Names Deal Cracks Swiss Bank Secrecy

By LYNNLEY BROWNING - New York Times - August 19, 2009
In the latest setback to Switzerland’s tradition of banking secrecy, UBS, one of the nation’s largest banks, agreed on Wednesday to turn over information on more than 4,400 American clients suspected by the Internal Revenue Service of using Swiss accounts for tax evasion.

The agreement is likely to unnerve American customers of UBS who do not know if their names will be divulged, and could deter others from opening Swiss accounts in the future.

Whether the deal will change the Swiss banking industry’s culture of secrecy remains to be seen. Smaller Swiss banks say they are confident that they can blunt its effects and continue to profit by finding new, more elaborate ways to protect the privacy of clients. But American authorities have made clear that their pursuit of tax evaders will not stop at UBS.

The 4,450 accounts at UBS that are covered under the new agreement held over $18 billion at one point, according to the I.R.S. commissioner, Douglas Shulman, who called the deal “a major step forward in piercing the veil of bank secrecy.”

UBS will give the names to the Swiss tax authority, which will forward them to the I.R.S. Under a new tax treaty with Switzerland, it could take more than a year for most of the names to be disclosed. In coming weeks the bank will start to notify clients, who can appeal the disclosure in Swiss courts.

It is not clear how UBS will decide which clients to unmask, though American officials have said that they are interested only in the biggest accounts — some containing hundreds of millions of dollars — and accounts that made use of offshore entities and sham corporations.

The agreement is another victory for the I.R.S. and the Justice Department in the long-running case against UBS, which in February paid $780 million and admitted to criminal wrongdoing in selling offshore banking services that enabled tax evasion. Larger Swiss banks like UBS and Credit Suisse have curtailed banking services for wealthy Americans in response to the increased scrutiny.

Some smaller, centuries-old private Swiss banks, however, are stepping up their efforts to attract American money, given the importance of foreign clients to the nation’s financial institutions.

Executives at smaller Swiss banks and trade groups say they are increasingly working with Swiss financial and legal companies to set up offshore entities as a way to shield assets from prying regulatory eyes. They have also been reassuring clients that their accounts will remain confidential.

Sebastian Dovey, a managing partner at Scorpio Partnership, a wealth consulting firm in London, said that “we have not seen huge amounts of movement” of American money out of Swiss banks.

The current penalty for this type of failure to disclose assets is up to 50 percent of the highest annual balance of each account for each of the last three years — an amount that can quickly wipe out an investor and still leave him owing taxes and interest.

Investors who come forward before Sept. 23 face a reduced penalty, of 5 percent to 20 percent, depending in part on whether the wealth was inherited. They will also be hit with the penalty just once, on the highest balance in the accounts during the last six years.

The Justice Department has opened criminal investigations of 150 UBS clients, and is likely to bring more indictments on top of the four it brought in recent months. Only clients who are prosecuted are likely to have their names become public.

The landmark settlement is expected to provide a road map for the I.R.S. as it tries to clamp down on tax evasion by Americans who use offshore accounts.

Smaller Swiss banks are still helping clients hide billions of dollars through complex structures in offshore havens in the Caribbean, Panama, Luxembourg, Singapore and Guernsey in the English Channel. The crackdown is casting a spotlight on the network of lawyers, accountants and advisers who help underpin the Swiss private banking industry by steering clients to such banks.

An American official, who spoke on condition of anonymity because he was not authorized to speak publicly, said this week that the Justice Department was preparing criminal cases against some of the Swiss agents and intermediaries who set up offshore entities for clients and funnel their money to private banks. They take a referral fee in the process — sometimes up to 50 percent, according to a former UBS private banker.

A little-known I.R.S. program, the Offshore Identification Unit, is helping to build a map of this world. It recently began tracking all disclosures of wealthy Americans who, unnerved by the UBS situation, have come forward to declare their assets and account details, often naming the private banks and intermediaries they used.

Julia Werdigier contributed reporting. Read more in the New York Times

Broken links in food-safety chain hid peanut plants' risks

By Julie Schmit, USA TODAY - 4/28/2009
BLAKELY, Ga. — When Food and Drug Administration inspectors visited Peanut Corp. of America's plant here in late 2001, they noticed peanut-processing equipment had been improperly repaired with duct or cellophane tape.
The "widespread" use of tape — some torn — concerned the inspectors because it could harbor insects, was hard to sanitize and could lead to adulterated food.

PCA President Stewart Parnell, who had taken over the plant in February, said it was a good thing they hadn't come a couple months earlier, because they would have seen even more tape then, according to the inspectors' report. Parnell promised to fix the equipment.

But last year — months before a salmonella outbreak was linked to PCA's products from the plant — a private audit found tape still used on equipment and to cover wall seams.

Details matter in food safety, and the story of how PCA came to be held responsible for one of the nation's largest and most costly salmonella outbreaks is all about details — lots of them — unseen or unreported or not acted upon until it was too late.

Federal authorities have begun a criminal investigation of PCA, and the company is bankrupt. Records produced in the FDA's investigation of PCA and in congressional hearings on the outbreak portray a company that not only failed to heed warnings about its deficiencies, but allegedly shipped products that had tested positive for salmonella after retests were negative.

More important, the case reveals a food-safety system in which every key link in the chain of protection failed, food-safety officials and lawmakers say. The outbreak "is a poster child for everything that went wrong" with the USA's food-safety system, says William Hubbard, a former FDA associate commissioner. "Down the line, you can find flaws and failures."

The U.S. food-safety net relies heavily on companies to be good operators. Yet PCA repeatedly failed to fix problems that were brought to its attention, according to regulatory records and documents made public in congressional hearings. Nestlé, for example, twice inspected PCA plants and chose not to take on PCA as a supplier because it didn't meet Nestlé's food-safety standards, according to Nestlé's audit reports in 2002 and 2006.

Regulators never found anything major wrong with PCA's Blakely plant until after the outbreak. Then, the FDA found major problems in sanitation, manufacturing and even plant design.

Unlike Nestlé, other PCA customers, including Kellogg, never audited the Blakely plant themselves. Instead, they selected PCA as a supplier based in part on an inspection by an auditing firm that was paid by PCA and that rates almost every client "excellent" or "superior," said Rep. Bart Stupak, D-Mich., citing his committee's investigation.

The outbreak resulted in 700 reported illnesses and may have contributed to nine deaths. More than 3,600 products were recalled, costing the food industry hundreds of millions of dollars and signaling to parents that many of their children's favorites — peanut crackers, cookies, ice cream — could be dangerous.

The outbreak also caused heartbreak. One family alleges it stole a mother and a Christmas from them. Shirley Almer, a 72-year-old cancer survivor, died Dec. 21 after eating salmonella-tainted PCA peanut butter in an elder-care facility, her son Jeffrey testified to Congress.

"Shirley Almer loved this country but was terribly let down by a broken and ineffective food system," he said at the congressional hearing.

The industry watchers

PCA got more than one warning from other companies that its Blakely plant had problems.

•Deibel Labs, which ran more than 1,600 salmonella tests for PCA's Blakely plant from 2004 through 2008, found almost 6% positive. It was so many that Deibel sent PCA's samples to a separate part of its Chicago lab to lessen chances that they'd contaminate other products, Charles Deibel, the firm's president, said in an interview.

For roasted products such as peanuts, a positive rate above 1 in 10,000 would be high, Deibel said. Proper roasting kills salmonella with heat. PCA never asked Deibel to look into the issue, Deibel said.

•Another lab hired by PCA, JLA, based in Georgia, told PCA in 2006 that the Blakely plant hadn't adequately documented that its roasting killed salmonella, according to a letter from JLA to PCA that congressional investigators released. After the outbreak, the FDA noted the same deficiency in its 2009 report.

•Nestlé audited the Blakely plant in 2002 and rejected it as a supplier. Nestlé's audit report said the plant needed a "better understanding of the concept of deep cleaning" and failed to adequately separate unroasted raw peanuts from roasted ones. Having them in the same area could allow bacteria on raw nuts to contaminate roasted ones, a risk known as cross-contamination.

The plant wasn't even close to Nestlé's standards, auditor Richard Hutson said in an interview. Hutson, who now heads quality assurance for several Nestlé divisions, said he shared his concerns with PCA officials at the time, but "they didn't pursue it" further with Nestlé, he says.

After the outbreak, the FDA found problems at the Blakely plant that were similar to those found by Nestlé, including inadequate cleaning and storing of raw and roasted peanuts too close together.

Nestlé also rejected PCA's Texas plant in 2006.

Neither Deibel, JLA nor Nestlé shared their findings with anyone other than PCA, which is common industry practice. Congressional lawmakers don't fault companies for not sharing proprietary data, but some now say that foodmakers' microbiological test results should be reported to regulators.

Had the FDA seen PCA's salmonella test results, it might have detected a problem sooner, said Stephen Sundlof, the FDA's head of its food-safety center, at a congressional hearing in February.

That a lab detected salmonella in PCA products but reported it only to PCA is a practice that "we can't afford to have in our food-safety system," said Rep. Bruce Braley, D-Iowa, at the same hearing.

The regulators

The issues noted by Nestlé and JLA, and the frequent salmonella positives found by Deibel, went undetected by regulators. That's part of what Stupak calls a "total systemic breakdown" of the U.S. food-safety system.

The FDA didn't inspect the Blakely plant itself, after its 2001 check, until the outbreak. That's not unusual. The agency's inspection staff is so strapped, it inspects food facilities an average of once every five to 10 years unless they're deemed high risk, which peanut processors were not.

About half the FDA's food inspections are done by state inspectors, whose departments are paid by the FDA to do that work.

After the outbreak, and a 13-day inspection of the Blakely plant in January, the FDA delivered a scathing report. It said the plant didn't clean up after finding salmonella, had poor controls to prevent contamination and had poor design to prevent roof leaks.

Most important, the FDA discovered that PCA shipped products that had tested positive for salmonella, then negative on a retest. Shipping such product is "universally condemned," the FDA's Sundlof testified to Congress, because salmonella can be missed in tests. Products should be destroyed after one positive result, regulators say.

But nine inspections of the Blakely plant — by Georgia agricultural inspectors in 2006, 2007 and 2008 — found only minor issues, many of which were quickly fixed, said Oscar Garrison, Georgia assistant Agriculture commissioner. Two of the checks were done for the FDA.

Garrison defends the state inspections as a "snapshot in time." Even rigorous inspections wouldn't always detect problems if a processor is intent on "breaking the law," he said.

But Stupak, who held two hearings on the outbreak, said the FDA's 2009 inspection report notes numerous violations of good manufacturing practices that weren't found by the state and which FDA officials later testified should have been caught.

The PCA case has cast a spotlight on the rigor of state inspections done for the FDA. Some states do a good job; some don't, Hubbard said. The FDA knows it needs to raise standards, said Michael Taylor, food-safety expert at George Washington University.

"There's a basic breakdown when an FDA-contracted inspection doesn't detect problems that seem so obvious," Taylor said.

PCA, which closed its three plants after the outbreak, has disputed some of the FDA's assertions. Parnell, who shares PCA's ownership with an investor group, worked at its Virginia headquarters. He and other former PCA managers refused to comment.

The plant in Blakely used to employ 50 but now sits deserted. Its paint is faded and chipped, as if a symbol of the deficiencies the FDA said were inside.

The customers

When the outbreak hit, PCA supplied 2.5% of the nation's peanut products, including peanut butter sold to institutions and paste and meal used in foods made by hundreds of companies.

To win customers, Parnell "extolled" the fact that an auditor, AIB International, had rated the plant as "superior," said King Nut CEO Martin Kanan at a congressional hearing. King Nut sold peanut butter under its name that was made by PCA.

That rating also satisfied Kellogg, which began buying PCA's peanut paste for sandwich crackers in 2007. Kellogg CEO David Mackay testified at a congressional hearing in March that PCA was a "dishonest supplier" and that Kellogg had done "everything we could" to ensure safety.

PCA had been audited by AIB, "the most commonly used auditor in the U.S.," Mackay said. PCA had verified that it had fixed issues raised in the first audit in 2006, Kellogg says. Kellogg visited the plant but didn't audit. Kellogg also got certificates from PCA — issued by private labs paid by PCA — saying the product was salmonella-free, Kellogg says.

But AIB's rating of PCA has since come under attack, along with the common practice of foodmakers paying for their own audits.

Stupak said congressional investigators found that AIB gives 98% of companies a "superior" or "excellent" rating. He also said that e-mails between AIB and PCA point to a relationship that's too cozy to ensure a tough audit.

"You lucky guy. I am your AIB auditor," AIB's Eugene Hatfield wrote PCA on Dec. 22, says an e-mail released by Stupak's committee.

In 2008, PCA had more than a month's warning before its AIB audit. Former PCA employees, sanitation director Anne Bristow and Bobby Mallard, said in interviews that the plant was deep-cleaned beforehand.

"Five days later, it would be back to normal," said Mallard, who ran a peanut-roasting line. "It was dirty."

The last AIB audit, done on one day in March 2008, found few problems. "Excellent cooperation was received by the writer," wrote Hatfield in the report. "On some occasions, the items were immediately corrected."

AIB refused an interview request but defends its audits on its website. It says Hatfield had inspected 200 peanut facilities in his career and did a PCA check that was so detailed he found beetles behind duct tape.
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AIB also says the Blakely plant ran for months without a manager in mid-2008, providing ample time for it to deteriorate between AIB's audit and the FDA's January 2009 inspection.

AIB also draws criticism from a former food-industry official. Its audit of PCA was "superficial," said Jim Lugg, former food-safety chief for bagged salad maker Fresh Express, who reviewed AIB's audit of PCA at USA TODAY's request.

One example of "shallow treatment of a big issue," Lugg says, is that the audit notes that PCA had a written program to evaluate suppliers and had an approved list. But AIB did no further checking of the suppliers. Years ago, Fresh Express stopped using AIB audits because it found them inadequate, he adds.

Lugg also questions why another audit firm ranked the PCA plant so high even though the auditor noted many problems.

In April 2008, NSF Cook & Thurber inspected the Blakely plant for a client, which it says wasn't PCA. The audit found so many "minor" deficiencies at the plant — including use of tape — that the plant ranked in the bottom 6% of audits done by NSF last year, NSF said in a statement, adding that it stood "100% behind" the audit.

Still, NSF gave the plant an "opportunity for improvement" rating on food safety and quality, just below the "acceptable-excellent" rating. Lugg says that rating appears too high, given the concerns noted in the audit, including criticisms of the plant's condition, sanitation and pest control.

"The whole idea (of third-party audits) isn't working," says former FDA official Hubbard. "The inspectors are either telling the client what they want to hear, or they're doing a perfunctory audit, or they're poorly trained."

Kellogg, while defending its oversight of PCA, now says it will do its own inspections of high-risk suppliers. It spent less than $20 million on PCA products. Its cracker recall will cost up to $70 million, Mackay testified.

Many companies need to do more due diligence on suppliers, food-safety experts say. "There needs to be a revolution in the supply chain," says Michael Doyle, director of the University of Georgia Center for Food Safety.

The end result

Since the recall, Parnell has been portrayed by congressional lawmakers as a man most concerned with getting product out the door.

Former employees also say too little was spent on the Blakely plant. "It was production, production, production," says Mallard. "Then clean for 15 minutes."

"I'd tell Stewart that this needs to be changed right away," Bristow says. "He'd say, 'We'll get on it.' It wasn't done."

The plant's roof leaked so badly, "It rained in the plant," says Teresa Spencer. Rainwater can carry salmonella from bird droppings. The roof leaked even after PCA fixed it, Mallard says.

PCA also left key jobs open. In addition to losing its plant manager in 2008, it lacked a quality manager for at least four months, NSF's audit says.

Parnell's side remains untold. At a congressional hearing in February, he invoked his constitutional right not to testify. His lawyer also refused comment for this story, citing the criminal probe, as did Parnell's daughter, who did PCA's books.

Jeffrey Almer and his sisters sat behind Parnell in the hearing room.

Their mother, Shirley, a woman who dragged her grown sons onto the dance floor, had entered a Minnesota rest home after Thanksgiving to recover from a urinary tract infection. The day before her expected release, her family was told she had hours to live. Her mother had lived to be 101.

When Parnell refused to testify, Jeffrey, 46, a finance employee for Best Buy, says he felt rage. It was directed at Parnell but also at the food-safety system that he says failed his mother.

"My mom should be here today," he testified.

Contributing: Tom Ankner
Read more in US News

Todd Staples - Campaigning of food safety - Really?

By Vince Leibowitz - Capitol Annex

Paul Burka "stirs up a hornets nest"

By Faith Chatham - DFWRCC - July 4, 2009

Texas Monthly writer Paul Burka wrote that he didn't think Ronnie Earle can win a Democratic Primary or get cross-over votes. His comments drew immediate responses. He posted his "opinion" at 11:12 a.m. July 3rd. By 11:56 a.m. July 4th, 26 people had responded. Several were from the same person. Those in disagreement with Burka cite Ronnie Earle's long record and passion for ethics.

We recommend you read the thread and add your own comments: Texas Monthly

I do not have permission to post all of the comments, but am including mine and Lauri Wiss's:

July 4th, 2009 at 11:43 am
Faith Chatham says:
Ronnie Earle excites the Democratic base more than any name which has been floated for Governor to date. Dirty dog Democratic activists who have been considering sitting this one out if the only choices on the table are GWB’s partner and Kinkey, are organizing and leading the DRAFT RONNIE EARLE for GOVERNOR campaign. He appeals to citizens, both Democratic and Republican and Independent who are disgusted with the rob, pillage, and charge the people more for less while lining the special interests pockets mentality of Austin. The realities of the current administration in Austin, and the similarity between many Democratic and Republican legislators’ lack of concern for the good of the people of this state (unless they are their personal benefactors) has united the far left and the far right on many basic issues.
The primary issues which most Texans are speaking with one voice are the strengths of Ronnie Earle. Texans want fairness. What is good for one should be good for all. There should not be one set of rules for the elite and another for the rest of us. Ronnie Earle has been consistent. From his days as a Legislator in the “Dirty Dozen” through this very minute, he has always applied the law equally to all. He even filed against himself when he discovered he’s failed to file paperwork!
He’ll win the Democratic primary if he declares and he’ll be the strongest Democratic candidate we can field against any deep-pocketed Republican in this state.
Mr. Burka, you are dead wrong on this one. Watch Ronnie Earle run and watch Ronnie Earle win!

July 4th, 2009 at 11:56 am
Lauri Wiss says:
Well, Trimpack did occur on Perry’s watch with people on his staff. Letting Delay use staff and equipment from the Governor’s office will come back to haunt him.
Abbot allowed the problems with youth and prison issues to continue until 2008 when it was called to his attention in memos in 2002.
The TTC plans coming from the Governor’s Office began in 2002. The AG should not have had to declare in 2009 that it was unconstitutional,Perry should have known this in 2002. Don’t underestimate the TTC on voters and Perry’s initiative on this.
College education has skyrocketed again, Perry had input on those trustees who decided to deregulate tuition. The Call Center for Human Services was private corporation. Would it have worked it it had been done by employees currently employed by the state?
Unemploymenht is at an all time high here in the state. That is another group of people who will have many memories of not receiving their federal 13 week extensions for several months due tostate “computer problems” when they are already receiving state unemployment checks?
Tell me again why you think there won’t be Republican crossover?
Ronnie Earle stood up for keeping the process as ethical as possible, especially with budget cuts being the response to his being effective.
KBH will have a higher bar to climb if Ronnie Earle is her opponont. Just whaling away at Perry will not tell us what she will be doing for the state.

Ronnie Earle has formed a campaign committee

He has not declared for what office.
Help convince Ronnie Earle to run for Governor.
Take poll on Capitol Inside

More: Why We Need Ronnie Earle as Governor of Texas

By Faith Chatham - DFWRCC - July 3, 2009

Until the deadline for filing for Governor, this site will post updates to "Why We Need Ronnie Earle for Governor." You can add your endorsement by responding to the post using the Comment. Comments are moderated and if on topic and not offensive to Faith Chatham, will be posted usually within 24 hours. Earlier endorsements are farther down on this blog.

Faith Chatham on Facebook: Why We Need Ronnie Earle - July 2, 2009

Ronnie Earle has a strong sense of what government should do and what those in office should not do. This basic line in the sand of decency has been absent in Austin for a very long time. As a Texas Legislator and member of the "Dirty Dozen", he stood-up against corruption in political office. As District Attorney in the capitol of Texas, he has prosecuted the powerful when there were legal grounds to justify those cases. He is not known for doing the "politically expedient thing" or for acting for his own enrichment.

Of all the potential names I've heard floated for Governor, his is the only one which excites me. With Earle, folks know where he stands. He understands the Constitution of Texas and the U.S. Constitution. Frequently when we watch the actions and hear the words of our current and recent Governors, it is difficult to think they have even read the documents.

Earle will be a step in the right direction toward instillng confidence in Texas government.

Mark Twain said "No man's life, liberty, or property is safe while the legislature is in session. - Mark Twain (1866)"

The Governor of Texas has ripped off the people far too long. We've survived GWB using the office merely as a campaign planning session for the Presidency and his college roommate using it to court European and Australian business interests while neglecting those at home.

I bet Earle is one governor who would expect a more modest expenditure for a temporary residence than has been laid out for Governor Perry.

I think it is time for Texas to elect a governor who will truly serve the people of this state instead of concentrating on transferring public infrastructure into the hands of his international corporate buddies.

I'm been planning on sleeping through the 2010 election cycle but if Ronnie Earle declares for Governor, I'll do what I can to help people understand why we need him as Governor.--

Harriet Irby on Facebook July 2, 2009:

Mr.Earle is ferociously honest. What a refreshing change!

Jim Hightower | The Fourth of July Is a Celebration of Agitation

Jim Hightower | The Fourth of July Is a Celebration of Agitation

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Draft Ronnie Earle

By Faith Chatham - DFWRCC - July 1, 2009

McBlogger wrote:

One of the reasons I like Earle is the fire and passion he brings to everything he does. He's the kind of candidate who won't let Republicans in this state know that it's OK for them to vote for a Democrat, he's the kind of man who can convince them the Republicans are full of shit, with a smile on his face and a beer in his hand. Read more on mcblogger.com

Texas Needs You Ronnie Earl

Vince Leibowitz wrote on Capitol Annex:

The next big question folks are probably asking is, “Why Ronnie Earle?” I think that the answers are pretty obvious, but I’ll elaborate.

Ronnie Earle is a classic progressive, good-government Democrat with the capability to inspire people and, ultimately, reach across party lines and actually win in places in this state Democrats haven’t won in a while.

Last year, I contacted then-DA Earle about participating in a panel that we were assembling for Netroots Nation called “Blogs As The Ethics Watchdog.” We wanted him to participate because we thought he’d have a unique perspective on some of the issues bloggers in Texas had covered since, after all, his office investigated them. Shortly after that, I got the opportunity to hear him speak at a fundraiser in East Texas (if memory serves, I even got to introduce him, because I’d suggested him as a speaker). I couldn’t quote you chapter and verse of his speech, but it was inspiring and, through that speech, Ronnie Earle articulated (perhaps without even realizing it) a vision for Texas that is different from the kind of thing you typically hear gubernatorial candidates talk about. Given that he wasn’t a candidate for anything at that point, it was particularly impressive.

Ronnie Earle talked about a vision for a Texas that is proactive and not reactive when it comes to public policy areas like crime and education. He talked about a Texas where the interests of children and the elderly come first, and not the interests of big business or big donors. He even set forth a few ways Democrats could accomplish those things, but I won’t try to recount them today.

In July of last year, I got to hear Ronnie Earle speak again in a more casual atmosphere at the Netroots Nation panel. By that time (and even when he spoke at the spring fundraiser), he had been mentioned as a possible candidate for statewide office. As I listened to some of what he said in the Netroots Nation panel, though, and recalled the earlier speech I heard, I decided that if Ronnie Earle ever ran for statewide office, he was a candidate I would support.

Since he hasn’t made up his mind yet, and since I know a number of people who feel the same way I do, now is the time to offer a little encouragement–hence DraftRonnie.com.

Just as is noted on the draft site, Texas needs Ronnie Earle right now. Texas Democrats really need Ronnie Earle right now.

MORE ABOUT RONNIE EARLE:
The Impact Players: The Earle of Democracy by Mark Donald, Texas Lawyer

..He half-expected these and more after his two-year investigation into alleged violations of Texas campaign finance laws led to 32 indictments spread among three political associates of U.S. House Majority Leader Tom DeLay, R-Sugar Land, and eight corporations.

“There is a basic rule that the Mafia follows,” Earle says. “And it is used as a template by most politicians that I have investigated: Deny the allegation and attack the allegator.”

Returned on Sept. 26, the indictments seem fairly straightforward. Section 253.094 of the Texas Election Code prohibits corporations and labor unions from making political contributions or expenditures and 253.003 makes it a crime to accept them. Each offense is punishable as a third-degree felony, although the statute has been interpreted to exempt corporate money spent on administrative expenses such as rent and utilities.

The indictments accuse John Colyandro and Warren Robold, who were affiliated with Texans for a Republican Majority [TRMPAC], and eight of the PAC’s corporate donors of accepting or making banned corporate contributions. James Ellis, who was also associated with TRMPAC, and Colyandro have also been indicted for money laundering, a first-degree felony. Each of the defendants has pleaded not guilty to the charges.

The factual allegations surrounding the investigation and indictments, however, are so dense, interconnected and politically charged, they make Republicans look like Machiavellian power mongers and Democrats look like paranoid conspiracy theorists.

According to press accounts from the Texas Observer to the New York Times, Tom DeLay sought to increase his Republican majority in Congress by increasing the number of representatives from the Texas congressional delegation. “I’m the majority leader and I want more seats,” he told the Washington Post.

If Republicans could gain a majority of seats in the Texas House in the 2002 election, they could elect a DeLay-friendly speaker [Tom Craddick, R-Midland] who could then help push through a DeLay-engineered redistricting plan, which would then increase the size of the Texas delegation in Congress — which is what happened.

Spotlight on Prosecutor

By Ralph Blumenthal, The New York Times, October 11, 2004

...On Sept. 21, after nearly two years of investigation, the latest of three successive grand juries indicted three top fund-raisers and eight corporate givers for contributions to the political action committee of Texans for a Republican Majority, a group that is linked to Mr. DeLay, of the Houston suburb of Sugar Land, and Tom Craddick of Midland, a fellow Republican who is speaker of the Texas House. The charge is funneling hundreds of thousands of dollars in illicit corporate money to Republican statehouse candidates in 2002.

The candidates’ victories set off a redistricting effort to solidify Republican control of Congress in 2004. “Clearly corporate money was used in political campaigns, and that’s against the law,” Mr. Earle said.

The Texas Association of Business, another group involved in the inquiry, boasted in a 2002 newsletter that it “blew the doors off the Nov. 5 general election using an unprecedented show of muscle that featured political contributions and a massive voter education drive.”

Mr. Earle said, “Nobody can just violate Texas law, brag about it and then get away with it.”

He was non-partisan in prosecuting elected officials who misused their office for personal gain:

Mr. Earle has been recognized as an innovator for working, sometimes with his wife, Twila, to mobilize communities to fight crime. “Mostly, I got tired of waiting for something terrible to happen before I could do anything,” Mr. Earle told a 2002 conference on drugs at Rice University.

Meanwhile, he racked up some other prominent prosecutions of Democrats, winning a guilty plea for misuse of office against State Treasurer Warren G. Harding in 1982; a guilty plea on financial disclosure violations from the Texas House speaker, Gib Lewis, in 1992; and various convictions against state legislators of both parties. But he lost a felony bribery case against Attorney General Jim Maddox, a Democrat, acquitted in 1985.

He has even prosecuted himself:

Among those he successfully prosecuted was himself. As he announced in a news release on March 14, 1983: “I have discovered that my officeholder campaign finance reports were not filed for 1981 and 1982.” He filed them belatedly, he said, apologizing to his constituents for the misdemeanor and adding: “I have today caused a complaint to be filed against me in this matter and this afternoon I expect to pay a fine assessed by the court.” It came to $212, including court costs.

(By Ralph Blumenthal, The New York Times, October 11, 2004)

He focuses on Crime Prevention:
Guarding Death’s Door
By John Cloud, Time Magazine, July 14, 2003

Earle’s capital locale has extended his visibility beyond the county. He was one of the first prosecutors in Texas to create a victim-assistance program, in 1979; later he helped write a state law requiring every D.A. to open an office to connect crime victims with social services. He helped start Austin’s Children’s Advocacy Center, which works with abused kids, and a family-justice division of the D.A.’s office, which prosecutes those accused of domestic violence and helps their families get back to normal. A lot of prosecutors view such do-gooderism as a waste of time, preferring to devote themselves to cases guaranteed to go Live at 5. Earle, by contrast, rarely appears in court. He would rather attend, as he did recently, a conference in a motel ballroom off Highway 35 to talk about how to fight substance abuse. Predictably, those in the movement for community justice, which tries to combat the sources of crime as well as punish it, swoon over him. “He has a track record going back years of working toward crime prevention by working in the community,” says Catherine Coles, a fellow at Harvard’s Kennedy School of Government who studied Earle’s office in the ’90s.

...“At first, I thought justice was vengeance,” he says, settling back into the chair in his second-floor office, which is not far from the pink-granite capitol. “D.A.s feel they have to give voice to the anguish that victims feel. And I tell you, that’s a righteous anger. You look at these guys”–the killers, he means–”and some of them are monsters, just awful.” Many prosecutors don’t concern themselves with why they become awful, but Earle has a theory: “People learn to act through what I call the ethics infrastructure, that network of mommas and daddies and aunts and uncles and teachers and preachers”–he continues the list for some time–”who all teach us how to act. And that infrastructure has atrophied. When I was growing up”–Earle is 61 and was raised outside Fort Worth–”my mother had seven sisters and a brother. My dad had six siblings. So I had all these aunts and uncles plus my mother and father, and that structure is powerful. People don’t have that now. And nobody is taking care of the children.

“So it’s almost as if most of the people we send to death row, it’s like we can say, ‘Look what we made you do.’ Most of them–if they had someone who had intervened in their life at an appropriate point, this would not have happened. And that’s sad to realize. That doesn’t necessarily make you squeamish about using the death penalty, but it does make you more discerning about it.”

But Earle has always been a little weird. A close observer of Texas politics e-mailed this description of him: “Thoughtful. Conspiratorial. Crusader. Half-whacked. Smart. Insightful. Wise. Nuts.” Well, not nuts. But most of it has a kernel of truth. Earle’s reputation as conspiratorial derives largely from the workings of his office’s public-integrity unit, a watchdog office that prosecutes those (including elected officials) who commit crimes in the course of their dealings with the state. Earle’s job, in other words, is to root out conspiracies.

Earle is often suspected of bringing partisan cases on behalf of fellow Democrats. And while he has prosecuted 12 Democrats and only three Republicans, his biggest embarrassment came in 1994, after U.S. Senator Kay Bailey Hutchison, a prominent Republican, was indicted for allegedly using state employees to do political tasks. Earle amassed thousands of documents as evidence, and many thought the new Senator could lose her job. But at a pretrial hearing, the judge and Earle clashed over the admissibility of the documents; fearing he would lose, Earle declined to present a case. Hutchison was quickly acquitted, and Earle was portrayed as a fool. Republicans have never quite forgiven him.

...Like most other prosecutors, Earle often sees himself as an advocate–for his constituents, for the state, for crime victims. Because of their role, prosecutors tend to be portrayed in popular culture as modern-day knights. But Earle has come to prefer another metaphor. “I’m the gatekeeper,” he says. “I don’t dare ask my boss, the public, to sit in judgment of somebody that I don’t think deserves to die. That’s why they elect me, to exercise that judgment and not bother them.” Buried in that philosophy is something radical–the notion that the jury system, as it’s currently constructed, can’t be trusted to send only the guilty to death row. Most prosecutors wouldn’t embrace that philosophy, which is why it may take an Earle, not a knight, to slay the demon of error.

In Earle's own words:
Community Restorative Justice and the Future of Democracy

By Ronnie Earle, May 2000
Justice in our culture has many meanings, but mostly it has become a hero word. We have grown accustomed to thinking of it as vengeance, or payback, and usually as one act, as in the execution of a criminal or the movie killing of a bad guy.

Justice in its original contemplation was neither so crude nor so simple. It was a sense of balance, of completeness, of harmony and fairness. It involved the daily, mundane work of building community by taking care of the relationships upon which community is based. It was not as simple as an immediate release of anger; it was certainly more meaningful. The Hebrew word Shalom comes closest to describing this sense of justice as a general sort of okay-ness that was shared in and contributed to by everyone in the community.

...
Justice is thus an organic product of the community’s institutions, and that is what controls behavior, not the law. The law historically just caught those few who fell through the cracks in the ethics infrastructure; it was never designed to be a substitute for what former Travis County, Texas Sheriff Doyne Bailey once referred to as the institutions of love. It is upon that structure and the connections within it that justice depends.

The community restorative justice movement is focused on connecting people both in and out of government. It is an effort to use the opportunities for intervention provided by crime and related social dysfunction as tools to begin the process of rebuilding the social capital upon which both community and justice are based. It is a spontaneous, grassroots effort to discharge what Dan Van Ness says is the moral responsibility of community to create peace. It seeks to reweave the fabric of community by involving the public in its own protection.

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He is not afraid to think outside the box:

The focus of the criminal justice system has been on the trees—response time, arrest rates, conviction rates, length of sentence, crime rates, recidivism rates, and so on. The forest—the place of that system in the culture and its role in values clarification and reinforcement—has seldom even been noticed, except by the popular entertainment media. Community restorative justice asks us to see and care about both the forest and the trees.

Community restorative justice is not easy to understand, much less to practice, except for members of the lay public. They have only to learn a new way. They are not burdened as are criminal justice professionals with the necessity of first unlearning the old; for the pros it is like having to drive the train while trying to build a new railroad without being sure of the destination.

Community restorative justice operates at two levels. First, it asks the agencies that have traditionally operated separately and independently of each other to work together, sharing power and authority with each other. That is hard, especially given the ubiquity of turf wars in social and criminal justice.

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Where is USA Tax Money Going?

Link shows spending of U.S. Government.

Why Rehash Things That Went Wrong Last Election Cycle?

By Faith Chatham - DFWRCC - June 1, 2009
It's all about process. Even though we are several hundred years old, the American System is a "work in progress." We're still evolving, fine-tuning, and hopefully getting better. Growth for a nation (or political party) is sometimes a jagged path rather than a straight line. Review and petition, discussion and revolt all play their part in refining the political process. We didn't learn to hold the tea cup correctly by just picking one up. We don't learn to conduct flawless elections by merely signing up to run as election judge! The Democratic Primary of 2008 showed people in Texas that there is room for much improvement beyond the mere electronics of voting machines.

It isn't about Obama or Hillary. It isn't about Democrat or Republican. It is important, I think, to examine what occurred in that election cycle and to evaluate what really went off track. We need to know where it departed from reflecting the intent of the voters in order to know where to work, petition, influence, and demand that it is improved for the next race.

It is also important to see what worked right and be thankful and appreciative to the millions of people who did their part. That includes people who disagreed with each other, voted for different candidates, worked for opposing campaigns, and donated/volunteered on all sides. Process includes everybody.

The candidate who is declared the winner of any election should be the one selected by the majority of the voters. The process for recording and reporting votes should be as flawless as it is humanly possible to make. The percentages reported up each step of the party selection process should mesh with the percentages of votes cast per candidate from the bottom to the top. (See Texas Presidential Voting Results)

It is important for those who market political candidates to understand that the perceptions of the people determine how folks vote and participate in the process. In Texas, no Democrat won any statewide office during an election cycle in which many thought the Democrats had "the" advantage. (See Texas Statewide '08 Voting Results)


It is beneficial for people who care about issues and causes to understand the events, behaviors, grassroots synergy, campaign strategies which worked, backfired or fizzled and their impact on voters' behavior. Those things all carry through and impact legislation.

Legislation authorizes or prohibits policies which create, fund, or implement infrastructure, human services, education, environmental protection, business development, property protection, transportation, etc.

One governor can veto legislation passed by every member of both houses! One Lt. Governor in Texas can stall legislation favored by the majority of the Senate. It is all a connected link and streams back to the citizen's perception of the process and their participation at the voting booth. One underfunded dark-horse candidate who receives only a thin slice of the votes can bring issues to the minds of politicians and voters which make their way into planks of major candidates and get passed in legislation.

It is important for people to know that their preference is registered accurately or we stop participating. (See Texas Voter Registration and Voter Turnout)

Those who market candidates need to understand the relationship between public perception and voter participation. When marketing overshadows democratic process, and people realize that their votes do not determine the party's nominee or ultimate winner of the seat, there are reactions. The PUMA movement in the Democratic Party in 2008 is a good example. It has crossed party lines, uniting women and causing both parties to examine the united power of female voters.

Jim Mattox's last speech was testimony at the West Committee on Texas-Two Step. Mattox told Democrats what needs to be changed for Democrats to win again in Texas.

Evaluation and reflection are tools which help us keep the process honest. It is how we are able to take that jagged line and straighten it out again, so that we can truly reflect what many think America is all about.

There were counties in Texas where voter participation exceeded 30%. There were others where it was less than 2%. After the balloons and confetti of election night have settled and the last acceptance or congratulatory/ concession telephone call has been made, it is beneficial for everyone for some to step back and look at the numbers, plug in the events and evaluate the message, examine the irregularities in the voting process and analyze the election cycle as a process. See Change the Caucus System - End the Texas Two-Step) It is hard to accurately plug in values for "likeable" or "unlikeable" and personality factors. However, it is possible to look at turn-out, party organization, campaign resources per voting area, and more importantly, party rules, state election law, and chaos in various parts of the process which created irregularities.

We can learn to avoid problems by experiencing them. The primary of '08 can be utilized as a learning experience for all of us. Democrats, Republicans, PUMAs, Obamabites, and Independents can all look at that election and identify places we need to improve. Participating lets us work with others to do it better next time.

I may not agree with you. You may detest everything I usually stand for. However, I will fight to the death for your right to have your opinion accurately recorded and reported at the voting booth. To me, the precept of one person one vote and that vote counted accurately without harassment or discrimination is the American Ideal.

Bury the Trans-Texas Corridor

By David Van Os, May 23, 2009
For all of you Texas patriots who have upraised your voices for the last three years against Slick Rick Perry's plans to sell off our public highway system to private interests so they can stuff their bloated pocketbooks with billions of dollars in predatory toll fees while devastating hundreds of thousands of acres of good Texas earth in massive land grabs - IT HAS COME DOWN TO THE NEXT FOUR DAYS.

The 2009 legislative session is nearing its end. The Texas Department of Transportation is facing legislative sunset this year. Various bills have passed one or the other of the two Texas legislative chambers, the Senate and the House, to reauthorize TXDOT's existence under different competing sets of values. Which will it be - democracy of the people, or despotism of the greedy?
In some of the pending versions of transportation legislation, the public will would finally be honored with the long-sought elimination of the Trans-Texas Corridor and the democratization of the Texas Transportation Commission. I want to take this opportunity to express special commendation for Rep. David Leibowitz, whose labors against the toll-building robber barons and the anti-democratic TXDOT bureaucrats are on the verge of success with the potential final enactment of his bills into law.

In other versions of transportation legislation, the use of private contracts to build and operate massive toll roads, particularly TTC-69 through the heart of East Texas, would be re-authorized. In one particularly ugly bit of backroom chicanery, a deal is already made to grant the building and operation of TTC-69 to a private company from Spain. We have been fighting the same spectre for years now, but as we know, the greedy don't give up easy.

It appears probable that the competing value systems will face off in House-Senate conference committee action on Tuesday, May 26. Long hours, days, and years of hard work for many thousands of grassroots Texans who have been fighting for democracy in Texas transportation planning may come down to making sure the legislators hear the voice of the people loudly and clearly over the next four days.

The TXDOT reauthorization bill is HB 300. The bad bills that the people have to defeat to nail the coffin shut on the Trans-Texas Corridor are SB 17 and SB 404. The latter bills would re-authorize CDAs (comprehensive development agreements); in other words, sell-out deals to put billions of dollars in toll fees into private pockets for operating toll roads that the people of Texas do not want.

If you want to do your part to make sure the people are finally rewarded with victory in this fight, CALL your Texas House Representative and your Texas Senator today through the Capitol switchboard at (512) 463-4630 between 8 a.m. and 5 p.m. Tell your Representative and your Senator, or their staffs, you are against SB 17 and SB 404 and anything else that allows comprehensive development agreements in highway construction. Tell them you expect them to GET RID of the Trans-Texas Corridor for good and to GET RID of private toll road development for good. Tell them you want a democratically elected Texas Transportation Commission.

We the People have been speaking for a long time. We want democracy, not corporate-governmental oligarchy. Now let's bear down. Two years ago some of the legislators who had pledged to support the people's will wavered at the finish line. This time we can't let them waver. Let them hear our voices in this moment of truth. NO private contracts for toll roads, NO Trans-Texas Corridor, NO comprehensive development agreements, and YES to a democratically elected Texas Transportation Commission.
Thank you for your attention.
Sincerely,
David Van Os

Are Wall Street speculators driving up gasoline prices?

By Kevin G. Hall - McClatchy Newspapers - May 22, 2009
WASHINGTON — Oil and gasoline prices are rising fast as Memorial Day weekend approaches, but not because supplies are tight or demand is high.

U.S. crude-oil inventories are at their highest levels in almost two decades, and demand has fallen to a 10-year low, but crude oil prices have climbed more than 70 percent since mid-January to a six-month high of $62.04 on Wednesday.

Meanwhile, although refiners are operating at less than 85 percent of capacity, which leaves them plenty of room to churn out more gasoline if demand rises during the summer driving season, the price of gasoline at the pump has climbed 28 cents a gallon from a month earlier to $2.33.

This time, Wall Street speculators — some of them recipients of billions of dollars in taxpayers' bailout money — may be to blame.

Big Wall Street banks such as Goldman Sachs & Co., Morgan Stanley and others are able to sidestep the regulations that limit investments in commodities such as oil, and they're investing on behalf of pension funds, endowments, hedge funds and other big institutional investors, in part as a hedge against rising inflation.

These investors now far outnumber big fuel consumers such as airlines and trucking companies, which try to protect themselves against price swings, and they're betting that the economy eventually will rebound, that the Obama administration's spending policies and Federal Reserve actions will trigger inflation — or both — and that oil prices will rise.

"They're buying because they think it will diversify their portfolio, and they think it will diversify their portfolio against inflation, and maybe they think the economy will turn around," said Michael Masters, a hedge-fund manager who testified before Congress last year about the consequences of what are called exchange-traded funds.

Oil contracts are traded mostly in U.S. dollars, and inflation would erode the value of oil earnings, stocks or any other asset denominated in U.S. currency. Many investors are pouring money into oil futures — contracts for future deliveries of oil at specified prices — in the belief that oil prices will rise as inflation erodes the dollar's value.

This turns oil futures contracts into a way for investors to hedge against inflation at the expense of American consumers, who have to pay more to fill their gas tanks as oil and gasoline prices rise.

Masters and other critics say this speculative flow of money into commodities markets is a self-fulfilling prophecy that's distorting the usual process by which buyers and sellers set prices and is driving up the prices of oil, gasoline, grains and other essentials.

"There is definitely an inflation premium at work here," said John Kilduff, a senior vice president of MF Global in New York, a brokerage house that helps large investors trade in energy markets.

In a report May 6, CNBC television senior energy correspondent Sharon Epperson said that traders told her that prices were disconnected from supply and demand.

"Nymex traders tell me they're seeing new money coming in from passive funds that are reallocating assets away from precious metals and into energy holdings. It's this money flow — rather than the fundamental supply-demand data — that's driving oil prices higher," she reported

.

Morgan Stanley didn't respond to requests for comment via e-mail and telephone.

"Goldman Sachs declines to comment for your story," spokesman Michael DuVally said.

In a report April 16 on last year's spike in natural gas prices, the Federal Energy Regulatory Commission concluded that similar investment flows drove up the price that consumers paid to heat their homes with natural gas.

"This increase in commodity prices occurred as large pools of capital flowed into various financial instruments that essentially turn commodities like natural gas into investment vehicles," the report says. "Ultimately, we believe that financial fundamentals . . . explains natural gas prices during the year."

During a visit to McClatchy's Washington Bureau, hedge-fund manager Masters also said that big institutional investors were sucking the air out of the fragile economic recovery, in part because their Wall Street partners were exempt from federal limits on how much they could bet on commodity prices.

"What they don't realize is because we don't have position limits, the money they put in is driving up the price" for oil and other commodities, he said.

Contracts for future deliveries of oil and other commodities are traded on the New York Mercantile Exchange, and the futures market for oil has position limits that restrict how much of the market big speculators can control.

However, big Wall Street banks are exempt from these restrictions, and there also are no such limits in derivatives markets. These vast unregulated markets involve private contracts between swaps dealers — usually big Wall Street banks — and large investors. These dark markets, also called over-the-counter markets, are thought to be 10 times larger than the futures market, and they have no position limits and no regulation.

"We were in essence operating with a blindfold on for those over-the-counter markets that we couldn't see," Michael Dunn, the acting chairman of the Commodity Futures Trading Commission, acknowledged last week during a news conference to announce proposed new regulation of derivatives markets.

A stream of financial deregulation under the Clinton administration, culminating in the Commodity Futures Modernization Act of 2000, led to a global race away from regulation.

"The Modernization Act specifically said we were not going to look at those; we weren't going to regulate them. Times have changed, and now we think it is time for us to look at them," Dunn said.

Does Dunn think that Wall Street is partly to blame for the current $27-a-barrel run-up in oil prices or for the 12-month run-up from $70 to last July's record $147, followed by the four-month collapse in prices to $56?

"Everybody has an opinion of what drove the market in the energy crisis. Do I think it was part of the problem? I do," he said. "Do I think it was all of the problem? No.

"I think monetary policies — a weak dollar — had an impact on it. I think speculation by the herd, people saying prices of fuel are going to go up and I want to get in on that" also played a part.

The International Swaps and Derivatives Association, which represents the big players in these markets, said in a statement to McClatchy that fundamentals, not speculation, were driving up prices.
o

"Oil prices are fundamentally driven by macroeconomic factors affecting supply and demand," the group said. "Energy derivatives are a key tool for helping companies manage the resulting fluctuations in prices."

Read more in McClatchydc

Good News Bad News in Reversal of Preemption - which Bush used to give Federal Law peremption over state law

By Faith Chatham - DFWRCC - May 23, 2009
Interstate banks, and their offshore hedge funds protected investors, utilized Federal law and Bush administration policies in the 1990s and 2000's to encroach into states such as Texas with had state laws inhibiting predatory lending policies, protective ursury laws and homestead protections allowing Texans not to lose their homes when bankrupted by unsecured debt. A return to applying Texas State Law would have been a welcome reprieve if Rick Perry were not still in office in Texas. Now, after two decades of Republican control of the Texas House and Senate, giving State Law the preemption over Federal Law, may result in less protections here than other states are reaping under the Obama administration. A review of Texas Law, code by oode, will be required to determine if Texans would benefit more from reversal of Bush era Federal Law and enforcement of Federal Law preemption over state law, or preemption of Texas Law over the Federal.

Obama Curtails Bush's Policy of 'Preemption'
It Let Federal Rules Override State Laws
By Philip Rucker - Washington Post Staff Writer - Friday, May 22, 2009

President Obama continued to reverse his predecessor's policies this week by undoing a controversial Bush administration rule known as "preemption" that used federal regulations to override state laws on the environment, health, public safety and other issues.

Obama, in a memorandum to federal agency heads issued late Wednesday, said his administration should undertake regulations preempting state laws in rare instances and "only with full consideration of the legitimate prerogatives of the states and with a sufficient legal basis for preemption."

The president ordered department heads to review all regulations issued in the past 10 years that are designed to preempt state law and determine whether they are justified under the new policy. If they cannot be justified, Obama said, his administration should consider amending the regulations.

Bush administration officials inserted preemptive language into dozens of federal regulations, in many cases shielding corporations from restrictive state laws. For instance, federal preemption provisions stopped California from enforcing a law limiting greenhouse gas emissions.

In the past ten years, the Texas Legislature voted to amend, repeal or change more of the Texas Transportation Code than had been written in the past 50 years. Most of the changes allowed privitazion of public highways and bridges, streamlined environmental impact assessments, private toll operator preferences over public transporation authorities, and streamlined eminent domain claims for land claims by private toll, stadium, pipeline and water companies.

"It's environmental law, it's drug law, it's mortgage law, it's a whole host of areas where the Bush administration was really aggressive about using regulatory action to clear state and local laws that businesses and corporations didn't like,"

said Doug Kendall, president of the Constitutional Accountability Center.

George W. Bush and Rick Perry used Texas as an incubator, where they frequently piloted corporate friendly, consumer detrimental policy before it debuted in the national political arena. Once George W. Bush was elected President, and Rick Perry advanced to Texas Governor, they welded their political clubs in unison. Now, Texans, who have hope that a change in the Federal Administration will overturn some of the more entrenched Bush era policies, view the overturn of Federal law pre emption as possibly being a two-edged sword. If corporate lobbyists were diverted from concentrating on changing state laws once they got repressive Federal policies enacted, there may be some bright spots for Texans with this new policy, which allow older policies to again become standard practice. However, with the Perry administration still in power, it is dubious that older, more consumer friendly policies which do not favor the largest donors and international banking/petro/drug kingpins will be dusted off and practiced in the Lone Star State.

The U.S. Chamber of Commerce warned that Obama's move could wreak havoc on businesses that would have to deal with different state laws, causing a flood of lawsuits.

"Removing federal preemption forces employers to navigate a confusing, often contradictory patchwork quilt of 50 sets of laws and regulations," said Lisa Rickard, president of the Chamber's Institute for Legal Reform.

The Obama administration is probably finding that thansforming "Change" into more than a mere political slogan is more difficult than they originally surmised. Although corporations are "forbidden" from making political donations, powerful PACS of corporate employees and individuals, frequently CEOs and stockholders with deep pockets, influence lawmakers and the Executive Branch on state and Federal levels. Lawyers, acting as lobbyists, cloaked under attorney-client privilege, present corporate friendly legislation to legislative counsels without having to report their contacts with Legislators. This is how much of the corporate/industry-friendly special interest legislation gets introduced. A nod or buzz from one legislator or aide to another and word passes among cliques of legislators who shared donors and friends during campaign battles moves the legislation in and out of committee, blocking others from hearing or debate, speeding enactment of protectionism and repeals of oversight regulation legislation.

The White House described the move as another step toward rescinding Bush administration policies and protecting the constitutional rights of states.

"

This memorandum brings clarity and orderliness back to this rule-making process and also ensures that preemption will be done only in cases where it's legally justifiable," said Kenneth Baer, a spokesman for the Office of Management and Budget.

Obama's memo comes nearly three months after the Supreme Court called into question Bush's preemption policy while issuing a major setback to pharmaceutical companies. In Wyeth v. Levine, the court ruled 6 to 3 in favor of a woman who had her arm amputated after an improper injection of an anti-nausea medication. The court said drugmakers could not rely on federal regulation to shield them from lawsuits brought under state consumer-protection laws.

Texas has some of the strongest anti-trust laws in any of the states. Weaker Federal policies and lack of enthusiasm for enforcement of Texas laws gave the energy sector and communication industries an almost free-run on Texas consumers for the past ten-years. In 2006, David Van Os ran for Texas Attorney general on a platform, promising to enforce Texas's Anti-trust laws. Re-elected, Gregg Abbott, has been less zealous in enforcing anti-trust legislation in Texas than some think David Van Os would have been, had he been elected Texas Attorney General. Van Os promised to utilize anti-trust statues to restrict oil and gas from gouging and price-fixing. The largest contingency of lobbyist in Austin last legislative session were employed by parties interested in the TXU acquisition. Legislation was passed tying the price consumers pay for residential electricity to the cost of natural gas, even if produced by less costly methods. This virtually took the benefit out of wind powered sources to the advantage of TXU, keeping electricity cost escalating higher in Texas than in neighboring states.

The American Association for Justice, which represents trial lawyers, cheered Obama's move, saying his memo "makes clear that the rule of law will once again prevail over the rule of politics."

Kendall, of the Constitutional Accountability Center, said that Obama "clearly understands the important role that state and local governments play in our constitutional system and has displayed a very different vision of our Constitution than President Bush displayed in his eight years."

In Texas, until special interest groups which have placed their people on the inside of government, in office and bureaus with industry oversight, are displaced, Obama's attempts to relax Bush era environment detrimental and predatory consumer practices by reviewing Bush's policy of Federal pre-emption will probably not give Texas as much relief as can be seen in other states.

Quotes in this article are from tne Washington Post

The Real Class War

By David Van Os - March 17, 2009
(The opinions expressed in this column are those of David Van Os and may or may not be the expressed opinions shared by DFWRCC and/or Faith Chatham. David Van Os practices law in San Antonio, Texas)

The corporate elite and their many political stooges love to scream, "Class war!" when change is demanded from the bottom up.

Their intention is to evoke in the public mind frightening images of bloodthirsty Bolshevik revolutionaries rampaging through the streets with torches and red banners, chanting "Dictatorship of the proletariat" and shooting every businessman and employer on sight.

With such propaganda what they are really trying to do is to divert the public's attention from the true fact that there really is socioeconomic class war in the United States of America, except that the aggressors are the elite denizens of the top, not the rest of us down here at the bottom.

The bailouts of Wall Street robber barons are some of the clearest manifestations of the real class war in a long time.

For example, in an attempted defense of the obscene bonuses paid to AIG executives with taxpayers' money, the first excuse we heard two days ago was that the executives were entitled to their bonuses by contract, and we could not intrude on the sanctity of contracts.

Well, now. When the automakers asked for government assistance to stay afloat, did anybody in decision-making authority say, "We can't interfere with the United Auto Workers' contracts"? Of course not! It was presumed by all, and expected by the Congress and the President (both the former and the current), that the hourly-wage workers would give up their contractually protected benefits and wages. The Auto Workers' contracts were no less legally binding contracts than the AIG executives' contracts. In fact, it seems to me the Auto Workers' contracts carried more sanctity, in having been agreed to and ratified by many more thousands of individuals

There was one big difference between the two situations. One involved the silk stocking elite, and the other involved hourly paid blue-collar workers. One involved the aristocracy, and the other involved the grassroots masses.

And in the paneled offices and conference rooms of the Beltway elite who inhabit the political administrations (both former and current), the aristocracy protected their own. Let's make the workers at the auto plants give up their contracts, but for heaven's sake let's not interfere with the sacred contracts of our wine-and-cheese buddies.

Meanwhile right here in Texas, the Neanderthal Republican Governor and his fellow Neanderthal Republican political elite have declared that out-of-work Texans should not benefit from the extended unemployment benefits offered by the federal stimulus package. In other words, Texas taxpayers should not participate in some comeback from their own federal tax dollars. I'm talking about all Texas taxpayers, not just the unemployed. Keeping unemployment benefits flowing into the otherwise penniless pockets of the jobless puts much-needed money into the cash registers of honest local retail businesses, thus keeping more employees from falling into the ranks of the unemployed. All of us are the victims of this top vs. bottom class war that we did not initiate, are we not?

Today journalistic pundits are breathlessly announcing that populist anger is cropping up in the countryside over the Wall Street executives' greedy personal self-enrichment at the hands of the taxpayers. Well, duh!

The President and his administration have joined the outrage parade - not as leaders, but as followers of We the People when it became politically necessary. Let's keep up the "populist anger", folks. We are in the lead. And when the corporate executives and Washington politicians start talking about "class war", let's remember who has really been making war on whom for a very long time.

Sincerely,

David Van Os

email: david@texas-patriot.com