C-J
Obama has a clear choice. Does he want to be a Democrat or be a President?
He was elected to be President, so be one!! The choices are bleak.
(1) NATO is surrounded in Afghanistan and logistical support is limited to air convoys. More troops will make that worse. McCrystal has made his choice, he wants to be part of the Military Industrial Complex where winning isn't the objective, profits are the objective.
(2) Leave Afghanistan, the graveyard of empires, and maybe shift his attention to Pakistan, which really matters.
(3)increase the NATO contingent and continue a war policy that has only 1 in 10 chances of success anyway.
Sun Tzu in his book "The Art of War" says never commit to a losing choice. Withdraw and recomit at a better time. Winning is always a political objective not a military expediency.
Whatever he choses you can depend on 1 thing the Military Industrial comlex has a backup plan to make more profit and paint anyone that doesn't support their profit's bottom line as weak on National Security.
REAL MEN LOVE LOGISTICS
If the Afghan War was ever winnable the Cheney-Bushistas (bullshistas) would have done so, because they wanted and craved the glory. They soon discovered, after a few staged and super-hyped "successes", that they couldn't win their war and were mired down. To distance themselves from the looming catastrophe, they made a name change from American Forces to NATO Forces. To escape even more embarrassment, for their reckless adventure in Afghanistan, they "ginned up" and super-hyped another war to find those "WMD's" that were here or there and maybe even everywhere. In quick succession they began appointing a series of new NATO and American Commanders in 2 "theaters" of war. (They were all American Generals) Unfortunately all these Generals in Command have adopted historically failed military strategies. They should have read "The Art of War" or the military strategies of Alexander The Great. The Cheney-Bushistas last desperate act before the 2008 elections was to download their unfinished business onto another Presidency and blame it for the loss.
Because the Cheney-Bush Presidency didn't negotiate long term leases with Kyrgyzstan, (A logistical blunder with imminent consequences) the Government of Kyrgyzstan will close the US military base in Manas to Americans. They have virtually ordered the Americans (NATO) out of their Country, shutting an indispensable supply line for America(NATO). The only remaining land supply lines are through the steep gorges and nearly indefensible high mountain passes like the Khyber Pass between Afghanistan and Pakistan. The steep and narrow valley gorges between Kyrgyzstan, Tajikistan and Afghanistan are already under siege and effectively closed. The Taliban have demonstrated they can close any high mountain pass between Afghanistan and Tajikistan or Pakistan, almost at will. America (NATO) may have to fight it's way out of Afghanistan through Pakistan. This is a Military Planer's nightmare and it could come true. Lets hope not, but the logistical odds are against us, about 10 to 1.
If the passes were cut off, then the only exit would be by expensive, cumbersome and limited airlift, leaving most of the heavy weapons and materials behind. Only a moron would deploy forces into areas without reliable logistical support. But that's exactly what the Cheney-Bush Presidency did. The 103,000 troops under McChrystal's command in Afghanistan, include 63,000 Americans, more than half of whom arrived this year as part of an escalation strategy begun under the previous Cheney-Bush Presidency. Under the Obama Presidency the force is set to rise to 110,000 including 68,000 Americans by December 2009.
If you have Google Earth I encourage you to familiarize yourself with the countries on all sides of Afghanistan and ask yourself the following question; How can I give adequate logistical support to the present forces or more forces in the future? Then take a ground eye view of the Khyber Pass and ask yourself; How could I move thousands or even 10 troops through this natural killing field? You can't and you shouldn't because these passes can close at any time for any reason. Currently all passes between Afghanistan and Pakistan are closed because of an "agriculture inspection" quarrel. These switchback passes are narrow and enclosed within steep gorges and high canyon walls. Vulnerable bridges can be closed by landslides, earthquakes, snow, rain, mud slides, flash floods, Taliban attacks or simple quarrels between neighboring tribes. Any of which can disable or wipe out infrastructure for weeks at a time. Imagine the predicament of a battalion including heavy vehicles and tanks caught between two non-existent bridges and a steep cliff on one side and a deep gorge on the other. Do you begin to see their vulnerabilities, now just add rain or snow. Would the Taliban allow them to pass without a single casualty? Even if 1 tank were simply disabled could the others continue unhindered?
All domestic costs including Congressional allocations of about a hundred or so billion dollars a year, will be between $3 to $6 trillion dollars. This is equal to 1/4 to 1/2 our Gross Domestic Production. Most if not all of our domestic programs, including Medi-Care and Social Security will become impossible. Afghanistan will be politically fatal for this and future Presidencies. All choices will end in tears. Now the logical question arises; "Should we bet the farm and go for it"? Unfortunately the Cheney-Bush Presidency already did and the farm is in jeopardy
In the background we can still hear the apoplectic Pentagon shill, Dick Cheney, shouting out his constant and reckless drivel, desperately continuing to shift the blame onto the following Presidency. He is obviously and irresponsibly defending his fabricated justifications for invading Afghanistan and Iraq. There was no meaningful reason to invade Afghanistan. I agree with George F. Will, "Only Pakistan really mattered".
In a recent article by James Cordesman he lays out his reasons for the apparent failures up to today. The main point I would make about his article is; He is fully vested in failed policies and was a prominent talking head during the cheer leading portion of the run-up to the Afghan and Iraqi wars. He also lays out the same tired and discredited view that it's ”Not our fault”. (When will they ever take responsibility for their job?) It is my recollection that during every funding request, they were given more money than they asked for and they spent it. I remember seeing pallets of money being unloaded in Baghdad and it simply disappeared without any accounting, whatsoever. Maybe Afghanistan became the stepsister of Iraq, but they had a job to do and they are now whining about not having sufficient support. Well here is the best advice that the Military/Industrial Complex can get; “Get out now and take full responsibility for your failure”. Be Patriots not Parasites"!!
C-J
By Steven Thomma, Jonathan S. Landay and David Lightman | McClatchy Newspapers
WASHINGTON — With the military and Republicans publicly pressuring him to send more troops to Afghanistan soon and his own administration now deeply divided about how to proceed there, the eight-year war against al Qaida and the Taliban has become an increasingly urgent policy and political dilemma for President Barack Obama.
He can escalate an unpopular and open-ended war and risk a backlash from his liberal base or refuse his commanders and risk being blamed for a military loss that could tar him and his party as weak on national security.
Obama's decision could be a defining moment of his presidency, and it will reveal much about how he leads. Friends and enemies around the world will be watching — and judging — whether he's firmly in charge or whether he instinctively seeks some safe middle ground.
"This is tough for Democrats. They own this war. They own what happens from here on out. This is a bit of a mess for them all the way around," said Juan Carlos Zarate, a senior adviser at Center for Strategic and International Studies and a former official in the Bush and Clinton administrations.
In interviews with McClatchy last week, military officials and other advocates of escalation expressed their frustration at what they consider "dithering" from the White House. Then, while Obama indicated in television interviews Sunday that he isn't ready to consider whether to send more troops to Afghanistan, someone gave The Washington Post a classified Pentagon report arguing that more troops are necessary to prevent defeat.
The White House insisted anew Monday that the president won't be stampeded into a quick decision on more troops, saying that he first wants to make sure there's a sound strategy in place to secure Afghanistan and make certain that it can't be used as a haven for al Qaida terrorists, as it was before 2001.
His hesitation reflects deep divisions within his own administration and deep uncertainty about whether, even with tens of thousands more troops, the U.S. can succeed in Afghanistan without a less corrupt and legitimately elected Afghan government, greater cooperation from neighboring Pakistan and more time and money than the American public and the Congress may be willing to commit.
Opponents of escalation, led by Vice President Joe Biden and his national security adviser, Antony Blinken; Deputy National Security Adviser Tom Donilon; and deputy secretaries of state Jacob Lew and Jim Steinberg, fear that Afghanistan is a quagmire that will further undermine the administration's domestic political agenda and hurt the Democrats in next year's congressional elections.
The Pentagon itself is sharply divided over what to do, said several defense officials who weren't authorized to speak publicly and requested anonymity, with much, but not all, of the uniformed military lined up behind Army Gen. Stanley McChrystal, the commander of U.S. troops in Afghanistan. McChrystal wrote the leaked memo, but top policy advisers such as Deputy Secretary of Defense Michele Flournoy oppose his plan. Some senior officers also are concerned that sending more troops to Afghanistan would add to the already severe strains on an Army and Marine Corps from the wars in Iraq and Afghanistan.
Opponents of a buildup contend that al Qaida, which they note is based in Pakistan, not in Afghanistan, could be neutralized by having U.S. special forces standing by and ready to attack bin Laden's followers once actionable intelligence on their locations is acquired.
This group "wants to find an area where you can pay off enough warlords to provide you with security and then launch from there," another defense official said, requesting anonymity because he wasn't authorized to speak publicly. Meantime, he said, this group would continue building up and training Afghan security forces.
That alternative, however, would require more U.S. troops to train Afghan forces.
McChrystal and other proponents of committing more troops argue, as his memo does, that success in Afghanistan is "still achievable" but without more U.S. troops soon, the war "will likely result in failure."
The internal debate behind closed doors comes as the American people increasingly oppose the war. In one recent poll for CNN, 58 percent said they opposed the war, while 39 percent favored it. The poll was conducted Sept 11-13.
They also don't much like the idea of sending more troops. A McClatchy-Ipsos poll at the end of August found 56 percent of Americans opposed to sending more troops, while 35 percent favored it.
Not surprisingly, many Democrats in Congress oppose sending more troops. Many of them will face re-election next year.
"It would be a major mistake to increase troop levels — we're getting sucked into something we'll never be able to get out of," said Rep. Jim McGovern, D-Mass.
Rep. Lynn Woolsey, D-Calif., said it would be a waste of manpower to send more troops to Afghanistan. "There's no military solution to Afghanistan," she said.
Other Democrats want to wait for Obama to take the lead rather than risk splitting with their leader over a controversial war in the first year of his presidency.
"Until the president makes a decision on this, I think we're really jumping way ahead of ourselves to find out what we need in Afghanistan," said Senate Majority Leader Harry Reid, D-Nev.
Republicans are urging Obama to give McChrystal what he wants — and threatening to lambaste Obama if he backs down.
Rep. John Boehner, R-Ohio, his party's leader in the House of Representatives, noted that Obama in March endorsed the idea of a strong counterinsurgency strategy to secure Afghanistan.
"I am deeply troubled, however, by reports that the White House is delaying action on the general's request for more troops . . . . It's time for the president to clarify where he stands on the strategy he has articulated, because the longer we wait, the more we put our troops at risk."
Senate Republican leader Mitch McConnell of Kentucky echoed Boehner in calling for Obama to give McChrystal what he asks: "Anything less would confirm al Qaida's view that America lacks the strength and the resolve to endure a long war."
White House Press Secretary Robert Gibbs said Monday that Obama refuses to be rushed into a decision and that he won't order more troops unless a clear strategy demands that.
"The president obviously has seen General McChrystal's report and has had a chance to look at it and is in the process of, with his national security team and those at the Pentagon, working through some of the strategic assessments that the president thinks need to be evaluated," Gibbs said.
Gibbs refused to say whether that might include scaling back the Afghanistan mission to a strategy focused more narrowly on al Qaida leaders.
"The president is going to focus on getting the strategy right," Gibbs said, "and I'm not going to go through what options he may or may not have."
There are currently 65,000 U.S. troops in Afghanistan. There are expected to be 68,000 by November with the arrival of the last of the 17,700 troops and 4,000 trainers Obama ordered in the spring. There are an additional 39,000 NATO troops.
(William Douglas and Nancy A. Youssef contributed to this article.)
Tuesday, September 22, 2009
US eyes more drone hits on terror havens
C-J
Lets look at everything; First we invade Afghanistan, grave yard of empires, then we invade Iraq, grave yard for 1,000,000+ Iraqui citizens and now we start screwing with Pakistan. What a bunch of idiots! But Like I have always said; "It's not about winning it's about corporate profit"
C-J
WASHINGTON – The White House is looking at expanding counterterror operations in Pakistan to refocus on eliminating al-Qaida instead of mounting a major military escalation in Afghanistan.
Two senior administration officials said Monday that the renewed fight against the terrorist organization could lead to more missile attacks on Pakistan terrorist havens by unmanned U.S. spy planes. The officials spoke on condition of anonymity because no decisions have been made.
Top aides to President Barack Obama said he wants more time to decide.
The proposed shift would bolster the U.S. mission in the region on Obama's long-stated goal of dismantling al-Qaida. White House and Pentagon officials are debating whether to send more troops to Afghanistan.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — President Barack Obama's top commander in Afghanistan has told him that without more troops the United States could lose the war that Obama has described as the nation's foremost military priority.
Obama must now decide whether to commit thousands of additional American forces or try to hold the line against the Taliban with the troops and strategy he has already approved. Obama made clear in television interviews Sunday that he is reassessing whether his narrowed focus on countering the Afghan insurgency is working and will not be rushed into a decision about additional troops.
"Resources will not win this war, but under-resourcing could lose it," Gen. Stanley McChrystal wrote in a five-page summary of the war as he found it upon taking command this summer.
McChrystal's confidential 66-page report, sent to Defense Secretary Robert Gates on Aug. 30, is now under review at the White House.
"Although considerable effort and sacrifice have resulted in some progress, many indicators suggest the overall effort is deteriorating," McChrystal said of the war's progress.
Obama approved 21,000 additional U.S. troops earlier this year, on the advice of Gates and other senior defense and military leaders. That will bring the number of U.S. troops in Afghanistan to a record 68,000 by the end of this year, working alongside 38,000 NATO-led troops.
The question now is whether to divert troops from Iraq or make other adjustments to expand that force significantly early next year. Gates and others have repeatedly warned that too large a force would do more harm than good in a country hostile to anything it sees as foreign meddling. But Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, told Congress last week he thinks more troops are probably necessary.
Pentagon press secretary Geoff Morrell said in a statement that the McChrystal assessment "is a classified, pre-decisional document, intended to provide President Obama and his national security team with the basis for a very important discussion about where we are now in Afghanistan and how best to get to where we want to be."
While asserting that more troops are needed, McChrystal, the top U.S. and NATO commander in Afghanistan, also pointed out an "urgent need" to significantly revise strategy. The U.S. needs to interact better with the Afghan people, McChrystal said, and better organize its efforts with NATO allies.
"We run the risk of strategic defeat by pursuing tactical wins that cause civilian casualties or unnecessary collateral damage. The insurgents cannot defeat us militarily; but we can defeat ourselves," he wrote.
In his blunt assessment of the tenacious Taliban insurgency, McChrystal warned that unless the U.S. and its allies gain the initiative and reverse the momentum of the militants within the next year the U.S. "risks an outcome where defeating the insurgency is no longer possible."
The content of the report was first reported by The Washington Post, which said it withheld publication of portions of the document at the government's request.
Morrell confirmed the report, but said the Pentagon would not release McChrystal's assessment.
"While we would have much preferred none of this be made public at this time we appreciate the paper's willingness to edit out those passages which would likely have endangered personnel and operations in Afghanistan," Morrell said in an e-mail statement.
The Pentagon and the White House are awaiting a separate, more detailed request for additional troops and resources. Media reports Friday and Saturday said McChrystal has finished it but was told to pocket it, partly because of the charged politics surrounding the decision. McChrystal's senior spokesman, Rear Adm. Gregory Smith, told The Associated Press on Sunday the report is not complete.
On Monday, another Pentagon spokesman said he cannot predict when the request will arrive, and said McChrystal's depiction of the war is one tool the administration will use to choose its path.
"The way forward in Afghanistan ... is more complex than just the security aspect of it," Pentagon spokesman Bryan Whitman said. "There are political aspects, developmental aspects, economic, a range of things you have to look at."
A spokesman for Afghanistan's Defense Ministry said Sunday the Afghan government would not second-guess international military commanders on the need for more troops, but said that the greatest need is on the other side of the Afghan-Pakistan border, where the insurgency is infiltrating Afghanistan.
In Congress, the war has taken on a highly partisan edge. Senate Republicans are demanding more forces to turn around a war that soon will enter its ninth year, while members of Obama's own Democratic Party are trying to put on the brakes. Obama said in the Sunday interviews that he will not allow politics to govern his decision.
The president said he has not asked McChrystal to sit on his request for U.S. reinforcements.
"No, no, no, no," Obama responded when asked whether he or aides had directed McChrystal to temporarily withhold a request for additional U.S. forces and other resources.
"Are we doing the right thing?" he asked during one of a series of interviews broadcast Sunday. "Are we pursuing the right strategy?"
Obama gave no deadline for making a decision about whether to send more Americans into harm's way.
"The only thing I've said to my folks is, 'A, I want an unvarnished assessment, but, B, I don't want to put the resource question before the strategy question,'" Obama said. "Because there is a natural inclination to say, 'If I get more, then I can do more.' "
Mullen told Congress last week he expected McChrystal's request for additional forces and other resources "in the very near future." The White House has remained vague about how long it would take to receive the report and act on it.
Obama spoke on CNN's "State of the Union," ABC's "This Week," NBC's "Meet the Press," and CBS' "Face the Nation."
___
Associated Press writer Rahim Faiez in Kabul contributed to this report.
Lets look at everything; First we invade Afghanistan, grave yard of empires, then we invade Iraq, grave yard for 1,000,000+ Iraqui citizens and now we start screwing with Pakistan. What a bunch of idiots! But Like I have always said; "It's not about winning it's about corporate profit"
C-J
WASHINGTON – The White House is looking at expanding counterterror operations in Pakistan to refocus on eliminating al-Qaida instead of mounting a major military escalation in Afghanistan.
Two senior administration officials said Monday that the renewed fight against the terrorist organization could lead to more missile attacks on Pakistan terrorist havens by unmanned U.S. spy planes. The officials spoke on condition of anonymity because no decisions have been made.
Top aides to President Barack Obama said he wants more time to decide.
The proposed shift would bolster the U.S. mission in the region on Obama's long-stated goal of dismantling al-Qaida. White House and Pentagon officials are debating whether to send more troops to Afghanistan.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — President Barack Obama's top commander in Afghanistan has told him that without more troops the United States could lose the war that Obama has described as the nation's foremost military priority.
Obama must now decide whether to commit thousands of additional American forces or try to hold the line against the Taliban with the troops and strategy he has already approved. Obama made clear in television interviews Sunday that he is reassessing whether his narrowed focus on countering the Afghan insurgency is working and will not be rushed into a decision about additional troops.
"Resources will not win this war, but under-resourcing could lose it," Gen. Stanley McChrystal wrote in a five-page summary of the war as he found it upon taking command this summer.
McChrystal's confidential 66-page report, sent to Defense Secretary Robert Gates on Aug. 30, is now under review at the White House.
"Although considerable effort and sacrifice have resulted in some progress, many indicators suggest the overall effort is deteriorating," McChrystal said of the war's progress.
Obama approved 21,000 additional U.S. troops earlier this year, on the advice of Gates and other senior defense and military leaders. That will bring the number of U.S. troops in Afghanistan to a record 68,000 by the end of this year, working alongside 38,000 NATO-led troops.
The question now is whether to divert troops from Iraq or make other adjustments to expand that force significantly early next year. Gates and others have repeatedly warned that too large a force would do more harm than good in a country hostile to anything it sees as foreign meddling. But Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, told Congress last week he thinks more troops are probably necessary.
Pentagon press secretary Geoff Morrell said in a statement that the McChrystal assessment "is a classified, pre-decisional document, intended to provide President Obama and his national security team with the basis for a very important discussion about where we are now in Afghanistan and how best to get to where we want to be."
While asserting that more troops are needed, McChrystal, the top U.S. and NATO commander in Afghanistan, also pointed out an "urgent need" to significantly revise strategy. The U.S. needs to interact better with the Afghan people, McChrystal said, and better organize its efforts with NATO allies.
"We run the risk of strategic defeat by pursuing tactical wins that cause civilian casualties or unnecessary collateral damage. The insurgents cannot defeat us militarily; but we can defeat ourselves," he wrote.
In his blunt assessment of the tenacious Taliban insurgency, McChrystal warned that unless the U.S. and its allies gain the initiative and reverse the momentum of the militants within the next year the U.S. "risks an outcome where defeating the insurgency is no longer possible."
The content of the report was first reported by The Washington Post, which said it withheld publication of portions of the document at the government's request.
Morrell confirmed the report, but said the Pentagon would not release McChrystal's assessment.
"While we would have much preferred none of this be made public at this time we appreciate the paper's willingness to edit out those passages which would likely have endangered personnel and operations in Afghanistan," Morrell said in an e-mail statement.
The Pentagon and the White House are awaiting a separate, more detailed request for additional troops and resources. Media reports Friday and Saturday said McChrystal has finished it but was told to pocket it, partly because of the charged politics surrounding the decision. McChrystal's senior spokesman, Rear Adm. Gregory Smith, told The Associated Press on Sunday the report is not complete.
On Monday, another Pentagon spokesman said he cannot predict when the request will arrive, and said McChrystal's depiction of the war is one tool the administration will use to choose its path.
"The way forward in Afghanistan ... is more complex than just the security aspect of it," Pentagon spokesman Bryan Whitman said. "There are political aspects, developmental aspects, economic, a range of things you have to look at."
A spokesman for Afghanistan's Defense Ministry said Sunday the Afghan government would not second-guess international military commanders on the need for more troops, but said that the greatest need is on the other side of the Afghan-Pakistan border, where the insurgency is infiltrating Afghanistan.
In Congress, the war has taken on a highly partisan edge. Senate Republicans are demanding more forces to turn around a war that soon will enter its ninth year, while members of Obama's own Democratic Party are trying to put on the brakes. Obama said in the Sunday interviews that he will not allow politics to govern his decision.
The president said he has not asked McChrystal to sit on his request for U.S. reinforcements.
"No, no, no, no," Obama responded when asked whether he or aides had directed McChrystal to temporarily withhold a request for additional U.S. forces and other resources.
"Are we doing the right thing?" he asked during one of a series of interviews broadcast Sunday. "Are we pursuing the right strategy?"
Obama gave no deadline for making a decision about whether to send more Americans into harm's way.
"The only thing I've said to my folks is, 'A, I want an unvarnished assessment, but, B, I don't want to put the resource question before the strategy question,'" Obama said. "Because there is a natural inclination to say, 'If I get more, then I can do more.' "
Mullen told Congress last week he expected McChrystal's request for additional forces and other resources "in the very near future." The White House has remained vague about how long it would take to receive the report and act on it.
Obama spoke on CNN's "State of the Union," ABC's "This Week," NBC's "Meet the Press," and CBS' "Face the Nation."
___
Associated Press writer Rahim Faiez in Kabul contributed to this report.
Monday, September 21, 2009
1 in 4 FHA Mortgage Loans in Foreclosure or Delinquency
BY: Mac Slavo- September 21st, 2009
The current FHA report is now out for servicing delinquencies and defaults, and as expected it is indeed worse, not better. The administration continues to LIE about claimed “improvements” in the character of home finance.
22.9% of all FHA loans are either delinquent or in foreclosure.—
Let’s see - 30 days are up, 60 days are up, 90+ days are up, default+foreclosure is up and 60+ including foreclosures are of course up.
Improvement? Where? This is current as of August now and the internals continue to deteriorate.
For a closer look at the specific deflault rates, we urge readers to visit the Market Ticker and read Karl Denninger’s full analysis. No matter what you hear in the mainstream media, or from Wall Street, or from the White House, the numbers do not lie. We’ll see how the numbers get spun on this one, though we would not be surprised if most people watching cable and network news never hear about it.
The 1 in 4 number may be alarming to some, but in reality, all of these loans are backstopped by the Federal Government, so if the SHTF, we can feel confident knowing that Uncle Sam the taxpayers will take care of the bill for those predatory loans. Responsible tax payers understand that sometimes individuals get greedy, bite off more than they can chew, and then need a bailout so they don’t lose their homes. We are true believers in taking from those with the ability to pay and giving to those without that ability. Hey, this is America, and that’s what we’re all about.
The current FHA report is now out for servicing delinquencies and defaults, and as expected it is indeed worse, not better. The administration continues to LIE about claimed “improvements” in the character of home finance.
22.9% of all FHA loans are either delinquent or in foreclosure.—
Let’s see - 30 days are up, 60 days are up, 90+ days are up, default+foreclosure is up and 60+ including foreclosures are of course up.
Improvement? Where? This is current as of August now and the internals continue to deteriorate.
For a closer look at the specific deflault rates, we urge readers to visit the Market Ticker and read Karl Denninger’s full analysis. No matter what you hear in the mainstream media, or from Wall Street, or from the White House, the numbers do not lie. We’ll see how the numbers get spun on this one, though we would not be surprised if most people watching cable and network news never hear about it.
The 1 in 4 number may be alarming to some, but in reality, all of these loans are backstopped by the Federal Government, so if the SHTF, we can feel confident knowing that Uncle Sam the taxpayers will take care of the bill for those predatory loans. Responsible tax payers understand that sometimes individuals get greedy, bite off more than they can chew, and then need a bailout so they don’t lose their homes. We are true believers in taking from those with the ability to pay and giving to those without that ability. Hey, this is America, and that’s what we’re all about.
New online banking threat
Mike Harvey , Technology Correspondent
The Trojan horse from the film Troy is hard to miss, but the latest Clampi Trojan virus is much more subtle
Cyber criminals have created a highly sophisticated Trojan virus that steals online banking log-in details from infected computers.
The Clampi virus, which is spreading rapidly across hundreds of thousands of computers in Britain and the United States, infects computers when users visit websites that host a malicious code.
Once on the computer, the virus sits unnoticed until the user logs on to bank, credit card or other financial websites. It then captures log-in and password information and sends it to a server run by the attackers. They can then tell the compromised computer to send money to accounts that they control, or they can buy goods with the stolen credit card details.
The trojan has a list of more than 4,500 finance-related websites that it monitors, including British high street banks. Security experts warned that it was one of the stealthiest and most pervasive threats to computers using the Microsoft Windows operating systems.
Related Links
Safety fears over online banking
Fight back against refusal to pay out on chip-and-PIN fraud
Orla Cox, security operations manager with Symantec, the online security company, said: “Clampi is a complex threat. People are only just beginning to understand how it operates.”
Researchers have found that the list of sites that Clampi is monitoring includes banks, credit card companies, online casinos, e-mail, wire transfer services, retail sites, utilities, share brokerages, mortgage lenders and government sites.
Ms Cox said: “The first big wave was in the US in July, but it is spreading around the world, particularly English-language countries. We have seen samples of it targeting UK high street banks. There is potential for another wave to come.”
It is estimated that more than 1,000 out of 40,000 or more infected computers have been in Britain. Only computers running Microsoft Windows are affected. Most of the infections seem to have occurred among small and medium-sized businesses, many of which have been reluctant to reveal how they have fallen victim.
In America, $75,000 (£46,000) was stolen in July from Slack Auto Parts, a car parts supplier in Gainesville, Georgia. In August, criminals used Clampi to steal online banking details for the public school district in Sands Spring, Oklahoma. The attackers then submitted a series of false payroll payments, totalling more than $150,000.
The attack was one of a series on American schools in which criminals hired unsuspecting money mules — people who transfer money or fraudulently obtained high-value goods — to receive the transfers of stolen cash and then wire the money out of the country. Cyber criminals stole more than $700,000 from the Western Beaver School District in 74 fraudulent electronic transfers, The Washington Post reported.
Clampi is one of a new wave of viruses to target the online banking system. Its emergence came as security experts warned that malicious websites hiding trojan viruses were no longer confined to sites such as gambling and pornography.
A recent report by IBM security systems found an increase in malicious content such as viruses on trusted sites, including popular search engines, blogs, online magazines and mainstream news sites. The number of links to malicious web pages rose by more than 500 per cent in the first half of this year. Last week, attackers placed a virus in an advert on the website of The New York Times.
Trojan viruses such as Clampi accounted for 55 per cent of all new malicious software in the first half of the year, IBM said, up from 46 per cent for the same period last year. Researchers say that variants of Clampi — also known as Ligats or Ilomo — have been around since 2005, but the new version appears to be spreading more quickly.
Heading off hackers
Do not click on suspicious links to unknown sites within e-mails, instant messages or social networking sites
Be cautious about doing business with unknown e-commerce sites and always use a credit card, not a debit card
Install a comprehensive security solution and keep it up-to-date
Use a security solution that offers browser protection and a website rating service Browser protection will block questionable downloads from getting on to your computer, and website rating services can warn you if a site is infected
Secure your wi-fi connection with a strong password to ensure that others cannot connect to your network and access data stored on your computer
Any user whose system has been infected by Clampi should immediately change any and all passwords used on that system for any websites, but particularly financial credentials
Source: Symantec
The Trojan horse from the film Troy is hard to miss, but the latest Clampi Trojan virus is much more subtle
Cyber criminals have created a highly sophisticated Trojan virus that steals online banking log-in details from infected computers.
The Clampi virus, which is spreading rapidly across hundreds of thousands of computers in Britain and the United States, infects computers when users visit websites that host a malicious code.
Once on the computer, the virus sits unnoticed until the user logs on to bank, credit card or other financial websites. It then captures log-in and password information and sends it to a server run by the attackers. They can then tell the compromised computer to send money to accounts that they control, or they can buy goods with the stolen credit card details.
The trojan has a list of more than 4,500 finance-related websites that it monitors, including British high street banks. Security experts warned that it was one of the stealthiest and most pervasive threats to computers using the Microsoft Windows operating systems.
Related Links
Safety fears over online banking
Fight back against refusal to pay out on chip-and-PIN fraud
Orla Cox, security operations manager with Symantec, the online security company, said: “Clampi is a complex threat. People are only just beginning to understand how it operates.”
Researchers have found that the list of sites that Clampi is monitoring includes banks, credit card companies, online casinos, e-mail, wire transfer services, retail sites, utilities, share brokerages, mortgage lenders and government sites.
Ms Cox said: “The first big wave was in the US in July, but it is spreading around the world, particularly English-language countries. We have seen samples of it targeting UK high street banks. There is potential for another wave to come.”
It is estimated that more than 1,000 out of 40,000 or more infected computers have been in Britain. Only computers running Microsoft Windows are affected. Most of the infections seem to have occurred among small and medium-sized businesses, many of which have been reluctant to reveal how they have fallen victim.
In America, $75,000 (£46,000) was stolen in July from Slack Auto Parts, a car parts supplier in Gainesville, Georgia. In August, criminals used Clampi to steal online banking details for the public school district in Sands Spring, Oklahoma. The attackers then submitted a series of false payroll payments, totalling more than $150,000.
The attack was one of a series on American schools in which criminals hired unsuspecting money mules — people who transfer money or fraudulently obtained high-value goods — to receive the transfers of stolen cash and then wire the money out of the country. Cyber criminals stole more than $700,000 from the Western Beaver School District in 74 fraudulent electronic transfers, The Washington Post reported.
Clampi is one of a new wave of viruses to target the online banking system. Its emergence came as security experts warned that malicious websites hiding trojan viruses were no longer confined to sites such as gambling and pornography.
A recent report by IBM security systems found an increase in malicious content such as viruses on trusted sites, including popular search engines, blogs, online magazines and mainstream news sites. The number of links to malicious web pages rose by more than 500 per cent in the first half of this year. Last week, attackers placed a virus in an advert on the website of The New York Times.
Trojan viruses such as Clampi accounted for 55 per cent of all new malicious software in the first half of the year, IBM said, up from 46 per cent for the same period last year. Researchers say that variants of Clampi — also known as Ligats or Ilomo — have been around since 2005, but the new version appears to be spreading more quickly.
Heading off hackers
Do not click on suspicious links to unknown sites within e-mails, instant messages or social networking sites
Be cautious about doing business with unknown e-commerce sites and always use a credit card, not a debit card
Install a comprehensive security solution and keep it up-to-date
Use a security solution that offers browser protection and a website rating service Browser protection will block questionable downloads from getting on to your computer, and website rating services can warn you if a site is infected
Secure your wi-fi connection with a strong password to ensure that others cannot connect to your network and access data stored on your computer
Any user whose system has been infected by Clampi should immediately change any and all passwords used on that system for any websites, but particularly financial credentials
Source: Symantec
Fed Rejects Geithner Request for Study of Governance, Structure
By Craig Torres and Robert Schmidt
Sept. 21 (Bloomberg) -- The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said.
The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”
Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”
“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”
U.S. lawmakers have also called for a review of the Fed’s power and structure, saying Fed Chairman Ben S. Bernanke overstepped his authority as he bailed out creditors of Bear Stearns Cos. and American International Group Inc. while battling a crisis that led to $1.62 trillion in writedowns and losses at financial firms.
No Work Done
While the report requested by the Treasury hasn’t been formally scrapped, no work has been done on the project, which was due Oct. 1, the people said. Treasury spokesman Andrew Williams declined to comment, as did Fed spokeswoman Michelle Smith.
The central bank is performing its own reviews of possible operational changes following the financial crisis. Fed Governor Elizabeth Duke is leading an internal study of the roles of the directors that serve on each of the boards at regional Fed banks.
“The institution is trying to keep a low profile,” said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington and the former director of Division of Monetary Affairs at the Fed Board. “To publish a report now invites comment on that report.”
‘Associated Costs’
The Senate passed 96-2 a nonbinding budget amendment in April supporting “an evaluation of the appropriate number and the associated costs” of the district banks. The measure was sponsored by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Alabama Senator Richard Shelby, the senior Republican on the panel.
House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, has also called for more scrutiny of the central bank, saying last year he aims to probe how the 12 regional Fed presidents are appointed and their role in setting interest rates. The Fed banks are semi-private entities, each overseen by a nine-member board of directors.
Legislation in both houses of Congress would allow for audits by the Government Accountability Office of the central bank’s monetary policy and other operations. Bernanke opposes the measure, which was introduced in the House by Representative Ron Paul of Texas, a Republican. Frank has scheduled a committee hearing on the issue for Sept. 25.
Lessons Learned
Along with the study by Duke, the Fed is reviewing how to overhaul supervision based on lessons learned from the financial crisis.
The Treasury interest in a Fed structural review partially stems from the administration’s proposal to make the central bank the lead regulator for the largest, most inter-connected financial institutions.
Fed Governor Daniel Tarullo, an Obama appointee, is working on changes to the supervisory process that are preparing the central bank for a larger role in tracking risks across the financial system.
Tarullo is focusing on bank-to-bank comparisons and quantitative scenario testing of bank portfolios. The Fed is currently examining the vulnerability of banks with assets under $100 billion to falling commercial real estate values.
Congressional leaders have balked at the notion of giving the Fed more power and are leaning toward vesting authority over capital, liquidity and risk-management practices of big banks in a council of regulators.
Supervisory Council
“There will be a council,” Frank told Bloomberg Television Sept. 14.
The review led by Duke followed the resignation in May of Stephen Friedman as New York Fed chairman because of ties to Goldman Sachs Group Inc. Friedman is a director on Goldman Sachs’s board.
Goldman Sachs became a bank holding company in September 2008, a change that would have normally barred Friedman from continuing to serve in his New York Fed post. Officials gave him a waiver so he could remain in the job, which has mostly an advisory role.
Friedman, chairman of Stone Point Capital LLC, said at the time of his resignation that he had complied with all the Fed’s rules and his service on the board was “mischaracterized as improper.”
Some analysts said a Fed revision of the role of directors is overdue.
“Allowing local bankers to play a leading role in selecting reserve bank presidents is the most worrying aspect of the current system,” Lou Crandall, chief economist at Wrightson ICAP LLC, wrote to clients in July.
District bank presidents are nominated by committees made up of people whose institutions the nominees may have supervised.
“The conflicts of interest inherent in the current system are glaring,” Crandall said.
Sept. 21 (Bloomberg) -- The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said.
The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”
Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”
“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”
U.S. lawmakers have also called for a review of the Fed’s power and structure, saying Fed Chairman Ben S. Bernanke overstepped his authority as he bailed out creditors of Bear Stearns Cos. and American International Group Inc. while battling a crisis that led to $1.62 trillion in writedowns and losses at financial firms.
No Work Done
While the report requested by the Treasury hasn’t been formally scrapped, no work has been done on the project, which was due Oct. 1, the people said. Treasury spokesman Andrew Williams declined to comment, as did Fed spokeswoman Michelle Smith.
The central bank is performing its own reviews of possible operational changes following the financial crisis. Fed Governor Elizabeth Duke is leading an internal study of the roles of the directors that serve on each of the boards at regional Fed banks.
“The institution is trying to keep a low profile,” said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington and the former director of Division of Monetary Affairs at the Fed Board. “To publish a report now invites comment on that report.”
‘Associated Costs’
The Senate passed 96-2 a nonbinding budget amendment in April supporting “an evaluation of the appropriate number and the associated costs” of the district banks. The measure was sponsored by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Alabama Senator Richard Shelby, the senior Republican on the panel.
House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, has also called for more scrutiny of the central bank, saying last year he aims to probe how the 12 regional Fed presidents are appointed and their role in setting interest rates. The Fed banks are semi-private entities, each overseen by a nine-member board of directors.
Legislation in both houses of Congress would allow for audits by the Government Accountability Office of the central bank’s monetary policy and other operations. Bernanke opposes the measure, which was introduced in the House by Representative Ron Paul of Texas, a Republican. Frank has scheduled a committee hearing on the issue for Sept. 25.
Lessons Learned
Along with the study by Duke, the Fed is reviewing how to overhaul supervision based on lessons learned from the financial crisis.
The Treasury interest in a Fed structural review partially stems from the administration’s proposal to make the central bank the lead regulator for the largest, most inter-connected financial institutions.
Fed Governor Daniel Tarullo, an Obama appointee, is working on changes to the supervisory process that are preparing the central bank for a larger role in tracking risks across the financial system.
Tarullo is focusing on bank-to-bank comparisons and quantitative scenario testing of bank portfolios. The Fed is currently examining the vulnerability of banks with assets under $100 billion to falling commercial real estate values.
Congressional leaders have balked at the notion of giving the Fed more power and are leaning toward vesting authority over capital, liquidity and risk-management practices of big banks in a council of regulators.
Supervisory Council
“There will be a council,” Frank told Bloomberg Television Sept. 14.
The review led by Duke followed the resignation in May of Stephen Friedman as New York Fed chairman because of ties to Goldman Sachs Group Inc. Friedman is a director on Goldman Sachs’s board.
Goldman Sachs became a bank holding company in September 2008, a change that would have normally barred Friedman from continuing to serve in his New York Fed post. Officials gave him a waiver so he could remain in the job, which has mostly an advisory role.
Friedman, chairman of Stone Point Capital LLC, said at the time of his resignation that he had complied with all the Fed’s rules and his service on the board was “mischaracterized as improper.”
Some analysts said a Fed revision of the role of directors is overdue.
“Allowing local bankers to play a leading role in selecting reserve bank presidents is the most worrying aspect of the current system,” Lou Crandall, chief economist at Wrightson ICAP LLC, wrote to clients in July.
District bank presidents are nominated by committees made up of people whose institutions the nominees may have supervised.
“The conflicts of interest inherent in the current system are glaring,” Crandall said.
Why haven't any Wall Street tycoons been sent to the slammer?
By Kevin G. Hall | McClatchy Newspapers
WASHINGTON — More than a year into the gravest financial crisis since the Great Depression, millions of Americans have seen their home values and retirement savings plunge and their jobs evaporate.
What they haven't seen are any Wall Street tycoons forced to swap their multi-million dollar jobs and custom-made suits for dishwashing and prison stripes.
There are plenty of civil and class-action lawsuits from aggrieved investors angered by the losses in their mortgage bonds, hedge funds or pensions. Regulators have stepped up their vigilance after the fact. But to date, no captain of finance tied to the crisis has walked the plank.
There have been some high-profile arrests and federal convictions of financial giants — such as Ponzi scheme king Bernard Madoff and Stanford Financial Group chairman Robert Allen Stanford. They weren't among the causes of the financial meltdown, however, just poster boys for an era of lax enforcement, weak regulation and devout faith in free markets.
"A lot of people who are responsible (for the crisis) seem to have gotten awfully rich in the process," said Barbara Roper, the director of investor protection for the Consumer Federation of America.
The absence of what many would call justice stands out all the more because past financial crises always had their villains. The depression-era had electricity and railroad magnate Samuel Insull, who partly inspired the movie "Citizen Kane." The savings and loan crisis of the 1980's had banker Charles Keating. Energy giant Enron Corp.'s spectacular collapse offered the late CEO Kenneth Lay, a Texas crony of President George W. Bush.
Yet there's no such poster child for the Great Recession, as today's crisis is now called.
One may yet emerge. The FBI has more than 580 large-scale corporate fraud investigations under way. At least 40 of them are scrutinizing players in sub-prime mortgage lending, which was the first domino to fall and triggered a global financial crisis.
"The investigations are very complex; it's not something that's going to turn overnight," said Bill Carter, a spokesman at FBI headquarters. "They are labor intensive. They involve a review of records."
To date, the closest thing to a prosecution of a major actor in the financial meltdown is a civil fraud case that the Securities and Exchange Commission brought on June 4 against Angelo Mozilo, the perma-tanned CEO of mortgage-lending giant Countrywide.
The SEC, in documents filed in a federal courtroom in central California, accuses Mozilo of "deliberately misleading investors" by misrepresenting the risk that Countrywide posed. The SEC also accused him of insider trading because he sold large shares of company stock and options ahead of what he allegedly knew was a coming collapse of mortgage lending.
Unless the Justice Department brings corresponding criminal charges, however, Mozilo could be hit with penalties and a ruined reputation if convicted — but he wouldn't see the inside of a jail cell.
Another big trial is imminent, however. On Oct. 13, a Brooklyn jury will begin hearing the federal prosecution of former Bear Stearns investment fund founder Ralph Cioffi and his fund manager Matthew Tannin.
Two of their hedge funds, offered to mega-wealthy investors and heavily weighted with investments in mortgage bonds backed by sub-prime loans to the weakest borrowers, collapsed in June and August of 2007. Their collapse signaled a gathering storm in mortgage finance that culminated in March 2008 with the government-brokered fire sale of their bank to JP Morgan Chase.
Both men were charged on June 19, 2008, with defrauding investors, passing off as safe the investment in mortgage bonds even though they described the market for sub-prime mortgages as "toast" in their own e-mails. Cioffi also faces charges of insider trading.
Lawyers for both men declined comment to McClatchy, but when their clients were arrested they called the pair scapegoats for the broader financial crisis.
Court documents filed in August show attorneys for the two are trying to suppress evidence that the executives' special trading notebooks have disappeared. The government suspects that Cioffi and Tannin, or someone helping them, made them disappear to cover their tracks.
Cioffi's attorneys also asked in August that the presiding judge quash the use of evidence that points to their clients' lavish lifestyle, including mansions and Ferraris. The documents accused federal prosecutors of "improper appeal to class prejudice." Tannin's attorneys joined the motion on Sept.15.
Class prejudice against bankers is what many Americans feel, evident in the death threats made against some former or current executives at insurer American International Group and other financial firms earlier this year. Wall Street switchboard operators at some institutions no longer provide addresses to phone callers.
Americans are angry because the suffering on Main Street is a spillover from the excessive risk taking and lavish compensation of executives who invested on behalf of the ultra-wealthy. Investors seeking outsized "alpha" returns turned to Wall Street, both seeking to make a short-term killing even if doing so eventually brought the near collapse of the financial system.
President Barack Obama alluded to this on Sept. 14 in a New York speech to commemorate the anniversary of the collapse of investment bank Lehman Brothers, which sent off a global financial panic.
"We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses," Obama said, promising new rules. "Those on Wall Street cannot resume taking risks without regard for consequences."
There are persistent but unconfirmed reports that the FBI and grand juries are looking at the e-mails of executives of failed institutions such as Bear Stearns, which pioneered the process of pooling sub-prime loans for sale to investors, and Lehman Brothers, which was a leader in these toxic products when it collapsed.
Records from AIG, which the Federal Reserve saved from collapse on Sept. 17, 2008, are also thought to be under review. The FBI reportedly is also looking at rating agencies Fitch, Moody's and Standard & Poor's to determine if they knowingly gave pools of sub-prime mortgages AAA investment-grade ratings, the best possible, despite evidence to the contrary.
Carter, the FBI spokesman, declined comment on ongoing investigations.
The lack of any prosecution to date doesn't mean authorities aren't investigating, added Ian McCaleb, a spokesman for the Department of Justice.
"There are ongoing cases. But from a prosecution standpoint, it takes a significant amount of time to develop these things. Most financial fraud cases are very complex and it could take a while to unravel the specifics of each case," he said. "I would characterize financial fraud as one of our top priorities."
Another possibility is that a new politically appointed Financial Crisis Inquiry Commission could turn up something that leads to prosecution. The 10-member panel, created by Congress this month, began probing the origins of the crisis, has subpoena power and could compel testimony. This could, however, lead to conflicts with ongoing legal investigations.
Another reason that there've been no arrests of the perpetrators of the financial meltdown is that agencies such as the SEC, which regulates trading in stocks and bonds, and the Commodity Futures Trading Commission, which oversees the trading of contracts for future delivery of energy and farm products, lack powers of criminal prosecution.
They can bring civil charges that result in fines or pass information to federal prosecutors or the FBI, which under the Bush administration was reorganized to focus less on white-collar crime and more on national security matters and crimes against children.
Legislation introduced in the House and Senate would make it easier for the CFTC to prosecute, especially allegations of market manipulation. Measures would lower the current high threshold for determining manipulation. In 35 years, the agency has won only a single manipulation case, and it's under appeal. The bills also would give commodities regulators powers to bring criminal cases.
"Folks who do the crime shouldn't just pay a fine, but do the time," said Bart Chilton, a CFTC commissioner who's championed the need for prosecutorial powers.
Because it saves time and money, regulators traditionally have negotiated settlements with bad actors, and fines often amount to a business cost.
That, too, may be changing, however. The SEC on Sept. 14 was hit with a stinging judicial rebuke for its half-hearted efforts to punish Bank of America for alleged disclosure failures in the government-brokered purchase of investment bank Merrill Lynch.
U.S. District Judge Jed Rakoff tossed out a $33 million settlement between the SEC and Bank of America, effectively calling it a fig leaf. The agency, he said, looked as if it was enforcing the law while the bank and its CEO, Kenneth Lewis, got away with a slap on the wrist.
"It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the bank's alleged misconduct now pay the penalty for that misconduct," Rakoff wrote in a scathing 12-page opinion that ordered the complaint to proceed to trial.
WASHINGTON — More than a year into the gravest financial crisis since the Great Depression, millions of Americans have seen their home values and retirement savings plunge and their jobs evaporate.
What they haven't seen are any Wall Street tycoons forced to swap their multi-million dollar jobs and custom-made suits for dishwashing and prison stripes.
There are plenty of civil and class-action lawsuits from aggrieved investors angered by the losses in their mortgage bonds, hedge funds or pensions. Regulators have stepped up their vigilance after the fact. But to date, no captain of finance tied to the crisis has walked the plank.
There have been some high-profile arrests and federal convictions of financial giants — such as Ponzi scheme king Bernard Madoff and Stanford Financial Group chairman Robert Allen Stanford. They weren't among the causes of the financial meltdown, however, just poster boys for an era of lax enforcement, weak regulation and devout faith in free markets.
"A lot of people who are responsible (for the crisis) seem to have gotten awfully rich in the process," said Barbara Roper, the director of investor protection for the Consumer Federation of America.
The absence of what many would call justice stands out all the more because past financial crises always had their villains. The depression-era had electricity and railroad magnate Samuel Insull, who partly inspired the movie "Citizen Kane." The savings and loan crisis of the 1980's had banker Charles Keating. Energy giant Enron Corp.'s spectacular collapse offered the late CEO Kenneth Lay, a Texas crony of President George W. Bush.
Yet there's no such poster child for the Great Recession, as today's crisis is now called.
One may yet emerge. The FBI has more than 580 large-scale corporate fraud investigations under way. At least 40 of them are scrutinizing players in sub-prime mortgage lending, which was the first domino to fall and triggered a global financial crisis.
"The investigations are very complex; it's not something that's going to turn overnight," said Bill Carter, a spokesman at FBI headquarters. "They are labor intensive. They involve a review of records."
To date, the closest thing to a prosecution of a major actor in the financial meltdown is a civil fraud case that the Securities and Exchange Commission brought on June 4 against Angelo Mozilo, the perma-tanned CEO of mortgage-lending giant Countrywide.
The SEC, in documents filed in a federal courtroom in central California, accuses Mozilo of "deliberately misleading investors" by misrepresenting the risk that Countrywide posed. The SEC also accused him of insider trading because he sold large shares of company stock and options ahead of what he allegedly knew was a coming collapse of mortgage lending.
Unless the Justice Department brings corresponding criminal charges, however, Mozilo could be hit with penalties and a ruined reputation if convicted — but he wouldn't see the inside of a jail cell.
Another big trial is imminent, however. On Oct. 13, a Brooklyn jury will begin hearing the federal prosecution of former Bear Stearns investment fund founder Ralph Cioffi and his fund manager Matthew Tannin.
Two of their hedge funds, offered to mega-wealthy investors and heavily weighted with investments in mortgage bonds backed by sub-prime loans to the weakest borrowers, collapsed in June and August of 2007. Their collapse signaled a gathering storm in mortgage finance that culminated in March 2008 with the government-brokered fire sale of their bank to JP Morgan Chase.
Both men were charged on June 19, 2008, with defrauding investors, passing off as safe the investment in mortgage bonds even though they described the market for sub-prime mortgages as "toast" in their own e-mails. Cioffi also faces charges of insider trading.
Lawyers for both men declined comment to McClatchy, but when their clients were arrested they called the pair scapegoats for the broader financial crisis.
Court documents filed in August show attorneys for the two are trying to suppress evidence that the executives' special trading notebooks have disappeared. The government suspects that Cioffi and Tannin, or someone helping them, made them disappear to cover their tracks.
Cioffi's attorneys also asked in August that the presiding judge quash the use of evidence that points to their clients' lavish lifestyle, including mansions and Ferraris. The documents accused federal prosecutors of "improper appeal to class prejudice." Tannin's attorneys joined the motion on Sept.15.
Class prejudice against bankers is what many Americans feel, evident in the death threats made against some former or current executives at insurer American International Group and other financial firms earlier this year. Wall Street switchboard operators at some institutions no longer provide addresses to phone callers.
Americans are angry because the suffering on Main Street is a spillover from the excessive risk taking and lavish compensation of executives who invested on behalf of the ultra-wealthy. Investors seeking outsized "alpha" returns turned to Wall Street, both seeking to make a short-term killing even if doing so eventually brought the near collapse of the financial system.
President Barack Obama alluded to this on Sept. 14 in a New York speech to commemorate the anniversary of the collapse of investment bank Lehman Brothers, which sent off a global financial panic.
"We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses," Obama said, promising new rules. "Those on Wall Street cannot resume taking risks without regard for consequences."
There are persistent but unconfirmed reports that the FBI and grand juries are looking at the e-mails of executives of failed institutions such as Bear Stearns, which pioneered the process of pooling sub-prime loans for sale to investors, and Lehman Brothers, which was a leader in these toxic products when it collapsed.
Records from AIG, which the Federal Reserve saved from collapse on Sept. 17, 2008, are also thought to be under review. The FBI reportedly is also looking at rating agencies Fitch, Moody's and Standard & Poor's to determine if they knowingly gave pools of sub-prime mortgages AAA investment-grade ratings, the best possible, despite evidence to the contrary.
Carter, the FBI spokesman, declined comment on ongoing investigations.
The lack of any prosecution to date doesn't mean authorities aren't investigating, added Ian McCaleb, a spokesman for the Department of Justice.
"There are ongoing cases. But from a prosecution standpoint, it takes a significant amount of time to develop these things. Most financial fraud cases are very complex and it could take a while to unravel the specifics of each case," he said. "I would characterize financial fraud as one of our top priorities."
Another possibility is that a new politically appointed Financial Crisis Inquiry Commission could turn up something that leads to prosecution. The 10-member panel, created by Congress this month, began probing the origins of the crisis, has subpoena power and could compel testimony. This could, however, lead to conflicts with ongoing legal investigations.
Another reason that there've been no arrests of the perpetrators of the financial meltdown is that agencies such as the SEC, which regulates trading in stocks and bonds, and the Commodity Futures Trading Commission, which oversees the trading of contracts for future delivery of energy and farm products, lack powers of criminal prosecution.
They can bring civil charges that result in fines or pass information to federal prosecutors or the FBI, which under the Bush administration was reorganized to focus less on white-collar crime and more on national security matters and crimes against children.
Legislation introduced in the House and Senate would make it easier for the CFTC to prosecute, especially allegations of market manipulation. Measures would lower the current high threshold for determining manipulation. In 35 years, the agency has won only a single manipulation case, and it's under appeal. The bills also would give commodities regulators powers to bring criminal cases.
"Folks who do the crime shouldn't just pay a fine, but do the time," said Bart Chilton, a CFTC commissioner who's championed the need for prosecutorial powers.
Because it saves time and money, regulators traditionally have negotiated settlements with bad actors, and fines often amount to a business cost.
That, too, may be changing, however. The SEC on Sept. 14 was hit with a stinging judicial rebuke for its half-hearted efforts to punish Bank of America for alleged disclosure failures in the government-brokered purchase of investment bank Merrill Lynch.
U.S. District Judge Jed Rakoff tossed out a $33 million settlement between the SEC and Bank of America, effectively calling it a fig leaf. The agency, he said, looked as if it was enforcing the law while the bank and its CEO, Kenneth Lewis, got away with a slap on the wrist.
"It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the bank's alleged misconduct now pay the penalty for that misconduct," Rakoff wrote in a scathing 12-page opinion that ordered the complaint to proceed to trial.
McChrystal: More Forces or 'Mission Impossible'
C-J
No matter how they gin up their predicament, there is a 9 in 10 chance nothing will help "win the war". The NATO forces are surrounded, their supply lines are over-stressed, if not just plain severed. Adding more troops will only make the supply line problem more acute.
Bob Woodward interprets the General's report so it supports the view of the Military Industrial complex, not the troops. When all is said and done, these guys haven't learned anything about the art of war. But, like I have said before; "winning a war isn't the objective, profit is the objective".
C-J
McChrystal: More Forces or 'Mission Failure'
Top U.S. Commander For Afghan War Calls Next 12 Months Decisive
By Bob Woodward
Washington Post Staff Writer
Monday, September 21, 2009
The top U.S. and NATO commander in Afghanistan warns in an urgent, confidential assessment of the war that he needs more forces within the next year and bluntly states that without them, the eight-year conflict "will likely result in failure," according to a copy of the 66-page document obtained by The Washington Post.
Gen. Stanley A. McChrystal says emphatically: "Failure to gain the initiative and reverse insurgent momentum in the near-term (next 12 months) -- while Afghan security capacity matures -- risks an outcome where defeating the insurgency is no longer possible."
His assessment was sent to Defense Secretary Robert M. Gates on Aug. 30 and is now being reviewed by President Obama and his national security team.
McChrystal concludes the document's five-page Commander's Summary on a note of muted optimism: "While the situation is serious, success is still achievable."
But he repeatedly warns that without more forces and the rapid implementation of a genuine counterinsurgency strategy, defeat is likely. McChrystal describes an Afghan government riddled with corruption and an international force undermined by tactics that alienate civilians.
He provides extensive new details about the Taliban insurgency, which he calls a muscular and sophisticated enemy that uses modern propaganda and systematically reaches into Afghanistan's prisons to recruit members and even plan operations.
McChrystal's assessment is one of several options the White House is considering. His plan could intensify a national debate in which leading Democratic lawmakers have expressed reluctance about committing more troops to an increasingly unpopular war. Obama said last week that he will not decide whether to send more troops until he has "absolute clarity about what the strategy is going to be."
The commander has prepared a separate detailed request for additional troops and other resources, but defense officials have said he is awaiting instructions before sending it to the Pentagon.
Senior administration officials asked The Post over the weekend to withhold brief portions of the assessment that they said could compromise future operations. A declassified version of the document, with some deletions made at the government's request, appears at washingtonpost.com.
McChrystal makes clear that his call for more forces is predicated on the adoption of a strategy in which troops emphasize protecting Afghans rather than killing insurgents or controlling territory. Most starkly, he says: "[I]nadequate resources will likely result in failure. However, without a new strategy, the mission should not be resourced."
'Widespread Corruption'
The assessment offers an unsparing critique of the failings of the Afghan government, contending that official corruption is as much of a threat as the insurgency to the mission of the International Security Assistance Force, or ISAF, as the U.S.-led NATO coalition is widely known.
"The weakness of state institutions, malign actions of power-brokers, widespread corruption and abuse of power by various officials, and ISAF's own errors, have given Afghans little reason to support their government," McChrystal says.
The result has been a "crisis of confidence among Afghans," he writes. "Further, a perception that our resolve is uncertain makes Afghans reluctant to align with us against the insurgents."
McChrystal is equally critical of the command he has led since June 15. The key weakness of ISAF, he says, is that it is not aggressively defending the Afghan population. "Pre-occupied with protection of our own forces, we have operated in a manner that distances us -- physically and psychologically -- from the people we seek to protect. . . . The insurgents cannot defeat us militarily; but we can defeat ourselves."
McChrystal continues: "Afghan social, political, economic, and cultural affairs are complex and poorly understood. ISAF does not sufficiently appreciate the dynamics in local communities, nor how the insurgency, corruption, incompetent officials, power-brokers, and criminality all combine to affect the Afghan population."
Coalition intelligence-gathering has focused on how to attack insurgents, hindering "ISAF's comprehension of the critical aspects of Afghan society."
In a four-page annex on detainee operations, McChrystal warns that the Afghan prison system has become "a sanctuary and base to conduct lethal operations" against the government and coalition forces. He cites as examples an apparent prison connection to the 2008 bombing of the Serena Hotel in Kabul and other attacks. "Unchecked, Taliban/Al Qaeda leaders patiently coordinate and plan, unconcerned with interference from prison personnel or the military."
The assessment says that Taliban and al-Qaeda insurgents "represent more than 2,500 of the 14,500 inmates in the increasingly overcrowded Afghan Corrections System," in which "[h]ardened, committed Islamists are indiscriminately mixed with petty criminals and sex offenders, and they are using the opportunity to radicalize and indoctrinate them."
Noting that the United States "came to Afghanistan vowing to deny these same enemies safe haven in 2001," he says they now operate with relative impunity in the prisons. "There are more insurgents per square foot in corrections facilities than anywhere else in Afghanistan," his assessment says.
McChrystal outlines a plan to build up the Afghan government's ability to manage its detention facilities and eventually put all such operations under Afghan control, including the Bagram Theater Internment Facility, which the United States runs.
For now, because of a lack of capacity, "productive interrogations and detainee intelligence collection have been reduced" at Bagram. "As a result, hundreds are held without charge or without a defined way-ahead. This allows the enemy to radicalize them far beyond their pre-capture orientation. The problem can no longer be ignored."
McChrystal's Plan
The general says his command is "not adequately executing the basics" of counterinsurgency by putting the Afghan people first. "ISAF personnel must be seen as guests of the Afghan people and their government, not an occupying army," he writes. "Key personnel in ISAF must receive training in local languages."
He also says that coalition forces will change their operational culture, in part by spending "as little time as possible in armored vehicles or behind the walls of forward operating bases." Strengthening Afghans' sense of security will require troops to take greater risks, but the coalition "cannot succeed if it is unwilling to share risk, at least equally, with the people."
McChrystal warns that in the short run, it "is realistic to expect that Afghan and coalition casualties will increase."
He proposes speeding the growth of Afghan security forces. The existing goal is to expand the army from 92,000 to 134,000 by December 2011. McChrystal seeks to move that deadline to October 2010.
Overall, McChrystal wants the Afghan army to grow to 240,000 and the police to 160,000 for a total security force of 400,000, but he does not specify when those numbers could be reached.
He also calls for "radically more integrated and partnered" work with Afghan units.
McChrystal says the military must play an active role in reconciliation, winning over less committed insurgent fighters. The coalition "requires a credible program to offer eligible insurgents reasonable incentives to stop fighting and return to normalcy, possibly including the provision of employment and protection," he writes.
Coalition forces will have to learn that "there are now three outcomes instead of two" for enemy fighters: not only capture or death, but also "reintegration."
Again and again, McChrystal makes the case that his command must be bolstered if failure is to be averted. "ISAF requires more forces," he states, citing "previously validated, yet un-sourced, requirements" -- an apparent reference to a request for 10,000 more troops originally made by McChrystal's predecessor, Gen. David D. McKiernan.
A Three-Headed Insurgency
McChrystal identifies three main insurgent groups "in order of their threat to the mission" and provides significant details about their command structures and objectives.
The first is the Quetta Shura Taliban (QST) headed by Mullah Omar, who fled Afghanistan after the attacks of Sept. 11, 2001, and operates from the Pakistani city of Quetta.
"At the operational level, the Quetta Shura conducts a formal campaign review each winter, after which Mullah Omar announces his guidance and intent for the coming year," according to the assessment.
Mullah Omar's insurgency has established an elaborate alternative government known as the Islamic Emirate of Afghanistan, McChrystal writes, which is capitalizing on the Afghan government's weaknesses. "They appoint shadow governors for most provinces, review their performance, and replace them periodically. They established a body to receive complaints against their own 'officials' and to act on them. They install 'shari'a' [Islamic law] courts to deliver swift and enforced justice in contested and controlled areas. They levy taxes and conscript fighters and laborers. They claim to provide security against a corrupt government, ISAF forces, criminality, and local power brokers. They also claim to protect Afghan and Muslim identity against foreign encroachment."
"The QST has been working to control Kandahar and its approaches for several years and there are indications that their influence over the city and neighboring districts is significant and growing," McChrystal writes.
The second main insurgency group is the Haqqani network (HQN), which is active in southeastern Afghanistan and draws money and manpower "principally from Pakistan, Gulf Arab networks, and from its close association with al Qaeda and other Pakistan-based insurgent groups." At another point in the assessment, McChrystal says, "Al Qaeda's links with HQN have grown, suggesting that expanded HQN control could create a favorable environment" for associated extremist movements "to re-establish safe-havens in Afghanistan."
The third is the Hezb-e-Islami Gulbuddin insurgency, which maintains bases in three Afghan provinces "as well as Pakistan," the assessment says. This network, led by the former mujaheddin commander Gulbuddin Hekmatyar, "aims to negotiate a major role in a future Taliban government. He does not currently have geographical objectives as is the case with the other groups," though he "seeks control of mineral wealth and smuggling routes in the east."
Overall, McChrystal provides this conclusion about the enemy: "The insurgents control or contest a significant portion of the country, although it is difficult to assess precisely how much due to a lack of ISAF presence. . . . "
The insurgents make money from the production and sale of opium and other narcotics, but the assessment says that "eliminating insurgent access to narco-profits -- even if possible, and while disruptive -- would not destroy their ability to operate so long as other funding sources remained intact."
While the insurgency is predominantly Afghan, McChrystal writes that it "is clearly supported from Pakistan. Senior leaders of the major Afghan insurgent groups are based in Pakistan, are linked with al Qaeda and other violent extremist groups, and are reportedly aided by some elements of Pakistan's ISI," which is its intelligence service. Al-Qaeda and other extremist movements "based in Pakistan channel foreign fighters, suicide bombers, and technical assistance into Afghanistan, and offer ideological motivation, training, and financial support."
Toward the end of his report, McChrystal revisits his central theme: "Failure to provide adequate resources also risks a longer conflict, greater casualties, higher overall costs, and ultimately, a critical loss of political support. Any of these risks, in turn, are likely to result in mission failure."
Josh Boak and Evelyn Duffy contributed to this report.
No matter how they gin up their predicament, there is a 9 in 10 chance nothing will help "win the war". The NATO forces are surrounded, their supply lines are over-stressed, if not just plain severed. Adding more troops will only make the supply line problem more acute.
Bob Woodward interprets the General's report so it supports the view of the Military Industrial complex, not the troops. When all is said and done, these guys haven't learned anything about the art of war. But, like I have said before; "winning a war isn't the objective, profit is the objective".
C-J
McChrystal: More Forces or 'Mission Failure'
Top U.S. Commander For Afghan War Calls Next 12 Months Decisive
By Bob Woodward
Washington Post Staff Writer
Monday, September 21, 2009
The top U.S. and NATO commander in Afghanistan warns in an urgent, confidential assessment of the war that he needs more forces within the next year and bluntly states that without them, the eight-year conflict "will likely result in failure," according to a copy of the 66-page document obtained by The Washington Post.
Gen. Stanley A. McChrystal says emphatically: "Failure to gain the initiative and reverse insurgent momentum in the near-term (next 12 months) -- while Afghan security capacity matures -- risks an outcome where defeating the insurgency is no longer possible."
His assessment was sent to Defense Secretary Robert M. Gates on Aug. 30 and is now being reviewed by President Obama and his national security team.
McChrystal concludes the document's five-page Commander's Summary on a note of muted optimism: "While the situation is serious, success is still achievable."
But he repeatedly warns that without more forces and the rapid implementation of a genuine counterinsurgency strategy, defeat is likely. McChrystal describes an Afghan government riddled with corruption and an international force undermined by tactics that alienate civilians.
He provides extensive new details about the Taliban insurgency, which he calls a muscular and sophisticated enemy that uses modern propaganda and systematically reaches into Afghanistan's prisons to recruit members and even plan operations.
McChrystal's assessment is one of several options the White House is considering. His plan could intensify a national debate in which leading Democratic lawmakers have expressed reluctance about committing more troops to an increasingly unpopular war. Obama said last week that he will not decide whether to send more troops until he has "absolute clarity about what the strategy is going to be."
The commander has prepared a separate detailed request for additional troops and other resources, but defense officials have said he is awaiting instructions before sending it to the Pentagon.
Senior administration officials asked The Post over the weekend to withhold brief portions of the assessment that they said could compromise future operations. A declassified version of the document, with some deletions made at the government's request, appears at washingtonpost.com.
McChrystal makes clear that his call for more forces is predicated on the adoption of a strategy in which troops emphasize protecting Afghans rather than killing insurgents or controlling territory. Most starkly, he says: "[I]nadequate resources will likely result in failure. However, without a new strategy, the mission should not be resourced."
'Widespread Corruption'
The assessment offers an unsparing critique of the failings of the Afghan government, contending that official corruption is as much of a threat as the insurgency to the mission of the International Security Assistance Force, or ISAF, as the U.S.-led NATO coalition is widely known.
"The weakness of state institutions, malign actions of power-brokers, widespread corruption and abuse of power by various officials, and ISAF's own errors, have given Afghans little reason to support their government," McChrystal says.
The result has been a "crisis of confidence among Afghans," he writes. "Further, a perception that our resolve is uncertain makes Afghans reluctant to align with us against the insurgents."
McChrystal is equally critical of the command he has led since June 15. The key weakness of ISAF, he says, is that it is not aggressively defending the Afghan population. "Pre-occupied with protection of our own forces, we have operated in a manner that distances us -- physically and psychologically -- from the people we seek to protect. . . . The insurgents cannot defeat us militarily; but we can defeat ourselves."
McChrystal continues: "Afghan social, political, economic, and cultural affairs are complex and poorly understood. ISAF does not sufficiently appreciate the dynamics in local communities, nor how the insurgency, corruption, incompetent officials, power-brokers, and criminality all combine to affect the Afghan population."
Coalition intelligence-gathering has focused on how to attack insurgents, hindering "ISAF's comprehension of the critical aspects of Afghan society."
In a four-page annex on detainee operations, McChrystal warns that the Afghan prison system has become "a sanctuary and base to conduct lethal operations" against the government and coalition forces. He cites as examples an apparent prison connection to the 2008 bombing of the Serena Hotel in Kabul and other attacks. "Unchecked, Taliban/Al Qaeda leaders patiently coordinate and plan, unconcerned with interference from prison personnel or the military."
The assessment says that Taliban and al-Qaeda insurgents "represent more than 2,500 of the 14,500 inmates in the increasingly overcrowded Afghan Corrections System," in which "[h]ardened, committed Islamists are indiscriminately mixed with petty criminals and sex offenders, and they are using the opportunity to radicalize and indoctrinate them."
Noting that the United States "came to Afghanistan vowing to deny these same enemies safe haven in 2001," he says they now operate with relative impunity in the prisons. "There are more insurgents per square foot in corrections facilities than anywhere else in Afghanistan," his assessment says.
McChrystal outlines a plan to build up the Afghan government's ability to manage its detention facilities and eventually put all such operations under Afghan control, including the Bagram Theater Internment Facility, which the United States runs.
For now, because of a lack of capacity, "productive interrogations and detainee intelligence collection have been reduced" at Bagram. "As a result, hundreds are held without charge or without a defined way-ahead. This allows the enemy to radicalize them far beyond their pre-capture orientation. The problem can no longer be ignored."
McChrystal's Plan
The general says his command is "not adequately executing the basics" of counterinsurgency by putting the Afghan people first. "ISAF personnel must be seen as guests of the Afghan people and their government, not an occupying army," he writes. "Key personnel in ISAF must receive training in local languages."
He also says that coalition forces will change their operational culture, in part by spending "as little time as possible in armored vehicles or behind the walls of forward operating bases." Strengthening Afghans' sense of security will require troops to take greater risks, but the coalition "cannot succeed if it is unwilling to share risk, at least equally, with the people."
McChrystal warns that in the short run, it "is realistic to expect that Afghan and coalition casualties will increase."
He proposes speeding the growth of Afghan security forces. The existing goal is to expand the army from 92,000 to 134,000 by December 2011. McChrystal seeks to move that deadline to October 2010.
Overall, McChrystal wants the Afghan army to grow to 240,000 and the police to 160,000 for a total security force of 400,000, but he does not specify when those numbers could be reached.
He also calls for "radically more integrated and partnered" work with Afghan units.
McChrystal says the military must play an active role in reconciliation, winning over less committed insurgent fighters. The coalition "requires a credible program to offer eligible insurgents reasonable incentives to stop fighting and return to normalcy, possibly including the provision of employment and protection," he writes.
Coalition forces will have to learn that "there are now three outcomes instead of two" for enemy fighters: not only capture or death, but also "reintegration."
Again and again, McChrystal makes the case that his command must be bolstered if failure is to be averted. "ISAF requires more forces," he states, citing "previously validated, yet un-sourced, requirements" -- an apparent reference to a request for 10,000 more troops originally made by McChrystal's predecessor, Gen. David D. McKiernan.
A Three-Headed Insurgency
McChrystal identifies three main insurgent groups "in order of their threat to the mission" and provides significant details about their command structures and objectives.
The first is the Quetta Shura Taliban (QST) headed by Mullah Omar, who fled Afghanistan after the attacks of Sept. 11, 2001, and operates from the Pakistani city of Quetta.
"At the operational level, the Quetta Shura conducts a formal campaign review each winter, after which Mullah Omar announces his guidance and intent for the coming year," according to the assessment.
Mullah Omar's insurgency has established an elaborate alternative government known as the Islamic Emirate of Afghanistan, McChrystal writes, which is capitalizing on the Afghan government's weaknesses. "They appoint shadow governors for most provinces, review their performance, and replace them periodically. They established a body to receive complaints against their own 'officials' and to act on them. They install 'shari'a' [Islamic law] courts to deliver swift and enforced justice in contested and controlled areas. They levy taxes and conscript fighters and laborers. They claim to provide security against a corrupt government, ISAF forces, criminality, and local power brokers. They also claim to protect Afghan and Muslim identity against foreign encroachment."
"The QST has been working to control Kandahar and its approaches for several years and there are indications that their influence over the city and neighboring districts is significant and growing," McChrystal writes.
The second main insurgency group is the Haqqani network (HQN), which is active in southeastern Afghanistan and draws money and manpower "principally from Pakistan, Gulf Arab networks, and from its close association with al Qaeda and other Pakistan-based insurgent groups." At another point in the assessment, McChrystal says, "Al Qaeda's links with HQN have grown, suggesting that expanded HQN control could create a favorable environment" for associated extremist movements "to re-establish safe-havens in Afghanistan."
The third is the Hezb-e-Islami Gulbuddin insurgency, which maintains bases in three Afghan provinces "as well as Pakistan," the assessment says. This network, led by the former mujaheddin commander Gulbuddin Hekmatyar, "aims to negotiate a major role in a future Taliban government. He does not currently have geographical objectives as is the case with the other groups," though he "seeks control of mineral wealth and smuggling routes in the east."
Overall, McChrystal provides this conclusion about the enemy: "The insurgents control or contest a significant portion of the country, although it is difficult to assess precisely how much due to a lack of ISAF presence. . . . "
The insurgents make money from the production and sale of opium and other narcotics, but the assessment says that "eliminating insurgent access to narco-profits -- even if possible, and while disruptive -- would not destroy their ability to operate so long as other funding sources remained intact."
While the insurgency is predominantly Afghan, McChrystal writes that it "is clearly supported from Pakistan. Senior leaders of the major Afghan insurgent groups are based in Pakistan, are linked with al Qaeda and other violent extremist groups, and are reportedly aided by some elements of Pakistan's ISI," which is its intelligence service. Al-Qaeda and other extremist movements "based in Pakistan channel foreign fighters, suicide bombers, and technical assistance into Afghanistan, and offer ideological motivation, training, and financial support."
Toward the end of his report, McChrystal revisits his central theme: "Failure to provide adequate resources also risks a longer conflict, greater casualties, higher overall costs, and ultimately, a critical loss of political support. Any of these risks, in turn, are likely to result in mission failure."
Josh Boak and Evelyn Duffy contributed to this report.
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