As a result of our work, Congress and government investigators have pressed the Defense Department to fix flaws that have prevented troops with TBIs from being properly diagnosed and treated.

In January, Sen. Claire McCaskill, D-Mo., questioned the Pentagon’s decision to deny cognitive rehabilitation therapy to troops with brain injuries. Her inquiry came after a story we did about how the Pentagon based its decision not to pay for such care on a much-criticized report from the ECRI Institute. Following the story and McCaskill’s inquiry, the Pentagon solicited the help of the Institute of Medicine, which released a report in October urging the Defense Department to do more research on the therapy before offering it more broadly.

Investigators at the U.S. Government Accountability Office have also scrutinized military programs developed to address brain injuries. In a February report, the GAO said that the Pentagon’s Defense Centers of Excellence was plagued by weak leadership, uncertain priorities and flawed accounting. The DCOE, which was created after a 2007 Washington Post series exposed the poor living conditions of concussed troops at Walter Reed Army Medical Hospital, couldn’t explain exactly how much taxpayer money it received or how it was spent, the GAO report said.

In March, the Army responded to a story we published last year about how soldiers had been denied Purple Hearts after suffering concussions on the battlefield. The Army issued new guidance, making it easier for brain-injured soldiers to get recognition.

Among the reasons the military has struggled to treat brain-injured troops, one of the most obdurate is a lack of neurologists, according to interviews and documents we obtained earlier this year. Policies issued in June 2010 requiring soldiers to receive a comprehensive evaluation when they suffer three or more mild traumatic brain injuries in one year have intensified the need for qualified doctors.

Plus, as we reported in May, more than half of all Iraq and Afghanistan veterans treated in Department of Veterans Affairs hospitals since 2002 have been diagnosed, at least preliminarily, with mental health problems.

One such veteran is Brock Savelkoul, a troubled young man who survived a blast in Iraq. Back home in North Dakota, he embarked on an equally harrowing journey that ended in an armed standoff with local law enforcement officers, who spent hours persuading him not to commit suicide.

Savelkoul, who we featured in a Kindle Single earlier this year, was one of about 300 troops examined in a study conducted by then-Lt. Col. Mike Russell, the Army’s leading neuropsychologist. Russell presented his findings in November 2009 and concluded that a computer test being used to evaluate whether soldiers had suffered concussions was “only slightly better than a coin toss.”

Russell was referring to the Automated Neuropsychological Assessment Metrics, or ANAM, which the military has given to 1 million troops since 2008 in response to an order from Congress.

Last month, we published a story about how the military came to spend $42 million on the ANAM program, despite the fact that the test was never scientifically proven to detect brain injuries. As part of our investigation, we released a withering report on the ANAM that Russell delivered to members of Congress, which was not previously available to the public. In his critique, Russell lambastes nearly every aspect of the program, saying that “the selection of ANAM was nepotistic, and the long delay in examining alternative instruments is baffling.”

Following our story, McCaskill began an investigation into contracts surrounding the ANAM program. Rep. Bill Pascrell, D-N.J., co-chairman of the Congressional Brain Injury Task Force, proposed an amendment to the 2012 National Defense Authorization Act to help fix the beleaguered testing program, but it was pulled from the legislation. Pascrell is now pushing for a large increase in funding for the military’s TBI services in this year’s appropriations bill.

This post appears courtesy of ProPublica.

TBI: When Blasts Damage the Brain

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First, there’s the still-to-come multi-state settlement over alleged fraud on the part of the country’s five largest mortgage servicers. That’s the settlement being brokered by a coalition of state attorneys general and once touted as homeowners’ best bet for redressing banks’ flaws in foreclosure and mortgage documentation. Over the past year, one story after another declared such a deal was imminent, but the details — thetotal price tag, the deal’s framework, and the expected date — have continually been changing.

Earlier this month, the Des Moines Register reported Iowa Attorney General Tom Miller — a point man for the attorneys’ general probe — as saying that the final deal should be complete before Christmas and would include a measure to reduce the total debt owed by underwater homeowners. No deal has yet been announced. Miller wouldn’t disclose a dollar figure on the size of the settlement — or whether California, one of the hardest-hit states, would participate.

Over the course of the year, some state attorneys general seemed to lose faith in the coordinated effort, voicing concerns that the eventual settlement would be too easy on the banks.

California Attorney General Kamala Harris signaled her hesitation too, as did the attorneys general of New York, Delaware, Nevada,Massachusetts, Kentucky and Minnesota. These state attorneys general — many of whom have filed their own suits against major servicers, foreclosure processing firms, and other players – questioned whether the settlement would limit their ability to take more aggressive action against foreclosure abuses in their states and either expressed doubts about whether they’d sign on to the final settlement or pulled out of the talks altogether.

Banks, meanwhile, have pushed for the settlement to include broader releases from legal liability over mortgage-related abuses. According to a recent Wall Street Journal piece, they’ve tried to make their participation in the settlement contingent on being shielded from the possibility of lawsuits brought by the new Consumer Financial Protection Bureau.

Also still to be determined? An official to monitor the banks and servicers and ensure they comply with whatever agreement is eventually reached.

Meanwhile, federal banking regulators have also begun to act. In April, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve accused eight mortgage servicers and two third-party mortgage processing firms of “unsafe and unsound” foreclosure practices and ordered them to come up with a plan to prevent the same errors going forward. (Read the orders they received.) But the revamp plans drawn up by the banks are kept confidential. And no financial penalties have been issued, though regulators have said that they’re still to come.

Regulators also launched an interagency foreclosure review program [PDF] this year to identify and compensate homeowners who were wronged in the foreclosure process. The plan is to review sample loan files pulled from the files from 14 largest mortgage servicers, as well as files from homeowners who submit a request for a review.

The regulators in charge of the program have so far declined to disclose information on key aspects of the review, such as what kinds of compensation are available to homeowners, how compensation would be calculated, and for what specific offenses. (Homeowners with questions can see our FAQ on the reviews to see whether they’re eligible for review and how to apply.)

The reviews themselves are being conducted by outside consulting firms that will be supervised by the regulators but paid by the banks. As we’ve reported, some lawmakers have raised concerns about the experience of the reviewers and whether they will truly be able to operate independently of the banks.

Finally, it bears mentioning that despite the efforts on both the federal and state level to address the systemic failures of banks and mortgage servicers, errors are continuing – and they’re still causing wrongful foreclosures.

The only subset of homeowners who seem to have gotten a break — or redress for botched foreclosures — is military families. Earlier this year, the Justice Departmentsettled lawsuits against subsidiaries of Bank of America and Morgan Stanley over allegations that they wrongfully foreclosed on active duty service members, in violation of a law that specifically offers them greater protection from foreclosure. As part of that settlement, the two companies apologized and paid a combined penalty of $22 million, plus compensation to certain service members who suffered wrongful foreclosures.

This article appears courtesy of ProPublica.

As reporters covering the beat know, Wall Street is a reluctant participant in introspection. Journalists investigating the Street have to pierce a code of omertà, borne of the fear of lawsuits and federal investigations. No one wants to have the reputation of being a snitch in an industry where hiring and bonuses are based on relationships as much as quarterly results. The truth is even more tightly held when it hides the origins of financial disaster, but even in the best of times, these are not, by nature, navel gazers. Traders and market makers are like sharks, always wanting to move forward, onto the next deal. There is no percentage in looking back.

All you need to know about the moral universe Margin Call inhabits is on display in the opening scene of the movie. The downturn has begun. The firing squad — represented by two women in identical business suits — arrives on the trading floor trailed by underlings carrying cardboard boxes to cart away personal effects. When they come into view, a series of swift reactions plays across the face of Will Emerson, a senior trader acted brilliantly by Paul Bettany. First fear. Then dismay. And finally, relief and dismissal. After 80 percent of the floor is axed, Emerson’s boss, Sam, a wan Kevin Spacey, gives a pep talk to the traders left standing. “They were good. You are better. Now they are gone. They are not to be thought of again.”

Among the casaulties is the risk manager for the trading group, Eric Dale, played by Stanley Tucci. On the way out the door, Dale tells his young protege, Peter Sullivan, that he has been working on something important. As the elevator closes, he hands Sullivan a zip drive and says cryptically, “Be careful.”

Jeremy Irons as John Tuld in Margin Call. (Walter Thomson/Roadside Attractions)

Sullivan, played by Zachary Quinto, who also helped produce the movie, waits until the office clears for the night and then dives into the figures. To his horror, he discovers the bank is massively overleveraged. If trends continue, projected losses are much greater than the value of the firm. Upon learning how dire the situation has become, the CEO John Tuld, portrayed by a scene-chewing Jeremy Irons, says, “So what you are telling me is that the music is about to stop and we are going to be left holding the biggest bag of oderous excrement ever assembled in the history of capitalism.”Sullivan is the questioning heart of Margin Call. He has a doctorate in engineering with a speciality in propulsion — literally a rocket scientist. And like so many of the best and brightest of his generation, he turned to Wall Street, where Chandor clearly believes his gain is society’s loss. When one of his superiors asks Sullivan why he has foresaken engineering, he responds: “It’s all just numbers really, just changing what you are adding up, and to speak freely, the money here is considerably more attractive.”

Sullivan operates in the constricted space of the Wall Street risk manager. Risk managers and accountants are among the few who actually know what the numbers mean. They see the whole picture. It’s a running joke through the movie that Sullivan’s bosses, right up to the CEO, don’t understand the financial wizardry behind the products they make and sell. When confronted with Sullivan’s analysis, Sam says, “Oh Jesus, you know I can’t read these things. Just speak to me in English.”

The risk manager is not in sales, which is the heart and soul of the institution. He or she only offers recommendations. Throughout Margin Call there are a number of references to warnings unheeded. And indeed, in the real world, the success of investment banks at subverting their risk management rules correlated nicely with how badly they fared when the crisis hit. In the ultimate irony, when it’s time for someone to take the fall for the firm’s risk taking, it’s the head of risk management, played by Demi Moore who is pushed to the scaffold.

Sullivan and his side-kick Seth, played by Penn Badgley, are still new enough to the system to be doubtful of its utility. Seth is enamored with the money Wall Street offers and particularly impressed by his boss Will Emerson, who pulled down $2.5 million the previous year. They briefly wonder whether that’s “right,” but push the unwelcome thought away unanswered.

When Emerson tells the eager young men that “you learn to spend what is in your pocket” and that most of his money is gone, they are incredulous. He itemizes his expenses for them, including $76,520 for hookers, booze and dancers. Their adulation only increases when he admits he claimed most of that back as entertainment expenses.

Later when Seth bemoans the fact that normal people will be hurt by their actions, Emerson’s ferocious response is shocking both for its amorality and its kernels of truth.

“If you really want to do this with your life you have to believe that you’re necessary. And you are. People want to live like this in their cars and their big fucking houses that they can’t even pay for? Then you’re necessary. The only reason they all get to continue living like kings is because we’ve got our fingers on the scales in their favor. I take my hand off and the whole world gets really fucking fair really fucking quickly and nobody actually wants that. They say they do but they don’t. They want what we have to give them, but they also want to play innocent and pretend they have no idea where it came from. That’s more hypocrisy than I’m willing to swallow. Fuck them. Fuck normal people.”

Faced with the pile of excrement on the books, the archly named Tuld (Lehman Brothers CEO was Dick Fuld) decides the bank must unload it, and quickly, before customers wise up. At this point, the movie could just as easily be called, “Damage Control: When Greed Turns to Fear.”

Sam tries to talk Tuld out of his plan. “If you do this, you will kill the market for years. It’s over. And you are selling something that you know has no value,” he says.

Tuld responds with the excuse every Wall Street executive used when investigators came calling after the shit hit the investors: “We are selling to willing buyers at the current fair market price so that we may survive.”

In the real world, the buyers were not as sophisticated and the deals not as transparant as bankers claimed.

The House always wins, Emerson tells his young charges. The corollary is that everybody is for sale. Indeed, anyone who has qualms in the movie finds the right price for their acquiesence. In this world, traders earn bonuses for screwing their customers. Tucci’s character is told he can lose his health care and stock options — or keep them while sitting quietly in a room for a day at $176,476 an hour. “It didn’t seem like much of a choice,” he says.

Beyond the sheer entertainment value of the movie, Chandor’s biggest coup is his willingness to indict a system rather than simply blame the individuals within it. Ultimately, Margin Call is the story of a Wall Street that has evolved from an economic helpmate to an economic predator.

This post appears courtesy of ProPublica.

While Bair said that President Barack Obama’s “heart is in the right place,” she criticized his economic team for taking controversial steps to aid banks while, in Nocera’s words, being “utterly unwilling to take any political heat to help homeowners.”

We have been tracking Obama’s struggling home loan modification program since 2009. Bair’s analysis of the government’s approach is very much in line with what we’ve reported. From the beginning, the program was watered down and stripped of key enforcement measures, after President Obama backed away from his campaign promises to force banks to modify mortgages. Treasury’s oversight of the program has been lax and characterized by deference to banks.

The government has only recently begun to penalize several major banks for their byzantine, error-prone modifications. As we’ve reported, homeowners have often been forced to deal with lost documents, poor communication and mistaken denials. As of May, approximately 730,000 homeownershad received permanent loan modifications — a fraction of the millions of homeowners that the Obama administration promised to help.

In criticizing the industry’s approach, Bair became the first regulator to speak so frankly about the issue.

In her interview, Bair, a moderate Republican appointed by President George W. Bush, described a long-standing industry resistance to granting home loan modifications — a resistance that she first tried to overcome, unsuccessfully, just before the housing bubble burst in 2007.

After she took over the FDIC in 2006, Bair said, she realized that “predatory” loaning practices — like adjustable rate mortgages whose rates jumped steeply after an introductory period — had become mainstream. Bair held a series of meetings with mortgage industry executives. The goal was to forestall wide-scale foreclosures by convincing debt servicers to modify loan payments when homeowners went into default.

“After doing some arm-twisting,” Nocera wrote, “Bair felt she had extracted a commitment” that servicers would try to restructure mortgages — in particular, that they would be willing to freeze adjustable-rate mortgages at the original payment level, rather than the higher “reset rate,” as Nocera reported in 2007.

But later that year, after the housing market had crashed, Bair learned from a survey of mortgage servicers that those conversations had been ignored.

“It showed that like 1 percent of those reset mortgages were being restructured,”  Bair told Nocera. “They would just push people into foreclosure.”

She told Nocera that she felt that she had been lied to, and that what mortgage servicers had promised in their meetings with the FDIC had simply been “happy talk.”

As we’ve reported, part of the problem with the home loan modification process is that mortgage servicers have few incentives to help homeowners — or to save investors money. The servicers, the largest of which are the nation’s biggest banks, don’t own the vast majority of the loans they handle. That means that they don’t bear the loss if the loan goes to foreclosure. In fact, servicers often make money from foreclosure fees.

Bair pointed out this same problem in an op-ed in the Washington Post last week that echoed her address to the National Press Club in June. She noted that the servicers’ short-term incentives to foreclose on homes were wildly out of line with everyone’s long-term benefit—including their own:

[Mortgage servicers'] under-investment in servicing has led to a huge inventory of foreclosed properties and mounting litigation that is likely to cost them far more than any savings they achieved by cutting corners.

In Bair’s account, the Treasury’s prioritization of the well-being of financial institutions over the well-being of homeowners has hobbled the government’s foreclosure response since the beginning of the crisis. As we reported in February, Geithner’s Treasury undermined a 2009 attempt to put more pressure on servicers to modify mortgages.

Bair told Nocera that when she went to the Treasury in 2007 to encourage them to put pressure on mortgage servicers, she received little response. The government, she said, “thought maybe I was overstating the problem and that it wasn’t going to be that big a deal.” Instead, Bair gained a reputation as “difficult.”

In her recent Washington Post op-ed, Bair wrote:

Government efforts to promote modifications … have gradually moved in the right direction but have remained behind the curve. At the height of the crisis in the fall of 2008, when fear over where the bottom was ruled the markets, policymakers were supremely focused on the short-term priority of preventing the failure of the nation’s largest financial companies. Government assistance to financial institutions took a variety of forms, amounting to a total commitment of almost $14 trillion by the spring of 2009. While those actions were necessary to prevent an even bigger economic catastrophe, we still have not addressed the No. 1 cause of both the crisis and the subpar recovery we are in: a stubborn refusal to deal head-on with past-due and underwater mortgages.

Starting in September, Bair will be working for Pew Charitable Trusts (a ProPublica supporter)—a move that earned her plaudits from the Wall Street Journal’s Deal Blog, which noted, “Here’s a bit of shocking news: A Washington regulator is NOT going to work for the industry she used to rule over.” She has also secured a book deal for her own account of the financial crisis, “Bull by the Horns: What Main Street Must Do To Fix Wall Street.”