Audit Notes: Another Obama fraud stat unravels, doctor cartel, NYT

Bloomberg helps uncover wildly inflated mortgage prosecution numbers

Score one for the watchdogs at Bloomberg News, whose reporting helped force the Obama administration to admit that it touted wildly inflated mortgage-fraud prosecution numbers a month before the election.

Phil Mattingly and Tom Schoenberg noticed right away that something was amiss with Eric Holder’s announcement, filing this story two days after the AG said a yearlong sweep had resulted in 530 prosecutions.

Now comes the walkback from the Obama administration. Bloomberg:

The FBI restated the number of people criminally charged to 107 from 530. Agencies were asked to correct victims’ total losses to $95 million from an estimated $1 billion, and the number of victims found to 17,185 from more than 73,000.

As Bloomberg’s Jon Weil notes, this is the second time Holder has touted egregiously inflated numbers to try to misdirect people from the fact that the former Wall Street-connected lawyer hasn’t successfully prosecuted any major Wall Street figure for the financial crisis and has hardly even tried:

What a charade. No wonder the government found it so difficult to bring a meaningful number of accounting-fraud cases against bank executives after the financial crisis. Its own books were cooked.

This was the second time, mind you, that Holder’s Justice Department had pulled a stunt like this. In December 2010, Holder held a press conference to tout a supposed sweep by the president’s Financial Fraud Enforcement Task Force called “Operation Broken Trust.” (The mortgage-fraud program was part of the same task force.) As with the mortgage-fraud initiative, Broken Trust wasn’t actually a sweep. All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another. Then it held a press gathering.

The New York Times has an excellent page-one story on how the US keeps out foreign doctors by making it extremely difficult for them to get licensed here:

For years the United States has been training too few doctors to meet its own needs, in part because of industry-set limits on the number of medical school slots available. Today about one in four physicians practicing in the United States were trained abroad, a figure that includes a substantial number of American citizens who could not get into medical school at home and studied in places like the Caribbean.

But immigrant doctors, no matter how experienced and well trained, must run a long, costly and confusing gantlet before they can actually practice here.

The best option, of course, would be to vastly increase the number of doctors we train here at home. But medical licenses are effectively a cartel controlled by the powerful doctors lobby, which has successfully lobbied to restrict the number of new doctors we train and thus artificially props up doctor pay.

Dean Baker views this through the prism of trade policy and protectionism, and he’s right.

Elites love free trade and immigration when it brings competition to working-class and middle-class workers. They’re not so keen on it when it affects them.

— Capital New York’s Tom McGeveran considers a Graham-family scenario for the Sulzberger family and The New York Times:

As of June 2013, the company had $918 million in cash. $70 million is expected to come in the door as a result of the company’s sale of The Boston Globe. (There’s really nothing of significance left for the Times to sell, so that well is now dry.) But the company has $694 million in debt, according to one estimate (in a column that is otherwise bullish on the Sulzbergers retaining control) and its pension obligations are underfunded to the tune of $150 million, the company said in a recent earnings call.

$144 million is not a lot of net cash for them to have on hand…

I don’t expect this to happen very soon. But this memo provides, for the first time really, a script of how it will happen if it does. Subscription growth declines as they saturate some markets and fail to capture others. Ad revenue continues to drop and video isn’t enough to stanch the losses. There’s nothing left but the core product to chip away at, but attrition becomes necessary.

The family has bet, correctly, I think, on the Times, and this is a worst-case scenario. But it doesn’t have much cushion now, having shed businesses like that threw off tens of millions of dollars a year in free cashflow.

And the newspaper industry is plenty used to worst-case scenarios now.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,