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Welcome to the official website of Professor andré douglas pond cummings.  This greetings/introduction page will serve to showcase the latest insights and work of Professor cummings as he seeks to challenge the status quo and work toward equality and social justice.  According to renowned public intellectual Dr. Cornel West, Professor cummings scholarly "reputation goes far beyond . . . the nation, and is heard in every corner of the globe, wrestling with legacies of legal thinking on one hand and popular culture on the other."


How Home Ownership Keeps Blacks Poorer Than Whites

Vice Provost Dorothy Brown
In an important article penned in late 2012 by Emory Law Professor and Vice Provost Dorothy Brown, she argues that home ownership continues to be a wealth building tool for white homeowners but does not benefit African American homeowners in the same way.  Her article continues to resonate in 2014 as real estate markets have seemingly rebounded in many communities across the nation, but not significantly for African American communities.  Writing for Forbes magazine, Brown posits: 

"Home ownership has been an important vehicle in creating a solid white middle class, but it has not done the same for most black homeowners, because blacks and whites buy homes in very different neighborhoods. Research shows that homes in majority black neighborhoods do not appreciate as much as homes in overwhelmingly white neighborhoods. This appreciation gap begins whenever a neighborhood is more than 10% black, and it increases right along with the percentage of black homeowners. Yet most blacks decide to live in majority minority neighborhoods, while most whites live in overwhelmingly white neighborhoods."

Brown continues by arguing that this divide and the wealth gap between black and whites is not as much about class as it is about race:

"If you think this is class and not race, you are wrong. A 2001 Brookings Institution study showed that 'wealthy minority neighborhoods had less home value per dollar of income than wealthy white neighborhoods.' The same study concluded that 'poor white neighborhoods had more home value per income than poor minority neighborhoods.' The Brookings study was based on a comparison of home values to homeowner incomes in the nation’s 100 largest metropolitan areas, and it found that even when homeowners had similar incomes, black-owned homes were valued at 18% less than white-owned homes. The 100 metropolitan areas were home to 58% of all whites and 63% of all blacks in the country."

Finally, Brown describes that these studies are supported by significant research and that at bottom, the real estate market penalizes integration:

"Those conclusions are supported by a large body of research. Put simply, the market penalizes integration: The higher the percentage of blacks in the neighborhood, the less the home is worth, even when researchers control for age, social class, household structure, and geography." 

For those that argue that we live in a post-racial society, and that the election of President Obama has finally cleansed our nation of the lingering effects of slavery, Jim Crow, "separate but equal" and the discriminatory prison industrial complex, well, they have some explaining to do.
Concussion Awareness Event at the Indiana Tech Law School

The Indiana Tech Law School is pleased to present a timely concussion awareness event focusing on preventing brain injury in student athletes.  This event entitled "Your Role in Preventing Brain Injury in Student Athletes" will occur on March 11th, at 6 p.m. in Fort Wayne, IN, at the Schaefer Gymnasium on the Indiana Tech campus.  Chris Nowinski, the co-director of the Center for the Study of Traumatic Encephalopathy at Boston University School of Medicine, will provide the keynote address.  The event is free and open to the public.


Michigan Law School Panel

On March 14, 2014, at the University of Michigan Law School, Professors Donald Tibbs and andré douglas pond cummings will present "Hip-Hop Mass Incarceration, and the Private Prison Industrial Complex" at 12 noon in Hutchins Hall, Room 100.


The Myth of Maximizing Shareholder Value

Jamie Dimon (courtesy of Steve Jurvetson/Wikimedia Commons)
Profit maximization is often taught to law and business students as a primary driver for corporate leaders in the United States.  Put another way, students learn that corporate executives are bound to consider shareholder enrichment as a primary motivator in their leadership of U.S. corporations.  While critics like Lynn Stout and Yves Smith decry this notion as false, the duty of "profit maximization," the principle persists, as if members of corporate boards and company executives spend much of their time planning how to increase profits for the shareholders that ostensibly hire them.  In my own writing and thinking, I am convinced that profit maximization is no myth but just misconstrued; profit maximization does exist for corporate leaders, but not for increasing shareholder profit, but for increasing their OWN profit.  Stated differently, if profits increase for a corporation, that often means that executive compensation will increase remarkably if corporations show a successful bottom line.  So evidence suggests that corporate leaders make decisions that will increase their own bottom line, rather than that of the company's owners, the shareholders.

At Naked Capitalism, Yves Smith writes that the notion of shareholder profit maximization is bunk.  He writes:  "So many of the assertions made about 'maximizing shareholder value' are false that they should be assumed to be a lie until proven otherwise. The first is that board and managements are somehow obligated to 'maximize shareholder value' is patently false. Legally, shareholders’ equity is a residual claim, inferior to all other obligations. Boards and management are required to satisfy all of the company’s commitments, which include payments to vendors (including employees), satisfying product warranties, paying various creditors, paying taxes, and meeting various regulatory requirements (including workplace and product safety rules and environmental regulations)."

Rather, Smith continues "For the past three decades, top executives have been rewarding themselves with mega-million dollar compensation packages while American workers have suffered an unrelenting disappearance of middle-class jobs. Since the 1990s, this hollowing out of the middle-class has even affected people with lots of education and work experience.  As the Occupy Wall Street movement correctly recognized, the concentration of income and wealth of the economic top 'one percent' of society has left the rest of us largely high and dry. Corporate profits are increasingly going to share buybacks or dividend distribution, but very little is going back into research and development efforts, capital reinvestment, and employment. Corporations, in other words, are devoting increasing amounts of their considerable and growing financial resources to redistribution rather than innovation. And they are doing so based on the justification of 
'increasing shareholder value.'"

This redistribution of wealth is from corporate coffers into corporate executives pockets, NOT to shareholders or charitable organizations.  Evidence of this comes this week with reports that Jamie Dimon, CEO of JP Morgan Chase (pictured above), has been rewarded a 74% pay hike (18.5 million dollar bonus), despite a very rocky past two years of leadership where JP Morgan has paid billions of dollars in fines for regulatory failures.

Redistribution of wealth occurs in the United States, just not in the way folks are often led to believe.  Corporate profits are increasingly landing in the pockets of the 1%, not in the pockets of the shareholders.


MLK Day and Citizen's United

courtesy of Marion S. Trikosko/Library of Congress
In an AlterNet article appearing today, the day we celebrate the legacy of Dr. Martin Luther King, Jr., entitled "As We Celebrate MLK Day . . . Tomorrow's Anniversary of Citzen's United Reminds Us of Increasing Injustice," Professor Ian Haney Lopez discusses the connection between Dr. King's economic equality message which dominated the final years of his life, and increasing wealth inequality in America, represented strongly by the Supreme Court's Citizen's United opinion.

Per AlterNet:  "Monday is the national holiday honoring Martin Luther King Jr., and  Tuesday marks the fourth anniversary of Citizens United, the case that dramatically widened the flood of big money in elections. Their confluence is opportune, for while each seems to invite reflection on a different core social problem—respectively racial inequality and the power of concentrated wealth—each teaches lessons relevant to the other.

King clearly saw how racial and economic justice formed mutual requirements. The strike by African American sanitation workers in Memphis, where King was assassinated, reflected the truth that racial justice for minorities would depend on economic opportunities. In the other direction, the Poor Peoples’ March on Washington that King labored for in the months before his death arose out of the conviction that economic security for persons of every race depended on transcending racial divisions."


Derivatives and Deregulation

Russel Funk and Daniel Hirschman, both PhD candidates at the University of Michigan, have just released an interesting paper entitled "Derivatives and Deregulation: Financial Innovation and the Demise of Glass-Steagall."  In the paper, they look closely at the first major currency swap in history, a 1981 exchange between IBM and the World Bank, and trace how this financial innovation (swaps primarily) literally drove the demise of the firewall between commercial and investment banks established in the 1933 Glass-Steagall Act. 

Here is the abstract:

"Just as regulation may inhibit innovation, innovation may undermine regulation. Regulators, much like market actors, rely on categorical distinctions to understand and act on the market. Innovations that are ambiguous to regulatory categories but not to market actors present a problem for regulators and an opportunity for innovative firms to evade or upend the existing order. We trace the history of one class of innovative financial derivatives — interest rate and foreign exchange swaps — to show how these instruments undermined the separation of commercial and investment banking established by the Glass-Steagall Act of 1933. Swaps did not fit neatly into existing product categories — futures, securities, loans — and thus evaded regulatory scrutiny for decades. The market success of swaps put commercial and investment banks into direct competition, and in so doing undermined Glass-Steagall. Drawing on this case, we theorize some of the political and market conditions under which regulations may be especially vulnerable to disruption by ambiguous innovations."

The paper can be downloaded here.


Dog Whistle Politics

Professor Ian Haney López has just released his latest important book Dog Whistle Politics:  How Coded Racial Appeals Have Reinvented Racism and Wrecked the Middle Class.

Description:  "Campaigning for president in 1980, Ronald Reagan told stories of Cadillac-driving 'welfare queens' and 'strapping young bucks' buying T-bone steaks with food stamps. In trumpeting these tales of welfare run amok, Reagan never needed to mention race, because he was blowing a dog whistle: sending a message about racial minorities inaudible on one level, but clearly heard on another. In doing so, he tapped into a long political tradition that started with George Wallace and Richard Nixon, and is more relevant than ever in the age of the Tea Party and the first black president. 

In Dog Whistle Politics, Ian Haney López offers a sweeping account of how politicians and plutocrats deploy veiled racial appeals to persuade white voters to support policies that favor the extremely rich yet threaten their own interests. Dog whistle appeals generate middle-class enthusiasm for political candidates who promise to crack down on crime, curb undocumented immigration, and protect the heartland against Islamic infiltration, but ultimately vote to slash taxes for the rich, give corporations regulatory control over industry and financial markets, and aggressively curtail social services. White voters, convinced by powerful interests that minorities are their true enemies, fail to see the connection between the political agendas they support and the surging wealth inequality that takes an increasing toll on their lives. The tactic continues at full force, with the Republican Party using racial provocations to drum up enthusiasm for weakening unions and public pensions, defunding public schools, and opposing health care reform.

Rejecting any simple story of malevolent and obvious racism, Haney López links as never before the two central themes that dominate American politics today: the decline of the middle class and the Republican Party's increasing reliance on white voters.Dog Whistle Politics will generate a lively and much-needed debate about how racial politics has destabilized the American middle class -- white and nonwhite members alike."


Important Stories to Close Out the Year

As 2013 draws to a close, two important events have occurred in December that bear mentioning as the world prepares to usher in 2014.  In connection with America's epic failure, the War on Drugs:

First, A Divided Federal Court Rules Crack Cocaine Sentencing Reforms Do No Apply to Those Already in Prison:
In a blow to those sentenced under grossly unfair crack cocaine versus powder cocaine sentencing requirements, the Sixth Circuit Court of Appeals ruled in early December that the new sentencing regime ushered in under the 2010 Fair Sentencing Act does not apply retroactively to those currently sitting in prison.  From the NAACP release: "[A] sharply divided Sixth Circuit Court of Appeals ruled that the Fair Sentencing Act (FSA), which reduced the unfair, unjustified, and racially discriminatory crack cocaine/powder cocaine sentencing ratio from 100-to-1 to 18-to-1, does not apply to thousands of individuals who are currently incarcerated pursuant to sentences imposed under the discredited 100-to-1 regime.  Seven judges concluded that the FSA should apply to those serving sentences under the 100-to-1 federal sentencing structure, and ten judges declared that it should not."

"'We are deeply disappointed in the outcome of this case. Thousands of people, the majority of whom are African-American, are still serving time under an unfair drug sentencing regime that has destroyed individuals, families and communities. Today’s decision demonstrates that those who are working to eliminate the impermissible role of race in criminal prosecutions and sentences still have much more work to do. We will continue to press this issue in the court,' said Sherrilyn A. Ifill, President and Director-Counsel of the NAACP Legal Defense and Educational Fund, Inc., a leading civil rights law firm and a separate entity from the NAACP."

President Obama, Congress, Federal Courts, and the United States Supreme Court must act immediately to  begin commuting the sentences of those individuals imprisoned under the grossly unfair 100:1 sentencing disparity between crack and powder cocaine.

Second, President Obama Commutes the Sentences of Eight Crack Cocaine Offenders:
President Obama, recognizing that thousands of inmates are jailed under patently unfair sentencing policies in connection with crack cocaine and powder cocaine sentences, began what can fairly be hoped for as the beginning of righting past wrongs, commuted the sentences of eight crack cocaine offenders who have served prison time for more than 15 years, and would be out of prison, had they been sentenced under powder cocaine guidelines.

Congress passed the Fair Sentencing Act in 2010 which, according to The Root, "reduced the disparity in sentencing between offenses for crack and powder cocaine from 100:1 to 18:1. The 100:1 ratio meant that people involved in offenses for crack cocaine faced longer sentences that those involving the same amount of powder cocaine."  The New York Times reports that President Obama released the following statement: 

"'This law began to right a decades-old injustice, but for thousands of inmates, it came too late,' the president said in a release given to the media. 'If they had been sentenced under the current law, many of them would have already served their time and paid their debt to society.  Instead, because of a disparity in the law that is now recognized as unjust, they remain in prison, separated from their families and their communities, at a cost of millions of taxpayer dollars each year.'"

Let's hope for much more of the same in 2014. 


The Leading Subprime Lenders Most Responsible for the Mortgage Meltdown

As promised, below is the 2009 list of the top 25 subprime lenders that crushed the U.S. housing market in 2007-08.  As discussed earlier this week, nearly every executive at the below banks have more than landed on their feet and are now reengaged in the business of writing loans . . .

Courtesy of The Center for Public Integrity:

"These top 25 lenders were responsible for nearly $1 trillion of subprime loans, according to a Center for Public Integrity analysis of 7.2 million “high interest” loans made from 2005 through 2007. Together, the companies account for about 72 percent of high-priced loans reported to the government at the peak of the subprime market. Securities created from subprime loans have been blamed for the economic collapse from which the world’s economies have yet to recover.
  1. Countrywide Financial Corp.
    Amount of Subprime Loans: At least $97.2 billion
  2. Ameriquest Mortgage Co./ACC Capital Holdings Corp.
    Amount of Subprime Loans: At least $80.6 billion
  3. New Century Financial Corp.
    Amount of Subprime Loans: At least $75.9 billion
  4. First Franklin Corp./National City Corp./Merrill Lynch & Co.
    Amount of Subprime Loans: At least $68 billion
  5. Long Beach Mortgage Co./Washington Mutual
    Amount of Subprime Loans: At least $65.2 billion
  6. Option One Mortgage Corp./H&R Block Inc.
    Amount of Subprime Loans: At least $64.7 billion
  7. Fremont Investment & Loan/Fremont General Corp.
    Amount of Subprime Loans: At least $61.7 billion
  8. Wells Fargo Financial/Wells Fargo & Co.
    Amount of Subprime Loans: At least $51.8 billion
  9. HSBC Finance Corp./HSBC Holdings plc
    Amount of Subprime Loans: At least $50.3 billion ***
  10. WMC Mortgage Corp./General Electric Co.
    Amount of Subprime Loans: At least $49.6 billion
  11. BNC Mortgage Inc./Lehman Brothers
    Amount of Subprime Loans: At least $47.6 billion ***
  12. Chase Home Finance/JPMorgan Chase & Co.
    Amount of Subprime Loans: At least $30 billion
  13. Accredited Home Lenders Inc./Lone Star Funds V
    Amount of Subprime Loans: At least $29.0 billion
  14. IndyMac Bancorp, Inc.
    Amount of Subprime Loans: At least $26.4 billion
  15. CitiFinancial / Citigroup Inc.
    Amount of Subprime Loans: At least $26.3 billion
  16. EquiFirst Corp./Regions Financial Corp./Barclays Bank plc
    Amount of Subprime Loans: At least $24.4 billion
  17. Encore Credit Corp./ ECC Capital Corp./Bear Stearns Cos. Inc.
    Amount of Subprime Loans: At least $22.3 billion
  18. American General Finance Inc./American International Group Inc. (AIG)
    Amount of Subprime Loans: At least $21.8 billion ***
  19. Wachovia Corp.
    Amount of Subprime Loans: At least $17.6 billion.
  20. GMAC LLC/Cerberus Capital Management
    Amount of Subprime Loans: At least $17.2 billion ***
  21. NovaStar Financial Inc.
    Amount of Subprime Loans: At least $16 billion
  22. American Home Mortgage Investment Corp.
    Amount of Subprime Loans: At least $15.3 billion
  23. GreenPoint Mortgage Funding Inc./Capital One Financial Corp.
    Amount of Subprime Loans: At least $13.1 billion
  24. ResMAE Mortgage Corp./Citadel Investment Group
    Amount of Subprime Loans: At least $13 billion
  25. Aegis Mortgage Corp./Cerberus Capital Management
    Amount of Subprime Loans: At least $11.5 billion
***Total includes subsidiaries"


Checking Back In On the Mortgage Crisis Perpetrators

Five years after the collapse of Lehman Brothers which ushered in the crushing mortgage crisis of 2008, perpetuated primarily by subprime lenders, it appears that those most at fault for originating, selling and packaging predatory subprime loans are fully back in business.  Most now agree that lowered lending standards, predatory loans, and an insatiable Wall Street appetite for packaging loans into investment instruments, all at massive profit margins, led to the 2007-08 implosion of global markets.  Now, those individuals most responsible for creating the reckless loans that enabled the crisis have reentered the lending market after facing next to no genuine discipline for their recklessness.

According to The Center for Public Integrity's report Subprime Lending Execs Back in Business Five Years After Crash: "Five years after the financial crisis crested with the bankruptcy of Lehman Brothers Holdings Inc., top executives from the biggest subprime lenders are back in the game. Many are developing new loans that target borrowers with low credit scores and small down payments, pushing the limits of tighter lending standards that have prevailed since the crisis.  Some experts fear they won’t know where to stop.

The Center for Public Integrity in 2009 identified the top 25 lenders by subprime loan production from 2005 through 2007. Today, senior executives from all 25 of those companies or companies that they swallowed up before the crash are back in the mortgage business. Most of these newer “non-bank” lenders are making or collecting on loans that may be too risky to qualify for backing by the U.S. government. As the industry regains its footing, these specialty lenders represent a small but growing portion of the market."

As always seems to be the case when financial fraud and debauchery are involved, U.S. citizens continue to struggle economically, as foreclosures and joblessness continues, meanwhile, banking executives that engaged in the reckless lending that led to the market collapse are back at it with very little meaningful or realistic consequences. Later this week, I will post the list of the top 25 subprime lenders from 2005 to 2007, whose executives are now fully re-engaged in the loan business.


JP Morgan's Settlement of Duplicity Charges

Yesterday, JP Morgan Chase agreed to settle claims that it sold toxic mortgages to government-sponsored enterprises Fannie Mae and Freddie Mac by misrepresenting the quality of the mortgages that it sold to the GSE's during the run-up to the financial market crisis.  JP Morgan agreed to pay $5.1 billion dollars to Fannie Mae and Freddie Mac disclaiming wrongdoing but adding to a rough year of controversy for the Wall Street banking giant.

According to CNN/Money: "The claims relate to conduct at JPMorgan and at Bear Stearns and Washington Mutual, which JPMorgan purchased in 2008. At issue are allegations that the firms sold risky mortgages and mortgage securities while misrepresenting their quality. Among the purchasers were Fannie Mae and Freddie Mac, the government-backed housing finance giants that required a massive bailout in 2008 when their housing investments soured. The deal was announced by the Federal Housing Finance Agency, which has overseen Fannie and Freddie since their 2008 rescue. . . .

JPMorgan will pay $4 billion to resolve claims related to the alleged misrepresentation of mortgage-backed securities - investment products created by bundling payments from individual loans. It will also repurchase $1.1 billion worth of mortgages sold to Fannie and Freddie between 2000 and 2008 that the firms say do not meet their quality standards."

According to Bloomberg:  "The [Federal Housing Finance Authority] had accused JPMorgan and its affiliates of making false statements and omitting material facts in selling about $33 billion in mortgage bonds to the two companies [Fannie and Freddie] from Sept. 7, 2005, through Sept. 19, 2007.  Executives at JPMorgan, Washington Mutual and Bear Stearns Cos., which was also acquired by JPMorgan in 2008, knowingly misrepresented the quality of the loans underlying the bonds, the regulator wrote in the lawsuit in federal court in Manhattan."

Interestingly, in the early post-market crash days, when individuals were rushing to place blame, a clear vocal minority attempted to place full blame for the mortgage crisis on Fannie Mae and Freddie Mac basically arguing that the GSE's created an environment where mortgages of all sizes and shapes would be repurchased by the GSE's, sans standards.  Now, with JP Morgan agreeing to buy back over $1 billion in mortgages and mortgage-backed securities that it misrepresented to the GSE's in the first place, it appears clear that the quality of mortgages sold to the housing giants were fraudulently misrepresented, as historic standards existed for the GSE's in what types of mortgages it would actually purchase from private banks.  Fraud, essentially, was engaged in by Wall Street and commercial banks like Washington Mutual, Countrywide, JP Morgan, Bear Stearns, etc., leading in part to the mortgage crisis that continues to hinder economic growth today.

Despite engaging in alleged fraud, $5.1 billion represents just a fraction of JP Morgan's profits.  "JPMorgan is large enough to easily absorb the settlement costs. It's the biggest bank in the nation, with assets of $2.5 trillion and net income of $21.3 billion in 2012."  That said, "[t]he bank has been buffeted by legal problems in the past few months, however. It has paid over $1 billion in fines in connection with last year's 'London Whale' trading debacle, and $80 million more over its allegedly unfair credit card billing practices."


The Foreclosure Crisis Recovery Is Enriching the Elite

As the housing market continues to rebound, it appears that those benefiting the most from the recovery are wealthy Americans and real estate corporations.  In her New York Times piece  Boom Bust Flip, economic reporter Catherine Rampell describes how most foreclosures during the mortgage crisis occurred in middle and lower class neighborhoods, often when big banks refused to renegotiate mortgages.  Most purchasers of foreclosed properties in the past five years have been wealthy Americans and large corporations like Blackstone, the private equity giant.  Foreclosed properties were purchased at deep discounts and are now being resold at close to or in excess of the the original purchase price of those that were foreclosed on - meaning that housing prices have rebounded in some areas to close to pre-crisis levels.  However now, the original middle and lower class homeowners have foreclosures on their record while wealthy Americans and large corporations are profiting handsomely on the housing price rebound.  

Rampell describes this trajectory as follows:  "There’s a popular perception that so-called McMansions and Garage-Mahals brought down the housing market. Yet more than half of all homes that went into foreclosure between 2007 and 2012 were actually in the lowest price tier when they were purchased, and most were located in middle- and lower-income areas. As foreclosures mounted and home prices plummeted, observers have noted, it was disparately the wealthier investors who bought them up at bargain prices. (Credit was hard to come by, after all, which benefited cash buyers.) Blackstone, the private-equity giant, bought almost 30,000 homes around the country and now has a nationwide single-family-home rental platform. . . . 

Now, five years after the start of the financial crisis, the housing market has come back, and many of these investors are cashing in. According to tabulations by Redfin, an online real estate listings site, banks have already sold about 1.5 million of the nearly 2 million homes that were foreclosed on during the past half-decade. Resales are becoming more common and can be hugely profitable. A house in Redwood City, Calif., for instance, was sold in a foreclosure auction in 2011 for less than half what the evicted owner paid in 2006. Ten months later, it was flipped for close to its previous price. Another house in Los Angeles went into foreclosure in 2012 and was flipped seven months later for a markup of $254,000, or 66 percent. Of the 87,062 foreclosures in the last five years that were bought by corporate investors and have been flipped, about a quarter were sold for at least $100,000 more than what the investor originally paid, according to Redfin."

Once again, Main Street suffers while Wall Street scoops up piles of cash.  As noted by Rampell: "The boom-bust-flip phenomenon is just one of the most obvious ways that research suggests the financial crisis has benefited the upper class while brutalizing the middle class. . . . Even before the recession, inequality was growing. Now, despite all the promises that politicians of both parties have made, the housing market and public policy are helping to accelerate the [inequality] trend."


Will Wall Street's Fleecing of Main Street Citizens Never Cease?

Matt Taibbi
I am growing weary of the ways that Wall Street manufactures wealth and "growth" from thin air, 
providing no real public good, but rather re-routing cash flow to elite bankers while engaging in voodoo economics.  The latest incarnation of Wall Street's duplicity and fleecing of Main Street workers is through the recent nationwide trend of moving pension fund deposits into the hands of hedge fund financiers, all the while casting dispersions on workers and pension funds as the "cause" of crisis-like budget conditions in states the nation over.

Matt Taibbi, in his latest exposé, describes the looting of pension funds across the country by Wall Street bankers and hedge fund executives providing no real value, but collecting hundreds of millions of dollars in fees.  In "Looting the Pension Funds," Taibbi describes that astonishing audacity of Wall Street in refusing to accept any blame for the financial crisis of 2008 as the leading reason that state's across the country have been plunged into budget crises, and instead fingering pension fund existence and funding as the reason for state shortfalls while lobbying states to turn the investment dollars in pension funds over to Wall Street, through hedge fund investment and the collection of billions of dollars of fees, simultaneously exposing pension funds to the inordinate risk associated with hedge funds, rarely the type of risk that pension funds should assume.

Per Taibbi:  "This is the third act in an improbable triple-f***ing of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy. The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios - remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.  

Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front. The battle increasingly centers around public funds like state and municipal pensions. This war isn't just about money. Crucially, in ways invisible to most Americans, it's also about blame. In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops - not bankers - as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities.

Not only did these middle-class workers already lose huge chunks of retirement money to huckster financiers in the crash, and not only are they now being asked to take the long-term hit for those years of greed and speculative excess, but in many cases they're also being forced to sit by and watch helplessly as Gordon Gekko wanna-be's like Loeb or scorched-earth takeover artists like Bain Capital are put in charge of their retirement savings. 

It's a scam of almost unmatchable balls and cruelty, accomplished with the aid of some singularly spineless politicians. And it hasn't happened overnight. This has been in the works for decades, and the fighting has been dirty all the way."

And why select hedge funds to oversee investment of pension fund deposits?  Surely it cannot be about performance.  Again, from Taibbi:  "On Wall Street, people are beginning to clue in to the fact - spikes notwithstanding - that over time, hedge funds basically suck. In 2008, Warren Buffett famously placed a million-dollar bet with the heads of a New York hedge fund called Protégé Partners that the S&P 500 index fund - a neutral bet on the entire stock market, in other words - would outperform a portfolio of five hedge funds hand-picked by the geniuses at Protégé.  

Five years later, Buffett's zero-effort, pin-the-tail-on-the-stock-market portfolio is up 8.69 percent total. Protégé's numbers are comical in comparison; all those superminds came up with a 0.13 percent increase over five long years, meaning Buffett is beating the hedgies by nearly nine points without lifting a finger."

Can it be that the only real reason that pension deposits are being redirected to hedge funds and Wall Street, is so that Wall Street cronies can bilk investors out of millions of dollars of fees while cozying up to the politicians that direct the pension investments their way?  Seems so.


Is the Current American Economy and Recovery a House of Cards?

According to Sanjay Sanghoee the current American economic recovery is deeply flawed and unsustainable.  Emerging evidence indicates that while the mortgage crisis of 2008 wiped out nearly 40% of wealth in the United States, nearly all of the economic recovery since that time has been reaped by the top 1% (fully 95% of the recovery gains have gone to the most wealthy Americans).  Inequality is growing and at it worst rate since the 1920s. From Sanghoee at the Huffington Post:

"Here are the hard facts:
  • Unemployment in the United States, at 7.3 percent, is declining but only because people are giving up and leaving the work force completely.
  • Income inequality in our nation is the worst it has been since the 1920s and almost double that of other developed nations.
  • The average income of those in the top 1 percent is $717,000 compared to $51,000 for everyone else.
  • The same top 1 percent also owns 42 percent of America's wealth, with the next 4 percent claiming another 30 percent.
  • The financial crisis of 2008 wiped out 39 percent of the wealth in the United States, but the top 1 percent have reaped 95 percent of all income gains since that time.
  • The average CEO of an S&P 500 company makes 204 times the income of rank-and-file employee and this ratio has increased by 20 percent since 2009.
  • Two-thirds of minimum-wage earners in America live below the poverty line.
  • Major companies like Walmart refuse to pay a living wage to most employees, make it impossible for workers to unionize, and deny them benefits by labeling full time workers as contractors (even as healthcare costs rise).
  • Our Treasury loses $150 billion in revenues every year because of offshore tax shelters and $200 billion because of other loopholes that disproportionately benefit the wealthy, which then necessitates cutting public services and welfare.
  • Social Security and Medicare, which low-income Americans and seniors rely on heavily for financial support, are projected to run out of money by 2033 and 2026 respectively, which will trigger a sharp reduction in benefits for both programs."
That the United States, with so many resources and creative intellects at its disposal, cannot get it together when it comes to inequality and poverty is a deeply disturbing proposition.


Momentum Shift in the Failed War on Drugs

Important news last week out of Washington D.C.:  The Justice Department will not challenge state laws in Colorado and Washington that legalize marijuana and will abruptly change focus in the prosecution of the War on Drugs.  In what is no doubt bad news to the private prison industry, federal enforcement will now shift focus from scooping up low level, non-violent drug offenders and instead prioritize stopping large drug cartels and kingpin operations.

From CNN:  "Under the new guidelines, federal prosecutors are required to focus on eight enforcement priorities, including preventing marijuana distribution to minors, preventing drugged driving, stopping drug trafficking by gangs and cartels and forbidding the cultivation of marijuana on public lands. . . .

Nineteen states and the District of Columbia allow some legal use of marijuana, primarily for medicinal purposes.  The attorney general told the Washington and Colorado governors that the Justice Department will work with the states to craft regulations that fall in line with the federal priorities, and reserves the right to try to block the laws if federal authorities find repeated violations."

As private prison profiteers have raked in billions of dollars of taxpayer money warehousing low level marijuana users, this shift in focus will now harm bottom line profitability.  Private prison corporations, perhaps anticipating the impending sea change, have already re-focused efforts to fill prison beds and maintain profitability by lobbying furiously for detention policies that imprison immigrants.  The next battle against the perverse incentives that motivate private prison corporations is shaping up to take place along immigration reform lines.

cross posted on the Hip Hop Law Blog


The Next Wave of Criminal "Clients" for Private Prison Profit

Just as Eric Holder seems to be signaling an end to the chaos and unsustainable economics of the War on Drugs, it appears that the talons of the private prison industry have already sunk deeply into its next prey/victim of choice.  As has been signaled for some time now on the CrImmigration blog and other outlets,criminal prosecution of undocumented immigrants has become the "new wave of non-violent" prisoners that are "flooding" into prisons in the United States.

This nation seems intent on locking up as many non-violent human beings as it possibly can, so long as the prisoners are persons of color, and this hysteria is driven furiously by private prison corporate influence, as the private prison regime seeks revenue and profit at every turn.

From Chris Kirkham:  "Now, just as the federal government has pulled back the throttle on the drug war, it is embarking on an unprecedented campaign to criminally prosecute undocumented immigrants crossing the border. The result: A new wave of non-violent offenders are flooding the nation's prisons.

'This is the crime du jour,' said Judith Greene, director of the nonprofit Justice Strategies, which has focused on the private prison industry's growing reliance on incarcerating undocumented immigrants. 'It's the drug war all over again. It's what's driving the market in federal prisons.'  Immigration offenders represent one of the fastest-growing segments of the federal prison population, providing a lucrative market for private prison corporations that largely control these inmates in the system. Over the last decade, revenue from the federal prison system has more than tripled for the GEO Group and nearly doubled for Corrections Corp. of America - the two companies that dominate the private prison industry."


The Economics and Immorality of a Failed Drug War

Many commentators now agree that the War on Drugs has become an epic failure.  That the Obama administration and AG Holder have publicly acknowledged as much is a good first step in correcting the fail, but it is just a small first step.  Holder's announcement is simply a policy shift.  This shift does not carry the weight of the law behind it, nor has any new legislative enactment mandated this change of policy direction.  And, as is the case in all policy decisions, it can later be reversed by a politician of a different mind.  Essentially, Holder's pronouncement means that federal prosecutors, who wield enormous discretionary power in our crime and punishment system, will be directed to use that discretion now to no longer prosecute low level, non-violent drug offenders to the full extent that the law currently allows.  Federal prosecutors have been directed to power down the charging authority handed them by Congress and the courts, that enables massively disproportionate punishment outcomes and devastating consequences.

Our nation's prisons are overflowing with low level, non-violent marijuana users and sellers costing the United States billions per year.  More than 40% of our country's prison population has been incarcerated on draconian marijuana convictions.  Of those drug convictions, more than 70% have been African American and Latino offenders.  The outrage in this outcome, is that statistics reveal that drug use occurs at a fairly consistent rate/percentage across races, meaning basically that the War on Drugs has been enforced in awildly discriminatory manner.  Drug use percentages is essentially the same for white citizens, Asian citizens, African American citizens, and Latino citizens, yet 70% of convicted drug felons are black and Latino.  Law enforcement has systematically targeted minority and urban communities to win their drug convictions, literally steering clear of suburban, beach city, and University drug users.

Not surprisingly, local law enforcement has come out in opposition to Holder's policy announcement.  For three decades, national law enforcement has prosecuted the War on Drugs in a very systematic and discriminatory manner.  Holder's policy will force peace officers to begin targeting high level drug kingpins and cartel bosses, not low level, non-violent offenders who literally fill our nation's prisons to overcrowding.  Statistics will now be kept differently as police officers that turn low level drug users over to prosecutors will be sorely disappointed when prosecutorial discretion is used to refuse to charge the low level offenders, despite the draconian laws that call for such charging.

The tide seems to be turning on the drug war.  Momentum is growing for real and radical change.  Although this Holder policy shift is a small step, Adam Gopnik at the New Yorker argues in "Mandatory Sentences and Moral Change" that small steps can sometimes signal enormous sea changes.  I am optimistic that we can begin to turn back the incredibly misguided era of mass incarceration in the United States.  That said, corporate power and influence will have to be dealt with and thwarted as profit maximization in the private prison industry has become a powerful force in the U.S. punishment regime.


Closer to Getting it Right on Drugs

Terrific news today for those interested in fairness and justice in connection with the failed War on Drugs in the United States.  Attorney General Eric Holder announcedthat the Department of Justice will end its ridiculous prosecution of low level, non violent drug offenders as mandated for so long by the skewed sentencing guidelines, that locked up low level offenders for time periods one typically would associate with drug kingpins and cartel bosses.

Holder reasoned:  "'Too many Americans go to too many prisons for far too long, and for no truly good law enforcement reason,' Holder told the American Bar Association's House of Delegates in San Francisco.  He questioned some assumptions about the criminal justice system's approach to the 'war on drugs,' saying that excessive incarceration has been an 'ineffective and unsustainable' part of it.  Although he said the United States should not abandon being tough on crime, Holder embraced steps to address 'shameful' racial disparities in sentencing, the budgetary strains of overpopulated prisons and policies for incarceration that punish and rehabilitate, 'not merely to warehouse and forget.'"

From the New York Times:  "In a major shift in criminal justice policy, the Obama administration moved . . . to ease the overcrowding in federal prisons by ordering prosecutors to omit listing quantities of illegal substances in indictments for low-level drug cases, sidestepping federal laws that impose strict mandatory minimum sentences for drug-related offenses."

The Corporate Justice Blog has long reported on the multiple failures associate with the War on Drugs, including the perverse involvement of the private prison industry on the continuing incarceration of American citizens for "no truly good law enforcement reason," but instead to increase profits for executives and shareholders.  The private prison corporation regime has for years lobbied for draconian mandatory minimum sentences in order to increase the length of time that low level prisoners would remain incarcerated.


Credit Rating Agencies Still for Sale?

In yet another scathing rebuke, Matt Taibbi of Rolling Stone underscores the role of the rating agencies in the financial market crisis in his latest piece called "The Last Mystery of the Financial Crisis."  As reported repeatedly on the Corporate Justice Blog, and Taibbi's investigative report buttresses the posts, significant blame for the mortgage crisis lays at the feet of the corrupted credit rating agencies, Moody's, Standard & Poor's and Fitch.  Based on recent court documents made public following the rating agencies $255 million settlement for their roles in knowingly mis-rating mortgage backed security investment vehicles in the run-up to the mortgage meltdown, a pitiful story is revealed of full blown rating agency head-bowed acquiescence to the demands of mega-banks (like Morgan Stanely) simply for the money - pay us enough and we will give you the rating that you want, science and integrity be damned.

From Rolling Stone and Taibbi:  "Thanks to a mountain of evidence gathered for a pair of major lawsuits by the San Diego-based law firm Robbins Geller Rudman & Dowd, documents that for the most part have never been seen by the general public, we now know that the nation's two top ratings companies, Moody's and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.  In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked. . . .

[The rating agency's] primary function is to help define what's safe to buy, and what isn't. A triple-A rating is to the financial world what the USDA seal of approval is to a meat-eater . . .  It's supposed to be sacrosanct, inviolable: According to Moody's own reports, AAA investments "should survive the equivalent of the U.S. Great Depression.  It's not a stretch to say the whole financial industry revolves around the compass point of the absolutely safe AAA rating. But the financial crisis happened because AAA ratings stopped being something that had to be earned and turned into something that could be paid for."

The story is worth the read, as the incest amongst Wall Street Banks and the Credit Rating Agencies in the period prior to the market collapse is simply unbelievable.  More unbelievable still, the credit rating agencies remain in business and very little has changed.

Again, from Taibbi:  "2008 was to the American economy what 9/11 was to national security. Yet while 9/11 prompted the U.S. government to tear up half the Constitution in the name of public safety, after 2008, authorities went in the other direction [with the credit rating agency process]. If you can imagine a post-9/11 scenario where there were no metal detectors at airports and people could walk on carrying chain saws and meat cleavers, you get a rough idea of what was done to reform the ratings process.  Specifically, very little was done to change the way AAA ratings are created – the "issuer pays" model still exists, and the "Big Three" retain roughly the same market share. An effort by Minnesota Sen. Al Franken to change the compensation model through a new approach under which agencies would be assigned to rate new issues through a government agency passed overwhelmingly in the Senate, but in the House it was relegated to a study by the SEC – which released its findings last year, calling for . . . more study. "The conflict of interest still exists in the exact same way," says a frustrated Franken."

Corruption rewarded?  Wouldn't the most efficient response be to blow up Moody's, S&P's and Fitch and begin from scratch, where integrity is the most important outcome?

MONDAY, JULY 15, 2013

"Professor Calls War on Drugs an 'Abomination'"

The War on Drugs has been waged in a wildly discriminatory manner.  The decision to wage the war on drugs in urban and poor communities from its inception was a conscious decision made by lawmakers and politicians from the very early days of the so called "war."  Incarceration rates of African American and Latino citizens are massively out of proportion to their population rates, despite overwhelming evidence that Americans use drugs in very similar percentages across all races.  Two explanations for this disproportion in connection with drug arrests are first, that it is much easier to incarcerate citizens from poor and powerless communities, making it true that urban and poor communities are hyper-policed, while frat houses, suburban communities, and wealthy neighborhoods, where drug use is just as prevalent, are rarely policed; and second, that politicians and lawmakers deliberately waged the War on Drugs in urban and poor communities to re-subordinate minority citizens, in light of their gains from the Civil Rights movement, particularly passage of the Civil Rights Act and the Voting Rights Act (recall that President Nixon declared the War on Drugs in the early 1970s, and President Reagan federalized the war in the early 1980s, just a few years after real political and social gains were made by minority citizens).

cummings speaks to the Unitarian Universalist congregation
One of the primary reasons it has been so difficult to end the failed War on Drugs, is that corporate interests and profit increase are now deeply entangled and entrenched in the United States prison industry.  The advent of the private prison corporation in the late 1970s with the introduction of the Corrections Corporation of America in Tennessee, now ensures that dozens of millions of dollars are spent annually by private prison executives to lobby aggressively for increases in private prison facilities, increases in crimes that lead to jail time, increases in length of sentences, and increasing incarceration rates of American citizens and illegal residents.

Corporate interests are now energized by the profit potential of increasing incarceration in the United States.  Perverse incentives are innumerable now for the private prison executive.  Immoral motives, attendant stereotypes and damaging public perceptions have grown out resulting in outcomes such as the "Kids for Cash" scandal in Pennsylvania (where sitting state judges received bribes and kickbacks for every juvenile that they sentenced to jail time in a private juvenile detention center); the horrible Trayvon Martin murder and acquittal (where an innocent, random African American boy was profiled as a "punk," and "suspicous" likely drug dealer by a neighborhood watch volunteer who followed, shot and killed the youth); the SB-1070 "show your papers" law in Arizona (that was drafted by the private prison lobby and handed over to willing legislatures who introduced the law verbatim).  Terrible outcomes motivated by immoral and perverse incentives are the cognizable result of the private prison industry.


Critical Race Theory: The Cutting Edge

Professors Richard Delgado and Jean Stefancik have just released the third edition of their seminal compilation Critical Race Theory: The Cutting Edge.  This book traces the evolution of Critical Race Theory and examines wide ranging topics, including economics, class, and wealth, critiquing and offering solutions through critical analysis.  

According to the Temple University Press: "Critical Race Theory has become a dynamic, eclectic, and growing movement in the study of law. With this third edition of Critical Race Theory, editors Richard Delgado and Jean Stefancic have created a reader for the twenty-first century—one that shakes up the legal academy, questions comfortable liberal premises, and leads the search for new ways of thinking about our nation's most intractable, and insoluble, problem—race.

The contributions, from a stellar roster of established and
emerging scholars, address new topics, such as intersectionality and black men on the "down low."  Essays also confront much-discussed issues of discrimination, workplace dynamics, affirmative action, and sexual politics. Also new to this volume are updated section introductions, author notes, questions for discussion, and reading lists for each unit. The volume also covers the spread of the movement to other disciplines such as education.

Offering a comprehensive and stimulating snapshot of current race jurisprudence and thought, this new edition of Critical Race Theory is essential for those interested in law, the multiculturalism movement, political science, education, and critical thought."


Charitable Giving?

Corporations are legally permitted to expend general treasury funds for charitable purposes.  Indeed, corporations are encouraged to contribute to charities in order to improve the communities in which they do business and to support the consumers that purchase their products or use their services.  State rules place parameters around the amount of money that can be allocated from corporate coffers to charitable entities with most rules allowing contributions that are reasonable in amount, related to a corporate purpose, and not distributed to "pet" charities.  With corporations now stepping into the giving role that large philanthropic families played in the 19th and 20th centuries (like the Mellon family, the Rockefeller family, etc.), and with charities relying more heavily than ever on corporate gifts, what are we to make of news today that dozens of charities are little more than scams initiated by individuals seeking easy windfalls?

CNN, together with the 
Tampa Bay Times and the Center for Investigative Reporting, released a stunning report today indicating that hundreds, if not thousands of charities are siphoning millions of dollars from charitable givers and enriching charity founders and executives and for-profit companies that are paid to solicit the charitable gifts.  This report indicates that thousands of charities pay for-profit vendors to raise their donations, sometimes spending more than 90% of the contributions on soliciting more contributions.  CNN reports that the worst charity investigated was the Kids Wish Network:

"Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families.  Every year, it spends less than 3 cents on the dollar helping kids.  Most of the rest gets diverted to enrich the charity's operators and the for-profit companies Kids Wish hires to drum up donations.  In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate solicitors. An additional $4.8 million has gone to pay the charity's founder and his own consulting firms.  No charity in the nation has siphoned more money away from the needy over a longer period of time.  


But Kids Wish is not an isolated case, a yearlong investigation by the Tampa Bay Times and The Center for Investigative Reporting has found.  Using state and federal records, the Times and CIR identified nearly 6,000 charities that have chosen to pay for-profit companies to raise their donations.  Then reporters took an unprecedented look back to zero in on the 50 worst - based on the money they diverted to boiler room operators and other solicitors over a decade.  These nonprofits adopt popular causes or mimic well-known charity names that fool donors. Then they rake in cash, year after year. The nation's 50 worst charities have paid their solicitors nearly $1 billion over the past 10 years that could have gone to charitable works."


The Kids Wish Network is not alone.  This investigative report listed the 50 worst charities.  Below is a chart listing the top ten worst charities ranked by money spent on soliciting costs versus money spent on direct cash aid.


Are publicly traded corporations engaging in appropriate due diligence before spending general treasury funds on charitable contributions?  The report above indicates that there is an urgent need to engage in such diligence.


The 50 worst, ranked by money blown on soliciting costs

Totals from the latest 10 years of available federal tax filings


Charity name

Total raised by solicitors

Paid to solicitors

% spent on direct cash aid


Kids Wish Network

$127.8 million

$109.8 million



Cancer Fund of America

$98.0 million

$80.4 million



Children's Wish Foundation International

$96.8 million

$63.6 million



American Breast Cancer Foundation

$80.8 million

$59.8 million



Firefighters Charitable Foundation

$63.8 million

$54.7 million



Breast Cancer Relief Foundation

$63.9 million

$44.8 million



International Union of Police Associations, AFL-CIO

$57.2 million

$41.4 million



National Veterans Service Fund

$70.2 million

$36.9 million



American Association of State Troopers

$45.0 million

$36.0 million



Children's Cancer Fund of America

$37.5 million

$29.2 million




The Sordid Private Prison Corporation Agenda

News out of the United States this week in connection with the debacle that is the for-profit private prison corporation regime borders on deprave.  That the privatization of the prison industry in the U.S. (and abroad) is not now considered an epic failure is mystifying.  In Pennsylvania, Mark Ciavarella, Jr., the former juvenile court judge that orchestrated the "Kids for Cash" scandal, was formally sentenced to 28 years in prison for his role in sending children to jail in return for cash payments (the Third Circuit Court of Appealsupheld the sentence from his 2011 trial).  Ciavarella was found guilty in 2011 of "engaging in a pattern of racketeering and participating in a racketeering conspiracy through his receipt and transfer of $997,600 from individuals associated with the juvenile detention centers."  Ciavarella and former Judge Michael Conahan were both accused of sending children to private juvenile detention facilities, in Luzerne County, PA, often in violation of the kids' constitutional rights, in return for bribes and kickbacks from private prison owner Robert Mericle for the number of children that they sentenced to spend time in the Mericle-built private juvenile facilities.  Conahan pled guilty to racketeering in 2010, while Ciavarella cavalierly battled the indictment claiming that he received only a "finders fee" for assisting in the construction of the private prison facility.

As reported in 2011 by the 
Christian Science Monitor, the jury found Ciavarella guilty on 12 of 39 counts in his indictment. Aside from racketeering, he "was also convicted of failing to record the secret payments on judicial financial disclosure forms from 2004 to 2007, and for filing false tax returns for those same years. In addition, the jury found him guilty of engaging in a money-laundering conspiracy to conceal the payments."

perverse incentives that attach when private corporations seek to control a public function like crime and punishment, including sentencing and imprisonment, literally overwhelms both judges and corporate executives. That a private prison company would actually bribe judges to fill their prisons is appalling.  Just as outrageous is that judges would, without remorse, destroy the lives of young kids by imprisoning them for minor crimes or misbehaviors, in order to receive bribes that the private industry seems more than willing to pay.

GEO Group Headquarters in Florida

Meanwhile, the GEO Group, Inc., one of the nation's largest private prison companies, has been lying to investors and the general public. The mantra of private prison companies is that they "do no harm" as they simply run prisons more efficiently and for lower cost than government can.  In repeating this mantra, the GEO Group and the Corrections Corporation of America (CCA) routinely claim that they do not seek to influence legislatures or lobby for longer sentences, for greater prison time or for the expansion of crimes that will ultimately lead to a stronger flow of prisoners into their prison beds, including claims that they are not involved in the criminalization of immigration.  This however, is reportedly not true.  Not only is there emerging evidence that private prisons run less efficiently and at greater cost than those run by states and municipalities, but GEO Group's public disclosures this year admitted to paying millions of dollars to lobbyists that are seeking to influence immigration policy by sending illegal immigrants into the private prisons.

The Nation reports:  "Earlier this year, one of the largest private prison corporations in the country sent out a statement to reporters claiming that it would not lobby in any way over the immigration reform debate. A new disclosure shows that the company, the Boca Raton–based Geo Group, has in fact paid an 'elite team of federal lobbyists' to influence the comprehensive immigration reform legislation making its way through Congress. . . .

In February and March, Pablo Paez, the Geo Group’s vice president of corporate relations, told media outlets, including the Financial Times and The Nation, that his firm would steer clear of immigration reform politics. . . . 'The GEO Group has never directly or indirectly lobbied to influence immigration policy. We have not discussed any immigration reform related matters with any members of Congress, and we will not participate in the current immigration reform debate.'

Geo Group’s quarterly lobbying disclosure tells a different story. A disclosure filed in April shows that the company turned to Navigators Global to lobby both houses of Congress on 'issues related to comprehensive immigration reform.' Navigators Global, a corporate government affairs firm founded by several Republican aides, has been retained by the Geo Group since 2011 . . . ."

The private prison industry is sordid, evidenced by judicial bribery and lying to investors and the public at large.  How long will we stand for this debauchery?


"You Can Sell Your Shares"

Howard Schultz - CEO Starbucks Corporation

Starbucks CEO Howard Schultz was very pointedwhen challenged by a shareholder at the coffee giant's annual meeting for publicly supporting marriage equality in the state of Washington.  When asked whether he felt that supporting gay marriage drove customers, and profits, away from Starbucks, Schultz essentially responded that he was not going to apologize for a year when shareholders received a 38% return on shares owned and that if shareholders were truly aggrieved by the political stance, then they could always sell their shares.

Forbes quoted CEO Schultz as follows when directly responding to a shareholder: “Not every decision is an economic decision. Despite the fact that you recite statistics that are narrow in time, we did provide a 38% shareholder return over the last year. I don’t know how many things you invest in, but I would suspect not many things, companies, products, investments have returned 38% over the last 12 months. Having said that, it is not an economic decision to me. The lens in which we are making that decision is through the lens of our people. We employ over 200,000 people in this company, and we want to embrace diversity. Of all kinds. . . .  If you feel, respectfully, that you can get a higher return than the 38% you got last year, it’s a free country. You can sell your shares in Starbucks and buy shares in another company. Thank you very much.”

Often, disgruntled shareholders have no real claim when a corporation takes a particular position or makes a certain economic decision that impacts share price and profitability.  Selling one's shares is always the bottom line alternative if shareholders are truly disenchanted with a companies strategic vision.

Schultz's decision to come out publicly in favor of marriage equality last year was a bold move, though trending in the United States has seen a 
dramatic shift
 to a majority of Americans now favoring marriage equality.

[photo courtesy of Adam Bielawski through Creative Commons]

Saturday, April 13, 2013

American Indian Mascots Continue to Divide

Moni Basu at CNN has just written yet another "take" on the American Indian mascot conundrum.  In Native American Mascots: Pride or Prejudice?" Basu interviews Suzan Shown Harjo who brought the now famous case Harjo v. Pro Football, Inc., attempting to have the trademark for the "Washington Redskins" canceled because it is offensive, derogatory, and contemptible.

Although "Harjo was defeated in the courts, . . . public opinion has been shifting steadily on the matter.  In March, several lawmakers introduced a bill in Congress that would amend the Trademark Act of 1946 to ban the term “redskin” in a mark because it is disparaging of native people. Among the sponsors of the bill is civil rights activist Rep. John Lewis, D-Georgia.  Harjo says she hopes the legislation will accomplish what litigation has failed to do so far.  If passed, the bill would force the Washington football team to discard its trademarked name and ban the use of any offensive term in any future trademarks."


GEO Group Stadium Naming Deal Fails

FAU Students Protesting GEO Group Naming Deal
When the GEO Group and Florida Atlantic University agreed to a $6 million football stadium naming deal in February 2013, neither GEO CEO George Zoley or FAU President Mary Saunders anticipated the incredible backlash that descended upon the private for-profit prison company (GEO) and the University.  Due to student protests, faculty opposition, national media attention being drawn to GEO's terrible record ofhuman rights violations in its private prisons, and the quickly assigned nickname of "Owlcatraz" to the FAU Owls football stadium, GEO Group announced yesterday that it was withdrawing its pledged stadium naming donation.  In pulling its $6 million pledge, CEO Zoley released a self-serving statement blaming "distractions" as the reason that the pledge was being withdrawn.  Per Zoley:  "What was originally intended as a gesture of GEO's goodwill to financially assist the University's athletic scholarship program has surprisingly evolved into an ongoing distraction to both of our organizations."

The "surprising[] . . . distractions" to which Zoley refers include (a) student protests challenging FAU to reject the donation as hypocritical pointing out that GEO Group's profit base is derived almost entirely from human misery and suffering, (b) an overwhelmingly passed faculty resolution calling upon President Saunders to cancel the deal because GEO Group's "business practices do not align with the mission of the university," (c) a sit-in held in President Saunder's office by students, (d) a mocking national spotlight from Stephen Colbert's comedy/news show (suggesting that one of the problems of drawing attention to your business, is that people will pay attention to what your business actually does), and (e) community outrage protesting GEO's intimate affiliation with an institution of higher education.

As has been discussed in this blog space often, private prison companies are perversely incentivized to generate profit based on human misery through working to increase the incarceration levels of United States citizens and immigrants.  Private prison corporations pay dozens of millions of dollars to lobby legislators for harsher sentencing regimes, new crimes that require incarceration (AZ SB1070), and increasing prevalence of private prison contracts based on dubious claims of efficiency and cost savings.  Without providing any product or needed public good, GEO Group, the Corrections Corporation of America (CCA), and other private prison companies profit in two primary ways that are incredibly objectionable:

First, private prison companies contract with state and federal governments to warehouse U.S. prisoners and are paid in taxpayer funds on a "per bed" basis.  Essentially, taxpayer funds are being transferred from taxpaying citizens into the pockets of private prison company executives and shareholders for no recognizable good or service.  Almost all of the recent emerging evidence suggests that private prison companies run prisons LESS efficiently, LESS safely, and LESS cost effectively than do federal and state governments.  The Lake Erie Prison report just released finds that CCA is so profit driven, that the CCA- run prison at Lake Erie does not provide proper supervision of prisoners and that drug use and violence are rampant, both in an attempt to avoid costly prisoner lawsuits.  

Second, private prison companies exploit the labor of the prisoners in their care by entering into contracts with companies like IBM, Victoria's Secret, WalMart, and McDonald's for prisoners to work for pennies with the contractual rewards paid into the coffers of the private prison company (thus to shareholders and executives).  Prisoners are paid between $0 and $4 for the labor that they engage in sewing for Victoria's Secret, manufacturing for WalMart and McDonalds, with the fruit of their labor being paid to the prison company rather than to the prisoner. Indentured servitude continues in our prisons in the United States and the GEO Group and CCA profit from these immoral activites.

Rendering of how GEO Group Stadium would have appeared
That both of these profit sources continue in the United States today is shocking.  That the students, faculty, and community at FAU recognized this appalling business model is heartening. The GEO Group's name will NOT adorn the football stadium at FAU.  It appears that "surprising[] . . . distractions" of massive protest are just beginning for the private prison industry.

 cross-posted on the Sports Law Blog

FRIDAY, MARCH 22, 2013

Incarceration Nation

Professor Paul Butler penned an opinion piece for the New York Times this week, Gideon's Muted Trumpet, where he traces the history of incarceration in the United States since the Gideon v. Wainwright case was decided fifty years ago.  Essentially, Gideon guarantees that a poor person will be given access to a lawyer when charged with a serious crime.  Often the Miranda warning, repeated on a loop in television police dramas, comes to mind when thinking about Gideon's guarantee of legal representation (i.e., You have the right to remain silent . . .  You have the right to an attorney.  If you cannot afford an attorney, one will be provided for you . . .).  But what has this guarantee wrought after fifty years?  

Per Butler:  "A poor person has a much greater chance of being incarcerated now than when Gideon was decided, 50 years ago . . . . This is not because of increased criminality — violent crime has plunged from its peak in the early 1990s — but because of prosecutorial policies that essentially target the poor and relegate their lawyers to negotiating guilty pleas, rather than mounting a defense."

Butler's op-ed discusses the underrecognized problem of prosecutorial discretion, which infuses an enormous amount of power in the men and women that prosecute federal and state crimes in the U.S.  Butler writes:  "The so-called war on crime greatly expanded criminal liability. A prosecutor can almost always find some charge: there are over 4,000 crimes on the federal books alone. Recreational drug use is one of the more popular activities in America, but racial minorities suffer the brunt of drug-related convictions.  In part because of federal grants to states to incarcerate drug offenders, the United States experienced the largest increase in incarceration in the history of the free world. Our population is less than 5 percent of the world’s but we have nearly 25 percent of its prisoners. When Gideon was decided, about 43 percent of defendants were indigent. Now, over 80 percent are."

The United States continues to wage an internal war against its own citizens, particularly if a U.S. citizen happens to be poor and minority.  It is simply the easiest way to appear tough on crime and to fill our nation's prisons, increasingly operated by private prison corporations for profit.


Wall Street Pay Rises; Worker's Pay Does Not

Bonuses on Wall Street rose 9% in 2012, nearing former record highs, at the same time that pay for U.S. workers continues to stagnate.  Up until the 1970s, worker compensation and productivity rose simultaneously, rewarding workers for gains in productivity.  However, since 1978, worker compensation has flatlined while productivity has increased markedly.  The benefits of greater productivity have gone almost exclusively to shareholders and corporate executives and not to the employees driving the gains.  "Companies are on a tear in terms of productivity and profits, but they aren't sharing much of the gains with their workers. . . .  Productivity, which measures the goods and services generated per hour worked, rose by 80.4% between 1973 and 2011, compared to a 10.7% growth in median hourly compensation . . . ."

With unemployment still hampering many American workers, bonus pay on Wall Street is projected to rise another 8%  in 2013.  Despite the increase in compensation, Wall Street banks continue to slash jobs to cut costs and spur profits. Meanwhile, "[e]mployers are achieving their gains with fewer workers []. U.S. economic activity is now 2.5% higher than it was when the recession began in late 2007, but there are more than 3 million fewer workers on the job, said Mark Perry, a scholar at the conservative American Enterprise Institute." To that end, Wall Street continues its tone deaf march intent on enriching its executives at the expense of its employees and the United States economy.

MONDAY, MARCH 18, 2013

Does Hip Hop Injure the Black Community?

Hip Hop Concert in Boston, MA
Hip hop writer Sebastian Elkouby asks "Is Hip Hop Destroying Black America?" in article published this week.  Commercialized hip hop is castigated by Elkouby as he responds to the common refrain from some quarters that hip hop positively injures African American youth and communities.  Elkouby writes:

"Is Hip Hop Destroying Black America? To answer this question fairly, we must first discard the distorted image of Hip Hop that mainstream media has passed off for the past 20 years. Hip Hop is a movement consisting of 4 main artistic elements: DJ’ing, Rapping, Breaking and Graffiti. But at its core, it is a philosophy based on the idea that self expression is an integral part of the pursuit of peace, love and unity. It was created by young visionaries who tapped into their greatest potential and gave birth to one of the most important cultural phenomenon the world has ever seen."

Elkouby rightly asks why critics so expressly point to artists for perpetuating negative stereotypes, glorification of violence, and disrespect of women, while ignoring the record executives, the "adults" in the room, who fill the nation's airwaves with banal messages and low-brow fare. "It’s easy to blame talentless top 40 rappers for dominating the airwaves of so called hip hop radio stations like L.A.’s Power 106 or New York’s Hot 97 while Rick Cummings, president of programming for Emmis Communications, which owns both stations, isn’t held accountable for his part in broadcasting filth to millions of listeners.  Time and time again, the real decision makers get away with murder while rap artists are projected as the embodiment of everything that is wrong with Hip Hop and young Black males.  Kind of how gangs are perceived as the lone cause of urban violence while those who bring guns and drugs into the community remain anonymous." 

Further, Interscope President Jimmy Iovine gets called out as the real "gangster" in gangsta rap music, for propagating ridiculousness in hip hop, particularly after signing Chicago 16-year old Chief Keef, who does little more than extol the virtue of blunt smoking and snitch killing in his music.


Will A Stadium "Naming" Deal Celebrate the Perverse Private Prison Industry?

The GEO Group, one of two nationally prominent private prison corporations in America has just signed an agreement with Florida Atlantic University to "name" the football stadium at FAU.  Understandably, this has caused an uproar from many on the faculty and in the student body at Florida Atlantic.  "The GEO Group Stadium" at Florida Atlantic University immediately conjures up images of the now retired "Enron Stadium" where the Houston Astros used to take the field, except that The GEO Group is undoubtedly more sinister and harmful to United States citizens than Enron ever was (a fact absolutely lost on FAU President Mary Jane Saunders until student and faculty protests erupted).

The GEO Group is a private prison company.  As I have written about extensively, private prison corporations essentially collect taxpayer funds from federal and state governments (a "per diem" or per bed fee) in order to house prisoners on behalf of these governments and do so with an immoral profit maximization motivation. Private prison companies profit on human misery.  Shareholders of  GEO Group stock expect the board of directors and executives to return handsome profits from imprisoning United States citizens (and increasingly illegal aliens).  The perversity in this arrangement, of course, is that in order to increase profits for shareholders, private prison companies, including the Corrections Corporation of America (the other prominent U.S. private prison company), seek to aggressively imprison more Americans by lobbying legislatures to increase sentencing laws, divine new laws/ways to imprison individuals, and even engage in drafting model legislation like SB 1070 (Arizona's "show me your papers" law) and three-strikes laws.  In "All Eyez on Me: America's War on Drugs and the Prison Industrial Complex," I describe the perverse incentives that motivate the private prison industry by examining the immorality attendant in leadership of private prison companies debating suc
Hip Hop and the ABA

 The September 2012 edition of the ABA Journal reports favorably on the "Hip Hop and the American Constitution" course offered last spring semester collaboratively between Drexel University Earle Mack School of Law and the West Virginia University College of Law.  In an article entitled "Hip-Hop at Law," reporter L.J. Jackson writes:

Public Enemy (in Hamburg, Germany 2000)
"Back in 1989, when Chuck D and Flavor Flav exhorted Public Enemy fans to 'Fight the Power,' it’s likely that they never envisioned their anti-establishment anthem would be deconstructed and analyzed as part of an innovative law school curriculum. But the lyrics and discographies of Public Enemy and other hip-hop artists are indeed the subjects of a recent law school seminar and a forthcoming anthology studying the intersection of the Constitution and hip-hop.  Law professors Donald Tibbs and andré cummings are working on a textbook based on the class they co-taught this spring called 'Hip-Hop and the American Constitution.' The lecture series brought an eclectic mix of law professors, formerly incarcerated people and rap artists to the classroom to discuss hip-hop’s legal implications. 'It initially was a hope and dream' to teach the class, says Tibbs of Drexel University, who conceived the idea and pitched it to cummings of West Virginia University."

The entire article can be read here:  Hip-Hop at Law

(photo courtesy of MikaV, Creative Commons License)
Election 2012 Outcomes

 Several frightening outcomes have surfaced following last week's presidential election.  Of course, many very positive takeaways have emerged as well, with Professor Steve Ramirez writing about two of them in this Corporate Justice space.  Yet, the frightening outcomes appear to show that our nation remains deeply divided along racial and class lines.

Following the election, statisticians and social media analysts got busy and turned up the following two charts, which should give Americans everywhere pause. First, the chart below shows that we are most definitely not a post-racial place, as evidenced by the number and intensity of racist tweets that were sent on election night following President Obama's re-election.

The next chart shows how the state's with the most educated populations voted, versus how the state's with the least educated populations voted for president.  How "educated" a state is was determined by percentages of citizens 25 years of age and older with a college degree or more.

These two charts seem to evidence that our nation remains deeply divided, both on issues of race and of class.  Racist tweets in the deep south were prevalent, most obviously in Mississippi and Alabama following President Obama's re-election success.  Still, racist tweets were evident throughout the nation.  Further, if "education" level is to be measured by college degree, then those states with the most college graduates voted overwhelmingly for President Obama, where those states with the fewest college graduates were nearly as overwhelmingly in support of Mitt Romney.  We must continue to try to bridge divides in the United States by honestly confronting issues of festering racism and poverty.

Hip Hop and the American Constitution

Dr. Donald Tibbs in collaboration with Professorandré douglas pond cummingsare offering a first-of-its-kind law school course entitled "Hip Hop and the American Constitution," this spring semester 2012. Through an innovative link-up between Drexel University Earle Mack School of Law and the West Virginia University College of Law, Tibbs and cummings are presenting to law students at both schools an intellectual and academic experience connecting the intersections of hip hop with the law. The course is being presented primarily as a lecture series, where academics and activists from across the nation are traveling to Philadelphia and presenting their published work which examines various aspects of the the law through the lens of hip hop, its artists, culture and messaging. Students will be required to read the lecturing scholars work, be it law review articles or books, and will then intellectually engage with the visiting scholars following a lecture presented by each visiting professor. In addition, students will keep a journal of their insights through the semester, and will present a final paper tackling a current issue in the law and how hip hop music or culture critiques this law.

The lecture series will occur on Thursday evenings at Drexel Law throughout the spring 2012 semester and is being broadcast live to students at WVU Law. The lecture series line-up will proceed throughout the semester as follows:

January 19, 2012: ProfessorBret Asbury, Drexel Law, "Anti-Snitching and the Hip Hop Community"

January 26, 2012: Professor andré douglas pond cummings, WVU Law, "All Eyez on Me: Hip Hop, Mass Incarceration and the Prison Industrial Complex

February 3, 2012: Professor Paul Butler, George Washington Law, "Let's Get Free: A Hip Hop Theory of Justice

February 9, 2012: Dr. Imani Perry, Princeton University, "Prophets of the 'Hood: Politics and Poetics in Hip Hop"

February 16, 2012: Professor Akilah Folami, Hofstra Law, "Law, Hip Hop and the Black Public Sphere"

February 23, 2012: Dr. Tryon Woods, UMass - Dartmouth, "Law, Black Sexual Politics, and Punishment"

March 1, 2012: Professor Kim Chanbonpin, John Marshall Law, "Legal Writing, The Remix: Plagiarism and Hip Hop Ethics

March 8, 2012: Professor Anthony Farley, Albany Law, "Sarah Palin: The Last Black President or Straight Up Gangsta"

March 22, 2012: Professor Pamela Bridgewater, American Law, "Is Feminism Dead? Is Hip Hop Dead? And Other 21st Century Questions of Marginal Utility"

March 29, 2012: Professor Andre Smith, Widener Law, "OPP - Other People's Property: Hip Hop's Inherent Clashes With Property Laws and its Ascendance as Global Counter Culture"

April 5, 2012: Dr. Donald Tibbs, Drexel Law, "From Black Power to Hip Hop"

April 12, 2012: Guest Finale/Keynote Speaker (TBA)

Contributing scholars who will teach portions of the WVU Law section include Professor Atiba Ellis, WVU Law and Nick Sciullo, Ph.d candidate, Georgia State University.

Each of the above lecture series participants will publish their articles or book excerpts in an anthology that Tibbs and cummings will edit, slated for publication in 2013.