Pearland’s politico pastor and the judiciary

judicial tyranny.gifFollowing on this post from yesterday on misguided efforts to restrict the independence of judicial branch of government, this Washington Post article profiles Rick Scarborough, the Pearland, Texas Baptist minister turned political operative. Mr. Scarborough is a leader in the movement within the Republican Party to persuade Senate Republicans to change the rules so that Democrats cannot use filibuster to block President Bush’s federal judicial nominees. In 2002, Jerry Falwell publicly touted Mr. Scarborough as one of the new leaders of the religious right in America.
Scarborough.jpgMeanwhile, George Washington University Law Professor Orin Kerr over at the Volokh Conspiracy takes a good-natured jab at those such as Mr. Scarborough who disingenuously claim that the fight over the judiciary is based on Constitutional principles and not good ol’ fashioned American politics. Professor Kerr observes the following about a prominent Supreme Court Justice:

If you think about it, [this Justice] is directly or indirectly responsible for many of the problems with the modern judiciary. Not only did [this Justice] personally fail to intervene in the Schiavo case, ignoring the will of Congress, but he has repeatedly urged judges to simply ignore Congressional intent. He refuses to cite legislative history, woodenly following the “text” rather than deferring to clear statements of what Congressional leaders intended to do. This kind of judicial hubris is simply unacceptable.
His activist opinions have invented new constitutional rights for marijuana growers, given thousands of convicted criminals a “get out of jail free” card, and tried to limit the President’s ability to fight the war on terror. In addition, [this Justice] has relied heavily on foreign legal sources to interpret allegedly ambiguous provisions of the Bill of Rights (see part II.A). Indeed, [this Justice’s] contempt for our system of Government is so great that he admits he wants to see the Constitution “dead.

Who is the Justice taking such outrageous positions? That’s right, Mr. Scarborough’s favorite, Justice Antonin Scalia.
Also, University of Texas Law Professor Brian Leiter points to this statement approved by the deans of the United States’ top law schools (including Dean William Powers of the UT Law School and Dean Nancy Rapoport of the University of Houston Law Center), which provides the following common sense advice:

Recent threats of retaliation against federal judges by members of Congress and others harm the rule of law and the important constitutional principle of separation of powers. We strongly oppose these threats of retaliation. Regardless of whether we agree or disagree with their opininons, we express our full support for judges who properly discharge their constitutional responsibilities by deciding the cases before them as they believe the law requires.
We recognize that Americans wil often disagree, as do we, with particular judicial opinions. But the legislative and executive branches have constitutional means available to them to seek to alter the law as declared by the judiciary. An effort to use those means is part of our tradition of separation of powers and is entirely proper. But it is irresponsible and harmful to our constitutional system and to the value of a judiciary that is independent, in fact and appearance, when prominent individuals and members of Congress state or imply that judges may be impeached or otherwise punished because of their rulings. We urge them to stop.

The Grand Old Spending Party

republican.gif Check out the following executive summary of this Cato Institute paper entitled The Grand Old Spending Party: How Republicans Became Big Spenders:

President Bush has presided over the largest overall increase in inflation-adjusted federal spending since Lyndon B. Johnson. Even after excluding spending on defense and homeland security, Bush is still the biggest-spending president in 30 years. His 2006 budget doesn?t cut enough spending to change his place in history, either.
Total government spending grew by 33 percent during Bush?s first term. The federal budget as a share of the economy grew from 18.5 percent of GDP on Clinton?s last day in office to 20.3 percent by the end of Bush?s first term.
The Republican Congress has enthusiastically assisted the budget bloat. Inflation-adjusted spending on the combined budgets of the 101 largest programs they vowed to eliminate in 1995 has grown by 27 percent.
The GOP was once effective at controlling non-defense spending. The final non-defense budgets under Clinton were a combined $57 billion smaller than what he proposed from 1996 to 2001. Under Bush, Congress passed budgets that spent a total of $91 billion more than the president requested for domestic programs. Bush signed every one of those bills during his first term. Even if Congress passes Bush?s new budget exactly as proposed, not a single cabinet-level agency will be smaller than when Bush assumed office.
Republicans could reform the budget rules that stack the deck in favor of more spending. Unfortunately, senior House Republicans are fighting the changes. The GOP establishment in Washington today has become a defender of big government.

This Slate op-ed provides historical perspective to the findings of the Cato Institute study. Hat tip to Tyler Cowen over at Marginal Revolution for the links.

Ron Chernow on the independent judiciary

supreme court.jpgRon Chernow — the author of The House of Morgan (1990), The Warburgs (1994), Titan: The Life of John D. Rockefeller, Sr. (1998), and last year’s marvelous Alexander Hamilton (2004) — writes this interesting NY Times op-ed in which he provides insightful historical perspective on the current political battle that is brewing over the misguided proposals of certain Republican Party politicians to cut off federal financing for the judiciary and even abolish some lower-level federal courts.
After explaining how President Thomas Jefferson and the Republicans attempted to undermine the independence of the American judiciary during the early 1800’s after former President John Adams and the Federalist Party had stacked the federal judiciary immediately before Adams had left office, Mr. Chernow observes wisely:

So, before they starve the lower courts of funds, Republicans in Congress and the conservative evangelicals who support them would be wise to ponder these events of the early 1800’s. For all the talk today of tyrannical judges, the judiciary still relies on Congress for its financing and on the executive branch to enforce its decisions. It could easily, once again, end up at the mercy of the other two branches, upsetting the delicate balance the framers intended.

Or, stated another way, if a leader of the stature of Thomas Jefferson almost compromised the independence of the judiciary, just think what damage Tom DeLay could do.

Stros activate Berkman

Berkman4.jpgThe reeling Stros (11-16) get a nice boost today as the club’s best hitter — Lance Berkman — is expected to play tonight in the Stros’ game against the Braves (17-11) in Atlanta. Berkman has been rehabilitating his right ACL over the past six months after surgery on his knee that he injured while playing flag football last November. Here is the Stros’ press release on the activation of Berkman.
Although the Stros have not yet announced the player who will be dropped from the 25 player roster to accomodate Berkman, my sense is that it will be either Brandon “Home Run” Duckworth or Chad Harville, who had a rough outing in last night’s game in Atlanta.
Update: Just to show what I know, the Stros announced this evening that they sent rookie Chris Burke (-4 RCAA/.222 Ave/.265 OBP/.244 SLG) to AAA Round Rock to make room on the roster for Berkman. Inasmuch as Burke is blocked by Bidg at his natural position of second base and has not hit well enough so far this season to merit a reserve role in the outfield, he is probably better off at Round Rock where he can play every day. However, the Stros probably will not carry 12 pitchers on the 25 player roster for long, so another roster move is likely in the near future.
The already weak-hitting Stros have been struggling at the plate this season without Berkman, who is legitimately one of the best hitters in Major League Baseball right now. To appreciate just how good a hitter Berkman is, consider his runs scored against average (“RCAA”), which is a statistic that Lee Sinins developed to measure how many more runs a hitter generates compared to the number of runs an average hitter creates.
As noted several times on this blog, RCAA is particularly valuable to evaluate hitting because it focuses on the two most important things in winning baseball games — that is, creating runs and avoiding making outs. RCAA basically computes the number of outs that a particular player uses in creating runs for his team and then compares that number to the amount of runs that an average player in the league would create while using an equivalent number of outs. Inasmuch as the hypothetical average player’s RCAA is always zero, a player can have either an RCAA that is a positive number — which indicates he is an above average hitter (i.e., Barry Bonds) — or an RCAA that is a negative number, which means he is performing below average (i.e., Brad Ausmus).
Moreover, RCAA is a valuable tool to evaluate hitting ability because it provides a good measure for comparing hitters who played during different eras. Inasmuch as RCAA measures a player’s hitting ability against that of an average player in the player’s league for each particular season, a player’s lifetime RCAA is an accurate measure to compare players from different eras — it essentially measures how each player performed against an average player in his era. On the other hand, comparing other hitting statistics — such as on-base average, slugging percentage, and batting average — is often skewed between players of hitter-friendly eras versus players of pitcher-friendly eras.
Berkman is well on his way to being the best hitter in Stros history. After a 55 RCAA/.982 OPS 2002 season and a 40 RCAA/.927 OPS 2003 season, Berkman had an incredible .566 SLG, .450 OBA, 1.016 OPS, 69 RCAA in 160 games during the 2004 season. He has a .980 career OPS (i.e. on-base average + slugging percentage), compared to the league average of .777 during his career, and 254 RCAA in 775 games.
Berkman’s 236 RCAA over the past 4 years ranks 8th in the past half century for players of the age 25-28:
1 Mickey Mantle 322
2 Frank Thomas 320
3 Barry Bonds 319
4 Hank Aaron 256
5 Manny Ramirez 250
6 Willie Mays 246
7 Jeff Bagwell 239
8 Lance Berkman 236
T9 Todd Helton 228
T9 Frank Robinson 228
Not bad company.

Dr. Bart Smith updates Houston economic forecast

Bart Smith.jpgAs noted earlier here and here, University of Houston economics professor Dr. Barton Smith is the leading expert on the regional economics of the Houston metropolitan area. Dr. Smith is also the director of the UH Institute for Regional Forecasting, and his report on the local real estate market that he gives a couple of times a year to the Houston real estate business community is always one of the most well-attended luncheons in the Houston business community.
All in all, Dr. Smith views the Houston economy to be in a small but steady growth mode that is largely dependent on what happens in the exploration and production sector of the oil and gas industry. While Houston’s housing market is not overinflated, Dr. Smith believes that it is currently suffering from oversupply, although not close to the extent of the dreaded days in the Houston real estate market of the mid-to-late 1980’s. Dr. Smith reminded the audience that high energy prices alone are not enough to create a booming economy in Houston anymore, and noted that, while upstream energy grew at nearly 5 percent last year, the overall regional economy grew only 0.9 percent. Dr. Smith pointed out that this is the result of such factors as slow growth in downstream energy (including refining and petrochemicals) and in non-energy sectors of the regional economy.

The Enron brand

Judge Bowdre.jpgOne of the remarkable cultural developments since the collapse of Enron Corporation has been the branding of the “Enron” name to become synonomous with all forms of corporate corruption. Earlier this week, the prosecution’s use of the Enron brand in the corporate-fraud trial of former HealthSouth CEO Richard M. Scrushy got the prosecution in some very hot water with the judge in that case.
The fireworks came after the witness — HealthSouth’s security chief and a key defense witness — had mentioned Enron during cross-examination. The prosecutor then then asked the witness if he was referring to “the same company that defrauded investors and laid off many employees, resulting in prison sentences for some people.” That prompted U.S. District Judge Karon O. Bowdre (pictured above) — who previously had warned lawyers in the trial to refrain from references to Enron or any other corporate frauds — to pound her gavel and yell the prosecutor’s name.
After slamming her gavel, Judge Bowdre instructed the jury that the prosecutor had asked a “series of inappropriate questions.” The judge then advised the jury that she was terminating the cross-examination “as a sanction” to the prosecution. No word yet on whether the prosecutor faces further sanctions for what is a serious and intentional breach of the judge’s previous order.
Professor Ribstein has a typically adept observation about this latest incident of prosecutorial misconduct:

“If the government actually has to try the facts of each individual corporate fraud case, it could get sticky.”

“Now be nice, Carl”

carl_icahn.jpgYesterday’s conference call for Blockbuster, Inc.’s CEO John Antioco to discuss the company’s quarterly earnings turned out not to be the routine chat that usually occurs in such calls. Blockbuster investor Carl Icahn made sure of that.
Mr. Icahn and two entertainment industry veterans are opposing Mr. Antioco and two current directors in the company’s upcoming annual meeting. Mr. Icahn is Blockbuster’s biggest shareholder, with about 8.6% of Blockbuster’s combined voting shares. He is also expected to receive support in his fight with Mr. Antioco from most of the hedge funds that own a big chunk of Blockbuster’s stock.
So, this veteran warrior of seemingly countless corporate battles (here are a few previous posts on Mr. Icahn) surprised everyone on the call (via about 450 phone and Web connections) when his distinctive raspy-voice joined the question-and-answer session of the call, beginning with the following missile shot at Mr. Antioco:

“You have mischaracterized what I’m trying to achieve here,” Mr. Icahn alleged regarding his recent move to gain control of the Blockbuster board. “We would want you accountable.”

Mr. Icahn went on to characterize Mr. Antioco’s $50 million bonus last year as “egregious” given Blockbuster’s faltering business. Earlier, the company had announced a first-quarter loss of $57.5 million compared with year-earlier net income of about $115 million.
Well, if you want a fight, just mischaracterize a CEO’s pay. The usually calm Mr. Antioco accused Mr. Icahn of making an “erroneous” statement about his pay and then said:

“I didn’t get a $50 million bonus. I think you know that.”

Blockbuster regulatory filings show that Mr. Antioco earned $7 million in cash and $26.7 million in restricted stock in addition to stock options worth potentially much more. Mr. Antioco then appealed to investors on the call:

“Do you honestly believe that electing a divisive element will help move the company and your investment forward?”

In addition to the foregoing, Mr. Icahn challenged Mr. Antioco to give up his entitlement to future bonuses in light of Blockbuster’s financial problems and to put the entire board up for election next year rather than continuing the staggered current system under which two or three directors are nominated for election every year. Mr. Antioco shot back that such decisions were the preogative of the board.
At any rate, the unusual dust-up between the two rivals went on for six minutes with each man interrupting the other and ended only when Mr. Icahn was cut off in midsentence by the conference call operator, who declared the investor’s comments were not “appropriate.” The operator’s cut-off came right before Mr. Icahn appeared ready to reveal details of an offer from a leveraged buyout firm to bid for Blockbuster. Mr. Antioco later told listeners on the call that the company had received no such offers. Being cut off in mid-sentence was “corporate democracy, Antioco-style,” Mr. Icahn commented later.
No word yet on whether Blockbuster is selling tickets to its upcoming annual meeting.
Update: Charlie Quidnunc, a podcast-blogger in Mercer Island, Washington, actually listened in on the Blockbuster conference call and has this post and podcast on the call. Don’t miss it. As Charlie notes, this was not your typical conference call for a publicly-traded company.

What was that message again?

boilerroom.jpgProfessor Podgor over at the White Collar Crime Prof Blog points us to this Securities and Exchange Commission press release that describes the SEC’s lawsuit against some Houston-area telemarketers who are taking a rather creative approach to soliciting purchases of six microcap stocks.
Turns out that the stock promoters left hundreds of thousands of fraudulent “wrong number” stock tip messages in which a woman by the name of “Debbie” would leave a hot stock tip message on the phone recipient’s voice mail and would leave it in such a way to make the recipient believe that “Debbie” had dialed the number by mistake and had really meant to call a friend to pass along the hot stock tip.
The SEC complaint alleges that the messages were part of a larger scheme enabling the Houston-based stock promoters (Peter S. Cahill of Houston and Cahill’s Clearlake Venture Group) to sell approximately $4.5 million of one of the touted stocks through a Tampa, Fla.-based broker-dealer. The SEC alleges that the scheme drove up the price of each of the touted stocks, temporarily inflating their combined market capitalization by approximately $180 million.
Gosh, what is the world coming to? You can’t even trust those hot stock tips mistakenly left on your voicemail anymore? ;^)

Nebraska upsets OU!

Nebraska v OU.jpgFollowing on these earlier posts on the current conflict between the Universities of Nebraska and Oklahoma, the ‘Huskers have scored an upset!
My sense is that the ‘Huskers will not do as well against the Sooners on the gridiron this fall.
Update: OU fan Jim Bob Baker, who had taken the “over” on the pre-verdict over/under betting line of a three year sentence for the defendant, observed the following about the jury:

“Not guilty? Gee, I didn’t know that there were that many Oklahoma State alumni in Cleveland County (Norman), Oklahoma.”

It’s a tough time to be an insurer

FBI.jpgFrustrated with the Lord of Regulation getting all the headlines recently, the Federal Bureau of Investigation announced yesterday a wide-ranging inquiry into the insurance industry that could extend into banking and other financial sectors.
FBI investigators and insurance regulators from multiple states are meeting in New York City today during which the regulators are apparently going to school the FBI agents on the structured finance transactions that insurers commonly use to manage earnings or — as described in the current climate of regulatory demagoguery — to manipulate financial statements. The FBI has assigned between 50 and 75 agents from its Financial Crimes Section to the probe and confirmed that its investigation is the result of the various criminal and regulatory probes that are already underway in regard to AIG and Berkshire Hathaway’s reinsurance unit, General Re.
One would hope that the FBI actually hires an expert or two in structured finance to explain the legitimacy of many such transactions before going on the Sunday talk shows and alleging widespread criminal activity within the industry. The misguided nature of the government and the bankruptcy examiner’s similar investigations into many of Enron’s structured finance transactions has already been well-chronicled, particularly by University of Chicago business professor and structured finance expert, Christopher Culp, in his recent books, Corporate Aftershock (Cato 2003) and Risk Transfer (Wiley 2004).
Meanwhile, checking in on the AIG saga, the Wall Street Journal ($) and others published a copy of a letter from former AIG CEO Maurice “Hank” Greenberg to the AIG board yesterday in which Mr. Greenberg laments AIG’s restatement of net worth earlier this week and points out that the restatement lacked critical input from Mr. Greenberg and former AIG CFO, Howard I. Smith. How the company could have reached its conclusions without Mr. Smith’s input “is beyond my comprehension,” observed Mr. Greenberg in the letter.
Of course, the Lord of Regulation made certain that the AIG board did not have such input by effectively forcing Messrs. Greenberg and Smith to invoke their Fifth Amendment privilege against self-incrimination by publicly alleging that they had committed crimes before even hearing from either man. So it goes in the post-Enron business world of being guilty until proven innocent if one engages in structured finance transactions.