Living With Cancer: The Good Patient Syndrome

I remember when being good seemed strategic.

After the technician took out a pad to draw an inscrutable diagram, I nodded and pretended to recognize a squiggle at the center of what looked like a snail. I discussed my oncologist’s research projects, instead of complaining about pain. Generally I answered a nurse’s opening query — “So how are you?”– with a cheery “Good! How are you?” Grumbles about waiting interminably for a scan in a freezing room never rolled off my tongue. When an interventional radiologist managed to remove two stents from my body, I didn’t fault the surgeon who left them there to trigger a massive infection followed by an allergic response to antibiotics: I sent a thank you note to the radiologist.

What was wrong with me? Outside the medical sphere, I am prone to impatience, candor and bouts of argumentative fervor. Had feminine socialization kicked in? As a girl, I was trained to be courteous to people in positions of authority and to revere the saving knowledge of physicians. But men also exhibit symptoms of the good patient syndrome.

Indeed, Anatole Broyard preached its virtues in his book “Intoxicated by My Illness,” although his version was less compliant, more ironic than mine. “If a patient expects a doctor to be interested in him, he ought to try to be interesting. When he shows nothing but a greediness for care, nothing but the coarser forms of anxiety, it’s only natural for the doctor to feel an aversion.” Following this logic, Broyard embarked upon an impersonation: “I never act sick. A puling person is not appealing.” He therefore set out to charm his physicians — to distinguish himself from boring, easily forgotten patients. I did this too, adding a pinch of obedience, a dash of gratitude, and a smidgen of eccentricity to the mix. One doesn’t want to be just any old patient; patients are replaceable.

Since illness had never intoxicated me, why was I behaving like Broyard? The short answer is terror: these people could hurt me.

Were I to seem boring or easily forgotten, should I appear crabby or disagreeable, I might get neglected or, in my anxious imagination, harmed. Not consciously neglected or intentionally harmed, of course, because doctors and nurses have dedicated themselves to helping people whose sickness often makes them boring and disagreeable. But neglected or harmed nonetheless. Like most patients, I am keenly aware that the medical staff at most facilities are overloaded. It is easy to get left for hours unattended on a gurney or starved and freaked when surgeries are perpetually postponed or distressed and bruised when the bindings on limbs are roughly or hastily applied.

But of course adopting the role of model patient does not provide a solution. Much of the caretaking in hospitals remains out of the control of our personal physicians and nurses. And in any case, too much ingratiating docility can be dangerous to a patient’s health.

If I had persisted in asking my surgeon about the fate of the stents that he had implanted in my body, he might have remembered to remove them. If I had not followed to the letter the dosage he prescribed of a heavy-duty antibiotic, especially as I began to get sick to my stomach and dizzy, I might not have had the full-body breakdown of an allergic reaction. Earlier still, if I had insisted on better bowel preps before my first abdominal surgery, or a postponement, maybe the stents and infection and the allergic reaction to antibiotics would never have happened.

Even before that, if I had challenged my general practitioner who diagnosed indigestion, maybe my cancer would have been found at an earlier stage. If my grandmother had wheels, she’d be an omnibus: that’s a family joke.

So much for the magical thinking that good patients receive the best care. Being a submissive or dutiful patient doesn’t always pay off. Who exactly was I being good for? Sometimes it’s good to be bad.

Was I good for nothing? When I was at my most puling and unappealing and too sick to be good, with pain so overwhelming that I had to be taken to my oncologist’s examining room in a wheelchair, she placed her hand on my knee and kept it there while explaining how she would take care of me. Though I could not look her in the eye, though I could not speak for groaning, I took her point. I had foisted the good patient role on myself. She had always seen through the pose to the mortally sick human being. Why else would I be here, I realized.

At that moment I resolved to renounce or rectify my goodness. I don’t always succeed.


Susan Gubar is a distinguished emerita professor of English at Indiana University and the author of “Memoir of a Debulked Woman,” which explores her experience with ovarian cancer.

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Wealth Matters: What the Small Player Can Expect When Using a Lobbyist


Robert Caplin for The New York Times


Domenic Rom, a senior vice president at Technicolor, a postproduction company for film and television, became part of a group of similar companies that wanted to lobby for a tax credit.







IF there is one thing most small-business owners have in common, it is that they have far less ability than big corporations to affect what happens to them politically.




Few small-business owners — the kind of people who accumulate wealth through a service or manufacturing business and are working at it every day — have the deep pockets of a major corporation. Consider what Amgen, the world’s largest biotechnology company, did to help win an exemption in the so-called fiscal cliff bill to extend its patent on a profitable dialysis drug for two more years at a great cost to Medicare. It sent its 74 lobbyists in Washington to meet with — and direct contributions to — a host of politicians who worked in its favor.


But even if small businesses can’t buy the kind of influence that a huge company like Amgen can, that does not mean they cannot buy influence at all. Still, as in other aspects of life, you get what you pay for.


Entrepreneurs would want to hire a lobbyist for a fairly straightforward reason: they have an issue they want addressed or changed and they have reached the point where they feel they need to act. What is more difficult is acting on that impulse effectively, knowing it could cost a lot of money.


Lawrence E. Scherer, a founder of State and Broadway, a lobbying firm in New York, said a typical retainer for a small-business client would be around $5,000 a month, but the assignment could last for a year or more. Suri Kasirer, once an aide to former Gov. Mario Cuomo of New York and president of Kasirer Consulting, said her typical retainer was $10,000 to $20,000 a month, with a three-month minimum.


“For small-business owners, the idea of having a lobbyist interact with a government is so novel and so out of their scope that $5,000 a month could seem daunting,” Mr. Scherer said. “But as government has more issues in front of it, it could be a cheap date.”


People who have success lobbying state and local governments — since the federal government is beyond the budget of individuals — tend to fall into three categories: they want something changed, they want something new or they want access.


Avik Kabessa, chief executive of Carmel Car and Limousine Service in New York City, said he became part of a group of livery car owners in 2008 that lobbied the state to establish a workers’ compensation fund for livery drivers and to repeal a sales tax on livery fares.


He said it took a year and a half for the lobbying efforts to work. The costs were split among members of the group, called the Livery Round Table. (Livery companies fall between higher-end black car and limousine services and city taxis.)


“I wish we had the expertise, knowledge and contacts to have been able to do this ourselves,” he said. “But just as you would go to a doctor when you’re sick, you go to a lobbyist for your legislative affairs.”


Ms. Kasirer is working on a similar case with a group of small-business owners who do not often work well together. She is representing seven expediters — companies that are paid by contractors and developers to handle getting various building permits in New York City. She said new rules could end their business.


“We were approached by a few of them, and we said ‘Let’s get as many of them together as we could,’ ” she said. “They realized that ultimately they could be put out of business or their business could be so severely handicapped that they would have to lay off people.”


For small-business owners, forming an ad hoc group and putting aside any competitive business interest to get something greater for their industry is important. So, too, is having the patience and the willingness to accept something short of their goal and then go back for more.


Domenic Rom, a senior vice president at Technicolor, a postproduction company for film and television, became part of a group of similar companies that wanted to lobby for a tax credit. While New York offered tax credits for shooting a film or television show in the state, it did not offer similar credits to the postproduction part of the industry, which includes editing, sound design and adding computer-generated effects.


Mr. Rom said the 14 companies created the Post New York Alliance and each paid $5,000 in dues. They began lobbying in 2009, working with Mr. Scherer. By the next year, they received a 10 percent tax credit for postproduction work.


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DealBook: Choice for S.E.C. Is Ex-Prosecutor, in Signal to Wall St.

President Obama is tapping Mary Jo White, a former United States attorney turned white-collar defense lawyer, to be the next chairwoman of the Securities and Exchange Commission, according to the White House.

Mr. Obama is set to announce the nomination at the White House on Thursday afternoon. As part of the event, the White House will also renominate Richard Cordray to lead the Consumer Financial Protection Bureau, a role he has held for the last year under a recess appointment.

In its choice of Ms. White and Mr. Cordray, the White House is sending a signal about the importance of holding Wall Street accountable for wrongdoing. Both picks are former prosecutors.

Regulatory chiefs are often market experts or academics. But Ms. White spent nearly a decade as United States attorney in New York, the first woman named to this post. Among her prominent cases, she oversaw the prosecution of the mafia boss John Gotti as well as the people responsible for the 1993 World Trade Center bombing. She is now working the other side, defending Wall Street firms and executives as a partner at Debevoise & Plimpton.

As the attorney general of Ohio, Mr. Cordray made a name for himself suing Wall Street companies in the wake of the financial crisis. He undertook a series of prominent lawsuits against big names in the finance world, including Bank of America and the American International Group.

The White House expects Ms. White, 65, and Mr. Cordray, 53, to draw on their prosecutorial backgrounds while carrying out a broad regulatory agenda under the Dodd-Frank Act. Congress enacted the law, which mandates a regulatory overhaul, in response to the 2008 financial crisis.

Jay Carney, the White House press secretary, said Ms. White has “an incredibly impressive resume” and that her appointment along with the renomination of Mr. Cordray sends an important signal.

“The president believes that appointment and the renomination he’s making today demonstrate the commitment he has to carrying out Wall Street reform, making sure we have the rules of the road that are necessary and that are being enforced in a way” to avoid a crisis like that of 2008, Mr. Carney said.

Another White House official added that Ms. White and Mr. Cordray will “serve in top enforcement roles” in part so that “Wall Street is held accountable and middle-class Americans never again are harmed by the abuses of a few.”

Ms. White will succeed Elisse B. Walter, a longtime S.E.C. official, who took over as chairwoman after Mary L. Schapiro stepped down as the agency’s leader in December. Mr. Cordray joined the consumer bureau in 2011 as its enforcement director.

The nominations could face a mixed reception in Congress. The Senate already declined to confirm Mr. Cordray, with Republicans vowing to block any candidate for the consumer bureau, a new agency created to rein in the financial industry’s excesses. It is unclear whether the White House and Mr. Cordray will face another standoff the second time around.

Mr. Carney argued that there were no substantive objections to Mr. Cordray’s confirmation, only political ones. “He is absolutely the right person for the job,” Mr. Carney said.

Ms. White is expected to receive broader support on Capitol Hill. Senator Charles E. Schumer, a New York Democrat, declared that Ms. White was a “tough-as-nails prosecutor” who “will not shy away from enforcing the laws to ensure that markets operate fairly.”

But she could face questions about her command of arcane financial minutiae. She was a director of the Nasdaq stock market, but has otherwise built her career on the law-and-order side of the securities industry.

People close to the S.E.C. note, however, that her husband, John W. White, is a veteran of the agency. From 2006 through 2008, he was head of the S.E.C.’s division of corporation finance, which oversees public companies’ disclosures and reporting.

Some Democrats also might question her path through the revolving door, in and out of government. While seen as a strong enforcer as a United States attorney, she went on in private practice to defend some of Wall Street’s biggest names, including Kenneth D. Lewis, a former head of Bank of America. She also represented JPMorgan Chase and the board of Morgan Stanley. Last year, the N.F.L. hired her to investigate allegations that the New Orleans Saints carried out a bounty system for hurting opponents.

Consumer advocates generally praised her appointment on Thursday. “Mary Jo White was a tough, smart, no-nonsense, broadly experienced and highly accomplished prosecutor,” said Dennis Kelleher, head of Better Markets, the nonprofit advocacy group. “She knew who the bad guys were, went after them and put them in prison when they broke the law.”

The appointment comes after the departure of Ms. Schapiro, who announced she would step down from the S.E.C. in late 2012. In a four-year tenure, she overhauled the agency after it was blamed for missing the warning signs of the crisis.

Since her exit, Washington and Wall Street have been abuzz with speculation about the next S.E.C. chief. President Obama quickly named Ms. Walter, then a Democratic commissioner at the agency, but her appointment was seen as a short-term solution. It is unclear if she will shift back to the commissioner role if Ms. White is confirmed.

In the wake of Ms. Schapiro’s exit, several other contenders surfaced, including Sallie L. Krawcheck, a longtime Wall Street executive. Richard G. Ketchum, chairman and chief executive of the Financial Industry Regulatory Authority, Wall Street’s internal policing organization, was also briefly mentioned as a long-shot contender.

Peter Baker and Kitty Bennett contributed reporting

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Apple shares slide by most in over four years on disappointing iPhone sales


(Reuters) - Apple Inc's shares fell by as much as 12 percent on Thursday, staging their biggest percentage drop in over four years and slicing more than $50 billion from the company's market value, as disappointing holiday-period iPhone sales reinforced fears it is losing its dominance in smartphones.


Eighteen brokerages, including Barclays Capital, Mizuho Securities USA, Credit Suisse, and Raymond James cut their price targets on the stock of the world's biggest publicly traded company by an average $132 to $612.


Apple's shares slid to $450.66 at the open on the Nasdaq, before recouping some of their losses.


The stock hit a peak close of $702.10 on September 19, valuing the company at $658 billion. Since then, it has lost about $225 billion, or 35 percent, of its in market value -- or about the entire worth of Chevron Corp, the second biggest U.S. oil company.


Jefferies & Co cut its rating on Apple's stock to "hold" from "buy" and slashed its share price target by $300 to $500.


Jefferies analyst Peter Misek, who has previously raised red flags about Apple cutting orders to suppliers, said the iPhone slowdown was "real and material" and here to stay.


"We think Apple is losing the screen-size wars," Misek said, noting that demand was moving away from the iPhone's 3.5-inch and 4-inch screens to screens of 5 inches offered by rivals such as Samsung Electronics Co Ltd, HTC Corp and Nokia Oyj.


Samsung, which is at the same time Apple's chief rival and biggest component supplier, overtook Apple as the biggest seller of smartphones in the third quarter, selling close to 500 handsets a minute.


Apple said it shipped a record 47.8 million iPhones in the December quarter, but this was well below the average analyst forecast of 50 million units.


The company's margins were also hit, sliding to 38.6 percent from 44.7 percent a year earlier, partly because its iPad is cannibalizing its high-margin Macintosh computers.


Expectations heading into the results had been subdued by news of possible production cutbacks, putting pressure on Chief Executive Tim Cook to keep up the company's momentum.


NEW PRODUCTS NEEDED


Analysts said Apple's growth would hinge on new products, but added that a new launch wasn't on the horizon.


"To re-accelerate growth, Apple likely needs to launch new products, yet few seem likely before June," Nomura's Stuart Jeffrey said.


The company has been long rumored to be working on a television but has so far deflected questions on its existence. Apple hasn't launched a new line of products in almost three years, apart from a smaller version of the iPad.


Some analysts questioned the company's strategy of betting its fortunes on one phone, while others said a cheaper iPhone could arrest losses of market share.


"Apple's modus operandi to date has been to cream the high-end off each market, but as the company's grown it may now need to target more of the mainstream," Evercore Partners analysts said.


Up to Wednesday, 24 analysts had lowered their price targets since October when Apple reported its fourth-quarter results, according to Thomson Reuters data.


Apple shares were down 10.3 percent at $460.66 in late morning trading.


The disappointing results also hit shares of some of Apple's suppliers. Cirrus Logic Inc, which gets nearly 80 percent of its revenue from Apple, fell 10 percent while shares of Skyworks Solutions Inc, which depends on Apple for about a quarter of its revenue, slipped 5 percent.


Cirrus makes audio-related chips while Skyworks provides power amplifiers for Apple products.


Apple is the lowest ranked stock among the marquee technology firms in the United States based on the change in analyst sentiment, or Analysts Revision Model (ARM), according to StarMine.


Apple's global ARM score of 10 is well below Google Inc's 34 and Microsoft Corp's 19 out of a possible 100. Nokia and Samsung have scores of 82 and 89, respectively.


Research in Motion Ltd has a perfect score of 100, according to the model, which measures analysts' revision of key indicators such as earnings and revenue estimates and changes to their ratings.


(Additional reporting by Saqib Ahmed; Editing by Saumyadeb Chakrabarty, Rodney Joyce and Ted Kerr)



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White, Underwood, Lumineers to perform at Grammys


NEW YORK (AP) — Grammy nominees Jack White, Carrie Underwood and the Lumineers will hit the Grammys stage next month.


The Recording Academy announced Thursday that those acts will join previously announced performers including fun., The Black Keys and Taylor Swift at the Feb. 10 awards show in Los Angeles.


White is nominated for album of the year and the Lumineers are up for best new artist.


U.K. newcomer Ed Sheeran and Elton John will perform together. Sheeran's "The A Team" is nominated for song of the year.


Country singers Miranda Lambert and Dierks Bentley will also join forces onstage.


The Black Keys, Rihanna and Mumford & Sons are also set to perform.


Frank Ocean, Jay-Z, fun., Kanye West, Black Keys' Dan Auerbach and Mumford & Sons lead with six nominations each.


____


Online:


http://www.grammys.com


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Well: The Drawn Out Process of the Medical Lawsuit

She was one of the most highly sought radiologists in her hospital, a doctor with the uncanny ability to divine the source of maladies from the shadows of black and white X-ray films.

But one afternoon my colleague revealed that she had been named in a lawsuit, accused of overlooking an irregularity on a scan several years earlier. The patient suing believed she had missed the first sign of a now rampant cancer.

While other radiologists tried to assure her that the “irregularity” was well within what might be considered normal, my colleague became consumed by the what-if’s. What if she had lingered longer on the fateful film? What if she had doubled-checked her reading before signing off on the report?

She began staying late at the hospital to review, and re-review, her work. And she worried about her professional reputation, asking herself if colleagues were avoiding her and wondering if she would have trouble renewing her license or hospital privileges. At home she felt distracted, and her husband complained that she had become easy to anger.

After almost a year of worry, my colleague went to court and was cleared of the charges. But it was, at best, a Pyrrhic victory. “I lost year of my life,” she told me. “That lawsuit completely consumed me.”

She was not the first colleague to recount such an experience. And far from overstating the issue, doctors may in fact be underestimating the extent to which malpractice not only consumes their time but also undermines their ability to care for patients, according to a new study in Health Affairs.

For more than 150 years, the medical malpractice system has loomed over health care, and doctors, the vast majority of whom will face a lawsuit sometime in their professional lives, remain ever vocal in their criticism of the system. But with few malpractice claims resulting in payments and liability premiums holding steady or even declining, doctors have started to shift their focus from the financial aspects of malpractice to the untold hours spent focused on lawsuits instead of patient care.

Now researchers are putting numbers to those doctors’ assertions. For the current study, they combed through the malpractice claims records of more than 40,000 doctors covered by a national liability insurer. They took note of the length of each claim, as well as any payments made, the severity of the injury and the specialty practiced by the physician being sued.

Most claims required almost two years from initiation of the lawsuit, and almost four years from the time of the event in question, to reach a resolution. Cases that resulted in payment or that involved more severe patient injuries almost always took longer.

The researchers then looked at the proportion of a doctor’s career spent on an open claim. They discovered that on average, doctors spent more than four years of their career — more time than they spent in medical school — working through one or more lawsuits. Certain specialists were more vulnerable than others. Neurosurgeons, for example, averaged well over 10 years, or over a quarter of their professional life, embroiled in lawsuits.

“These findings help to show why doctors care so intensely about malpractice and what they might face over the course of a lifetime,” said Seth A. Seabury, lead author and a senior economist at the RAND corporation in Santa Monica, Calif.

The results also underscore what plaintiffs must endure. Previous studies have shown that when medical errors occur, patients prefer to have physicians acknowledge the mistake quickly and apologize as soon as possible. Though less than 5 percent of all errors ever lead to a malpractice claim, lengthy claims drag out the process and, in certain cases, hold up what may be appropriate compensation.

Patients not directly involved can be affected as well. A legitimate malpractice lawsuit sometimes results in doctors or even entire institutions changing how they practice in order to prevent similar events from happening again. Lengthy legal wrangling can slow down these potentially important improvements.

While these findings are only an indirect measure of the extent to which malpractice claims can affect doctors’ and patients’ lives, the study makes clear the importance of considering time, as well as cost, when looking at malpractice reform.

“If we could get these cases resolved faster, we might be able to improve the efficiency of the system, lower costs and even improve quality of care for patients,” Dr. Seabury said.

“Having these things drag on is a problem for doctors and patients.”

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DealBook: Choice for S.E.C. Is Ex-Prosecutor, in Signal to Wall St.

President Obama is tapping Mary Jo White, a former United States attorney turned white-collar defense lawyer, to be the next chairwoman of the Securities and Exchange Commission, according to the White House.

Mr. Obama is set to announce the nomination at the White House on Thursday afternoon. As part of the event, the White House will also renominate Richard Cordray to lead the Consumer Financial Protection Bureau, a role he has held for the last year under a recess appointment.

In its choice of Ms. White and Mr. Cordray, the White House is sending a signal about the importance of holding Wall Street accountable for wrongdoing. Both picks are former prosecutors.

Regulatory chiefs are often market experts or academics. But Ms. White spent nearly a decade as United States attorney in New York, the first woman named to this post. Among her prominent cases, she oversaw the prosecution of the mafia boss John Gotti as well as the people responsible for the 1993 World Trade Center bombing. She is now working the other side, defending Wall Street firms and executives as a partner at Debevoise & Plimpton.

As the attorney general of Ohio, Mr. Cordray made a name for himself suing Wall Street companies in the wake of the financial crisis. He undertook a series of prominent lawsuits against big names in the finance world, including Bank of America and the American International Group.

The White House expects Ms. White, 65, and Mr. Cordray, 53, to draw on their prosecutorial backgrounds while carrying out a broad regulatory agenda under the Dodd-Frank Act. Congress enacted the law, which mandates a regulatory overhaul, in response to the 2008 financial crisis.

Jay Carney, the White House press secretary, said Ms. White has “an incredibly impressive resume” and that her appointment along with the renomination of Mr. Cordray sends an important signal.

“The president believes that appointment and the renomination he’s making today demonstrate the commitment he has to carrying out Wall Street reform, making sure we have the rules of the road that are necessary and that are being enforced in a way” to avoid a crisis like that of 2008, Mr. Carney said.

Another White House official added that Ms. White and Mr. Cordray will “serve in top enforcement roles” in part so that “Wall Street is held accountable and middle-class Americans never again are harmed by the abuses of a few.”

Ms. White will succeed Elisse B. Walter, a longtime S.E.C. official, who took over as chairwoman after Mary L. Schapiro stepped down as the agency’s leader in December. Mr. Cordray joined the consumer bureau in 2011 as its enforcement director.

The nominations could face a mixed reception in Congress. The Senate already declined to confirm Mr. Cordray, with Republicans vowing to block any candidate for the consumer bureau, a new agency created to rein in the financial industry’s excesses. It is unclear whether the White House and Mr. Cordray will face another standoff the second time around.

Mr. Carney argued that there were no substantive objections to Mr. Cordray’s confirmation, only political ones. “He is absolutely the right person for the job,” Mr. Carney said.

Ms. White is expected to receive broader support on Capitol Hill. Senator Charles E. Schumer, a New York Democrat, declared that Ms. White was a “tough-as-nails prosecutor” who “will not shy away from enforcing the laws to ensure that markets operate fairly.”

But she could face questions about her command of arcane financial minutiae. She was a director of the Nasdaq stock market, but has otherwise built her career on the law-and-order side of the securities industry.

People close to the S.E.C. note, however, that her husband, John W. White, is a veteran of the agency. From 2006 through 2008, he was head of the S.E.C.’s division of corporation finance, which oversees public companies’ disclosures and reporting.

Some Democrats also might question her path through the revolving door, in and out of government. While seen as a strong enforcer as a United States attorney, she went on in private practice to defend some of Wall Street’s biggest names, including Kenneth D. Lewis, a former head of Bank of America. She also represented JPMorgan Chase and the board of Morgan Stanley. Last year, the N.F.L. hired her to investigate allegations that the New Orleans Saints carried out a bounty system for hurting opponents.

Consumer advocates generally praised her appointment on Thursday. “Mary Jo White was a tough, smart, no-nonsense, broadly experienced and highly accomplished prosecutor,” said Dennis Kelleher, head of Better Markets, the nonprofit advocacy group. “She knew who the bad guys were, went after them and put them in prison when they broke the law.”

The appointment comes after the departure of Ms. Schapiro, who announced she would step down from the S.E.C. in late 2012. In a four-year tenure, she overhauled the agency after it was blamed for missing the warning signs of the crisis.

Since her exit, Washington and Wall Street have been abuzz with speculation about the next S.E.C. chief. President Obama quickly named Ms. Walter, then a Democratic commissioner at the agency, but her appointment was seen as a short-term solution. It is unclear if she will shift back to the commissioner role if Ms. White is confirmed.

In the wake of Ms. Schapiro’s exit, several other contenders surfaced, including Sallie L. Krawcheck, a longtime Wall Street executive. Richard G. Ketchum, chairman and chief executive of the Financial Industry Regulatory Authority, Wall Street’s internal policing organization, was also briefly mentioned as a long-shot contender.

Peter Baker and Kitty Bennett contributed reporting

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DealBook | The Trade: Financial Crisis Suit Suggests Bad Behavior at Morgan Stanley

On March 16, 2007, Morgan Stanley employees working on one of the toxic assets that helped blow up the world economy discussed what to name it. Among the team members’ suggestions: “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust” and “Mike Tyson’s Punchout,” as well a simple yet direct reference to a bag of excrement.

Ha ha. Those hilarious investment bankers.

Then they gave it its real name and sold it to a Chinese bank.

We are never going to have a full understanding of what bad behavior bankers conducted in the years leading up to the financial crisis. The Justice Department and the Securities and Exchange Commission have failed to hold big wrongdoers to account.

We are left with what scraps we can get from those private lawsuits lucky enough to get over the high hurdles for document discovery. A case brought against Morgan Stanley by a Taiwanese bank in a New York State Supreme Court in Manhattan has cleared that bar.

The results are explosive. Hundreds of pages of internal Morgan Stanley documents, released publicly last week, shed much new light on what bankers knew at the height of the housing bubble and what they did with that secret knowledge.

The lawsuit concerns a $500 million collateralized debt obligation called Stack 2006-1, created in the first half of 2006. Collections of mortgage-backed securities, C.D.O.’s were at the heart of the financial crisis.

But the documents suggest a pattern of behavior larger than this one deal: people across the bank understood that the American housing market was in trouble. They took advantage of that knowledge to create and then bet against securities and then also to unload garbage investments on unsuspecting buyers.

Morgan Stanley doesn’t see the narrative as the plaintiffs do. The firm is fighting the lawsuit, contending that the buyers were sophisticated clients and could have known what was going on in the subprime market. The C.D.O. documents disclosed, albeit obliquely, that Morgan Stanley might bet against the securities, a strategy known as shorting. The firm did not pick the assets going into the deal (though it was able to veto any assets). And any shorting of the deal was part of a larger array of trades, both long and short. Indeed, Morgan Stanley owned a big piece of Stack, in addition to its short bet.

Regarding the profane naming contest, Morgan Stanley said in a statement: “While the e-mail in question contains inappropriate language and reflects a poor attempt at humor, the Morgan Stanley employee who wrote it was responsible for documenting transactions. It was not his job or within his skill set to assess the state of the market or the credit quality of the transaction being discussed.”

Philip Blumberg, the Morgan Stanley lawyer who composed most of the names, meet the underside of a bus, courtesy of your employer.

Another Morgan Stanley employee sent an e-mail that same morning, suggesting that the deal be called “Hitman.” This might have been an attempt to manage up, because “Hitman” was the nickname of his boss, Jonathan Horowitz, who helped head the part of the group that oversaw mortgage-backed C.D.O.’s. Mr. Horowitz replied, “I like it.”

Both Mr. Blumberg and Mr. Horowitz, now at JPMorgan, declined to comment through representatives at their banks.

In February 2006, Morgan Stanley began putting together the Stack C.D.O. According to an internal presentation, Stack “represents attractive business for Morgan Stanley.”

Why? In addition to fees, another bullet point listed: “Ability to short up to $325MM of credits into the C.D.O.” In other words, Morgan Stanley could — and did — sell assets to the Stack C.D.O., intending to profit if the securities backed by those assets declined. The bank put on a $170 million bet against Stack, even as it was selling it.

In the end, of the $500 million of assets backing the deal, $415 million ended up worthless.

“While investors and taxpayers all over the world continue to choke on Wall Street’s toxic subprime products, to this day not a single major Wall Street executive has been held accountable for misconduct relating to those products,” said Jason C. Davis, a lawyer at Robbins Geller who is representing the plaintiff in the lawsuit. “They are generally untouchable, but we are pleased that the court in this case is ordering Morgan Stanley to turn over damning evidence, so that the jury will get to see what Morgan Stanley really knew about the troubled nature of its supposedly ‘higher-than-AAA’ quality product.”

Why might Morgan Stanley have bet against the deal? Did its traders develop a brilliant thesis by assessing the fundamentals of the housing market through careful analysis of the public data? The documents suggest something more troubling: bankers found out that the housing market was diseased from their colleagues down the hall.

Bankers were getting information from fellow employees conducting and receiving private assessments of the quality of the mortgages that the bank would purchase to back securities. These reports weren’t available to the public. It would be crucial information for trading in securities backed by those kinds of mortgages.

In one e-mail from Oct. 21, 2005, a Morgan Stanley employee warns a banker that the mortgages Morgan Stanley is buying from loan originators are troubled. “The real issue is that the loan requests do not make sense,” he writes. As an example, he cites “a borrower that makes $12K a month as an operation manger (sic) of an unknown company — after research on my part I reveal it is a tarot reading house. Compound these issues with the fact that we are seeing what I would call a lot of this type of profile.”

In another e-mail from March 17, 2006, another Morgan Stanley employee writes about a “deteriorating appraisal quality that is very flagrant.”

Two of the employees who received those e-mails joined an internal hedge fund, headed by Howard Hubler, that was formed only the following month, in April 2006. As recounted in Michael Lewis’s “The Big Short,” Mr. Hubler infamously bet against the subprime market on Morgan Stanley’s behalf, a fact that Morgan Stanley’s chief financial officer conceded in late 2007. Mr. Hubler’s group was supposed to be separate from the rest of Morgan Stanley, but the two bankers continued to receive similar information about the underlying market, according to the person briefed on the matter.

At no point did they receive material, nonpublic information, a Morgan Stanley spokesman says.

I struggle to see how the private assessments that the subprime market was imploding were immaterial.

Another of Morgan Stanley’s main defenses is that it couldn’t have thought the investment it sold to the Taiwanese was terrible because it, too, lost money on securities backed by subprime mortgages. As the Morgan Stanley spokesman put it, “This deal must be viewed in the context of a significant write-down for Morgan Stanley in 2007, when the firm recorded huge losses in its public securities filings related to other subprime C.D.O. positions.”

This is a common refrain offered by big banks like Citigroup, Merrill Lynch and Bear Stearns to absolve them of any responsibility.

But does losing money wipe away sin?

Yes, Mr. Hubler made his bets in what turned out to be a deeply disastrous way. As part of a complex array of trades, he bet against the middle slices of subprime mortgage C.D.O.’s. He bought the supposedly safe top parts. The income from the top slices helped offset the cost of betting against the middle slices. But when the market collapsed, the top slices — called “super senior” because they were supposedly safer than Triple A — didn’t hold their value, losing billions for Mr. Hubler and Morgan Stanley. Mr. Hubler did not respond to requests for comment.

So Morgan Stanley lost a great deal of money.

But let’s review what the documents suggest is the big picture.

In the fall of 2005, bank employees share nonpublic assessments of how the subprime market is a house of tarot cards.

In February 2006, the bank begins creating Stack in part so that it can bet against it.

In April 2006, the bank creates its own internal hedge fund, led by Mr. Hubler, who shorts the subprime market. Among the traders in this internal shop are people who helped create Stack and other deals like it, and at least two employees who had access to the private due diligence reports.

Mr. Hubler’s group had no investment position in Stack, according to a person briefed on the matter, but it sure looks as if the bank saw what was coming and tried to position itself for a subprime market collapse.

Finally, by early 2007, the bank appears to realize that the subprime market is cratering even worse that it expects. Even the supposedly safe pieces of C.D.O.’s that it owns, including its piece of Stack, are facing losses. So Morgan Stanley bankers set to scouring the world to peddle as a safe and sound investment what its own employees are internally deriding.

Morgan Stanley declined to comment on whether it made money on its Stack investments over all. But it looks to have turned out well for the bank. In Stack, it managed to fob off a nuclear bomb to the Taiwanese bank.

Unfortunately for Morgan Stanley, it had so many other pieces of C.D.O.’s, so many nuclear warheads, that it couldn’t find nearly enough suckers around the world to buy them all.

And so when the real collapse came, Morgan Stanley was left with billions of dollars in losses.

That hardly seems exculpatory.


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Cisco to buy Israel-based software maker for $475 million


(Reuters) - Cisco Systems Inc said it will buy Israeli software maker Intucell for about $475 million in cash to expand its mobile network management offerings.


Privately held Intucell makes software that helps mobile carriers manage cellular networks automatically.


(Reporting by Supantha Mukherjee in Bangalore; Editing by Maju Samuel)



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Sundance stars sound off on gun violence in film


PARK CITY, Utah (AP) — The Sundance Film Festival isn't home to many shoot-'em-up movies, but action-oriented actors at the festival are being questioned about Hollywood's role in American gun violence.


Guy Pearce, Ellen Page and Alexander Skarsgard all say Hollywood shares in the blame.


Pearce is in Park City, Utah, to support the family drama "Breathe In," but he's pulled plenty of imaginary triggers in violent films such as "Lockdown" and "Lawless." He says Hollywood may make guns seem "cool" to the broader culture, but there are vast variations in films' approach to guns.


Skarsgard says that despite the existence of violent video games and Hollywood movies in his native country of Sweden, there aren't nearly as many gun deaths there. Page says the availability of "crazy assault rifle(s)" makes her feel less safe.


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