House Passes FISA Bill Without Retroactive Immunity

This is tremendously good news:

Today, the House passed the House amendment to the Senate amendment to H.R. 3773, to amend the Foreign Intelligence Surveillance Act of 1978 to establish a procedure for authorizing certain acquisitions of foreign intelligence, and for other purposes.

The revised House legislation to amend FISA grants new authorities for conducting electronic surveillance against foreign targets while preserving the requirement that the government obtain an individualized FISA court order, based on probable cause, when targeting Americans at home or abroad. The House bill also strongly enhances oversight of the Administration’s surveillance activities. Finally, the House bill does not provide retroactive immunity for telecom companies but allows the courts to determine whether lawsuits should proceed.

The Gavel lists key points and other detailed explanations of this legislation and how it reinforces and even strengthens the RESTORE Act.

Libby is feeling a bit giddy:

Well blow me over with the wind of a butterfly’s wing. The House passed a FISA bill today that did NOT include telecom immunity. As my friend Dax would say, just damn. Now it’s far from over but it’s just a little short of miraculous in my mind that we’ve come so far and so long in this fight.

Bush’s reaction was to “demand” that the House pass the Senate version of the bill, which includes retroactive immunity: “The American people understand the stakes in this struggle. They want their children to be safe from terror,” he said.

Wrong, Elmo. The American people want their children to be able to see a doctor when they’re sick. They want their children to be safe from street crime and drug pushers. The American people want their children to be able to find a job when they get out of school. Of course, the American people also want their children to be safe from terrorism, but I’ll bet you the cost of a full tank of gas that if you actually bothered to go to the American people and ask them to list the top five things that they want for their children, being safe from terror might be number eight.

Getting back to the details of the House bill, Glenn Greenwald wrote on Wednesday about the clever strategy House Democrats used to keep retroactive immunity out of the bill without compromising the telecoms’ rights under existing law:

… By including a provision that explicitly authorizes telecoms to submit to the court any exculpatory documents — notwithstanding the assertion by the administration that those documents are subject to the “state secrets” privilege — the House bill completely guts, in one fell swoop, the primary argument that, for months, has been made by telecoms and their allies as to why amnesty is necessary.

As Marcy Wheeler documented several months ago, the primary — really the sole — excuse given by the Senate Intelligence Committee as to why telecom amnesty was necessary was that the telecoms did nothing wrong but were being blocked by the administration from using the documents they have to prove it. From the Committee’s report recommending telecom amnesty:

To the extent that any existing immunity provisions are applicable, however, providers have not been able to benefit from the provisions in the civil cases that are currently pending. Because the Government has claimed the state secrets privilege over the question of whether any particular provider furnished assistance to the Government, an electronic communication service provider who cooperated with the Government pursuant to a valid court order or certification cannot prove it is entitled to immunity under section 2511(2)(a)(ii) without disclosing the information deemed privileged by the Executive branch.

It’s critical to emphasize — as that passage references — that the telecoms already have immunity under existing statutes, even if they broke the law, as long as they obtained from the Attorney General certifications that the warrantless surveillance requests were legal. If the telecoms really did obtain those certifications — and it’s extremely unlikely that they did — then all they ever had to do was just show them to the court and they would be immune. Their excuse up until now — “we can’t use the documents we have to defend ourselves because we aren’t allowed to show them to the judge” — is now completely eliminated by the House bill.

As Glenn pointed out earlier today, after the House version passed, none of us who oppose retroactive immunity really expected this outcome; maybe we can allow ourselves to hope that it represents a real change in congressional thinking on this issue, and not just a momentary blip:

The House just now approved a new FISA bill that denies retroactive immunity to lawbreaking telecoms and which refuses to grant most of the new powers for the President to spy on Americans without warrants. It passed comfortably, by a 213-197 margin.

Notably, many of the 21 “Blue Dogs” who previously signed a letter indicating their support for telecom immunity and the Rockefeller bill — including several of the six whom the highly successful blog fund-raising campaign earlier this week targeted — voted (and spoke) in support of the House bill (only 10 Democrats voted against the bill, including at least a couple of progressives who think the bill doesn’t go far enough). Many of those Blue Dogs were persuaded to support the bill by the protections which the bill offers to telecoms (i.e., authorizing them to introduce even classified evidence in the lawsuits to prove they complied with the law, if they actually did).

As impressive as the House vote itself was, more impressive still was the floor debate which preceded it. I can’t recall ever watching a debate on the floor of either House of Congress that I found even remotely impressive — until today. One Democrat after the next — of all stripes — delivered impassioned, defiant speeches in defense of the rule of law, oversight on presidential eavesdropping, and safeguards on government spying. They swatted away the GOP’s fear-mongering claims with the dismissive contempt such tactics deserve, rejecting the principle that has predominated political debate in this country since 9/11: that the threat of the Terrorists means we must live under the rule of an omnipotent President and a dismantled constitutional framework.

The Electronic Frontier Foundation is plaintiff in one of the lawsuits currently pending against the telecoms:

This morning the House of Representatives passed a compromise surveillance bill that does not include retroactive immunity for phone companies alleged to have assisted in the NSA’s warrantless wiretapping program. The bill would allow lawsuits like the Electronic Frontier Foundation’s case against AT&T to proceed while providing specific security procedures allowing the telecom giants to defend themselves in court.

The House bill succeeded 213 to 197 despite the president’s threat to veto any bill that does not include immunity.

“We applaud the House for refusing to grant amnesty to lawbreaking telecoms, and for passing a bill that would allow our lawsuit against AT&T to proceed fairly and securely,” said Electronic Frontier Foundation (EFF) Senior Staff Attorney Kevin Bankston. “Amnesty proponents have been claiming on the Hill for months that phone companies like AT&T had a good faith belief that the NSA program was legal. Under this bill, the companies could do what they should have been able to do all along: tell that story to a judge.”

Bear Stearns

Earlier today I posted here and promised to address the Bear Stearns situation. I knew that the liquidity situation at Bear Stearns was important. I had no idea at the time just how Bear Stearns’ problems were interpreted to be by its creditors and by the Federal Reserve.

There are a lot opinions floating around the financial world tonight and it is hard to tell if some of them are extreme or even possible. From Bloomberg comes this quote:

“We are facing a potential black hole for all financial markets,” said Neil MacKinnon, chief economist at London-based hedge fund ECU Group, which manages $2 billion in assets. “This is being labeled as perhaps the worst financial and banking crisis since the Great Depression. While that sounds fairly apocalyptic, I think it is a realistic assessment of what is happening at the moment.”

Hyperbole? We are in a political and economic situation without parallel for anyone that is in a position to influence the outcome. The Economist has this:

As the credit crunch has deepened and broadened, the worst fear of many on Wall Street has been the collapse or forced rescue of a big bank or broker. That moment is now upon them.

[snip]

The meltdown at Bear, which began last summer when two of its hedge funds blew up, is a classic example of how liquidity problems and ebbing confidence can quickly turn into a solvency crisis, especially for investment banks, which are more reliant on short-term funding than commercial banks.

A lot of people in small town America are not happy to see a Federal bailout of a large Wall Street bank. Personally, I am conflicted on the issue. However, I fear the consequences of allowing the bank to fail. As the Wall Street Journal remarks:

For Fed officials it was a difficult choice. They did not want to single Bear out for help and they realized their actions aggravated “moral hazard” — the tendency of bailouts to encourage future risky behavior. But the alternative was potentially far worse. Bear risked defaulting on extensive “repo” loans, in which it pledges securities as collateral for overnight loans from money-market funds. If that happened, other securities dealers would see their repo loans reduced or cut off. The pledged securities behind those loans could be dumped in a fire sale, deepening the plunge in securities prices.

By 7 a.m. Friday, the New York Federal Reserve Bank had agreed that it would provide financing to Bear Stearns via J.P. Morgan Chase. J.P. Morgan was used as a conduit because, as a commercial bank, it already has access to the Fed’s discount window, is under the Fed’s supervisory authority, is Bear’s clearing bank and knows Bear well from a previous discussion of a possible strategic tie-up.

Thus, technically the Fed still hasn’t lent directly to investment banks. But the central bank has explicitly assumed the risk of the loan.

The market reaction to the Bear Stearns liquidity situation was a drop of over 300 points on the Dow, with the Dow closing down 195 points. This is a short-term fix for a much larger, long-term dilemma. I think we will see a need for more actions by the Fed in the near future. This obviously gets into a political question with an election in a little over six months. A short-term solution in order to mitigate Republican losses in November is in the cards.

A Tale of Two Pastors

In the United States of America, many outrageous, divisive statements are made — but they don’t all receive the same degree of attention or condemnation.

If a presidential candidate’s pastor preaches a sermon saying that African-Americans should not be expected to sing “God Bless America”; they should sing instead “God Damn America,” it touches off a firestorm that gravely threatens that candidate’s national aspirations even after he condemns those sentiments in the strongest possible terms, and even though the outrageous sermon was the pastor’s last, because he retired two years ago and will not be the spiritual leader anymore of the church of which the candidate has been a member for two decades.

If, by contrast, a presidential candidate accepts the endorsement of a pastor who has said that the Roman Catholic Church conspired with Hitler to exterminate Jews in the Holocaust, and that God will send terrorists to attack America, as on 9/11, if the U.S. government supports a two-state solution for Israel and the Palestinians, and that Hurricane Katrina was God’s way of punishing the city of New Orleans for having a gay pride parade, that is one day’s news and soon forgotten — even if said presidential candidate defends his acceptance of that endorsement and refuses to reject it.

There is only one relevant difference between the statements made by these two pastors: what or who they are attacking. The first pastor, Jeremiah Wright, is attacking U.S. government domestic and foreign policy. He is, in Ronald Kessler’s words, “blam[ing] America for starting the AIDS virus, training professional killers, importing drugs and creating a racist society that would never elect a black candidate president.”

The second pastor, John Hagee, is doing, essentially, the opposite: He is blaming and demonizing the human faces behind those official U.S. policies — or what Jeremiah Wright believes those policies to be. Rather than attacking government orthodoxy, he is actually exploiting the prejudices inherent in that orthodoxy to continue hurting its victims.

Perhaps that explains why the supporters of government orthodoxy are so much more upset about the first pastor than they are about the second.

More Bad News

Just to try and put some perspective on the sub-prime mess in dollar figures I am listing the asset “writedowns and credit losses” as reported at Bloomberg.com this morning. I am posting the complete article

Subprime Losses Reach $195 Billion; German Banks Get Hit: Table
By Yalman Onaran

March 14 (Bloomberg) — The following table shows the $195 billion in asset writedowns and credit losses since the beginning of 2007, including reserves set aside for bad loans, at more than 45 of the world’s biggest banks and securities firms.

German banks reporting earnings this week said they had further losses related to the U.S. subprime market as the value of the assets they owned fell in February.

The charges stem from the collapse of the U.S. subprime- mortgage market. The figures, from company statements and filings, also reflect some credit losses or writedowns of mortgage assets that aren’t subprime. Charges taken on leveraged- loan commitments aren’t included.

All figures are in billions of U.S. dollars, converted at today’s exchange rate if reported in another currency. They are net of financial hedges the firms used to mitigate losses.

Firm                    Writedown     Credit Loss(a)   Total

Merrill Lynch             24.5                          24.5

Citigroup                 19.9            2.5           22.4

UBS                       18.1                          18.1

HSBC                       3.0            9.4           12.4

Morgan Stanley             9.4                           9.4

IKB Deutsche               8.9                           8.9

Bank of America            7              0.9            7.9

Credit Agricole            6.5                           6.5

Washington Mutual          0.3            5.5            5.8

Credit Suisse              4.9                           4.9

Wachovia                   2.7            2              4.7

Canadian Imperial (CIBC)   4.2                           4.2

Societe Generale           3.8                           3.8

JPMorgan Chase             1.6            2.1            3.7

Mizuho Financial Group     3.4                           3.4

Barclays                   3.3                           3.3

Royal Bank of Scotland     3.2                           3.2

Bayerische Landesbank      3                             3

SachsenLB                  2.8                           2.8

Dresdner                   2.7                           2.7

Bear Stearns               2.6                           2.6

Deutsche Bank              2.4                           2.4

ABN Amro                   2.4                           2.4

Fortis                     2.3                           2.3

Natixis                    1.9                           1.9

HSH Nordbank               1.7                           1.7

Wells Fargo                0.3            1.4            1.7

Lehman Brothers            1.5                           1.5

DZ Bank                    1.5                           1.5

National City              0.4            1              1.4

BNP Paribas                1              0.3            1.3

Caisse d'Epargne           1.2                           1.2

Nomura Holdings            1                             1

Gulf International         1                             1

European banks not         7.7                           7.7
  listed above (b)

Asian banks excluding      4.1            0.7            4.8
  Mizuho, Nomura (c)

Canadian banks             2.5            0.1            2.6
  excluding CIBC (d)
                          ____          _____          _____

TOTALS*                  168.8           25.8          194.6

* Totals reflect figures before rounding. Some company names have
been abbreviated for space.

(a) The difference between writedown and credit loss: Investment banks and the investment-banking units of financial conglomerates mark their assets to market values, whether they’re loans, securities or collateralized debt obligations, and label that a “writedown” when values decline. Commercial banks take charge-offs on loans that have defaulted and increase reserves for loans they expect to go bad, which they label “credit losses.” Commercial banks can have writedowns on holdings of bonds or CDOs as well.

(b) European banks whose losses are smaller than $1 billion each are in this group: ING Groep, Allied Irish Banks, Bradford & Bingley, Aareal Bank, Deutsche Postbank, Lloyds TSB Group, Standard Chartered, Northern Rock, HBOS, Dexia, WestLB, Commerzbank, NordLB, Rabobank, HVB Group, Landesbank Baden- Wuerttemberg.

(c) Asian banks with writedowns smaller than $1 billion: Bank of China, Mitsubishi UFJ, Sumitomo Mitsui, Shinsei, Sumitomo Trust, Aozora Bank, DBS Group, Australia & New Zealand Banking Group, Abu Dhabi Commercial, Bank Hapoalim, Arab Banking Corp., Fubon Financial.

(d) Canadian banks included in this group: Bank of Montreal, National Bank of Canada, Bank of Nova Scotia, Royal Bank of Canada.

To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net.

There will be another post up later today as more information becomes available in the #21 financial institution (above), Bear Stearns, liquidity problem and the Federal Reserve bailing them out.

Thought of the Day

There is nothing worse than aggressive stupidity.

Johann Wolfgang von Goethe

Now Mark Penn Is Saying Obama Can’t Win the General Election

He said it during a conference call with reporters:

Mark Penn made the comment during a conference call in which the Clinton campaign and two of her supporters — Pennsylvania Gov. Ed Rendell and Philadelphia Mayor Michael Nutter — argued that Obama has sent Pennsylvanians a bad signal by allegedly downplaying the importance of that state’s April 22 primary. They made the case that this memo from Obama campaign manager David Plouffe (which Nutter said the author should be fired for writing), would come back to haunt Obama in the fall if he is the Democratic nominee.

Perhaps someone can explain to me why Plouffe should be fired for writing the memo, because, after reading it, I am at a loss to know what Nutter (aptly named) finds problematic about it.

The USA Today piece includes audio of the telephone conversations.

Jonathan Chait suggests that the Clinton strategy is to make Obama unelectable by saying he’s unelectable, over and over and in every way possible:

As I said, Obama was running well ahead of Clinton in head-to-head matchups a few weeks ago, and now they’re tied. After several more weeks of Clinton reinforcing McCain’s message against Obama, Clinton will probably be performing better than Obama against McCain. This is the point I made in my TRB column. She needs to convince the remaining uncommitted superdelegates to split for her by about a 2-to-1 margin. The only way she can get a split like that is if she can persuasively argue that Obama is unelectable. And the only way she can do that is to make him unelectable. Some people have treated this as an unfortunate byproduct of Clinton’s decision to continue her campaign. It’s actually a central element of the strategy. Penn is already saying he’s unelectable. It’s not true, but by the time the convention rolls around, it may well be.

John Cole thinks Clinton is a sociopath:

Listen to this interview (via Sully). Hillary Clinton is insane. I don’t know what else to conclude after listening to her state, the Michigan and Florida elections were fair, to state that she never claimed McCain was experienced and Obama was not, to claim she has not hinted that Obama would be her VP. It was like Say Anything, the political edition. Sullivan is right- she is a sociopath. There really is no other way to describe it.

That NPR link actually comes from one of Andrew Sullivan’s readers, who passed it along with this commentary:

If you did not hear Clinton’s interview with Steve Inskeep on NPR this morning, be sure to give a listen. It shattered my Obama optimism.

Inskeep gave her several of the hard questions you write about every day, and she parried every one. She sounded — not was, but sounded — rational, logical, sensible (Obama-like?) in explaining why the MI and FL delegates should be seated, and denying she ever said McCain was more qualified than Obama. Some of her answers were such whoppers that Inskeep actually repeated the questions, his voice rising with incredulity.

The woman is an absolute assassin. Ice water in her veins. A second-generation terminator (yeah, the liquid-metal kind). As a politician, I fear she is light years ahead of Obama, and I am very, very afraid.

After listening to the interview (and actually before that, if I’m honest), I agree.

Did you know that the p.r. firm Mark Penn runs (Burson-Marsteller; he’s CEO) also is advising John McCain in his run for the Republican nomination? Neither did I.