John Brennan, former CIA director under President Obama, gave a profile story to the New York Times Magazine. Here are two quotes from the article:
“We’re at a critical stage in our nation’s history. When I see there is dishonesty and a lack of integrity, Yeah, I speak out.”
But, follow along closely now because he does not want to speak out too much:
“I just don’t want to get into details about what I know or don’t know.”
Now there’s speaking out for you.
Rod Rosenstein, assistant attorney general of the United States and second in command at the Justice Department, is featured on the front page of today’s New York Times. According to the article, which is sourced to 4 people, Mr. Rosenstein appeared conflicted, was “shaken,” “unsteady,” and “overwhelmed” when he wrote the memo about former FBI Director James Comey’s performance at the FBI. President Trump fired Mr. Comey shortly after he received the Rosenstein memo. The sources maintain that Mr. Rosenstein was angry at the time because he felt that the White House used him to rationalize firing Mr. Comey. Well, now, why write the memo of justification for firing Mr. Comey if you cannot support firing Mr. Comey?
Then the “Why did you write it?” question eludes the Times. And there is a big part of the story that only gets a few lines. Mr. Rosenstein has made public statements before Congress that show no regret about the memo, “I wrote it. I believe it. I stand by it.” Yet the Times story quotes one of the four people as saying Mr. Rosenstein sounded “frantic, nervous, upset, and emotionally dis-regulated (whatever that means).” The sources say that Mr. Rosenstein was criticized by career prosecutors for allowing President Trump to use him.
The Justice Department, through a spokeswoman, disputes the descriptions, saying that if Mr. Rosenstein was all those things it was because Mr. McCabe had concealed the Comey memos from him. Mr. McCabe’s cadre of anonymous sources disputes that story, with a close McCabe associate saying Mr. Rosenstein never brought up the memos to Mr. McCabe. Mr. McCabe was terminated by FBI Director Christopher Wray for lying. Talk about your tangled webs. Make up your own chart and insert here. Isn’t the FBI supposed to be chasing the liars?
Somewhere in and amongst the friends, the close associates, the spokeswoman, and Mr. Rosenstein’s public statements and speeches, the truth rests. Eventually, the truth will percolate. In the meantime, the Barometer is grateful to have never worked in D.C. Too many buses to get thrown under. Too much duplicity. Too many back- and front-stabbers. Too much drama. Too many painful career deaths by a thousand cuts. For the sake of ending the nation’s “emotional dis-regulation” let’s hope for bubbling percolation so that this mess can be wrapped up and we can move on to something less soap operaish. We are all “sane,” “overwhelmed,” “nervous,” “upset,” and, one new adjective, disappointed with the whole lot of them. A pox on all your fiefdoms.
Algerian officials had enough of the students cheating during exams. Their solution? Shut down the Internet in the whole country during exam hours. A digital blackout. In order to cheat, the students will have to go low tech — back to answers on palms, crib sheets, and towels in the restroom. The human mind knows no limitations when it comes to cheating.
Top front page and 3 full; inside pages in today’s New York Times about McKinsey & Company’s consulting contract with Eskom, a South African power company. It was a $700 million contract, but the payment was contingent on turning around a nearly insolvent company. In the late 1980s, when McKinsey was just launching into energy consulting, Jeffrey Skilling was with McKinsey. Yes, that Jeffrey Skilling, former CEO of Enron who was convicted of and imprisoned for accounting frau. At that time, Mr. Skilling was against anything but flat-fee contracts in energy. Payments under contracts based on whether McKinsey delivered results, Mr. Skilling argued, would be an incentive to tell clients to reduce costs when cost reduction might not be in its best interests. Mr. Skilling told McKinsey partners that such contracts “could destroy” McKinsey. Funnily enough, Mr. Skilling saw the ethical issue. The other partners did not. McKinsey went full speed ahead into results contracts in the energy sector.
The $700 million bet in South Africa was a big one. Just the amount McKinsey would be paid (and with government agencies the amount paid is always public) would turn the heads of officials and citizens in financially struggling South Africa. However, the payment amount turned out to be the least of McKinsey’s worries. It affiliated with a local company, without really doing the vetting. As it turns out, that company was a front for other companies that were funneling money to other companies in order to funnel money to the Gupta family to funnel money to government officials.McKinsey found itself in the midst of a national scandal with an illegal contract.
Some saw the red flags in 1980. Some saw the red flags in South African corruption. Some saw the red flags when the contract amounts were so large. Some saw the red flags when they witnessed the profligate spending. But seeing the red flags is different from acting on them. This one, as Dominic Barton McKinsey’s resigning managing director said, “I take responsibility. This isn’t who we are. It isn’t what we do.”
Yes, actually it is who McKinsey is now. A ‘tin ear” to ethical issues gets one into a great deal of deafness and the fallout of failure.
Former Countrywide CEO, Angelo Mozilo, in an interview with the Wall Street Journal on whether the mortgages loans his company (and many others) made were the cause of the 2008 housing crisis and market collapse. He says a liquidity crunch and panic were the causes. This from a man who was accused by the SEC of unloading $140 million of his stock based on inside information. He settled the charges for $22.5 million.
Experts and those grounded in reality beg to differ. “It wasn’t just Countrywide, but Countrywide was taking shortcuts everywhere. They weren’t picky about quality. And everybody bought into this, hook, line, and sinker at exactly the wrong time.” Mr. Mozilo is, amazingly, still selling.
The McKinsey RTC division of McKinsey & Co. participated in the restructuring of United Airlines, American Airlines, Edison Mission Energy, NII Holdings, Inc., Alpha Natural Resources, Inc. and SunEdison, Inc. McKinsey RTC was an adviser to those companies during their restructurings. McKinsey RTC did not disclose to the bankruptcy court that McKinsey & Co.’s retirement funds, through its hedge fund investors, held a stake in the debt or other obligations of those six companies.
The disclosure form to the bankruptcy court is a sworn statement that the adviser is a “disinterested party.” McKinsey released a statement saying that it met all legal requirements and that it has been approved for participation by the bankruptcy courts handling the Chapter 11 proceedings for the companies. McKinsey believes that the retirement fund is run separately and therefore disclosure was not required under the regulations.
McKinsey may be right. But, let’s look at it from another angle. How those companies fared in Chapter 11 restructuring had an effect on every McKinsey employee in terms of the performance of their retirement fund. The data are still out on that one. We have us a little letter of the law vs. spirit of the law situation here.
As we say in training on conflicts of interest, if there is the slightest chance of appearance or a glimmer of doubt, disclose.
Interesting how sophistication always gets in the way of being upfront.
FBI attorney Lisa Page and Peter Strzok, paramours, engaged the following in their preparation for questioning then-candidate Hillary Clinton about her e-mails, server, and destruction of both:
10:52 p.m., Page: “One more thing: she might be our next president. The last thing you need us going in there loaded for bear. You think she’s going to remember or care that it was more doj than fbi?”
10:56 p.m., Strzok: “Agreed.”
SO MUCH FOR JUSTICE BEING BLIND!
Members of Congress, the broadcast industry, and Hollywood producers were removing their clothes in offices and elevators. Paul Ryan’s congressional solution is sexual harassment training for all members of congress and their staff. A Starbucks manager handles a non-paying customer issue with police escalation. CEO Howard Schultzz shuts down the enterprise so that they can all be trained on their biases. The former director of the FBI pulled an Alexander Haig and took over the Justice Department via press conference. FBI Director Christopher Wray has ordered that all FBI agents have training on avoiding bias.
Speaking as someone with a vested interest in training, allow me to share this hard truth: Training cannot fix these workplace problems. Training is salve for the conscience. Training is a checked box that can bring lower insurance rates and reduced sentencies and fines should the training not take.
Subjecting an entire workforce to training when a couple of ne’er-do-wells at the top created a public relations nightmare is one of the worst things to do. You add resentment to the emotions that frontline employees, who are already disgusted by the behaviors of a few, feel.
Fear of litigation, concerns about privacy, and visible contrition by subjecting employees to Pollyannaish platitudes drive leaders to the trainers. What leaders should be doing is firing the offenders. We once knew to keep our clothes on at work. Get rid of those who can’t. The FBI surely can muster the fortitude to fire agents who spend their time at work having affairs, texting on government phones, and using those texts to plot an overthrow of an election and mock the American people. Discipline is the training organizations need. When heads roll, behaviors change.
At the heart of every ethical and legal lapse in any organization is bad behavior. Sometimes, as in the case at the FBI, the top layer of leadership is the problem. Leaders at the FBI were accepting tickets, meals, and general camaraderie from journalists. See what happens if a field agent started that kind of nonsense. Get rid of the leaders and everyone is trained on accepting “stuff.” Starbucks fired the manager at the Philadelphia store for not following company policies. That was the right thing to do. The day of closing for training was based on an erroneous conclusion about the bias of its workforce. One manager behaving badly does not a bad culture make.
Save your money. Don’t hire the trainers. Fire the offenders, and do so before they impose the feel-goodism of a blanket one-size-fits-all prescription. The fortitude to fire is the fix.
New York Times, June 14, 2018, p. A23. Hold the olive oil — no one is clear on this one. Issue, retract, reissue, and still no one can replicate. Turns out the folks in the villages where the subjects eating the Mediterranean diet became the envy of their neighbors, who were not getting the free olive oil. So, the researchers gave out the police oil to the control groups in the villages. So, the village folks were eating the same diet. No randomness here. Still, the researchers stand behind the study. The moral of the story is to watch those grad students in the field. They can mess up a study through their generosity.
New York Times, June 14, 2018, p. B1. Well, la-de-da! I think we knew that.
Clint Walker was a struggling young actor in the 1950s, securing minor parts in Bowery Boys’ films. Then came an opportunity to meet with Cecil B. DeMille about his film, “The Ten Commandments.” On the way to his chance-of-a-lifetime meeting, he spotted a woman on the side of the road with a flat tire in her car. He stopped to change the tire and sent the woman on her way. He cleaned himself up a bit and headed for the studio. When he walked into the meeting, Mr. DeMille said, “You’re late, young man.” Mr. Walker, in recounting the story said, Uh-oh. My career is ended before it began.” Mr. Walker explained the stop for the tire-change, and Mr. DeMille responded, “Yes, I know all about it. That was my secretary.”
Thanks to the New York Times for this part of its obituary for Mr. Walker, may this gentleman who had his priorities and values clear no matter the cost, rest in peace.
Professor Gary Gorton of Yale University served as a consultant for AIG from 1996-2008. Professor Gorton’s job was to devise computer models for AIG to use to gauge the risk in those delightful derivatives — credit-default swaps. The Barometer could have helped on that risk model — betting on whether over-mortgaged Americans were going to default on their mortgages, home-equity lines of credit, second mortgages, and new-home mortgages was a big mistake. The only issue was when they would all default.
AIG ended up with a bailout from the federal government of $185 billion. Where is Professor Gorton now? Well, following a bad few years in which he received death threats and had additional security at Yale for his part in the 2008 financial crisis, Professor Gorton is teaching a finance class at Yale on . . . the 2008 financial crisis. That’s a course that would be fun to audit. When Professor Gorton was queried in a 2011 conference as to whether he might have missed anything in his computer models he said, “I didn’t miss anything.”
Accountability, where is thy sting?
For both Matt Patricia, the new head coach of the Detroit Lions, and Luke Heimlich, an Oregon State baseball player with amazing talent, the sudden emergence in the media about their alleged sexual misconduct, 22 years and 6 years ago, respectively, the revelations hit hard. For Patricia, the Detroit Newsreported that he, along with another young man, had been indicted for aggravated sexual assault of a woman during their spring break on Padre Island. The victim was “unable to testify” because she could not face the “pressure” of a trial, and the indictment was dismissed. For Heimlich, the allegations, which he denies despite his guilty plea at age 15, involved charges of “child molestation in the first degree” of his young niece. Heimlich was just weeks away from completing all the requirements of his sentence to have his record expunged when The Oregonian ran a full story on the case.
These are the cases that try our souls. These are the cases where enviable athletic talent resides in a person whose pasts, whether true or false, make us uncomfortable.
And then there are the ethical issues, most of which have not been considered in the year of MeToo. What does become of those who have made mistakes? Does it make a difference if they acknowledge their mistakes? Do we sentence them to the life of a pariah? How do the victims cope with success of those who harmed them? The stomach churns, but you can’t help the empathy that swells for both sides. Forgiveness and judgment are not our jobs. Thank goodness. These are the times when we are glad to surrender accountability to a higher authority and let the sports teams grapple with the issues. We leave the NFL franchise, the Oregon State administrators, and the major league baseball teams to make decisions about their future with little guidance from us because no matter which way you turn, it feels wrong and more wrong and then the empathy returns. Oh, why can’t they all be like Joseph Profumo? Go away and devote your life to charity.
Perhaps what we can do is learn from these troubling events in the lives of others. These two lives and the events in them, current and past offer a lesson for all. This stuff just wants out there. The NFL, the Patriots (where Patricia was an assistant coach, and the Detroit Lions say they did not know and the background checks did not bring up the information. Oregon State? Well, Sports Illustrated struggled mightily to find what they knew about Heimlich and when they knew it, but the answers are not clear or forthcoming. Which leaves us with Patricia and Heimlich. They should have gotten all of this out there, take their pain, and get it over with because it is coming out anyway. And “It” has the worst timing. After 22 years for one, just at the peak of an NFL career as a head coach, and weeks before a juvenile record is expunged. Uncannily impossible? No, not when truth wants out there. it will find a way. Perhaps it is the nondisclosure that finds us wondering about their character. We can forgive and forget, but maybe we just want the right to have it on the table, and the earlier the better, and sooner rather than later.
Educational institutions can lose their federal funding if they have an excessive number of loan defaults among their graduates. An excessive rate is measured using the figure of how many of an institution’s graduates default within 3 years of graduation (called the cohort default rate). The intent is to measure whether the institutions are producing graduates who can earn a living and repay their loans.
However, educational institutions have found a way to game the metric. They are contacting their graduates and asking them to put their loans in forbearance (i.e., on ice), which means that the borrowers can avoid default. They are not paying their loans, but loans on ice do not count against the institutions’ co-hort rate. The forbearance rate has doubled since 2009. Graduates face consequences for the forbearance option. Their loans accumulate interest, their credit ratings are affected, and they cannot obtain loans for houses. The educational institutions benefit by talking graduates into forbearance, but the graduates suffer. Taxpayers foot the bill for forbearance too. The likelihood of a loan being repaid after forbearance is reduced substantially because the amount of the loan continues to grow. Graduates find themselves in a hole and the interest keeps digging them in deeper.
Legislation has been proposed to close the forbearance loophole and provide graduates with new options, including a longer 25-year repayment plan with lower monthly payments as well as government service loan forgiveness programs.
