Wednesday, March 14, 2012

At Harvard, Obama Dived Into Diversity Fight

In this video, not previously available online but licensed by BuzzFeed from a Boston television station, the future president speaks at a 1991 campus protest organized to demand tenure for minority and female law professors.

Bell was the first black tenured professor at the school, and a pioneer of "critical race theory," which insisted, controversially, on reading issues of race and power into legal scholarship. His protest that spring was occasioned by Harvard's denial of tenure to a black woman professor, Regina Austin, at a time when only three of the law school's professors were black and only five women. He told Harvard he would take a leave of absence — a kind of academic strike — "until a woman of color is offered and accepted a tenured position on this faculty," and he launched a hunger strike to dramatize his point.
Obama was a major figure on campus, the first black president of the Law Review. Some friends, in a prescient joke, just referred to him as "the first black president." He had a reputation as a conciliatory figure, not a confrontational one like Bell.
""How Obama would react to Derrick Bell's protest was a matter of some interest," New Yorker editor David Remnick wrote in his exploration of Obama and race, The Bridge.
It was a situation in which clear lines had been drawn, and Obama sided with Bell. In a speech before the law school's Harkness Commons — and sounding very much like his future presidential self — he described Bell as "the Rosa Parks of legal education."
Obama's stand provided a major boost to the protests, Keith Boykin, one of their organizers, later recalled.
Barack was always supportive and sympathetic to our campaign for faculty diversity. He spoke about it at one of our rallies. But he was not actively involved in the protest movement. Nor did he need to be. As I said, his presence alone made the case. And even if he agreed with the cause of the movement, he didn't need to be involved in the more radical protests we launched because our tactics were controversial on campus.
In video, licensed by Buzzfeed from the WGBH Boston television station's Media Library and Archives, now available online at BuzzFeed in it's entirety, Obama praised the "excellence of his scholarship."

Melissa Harris-Perry Defends President Obama Hugging Professor Derrick Bell

Melissa Harrisperry
MSNBC host Melissa Harris-Perry took some time on her Saturday show to discuss what she called a "manufactured controversy" that erupted around President Barack Obama and former Harvard Law professor, Derrick Bell.
Harris-Perry, who referred to Bell as an extraordinary legal scholar, issued a bold defense in favor of Obama. Earlier this week, a 22-year-old video was released showing then-law student Barack Obama at a rally for Professor Bell, who passed away last year. At the rally, Bell, who was Harvard's first tenured African American law professor, spoke about his decision to take an unpaid leave of absence to protest Harvard Law School's failure to offer an African American woman a tenure-track position.
Harris-Perry harshly criticized what she called conservative media outlets who claimed that Obama was "adhering to a radical, anti-American agenda."
She highlighted one key moment that she believed Obama's critics have "seized upon as a smoking gun": when Bell and Obama publicly embraced during the rally. "President Obama tried and convicted in the court of conservative public opinion for the unforgivable offense of hugging a black man," she said.
Harris-Perry compared Obama's critics to those who attacked First Lady Eleanor Roosevelt in the 1940s, who Harris-Perry said was regularly criticized for "public proximity to black people." Harris-Perry said, "and now we're asked to see this photo not as two legal scholars embracing in solidarity against injustice but as a seditious traitor embracing a radical idea."


The Big Fracking Bubble: The Scam Behind the Gas Boom

Rolling Stone

It’s not only toxic – it’s driven by a right-wing billionaire who profits more from flipping land than drilling for gas.

A natural gas drilling rig stands on a Chesapeake Energy Corp. drill site in Bradford County, Pennsylvania.
A natural gas drilling rig stands on a Chesapeake Energy Corp. drill site in Bradford County, Pennsylvania.
Daniel Acker/Bloomberg via Getty Images
Aubrey McClendon, America's second-largest producer of natural gas, has never been afraid of a fight. He has become a billionaire by directing his company, Chesapeake Energy, to blast apart gas-soaked rocks a mile underground and pump the fuel to the surface. "We're the biggest frackers in the world," he declares proudly over a $400 bottle of French Bordeaux at a restaurant he co-owns in his hometown of Oklahoma City. "We frack all the time. What's the big deal?"

McClendon dominates America's supply of natural gas the same way the Tea Party-financing Koch brothers control the nation's pipelines and refineries. Like them, McClendon is an influential right-wing power broker – he helped fund the Swift Boat attacks against John Kerry in 2004, donated $250,000 to the presidential campaign of Rick Perry, and contributed more than $500,000 to stop gay marriage. But unlike his fellow energy czars, McClendon knows how to tone down his politics and present a friendlier, less ideological face to the public. He secretly gave $26 million to the Sierra Club to fight Big Coal, and built a Google-like campus for Chesapeake's 4,600 employees in Oklahoma City, complete with a 63,000-square-foot day care center, a luxurious gym and four cafes manned by cook-to-order chefs. He even voted for Barack Obama because he thought the country needed "an inspirational figure."

At 52, McClendon still looks like the whip-smart accountant he once aspired to be – crisp white shirt, polished shoes, a toss of white hair. To hear him tell it, the cleaner-than-coal fuel he produces will revive our faltering economy, free us from the tyranny of foreign oil and save the planet from global warming. "I have a fossil fuel that makes other fossil fuels obsolete," he boasts. By McClendon's estimate, the industry has drilled more than 1.2 million wells nationwide, yet so far there have been only a few confirmed cases where things have gone wrong – despite dire warnings from scientists and environmentalists that fracking pollutes rivers and streams, contaminates drinking water and turns large swaths of farmland into industrial moonscapes. "Where is the mushroom cloud?" McClendon asks. "Where are the dogs with one leg? Where are the people that have been maimed or hurt?"

He sips his Bordeaux; his own private wine cellar once boasted more than 10,000 bottles. It's a good riff, with some truth to it. But what McClendon leaves out is the real nature of the business he's in. Fracking, it turns out, is about producing cheap energy the same way the mortgage crisis was about helping realize the dreams of middle-class homeowners. For Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas. The company is now the largest leaseholder in the United States, owning the drilling rights to some 15 million acres – an area more than twice the size of Maryland. McClendon has financed this land grab with junk bonds and complex partnerships and future production deals, creating a highly leveraged, deeply indebted company that has more in common with Enron than ExxonMobil. As McClendon put it in a conference call with Wall Street analysts a few years ago, "I can assure you that buying leases for x and selling them for 5x or 10x is a lot more profitable than trying to produce gas at $5 or $6 per million cubic feet."

According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. "This is an industry that is caught in the grip of magical thinking," Berman says. "In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down." Like generations of energy kingpins before him, it would seem, McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his.

As recently as a decade ago, many energy experts believed that America was nearly pumped out – that the only oil and gas left here at home was too difficult and too expensive to get out of the ground. Until we can ferment synthetic fuels with genetically engineered yeast or develop solar cells as cheap as Frisbees, the argument went, we would be stuck buying oil from the Arabs.

Geologists had long known there was a lot more energy buried deep underground – they called these subterranean rock layers "the kitchen," because it was where the gas and oil were actually made, before they bubbled up and gathered in reservoirs. But nobody knew how to extract these deep reserves – at least, not in a way that made economic sense. Then, in the 1980s, a Texas wildcatter named George Mitchell began working on a way to drill a mile down into the earth, turn the drill sideways, and keep drilling horizontally into a thin layer of shale. Next, he pumped in a few million gallons of water and sand under enough pressure to shatter the rock. When he pumped the water out, gas and oil flowed out of the rock's fractured pores.
The new technique ignited a boom in drilling for "unconventional" sources of gas and oil: Shale gas now provides 25 percent of America's gas supply, enabling the U.S. to pass Russia as the world's largest producer of natural gas. Initially, even environmentalists were enthusiastic. Fred Krupp, who heads the Environmental Defense Fund, called the gas boom a "potential game changer" – a cleaner energy source that could replace coal and oil for a few decades, until the cost of wind and solar power dropped enough to put fossil fuels out of business. But exactly how much gas and oil we can continue to squeeze out of deep sources like shale rock is unclear. In his State of the Union address, President Obama estimated that there's enough to fuel the country for nearly 100 years. T. Boone Pickens, the energy billionaire who has a major stake in Chesapeake Energy, offers an even more sweeping assessment. "Natural gas," he tells me point-blank, "is the solution to America's energy problems."

At first, when oil and gas producers confined themselves to fracking in the wide-open spaces of Texas and Oklahoma, nobody much gave a damn. The trouble started in 2007, when drilling operators made a run on the Marcellus Shale, a broad region of gas reserves that stretches through Pennsylvania and up into Ohio and New York. Almost overnight, fracking's technological miracle was recast as the next great environmental menace. The Oscar-nominated film Gasland exposed the dark underbelly of fracking, interviewing residents who could literally light their faucets on fire, thanks to the gas that had contaminated their drinking water. Last year, The New York Times documented how gas drillers were dumping millions of gallons of irradiated wastewater loaded with toxic chemicals into Pennsylvania's rivers and streams, largely without regulatory oversight.

At the same time, scientists began to conclude that America's reserves of natural gas have been overhyped. In January, the Energy Department cut its estimate of the amount of gas available in the Marcellus Shale by nearly 70 percent, and a group affiliated with the Colorado School of Mines warns that there may be only 23 years' worth of economically recoverable gas left nationwide. Even worse, new studies suggest that because of fugitive emissions of methane from wellheads and pipelines, natural gas may actually be no better than coal when it comes to global warming. "I was an early optimist about natural gas," says Robert Kennedy Jr., who sits on a panel that's advising Gov. Andrew Cuomo on whether to allow drillers like McClendon to expand into New York. "But after looking into it, I now believe that, without tighter regulations and stricter oversight, the shale-gas boom could turn out to be an economic and environmental disaster."

The oil and gas business is full of guys like T. Boone Pickens, self-made men who rose from a hardscrabble life on the prairie to become titans of the industry. McClendon, by contrast, grew up awash in oil money: He's the great-nephew of Robert S. Kerr, the influential Oklahoma governor and senator who co-founded the Kerr-McGee Corp. in 1929. Kerr-McGee was the ExxonMobil of its time, an energy giant that eventually sold for $16 billion. McClendon's personal fortune is now estimated at $1.2 billion, including a major stake in the NBA's Oklahoma City Thunder and a $20 million retreat in Bermuda.
By the time McClendon headed off to college, at Duke University, he didn't have much interest in the family business. He majored in history, joined a frat and listened to a lot of Bruce Springsteen. But his real passion was accounting. "I just wanted to be a businessman," he says, "and to me, the best way to understand business was to be an accountant." He might have gone on to a steady, solid career at Arthur Andersen had he not come across an article in The Wall Street Journal during his senior year. "It was about two guys who had drilled a big well in the Anadarko Basin that had blown out, and it was alleged to be the biggest blowout in the history of the country," McClendon recalls. "They sold their stake to Washington Gas and Light and got a $100 million check. I thought, 'These are two dudes who just drilled a well and it happened to hit.' So that really piqued my interest."

After graduation, McClendon married his college sweetheart and went to work for a small Oklahoma City oil company owned by his uncle. He worked in accounting for a few months, but quickly became what is known in the industry as a "landman" – the person who finds and negotiates the leases that allow drillers to extract oil and gas. "Landmen were always the stepchild of the industry," he says. "Geologists and engineers were the important guys – but it dawned on me pretty early that all their fancy ideas aren't worth very much if we don't have a lease. If you've got the lease and I don't, you win."

In 1982, McClendon struck out on his own as a landman. He was 23, living in a modest house, making $24,000 a year. "I bought a typewriter, rented an office, bought some maps and basically just started to follow around other companies, trying to see what crumbs they would leave," he says. He called his tiny outfit Chesapeake Investments – for no reason except that "I always loved that region of the country." He soon forged a partnership with another landman, Tom Ward. "We worked together for six years," Ward recalls, "doing deals for scraps of land in Oklahoma, faxing each other in the middle of the night. Eventually, we got the hang of it."

When the fracking revolution began, McClendon says, he and Ward quickly realized that the new technique offered them an opening. In the natural gas industry, the advantage had long gone to operators with the geological and engineering expertise to pinpoint gas reservoirs. Now it didn't matter where you drilled – the gas was pretty much evenly distributed throughout the earth's deep shale layers. The edge suddenly belonged to operators who could lock up as much land as quickly and as cheaply as possible – precisely the skill that Ward and McClendon had developed scraping around Oklahoma land deeds. In 1989, the two men chipped in $50,000 to form a new company, Chesapeake Energy, to focus primarily on shale gas. It grew like a Silicon Valley startup: By 1993, when Chesapeake went public, the firm was valued at $25 million.

From the outset, financial risk-taking was as much a part of the firm's success as technological innovation. Chesapeake was the first gas-exploration company to issue high-yield junk bonds, which gave it a steady cash flow to pay for leasing and drilling. "To be able to borrow money for 10 years and ride out boom-and-bust cycles was almost as important an insight as horizontal drilling," McClendon says. "For the first time, we were able to build a company where, if something didn't work for a little bit of time, we could regroup and find something that did work."

By 2003, Chesapeake had expanded deeper into Oklahoma and Texas, as well as Louisiana and Arkansas. "They became a land-acquisition machine," says Phil Weiss, an analyst at Argus Research who has followed the firm for more than a decade. The key to success was discovering new gas plays before other companies, then leasing vast tracts of land as quickly and quietly as possible.

Chesapeake's land operation became almost as technologically sophisticated as its drilling operation, with a huge databank of property records and mineral-ownership rights across the country. "The goal is not just to pump gas," explains Pickens. "It's also to lock up future reserves." The company's financial statements estimate that it currently holds drilling rights to as much as 100 trillion cubic feet of gas – enough to supply the entire country for five years.

At Chesapeake, McClendon operated more like a land speculator than an oilman. "Our approach is to go in early, quietly and big," says Henry Hood, who directs Chesapeake's land purchases. "We like to get our deals signed before anybody knows what we're up to and tries to run up prices." But buying up such huge swaths of land requires huge chunks of cash – and the money often comes not from gas production, but from selling off land or going into debt. After Chesapeake drills a few wells in a region and "proves up" the reserves, it hawks the leases to big oil and gas companies looking to get into the shale-gas game. In 2010, it pocketed $2.2 billion by selling land it bought in Texas for $2,000 an acre to one of China's largest oil companies for $11,000 an acre. "That's a five-to-one return on investment," says Jeff Mobley, Chesapeake's senior vice president for investor relations.

In recent years, the company has also sold off the future proceeds it expects to receive from thousands of wells – a complex financing deal that enables it to borrow cash now without counting the debt it will owe when it has to drill the wells later. The very first deal, made with Deutsche Bank and a Swiss investment firm, brought Chesapeake more than $1 billion in return for 15 years of future production from 4,000 wells. "It's not illegal, but most gas and oil companies don't do it," says Bob Brackett, an analyst with Sanford C. Bernstein & Co. "Chesapeake's poor credit rating pushes them to turn to unconventional financing."

To make its operations even riskier, leaseholders like Chesapeake are required by law to drill on the land within three to five years after acquiring the rights or wind up forfeiting the lease. "The more land they acquire, the more capital they have to spend upfront," says Deborah Rogers, a former investment banker who learned just how precarious Chesapeake's business model was when she looked into the firm's financial statements after the company sunk wells near her property in Texas. "Then they have to drill it or lose it, which further adds to capital costs. And the more they drill, the more gas they produce, which lowers the price of gas and further reduces their revenues. In the end, this drilling treadmill is difficult to sustain for long – especially if the wells under­perform, or the resource turns out to not be as valuable as they thought."

This sort of gambling suits McClendon, who is known for placing big bets – and sometimes losing big. During the financial meltdown in 2008, McClendon was forced to sell off 94 percent of his stock in Chesapeake – some 33 million shares – for $550 million to meet a margin call on his personal investments. (Only a few months earlier, the stock had been worth $2 billion.) Despite the dramatic setback, Chesapeake's board boosted McClendon's annual salary to $112 million, making him the highest paid CEO at any S&P 500 company at the time. The pay hike, which sparked a shareholder lawsuit, was scorned by Wall Street analysts. "McClendon clearly thinks of Chesapeake as his own personal piggy bank," says one. In the end, that piggy bank may prove to be empty: In February, Chesapeake announced that, because of low gas prices, its revenues will fall $3.5 billion short of its expenses this year.

Until a few years ago, Bradford County was a forgotten landscape of struggling dairy farms and strip-mall nail salons dotting the Susquehanna River in northeastern Pennsylvania. Then, in 2007, gas speculators looking for the next big play zeroed in on the geologic formation called the Marcellus Shale, a 300-foot-thick layer of gas-soaked rock that underlies much of Pennsylvania, as well as parts of Ohio and New York. Chesapeake was one of the first operators to rush into the region, buying up nearly two million acres of land in just a few months. Since then, the company has drilled more than 600 wells here, and it hopes to drill thousands more, virtually covering the region with rigs. "In 10 years," McClendon says, "the Marcellus is likely to become the most productive natural gas field in the world." The county, population 62,000, has already been transformed from sleepy farmland to industrial boomtown: the roads crowded with trucks hauling water, the rail lines rumbling with trains hauling sand, the roadside bars overflowing with drill hands from Oklahoma and Texas, the hotels and motels booked for months in advance.

Chesapeake's operations in the region are run out of an old department store in the county seat of Towanda, located on the banks of the Susquehanna some 20 miles south of the New York state border. It feels more like a military outpost than a corporate office, with dozens of white SUVs emblazoned with the Chesapeake logo parked in rows out front. Inside, offices are separated by thin walls thrown up in a hurry, many of them decorated with arty shots of drilling rigs in pristine landscapes. In these parts, the company's PR efforts are squarely aimed at quelling any environmental fears. To underscore how safe fracking is, Brian Grove, Chesapeake's director of corporate development in the Marcellus region, explains that the layer of shale being drilled is 7,000 feet beneath the surface, whereas drinking water rarely runs deeper than 1,000 feet. "That leaves 6,000 feet of rock in ­between," he says. "There is no way that any fluids are going to migrate from the shale rock up to the drinking-water aquifers."

Grove, an affable guy in a Chesapeake shirt, also points out that the entire length of the well bore is encased in heavy steel, to prevent gas from leaking into the drinking water. What's more, he adds, the top 750 feet of the well, where it's most likely to pass through aquifers, gets a triple layer of steel – a precaution the company took after it had some problems with methane near the surface getting into drinking water. In short, he suggests, the fluids and gas traveling up the well bore are completely isolated from the surrounding earth by up to three layers of heavy steel. "It's a closed system," he says. "Done right, drilling and fracking does not pollute drinking water." This, in essence, is the mantra at Chesapeake: Everything we do is safe and environmentally responsible. Trust us.

One afternoon, Grove drives me out to the Nomac 7 rig, which is drilling about 15 miles east of Towanda. I climb up into the operations box on the rig and watch as the driller guides a bit a mile down into the earth through an eight-inch hole. Once the drilling is finished, millions of gallons of fracking fluid – water and sand, mixed with a host of chemicals that make the water "slippery" – will be injected deep into the well to fracture the underground shale. The wastewater, known as flowback, will then be pumped out, and gas production will begin.

The problem with all sophisticated technology, of course, is that things inevitably go wrong. Last April, a Chesapeake well in Bradford County suffered a massive blowout. It was the onshore, natural gas version of what happened to BP in the Gulf two years ago: A wellhead flange failed, and toxic water gushed uncontrollably from the well for several days before workers were able to bring it under control. Seven families were evacuated from their homes as 10,000 gallons of fracking fluid spilled into surrounding pastures and streams. Pennsylvania fined the company $250,000 – the highest penalty allowed under state law.
Well failures, in fact, are fairly common at drilling sites. I ask Anthony Ingraffea, an engineering professor at Cornell University and a former consultant for oil-service firms, to look at the 141 violations levied against Chesapeake in Pennsylvania last year. According to Ingraffea, 24 of them involved failures of well integrity. "When a well loses integrity, it means the seal is broken and something – usually methane, but it could also be flowback water – is leaking out underground," he says. "And it's impossible to know where it is going, or in what amounts."

It's also impossible to know what chemicals are flowing out of the wells, or how toxic they are, because companies like Chesapeake are not required to disclose the compounds they use in fracking operations. Providers of fracking fluids, such as Halliburton, claim that the composition of such fluids can't be revealed without disclosing trade secrets. In 2005, the industry lobbied hard for what's known as "the Halliburton loophole," which exempts it from federal disclosure requirements. In recent months, Colorado, Texas and Pennsylvania have moved to tighten state regulations and require mandatory disclosure of what's in the fracking fluids, but loopholes still remain. "We don't know the chemicals that are involved," Vikas Kapil, chief medical officer at the National Center for Environmental Health, admitted at a recent conference. "We don't have a great handle on the toxicology of fracking chemicals."

Whatever it is, there's a lot of it: Random data I sampled from five wells that Chesapeake drilled in Pennsylvania and Ohio last year reveals that the company injected between 24,000 pounds and 230,000 pounds of chemicals into each well. Some of the chemicals are relatively harmless, used in common household products. But others – such as 2-butoxyethanol – are known to cause cancer in animals.
An even larger threat is the flowback waste that is pumped out after a well is fracked. It's a salty brine, mildly radioactive, and laced not just with toxic chemicals but with natural hydrocarbons and heavy metals like barium and benzene, which are known carcinogens even in minute quantities. In fracking operations out West, the flowback is generally injected into underground sites that meet EPA standards. But in the Marcellus, there are virtually no injection sites. In the early days, gas producers did pretty much whatever they wanted with the billions of gallons of toxic water their operations produce. "Since there were no laws covering the disposal of this stuff at first, they just dumped it into rivers or hauled it off to sewage plants to be 'treated,' which they knew didn't work," says Deborah Goldberg, a lawyer at Earth­justice. "They just wanted to get rid of the stuff as quickly and as cheaply as possible." At one fracking operation, a subcontractor was caught opening the valves on the back of his truck and dumping the wastewater on roads.

New laws in Pennsylvania now prohibit companies from discharging flowback into rivers and streams. Instead, operators like Chesapeake either "recycle" their water by running it through a filtration system, or haul it off to Ohio and inject it underground – a process which, some seismologists now suspect, is the reason Ohio was hit by an uncharacteristically large number of earthquakes last year. (The injected water lubricates fault lines, the theory goes, causing them to slip.)

McClendon dismisses the dangers of flowback, insisting that other industries cause far more pollution. "Why are you not focused on the amount of oil runoff from parking lots when it rains?" he recently asked a top environmentalist. "What about the billions of tons of agricultural chemicals that run off every day into streams and rivers? That's real pollution that kills real fish, and degrades a real environment. What's worse for Chesapeake Bay? Fertilizer runoff from poultry farms? Or fracking 200 miles away for which there is no evidence that one drop has ever gotten more than 100 yards away from a well site?"

According to McClendon, environmentalists hate fracking for a self-serving reason: because it upends their dreams of green power. "If you believe in a world where the wind and the sun are going to produce all our power in the future, then we've disrupted that vision of the world," he says. "On the other hand, if you dream of a world where air is cleaner, where energy is half the price it was before and we're not exporting a million dollars a minute to OPEC or having to go fight wars in Afghanistan and Iraq, then you should embrace natural gas. That's what's so troubling to me – that people are willing to turn a blind eye to the enormous, well-known consequences of what we do today and not realize that this new path is the only affordable, scalable way to something else."

Last year, scientists at Duke University, McClendon's alma mater, published the first rigorous, peer-reviewed study of pollution at drilling and fracking operations. Examining 60 sites in New York and Pennsylvania, they found "systematic evidence for methane contamination" in household drinking water: Water wells half a mile from drilling operations were contaminated by methane at 17 times the rate of those farther from gas developments. Although methane in water has not been studied closely as a health hazard, it can seep into houses and build up to explosive levels.

The study caused a big stir, in part because it was the first clear evidence that fracking was contaminating drinking water, contrary to the industry's denials. Just weeks after the study was released, the Pennsylvania Department of Environmental Protection fined Chesapeake $1.1 million – the largest fine against an oil and gas operator in the agency's his­tory – for contaminating 17 wells in Bradford County, including some that had been part of the Duke study.

McClendon, a major benefactor to Duke, fired off a blistering letter to the university, which was printed in the alumni magazine and widely circulated online. He didn't point out any errors by the scientists or question their methodology. Instead, he went after their character, dismissing the study as "more political science than physical science" and accusing them of having a bias against fossil fuels. "These guys," he tells me, "have invested their lives in the view that climate change is occurring, that fossil fuels are bad, and that natural gas is a fossil fuel, and therefore it's bad."

When I ask Avner Vengosh, a geochemistry professor who served as a lead author of the study, about McClendon's letter, he laughs lightly. "I have no agenda," he says. "I am a scientist. I report what the evidence I find tells me to report." He and his colleagues visited Chesapeake's headquarters in Oklahoma a few weeks before the study was finished and shared their results with the company. They also offered to consider any data that Chesapeake might have that would challenge their results. "They offered us nothing," says one scientist who attended the meeting.

One of the wells in the study belongs to Sherry Vargson, a dairy farmer who lives in a white house on nearly 200 acres in Granville Summit, a rural area 20 miles from Chesapeake's regional headquarters in Towanda. Unlike many residents, who have been forced by gas companies to sign nondisclosure agreements, Vargson is happy to discuss her experiences with Chesapeake. In 2007, shortly after her two children left for college, a landman from the company showed up at her door and asked to lease the mineral rights beneath her farm. "He told us there was natural gas in the shale rock a mile down, and they had a new way to drill for it that was minimally invasive and would cause very little damage to our land," she recalls. "He said it was a patriotic thing to do, that natural gas would help America gain energy independence."

The landman offered Vargson $100 per acre, plus 12 percent in royalties. He told her there was no way to predict how big the royalties would be, but emphasized that she stood to make "a lot of money" over the 30-year life expectancy of the well. Vargson accepted the deal. "We thought we were taken care of," she says.

Drilling, which began the next year, was an immediate nightmare. One morning, Vargson woke up at 6 a.m. to find 18 trucks idling in her driveway. The hillside behind her house was leveled for a drill pad, and the rig went up 500 feet from her back door. Once the fracking began, water trucks made hundreds of trips up and down her driveway, while air compressors roared all day and night. When the gas was flared off before production began, the flame was so bright in the night sky that she could see it glowing red on the horizon 12 miles away.

Vargson noticed not long after production began in 2009 that water in the trough out back stopped freezing on cold nights. Inside the house, the faucet began to sputter and spit. Her husband seemed to have a lot of headaches, and Vargson felt nauseous if she stayed in the shower for more than a few minutes. Acting on a tip from a friend, she had her water tested. It was loaded with methane.

"I discovered I could light my water on fire," she says. "And I still can." To demonstrate, she walks over to the faucet in her kitchen, lights a match and turns on the faucet. Whoosh! A flame shoots out like a blowtorch.

Vargson stopped drinking the water after she discovered the methane – but tests showed that her water also contained elevated levels of toxic chemicals like radium, manganese and strontium. Chesapeake agreed to supply Vargson with fresh drinking water, delivered to her door in five-gallon jugs once a month, but it denies any responsibility for the elevated methane levels. Tom Darrah, a Duke geologist who has examined Vargson's well for a new study, finds that difficult to square with the facts. "Anyone who has seen the data I have and thinks this much methane in her well is from natural sources has their head in the sand," he says.
For Vargson, and many homeowners just like her, fracking has proved to be a full-blown disaster. Since she signed up with Chesapeake, her back pasture has become a full-time industrial zone, her water supply has been contaminated, and it will be virtually impossible to sell her home, since it lacks drinkable water. What's more, her well turned out to be a dud: The landman from Chesapeake who sold her on the deal failed to mention that 80 percent of a well's gas is often depleted within the first two years. In all likelihood, Vargson's well will end up being a money-loser for Chesapeake, either sold off to another company or refracked in an attempt to dislodge more gas. Either way, the royalty checks that Vargson and her husband were counting on for retirement will hardly pay for dinner and a movie. "We made about $1,400 the first month, and it's been all downhill from there," she says. Her check for last November: $70.

I ask her how she feels about the promise of fracking now. "I think the industry is destroying our water resource to extract a gas resource," she says. "And in the long run, I don't think that's a very smart trade."

As fracking has come under increasing attack, McClendon has used his financial clout to keep the drills pumping. Chesapeake spent only $2 million on federal lobbying last year – about average for a company its size – but it has contributed almost as much to political candidates and PACs in the current election cycle as the Koch brothers. (McClendon makes it clear that he won't be voting for Obama this time around.) In Pennsylvania, Chesapeake has contributed more than half a million dollars to state and local politicians since 2008 – the highest total in the industry.

McClendon, who funds an industry lobbying group called America's Natural Gas Alliance, has also used his cash to attack Big Coal, hoping to topple his chief competitor and refit coal plants to run on natural gas. In 2007, when a Texas utility threatened to build 11 new coal plants, he won over many clean-energy activists by spending $1 million on a "Coal Is Filthy" media blitz. The $26 million he gave to the Sierra Club helped fund its "Beyond Coal" campaign, which has blocked more than 150 new coal plants. But in 2010, when McClendon tried to cement an alliance with environmental groups at a two-day conference in Colorado, the plan backfired. McClendon struck many of the assembled activists as aloof and arrogant. A few weeks later, after he backed away from a promise to lobby for tougher laws requiring the industry to disclose the chemicals it uses in fracking fluid, one top environmentalist sent an e-mail to other participants calling McClendon "a pathological liar."

But McClendon's worst enemy may not be environmentalists or coal companies, but his own recklessness. He played a leading role in creating the fracking bubble by hyping the promise of endless natural gas and sweet-talking Wall Street into funding a massive land grab. If the bubble bursts, Chesapeake's stockholders won't be the only ones who pay the price – the shock waves will be felt throughout the economy, from homeowners who rely on natural gas for heat to manufacturers who were betting on it to power their new factories. Thanks to McClendon's gambles, Chesapeake is struggling to cover $10 billion in long-term debt. In recent weeks, the company has announced it will sell off more land and shut down some production. McClendon also hopes to increase demand and boost gas prices by promoting cars and power plants that run on natural gas, and by cutting deals to export gas to Europe and Asia, where prices are five times higher than in the U.S.

Turning vast stretches of Pennsylvania into a pincushion in order to ship gas to China doesn't exactly mesh with McClendon's emphasis on making America energy independent. But unless something changes, that's precisely where things are headed – on a grand scale. "In the Marcellus, the boom has just begun," says Ingraffea, the Cornell engineer. "The idea is to drill everywhere." Tougher laws and stricter enforcement could mitigate the damage to people and the environment, but widespread drilling – especially at the boomtown pace that McClendon is pushing – will inevitably result in mishaps. Well casings will fail. Fracking chemicals will be spilled. Drinking water will be contaminated. Methane will seep into the atmosphere, accelerating global warming. When you add it all up, you can see why many environmentalists and clean-energy activists no longer see natural gas as a bridge to a more sustainable future. "It's time to stop thinking of natural gas as a 'kinder, gentler' energy source," Mike Brune, executive director of the Sierra Club, recently blogged. "Instead of rushing to see how quickly we can extract natural gas, we should be focusing on how to be sure we are using less."

That kind of talk enrages McClendon. "What does that mean, Mike?" he asks angrily when I ask him about Brune's comment over dinner at his restaurant. "Does that mean we maximize the use of coal? That we fill the countryside with windmills and kill all the migratory birds and double electricity prices while we do it? What's the human cost to doubling electricity prices? What's the human benefit to halving them? I think those are enormously important questions that are never imposed at the same time people say, 'Fracking is bad.'"

I look at the $400 bottle of wine on the table. Much of what McClendon says is misleading – wind power is as cheap as gas in some places and falling fast, and cutting back on gas doesn't have to mean burning more coal. But his plan is clear. He's not going to back off until every last square foot of shale rock in America is drilled and fracked and sucked clean of gas. McClendon may rely on sophisticated new drilling technologies, but at heart, he's driven by the same dream of endless extraction that has gripped oil barons and coal companies since the dawn of the Industrial Revolution. In the end, all his talk of energy independence and a cleaner, brighter future boils down to a single demand, as simple as it is disastrous: Drill, baby, drill.
This story is from the March 15, 2012 issue of Rolling Stone.
Chesapeake Energy Responds to 'The Big Fracking Bubble'
Rolling Stone's Response

President Obama on Jobs and the Economy

March 9, 2012

White House Travel | Domestic Trip
President Obama spoke about jobs and the economy at the Rolls-Royce Crosspointe advanced-manufacturing facility in Prince George County, Virginia. He talked about a new initiative to help American companies become more competitive by creating manufacturing hubs that would take ideas from the lab and move them quickly to the marketplace.

Bank of America: Too Crooked to Fail

Rolling Stone

The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?

bank of america
Illustration by Victor Juhasz
At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.
It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.
But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.
All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.
They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.
Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not bankers or capitalists, but a class of person that was never supposed to exist in America: royalty.
Self-appointed royalty, it's true – but just as dumb and inbred as the real thing, and every bit as expensive to support. Like all royals, they reached their position in society by being relentlessly dedicated to the cause of Bigness, Unaccountability and the Worthlessness of Others. And just like royals, they spend most of their lives getting deeper in debt, and laughing every year when our taxes go to covering their whist markers. Two and a half centuries after we kicked out the British, it's really come to this?
Bank of America started out in San Francisco in 1904 as an emblem of American capitalism. Founded by a first-generation Italian-American named Amadeo Giannini – it was even originally called the Bank of Italy – the bank set out to serve immigrants denied credit by other banks, and it was instrumental in helping to rebuild the city after the devastating earthquake of 1906.
But like many of the truly bad ideas in history, the present-day version of Bank of America was the product of a testosterone overdose. The concept of an overmassive, acquiring-everything-in-sight, bicoastal megabank was hatched in the terminal inferiority complex of a greed-sick asshole – actually two greed-sick assholes, both of them CEOs of Southern regional banks, who launched a cartoonish arms race of bank acquisitions that would ultimately turn the American business world upside down.
The antagonists were Hugh McColl Jr. and Ed Crutchfield, the respective leaders of North Carolina National Bank (which would take over Bank of America) and First Union (which turned into Wachovia), both based in Charlotte, North Carolina. Obsessed with each other, these two men transformed their personal competition into one of the most ridiculous and elaborate penis-measuring contests in the history of American business – even engaging in the garish Freudian spectacle of vying to see who would have the tallest skyscraper in Charlotte. First Union kicked things off in 1971 by erecting the 32-story Jefferson First Union Tower, then the biggest building in town – until McColl's bank built the 40-story NCNB Plaza in 1974. Then, in the late Eighties, Crutchfield topped McColl with the city's first post­modern high-rise, One First Union Center, at 42 stories. That held the prize until 1992, when McColl went haywire and put up the hideous 60-story Bank of America Corporate Center, a giant slab of gray metal affectionately known around Charlotte as the "Taj McColl." When asked by reporters if he was pleased that his 60-story monster overwhelmed his rival's 42-story weenie, McColl didn't hesitate. "Do I prefer having the tall one?" he said. "Yes."
For a time, this ridiculous rivalry between two strutting Southern peacocks was restrained by the law – specifically, the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company Act of 1956. These two federal statutes, which made it illegal for a bank holding company to own and operate banks in more than one state, were effectively designed to prevent exactly the Too Big to Fail problem we now find ourselves faced with. The goal, as Sen. Paul Douglas explained at the time, was "to prevent an undue concentration of banking and financial power, and instead keep the private control of credit diffused as much as possible."
But these laws didn't sit well with Hugh McColl. To him, size was everything. "We realized that if we didn't leave North Carolina," he explained later in his career, "we would never amount to anything – that we would not be important." Note that he didn't say the ban on expansion prevented him from turning a profit or earning good returns for his shareholders – only that it put a limit on his sense of self-importance. So McColl and his banking minions set out to break down the interstate banking laws. First, in 1981, they used a legal loophole in Florida law to buy a bank branch there – evading the federal ban on out-of-state owners. Then, following a Supreme Court decision in 1985 that allowed banks to cross state lines within a designated region, he and Crutchfield went on a conquering spree worthy of a Mongol horde, buying up a host of banks in other Southern states. McColl, a silver-haired ex-Marine who would eventually be celebrated for bringing a "military approach" to his business, went to ridiculous lengths to play up the manly conquest aspect of his bank's merger frenzy, rewarding key employees with crystal hand grenades. By 1995, McColl had acquired more than 200 banks and thrifts across the South, while Crutchfield had snapped up 50.
A few years later, after Congress repealed most of the barriers to interstate banking, McColl took over Bank of America, realizing his dream of creating what one trade publication called "the first ocean-to-ocean bank in the nation's history." Later, after McColl retired, his successors kept up his acquisitive legacy, buying notorious mortgage lender Countrywide Financial in 2008, and using some of the $25 billion in federal bailout funds they received to acquire dying investment bank Merrill Lynch. Both firms were infamous for their exotic gambles and their systematic cutting of regulatory corners – meaning that the shopping spree had burdened Bank of America with a huge portfolio of doomed trades and criminal conspiracies.
But to McColl, it was all worth it – because he would never have been important if he hadn't also been big. "I have no regrets about building it large," he said in 2010, when asked if he considered all the monster consolidations a mistake in light of the crash of 2008. "I may have some regrets about not building it larger."
This deeply American terror of not always having the absolutely hugest dick in the room is what put us in the inescapable box called Too Big to Fail. When the bailouts were dreamed up to save Bank of America, the government was essentially committing public resources to preserve this lunatic spending spree – which means two successive presidential administrations have now spent nearly half a decade and hundreds of billions of tax dollars defending the premise that Hugh McColl should always be allowed to have the "taller one."
And why? The rationale for allowing that merger spree in the first place was based on a phony assumption: that big banks would somehow be more efficient and more profitable than small ones. "The whole premise of a Citibank or a Chase or a Bank of America is wrongheaded," says Susan Webber, an analyst who writes one of the most popular and respected financial blogs under the pseudo­nym Yves Smith. "Studies consistently show that after a certain size threshold, bank efficiency taps out. In fact, it turns out that all those cost savings the banks were supposed to enjoy from being bigger were actually based on cutting corners and fraud."
And man, what a lot of fraud!
In the end, it all comes back to mortgages. Though Bank of America would ultimately be charged with committing a dizzyingly diverse variety of corporate misdeeds, the bulk of the trouble the bank is in today arises from the Great Mortgage Scam of the mid-2000s, which caused the biggest financial bubble in history.
The shorthand version of the scam is by now familiar: Banks and mortgage lenders conspired to create a gigantic volume of very risky home loans, delivering outsize mortgages to dubious borrowers like immigrants without identification, the unemployed and people with poor credit histories. Then the banks took those dicey home loans and sprinkled them with bogus math, using inscrutable financial gizmos like collateralized mortgage obligations to rechristen the risky home loans as high-grade, AAA-rated securities that could be sold off to unions, pensioners, foreign banks, retirement funds and any other suckers the banks could find. In essence, America's financial institutions grew vast fields of cheap oregano, and then went around the world marketing their product as high-grade weed.
The holy trinity of Bank of America, Countrywide and Merrill Lynch represented the worst conceivable team of financial powers to get hold of this scam. It was a little like the Wall Street version of Michael Bay's nonclassic Con Air, in which the world's creepiest serial killer, most demented terrorist and most depraved redneck are all thrown together on the same plane. In this case, it was the most careless mortgage lender (the spray-tanned huckster Angelo Mozilo from Countrywide, who was named the second-worst CEO of all time by Portfolio magazine), the most dangerous mortgage gambler (Merrill, whose CEO was the self-worshipping jerkwad John Thain, the ex-Goldman banker who bought himself an $87,000 area rug as his company was cratering in 2008) and the most relentless packager of mortgage pools (Bank of America), all put together under one roof and let loose on the world. These guys were so corrupt, they even shocked one another: According to a federal lawsuit, top executives at Countrywide complained privately that Bank of America's "appetite for risky products was greater than that of Countrywide."
The three lenders also pioneered ways to sell their toxic pools of mortgages to suckers. Bank of America's typical marketing pitch to a union or a state pension fund involved a double or even triple guarantee. First, it promised, in writing, that all its loans had passed due diligence tests and met its high internal standards. Next, it promised that if any of the loans in the mortgage pool turned out to be defective or in default, it would buy them back. And finally, it assured customers that if all else failed, the pools of mortgages were all insured, or "wrapped," by bond insurers like AMBAC and MBIA.
It sounded like a can't-lose deal. Not only did the bank offer a written guarantee of the high quality of the loans it was selling, it also promised to buy back any bad loans, which were often insured to boot. What could go wrong?
As it turned out, everything. From tits to toes, the mortgage pools created, packaged and sold by Countrywide, Merrill Lynch and Bank of America were a complete sham: worthless and often falling apart virtually from the day they were delivered.
First of all, despite the fact that the banks had promised that all the loans in their pools met their internal lending standards, that turned out to be completely untrue. An SEC­ investigation later found out, for instance, that Countrywide essentially had no standards for whom to lend to. As a federal judge put it, "Countrywide routinely ignored its official underwriting guidelines to such an extent that Countrywide would underwrite any loan it could sell." Translation: Countrywide gave home loans to anything with a pulse, provided they had a sucker lined up to buy the loan.
How did they make these loans in the first place? By committing every kind of lending fraud imaginable – particularly by entering fake data on home loan applications, magically turning minimum-wage janitors into creditworthy wage earners. In 2006, according to a report by Credit Suisse, a whopping 49 percent of the nation's subprime loans were "liar's loans," meaning that lenders could state the incomes of borrowers without requiring any proof of employment. And no one lied more than Countrywide and Bank of America. In an internal e-mail distributed in June 2006, Countrywide's executives worried that 40 percent of the firm's "reduced documentation loans" potentially had "income overstated by more than 10 percent... and a significant percent of those loans would have income overstated by 50 percent or more."
"What large numbers of Countrywide employees did every day was commit fraud by knowingly making and approving loans they knew borrowers couldn't repay," says William Black, a former federal banking regulator. "To do so, it was essential that the loans be made to appear to be relatively less risky. This required pervasive documentation fraud."
So what happened when institutional investors realized that the loans they had bought from Countrywide were nothing but shams? Instead of buying back the bad loans as promised, and as required by its own contracts, the bank simply refused to answer its phone. A typical transaction involved U.S. Bancorp, which in 2005 served as a trustee for a group of investors that bought 4,484 Countrywide mortgages for $1.75 billion – only to discover their shiny new investment vehicle started throwing rods before they could even drive it off the lot. "Soon after being sold to the Trust," U.S. Bancorp later observed in a lawsuit, "Countrywide's loans began to become delinquent and default at a startling rate." The trustees hired a consultant to examine 786 loans in the pool, and found that an astonishing two-thirds of them were defective in some way. Yet, confronted with the fraud, Countrywide failed to repurchase a single loan, offering "no basis for its refusal."
And what about that ostensible insurance that Bank of America sold with its bundles of mortgages? Well, those policies turned out not to be worth very much, since so many of the loans defaulted that they blew the insurers out of business. If you went bust buying bad mortgages from Bank of America, chances are, so did your insurer. At best, you two could now share a blanket in the poorhouse.
Many of the nation's largest insurers, in fact, are now suing the pants off Bank of America, claiming they were fraudulently induced to insure the bank's "high lending standards." AMBAC, the second-largest bond insurer in America, went bankrupt in 2010 after paying out some $466 million in claims over 35,000 Countrywide home loans. After analyzing a dozen of the mortgage pools, AMBAC found that a staggering 97 percent of the loans didn't meet the stated underwriting standards. That same year, the Association of Financial Guaranty Insurers, a trade group representing firms like AMBAC, told Bank of America that it should be repurchasing as much as $20 billion in defective mortgages.
Some of these institutional investors were at least partial accomplices to their own downfall. In the boom era of easy money, financial professionals everywhere were chasing the lusciously high yields offered by these bundles of subprime mortgages, and everyone knew the deals weren't exactly risk-free. But ultimately, Bank of America was knowingly selling a defective product – and down the road, that product was bound to blow up on somebody innocent. "A teacher or a fireman goes to work and saves money for their retirement via their pensions," says Manal Mehta, a partner at the hedge fund Branch Hill Capital who spent two years researching Bank of America. "That pension fund buys toxic securities put together by Wall Street that were designed to fail. So when that security blows up, wealth flows directly from that pension fund into the hands of a select few."
This is the crossroads where Bank of America now lives – trying to convince the government to allow it to remain in business, perhaps even asking for another bailout or two, while it avoids paying back untold billions to all of the institutional customers it screwed, the list of which has grown so long as to almost be comical. Last year, the bank settled with a group of pension and retirement funds, including public employees from Mississippi to Los Angeles, that charged Bank of America and Merrill with misrepresenting the value of more than $16 billion in mortgage-backed securities. In the end, the bank paid only $315 million.
In the first half of last year, Bank of America paid $12.7 billion to settle claims brought by defrauded customers. But countless other investors are still howling for Bank of America to take back its counterfeit product. Allstate, the maker of those reassuring Dennis Haysbert-narrated commercials, claims it got stuck with $700 million in defective mortgages from Countrywide. The states of Iowa, Oregon and Maine, as well as the United Methodist Church, are suing Bank of America over fraudulent deals, claiming hundreds of billions in collective losses. And there are similar lawsuits for nonmortgage-related securities, like a revolting sale of doomed municipal securities to the state of Hawaii and Maui County. In that case, Merrill Lynch brokers allegedly dumped $944 million in auction-rate securities on the Hawaiians, even though the brokers knew that the auction-rate market was already going bust. "Market is collapsing," a Merrill executive named John Price admitted in an internal e-mail, before joking about having to give up pricey dinners at a fancy Manhattan restaurant. "No more $2K dinners at CRU!!"
In the end, says Mehta, Bank of America's fraud resulted in "one of the biggest reverse transfers of wealth in history – from pensioners to financiers. What the 99 percent should understand is that Wall Street knowingly inflated the bubble by engaging in rampant mortgage fraud – and then profited from the collapse of their own exuberance by devising a way to shift the losses to countless pension funds, endowments and other innocent investors." The assembled worldwide collection of swindled pensioners and unions and investors is a little like the crowd that storms the basketball court in the Will Ferrell movie Semi-Pro when the home team's owner welshes on his promise to hand out free corn dogs if the score tops 125 points. Corn dogs, Bank of America! Where are the freaking corn dogs!
Incredible as it sounds, owing practically everyone in the world billions of dollars apiece is only half of Bank of America's problem. The bank didn't just flee the scene of its various securities rip-offs. It also made a habit out of breaking the law and engaging in ethical lapses on a grand scale, all over the globe. Once your money ends up in their pockets, they just slither off into the night, no matter their legal or professional obligations.
Case in point: With all those hundreds of thousands of mortgages the bank bought, it simply stopped filing basic paperwork – even the stuff required by law, like keeping chains of title. A blizzard of subsequent lawsuits from pissed-off localities reveals that the bank used this systematic scam to avoid paying local fees. Last year, a single county – Dallas County in Texas – sued Bank of America for ducking fees since 1997. "Our research shows it could be more than $100 million," Craig Watkins, the county's district attorney, told reporters. Think of that next time your county leaves a road unpaved, or is forced to raise property taxes to keep the schools open.
But the lack of paperwork also presented a problem for the bank: When it needed to foreclose on someone, it had no evidence to take to court. So Bank of America unleashed a practice called robo-signing, which essentially involved drawing up fake documents for court procedures. Two years ago, a Bank of America robo-signer named Renee Hertzler gave a deposition in which she admitted not only to creating as many as 8,000 legal affidavits a month, but also to signing documents with a fake title.
Yet here's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America consider the mass, factory-style production of tens of thousands of fake legal documents per month not that big a deal. "Robo-signing is like focusing on Bernie Madoff's accountant," quips April Charney, a well-known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of America.
Robo-signing is not the disease – it's a symptom of Bank of America's entire attitude toward the law. A bank that's willing to commit whole departments to inventing legal affidavits might also, for instance, intentionally ding depositors with bogus overdraft fees. (A class action suit accused Bank of America of heisting some $4.5 billion from its customers this way; the bank settled the suit for a mere 10 cents on the dollar.)
Or it might give up trying to win government contracts honestly and get involved with rigging municipal bids – a mobster's crime, for which the accused used to do serious time, back when the bids were for construction and garbage instead of municipal bonds, and the defendants were Eye-talians in gold chains instead of Ivy Leaguers in ties and Chanel glasses. We now know that Bank of America routinely conspired with other banks to make sure it paid low prices for the privilege of managing the moneys of various cities and towns. If the city of Baltimore or the University of Mississippi or the Guam Power Authority issued bonds to raise money, the bank would huddle up with the likes of Bear Stearns and Morgan Stanley and decide whose "turn" it was to win the bid. Bank of America paid a $137 million fine for its sabotage of the government-contracting process – and in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency program, essentially confessing its criminal status: As plaintiff attorneys noted, the application "means that Bank of America is an admitted felon." Think about that when you hear about all the bailouts the bank has gotten in the past four years. A street felon who gets out of jail can't even vote in some states – and yet Bank of America is allowed to receive billions in federal aid and dominate the electoral process with campaign contributions?
Some of the bank's other collusive schemes are even more ambitious. Last year, the bank was sued, alongside some of its competitors, for conspiring to rig the London Interbank Offered Rate. Many adjustable-rate financial products are based on LIBOR – so if the big banks could get together and artificially lower the rate, they would pay out less to customers who bought those products. "About $350 trillion worth of financial products globally reference LIBOR," says one antitrust lawyer familiar with the case. "Which means," she adds in a striking understatement, "that the scale of this conspiracy is extremely large."
What's most striking in all of these scams is the corporate culture of Bank of America: These guys are just dicks. Time and again, they go out of their way to fleece their own customers, without a trace of remorse. In classic con-artist behavior, Bank of America even tried to rip off homeowners a second time by gaming President Obama's HAMP program, which was designed to aid families who had already been victimized by the banks. In a lawsuit filed last year, homeowners claim they were asked to submit a mountain of paperwork before receiving a modified loan – only to have the bank misplace the documents when it was time to pay up. "The vast majority tell us the same thing," says Steve Berman, an attorney for the plaintiffs. "Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about the status of their loans and even took actions toward foreclosure without informing homeowners of their options." The scheme allowed the bank to bleed struggling homeowners for a few last desperate months by holding out the carrot of federal aid they would never receive.
Even when caught red-handed and nailed by courts for behavior like this, Bank of America has remained smugly unrepentant. As part of an $8.4 billion settlement it entered into with multiple states over predatory lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise rates on borrowers. But no sooner was the deal signed than the bank "materially and almost immediately violated" the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes helping a victim get a loan modification.
The bank's list of victims goes on and on. The disabled? Just a few weeks ago, the government charged Bank of America with violating the Fair Housing Act by illegally requiring proof of disability from people who rely on disability income to make their mortgage payments. Minorities? Last December, the bank settled with the Justice Department for $335 million over Countrywide's practice of dumping risky subprime loans on qualified black and Hispanic borrowers. The poor? In South Carolina, Bank of America won a contract to distribute unemployment benefits through prepaid debit cards – and then charged multiple fees to jobless folk who had the gall to withdraw their money from anywhere other than a Bank of America ATM. Seriously, who hasn't this bank conspired to defraud? Puppies? One-eyed Sri Lankans?
Bank of America likes to boast that it has changed its ways, replacing many of the top executives who helped create the mortgage bubble. But the man promoted from within to lead the new team, CEO Brian Moynihan, is just as loathsome and tone-deaf as his previous bosses. As befits a new royal, Moynihan defended a plan to gouge all debit-card users with $5 fees by citing his divine privilege: "We have a right to make a profit." And despite the bank's litany of crimes, Moynihan seems to think we're just overreacting. After all, he gives to charities! "I get a little incensed when you think about how much good all of you do, whether it's volunteer hours, charitable giving we do, serving clients and customers well," he told employees last October. Then, addressing would-be protesters: "You ought to think a little about that before you start yelling at us."
In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program. The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to try to game the game itself – by fixing global interest rates!
So what does the government do about a rogue firm like this, one that inflates market-wrecking bubbles, commits mass fraud and generally treats the law like its own personal urinal cake? Well, it goes without saying that you rescue that "admitted felon" at all costs – even if you have to spend billions in taxpayer money to do it.

Bank of America should have gone out of business back in 2008. Just as the mortgage market was crashing, it made an inconceivably stupid investment in subprime mortgages, acquiring Countrywide and the billions in potential lawsuits that came with it. "They tried to catch a falling knife and lost their hand and foot in the process," says Joshua Rosner, a noted financial analyst. It then spent $50 billion buying a firm, Merrill Lynch, that was rife with billions in debts. With those two anchors on its balance sheet, Hugh McColl's bicoastal dream bank should have gone the way of the dinosaur.
But it didn't. Instead, in the midst of the crash, the government forked over $45 billion in aid to Bank of America – $20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another $25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion in Bank of America debt.
So what did the bank do with that money? First, it sat by while lame-duck executives at Merrill paid themselves $3.6 billion in bonuses – even though Merrill lost more than $27 billion that year. In all, 696 executives received more than $1 million each for helping to crash the storied firm. (The bank wound up hit with a $150 million fine for its failure to inform shareholders about the Merrill losses and bonuses.) Bank of America, meanwhile, paid out more than $3.3 billion in bonuses to itself, including more than $1 million each to 172 executives.
In fact, the real bailouts of Bank of America didn't even begin until well after TARP. In the years since the crash, the bank has issued more than $44 billion in FDIC-insured debt through a little-known Federal Reserve plan called the Temporary Liquidity Guarantee Program. The plan essentially allows companies whose credit ratings are fucked to borrow against the government's good name – and if the loans aren't paid back, the government is on the hook for all of it. Bank of America has also stayed afloat by constantly borrowing billions in low-­interest emergency loans from the Fed – part of $7.7 trillion in "secret" loans that were not disclosed by the central bank until last year. When the data was finally released, we found out that, on just one day in 2008, Bank of America owed the Fed a staggering $86 billion.
That means that when you take out a credit card or a mortgage or a refinancing from Bank of America, you're essentially borrowing from the state; the "private" bank is simply taking a cut as a middleman. "For banks, the cost of capital is the key to success," says former New York governor Eliot Spitzer. "So by lowering their cost of capital to almost zero, the Fed has almost guaranteed that the banks will make big profits."
Another public lifeline is Fannie Mae and Freddie Mac, the giant, nationalized mortgage lenders. Need to make some cash? Toss a bunch of home loan applications onto a city street, then sell the resulting mortgages to Fannie and Freddie, which are basically a gigantic pile of public money guarded by second-rate managers. Just like the state pensions in Iowa and Maine and Missis­sippi, Fannie and Freddie were targeted for sales of toxic mortgages, and just like those entities, they have sued Bank of America, claiming they were suckered into buying more than $30 billion in shitty securities. But unlike those other suckers, Fannie and Freddie continued to buy crap loans from Bank of America even after it was clear they'd been hoodwinked. Last year, the bank created more than $156 billion in mortgages – nearly $38 billion of which were bought by Fannie. Having the government as an ever-ready customer, standing by to buy mortgages at full retail prices, has always been an ongoing hidden bailout to the banks.
But even the government has its limits. In February, Fannie announced it would no longer keep blindly buying mortgages from Bank of America. Why? Because the bank, already slow to buy back its defective mortgages, had gotten even slower. By the end of last year, the government reported, more than half of all the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America.
But if you think that Fannie cutting off the bank is good news, think again. If it can't get the money it's owed from Bank of America, it'll just go begging to the Treasury. Fannie has already asked for $4.5 billion to cover losses this year – and if Bank of America doesn't pony up, it'll have to reach even deeper into our pockets, making for yet another shadow bailout to the firm.
It gets worse. Last fall, some of the bank's biggest creditors and counterparties started to get nervous about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered, complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55 trillion in potential losses. Black, the former regulator, calls the transfer an "obscenity. As a regulator, I would have never allowed it. Transferring risk to the insured institution crosses the reddest of red lines."
But by far the biggest bailout to Bank of America has come via the sweetheart deals it cut to settle the massive lawsuits filed against it. Some of the deals, which were brokered by the Justice Department and state attorneys general, allowed the bank to get away with paying pennies on the dollar on its mountains of debt. Worst of all was the recent $26 billion foreclosure settlement involving Bank of America and four other major firms. The deal, in which the banks agreed to pay cash to screwed-over homeowners in exchange for immunity from federal prosecution on robo-signing issues, was hailed as a big multibillion-dollar bite out of the banks. President Obama was all but strutting over his beatdown of Wall Street. "We are Americans, and we look out for one another; we get each other's backs," he declared. "We're going to make sure that banks live up to their end of the bargain."
In fact, the government has a lousy track record when it comes to enforcing settlements. The foreclosure deal arrives on the heels of an $8.4 billion investor settlement, whose provisions Bank of America had already been accused of violating, raising rates and abusing homeowners as soon as the deal was struck. The bank also violated a previous settlement with the Federal Trade Commission, illegally slapping $36 million in fees on struggling homeowners after specifically agreeing not to do so. So Bank of America's reward for blowing off its previous settlements for mistreating homeowners was to get another soft-touch deal from the government, which they will presumably be just as free to ignore. Why? Because while state officials have ultimate enforcement authority over the foreclosure settlement, the early enforcement reviews will be handled by "internal quality control groups." In other words, Bank of America itself will be grading its own compliance!
Even if Bank of America coughs up its share of the $26 billion settlement, the deal is woefully inadequate to address the wider fraud that went on in creating and pooling mortgages. "It's like handing a box of tissues to someone whose immune system has been destroyed by AIDS," says Rosner. "It doesn't come close to addressing the scale of the problem." Many Wall Street observers think that without the waiver from federal prosecution provided by the settlement, Bank of America would have faced billions in lawsuits for robo-signing offenses alone.
Oh, and one more thing, since we're talking about avoiding bills: Bank of America didn't pay a dime in federal taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation that year. You do the math.
And here's the biggest scam of all: After all that help – all the billions in bailouts, the tens of billions in Fed loans, the hundreds of billions in legal damages made to disappear, the untold billions more of unpaid bills and buybacks – Bank of America is still failing. In December, the bank's share price dipped below $5, and after being cut off by Fannie in February, the bank announced a truly shameless plan to jack up fees for depositors by as much as $25 a month – what one market analyst called a "measure of last resort."
The company reported positive earnings last year, with net income of $84 million, but analysts aren't convinced. David Trainer, a MarketWatch commentator, switched his rating of Bank of America to "very dangerous" in part because its accounting is wildly optimistic. Among other things, the bank's projections assume a growth rate of 20 percent every year for the next 18 years. What's more, the bank has set aside only $8.5 billion for buybacks of those crap corn-dog loans from enraged customers – even though some analysts think the number should be much higher, perhaps as high as $27 billion. Because more lawsuits are so likely, says Mehta, it's "virtually impossible to decipher if Bank of America requires more equity, or even another tax­payer bailout."
But the only number that really matters is this one: $37 billion. That's the total bonus and compensation pool this broke-ass, state-dependent, owing-everybody-in-sight bank paid out to its employees last year. This, in essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives. Then, with the company on the verge of collapse, the inevitable state rescue. In this whole picture, the only money that's ever "real" is the fat bonuses the executives cash out of the bank at the end of each year. "Fraud is a sure thing," says Black. "The firm fails, unless it is bailed out, but the controlling officers walk away wealthy."
The Dodd-Frank financial reform approved by Congress last year was supposed to fix the problem of Too Big to Fail, giving the government the power to take over and disband troubled megafirms instead of bailing them out. "The way to cut our Gordian financial knot is simple," MIT economist Simon Johnson wrote in The New York Times. "Force the big banks to become smaller." But few in the financial community believe that will ever happen. "If Bank of America crashes, the first thing that would happen is Dodd-Frank would be revealed as a fraud," says Rosner. "The Fed and the Treasury would ask Congress for a bailout to 'save the economy.' It's the worst-kept secret on Wall Street."
In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly punished by the market – the executives would get to loot their own firms once, then they'd be looking for jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else they can get their hands on. The threat posed by Bank of America isn't just financial – it's a full-blown assault on the American dream. Where's the incentive to play fair and do well, when what we see rewarded at the highest levels of society is failure, stupidity, incompetence and meanness? If this is what winning in our system looks like, who doesn't want to be a loser? Throughout history, it's precisely this kind of corrupt perversion that has given birth to countercultural revolutions. If failure can't fail, the rest of us can never succeed.

Al Gore: Climate of Denial

Rolling Stone

Can science and the truth withstand the merchants of poison?

Illustration by Matt Mahurin

The first time I remember hearing the question "is it real?" was when I went as a young boy to see a traveling show put on by "professional wrestlers" one summer evening in the gym of the Forks River Elementary School in Elmwood, Tennessee.
The evidence that it was real was palpable: "They're really hurting each other! That's real blood! Look a'there! They can't fake that!" On the other hand, there was clearly a script (or in today's language, a "narrative"), with good guys to cheer and bad guys to boo.
But the most unusual and in some ways most interesting character in these dramas was the referee: Whenever the bad guy committed a gross and obvious violation of the "rules" — such as they were — like using a metal folding chair to smack the good guy in the head, the referee always seemed to be preoccupied with one of the cornermen, or looking the other way. Yet whenever the good guy — after absorbing more abuse and unfairness than any reasonable person could tolerate — committed the slightest infraction, the referee was all over him. The answer to the question "Is it real?" seemed connected to the question of whether the referee was somehow confused about his role: Was he too an entertainer?
That is pretty much the role now being played by most of the news media in refereeing the current wrestling match over whether global warming is "real," and whether it has any connection to the constant dumping of 90 million tons of heat-trapping emissions into the Earth's thin shell of atmosphere every 24 hours.
Admittedly, the contest over global warming is a challenge for the referee because it's a tag-team match, a real free-for-all. In one corner of the ring are Science and Reason. In the other corner: Poisonous Polluters and Right-wing Ideologues.
The referee — in this analogy, the news media — seems confused about whether he is in the news business or the entertainment business. Is he responsible for ensuring a fair match? Or is he part of the show, selling tickets and building the audience? The referee certainly seems distracted: by Donald Trump, Charlie Sheen, the latest reality show — the list of serial obsessions is too long to enumerate here.
But whatever the cause, the referee appears not to notice that the Polluters and Ideologues are trampling all over the "rules" of democratic discourse. They are financing pseudoscientists whose job is to manufacture doubt about what is true and what is false; buying elected officials wholesale with bribes that the politicians themselves have made "legal" and can now be made in secret; spending hundreds of millions of dollars each year on misleading advertisements in the mass media; hiring four anti-climate lobbyists for every member of the U.S. Senate and House of Representatives. (Question: Would Michael Jordan have been a star if he was covered by four defensive players every step he took on the basketball court?)
This script, of course, is not entirely new: A half-century ago, when Science and Reason established the linkage between cigarettes and lung diseases, the tobacco industry hired actors, dressed them up as doctors, and paid them to look into television cameras and tell people that the linkage revealed in the Surgeon General's Report was not real at all. The show went on for decades, with more Americans killed each year by cigarettes than all of the U.S. soldiers killed in all of World War II.
This time, the scientific consensus is even stronger. It has been endorsed by every National Academy of science of every major country on the planet, every major professional scientific society related to the study of global warming and 98 percent of climate scientists throughout the world. In the latest and most authoritative study by 3,000 of the very best scientific experts in the world, the evidence was judged "unequivocal."
But wait! The good guys transgressed the rules of decorum, as evidenced in their private e-mails that were stolen and put on the Internet. The referee is all over it: Penalty! Go to your corner! And in their 3,000-page report, the scientists made some mistakes! Another penalty!
And if more of the audience is left confused about whether the climate crisis is real? Well, the show must go on. After all, it's entertainment. There are tickets to be sold, eyeballs to glue to the screen.
Part of the script for this show was leaked to The New York Times as early as 1991. In an internal document, a consortium of the largest global-warming polluters spelled out their principal strategy: "Reposition global warming as theory, rather than fact." Ever since, they have been sowing doubt even more effectively than the tobacco companies before them.
To sell their false narrative, the Polluters and Ideologues have found it essential to undermine the public's respect for Science and Reason by attacking the integrity of the climate scientists. That is why the scientists are regularly accused of falsifying evidence and exaggerating its implications in a greedy effort to win more research grants, or secretly pursuing a hidden political agenda to expand the power of government. Such slanderous insults are deeply ironic: extremist ideologues — many financed or employed by carbon polluters — accusing scientists of being greedy extremist ideologues.
After World War II, a philosopher studying the impact of organized propaganda on the quality of democratic debate wrote, "The conversion of all questions of truth into questions of power has attacked the very heart of the distinction between true and false."
Is the climate crisis real? Yes, of course it is. Pause for a moment to consider these events of just the past 12 months:
Heat. According to NASA, 2010 was tied with 2005 as the hottest year measured since instruments were first used systematically in the 1880s. Nineteen countries set all-time high temperature records. One city in Pakistan, Mohenjo-Daro, reached 128.3 degrees Fahrenheit, the hottest temperature ever measured in an Asian city. Nine of the 10 hottest years in history have occurred in the last 13 years. The past decade was the hottest ever measured, even though half of that decade represented a "solar minimum" — the low ebb in the natural cycle of solar energy emanating from the sun.
Floods. Megafloods displaced 20 million people in Pakistan, further destabilizing a nuclear-armed country; inundated an area of Australia larger than Germany and France combined; flooded 28 of the 32 districts that make up Colombia, where it has rained almost continuously for the past year; caused a "thousand-year" flood in my home city of Nashville; and led to all-time record flood levels in the Mississippi River Valley. Many places around the world are now experiencing larger and more frequent extreme downpours and snowstorms; last year's "Snowmaggedon" in the northeastern United States is part of the same pattern, notwithstanding the guffaws of deniers.
Drought. Historic drought and fires in Russia killed an estimated 56,000 people and caused wheat and other food crops in Russia, Ukraine and Kazakhstan to be removed from the global market, contributing to a record spike in food prices. "Practically everything is burning," Russian president Dmitry Medvedev declared. "What's happening with the planet's climate right now needs to be a wake-up call to all of us." The drought level in much of Texas has been raised from "extreme" to "exceptional," the highest category. This spring the majority of the counties in Texas were on fire, and Gov. Rick Perry requested a major disaster declaration for all but two of the state's 254 counties. Arizona is now fighting the largest fire in its history. Since 1970, the fire season throughout the American West has increased by 78 days. Extreme droughts in central China and northern France are currently drying up reservoirs and killing crops.
Melting Ice. An enormous mass of ice, four times larger than the island of Manhattan, broke off from northern Greenland last year and slipped into the sea. The acceleration of ice loss in both Greenland and Antarctica has caused another upward revision of global sea-level rise and the numbers of refugees expected from low-lying coastal areas. The Arctic ice cap, which reached a record low volume last year, has lost as much as 40 percent of its area during summer in just 30 years.
These extreme events are happening in real time. It is not uncommon for the nightly newscast to resemble a nature hike through the Book of Revelation. Yet most of the news media completely ignore how such events are connected to the climate crisis, or dismiss the connection as controversial; after all, there are scientists on one side of the debate and deniers on the other. A Fox News executive, in an internal e-mail to the network's reporters and editors that later became public, questioned the "veracity of climate change data" and ordered the journalists to "refrain from asserting that the planet has warmed (or cooled) in any given period without IMMEDIATELY pointing out that such theories are based upon data that critics have called into question."
But in the "real" world, the record droughts, fires, floods and mudslides continue to increase in severity and frequency. Leading climate scientists like Jim Hansen and Kevin Trenberth now say that events like these would almost certainly not be occurring without the influence of man-made global warming. And that's a shift in the way they frame these impacts. Scientists used to caution that we were increasing the probability of such extreme events by "loading the dice" — pumping more carbon into the atmosphere. Now the scientists go much further, warning that we are "painting more dots on the dice."  We are not only more likely to roll 12s; we are now rolling 13s and 14s. In other words, the biggest storms are not only becoming more frequent, they are getting bigger, stronger and more destructive.
"The only plausible explanation for the rise in weather-related catastrophes is climate change," Munich Re, one of the two largest reinsurance companies in the world, recently stated. "The view that weather extremes are more frequent and intense due to global warming coincides with the current state of scientific knowledge."
Many of the extreme and destructive events are the result of the rapid increase in the amount of heat energy from the sun that is trapped in the atmosphere, which is radically disrupting the planet's water cycle. More heat energy evaporates more water into the air, and the warmer air holds a lot more moisture. This has huge consequences that we now see all around the world.
When a storm unleashes a downpour of rain or snow, the precipitation does not originate just in the part of the sky directly above where it falls. Storms reach out — sometimes as far as 2,000 miles — to suck in water vapor from large areas of the sky, including the skies above oceans, where water vapor has increased by four percent in just the last 30 years. (Scientists often compare this phenomenon to what happens in a bathtub when you open the drain; the water rushing out comes from the whole tub, not just from the part of the tub directly above the drain. And when the tub is filled with more water, more goes down the drain. In the same way, when the warmer sky is filled with a lot more water vapor, there are bigger downpours when a storm cell opens the "drain.")
In many areas, these bigger downpours also mean longer periods between storms — at the same time that the extra heat in the air is also drying out the soil. That is part of the reason so many areas have been experiencing both record floods and deeper, longer-lasting droughts.
Moreover, the scientists have been warning us for quite some time — in increasingly urgent tones — that things will get much, much worse if we continue the reckless dumping of more and more heat-trapping pollution into the atmosphere. Drought is projected to spread across significant, highly populated areas of the globe throughout this century. Look at what the scientists say is in store for the Mediterranean nations. Should we care about the loss of Spain, France, Italy, the Balkans, Turkey, Tunisia? Look at what they say is in store for Mexico. Should we notice? Should we care?
Maybe it's just easier, psychologically, to swallow the lie that these scientists who devote their lives to their work are actually greedy deceivers and left-wing extremists — and that we should instead put our faith in the pseudoscientists financed by large carbon polluters whose business plans depend on their continued use of the atmospheric commons as a place to dump their gaseous, heat-trapping waste without limit or constraint, free of charge.
The truth is this: What we are doing is functionally insane. If we do not change this pattern, we will condemn our children and all future generations to struggle with ecological curses for several millennia to come. Twenty percent of the global-warming pollution we spew into the sky each day will still be there 20,000 years from now!
We do have another choice. Renewable energy sources are coming into their own. Both solar and wind will soon produce power at costs that are competitive with fossil fuels; indications are that twice as many solar installations were erected worldwide last year as compared to 2009. The reductions in cost and the improvements in efficiency of photovoltaic cells over the past decade appear to be following an exponential curve that resembles a less dramatic but still startling version of what happened with computer chips over the past 50 years.
Enhanced geothermal energy is potentially a nearly limitless source of competitive electricity. Increased energy efficiency is already saving businesses money and reducing emissions significantly. New generations of biomass energy — ones that do not rely on food crops, unlike the mistaken strategy of making ethanol from corn — are extremely promising. Sustainable forestry and agriculture both make economic as well as environmental sense. And all of these options would spread even more rapidly if we stopped subsidizing Big Oil and Coal and put a price on carbon that reflected the true cost of fossil energy — either through the much-maligned cap-and-trade approach, or through a revenue-neutral tax swap.
All over the world, the grassroots movement in favor of changing public policies to confront the climate crisis and build a more prosperous, sustainable future is growing rapidly. But most governments remain paralyzed, unable to take action — even after years of volatile gasoline prices, repeated wars in the Persian Gulf, one energy-related disaster after another, and a seemingly endless stream of unprecedented and lethal weather disasters.
Continuing on our current course would be suicidal for global civilization. But the key question is: How do we drive home that fact in a democratic society when questions of truth have been converted into questions of power? When the distinction between what is true and what is false is being attacked relentlessly, and when the referee in the contest between truth and falsehood has become an entertainer selling tickets to a phony wrestling match?
The "wrestling ring" in this metaphor is the conversation of democracy. It used to be called the "public square." In ancient Athens, it was the Agora. In the Roman Republic, it was the Forum. In the Egypt of the recent Arab Spring, "Tahrir Square" was both real and metaphorical — encompassing Facebook, Twitter, Al-Jazeera and texting.
In the America of the late-18th century, the conversation that led to our own "Spring" took place in printed words: pamphlets, newsprint, books, the "Republic of Letters." It represented the fullest flower of the Enlightenment, during which the oligarchic power of the monarchies, the feudal lords and the Medieval Church was overthrown and replaced with a new sovereign: the Rule of Reason.
The public square that gave birth to the new consciousness of the Enlightenment emerged in the dozen generations following the invention of the printing press — "the Gutenberg Galaxy," the scholar Marshall McLuhan called it — a space in which the conversation of democracy was almost equally accessible to every literate person. Individuals could both find the knowledge that had previously been restricted to elites and contribute their own ideas.
Ideas that found resonance with others rose in prominence much the way Google searches do today, finding an ever larger audience and becoming a source of political power for individuals with neither wealth nor force of arms. Thomas Paine, to take one example, emigrated from England to Philadelphia with no wealth, no family connections and no power other than that which came from his ability to think and write clearly — yet his Common Sense became the Harry Potter of Revolutionary America. The "public interest" mattered, was actively discussed and pursued.
But the "public square" that gave birth to America has been transformed beyond all recognition. The conversation that matters most to the shaping of the "public mind" now takes place on television. Newspapers and magazines are in decline. The Internet, still in its early days, will one day support business models that make true journalism profitable — but up until now, the only successful news websites aggregate content from struggling print publications. Web versions of the newspapers themselves are, with few exceptions, not yet making money. They bring to mind the classic image of Wile E. Coyote running furiously in midair just beyond the edge of the cliff, before plummeting to the desert floor far beneath him.
The average American, meanwhile, is watching television an astonishing five hours a day. In the average household, at least one television set is turned on more than eight hours a day. Moreover, approximately 75 percent of those using the Internet frequently watch television at the same time that they are online.
Unlike access to the "public square" of early America, access to television requires large amounts of money. Thomas Paine could walk out of his front door in Philadelphia and find a dozen competing, low-cost print shops within blocks of his home. Today, if he traveled to the nearest TV station, or to the headquarters of nearby Comcast — the dominant television provider in America — and tried to deliver his new ideas to the American people, he would be laughed off the premises. The public square that used to be a commons has been refeudalized, and the gatekeepers charge large rents for the privilege of communicating to the American people over the only medium that really affects their thinking. "Citizens" are now referred to more commonly as "consumers" or "the audience."
That is why up to 80 percent of the campaign budgets for candidates in both major political parties is devoted to the purchase of 30-second TV ads. Since the rates charged for these commercials increase each year, the candidates are forced to raise more and more money in each two-year campaign cycle.
Of course, the only reliable sources from which such large sums can be raised continuously are business lobbies. Organized labor, a shadow of its former self, struggles to compete, and individuals are limited by law to making small contributions. During the 2008 campaign, there was a bubble of hope that Internet-based fundraising might even the scales, but in the end, Democrats as well as Republicans relied far more on traditional sources of large contributions. Moreover, the recent deregulation of unlimited — and secret — donations by wealthy corporations has made the imbalance even worse.
In the new ecology of political discourse, special-interest contributors of the large sums of money now required for the privilege of addressing voters on a wholesale basis are not squeamish about asking for the quo they expect in return for their quid. Politicians who don't acquiesce don't get the money they need to be elected and re-elected. And the impact is doubled when special interests make clear — usually bluntly — that the money they are withholding will go instead to opponents who are more than happy to pledge the desired quo. Politicians have been racing to the bottom for some time, and are presently tunneling to new depths. It is now commonplace for congressmen and senators first elected decades ago — as I was — to comment in private that the whole process has become unbelievably crass, degrading and horribly destructive to the core values of American democracy.
Largely as a result, the concerns of the wealthiest individuals and corporations routinely trump the concerns of average Americans and small businesses. There are a ridiculously large number of examples: eliminating the inheritance tax paid by the wealthiest one percent of families is considered a much higher priority than addressing the suffering of the millions of long-term unemployed; Wall Street's interest in legalizing gambling in trillions of dollars of "derivatives" was considered way more important than protecting the integrity of the financial system and the interests of middle-income home buyers. It's a long list.
Almost every group organized to promote and protect the "public interest" has been backpedaling and on the defensive. By sharp contrast, when a coalition of powerful special interests sets out to manipulate U.S. policy, their impact can be startling — and the damage to the true national interest can be devastating.
In 2002, for example, the feverish desire to invade Iraq required convincing the American people that Saddam Hussein was somehow responsible for attacking the United States on September 11th, 2001, and that he was preparing to attack us again, perhaps with nuclear weapons. When the evidence — the "facts" — stood in the way of that effort to shape the public mind, they were ridiculed, maligned and ignored. Behind the scenes, the intelligence was manipulated and the public was intentionally deceived. Allies were pressured to adopt the same approach with their publics. A recent inquiry in the U.K. confirmed this yet again. "We knew at the time that the purpose of the dossier was precisely to make a case for war, rather than setting out the available intelligence," Maj. Gen. Michael Laurie testified. "To make the best out of sparse and inconclusive intelligence, the wording was developed with care." Why? As British intelligence put it, the overthrow of Saddam was "a prize because it could give new security to oil supplies."
That goal — the real goal — could have been debated on its own terms. But as Bush administration officials have acknowledged, a truly candid presentation would not have resulted in sufficient public support for the launching of a new war. They knew that because they had studied it and polled it. So they manipulated the debate, downplayed the real motive for the invasion, and made a different case to the public — one based on falsehoods.
And the "referee" — the news media — looked the other way. Some, like Fox News, were hyperactive cheerleaders. Others were intimidated into going along by the vitriol heaped on any who asked inconvenient questions. (They know it; many now acknowledge it, sheepishly and apologetically.)
Senators themselves fell, with a few honorable exceptions, into the same two camps. A few weeks before the United States invaded Iraq, the late Robert Byrd — God rest his soul — thundered on the Senate floor about the pitiful quality of the debate over the choice between war and peace: "Yet, this Chamber is, for the most part, silent — ominously, dreadfully silent. There is no debate, no discussion, no attempt to lay out for the nation the pros and cons of this particular war. There is nothing."
The chamber was silent, in part, because many senators were somewhere else — attending cocktail parties and receptions, largely with special-interest donors, raising money to buy TV ads for their next campaigns. Nowadays, in fact, the scheduling of many special-interest fundraisers mirrors the schedule of votes pending in the House and Senate.
By the time we invaded Iraq, polls showed, nearly three-quarters of the American people were convinced that the person responsible for the planes flying into the World Trade Center Towers was indeed Saddam Hussein. The rest is history — though, as Faulkner wrote, "The past is never dead. It's not even past." Because of that distortion of the truth in the past, we are still in Iraq; and because the bulk of our troops and intelligence assets were abruptly diverted from Afghanistan to Iraq, we are also still in Afghanistan.
In the same way, because the banks had their way with Congress when it came to gambling on unregulated derivatives and recklessly endangering credit markets with subprime mortgages, we still have almost double-digit unemployment, historic deficits, Greece and possibly other European countries teetering on the edge of default, and the threat of a double-dip recession. Even the potential default of the United States of America is now being treated by many politicians and too many in the media as yet another phony wrestling match, a political game. 

Are the potential economic consequences of a U.S. default "real"? Of course they are! Have we gone completely nuts?
We haven't gone nuts — but the "conversation of democracy" has become so deeply dysfunctional that our ability to make intelligent collective decisions has been seriously impaired. Throughout American history, we relied on the vibrancy of our public square — and the quality of our democratic discourse — to make better decisions than most nations in the history of the world. But we are now routinely making really bad decisions that completely ignore the best available evidence of what is true and what is false. When the distinction between truth and falsehood is systematically attacked without shame or consequence — when a great nation makes crucially important decisions on the basis of completely false information that is no longer adequately filtered through the fact-checking function of a healthy and honest public discussion — the public interest is severely damaged.
That is exactly what is happening with U.S. decisions regarding the climate crisis. The best available evidence demonstrates beyond any reasonable doubt that the reckless spewing of global-warming pollution in obscene quantities into the atmospheric commons is having exactly the consequences long predicted by scientists who have analyzed the known facts according to the laws of physics.
The emergence of the climate crisis seems sudden only because of a relatively recent discontinuity in the relationship between human civilization and the planet's ecological system. In the past century, we have quadrupled global population while relying on the burning of carbon-based fuels — coal, oil and gas — for 85 percent of the world's energy. We are also cutting and burning forests that would otherwise help remove some of the added CO2 from the atmosphere, and have converted agriculture to an industrial model that also runs on carbon-based fuels and strip-mines carbon-rich soils.
The cumulative result is a radically new reality — and since human nature makes us vulnerable to confusing the unprecedented with the improbable, it naturally seems difficult to accept. Moreover, since this new reality is painful to contemplate, and requires big changes in policy and behavior that are at the outer limit of our ability, it is all too easy to fall into the psychological state of denial. As with financial issues like subprime mortgages and credit default swaps, the climate crisis can seem too complex to worry about, especially when the shills for the polluters constantly claim it's all a hoax anyway. And since the early impacts of climatic disruption are distributed globally, they masquerade as an abstraction that is safe to ignore.
These vulnerabilities, rooted in our human nature, are being manipulated by the tag-team of Polluters and Ideologues who are trying to deceive us. And the referee — the news media — is once again distracted. As with the invasion of Iraq, some are hyperactive cheerleaders for the deception, while others are intimidated into complicity, timidity and silence by the astonishing vitriol heaped upon those who dare to present the best evidence in a professional manner. Just as TV networks who beat the drums of war prior to the Iraq invasion were rewarded with higher ratings, networks now seem reluctant to present the truth about the link between carbon pollution and global warming out of fear that conservative viewers will change the channel — and fear that they will receive a torrent of flame e-mails from deniers.
Many politicians, unfortunately, also fall into the same two categories: those who cheerlead for the deniers and those who cower before them. The latter group now includes several candidates for the Republican presidential nomination who have felt it necessary to abandon their previous support for action on the climate crisis; at least one has been apologizing profusely to the deniers and begging for their forgiveness.
"Intimidation" and "timidity" are connected by more than a shared word root. The first is designed to produce the second. As Yeats wrote almost a century ago, "The best lack all conviction, while the worst are full of passionate intensity."
Barack Obama's approach to the climate crisis represents a special case that requires careful analysis. His election was accompanied by intense hope that many things in need of change would change. Some things have, but others have not. Climate policy, unfortunately, is in the second category. Why?
First of all, anyone who honestly examines the incredible challenges confronting President Obama when he took office has to feel enormous empathy for him: the Great Recession, with the high unemployment and the enormous public and private indebtedness it produced; two seemingly interminable wars; an intractable political opposition whose true leaders — entertainers masquerading as pundits — openly declared that their objective was to ensure that the new president failed; a badly broken Senate that is almost completely paralyzed by the threat of filibuster and is controlled lock, stock and barrel by the oil and coal industries; a contingent of nominal supporters in Congress who are indentured servants of the same special interests that control most of the Republican Party; and a ferocious, well-financed and dishonest campaign poised to vilify anyone who dares offer leadership for the reduction of global-warming pollution.
In spite of these obstacles, President Obama included significant climate-friendly initiatives in the economic stimulus package he presented to Congress during his first month in office. With the skillful leadership of House Speaker Nancy Pelosi and committee chairmen Henry Waxman and Ed Markey, he helped secure passage of a cap-and-trade measure in the House a few months later. He implemented historic improvements in fuel-efficiency standards for automobiles, and instructed the Environmental Protection Agency to move forward on the regulation of global-warming pollution under the Clean Air Act. He appointed many excellent men and women to key positions, and they, in turn, have made hundreds of changes in environmental and energy policy that have helped move the country forward slightly on the climate issue. During his first six months, he clearly articulated the link between environmental security, economic security and national security — making the case that a national commitment to renewable energy could simultaneously reduce unemployment, dependence on foreign oil and vulnerability to the disruption of oil markets dominated by the Persian Gulf reserves. And more recently, as the issue of long-term debt has forced discussion of new revenue, he proposed the elimination of unnecessary and expensive subsidies for oil and gas.
But in spite of these and other achievements, President Obama has thus far failed to use the bully pulpit to make the case for bold action on climate change. After successfully passing his green stimulus package, he did nothing to defend it when Congress decimated its funding. After the House passed cap and trade, he did little to make passage in the Senate a priority. Senate advocates — including one Republican — felt abandoned when the president made concessions to oil and coal companies without asking for anything in return. He has also called for a massive expansion of oil drilling in the United States, apparently in an effort to defuse criticism from those who argue speciously that "drill, baby, drill" is the answer to our growing dependence on foreign oil.
The failure to pass legislation to limit global-warming pollution ensured that the much-anticipated Copenhagen summit on a global treaty in 2009 would also end in failure. The president showed courage in attending the summit and securing a rhetorical agreement to prevent a complete collapse of the international process, but that's all it was — a rhetorical agreement. During the final years of the Bush-Cheney administration, the rest of the world was waiting for a new president who would aggressively tackle the climate crisis — and when it became clear that there would be no real change from the Bush era, the agenda at Copenhagen changed from "How do we complete this historic breakthrough?" to "How can we paper over this embarrassing disappointment?"
Some concluded from the failure in Copenhagen that it was time to give up on the entire U.N.-sponsored process for seeking an international agreement to reduce both global-warming pollution and deforestation. Ultimately, however, the only way to address the climate crisis will be with a global agreement that in one way or another puts a price on carbon. And whatever approach is eventually chosen, the U.S. simply must provide leadership by changing our own policy.
Yet without presidential leadership that focuses intensely on making the public aware of the reality we face, nothing will change. The real power of any president, as Richard Neustadt wrote, is "the power to persuade." Yet President Obama has never presented to the American people the magnitude of the climate crisis. He has simply not made the case for action. He has not defended the science against the ongoing, withering and dishonest attacks. Nor has he provided a presidential venue for the scientific community — including our own National Academy — to bring the reality of the science before the public.
Here is the core of it: we are destroying the climate balance that is essential to the survival of our civilization. This is not a distant or abstract threat; it is happening now. The United States is the only nation that can rally a global effort to save our future. And the president is the only person who can rally the United States.
Many political advisers assume that a president has to deal with the world of politics as he finds it, and that it is unwise to risk political capital on an effort to actually lead the country toward a new understanding of the real threats and real opportunities we face. Concentrate on the politics of re-election, they say. Don't take chances.
All that might be completely understandable and make perfect sense in a world where the climate crisis wasn't "real." Those of us who support and admire President Obama understand how difficult the politics of this issue are in the context of the massive opposition to doing anything at all — or even to recognizing that there is a crisis. And assuming that the Republicans come to their senses and avoid nominating a clown, his re-election is likely to involve a hard-fought battle with high stakes for the country. All of his supporters understand that it would be self-defeating to weaken Obama and heighten the risk of another step backward. 

Even writing an article like this one carries risks; opponents of the president will excerpt the criticism and strip it of context.
But in this case, the President has reality on his side. The scientific consensus is far stronger today than at any time in the past. Here is the truth: The Earth is round; Saddam Hussein did not attack us on 9/11; Elvis is dead; Obama was born in the United States; and the climate crisis is real. It is time to act.
Those who profit from the unconstrained pollution that is the primary cause of climate change are determined to block our perception of this reality. They have help from many sides: from the private sector, which is now free to make unlimited and secret campaign contributions; from politicians who have conflated their tenures in office with the pursuit of the people's best interests; and — tragically — from the press itself, which treats deception and falsehood on the same plane as scientific fact, and calls it objective reporting of alternative opinions.
All things are not equally true. It is time to face reality. We ignored reality in the marketplace and nearly destroyed the world economic system. We are likewise ignoring reality in the environment, and the consequences could be several orders of magnitude worse. Determining what is real can be a challenge in our culture, but in order to make wise choices in the presence of such grave risks, we must use common sense and the rule of reason in coming to an agreement on what is true.
So how can we make it happen? How can we as individuals make a difference? In five basic ways:
First, become a committed advocate for solving the crisis. You can start with something simple: Speak up whenever the subject of climate arises. When a friend or acquaintance expresses doubt that the crisis is real, or that it's some sort of hoax, don't let the opportunity pass to put down your personal marker. The civil rights revolution may have been driven by activists who put their lives on the line, but it was partly won by average Americans who began to challenge racist comments in everyday conversations.
Second, deepen your commitment by making consumer choices that reduce energy use and reduce your impact on the environment. The demand by individuals for change in the marketplace has already led many businesses to take truly significant steps to reduce their global-warming pollution. Some of the corporate changes are more symbolic than real — "green-washing," as it's called — but a surprising amount of real progress is taking place. Walmart, to pick one example, is moving aggressively to cut its carbon footprint by 20 million metric tons, in part by pressuring its suppliers to cut down on wasteful packaging and use lower-carbon transportation alternatives. Reward those companies that are providing leadership.
Third, join an organization committed to action on this issue. The Alliance for Climate Protection (, which I chair, has grassroots action plans for the summer and fall that spell out lots of ways to fight effectively for the policy changes we need. We can also enable you to host a slide show in your community on solutions to the climate crisis — presented by one of the 4,000 volunteers we have trained. Invite your friends and neighbors to come and then enlist them to join the cause.
Fourth, contact your local newspapers and television stations when they put out claptrap on climate — and let them know you're fed up with their stubborn and cowardly resistance to reporting the facts of this issue. One of the main reasons they are so wimpy and irresponsible about global warming is that they're frightened of the reaction they get from the deniers when they report the science objectively. So let them know that deniers are not the only ones in town with game. Stay on them! Don't let up! It's true that some media outlets are getting instructions from their owners on this issue, and that others are influenced by big advertisers, but many of them are surprisingly responsive to a genuine outpouring of opinion from their viewers and readers. It is way past time for the ref to do his job.
Finally, and above all, don't give up on the political system. Even though it is rigged by special interests, it is not so far gone that candidates and elected officials don't have to pay attention to persistent, engaged and committed individuals. President Franklin Roosevelt once told civil rights leaders who were pressing him for change that he agreed with them about the need for greater equality for black Americans. Then, as the story goes, he added with a wry smile, "Now go out and make me do it."
To make our elected leaders take action to solve the climate crisis, we must forcefully communicate the following message: "I care a lot about global warming; I am paying very careful attention to the way you vote and what you say about it; if you are on the wrong side, I am not only going to vote against you, I will work hard to defeat you — regardless of party. If you are on the right side, I will work hard to elect you."
Why do you think President Obama and Congress changed their game on "don't ask, don't tell?" It happened because enough Americans delivered exactly that tough message to candidates who wanted their votes. When enough people care passionately enough to drive that message home on the climate crisis, politicians will look at their hole cards, and enough of them will change their game to make all the difference we need.
This is not naive; trust me on this. It may take more individual voters to beat the Polluters and Ideologues now than it once did — when special-interest money was less dominant. But when enough people speak this way to candidates, and convince them that they are dead serious about it, change will happen — both in Congress and in the White House. As the great abolitionist leader Frederick Douglass once observed, "Power concedes nothing without a demand. It never did, and it never will."
What is now at risk in the climate debate is nothing less than our ability to communicate with one another according to a protocol that binds all participants to seek reason and evaluate facts honestly. The ability to perceive reality is a prerequisite for self-governance. Wishful thinking and denial lead to dead ends. When it works, the democratic process helps clear the way toward reality, by exposing false argumentation to the best available evidence. That is why the Constitution affords such unique protection to freedom of the press and of speech.
The climate crisis, in reality, is a struggle for the soul of America. It is about whether or not we are still capable — given the ill health of our democracy and the current dominance of wealth over reason — of perceiving important and complex realities clearly enough to promote and protect the sustainable well-being of the many. What hangs in the balance is the future of civilization as we know it.