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The Public Editor: Making Sense of a Sensational Case

July 13, 2013 by Leave a Comment

These days, the beast has been ravenous for the murder trial of George Zimmerman, the Florida neighborhood watch volunteer who shot and killed Trayvon Martin, an unarmed black teenager. The case was swollen with confusing evidence, Florida’s liberal self-defense laws and deep-seated racial tension. Cable coverage has been round the clock.

While hardly going the way of CNN’s near total obsession, The Times gave the Zimmerman trial a great deal of daily attention, including frequently updated courtroom coverage on the Web.

Decisions about the amount of coverage to give a high-profile trial are always subjective. But it is notable — and it opens The Times to criticism — that this one got the kind of day-in, day-out attention that The Times did not deem worthwhile in a pair of other important cases this year: the trial of the abortion doctor Kermit Gosnell and the court-martial of Pfc. Bradley Manning, who leaked vast amounts of classified government documents. (Although the Gosnell trial did seem to get short shrift at first, I felt it was given adequate coverage by the end. But I have thought all along that the Manning matter deserves more sustained evidence of The Times’s interest.)

The Zimmerman trial coverage was solid. But foremost, The Times has showed its trademark strength with in-depth, enterprising pieces exploring the broader issues of this crime and its aftermath.

Last week, for example, Lizette Alvarez wrote skillfully about the racial issues that had emerged, noting that “race lingers awkwardly on the sidelines, scarcely mentioned but impossible to ignore.” That article appeared on the front page, the first during the trial to do so.

In the first weeks after Mr. Martin was killed, on Feb. 26, 2012, The Times lagged behind, seeming not to recognize the broader implications and the way the teenager’s death had captured public interest. But on April 2 it published an exhaustive and well-written account by four reporters that started on the front page and filled two full pages inside. It explored the polarizing effect of the shooting. Soon after that, a front-page piece by Serge Kovaleski investigated the police missteps after the shooting. (Some critics of The Times believe its motto should not be “All the News That’s Fit to Print” but rather “More, Later.”)

Given the enormous overload of coverage elsewhere, The Times tried to provide something distinctive. Charles Strum, the deputy national editor handling the story, told me that his aim had been “to bring more light than heat, because, over all, this is a situation with more heat than light.” While editing articles in the New York office — most of them written by Ms. Alvarez, the Miami bureau chief — he spent his days wearing headphones so that he could listen to live streaming of the trial.

“There are a lot of accusations, a lot of misinformation and a lot of conspiracy theorizing,” he said.

The smallest points were scrutinized. Why, for example, did The Times use so many descriptions of Mr. Zimmerman’s ethnicity? Michael G. Brautigam of Brooklyn is one of many readers who commented on how The Times described Mr. Zimmerman. He wrote to me: “If memory serves, George Zimmerman has been described in a significantly different way each day of the week.” A week ago Monday he was labeled “half Hispanic,” the next day as “half Peruvian,” a day later as “self-described Hispanic.” Earlier, he was described as a “white Hispanic.”

I asked Ms. Alvarez to explain. “It’s been a struggle all along,” she said. “If he were black or if his name was Rodriguez instead of Zimmerman, this would have been a completely different situation.” The case would not have had its racial flash point, she said. In a nation where a blend of race and ethnicity are more and more the norm, the labeling struggle is an effort to note that Mr. Zimmerman shares in that mixture more than his name alone indicates.

Separately from news coverage, some readers complained about several Op-Ed columns by Charles Blow, finding them one-sided, with a particular complaint about one that appeared on July 3, comparing Mr. Zimmerman’s videotaped re-enactment with his written and spoken statements. Richard Murphy of Fairfield, Conn., wrote: “I realize that Mr. Blow is an opinion columnist, but does The Times really want to put Mr. Zimmerman on trial in its pages? Mr. Blow isn’t reporting, he is deliberately attempting to discredit Zimmerman, to convince people of his guilt.”

I sent this complaint to Mr. Blow and asked him to respond. “I simply raised questions about inconsistencies in George Zimmerman’s accounts of his struggle with Trayvon Martin,” he said.

Looking back over the columns that Mr. Blow has written on the case since last year, I found them generally thoughtful, if clearly sympathetic to the Martin family. The column that Mr. Murphy cited may have come close to the limits of fair comment, taking on a prosecutorial tone. If you believed the medical examiner, the columnist wrote, “the struggle simply couldn’t have happened as Zimmerman described it.” Those kinds of judgments might have been best left to the jury. But columnists are allowed wide leeway, and even in this instance I found Mr. Blow within his rights.

The Times was slow off the mark on this story, and on some early developments, it let the local media break the news. But over all, it has done its job, satisfying interest without sensationalizing, covering the trial with a measured tone, and providing depth and perspective — valuable commodities on a story all too capable of creating hysteria.

Mr. Strum, however, knows there are ways in which any coverage, no matter how thoughtful, must be found wanting.

“This trial brings up all the old pain of every violent racial crime that’s ever happened — with questions of who’s the aggressor, whether a fair trial is possible, whether there is such a thing as equal justice in America,” he told me. “The questions are out there, and unfortunately, they won’t be answered.”

Article source: http://www.nytimes.com/2013/07/14/public-editor/making-sense-of-a-sensational-case.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

DealBook: Documents Show Obama Officials in Tension Over British Banks

May 29, 2013 by Leave a Comment

Bart Naylor of Public Citizen was critical of Treasury.Doug Mills/The New York TimesBart Naylor of Public Citizen was critical of Treasury.

Government documents have recently emerged that offer a rare behind-the-scenes glimpse into the Obama administration’s decision-making as it prepared to take actions against two big British banks over money laundering.

In the case of the banks suspected of laundering billions of dollars through the American financial system — HSBC and Standard Chartered — authorities decided last year to level hefty fines rather than seek criminal charges. Those decisions raised concerns in Washington that some banks, having grown so large and interconnected, are too big to indict.

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The internal government documents, which revealed some tension among authorities about how aggressively to pursue the cases, suggest that at least one agency, the Treasury Department, was alert to such concerns. When authorities were being blamed for letting HSBC off the hook, Treasury officials assured top aides to Timothy F. Geithner, then the Treasury secretary, that monetary penalties were coming as “quickly as possible,” according to the documents reviewed by The New York Times.

The agency also contacted and persuaded a news organization to withdraw a report that wrongly blamed Treasury for not indicting HSBC, the documents indicate. (It’s the job of the Justice Department to decide criminal charges, Treasury explained.)

Ultimately, Treasury assessed a record $875 million fine against HSBC. But some critics wanted more, noting that Treasury’s own internal documents cite the bank’s “egregious violations” of money laundering laws as “qualitatively worse” than other banks.

“I would like to see Treasury support zealous prosecution, and instead I see them managing their image,” said Bart Naylor, a policy advocate at Public Citizen, a nonprofit group critical of the government for not taking a harder line with HSBC.

Treasury released the internal documents to Public Citizen through a Freedom of Information Act request. The group then shared the information with The Times. A spokesman for Treasury declined to comment.

Timothy F. Geithner, the former Treasury secretary, had a more staid philosophy in money laundering cases than other regulators.Jim Lo Scalzo/European Pressphoto AgencyTimothy F. Geithner, the former Treasury secretary, had a more staid philosophy in money laundering cases than other regulators.

In a sign that the money laundering cases pitted authorities against one another, the Treasury Department raised concerns last year that New York’s banking regulator acted against Standard Chartered without sufficiently notifying federal authorities, the documents show. Treasury officials explained the concerns in an internal memo to Mr. Geithner.

The memo, internal e-mails show, was prepared for Mr. Geithner as “talking points” ahead of an October meeting with George Osborne, Britain’s chancellor of the Exchequer. In a September letter to Mr. Geithner, Mr. Osborne had expressed significant “concerns” about New York’s action, given that the United States and Britain typically collaborate closely on such cases.

While the talking points highlighted “Treasury’s coordination” with British regulators, it also distanced Mr. Geithner from the New York regulator, Benjamin M. Lawsky.

“Unfortunately,” the memo said, Mr. Lawsky’s office notified federal authorities “only hours before its public announcement.”

But people close to the case argue that federal authorities were aware that Mr. Lawsky was poised to act. Three months before filing the case, Mr. Lawsky’s office informed Treasury and other federal officials that it planned to soon take action against Standard Chartered, the people close to the case said.

The tension reflected a culture clash between Mr. Lawsky’s aggressive approach and the more staid philosophy common at the Treasury Department. A former terrorism prosecutor, Mr. Lawsky adopted a broader view of Standard Chartered’s wrongdoing than federal authorities, and even threatened to revoke its state banking license. At the time, Treasury and the Justice Department were not ready to act.

Matt Anderson, a spokesman for Mr. Lawsky, declined to comment. In a speech this April, however, Mr. Lawsky played down the tensions, saying “a dose of healthy competition among regulators is helpful and necessary to safeguarding the stability of our nation’s financial system.”

But in Washington, some discussions have taken a more hostile tone as the Justice Department faces scrutiny for not indicting HSBC.

The Justice Department has explained that it follows guidelines requiring prosecutors to weigh indictments of businesses with “collateral consequences” like job losses and, in the case of big banks, a threat to the economy. And in a recent letter to Congress, the department explained that it has “contacted relevant government agencies to discuss such issues,” including federal regulators.

But in Congressional testimony in March, David S. Cohen, Treasury’s under secretary for terrorism and financial intelligence, said “The decision whether to bring criminal charges is the exclusive prerogative of criminal prosecutors.” He added that “we were not in a position to offer any meaningful guidance” in the HSBC criminal case.

But inside the Treasury Department in late 2012, shortly after Congress scolded authorities for not yet punishing HSBC, officials appeared to make the civil case a significant priority.

Over several weeks, Treasury officials consulted two of Mr. Geithner’s top lawyers, Christopher Meade and Christian Weideman. The involvement of the lawyers, who were known at Treasury as Mr. Geithner’s top problem solvers, reflected the seriousness of the approach.

Treasury officials sent the lawyers “new developments” in the HSBC case. At one point, an official assured them that Treasury was moving “as quickly as possible to put together administrative penalty actions.”

When Treasury joined the Justice Department in announcing the case in December, a media outlet ran an overnight article in which a professor speculated that Mr. Geithner had not criminally prosecuted HSBC to avoid putting it out of business.

By dawn that day, Treasury officials e-mailed one another about the article. Shortly after, National Public Radio retracted the quote and issued a statement saying that Treasury had not been involved in the decision not to indict HSBC.

Article source: http://dealbook.nytimes.com/2013/05/29/documents-show-obama-officials-in-tension-over-british-banks/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Doubt Is Cast on Consultants Hired to Fix Banks’ Abuses

February 1, 2013 by Leave a Comment

Furniture is removed from a foreclosed house in Richmond, Calif.Justin Sullivan/Getty ImagesFurniture is removed from a foreclosed house in Richmond, Calif.

Federal authorities are scrutinizing private consultants hired to clean up financial misdeeds like money laundering and foreclosure abuses, taking aim at an industry that is paid billions of dollars by the same banks it is expected to police.

The consultants operate with scant supervision and produce mixed results, according to government documents and interviews with prosecutors and regulators. In one case, the consulting firms enabled the wrongdoing. The deficiencies, officials say, can leave consumers vulnerable and allow tainted money to flow through the financial system.

“How can you be independent if you’re hired by the entity you’re reviewing?” Senator Jack Reed, Democrat of Rhode Island, who sits on the Senate Banking Committee, said.

The pitfalls were exposed last month when federal regulators halted a broad effort to help millions of homeowners in foreclosure. The regulators reached an $8.5 billion settlement with banks, scuttling a flawed foreclosure review run by eight consulting firms. In the end, borrowers hurt by shoddy practices are likely to receive less money than they deserve, regulators said.

On Thursday, Senator Elizabeth Warren, Democrat of Massachusetts, and Representative Elijah Cummings, Democrat of Maryland, announced that they would open an investigation into the foreclosure review, seeking “additional information about the scope of the harms found.”

Critics concede that regulators have little choice but to hire outsiders for certain responsibilities after they find problems at the banks. The government does not have the resources to ensure that banks follow the rules. Still, consultants like Deloitte Touche and the Promontory Financial Group can add to regulators’ headaches, the government documents and interviews indicate. Some banks that work with consultants continue to run afoul of the law. At other times, consultants underestimate the extent of the misdeeds or facilitate them, preventing regulators from holding institutions accountable.

Now, regulators and lawmakers are rethinking their relationship with the consultants. Officials at the Federal Reserve, which oversees many large banks, are questioning the prudence of relying on consultants so heavily, said two people with direct knowledge of the matter.

When the Office of the Comptroller of the Currency penalized JPMorgan Chase last month for breakdowns in money-laundering controls, it imposed stricter requirements, ordering the bank to hire a consultant with “specialized experience” in money laundering and to ensure that the firm “not be subject to any conflict of interest.” In a separate action against the bank related to a $6 billion trading loss last year, the agency opted not to mandate an outside consultant at all.

While the comptroller’s office will continue requiring consultants in certain cases, some agency officials are worried about the quality of the work, as well as the consultants’ independence, according to three government officials briefed on the matter.

Since the financial crisis, regulators have increasingly relied on consultants. The comptroller’s office ordered banks to hire consultants in more than 130 enforcement actions since 2008, or nearly 15 percent of the cases.

It can be a lucrative business. In 2011, regulators mandated that 14 banks employ consultants to determine whether homeowners were wrongfully evicted. Over 14 months, the consultants collected about $2 billion in fees, according to regulators and bank officials.

Those fees amounted to more than half of what homeowners will receive under the $8.5 billion settlement that ended the review. As part of the deal, officials will disburse $3.3 billion to 3.8 million borrowers in foreclosure.

According to consultants and regulators, the broad review was plagued with inefficiencies. For example, Promontory initially instructed employees to calculate lawyers’ fees for each loan, to assess if borrowers were overcharged. Later, it scrapped the original procedure, only to reverse the policy again two weeks later, according to two reviewers who worked for Promontory.

“From Day 1, Promontory strove to conduct its review work as thoroughly and independently as possible,” a spokesman for the firm, Christopher Winans, said in a statement. “Our overarching concern at all times was to serve the best interests of borrowers.”

Some lawmakers question whether a consultant’s regulatory connections helped it secure contracts. PricewaterhouseCoopers, which has a stable of former Securities and Exchange Commission officials, won much of the foreclosure review work, signing deals with four banks, including Citigroup. Promontory, the firm examining loans for Wells Fargo, Bank of America and PNC, was founded in 2000 by the former head of the comptroller’s office, Eugene A. Ludwig.

When the contracts were initially awarded, some housing advocates complained that consulting firms could not objectively evaluate banks with which they had pre-existing business relationships. The comptroller’s office said it vetted the firms to spot such potential conflicts, and argued that the process provided swifter relief for homeowners than if the government had hired the companies directly through a lengthy contracting process.

But concerns persisted. Deloitte, which won the contract to review JPMorgan’s loans, had previously audited Washington Mutual and Bear Stearns, two firms JPMorgan acquired during the financial crisis. In May, the comptroller’s office replaced Allonhill, the consultant for Aurora Bank, after the firm disclosed that it had already reviewed some “of the same pool of loans” as part of an earlier contract.

“It’s clear from the foreclosure settlement that oversight over consultants was inadequate and the review process was deeply flawed,” said Representative Carolyn B. Maloney, Democrat of New York, who recently pressed regulators to detail how consultants were paid. People close to the review say consultants relied on a process that the comptroller’s office designed in 2011, under previous leadership.

“This was a very complex process,” a spokesman for the comptroller said. “Throughout the process, regulators provided continuous oversight, guidance and were available to discuss issues.” The agency also performs spot checks on the consultants.

Still, the foreclosure review highlighted broader concerns about the role consultants play.

Since the financial crisis, the comptroller’s office has issued nearly 20 enforcement actions against banks that had already hired consultants to help iron out problems, according to government documents. While consultants cannot be expected to remedy every last issue at the banks, the actions raise questions about the effectiveness of their work.

When HSBC, the British bank, was sanctioned in 2003 over porous money-laundering controls, the bank turned to Deloitte to review its compliance, an official briefed on the matter said. Deloitte also worked for HSBC from 2006 to 2008, the person said, building a system to monitor money flows more effectively. But the bank ran into trouble in 2010 over similar issues, as highlighted in a recent scathing report by the Senate’s Permanent Subcommittee on Investigations.

As part of a regulatory order, HSBC again hired Deloitte, this time to assess the number of times the bank failed to report suspicious transactions. Deloitte, three officials said, generously bundled hundreds of missed transfers into a single report. That helped save the bank from some government fines.

Despite the undercounting, HSBC still paid a record $1.9 billion last year to settle accusations that it enabled drug cartels to move money through its American subsidiaries.

In a statement, a spokesman for the firm said, “Deloitte fully stands behind the quality and integrity of its work on behalf of regulatory authorities.”

Deloitte has also been suspected of helping institutions cloak illicit transfers of money to rogue nations around the globe. In August, New York’s top banking regulator, Benjamin M. Lawsky, accused Deloitte of helping the British bank Standard Chartered flout American sanctions.

The consulting firm was hired to flag suspicious transfers routed through Standard Chartered’s New York branches. Instead, it instructed bankers on how to escape regulatory scrutiny, according to state court documents.

Deloitte turned over “highly confidential information” from which the bank gleaned insight into “regulators’ concerns and strategies,” the court documents said. The firm later doctored its report to regulators, Mr. Lawsky said, deliberately removing some illegal transfers on behalf of Iranian clients. In an e-mail, a Deloitte partner admitted that a report on the transactions was a “watered-down version.”

The authorities never took legal action against Deloitte, and federal officials noted in a separate settlement agreement that Standard Chartered employees withheld critical information from the consulting firm.

Despite these concerns, regulators are turning to a familiar source to help Standard Chartered. As part of a $327 million settlement last year, the bank is required to hire “an independent consultant.”

Article source: http://dealbook.nytimes.com/2013/01/31/doubt-is-cast-on-firms-hired-to-help-banks/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,