treasury – Techdirt (original) (raw)

Elon’s Twitter Destruction Playbook Hits The US Government, And It’s Even More Dangerous

from the twisting-the-chaos-knob-on-the-levers-of-power dept

Remember how Elon Musk destroyed Twitter by ripping apart its infrastructure without understanding it? Now imagine that same playbook applied to the federal government. It’s happening, and the stakes are exponentially higher. When reviewing Kate Conger and Ryan Mac’s book “Character Limit” last fall, I highlighted two devastating patterns in Musk’s management: his authoritarian impulse to (sometimes literally) demolish systems without understanding them, and his tendency to replace existing, nuanced solutions with far worse alternatives (even when those older systems probably did require some level of reform). Those same patterns are now threatening the federal government’s basic functions.

Let’s be crystal clear about what’s happening: A private citizen with zero Constitutional authority is effectively seizing control of critical government functions. The Constitution explicitly requires Senate confirmation for anyone wielding significant federal power — a requirement Musk has simply ignored as he installs his loyalists throughout the government while demanding access to basically all of the levers of power, and pushing out anyone who stands in his way.

The parallel to Twitter is striking and terrifying. At Twitter, Musk’s “reform” strategy transformed a platform used by hundreds of millions for vital communication into his personal megaphone, hemorrhaging somewhere between 60-85% of its revenue in the process. But Twitter was just a private company. Now he’s applying the same destructive playbook to the federal government, where the stakes involve not just user experience or advertising dollars, but the basic functioning of American democracy.

The constitutional violations here dwarf the Twitter debacle. Where Musk merely broke a social media platform through incompetence last time, he’s now breaking the actual mechanisms of governance — and doing it with the same reckless playbook that turned Twitter into a ghost town. As Conger and Mac, who documented the Twitter disaster, point out, even the specific tactics are being recycled:

The email landed in employees’ inboxes with the subject line: “Fork in the Road.” The message in the email was stark: Accept a sweeping set of workplace changes or resign.

That was the note that millions of federal employees received around 5 p.m. on Tuesday. It echoed a similar message that thousands of workers at Twitter got from Elon Musk in late 2022 after he bought the company.

[….]

Mr. Musk, who also leads Tesla and SpaceX, has enlisted the help of a team of loyalists to assess agencies and make cuts, the same thing he did during the Twitter takeover.

Steve Davis, the head of Mr. Musk’s tunneling startup, The Boring Company, helped oversee cost-cutting at Twitter and now leads DOGE. Brian Bjelde, a longtime human resources executive at SpaceX who also helped during the Twitter takeover, is now an adviser to the Office of Personnel Management.

Michael Grimes, a top banker at Morgan Stanley who helped lead Mr. Musk’s Twitter acquisition, is expected to take a senior job at the Commerce Department.

One of Mr. Musk’s software engineers at Tesla, Thomas Shedd, was named the head of “Technology Transformation Services” at the General Services Administration, which helps manage federal agencies. Mr. Shedd promptly employed a Musk tactic: asking for proof of engineers’ technical chops.

Mr. Shedd asked for engineers to sign up for sessions in which they could share “a recent individual technical win,” according to an email sent to more than 700 employees on Tuesday night and viewed by The Times.

Wired, which has also noted the obvious parallels between Musk’s takeover of Twitter and the federal government (written by Zoe Schiffer, who also wrote an insightful book about the Twitter disaster) has an even more terrifying article about just how unqualified Musk’s goons are:

Sources say that Riccardo Biasini, formerly an engineer at Tesla and most recently director of operations for the Las Vegas Loop at the Boring Company, Musk’s tunnel-building operation, is also at OPM as a senior advisor to the director. (Steve Davis, the CEO of the Boring Company, is rumored to be advising Musk on cuts to be made via DOGE, and was integral in Musk’s gutting of Twitter, now X, after his takeover of the company in 2022.)

According to the same sources, other people at the top of the new OPM foodchain include two people with apparent software engineering backgrounds, whom WIRED is not naming because of their ages. One, a senior advisor to the director, is a 21-year-old whose online resume touts his work for Palantir, the government contractor and analytics firm cofounded by billionaire Peter Thiel, who is its chairman. (The former CEO of PayPal and a long-time Musk associate, Thiel is a Trump supporter who helped bankroll the 2022 Senate campaign of his protege, Vice President JD Vance.) The other, who reports directly to Scales, graduated high school in 2024, according to a mirrored copy of an online resume and his high school’s student magazine; he lists jobs as a camp counselor and a bicycle mechanic among his professional experiences, as well as a summer role at Neuralink, Musk’s brain-computer interface company.

Among the new highers-up at OPM is Noah Peters, an attorney whose LinkedIn boasts of his work in litigation representing the National Rifle Association and who has written for right-wing outlets like the Daily Caller and the Federalist; he is also now a senior advisor to the director. According to metadata associated with a file on the OPM website, Peters authored a January 27 memo that went out under acting OPM director Charles Ezell’s name describing how the department would be implementing one of Trump’s executive orders, “Restoring Accountability To Policy-Influencing Positions Within the Federal Workforce.” This has to do with what’s sometimes known as Schedule F—a plan to recategorize many civil service jobs as political appointees, meaning they would be tied to the specific agenda of an administration, rather than viewed as career government workers. The order would essentially allow for career certain civil servants to be removed in favor of Trump loyalists by classifying them as political appointees, a key part of the Project 2025 plan for remaking the government.

For all of Musk and fans whining about the hiring of “unqualified” people (which has been very clearly coded to mean non-white, non-male, non-cisgender), the fact that he’s hired a kid whose experience is “camp counselor” into a high-level position is fucking insane.

But this isn’t just about personnel changes. It’s about systematically dismantling government institutions from the inside out.

And it’s only getting more and more dangerous. It’s been reported (and a lawsuit has been filed over it) that the “fork in the road email” was sent via a hastily setup on-premises server that these idiots needed to do the email blast, even though that almost certainly violates federal law.

On top of that, there are multiple reports of Musk basically taking over various parts of the government. He apparently showed up at the General Services Administration on Thursday, just after his right-hand man in the Twitter shakeup, Steve Davis, told them they were ending a bunch of leases on government buildings (another thing that Twitter also did). Even worse, Wired reports that Musk’s friends are using the GSA to try to get access to a variety of systems, including remote access to laptops, and even reading emails of government employees.

There also appears to be an effort to use IT credentials from the executive office of the president to access GSA laptops and internal GSA infrastructure. Typically, access to agency systems requires workers to be employed at such agencies, sources say. While Musk’s team could be trying to obtain better laptops and equipment from GSA, sources fear that the mandate laid out in the DOGE executive order would grant the body broad access to GSA systems and data. That includes sensitive procurement data, data internal to all the system and services GSA offers, and internal monitoring software to surveil GSA employees as part of normal auditing and security processes.

The access could give Musk’s proxies the ability to remote into laptops, listen in on meetings, read emails, amongst many other things, a former Biden official told WIRED on Friday.

Then, on Friday morning, there were even scarier reports of him fighting with the longest tenured non-political employee at the Treasury Department, David Lebryk, leading Lebryk to resign after Musk demanded access to the US Treasury’s payment system.

Typically only a small number of career officials control Treasury’s payment systems. Run by the Bureau of the Fiscal Service, the sensitive systems control the flow of more than $6 trillion annually to households, businesses and more nationwide. Tens, if not hundreds, of millions of people across the country rely on the systems, which are responsible for distributing Social Security and Medicare benefits, salaries for federal personnel, payments to government contractors and grant recipients and tax refunds, among tens of thousands of other functions.

But Musk demanded that he get to control it, apparently.

The highest-ranking career official at the Treasury Department is departing after a clash with allies of billionaire Elon Musk over access to sensitive payment systems, according to three people with knowledge of the matter, who spoke on the condition of anonymity to describe private talks.

And it’s not that Lebryk had ideological disagreements. As the WaPo story notes:

“I could not, to this day, tell you his politics,” Faulkender, who served as an assistant secretary at Treasury during Trump’s first term, told The Washington Post at the time. “He always seemed to be relaxed and under control.”

But he got pushed out because Elon’s team wants control over the money spigot.

Then, later today, Reuters reported that Musk’s aides have locked career civil servants entirely out of government computer systems.

Aides to Elon Musk charged with running the U.S. government human resources agency have locked career civil servants out of computer systems that contain the personal data of millions of federal employees, according to two agency officials.

[….]

The systems include a vast database called Enterprise Human Resources Integration, which contains dates of birth, Social Security numbers, appraisals, home addresses, pay grades and length of service of government workers, the officials said.

“We have no visibility into what they are doing with the computer and data systems,” one of the officials said. “That is creating great concern. There is no oversight. It creates real cybersecurity and hacking implications.”

Officials affected by the move can still log on and access functions such as email but can no longer see the massive datasets that cover every facet of the federal workforce.

Again, Elon has not been nominated as an officer of the US, and the Senate has not even been given the ability to review any such nomination. Instead, he’s basically acting like he runs the government and is slashing and cutting with wild abandon.

There are all sorts of laws that have been broken in the process, forcing courts to jump in. Earlier today, for example, a judge in Rhode Island had to stop the Musk/Trump administration from carrying out their attempt to stop spending money apportioned by Congress. A judge having to use this kind of “talking to a five-year-old language” to the Presidential administration is crazy:

The Executive’s statement that the Executive Branch has a duty “to align Federal spending and action with the will of the American people as expressed through Presidential priorities,” (ECF No. 48-1 at 11) (emphasis added) is a constitutionally flawed statement. The Executive Branch has a duty to align federal spending and action with the will of the people as expressed through congressional appropriations, not through “Presidential priorities.” U.S. Const. art. II, § 3, cl. 3 (establishing that the Executive must “take care that the laws be faithfully executed . . .”). Federal law specifies how the Executive should act if it believes that appropriations are inconsistent with the President’s priorities–it must ask Congress, not act unilaterally. The Impoundment Control Act of 1974 specifies that the President may ask that Congress rescind appropriated funds.3 Here, there is no evidence that the Executive has followed the law by notifying Congress and thereby effectuating a potentially legally permitted so-called “pause.”

While just at the district court level, this judicial smackdown echoes historic rebukes like Youngstown Sheet & Tube Co. v. Sawyer, where SCOTUS reminded Truman that “the President’s power to see that the laws are faithfully executed refutes the idea that he is to be a lawmaker.” Musk’s shadow administration represents a constitutional crisis orders of magnitude greater than Twitter’s blue check chaos.

When Elon took over Twitter, he certainly had the right to go in and destroy the place through ignorance and overconfidence.

But this is the US government. He doesn’t own it. He wasn’t elected. He wasn’t officially appointed. And there are laws that are being broken left and right. Even worse, the impact of all this nonsense is way more significant and way more serious than any of the shit he pulled at Twitter.

Millions of people actually depend on the US government functioning. You can’t just have some random jackass show up and rip out fences and assume shit won’t go south. They went completely south with Twitter, but that was just a random social media site people could move on from. This is the most powerful country in the world, and it’s being ripped apart by someone with no concern or care for the actual damage he’s doing.

I would be among the first to say that the federal government needs massive reform, just as I thought that Twitter needed a major overhaul (one of the reasons I wrote my Protocols not Platforms paper was to try to inspire that kind of overhaul). But there are smart ways to do it and then there’s this: which is just utter destruction while looking over his shoulder to see if the nihilistic kids who worship his every move are finding it entertaining.

There’s a crucial lesson here about thoughtful reform versus destruction: Musk’s approach to institutions resembles a toddler “fixing” a grandfather clock by removing its pendulum. Yes, the clock needed maintenance — but now it can’t tell time at all. The federal government absolutely needs reform, but what we’re seeing isn’t reform — it’s vandalism dressed up as innovation. And unlike Twitter, where users could move to Mastodon or Bluesky (or just log off entirely), there’s no backup government waiting in the wings when Musk’s wrecking ball finishes swinging.

Those who care about functional institutions must demand adherence to constitutional processes, not billionaire whims. Because if we don’t, we might find ourselves longing for the days when Musk was only breaking social networks instead of the basic machinery of democracy.

Filed Under: donald trump, elon musk, governance, government, omb, power, treasury
Companies: twitter, x

DHS Cyber Warriors Issue Warning About Massive Hacking Campaign, Disclose They've Been Hacked A Day Later

from the holy-shit-this-is-bad dept

Welp. Everything is compromised. Again.

Reuters was the first to report suspected Russian hackers had gained access to hundreds of SolarWinds customers, including US government agencies.

Hackers believed to be working for Russia have been monitoring internal email traffic at the U.S. Treasury and Commerce departments, according to people familiar with the matter, adding they feared the hacks uncovered so far may be the tip of the iceberg.

[…]

The cyber spies are believed to have gotten in by surreptitiously tampering with updates released by IT company SolarWinds, which serves government customers across the executive branch, the military, and the intelligence services, according to two people familiar with the matter. The trick – often referred to as a “supply chain attack” – works by hiding malicious code in the body of legitimate software updates provided to targets by third parties.

A full report by FireEye (which was also a victim of this hacking) details the process used to gain illicit access, which involved leveraging bogus signed components crafted by the hackers and distributed by an unaware SolarWinds. The widespread hacking campaign may have begun as early as March of this year. That it was only discovered now means the fallout from this will continue for months to come.

Here’s how the backdoor works, according to FireEye:

SolarWinds.Orion.Core.BusinessLayer.dll is a SolarWinds digitally-signed component of the Orion software framework that contains a backdoor that communicates via HTTP to third party servers. We are tracking the trojanized version of this SolarWinds Orion plug-in as SUNBURST.

After an initial dormant period of up to two weeks, it retrieves and executes commands, called “Jobs”, that include the ability to transfer files, execute files, profile the system, reboot the machine, and disable system services. The malware masquerades its network traffic as the Orion Improvement Program (OIP) protocol and stores reconnaissance results within legitimate plugin configuration files allowing it to blend in with legitimate SolarWinds activity. The backdoor uses multiple obfuscated blocklists to identify forensic and anti-virus tools running as processes, services, and drivers.

SolarWinds boasts over 300,000 customers, including 425 Fortune 500 companies, all ten of the top ten telcos, the Pentagon, State Department, NSA, DOJ, and the White House. Its long list of customers (which now returns a 404 error) all but ensures every passing hour will add another victim to the list.

According to SolarWinds’ post-attack-discovery SEC filing, it believes only a small percentage of its customers are affected. But even a fraction of its users is still a gobsmacking number of potential victims.

On December 13, 2020, SolarWinds delivered a communication to approximately 33,000 Orion product customers that were active maintenance customers during and after the Relevant Period. SolarWinds currently believes the actual number of customers that may have had an installation of the Orion products that contained this vulnerability to be fewer than 18,000.

The attack is serious and widespread enough that the DHS’s cybersecurity arm has issued a warning — one that says the only proven way to mitigate damage at this point is to disconnect affected hardware from the internet and pull the plug on Orion software. The CISA (Cybersecurity and Infrastructure Security Agency) Emergency Directive says this is a persistent threat — one not easily patched away.

CISA has determined that this exploitation of SolarWinds products poses an unacceptable risk to Federal Civilian Executive Branch agencies and requires emergency action. This determination is based on:

CISA understands that the vendor is working to provide updated software patches. However, agencies must wait until CISA provides further guidance before using any forthcoming patches to reinstall the SolarWinds Orion software in their enterprise.

The directive goes on to mandate reporting on infected systems and for affected agencies to assume the system remains compromised until CISA gives the all-clear. Unfortunately, this grave warning comes from an agency that is also compromised. CISA issued the directive on December 13. Here’s what was reported in the early hours of December 14:

US officials suspect that Russian-linked hackers were behind the recent data breach of multiple federal agencies, including the Departments of Homeland Security, Agriculture and Commerce, but are continuing to investigate the incident, multiple sources told CNN Monday.

CNN learned Monday that DHS’ cyber arm, which is tasked with helping safeguard the nation from attacks by malicious foreign actors, is among at least three US government agencies compromised in the hack.

In addition to CISA, government officials also suspect breaches at the US Postal Service and the Department of Agriculture. And the Defense Department is in the process of assessing its own exposure, if any. If any of its components have been breached, it has yet to be publicly reported.

The Russian government is denying involvement, but the evidence seems to point to “Cozy Bear,” the offensive hacking wing of Russia’s intelligence services. Unfortunately, SolarWinds’ dominance in the network management field made it that much easier for the attack to scale. And with CISA compromised, the government’s attempts to mitigate damage will be slowed as its own cybersecurity wing attempts to rid itself of a persistent threat.

Filed Under: cisa, commerce department, hacking, russia, treasury, vulnerability
Companies: fireeye, solarwinds

Treasury Department Wing Latest To Be Accused Of Domestic Spying

from the just-dipping-into-the-domestic-stream-until-someone-says-stop dept

Some more domestic spying taking place, this time by financial regulators. While the US Treasury Department is well within its legal wheelhouse to investigate domestic financial wrongdoing, its Office of Intelligence and Analysis is only supposed to monitor financial activity occurring outside of the US. The OIA has apparently been helping itself to domestic financial records, as Jason Leopold reports.

Over the past year, at least a dozen employees in another branch of the Treasury Department, the Financial Crimes Enforcement Network, have warned officials and Congress that US citizens’ and residents’ banking and financial data has been illegally searched and stored. And the breach, some sources said, extended to other intelligence agencies, such as the National Security Agency, whose officers used the Treasury’s intelligence division as an illegal back door to gain access to American citizens’ financial records.

The US Treasury Department has responded to the allegations raised by several anonymous sources, claiming Leopold’s article is basically bullshit.

“The BuzzFeed story is flat out wrong. An unsourced suggestion that an office within Treasury is engaged in illegal spying on Americans is unfounded and completely off-base.”

The department claims any sharing of data between the domestic-focused Financial Crimes Enforcement Network (FinCEN) and the OIA is completely legal. The NSA made a similar claim about its perusing of domestic financial data. But those claims seem a little hollow now that the Treasury Department’s Inspector General has announced an investigation into this information sharing.

In some cases, the information shared had been properly redacted. But officials claim OIA personnel simply found ways to obtain the blacked-out data.

Some sources have also charged that OIA analysts have, in a further legal breach, been calling up financial institutions to make inquiries about individual bank accounts and transactions involving US citizens. Sources said the banks have complied with the requests because they are under the impression they are giving the information to FinCEN, which they are required to do.

That’s how the backdoor works. When identifying information is redacted, the OIA just calls up the financial institution and asks for more information about unnamed accounts until it has enough to nullify built-in minimization procedures.

And there’s more. It appears OIA is passing along domestic banking data to other foreign-facing agencies like the CIA and Defense Intelligence Agency. According to Leopold’s sources, this has gone on for years. It’s only coming to light now because FinCEN officials have begun complaining about the apparent privacy violations.

This has drawn the attention of Sen. Ron Wyden, who is now demanding answers from the Treasury Department.

“If true, those allegations would represent a serious abuse of spying powers to gather Americans’ financial information,” Senator Ron Wyden’s spokesman, Keith Chu, said in a statement: “Sen. Wyden plans to get to the bottom of what happened and take a close look at whether the rules currently protecting the privacy of Americans are strong enough and adequately enforced.”

This is something Wyden does well: dogged pursuits of information pertaining to intelligence community misconduct. Unfortunately, the intelligence community maintains a pretty solid stiff arm, which tends to put years between Wyden’s questions and their eventual answers. Throw in some national security concerns, and the agencies involved are likely to be permitted to go dark for as long as possible.

The years of infighting between FinCEN and the OIA appear to be causing collateral damage. Another Leopold report from a couple of weeks ago covers a bizarre incident at the Treasury Department as FinCEN analysts attempted to dig through financial data for anything of interest that might have helped investigators track down participants in the recent London terrorist attack.

When the officials got to their secure operations center in Northern Virginia that Saturday night, they discovered that everyone on duty had been blocked from the classified networks their response depended upon. They couldn’t open links emailed by the FBI about the suspected terrorists they were supposed to be chasing. They couldn’t begin following the threads connecting those suspects to the people who had been funding and supporting them.

The lack of access for personnel within the Financial Crimes Enforcement Network — never before reported — cost antiterrorism forces on both sides of the Atlantic crucial time in identifying and pursuing the people and networks around the attackers, according to sources and documents reviewed by BuzzFeed News.

One possible explanation for the lockout may be the ongoing feud between FinCEN and the OIA. The OIA grants access to FinCEN, which allows it to piece together paper trails from both domestic and foreign banking data. If the OIA wanted to keep FinCEN out, it easily could. The other explanation is human error: unrenewed network security keys.

Whatever is happening isn’t pretty. Human errors like these can result in lost human lives. If there’s a turf war happening, the latest claims about OIA malfeasance are only going to result in less cooperation during critical times which, again, will possibly result in the loss of lives.

Filed Under: backdoor surveillance, financial records, fincen, oia, surveillance, treasury

from the it-never-ends dept

Update: Just as we published this, news came in that this amendment was rebuffed, but the point remains: Congress keeps trying to sneak in little favors to Hollywood every chance it gets.

Congress continues to show that it learned absolutely nothing from the SOPA/PIPA mess earlier this year. While we’ve been focused on the problematic IPAA bill in the House, which would create a high level IP Enforcement “deputy assistant” within the Commerce Department, over in the Senate, Debbie Stabenow is looking to create another such role in the Treasury Department. We just mentioned an effort by the Senate Finance Committee to actually make the Special 301 report useful by having it go after internet censorship… but according to Politico’s Morning Tech, Senator Stabenow has very quietly introduced an amendment to that effort, which would increase the role of the Treasury Department as Hollywood’s private police force:

A tweak by Sen. Debbie Stabenow made available last night would add to the trade bill her own measure, the Protect American Innovation Act. Among other things, the amendment would establish the position of “director of Intellectual Property Rights Enforcement” at Treasury, while boosting the ability of Customs and ICE to find and seize infringing materials entering the country or to be exported.

Stabenow actually introduced this “Protect American Innovation Act” last year, in the midst of the fight over SOPA and PIPA, and very few people noticed, since all of the attention was on those two bills. But if you look at the details, it’s just more of the same. It would increase the Treasury Department’s role in intellectual property enforcement, first by establishing a “director of intellectual property rights enforcement” withing the Treasury. That position would be tasked with working closely with ICE — and ICE would get its own new “coordinator of intellectual property enforcement.” You remember ICE. Those are the folks famous for censoring websites based on no evidence, just the RIAA’s say-so. Oh, and remember Dajaz1? That’s one of those sites that ICE erroneously censored. One of that site’s admins lives in Michigan — Stabenow’s home state. But, apparently, Stabenow would rather carry water for Hollywood than protect her own constituents from gross overreach by the US government.

Given how badly ICE screwed up that job, it’s amazing that Stabenow wants to increase their authority. But that’s what’s happening. The bill defines “piracy” as “activities related to production of or trafficking in unauthorized copies or phonorecords of works protected under title 17, United States Code, or related laws.” And we thought “piracy” was defined as “an act of criminal violence at sea.” But, notice just how broad that text is there. Any production of “unauthorized copies” of works protected under the copyright act. Yeah, if you make a copy… the Treasury Department and ICE might be able to target you.

The bill also says that Treasury/ICE/Customs should get training in new technology for “detecting and identifying, at ports of entry… pirated goods.” Given how broad this is, you could read this to mean that your phones, MP3 players and laptops may get scanned at the border for all of the music and movies you have. There was talk of such things in ACTA, but they were rejected when people spoke up — and now they’re back in a bill from Senator Debbie Stabenow who apparently slept through what happened in response to SOPA/PIPA and ACTA.

The bill also gives law enforcement within Treasury/ICE/Customs pretty broad powers, including issuing fines for importing “pirated” goods, and says that such fines “may not be mitigated” unless ordered by a court or “pursuant to regulations issued by the Commissioner.” And such fines “may not be dismissed or vacated.” In other words, if they catch you with pirated works, they may be required to issue fines. In fact, it says that the mitigation, dismissal or vacation of such fines can only happen for “extraordinary cases.” Having a few unauthorized songs on your iPhone isn’t extraordinary.

But wait… there’s more. While the IPAA, as discussed, would increase US diplomatic efforts to push for IP enforcement abroad… and so would this bill, though in a different area. Rather than IP attaches, now ICE and Customs would be tasked with spreading Hollywood-style maximalism to other countries by increasing staffing to provide training and assistance to other countries in “detecting” such “pirated goods.”

There are also a ton of small changes to copyright law, which would take quite a few hours to dig in and see what they actually do. As is typical of these kinds of bills, they don’t tell you what the bill would actually now say — they just say things like “strike from [phrase y] to [phrase x] and insert [random string of terms].” And, sometimes (including here), even these phrases then point you to other laws that you have to piece together as well. You have to sit down, pull up the original, figure out what’s being taken out, what’s being inserted and what it all means. There appear to be about a dozen such changes which we’ll have to go through later, but it wouldn’t surprise me to find more trouble in there.

For example, just a quick look at Section 143 of this bill might appear like a minor textual change. It says you have to add the following to a different bill (19 U.S.C. 1595a(c)(2)). What’s that? Oh, it’s the rules for the government forfeiting your property. And what’s the text?

‘(G) it is a technology, product, service, device, component, or part thereof the importation of which is prohibited under section 1201(a)(2) of title 17, United States Code.’.

Okay piece that back into the bill above, and you see that what it’s actually doing is increasing the types of things that can be forfeited by ICE and Customs. But how so? Well, you have to jump over to section 1201(a) of Title 17, which is the anti-circumvention provision of the DMCA.

When you sit back and parse it all together, you realize that they’re now allowing ICE/Customs to forfeit any circumvention device. Considering how many “circumvention devices” you already own without realizing it, you should be concerned.

Either way, I’m sure there’s more in there, but this is just a quick read, because, again, this effort was announced yesterday for markup today. And, yes, while Stabenow released this bill last year, it got little attention because no one thought it was going anywhere. To suddenly jump the line and try to attach it to a separate, important bill, shows the same sort of attempt to sneak through laws for Hollywood without public scrutiny.

Filed Under: congress, customs, debbie stabenow, ice, ip enforcement, piracy, senate, treasury

Treasury Department Meddling In Venture Capital For No Good Reason

from the not-all-private-equity-is-the-same dept

The Wall Street Journal has an important editorial pointing out why it’s a mistake for Treasury Secretary Timothy Geither to include venture capital funds in his new regulatory plan to deal with “systemic risk.” There’s no doubt that highly leveraged hedge funds contributed greatly to the current economic situation creating a level of systemic risk that we’re only just coming to terms with. However, it’s not at all clear what venture capital has to do with that. Yes, both are unregulated funds of private equity, but that’s about where the similarities end. Venture capital relies very little on debt, and is usually a way for wealthy investors to bet money more long term on new innovations, rather than the sort of short-term speculation that is more common with hedge funds.

Yet, for some reason, they’re being lumped together and will have the same regulatory burdens. This could significantly hinder venture capitalists, similar to some other recent regulatory changes, creating unnecessary and wasteful burdens that are more for show than any actual effort to protect the economy. As the editorial points out: we’ve already stress tested the venture capital world, when the dot com bubble burst, it didn’t cause any systemic risk. No banks failed because of the bubble bursting. So why is the government suddenly acting like VCs are a threat to the widespread economy now?

Filed Under: economy, systemic risk, timothy geithner, treasury, venture capital