On: Bobby Fischer

Like the finest of musicians, masters of chess often get their start early; Bobby Fischer was just six when he learned to play the game he would spend the next 58 years redefining. Mr. Fischer was to chess what Stanley Kubrick was to film, what Andy Roddick is to tennis, and what Joshua Bell is to classical music: a virtuoso of his field.

Forty years ago this Saturday, Mr. Fischer became the first (and, to date, only) American world chess champion. It could not have been accomplished at a better time, for it was 1972, during the throes of the Cold War, when Mr. Fischer forcefully wrestled the Soviet Chess Machine into submission.

Since 1948, the reigning world champion had hailed from the Soviet Union: Mikhail Botvinnik in 1948; Vasily Smyslov in 1957, Mikhail Tal in 1960, Tigran Petrosian in 1963 and Boris Spassky, the man who Bobby Fisher would later beat, in 1969.

There is no analogue in American culture for what chess was to the Soviets. Indeed, to draw a comparison between chess and baseball would do a disservice to the game (or, as the Soviets saw it, the sport) which one grandmaster would later call “mental torture.”

For the Soviets, chess was more than a pastime. The young and talented could be sent to elite training schools, and many institutions not only taught their students math and science, but chess as well. Professional players worthy of competing on the international stage not only received the enthusiastic backing of their culture, but the endorsement and money of their government.

For this reason, the young American’s rise was unlikely.  It was Bobby’s older sister, Joan, who taught her younger brother the game. The boy immediately became enthralled, and over time showed signs of obsession. Several years passed before Regina Fisher, Bobby’s mother, took her son to a doctor for psychological evaluation.

The psychologist told her not to worry, that there were worse things on which a child his age might fixate. It was, after all, chess, the game of kings, queens, intellectuals and elites, and new studies were emerging showing that those who played on a regular basis developed heightened math and critical thinking skills. Those studies have largely held up to this day, with many World Champions not merely being gifted in chess, but bordering on polymathic as well.

Bobby Fischer, though, was the exception which proved this rule. At age 16 he dropped out of high school because it was affecting his game; shortly thereafter, he became so detached and discourteous toward his mother that she left their apartment and subsidized her son from afar. The young Mr. Fischer was too immersed to care.  

No doubt it was this infatuation which would lead to his success.

Still, his apparent barbarism nearly ruined his chances at his ultimate goal of becoming world champion. During his match against the more loveable Boris Spassky, Mr. Fischer forfeited the first two games (giving Mr. Spassky a sizeable advantage in chess terms) due to what Mr. Fischer considered adverse playing conditions. He would frequently whinge about the harshness of the lighting and the closeness of the spectators. At one point he opined about the sounds of the television cameras, even though the noise they emitted could not be registered by the human ear.

Mr. Spassky could have refused to play the challenger given the absurdity of the demands, but he continued on. After many of Mr. Fischer’s conditions had been met (including searching the light fixtures for Soviet technology), Mr. Fischer went on to win the world championship candidly, while Mr. Spassky was exiled from his native land.

Mr. Fischer, too, would one day face exile from his home country, but not before forfeiting his hard won championship back to the Soviets just three years later by refusing to defend his title.

Immediately Mr. Fischer became a recluse, and only reemerged to play a rematch against Mr. Spassky in embargoed Yugoslavia, for which the US disowned him and put out a warrant for his arrest.

Later on, and for some unknowable reason, Mr. Fischer became immersed in Nazi literature. 

This was exemplified during September 11^th, during which Mr. Fischer took to Filipino radio to proclaim that the attack was “all good news” because it was an attack on America's Jewry. 

And yet, despite these atrocities, Mr. Fischer remains an American icon. He not only achieved his dream of becoming World Chess Champion, but instilled a deep love of chess in America: enrollment in the United States Chess Federation increased markedly, prize money in chess ballooned, and many talented players can now make livings not only playing the game, but teaching students as well -- students hoping, perhaps, to one day become the second American world chess champion.  

In 2008, Bobby Fisher died at the age of 64, fitting for a man who spent his life consumed with the 8-by-8 checkered board in front of him.

On: Todd Akin and Conservative Women

Today, the Washington Post ran an excellent article on two women who continue to support Republican candidate for Senate, Todd Akin, even after his controversial comments. Sharon Barnes and Janice DeWeese are both women from Missouri's 2nd District, and plan to vote for Mr. Akin for Senator.

Read why from the Washington Post.

On: A&M and Homosexuality

If, as F. Scott Fitzgerald noted, “[t]he test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function”, then the students of A&M are indeed first-rate. Or, more likely, they are simply complacent with a paradox whose existence they should find intolerable: Aggies, as they are called, vainly believe that they are, at once, the friendliest college in the nation and, more accurately, unfriendly to their LGBT students.

The first claim is mere campus lore, unofficial but doled out to prospective students and accepted as fact. As one description of the school reads, such good-naturedness is part of “[t]he untold spirit at Texas A&M” and “the underlying pulse of Aggieland.”

To the percipient, such gratuitousness will fall on deaf ears; experience warns that if an entity boasts in such a manner, their claim is most likely untrue.

And it is. In an annual survey published by The Princeton Review (TPR), Aggies crossed the following: “Students treat all persons equally, regardless of their sexual orientation and gender identity/expression.” Students responded by using a Likert scale ranging from “strongly agree” to “strongly disagree.”

Earlier this summer, the results came back: In comparison to other American colleges, it appears, Aggies rank seventh in LGBT-Unfriendliness.

This is not a stain on an otherwise implacable record.

In 1976, after members of a gay Aggie support group were threatened at knife-point, the members sought official recognition through A&M’s Student Programs Office.

Dr. John Koldus, the Vice President for Student Affairs, denied their request; University President Jack Williams issued a memo saying the school would not recognize the student group “until and unless [they were] ordered by a higher authority to do so”; and a transcript of an A&M Board of Regents meeting reads as follows:

“So—called ‘gay’ activities run diabolically counter to the traditions and standards of Texas A&M University, and the Board of Regents is determined to defend the suit filed against it by three students seeking ‘gay’ recognition and, if necessary, to proceed in every legal way to prohibit any group with such goals from organizing or operating on this or any other campus for which this Board is responsible.”

The "suit" in question was Gay Student Services v. Texas A&M, and it would be eight years before the Fifth Circuit of Appeals would rule that "TAMU's refusal to recognize [the group] as an on-campus student organization impermissibly denied [them] their First Amendment rights.” The case set a national precedent by removing all legal restrictions for gay organizations on public college campuses.

More recently, however, A&M’s problem has been with its pupils: For the past eleven years TPR has classified A&M as one of the top twenty schools unfriendly to their LGBT students; for six of those, they were in the top ten. Few expected "the friendliest college in the nation" to receive recognition in 2011.

Having been falling on the list for the past several years, in 2010 A&M ranked 17^th  in the country, and seemed poised to exit the top twenty. 

But like Sisyphus, the anticipation of success is greeted only with the reality of failure.

Their felling was probably due to a student senate bill introduced the previous year. The bill requested the university  "provide equal funding for family and traditional values education, as well as alternative sexual education” and opposed “any increase to student fees to fund this mandate”.

Such conditions, it was rightly feared, would lead to budget cuts for the university’s LGBT Recourse Center. During the floor debate, the ten sponsors of the bill were openly hostile to student funding of the LGBT Resource Center, despite the fact that none of them, by their own admission, had ever visited.

Therefore, in 2011, instead of leaving the list,  Aggies jumped from 17^th to tenth.  Now at seventh, they are the highest ranked students who attend a public institution. 

Speculation is optional folly, and indeed, the reason for A&M’s persistence can only remain a matter of speculation. However, it is worth noting that TPR ranks Aggies as the 13^th Most Religious Students, the seventh Most Politically Active, and the Most Conservative in the country.

Still, with every year comes a new class, and renewed hope for change. In substitution of Fitzgerald’s affirmation, their test of “first-rate intelligence” will be to devise a way to liberalize A&M’s upperclassmen, a task at which all prior classes have failed.

They’d be forgiven for preferring Sisyphus’ punishment instead.   

On: The quiet game

It has been two months since the Supreme Court effectively ended the debate on the Affordable Health Care Act, which is more time than necessary for attention to our oft-forgotten third branch to wane.

But for a moment, let’s refocus.

In Federalist 78, James Madison, detailing his architecture of the American government, wrote that “the judiciary, from the nature of its function, will always be the least dangerous to the political rights of the constitution” because it has “neither force nor will, but merely judgment”.

Use of the adjective “merely” is unfortunate due to the inadvertent implication that the power of the judiciary is miniscule in comparison to its counterparts. In reality, being as their judgment regards the “political rights of the constitution,” the judiciary can indirectly shape American policy, for they are the final determinants of what are, and are not, suitable undertakings for the legislative and executive branches.

Case in point: it was May 17, 1954 when, after years of debate, the Supreme Court finally announced their historic ruling on Brown v. Board of Education, irrevocably altering America for the better.

Anti-segregationists, history tells, caught their break nine months earlier.

On September 8, 1952, then-Chief Justice Fred Vinson unexpectedly suffered a fatal heart attack. In response, Associate Justice Felix Frankfurter candidly mentioned to one of his clerks, “This is the first indication I have ever had that there is a God.”

Unfeeling words, but perhaps not untrue. Chief Justice Vinson was one of five justices who could reliably be counted upon to uphold the “separate but equal” doctrine, enshrined as constitutional nearly 50 years prior in Plessy v. Ferguson.

The Chief Justice’s  death, tragic as all death is, was serendipitous, given that it allowed President Eisenhower to replace him with Earl Warren, who was much more sympathetic to the pleas and legal arguments of anti-segregationists. When the case was argued before the Warren court, Chief Justice Warren managed to convince his fellow justices of his convictions and secure a unanimous ruling.

This, and other historical vignettes, underscore the importance of the judicial branch, and therefore the special attention which must be paid to the judicial philosophies of those campaigning to become Commander-in-Chief. Since it is the president’s job to appoint judges to the higher and lower courts for lifelong terms, it is his beliefs which will be reflected in these appointments, and his beliefs which will hold their roots in American jurisprudence for some time afterward.

Call it the political quiet game, the equivalent of a patient move in chess: It may lack the bombast of other techniques, but it is unquestionably effective, and immeasurably important.

If, for example, Michael Dukakis and not George Bush, Sr. had won the 1988 presidential election, liberal justice Thurgood Marshall (the man who successfully argued Brown v. Board of Education 37 years earlier) would have been replaced by a like minded left leaning judge. Instead, Justice Marshall’s empty seat went to conservative Clarence Thomas.

The result: Citizens United v. Federal Election Commission, Walmart v. Dukes, and, crucially, Bush v. Gore were all decided in favor of the current conservative majority.

Who on the left wouldn’t prefer another liberal on the Supreme Court when, in their next term, it reexamines the constitutionality of Section Five of the Voting Rights Act, considers the  race based admissions process at the University of Texas, and whether or not gay marriage is a constitutionally protected right? What happens if abortion comes up again?

One election would have secured a liberal majority in the Supreme Court for the next fourteen years.  That same election ensured the opposite.

Worse, a recent article from the New York Times tells that, after nearly four years in office, “President Obama is set to end his term with dozens fewer lower-court appointments than both Presidents Bill Clinton and George W. Bush achieved in their first four years.” 

Part of this is undoubtedly allayed by the president’s  two superb Supreme Court picks, Justices Sotamayor and Kagan. The two newest members of SCOTUS have voted together 94 percent of the time as reliable members of the court’s left wing.

But now, the court has three justices over the age of 75: Scalia and Kennedy at 76 and Ginsburg at 79. Stephen Breyer is 74.

Some presidents don’t have the opportunity to nominate Supreme Court justices. The next president may have the ability to shape the court for several presidencies to come.

For this reason and others, the upcoming election is important.

On: The Left's lead columnist is currently under the weather. Therefore this week's column will be postponed until next week.

Thank you for your patience.

Paul Ryan Reading Guide: The Best Reporting on the VP Candidate

ProPublica, Aug. 11, 2012, 3:17 p.m.

Aug. 12: This post has been corrected.

Want help going beyond the horse race? We're gathering the best stories out there on Congressman Paul Ryan, his positions, and his background. Have other stories to share? Add them in comments.

Background

Fussbudget, The New Yorker, August 2012 This sweeping profile is a great introduction to Paul Ryan and his politics. Starting in his hometown of Janesville, Wisconsin, it lays out the evolution of Ryan's economic beliefs, and his rise through the G.O.P – from his early affinity to Ayn Rand to failed attempts at privatizing Social Security, to his Path to Prosperity budget plan, which would make radical changes in Medicaid and other social programs. The article also looks at the ways that federal-funded projects have helped Ryan's hometown--and notes that Ryan's plan "would drastically reduce the parts of the budget" that are funding exactly these kinds of projects.

Ryan shines as GOP seeks vision, The Milwaukee Journal Sentinel, April 2009 A broad look at Ryan from his home-state paper at a time when Ryan's national profile was on the rise. Ryan discusses, among other things, how having gay friends led him to break with his party on a gay rights bill in Congress and his "real passion" -- bowhunting.

The Legendary Paul Ryan, New York Magazine, April 2012 A look at how the Republican party rallied around Ryan's "Path to Prosperity," putting the newcomer's fiscal agenda at the center of the 2012 presidential campaign well before voters had even chosen Romney as their Republican nominee.

On the paradox of Paul Ryan, The American Conservative, April 2012 What does Mitt Romney gain from Paul Ryan? Romney may be betting on a boost from conservatives who view Ryan as a hero for his aggressive stance on entitlements and federal spending, but as W. James Antle III points out, that may not be enough to win over grassroots conservatives. Antle writes that despite his anti-entitlements campaign, Ryan's voting record "more closely resembles that of the Republicans who have lost to Tea Party primary challengers than that of a ruthless government-cutter."

Man with a Plan, Weekly Standard, July 2012 The Weekly Standard's Stephen Hayes wrote a favorable profileof Ryan in July in the midst of veep buzz. The piece traces his entire career with a particular focus on how, in recent years, Ryan became "the intellectual leader of the Republican party."

How Important is Altas Shrugged author Ayn Rand to Paul's political philosophy?  The Atlas Society, April  2012 In a 2005 speech to the Atlas Society, Paul said, "The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand...you can't find another thinker or writer who did a better job of describing and laying out the moral case for capitalism." According to the excerpts and audio of his speech posted on the society's website, he also said that Rand was "required reading" for his interns and staff.  But recently, Ryan has said while he had read Rand's novels when he was young, his supposed obsession with her was "an urban legend." "I reject her philosophy," Ryan told Robert Costa at National Review in April. "It's an atheist philosophy. It reduces human interactions down to mere contracts and it is antithetical to my worldview."

Policy

A Closer Look at Ryan's Budget Roadmaps, The New York Times, August 2012 As part of an in-depth look at Ryan's polarizing House Republican budget plan, the New York Times highlights two studies of how the plan would affect Americans.  One, a long-term analysis by the Congressional Budget Office of some of Ryan's suggested changes to Medicare and Medicaid, found that, "Under the proposal, most elderly people who would be entitled to premium support payments would pay more for their health carethan they would pay under the current Medicare system." The other, a study by the Tax Policy Centerof the Urban Institute and the Brookings Institution, found that "the tax cuts in Paul Ryan's 2013 budget plan would result in huge benefits for high-income peopleand very modest—or no— benefits for low income working households."

What's Paul Ryan's foreign policy?  Foreign Policy, April 2012 While Ryan has a limited record on international affairs, he has spoken about everything from how to handle China (less hawkishly than Romney)  to getting cosier with rising powers India and Brazil. Foreign Policy's helpful overview says the overall picture that emerges is "a bit of a Rorschach test."  Ryan says the U.S. should stay deeply engaged-- "America is the greatest force for human freedom the world has ever seen" -- while he has also called for cutting funding for U.S. international aid.

Ryan's personal finances and connections

Ryan is wealthy--but not by Romney standards. The congressman reported 2011 assets valued at between $2.4 and $9.3 million, according to an Associated Press report looking at his recently filed financial disclosure form. The money is spread in small chunks over various stock investments and in business interests in Wisconsin and his wife's home state of Oklahoma. You can browse his assets here(.pdf). Ryan also filed an amendmentto his disclosure noting that his wife's mother died in 2010 and the family gained interest in a trust worth between $1 and $5 million.

Paul Ryan's Shrewd Budget Payday, Daily Beast, June 2011 The website takes a closer look at mining, mineral, and energy holdings owned by Ryan -- primarily in his wife's home state of Oklahoma -- and how they would be positively affected by Ryan's proposed tax policies. A Ryan spokesman told the Daily Beast: "These are properties that Congressman Ryan married into. It's not something he has a lot of control over." The piece also reports that relatives of Ryan have received federal farming subsidies.

Paul Ryan has got plenty of friends on K Street, Politico, August 2012 A brief look at the friends Ryan his wife Janna have made on K Street in their years in Washington, among them former Ohio congressman Mike Oxley (of Sarbanes-Oxley fame), who is now a lobbyist for the Financial Industry Regulatory Authority (FINRA). Janna Ryan, a tax attorney, herself worked as a lobbyist for PriceWaterhouseCooper, the article reports.  

Ryan's Unlikely Alliance with Organized Labor  Mother Jones, May 2011 Ryan's family construction business relies on union labor. "I grew up in organized labor," Ryan told the Milwaukee Magazine in 2005. "I have a lot of constituents who are in organized labor. I really do not have this ‘us against them' mentality." As a congressman, Paul has worked closely with local union leaders and fought to protect the wages of construction workers. While many of his policy plans are directly opposed to what unions want, some unions have continued to support him. Over the course of his career, the Carpenters & Joiners Union has given him $57,500---only slightly less than he has received from Koch Industries, according to The Center for Responsive Politics.

Correction: This post originally said that the Mother Jones article was published in November 2012. It was actually published in May 2011.

On: The left's inability to argue

by: Joshua Howell

From America’s 24 hour news networks and its ill-disciplined internet lifestyle comes the erosion of what undergirds true sensibility, and therefore the transformation and progression of culture. Call it a corollary of The Law of Diminishing Returns: As the amount of information -- and the speed at which it is attained -- increases, our collective capacity for 20/20 reflection declines. This inverse relationship is important, because the news and the conversation it creates only graduates from petty voyeurism when placed in some form of historical and human context. That’s context which can only be applied when the passions have cooled, impossible given America’s insatiable appetite for data, no matter how trivial. 

Perhaps the Left was distracted by Gabby Douglas’ hair.

No matter, the most ingratiating aspect of reflection is that it’s never too late. Therefore, three weeks after Dan Cathy, president of Chick-fil-A, stepped into the culture wars, and three weeks after the Left’s embarrassingly botched response, it’s time for some historical and human context: Simply put, despite the Left’s protestations, this was about freedom of speech. For this, liberals have only themselves to blame.

The Left doesn’t want to be talking about freedom of speech; they’d rather be talking about the WinShape Foundation, the charitable arm of Chick-fil-A. In 2009 it donated $1.7 million to six organizations that share Mr. Cathy’s views. Many of the recipients take opposition further.

A year after receiving their donation, the Family Research Council sent fellow Peter Sprigg to MSNBC, where he would opine: “I think that the Supreme Court decision in Lawrence v. Texas -- which overturned the sodomy laws in this country -- was wrongly decided. I think there would be a place for criminal sanctions against homosexual behavior.”

Exodus International, another recipient of the chicken-tainted money, employs counselors who specialize in helping those who have “same-sex attraction (SSA) issues,” forgetting that homosexuality is not a medical disorder. The American Medical Association, The American Psychiatric Association, The American Psychological Association, The American Psychoanalytic Association and The American Academy of Pediatrics have all released statements to this effect. Sexual orientation is not a choice, they say, and cannot be changed.

It would seem that this was a debate requiring little effort to win. Liberals only needed a brand of argument having subtly, calm and familiarity with an old lawyer’s a­dage: “If you have the law on your side, argue the law; if you have the facts on your side, argue the facts; if you have neither, pound on the table.”

Despite the growing evidence from both the hard and soft sciences in support of their position, bleeding heart liberals unthinkingly applied their fists to the table.

Both the mayor of Boston, Thomas Menino, and the mayor of Chicago, Rahm Emannuel, threatened to restrict Chick-fil-A’s access to customers because of Mr. Cathy’s statements. Then, and only then, did the national conversation correctly shift to matters of freedom of speech.

Liberals, in their high-mindedness, forgot a lessen they should have learned in the 60s: debates on social policy always take a backseat to debates on the nature of government. Because America has a constitution, before any government policy can be implemented, two questions must be answered in the affirmative: First, is this something government has the ability to fix? Second (and more important), if so, is it within government’s purview to create such a policy?

When figureheads from Boston and Chicago threaten to do what is plainly illegal, because of the plainly legal actions of Chick-fil-A, America abruptly stopped debating the unsavory nature of the fast food chain’s speech, and shifted focus toward the nature and power of government.

Not satisfied with their loss, liberals doubled down.

In response to “Chick-fil-A Day,” the Left attempted a “Kiss In,” during which gay men and women would go to their local Chick-fil-A franchise and kiss in public. Despite liberals supposed sensitivity to homosexuality, in their rush to make news, they forgot the reasons why anonymity remains the primary choice among many in the gay community.

Meanwhile, on the right
While the Left continues its foundering, the Tea Party prolongs its election of congressmen. All those who whinge about anti-intellectualism on the right, meet Ted Cruz, the next Senator from Texas.

Whatever one might say on his policies, it’s impossible to deny his educational pedigree: he has a degree from Princeton, where he wrote a thesis on the Ninth and Tenth Amendments, and a law degree from Harvard, where he graduated magna cum laude.

Oh, and in celebration of his win, Ted Cruz served Chick-fil-A to supporters.

Now think back: When was the last time anyone mentioned Occupy Wall Street?

It’s time the Left rethought its approach.

Emails Give Glimpse Into Deals That Fueled Financial Meltdown

by Jesse Eisinger and Jake Bernstein ProPublica, Aug. 6, 2012, 9:40 a.m.by Jake Bernstein and Jesse Eisinger, ProPublica, Dec. 22by Jake Bernstein and Jesse Eisinger, ProPublica, Aug. 26by Jesse Eisinger and Jake Bernstein, ProPublica, April 9

As ProPublica has been detailing for two years, Wall Street banks and the hedge fund Magnetar worked together to build mortgage-backed deals that the hedge fund also bet against. The more than $40 billion of deals helped fuel the crash of 2008.

Now, recently collected emails from bankers and a Magnetar executive involved in some of the deals appear to shed new light on how they did it.

Fiduciaries threatened with a loss of business if they didn't cooperate. Prime movers behind a billion-dollar deal suggesting they need to keep their actions hidden. It's all portrayed in the emails, which were included as part of a civil lawsuit against Magnetar filed in New York's Southern District Court in late June. (Our reporting is also cited in the complaint.)

The suit was brought by Italian bank Intesa San Paolo, which lost $180 million on an investment linked to a mortgage bond deal put together by Magnetar and French bank Calyon. The deal was "built to fail," in the words of the complaint.

Boston-based Putnam was the manager on the deal, called Pyxis 2006, which involved the creation of a $1 billion collateralized debt obligation. The managers in such deals were supposed to be independent and looking out for all investors' interests.

Intesa is suing all three players, Magnetar, Calyon and Putnam. Intesa, which is seeking unspecified damages, accuses Calyon and Putnam of misrepresenting the deal and Magnetar of acting in a conspiracy with Calyon and Putnam to aid and abet fraud. (Much of the information cited in the suit comes from an earlier case involving many of the same players that was settled.)

As with all partial document trails, the emails are open to a variety of interpretations. Magnetar says they have been selectively excerpted and that the more complete email chains don't show what the plaintiff alleges.

The firms involved in the deal 2014 Magnetar, Putnam and Calyon 2014 filed motions to dismiss the suit last month.

A Putnam spokesman said, "The lawsuit is completely without merit and will be defended vigorously." A Calyon spokeswoman declined to comment.

Magnetar is reportedly under SEC investigation. The hedge fund says it has not received a formal notice of possible charges from the SEC and calls the lawsuit "meritless." The hedge fund reiterated that it "did not control" what went into the deals, known as collateralized debt obligations. (Read their full response.)

Here are some excerpts from the emails, with our captions: 

On June 14, 2006, an executive from Calyon wonders if Magnetar's participation should be hidden, that is, remain "behind the scenes and outside of the docs" in "exactly the same way we did" with another Magnetar CDO:

Magnetar's Jim Prusko responds: "No, not at all. What's your number?" Magnetar points to that response as exculpatory.

Yet a week later, Calyon, Magnetar and Deutsche Bank (which was also investing in the deal and playing a similar role as Magnetar), discussed creating a side agreement giving Deutsche Bank and Magnetar veto power over assets that were to go into the deal. Such side agreements were rare and would have left some investors unaware of important details of the deal.

Ultimately, that side deal was never consummated, according to Magnetar. But Magnetar made sure it knew about the asset selection for the CDO, which Intesa charges is an example of its secret control. Neither Magnetar's influence in the deal nor the hedge fund's bet against it were clearly disclosed to investors:

As the linchpin investor on the CDO, Magnetar needed to know what went into the investment, the hedge fund says. This does not indicate it ultimately controlled what went into the deal. Magnetar points out that Prusko, the Magnetar executive, wrote to the manager in an earlier email that the hedge fund will buy assets "of your choosing":

Though Calyon, which created and marketed the deal, told Intesa that it would select some better-quality, "prime" assets, none got in there, according to the complaint:

A key issue is who exactly knew whether Magnetar was betting against, or shorting, the deals in which it was investing. In one of the email exchanges, from September 2006, executives from Calyon and Putnam discuss who is shorting. The Putnam executive says: "It is definitely Magnetar." In other words, the manager who was supposedly looking out for investors' interests claimed to know that Magnetar was betting against the deal:

Other emails refer to a CDO manager, the Dutch-owned NIBC, which was involved in another Magnetar deal. (As we reported in 2010, NIBC once pushed back against perceived pressure from Magnetar to make a deal riskier.)

Regarding another Magnetar deal, Calyon's Alex Rekeda writes in November 2006 that NIBC is concerned that it is ceding too much power to Magnetar and Deutsche, which was again partnering with Magnetar on the deal. He also relays another concern: "They feel very strongly that the older vintage bonds that they have in the portfolio have by far superior credit characteristics compared to the bonds they can pick up in the market now." Translated: NIBC was feeling pressure to buy riskier bonds and didn't think doing so would benefit investors.

(Last month, the Securities and Exchange Commission settled securities law charges against one of the players, the former Calyon banker Rekeda, accused of violating securities laws in conjunction with another Magnetar CDO. Rekeda did not admit or deny wrongdoing.)

Deutsche's Michael Henriques replies that the original investors 2014 which include Magnetar and Deutsche Bank 2014 are taking "execution, credit and manager risk." That suggests Magnetar and Deutsche viewed themselves as the real managers of the CDO, not the supposedly independent NIBC. Henriques, who later went to work for Magnetar, also complains that NIBC is treating Deutsche Bank and Magnetar poorly, lacking "a spirit of partnership."

That same day, Deutsche's Henriques threatens to withdraw a lucrative line of business from NIBC:

In another deal from a few months earlier, Magnetar's Prusko had also threatened to withhold business from the manager, Putnam, if it did not "play ball":

Magnetar says Prusko's email solely refers to the fees on the deal, and not about controlling asset selection or any other issue.

In a statement, Magnetar said: "Intesa's decision to amend this complaint appears to be little more than a transparent effort to sensationalize a baseless case in which each defendant has already moved for dismissal.

"As the Plaintiff is well aware from the motion to dismiss we filed some time ago, no Magnetar entity was a party to the credit default swap at issue in the case, and we were not even aware of that transaction until this complaint was filed.

"We continue to believe that Intesa's accusations are meritless, and that the case should be dismissed.

"And, as we have stated numerous times in the past: Magnetar did not control the asset-selection process and our Mortgage CDO investment strategy was designed and implemented to maintain a market-neutral portfolio."

On: Greater Expectations

by: Lilly McAlister

Over the past few days, much of the internet has been flooded with flame wars raging back and forth between those in support of, in opposition to, and of course those simply tired of hearing about Chick-Fil-A. While I have grown rather weary of the argument myself at this point, I have to admit that one of the most interesting statements which I have seen posted over and over are people questioning how anyone could ever be surprised by something like this. How could people possibly be suddenly so angry over news like this coming out of a company that has been openly Christian for years, which raises an interesting question – is this something that should be inherently expected out of a company which is owned by a Christian family?

Let me say this, I am neither shocked nor even particularly disappointed that the owner said he and his family support what they think of as the traditional family, he can say that and he can feel that way, and it doesn’t honestly offend me all that much. However, I reserve the right to potentially be surprised when I learn that a business is funding aggressive social lobbying groups with millions every year, even if they are a publicly "Christian" business. I reserve the right to be disappointed by this, and to consider it a negative when a business actively lobbies against any and all civil liberties causes for a group of people. I reserve the right to not automatically assume that because you are Christian and you personally consider homosexuality to be a sin that you also automatically feel that legislation making it illegal to fire a person for being gay or decriminalizing same-sex relationships should be overturned.

People have asked me that if this sort of thing really bothers me how I could in turn support any restaurant with Christian owners because the bible says that women who are not virgins on their wedding nights must be put to death, not only assuming that this rule is applicable to my situation but automatically assuming that the root issue lies with the existence of their belief system. Yes, I wear pants, I attend school, I argue with men in public, and I do not believe in God; there are many ways by which I could fairly be called a sinner  by the rules of that faith and that is just fine. The difference is that no one is launching major national campaigns attempting to put me in jail or put me to death for violating any of those religious laws. I am not debating your right to personally disagree with something, and I am not challenging your religion’s right to oppose it; I am choosing to actively not support you in your efforts to legislate your personal religious beliefs.

In short, I can consider this behavior not to be an inherent consequence of being a business run by a member of the Christian faith because I do not to consider the term "Christian" to be synonymous with "bigot" and as such I reserve the right to consider bigoted actions and statements out of Christian people to be every bit as disappointing as bigoted actions and statements that come out of anybody else.  What’s more surprising to me is that the people discouraging the separation of these terms seem to be doing so mostly in defense of the company, stating that we should expect no less out of a company whose owners are so openly active in their faith. They say this almost as though we cannot expect people to both have strong personal faith and peacefully coexist with persons whose beliefs do not match their own, and to that end I must respectfully disagree with them for I have known far too many good people, of many faiths, who have shown that statement to be false.

*The dictionary defines the word “bigot” as: a person who is utterly intolerant of any differing creed, belief, or opinion. I would argue that attempting to legally enforce your personal creed, belief, or opinion and criminalizing the failure to do so demonstrates a lack of tolerance for those differing beliefs and opinions, as such I feel that the word is appropriate for the context in which I have placed it.

**Additional side note, choosing to personally boycott a business is not the same as trying to legally prevent them from doing business. You are choosing to not financially support them and are encouraging others to make the same choice but you are not attempting to actually prevent them from being able to legally operate. It's a personal choice and an action that takes place in the private sector, which is not the same as taking legal action against them. I am not saying they are committing a crime, and I am not trying to criminalize what they're doing.