Month: March 2005


  • Mayor Bloomberg marches in the 244th Annual St. Patrick’s Day Parade. March 17, 200









    Mayor Mike


    John Cassidy discusses Bloomberg’s record, his money, and his ambitions/


    Issue of 2005-04-04
    Posted 2005-03-28


    This week in the magazine, John Cassidy writes about New York City’s mayor, Michael Bloomberg, focussing on Bloomberg’s businesslike style and his obsession with building a sports stadium on the West Side of the city. Here, with The New Yorker’s Ben Greenman, Cassidy discusses Bloomberg and his first administration.


    BEN GREENMAN: If Bloomberg does not win reëlection in November, how will he be remembered as a mayor?


    JOHN CASSIDY: That’s a tough question. In the short term, I think he will be remembered as a good mayor who did better than many people expected. We tend to forget now what it was like in New York after 9/11. When Bloomberg was inaugurated, the smoke was still rising at Ground Zero. The economic outlook was highly uncertain, some people were predicting a mass corporate exodus, and the city had a big budget deficit. Bloomberg handled the situation calmly and competently. He balanced the budget, kept the city running, and didn’t make any terrible mistakes. He’s never been very popular—he’s not a man who inspires strong feelings, generally speaking—but I think most New Yorkers, even his opponents, think he has done pretty well.


    In the long term, if he loses in November, I think Bloomberg will be remembered as a billionaire with no political experience who spent seventy-five million dollars, or whatever it was—he won’t say exactly—to buy his way into City Hall. As far as political history is concerned, that probably overshadows most of the things he has done in office. Of course, the businessman-politician phenomenon is happening all over the country, but this was the first time since the nineteenth century that a businessman has become mayor of New York. Given how well Bloomberg has done, I think we’ll probably see more of them in the future. He’s broken the taboo.


    He followed Rudolph Giuliani, one of the city’s most controversial and, following September 11th, most popular mayors. Why did Giuliani choose Bloomberg? What do the differences in their styles and personalities mean for the city?


    You’d have to ask Rudy why he chose Bloomberg. The two have never been particularly close personally. But I think Giuliani wanted to leave a legacy of another Republican mayor, and Bloomberg was the best Republican candidate available, even if he had only just joined the Party. He was moderate and sensible, and he had a lot of money to spend on the campaign. Even after 9/11, I don’t think he would have been elected if the Democrats hadn’t self-destructed, but who knows for sure? As for personalities, obviously Bloomberg doesn’t have Giuliani’s charisma, magnetism, megalomania—whatever you want to call it. You just have to see the two of them together and that’s obvious. On St. Patrick’s Day, they walked down Fifth Avenue together, and the crowds were cheering, “Rudy, Rudy, Rudy.” Of course, Giuliani’s performance on and after 9/11 had a lot to do with that, but even without 9/11 he’s always been a fascinating, almost Gothic character, especially compared with Bloomberg. On the other hand, I think quite a lot of New Yorkers are relieved to have a low-key mayor who doesn’t make such a big fuss about things. Having Rudy in City Hall was a melodrama: the constant political battles, the divorce, the terrorist attack. Melodramas are fun for a while, but they get tiring. Bloomberg minds the shop without much fuss and things seem to work out O.K. It doesn’t sound like a great campaign slogan, but it might well be enough.


    For people who do not live in New York, can you explain the phenomenon of moderate New York Republicans? Giuliani has moved back toward the right a bit as he prepares for a possible Presidential bid in 2008, but he is still liberal on social issues. Bloomberg considers himself a nonpartisan moderate. Why are national Party trends not reflected in the city?


    It’s primarily a matter of history and immigration. Historically, the Democrats have been the party of the immigrants and the minorities, and, as a result, they have controlled City Hall. Things have changed a bit in recent years, but not very much. The majority of New Yorkers are nonwhite. In terms of registered voters, the Democrats hold an advantage of almost six to one. Given that this is the political battlefield the parties are competing on, white, conservative Republicans don’t have any prospect of victory. If Tom DeLay ran in New York, he wouldn’t have a prayer. (Well, he might have a prayer, but he wouldn’t have anything else.) So if you are a Republican and you want to be mayor, you have to trim to the left. Rudy did it. Bloomberg does. Of course, there is a question of whether Bloomberg is really a Republican at all. Until a few years ago, he was a registered Democrat.


    Much of the article deals with Bloomberg’s preoccupation with the West Side stadium, as well as the bid to host the 2012 Olympics. Why is he obsessed with the stadium and the Games?


    That’s what everybody is asking, even his own supporters. There are two basic theories, both of which are partially true, I think. The first one, which I spend a lot of the article explaining, is that Bloomberg is basically an entrepreneur, and what entrepreneurs believe in is innovation and growth. Bloomberg thinks of himself as New York’s C.E.O. If you look at the stadium that way, it makes some sense. The city faces a long-term crisis. It spends more than it takes in from taxes. (Bloomberg has balanced the budget in the short term, but in the long term the trends are all bad.) So as a pragmatic businessman what do you do? One option is cutting spending: laying off workers, shutting down firehouses, that sort of thing. The problem is that New Yorkers don’t like these cuts, and they are right. They impact the quality of life. What’s the alternative? Raising taxes is one possibility, but people don’t like that, either, as Bloomberg discovered when he raised the property tax. The only option left is expanding the tax base through economic growth. That’s Bloomberg’s strategy. The stadium, which Bloomberg views more as a convention center, is part of a broad economic-development plan that is designed to stimulate growth throughout the city. Will it work? It’s not clear.


    So that’s one theory: Bloomberg the entrepreneur. The other theory is more cynical. It says that Dan Doctoroff, the deputy mayor for economic development, talked Bloomberg into supporting the stadium, and he’s been stuck with it ever since. Doctoroff is in charge of the 2012 Olympics bid, which depends on a stadium being built. I talked with Doctoroff. He’s very articulate and persuasive. I’m sure he did make a strong case to Bloomberg for the stadium. At the same time, though, Bloomberg is an opinionated, self-made billionaire. People like that don’t do things unless they want to do them. I think Bloomberg believes in the economic arguments for the stadium and the transformation of the West Side. Doctoroff may have got him interested in the first place, but Bloomberg is his own man.


    If the stadium becomes very unpopular politically, is he likely to give up on it?


    Not much chance of that. He’s determined to go ahead with it, come what may. The public opposition has only strengthened his resolve. He thinks, I’m not a normal politician. I’ll do what I think is right, not what the polls say I should do. He’s funny like that. I think it was the same thing with the smoking ban. To begin with, it was unpopular, but that only convinced Bloomberg that he was right. Now, of course, most people support the smoking ban.


    What is his over-all vision for the city? How much chance does he have of realizing it?


    He’s not really a “vision guy.” He’s a pragmatic businessman. But I think he does have an idea in his head of what New York should be—a multiracial, multicultural meritocracy, where anybody can come and succeed by dint of enterprise and hard work. Of course, this is not a very original idea, but it remains a powerful one. Bloomberg came from a pretty modest background, remember. He’s a product of the meritocracy. That’s why he is so big on education reform. You can’t have a fluid meritocracy if half the school population, or more than half, is functionally illiterate.


    Does his businessman’s perspective benefit him in certain areas of government but harm him in others? How has it affected education, for example?


    Well, it makes him more open to reform. Unlike most politicians, he doesn’t have a stake in the existing system. In New York, most politicians are Democrats, so, inevitably, they are partly beholden to the unions. There is nothing wrong with that. Unions represent the working people, and they deserve a strong voice. But they have their own interests, which they want to protect. The teachers’ union is a good example. At the moment, thanks to the union contract, teachers can choose which schools they work at, based on seniority. Now, when that rule was introduced, it may have sounded sensible: why not reward loyalty and long service? But what it means in practice is that the best and most experienced teachers choose good schools, and starting teachers, who don’t know much, get stuck in bad schools in bad neighborhoods, which is where you really need good teachers. Bloomberg is trying to change this, and he is right to do so.


    Of course, there are disadvantages to being a businessman, too, such as lack of knowledge about government, and lack of political sense. When Bloomberg took over, he just didn’t know very much about how the city worked, and it took him a while to get up to speed. He made some silly suggestions early on, such as using empty prisons to house homeless people. He caught up pretty quickly, but his political judgment is still suspect, and the stadium is a perfect example of that. From a political perspective, it makes little sense to stake your mayoralty on a project that most New Yorkers oppose. If Bloomberg had been a more experienced politician, he would have realized what he was getting into a lot earlier. But he thought he could ram it through, just like the smoking ban, and that eventually people would come around.


    As you observed his mayoral administration, was there anything that surprised you?


    Sure, lots of things. You always discover stuff when you spend a long time reporting an article. Here’s a basic one: people think that Bloomberg spends most of his time in City Hall. Well, he is there every day, but he also spends a heck of a lot of time tripping around the city, from event to event. Every day, he does two or three of them, sometimes five or six. There are official events, semi-official events, and private events. I remember Ed Koch once said that he didn’t want to be a “ribbon-cutting mayor,” but he didn’t have any choice. Bloomberg is the same. To begin with, he didn’t like it much, but now he’s actually pretty good at it. Which leads me to another point: Bloomberg is a pretty terrible public speaker. If you turn on NY1 and see him making a speech, his voice is flat and grating. He sounds like a bank manager, or something. But one-on-one, and in small groups, he’s a lot more engaging and animated. He’s self-deprecating. He makes jokes. Not necessarily good ones, but jokes nonetheless. One of the big challenges that his campaign strategists face is getting this side of him across to the public.


    You say in the article that Bloomberg’s daughter hopes to compete for a place on the 2012 Olympic equestrian team. Does she have a shot at a medal?


    I’m not sure. By all accounts, she’s a very talented rider, although she had a bad fall recently. I think she has been close to making the national team before. Bloomberg seems to be optimistic about her chances. He said that watching her win a medal on Staten Island—that’s where the equestrian events would be held—would be the highlight of his life. Of course, he might have just been saying this for political reasons, but I don’t think so. He certainly sounded sincere. If he was faking it, he’s a better politician than I have given him credit for being.


     


     


     












  • PIECEWORK

    by ATUL GAWANDE

    Medicine’s money problem.

    Issue of 2005-04-04
    Posted 2005-03-28



    To become a doctor, you spend so much time in the tunnels of preparation—head down, trying not to screw up, trying to make it from one day to the next—that it is a shock to find yourself at the other end, with someone shaking your hand and asking how much money you want to make. But the day comes. Two years ago, I was finishing my eighth and final year as a resident in surgery. I had got a second interview for a surgical staff position at the Brigham and Women’s Hospital, in Boston, where I had trained. It was a great job—I’d get to specialize in surgery for certain tumors that interested me, but I’d also be able to do some general surgery. On the appointed day, I put on my fancy suit and took a seat in the wood-panelled office of the chairman of surgery. He sat down opposite me and then he told me the job was mine. “Do you want it?” Yes, I said, a little startled. The job, he explained, came with a guaranteed salary for three years. After that, I would be on my own: I’d make what I brought in from my patients and would pay my own expenses. So, he went on, how much should we pay you?


    After all those years of being told how much I would either pay (about forty thousand dollars a year for medical school) or get paid (about forty thousand dollars a year in residency), I was stumped. “How much do the surgeons usually make?” I asked.


    He shook his head. “Look,” he said, “you tell me what you think is an appropriate income to start with until you’re on your own, and if it’s reasonable that’s what we’ll pay you.” He gave me a few days to think about it.



    Most people gauge what they should be paid by what others are paid for doing the same work, so I tried asking various members of the surgical staff. These turned out to be awkward conversations. I’d pose my little question, and they’d start mumbling as if their mouths were full of crackers. I tried all kinds of formulations. Maybe they could tell me how much take-home pay would be if one did, say, eight major operations a week? Or how much they thought I should ask for? Nobody would give me a number.


    Most people are squeamish about saying how much they earn, but in medicine the situation seems especially fraught. Doctors aren’t supposed to be in it for the money, and the more concerned a doctor seems to be about making money the more suspicious people become about the care being provided. (That’s why the good doctors on TV hospital dramas drive old cars and live in ramshackle apartments, while the bad doctors wear bespoke suits.) During our hundred-hour-week, just-over-minimum-wage residencies, we all take a self-righteous pleasure in hinting to people about how hard we work and how little we earn. Settled into practice a few years later, doctors clam up. Since the early nineteen-eighties, public surveys have indicated that two-thirds of Americans believe that doctors are “too interested in making money.” Yet the health-care system, as I soon discovered, requires doctors to give inordinate attention to matters of payment and expenses.


    To get a sense of the numbers involved, I asked our physician group’s billing office for a copy of its “master fee schedule,” which lists what various insurers pay staff doctors for the care they provide. It has twenty-four columns across the top, one for each of the major insurance plans, and, running down the side, a row for every service a doctor can bill for. Our current version goes on for more than six hundred pages. Everything’s in there, with a dollar amount attached. For those who have Medicare—its payments are near the middle of the range—an office visit for a new patient with a “low complexity” problem (service No. 99203) pays $77.29. A visit for a “high complexity” problem (service No. 99205) pays $151.92. Setting a dislocated shoulder (service No. 23650) pays $275.70. Removing a bunion: $492.35. Removing an appendix: $621.31. Removing a lung: $1,662.34. The best-paid service on the list? Surgical reconstruction for a baby born without a diaphragm: $5,366.98. The lowest-paying? Trimming a patient’s nails (“any number”): $10.15. The hospital collects separately for any costs it incurs.


    The notion of a schedule like this, with services and fees laid out à la carte like a menu from Chili’s, may seem odd. In fact, it’s rooted in ancient history. Doctors have been paid on a piecework basis since at least the Code of Hammurabi; in Babylon during the eighteenth century B.C., a surgeon got ten shekels for any lifesaving operation he performed (only two shekels if the patient was a slave). The standardized fee schedule, though, is a thoroughly modern development. In the late nineteen-eighties, insurers, both public and private, began to agitate for a more “rational” schedule of physician payments. For decades, they had been paying physicians according to what were called “usual, customary, and reasonable fees.” This was more or less whatever doctors decided to charge. Not surprisingly, some of the charges began to rise considerably. There were some egregious distortions. For instance, cataract-surgery fees (which could reach six thousand dollars in 1985) had been set when the operation typically took two to three hours. When new technologies allowed ophthalmologists to do these operations in thirty minutes, the fees didn’t change. Billings for this one operation grew to consume four per cent of Medicare’s budget. In general, payments for doing procedures had far outstripped payments for diagnoses. In the mid-eighties, doctors who spent an hour making a complex and lifesaving diagnosis were paid forty dollars; for spending an hour doing a colonoscopy and excising a polyp, they received more than six hundred dollars.


    This was, the federal government decided, unacceptable. The system discouraged good primary care, and distorted specialty care. So the government determined that payments ought to be commensurate with the amount of work involved. The principle was simple and sensible; putting it into practice was another matter. In 1985, William Hsiao, a Harvard economist, was commissioned to measure the exact work involved in each of the tasks doctors perform. It must have seemed a quixotic assignment, something like being asked to measure the exact amount of anger in the world. But Hsiao came up with a formula. Work, he decided, was a function of time spent, mental effort and judgment, technical skill and physical effort, and stress. He put together a large team that interviewed and surveyed thousands of physicians from almost two dozen specialties. They analyzed what was involved in everything from forty-five minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer.


    They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Estimates and extrapolations were made in this way for thousands of services. (Cataract surgery was estimated to involve slightly less work than a hysterectomy.) Overhead and training costs were factored in. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do. Some specialists were outraged by particular estimates. But Congress set a multiplier to convert the relative values into dollars, the new fee schedule was signed into law, and in 1992 Medicare started paying doctors accordingly. Private insurers followed shortly thereafter (although they applied somewhat different multipliers, depending on the deals they struck with local physicians).


    There is a certain arbitrariness to the result. Who can really say whether a hysterectomy is more labor-intensive than cataract surgery? A subsequent commission has reëxamined and recalibrated the relative values for more than six thousand different services. Such toil will no doubt continue in perpetuity. But the system has been accepted—more or less.



    Even with the fee schedule in front of me, I had a hard time figuring out how much I’d earn. My practice would primarily involve office visits, some general surgery (appendectomies, gallbladder removals, bowel and breast surgery), and—given my interest in endocrine tumors—a lot of thyroid and adrenal surgery. Each of these procedures pays between six hundred and eleven hundred dollars, and I could expect to do eight or so a week. Multiplying the numbers by forty-eight workweeks in a year, it seemed that I could make a flabbergasting half-million dollars a year. But then I’d have to spend thirty-one thousand dollars a year on malpractice insurance, and eighty thousand dollars a year to rent office and clinic space. I’d have to buy computers and other office equipment, and hire a secretary and a medical assistant or a nurse. The department of surgery deducts 19.5 per cent for its overhead. Then, there’s the five to ten per cent of patients who get free care because they don’t have insurance. And, even when patients are insured, some pay far less than others. Studies also indicate that insurers find a reason to reject up to thirty per cent of the bills they receive.


    Roberta Parillo is a financial-disaster specialist for doctors who is called by physician groups or hospitals when they suddenly find that they can’t make ends meet. (“I fix messes” was the way she put it to me.) At the time I spoke to her, she was in Pennsylvania, trying to figure out where things had gone wrong for a struggling hospital. In previous months, she’d been in Mississippi, to help a group of a hundred and twenty-five physicians who found they were in debt; Washington, D.C., where a physician group was worried about its survival; and New England, for a big anesthesiology department that had lost fifty million dollars. She’d turned away a dozen other clients. It’s quite possible, she told me, for a group of doctors to make nothing at all.


    Doctors quickly learn that how much they make has little to do with how good they are. It largely depends on how they handle the business side of their practice. “A patient calls to schedule an appointment, and right there things can fall apart,” she said. If patients don’t have insurance, you have to see if they qualify for a state assistance program like Medicaid. If they do have insurance, you have to find out whether the insurer lists you as a valid physician. You have to make sure the insurer covers the service the patient is seeing you for and find out the stipulations that are made on that service. You have to make sure the patient has the appropriate referral number from his primary-care physician. You also have to find out if the patient has any outstanding deductibles or a co-payment to make, because patients are supposed to bring the money when they see you. “Patients find this extremely upsetting,” Parillo said. “ ‘I have insurance! Why do I have to pay for anything! I didn’t bring any money!’ Suddenly, you have to be a financial counsellor. At the same time, you feel terrible telling them not to come in unless they bring cash, check, or credit card. So you see them anyway, and now you’re going to lose twenty per cent, which is more than your margin, right off the bat.”


    Even if all this gets sorted out, there’s a further gantlet of mind-numbing insurance requirements. If you’re a surgeon, you may need to obtain a separate referral number for the office visit and for any operation you perform. You may need a pre-approval number, too. Afterward, you have to record the referral numbers, the pre-approval number, the insurance-plan number, the diagnosis codes, the procedure codes, the visit codes, your tax I.D. number, and any other information the insurer requires, on the proper billing forms. “If you get anything wrong, no money—rejected,” Parillo said. Insurers also have software programs that are designed to reject certain combinations of diagnosis, procedure, and visit codes. Any rejection, and the bill comes back to the patient. Calls to the insurer produce automated menus and interminable holds.


    Parillo’s recommendations are pretty straightforward. Physicians must computerize their billing systems, she said. They must carefully review the bills they send out and the payments that insurers send back. They must hire office personnel just to deal with the insurance companies. A well-run office can get the insurer’s rejection rate down from thirty per cent to, say, fifteen per cent. That’s how a doctor makes money, she told me. It’s a war with insurance, every step of the way.



    When I was going through medical training, a discouraging refrain from older physicians was that they would never have gone into medicine had they known what they know now. A great many of them simply seemed unable to sort through the insurance morass. This was perhaps why a 2004 survey of Massachusetts physicians found that fifty-eight per cent were dissatisfied with the trade-off between their income and the number of hours they were working; fifty-six per cent thought their income was not competitive with what others earn in comparable professions; and forty per cent expected to see their income fall over the next five years.


    William Weeks, a Dartmouth professor, has done a number of studies on the work life of physicians. He and his colleagues found that working hours for physicians are indeed longer than for other professions. (In 1998, the typical general surgeon worked sixty-three hours per week.) He also found that, if you view the expense of going to college and professional school as an investment, the payoff is somewhat poorer in medicine than in other professions. Tracking the fortunes of graduates of medical schools, law schools, and business schools with comparable entering grade-point averages, he found that the annual rate of return by the time they reach middle age is sixteen per cent per year in primary-care medicine, eigh-teen per cent in surgery, twenty-three per cent in law, and twenty-six per cent in business. Not bad, in any of these fields, but the differences are there. A physician’s income also tends to peak when he has been in practice between five and ten years, and then decrease in subsequent years as his willingness and ability to work the long hours wane.


    All that said, it seems churlish to complain. Here are the facts. In 2003, the median income for primary-care physicians was $156,902. For general surgeons, like me, it was $264,375. In certain specialties, the income can be a good deal higher. Busy orthopedic surgeons, cardiologists, pain specialists, oncologists, neurosurgeons, hand surgeons, and radiologists frequently earn more than half a million dollars a year. Maybe lawyers and businessmen can do better. But then most biochemists, architects, math professors earn less. In the end, are we working for the profits or for the patients? We can count ourselves lucky that we haven’t had to choose.


    There are, however, those who do choose—and manage to earn considerably more than most. I talked to one such surgeon. He had practiced general surgery at the same East Coast hospital for three decades. He loved his work, he said. He did not have an unduly heavy schedule. His office hours were from nine-thirty to three-thirty on just one day a week. He did about six operations a week. He had been able to develop a special interest and skill in laparoscopy—performing operations through tiny incisions using fine instruments and a fibre-optic video camera. And he no longer had to cover midnight emergencies. I asked him in some roundabout way how much he earned doing this. “Net income?” he said. “About one point two million last year.”


    I had to catch my breath for a moment. He’d made more than a million dollars every year for at least the past decade. I wondered how it was possible, or even acceptable, to earn so much for doing general surgery. He was perfectly aware of the reaction. (As was his hospital, which did not want his or its name to appear in print for this article.) “I think doctors shortchange themselves,” he said. “Doctors are working for fees that are similar to or below plumbers or electricians”—professions that, he noted, don’t require a decade of school and training. He doesn’t see why doctors should let insurance companies dictate their compensation. So he accepts no insurance. If you decide to see him, you pay cash. If you then want to fight with your insurer for reimbursement, that’s up to you.


    The fees he charges are what he finds the market will bear. For a laparoscopic cholecystectomy—removal of the gallbladder, one of the most common operations in general surgery—insurers will pay surgeons about seven hundred dollars. He asks for eighty-five hundred dollars. For a gastric fundoplication, an operation to stop severe reflux of stomach acid, insurers pay eleven hundred dollars. He charges twelve thousand dollars. He has had no shortage of patients.


    It’s not clear how easily others would replicate his success. After all, he works in a large metropolis, where many people have either incomes or insurance policies generous enough to accommodate his fees. He’s also something of a star in his field. “I know in my heart that I can do things that other surgeons can’t,” he told me.


    But suppose I did what he did—refused to deal with insurance and charged what the market would bear. I would not make millions, but I could make a lot more than I otherwise would. I’d avoid all the insurance hassles, too. Still, would I want to be a doctor only to those who could afford me?


    Why not? the surgeon was asking. “For doctors to think we have to be altruistic is sticking our heads in the sand,” he told me. Everyone is squeezing us in order to make money, he said—everyone from the supply companies that we pay to the insurers who are supposed to pay us. “The C.E.O. of Aetna’s compensation is now ten million dollars,” he pointed out. “These are for-profit companies. Insurance companies make money by withholding reimbursements to physicians or by not approving payment for a service we’ve provided.” To him, the question is why we deal with them at all. In his view, doctors need to understand that we are businessmen—nothing less, nothing more—and the sooner we accept this the better.


    His position has a certain bracing clarity. Yet, if this is purely a service-for-money business, if doctoring is no different from doing oil changes, why choose to endure twelve years of medical training, instead of, say, two years of business school? I still believe that doctors remain fundamentally motivated by the hope of doing meaningful and respected work for society. Hence the responsibility most of us feel to take care of people even when their insurers exasperate us, or when they have no insurance at all. If we fail ordinary people, then the notion that we do something special is gone. I can understand wanting to escape the insurance morass. But isn’t there some other way around it?



    In 1971, a thirty-three-year-old internist named Harris Berman decided to do things a little differently. He and a friend who had just completed his general-surgery training moved back to their home state of New Hampshire, to the town of Nashua. They joined up with a pediatrician, a family practitioner, and an obstetrician. Together they offered health care to patients for a fixed fee, without any bills to insurance companies. It was a radical experiment. They paid themselves fixed salaries of thirty thousand dollars a year, with no differences in income between specialties. They also bought reinsurance coverage to pay for costs that exceeded fifty thousand dollars, as Berman remembers it, in case a patient developed a catastrophic illness.


    The scheme worked. Berman, who is now sixty-six years old, told me the tale. They called themselves the Matthew Thornton Health Plan, after a physician who was one of New Hampshire’s three signers of the Declaration of Independence. They were essentially an H.M.O., though a very tiny one. Within a short time, about five thousand patients had signed up. The doctors thrived, and there were remarkably few hassles. In the beginning, they didn’t have any subspecialists, so when patients were sent to an ophthalmologist or an orthopedist the Thornton doctors had to make an individual payment. Eventually, they asked the specialists to accept a flat fee each month and dispense with the paperwork.


    “Some accepted,” Berman said. “And the effect on care was remarkable. The urologists, for example, suddenly became interested in having us understand which patients they really needed to see and which ones we could take care of without them. They came down and gave us talks—how to work up patients with blood in the urine and decide which ones you had to worry about. The ophthalmologists came down and told us how to take care of itchy eyes and runny eyes. They weren’t going to make more money seeing these unnecessary patients, and they found a way to make sure we became more efficient.”


    After a few years, the Matthew Thornton Health Plan started to be cheaper than other insurers. Employers caught on and enrollment soared. Berman had to bring in more doctors. That’s when things got more complicated. “In the beginning, we were all committed,” he said. “We worked hard—long hours, a lot of dedication, young and hungry. Then, as we started to get bigger and bring in more staff, we found that others joined for other reasons. They liked the salaried life style—the idea that being a doc could be a job, rather than a day-and-night commitment. Some were part-timers. We began to see people looking at their watches as five o’clock approached. It became clear that we had a productivity problem.” When they tried to bring in specialists to work full time with the group, the specialists refused to accept the same salary as the others. In order to get an orthopedic surgeon to join, Berman had to pay him considerably more than what everyone else got. It was the first of many adjustments he had to make in how and what to pay his fellow-physicians.


    Over the course of thirty years, Berman told me, he’d tried paying physicians almost every conceivable way. He’d paid low salaries and high salaries and still watched them go home at three in the afternoon. He’d paid fee-for-service and watched the paperwork accumulate and the doctors run up the bills to make more money. He’d come up with complicated bonus schemes for productivity and given doctors budgets to oversee. He’d given patients cash accounts to pay their doctors themselves. But no system was able to provide both simplicity and the right balance of thriftiness and reward for good patient care.


    By the mid-nineteen-eighties, sixty thousand patients had joined the Matthew Thornton Health Plan, mainly because it had controlled its costs more successfully than other plans. It had become the second-largest insurer in New Hampshire. And now it was Berman and his rules and his contracts that all the physicians complained about. In 1986, Berman left Matthew Thornton, and it was later taken over by Blue Cross. He went on to become the chief executive officer of Tufts Healthplan, one of New England’s largest health insurers (where he also earned a C.E.O.’s income). The radical experiment was over.



    In the United States in 2004, we spent somewhere around $1.8 trillion—15.4 per cent of all the money we have—on health care. Government and private insurance split about eighty per cent of those costs, and the rest largely came out of patients’ pockets. Americans seem to be reasonably happy with their care, but they haven’t liked the prices—insurance premiums increased by 9.3 per cent last year. Hospitals took about a third of the money; clinicians took another third; and the rest went for other things—nursing homes, prescription drugs, and the costs of administering our insurance system.


    Physicians’ after-expense incomes are a fairly small percentage of medical costs. But we’re responsible for most of the spending. For the patients I see in the office in a single day, I prescribe somewhere around thirty thousand dollars’ worth of medical care—in the form of specialist consultations, surgical procedures, hospital stays, X-ray imaging, and medicines. And how well these services are reimbursed inevitably affects how lavish I can be in dispensing them. This is where income becomes politics.


    I remember, nine years ago, getting the bill for the heart surgery that saved my son’s life. The total cost, it said, was almost a quarter-million dollars. My payment? Five dollars—the cost of the co-pay for the initial visit to the emergency room and the doctor who figured out that our pale and struggling boy was suffering from heart failure. I was an intern then, and in no position to pay for any significant part of his medical expenses. If my wife and I had had to, we would have bankrupted ourselves for him. But insurance meant that all anyone had to consider was his needs. It was a beautiful thing. Yet it’s also the source of what economists call “moral hazard”: with other people paying the bills, I did not care how much was spent or charged to save my child. To me, all the members of the team deserved a million dollars for what they did. Others were footing the bill—so it’s left to them to question the price. Hence the adversarial relationship doctors have with insurers. Whether insurance is provided by the government or by corporations, there is no reason to think that the battles—over the fees charged, the bills rejected, the pre-approval contortions—will ever end.


    Given the politics, what’s striking is how substantial medical payments have continued to be. Physicians in the United States today remain better compensated than physicians anywhere else in the world. Our earnings are more than seven times those of the average American employee, and that gap has grown over time. (In most industrialized countries, the ratio is under three.) This has allowed American medicine to attract enormous talent to its ranks, and kept doctors willing to work harder than members of almost any other profession. At the same time, the politics of health care has shown little concern for the uninsured. One in seven Americans has no coverage, and one in three younger than sixty-five will lose coverage at some point in the next two years. These are people who aren’t poor or old enough to qualify for government programs but whose jobs aren’t good enough to provide benefits, either. Our byzantine insurance system leaves gaps at every turn.



    A few days after the chairman of surgery offered me the job, I returned to his office and named my figure.


    “That’ll do fine,” he said, and we shook hands. Now I am the one who’s too embarrassed to say what I earn. We talked for a while afterward: about how to fit research in, how many nights I’d have to be on call, how to keep time for my family. The prospect of my new responsibilities filled me with both exhilaration and dread.


    As the meeting was ending, though, I realized that there was one final important question I had not brought up.


    “What are the health benefits like?” I asked.



  • Stephen Minarik, chairman of the New York State Republican Party.


    Bloomberg Might Endorse Clinton? Concern in G.O.P.


    By PATRICK D. HEALY





    ALBANY, March 30 – The chairman of the state Republican Party expressed concern about the “discipline and focus” of Mayor Michael R. Bloomberg’s re-election effort on Wednesday, citing Mr. Bloomberg’s recent kind words for the party’s bête noire, Senator Hillary Rodham Clinton.


    The Republican chairman, Stephen Minarik, said in an interview that he was not happy with Mr. Bloomberg’s suggestion Monday night that he might endorse Mrs. Clinton’s expected re-election campaign in 2006. Mr. Minarik said he was concerned that the mayor’s comment on someone as divisive as Mrs. Clinton showed a lack of disciplined adherence to his political message promoting his record, which Mr. Minarik praised.


    “I’m not going to say I was happy about it,” Mr. Minarik said in an interview on Wednesday, when asked about the mayor’s remark. “I was not happy. The mayor needs to show more discipline and focus and run squarely on his own record, which is strong.”


    “All successful candidates need party discipline, so I was disappointed that the mayor decided to make that statement,” Mr. Minarik added.


    Edward Skyler, a spokesman for the mayor, rejected the idea that Mr. Bloomberg was anything but disciplined and focused.


    “If you ask the mayor a question, you’ll get a straight answer,” Mr. Skyler said. “People shouldn’t read too much into a potential endorsement in a race where no one knows who’s running yet.”


    Mr. Skyler declined to predict whether Mr. Bloomberg might endorse Mrs. Clinton, who has not formally announced for re-election but said she plans to run.


    The G.O.P. chairman’s reaction underscored a looming electoral challenge for Mr. Bloomberg: wooing new Republican supporters and keeping conservatives while praising Democrats like Mrs. Clinton.


    A former Democrat himself, who registered as a Republican to seek office in 2001, Mr. Bloomberg is running in a city where Democrats have a roughly five-to-one advantage in voter registration, and his political standing is delicate enough that he often straddles party lines, endorsing both President Bush and Senator Charles E. Schumer, a Democrat, for re-election in 2004.


    “The mayor has made no bones about not being a true Republican, and in fact has referred to himself as a liberal,” said Douglas A. Muzzio, a professor of public affairs at Baruch College. “Minarik is pointing out a problem that the mayor could conceivably face – holding onto Republicans in Staten Island, in parts of Queens, and support from Giuliani Democrats.”


    In an interview on NY1 News Monday night, Mr. Bloomberg was asked if he might endorse Senator Clinton, akin to his support for Mr. Schumer last year. The mayor would not rule out the possibility, saying both senators “have worked very hard and very effectively for New York City and the state.” He added, “Party lines aren’t anywhere’s near as important to me as my responsibility to do what’s right for the public.”


    The remark drew criticism on Tuesday from Thomas V. Ognibene, a Republican challenger to Mr. Bloomberg. Mr. Ognibene also called on Mr. Minarik to resign as party chairman for supporting a mayor who might endorse Mrs. Clinton. Mr. Minarik said in the interview that he had no intention of resigning.


    Mr. Minarik said that falling crime rates, lower unemployment and education gains amounted to a “stellar record of achievement” and endorsed Mr. Bloomberg as a “smart and tough decisionmaker who deserves re-election.”


    But the party chairman was mindful of avoiding a Republican rift, as when former Mayor Rudolph W. Giuliani of New York crossed party lines to endorse Gov. Mario M. Cuomo, a Democrat, in his 1994 race against George E. Pataki, who won.


    Mr. Minarik is also seeking a challenger to Mrs. Clinton.


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  • The national trust, created to preserve historic structures, supported demolition of the Century Building in St. Louis


    When Preservation Equals Demolition


    By BRADFORD McKEE





    St. Louis


    FOR 108 years the neo-Classical style Century Building, with its 10-story marble facades accented by ornate friezes and pilasters, graced half a block in downtown St. Louis.


    But after 15 years of fighting by local preservationists it was razed in February to make way for a garage.


    The battle for the Century, with its familiar plot and cast of characters – preservationists squaring off against developers and politicians – resembled a typical preservation dispute. Yet it had an unusual twist: for the first time anyone involved can remember, the National Trust for Historic Preservation, the country’s most powerful preservation group, sided with the wreckers. In fact the redevelopment project that led to the Century’s demise was financed with the national trust’s help.


    Although the circumstances surrounding the Century are unusual, critics say the national trust, a private nonprofit organization with more than 200,000 members, has set a dangerous precedent.


    For Carolyn Hewes Toft, the president of the Landmarks Association of St. Louis, which has become an improbable adversary of the trust, its position was a violation of its mission to preserve historic structures. Ms. Toft suggested that the national trust had lost its integrity and said that of all the demolitions she had witnessed, “this loss is by far the most difficult to accept.”


    Officials at the national trust said that its part in the demolition reflects the changing role of preservation, which they said includes fighting urban sprawl and reviving entire downtown areas, as well as saving historic buildings and sites.


    Increasingly, the national trust is “using preservation as a tool for community revitalization,” said Richard Moe, its president. Sacrificing the Century, he added, was in line with the trust’s efforts to broker the renewal of historic but rundown neighborhoods like downtown St. Louis, even at the occasional expense of a treasured building.


    But for many preservationists, like Michael Tomlan, the director of the graduate program in historic preservation at Cornell University, that price is too high. What the national trust did, Mr. Tomlan said, was wrong. “It’s morally and in any number of senses ethically inappropriate. It violates preservation’s Hippocratic oath: if you can’t be supportive, for gosh sakes shut up.”


    Like the issues in most preservation battles, those surrounding the Century and downtown redevelopment here were complicated and played out over years as the parties jockeyed to influence the outcome.


    The Century’s fate was linked to the redevelopment of another building across the street, the Old Post Office, from the 1880′s, which is the centerpiece of downtown renewal projects.


    In 2001, when national trust officials were asked to consult on the transfer of the Old Post Office from federal to state ownership, they at first backed saving the Century. Missouri lined up two developers to restore, manage and lease the building for 99 years. Two tenants, Webster University and the state appellate courts, had already signed on.


    But the tenants demanded parking within view of the Old Post Office for security reasons. The developers, Steven Stogel of the DFC Group and Mark Schnuck of the Desco Group, local companies, did not want to spend the money to build underground parking and insisted that the Century was the only nearby above-ground site big enough for 1,000 cars. City officials agreed.


    Royce A. Yeater, the national trust’s regional director for the Midwest, said he tried to persuade the developers and the city to consider alternative sites, but they were intransigent. “The minds were made up within the power structure,” Mr. Yeater said in an interview. Mr. Stogel, the developer, said he studied all the alternatives offered, including an empty site directly north of the Old Post Office. “We reluctantly determined that we had to provide parking on the Century site,” he said.


    The national trust, making the restoration of the Old Post Office its priority, changed its position on the Century in January 2002 , swinging in favor of a garage on the site to ensure its continuing involvement with the project, Mr. Yeater said.


    Still, Mr. Yeater said, it was not an easy about-face for the national trust, which was founded by Congress in 1949 with a mandate to protect historic structures.


    In a bid to stop or at least slow the demolition, the Landmarks Association of St. Louis filed four lawsuits challenging the project. And in October 2002, nine months after the national trust gave its nod to demolition, the Interior Department accepted the Landmarks Association’s nomination of the Century to the National Register of Historic Places.


    The national trust’s commitment to the Old Post Office project deepened in December 2002, when Mr. Stogel, the developer, asked it to help finance the renovation through the National Trust Community Investment Corporation, its relatively new for-profit subsidiary.


    The investment corporation was formed in 2000 to encourage preservation projects with tax credits. Since 2003 the Treasury has allocated about $6 billion in so-called New Market tax credits to some 60 organizations, including the national trust, to be used as incentives for investors in depressed areas. So far the national trust’s corporation has invested $111 million in these tax credits in 19 projects, including the Dia Arts Foundation in an abandoned factory in Beacon, N.Y., which received $6.5 million; and the Telegram Building in Portland, Ore., a historic newspaper building turned into a commercial complex, which received $2.6 million. For the Old Post Office, the trust agreed in 2003 to allocate an $8.7 million tax credit.


    None of the other projects the corporation has financed has generated controversy on the scale of the Century, said John Leith-Tetrault, the president of the investment corporation.


    “We know you don’t make money on controversial projects,” Mr. Leith-Tetrault said. (Since 2003 the corporation has handed back $1.7 million in earnings to the national trust, after bearing the administrative costs of the tax-credit projects.)


    Under Treasury Department rules, the national trust’s investment corporation can charge up to 15 percent of its investment value as an administrative fee, an arrangement that some critics regard as a potential conflict between the nonprofit national trust’s mission and its profit-oriented subsidiary. But Mr. Leith-Tetrault said its typical fee is 5 percent to 8 percent.


    For the Century project the corporation charged the developers a fee of $438,750, Mr. Leith-Tetrault wrote in an e-mail message. That money will pay for the national trust to monitor the project as an investor for the seven-year life of the tax credits. Mr. Leith-Tetrault said that making a profit was not a major objective in this case. “We feel very comfortable that the fee was more than reasonable,” he said.


    Officials at the national trust say critics are overreacting when they accuse it of subsidizing the Century’s demolition. Mr. Moe said the trust is only helping to finance the $45 million Old Post Office project. The garage, which will cost $32 million more, is being paid for through the Missouri Development Finance Board.


    Experts in historic preservation say the face-off in St. Louis highlights the difficult choices preservationists must make. “Often, unfortunately, in preservation to get something you have to give up something else,” said Richard Longstreth, a professor of American studies and head of the historic preservation program at George Washington University. But he said it is important to ask “how much are you getting and how much are you losing?”


    Mr. Moe said national trust officials believe the greater good was served by restoring the Old Post Office and revitalizing the surrounding area. “We’re doing more of this kind of revitalization work than we did before,” he said, “but we haven’t changed our fundamental values.’”


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  • Dover Downs has brought millions in revenues to Delaware.


    As Gambling Grows, States Depend on Their Cut


    By FOX BUTTERFIELD





    DOVER, Del. – Gambling revenues, once a mere trickle, have become a critical stream of income in a number of states, in some cases surpassing traditional sources like the corporate income tax and helping states lower personal income or property taxes.


    The sums are so alluring that some officials are concerned that their states are becoming as addicted as problem gamblers. “We’re drunk on gambling revenue,” said Representative Wayne A. Smith, the Republican who is House majority leader in the Delaware Legislature. “Gambling revenues are like free money.”


    In Rhode Island, South Dakota, Louisiana, Oregon and, most of all, Nevada, taxes from casinos, slot machines at racetracks and lotteries make up more than 10 percent of overall revenues, according to a new report. In Delaware, West Virginia, Indiana, Iowa and Mississippi, gambling revenues are fast approaching 10 percent.


    So vital has the money become that in Rhode Island, gambling revenue has surpassed the corporate income tax to become the state’s third largest source of income, after the personal income and sales tax. It has enabled the state to avoid raising its income tax for 10 years.


    Because of gambling, South Dakota officials were able to push through a 20 percent reduction in property taxes a decade ago by increasing to 50 percent the state’s share of gambling revenue from video lottery terminals, up from 37 percent.


    A property tax reduction was also the main argument in Pennsylvania for legalizing gambling when the Legislature last year authorized slot machines at racetracks and casinos after years of intense opposition.


    Here in Delaware, where video slot machines were legalized in 1994 as a way to revive ailing horse racing and horse farming industries, racetracks are thriving, horse farms have been preserved and the legislature, unexpectedly, has been able to cut the top personal income tax rate over several years during the late 1990′s to 5.9 percent, from 8.4 percent, a reduction of nearly one-third.


    The scenes that fuel Delaware’s success take place every night. On a recent cold, rainy weeknight, many of the 2,500 video slot machines at Dover Downs here were clinking steadily, as customers from as far as Baltimore, Washington and Richmond, Va., pressed the play button every three seconds, as fast as the electronic terminals can spin. That was good news for the state, since Dover Downs, a combination harness racetrack, Las Vegas-style hotel, slot machine emporium and Nascar track, pumped $102 million from its slot machines alone into the budget last year. Delaware over all got $222 million from gambling – 8.1 percent of its $2.72 billion in state revenues.


    But Delaware, like most states that rely on gambling revenue, now faces a danger – competition from nearby states for the same dollars.


    Some 70 percent of gambling losses in Delaware’s three “racinos,” racetracks with video slot machines, come from visitors from Pennsylvania and Maryland, according to the Delaware Department of Finance. But Pennsylvania legalized slot machines last year and the Maryland Legislature is debating a bill to legalize gambling there.


    If Pennsylvania and Maryland install all the slot machines they are considering, Delaware could lose $120 million annually, almost 5 percent of state revenues, said Tom Cook, a spokesman for the Department of Finance.


    In Dover, the looming battle with Pennsylvania and Maryland has touched off a debate pitting the governor, Ruth Ann Minner, against many legislators.


    “We have legislators every day who propose opening new venues, like a big casino on the waterfront in Wilmington or a floating barge in the Delaware River,” said Governor Minner, a Democrat. “But there are only so many dollars that are going to be spent on gambling, and I don’t want to build that into the base of my budget and then find Pennsylvania and Maryland leaving a $120 million hole in it.”


    So Governor Minner has decided, in her words, “to draw a line in the sand.” She has allowed longer hours at the state’s three racinos and encouraged them to modernize to attract out-of-state bettors. But she is saying no to stand-alone casinos or other proposed new forms of gambling like blackjack tables and sports betting.


    Similar dilemmas are cropping up around the country now that 48 states, with the exception of Utah and Hawaii, have legalized some form of gambling.


    Like Delaware, South Dakota first legalized gambling for a limited purpose – allowing casinos in the decaying frontier town of Deadwood to try to preserve it.


    But South Dakota now gets $112.8 million a year from gambling, most of it from video slot machines in bars all over the state operated by the state lottery. Gambling accounts for 13.2 percent of South Dakota’s revenue, according to state figures.


    David Knudson, a Republican state senator from Sioux Falls, concedes that gambling has brought some benefits. In 1995 he was chief of staff to then Gov. Bill Janklow when South Dakota was able to push through the 20 percent property tax reduction because of gambling revenue.


    “But that only increased our dependence on gambling,” Mr. Knudson said. He noted that gambling opponents often cite the danger of addiction for individual gamblers, and said, “But the biggest addict turns out to be the state government that becomes dependent on it.”


    In 2000, worried about an increase in divorces, crime and suicide among problem gamblers, Mr. Knudson supported a ballot issue to repeal the law legalizing the state lottery video slot machines. But many members of the Legislature argued that the state would have to come up with alternative sources of money, Senator Knudson said, and the measure was defeated.


    Iowa, which pioneered modern riverboat gambling in 1989 when it legalized gambling as long as the boats were cruising on a river, is continually striving to keep ahead of neighboring states. When Illinois and Missouri soon passed similar laws, the Iowa Legislature voted to add slot machines at racetracks. It also negotiated with local Indian tribes for tribal casinos.


    Last year, facing a $140 million budget gap that threatened education programs, Iowa added table gambling at racetracks, dropped a moratorium on new gambling licenses and allowed gambling on the riverboats when they were tied ashore.


    Iowa derives 6.65 percent of its state revenue from gambling, according to a new study by William N. Thompson, a professor of public administration at the University of Nevada, Las Vegas, and a colleague at the university, Christopher Stream.


    The analysis, which Mr. Thompson says is the first to measure the percentage of state revenue from gambling, was done for the Wisconsin Policy Research Institute, a business-sponsored organization and based on 2003 data.


    Nevada, not surprisingly, gets by far the largest proportion of its revenue from gambling, 42.6 percent, Professor Thompson found. South Dakota is second, with 13.2 percent.


    Rhode Island is another state that legalized video slot machines for a limited purpose – to help its aging horse and dog racing tracks. When the slots were introduced in 1992, the income was small, but the amount has almost doubled every year since, said Joseph A. Montalbano, the president of the Rhode Island Senate, and has reached $281 million a year, including the state’s conventional lottery.


    Not only has gambling revenue surpassed the corporate income tax in Rhode Island and enabled the state to avoid raising its income tax, gambling also helps teach children, pay for medical care for the poor and repair roads.


    But Rhode Island, too, faces competition. There is concern that Massachusetts, the source of many customers at Rhode Island’s racinos, will legalize slot machines at its own racetracks, and within an hour’s drive of Providence, the large Indian-owned casinos in Connecticut are expanding.


    “We’re in a Catch-22 situation, with our third-largest revenue source being surrounded by these other gambling facilities,” said Senator Montalbano, a Democrat.


    So Senator Montalbano proposed legislation last week that would allow the new owner of Lincoln Park, Rhode Island’s largest racetrack, to increase its 2,543 video slot machines by 1,750 in exchange for a $125 million investment to upgrade the aging track.


    Here in Dover, Denis McGlynn, president and chief executive of Dover Downs Gaming and Entertainment Inc., also sees the need to expand, perhaps by allowing his slots to stay open 24 hours a day instead of closing at 4 a.m.


    “Sometimes you play the cards you’re dealt,” said Mr. McGlynn, whose company has prospered with the legalization of gambling in Delaware and is now a publicly owned corporation. “Delaware is small. It’s not Silicon Valley. People are not pouring in to build new industries from the ground up. But people are willing to come here and gamble and contribute to the state’s revenues.”


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  • Veteran journalist Ted Koppel


    Ted Koppel to Leave ‘Nightline’ and ABC News


    By JACQUES STEINBERG





    Ted Koppel, who during a quarter century as the host of “Nightline” on ABC provided a hard-news alternative to the monologues and light banter of Johnny Carson, Jay Leno and David Letterman, will leave the network when his contract expires in early December, ABC News announced today.


    Mr. Koppel said in an interview that he had informed ABC of his decision earlier this week and did not yet know what he might do next. It was not immediately clear how ABC intends to replace him.


    ABC News executives said today that they expected that “Nightline” would endure in the same time slot after Mr. Koppel’s departure, but the network has yet to resolve how it would rework the program or even whether it would continue to broadcast from Washington.


    In a statement, David Westin, president of ABC News, said, “Ted and I have discussed a number of options under which he might have remained at ‘Nightline’ or in some other capacity at ABC News, but Ted believes this is the right time for him to leave.”


    Noting Mr. Koppel’s 42 years at the network, Mr. Westin added, “As much as I will regret his leaving, he is firm in his conviction, and I respect his decision.”


    The pending departure of Mr. Koppel, 65, one of the most recognizable faces and toughest interviewers in broadcast news, comes in the midst of a protracted struggle within ABC to develop an alternative to the current iteration of “Nightline” – a half-hour interview program that is frequently taped and that Mr. Koppel is host of just three nights a week. “Nightline” has long lagged in the ratings for its 11:35 p.m. timeslot behind the first half-hour of both Mr. Leno’s “Tonight” show (the most-watched program at that hour) and Mr. Letterman’s “Late Show” (the established runner-up).


    In recent months, ABC executives have asked the news division to develop proposals for alternative programming for the “Nightline” slot (including an overhauled “Nightline”) that might prove more popular than Mr. Koppel’s program and draw a younger audience.


    While ABC, which is owned by the Walt Disney Company, was exploring the possibility of moving Mr. Koppel off “Nightline” when his current contract expires in December, the network had hoped to keep him at ABC News. With the departures in recent months of Tom Brokaw and Dan Rather from their respective evening news programs, the loss of Mr. Koppel would leave only Peter Jennings, anchor of “World News Tonight” on ABC since 1982, as a broadcast journalist who can claim comparable longevity and star power.


    Like Mr. Koppel, Mr. Jennings’s contract expires later this year and he has not yet signaled publicly whether he is interested in renewing it. Mr. Westin, however, said in an interview last fall that he expected Mr. Jennings to remain at his anchor desk for several more years.


    In an interview, Mr. Koppel acknowledged that one job he had considered at the network – though he would not say whether it had been formally offered to him – would have been to take the reins of the Sunday program “This Week,” which currently has as its host George Stephanopoulos but is itself lagging in the ratings behind “Meet the Press” on NBC and “Face the Nation” on CBS.


    “It was a possibility and it’s certainly a fine platform and it’s an interesting broadcast,” Mr. Koppel said. “But by the same token, I really feel there are other things I would rather do.”


    Asked what those jobs might be, Mr. Koppel said only: “There are some very interesting prospects out there, let’s put it that way.”


    Mr. Koppel’s longtime executive producer, Tom Bettag, a veteran of the news business who worked on the “CBS Evening News” with Walter Cronkite, will leave ABC around the time Mr. Koppel does, Mr. Westin said. The seeds of ABC’s announcement today were, in fact, sown three years ago, when the network sought, without Mr. Koppel’s knowledge, to woo David Letterman from CBS to the “Nightline” timeslot on ABC. At the time, an ABC executive was quoted as saying that “Nightline” no longer seemed relevant in late-night television, especially as increasing numbers of Americans began getting their news on the Internet.


    The network’s pursuit of Mr. Letterman angered Mr. Koppel. When the bid by ABC to land Mr. Letterman failed, the network struck an agreement with Mr. Koppel to keep “Nightline” in its timeslot for at least two more years. But the two sides remained wary of each other.


    In his statement, Mr. Westin said: “Ted, Tom and I have had ongoing conversations for almost five years seeking to ensure Nightline’s continuity, and to create an orderly transition. All of us are optimistic that both goals can and will be met.”


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  • Pope John Paul II delivers an Easter Sunday blessing from his studio’s window overlooking St. Peter’s Square at the Vatican, Sunday, March 27, 2005. Pope John Paul II’s blood pressure fell and he developed a high fever, an Italian news agency said Thursday, March 31, 2005, a worrying report that came a day after the ailing 84-year-old pontiff was given a feeding tube. (AP Photo/Pier Paolo Cito)


    Pope Develops High Fever From Infection as His Health Weakens


    By IAN FISHER





    VATICAN CITY, Friday, April 1 – The health of Pope John Paul II hit another serious crisis on Thursday, after he developed a high fever because of a urinary tract infection, the Vatican said.


    In a spare statement of three sentences, his chief spokesman, Dr. Joaquin Navarro-Valls, said the 84-year-old pope, who has looked gaunt and weak as his health has declined drastically in recent weeks, was receiving antibiotics to treat the infection.


    “The clinical situation is being closely watched by the Vatican medical team treating him,” the statement said.


    With little information coming out of the Vatican – and amid a flow pilgrims to St. Peter’s Square with the news that the pope’s life may be in danger – there seemed conflicting signs of just how grave this latest crisis is.


    Quoting anonymous Vatican officials, the Italian news agency ANSA said that the pope, fitted with a feeding tube only on Wednesday, was responding well to the antibiotics. Nicola Cerbino, a spokesman for the Gemelli hospital clinic in Rome, where the pope was admitted twice in February with the flu and serious problems breathing, said there were no plans to readmit him “tonight – at least for the moment.”


    Yet Italian news agencies reported that the pope, suffering for years from Parkinson’s disease, had been administered the Catholic sacrament for the sick and dying, often called Last Rites or Extreme Unction. There was no confirmation from the Vatican, and spokesmen for the pope could not be reached early on Friday morning.


    The last time he is known to have been administered last rites was on May 13, 1981, after he was shot by a would-be assassin in St. Peter’s Square, almost three years after he was chosen pope.


    Early Friday morning, the pitch of worry around the Vatican and among the faithful was especially high, after a Holy Week in which he was too sick to attend any of the ceremonies except for mass on Easter Sunday. Even then, he was so weak that no words came out of his mouth when he tried to deliver his traditional blessing from the window of his apartment of St. Peter’s Square.


    On Wednesday, in his most recent public appearance, he tried to speak again, but also failed. Hours later, the Vatican announced that doctors had threaded a feeding tube through his nose and into his stomach to ensure that he was properly nourished. The news came in the first medical statement from the Vatican in more than two weeks and unlike a string of earlier more upbeat reports, it characterized the pope’s recovery as “slow.”


    After months of what seemed relatively stable health, the pope’s condition has spiraled since Feb. 1, when he was admitted to Gemelli hospital suffering from flu, fever and spasms of the throat that caused severe problems breathing. He was discharged on Feb. 10, but was rushed to the hospital two weeks later with similar symptoms. That night, doctors performed a tracheotomy to insert a breathing tube into his windpipe.


    Doctors said that urinary tract infections are usually treatable, but that the pope’s age and advanced illness could present complications.


    Dr. Harry Fisch, professor of clinical urology at Columbia University Medical Center in New York, said such infections in men the pope’s age typically come from the prostate “and they can be severe.”


    “These infections tend to be readily treatable with antibiotics,” Dr. Fisch said. “They are normally not life-threatening, but in the elderly and debilitated, they can be. The fever won’t drop immediately. It can take a day.”


    Dr. Fisch said that a catheter – a tube inserted into the bladder of bed-bound patients to drain urine – can make such infections worse. The Vatican has not said whether the pope has such a catheter.


    Doctors said that infections often cause a drop in blood pressure – and several unconfirmed news reports said the pope was in fact suffering from a loss of blood pressure. Such a drop in blood pressure, doctors said, can lead to decreased levels of consciousness.


    Just after midnight here, the entrance to St. Peter’s Square was ringed by dozens of television cameras and journalists, as well as pilgrims and tourists peering up to the window of the pope’s apartment, where he has made his most recent, pained appearances.


    The light in his apartment was shut off around 11 p.m. local time Thursday, later than the pope’s usual bedtime. But a light in a room with medical equipment remained on past midnight, though with an extremely small circle of people attending to the pope and his health, it was impossible know whether this was significant.


    In the last two months of this most serious phase of the pope’s illness, the faithful seemed of two minds about his decline: Despite many contentious positions on social issues, the pope has remained extremely popular among the faithful, and many pilgrims have expressed deep sorrow at the prospect that he might die soon.


    But many have worried too about his deep suffering – evident in every recent public appearance.


    “He’ll finally be at peace,” said James Butler, 16, part of group of students from Dublin visiting Rome, who arrived at the Vatican just after midnight on Friday to pay their respects.


    Unlike in the pope’s other recent health crises, Italian news media switched their programming to extensive coverage not only of the pope’s health, but of his life and legacy. The state broadcaster RAI interrupted its television political talk shows on Thursday to ask guests to comment on the pope. Several stations began airing long retrospectives of his 26-year pontificate, one of the longest in the history of the Roman Catholic church.



    Elisabeth Rosenthal of The International Herald Tribune and Jason Horowitz of The New York Times contributed reporting from Rome for this article.


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  • The oil-for-food scandal

    Torturing the United Nations

    Mar 31st 2005
    From The Economist print edition


    Something rotten happened. But wait for all the facts before demanding Kofi Annan’s head













    Getty Images
    Getty Images



    AT SOME point in his career as chairman of America’s Federal Reserve, Paul Volcker appears to have learnt the art of Chinese water torture. Almost a full year since being asked by the Security Council to investigate the UN‘s mismanagement of Iraq’s oil-for-food programme, Mr Volcker has yet to deliver his final report. That is now expected in the middle of the year. But he has this week issued the second of two interim ones (see article), on the strength of which many people, including members of the American Congress, are renewing calls for Kofi Annan, the UN‘s secretary-general, to resign. Should he?


    Here’s the torture. Neither of Mr Volcker’s reports to date makes a clear case against Mr Annan himself. The first, in February, found that Benon Sevan, who headed the UN programme, had an “irreconcilable conflict of interest” because he helped a friend’s firm acquire a lucrative oil contract from Iraq. Mr Sevan pleads innocence but has left the UN. This week’s report focuses on Cotecna, a company that in 1998 won a “humanitarian inspection” contract—and happened to employ Mr Annan’s son, Kojo Annan. Mr Volcker’s team, seeking to find out whether this, too, amounted to a conflict of interest, has found no evidence that Kofi used any influence in awarding the contract to Kojo’s firm. The senior Mr Annan therefore claims to have been “exonerated”. For two reasons, sadly, that is not the case.



    First, the Cotecna affair is only one sub-plot in the larger drama of the oil-for-food scandal. The indictment his critics lay against Mr Annan is that the UN‘s boss should take ultimate responsibility for his organisation having mismanaged the programme, allowing Saddam Hussein to use bribes and kickbacks to siphon off billions of dollars that had been intended for humanitarian relief. Mr Volcker’s interim report says nothing about responsibility for this wider management failure so can hardly be construed as an exoneration.


    Second, even in the Cotecna affair, Mr Volcker does not award Mr Annan a gold star. The report finds no evidence of corrupt behaviour by the senior Mr Annan, but it paints a disturbing picture. Kojo appears to have lied to Kofi about his relationship with Cotecna. Kofi “forgot” various meetings he had with Cotecna’s boss. When Kofi did become aware that his son’s employer had made a bid for a UN contract, he asked his chief of staff, Iqbal Riza, to make sure there was no conflict of interest. But Mr Volcker finds this investigation “inadequate”. Mr Riza then had many of his own files shredded—even after orders had gone out to preserve and secure all papers that might be relevant to the oil-for-food investigation.


    In short, both the wider scandal and its Cotecna sub-plot suggest that Mr Annan has been a weak manager—even if, which remains to be proven, his ethics are as pure as snow. Moreover, oil-for-food is only one of several failures to have taken place on his watch. Another is the pattern of widespread sexual abuse by UN peacekeepers in several countries. A week ago, Mr Annan argued that the UN needed reform from top to bottom. Some of his ideas are good ones. But should he not make way for a new secretary-general, untainted by failure and controversy, to drive the changes through?




    If the UN were a company and Mr Annan its boss, this paper would ask him to resign right away. But the UN is not a company. Ultimate power rests with the member states, not a chief executive with a licence to issue whatever orders he likes. In the case of the principal exhibit against Mr Annan—oil-for-food—there is an especially strong argument for reserving final judgment until Mr Volcker issues his final report.


    That is because this programme was set up and run closely by the Security Council itself. Mr Volcker has yet to pronounce on how much blame lies with Mr Annan and how much with his political masters. As pressure on him mounts, Mr Annan may decide that his reputation is already so battered that he owes it to the UN to go. But hounding him out before all the evidence is in will add to the conviction of his defenders that he is being persecuted mainly for having criticised the American-led war in Iraq. Better to wait the few months until the Volcker report is complete. Then at last the water-torture can end.


  • March 29, 2005
    CRITIC’S NOTEBOOK

    On the Internet, 2nd (and 3rd and . . . ) Opinions

    By SARAH BOXER





    Do you remember Charles and Ray Eames’s 1977 film “Powers of Ten,” in which the camera zooms back from the surface of the Earth to a far-off point in space? As the details of the planet recede and vanish, new features of the universe appear. Before you know it, you’ve been sucked into another order entirely.


    Sometimes the Internet is like that. The traditional objects of culture – books, movies, art – are becoming ever more distant. In their place are reviews of reviews, museums of museums and many, many lists.


    Ron Hogan, who writes a literary blog called Beatrice.com, recently began a second blog, Beatrix: A Book Review Review. He’s not the only one reviewing reviewers. The blogs Bookdwarf, Conversational Reading, The Elegant Variation, Golden Rule Jones, The Reading Experience and Confessions of an Idiosyncratic Mind – all gloss, grade or review other people’s book reviews. On Gawker.com, a writer known as Intern Alexis reviews The New York Times Book Review.


    The site Edward Champion’s Return of the Reluctant also bears down on The New York Times Book Review and its editor, Sam Tanenhaus. Each week the site posts “The Sam Tanenhaus Brownie Watch.” It is an act of counting. It compares, among other things, the number of pages devoted to fiction versus nonfiction and the number of women assigned to review nonfiction, promisingthat if there are enough fiction pages or enough women Mr. Tanenhaus will be sent a brownie. Otherwise, “the brownie will be denied.”


    Most book-review reviews are summary, to say the least. Their main purpose, it seems, is to get noticed and linked to by more popular blogs. This, for example, was Golden Rule Jones’s assessment of The Chicago Tribune’s book coverage on Sunday: “What I liked: Good numbers; timely, worthwhile selections. What I didn’t like: Reviews are a little skimpy.”


    What about the other traditional objects of culture: movies, music and art? They, too, are becoming distant objects on the Web.


    The Museum of Online Museums site lists Web links not only to real museums and exhibitions but also to museums of odd objects (old Christmas lights, microphones and casino matchbook covers) and, yes, even to a museum of lists.


    The Web site I Love Music appears to be a bulletin board where music lovers can discuss music, but many of the questions posed on the site are in fact invitations to a list-making. One suggested topic was “the foxiest rock critic.” Another was “You owned more than one album by them, you listened to them fairly often, you knew in your heart of hearts that they really weren’t very good.”


    As these examples suggest, many lists on the Web have distance built into them. Respondents comment less on objects of culture than on themselves, their taste and their memory. The narcissistic lure can be irresistible.


    Consider a Web diversion recently cooked up by Laura Demanski, a Chicago-based writer and book reviewer, better known on the Web as Our Girl in Chicago (or simply OGIC), who sometimes posts on Terry Teachout’s blog, About Last Night. She asked her readers to list the first five movie quotes that popped into their heads.


    Some 200 quotes came in. “Casablanca” topped the list with seven mentions, each one with a different quote. The most-cited movie quote of all came from “Network,” which the Web site gives as : “I’m mad as hell and I’m not going to take this anymore!” And there was a six-way tie for shortest quote:


    “Stella!” (“A Streetcar Named Desire”)


    “Thirty-six?” (“Clerks”)


    “Plastics.” (“The Graduate”)


    “Willoughby!!!!” (“Sense and Sensibility”)


    “Sincerely.” (“Stand By Me”)


    “Khaaaaaaaaaaaaaaaaaaan!!!!” (“Star Trek II”)


    Ms. Demanski promises “a few general observations” about movie memory. What she really delivers, though, is a great set of lists.


    Not all lists are so much fun. There are plenty of boring lists on the Web. Everyday, Web contests list their winners. Every blog has a running tab of favorite Web sites. Many of them take a good part of a minute to scroll through.


    And then there are the Amazonian lists, those offered up by sites like Filmaffinity.com, Muiscplasma.com and Music-map.com. Once you reveal a book, film or musician you already like, these sites will “tell what you will like,” Sarah Lazarovic writes on the Web site CBC.ca. Such lists, she writes, are “supplanting the good old-fashioned review as the primary way for consumers to discover new music, movies and literature.”


    In other words, the review is being replaced by a shopping list. Which brings out something important about the economy of the Web. The more lists you’re on, the more you’re wanted. The premier compliment for a Weblog is to be listed (or linked) by lots of other blogs. The Truth Laid Bear keeps a list of the most-linked sites, a “blogosphere ecosystem.” It’s like the Social Register.


    The Web is not really a web after all. It is a list of lists.



    Copyright 2005 The New York Times Company | Home | Privacy Policy | Search | Corrections | RSS | Help | Back to Top


  • Andrew Susser was fired by Bank of America after putting this cover on a report on the casino and lodging industry called “Checking In.”


    March 29, 2005

    On Wall Street, a Rise in Dismissals Over Ethics


    By LANDON THOMAS Jr.





    Two senior investment bankers at Bank of America were summoned to a meeting this month where their boss, visibly uncomfortable and flanked by bank lawyers, read them a statement. They were both dismissed and asked to leave the building immediately. The decision was final.


    Stunned, the bankers asked if they had broken any regulations. No, they were told. Nor had they traded on any inside information. Within the hour, they had turned in their BlackBerrys and laptops and were on their way home to the suburbs.


    In the ruthlessly competitive world of investment banking, these two men had been doing what presumably was their job. Acting on a tip from a rival banker, they had called a company preparing to merge with another and asked to get in on the deal. In a different era, such an action might well have been seen as an example of what hungry bankers do to secure an edge with a client and maybe even a better bonus – not an inappropriate use of confidential information and cause for termination.


    But with regulatory scrutiny heightened after the collapse of Enron and other companies, corporations and their boards are adopting zero-tolerance policies. Increasingly, they are holding their employees to lofty standards of business and personal behavior. The result is a wave of abrupt firings as corporations move to stop perceived breaches of ethics by their employees that could result in law enforcement action or public relations disasters.


    “We are in a regulatory frenzy,” said Ira Lee Sorkin, a senior white-collar crime lawyer at Carter Ledyard & Milburn in Manhattan. “Corporations are acting out of fear and they don’t want to take a chance that employees did something wrong under their watch, so they are basically cleaning house. Someone has to say enough.”


    The seemingly frantic reach for the moral high ground is driven as much by self-interest as any attempt at righteousness, now that boards and chief executives have seen how public scandals can torpedo stock prices, alienate customers and end careers.


    The reasons for the dismissals vary widely, ranging from actions that are potentially illegal to conduct that is unseemly. Last week, for example, Thomas M. Coughlin, a former vice chairman and director, was forced to resign from Wal-Mart Stores over questions relating to his knowledge of corporate gift card and expense account abuses. Wal-Mart also referred the case to the Justice Department. Earlier this month, insurance giant American International Group fired two senior executives for refusing to cooperate with a regulatory investigation.


    At Boeing, Harry C. Stonecipher, the chief executive, was abruptly pushed out this month by his board for having a consensual affair with an executive, behavior that in a more permissive time might even have been winked at.


    “There is a new kind of Puritanism,” said Marjorie Kelly, editor of Business Ethics magazine, replacing what Ms. Kelly said was an era of “arrogance and ignorance, an attitude that boys will be boys.”


    There are exceptions, of course. After paying a $300 million fine to settle charges by the Securities and Exchange Commission that it overstated advertising revenue, Time Warner elected last week not to dismiss the executives, including the chief financial officer, who approved the fraudulent accounting. The three officials settled separate charges of securities law violations without admitting or denying guilt.


    But the reaction has been most severe on Wall Street, where investment banks, mutual funds and insurers have felt the sting of legal prosecution for ethical lapses most acutely.


    Bank of America, which has paid nearly $1 billion in fines over the last year, in many ways exemplifies this trend. Earlier this year, the bank acted in a similarly extreme fashion when it fired a highly regarded bond analyst, Andrew Susser, for his stab at humor in compiling a research report on the casino and lodging industry. On its cover, which carried the title “Checking In,” Mr. Susser’s face was superimposed over the body of a woman in a cocktail party dress and heels, as he was carried over the threshold by another man. There is no evidence that any client complained. Instead, the bank concluded on its own that the image was inappropriate.


    It is not only Bank of America that is cracking down.


    Citigroup, which has been plagued by a series of ethical lapses by its employees and has suffered a decline in stock price as a result, recently fired three senior executives after the breakdown within the firm’s private banking unit in Japan. Japanese regulators forced Citigroup to close its private bank, based in Tokyo, because of numerous violations, stemming from a lack of internal controls, including potential money laundering in one account. One of the fired executives, Thomas W. Jones, has filed a lawsuit against a consultant who wrote an internal report on the matter. Mr. Jones said he was not at fault.


    Next month, Citigroup will start an online ethics training program that will be mandatory for all of its 300,000 employees.


    At Goldman Sachs, Henry M. Paulson Jr., the chief executive, will moderate 20 forums this year on various business judgment and ethical issues with all the bank’s managing directors. Among the guest speakers invited by Mr. Paulson is Eliot Spitzer, the New York State attorney general, who talked to Goldman bankers last month about various ethical pitfalls.


    Given the scandals of recent years – Wall Street banks writing research reports biased in favor of corporate clients or doling out hot initial public offerings to win business, for example – it is not at all surprising that banks have been more rigorous in monitoring the behavior of their employees. But the two Bank of America employees, Eric Corrigan and Thomas Chen, say that Wall Street’s new broad brush has tarred them unfairly.


    “We are scapegoats,” said Mr. Chen, 37. “We agree that there should be zero tolerance when rules are broken, but we didn’t break any rules. This was a summary execution. We just need to re-establish our reputation because without that you can’t be an investment banker.”


    In a statement, a Bank of America spokesman said: “The environment in the financial sector continues to evolve and in any environment we expect our associates to maintain the highest possible ethical standards in everything that they do.”


    For Mr. Corrigan, Mr. Chen and Thomas W. Heath, the J. P. Morgan banker who provided the information to Mr. Corrigan, the fall from grace has been precipitous. Mr. Corrigan and Mr. Chen were successful and respected bankers who had received generous bonuses for their work last year.


    Mr. Heath had just finished working on one of the biggest bank deals of his career, and had accepted an offer to take his flourishing practice to Bank of America. J. P. Morgan has since fired him, and Bank of America has rescinded its job offer. Now all three are accused of inappropriately using confidential information – a charge that, in many ways, brands them with Wall Street’s version of the scarlet letter.


    Indeed, the story paints a vivid picture of how these changing times have made the exchange of information and market rumor – long the lifeblood of deal making on Wall Street – an exercise fraught with risk.


    Mr. Corrigan and Mr. Heath first met last month to discuss how they might work together once Mr. Heath joined Bank of America, potentially as Mr. Corrigan’s boss. No specific deals were discussed until a few days later, when Mr. Heath called Mr. Corrigan at the request of Bank of America executives. At the time, Mr. Heath and J. P. Morgan were advising Hibernia, a Louisiana-based bank, in its merger talks with Capital One, the credit card issuer.


    During that conversation, according to Mr. Corrigan, Mr. Heath voluntarily disclosed J. P. Morgan’s role in the deal.


    Mr. Corrigan said he was surprised that Mr. Heath would be so forthcoming. But he added that he and Mr. Chen had already heard rumors of the deal, which was formally announced on March 7, so he asked Mr. Chen to call an executive at Capital One. Mr. Corrigan also said that he told his boss about the exchange.


    Such an approach is standard investment banking behavior, said Mr. Chen and Mr. Corrigan, and neither felt he had crossed any line. Indeed, since Capital One was already a deal participant, both men argued, Mr. Chen did not break the circle of trust.


    “I didn’t even call my wife,” Mr. Chen said. “I had a relationship with the guy at Capital One, so I put a call in to him.”


    While Mr. Heath acknowledges that he erred in disclosing the information, he said he did so in response to a query from Mr. Corrigan and under the condition that the information not be used.


    “I had been asked by Bank of America to call Eric to discuss mutual accounts and smooth feelings as I would be assuming his group head position,” Mr. Heath said. “During the course of our conversation Eric said he was curious as to what I was working on. I told him that the information was bound in the strictest confidentiality, to which he agreed.”


    Mr. Corrigan denies that he made such a query or that Mr. Heath asked that the information remain confidential.


    No matter the details, “The pendulum has swung too far,” said Herbert A. Lurie, a former top investment banker at Merrill Lynch, where Mr. Chen once worked. “Tom Heath clearly did something wrong. He was working on a deal and he told competitive parties about it. But Tom Chen just called a party to the deal. In a normal world, Tom would have been given a hard time for not making the call.”


    For Bank of America, operating in today’s brave new regulatory world, such subtleties are immaterial. In the bank’s view, Mr. Corrigan and Mr. Chen exercised bad judgment in contacting the client after Mr. Heath’s phone call – especially since Mr. Heath claimed the information was given in confidence – and that was reason enough to fire them.


    Both Mr. Chen and Mr. Corrigan have hired lawyers and said that they were considering their legal options. Mr. Heath declined to comment on his future plans.


    While Mr. Corrigan and Mr. Chen both realize that they may never work on Wall Street again, they said they were determined to at least make it clear that they were men to be trusted.


    “I just need to restore my integrity,” Mr. Corrigan said. “I want to be able to look into my kids’ eyes and tell them I didn’t do anything wrong.”



    Micheline Maynard contributed reporting for this article.


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