New Merrill Lynch Disclosure Shines A Perjurious Light On Ben Bernanke’s Sworn Testimony; JP "Fed Lite" Morgan Also Dabbled In Repo 105-type Scams
Mar 19th
It seems it was just yesterday that Bernanke was on the edge of committing perjury and lying that the Federal Reserve of New York knew nothing about Lehman’s “more peculiar” off balance sheet transactions. Oh wait, it was: as a reminder in his cross by Scott Garrett, the New Jersey representative asked the Fed Head whether the “Fed was aware of the Repo 105 and the accounting irregularities going on?”
Bernanke answers “No – they were hidden.” Oops. Because a story just released by the Financial Times seems to indicate otherwise, and unless Merrill Lynch is lying out of their derriere, Mr. Bernanke should be immediately investigated for potential perjury before the American people. “Securities and Exchange Commission and Federal Reserve officials were warned by [Merrill Lynch] that Lehman Brothers was incorrectly calculating a key measure of its financial health months before its collapse in 2008…In the account given by the Merrill officials, the SEC, the lead
regulator, and the New York Federal Reserve were given warnings about
Lehman’s balance sheet calculations as far back as March 2008.” Amusingly, the sole purpose why Merrill would rat out Lehman is to make its own disastrous situation more agreeable, as often happens when the rats realize the sinking of the ship is inevitable. Well, unlike Merrill, whose liquidity situation was equally as disastrous on the weekend of September 14th, which found a pressed suitor in the form of BofA (and its Fed/Goldman-puppet CEO Ken Lewis), Lehman was not quite so lucky (one wonders why). Yet the bigger issue is why does the Fed keep on lying to the American public without any trace of consequence? When will someone finally wake up and sue the Federal Reserve (and we don’t mean FOIA), or at least slap a racketeering lawsuit on “those people?” Oh yeah, the market is up, American Idol is on TV, G-Pap has done all that was needed to (not) be bailed out, so all shall be well. This is better known as “if the other Ponzi dude was thrown in jail, you must acquit” defense.
Further troubling evidence from the FT that the FRBNY may be nothing more than a sinister cabal of Wall Street-acquired criminals:
Former Merrill Lynch
officials said they contacted regulators about the way Lehman measured
its liquidity position for competitive reasons. The Merrill officials
said they were coming under pressure from their trading partners and
investors, who feared that Merrill was less liquid than Lehman.The warnings take on a special significance after last week’s report by Anton Valukas,
the Lehman bankruptcy court examiner, who found that Lehman had used
questionable financing tools to flatter its balance sheet before its
September 2008 collapse.The findings raise questions over what
federal regulators knew about Lehman’s accounting and when they knew
it. In the account given by the Merrill officials, the SEC, the lead
regulator, and the New York Federal Reserve were given warnings about
Lehman’s balance sheet calculations as far back as March 2008.Former
and current Fed officials say even in the competitive world of Wall
Street, it is unusual for rival bankers to relay such concerns to the
Fed.
The Fed is currently scouring thru its emails, but unfortunately has no confirmation that any exchange like the one mentioned above has ever occurred:
The New York Fed said it were unable to verify that the conversation with Merrill Lynch bankers took place.
When in doubt deny, deny, deny. And what recourse do the American people have anyway? It’s not like the Fed is, you know, transparent, or willing to open its books to anyone, to demonstrate just how deep the criminal rabbit hole actually goes.
And also from the FT we learn that none other than JP Morgan was also using Repo 105 comparable transactions. At least Jamie Dimon’s firm not only was fully transparent about this gimmick, but it promptly ended the practice some time in 2005.
Unlike Lehman, which never disclosed the effects of its repo deals on
the firm’s balance sheet, JPMorgan detailed the year-end values of its
repo sales and purchases in annual reports beginning in 2001, after a
new accounting rule was introduced.The practice ended in 2005 when the company merged with Bank One. “The
transactions were done in very small amounts and were fully disclosed,”
a spokesman said.
So let’s paraphrase the question for Mr. Bernanke – was the Fed at least aware of those disclosed SFAS 140 transactions? And also, for our own curiosity, can we get a roster of all the FRBNY people who are and have been supposed to oversee SFAS 140 implementations by various banks (hello Steven Manzari)?
Banks Stifle First Amendment, Attempt To Create A Tiered Market Of "Clients" And "Everyone Else" As Theflyonthewall.com Is Blocked From Instant Stock Research Reporting
Mar 19th
Theflyonthewall.com, which is a news aggregator service (much like most of the blogosphere these days, but without the snarky commentary), and is hosted on Zero Hedge, has just seen a major driver of its business model cut off, after several banks just won an injunction that blocks Fly from notifying its clients when a bank may have issued a research event such as an Upgrade or, on those extremely rare occasions nowadays, Downgrade. The banks who feel violated by everyone getting access to information about their sellside detritus contemporaneously, not just wealthy accounts and wire services, are Barclays,
Bank of America Corp.’s Merrill Lynch, and Morgan Stanley. As Bloomberg reports, “U.S. District Judge Denise Cote in New York today granted a
request for an injunction sought by the three banks. They argued
at a March trial that Theflyonthewall.com, a Summit, New Jersey-
based firm with about 30 employees, wrongfully obtains and sells
reports on changes to the banks’ stock evaluations.” This is merely a case of picking on the weakest: the next ones to lose their First Amendment right will be, in order of importance, StreetAccount, Thomson Street Events, Briefing, and, ultimately Bloomberg. The reason: keep the market as two-tiered as possible so that clients of the above three banks (which list will likely expand promptly as more banks join in) have an upper hand over all the slower retail and algo operations. With this forced lag in information (which is a joke because anyone who cares, knows the second a research report goes public anyway), and with the ever increasing transaction times courtesy of nanosecond collocation facilities, soon the self-cannibalizing market will only rely on stealing money from those accounts who are still willing to participate in a market that is now split into two distinct groups: those who make money, and are clients of MS, ML and Lehman (and the rest of Wall Street), and everyone else. This is a huge hit for not just traditional media, but for the blogosphere as well, which revels in the freedom of not just ridiculing banks’ (Merrill Lynch) upgrades of horrendously shitty companies (REITs), but enjoys doing so in real time. We expect that the next step is that any blog or medium that has any negative things to say about Merrill, MS or Barclays (pretty much most independent media), will be served with a summons as soon as any criticism is made public.
As for Fly, ther following is a summary of the injunction terms:
The banks sought to block publication of their
recommendations for four hours from the release or until noon,
whichever is later. Cote chose a shorter period. For reports
issued before the market opens, the bar will be in effect until
10 a.m.. For those issued while the market in New York is open,
it will be in effect for two hours after publication. “This time frame preserves incentives for the firms to
create and disseminate research reports to their investor
clients, while still recognizing the inevitable, fast-moving and
widespread informal communication of recommendations on Wall
Street,” she wrote.
So these banks, all of which still use TALF, and are thus beholden to the taxpayer even though they may argue that TARP has been paid off so they can pay billions in bonuses, are now saying “hey taxpayers, rot in hell – if you want to get access to what is essentially public information, you will have to get in line, and only trade after Fidelity and Vanguard have already put their positions on.” While we are not PR specialists, this is not the right way to gain public support for the next time all the Wall Street kleptorcrats need a bail out.
Furthermore, this injunction is about the dumbest thing one could imagine: news of sell side research changes are reported immediately by Bloomberg, Reuters and all the major newswires. Why did Lehman, Morgan and Merrill not take them on? Oh yeah, limited budget. And now that they have a case precedent, the door is open to demand cashola or threaten with shutting down the big boys. As for the rest of the blogosphere – good luck. As the Fly’s lawyer Glenn Ostrager points out:
“The plaintiffs’ plan” is “to select probably one of, if
not the, smallest player on the street with the most limited
resources and pursue this claim so that they then, with that
advantage, can go to Bloomberg and others,” Ostrager said.
As for the banks point of view: apparently it is all Fly’s fault that bank sellside desks have been a massive loss center. The fact the the quality of research is biased and, frankly, horrendous, has apparently nothing to do with it.
“Each firm has lost business in, and has reduced
investment in and output of United States equity research as a
result of the free riding by Fly and other services,” Marks
told Cote at the nonjury trial. “This is a bread-and-butter
case of hot-news appropriation.”
And while the judge obviously keeled over to the banks’ demands, she did have some logical questions:
“Can the plaintiffs really effectively prevent their
headlines from emerging into the marketplace and being publicly
widespread?” Cote said.She also asked why only Theflyonthewall.com was sued.
“Why should an injunction issue against a small business,
a start-up, a small entrepreneur, when Goliath is permitted to
do the same thing,” Cote asked. “If an injunction issues
against Fly, and one year from now Bloomberg or Thomson or
Reuters is doing the same thing, why is that fair?”
We are confident that as banks seek to shut up more and more of the internet, that the fringe blogosphere will be next to be forcefully quieted, with or without the administration’s help. Until that time, we will continue to present you with all the critical information you need, without prejudice, and without worries of retribution, even as we slide deeper into a complete and utter market (and soon, social) totalitarian regime of the haves and have nots.
Full copy of the injunction, and the first shot across the bow to block free internet-based speech:
| Attachment | Size |
|---|---|
| Permanent Injunction.pdf | 24.29 KB |
China’s Fragile Economy, Its Housing Bubble, and What It Means To Us: Part III
Mar 19th
We think that China is an indestructible economic juggernaut but its economy is very fragile and it is sitting on a property bubble which will burst. What China does in response has major implications for their economy and the rest of the world. This is the third part of a three-part series on this topic
Inflation is on the Rise
I think they will panic if they see western economies weaken. They will panic further if real estate prices start to collapse as a result of tightening policies and western economies weaken. The panic will result in more fiscal and monetary stimulus.
This is right out of the Keynesian playbook and the result will feed the bubble, create inflation, and result in more debt. And, since a substantial part of their official “growth” comes from quasi-government entities (local and regional governments, Red Army and other State-run enterprises) which are highly inefficient as a result of top-down dictates from Beijing, much of this spending is just a waste of capital. Japan tried the same thing and it didn’t work for them either.
It is remarkable that Premier Wen can get up and say that China will have 8% growth this year. In light of poor exports, a financial bubble, poor internal demand, and the severe risk from the quasi-government and local government debt bomb, it is unlikely that China will see real economic growth this year approaching that number. Understand that they can claim to have such growth because of how they measure GDP, but it isn’t real.
And they are already seeing inflation. In February consumer prices rose 2.7% YoY, a 16-month high. Producer prices rose 4.3% in January and 5.4% in February. In light of money supply targets, inflation can only grow. The fact that there is an “output gap” has nothing to do with inflation; idle capacity and high inflation are compatible (remember stagflation). The government’s target is to keep it under 3%. No one believes that.
It is clear that, officially, the CPI won’t exceed 3%, but unofficially? There will be no way to know for sure. I doubt they will announce price controls to achieve their goal, but they have the power to do it unofficially by either fudging the numbers or “jawing” prices down, or both. If they attempt de facto price controls, the evidence of such will be shortages of certain commodities.
The Consequences to China and the World
1. China will lead no one out of the recession. Despite what many commentators tell you, China has weak internal consumption and lives on exports. We cannot look to them to be a leader of the world’s economies because they live off of the U.S., Europe, Japan, and other buyers of Chinese products. The U.S. will lead them out of the recession, not vice versa. The only way they can rapidly spur internal consumption is for them to abandon their wasteful planned economy, fully embrace capitalism, and let those who know how to create wealth and jobs do their thing.
2. The last thing they will do is let the yuan rise. The government is worried about the recovery of western consumer economies. In two blockbuster statements coming out of Beijing last Saturday (March 13) and Sunday (March 14), He Keng, vice chairman of the Financial and Economic Committee of the National People’s Congress, and Premier Wen Jiabao, said that they are worried about a double-dip global recession. This is an entirely new position China has taken on the recovery. This means also that they are more likely to increase fiscal and monetary stimulus. Maintaining the yuan may be easier when hot money bails out of their markets (maybe $25 billion flowed into China’s bubble).
3. China will not seriously tighten money and credit. They will continue to inflate to try to stimulate internal consumption and let inflation bail them out of the huge liabilities they face from massive defaults of local governments, quasi-government entities, and state-run enterprises. Even if they were serious about bursting the real estate bubble, they won’t because they know the economy will tank because the bubble was built on cheap money, courtesy of the People’s Bank of China, not real demand.
4. They have another incentive to inflate: to maintain the “stability” of the yuan. Since China’s leaders are clearly worried about a double-dip recession, there is pressure on them to stimulate exports, the mainstay of their economy. Letting the yuan rise will defeat that purpose. They can flood the market at will with new yuan and also use its reserves to sell yuan. Since they are cutting back slightly on purchases of U.S. Treasuries, they have the cash to control the yuan market.
5. The real estate bubble will burst … eventually. There is no period in history when such bubbles have not ended badly. I recommend Rogoff and Reinhart’s paper, “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises.” While I disagree with many of their economic assumptions, they offer a fascinating look at debt-fueled crises throughout history. Their conclusion: bubbles inevitably crash. They just came out with a book based on this paper.
6. When the bubble bursts, the results will be severe. You will recall that most of last year’s economic activity came from real estate. According to Yi Xianrong, a researcher at the Chinese Academy of Social Sciences’ Finance Research Center, mentioned above, “our economy growth will stop”. Or you could listen to economist Ken Rogoff who believes such a crash could reduce their GDP to 2%. Rogoff doesn’t offer much guidance on this other than to say it could happen in the next ten years.
7. What will happen to China after the crash is that they will be left with a situation similar to the U.S. where home prices collapsed, taking down many financial institutions, developers, and perhaps wiping out the equity of many home buyers. But … things are different in China, so it will be difficult to assess. For example, most buyers put very high down payments (about one-half) into a property. Also, the government will do what it can to bailout local governments by selling bonds to turn short-term obligations into long-term debt. Such activities by the government will only delay a recovery.
8. Their recovery will be prolonged. They cannot grow substantially without a recovery in exports. And that requires a recovery of the economies of their customers, mainly the U.S., Europe, and Japan. I believe we will see a double-dip recession in the U.S. U.S. consumption will continue to be restrained as consumers worry about the economy, their jobs, their high debt, their declining asset values, and their inability to retire on schedule. Consumers will protect themselves by increasing savings. And that won’t result in a huge increase in consumption. The consequences of a flattening of our economy will be bad for China.
9. They will have no real growth in internal consumer demand. The problem is that most of the new homes being built are aimed at the “rich” who are the main drivers of consumerism in China. When their housing asset base collapses, there will be a slowdown in internal consumption.
10. The government will be tempted to inflate even more to foster a recovery. Whether capital will continue to flow into real estate is a question mark. While that is possible, and perhaps investors there have short memories, it is more likely that capital will flow into other areas. As prices rise, look for assets to flow into the stock market, and commodities, especially gold. We may see a continuation of central bank purchases of gold that they started in April, 2009. A sure sign of inflation and the government’s attempt to control prices will be shortages of goods.
* * * * *
Will they continue to liberalize their economy? This is the big “if.” They need to do this to create wealth which increases the standard of living and leads to greater internal consumption. While their economy is in crisis, based on the Communist Party China’s fear of social unrest, liberalization is unlikely.
See the companion piece on political liberalization: Google: A Moral Company.
Also, tomorrow I will post a link where you can download the entire three-part article “China’s Fragile Economy, Its Housing Bubble, and What It Means To Us” in one PDF file.
Rumor Of Another Discount Rate Hike
Mar 19th
A rumor is circulating that barely a month since the last hike, the Fed is about to hike the discount rate (which is completely irrelevant of course, due to the whole $1.2 trillion in excess reserves thing) as early as today. When aksed for commentary, the Fed spokesman had no comment.
Did Andrew Ross Sorkin Misrepresent The Facts Surrounding Lehman’s Whistleblower?
Mar 19th
In the aftermath of the Zachery Kouwe plagiarism fiasco, the last thing Andrew Ross Sorkin’s Dealbook needs is another scandal. Yet this is precisely what may come out of a recent column by the TBTF author, in which ARS insinuated that Lehman whistleblower Matthew Lee came forth with incriminating Repo 105 evidence only after he was made aware he was about to be “downsized.” The Columbia Journalism Review’s Ryan Chittum debunks this story, after pointing out some potentially gross misrepresentations in the Sorkin column, which go to directly to motive and to the integrity behind Lee’s actions. “The Times’s DealBook editor Andrew Ross Sorkin, who wrote the
column, quotes the sources saying the whistle blower came forward only
after “it became clear” he was to be replaced in his job. We’ll get to
that peculiar phrasing in a minute, but the main problem is the Times story gives no indication that Lee was called for comment. In fact, he wasn’t called, according to Lee’s lawyer, Erwin Shustak, whom I talked to yesterday. “I’ve never spoken to the man (Sorkin) in my life,” Shustak says. “Nobody’s spoken to Matthew.” That doesn’t meet a basic fairness test. As it happens, Shustak tells us that Lee had no idea his job was in danger.” If indeed Sorkin misstated facts, a retraction is the only recourse as the potential for legal escalation on all sides of the story is huge. We are confident that while to Lehman managing directors $50 billion may have been a drop in the ocean, legal prosecution going after either ARS (or Lee) to reclaim it in part (or in whole) will surely make the Dealbook editor’s head spin, even after accounting for Paulson and Geithner’s 10,000 purchases of TBTF each (exaggeration ours… we hope).
Chittum writes:
There are some real journalistic lapses in a New York Times column Tuesday
that quoted anonymous sources about a Lehman Brothers whistleblower who
tried to warn about the failing bank’s questionable accounting
maneuvers, including one known as Repo 105.The problematic passage is here:
Lehman’s shell game didn’t come to light until June 2008,
when a lower-level executive named Matthew Lee sent a letter to
management raising a host of questions about the firm’s practices. (By
the way, the S.E.C. and Fed were still working inside the building at
this point.)
What the examiner didn’t report, however, was that
Mr. Lee started raising questions about Repo 105 only when it became
clear that he was being replaced in his role, according to people
briefed on the matter. Indeed, Mr. Lee’s original letter to management
did not mention the use of Repo 105.
Chittum then proceeds to note the abovementioned discussion with Lee’s lawyer Shustak in which he makes it clear that Sorkin never spoke to his client.
That doesn’t meet a basic fairness test. As it happens, Shustak tells us that Lee had no idea his job was in danger.
“That comment was made not based on any reality or fact that I’m
aware of,” Shustak says. “He couldn’t possibly be accurate because I
know that until Mr. Lee wrote these letters, he had not been notified
that he was part of any layoffs.”This is useful information that blunts, if not debunks, the
anonymous sources’ innuendo that Lee was motivated to come forward
because he was about to lose his job. Indeed, an on-the-record denial
carries far more weight than an off-the-record or on-background attack,
which this assertion clearly was. Sorkin declined to comment.The slip occurs near the bottom of a column on the failures of
regulators to discover the Lehman scandal that was right in front of
them, and is a jarring end to an otherwise fine piece.
Chittum continues:
Also, as noted, the Times’s phrasing poses problems, reporting Lee blew the whistle only after “when it became clear” he was being replaced.
Clear to whom? If Lee didn’t know he was being replaced the fact that
he was on his way out is irrelevant. The phrase itself is blurry. Why?Lee’s lawyer, Shustak, says Lee never sought the limelight:
“Matthew is a very private person,” he says. “His life has been
devastated when he was let go. He has not worked since then and is
living off his 401k. He just doesn’t want to get into the middle of
whatever lawsuits are going to be coming out of this whole report.”
It is a pity that the NYT, which recently let go hundreds of press room staffers, in the latest round of layoffs, has been resorting to such devices as attributing reality where there is none. In the old days, journalists would be forced to issue a retraction (or much worse) if indeed their reporting was not based on facts, as this particular piece so far appears to be. To be sure, this is not the first time the Columbia Journalism Review has discussed ARS – a week ago Dean Starkman wrote the most scathing review of Too Big To Fail we have yet read. Could this be just a case of some bad blood? Or, as Starkman insinuates, is this merely yet another case of Wall Street media capture? the truth will be made apparent over the next several months by the tone of Sorkin’s pieces. Nonetheless, having already attempted to exonerate Fuld once, one wonders just where Sorkin’s allegiance lies.
By the way, doesn’t it seem increasingly hard to vilify Richard S. Fuld Jr., the former chief executive of Lehman Brothers,
given what’s happened since that firm filed for bankruptcy?
No Andrew, it doesn’t. Yet we understand. After all, a sequel to TBTF has to be in the works at some point. And should Andrew lose his contacts, he may have to rely on his extensive understanding of finance to piece things together as an impartial outsider for once. Ironically, the Lehman examiner’s report is precisely what Too Big To Fail should have been, had ARS actually dug in underneath the surface of all the primary material he had been presented with. We are surprised Doubleday or Penguin has not yet offered Valukas an advance for his next much more relevant Wall Street thriller.
Greek Struggles Pressure Euro; May have to Turn to IMF for Help
Mar 19th
The U.S. Dollar finished higher versus most major currencies with the exception of the New Zealand Dollar. Fear that Greek fiscal problems may flare up once again sent investors scurrying out of the Euro and into relatively safer currencies. Nervous investors removed risk from the equation overnight and continued this trend throughout the day. Worries that Greece would not get the aid from the European Union helped to wipe out in two days a little more than half of the recent rally
The break in the Euro started late Wednesday when news came out that the political party representing German Chancellor Merkel said that a bailout was unlikely and that Greece may have to seek aid from the International Monetary Fund. This weakened the Euro, forcing a lower close. This news then spilled over into the markets overnight, putting pressure on higher yielding currencies while helping to drive traders into the Dollar for safety.
The EUR USD weakened further throughout Thursday morning before downside momentum accelerated shortly before the mid-session. Comments from the Greek Prime Minister Papandreou warned that his country would be forced to go to the International Monetary Fund if the European Union doesn’t come up with aid. This ultimatum seemed to upset long traders. Some traders are saying Papandreou is poised to attempt to go it alone if necessary.
Need A Lawyer? Call Now! (Or Just Go To Avvo.com)
Mar 19th
For years, lawyer advertisements have featured pinstripe-suited men standing in front of mahogany desks and leather-bound books, urging viewers to “call now!” Avvo Inc. wants to change that with its “no-shill” advertising model.
The operator of an online legal directory, which said today it raised $10 million in Series C venture funding, offers ratings and profiles for lawyers, as well as client reviews, peer reviews and attorney disciplinary records. The company also offers Avvo Answers, a question and answer forum where people can ask real attorneys – anonymously if desired – any legal question and receive personalized answers. Additionally, Avvo Legal Guides are a resource of lawyer-generated best practices for consumers seeking guidance on their legal issues.
The company says its Web site covers 90% of the lawyers in the U.S.
“First and foremost, we are all about helping consumers navigate the legal industry,” Chief Executive Mark Britton said. Avvo provides “more information and better guidance pertaining to their legal situation. A big part of that is helping them understand lawyers’ resumes and background.”
Avvo has two buckets of revenue: advertising on the site and a premium subscription for lawyers to create more detailed profiles.
While the Yellow Pages remains the company’s biggest competitor, Britton said sourcing a lawyer is moving away from the days where the flashiest phonebook ad reaped the most business.
“With the transparency of the Web, it’s incredibly empowering for consumers,” Britton said. “They want to see all the information related to the products and services they plan to pay for. Advertising has to be backed up by objective.”
Launched in 2007 and based in Seattle, Avvo’s investors include Benchmark Capital, DAG Ventures and Ignition Partners.
Federal Family and Medical Leave Act: Know Your Rights
Mar 19th
Dealing with a serious illness in the family is a very stressful event. I did not really understand the Federal Family and Medical Leave Act (FMLA) until recently, and I think everyone should be familiar with it. This law helps ensure that no worker is forced to choose between a job and his or her health or family’s needs.
In general, if you work for a business with 50 or more employees and have worked with their for at least a year, then the FMLA requires them to allow you up to 12 weeks of unpaid, job-protected leave within a 12-month period in the following situations:
- to care for a new child, whether for the birth of a son or daughter, or for the adoption or placement of a child in foster care;
- to care for a seriously-ill family member (spouse, child or parent);
- to recover from a worker’s own serious illness;
- to care for an injured servicemember in the family; or
- to address qualifying exigencies arising out of a family member’s deployment.
This is in addition to whatever paid leave benefits your workplace may offer.
Individual states have enacted laws that reduce the minimum business size and also expand the definition of eligible family members, for example to include domestic partners or grandparents. The Wikipedia FMLA page offers a good summary.
Many employers will not volunteer this information to you, as it often puts them in uncomfortable and costly positions due to having to find temporary replacements and also holding your job for you. They may even put up resistance to it. Definitely read up on this law and know your rights.
If you feel you have experienced a violation of the Family and Medical Leave Act, you can file a complaint with the Department of Labor. Contacting a lawyer who works in that area would also be wise, especially if you seek damages.
What about health insurance benefits during unpaid leave?
Under the FMLA, an employer must maintain the employee’s existing level of coverage (including family or dependent coverage) under a group health plan during the period of FMLA leave, provided the employee pays his or her share of the premiums.
More reading
U.S. Department of Labor
Family and Medical Leave Act of 1993 Fact Sheet
National Partnership for Women & Families
The Healthcare Bill Represents The Beginning Of A New Era Of Fiscal Responsibility
Mar 19th
(This guest post previously appeared at the OMB blog)
Today’s Congressional Budget Office (CBO) estimate of health insurance reform legislation reaffirms what we have said for the past year: that fiscally responsible health insurance reform is not only possible, but also is an important step toward long-term fiscal sustainability.
The new CBO estimate finds that health insurance reform will reduce the deficit by over $100 billion in this decade and by more than $1 trillion over the following 10 years. If enacted, this would be the most significant deficit-reduction package passed into law in over a decade. And it will begin to transform our health care system into one that delivers higher quality at lower cost, boosting the bottom lines of American businesses, families, and the federal government — all the while providing those with health insurance with new choices and a host of new consumer protections and expanding coverage to 32 million Americans.
By paying for itself and more, this legislation represents an important break from the way Washington has done business recently. In the first decade of this century, large, significant domestic policy initiatives—two tax cuts and a Medicare prescription drug benefit — were passed into law without being paid for, adding trillions to the deficit. That is why the President pushed for, and then signed into law, statutory pay-as-you-go (PAYGO) legislation that holds policymakers to a simple principle: if you propose new tax cuts or entitlement expansions, you must find a way to pay for them.
Some have raised concerns that the health insurance reform legislation may have fallen short of this PAYGO principle. That is simply false. CBO’s analysis shows that the combination of the Senate-passed bill and the reconciliation bill will be deficit-reducing according to statutory PAYGO standards — standards that go beyond simple deficit reduction.
In particular, the overall bill — including the Senate-passed bill and the reconciliation bill combined—generates over $100 billion in deficit reduction over the next decade (and more thereafter). For the purposes of statutory PAYGO, however, certain of the bill’s savings are not counted: namely, the deficit reduction coming from increased Social Security payroll tax revenues and from the CLASS Act, a long-term care program. But even excluding these components the combined bills generate a net reduction in the deficit, and thus are fully compliant with statutory PAYGO.
The CBO score today should leave no doubt that we are operating in a new fiscal era — one where we abide by our commitment to pay for new initiatives and take steps to restore fiscal responsibility by reining in the single biggest driver of our long-term shortfall.
Join the conversation about this story »
See Also:
- Which NYT Reporter Is The Unofficial Organ For Pelosi And Reid On Healthcare?
- Set The Clock: The Text Of The Healthcare Bill Is Now Up, And There’s 72 Hours To Vote On It
- White House Blasts Out Desperate Plea For Liberal Groups To ‘Pack The Crowd’ At Healthcare Rally
