DealBook: JPMorgan’s 4th-Quarter Profit Jumps 53% to $5.7 Billion

JPMorgan Chase touted a strong quarter of earnings, although the bank opted to slash the chief executive’s pay in light of a multi-billion dollar trading loss last year.

The bank reported a record profit of $5.7 billion for the fourth quarter, up 53 percent from the previous year. Revenues, too, were strong, rising 10 percent to $23.7 billion.

“The firm’s results reflected strong underlying performance across virtually all our businesses for the fourth quarter and the full year, with strong lending and deposit growth,” chief executive Jamie Dimon said in statement.

But the year was also clouded by a multi-billion dollar trading loss stemming from a bad bet on derivatives. JPMorgan continues to unwind the bungled trade that had racked up $6.2 billion in losses through the third quarter of 2012. JPMorgan said it “experienced a modest loss” during the recent quarter.

In light of the trading losses, the bank’s board opted to reduce Mr. Dimon’s total compensation. That decision was driven by a desire to hold the chief executive accountable for some of the oversight failings that led to the bungled bet, according to several people close to the board.

The board reduced Mr. Dimon’s total compensation for 2012 to $11.5 million from $23 million a year before. While Mr. Dimon’s salary remained the same at $1.5 million, his incentive compensation was slashed to $10 million, paid out in restricted stock.

Despite the overhang, JPMorgan managed to produce record profit, as the economy and credit conditions improved. The bank continued to reduce the money it set aside for potential losses, adding to profits overall. And the bank notched gains in all its major divisions, showing strength in both consumer and corporate banking operations.

Despite the rocky market conditions and uncertainty related to the budget impasse, the corporate-focused businesses reported nice gains. Investment banking fees jumped 54 percent to $1.7 billion, with debt and equity underwriting. Revenue in the commercial banking group hit $1.75 billion, with the tenth consecutive quarter of loan growth.

Income in JPMorgan’s asset management group rose 60 percent to $483 million. JPMorgan has been ramping up the business, as other riskier ventures get crimped by new regulation.

Like other big lenders, the bank’s earnings have also been bolstered by a surge in mortgage lending, driven in part by a series of federal programs that have helped drive down interest rates. As homeowners seize on the low rates, JPMorgan is experiencing a flurry of refinancing applications. The bank is also making bigger gains when those loans are packaged and eventually sold to big investors.

Overall, the mortgage banking group notched profit of $418 million, compared with a loss of $269 million in the previous year.

But those low interest rates also present a challenge for JPMorgan, which is dealing with glut of deposits. The bank reported average total deposits of $404 billion, up 10 percent from a year earlier.

As deposits pile up, the situation is weighing on profitability. The net interest margin, a key measure of a bank’s profitability, continued to shrink, dropping to 2.44 percent from 2.76 percent the previous year.

The bank also continues to face a slew of legal problems.

In the last year, JPMorgan has worked to move beyond some of the issues stemming from the mortgage crisis. Along with competitors, JPMorgan hashed out deals with federal regulators over claims that its foreclosures practices may have led to wrongful eviction of homeowners. Earlier this month, JPMorgan and other agrees $8.5 billion settlement with the Comptroller of the Currency and the Federal Reserve, which ends a costly and flawed review of loans in foreclosure ordered up by the regulators in 2011. The bank spent roughly $700 million this quarter on costs associated with the review.

Still, the bank is dealing with other cases that could prove costly. The New York attorney general, Eric T. Schneiderman, filed a lawsuit against the bank related to Bear Stearns, the troubled unit the JPMorgan bought in the depths of the financial crisis. In the lawsuit, filed in October, the attorney general claimed JPMorgan defrauded investors who bought securities created from shoddy mortgages.

JPMorgan was also hit with two enforcement actions earlier in this week, the first formal sanctions from federal banking regulators over the bank’s multibillion trading loss. Regulators from the Federal Reserve and the Comptroller of the Currency, identified flaws throughout the bank, citing failures in the bank’s ability to asses how big losses might swell as a result of the complex trades. In addition, regulators found that bank executives did not adequately inform board members about the potential losses.

Read More..

SoCal Edison destroyed downed poles before inspection

A state probe into the widespread power outages caused by a furious 2011 windstorm was unable to determine whether toppled utility poles met safety standards because Southern California Edison destroyed most of them before they could be inspected.

The winds that roared through the San Gabriel Valley knocked down hundreds of utility poles, snapped cables and uprooted scores of trees, leaving nearly a quarter of a million Edison customers without power, some for a full week.

In a report released Monday, the California Public Utilities Commission found that at least 21 poles were unstable because of termite destruction, dry rot or other damage before tumbling over in wind gusts of up to 120 mph on Nov. 30 and Dec. 1, 2011.

But more than 75% of the 248 Edison poles that were knocked down in the storm were destroyed by the utility before they could be inspected, a violation of commission rules.

"At the onset of [power] restoration efforts, preservation of failed poles was not made a priority by Southern California Edison," the report says.

Of the 248 poles that failed, partial segments of only about 60 poles were collected and delivered for analysis by commission engineers — the remaining poles were "discarded by SCE staff," according to the report.

Efforts to reconstruct downed poles, many of them sliced into segments smaller than 10 inches, "were immensely hindered by the nature of SCE's collection and cataloging methodology," investigators reported.

Edison workers scattered small pole segments in various collection bins, "making it nearly impossible to determine which failed pole they belonged to," according to investigators.

A spokesman for the utility declined to comment on the report, saying the utility was in the process of formulating a statement.

Commission investigators also found that at least 17 wire pole support systems did not meet safety standards.

The report calls on Edison to update its emergency response procedures and test them on a yearly basis.

Officials will consider formal enforcement actions, including financial penalties, if Edison does not comply.

In a statement Monday, U.S. Rep. Judy Chu (D-Monterey Park) — who represents Pasadena, South Pasadena, San Marino and other San Gabriel Valley cities — called for "immediate action" to ensure the issues raised in the report would not recur.

"This report confirms that by following such regulations and by asking for mutual assistance, power could have been restored more quickly," Chu said.

Former Assemblyman Anthony Portantino, who until recently represented part of the affected area, said the report "confirms what everyone who lived through the windstorm knew from personal experience, that Edison was not prepared and public safety and consumers suffered as a result."

State Sen. Carol Liu (D-La Cañada Flintridge) said the report raises fears that Edison equipment might sustain similar damage in future disasters.

"I am concerned that service and safety doesn't seem to be their priority," said Liu, who is married to California Public Utilities Commission President Michael Peevey.

The report comes less than a year after an Edison-commission study determined the utility had inadequate plans in place for emergencies and communicating with the public. The study, by Maryland-based Davies Consulting, also said the utility could have shortened power restoration time by one day or more by doing a better job of tracking and preparing for bad weather.

At the same time, the consultant commended Edison for having adequate staffing and managing a response that left no workers or customers injured.

joe.piasecki@latimes.com

Read More..

Software That Gives a Voice to What You Love (and Hate) About Work

Every human-resources manager not trapped in some Mad Men time warp will tell bosses and employees alike to ask for, and offer, feedback on a frequent basis. Of course outside of infrequent performance reviews, it rarely happens. With inspiration from Patagonia founder Yvon Chouinard, San Francisco-based startup 15Five was founded to make sure it does, and not just once a year, but once a week.

The 15Five online service creates five-question weekly reports that “take 15 minutes to write and five minutes to read,” hence the name. “We’re taking this very complicated challenge of gathering feedback from employees and generating it in a way that they enjoy doing, and doesn’t take much effort or time,” says 15Five founder David Hassell. “And we make sure the most critical information flows to the right people in the organization.”

The idea for 15Five, Hassell says, came from a solution legendary outdoorsman Chouinard devised to reconcile two seemingly conflicting parts of his work life: the need to spend a good chunk of his time hitting the California surf or hiking Yosemite to test products and come up with new ones, and keeping close tabs on the needs of Patagonia as a growing company.

Chouinard began asking his employees to spend 15 minutes writing a short report with negative and positive feedback on their work that he could read in five minutes. The quick summaries were perfect reading during a lull on a Rocky Mountain hiking trail, and allowed Chouinard to do triage on pressing problems, as well as promote the latest successes.

Hassell took Chouinard’s basic concept and built software to automate the process of writing a 15-five report. Every week, employees fill out a form with five questions chosen by the CEO. Questions can range from “How is morale?” to “What’s the biggest challenge you faced this week?” Answers can be as long or as short as employees want, and they are encouraged to leave both positive and negative feedback.

Department managers then review their employees’ reports, and can ask questions or leave comments. As they read each report, managers flag specific employee responses to build a larger report for the CEO. The idea is that feedback trickles up from the lowest-level employee to the CEO, which helps employees feel that their voice is heard.

Non-profit Startup Weekend‘s CEO Marc Nager says the reports help him keep attuned to the daily pulse of his company. “Before our weekly hands-on meeting, I spend an hour reading our 15Five reports so I know what we need to address and fix,” he says. One of Startup Weekend’s 15Five questions is “What do you wish had more time for this week?”, which Nager says helps the company find new ideas and projects that fall within its mission of promoting entrepreneurialism.

15Five is currently working on version 2.0 of its software, and Hassell says there will be easier ways to digest employees’ feedback to get an even better sense of what’s going on in the company, though he wouldn’t give specific details. To get there, 15FIve has raised $1 million from Yammer CEO David Sacks along with angel investors Ben Parr, Jason Calacanis, John Hamm, Matt Brezina, and Ben Ling.

The goal of it all, Hassell says, is to help businesses run more efficiently by spending less time fussing over office disputes, and more time on the activities that make their employees productive and happy. It’s something Chouinard would no doubt get behind, especially if it means more time to surf.

Read More..

Variance Films Picks Up Jay-Z Produced ‘An Oversimplification of Her Beauty’

NEW YORK (TheWrap.com) – Variance Films has acquired North American distributions rights to “An Oversimplification of Her Beauty,” Terence Nance‘s debut film executive produced by Jay-Z, Dream Hampton, Joy Bryant and comedian Wyatt Cenac.

Variance will release the movie in theaters April 12 while Cinema Guild handles downstream releases, such as DVD and digital.

Nance’s film explores the relationship between a young man and woman, as the man divines whether it is romantic or platonic. Nance stars alongside Namik Minter.

Mixing live action and animation, the film debuted at Sundance in 2012 and went on to screen at film festivals across the country.

“I know it’s a bit cliché to say ‘you’ve never seen anything like this before’, but if you’ve caught the film, I think you’ll agree that you’ve never seen anything like this before,” Variance Films founder Dylan Marchetti said in a statement. “Somehow, Terence has managed to blend documentary, narrative, ten different styles of animation, and a short film while telling a story that is immediately relatable to anyone who has ever loved someone who didn’t love them back, and frankly, that’s just about everyone.”

Founded in 2008, Variance is a New York-based independent distributor that released Spike Lee’s “Red Hook Summer” and will release Dave Grohl’s upcoming documentary “Sound City.”

Movies News Headlines – Yahoo! News

Read More..

The New Old Age Blog: Study: More to Meal Delivery Than Food

What’s a simpler idea than Meals on Wheels? Older, lower-income people who have trouble driving, cooking or shopping — or paying for food — sign up with a local agency. Each day, volunteers or paid staff come by and drop off a hot lunch. Federal and state dollars and local charities foot the bill.

At the Mobile Meals of Essex headquarters in my town in New Jersey on a recent morning, staffers were stuffing slices of whole wheat bread, pints of low-fat milk and containers of sliced peaches into paper bags. Next, they would ladle the day’s entree — West Indian curried chicken with brown rice and broccoli — onto aluminum trays.

Drivers in vans would fan out through the county, from downtown Newark through the sprawling suburbs, delivering the meals to 475 clients.

The benefit goes beyond food, of course. When his clients answer the door, often using walkers and canes, “I ask them how their morning’s going,” said a driver, Louis Belfiore, who would make 31 stops this day. “I give them their meal, I say, ‘Have a good day.’ They tell me, ‘You have a nice day, too.’”

This may represent the only face-to-face social interaction some homebound people have in the course of a day. And if they don’t come to the door, a series of phone calls ensues. “We’ve had people yell back, ‘I’m on the floor and I can’t get up.’ It doesn’t happen only in commercials,” said Gail Gonnelli, the program’s operations director.

Meals on Wheels advocates have always believed that something this fundamental – a hot meal, a greeting, another set of eyes – can help keep people in their homes longer.

But they didn’t have much evidence to point to, until a couple of Brown University health researchers crunched numbers — from Medicare, states and counties, the federal Administration on Aging and more than 16,000 nursing homes — from 2000 to 2009, publishing their findings in the journal Health Services Research.

The connection they discovered between home-delivered meals and the nursing home population will come as welcome news (though not really news) to Meals on Wheels believers: States that spent more than the average to deliver meals showed greater reductions in the proportion of nursing home residents who didn’t need to be there.

The researchers call these people “low-care” residents. Most people living in nursing homes require around-the-clock skilled care, and policymakers have been pushing to find other ways to care for those who don’t. Still, in 2010 about 12 percent of long-term nursing home patients — a proportion that varies considerably by state — didn’t need this level of care.

“They’re not fully dependent,” explained a co-author of the study, Vincent Mor. “They could be cared for in a community setting, whether that’s assisted living or with a few hours of home care.”

That’s how most older people prefer to live, which is reason enough to try to reserve nursing homes for those who can’t survive any other way. But political budget cutters should love Meals on Wheels, too. For every additional $25 a state spends on home-delivered meals each year per person over 65, the low-care nursing home population decreases by a percentage point, the researchers calculated — a great return on investment.

“We spend a lot on crazy medical interventions that don’t have as much effect as a $5 meal,” Dr. Mor concluded. With this data, “we’re able to see this relationship for the first time.”

(Co-author Kali Thomas — herself a volunteer Meals on Wheels driver in Providence, R.I. — has compiled a state by state list, posted on the Brown University LTCfocus.org Web site, showing how much states could save on Medicaid by delivering more meals.)

Sadly, though, appropriations for home-delivered meals are not increasing. The program served more than 868,000 people in 2010, the latest numbers available. But federal financing through the Older Americans Act has been flat for most of the decade, while food and gas costs — and the number of older people — have risen.

Given current budget pressures, advocates hope they can just hold the line (the “sequester” cuts to the federal budget are still looming unless Congress and the White House can reach agreement on the debt limit and a spending plan). Already, “we’ve seen millions and millions fewer meals,” said Tim Gearan, senior legislative representative at AARP. “Cuts from five-day service to three-day service. A lot more frozen food, which can be inappropriate for people who can’t operate ovens and microwaves. It’s been hard to watch.”

My urban/suburban county, Ms. Gonnelli said, maintains a waiting list: There are always about 65 seniors who qualify for Meals on Wheels, but there is no money to provide the food.

It can be a big step for an older person or his family to acknowledge that they need this kind of basic help and apply. It must be difficult, I said to Ms. Gonnelli, who has run the program for 15 years, to tell applicants she can’t help feed them.

“You have no idea,” she said.

---

Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

Read More..

DealBook: Alibaba's Founder to Give Up C.E.O. Title, but Will Remain Chairman

After 14 years of building up the Alibaba Group into one of the biggest Internet companies in the world, Jack Ma is taking a step back from the chief executive role of the Chinese e-commerce giant.

But Mr. Ma isn’t leaving entirely; he will hold on to the role of executive chairman, he told DealBook in an interview on Monday. He plans to name his successor when his title change becomes effective on May 10.

He won’t be the only one to hand over some of the company’s reins. Mr. Ma said that most of Alibaba’s leaders “born in the 1960s” will pass their leadership responsibilities to younger colleagues, born in the 1970s and 1980s.

“We believe that they understand the future better than us, and then have a better chance of seizing the future,” he wrote in an e-mail to employees explaining his change in duties.

The shift is the biggest change yet at Alibaba in some time, as it continues to ready itself for the next chapter of its existence. Last week, the company said that it was cleaving itself into 25 smaller divisions — to give managers more flexibility.

And it follows the transformative deal that Alibaba struck with Yahoo last year, in which the Chinese company agreed to buy back about half of the stake in itself held by Yahoo, its American partner. Alibaba had long sought to repurchase the shares to help regain control over its corporate destiny.

For Mr. Ma, the decision to step back from day-to-day management was borne of several reasons. One of them was personal: the job is increasingly tiring.

“I’m 48. I’m no longer young enough to run such a fast-growing business,” Mr. Ma said in the interview. “When I was 35, I was so energetic and fresh-thinking. I had nothing to worry about.”

Come May, Mr. Ma will slide into the role of executive chairman, which he said would let him focus on broad strategic issues, as well as corporate development and social responsibility.

It is a move that the entrepreneur said had been in the works for some time. He has been training “a few candidates” among the younger generation for the chief executive position.

Speculation about who will take over is likely to focus on the heads of Alibaba’s biggest businesses, including Alibaba.com, an online market for small businesses; Taobao, an enormous consumer shopping site; and Alipay, an online payment platform.

Mr. Ma’s early departure will give his replacement time to grow into the role, Mr. Ma said. That could be important when Alibaba finally goes public, sometime down the road. Mr. Ma added that the exact timing or other details of an initial offering haven’t been determined.

Until then, Mr. Ma will remain a powerful figure within the company he founded.

“I will still be very active,” he said. “It is impossible for me to retire.”

Read More..

Chuck Hagel's opponents switched gears

WASHINGTON — For all the controversy over President Obama's choice for Defense secretary, many of Chuck Hagel's most outspoken critics were for the former Nebraska senator before they were against him.

In 2006, Sen. John McCain (R-Ariz.), who forged a close bond with Hagel over their shared service in Vietnam and penchant for bucking the Republican establishment, said, "I'd be honored to have Chuck with me in any capacity."

In 2007, Senate Republican leader Mitch McConnell acknowledged that many of Hagel's dire predictions about the Iraq war had come true. He praised Hagel at an Omaha fundraiser as "one of the premier foreign policy voices" and "one of the giants in the United States Senate."

Sen. Pat Roberts (R-Kan.) worked with Hagel for years on efforts to ease the embargo against Cuba and promote trade policies to help Midwestern farmers. He tolerated playful ribbing from Hagel when the University of Nebraska beat Kansas schools in football.

Now, McCain says he worries about his fellow Republican's "worldview." McConnell said, "I'm going to take a look at all the things that Chuck has said over the years and review that … in terms of his qualifications to lead our nation's military." And Roberts has said flatly that he won't back his onetime friend for the Pentagon post, citing "a lot of concern about Chuck."

Several factors are behind the opposition to Hagel, including the anger he caused among many Republicans by criticizing the George W. Bush administration's Iraq policies and by endorsing some Democrats for office.

At least in public, the opposition to his nomination has focused on remarks he's made on Israel and Iran, particularly one 2006 interview in which he said the "Jewish lobby intimidates a lot of people" in Congress. Critics have objected to his referring to the lobbying as "Jewish" rather than "pro-Israel."

Supporters note that Israeli leaders haven't voiced any such worries about Hagel, who has often called Israel "a close friend and ally." They say he's been the victim of a U.S. political landscape that has become not only more partisan but less tolerant of criticism of Israel. Particularly on the Republican side of the aisle, unwavering support for Israeli policies has become a litmus test over the last decade.

"The debate about the U.S. relationship with Israel has certainly moved to the right," said Bob Kerrey, a Nebraska Democrat who served alongside Hagel in the Senate until 2001. "You could oppose settlements in the 1990s," he said, referring to Israelis building on land beyond Israel's 1968 borders. "Not anymore."

A review of Hagel's history shows a worldview, particularly on the Middle East, that does not fit easily into current political divisions.

Shaped by a tour in Vietnam — where mine explosions left him with burns and shrapnel lodged in his chest — Hagel, 66, has long been a reliable if sometimes blunt voice for caution in using military force. He has called for engaging with America's enemies instead of isolating them and for a healthy but restrained defense budget.

He first ran for the Senate in 1996 on a pledge to increase defense spending, which had been cut sharply after the end of the Cold War. By the time he ran for his second term, defense spending had begun to soar in the buildup after the Sept. 11 attacks. In recent years he's called the Pentagon budget "bloated."

Hagel had been in the Senate barely a year when, during a Foreign Relations Committee hearing in 1998, he cited a "perception in the Arab world that we've tilted way too far toward Israel in the Middle East peace process."

But at the same time he was building ties to Israeli leaders. In December 2000, a surge of deadly violence threatened President Clinton's bid to seal an Israeli-Palestinian peace deal in the final weeks of his presidency. At the request of the incoming Bush administration, Hagel carried an urgent message to Israeli leaders.

In a private meeting at the Israeli defense ministry, Hagel assured embattled Prime Minister Ehud Barak that Bush would support the peace deal if he signed it. It was a crucial promise from the American president-elect, who was then little known in the Middle East. In the end, Palestinian opposition killed the peace bid.

Martin Indyk, then-U.S. ambassador to Israel and the only other person in the meeting, said Hagel was "very sensitive, sympathetic and most of all supportive. He helped to calm Barak."

In recent years, Hagel has rejected unilateral sanctions against Iran, arguing that they only inflame anger in the Muslim world, but has said he supports sanctions imposed in concert with U.S. allies. He has argued against military action to stop Iran from building a nuclear weapon but, in a September opinion article in the Washington Post, called for "keeping all options on the table, including the use of military force."

That skepticism about sanctions has a long history with Hagel. In 2001, he was one of two senators to vote "no" on renewing unilateral U.S. sanctions against Iran and Libya.

"Somebody has to give another point of view here," Hagel said at a Senate Banking Committee hearing in which he questioned whether the sanctions worked.

But at the same hearing, he invoked Israel's needs, saying, "I don't think you bring more security to Israel by this kind of policy — which, again, unless you can tell me otherwise, has not produced any results."

In a 2006 speech at the Brookings Institution, Hagel criticized U.S. boycotts of talks with Hamas, Iran, Syria and other foes, saying that approach impeded efforts to end crises in the region.

"I don't know how the world has gotten better" by the U.S. refusal to talk, he said. "Things have gotten worse by any measure. And so it tells me that we'd better take some serious review of our current policy."

Many of Hagel's words echo those of Obama, who, like many Israeli military leaders, is said to be reluctant to launch a military strike on Iran. Obama has imposed tough sanctions on Iran but resisted more severe measures pushed by some in Congress because they could weaken a broad coalition of nations — including China — that backs the measures currently in place.

Hagel's supporters say that in his two terms in the Senate — he now serves as chairman of the Atlantic Council, a think tank that promotes multilateralism — he was a consistent realist.

"The principles he came away with from Vietnam are still there," said Charlyne Berens, a University of Nebraska-Lincoln journalism professor who wrote a 2006 biography on Hagel. "He's been saying these things for more than a decade."

shashank.bengali@latimes.com

Read More..

The FBI Needs Hackers, Not Backdoors

Just imagine if all the applications and services you saw or heard about at CES last week had to be designed to be “wiretap ready” before they could be offered on the market. Before regular people like you or me could use them.

Yet that’s a real possibility. For the last few years, the FBI’s been warning that its surveillance capabilities are “going dark,” because internet communications technologies — including devices that connect to the internet — are getting too difficult to intercept with current law enforcement tools. So the FBI wants a more wiretap-friendly internet, and legislation to mandate it will likely be proposed this year.

But a better way to protect privacy and security on the internet may be for the FBI to get better at breaking into computers.

Whoa, what? Let us explain.

Whether we like them or not, wiretaps — legally authorized ones only, of course — are an important law enforcement tool. But mandatory wiretap backdoors in internet services would invite at least as much new crime as it could help solve.

Especially because we’re knee deep in what can only be called a cybersecurity crisis. Criminals, rival nation states, and rogue hackers routinely seek out and exploit vulnerabilities in our computers and networks — much faster than we can fix them. In this cybersecurity landscape, wiretapping interfaces are particularly juicy targets.

Every connection, every interface increases our exposure and makes criminals’ jobs easier.

Matt Blaze directs the Distributed Systems Lab at the University of Pennsylvania, where he studies cryptography and secure systems. Prior to joining Penn, he was a distinguished member of technical staff at AT&T Bell Labs. He can be found on Twitter at mattblaze.

Susan Landau is currently a Guggenheim Scholar. She was a distinguished engineer at Sun Microsystems. Landau is the author of Surveillance or Security? The Risks Posed by New Wiretapping Technologies.  

We’ve Been Here Before

Two decades ago, the FBI complained it was having trouble tapping the then-latest cellphones and digital telephone switches. After extensive FBI lobbying, Congress passed the Communications Assistance for Law Enforcement Act (CALEA) in 1994, mandating that all telephone switches include FBI-approved wiretapping capabilities.

CALEA was justifiably controversial, not least because its requirement for “backdoors” across our communications infrastructure seemed like a security nightmare: How could we keep criminals and foreign spies from exploiting weaknesses in the new wiretapping features? Would we even be able to detect them when they did?

Those fears were soon borne out. In 2004, a mysterious someone — the case was never solved — hacked the wiretap backdoors of a Greek cellular switch to listen in on senior government officials … including the prime minister.

Think this could only happen abroad? Some years ago, the U.S. National Security Agency discovered that every telephone switch for sale to the Department of Defense had security vulnerabilities in their mandated wiretap implementations. Every. Single. One.

Given these risks, you might think now’s a good time to scale back CALEA and harden our communications infrastructure against attack.

But the FBI wants to do the opposite. They want to massively expand the wiretap mandate beyond phone services to internet-based services: instant messaging systems, video conferencing, e-mail, smartphone apps, and so on.

Yet on the internet, the threats — and consequences of compromise — are even more serious than with telephone switches. Not only would wiretap mandates put a damper on innovation, but the FBI is effectively choosing making it easier to solve some crimes by opening the door to other crimes.

Are these really the only options we have? No.

The FBI wants to massively expand the wiretap mandate beyond phone services to internet-based services.

Bugs Are Backdoors, Too

If it turns out that important surveillance sources really are going dark — and that’s a big if (it’s not only on TV that modern tech already makes it easier to surveil suspects) — there’s no need to mandate wiretap backdoors.

That’s because there’s already an alternative in place: buggy, vulnerable software.

The same vulnerabilities that enable crime in the first place also give law enforcement a way to wiretap — when they have a narrowly targeted warrant and can’t get what they’re after some other way. The very reasons why we have Patch Tuesday followed by Exploit Wednesday, why opening e-mail attachments feels like Russian roulette, and why anti-virus software and firewalls aren’t enough to keep us safe online provide the very backdoors the FBI wants.

Since the beginning of software time, every technology device — and especially ones that use the internet — has and continues to have vulnerabilities. The sad truth is that as hard as we may try, as often as we patch what we can patch, no one knows how to build secure software for the real world.

Instead of building special (and more vulnerable) new wiretapping interfaces, law enforcement can tap their targets’ devices and apps directly by exploiting existing vulnerabilities. Instead of changing the law, they can use specialized, narrowly targeted exploit tools to do the tapping.

In fact, targeted FBI computer exploits are nothing new. When the FBI placed a “keylogger” on suspected bookmaker Nicky Scarfo Jr.’s computer in 2000, it allowed the government to win a conviction from decrypting his files after gaining access to his PGP password. A few years later, the FBI developed “CIPAV,” a piece of software that enables investigators to download such spying tools electronically.

The sad truth is that no one knows how to build secure software for the real world.

Exploits aren’t a magic wiretapping bullet. There’s engineering effort involved in finding vulnerabilities and building exploit tools, and that costs money.

And when the FBI finds a vulnerability in a major piece of software, shouldn’t they let the manufacturer know so innocent users can patch? Should the government buy exploit tools on the underground market or build them themselves? These are difficult questions, but they’re not fundamentally different from those we grapple with for dealing with informants, weapons, and other potentially dangerous law enforcement tools.

But at least targeted exploit tools are harder to abuse on a large scale than globally mandated backdoors in every switch, every router, every application, every device.

While the thought of the FBI exploiting vulnerabilities to conduct authorized wiretaps makes us a bit queasy, at least that approach leaves the infrastructure, and everyone else’s devices, alone.

Ultimately, not much is gained — but too much is lost — by mandating special “lawful intercept” interfaces in internet systems. There’s no need to talk about adding deliberate backdoors until we figure out how to get rid of the unintentional ones … and that won’t be for a long, long time.

Read More..

“Struck by Lightning” review: Chris Colfer’s coming-of-age comedy not just for Gleeks

LOS ANGELES (TheWrap.com) – Want to feel like a layabout and as if you’re already way behind schedule in your life?

At just 22 years of age, Chris Colfer has starred in a TV series, “Glee,” for the past four seasons, winning a Golden Globe award and two Emmy nominations for his performance in the breakout role of gay high-school chorister Kurt Hummel.

Now Colfer has written a movie and stars in it and – here’s where the rest of us can start feeling like slackers – “Struck by Lightning” is smart, amusing, modestly scaled and will appeal to a wider audience than just Gleeks who adore Colfer and the Fox series.

Borrowing a page from “Sunset Boulevard,” Colfer begins his slight coming-of-age comedy by letting us know that his character, 17-year old Carson Phillips, is already dead. Carson, a high-school senior with literary ambitions, departs this earth thanks to lightning bolt that strikes his car.

The rest of the movie is an extended flashback to his final year of high school, during which Carson, an outcast, starts a literary journal, hoping his effort will impress the admissions committee at a fancy college sufficiently to approve his application.

The problem? None of his classmates want to contribute. Carson gets around this hurdle by digging up enough dirt to blackmail many of the school’s more popular kids — a jock, cheerleader and goth girl – into joining his endeavor.

The comedy, directed by Brian Dannelly (Showtime’s “Weeds”), sometimes gets more complicated than it needs to be and often feels a wee bit smug, but on the whole this is a promising first effort.

The supporting cast, which includes Rebel Wilson as Carson’s best friend, Allison Janney as his out-of-it single mother, Dermot Mulroney as his absent father and Christina Hendricks as dad’s new wife, all provide solid support, with Wilson, a skilled clown, earning the lion’s share of the laughs.

The 84-minute movie opens in theaters in New York and Los Angeles and several other cities on Friday. It has been available on VOD since December 19.

TV News Headlines – Yahoo! News

Read More..

Susan Nolen-Hoeksema, Psychologist Who Studied Depression in Women, Dies at 53

Susan Nolen-Hoeksema, a psychologist and writer whose work helped explain why women are twice as prone to depression as men and why such low moods can be so hard to shake, died on Jan. 2 in New Haven. She was 53.

Andrew Sacks

Susan Nolen-Hoeksema at the University of Michigan in 2003. Dr. Nolen-Hoeksema's research showed that women were more prone to ruminate, or dwell on the sources of problems rather than solutions, more than men.

Her death followed heart surgery to correct a congenitally weak valve, said her husband, Richard Nolen-Hoeksema.

Dr. Nolen-Hoeksema, a professor at Yale University, began studying depression in the 1980s, a time of great excitement in psychiatry and psychology. New drugs like Prozac were entering the market; novel talking therapies were proving effective, too, particularly cognitive behavior therapy, in which people learn to defuse upsetting thoughts by questioning their basis.

Her studies, first in children and later in adults, exposed one of the most deceptively upsetting of these patterns: rumination, the natural instinct to dwell on the sources of problems rather than their possible solutions. Women were more prone to ruminate than men, the studies found, and in a landmark 1987 paper she argued that this difference accounted for the two-to-one ratio of depressed women to depressed men.

She later linked rumination to a variety of mood and behavior problems, including anxiety, eating disorders and substance abuse.

“The way I think she’d put it is that, when bad things happen, women brood — they’re cerebral, which can feed into the depression,” said Martin Seligman, a professor of psychology at the University of Pennsylvania, who oversaw her doctoral work. “Men are more inclined to act, to do something, plan, beat someone up, play basketball.”

Dr. Seligman added, “She was the leading figure in sex differences in depression of her generation.”

Dr. Nolen-Hoeksema wrote several books about her research for general readers, including “Women Who Think Too Much: How to Break Free of Overthinking and Reclaim Your Life.” These books described why rumination could be so corrosive — it is deeply distracting; it tends to highlight negative memories — and how such thoughts could be alleviated.

Susan Kay Nolen was born on May 22, 1959, in Springfield, Ill., to John and Catherine Nolen. Her father ran a construction business, where her mother was the office manager; Susan was the eldest of three children.

She entered Illinois State University before transferring to Yale. She graduated summa cum laude in 1982 with a degree in psychology.

After earning a Ph.D. in psychology at the University of Pennsylvania, she joined the faculty at Stanford. She later moved to the University of Michigan, before returning to Yale in 2004.

Along the way she published scores of studies and a popular textbook. In 2003 she became the editor of the Annual Review of Clinical Psychology, an influential journal.

Dr. Nolen-Hoeksema moved smoothly between academic work and articles and books for the general reader.

“I think part of what allowed her to move so easily between those two worlds was that she was an extremely clear thinker, and an extremely clear writer,” said Marcia K. Johnson, a psychology professor and colleague at Yale.

Dr. Nolen-Hoeksema lived in Bethany, Conn. In addition to her husband, a science writer, she is survived by a son, Michael; her brothers, Jeff and Steve; and her father, John.

“Over the past four decades women have experienced unprecedented growth in independence and opportunities,” Dr. Nolen-Hoeksema wrote in 2003, adding, “We have many reasons to be happy and confident.”

“Yet when there is any pause in our daily activities,” she continued, “many of us are flooded with worries, thoughts and emotions that swirl out of control, sucking our emotions and energy down, down, down. We are suffering from an epidemic of overthinking.”

Read More..