CIA and JSOC To Continue Iraq Secret Ops For Years To Come - New Obama Foreclosure Plan Helps Banks At Taxpayers' Expense - Lurking European Debt Crisis?

CIA Will Continue To Run Secret Programs with Joint Special Operations Command (JSOC) in Iraq For Years

[This blog is hoping for an angel to descend and help to defray expenses. Calling all angels!]

As the U.S. military departs Iraq, the CIA is looking at how it can absorb and continue secret counterterrorism and intelligence programs run inside that country for years by the Joint Special Operations Command and other military organizations, officials tell The Daily Beast.

The programs involve everything from the deployment of remote sensors that scan the wireless spectrum of terrorist safe havens to stealth U.S.-Iraqi counterterrorism commando teams, and their status is uncertain as a U.S. diplomatic team negotiates with Iraqi leaders, according to officials, who made clear the CIA intends to keep a footprint inside the country even as troops leave by Dec. 31.

“There are of course parts of the counterterrorism mission that the intelligence community, including CIA, will be able to take on from other organizations—and there are parts of that mission that it won’t,” said one U.S. counterterrorism official who requested anonymity because of the sensitivity of secret negotiations with the Iraqis.

But the official added: “This idea that the U.S. military and CIA are somehow interchangeable is misinformed — they work together closely on some counterterrorism issues, but their missions, expertise, and authorities are fundamentally different. When the U.S. military leaves Iraq, some things just won’t happen anymore.”

In the last months of the Bush administration, the United States negotiated a plan to leave Iraq by the end of 2011. While the Pentagon pressed to keep between 5,000 and 15,000 troops in Iraq past that date, U.S.-Iraq negotiations broke down this month when Iraqi leaders refused to grant soldiers and military contractors immunity from Iraqi domestic law.

On Friday, many in the U.S. national-security bureaucracy were shocked when President Obama announced the end of the military mission in Iraq by Jan. 1. U.S. military planners had assumed that some intelligence missions would still be run from U.S. bases in Iraq into 2012. The new White House policy throws that plan into jeopardy.

Nonetheless, National Security Council spokesman Tommy Vietor said Monday that the United States was negotiating over the future elements of the U.S.-Iraqi military relationship. “As we complete the drawdown, we will continue to have discussions with Iraqi leaders about how best to meet their security needs in a manner that meets our mutual interests,” he said. “Possibilities could include training, exchange programs, tactical exercises, and regular coordination. But they will not include U.S. forces being permanently based in Iraq.”

Other U.S. officials say the CIA is examining how it can continue many of these secret programs once the U.S. military leaves. Many of these programs were developed in 2007 and 2008, when CIA Director David Petraeus, then a four-star Army general, assumed command of the multinational forces in Iraq.

The CIA, with its drones and paramilitary forces, has a far smaller, more stealth footprint than brigades of soldiers, meaning most Americans won’t see much of its continuing activity.

“My sense is that there will be some discussions about what can be given the CIA and whether some of the counterterrorism arrangements that exist today can be negotiated through a separate and secret channel,” said Marisa Cochrane Sullivan, managing director of the Institute for the Study of War, a think tank with close ties to Petraeus and the military’s new generation of counterinsurgency specialists.

While the CIA can pick up some of the slack for the departing military, another possibility is U.S. allies in the region. The United States is in talks with Kuwait about moving some equipment and troops there, said U.S. diplomats who spoke on the condition of anonymity.

Jasem al-Budaiwi, the deputy chief of mission for Kuwait’s embassy in Washington, declined to comment directly on the substance of the negotiations. “There is always continuous cooperation from both the Kuwaiti and U.S. side on military, political, and economic issues,” he said. “We have a great bilateral relationship. All issues are always discussed through many channels.”

The United States is also in discussions with Turkey about pre-positioning sensitive sensors, drones, and other equipment used in Iraq at the Incirlik airbase, which hosted a U.S. Air Force mission in the 1990s to monitor northern Iraq.

A Turkish Embassy spokesman in Washington said the United States would continue to assist Turkey in targeting Kurdish radical separatists, known as the PKK. “Moreover, the intelligence support provided by the United States will be continued on a bilateral basis,” he added. “We attach importance to this support. That said, we are not able to provide details on the content, equipment, or the methods of the cooperation between the two sides in this area.”

For now, a major issue for the military and U.S. intelligence community is retaining some of the capabilities of the Intelligence, Surveillance, and Reconnaissance (ISR) programs run out of Iraq when these cannot be launched from bases inside the country. These programs, in combination with a population-centric counterinsurgency strategy, are widely credited within the military with stopping al Qaeda’s efforts to turn Iraq into a Sunni Islamic republic. The programs included detailed full-motion video monitoring of known terrorist enclaves as well as the lightning-quick interception of temporary cellphone calls and text messages from suspected terrorists.

“We could run ISR collection activities out of Turkey and Kuwait, but the real problem is we have a lot of collection targets in Iraq,” said a senior U.S. intelligence official familiar with the details of negotiations over the programs. “We need to know what is going on all over Iraq, or at least in critical nodes.”

. . .The United States will need to find a way to remain in Iraq in 2012 just to keep the Iraqi military functional, said Cochrane Sullivan. “Right now we still provide important capabilities — for example, medical evacuation; we provide intelligence; we provide logistical support,” she said. “The Iraqis have some helicopters, but they are still reliant on the United States there as well.” 

One possibility would be to “rotate forces in and out of Iraq for a set of exercises,” she said. “You bring them in to do an exercise or a training course, and then you pull them out. That’s the not the same as stationing troops in Iraq past 2011.”

 Did you hear about Obama's Executive Order that would "help" the poor, sad (and badly underserved) victims of foreclosure? It's not exactly what it's sold as, and it seems that nothing can actually be done by Washington that does not make the lower- and middle-classes absorb more of the banksters' proper losses. It's a rule.

New Obama Foreclosure Plan Helps Banks At Taxpayers' Expense

WASHINGTON -- The Obama administration is introducing a new program on Monday designed to lower monthly mortgage payments for more troubled homeowners.

But a key new condition in the plan would shift the financial liability for refinanced loans from Wall Street banks to the American taxpayer. And by focusing on lower payments, the program does not confront what housing experts view as the core problem in the foreclosure crisis -- borrower debt that exceeds the value of one's home.

Faced with the weak response to the Home Affordable Refinance Program, the Obama administration is planning to open up the program to all borrowers who owe more on their mortgage than their homes' worth, commonly dubbed being underwater, and have not missed a mortgage payment. HARP had been limited to borrowers who owed up to 25 percent more than their home is worth.

More than 22 percent of all home mortgages -- or 10.9 million homes -- are currently underwater, according to CoreLogic data. Fewer than 900,000 borrowers have elected to go through HARP to date.

The revised program also eliminates several fees associated with refinancing that can make the decision to refinance uneconomical for borrowers. But the potential benefit of the eliminated fees could be relatively small: If a few thousand dollars worth of fees made refinancing a bad deal for underwater borrowers, the ultimate benefits that refinancing can pose would remain limited.

On a conference call with reporters, White House National Economic Council Director Gene Sperling referred to the HARP expansion as "a win-win policy" that will result in "less defaults" and "fewer foreclosures." But one of the program's new terms will benefit private-sector Wall Street banks, potentially at the expense of taxpayers.

The newly expanded program would expunge legal liabilities associated with mortgages refinanced through the program for the original lenders of the mortgages. Each time a bank sent a loan to Fannie and Freddie, it certified that the loan met Fannie and Freddie's safe lending criteria. But many loans sent to the mortgage giants did not, in fact, meet those criteria.

Currently, when borrowers default on those ineligible loans, the mortgage giants can "put back" the resulting losses onto the banks that pushed the loans.

Under the modified plan, "put back" liability at banks will be erased for any underwater mortgage that is refinanced through HARP, eliminating Fannie and Freddie's ability to sack lenders with losses in the event that the mortgage does not pan out.

If borrowers go through HARP, but decide after several months that the modest monthly savings do not outweigh owing tens of thousands of dollars more than their home is worth, taxpayer-owned Fannie and Freddie will have to take the full loss.

Even if the original loan was sent to Fannie and Freddie with false or fraudulent guarantees from the bank - promises that may directly be tied to the borrower's current financial problems - banks will be immune from liability. Fannie and Freddie plan to charge banks "a modest fee" to extinguish this liability, but the administration has yet to determine what that fee will be.

While the revised program seeks to lower mortgage payments for underwater homeowners, the program does nothing to address the core problem -- owing more than the home is worth. Though borrowers may save hundreds of dollars a month in lower payments by refinancing, they routinely owe tens of thousands of dollars more than their homes are worth, even after receiving aid.

"In most cases people would probably be better off walking," said economist Dean Baker, co-director of the Center for Economic Policy and Research.

During a conference call with reporters, Department of Housing and Urban Development Secretary Shaun Donovan acknowledged that negative equity is a problem, and said the administration hopes to address the issue on other fronts. Donovan cited settlement negotiations with big banks over widespread allegations of foreclosure fraud and initiatives under the Home Affordable Modification Program, a separate Obama foreclosure-relief plan administered by banks, as key initiatives.

New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden have both objected to the foreclosure fraud settlement talks on the grounds that they give away too much to banks without investigating the scope of fraud problems in the system. The Home Affordable Modification Program has been a hotbed for the kind of borrower abuses that the administration is pressuring lenders to settle over.

And how about that lurking European Debt problem? The news is not good, and Simon Johnson (one of my favorite economists) has some uncomfortable questions for our "leaders."

European Debt: The Big Picture (It's All Interconnected!)

Simon Johnson

For everyone struggling to get their arms around the debt crisis in Europe, Bill Marsh in last Sunday’s New York Times offers literally a compelling picture, with graphic illustration for the key issues.

The picture is big, 18×21 inches. Either you need a very large computer screen or a hard copy of the paper (pp. 6-7 in the SundayReview section, It’s All Connected: A Spectator’s Guide to the Euro Crisis).

The main debt linkages across borders for which we have data are all here – and the graphic pulls your eye appropriately to the centrality of Italy in whatever happens next.  (On why eurozone policy towards Italy now matters so much – and what are the options – see my recent paper with Peter Boone, “Europe on the Brink”.)

But you might think also about what is not in the NYT graphic because we lack reliable information.  For example, what is the exposure of US financial institutions to European debt, directly or indirectly, through derivatives transactions of any kind?

The opaqueness of derivative markets means that most investors can only guess at what could happen.  Most of the relevant regulators and supervisors with whom I have talked seem also to be largely in the dark – remember the experience of AIG in 2008.

Cross-border bank exposures through loans and other holdings are publicly disclosed – data from the Bank for International Settlements are represented by the arrows in the NYT graphic.  These data are surely not perfect, but they do convey the main points and they tell you where to focus attention.

Why do we not require publication of similar data, preferably by financial institution, for all derivative transactions – including both gross and supposedly net exposures across borders?