Goldman Sachs told managers 'reduce risk'
WASHINGTON, April 27 (UPI) -- Three current and former Goldman Sachs employees told U.S. senators Tuesday upper management frequently instructed them to minimize risks.
Rather than tell staff to go long or short on the housing market, executives told mortgage department managers, those staking out the bank's market position during 2006 and 2007, to "get smaller, reduce risks and get closer to home," said Josh Birnbaum, former managing director of Goldman's mortgage department.
"Closer to home" was the in-house code for pulling back if Goldman's position -- long or short -- had gotten too far from neutral, the executives said.
Birnbaum and mortgage department directors Dan Sparks and Mike Swenson said the bank's position was a constantly changing reaction to positions requested by clients.
At the Goldman Sachs hearing, U.S. Sen. Carl Levin accused the investment bank of behaving as banks did in the 1920s, sparking the Great Depression.
Levin, D-Mich., said Goldman Sachs misused the system to "put its own interests and profits ahead of the interests of its clients and our communities."
"In looking at this crisis, it's not hard to echo the conclusion of another congressional committee, which found, quote, 'the results of the unregulated activities of the investment bankers were disastrous,' close quote. That conclusion came in 1934, as the Senate looked into the reasons for the Great Depression. And the parallels are unmistakable to today's events," Levin said.
Goldman has denied it helped create the mortgage market collapse by betting against the market.
Financial regs bill fails to advance again
WASHINGTON, April 27 (UPI) -- A second attempt to move along legislation that would reform the U.S. financial system in the Senate failed Tuesday on a 57-41 vote.
Once again, a vote to start formal debate on the bill fell three votes shy of the necessary 60 votes to avoid a filibuster. A vote to advance the bill failed Monday by the same 57-41 vote with all Republicans present voting against ending cloture to allow formal debate to begin. On both days, Sen. Ben Nelson, D-Neb., joined Republicans.
The Republicans refusal to allow debate on the bill "is just an amazing thing," Sen. Dianne Feinstein, D-Calif., said immediately after the vote. "We cannot even begin to debate on this bill. ... We are prevented essentially from debating one of the most important bills that congress could pass."
In debate leading up to the vote, senators on both sides of the aisle said no one was against financial regulation reform -- they just had differing views on how the Senate bill would help achieve it.
"The way to fix the bill is to begin to debate the bill," Sen. Christopher Dodd, D-Conn., chairman of the Senate banking committee, said in debate. "Can we begin discussing the bill? Because until we move on to the bill, all this talk is nothing but talk."
Republicans agree that better regulation of the U.S. financial system is needed, but Dodd's bill "does not achieve that goal," said Sen. Pat Roberts, R-Kan.
He said constituents have demanded that they "never be put on the hook" for another bailout of a failed company. Republicans have expressed concern that bailouts could be institutionalized in the bill while Democrats said that wasn't the case.
Sen. Sam Brownback, R-Kan., said taxpayers "are fed up with heavy-handed, big government."
Republicans also took issue with the omission of governmental entities and mortgage giants Fannie Mae and Freddie Mac.
"Failure to deal with this is a glaring omission," said Sen. Jon Kyl, R-Ariz., and minority whip.
Dodd and other Democrats said regulating the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. needed to be addressed in separate legislation.
Outside the chamber, Dodd and Sen. Sen. Richard C. Shelby, R-Ala., the ranking Republican on the banking committee, were working on a bipartisan measure. Roberts called the next 48 hours "absolutely critical" in achieving a bipartisan bill.
Mexico issues Arizona travel alert
MEXICO CITY, April 27 (UPI) -- The Mexican government Tuesday issued a travel alert for Arizona, saying Mexican nationals could face harassment as a result of the state's new immigration law.
President Felipe Calderon told a Mexico City news conference Monday the Arizona law opens the way for "intolerance, hate, discrimination and abuse in law enforcement."
Arizona Gov. Jan Brewer signed the Support Our Law Enforcement and Safe Neighborhoods Act into law Friday. It takes effect 90 days after the end of the legislative session and authorizes police to check foreigners' identification and detention of those questioned who don't have proper documentation. The measure has sparked demonstrations nationwide, with parallels drawn to the early days of Nazi Germany.
The Foreign Affairs Ministry advised Mexican nationals to use "extreme caution" traveling to Arizona -- even before the law takes effect -- and listed consulates where people can get help.
"It is important to act with prudence and respect local laws," the advisory said.
It added, "As long no clear criteria are defined for when, where and who the authorities will inspect, it must be assumed that every Mexican citizen may be harassed and questioned without further cause at any time."
Oil spill smaller but worse than 1979's
HOUSTON, April 27 (UPI) -- The oil spill from last week's oil rig explosion near Louisiana is smaller than a huge 1979 spill near Mexico, but potentially more devastating, experts said.
The oil slick from the Deepwater Horizon's well explosion and fire in the Gulf of Mexico April 20 is worse than the 1979 Ixtoc 1 leak, if for no other reason than that 11 oil workers' lives were lost, the Houston Chronicle reported Tuesday.
The Deepwater Horizon oil slick currently is about 80 miles long and 48 miles wide, the newspaper said.
The Ixtoc well poured about 140 million gallons of oil into the gulf for 295 days before it was capped. The current spill is an estimated 42,000 gallons per day. It would take nine years for the Deepwater Horizon spill to match the 1979 spill, the Chronicle reported.
The April 20 oil spill is closer to the U.S. Gulf coast shores, and there is concern it could damage the coastline more than did the 1979 spill, scientists said.
But marine biologists say the clean-up system is better now than it was more than 30 years ago.
"We're better prepared now. If they're able to clean it up out there in the open water, that's the best thing they can do," said Wes Tunnell, a marine biologist with the Corpus Christi Harte Research Institute for Gulf of Mexico studies.
Malcolm X killer freed
NEW YORK, April 27 (UPI) -- New York corrections officials Tuesday paroled Thomas Hagan, the only man who admitted his role in the 1965 assassination of Malcolm X.
Hagan, 69, who has been on work release since March 1992, was released at 11 a.m. from the Lincoln Correctional Center, which is on Malcolm X Boulevard in New York, CNN reported.
Hagan was sentenced in 1966 to 20 years to life in prison and had gone before the parole board 15 times since 1984. Two other men convicted in the killing, whom Hagan said were innocent, were released in the 1980s.
"I can't really describe my remiss and my remorse for my actions," Hagan has said.
Malcolm, 39, was shot to death Feb. 21, 1965, after abandoning the Nation of Islam for orthodox Islam. The split spawned a feud with Nation of Islam founder Elijah Muhammad. The Nation of Islam, however, has denied any role in the assassination.
Hagan, then 22 and known as Talmadge X Hayer, was a radical member of the Nation of Islam, CNN said. He was shot in the leg during the assassination as he tried to escape and was beaten by the crowd. He told the parole board at the time, he was incensed about remarks Malcolm X made about Muhammad.
"I can't say that anyone in the Nation of Islam gave us the idea or instructed us to do it. We did this ourselves for the most part, yes," Hagan said at his parole hearing.
