Democratic In-Fighting: Executive Branch

The media has done a good job showing the battles within the Democratic party vis-a-vis Congress, but they also exist within the Executive branch of government. Two examples that haven't gotten the attention they deserve involve torture prosecution and, in a story that is just breaking, antitrust enforcement.

President Obama has repeatedly stated that he wishes to look forward and not open prosecutions of any Bush administration policy, but a few weeks ago Attorney General Holder announced that he is "considering having a prosecutor investigate allegations of CIA torture of suspected terrorists, The Washington Post said." He has, however, also announced that the prosecutions would be limited to those who committed acts that went above and beyond the ones outlined in the famous torture memos and NOT to the architects of the program. This viewpoint has been eloquently challenged by the progressive Democrats in a letter to the AG by Senator Russ Feingold. I hope Holder listens...

Back in May, President Obama's antitrust chief, Christine Varney, announced that the Justice Department “will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers." Apparently, the Bush Administration didn't just stop enforcing the antitrust laws already on the books, but enacted a legal policy that impeded the government’s ability to fight anticompetitive conduct by monopolistic companies in court. Despite the announcement and Mrs Varney making it clear that courts should no longer refer to the Bush administration policy, other departments within the Executive Branch are refusing to go along.

Why can't Democrats get their house in order and govern as one? It's the one aspect of politics that the Dems need to learn from the Republicans. For good or for bad, the Republican party is great at unifying their message and getting their legislative agenda passed. Personally, I suspect lobbying contributions have something to do with it.

Department of Justice Launches Probe into Credit Derivatives

The anti-trust division of the Department of Justice has opened an investigation into the Markit Group over their role in the Credit Default Swap market.

Who exactly is Markit Group? They provide pricing data on the CDS market and has developed many of the most closely-watched derivatives pricing benchmarks in it. And who are the shareholders in this group, which was set up in 2001? You guessed it: JPMorgan Chase, Goldman Sachs, Deutsche Bank, Bank of America and Morgan Stanley to name a few. That list may look familiar, it is almost identical to the list of major counterparties who benefitted from the bailout of AIG.

Why is the DOJ investigating the Credit Default Swap market? As the above graph shows, the CDS market grew from literally nothing in 2001 to over a $60 trillion market in only 6 years. Keep in mind, according to the World Bank, the GDP of the US in 2008 was $14 trillion and the GDP of the entire globe was only around $60 trillion. Looking at those stats, how was the size of the CDS market even possible?

Why do I have a feeling these banks were doing something wrong?