February 2013 Archives

What the Department of Justice's Drone Memo Means

February 7, 2013

 

What the Drone Memo Means

By R. Tamara de Silva

February 7, 2013

 

[W]e are heirs to a tradition given voice 800 years ago by Magna Carta, which, on the barons' insistence, confined executive power by "the law of the land."  Justice Souter and Justice Ginsburg, Hamdi v. Rumsfeld 542 U.S. 507 (2004)

 

       On February 5, 2013, a Department of Justice memo ("Drone Memo") was released to NBC justifying the President's killing of Americans by lethal force, such as by drones.[1]  The targeted killing of Americans as justified in this memo gives the Executive Branch a power over American lives that is at once unprecedented and terrifying in scope.   The idea of a government unilaterally assassinating its citizenry is fundamentally at war with America's Constitutional legacy, which was established with separate and equal branches of power specifically to limit the possibility of an abuse of government power or outright tyranny.  The issues presented in the memo have Constitutional implications that cease due process rights based upon what may be unsubstantiated accusations and go against traditions of justice dating back to the Magna Carta.  Americans need to understand what is at stake.  The Drone Memo justifies the assassination of Americans by the Executive Branch based on the equating of terror (a term and concept that is not defined in the memo) with war and making Americans into enemy combatants without any due process of legal proceedings for actions and associations that are similarly ill-defined.  This memo does outline an enlargement of Executive power over due process that is without historical precedent in American history.  It bears note, that the Drone Memo asserts for the first time in American history, the power of a President to assassinate Americans, unchecked and unanswerable to anyone, including the Judiciary and the Legislature.

       The legitimacy of a government that would kill its citizenry has been portrayed and accepted by many Americans as merely a political issue the idea being-if our guy is doing it, we must stand by him because after all he's not the other party's guy.  After all, the same people who once complained bitterly about renditions and enhanced interrogation techniques have no objection to mass killings by unmaned drones-with civilian and child casualties in the hundreds.  But this is not a political issue and looking at it in simplistic tribal terms will prevent the public from understanding its import to them.  It may be an unwritten rule to fall in line behind your party's line, but this is one instance worthy of exception.  According to a senior legal official in President George W. Bush's administration, no other President of any political stripe has ever before authorized the targeted killing of Americans.[2]  The import of this memo, on the heels of the Patriot Act, and the NDAA's striving for a permanent suspension of habeas corpus, among other recent laws, is nothing less than the crossing of a legal Rubicon that would now permanently allow for the suspension of the due process of law.  At a minimum, this memo strips Americans of the protections of Fifth Amendment and in so doing, alters what it means to be an American.  This administration's authorization to use deadly force upon Americans without any legal safeguard of due process has a legal and moral significance that is difficult to comprehend or quite honestly, believe.

       Never before have an American president and his Attorney General openly stated that the Executive Branch can bypass Due Process of law to kill an American-if they (solely at their discretion), think they have a good enough reason because they have invented something called, "Executive Due Process."  It is the Executive Branch, boldly asserting an absolute power to suspend a significant portion of the Bill or Rights, unchecked by any other branch of government and unfettered in the scope or protocols used in the exercise of this new power.

       It is not as I write this that I do not understand first principles.  A nation must exist before it can provide its citizens any rights, liberties or anything.  A nation must also be allowed broad latitude to protect its citizens.  Security was a large part of the bargain described by Hobbes for leaving a state of nature and war to enter into a social contract.  It is the function of the Executive Branch to protect the security of Americans.  Terrorism remains a tremendous threat and after two wars in Iraq and Afghanistan, it would be naïve to think that the sentiments behind terror groups like Al-Qaeda have diminished because of our war on terror-there is evidence to suggest the opposite case. 

       As the late Allan Bloom often remarked, the first principle of any nation state was no different from that of any individual's-it is and must always be, self-preservation.  With this understood, most Americans have accepted an implicit tradeoff and the loss of some civil liberties and privacy for the sake of national security.   However, what the Drone Memo does is give away two entire Amendments and the bedrock of the freedoms that are uniquely American.  It is as if Americans have become so cowered of terrorists after 9/11 that we would as a country surrender the soul of America and its most deeply held values for the promise of a hope of a bit more security.  

        But in giving absolute authority to kill an American to any one man, President, CIA director or intelligence officer, unfettered by the United States Constitution's prohibition of such, we are making America into a country of rule by the men who would wield this power-no longer is it a country of rule by law.  We cannot just rest on knowing we are protected by a Bill of Rights- we now have to hope for the good characters of those we elect because we have surrendered the laws that would have kept their power over our freedom in check.   In America, the protections of the Bill of Rights were never to be handed over to an elected official with whom we were told to just "trust" them.  This is not America- nor is it consistent with the historical point of the American experiment in the first place.

       In fact, the United States Supreme Court in Hamdi v. Rumsfeld ruled that we are not required to "just trust" the government in matters of indefinite detention either.  The Court in Hamdi reiterated the principle that the Executive Branch cannot detain an American citizen without some form of due process.[3]   Hamdi was a United States citizen arrested in Afghanistan and taken into the custody of a military prison in Virginia.  From there he filed a petition for habeas corpus that ended up in the Court, which ruled that Mr. Hamdi did have a right as an American to be heard before an impartial judge.  President George W. Bush's administration had argued that Mr. Hamdi had no rights as an enemy combatant and that it could dispense with Hamdi as they saw fit.

       Ironically, it is the decision in Hamdi on which much of the Drone Memo relies.  This is a spectacle of legal gymnastics whose logic is ephemeral.  The Obama Administration's lawyers try to make the case that Hamdi is distinguishable because he was detained-that it was feasible to detain him.  The Drone Memo asserts a right to kill an American if he cannot feasibly be detained, because he cannot feasibly be detained.  They are wrong.  If the Supreme Court believes an American has the right to appear before an impartial fact-finder before being deprived of his liberty, then that American should at least have that right before being deprived of his life. 

       The Fifth Amendment guarantees on all Americans the right to due process of law before the taking of life or liberty.  The taking of an American's life by the government legally, as common-sensically, demands a higher level of due process than being imprisoned or detained--not less. Does the separation of powers doctrine require federal courts to defer to Executive Branch determinations that an American citizen is an "enemy combatant"?   Not according to the Court in Hamdi,

 

Finally, even if history had spared us the cautionary example of the internments in World War II, even if there had been no Korematsu,  there would be a compelling reason to read §4001(a) to demand manifest authority to detain before detention is authorized. The defining character of American constitutional government is its constant tension between security and liberty, serving both by partial helpings of each. In a government of separated powers, deciding finally on what is a reasonable degree of guaranteed liberty whether in peace or war (or some condition in between) is not well entrusted to the Executive Branch of Government, whose particular responsibility is to maintain security. For reasons of inescapable human nature, the branch of the Government asked to counter a serious threat is not the branch on which to rest the Nation's entire reliance in striking the balance between the will to win and the cost in liberty on the way to victory; the responsibility for security will naturally amplify the claim that security legitimately raises. A reasonable balance is more likely to be reached on the judgment of a different branch, just as Madison said in remarking that "the constant aim is to divide and arrange the several offices in such a manner as that each may be a check on the other-that the private interest of every individual may be a sentinel over the public rights." Hence the need for an assessment by Congress before citizens are subject to lockup, and likewise the need for a clearly expressed congressional resolution of the competing claims.[4]

 

 

       Societies have normative values and also ones that are pre-textual--designed to mask far baser values.  Historically, one nation that has effectively used the pretext of danger to the state to imprison all who would criticize it is the Soviet Union.  All societies have normative values and at times some of them are pretextual-designed to mask much baser values.  Security was a value with which the Soviet system used to hide the interests of its leaders from Nikita Khrushchev to Vladimir Putin.  A pretextual interest in security is used to control not only an entire population but also its public opinion.  Vladimir Putin has his own record of repressive psychiatry and the imprisonment of anyone whose only crime appears to be the insult of his vanity.

       America was established to guard against the assertion of pretextual values on the people by any one branch of government.  The American system of government has several ingenuous structural safeguards such as having three branches of government where each is in theory at least powerful enough to keep the other in check.  In writing down what rights a people had and suggesting the existence of many others, unenumerated like the right to privacy or to travel-America's founders established a system of rule by law and not men.  If for example a tyrant came into power, his power would be curtailed at the boundaries of the rights retained by the people, subject of course to Constitutional amendment, within the Constitution and specifically, the Bill of Rights.  In theory, as long as you could freely associate and assemble and speak, and your life and liberty were still protected by due process of law, there would be very real checks on the harm to be caused by any one elected official with pretextual values.  It is specifically because of our legal system and Constitution that we have, within our own borders, enjoyed being the freest people in the world.  The greatness of America and its attraction to so many immigrants has in large part always been its core values, tracing back to the Magna Carta, of human dignity, freedom of expression and individual liberty.

       America was the birthplace of sedition.  Born out of the fury and ideals of those who were then considered religious kooks, fanatics, terrorists and worse.  Not surprisingly, we became a nation, the envy of the world, where unlike everywhere else, you could say anything and not be locked up as a political prisoner because you have annoyed someone in elected office.  The First Amendment protects your speech and the Fifth Amendment guarantees that your life and liberty cannot be dispensed with just on the whim of someone in power.

       Due process of law is the most American of all civil liberties-it is nothing less in the American law to civil liberty than everything.  It is only because of the Fifth Amendment that you have a presumption of innocence.  Governments mean well and are filled with honorable prosecutors who care deeply about civil liberties.  However, they also make mistakes.  We have jailed people for decades only to find them exonerated by DNA evidence-we have even made erroneous executions.  If the justice system, with all the protections of due process intact can make mistakes, what can one man or two do without any check on their judgment and without affording the alleged target, any due process or notice whatsoever?  Is it possible that the Executive Branch can err in declaring someone an enemy combatant?  Why are its determinations unchecked by any other branch of government, as the Drone Memo would have them be?  Is this not in itself for such an enormous power claimed, so obviously at odds with the principle of a separation of powers? 

       Targeted killings of non-Americans have proven themselves to hit wide of their marks.  CIA Director, John O. Brennan once stated that there were no civilian casualties in drone strikes and then admitted that there were casualties but then stated that they were "exceedingly rare."  Many independent sources confirm over 3,000 militants and civilians have been killed by drones. Drone strikes have killed over 176 children in one country alone and unless this was the Administration's intention, how can it be argued that drone strikes do not make mistakes?  

       The Drone Memo also uses terms like "associated forces" and "imminent threat" that are nowhere defined and capable of shifting interpretation depending on who is using them and to fit what purpose.   What constitutes being an associated force?  Is intention required, or mens rea required or is this a crime that can be stumbled into?  For example, if an American is a social acquaintance of someone who looks at a website that is later considered to offer, "material support" (again a term undefined) by expressing opinions, does that American become an associated force of the offending American?  Are his family also in danger?  If they can be killed without any due process, these questions will never be answered.

       What about the shifting definitions of terrorism?  Is it that difficult to envision the power to kill Americans without due process being abused?  If you think so, then you may not be aware of whom the Department of Homeland Security considers a likely terrorist.

       In a study by the National Consortium for the Study of Terrorism and Responses to Terrorism entitled, "Hot Spots of Terrorism and Other Crimes in the United States, 1970-2008," which was funded by the Department of Homeland Security, terrorists are likely people, "reverent of individual liberty...suspicious of centralized federal authority or anti-government," including people who are extremely liberal or extremely conservative.  What about people who belong to the NRA or are against gun control-at what point do their convictions constitute a resistance that is deemed intolerable to their government?[5] 

       The Drone Memo asserts that questions about definitions like enemy combatants and imminent harm are the exclusive province of the Executive Branch, that they are not legal matters and hence not subject to judicial review of the courts.  The Supreme Court made it abundantly clear in Hamdi that the Executive Branch, despite the exigencies of the War on Terror, did not have a blank supra-Constitutional check, nor did get to violate the separation of powers,

 

In sum, while the full protections that accompany challenges to detentions in other settings may prove unworkable and inappropriate in the enemy-combatant setting, the threats to military operations posed by a basic system of independent review are not so weighty as to trump a citizen's core rights to challenge meaningfully the Government's case and to be heard by an impartial adjudicator.

    In so holding, we necessarily reject the Government's assertion that separation of powers principles mandate a heavily circumscribed role for the courts in such circumstances. Indeed, the position that the courts must forgo any examination of the individual case and focus exclusively on the legality of the broader detention scheme cannot be mandated by any reasonable view of separation of powers, as this approach serves only to condense power into a single branch of government. We have long since made clear that a state of war is not a blank check for the President when it comes to the rights of the Nation's citizens. Youngstown Sheet & Tube. Whatever power the United States Constitution envisions for the Executive in its exchanges with other nations or with enemy organizations in times of conflict, it most assuredly envisions a role for all three branches when individual liberties are at stake.....

    Because we conclude that due process demands some system for a citizen detainee to refute his classification, the proposed "some evidence" standard is inadequate. Any process in which the Executive's factual assertions go wholly unchallenged or are simply presumed correct without any opportunity for the alleged combatant to demonstrate otherwise falls constitutionally short.....[6] 

 

       The targeted killing of Americans poses an unprecedented threat to due process.   Fortunately, I am convinced the arguments advanced in the Drone Memo would not pass Constitutional muster with the same Supreme Court that ruled in Hamdi.  But it has to get there and if it does not, Congress and the American people must act.  Congress should clarify what this memo means and identify the protocols in which it will be used with enough specificity so that the awesome power it assumes is not abused-and it is at least checked. The argument advanced in the Drone Memo is that the government should be taken at its word that it will be rigorous about identifying terror targets, which are American.  This is not a legally sufficient basis for eliminating due process for American citizens because the Executive Branch is not unbiased and as such it cannot be expected to be an impartial check on itself.  We were established as a nation of laws and not of men.  There is ample historical precedent against trusting any one branch of government or ruler with absolute power to take the lives of its citizenry-by the way, America was established in part to avoid the type of government in which such a power would be exerted unchecked upon its citizenry- remember?@

R. Tamara de Silva

February 7, 2013



[2] http://www.nytimes.com/2010/04/07/world/middleeast/07yemen.html?hp&_r=0

[3] Hamdi v. Rumsfeld, 542 U.S. 507, 521

[4] Id., Justice Souter and Justice Ginsberg opinion

[5] http://start.umd.edu/start/publications/research_briefs/LaFree_Bersani_HotSpotsOfUSTerrorism.pdf

[6] Hamdi v. Rumsfeld, 542 U.S. 507, 52-

United States v. Standard & Poor's

February 5, 2013

  

 

United States v. Standard & Poor's

By R Tamara de Silva

January 5, 2013

       The Department of Justice filed a civil lawsuit yesterday against one of the of big three credit ratings agencies, Standard & Poor's ("S&P") and its parent company, McGraw-Hill, Inc.[1]  The suit alleges that S&P deliberately gave its coveted triple-A ratings to sub-prime debt in order to win fees.  The suit does not address the structural conflicts of interest within the three credit ratings agencies that are Nationally Recognized Statistical Rating Organizations ("NSRO"), nor will it address or cure any of the underlying causes of the credit crisis.  While there are problems with the credit rating agency business model, it will be difficult to prove that S&P knew any more than even the audit committees of the investment firms on whom it relied, or the issuers of debt instruments themselves.  The suit will of course result in the levy of a fine.  But while S&P's hands may not be entirely unsullied- far more importantly to the untrained public eye, they are as good a scapegoat as any other.

       S&P is a credit rating agency whose business is to provide credit ratings represented by letters from triple-A to D, in exchange for fees.  Federal laws require that certain institutions only hold investments that have a credit rating of "investment grade," but most of the financial world relies on credit ratings agencies to weigh and measure risk, risk defined in terms of the credit worthiness of investments and institutions.    S&P is the largest of three credit ratings agencies that is recognized by the Securities and Exchange Commission ("SEC") as an NSRO.   From 2004 towards the end of 2008, S&P assigned credit ratings on nearly $4 trillion of debt instruments.  In terms of sheer size and credibility, despite this suit and skepticism of the NSROs particularly in Europe, the world has no credible alternative to credit ratings agencies and specifically nothing to replace, Standard & Poors.

       Keep in mind that almost five years after the worst financial crisis in United States history, the Department of Justice has yet to criminally charge a single culpable senior executive or firm.  If history is any guide, the Justice Department will reach a civil settlement with S&P wherein the firm will agree, without admitting any wrongdoing, to pay a fine that in relative terms, will have as large a fiscal impact on S&P as the cost of one month's dry kibble would have to the owners of the Grumpy Cat.  The suit asks for a fine in excess of $1 billion but these will typically be negotiated down and the government has not latterly demonstrated a willingness to go to trial with these suits.  Like so many Wall Street settlements reached over the past ten years, the cost of the settlement fine imposed will ultimately be a pittance relative to the quarterly earnings of the offending firm-S&P is not likely to become the first exception to this rule.

       There in the gilded annals of academic and economic theory yet remains the tidy axiom that markets are self-correcting.  It is thought that market forces of supply and demand will drive out weaker competitors and bring in new ones through their own determinative natural selection.  It is not necessarily so.  Yet this assumption is an inescapable cliché of economic theory now unfortunately embedded into political discourse.  This axiom ignores the asymmetrical political and economic power of some market participants relative to others, and the use of regulation to give some participants a structural competitive advantage over others.  Self-correcting economic behavior occurs famously in the instance of market bubbles like tulip manias, Internet stocks and real estate bubbles, all of which eventually burst.   However, none of this bursting applies to credit ratings agencies. 

       Credit ratings agencies are often wrong, have been wrong and will not, even under Dodd-Frank, need to be correct, much less try harder to do so, or for that matter make any effort towards attempting to.   All three credit ratings agencies adjusted their triple-A ratings of debt instruments to less than investment grade at virtually the same time the rest of the world figured out there was a problem with them.  In their defense, S&P points out that credit ratings are, "forward-looking opinions about credit risk. Standard & Poor's credit ratings express the agency's opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time." [2]  The problem is that by the time the credit ratings agencies, self-correct, their statements are no longer forward looking or even present looking but much more akin to being told how a movie ends a few months after you have seen it.

       Not that long ago, collateralized debt obligations were repackaged during the credit bubble into investment pools and other mortgage backed securities and collectively adorned with the gold standard of financial ratings, the coveted AAA ratings of the largest credit ratings agencies, Fitch, S&P and Moody's.   The credit ratings agencies gave their coveted and in theory elusive triple-A rating to investments that were anything but credit worthy or in the best case, possessed of a very mixed credit pedigree.  The agencies' bestowal of triple-A ratings to companies and investment vehicles that were junk and later discovered to be junk, caused losses in the billions and trillions of dollars to everyone who relied on their ratings--essentially everyone.

       The role of the credit ratings agencies, was present from Goldman Sachs' knowingly selling instruments it bet against in Abacus to Citigroup's selling of investments it also bet against-all these transactions of a seemingly knowing fraud were adorned with triple-A ratings.  Triple-A ratings played an essential role in the credit crisis- enough to make them arguably the largest "but-for" causal culprit of the financial crisis.  "But for" the credit ratings agencies bestowal of triple-A ratings on sub-prime debt investments, the credit crisis would not have occurred.   But the financial world does not operate as simply as the liability model used by personal injury lawyers to make someone pay for car accidents or anything resulting in a personal injury.  The financial world is incomparably more complex and the causes of the financial crisis are many.

       In a larger sense, the credit ratings agencies cannot help it.  The fault lies with their business model and that having no competition, they really can be wrong in the largest possible way and not be "wrong" in the conventional sense. 

       The big three credit ratings agencies are bestowed with a monopoly by the government and if the world did not like the big three credit ratings agencies, it would find (with the exception of a few marginal players) that it had precisely nowhere else to go.  Put another away, even after having the SEC accuse them of consumer fraud, and being about as wrong as they can be, the big three credit ratings agencies still rate 96% of the world's bonds.  Sort of as Henry Ford was reputed to have said about offering customers the choice of a new model T in "any color so long as its black."

       What is more, their business model makes the ratings agencies operate within a closed conflict of interest loop.  The credit ratings agencies are paid by the issuers (who are also their clients) of the securities they were supposed to evaluate-this creates a conflict of interest.

       But the government, or specifically the SEC knew of the conflicts of interest within the credit rating agency business model and approved of them.  In June 2007, the SEC acknowledged that there might be a real problem having the referee in a match being paid by one of the sides-not the investors or the public's side either.   The SEC asked S&P for documentation of how S&P handled conflicts of interests and after several months of scrutiny, approved of S&P as a NSRO--again, after having vetted the inherent conflicts of interest within S&P's business model. 

       The ratings agencies have lobbying power in Washington and every interest in protecting their triopoly, which remains, even after the Credit Crisis and the implementation of Dodd-Frank, wholly unscathed.  But really, in the absence of any alternative and near total dependency, the world has an interest in S&P too.

       The most persuasive mitigating factor against charging the S&P or any of the credit ratings agencies with fraud is that they themselves relied on the internal audit committees of their clients/issuers.  The credit ratings agencies relied on the audit committees of their issuer clients, which committees had signed off and attested to the S&P and the other credit ratings agencies about the value and risk profiles of the investments for which they sought ratings.  Ultimately, unless corporate boards are compromised of crony Chia pets distinctly and wholly incapable of bearing any liability or culpability (a very real possibility upon even a cursory scrutiny- and another discussion for another time), they ought to bear the responsibility for misleading the credit ratings agencies, or simply not knowing what they were doing.

       Either the investment banks' audit committees were not qualified to pass on these investments or the credit ratings agencies were not.  What now seems obvious is that both the credit ratings agencies and the audit committees were not sophisticated enough to understand the investment products they were charged with scrutinizing.  They approved of them anyway.  

       The credit ratings agencies could not give accurate ratings of many of the instruments involved in the housing bubble and credit crisis because of the complexity of the transactions involved and their inability to understand what they were analyzing.  Not knowing what they were doing makes them at least guilty, if they were regular market participants, (which they are not) of criminal fraud.   They may have culpability because they perpetuated a fraud on the marketplace by accepting money and using their position of trust, as a government sanctioned arbiter or investments, to pretend to pass on investments when in reality they did not know what they were examining or did and had a financial incentive to lie.  One thing is certain, were the credit ratings agencies like any number of the two-bit individuals the Department of Justice and SEC have prosecuted, one could say that the prosecution of fraud is not disproportionately tilted towards the smallest financial participants, or at least squarely away from the largest ones.

       In theory, the credit ratings agencies exist to level asymmetries of information.  They are also supposed to evaluate risk.   Unfortunately, the credit ratings agencies have conflicts of interests and they evaluate financial products (like collateralized debt obligations) that they do not understand.  They were far from alone in not understanding the debt instruments presented to them.  In 2007, even Ben Bernanke thought the risk of sub-prime debt was contained.  The ratings agencies, like most of Wall Street during financial crises seemed to lack fixed ways to measure absolute risk, and as a result during financial crises, when you would most want risk models to work, they too prove catastrophically wrong.  Moreover, as much as Wall Street was wrong in assessing its risk, so was the government and many of Wall Street's largest institutions-so why merely pick on S&P?  Unlike all of the players on Wall Street however, the credit ratings agencies are still the only game in town.  The Department of Justice's civil suit will do nothing to change this.@

R Tamara de Silva

Chicago, Illinois



[2] http://www.standardandpoors.com/ratings/definitions-and-faqs/en/us