This Week’s Report: "Prostitution Debate"

by Marcia Clemmitt, May 23, 2008

Should the United States legalize sex work?

Prostitution made the front pages recently when Democratic New York Gov. Eliot Spitzer resigned after he was outed as a client of a high-priced escort service. The fall of Spitzer, a fierce foe of prostitution in his previous post as state attorney general, highlighted American ambivalence about the sex industry, which receives little public debate and seems to surface in the media only when high-profile customers are named as clients. Behind the scenes, however, fierce debate rages about the best plan for limiting the harms of prostitution, which include drug addiction and minors being forced into sex work. Anti-prostitution feminists argue that the United States should follow Sweden’s example by arresting and jailing johns instead of prostitutes while providing social services to help women leave the sex industry. But other activists argue that only complete decriminalization and recognition of sex work as a form of labor can end the social stigma that leaves prostitutes unprotected from disease and violence.

  • Should the United States legalize or decriminalize prostitution?
  • Should law enforcement focus on johns rather than prostitutes?
  • Should society concentrate on ending forced prostitution rather than ending all prostitution?
To read the Overview of this week's report, click here.

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Coming Up in CQ Researcher

Changing U.S. Electorate
Demographics have played nearly as large a role in this year’s presidential race as health care, war and the economy. The Democratic field has come down to an African American man dominating voting among blacks, the young and highly-educated voters and a white woman winning older voters, Hispanics and the white working class. Regardless of whether Barack Obama or Hillary Clinton is the nominee, the Democratic candidate’s first order of business will be reuniting party supporters against Republican John McCain. Many trends favor Democrats, including increased support among Latinos and voters under 30. But states that have supported George W. Bush are gaining in population and will gain electoral votes by 2012. As the American electorate changes shape, the big question is which party stands to gain the most.
By Alan Greenblatt


The U.S. and the "New" Russia
When Russian voters elected a new president on March 2, the outcome was hardly in doubt. First Deputy Prime Minister Dmitry Medvedev, 42, is both genuinely popular and had the backing of the incumbent, Vladimir Putin. The Bush administration is hoping Medvedev will improve current U.S.-Russian tension. In 2001, Bush said he looked Putin in the eye and saw a man who was "straightforward and honest." But it was downhill from there. Relations between Washington and the Kremlin got steadily worse after Iraq, with some experts warning that further worsening could lead to a new Cold War. The contours of U.S.-Russian differences have emerged in disagreements over how to deal with Iran’s nuclear ambitions, in diplomatic stand-offs over Kosovo, Ukraine and Georgia (Russian neighbors who want to join NATO), in disputes over gas and oil pipelines and above all in the Bush administration’s plan to put an anti-missile system in Eastern Europe. Caught in the middle as usual is Europe, the historic battlefield of Russian expansionism. French President Nicolas Sarkozy expressed the general concern — increasingly reflected in the polls — that "Russia is imposing its return on the world scene by playing its assets, notably oil and gas, with a certain brutality."
By Roland Flamini


Campaign Finance Reform
As the 2008 presidential contest approaches, the campaign-finance system is in upheaval. Six years after Congress passed the landmark Bipartisan Campaign Reform Act to help curb the influence of unregulated "soft" money in politics, the so-called McCain-Feingold law is facing court challenges and persistent claims that it infringes on free-speech rights. Meanwhile, the system of public funding for federal campaigns is teetering, and Democratic frontrunner Barack Obama is poised to be the first major-party presidential candidate to bypass it in a general election. The Federal Election Commission, charged with enforcing the nation’s campaign-finance laws, has been paralyzed because of partisan bickering. And spurred partly by the effects of McCain-Feingold and the shortcomings of the public-financing system, candidates have been turning more and more to small donors, who are responding in unprecedented ways.
By Thomas J. Billitteri

Coming Up in CQ Global Researcher: Anti-Semitism in Europe

Anti-Semitic incidents in European countries have surged since 2000, the start of the second Palestinian intifada. Some Jewish groups and experts are particularly disturbed because Europe appears to be adjusting to a new high level of hate incidents and anti-Jewish rhetoric while violent attacks on individuals continue to rise. A recent British parliamentary inquiry raised concern about a "widespread change in mood and tone when Jews are discussed" in the media, in universities and other public settings. Spikes in hate incidents seem to follow Middle East or Muslim-related news events, such as the 9/11 terrorist attacks in the U.S. or the 2006 Lebanon war between Israel and Hezbollah — becoming triggers to violence in Europe. Meanwhile, some experts say this new type of anti-Semitism seems to rouse the old kinds of European racial canards that existed before and during World War II. Caricatures in the European press have revived images reminiscent of medieval beliefs in the Jew as child-killer. Political cartoons in newspapers and on the Internet have employed Nazi-like imagery to portray Jewish Israelis as cruel and bloodthirsty in countries as varied as Norway, Greece and England.

By Sarah Glazer

In the News: Americans Permitted to Send Cell Phones to Cuba

President Bush has announced a change in policy that will allow Americans to send cell phones to relatives in Cuba. Bush said he is making the change because new President Raul Castro is allowing Cubans to own mobile phones for the first time. Bush urged the Cuban government to further loosen restrictions by allowing citizens to watch uncensored movies and have free access to the Internet. In addition, he underscored the need for more free-market reforms. The United States has maintained an embargo on Cuba ever since former President Fidel Castro — brother of Raul — overthrew the country’s pro-American government half a century ago.

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In the News: France Lobbies for Aid to Myanmar

French Foreign Minister Bernard Kouchner criticized the U.N. Security Council for not agreeing to pressure Myanmar into opening its doors to foreign aid. Citing the 2005 U.N. resolution on the "responsibility to protect," which calls for humanitarian intervention in times of armed conflicts, France has been unsuccessful in convincing the council that Myanmar’s military rulers should let aid reach the victims of Cyclone Nargis. China, Russia, South Africa and Vietnam have refused to impose the doctrine because the Myanmar situation does not involve armed conflict. In response, Kouchner cited a 1988 resolution saying that forgoing humanitarian assistance to victims of natural disasters "constitutes a threat to human life and an offence to human dignity." The cyclone, which hit Myanmar two weeks ago, has left more than 134,000 dead or missing.

To view the entire CQ Global Researcher report, "World Peacekeeping," click here. [subscription required]

In the News: Top Basque Separatist Leader Arrested in France

Spanish and French authorities have arrested one of the highest-ranking members of the Basque separatist group ETA, dealing a blow to the movement after a series of ETA bombings in northern Spain. Police detained Francisco Javier Lopez in an apartment in the southwestern French city of Bordeaux along with three other ETA members on May 20. A warrant had been out for Lopez’s arrest since January 2007. Spanish Interior Minister Alfredo Perez Rubalcaba says Lopez probably wields the greatest political and military weight within ETA, which Spain regards as a terrorist organization. He was convicted — in absentia — by a French court in 2005 and sentenced to eight years in prison for recruiting ETA operatives.

To view the CQ Global Researcher report, "Separatist Movements," click here. [subscription required]

Overview of This Week’s Report: "Prostitution Debate"

Navy Lt. Cmdr. Rebecca Dickinson, a 38-year-old divorced mother of three, testified in a federal courthouse in Washington, D.C., April 10 about the interview process she went through to get a second — civilian — job.

In need of money a few years ago, Dickinson answered an Internet ad for an escort service and scheduled a tryout appointment with a customer in a Maryland suburb. "We had small talk for a little bit, and then we began to have sexual relations," she said. "He tried to remove the condom. I was fighting to keep it on."

Later, when Dickinson told her prospective boss — so-called D.C. Madam Deborah Jeane Palfrey — that she was upset that the man tried to force unprotected sex, Palfrey warned her: "Don’t talk about such things on this phone."

Dickinson told her story after the prosecution called her to testify under a grant of immunity at Palfrey’s trial on prostitution-related racketeering and financial charges. On April 15, a jury convicted Palfrey, who faced a likely four-to-six-year prison term. Palfrey hung herself a few days later, leaving behind a note that said she could not face prison again.

Dickinson hasn’t been charged but has already suffered her punishment. Forced to publicly admit providing sexual services for pay, she has been stripped of her Navy job and may be forced to leave her 19-year military career without retirement benefits.

Dickinson’s story typifies many of the tough truths about the "high-end" prostitution that makes front-page news when powerful clients are involved, say sex-industry analysts. Overwhelmed by economic or other personal pressures, many like Dickinson turn to escort work and end up losing their reputations and, often, their jobs and homes when their sex-work pasts are discovered. Meanwhile, high-profile johns — such as Sen. David Vitter, R-La. — a Palfrey client who has campaigned on the need to protect the sanctity of marriage — often escape the toughest censure and keep their careers.

The sex industry operates in the shadows, making it virtually impossible to gather reliable data about prostitution. Estimates of the proportion of women who’ve worked as prostitutes vary wildly, ranging from less than a quarter of 1 percent to about 1 percent in the United States and up to 7 percent in some other countries.

What is known is that around 90,000 prostitution arrests occur in the United States annually, with sex workers, not their customers, making up the overwhelming majority of those arrested. Most return to prostitution after their arrests, including many who would like to leave the work, in part because virtually no comprehensive social services exist for prostitutes. That’s especially troubling, given that many prostitutes enter the industry as homeless teenagers, who’ve run away or been evicted from dysfunctional families. As prostitutes, they are at high risk for violence, including rape and murder.

Even though some countries are seeking new ways to limit the harm caused by prostitution, it continues to be illegal in the United States except in 11 Nevada counties, and debate on alternatives — such as decriminalization — is less robust than in other countries. That’s partly because denial and ambivalence characterize most American attitudes on the sex trade.

Other recent high-profile revelations demonstrate that ambivalence, says Martha Shockey-Eckles, an assistant professor of sociology at Saint Louis University. Earlier this year, for instance, Democratic New York Gov. Eliot Spitzer, a fierce foe of prostitution and sex trafficking in his previous post as state attorney general, was named as a client of an escort service that charged customers up to $5,000 a night. Spitzer resigned his job but blamed his longtime use of prostitutes on "a sex addiction," she says. Most johns "think themselves to be morally upright individuals," she says. (Spitzer has not yet been indicted but could eventually face money-laundering or other charges.)

If johns’ attitudes seem inconsistent, so do U.S. laws relating to prostitution. For example, in New York state, because the age of consent for sex is 18, a 17-year-old girl who has consensual sex is considered a victim of statutory rape, and her partner is considered a criminal. But if she’s a prostituted girl under 18, she is arrested as a criminal and her john usually escapes punishment, says Taina Bien-Aimé, executive director of the international women’s advocacy organization Equality Now.

Prostitutes — many of whom got into the business as abused or homeless teenagers who left or were cast out of dysfunctional families — also face a high risk of rape and murder, including as victims of serial killers. "We’re so often in this society pointing the finger of blame that we forget that a lot of women are in danger," says Shockey-Eckles. "And they have little means of protecting themselves, because law enforcement is not their friend."

Bringing the ordinary lives of prostitutes into the open could help remove some stigma, she suggests. "If I try to discuss it, I hear about a woman having no values, that the woman is slimy," she says. "But they do have values, and very often they are the same values as ["Leave It to Beaver" mom] June Cleaver. I’ve asked many prostitutes, ‘What’s the most important thing in your life?’ And over and over the answer is, ‘My son.’ "

"You always hear, ‘I’d do anything before I’d be a prostitute,’ " says Shockey-Eckles. "But what if you couldn’t feed your child?"

While little policy debate is occurring in the United States, numerous other countries are trying to deal with the issue in new ways. New Zealand has decriminalized prostitution and categorizes sex work as a form of labor in an effort to end the stigmatization. Several Australian states — including, most recently, Western Australia, in April — have legalized prostitution and some brothel-keeping in an attempt to improve prostitutes’ lives through regulation. In Greece, where both selling sex and brothel-keeping are legal and regulated, prostitutes are required to have biweekly health checks. Sweden has taken a different approach, decriminalizing the selling of sex while toughening penalties for johns.

Ronald Weitzer, a sociology professor at George Washington University, agrees there is room for a public discussion of such measures in the United States, but he acknowledges that most U.S. politicians "are very wary to touch it." Nevertheless, he points out, polls show that — depending on wording — 25 to 47 percent of Americans favor some kind of legalization, especially if it would help curb the spread of sexually transmitted diseases (STDs).

Although prostitution is largely ignored by legislators and the public, activists hotly debate issues relating to prostitution, such as whether it could be legalized and regulated or whether law enforcement should crack down on johns.

"When are we as a society going to grow up and face the fact that, although sex can be spiritual and emotional, it can also be a commodity?" asked sexologist Susan Block, author of Advertising for Love. "What about all the single johns? They aren’t even cheating" on anyone. Besides, she continues, "many perfectly legal sex acts are business transactions, from . . . guys who sleep with women to stay rent-free in their apartments to gold-diggers who simply marry for money."

But Bien-Aimé insists that "prostitution isn’t sex, it’s sexual exploitation . . . and we have to make the distinction between those two."

Clinical psychologist Melissa Farley, director of the San Francisco-based anti-prostitution group Prostitution Research & Education, agrees. "I don’t think it’s OK that, because some of us don’t have to prostitute to pay the rent, we set aside a given class of women and say, ‘OK, have at them!’ " she says.

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This Week’s Report: “Financial Crisis”

By Kenneth Jost, May 9, 2008

Did lax regulation cause a credit meltdown?

The flood of subprime mortgage defaults roiling the U.S. housing market is also feeding a worldwide credit crisis. Using complex computerized models, lenders have pooled credit instruments of all sorts – mortgages, credit-card debt, corporate and government bonds – for trading in lightly regulated financial markets. The banks, investment funds and other players that trade in these markets say that such “securitization” promotes economic liquidity by spreading and diversifying risk. Critics say the practice actually allows dubious loans to uncreditworthy customers to spread virus-like through worldwide financial markets. Investment banks in the United States and elsewhere are taking billion-dollar losses as they are forced to revalue their holdings. The U.S. Treasury Department has proposed a major overhaul of financial-markets regulation, but the sweeping plan offers little by way of immediate relief. In any event, any proposals for additional regulation will face stiff resistance from the financial community.

  • Should the Federal Reserve be given more power to prevent financial crises?
  • Should regulation of commercial banks and investment firms be tightened?
  • Should the markets for credit derivatives be more closely regulated?
To read the Overview of this week’s report, click here.

To view this week’s entire report on CQ Researcher Online, click here. [subscription required]

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Coming Up in CQ Researcher

Debating Prostitution
Governments around the world are challenging traditional approaches to dealing with prostitution in an effort to eliminate the harms of prostitution, including minors being forced into sex work and attacks on prostitutes. In Sweden, the act of selling sex has been decriminalized, and police now target johns for arrest and prosecution. The plan wins plaudits from traditional feminist groups who say its focus on snuffing out demand is the surest way to eliminate the sex industry, which they argue inevitably promulgates violence against women. Germany, New Zealand and several Australian states have legalized certain forms of prostitution, such as brothels in specified districts. But advocates of sex-workers’ rights are skeptical of both approaches, arguing that only complete decriminalization and recognition of sex work as a form of labor like any other can end the social stigma that leaves prostitutes unprotected from disease and violence and unable to seek help for fear of arrest or harassment by authorities.
By Marcia Clemmitt


America’s Changing Electorate
Demographics have played nearly as large a role in this year’s presidential race as health care, war and the economy. The Democratic field has come down to an African American man dominating voting among blacks, the young and highly-educated voters and a white woman winning older voters, Hispanics and the white working class. Regardless of whether Barack Obama or Hillary Clinton is the nominee, the Democratic candidate’s first order of business will be reuniting party supporters against Republican John McCain. Many trends favor Democrats, including increased support among Latinos and voters under 30. But states that have supported George W. Bush are gaining in population and will gain electoral votes by 2012. As the American electorate changes shape, the big question is which party stands to gain the most.
By Alan Greenblatt


The U.S. and the “New” Russia
When Russian voters elected a new president on March 2, the outcome was hardly in doubt. First Deputy Prime Minister Dmitry Medvedev, 42, is both genuinely popular and had the backing of the incumbent, Vladimir Putin. The Bush administration is hoping Medvedev will improve current U.S.-Russian tension. In 2001, Bush said he looked Putin in the eye and saw a man who was “straightforward and honest.” But it was downhill from there. Relations between Washington and the Kremlin got steadily worse after Iraq, with some experts warning that further worsening could lead to a new Cold War. The contours of U.S.-Russian differences have emerged in disagreements over how to deal with Iran’s nuclear ambitions, in diplomatic stand-offs over Kosovo, Ukraine and Georgia (Russian neighbors who want to join NATO), in disputes over gas and oil pipelines and above all in the Bush administration’s plan to put an anti-missile system in Eastern Europe. Caught in the middle as usual is Europe, the historic battlefield of Russian expansionism. French President Nicolas Sarkozy expressed the general concern – increasingly reflected in the polls – that “Russia is imposing its return on the world scene by playing its assets, notably oil and gas, with a certain brutality.”
By Roland Flamini

In the News: Obama Increases Lead Over Clinton

Sen. Hillary Rodham Clinton vowed to continue her campaign for the Democratic presidential nomination after narrowly defeating Sen. Barack Obama in the Indiana primary, 51 to 49 percent. However, Obama took the North Carolina primary by 14 points. The results place Clinton at a severe disadvantage as campaign officials question whether she will be able to overcome her competitor’s substantial lead in pledged delegates. In order to keep her chances of overtaking Obama alive, officials say she will need decisive victories in the six remaining primaries. Meanwhile, Obama stressed that unifying the divided Democratic Party will be essential to winning in the general election. The presidential hopefuls’ next stop is West Virginia, where Clinton is favored.

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In the News: University Suspends Six Fraternities After Drug Arrests

San Diego State University suspended six fraternities after an undercover investigation of a college drug ring led to the arrests of 75 students and the recovery of approximately $100,000 worth of drugs. The Theta Chi fraternity house was among nine locations raided by authorities, who found cocaine, Ecstasy and guns. The investigation was launched after a freshman sorority member died from a cocaine overdose last year. San Diego State President Steve Weber says that the university is committed to removing drugs from campus.

To view the CQ Researcher Online report, "War on Drugs," click here. [subscription required]

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In the News: Federal Agents Raid Whistleblower Protection Agency

Agents raided a federal whistleblower protection agency as part of an ongoing investigation of the chief of the Office of Special Counsel, Scott J. Bloch. Bloch is under investigation for obstruction of justice. The Office of Personnel Management’s inspector general’s office and the FBI had already begun conducting investigations into Bloch’s activities when he hired professionals to erase both his and two of his aides’ computer archives. The FBI served all 17 staffers in the office with grand jury subpoenas, confiscated computers and records and questioned Bloch. A spokesman for the Office of Special Council insists Bloch will remain as chief.

To view the CQ Researcher Online report, "Protecting Whistleblowers," click here. [subscription required]

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Overview of This Week’s Report: “Financial Crisis”

Change was on the agenda this spring when the giant Swiss bank UBS – the world’s largest wealth management company – held its annual shareholder meeting.

Only a few months earlier, UBS had been poised for major expansion. But then came the global credit crunch, brought on by the spread of subprime mortgages and other bad debts through financial institutions around the world.

Addressing shareholders assembled in Basel for an April 23 meeting described as “raucous” and “stormy,” outgoing Chief Executive Marcel Rohner acknowledged UBS was shelving its grand ambition to go beyond its primary business of private banking and become a dominant global player in the lucrative field of investment banking.

“We no longer aim to offer everything to everyone in investment banking,” Rohner said. “We do not need an oversized balance sheet. We do not need an oversized inventory of trading portfolios. And we do not need an unnecessary concentration of risk.”

Along with other big banks in Europe and the United States, UBS had experienced a financial meltdown – and in UBS’s case a shareholder revolt – after it lost nearly $38 billion, more than any other lender, since the start of the subprime crisis in July 2007.

A report filed by UBS with the Swiss Federal Banking Commission blamed the losses on some $70 billion worth of risky assets accumulated in the face of supposedly elaborate risk-detection procedures by two arms of UBS’s investment bank.

The report acknowledged that UBS had made no “specific decision either to develop business in, or to increase exposure to, subprime markets” or “substantially to increase UBS’s overall risk taking.” Risk-management controls, the report added in bland corporate-speak, had not been “sufficiently robust.”

U.S. banks likewise had not consciously decided to substantially increase their risk taking in the past few years, but that is what happened – and by April 2008 they were paying for their mistakes. One by one, major U.S. banks reported billions in write-downs: $13 billion for Citigroup, the nation’s biggest commercial bank; $9.7 billion for Merrill Lynch, perhaps the best-known investment bank; $5.1 billion for JP Morgan Chase; $1.9 billion for Bank of America.

The grim reports came only a few weeks after the stunning demise of perhaps the most aggressive of the major Wall Street investment houses: Bear Stearns. With billions of dollars’ worth of dubious financial instruments known as mortgage-backed securities on its books, Bear found itself in mid-March facing the 21st-century equivalent of a run on the bank. Clients began pulling out their money after word rippled through Wall Street that other financial institutions were refusing to extend Bear credit.

Bear’s top executives went on the CNBC financial news channel on March 11 and 12 to insist that nothing was amiss, but by week’s end they had to go hat in hand to rival JP Morgan for an emergency loan. Over the weekend the Federal Reserve stepped in. With Fed Chairman Ben Bernanke personally superintending, the nation’s central bank forced Bear Stearns to accept a buyout by JP Morgan at the fire-sale price of $2 a share (later raised to $10). The Fed greased the deal by extending a $29 billion line of credit to JP Morgan and taking over management of Bear’s mortgage portfolios.

Much, but not all, of the blame for the financial dislocations at Bear and other institutions lay with the explosion of subprime mortgages: expensive, frequently high-interest loans hawked aggressively by mortgage brokers, often to speculators or home buyers with poor credit, and then packaged into mortgage securities for sale to banks or other financial institutions. Far removed from the borrowers, the financial institutions either could not or did not carefully evaluate the quality of the underlying loans.

For many home buyers and speculators, the unsustainable loans translated into delinquencies and foreclosures. But beyond the countless stories of once hopeful families losing their homes or struggling to keep them, the national and global economies were feeling pain, too.

“We had a problem that originated in the subprime sector and then spread to the entire credit market,” says Daniel Beim, a professor of finance and economics at Columbia Business School in New York City. “We now have a total gridlock in the global credit market economy.”

Wall Street’s best and brightest had clearly messed up – tripped up, according to one expert, by overconfidence in their financial wizardry and enabled by regulatory failure. “With the benefit of hindsight,” says Thomas Schlesinger, executive director of the Financial Markets Center, which monitors the Federal Reserve System and the financial sector, the crisis “came about by a combination of risk taking, innovation and hubris in the financial sector and equal amounts of deregulation, desupervision and hubris among financial regulators.”

Some of the blame is also being laid on the major credit rating agencies, private companies retained by the banks that marketed mortgage securities to provide ratings that would-be purchasers relied on in deciding whether to buy. Some experts blame the agencies for giving the securities favorable investment-grade ratings even after evidence of the mortgage meltdown began to emerge.

On Wall Street, the demise of the 85-year-old Bear Stearns is likely to mean pink slips for many of its 14,000 employees. UBS’s financial misadventures are forcing the bank to lay off 5,500 employees.

Overall, the U.S. financial sector had already lost 60,000 jobs over the past year, according to the Bureau of Labor Statistics. The trimmed payrolls and bleak earnings reports signaled an end to a quarter-century of high-flying earnings that saw the financial sector’s share of total corporate profits in the United States rise, according to the Bureau of Economic Analysis, from 15 percent in 1980 to 27 percent in 2007.

While engineering the Bear Stearns rescue, the Fed also took a broader step to ease the financial crisis by creating a new lending window – to be called the “primary dealer credit facility” – for investment banks. Wall Street and Washington both generally approved the action as a needed step to keep financial markets going, but some saw the move as long overdue. “I’m not 100 percent sure what kept the Fed from doing this earlier,” says Ross Levine, a professor of economics at Brown University in Providence, R.I.

Beefing up the Fed’s ability to protect financial markets from “systemic” risks is one of the most concrete recommendations in a “blueprint” for financial regulatory reform released by the Treasury Department in late March. The 218-page report also calls for:

  • Establishment of federal standards for all mortgage lenders, not just banks.
  • Fundamental restructuring of the multiple agencies currently regulating banks, thrifts (such as savings and loan associations) and credit unions;
  • Consolidation of the two major agencies protecting investors: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Financial-sector trade associations call the blueprint a good starting point for a debate over “modernizing” a federal regulatory structure that has evolved piece by piece since the Civil War. Consumer groups, on the other hand, are criticizing the proposals as warmed-over deregulation. In any event, Treasury Secretary Henry Paulson – former head of Goldman Sachs, biggest of the investment banks – acknowledges the Fed set out proposals too sweeping for Congress to digest in the seven months before the presidential election.

In fact, the Democratic-controlled Congress is largely ignoring the Treasury report. Instead, House and Senate banking committees are concentrating on more immediate steps to aid financially strapped mortgage borrowers and crack down on predatory lenders.

Whatever may be done to ease the mortgage crisis, pressing questions about financial markets and their regulation will remain. The era of traditional, personal-relationship banking and investing has yielded to an impersonal system that is more complex and more opaque. In addition, the historic separation between commercial banks and investment houses has all but ended thanks to industry consolidation and a deregulatory law passed by Congress in 1999.

In one of the least understood changes, a variety of new financial instruments has emerged known as “credit derivatives.” In one of the simplest forms – a “credit default swap” – a bank or other institution holding a loan buys what amounts to insurance by paying a premium to a “counterparty” that agrees to pay off the loan in the event of a default by the original borrower.

The advocates of derivatives say they help ease credit by spreading risk. The critics say they threaten financial disaster by spreading it. One side points to the 1980s and ‘90s as evidence, the other to the current financial turmoil.

The debate underscores the importance of risk management in the financial sector, forcing lawmakers and regulators to ask whether there is a need for tighter regulation of financial institutions by Congress, the Federal Reserve or other federal agencies. Specific proposals are in short supply so far, however, and any significant changes will face hard going in a field with lots of competing financial and political interests.

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This Week’s Report: “Cyberbullying”

by Thomas J. Billitteri, May 2, 2008

Are new laws needed to curb online aggression?

Child advocates say a growing epidemic of “cyberbullying” – the use of computers, cell phones, social-networking sites and other technology to threaten or humiliate others – is putting young people at risk, sometimes with deadly consequences. The Centers for Disease Control and Prevention has labeled “electronic aggression” an “emerging public-health problem.” Court precedents on school discipline and students’ First Amendment rights provide limited guidance to educators grappling with the emerging world of cyber communication, especially transmissions originating off school grounds. Nonetheless, many states and school districts are taking strong steps aimed at curbing cyber abuse. In Congress, bills to provide new funding for online-safety programs have been introduced, but conflicts have arisen over how federal money for such efforts should be spent.

  • Are new laws needed to curb cyberbullying?
  • Do cyberbully laws violate constitutional rights?
  • Should parents be held liable for cyberbullying offenses?

To read the Overview of this week’s report, click here.

To view this week’s entire report on CQ Researcher Online, click here. [subscription required]

To buy a PDF of the report, click here.

Coming Up in CQ Researcher

Financial Crisis
The shaky subprime mortgages creating widespread turmoil in the U.S. housing market are also feeding a worldwide credit crisis. Deploying complex computerized models, lenders have pooled credit instruments of all sorts – mortgages, credit card debt, corporate and government bonds – and sliced and diced the packages for trading in lightly regulated financial markets. The banks, investment funds and other players that trade in these markets say that “securitization” promotes economic liquidity by spreading and diversifying risk. Critics say the practices actually allow dubious loans to uncreditworthy customers to spread virus-like through worldwide financial markets. Banks in the United States and elsewhere are taking big write-offs as they are forced to revalue their holdings. The U.S. Treasury Department is proposing a major overhaul of financial markets regulation, but the sweeping plan offers little by way of immediate relief. In any event, any proposals for additional regulation will face stiff resistance from the financial community.
By Kenneth Jost


Debating Prostitution
Governments around the world are challenging traditional approaches to dealing with prostitution in an effort to eliminate the harms of prostitution, including minors being forced into sex work and attacks on prostitutes. In Sweden, the act of selling sex has been decriminalized, and police now target johns for arrest and prosecution. The plan wins plaudits from traditional feminist groups who say its focus on snuffing out demand is the surest way to eliminate the sex industry, which they argue inevitably promulgates violence against women. Germany, New Zealand and several Australian states have legalized certain forms of prostitution, such as brothels in specified districts. But advocates of sex-workers’ rights are skeptical of both approaches, arguing that only complete decriminalization and recognition of sex work as a form of labor like any other can end the social stigma that leaves prostitutes unprotected from disease and violence and unable to seek help for fear of arrest or harassment by authorities.
By Marcia Clemmitt


America’s Changing Electorate
Demographics have played nearly as large a role in this year’s presidential race as health care, war and the economy. The Democratic field has come down to an African American man dominating voting among blacks, the young and highly-educated voters and a white woman winning older voters, Hispanics and the white working class. Regardless of whether Barack Obama or Hillary Clinton is the nominee, the Democratic candidate’s first order of business will be reuniting party supporters against Republican John McCain. Many trends favor Democrats, including increased support among Latinos and voters under 30. But states that have supported George W. Bush are gaining in population and will gain electoral votes by 2012. As the American electorate changes shape, the big question is which party stands to gain the most.
By Alan Greenblatt

In the News: New York City’s Suit Against Gunmakers Dismissed

The Second U.S. Circuit Court of Appeals ruled against New York City in its lawsuit against the gun industry, asserting that gunmakers are protected from third-party litigation. Filed in 2000, the suit charged that gunmakers and distributors knowingly provided illegal markets with weapons. The manufacturers claimed that under the Protection of Lawful Commerce in Arms Act, they could only be charged for violating state or federal statutes in their sales and marketing practices. The court ultimately rejected the city’s contention that gunmakers had violated the state’s public nuisance law by poorly managing transactions with retailers, thereby enabling criminals to obtain firearms and threaten public safety.

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In the News: Austrian Confesses to Imprisonment and Incest

A 73-year-old Austrian man confessed to fathering seven children with his daughter Elisabeth, whom he imprisoned in a windowless basement cell in his home since 1984. Now 42, Elisabeth was reportedly sexually abused while she lived in captivity with her three children, while Josef Fritzl, her father, and mother, who claimed to be unaware of the situation, raised her three other children. Fritzl currently faces up to 15 years in prison on charges of rape. However, officials have launched an investigation into the death of Elisabeth’s seventh child, who died in infancy. The child’s burnt remains were discovered in a furnace. If charged with “murder through failure to act,” Fritzl could be sentenced to up to 20 years in prison. Family members were recently reunited at a clinic where psychiatrics will oversee their recovery.

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In the News: Higher Tuition Doesn’t Improve Achievement

A new report questions whether increased tuition expenses at colleges and universities translate into higher student achievement. Although schools say they are raising rates to ensure quality education, most of the revenue generated is not spent on instructional costs, according to the Delta Cost Project, a Washington-based nonprofit. The money is instead invested in other operating expenses such as research, public outreach and financial aid. While tuition rates continue to rise, the United States achieves only 54 percent degree completion, substantially lower than the international average among industrialized nations, according to the Organization for Economic Cooperation and Development.

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Overview of This Week’s Report: “Cyberbullying”

By Thomas Billitteri

The episodes are hurtful, ugly – and sometimes deadly. In Lakeland, Fla., a group of teenagers records the beating of another teen and threatens to show the video on the Internet. The local sheriff says the attack was in retaliation for online trash-talking by the victim.

At a high school near Pittsburgh, an anonymous e-mail list features sexually explicit rankings of 25 female students, names and photos included.

In suburban Dardenne Prairie, Mo., near St. Louis, 13-year-old Megan Meier hangs herself after receiving cruel messages on the social-networking site MySpace. She thinks the messages are from a boy she met online, but the messages are a hoax.

In Essex Junction, Vt., 13-year-old Ryan Patrick Halligan kills himself after months of harassment, including instant messages calling him gay. “He just went into a deep spiral in eighth grade,” said his father, who advocates a state law forcing schools to develop anti-bullying policies. “He couldn’t shake this rumor.”

The cases, albeit extreme, highlight what school officials, child psychologists, legal experts and government researchers argue is a fast-spreading epidemic of “cyberbullying” – the use of the Internet, cell phones and other digital technology to harass, intimidate, threaten, mock and defame.

Experts say cyberbullying has become a scourge of the adolescent world, inflicting painful scars on youngsters and vexing adults unable to stop the abuse. While many instances are relatively harmless, others can have serious, long-lasting effects, ranging from acute emotional distress, academic problems and school absenteeism to violence, a desire for revenge and vulnerability to sexual predation.

Studies show cyberbullying affects millions of adolescents and young adults and can be more prevalent among girls than boys, especially in the earlier grades. The Centers for Disease Control and Prevention last year labeled “electronic aggression” – its term for cyberbullying – an “emerging public-health problem.” Still, a reliable profile of cyberbullying is difficult to construct. Research is in its infancy, experts who measure online abuse define it in different ways and many incidents are difficult to tally accurately. Studies leave little doubt, however, that cyberbullying is growing, as the following small sampling of recent research makes clear:

* Roughly a third of teens who use the Internet said they’d received threatening messages, had e-mail or text messages forwarded without consent, had an embarrassing picture posted without consent, had rumors about them spread online, or experienced some other kind of online harassment, according to the Pew Research Center.

* About 9 percent of respondents ages 10 through 17 said they were victims of threats or other offensive behavior, not counting sexual solicitation, that was sent online to them or about them for others to see, according to a 2005 University of New Hampshire survey. That rate was up 50 percent from a similar survey five years earlier.

* More than 70 percent of heavy Internet users ages 12 through 17 – mostly girls – said they had experienced at least one incident of online intimidation via e-mail, cell phones, chat rooms and other electronic media in the previous year, according to a national survey posted on a teen Web site in 2005 by Jaana Juvonen, a psychology professor at the University of California at Los Angeles. A fifth of respondents reported seven or more incidents.

Some cyberbullies are angry loners or misfits, sometimes seeking revenge for having been bullied themselves. But experts say it is common for online abusers to be popular students with plenty of self-esteem who are trying to strengthen their place in the social hierarchy. They do it by intimidating those they perceive to have less status.

“It’s not really the schoolyard thug character” in some cases, says Nancy Willard, executive director of the Center for Safe and Responsible Internet Use, a research and professional development organization in Eugene, Ore. “It’s the in-crowd kids bullying those who don’t rank high enough.”

What fuels cyberbullying is “status in schools – popularity, hierarchies, who’s cool, who’s not,” says Danah Boyd, a fellow at the Berkman Center for Internet and Society at Harvard Law School who studies teens’ behavior on MySpace, Facebook and other social-networking sites. Peer pressure for status is further aggravated by adult pressure on teens to succeed, which can breed a cruel game of one-upmanship, Boyd says. “That pressure exerted by parents and reinforced and built out in peer groups is sort of the Petri dish for bullying.”

Of course, bullying itself is nothing new. In some respects, cyberbullying is simply a new manifestation of a problem that in earlier days played out chiefly in playground dustups and lunch-money shakedowns.

What’s new is the technology. More than 90 percent of teens are online. More than half of online teens have profiles on social-networking sites. And cell phones – many with photo and instant-messaging capabilities – are ubiquitous. The rise of networking sites, personal Web pages and blogs brimming with the minutiae of teen antics and angst has helped to create a rich climate for cyber mayhem: locker-room photos snapped with cell phones and broadcast on the Internet, fake profiles created on social-networking sites, salacious rumors spread in chat rooms, threats zapped across town in instant messages.

Child advocates also tie the increase in cyberbullying to a rise in incivility in the broader culture, from gratuitous insults on popular TV shows like “American Idol” to cynical sniping on the presidential campaign trail.

“I think the culture is angrier,” says Mark Weiss, education director of Operation Respect, a nonprofit group in New York City founded by folk singer Peter Yarrow (a member of the legendary trio Peter, Paul and Mary) that promotes safe and compassionate educational climates. While kids have always picked on each other, Weiss says “the virulence is greater” today than in past generations.

“It’s more intense, it might be more widespread, and I think you see more of it. The things on TV, the laugh tracks of situation comedies, it’s all about making fun of each other and putting each other down, and reality TV is all about humiliation.”

Cyberbullying has impelled lawmakers, especially at the state level, to either pass anti-bullying laws that encompass cyberbullying or add cyberbullying to existing statutes. Some laws are propelled by a mix of concern about electronic bullying and online sexual predators.

But using laws and courts to stop cyberbullying has been tricky and sometimes highly controversial. “There’s a big conflict in knowing where to draw the line between things that are rude and things that are illegal,” says Parry Aftab, an Internet privacy and security lawyer who is executive director of wiredsafety.org, an Internet safety group in Irvington-on-Hudson, N.Y., that bills itself as the world’s largest.

School officials, for instance, must negotiate the treacherous shoals of cyberbullying content transmitted by a student who is off school grounds. Legal precedents on student expression allow educators to suppress speech that substantially disrupts the educational process or impinges on the rights of others. Some argue that school officials’ authority to regulate cyber communication stops at the schoolhouse door, while others say they should regulate it when it affects the school climate.

“Even when it’s off campus, the impact is coming to school in the form of young people who have been so tormented they are incapable of coming to school to study, which leads to dropouts, fights, violent altercations and suicide,” says Willard, a former attorney and former teacher of at-risk children. “It has an incredibly long-lasting effect on the school community.”

But the law on that question can be confusing, and the U.S. Supreme Court has yet to decide a case involving student Internet speech. Trying to regulate what students do or say on their home computers or in text messages sent from the local mall could wind up trampling students’ constitutional rights or the rights of parents to direct their children’s upbringing as they see fit, say free-speech advocates.

“There are more questions than answers in this emerging area of law,” David L. Hudson Jr., research attorney for the First Amendment Center, a free-speech advocacy group, noted recently.

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