Unfolding Financial Meltdown on Wall Street by Dr. Ellen Brown

Dandelion Salad

by Dr. Ellen Brown
Global Research, June 15, 2008
webofdebt.com

What’s The Difference Between Lehman Brothers & Bear Stearns? Lehman’s CEO Sits On the Board Of The NY Fed

An earlier article by this author (“The Secret Bailout of JP Morgan“) summarized evidence presented by John Olagues, an expert in options trading, suggesting that JPMorgan, far from “rescuing” Bear Stearns, was actually its nemesis.1 The faltering investment bank was brought down, not by “rumors,” but by insider trading based on a plan drawn up much earlier. The deal was a lucrative one for JPM, handing the Wall Street megabank $55 billion in loans from the Federal Reserve (meaning ultimately the U.S. taxpayer). So how did JPM get away with it? Olagues notes the highly suspicious fact that JPM’s CEO James Dimon sits on the Board of the New York Federal Reserve.

In his latest post, Olagues discusses the fate of Lehman Brothers, the nation’s fourth-largest investment bank and the next faltering bank expected to fail.2 Unlike Bear Stearns, which got decimated by the JPM buyout using Federal Reserve money, Lehman Brothers is probably in line for a massive bailout from the Fed. At least, that’s what its CEO Richard Fuld seems to believe. The June 4, 2008 Financial Times of London quoted him as stating, “The Federal Reserve’s decision earlier this year to lend directly to investment banks should take questions about Lehman’s liquidity off the table.” Whether Lehman can come up with the “liquidity” to meet its debts is no longer an issue, because it expects to be feeding at the trough of the Federal Reserve, just as JPM did when it bought Bear Stearns at bargain-basement prices. The difference between the two “bailouts” is that Lehman Brothers, unlike Bear Stearns, will actually get the money. Why is Fuld so confident of this rescue operation? Olagues notes that Fuld, like Dimon (and unlike Bear CEO Alan Schwartz), sits on the Board of the New York Federal Reserve.

A conflict of interest? It certainly looks like it. Indeed, Olagues points to a statute defining this sort of self-dealing as a criminal offense. 18 U.S.C. Chapter 11, Section 208, makes it a felony punishable by up to 5 five years in prison for members of the Board of Directors of a Federal Reserve Bank to make decisions that benefit their own financial interests. That would undoubtedly apply here:

“Fuld, at last count, owns 1.9 million shares of Lehman, 600,000 restricted stock units and 900,000 executive stock options . . . . Although Mr. Fuld sold over $320,000,000 worth of stock at near all time highs in 2006 and 2007, received through the premature exercise of his stock options, he still has value in his present holdings of approximately $100,000,000.”

Likewise, says Olagues, “James Dimon holds almost 3 million shares of J.P. Morgan stock worth over $120 million with taxes already paid and executive stock options equal in my estimate of another $70 million. His dispositions of stock equaled $140 million over the past few years.” Olagues adds:

“Fuld, like Jamie Dimon, was at the luncheon on March 11, 2008 with Bernanke, Rubin, CEO of Citigroup, Geithner, President of the New York FED, Thain of Merrill Lynch, and Schwarzman. Some claim that the meeting was about Bear Stearns and how to handle the situation.”

Needless to say, Bear CEO Schwartz was not invited to the luncheon. “Lehman Bros. is one of the original stock holders of the New York Federal Reserve Bank,” Olagues observes. “Bear Stears does not now have any ownership in the FED banks.”

The luncheon was held two days before the April 14 collapse of Bear Stearns stock that led to the bank’s demise. If the luncheon attendees were indeed discussing the Bear problem on April 11, testimony before the Senate Banking Committee in which the principals said they first heard of the problem on the evening of the thirteenth, says Olagues, was “less than truthful.”

The evidence at least warrants an investigation, but who is going to hold these self-dealing Federal Reserve Board members to account? In a March 27 radio broadcast noted in The New York Post of the same day, Senator Christopher Dodd pointed out the conflict of interest and said it needed to be examined; but no mention was made of it at the April 4 Senate hearings. Why not? Olagues suggests he had gotten his marching orders by then from a major campaign contributor. New York Governor Eliot Spitzer, the former thorn in the side of the Wall Street bankers, has been summarily disposed of; and under the latest proposal of U.S. Treasury Secretary Hank Paulson, the Federal Reserve itself will soon become the chief overseer and regulator of the banks. The Federal Reserve will regulate the Federal Reserve Boards with their litany of private bank CEOs, a clear case of the fox guarding the henhouse.

So who is left to bring the banks to task? That question will be addressed in my next article. Stay tuned . . . .

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves and how we the people can get it back. Her eleven books include Forbidden Medicine and Nature’s Pharmacy (co-authored with Dr. Lynne Walker and selling 285,000 copies). See www.ellenbrown.com and www.webofdebt.com.

© Copyright Ellen Brown, webofdebt.com, 2008

The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=9343

The Secret Bailout of J. P. Morgan: How Insider Trading Looted Bear Stearns and the American Taxpayer

by Dr. Ellen Hodgson Brown
featured writer
Dandelion Salad
Ellen’s post
webofdebt.com
May 14, 2008

The mother of all insider trades was pulled off in 1815, when London financier Nathan Rothschild led British investors to believe that the Duke of Wellington had lost to Napoleon at the Battle of Waterloo. In a matter of hours, British government bond prices plummeted. Rothschild, who had advance information, then swiftly bought up the entire market in government bonds, acquiring a dominant holding in England’s debt for pennies on the pound. Over the course of the nineteenth century, N. M. Rothschild would become the biggest bank in the world, and the five brothers would come to control most of the foreign-loan business of Europe. “Let me issue and control a nation’s money,” Rothschild boasted in 1838, “and I care not who writes its laws.”

Continue reading

The Apex of Slavery By Caroline E. Winter (Benjamin Skinner)

Dandelion Salad

By Caroline E. Winter
Mother Jones
March 27, 2008

Eliot Spitzer’s high-priced prostitute, Kristen, is not a slave; she’s a prostitute. Or so says Benjamin Skinner, author of the new book A Crime So Monstrous: Face-to-Face With Modern-Day Slavery. Skinner’s opinion is informed by his definition of “slave”: someone who is forced to work, under threat of violence, for no pay beyond subsistence.

Going by this definition and the desire to humanize one of the globe’s most devastating injustices, he spent the past five years traveling between five continents to infiltrate slave trafficking networks—at times negotiating sales undercover (but never buying human life)—and collecting the searing stories of more than 100 victims.

The point of the book is loud and clear: Slavery is far from dead, and there’s not enough being done about it. There are more slaves in the world today than at any other point in history, with estimates ranging from 12 to 27 million, and we’re not talking about those laboring for less than a dollar a day in developing countries or choosing to charge thousands for an hour of intimacy. The statistic refers only to those who truly have no choice.

Skinner took time to speak with Mother Jones from his home in Brooklyn about how some evangelicals and a small subset of academic feminists have distorted America’s already skewed understanding of slavery, the hypocrisy of the Bush administration’s soaring anti-slavery rhetoric, and what constitutes the “typical” slave.

Mother Jones: Why does it come as such a shock that there are more slaves in the world today than ever before?

Benjamin Skinner: My sense is that there is a fundamental misunderstanding, particularly in America, of what slavery is. The term has lost its currency and so you get the artist formerly known as Prince writing the word slave on his cheek to protest a binding contract that pays him 10 million per album. You get people using the word slave to refer to those who are underpaid in sweatshops but can walk away.

…continued

Paulson’s Fixit Plan for Wall Street – If It’s Not Dead on Arrival, Someone Should Shoot It Quick

Dandelion Salad

By Mike Whitney
03/31/08 “ICH

It is being billed as a “massive shakeup of US financial market regulation”, but don’t be deceived. Treasury Secretary Henry Paulson’s proposals for broad market reform are neither “timely” nor “thoughtful” (Reuters) In fact, its all just more of the same free market “we can police ourselves” mumbo jumbo that got us into this mess in the first place. The real objective of Paulson’s so called reforms is to decapitate the SEC and increase the powers of the Federal Reserve. Same wine, different bottle. Paulson’s real motive is to preempt the regulatory sledgehammer that is set to descend on the entire financial industry following the 2008 election. There’s growing fear that a President Obama may tote his firehose down to Wall Street and flush out some of the debris that has collected in the market’s dark corners.

If Paulson’s plan is approved in its present form, Congress will have even less control over the financial system than it does now and the same group of self-serving banking mandarins who created the biggest equity bubble in history will be able to administer the markets however they choose without the annoyance of government supervision. That’s exactly what Treasury Secretary and his pals at the Fed want; unlimited power with no accountability.

Paulson is expected to lay out guidelines and principles that are intended to help regulators supervise the financial markets. According to AFP:

“The President’s Working Group on Financial Markets said the current regulatory structure is working well despite calls by some US lawmakers.”

In other words, the failing banking system, the housing meltdown, and the frozen corporate bond market are all signs of a robust financial system? This may be the most incongruous statement since “Mission accomplished”. The system is imploding and real people are being hurt by the fallout. Thirty years of industry-led lobbying has dismantled the regulatory regime which made US financial markets the envy of the world. The credibility and transparency are gone along with Glass-Steagall and government oversight of the explosive growth of over-the counter derivatives instruments. Now the system is prey to all types of dodgy debt instruments, suspicious “dark pool” trading and off-balance sheets operations which further reinforce the belief that cautious investment is no better than casino gambling.

“The regulatory line of sight today is by the counterparties,” the official said, adding that the guidelines should be “beneficial to industry.” (AFP)

How is that different than saying, “Caveat emptor”? That’s not a motto that inspires confidence. Many people still naively believe that planning their retirement should not have to be a Darwinian tussle with a crafty junk-bond salesman.

Under Paulson’s plan, the Federal Reserve will be granted new regulatory powers, but whatever for? The Fed doesn’t use the powers it has now. No one stopped the Fed from intervening in the mortgage lending fiasco, or the ratings agency abuses or the off-balance sheets shenanigans. They had the authority and they should have used it. The Fed knew everything that was going on—including the mushrooming sales of derivatives contracts which soared from under $1 trillion in 2000 to over $500 trillion in 2006—but they decided to cheerlead from the sidelines rather than do their jobs. The fact is, they were worried that if they got involved they might upset the gravy-train of obscene profits that was enriching their bankster friends.

Former Fed chief Greenspan used to croon like a smitten teenager every time he was asked about subprime loans or adjustable rate mortgages. And, as New York Times columnist Floyd Norris points out, (Greenspan) “praised the growth in the derivatives market as a boon for market stability, and resisted calls to use the Fed’s power to increase regulation.” Of course, he did. It was all part of Maestro’s “New Economy”; trickle-down Elysium, where the endless flow of low interest credit merged with financial innovation to create a Reaganesque El Dorado. There are no regulations in Eden; anything goes and to heck with the public, they can fend for themselves. Its a dog eat dog world and there ain’t no love.

Now its Paulson’s job to keep the neoliberal flame lit long enough to make sure that government busybodies and bureaucratic do-goodies don’t upset the applecart. That means concocting a wacky public relations campaign to convince the public that Wall Street is not just a pirate’s cove of land-sharks and bunko artists, but a trusted ally in maintaining a strong economy through vital and efficient markets.

The Times’ Norris summed up Paulson’s sham reforms like this:

“The plan has its genesis in a yearlong effort to limiting Washington’s role in the market. And that DNA is unmistakably evident in the fine print. Although the proposal would impose the first regulation of hedge funds and private equity funds, that oversight would have a light touch, enabling the government to do little beyond collecting information — except in times of crisis. The regulatory umbrella created in the 1930s would grow wider, with power concentrated in fewer agencies. But that authority would be limited, doing virtually nothing to regulate the many new financial products whose unwise use has been a culprit in the current financial crisis. (“In Treasury Plan, a Reluctant Eye over Wall Street”, Floyd Norris, New York Times)

What nonsense. The house is on fire and hyperventilating Hank is still wasting our time with this rubbish. The real problem is that Paulson and his buddies at the Federal Reserve think of the financial system as their personal fiefdom so they refuse to loosen their hoary grip even though the economy is listing starboard and the water is flooding into the lower decks.

Once again, the New York Times:

“All the checks and balances in the plan reflect the mindset of its architect, Treasury Secretary Henry Paulson, who came to Washington after a long career on Wall Street. He has worried that any effort to substantially tighten regulation could hamper the ability of American markets to compete with foreign rivals.”

No one elected Paulson to do anything. He has no mandate. He is an industry rep. who has worked exclusively for a small group of wealthy investors who have put the entire country at risk with their toxic mortgage-backed bonds, their reckless Ponzi-type speculation, and their off-book chicanery. Paulson should be removed immediately and returned to his wolf’s lair at G-Sax. If Bush is serious about straightening out Wall Street, then bring in Eliot Spitzer. He’s available. And he’ll do what it takes to clean house, that is, put a truncheon-wielding robo-cop in every trading-pit at the NYSE, and dispatch government accountants to every office of every CFO making sure they have a Big Red Pen in one hand and a taser in the other. That’s the only way to get the attention of the bandit-class.

“I do not believe it is fair or accurate to blame our regulatory structure for the current turmoil,” says Paulson.

Paulson is wrong. The current turmoil is all about the lack of regulation and he’d better prepare himself for some big changes. The pendulum is already in motion and tighter regulations will soon follow. There needs to be an accounting process for all transactions and capital requirements for every financial institution that creates credit. No exceptions. All of these businesses pose a real danger to the overall system and, therefore, must conform to clearly articulated and strictly enforced rules; no off-balance sheets operations, no dark pool trading, no unregulated derivatives contracts, no level 3 assets, no “mark to model” garbage bonds where CFOs unilaterally decide what they are worth by picking a number out of a hat. Its time to restore order to the markets so retirees and working class families can feel safe investing in their futures. They are the ones who are most hurt by Wall Street’s endless trickery.

Paulson’s plan is a non starter. The era of sandbagging, supply-side banditry is over. Good riddance.

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Smoke and Mirrors of the Bush Administration

April Fools: The Fox To Guard The Banking Henhouse

U.S. Treasury Regulatory Reform Proposals: Hapless, Helpless, Hopeless

Why the Paulson Plan is DOA + US proposes broad reform of market oversight

April Fools: The Fox To Guard The Banking Henhouse

Dandelion Salad

by Dr. Ellen Brown
Global Research, March 31, 2008

[author’s website at  www.webofdebt.com]

The Federal Reserve, which has been credited with creating the current housing bubble and bust just as it created the credit bubble of the Roaring Twenties and the bust of 1929, is now to be given vast new powers to oversee regulation of the banking industry and promote “financial market stability.” At least, that is the gist of a Treasury Department proposal to be presented to Congress on Monday, March 31, 2008. Adrian Douglas wrote on LeMetropoleCafe.com, “I would like to think that this is some sort of sick April Fools joke, but, alas, they are serious! What happened to free markets?”1

In fact, what happened to regulating the banks? The Treasury’s plan is not for the private Federal Reserve to increase regulation of the banking system it heads. Au contraire, regulation will actually be decreased. According to The Wall Street Journal:

“Many of the [Treasury’s] proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation. According to a summary provided by the administration, the plan would consolidate an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms. . . . Parts of the plan could reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. . . . The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.”2

“securities products” include the mortgage-backed securities, collateralized debt obligations, credit default swaps, and other forms of the great Ponzi scheme known as “derivatives” that have been largely responsible for bringing the banking system to the brink of collapse. But these suspect products are not to be more heavily scrutinized; rather, their approval will actually be “streamlined” and may be automatic if they are being traded in “foreign markets.” The Journal observes that the Treasury’s proposal was initiated last year by Secretary Henry Paulson not to “regulate” the banks but “to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system. His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders.” “streamlining” the rules evidently meant eliminating any that “clashed” with the Fed’s goal of allowing U.S. banks to be more “competitive” abroad. The Journal continues:

“While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation. The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings. . . . And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security.”

Regulating fraudulent, predatory and overly-speculative banking practices has been left to the States, not necessarily by law but by default. According to then-Governor Eliot Spitzer, writing in January of 2008, state regulators tried to regulate these shady practices but were hamstrung by federal authorities. In a February 14 Washington Post article titled “Predatory Lenders; Partner in Crime: How the Bush Administration Stopped the States from Stepping in to Help Consumers,” Spitzer complained:

“several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive ‘teaser; rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

“Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. . . . [A]s New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York’s, enacted laws aimed at curbing such practices . . . .

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye. . . . The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). . . . In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”

Less than a month after publishing this editorial, Spitzer was out of office, following a surprise exposé of his personal indiscretions by the Justice Department. Greg Palast observed that Spitzer was the single politician standing between a $200 billion windfall from the Federal Reserve guaranteeing the mortgage-backed junk bonds of the same banking predators that were responsible for the subprime debacle. While the Federal Reserve was trying to bail them out, Spitzer had been trying to regulate them, bringing suit on behalf of consumers.3 But Spitzer has now been silenced, and any other state attorneys general who might get similar ideas will be deterred by the federal oversight under which banking regulators are to be “consolidated.”

The Federal Reserve under Alan Greenspan deliberately enabled and permitted the derivatives debacle to take down the dollar and America’s credibility. Greenspan is now lauded, feted and awarded at the White House and on network television, and takes a victory lap tour promoting and signing his book and celebrating his multimillion dollar book deal, enjoying his knighthood status in England and hero status on Wall Street. And as the falling debris of the American economy still piles up around us, the very agency that enabled disaster is now seeking to consolidate ultimate authority and accountability to itself, and through centralization and arrogation of power, eliminate all those pesky little Constitutional and State regulations and agencies, recalcitrant governors and the last few whistle blowers, so that the further abuse of power can be streamlined through one agency only. That agency is to consist of an alliance of the banking powers and the executive branch, a perfect formula for the institutionalization of continual abuse.

Perhaps Spitzer was lucky that he was the target only of a character assassination. When Louisiana Senator Huey Long challenged the Federal Reserve and fought for the State’s right to oversee its own financial affairs in the 1930s, he was assassinated with bullets. Long’s local assertion of decentralized State powers, as provided for in the Tenth Amendment to the Constitution, enabled the State of Louisiana to loosen the grip of the corporations on the State’s wealth and allowed the setting up of schools and public institutions that elevated the people of the State and placed its “common wealth” back into the hands of its citizens, while providing employment and education. The Constitution reserves to the States and the people all those powers not specifically delegated to the federal government, arguably including the creation of money itself, which is nowhere specifically mentioned in the Constitution beyond creating coins. (See E. Brown, “Another Way Around the Credit Crisis: Minnesota Bill Would Authorize State Banks to Monetize; Productivity,” http://www.webofdebt.com/articles, March 23, 2008.) But in this latest attempt at expanding the Federal Reserve’s already over-expansive powers, we see clear evidence that the Wall Street and global banking powers have no intention of allowing their plans to be reined in by the Constitutional powers of the States and the people. Instead, they intend to fill up the moat and pull up the draw bridge on their feudal powers, and let the serfs shiver outside the gates for as long as they will put up with it.

NOTES

1 Adrian Douglas, “PPT to Come Out of the Closet,” http://www.lemetropolecafe.com (March 29, 2008).
2 Edmund Andrews, “Treasury’s Plan Would Give Fed Wide new Power,” New York Times (March 29, 2008).
3 Greg Palast, “Eliot’s Mess” http://www.gregpalast.com (March 14, 2008).

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies. Her websites are www.webofdebt.com and www.ellenbrown.com.

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The $200 billion bail-out for predator banks & Spitzer charges are intimately linked By Greg Palast

U.S. Treasury Regulatory Reform Proposals: Hapless, Helpless, Hopeless

Dandelion Salad

by Richard C. Cook
Global Research, March 31, 2008

The U.S. Department of the Treasury was the big loser in 2003 when the Bush Administration sped legislation through Congress to enact the Department of Homeland Security after 9/11. Stripped of its law enforcement components—the Secret Service; the Bureau of Alcohol, Tobacco, and Firearms; and the Customs Service—Treasury became what my colleagues at work began to call “IRS and the Seven Dwarves.” Continue reading

Is an International Financial Conspiracy Driving World Events?

Dandelion Salad

by Richard C. Cook
March 27, 2008

“They make a desolation and call it peace.” -Tacitus

Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?

Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world’s financial system? Or was it done, perhaps, “accidentally on purpose”?

And if so, why?

Let’s turn to the U.S. personage that conspiracy theorists most often mention as being at the epicenter of whatever elite plan is reputed to exist. This would be David Rockefeller, the 92-year-old multibillionaire godfather of the world’s financial elite.

The lengthy Wikipedia article on Rockefeller provides the following version of a celebrated statement he allegedly made in an opening speech at the Bilderberg conference in Baden-Baden, Germany, in June 1991:

“We are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries.”

This speech was made 17 years ago. It came at the beginning in the U.S. of the Bill Clinton administration. Rockefeller speaks of an “us.” This “us,” he says, has been having meetings for almost 40 years. If you add the 17 years since he gave the speech it was 57 years ago—two full generations.

Not only has “us” developed a “plan for the world,” but the attempt to “develop” the plan has evidently been successful, at least in Rockefeller’s mind. The ultimate goal of “us” is to create “the supranational sovereignty of an intellectual elite and world bankers.” This will lead, he says, toward a “world government which will never again know war.”

Just as an intellectual exercise, let’s assume that David Rockefeller is as important and powerful a person as he seems to think he is. Let’s give the man some credit and assume that he and “us” have in fact succeeded to a degree. This would mean that the major decisions and events since Rockefeller gave the speech in 1991 have probably also been part of the plan or that they have at least represented its features and intent.

Therefore by examining these decisions and events we can determine whether in fact Rockefeller is being truthful in his assessment that the Utopia he has in mind is on its way or has at least come closer to being realized. In no particular order, some of these decisions and events are as follows:

The implementation of the North American Free Trade Agreement by the Bill Clinton and George W. Bush administrations has led to the elimination of millions of U.S. manufacturing jobs as well as the destruction of U.S. family farming in favor of global agribusiness.

Similar free trade agreements, including those under the auspices of the World Trade Organization, have led to export of millions of additional manufacturing jobs to China and elsewhere.

Average family income in the U.S. has steadily eroded while the share of the nation’s wealth held by the richest income brackets has soared. Some Wall Street hedge fund managers are making $1 billion a year while the number of homeless, including war veterans, pushes a million.

The housing bubble has led to a huge inflation of real estate prices in the U.S. Millions of homes are falling into the hands of the bankers through foreclosure. The cost of land and rentals has further decimated family agriculture as well as small business. Rising property taxes based on inflated land assessments have forced millions of lower-and middle-income people and elderly out of their homes.

The fact that bankers now control national monetary systems in their entirety, under laws where money is introduced only through lending at interest, has resulted in a massive debt pyramid that is teetering on collapse. This “monetarist” system was pioneered by Rockefeller-family funded economists at the University of Chicago. The rub is that when the pyramid comes down and everyone goes bankrupt the banks which have been creating money “out of thin air” will then be able to seize valuable assets for pennies on the dollar, as J.P. Morgan Chase is preparing to do with the businesses owned by Carlyle Capital. Meaningful regulation of the financial industry has been abandoned by government, and any politician that stands in the way, such as Eliot Spitzer, is destroyed.

The total tax burden on Americans from federal, state, and local governments now exceeds forty percent of income and is rising. Today, with a recession starting, the Democratic-controlled Congress, while supporting the minuscule “stimulus” rebate, is hypocritically raising taxes further, even for middle-income earners. Back taxes, along with student loans, can no longer be eliminated by bankruptcy protection.

Gasoline prices are soaring even as companies like Exxon-Mobil are recording record profits. Other commodity prices are going up steadily, including food prices, with some countries starting to experience near-famine conditions. 40 million people in America are officially classified as “food insecure.”

Corporate control of water and mineral resources has removed much of what is available from the public commons, and the deregulation of energy production has led to huge increases in the costs of electricity in many areas.

The destruction of family farming in the U.S. by NAFTA (along with family farming in Mexico and Canada) has been mirrored by policies toward other nations on the part of the International Monetary Fund and World Bank. Around the world, due to pressure from the “Washington consensus,” local food self-sufficiency has been replaced by raising of crops primarily for export. Migration off the land has fed the population of huge slums around the cities of underdeveloped countries.

Since the 1980s the U.S. has been fighting wars throughout the world either directly or by proxy. The former Yugoslavia was dismembered by NATO. Under cover of 9/11 and by utilizing off-the-shelf plans, the U.S. is now engaged in the military conquest and permanent military occupation of the Middle East. A worldwide encirclement of Russia and China by U.S. and NATO forces is underway, and a new push to militarize space has begun. The Western powers are clearly preparing for at least the possibility of another world war.

The expansion of the U.S. military empire abroad is mirrored by the creation of a totalitarian system of surveillance at home, whereby the activities of private citizens are spied upon and tracked by technology and systems which have been put into place under the heading of the “War on Terror.” Human microchip implants for tracking purposes are starting to be used. The military-industrial complex has become the nation’s largest and most successful industry with tens of thousands of planners engaged in devising new and better ways, both overt and covert, to destroy both foreign and domestic “enemies.”

Meanwhile, the U.S. has the largest prison population of any country on earth. Plus everyday life for millions of people is a crushing burden of government, insurance, and financial fees, charges, and paperwork. And the simplest business transactions are burdened by rake-offs for legions of accountants, lawyers, bureaucrats, brokers, speculators, and middlemen.

Finally, the deteriorating conditions of everyday life have given rise to an extraordinary level of stress-related disease, as well as epidemic alcohol and drug addiction. Governments themselves around the world engage in drug trafficking. Instead of working to lower stress levels, public policy is skewed in favor of an enormous prescription drug industry that grows rich off the declining level of health through treatment of symptoms rather than causes. Many of these heavily-advertised medications themselves have devastating side-effects.

This list should at least give us enough to go on in order to ask a hard question. Assuming again that all these things are parts of the elitist plan which Mr. Rockefeller boasts to have been developing, isn’t it a little strange that the means which have been selected to achieve “peace and prosperity for the whole of humanity” involve so much violence, deception, oppression, exploitation, graft, and theft?

In fact it looks to me as though “our plan for the world” is one that is based on genocide, world war, police control of populations, and seizure of the world’s resources by the financial elite and their puppet politicians and military forces.

In particular, could there be a better way to accomplish all this than what appears to be a concentrated plan to remove from people everywhere in the world the ability to raise their own food? After all, genocide by starvation may be slow, but it is very effective. Especially when it can be blamed on “market forces.”

And can it be that the “us” which is doing all these things, including the great David Rockefeller himself, are just criminals who have somehow taken over the seats of power? If so, they are criminals who have done everything they can to watch their backs and cover their tracks, including a chokehold over the educational system and the monopolistic mainstream media.

One thing is certain: The voters of America have never knowingly agreed to any of this.


Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites. His book on monetary reform entitled We Hold These Truths: The Promise of Monetary Reform is in preparation. He is also the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, “the most important spaceflight book of the last twenty years.” His website is at
www.richardccook.com.


Lies and Torture by Eric Margolis

Dandelion Salad

by Eric Margolis
March 17, 2008

NEW YORK – America was riveted last week by the lurid spectacle of the humiliation of New York State’s former governor, Elliot Spitzer who resigned office after be exposed as a long-time client of an escort service.

As a notoriously tough, some said ruthless, former prosecutor, Spitzer relentlessly crusaded against financial, political and moral malefactors, including a number of prostitution cases. Some saw him a future presidential candidate.

That was until what was described as a ‘routine’ federal tax investigation uncovered payments to a high-end prostitution service by a certain ‘Client 9’ – who turned out to be a modern Savolarola, that scourge of sinners, the upright, unforgiving Elliot Spitzer. Worse, it seemed the governor paid up to $80,000 for call girls, apparently at up to $4,000-5,000 per one hour session. This alone qualified him for a dunce cap.

It’s always satisfying watching hypocrites and moralists exposed to public humiliation. Except, of course, for the humiliation inflicted on his brave, loyal wife who stood by the embattled governor and even urged him not to resign.

US media overflowed with endless hours of silly, hypocritical commentary by feminists, psychiatrists, and pundits about ‘why did he do it,’ as if infidelity was an aberration or disease.

Spitzer did it because he was a typical man genetically programmed to lust after other women. As the old saying goes, if a man isn’t thinking about sex, his mind is wandering.

Too many Americans still have adolescent views of sex and sugar-coated images of marriage. Europeans, by contrast, shrug off men’s need to stray as normal and acceptable, provided done discreetly. An infidelity scandal would not have gotten far in continental Europe – except France, where, unfortunately, the hyperactive, publicity-seeking Nicholas Sarkozy has for the first time made politician’s private lives fair game for media.

However ruthless, self-serving and hypocritical about prostitution, Spitzer was doing one good thing: going after Wall Street’s crooks and fraudsters largely responsible for the current financial crisis shaking world markets. His resignation at least temporarily removes pressure to investigate this den of thieves that had, with tacit administration blessing, brought Enron-style fraud to America’s finances, then exported them around the globe.

Spitzer’s downfall unfortunately obscured two far more important events. First, the White House’s refusal to release an exhaustive Pentagon review of 600,000 Iraqi documents that found no evidence that Saddam Hussein had any links with al-Qaida.

This was the second big lie after the ‘weapons of mass destruction’ canard propagated by the Bush White House to justify invading Iraq. So successfully was it spread by the administration and tame media, that on the eve of the 2003 US invasion of Iraq, 80% of Americans blamed Saddam for the 9/11 attacks. A small, al-Qaida Iraqi affiliate only appeared in Iraq as a result of the US invasion. It was not part of Osama bin Laden’s al-Qaida but Washington inflated this small group into the second coming of bin Laden and misled Americans still believe they are fighting his men in Iraq. All 22 of Iraqi organizations fighting US occupation are now called by Washington, ‘al-Qaida.’ No wonder the White House is trying to suppress the Pentagon study.

Spitzer’s pillorying also masked another profoundly shameful act. On Tuesday, 188 Republicans in the House of Representatives voted to uphold President George Bush’s veto of a Democratic-sponsored bill to ban CIA from using torture to interrogate enemy detainees. Their party-line vote was strong enough to prevent the 225 Democrats who voted to overturn the president’s veto from achieving the required two-third majority.

Republicans have now become the party of torture. Never has the Grand Old Party sunk so low. Those great Republicans, Lincoln, Eisenhower and Reagan, must be weeping in their graves.

Among tortures America now routinely inflicts on mostly Muslim captives: water torture, near suffocation, beatings, confinement in cramped positions, sleep and sensory deprivation, freezing rooms, ear-splitting noise, mock executions, psychotropic drugs, food laced with pork or excrement. Even KGB did not use all of these tortures.

However, the White House and Republicans insist none of this is really torture. Republicans just love euphemisms. These tortures are merely ‘enhanced interrogation.’ Overthrowing foreign governments is ‘regime change;’ murdering foreign leaders, ‘taking them out; ’ water torture is, ‘water-boarding.’

George Orwell warned such double-talk was the hallmark of totalitarian regimes.

The president and his party are violating existing American and international law, and UN agreements against torture. Their sanction of torture, and its apotheosis in the Guantanamo gulag, has disgraced America’s name around the globe and will continue to haunt the United States for decades to come. Captured American soldiers now know what to expect.

Presidential candidates Hillary Clinton, Barak Obama and John McCain – the latter a torture victim – all properly condemn the White House for promoting torture. But McCain, who should know better, fudges, saying he won’t restrict CIA interrogations. That is ominous.

The Spitzer follies should not distract us from the Bush Administration’s continuing violations of American and international law, and growing violations of the values America used to hold dear.

Copyright Eric S. Margolis 2008

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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“Today, I weep for my country” by Sen. Robert Byrd

It’s March 19 and Blogswarm Day! Posts on Iraq War by Lo

Olbermann: More on Obama Passport Story + The LIES that BIND!

The Lies That Led to War (video link; 2007)

How to Destroy a Country & Get Off Scot-Free By Linda Heard

Another Act of Evil: Slow Murder at Gitmo by Chris Floyd

The $200 billion bail-out for predator banks & Spitzer charges are intimately linked By Greg Palast

Forget Spitzer, fire Bernanke By Chan Akya

Dennis Kucinich: You Can’t Secure Our Nation With LIES!

Bush vetoes bill outlawing torture techniques By Joe Kay

Condoleezza Rice: Liar, Secretary of State, War Criminal (video)

Why the Bush Admin “Watergated” Eliot Spitzer by F. William Engdahl

Olbermann: Obama’s Race Speech + The Audacity of Unity + Love, American Style + Worst + Bushed!

Dandelion Salad

duckofprey

March 18, 2008

Obama’s Race Speech

More at http://www.MaddowFans.com

Rachel Maddow and Eugene Robinson join Keith Olbermann to discuss Barack Obama’s landmark speech on race.

Ryokibin

The Audacity of Unity

Keith speaks with Howard Fineman.

The Audacity of Unity: The dirty little secret of politics, is that those who cover it, dream one day of hearing a speech so significant and so material that it — and they — transcend politics. Our fourth story on the Countdown: put your thesorauses away… since Abraham Lincoln sat down at Gettysburg in 1864, there have been precious few of them, and Barack Obama’s today, was almost certainly not one of them. But as a political speech — and as to its political impact — this was a whopper. And look carefully. If it hadn’t occurred to you already…This may have also been… an audition.

Love, American Style

Keith speaks with Michael Musto.

The Luv Guvs: Three present or former Governors…A singing prostitute…And a menage-a-trois that was dubbed “The Friday Night Special”… My producers say… “Number One Story!” I say… “Stories My Producers Are Forcing Me To Cover.” And oh yeah, trysts at a Days Inn… Could be worse, could be Motel 6… we’ll leave the light on for you.

VOTERSTHINKdotORG

World’s Worst

Keith Olbermann

Rupert Murdoch.

John McCain

Bushed!

Heckuva Job Paulsonie-Gate

Gonzo-Gate

No-Fly-Gate

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Why the Bush Admin “Watergated” Eliot Spitzer by F. William Engdahl

Why the Bush Admin “Watergated” Eliot Spitzer by F. William Engdahl

Dandelion Salad

by F. William Engdahl
Global Research, March 18, 2008

The spectacular and highly bizarre release of secret FBI wiretap data to the New York Times exposing the tryst of New York state Governor, Eliot Spitzer, the now-infamous “No.9,” with a luxury call-girl, had less to do with the Bush Administration’s pursuit of high moral standards for public servants. Spitzer was likely the target of a White House and Wall Street dirty tricks operation to silence one of its most dangerous and vocal critics of their handling the current financial market crisis.

A useful rule of thumb in evaluating spectacular scandals around prominent public figures is to ask what and who might want to eliminate that person. In the case of Governor Eliot Spitzer, a Democrat, it is clear that the spectacular “leak” of government FBI wiretap records showing that Spitzer paid a high-cost prostitute $4,300 for what amounted to about an hour’s personal entertainment, was politically motivated. The press has almost solely focused on the salacious aspects of the affair, not least the hefty fee Spitzer apparently paid. Why the scandal breaks now is the more interesting question.

Spitzer became Governor of New York following a high-profile record as a relentless State Attorney General going after financial crimes such as the Enron fraud and corruption by Wall Street investment banks during the 2002 dot.com bubble era. The powerful former head of the large AIG insurance group, Hank Greenburg was among his detractors. He made powerful enemies by all accounts. He was bitterly hated on Wall Street. He had made his political career on being ruthless against financial corruption. Most recently, from his position as Governor of the nation’s second largest state, and home to its financial industry, Spitzer had begun making high profile attacks on the complicity of the Bush Administration in covertly arranging bailout if its Wall Street financial friends at the expense of ordinary homeowners and citizens, paid all with taxpayer funds.

Curiously, Spitzer, who had been elected governor in 2006 defeating a Republican by winning nearly 70 percent of the vote, has been not charged in any crime. However, the day the scandal broke New York Assembly Republicans immediately announced plans to impeach Spitzer or put him on public trial were he to refuse resignation. Spitzer could be asked to testify in any trial involving the Emperors Club prostitution ring. But so far he hasn’t been charged with a crime. Prostitution is illegal in most US states, but clients of prostitutes are almost never charged, nor are their names usually leaked in a case in process. The Spitzer case is in the hands of Washington and not state authorities, underscoring the clear political nature of the Spitzer “Watergate.”

The New York Times said Spitzer was an individual identified as Client 9 in court papers filed last week. Client 9 arranged to meet with “Kristen,” a prostitute who officially charged $1,000 an hour, on February 13 in a Washington hotel. Whatever transpired, Spitzer paid her $4,300, according to the official documents. The case is clearly political when compared with more egregious recent cases involving Republicans. Republican Mark Foley was exposed propositioning male interns in Congress and Rudolph Giuliani was discovered cheating on his wife, but no or few Republican calls for resignations were heard.

Why the attack now?

Spitzer had become increasingly public in his blaming the Bush Administration for the nation’s current financial and economic disaster. He testified in Washington in mid-February before the US House of Representatives Financial Services subcommittee on the problems in New York-based specialized insurance companies, known as “monoline” insurers. In a national CNBC TV interview the same day, he laid blame for the crisis and its broader economic fallout on the Bush Administration.

Spitzer recalled that several years ago the US Office of the Comptroller of the Currency went to court and blocked New York State efforts to investigate the mortgage activities of national banks. Spitzer argued the OCC did not put a stop to questionable loan marketing practices or uphold higher underwriting standards.

“This could have been avoided if the OCC had done its job,” Spitzer said in the interview. “The OCC did nothing. The Bush Administration let the housing bubble inflate and now that it’s deflating we’re dealing with the consequences. The real failure, the genesis, the germ that has spread was the subprime scandal,” Spitzer said. Fraudulent marketing and very low “teaser” mortgage rates that later ballooned higher, were practices that should have been stopped, he argued. “When mortgages are being marketed, there is a marketplace obligation to ensure the borrower can afford to pay back the debt,” he said.

That TV interview was only one instance of Spitzer laying blame on the Bush Republicans. On February 14, Spitzer published a signed article in the influential Washington Post titled, “Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers.”

That article, laying clear blame on the Administration for the development of the sub-prime crisis, appeared the day after his ill-fated tryst with the prostitute at the Mayflower Hotel. Just a coincidence? Spitzer wrote, “”In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act pre-empting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks.”

In his article Spitzer charged, “Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which he federal government was turning a blind eye.” Bush, said Spitzer right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet. Spitzer wrote, “When history tells the story of the sub-prime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favourably.”

With that article, some Washington insiders believe, Spitzer signed his own political death warrant.

 

F. William Engdahl is the author of Seeds of Destruction, the Hidden Agenda of Genetic Manipulation recently released by Global Research. He also the author of A Century of War: Anglo-American Oil Politics and the New World Order, Pluto Press Ltd.. To contact by e-mail: info@engdahl.oilgeopolitics.net.

Click to order William Engdahl’s book published by Global Research

Seeds of Destruction

The CRG grants permission to cross-post original Global Research articles on community internet sites as long as the text & title are not modified. The source and the author’s copyright must be displayed. For publication of Global Research articles in print or other forms including commercial internet sites, contact: crgeditor@yahoo.com

www.globalresearch.ca contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.

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Predatory Lenders’ Partner in Crime by Former NY Gov Eliot Spitzer

Eliot Spitzer

The Fed’s Wall Street Dilemma – Too Big to Bail

Dandelion Salad

By Pam Martens
ICH
03/17/08 “Counterpunch

Americans learned two new truths last week from the Bush Administration’s version of Life’s Little Instruction Book: if you’re a Wall Street miscreant you’re thrown a lifeline; if you’re a Wall Street crime fighter you’re thrown a land mine.

In the first effort, the Feds effectively handed a Federal Reserve ATM card to JPMorgan to funnel your tax dollars to the teetering Bear Stearns brokerage firm to address counterparty risks that have been building for at least 4 years as the Feds snoozed. Counterparty risk is the trillions of dollars of insurance contracts (credit default swaps and other derivatives) taken out by Wall Street firms on each others (counterparty) bonds, bundled mortgage and commercial debt (collateralized debt obligations). The firms have used unregulated over-the-counter contracts to perform this risk transfer alchemy and funded their own company, Markit Group Ltd., to take the place of a regulated exchange for price discovery.

In the second effort, the Feds tapped the Department of Justice, Internal Revenue Service, U.S. Attorney’s office in New York, FBI, five federal judges and a busy federal court to root out that Code Red threat to our national security: consensual sex. The sex involved a prostitution ring and Democratic New York State Governor, Eliot Spitzer, who was savaged and forced to step down by an avenging media mob abundantly fed with well placed leaks from a suspiciously homogenous group called “anonymous law enforcement officials.” Governor Spitzer, in his former role as New York State Attorney General, had taken the lead in rooting out Wall Street crimes against small investors because the Federal Reserve was preoccupied with lobbying to remove regulations on Wall Street’s crime factory.

As usual, the Feds handed the bill to the governed with no thought to the will of the governed.

While mainstream media called the Bear Stearns bailout the first brokerage bailout since the Great Depression, in truth it was the second in seven months.

The first brokerage bailout came without all the media fanfare because it arrived not on the wings of a public announcement but in five pages of indecipherable Fed jargon addressed to the General Counsel of Citigroup.

Here is the effective message sent by the Federal Reserve to Citigroup in its letter of August 20, 2007: now that we have allowed you to become both too big to fail and too big to bail by repealing the depression era investor-protection law known as the Glass-Steagall Act at your mere beckoning, we have to bend more rules to keep you afloat. So, for example, the rule that says the Federal Reserve is not allowed to lend to brokerages, just banks, from its discount window can be tweaked for you by lending up to $25 billion to you and then we’ll let you lend it to your brokerage arm. The Federal Reserve Act rule that says a bank can’t loan more than 10% of its capital stock and surplus to its brokerage affiliate, we’ll let you go as high as about 30% and say it’s in the public interest.

By giving Citigroup an exemption from Rule 23A of the Federal Reserve Act, by allowing it to funnel up to $25 Billion from the Fed’s discount window to its brokerage clients who were getting hit with margin calls, the Federal Reserve and Chairman Ben Bernanke telegraphed an incredibly dangerous message to global markets: we’re just as unaccountable as Wall Street. The Federal Reserve as enabler under Alan Greenspan created today’s problem and today’s Crony Fed under Ben Bernanke is killing off what’s left of U.S. financial credibility. (I had barely finished typing these words on Monday, March 17, 2008, when a news alert came across my screen advising that the Federal Reserve was taking the breathtaking step of making direct loans to all brokerage firms which are primary dealers for Treasury securities.)

The Federal Reserve is stumbling around in the dark and regularly bumping into the next bailout because it stopped being an independent monetary force and started taking its marching orders from Wall Street quite some time ago.

Here’s what Nancy Millar, President at the time of the National Organization for Women in New York City, presciently testified in writing to the Securities and Exchange Commission in August 2001. (Ms. Millar edited and signed this testimony while I and other Wall Street activists provided input. This testimony is available in full on the SEC’s web site.)

We thank the Securities and Exchange Commission for extending the comment period to September 4, 2001 in the critical area of bank oversight now that the lines between banks and brokerage firms have been blurred with the repeal of the Glass-Steagall Act.

We believe that the comments made in the letter dated June 29, 2001 from the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency should be disregarded in their totality. The banks of America have enough lobbyists and trade associations to argue their case before the SEC. It is not the charter or mandate of these three regulatory bodies to lobby on behalf of banks.

The body of evidence that should dictate how the SEC must now proceed since Congress saw fit to eliminate the critical protections afforded the investing public in the Glass-Steagall Act, resides in the tens of thousands of pages of transcripts of the Pujo Committee hearings held in 1913 and the Pecora Committee hearings of 1933 and 1934. Fancy promises from regulators that banks functioning in the dual role as brokerage firms can and will be self-policing is not what the SEC or Congress should rely on. The well-developed history of egregious abuses bestowed on the investing public prior to the enactment of Glass-Steagall, and since its recent repeal, is what the SEC and Congress must look to. To believe that the dynamics of power and greed have been materially altered in nine decades is to engage in naiveté at the public’s peril.

Our Nation’s prosperity, democracy and the productivity of its citizens demand a level playing field to acquire and safeguard financial assets. Society crumbles when assets achieved through years of honest hard work can be fleeced by brokerage firms masquerading as insured-deposit banks. It is the role of federal regulators to maintain a level playing field through stringent regulation.

We ask that the SEC immediately impose the same regulations that govern outside broker-dealers to securities’ operations within banks. And, we herewith ask Congress to reconsider the repeal of the Glass-Steagall Act or be held accountable for the peril that unfolds from this unwise and inadequately deliberated decision.

If ever there was evidence that America is now facing that peril, it was the most recent news that the Bush administration’s much touted “free and efficient market” had priced Bear Stearns at $30 a share at the close of trading on Friday, March 14, 2008 but on further examination of its books over the weekend, it was valued at $2 a share and absorbed by JPMorgan at that price.

Equally troubling is the growing awareness among Wall Street veterans that neither the Federal Reserve nor the U.S. Treasury comprehend was has happened here, much less how to contain it. Here’s what we heard from Hank Paulson, the Treasury Secretary, last week:

“regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it.”

Innovation? Less efficient? Is there anything at all that looks innovative or efficient about Wall Street today? It is a seized up house of cards built on a toxic formula of hubris, corruption and free market madness.

Before there is a complete breakdown, Congress must quickly address the five key reasons we have today’s mess on our hands:

(1) Incentive: from mortgage brokers paid higher fees to sell subprime loans rather than prime loans, to stockbrokers paid dramatically higher fees to sell mortgage-backed securities rather than U.S. Treasury securities, to investment bankers paid dramatically higher fees to package Collateralized Debt Obligations rather than issue plain vanilla corporate bonds, Wall Street has been incentivized to greed rather than honest service to investors.

(2) Artificial Demand: The above outsized incentive produced a glut of unwanted and unneeded product that had to be eventually hidden off Wall Street’s balance sheet in Structured Investment Vehicles (SIVs) or dressed up to look like Commercial Paper and buried in mom and pop money market funds. It is this glut and the lack of transparency as to where else this toxic paper is hiding that is creating the fear and panic on Wall Street.

(3) Counterparty Risk: The regulators allowed Wall Street firms/banks to balloon their asset base and pretend they were meeting capital adequacy tests by buying “insurance” in the form of derivative contracts. There was only one problem with these “hedging” techniques; the counterparty in many cases was just another Wall Street firm or an inadequately capitalized municipal bond insurer. Instead of spreading risk, the risk was concentrated among the same players.

(4) Glass-Steagall Act: Congress was incentivized through Wall Street campaign financing to throw reason and judgment out the window and repeal the only law that stood between the country and another 1929. Glass-Steagall must be restored; and public financing of federal campaigns is the only means of restoring the will of the governed to Washington.

Pam Martens worked on Wall Street for 21 years; she has no securities position, long or short, in any company mentioned in this article. She writes on public interest issues from New Hampshire. She can be reached at pamk741@aol.com
FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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“Bernankerupted”: Bear Stearns Fire-sale sends Global Markets Plunging; Dollar Routed

Massive Debt Default by Mike Whitney

The Total Collapse Of The Global Economy (video)

Major Stock Markets in Asia Tumble + Fed acts Sunday to prevent global bank run Mon

Three Easy Pieces: The Dollar, Paulson & Carlyle Capital By Mike Whitney

Massive Debt Default by Mike Whitney

Dandelion Salad

Digg It

The latest from Mike Whitney: The Fed is just an Extension of the Banking Establishment; The Bear bailout proves it 03.19.08

by Mike Whitney
Global Research, March 15, 2008

Bearly Alive, Wall Street Investment Giant Rushed to “Intensive Care” by Panicky Fed-Chief

On Friday, Bear Stearns blew up. It was the worst possible news at the worst possible time. A day earlier, the politically-connected Carlyle Capital hedge fund defaulted on $16.6 billion of its debt. Carlyle boasted a $21.7 billion portfolio of AAA-rated residential mortgage-backed securities, but was unable to make a margin call of just $400 million. (Where did the $21.7 billion go?) The news on Bear was the last straw. The stock market started reeling immediately; shedding 300 points in less than an hour. Then, miraculously, the tide shifted and the market began to rebound. If there was ever a time for Paulson’s Plunge Protection Team to come to the rescue; this was it. For weeks, the markets have been battered with bad news. Retail sales are down, unemployment is up, consumer confidence is in the tank, inflation is rising, the dollar is on the ropes, and the credit crunch has spread to even the safest corners of the market. Facing fierce headwinds, Washington mandarins and financial heavyweights had to decide whether to sit back and let one small investment bank take down the whole equities market in an afternoon or stealthily buy a few futures and live to fight another day? Tough choice, eh?

We’ll never know for sure, but that’s probably what happened.

We’ll also never know if Bernanke’s real purpose in setting up his new $200 billion auction facility was to provide the cash-strapped banks with a place where they could off-load the mortgage-backed junk that Carlyle dumped on the market when they went belly-up. That worked out well, didn’t it? Now the banks can trade these worthless MBS bonds with the Fed for US Treasuries at nearly full value. What a deal! That must have been the plan from the get-go.

The Bear Stearns bailout has ignited a firestorm of controversy about moral hazard and whether the Fed should be in the business of spreading its largess to profligate investment banks. But the Fed had no choice. This isn’t about one bank caving in from its bad bets. The entire financial system is teetering and a failure at Bear would have taken a wrecking ball to the equities market and sent stocks around the world into a violent death-spiral. The New York Times summed it up like this in Saturday’s edition:

“If the Fed hadn’t acted this morning and Bear did default on its obligations, then that could have triggered a widespread panic and potentially a collapse of the financial system”.

Bingo.

So, what makes Bear so special? How is it that one of the smallest investment banks can pose such a threat to the whole system?

That’s the question that will be addressed in the next couple weeks and people are not going to like the answer. For the last decade or so the markets have been reconfigured according to a new “structured finance” model which has transformed the interactions between institutions and investors. The focus has been on maximizing profit by creating a vast galaxy of exotic debt-instruments which increase overall risk and volatility in slumping market conditions. Derivatives trading which, according to the Bank of International Settlements, now exceeds $500 trillion, has sewn together the various lending and investment institutions in a way that one failure can set the derivatives dominoes in motion and bring down the entire financial scaffolding in a heap. That’s why the Fed got involved and (I believe) approached Congress in a closed-door session (which was supposed to be about FISA legislation) to inform lawmakers about the growing possibly of a major economic meltdown if conditions in the credit markets were not stabilized quickly.

The troubles at Bear and the danger they pose to the overall system were articulated in an article by Counterpunch editor, Alexander Cockburn in a November, 2006 article “Lame Duck: The Downside of Capitalism”:

“In a briefing paper under the chaste title, ‘Private Equity: A discussion of Risk and Regulatory Engagement’, the FSA raises the alarm.

“Excessive leverage: The amount of credit that lenders are willing to extend on private equity transactions has risen substantially. This lending may not, in some circumstances, be entirely prudent. Given current leverage levels and recent developments in the economic/credit cycle, the default of a large private equity backed company or a cluster of smaller private equity backed companies seems inevitable. This has negative implications for lenders, purchasers of the debt, orderly markets and conceivably, in extreme circumstances, financial stability and elements of the UK economy.”

Translation: It’s about to blow!

“The duration and potential impact of any credit event may be exacerbated by operational issues which make it difficult to identify who ultimately owns the economic risk associated with a leveraged buy out and how these owners will react in a crisis. These operational issues arise out of the extensive use of opaque, complex and time consuming risk transfer practices such as assignment and sub-participation, together with the increased use of credit derivatives. These credit derivatives may not be confirmed in a timely manner and the amount traded may substantially exceed the amount of the underlying assets.”(snip)

Translation: “The world’s credit system is a vast recycling bin of untraceable transactions of wildly inflated value.

The problem is that the oversight and stability of the world credit system is no longer within the purview of familiar international institutions like the International Monetary Fund or the Bank of International Settlements. Private traders are now installed at all the strategic nodes, gambling with stratospheric sums in such speculative pyramids as the credit derivative market which was almost nonexistent in 2001, yet which reached $17.3 trillion by the end of 2005. Warren Buffett, America’s most famous investor, has called credit derivatives “financial weapons of mass destruction.” ( Alexander Cockburn, “Lame Duck: The Downside of Capitalism” counterpunch.org)

Cockburn’s article anticipates the current problems at Bear and shows why the Fed cannot allow them to fester and spread throughout the system. The investment banks and brokerages all do business with each other, taking sides in trades as counterparties. If one player goes down it increases the likelihood of more failures. So the problem has to be contained.

The volume of derivatives contracts, that are not traded publicly on any of the major exchanges, has exploded in the last few years. These unregulated transactions, what Pimco’s Bill Gross calls the shadow banking system, have taken center-stage as market conditions continue to deteriorate and the downward-cycle of deleveraging begins to accelerate. The ongoing massacre in real estate has left the structured investment market frozen, which means that the foundation blocks (ie mortgage-backed securities) upon which all this excessive leveraging rests; is starting to crumble. It’s a real mess.

Derivatives trading, particularly in credit default swaps, is oftentimes exceeds the value of the underlying asset many times over. Credit Default Swaps are financial instruments that are based on loans and bonds that speculate on a company’s ability to repay debt. (a type of unregulated insurance) The CDS market is roughly $45 trillion, whereas, the aggregate value of the US mortgage market is only $11 trillion; four times smaller. That’s a lot of leverage and it can have a snowball effect when the CDSs trades begin to unwind.

In truth, the biggest risk to the financial system is counterparty risk; the possibility that some large investment bank, like Bear, goes under and sucks the rest of the market with it from the magnitude of its losses. Last year, Bear was the 12th largest counterparty to CDS trades according to Fitch ratings. If they were to suddenly disappear, the effects to the rest of the system would be catastrophic.

Fed Chairman Bernanke sat on the board of the FOMC when the investment gurus and brokerage sharpies customized the markets in a way that enhanced their own personal fortunes while increasing the risks of systemic failure. The SIVs, the conduits, the opaque derivatives, the off-balance sheets operations, the dark pools, the massive leverage, and the reckless expansion of credit; all emerged during his (and Greenspan’s) tenure. The Federal Reserve is largely responsible for the brushfire they are presently trying to put out.

Now, once again, Bernanke is acting beyond his mandate and invoking a law that hasn’t been used since the 1960s so the Fed can become the creditor for an institution that attempted to enrich itself through wild speculative bets on dubious toxic investments which are now utterly worthless. If that isn’t a good enough reason for abolishing the Federal Reserve; then what is?

The world’s most transparent and profitable markets have been transformed into a carnival sideshow managed by hucksters, flim-flam men, and rip off artists. The Bear bailout is yet another glaring example of a system that lacks all credibility and is quickly self-destructing.

The CRG grants permission to cross-post original Global Research articles on community internet sites as long as the text & title are not modified. The source and the author’s copyright must be displayed. For publication of Global Research articles in print or other forms including commercial internet sites, contact: crgeditor@yahoo.com

www.globalresearch.ca contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.

For media inquiries: crgeditor@yahoo.com
© Copyright Mike Whitney, Global Research, 2008
The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=8346

see

“Bernankerupted”: Bear Stearns Fire-sale sends Global Markets Plunging; Dollar Routed

Three Easy Pieces: The Dollar, Paulson & Carlyle Capital By Mike Whitney

The $200 billion bail-out for predator banks & Spitzer charges are intimately linked By Greg Palast

Roubini’s Nightmare Scenario; A Vicious Circle Ending In A Systemic Financial Meltdown By Mike Whitney

The Total Collapse Of The Global Economy (video)

.

. Digg It

Country of Laws by Ralph Nader

Dandelion Salad

by Ralph Nader
Friday, March 14. 2008

The Governor of New York, Eliot Spitzer, has resigned for being a longtime customer of a high-priced prostitution ring.

The President of the United States, George W. Bush, remains, disgracing his office for longtime repeated violations of the Constitution, federal laws and international treaties to which the U.S. is a solemn signatory.

In his forthright resignation statement, Eliot Spitzer—the prominent corporate crime buster—asserted that “Over the course of my public life, I have insisted, I believe correctly, that people, regardless of their position or power, take responsibility for their conduct. I can and will ask no less of myself.”

In a recent speech to a partisan Republican fund-raising audience, George W. Bush fictionalized his Iraq war exploits and other related actions, and said that next January he will leave office “with his head held high.”

Eliot Spitzer violated certain laws regarding prostitution and transferring of money through banks—though the latter was disputed by some legal experts—and for such moral turpitude emotionally harmed himself, his family and his friends.

George W. Bush violated federal laws against torture, against spying on Americans without judicial approval, against due process of law and habeas corpus in arresting Americans without charges, imprisoning them and limited their access to attorneys. He committed a massive war of aggression violating again and again treaties such as the Geneva Conventions, the UN Charter, federal statutes and the Constitution.

This war and its associated actions have cost the lives of one million Iraqis, over 4000 Americans, caused hundreds of thousands of serious injuries and diseases related to the destruction of Iraq’s public health facilities.

From the moment the news emerged about Spitzer’s sexual frolics the calls came for his immediate resignation. They came from the pundits and editorialists; they came from Republicans and they started coming from his fellow Democrats in the Assembly.

Speaker Sheldon Silver told Spitzer that many Democrats in the Assembly would abandon him in any impeachment vote.

George W. Bush is a recidivist war criminal and chronic violator of so many laws that the Center for Constitutional Rights has clustered them into five major impeachable “High Crimes and Misdemeanors” (under Article II, section .4)

Scores of leaders of the bar, including Michael Greco, former president of the American Bar Association, and legal scholars and former Congressional lawmakers have decried his laceration of the rule of law and his frequent declarations that signify that he believes he is above the law.

Many retired high military officers, diplomats and security officials have openly opposed his costly militaristic disasters.

Only Cong. Dennis Kucinich (Dem. Ohio) has publicly called for his impeachment.

No other member of Congress has moved toward his impeachment. To the contrary, Speaker Nancy Pelosi (Dem. Calif.), Rep. Steny Hoyer (Dem. MD) and House Judiciary Committee Chairman, John Conyers publicly took “impeachment off the table” in 2006.

When Senator Russ Feingold (Dem. Wisc.) introduced a Resolution to merely censure George W. Bush for his clear, repeated violations of the Foreign Intelligence Surveillance Act—a felony—his fellow Democrats looked the other way and ignored him.

Eliot Spitzer came under the rule of law and paid the price with his governorship and perhaps may face criminal charges.

George W. Bush is effectively immune from federal criminal and civil laws because no American has standing to sue him and the Attorney General, who does, is his handpicked cabinet member.

Moreover, the courts have consistently refused to take cases involving the conduct of foreign and military policy by the president and the Vice President regardless of the seriousness of the violation. The courts pronounce such disputes as “political” and say they have to be worked out by the Congress—ie. mainly the impeachment authority.

Meanwhile, the American people have no authority to challenge these governmental crimes, which are committed in their name, and are rendered defenseless except for elections, which the two Party duopoly has rigged, commercialized, and trivialized. Even in this electoral arena, a collective vote of ouster of the incumbents does not bring public officials to justice, just to another position usually in the high paying corporate world.

So, on January 21, 2009, George W. Bush and Dick Cheney will be fugitives from justice without any Sheriffs, prosecutors or courts willing to uphold the rule of law.

What are the lessons from the differential treatment of a public official who consorts with prostitutes, without affecting his public policies, and a President who behaves like King George III did in 1776 and commits the exact kinds of multiple violations that Thomas Jefferson, James Madison, and other founders of our Republic envisioned for invoking the impeachment provision of their carefully crafted checks and balances in the Constitution?

Well let’s see.

First, Bush and Cheney are advised not to travel to Brattleboro or Marlboro Vermont, two New England towns whose voters, in their frustrated outrage, passed non-binding articles instructing town officials to arrest them inside their jurisdictions.

Second, George W. Bush better not go to some men’s room at an airport and tap the shoe of the fellow in the next stall. While one Senator barely survived that charge, for the President it would mean a massive public demand for his resignation.

We certainly can do better as a country of laws, not men.

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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Living by the Sword by Ron Paul, M.D.

The $200 billion bail-out for predator banks & Spitzer charges are intimately linked By Greg Palast

Forget Spitzer, fire Bernanke By Chan Akya

Predatory Lenders’ Partner in Crime by Former NY Gov Eliot Spitzer

Nader-Ralph

www.votenader.org/

Living by the Sword by Ron Paul, M.D.

Dandelion Salad

by Ron Paul, M.D.
13 March 2008

It has been said that “he who lives by the sword shall die by the sword.” And in the case of Eliot Spitzer this couldn’t be more true. In his case it’s the political sword, as his enemies rejoice in his downfall. Most people, it seems, believe he got exactly what he deserved.

The illegal tools of the state brought Spitzer down, but think of all the harm done by Spitzer in using the same tools against so many other innocent people. He practiced what could be termed “economic McCarthyism,” using illegitimate government power to build his political career on the ruined lives of others.

No matter how morally justified his comeuppance may be, his downfall demonstrates the worst of our society. The possibility of uncovering personal moral wrongdoing is never a justification for the government to spy on our every move and to participate in sting operations.

For government to entice a citizen to break a law with a sting operation – that is, engaging in activities that a private citizen is prohibited by law from doing — is unconscionable and should clearly be illegal.

Though Spitzer used the same tools to destroy individuals charged with economic crimes that ended up being used against him, gloating over his downfall should not divert our attention from the fact that the government spying on American citizens is unworthy of a country claiming respect for liberty and the fourth amendment.

Two wrongs do not make a right. Two wrongs make it doubly wrong.

Sacrifice of our personal privacy has been ongoing for decades, but has rapidly accelerated since 9/11. Before 9/11 the unstated goal of collecting revenue was the real reason for the erosion of our financial privacy. When nineteen suicidal maniacs attacked us on 9/11, our country became convinced that further sacrifice of personal and financial privacy was required for our security.

The driving force behind this ongoing sacrifice of our privacy has been fear and the emotional effect of war rhetoric – war on drugs, war against terrorism, and the war against third world nations in the Middle East who are claimed to be the equivalent to Hitler and Nazi Germany.

But the real reason for all this surveillance is to build the power of the state. It arises from a virulent dislike of free people running their own lives and spending their own money. Statists always demand control of the people and their money.

Recently we’ve been told that this increase in the already intolerable invasion of our privacy was justified because the purpose was to apprehend terrorists. We were told that the massive amounts of information being collected on Americans would only be used to root out terrorists. But as we can see today, this monitoring of private activities can also be used for political reasons. We should always be concerned when the government accumulates information on innocent citizens.

Spitzer was brought down because he legally withdrew cash from a bank – not because he committed a crime. This should prompt us to reassess and hopefully reverse this trend of pervasive government intrusion in our private lives.

We need no more Foreign Intelligence Surveillance Act!

No more Violent Radicalization & Homegrown Terrorism Prevention Acts!

No more torture!

No more Military Commissions Act!

No more secret prisons and extraordinary rendition!

No more abuse of habeas corpus!

No more PATRIOT Acts!

What we need is more government transparency and more privacy for the individual!

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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The $200 billion bail-out for predator banks & Spitzer charges are intimately linked By Greg Palast

Forget Spitzer, fire Bernanke By Chan Akya

Predatory Lenders’ Partner in Crime by Former NY Gov Eliot Spitzer

Statement on H.R. 3773 – FISA Amendments Act of 2008 by Rep. Ron Paul, M.D.

Paul-Ron

The $200 billion bail-out for predator banks & Spitzer charges are intimately linked By Greg Palast

Dandelion Salad

By Greg Palast
After Downing Street
Reporting for Air America Radio’s Clout
Listen to Palast on Clout at www.GregPalast.com
Mar 14, 2008

While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.

This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and it’s variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chuck of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 a month payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram – because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinnings, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” – top grade – by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million – over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bail-out. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” – made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which he federal government was turning a blind eye.”

Bush, said Spitzer right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

But now, the Administration can rest assured that this love story – of Bush and his bankers – will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

A note on “Prosecutorial Indiscretion.”

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases – was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, ‘indiscretion.’

***
Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

Hear The Palast Report weekly on Air America Radio’s Clout.

And next Wednesday March 19, join Palast and Clout host Richard Greene on a dinner cruise on the Potomac River. For more information click here.

And this Sunday, at noon, on WABC-TV New York, catch Amy Goodman, Les Payne and Greg Palast on Like It Is with Gil Noble.

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

see

Forget Spitzer, fire Bernanke By Chan Akya

Predatory Lenders’ Partner in Crime by Former NY Gov Eliot Spitzer

Roubini’s Nightmare Scenario; A Vicious Circle Ending In A Systemic Financial Meltdown By Mike Whitney