The firms offered key executives shares at starter IPO prices not then available to ordinary retail investors. The executives resold their shares within days, making millions."

As CEO of eBay, Whitman hired Goldman Sachs to handle the company's initial public stock offering. She was also a private banking client of the firm's at the same time. She directed eBay to use Goldman Sachs for a second stock offering, too - and to help it acquire PayPal. Goldman Sachs got $8 million in fees from eBay while Whitman was CEO, while she made $1.78 million from those "spinning" deals.

Not that she needed the cash, being a billionaire and all. But that's how it works in Meg Whitman's world: Taking chances in the stock market is for the little people. To Meg Whitman, a million here or a million there as a "thank you" for your patronage is nothing more than her due. It's noblesse oblige, the aristocratic privilege of the corporate class.

Whitman was forced to leave the board after paying $3 million to settle a lawsuit from eBay shareholders, but she and Goldman had a warm relationship while it lasted. "Meg Whitman is one of the most dynamic and forward-looking leaders in business today," said Goldman CEO Hank Paulson in 2001. (That would be future Treasury Secretary Hank Paulson, of course; these Goldman folks like government power.)

To be clear, Whitman was never convicted of a crime and never admitted to wrongdoing (unless you think that writing a $3 million dollar check is an admission of wrongdoing.) When we say her past is "shady," we're not implying criminality. We're using the Merriam-Webster definition - "of questionable merit : uncertain, unreliable b : disreputable." As for the "disreputable" part, she was singled out for censure in a Congressional report issued by Ohio Republican Representative Michael Oxley - a distinction which, she complained, was "painful."

As the Bee reports, a business ethics expert responded thusly: "She's the victim? I love the transmutation. This was a not-very-subtle form of bribery that Wall Street's big investment houses, like Goldman Sachs, were using to develop their business."

She was a competent CEO, though she didn't create eBay and was never an entrepreneur. Her most noteworthy accomplishment before joining the already-thriving company was that she'd been the worldwide product manager for "Mr. Potato Head."(1) She ran the company well ... except for, you know ... the Goldman Sachs thing. But private sector CEO experience doesn't mean you'll perform well in a government job. (Dick Cheney and Don Rumsfeld were both former CEOs: I rest my case.)

And her spending's become an embarrassment. She's shattered all records, shelling out seven times as much as her opponents ($46 million so far - $27 million on the primary alone.) Her policy proposals include making the State Legislature a part-time body (looks like Republicans in the US Senate are beating her to it, though; maybe that's why they call them "bankers' hours.")

The next governor will inherit a state in deep financial crisis. Betting's still hot and heavy on who will default first: Greece or California. As the SEIU reported (pdf), many cities (including some in California) are facing a financial crisis because of bad derivatives deals they made with firms like Goldman Sachs. Will all this, does the state really need to be led by someone with a Goldman Sachs mentality?
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(1) Whitman managed the late-version Mr. Potato Head, the one with the plastic body. I'm old enough to have played as a child with the original Mr. Potato Head, discontinued in 1964 - the one where you inserted the toy eyes, ears, etc. into an actual potato. That has not influenced this analysis of Ms. Whitman in any way.

California Aims To Cut Use Of Cars

OurFuture.org Staff — Mon, 08 Sep 2008 11:59:38 -0400

California is poised to pass the first law in the nation linking greenhouse gas emissions to urban planning, a departure from the growth approach that spawned the state's car culture and urban sprawl. The measure, known as SB375, aims to give existing and new high-density centers where people live, work and shop top priority in receiving local, state and federal transportation funds. The idea is that such developments check sprawl and ease commutes, in turn cutting the car pollution wafting through the Golden State.

ICE's Newest Trick: Deporting High School Valedictorians

Corinne Ramey — Fri, 06 Jun 2008 17:13:27 -0400

I've written about U.S. Immigration and Customs Enforcement (ICE) officials' schoolyard antics before, but the recent news that ICE is planning to deport a California high school valedictorian just affirms my view that these immigration authorities need to get out of the schools. From the San Francisco Chronicle:

The valedictorian at Fresno's Bullard High School won't be attending college in the United States this fall because he's scheduled to be deported.
Seventeen-year-old Arthur Mkoyan's 4.0 grade-point average qualified him to enter one of the state's top universities. But he and his mother have been ordered back to Armenia after their last appeal for asylum failed. The family fled from what used to be part of the Soviet Union and has been seeking asylum since 1992.

But, rest assured, ICE shows its nice side once in a while (and if it's not clear, I'm being sarcastic here). As a sort of consolation prize, ICE decided to let Arthur stick around for graduation. According to the article, "A spokeswoman for Immigration and Customs Enforcement says they were given an extension until June 20 so Mkoyan could attend his graduation ceremony."

This past October, the Senate tried to help out students like Arthur, but to no avail. Legislation called the Development, Relief, and Education for Alien Minors Act -- better know as the DREAM Act -- was introduced in the Senate, but failed a procedural vote. The legislation would have allowed Arthur and approximately 65,000 other undocumented students a path to citizenship and the opportunity for a college education. But unfortunately for Arthur, the legislation failed.

Arthur's story and that of the DREAM Act are just two examples of what amounts to an utterly inconsistent immigration policy. Whether ICE wants to admit it or not, undocumented immigrants are here to stay, and an enforcement-only policy that consists of random deportations just isn't going to cut it. According to a recently-released report by the Public Policy Institute of California, Immigrant Pathways to Legal Permanent Residence: Now and Under a Merit-Based System, more than half of the immigrants in California who have legal permanent resident status were at some point undocumented. This number is 42% for the U.S. as a whole. These immigrants -- both documented and undocumented -- are a vital part of the nation's economy and the fabric of our nation. Deporting smart students like Arthur -- especially considering that such a huge percentage of immigrants eventually receive legal status -- is not only bad for the immigrant community, but for the nation as a whole.

For a slightly happier immigration story, check out this video of DMI scholar and Mexican immigrant Samantha Contreras. Samantha was undocumented when she graduated from high school, and soon realized the hardships associated with being undocumented.. "I learned the reality of my immigration status," she said. "I couldn't work, I couldn't go to college, I couldn't drive, I couldn't even get a Blockbuster membership card." Unlike Arthur's story, Samantha's has a happy ending -- an immigrant rights group helped her to enroll in college, and now she strives for a career in public policy.

Immigration Officials Turn to Schoolyard Bullying

Corinne Ramey — Thu, 08 May 2008 16:04:08 -0400

U.S. Immigration and Customs Enforcement (ICE) officials in California have stooped to a new, almost unbelievable low: intimidating schoolchildren.

Allow me to state the obvious: schools should be safe. And they should feel safe for the kids, their parents, and the teachers and staff who work there. But for the students at four Oakland schools and Berkley High School on Wednesday, school felt anything but safe. That day, rumors spread throughout the schools that ICE were nearby, possibly planning raids at the schools. Parents text-messaged their kids, warning them that ICE agents were close by so that the undocumented parents couldn't come to the schools to pick their children up. The Berkley school district became so overwhelmed with calls that they set up an automated voice message for parents, which according to the San Francisco Chronicle, stated that the administration would "not allow any child to be taken away from the school." The schools -- including Stonehurst Elementary, where immigration officials were parked across the street -- became a panic scene. Undocumented parents called friends and neighbors, asking them to pick up their children since the parents were afraid to come near the school. ICE spokespeople claimed that their intention was not to raid the schools but rather to make arrests at nearby locations.

Unfortunately, yesterday's Berkley and Oakland cases are not isolated incidents. ICE agents have routinely engaged in intimidation of workers -- both documented and undocumented -- and students. In Tucson, Arizona, a 17-year-old undocumented student at Catalina High Magnet School was arrested for possession of marijuana. Police came to the school, and then called the Border Control. When Border Control found out that the student was undocumented, they deported his father, who returned to Mexico accompanied by his wife and two sons.

The incident created an outrage in the school and community. The teenagers quoted in the Tucson Citizen article about the event state the facts that the adults around were apparently missing. "We think that shouldn't be allowed, because school is where we're supposed to be safe," said 16-year-old Mario Portillo. "No matter if you're an illegal alien, you have the right to an education." Eighteen-year-old Jorge Guerrero asked the somewhat obvious question, "How can we learn if we've scared the Border Patrol is going to come for us?" Araceli Sanchez, 14, said that she knew that the arrested student and his family were undocumented, but said that "he was just another student." And it was up to 14-year-old Ener Lopez to state the really obvious. "We should be safe in school," he said. Following a protest by more than 100 students in front of the Tucson Police Department headquarters, Tucson police have said that they will no longer call U.S. Border Patrol into schools or churches.

More recently, ICE agents in the raided 11 Taqueria El Balazo restaurants in the Bay Area, detaining 63 immigrant workers, including two 17-year-olds and a 15-year-old. Given the recent May Day protests by immigrant rights groups, it's unlikely that the timing of the raid was a mere coincidence. As Larisa Casillas, director of Bay Area Immigrant Rights Coalition, said, “I don’t think it is a coincidence that this happened a day after May Day. It wreaks havoc on the community." She sees the target as a strategic one. “When they hit a popular taqueria with a series of raids it sends a message, and our message back is that we need immigration reform. These are people who are working and contributing to the economic health of our region,” she said.

Casillas, I think, hits the nail on the head. Not only are these incidents -- both the school and taqueria raids -- likely part of a purposeful campaign to intimidate the Latino community, but in both cases the intimidation is bad not just for undocumented workers but for their communities at large. School raids cause widespread fear among students, parents, and teachers, and, at the very least, cause serious disruption in the ability of students to learn and feel safe in what should be a guaranteed safe environment. And, as Casillas says, immigrants -- even undocumented ones -- are vital to the economies of the regions where they live.

Immigrants make up 15% of the civilian workforce, and account for half of the labor force growth in the past 10 years, according to a White House report. They pay a significant amount of taxes and produce goods and provide services that are vital to the American middle class. They're vital to keeping our social security system afloat, pumping $6-7 billion a year into the Social Security system, most of which they can't claim because of their immigrant status. According to the same White House report, immigrants increase the earnings and productivity of native-born workers a significant amount, estimated at $37 billion a year. The bottom line is, decent, humane treatment of immigrants isn't just good for immigrants -- it's good for the current and aspiring American middle class.

This kind of conduct by ICE is incredibly destructive to families as well. If schools continue to be a scene of ICE intimidation, undocumented parents are less likely to send their native-born children to school, fearing that raids could result in families being deported. With immigrant families already being hit hard by the current recession and recent crackdowns on undocumented workers -- according to a recent Times article, remittances to Latin America have dropped significantly, yet another sign of the economic squeeze on immigrant families -- worries about deportation because of their kids attending schools are the last thing that immigrant families need.

Notably, it's not all bad. When reading news reports of the raids, in between all the eye-rolling at the fairly inane things that ICE agents said, I've been impressed by how supportive mayors and local officials have been of immigrant rights. "In my view, that is the ugly side of government," Oakland Mayor Ron Dellums said. "No way children should ever be treated to that kind of harassment and fear." Mayor Dellum said that Oakland should be free from raids. "As a sanctuary city," Dellums said, "we're all in unison. We don't want this type of intimidation. Immigrants are human beings, and need to be dealt with respect." Vice Mayor Larry Reid said that local officials were never told about the raids. "ICE just rolls in and tells our police department after the fact," he said. "The students are upset and crying. The school's administration said some of the kids are very shook up."

These local officials get it. When will ICE and the Border Control figure out that schoolyard bullying isn't an effective -- or humane, for that matter -- route to immigration reform?