Let the Lawsuits Begin: Banks Brace for a Storm of Litigation

Dandelion Salad

by Ellen Brown
Global Research
www.webofdebt.com/articles
July 13, 2008

In an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans. Olender wrote:

“The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

“What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.”1

The thought could send a chill through even the most powerful of investment bankers, including Treasury Secretary Henry Paulson himself, who was head of Goldman Sachs during the heyday of toxic subprime paper-writing from 2004 to 2006. Mortgage fraud has not been limited to the representations made to borrowers or on loan documents but is in the design of the banks’ “financial products” themselves. Among other design flaws is that securitized mortgage debt has become so complex that ownership of the underlying security has often been lost in the shuffle; and without a legal owner, there is no one with standing to foreclose. That was the procedural problem prompting Federal District Judge Christopher Boyko to rule in October 2007 that Deutsche Bank did not have standing to foreclose on 14 mortgage loans held in trust for a pool of mortgage-backed securities holders.2 If large numbers of defaulting homeowners were to contest their foreclosures on the ground that the plaintiffs lacked standing to sue, trillions of dollars in mortgage-backed securities (MBS) could be at risk. Irate securities holders might then respond with litigation that could indeed threaten the existence of the banking Goliaths.

States Leading the Charge

MBS investors with the power to bring major lawsuits include state and local governments, which hold substantial portions of their assets in MBS and similar investments. A harbinger of things to come was a complaint filed on February 1, 2008, by the State of Massachusetts against investment bank Merrill Lynch, for fraud and misrepresentation concerning about $14 million worth of subprime securities sold to the city of Springfield. The complaint focused on the sale of “certain esoteric financial instruments known as collateralized debt obligations (CDOs) . . . which were unsuitable for the city and which, within months after the sale, became illiquid and lost almost all of their market value.”3

The previous month, the city of Baltimore sued Wells Fargo Bank for damages from the subprime debacle, alleging that Wells Fargo had intentionally discriminated in selling high-interest mortgages more frequently to blacks than to whites, in violation of federal law.4

Another innovative suit filed in January 2008 was brought by Cleveland Mayor Frank Jackson against 21 major investment banks, for enabling the subprime lending and foreclosure crisis in his city. The suit targeted the investment banks that fed off the mortgage market by buying subprime mortgages from lenders and then “securitizing” them and selling them to investors. City officials said they hoped to recover hundreds of millions of dollars in damages from the banks, including lost taxes from devalued property and money spent demolishing and boarding up thousands of abandoned houses. The defendants included banking giants Deutsche Bank, Goldman Sachs, Merrill Lynch, Wells Fargo, Bank of America and Citigroup. They were charged with creating a “public nuisance” by irresponsibly buying and selling high-interest home loans, causing widespread defaults that depleted the city’s tax base and left neighborhoods in ruins.

“To me, this is no different than organized crime or drugs,” Jackson told the Cleveland newspaper The Plain Dealer. “It has the same effect as drug activity in neighborhoods. It’s a form of organized crime that happens to be legal in many respects.” He added in a videotaped interview, “This lawsuit said, ‘You’re not going to do this to us anymore.’”5

The Plain Dealer also interviewed Ohio Attorney General Marc Dann, who was considering a state lawsuit against some of the same investment banks. “There’s clearly been a wrong done,” he said, “and the source is Wall Street. I’m glad to have some company on my hunt.”

However, a funny thing happened on the way to the courthouse. Like New York Governor Eliot Spitzer, Attorney General Dann wound up resigning from his post in May 2008 after a sexual harassment investigation in his office.6 Before they were forced to resign, both prosecutors were hot on the tail of the banks, attempting to impose liability for the destructive wave of home foreclosures in their jurisdictions.

But the hits keep on coming. In June 2008, California Attorney General Jerry Brown sued Countrywide Financial Corporation, the nation’s largest mortgage lender, for causing thousands of foreclosures by deceptively marketing risky loans to borrowers. Among other things, the 46-page complaint alleged that:

“‘Defendants viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers’ long-term ability to afford them and to sustain homeownership’ . . .

“The company routinely . . . ‘turned a blind eye’ to deceptive practices by brokers and its own loan agents despite ‘numerous complaints from borrowers claiming that they did not understand their loan terms.’

“. . . Underwriters who confirmed information on mortgage applications were ‘under intense pressure . . . to process 60 to 70 loans per day, making careful consideration of borrowers’ financial circumstances and the suitability of the loan product for them nearly impossible.’

“‘Countrywide’s high-pressure sales environment and compensation system encouraged serial refinancing of Countrywide loans.’”7

Similar suits against Countrywide and its CEO have been filed by the states of Illinois and Florida. These suits seek not only damages but rescission of the loans, creating a potential nightmare for the banks.

An Avalanche of Class Actions?

Massive class action lawsuits by defrauded borrowers may also be in the works. In a 2007 ruling in Wisconsin that is now on appeal, U.S. District Judge Lynn Adelman held that Chevy Chase Bank had violated the Truth in Lending Act by hiding the terms of an adjustable rate loan, and that thousands of other Chevy Chase borrowers could join the plaintiffs in a class action on that ground. According to a June 30, 2008 report in Reuters:

“The judge transformed the case from a run-of-the-mill class action to a potential nightmare for the U.S. banking industry by also finding that the borrowers could force the bank to cancel, or rescind, their loans. That decision was stayed pending an appeal to the 7th U.S. Circuit Court of Appeals, which is expected to rule any day.

“The idea of canceling tainted loans to stem a tide of foreclosures has caught hold in other quarters; a lawsuit filed last week by the Illinois attorney general asks a court to rescind or reform Countrywide Financial mortgages originated under ‘unfair or deceptive practices.’

“. . . The mortgage banking industry already faces pressure from state and federal regulators, who have accused banks of lowering underwriting standards and forcing some borrowers, through fraud, into costly adjustable loans that the banks later bundled and sold as high-interest investment vehicles.”

The Truth in Lending Act (TILA) is a 1968 federal law designed to protect consumers against lending fraud by requiring clear disclosure of loan terms and costs. It lets consumers seek rescission or termination of a loan and the return of all interest and fees when a lender is found to be in violation. The beauty of the statute, says California bankruptcy attorney Cathy Moran, is that it provides for strict liability: the aggrieved borrowers don’t have to prove they were personally defrauded or misled, or that they had actual damages. Just the fact that the disclosures were defective gives them the right to rescind and deprives the lenders of interest. In Moran’s small sample, at least half of the loans reviewed contained TILA violations.8 If class actions are found to be available for rescission of loans based on fraud in the disclosure process, the result could be a flood of class suits against banks all over the country.9

Shifting the Loss Back to the Banks

Rescission may be a remedy available not only for borrowers but for MBS investors. Many loan sale contracts provide by their terms that lenders must take back loans that default unusually quickly or that contain mistakes or fraud. An avalanche of rescissions could be catastrophic for the banks. Banks were moving loans off their books and selling them to investors in order to allow many more loans to be made than would otherwise have been allowed under banking regulations. The banking rules are complex, but for every dollar of shareholder capital a bank has on its balance sheet, it is supposed to be limited to about $10 in loans. The problem for the banks is that when the process is reversed, the 10 to 1 rule can work the other way: taking a dollar of bad debt back on a bank’s books can reduce its lending ability by a factor of 10. As explained in a BBC News story citing Prof. Nouriel Roubini for authority:

“[S]ecuritisation was key to helping banks avoid the regulators’ 10:1 rule. To make their risky loans appear attractive to buyers, banks used complex financial engineering to repackage them so they looked super-safe and paid returns well above what equivalent super-safe investments offered. Banks even found ways to get loans off their balance sheets without selling them at all. They devised bizarre new financial entities – called Special Investment Vehicles or SIVs – in which loans could be held technically and legally off balance sheet, out of sight, and beyond the scope of regulators’ rules. So, once again, SIVs made room on balance sheets for banks to go on lending.

“Banks had got round regulators’ rules by selling off their risky loans, but because so many of the securitised loans were bought by other banks, the losses were still inside the banking system. Loans held in SIVs were technically off banks’ balance sheets, but when the value of the loans inside SIVs started to collapse, the banks which set them up found that they were still responsible for them. So losses from investments which might have appeared outside the scope of the regulators’ 10:1 rule, suddenly started turning up on bank balance sheets. . . . The problem now facing many of the biggest lenders is that when losses appear on banks’ balance sheets, the regulator’s 10:1 rule comes back into play because losses reduce a banks’ shareholder capital. ‘If you have a $200bn loss, that reduced your capital by $200bn, you have to reduce your lending by 10 times as much,’ [Prof. Roubini] explains. ‘So you could have a reduction of total credit to the economy of two trillion dollars.’”10

You could also have some very bankrupt banks. The total equity of the top 100 U.S. banks stood at $800 billion at the end of the third quarter of 2007. Banking losses are currently expected to rise by as much as $450 billion, enough to wipe out more than half of the banks’ capital bases and leave many of them insolvent.11 If debtors were to deluge the courts with viable defenses to their debts and mortgage-backed securities holders were to challenge their securities, the result could be even worse.

Putting the Genie Back in the Bottle

So what would happen if the mega-banks engaging in these irresponsible practices actually went bankrupt? These banks are widely acknowledged to be at fault, but they expect to be bailed out by the Federal Reserve or the taxpayers because they are “too big to fail.” The argument is that if they were allowed to collapse, they would take the economy down with them. That is the fear, but it is not actually true. We do need a ready source of credit, so we need banks; but we don’t need private banks. It is a little-known, well-concealed fact that banks do not lend their own money or even their depositors’ money. They actually create the money they lend; and creating money is properly a public, not a private, function. The Constitution delegates the power to create money to Congress and only to Congress.12 In making loans, banks are merely extending credit; and the proper agency for extending “the full faith and credit of the United States” is the United States itself.

There is more at stake here than just the equitable treatment of injured homeowners and investors in mortgage-backed securities. Banks and investment houses are now squeezing the last drops of blood from the U.S. government’s credit rating, “borrowing” money and unloading worthless paper on the government and the taxpayers. When the dust settles, it will be the banks, investment brokerages and hedge funds for wealthy investors that will be saved. The repossessed will become the dispossessed; and unless your pension fund has invested in politically well-connected hedge funds, you can probably kiss it goodbye, as teachers in Florida already have.

But the banking genie is a creature of the law, and the law can put it back in the bottle. The imminent failure of some very big banks could provide the government with an opportunity to regain control of its finances. More than that, it could provide the funds for tackling otherwise unsolvable problems now threatening to destroy our standard of living and our standing in the world. The only solution that will be more than a temporary fix is to take the power to create money away from private bankers and return it to the people collectively. That is how it should have been all along, and how it was in our early history; but we are so used to banks being private corporations that we have forgotten the public banks of our forebears. The best of the colonial American banking models was developed in Benjamin Franklin’s province of Pennsylvania, where a government-owned bank issued money and lent it to farmers at 5 percent interest. The interest was returned to the government, replacing taxes. During the decades that that system was in operation, the province of Pennsylvania operated without taxes, inflation or debt.

Rather than bailing out bankrupt banks and sending them on their merry way, the Federal Deposit Insurance Corporation (FDIC) needs to take a close look at the banks’ books and put any banks found to be insolvent into receivership. The FDIC (unlike the Federal Reserve) is actually a federal agency, and it has the option of taking a bank’s stock in return for bailing it out, effectively nationalizing it. This is done in Europe with bankrupt banks, and it was done in the United States with Continental Illinois, the country’s fourth largest bank, when it went bankrupt in the 1990s.

A system of truly “national” banks could issue “the full faith and credit of the United States” for public purposes, including funding infrastructure, sustainable energy development and health care.13 Publicly-issued credit could also be used to relieve the subprime crisis. Local governments could use it to buy up mortgages in default, compensating the MBS investors and freeing the real estate for public disposal. The properties could then be rented back to their occupants at reasonable rates, leaving people in their homes without the windfall of acquiring a house without paying for it. A program of lease-purchase might also be instituted. The proceeds would be applied toward repaying the credit advanced to buy the mortgages, balancing the money supply and preventing inflation.

Local and Private Solutions

While we are waiting for the federal government to act, there are also private and local possibilities for relieving the subprime crisis. Chris Cook is a British strategic market consultant and the former Compliance Director for the International Petroleum Exchange. He recommends getting all the parties to settle by forming a pool constituted as an LLC (limited liability company), in a partnership framework that brings together occupiers and financiers as co-owners under a neutral custodian. The original owners would pay an affordable rental, and the resulting pool of rentals would be “unitized” (divided into unit interests, similar to a REIT or real estate investment trust). Among other advantages over the usual mortgage-backed security, there would be no loans at interest, since the property would be owned outright by the LLC. Eliminating interest substantially reduces costs. The former owners would be able to occupy the property at an affordable rental, with the option to buy an equity stake in it. For the banks, the advantage would be that they would be able to find investors again, since the risk would have been taken out of the investment by insuring full occupancy at affordable rates; and for the investors, the advantage would be a secure investment with a dependable return.14

Carolyn Betts is an Ohio attorney who served in Washington as issuer’s counsel for MBS trusts formed by various federal governmental entities, and represented Resolution Trust Corporation in its auction of defaulted commercial mortgage loans during the last real estate crisis. She proposes a squeeze play by the states, in the style of that brought against the tobacco companies by a consortium of state attorneys general in the 1990s. She notes that at the end of 2007, at least 20% of the funds held by the Ohio Public Employees’ Retirement System (PERS) were in mortgage backed securities and similar investments. That makes Ohio public money a major investor in these mortgage-related securities. Ohio governments have an interest in not having homes foreclosed upon, since foreclosures destroy local real estate markets, contribute to lower tax revenues and losses on PERS investments, and cause a strain on state and local affordable housing systems. A coordinated series of actions brought by state attorneys general could eliminate the culpable banker middlemen and return the properties to local ownership and control.

Andrew Jackson reportedly told Congress in 1829, “If the American people only understood the rank injustice of our money and banking system, there would be a revolution before morning.” A wave of private actions, class actions and government lawsuits aimed at redressing injurious banking practices could spark a revolution in banking, returning the power to advance “the full faith and credit of the United States” to the United States, and returning community assets to local ownership and control.

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 websites are www.webofdebt.com and www.ellenbrown.com.

© Copyright Ellen Brown, Global Research, 2008

The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=9577

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

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.

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

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© Copyright Ellen Brown, Global Research, 2008
The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=8493

see

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

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

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

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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

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.

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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

Hallmarks of a “hit job” ordered from the very top: Forget Spitzer, fire Bernanke

Dandelion Salad

by Chan Akya
Global Research, March 14, 2008
Asia Times
Mar 15, 2008

There must be something about men achieving power that exposes them to frequent misuses of authority. In particular, infidelity seems a particular curse for the powerful across the world. This week’s events involving the governor of New York, Eliot Spitzer, may however have helped to hide a more egregious misuse of authority, namely that of Federal Reserve chief Ben Bernanke and his central banking cohorts around the world.

In another one of those nice coincidences that seem to happen whenever Wall Street is down and out, the unpopular governor of New York was found consorting with prostitutes through a Federal investigation that has all the hallmarks of a “hit job” ordered from the very top. Spitzer was deeply unpopular in the corridors of power, and especially with the current Treasury Secretary Hank Paulson, for daring to take various Wall Street firms down a few notches earlier this decade.

After also hitting other sacred cows such as large insurance companies, Spitzer was readying ammunition to strike at the heart of the current subprime crisis by attacking the monoline insurers and rating agencies. It is almost too convenient that the disclosures of his extracurricular activities came this week. Still, let us take everything said at face value and not attempt to conjecture any conspiracy behind all this.

People in Europe and Asia always find curious the preoccupation of Americans with sex, especially as the country appears to look askance at acts of immeasurable violence. This has been the formula for Hollywood – nary a nipple in sight but more than a few torsos getting blown to smithereens.

Be that as it may, the focus of the Spitzer case on two separate legal areas, namely using a prostitute and secondly for potential money laundering, both appear strangely exaggerated in the rest of the world. So the guy was having sex with a hooker; that’s essentially a problem between the married couple rather than being subject of intense public debate. Spitzer is said to have been neither crooked nor incompetent.

If anything, his personal use of prostitutes may have contradicted his public crusade against brothels and pimps. In essence, Spitzer had to resign because he was a hypocrite. Reading that line, perhaps a few of you would wonder as I did about the implications of other politicians around the world being asked to resign for being hypocritical. Nope, I couldn’t think of anyone who’d survive that either.

Sleight of hand

The sorry story of the governor and his extramarital affair though helped to achieve something much more important, namely to hide a brewing problem in the securities industry.

On Monday, when the Federal Reserve announced a new facility to help banks finance themselves by posting previously unacceptable collateral, stock and credit markets jumped for joy. That is, until someone started asking slightly cute questions on the lines of just who was in so much trouble that the Fed had to rush through an ill-prepared intervention.

As with the Sherlock Holmes dictum of “who benefits from the crime”, it is clear that this week’s moves were intended to help beleaguered brokers. While it is perhaps impossible to speculate just which company is in most trouble because of poor disclosure and the use of opaque valuation techniques, the most important brokers whose failure would have systemic implications include the likes of Bear Stearns, Lehman Brothers, Merrill Lynch and Morgan Stanley. Coming as it does so close to the expected announcement of first-quarter earnings (most brokers close their financial year in November, hence their first quarter ends February), the fear being expressed on the street was that it had to be one of the bigger firms as otherwise the Fed would not have bothered.

Brokers hold billions of dollars in the very securities that are suddenly eligible for refinancing with the Fed, such as mortgages and other securities that have proven well nigh impossible to sell to investors for the past few months. This has spilt over into the rest of the financial system, hurting various cities and towns across the US as they try to refinance themselves. That in turn must have gotten the government and its central bank all hot under the collar.

At this stage perhaps readers will be wondering why I implied a crime had taken place on Wall Street when all that seems to have happened is that a central banker has tried to quietly save one of the large financial firms in its backyard. The answer is a little more complicated than that, and touches upon the curiously ignored principles of central banking.

Walter Bagehot, the patron saint of central bankers, suggested the following basic principles for central banks to help the banks under their supervision to avoid liquidity runs.

A. Only lend against good collateral to avoid losses for taxpayers at a later date.
B. Lend at extremely high interest rates to avoid the facility being used willy-nilly by greedy bankers.
C. Make public the availability of such facilities, so as to prevent doubts and suspicions in the minds of depositors and other creditors.

This week’s announcement by the Fed violates EVERY one of those principles. Firstly, the collateral being accepted by the Fed is tainted as the market’s complete lack of appetite (at any price) for the securities shows. By providing the ability to liquefy these securities, the Fed has effectively signaled that it would accept just about any junk.

Secondly, the cost of borrowing is not punitive; indeed it is agreeably low for anyone who cares to fill out a couple of forms. Thirdly, this facility was not used previously; therefore the market has been in some doubt about really how useful it could be.

In essence, this is a US$200 billion facility that is being misapplied to rescue a specific part of the financial system at a preferential rate, and without any disclosure required on usage. Given all this, it is impossible for anyone to expect that the ultimate cost of this facility will not be borne by US taxpayers.

In my last article on Europe (Euro-trash, Asia Times Online, March 11, 2008) I pointed to the failures of the European Central Bank, which similarly violated the Bagehot principles when widening the range of acceptable collateral and lowering the discount rate made available to banks at the refinancing window. The Fed has entered into an arrangement that is eerily similar to that of the European Central Bank, whose actions have resulted in parts of the European financial system essentially becoming “zombie” companies, ie dead but still walking around.

From where I sit, it appears that Bernanke has opened a whole new can of worms in his efforts at maintaining the structural integrity of the US financial system. The financial means used are clearly at odds with what Americans have preached to the rest of the world, including Asia following its 1997 crisis.

To that extent, it is clear that Bernanke suffers from a similar complex to Spitzer, ie that rules do not apply to them because of magical exclusions that are self-derived. Once we decide that both have committed acts that are essentially illegal, it then becomes a question of gauging just who committed the worse crime.

Spitzer through his actions hurt his family and a small band of friends very badly. That however pales in comparison to the wide-ranging systemic damage being wrought by Bernanke through his ill-considered actions. The wrong government official resigned this week.

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 Chan Akya, Asia Times Online, 2008
The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=8335

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

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

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

Dandelion Salad

by Former New York Governor Eliot Spitzer
Global Research, March 14, 2008
Washington Post – 2008-02-14

The following oped by Eliot Spitzer was published barely a month prior to the unfolding scandal and his demise as Governor of the State of New York.

Does the scandal bear any relationship to Spitzer’s intent to reveal the criminal nature of the subprime mortgage scam and the role of the Bush administration. Was the scandal intended to silence Eliot Spitzer?

Continue reading

Olbermann: State Of Confusion + Defiant Decider + McAgents Of Intolerance

Dandelion Salad

Ryokibin

Mar. 13, 2008

State Of Confusion 

Keith speaks with Howard Fineman.

States of Confusion: The lyric was sung with gusto by Howard DaSilva as Ben Franklin in the movie “1776.” It was about a struggle by the Founding Fathers, each of whom wanted to avoid writing the declaration of Independence… But tonight it has unexpected relevance to the 2008 Democratic Primary. “I won’t put politics on paper — it’s a mania… “So I refuse, to use the pen, in Pennsylvania.” Our fifth story on the Countdown: the Clinton Campaign is using its pen, Strategist Mark Penn, in Pennsylvania, but may wish it hadn’t. First, Penn declared Barock Obama incapable of winning the general election if he couldn’t beat Clinton in the Keystone State… Then, the campaign tried to backtrack and insist he hadn’t and had only said it raised “serious questions.” Indeed.

Defiant Decider 

Keith speaks with Rachel Maddow.

Spy Way or the Highway: The House floats a FYCA Bill that doesn’t protect the Administration? The President promises a veto saying –quote– “Voting for this bill would make our country less safe”. The Head of U-S Central Command disagrees with the White House on Iraq and Iran? The President asks the Defense Secretary to –quote– “handle it”, and suddenly, there’s a resignation letter. Our third story on the Countdown — every once in awhile George W. Bush does something nefarious, to remind us all, that he’s still around.

Working Hard For The Money 

Keith speaks with Michael Musto.

Spitz Takes: If you think it callous to be making jokes about a man who had to bail out during his 15th month as governor of New York after being caught in a prostitution sting… Relax. Our number one story on the Countdown: Eliot Spitzer’s successor, Governor-To-Be David Paterson, asked at his first news conference today, quote, “so New Yorkers don’t have to go through this again, have you ever patronized a prostitute.” Paterson’s answer: “Only the lobbyists.” Thank you, try the veal, please tip your precinct captains, I’m here all term…

McAgents Of Intolerance 

Keith speaks with Dana Milbank.

Spare the Rod: While Senators Clinton and Obama re-enact Punch and Judy… Senator McCain, freed of the responsibility of campaigning to mainstream America, or even while the media was watching, found a new religious group to cross off his campaign mailing list… Muslims. In our fourth story tonight, on February 27th, McCain angered Catholics and, y’know, sane people… when he happily accepted the endorsement of…

Bushed! 

Iraq-Gate

You lied, they died-Gate

Halliburton-Gate

World’s Worst

Worse: Michael O’Hanlon

Worser: Lou Dobbs

Worst: Billy Crystal

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President Bush Addresses FISA Legislation (video)

Eliot Spitzer: Screwed

Dandelion Salad

Mother Jones
Mar 10, 2008

Having sex with prostitutes is always a risky proposition for any public official. But when you’ve pissed off some of the richest and most powerful people in the world, paying for sex may be one of the more stupid things you could do. Jezus, Eliot, what the hell were you thinking?

Spitzer had to know that people were gunning for him. Put aside Wall Street, he’d made plenty of enemies prosecuting garden-variety criminals. As head of the state’s organized crime task force, he prosecuted two major prostitution rings. He certainly must have realized that prostitution business often has deep ties to mobsters. So by associating with $5,500-an-hour “executive” call-girls who were in bed with wealthy individuals and possibly connected to organized crime, Spitzer put himself in a position where he could be blackmailed or ruined by the very types of people he had pursued.

…continued

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Spitzer Resigns, Citing Personal Failings

NY Governor Spitzer involved in Prostitution Ring!! (videos) + Sources: Spitzer Resignation Expected (updated)

Who cares if Eliot Spitzer hires prostitutes? + The Spitzer Sex Sting: A Few More Questions

Spitzer Resigns, Citing Personal Failings

Dandelion Salad

By DANNY HAKIM and ANAHAD O’CONNOR
NYT
March 12, 2008

Gov. Eliot Spitzer, reeling from revelations that he had been a client of a prostitution ring, announced his resignation today, becoming the first governor of New York to be forced from office in nearly a century.

Mr. Spitzer, appearing somber and with his wife at his side, said his resignation is to be effective Monday, and that Lt. Gov. David A. Paterson would be sworn in to replace him.

“As I leave public life, I will first do what I need to do to help and heal myself and my family,” he said. “Then I will try once again, outside of politics, to serve the common good and to move toward the ideals and solutions which I believe can build a future of hope and opportunity for us and for our children.”

…continued

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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NY Governor Spitzer involved in Prostitution Ring!! (videos) + Sources: Spitzer Resignation Expected (updated)

Who cares if Eliot Spitzer hires prostitutes? + The Spitzer Sex Sting: A Few More Questions