Category: Operational Risk

Is Social Security’s Website Suddenly Saying the System Owes You Far Less?

Mary Pat Campbell

Link: https://www.forbes.com/sites/kotlikoff/2023/10/20/is-social-securitys-website-suddenly-saying-it-owes-you-far-less/?sh=e3603bc7f679

Graphic:

Excerpt:

Social Security states, at this link: retirement/planner/AnypiaApplet.html, that “(Its) Online Calculator is updated periodically with new benefit increases and other benefit amounts. Therefore, it is likely that your benefit estimates in the future will differ from those calculated today.” It also says that the most recent update was in August 2023.

This statement references Social Security’s Online Calculator. But they have a number of calculators that make different assumptions. And it’s not clear what calculator they used to produce the graphic, see below, that projects your future retirement benefit conditional on working up to particular dates and then collecting immediately. Nor is Social Security making clear what changes they are making to their calculators through time.

What I’m quite sure is true is that the code underlying Social Security’s graphic projects your future earnings at their current nominal value. This is simply nuts. Imagine you are age 40 and will work till age 67 and take your benefits then. If inflation over the next 27 years is 27 percent, your real earnings are being projected to decline by 65 percent! This is completely unrealistic and makes the chart, if my understanding is correct, useless.

….

The only thing that might, to my knowledge, reduce projected future future benefits over the course of the past four months is a reduction in Social Security’s projected future bend point values in its PIA (Primary Insurance Amount) formula. This could lead to lower projected future benefits for those pushed higher PIA brackets, which would mean reduced benefit brackets. This could also explain why the differences in projections vary by person.

….

Millions of workers are being told, from essentially one day to the next, that their future real Social Security income will be dramatically lower. Furthermore, the assumption underlying this basic chart — that your nominal wages will never adjust for inflation — means that for Social Security’s future benefit estimate is ridiculous regardless of what it’s assuming under the hood about future bend points.

….

One possibility here is that a software engineer has made a big coding mistake. This happens. On February 23, 2022, I reported in Forbes that Social Security had transmitted, to unknown millions of workers, future retirement benefits statements that were terribly wrong. The statement emailed to me by a worker, which I copy in my column, specified essentially the same retirement benefit at age 62 as at full retirement age. It also specified a higher benefit for taking benefits several few months before full retirement.

Anyone familiar with Social Security benefit calculations would instantly conclude that there was either a major bug in the code or that that, heaven forbid, the system had been hacked. But if this wasn’t a hack, why would anyone have changed code that Social Security claimed, for years, was working correctly? Social Security made no public comment in response to my prior column. But it fixed its code as I suddenly stopped receiving crazy benefit statements.

Author(s): Laurence Kotlikoff

Publication Date: 20 Oct 2023

Publication Site: Forbes

PSNI apologises to officers and civilian staff after major security breach

Mary Pat Campbell

Link: https://m.belfasttelegraph.co.uk/news/northern-ireland/psni-apologises-to-officers-and-civilian-staff-after-major-security-breach/a1823676448.html?=123&s=03

Graphic:

Additional: https://twitter.com/owenboswarva/status/1688975359604101129/photo/1

Excerpt:

However, a second tab in the spreadsheet contained multiple entries in relation to more than 10,000 individuals. For each individual, there are 32 pieces of data meaning that in total, there are about 345,000 pieces of data in the file.

The spreadsheet, which has been seen by the Belfast Telegraph after we were alerted to it by a relative of a serving officer, includes each officer’s service number, their status, their gender, their contract type, their last name and initials, details of how much of the week they work, and their rank.

It also includes the location where they are based (but not their home address), their duty type (from chief constable to detective, intelligence officer and so on), details of their unit (such as the anti-corruption unit or the vetting department), their branch and department, and other technical information about their employment.

There are 10,799 entries in the database. There are 9,276 police officers and police staff. It is not clear if the additional entries relate to other employees or former employees.

The data has been removed from the internet.

There are details of staff who are suspended, on career breaks, or partly retired.

It reveals members of the organised crime unit, telecom liaison officers, intelligence officers stationed at ports and airports, PSNI pilots in its air support unit, officers in the surveillance unit and – of acute sensitivity – almost 40 PSNI staff based at MI5’s headquarters in Holywood.

There are a tiny number of individuals whose unit is given as “secret”. But although that does not disclose precisely what they do, it marks them out as operating in an acutely sensitive area – and then gives their name.

Author(s): Sam McBride and Liam Tunney

Publication Date: 8 Aug 2023

Publication Site: Belfast Telegraph

How Benjamin Franklin Helped Foil Early American Money Counterfeiters

Mary Pat Campbell

Link: https://www.wsj.com/articles/how-benjamin-franklin-helped-foil-early-american-money-counterfeiters-bf51f8c7

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Excerpt:

Franklin, who was a printer, among his other roles, was known for marking his early paper money with images of intricately veined leaves that were nearly impossible for counterfeiters to copy, using a variety of fonts, some available only to him, and intentionally lacing the text with misspellings.

But scientists say Franklin took things a step further to stave off fraudsters. Other distinguishing characteristics of Franklin’s money—the new research revealed through advanced atomic-level imaging methods—were more subtle. He used a unique black ink. His paper glimmered. Blue threads decorated the surface, and finer fibers were woven throughout. 

Researchers detailed the innovations in a paper published Monday in the journal Proceedings of the National Academy of Sciences. The findings describe previously unknown methods Franklin developed to safeguard printed money notes against counterfeiting.

Author(s): Jo Craven McGinty

Publication Date: 17 July 2023

Publication Site: WSJ

Report Highlights Public Health Impact of Serious Harms From Diagnostic Error in U.S.

Mary Pat Campbell

Link:https://www.hopkinsmedicine.org/news/newsroom/news-releases/report-highlights-public-health-impact-of-serious-harms-from-diagnostic-error-in-us#:~:text=Results%20of%20the%20new%20analysis,of%20the%20public%20health%20problem.

Excerpt:

Improving diagnosis in health care is a moral, professional and public health imperative, according to the U.S. National Academy of Medicine. However, little is known about the full scope of harms related to medical misdiagnosis — current estimates range widely. Using novel methods, a team from the Johns Hopkins Armstrong Institute Center for Diagnostic Excellence and partners from the Risk Management Foundation of the Harvard Medical Institutions sought to derive what is believed to be the first rigorous national estimate of permanent disability and death from diagnostic error.  

The original research article was published July 17 by BMJ Quality & Safety. Results of the new analysis of national data found that across all clinical settings, including hospital and clinic-based care, an estimated 795,000 Americans die or are permanently disabled by diagnostic error each year, confirming the pressing nature of the public health problem.  

….

To identify their findings, researchers multiplied national measures of disease incidence by the disease-specific proportion of patients with that illness who experience errors or harms. Researchers repeated this method for the 15 diseases causing the most harms, then extrapolated to the grand total across all dangerous diseases. To assess the accuracy of the final estimates, the study’s authors ran the analyses under different sets of assumptions to measure the impact of methodological choices and then tested the validity of findings by comparing them with independent data sources and expert review. The resulting national estimate of 371,000 deaths and 424,000 permanent disabilities reflects serious harms widely across care settings, and it matches data produced from multiple prior studies that focused on diagnostic errors in ambulatory clinics and emergency departments and during inpatient care.  

Vascular events, infections and cancers, dubbed the Big Three, account for 75% of the serious harms. The study found that 15 diseases account for 50.7% of the total serious harms. Five conditions causing the most frequent serious harms account for 38.7% of total serious harms: stroke, sepsis, pneumonia, venous thromboembolism and lung cancer. The overall average error rate across diseases was estimated at 11.1%, but the rate ranges widely from 1.5% for heart attack to 62% for spinal abscess. The top cause of serious harm from misdiagnosis was stroke, which was found to be missed in 17.5% of cases.  

Author(s):  David Newman-Toker 

Publication Date: 17 July 2023

Publication Site: Johns Hopkins, press release

DiNapoli: Woman Pleads Guilty to Theft and Must Pay Back $459K in NYS Pension and Social Security Payments

Mary Pat Campbell

Link:https://www.osc.state.ny.us/press/releases/2023/07/dinapoli-woman-pleads-guilty-theft-and-must-pay-back-459k-nys-pension-and-social-security-payments?utm_content=20230715&utm_medium=email&utm_source=weekly+news

Excerpt:

State Comptroller Thomas P. DiNapoli, United States Attorney for the Northern District of Georgia Ryan K. Buchanan and Inspector General for the Social Security Administration Gail S. Ennis today announced that Sandra Smith, a resident of Georgia, has pleaded guilty to the federal crime of theft of government funds and must pay back $459,050 in New York state pension and Social Security payments that were issued to her deceased mother-in-law.

“Exploiting the death of a family member for personal profit is a heinous crime,” DiNapoli said. “The defendant took advantage of our state pension fund and the Social Security Administration but as a result of our joint investigation her crimes were discovered. She now faces the consequences of her actions. My thanks to U.S. Attorney Buchanan and the Social Security Administration Office of the Inspector General for their partnership in ensuring justice was served and restitution was made in this case.”

Smith pleaded guilty to two counts of theft of government funds. Under her plea agreement, she will pay $264,699 in restitution to the state pension system and $194,351 to the SSA.

The defendant’s late-mother-in-law, Minnie Smith, was an employee of the New York State Insurance Fund for 20 years until retiring in 2005. To be closer to family, she moved from Brooklyn to Georgia afterward and passed away there on Sept. 14, 2006.

As her mother-in-law’s caretaker, Sandra Smith had access to her bank account, which she kept open after her mother-in-law’s death to enable the theft of continued payments from the New York state pension system and Social Security. The thefts were discovered and investigated by the Comptroller’s Division of Investigations and the SSA-OIG.

Smith, 49, pleaded before Judge Eleanor Ross of the United States District Court for the Northern District of Georgia.

Author(s): press release

Publication Date: 11 July 2023

Publication Site: Office of the NY State Comptroller

[109] Data Falsificada (Part 1): “Clusterfake”

Mary Pat Campbell

Link: https://datacolada.org/109

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Excerpt:

Two summers ago, we published a post (Colada 98: .htm) about a study reported within a famous article on dishonesty (.htm). That study was a field experiment conducted at an auto insurance company (The Hartford). It was supervised by Dan Ariely, and it contains data that were fabricated. We don’t know for sure who fabricated those data, but we know for sure that none of Ariely’s co-authors – Shu, Gino, Mazar, or Bazerman – did it [1]. The paper has since been retracted (.htm).

That auto insurance field experiment was Study 3 in the paper.

It turns out that Study 1’s data were also tampered with…but by a different person.

That’s right:
Two different people independently faked data for two different studies in a paper about dishonesty.

The paper’s three studies allegedly show that people are less likely to act dishonestly when they sign an honesty pledge at the top of a form rather than at the bottom of a form. Study 1 was run at the University of North Carolina (UNC) in 2010. Gino, who was a professor at UNC prior to joining Harvard in 2010, was the only author involved in the data collection and analysis of Study 1 [2].

Author(s): Uri Simonsohn, Leif Nelson, and Joseph Simmons

Publication Date: 17 Jun 2023

Publication Site: Data Colada

Batch-dependent safety of the BNT162b2 mRNA COVID-19 vaccine

Mary Pat Campbell

Link: https://onlinelibrary.wiley.com/doi/full/10.1111/eci.13998

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Excerpt:

Vaccination has been widely implemented for mitigation of coronavirus disease-2019 (Covid-19), and by 11 November 2022, 701 million doses of the BNT162b2 mRNA vaccine (Pfizer-BioNTech) had been administered and linked with 971,021 reports of suspected adverse effects (SAEs) in the European Union/European Economic Area (EU/EEA).1 Vaccine vials with individual doses are supplied in batches with stringent quality control to ensure batch and dose uniformity.2 Clinical data on individual vaccine batch levels have not been reported and batch-dependent variation in the clinical efficacy and safety of authorized vaccines would appear to be highly unlikely. However, not least in view of the emergency use market authorization and rapid implementation of large-scale vaccination programs, the possibility of batch-dependent variation appears worthy of investigation. We therefore examined rates of SAEs between different BNT162b2 vaccine batches administered in Denmark (population 5.8 million) from 27 December 2020 to 11 January 2022.

….

A total of 7,835,280 doses were administered to 3,748,215 persons with the use of 52 different BNT162b2 vaccine batches (2340–814,320 doses per batch) and 43,496 SAEs were registered in 13,635 persons, equaling 3.19 ± 0.03 (mean ± SEM) SAEs per person. In each person, individual SAEs were associated with vaccine doses from 1.531 ± 0.004 batches resulting in a total of 66,587 SAEs distributed between the 52 batches. Batch labels were incompletely registered or missing for 7.11% of SAEs, leaving 61,847 batch-identifiable SAEs for further analysis of which 14,509 (23.5%) were classified as severe SAEs and 579 (0.9%) were SAE-related deaths. Unexpectedly, rates of SAEs per 1000 doses varied considerably between vaccine batches with 2.32 (0.09–3.59) (median [interquartile range]) SAEs per 1000 doses, and significant heterogeneity (p < .0001) was observed in the relationship between numbers of SAEs per 1000 doses and numbers of doses in the individual batches. Three predominant trendlines were discerned, with noticeable lower SAE rates in larger vaccine batches and additional batch-dependent heterogeneity in the distribution of SAE seriousness between the batches representing the three trendlines (Figure 1). Compared to the rates of all SAEs, serious SAEs and SAE-related deaths per 1.000 doses were much less frequent and numbers of these SAEs per 1000 doses displayed considerably greater variability between batches, with lesser separation between the three trendlines (not shown).

Author(s): Max Schmeling, Vibeke Manniche, Peter Riis Hansen

Publication Date: 30 Mar 2023

Publication Site: European Journal of Clinical Investigation

Federal Financial Watchdog Aims to Expand Its Reach

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2023/04/24/federal-financial-watchdog-aims-to-expand-its-reach/

Excerpt:

The Financial Stability Oversight Council — the federal agency in charge of keeping the U.S. financial system upright — wants to change a 2019 document that limits how it tries to keep problems at life insurers, money market funds, cryptocurrency firms and other nonbank financial companies from destroying the economy.

FSOC announced Friday that it’s proposing a new version of the document that would free it from the 2019 restrictions.

….

FSOC started a fight with life insurers and their regulators by designating companies such as MetLife and Prudential Financial as “systemically important financial institutions,” or companies needing extra oversight.

Life insurers argued that the SIFI designation process was unclear, arbitrary and unfair.

MetLife sued FSOC over its SIFI designation. A federal appeals court threw out MetLife’s designation in 2018.

FSOC withdrew the last designation of a nonbank company — Prudential Financial — in October 2018.

…..

FSOC says it needs more flexibility to address potential risks as early and as quickly as possible, and that comparing the potential benefits of focusing attention on a nonbank company to the potential impact on the company is not useful.

“This is in part because it is not feasible to estimate with any certainty the likelihood, magnitude or timing of a future financial crisis,” FSOC said. FSOC argued that, if it does prevent a financial crisis, it would save the country trillions of dollars.

FSOC noted that it consults with state regulators and federal regulatory agencies regularly, and that its own members are made up mostly of state and federal agency heads.

“The council expects that most potential risks to financial stability will continue to be addressed by existing regulators rather than by use of the council’s nonbank financial company designation authority,” FSOC said.

Author(s): Allison Bell

Publication Date: 24 Apr 2023

Publication Site: Think Advisor

Thousands of Retirees Can’t Withdraw Savings Invested in Firms Controlled by Indicted Financier Greg Lindberg

Mary Pat Campbell

Link: https://www.wsj.com/articles/thousands-of-retirees-cant-withdraw-savings-invested-in-firms-controlled-by-indicted-financier-greg-lindberg-6a268369?st

Excerpt:

The 52-year-old executive [Greg Lindberg] was indicted last month on federal charges that he defrauded his insurers by lending $2 billion of their funds to companies in his private conglomerate, while allegedly siphoning off huge sums to finance his lavish lifestyle. He has pleaded not guilty and is out on bail.

Until last July, Mr. Lindberg was in federal prison on bribery charges related to the insurers. He was released after 21 months when an appeals court overturned the conviction. A retrial is scheduled for November.

The executive also is fighting a drawn-out court battle with North Carolina regulators, who seized his insurers in 2019 and now say they should be liquidated. Mr. Lindberg, who previously lived in North Carolina and was the subject of investigative articles in The Wall Street Journal in 2019, says the insurers are healthy and he has a plan to rescue them.

What rankles Mr. Zintel and others is that they believe Mr. Lindberg is using their money to fight his legal entanglements, allowing him to continue living extravagantly even as they cut back. Among the alleged extravagances: The divorced executive has spent millions of dollars on gifts for women, according to court documents, including paying some women to produce offspring for him.

Some 70,000 holders of annuities totaling $2.2 billion are unable to withdraw their money, filings show. Many are retirees or conservative investors who bought five- to seven-year annuities in 2017 and 2018. Financial advisers typically marketed them as a safe, higher-yielding alternative to bank CDs.

Author(s): Mark Maremont, Leslie Scism

Publication Date: 26 Mar 2023

Publication Site: WSJ

What the Madoff Series Left Out

Mary Pat Campbell

Link: https://reason.com/video/2023/02/21/what-the-madoff-series-left-out/

Excerpt:

And yet, nothing in the series leads the viewer to the conclusion that the SEC needed a bigger budget to catch Madoff. In fact, outsiders were sounding the alarm without access to government funding or regulatory muscle. In 2001, Barron’s journalist Erin Arvedlund reported that many Wall Street investors were suspicious that Madoff was engaged in foul play.

And the SEC received its first complaint that Madoff was running “an unregistered investment company” “offering ‘100%’ safe investments” in 1992. In 1999, a derivatives expert named Harry Markopolos, who worked at a competing firm, started to alert the SEC that Madoff’s investment returns were virtually impossible. In 2005, Markopolos sent the agency an infamous 25-page memo explaining why “The World’s Largest Hedge Fund is a Fraud.” The SEC opened an investigation in 2006, and then closed it the following year because the “uncovered violations” were “remedied” and “those violations were not so serious as to warrant an enforcement action.”

So how is this tale of epic failure on the part of a government agency the fault of deregulation?

Instead of making lazy allusions to the evils of free market capitalism, to better understand the lessons of the Madoff saga, director Joe Berlinger should have consulted the work of the free market economist George Stigler, who won the Nobel Prize in part for his work on “regulatory capture.”

Author(s): ZACH WEISSMUELLER AND DANIELLE THOMPSON

Publication Date: 21 Feb 2023

Publication Site: Reason

The End Is Near for Outdated Government Financial Reporting

Mary Pat Campbell

Link: https://www.route-fifty.com/finance/2023/02/end-near-outdated-government-financial-reporting/382747/

Excerpt:

By way of a few paragraphs inserted into the recently enacted 4,000-page 2023 National Defense Authorization Act, Congress mandated that state and local governments prepare their annual financial statements in a standardized format that is electronically searchable. The provision effectively drags state and local governments kicking and screaming into the 20th century, if not the 21st.

As worthy an accomplishment as this appears to be, it was resisted mightily by the state and local government financial community. Most prominently, they argue, the measure can potentially result in a major transfer of accounting and reporting regulatory authority from states to the federal government, thereby undercutting what many consider a fundamental principle of federalism. Moreover, state and local officials see it as one more costly unfunded mandate imposed upon their governments.   

The opposition by state and local governments is understandable. But they have no one to blame but themselves. To this day they are wedded to a technological past. In a perverted way, they may be getting their just desserts. The act requires them to do little more than what they should have done years ago on their own for the benefit of their investors and other stakeholders.  

Implicit in the act is that governments will have to prepare their financial statements using XBRL (eXtensible Business Reporting Language) or some comparable reporting framework. This is the format that the Securities and Exchange Commission, which would be charged with implementing the new provision, currently demands corporations use in their financial filings. XBRL requires all entities to classify each of the elements of their financial statements (e.g., assets, liability, revenues and expenses) by identical rules and in machine readable form.    

Author(s): Michael Granof and Martin J. Luby

Publication Date: 8 Feb 2023

Publication Site: Route Fifty