Isaac Laquedem

Clatsop County Democrats bounce two party stalwarts faster than Illinois booted Blagojevich

The fight in Clatsop County over the liquefied natural gas (LNG) terminal and the attendant pipeline is making the local Democratic party more efficient; for reasons not explained at its meeting on January 26, the Clatsop County Democratic Central Committee booted two precinct committeepersons.  A Daily Astorian news story on the meeting said that party leaders had received evidence that an unnamed for-profit corporation (my favorite kind, actually) was trying to take over the party committee.  The general suspicion is that the corporation is the developer of the proposed LNG plant at Bradwood, on the Columbia River.

The two ousted committee members had been appointed to the central committee in November at what the paper describes as a sparsely-attended meeting.  I have a feeling that future meetings of the central committee will draw much larger crowds.

A little bank in Bend understands what Merrill Lynch and Citigroup don't

Last week, Bank of America fired John Thain, the Merrill Lynch boss who, as Bank of America was getting ready to buy (meaning "rescue from disaster") the capsizing Merrill Lynch, pushed through a $1.2 million redecoration of his office and lavish bonuses for other Merrill Lynch executives.  (He asked for, but didn't receive, $40 million for himself even as his company was cratering.)

Citigroup, parent of Citibank, Salomon Smith Barney, and lots of other things, received $45 billion from the government bailout late last year.  It was getting ready to put the money to work on, among other things, a brand-new $50 million corporate jet (not even American-made)  for its high-flying top brass.  (And "brass" in one of its other meanings is an appropriate word for what Citigroup was planning to do with that little bit of your money and mine.)  Only after President Obama got wind of Citigroup's purchase did someone at Citigroup realize how tone-deaf that made their executives look.  Citigroup cancelled the purchase.

Contrast the bland ignorance of the Merrill Lynch and Citigroup leadership with little Cascade Bancorp in Bend, parent of Bank of the Cascades.  Bank of the Cascades isn't tiny, but it's not big either; its total tangible equity for its shareholders is only $135 million, or about equal to a corporate jet plus two or three Merrill Lynch bonuses.  Cascade Bancorp, like Citigroup and Bank of America, signed up for a slice of the federal bailout money and cut its dividend to one cent a share.  Yesterday it released a dismal earnings report, set aside a large chunk of money to cover loan losses, and cut its dividend to zero.  Its press release also included the following sentences:

Note that in context of the reported annual loss, the Company has made the decision to pay no 2008 bonuses. In addition, the Company has announced that there will be no executive salary increases effective in 2009.

This bank's management gets the point that the top people at Citigroup and Merrill Lynch missed: the federal money is to bail out the banks, not the bankers.  The feds would do well to make sure that the banks that receive larger slices of the federal rescue fund get the same message.

The Laquedem Kick The Bad Bankers Out On Their Assets Plan

The balance sheets of American banks are bad, for two main reasons.  One reason is that many banks, principally regional and community banks, lent too much money to developers without paying enough attention to whether their communities had homebuyers to buy the houses the developers were buying.  The other reason is that some banks, mainly the large banks, bought derivative securities that they didn't really understand, and for which there is now no resale market.

Banks are required to hold sums in cash, in federal funds (the same thing, really), or in short-term federal securities as reserves against possible losses on their assets.  Banks don't have to reserve anything against United States treasury obligations.  They have to reserve a little bit against municipal bonds, more against ordinary loans where the borrower's paying as agreed, still more against loans where the borrower's paying but the collateral isn't worth much, and much more against loans where the borrower isn't paying or has gone broke.  Banks also have to maintain a certain ratio of equity to assets.  For this discussion let's say it's 8%, meaning that a bank with $1 billion of assets must have $80 million of equity.  The equity, unlike the reserves, doesn't have to be in cash. 

Suppose a bank is holding $100 million of weird derivative securities, which until last year it could have sold for $100 million.  The bank could count those securities on its balance sheet at their market value of $100 million, and would likely have had to reserve only 1% or so, $1 million, against the likelihood of loss of value of those securities.

Then came the meltdown in the market for derivative securities.  Many securities attracted no bids -- that is, no one was willing to buy them at any price, even though they were making their payments as scheduled.  That made their market value zero under the accounting rules for banks.  Our hypothetical $1 billion bank with $100 million of derivatives, now freshly marked down to $0, now has an equity of $20 million below zero.

That's bad.  The Fed and the FDIC don't like banks to have negative equity.  Hence the plan, which may pass, to allow banks to sell their bad assets to a new bank to be formed solely for the purpose of buying the bad assets of other banks.  Our hypothetical bank could sell its $100 million of derivatives to Uncle Sam's Bad Bank for, let's say, $80 million, which turns the bank into a $980 million bank with $60 million of equity.  Not quite as good as it was before the crash, but still solvent.

More simply, the government proposes to isolate the bad assets of the banking system into a single Bad Bank, leaving the good assets to the private banks.  That's all very well, but it doesn't go far enough.  Who got those assets onto the balance sheets of the banks?  The Bad Bankers did, that's who.  Therefore, I propose the Laquedem Kick The Bad Bankers Out On Their Assets Program.  Each bank that participates in the Bad Bank program will identify the Bad Bankers who purchased, approved, and budgeted for those assets who are within the top three levels of management of the participating bank.  The employment contracts of those Bad Bankers will be assigned to the Bad Bank, and they will leave the employ of the banks.  In effect, the government will require the major banks to kick the Bad Bankers' Assets (spell it how you like) into the Bad Bank.  Shareholders of the participating banks won't have to stand the expense of paying the contracts of the Bad Bankers.  If the Bad Bankers are to collect on their lavish employment contracts, they will have to figure out how to make the Bad Assets pay.  For, to turn a phrase used by the anti-gun lobby, "Loans don't kill banks.  Lenders do."

I like Frank, who is smart enough not to want his old job back

This latest Oregonian story on Mayor Adams's troubles gave me a certain nostalgia for the Frank Ivancie years, though he's unlikely to head north from his home in sunny southern California to reenter our political scene.  During Hizzoner's four years as Mayor, as I recall, the police bureau was quiet, snowy arterials were sanded, and construction on the area's first light rail line started.  Despite the recession that plagued most of his term, he helped recruit overseas businesses to come to the area (NEC, for example).  The City's main public works project of the time, the Portland Building, came in pretty much on time and on budget.  Not a bad legacy.

Isaac seeks a new job, in case the incumbent steps down

I'm taking this opportunity to announce my candidacy for Mayor of Portland, if Mayor Adams should step down next month, and if I can overcome one small legal impediment, which is that I don't live in the City.  I am, however, prepared to serve anyway, and as a non-resident I can make decisions unaffected by bias toward one part of the City or another.  I'd be happy to commit to serve only as Isaac.  City Hall wouldn't have to endure me in person, only in persona.  That way, Portland would have a mayor along the lines of Garry Trudeau's creation Ron Headrest.

Every candidate needs a platform.  I'm starting with my transportation platform, not as a complete statement of what I think the City needs but as a guide to my thinking on the subject.  The key points:

1.  Replacing the Sellwood Bridge is the highest transportation priority in the City, and we will not contribute toward any other new transportation facilities until the Sellwood Bridge is replaced.  We will help Multnomah County pay to replace the bridge in its current location with a four-lane bridge capable of handling today's level of traffic.  This means that the City will not contribute money toward any new tram, trains, or other toys until we have a new bridge in place. 

2.  The City will not sell its parking meters as a tax shelter, nor will it change them out for even cooler meters until they become actually obsolete.

3.  The City will not build any bike paths that it can't commit to sweep regularly.

4.  NW Lovejoy and Marshall will be returned to one-way operation forthwith.  NW 14th and 16th Avenues will be returned to two-lane operation, with bicyclists encouraged to use NW 18th and 19th in their place.

5.  For those properties in North Macadam / South Waterfront that aren't already under construction, the maximum allowable density will be reduced to the level that the existing street system can support.

6.  Provisions in the zoning code that assume that if you prohibit people from building garages and parking areas, they will cease to own cars, will all be repealed.  The City will understand the difference between owning a car (and needing somewhere at home to park it) and using a car for a trip that could be done on mass transit.

7.  The City will support a tri-county gasoline tax of five cents a gallon, to be allocated among the cities in proportion to their population, which the cities may use only to improve dirt and gravel roads.  The City of Portland will use its share of the tax to curb and pave any unimproved or underimproved street in the City which 50% of the residential property owners want to have improved, and will pay 75% of the cost to improve the street.  Because the City has for so long shorted its most eastern residents, the City will start paving at its eastern border and work its way west, not using any of this fund on streets west of the Willamette until everyone on the east side who wants a paved street has one.  (I'm throwing this in to get Commissioner Leonard's vote.)

8.  The City will redesign and rebuild the intersection of E. Burnside and Sandy Boulevard so that all lanes go in the direction they're pointed in, instead of their current Peter Max-like slaloms.

There's more to my transportation platform, but I think that's enough for one day.

Isaac provides an election law primer to Kate Brown

The main issue in the Sam Adams imbroglio isn't whether he unlawfully had sex with a minor; it's whether he violated Oregon's election laws by encouraging others to make false statements about his relationship with Mr. Breedlove.

For the convenience of any attorneys general who might drop by this obscure corner of the blogosphere, let's look at ORS 260.532, which reads in part:

(1)  No person shall cause to be written, printed, published, posted, communicated or circulated, any letter, circular, bill, placard, poster, photograph or other publication * * * with knowledge or with reckless disregard that the letter, circular, bill, placard, poster, photograph, publication or advertisement contains a false statement of material fact relating to any candidate, political committee or measure.

The statute of limitations for this section is 30 days after the election, so the time to bring an action has expired.  However, consider ORS 260.345:

(1)  Any elector may file with any filing officer a written complaint alleging that a violation of an election law or rule * * * has occurred and stating the reason for believing that the violation occurred and any evidence relating to it. * * *

(3)  Upon receipt of a complaint under subsection (1) or (2) of this section, the Secretary of State or Attorney General immediately shall examine the complaint to determine whether a violation of an election law or rule has occurred and shall make any investigation the Secretary of State or Attorney General considers necessary. * * *

(8)  A filing officer having reason to believe that a violation of an election law or rule has occurred shall proceed promptly as though the officer had received a complaint.

And now look at ORS 260.355:

If, after a plea of guilty by or verdict of guilty against a person nominated or elected to a public office in a criminal prosecution of the person for violation of an election law in regard to either the person's nomination or election, the court determines that the violation was deliberate and material, the court, in addition to any other punishment it may impose, shall deprive the person of the nomination, or, if the person was elected to an office other than state Senator or state Representative, of the office. * * *

There are some wrinkles to this, mainly involving whether ORS 260.993 provides a penalty or merely limits the penalty for violating ORS 260.532, but here's what I think the argument could be.

Willamette Week's article suggests that Mr. Adams caused to be published a false statement with regard to himself and possibly Robert Ball, at a time when Mr. Ball was at least a prospective candidate for the office and when Mr. Adams clearly was a candidate.  Was the statement material to the election?  If so, then Mr. Adams violated ORS 260.532.  Any filing officer, meaning in this race the Secretary of State, who has read the Willamette Week article may now have reason to believe that Mr. Adams violated an election law, and is obligated to start an investigation.  Any elector (meaning a person registered to vote in the City of Portland) may send a copy of the article to the Secretary of State, Kate Brown, and point out her obligations under ORS 260.345(8).  In fact, it's probably enough just to e-mail her a link to this post. 

An unlikely leader offers a peace plan for the Middle East

Yesterday's New York Times carried an opinion piece on the Israel-Palestine problem.  The author called for a single state to include Israelis and Palestinians as equal citizens, and in tones of moderation included these remarks:

The basis for the modern State of Israel is the persecution of the Jewish people, which is undeniable. The Jews have been held captive, massacred, disadvantaged in every possible fashion by the Egyptians, the Romans, the English, the Russians, the Babylonians, the Canaanites and, most recently, the Germans under Hitler. The Jewish people want and deserve their homeland.

But the Palestinians too have a history of persecution, and they view the coastal towns of Haifa, Acre, Jaffa and others as the land of their forefathers, passed from generation to generation, until only a short time ago.

* * *

A two-state solution will create an unacceptable security threat to Israel. An armed Arab state, presumably in the West Bank, would give Israel less than 10 miles of strategic depth at its narrowest point. Further, a Palestinian state in the West Bank and the Gaza Strip would do little to resolve the problem of refugees. Any situation that keeps the majority of Palestinians in refugee camps and does not offer a solution within the historical borders of Israel/Palestine is not a solution at all.

The piece struck me as a thoughtful proposal, even if its peaceful realization is unlikely.  Perhaps it was written by an Israeli moderate?  A Palestinian moderate?  A European peacemaker?  I was surprised -- to say the least -- when I saw the author's name, that of an African leader and longtime supporter of the Palestine Liberation Organization not previously known for his moderation.  I don't think the timing of the publication, coming one day after President Obama took office, is a coincidence.

Portland's next mayor: Isaac handicaps the field

If Mayor Adams leaves his post, the voters will be asked to select someone to fill the mayor's post.  The public's selection is limited by one bland fact: they can choose only among the people who file for the office.  (I don't think a write-in candidate will win.)  My political friends are already speculating on who will be Portland's next mayor, even though they're not confident enough that Mayor Adams will in fact resign to put down any money on their choices to succeed him.

That's not to say that the political atmosphere is free of names.  So far I've heard four being discussed by the cognoscenti, and I'll rank them in order of probability, coupled with my estimate of the odds against each one landing the job.

1. Nick Fish.  If the mayor resigns, the campaign to succeed him will be short.  Commissioner Fish won election last year and is in the best position of any local candidate to revive his campaign organization on short notice.  The public likes him and he's generally a conciliator within the council, without obvious political adversaries.  Odds:  3 to 2

2. Dan Saltzman.  He won't run against Commissioner Fish, but if Commissioner Fish doesn't run, look for Commissioner Saltzman to throw his hat into the ring.  He's the least visible (blandest) of the City Council, and has so far stayed mostly out of controversy.  Voters who have tired of the recent theatrics on Fourth Avenue may well support someone who doesn't act out in public.  Odds:  3 to 1

3. David Bragdon.  Mr. Bragdon must leave Metro at the end of 2010, when term limits bar him from running for re-election.  Why not leave a little early?  The skills he's learned running the Metro Council will serve him well at the City Council.  He can raise the funds for the campaign easily.  His political organization is rusty, however, and he's need more time than Mr. Fish to put it together.   Odds:  5 to 1

4. Steve Novick. Mr. Novick came from nowhere to run a strong campaign last year against the speaker of the state house for the Democratic nomination for the senate, who was heavily favored by the Democratic establishment.  He won 42% of the vote, an amazing showing for a political unknown in his first race.  He's the most recognizable of the four potential candidates, and voters who elected Mr. Adams for his policy wonk reputation will get all that, and more, with Mr. Novick.  Odds: 7 to 1

5. All others:  19 to 1.  (This leaves no edge for the house, but I mostly run an honest book.)

I haven't asked any of the four if they're interested in serving, and they're all too politically astute to assert any ambition to be mayor before Mr. Adams resigns.  (And if Mr. Adams doesn't resign, we'll have to wait until 2012 to learn if any of the four wants to be mayor.)  They are, however, who I see as the front-runners for this race that hasn't started.

Some have mentioned Sho Dozono, last year's runner-up, as a candidate to replace Mr. Adams.  It seems fair to consider him, but my sense is that he's not all that unhappy about having lost the election, and will be content -- delighted -- to stay in private industry.

The Sam Adams countdown begins

In a meeting of real estate developers this morning, the consensus was that Mayor Adams will be out of office within 60 days.  Some movers and shakers who met this evening (not about the Mayor) figure that he has 30 days.  What's your view?

One small step for an American, one giant leap for Americankind