One 77-year-old’s search for the truth: 9/11, election fraud, illegal wars, Wall Street criminality, a stolen nuke, the neocon wars, control of the U.S. government by global corporations, the unjustified assault on Social Security, media complicity, and the "Great Recession" about to become the second Great Depression. "The most important truths are hidden from us by the powerful few who strive to steal the American dream by keeping We the People in the dark."
"Failure of Epic Proportions": Treasury Nominee Jack Lew’s Pro-Bank, Austerity, Deregulation Legacy
Former bank regulator William Black and Rolling Stone’s Matt Taibbi join us to dissect the career of Jack Lew, President Obama’s pick to replace Treasury Secretary Timothy Geither. Currently Obama’s chief of staff, Lew was an executive at Citigroup from 2006 to 2008 at the time of the financial crisis. He backed financial deregulation efforts while he headed the Office of Management and Budget under President Bill Clinton. During that time, Clinton enacted two key laws to deregulate Wall Street: the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000. Black, a white-collar criminologist and former senior financial regulator, is the author of "The Best Way to Rob a Bank Is to Own One." A contributing editor for Rolling Stone magazine, Taibbi is the author of "Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History."
[Original includes rush transcript]
Matt Taibbi & William Black on Bailout Secrets & How New Foreclosure Deal Spares Banks from Justice
Four years after the massive bailout that rescued Wall Street, we look at the state of the financial sector with Rolling Stone’s Matt Taibbi and former financial regulator William Black. In a new article for Rolling Stone, Taibbi argues the government did not just bail out Wall Street, but also lied on the financial sector’s behalf, calling unhealthy banks healthy and helping banks cover up how much aid they were getting. The government’s approach to the banks came under new scrutiny this week after it reached an $8.5 billion settlement for improprieties in the wrongful foreclosures on millions of American homeowners, including flawed paperwork, robo-signing and wrongly modified loans. The settlement will end an independent review of all foreclosures, meaning the banks could be avoiding billions of dollars in further penalties, in addition to criminal prosecution. [Original includes rush transcript]
Bailout Fraud and Unaccountability TARP watchdog exposes fraud. by Stephen Lendman On December 8, 2008, the Senate confirmed Neil Barofsky's nomination
as Troubled Asset Relief Program (TARP) watchdog. He assumed the post of
SIGTARP (Special Inspector General for TARP).
On July 20, 2009, he estimated the $700 billion bailout fund could
balloon to $23.7 trillion. Obama administration secrecy conceals what's
essential to reveal. Over $9 trillion is known. Some analysts think true
figures may be three times that amount. Only crooked bankers and
corrupt bureaucrats know for sure. In February 2009, Barofsky submitted an initial report to Congress.
In the past two months, he said, Washington handed out hundreds of
billions of dollars (like confetti) to troubled financial institutions.
Where did the money go, he asked? What assurances exist that it's not stolen or wasted? TARP didn't require recipients to report or internally track funds
used. Accountability wasn't mandated. Banks took full advantage. Instead
of loans to stimulate recovery, they hoarded cash, acquired other
financial institutions, paid off debt, speculated, and knew then and now
there's plenty more help for the asking. Fraud prevention standards weren't imposed. Barofsky doubts the program's longterm success.
On March 29, 2011, he headlined a New York Times op-ed "Where the Bailout Went Wrong," saying: Two and a half years after legislation passed, Obama officials
declared mission accomplished. "On my last day as the special inspector
general".I regret to say that I strongly disagree."
TARP and what followed struck out. It "failed to meet some of its
most important goals." Main Street was sacrificed for Wall Street. Congress was told TARP funds would buy up to $700 billion of
mortgages. Authorizing legislation (the Emergency Economic Stabilization
Act - EESA) emphasized preserving homeownership. Treasury officials promised help. EESA mandated it. Struggling
homeowners got none. Legislative provisions were violated. Treasury
changed the rules. Money went to banks with no accountability or mandate
to extend credit.
"There were no strings attached: no requirement or even
incentive to increase lending to home buyers, and against our strong
recommendation, not even a request that banks report how they used TARP
funds."
Instead of increased lending, it declined. As inspector general,
Barofsky had no enforcement power. He could only recommend. Suggested
policies fell on deaf ears. Treasury and Wall Street conspired to commit
grand theft. Ordinary people were hung out to dry and scammed. Helping homeowners was shelved. The Home Affordable Modification
Program (HAMP) was introduced. Obama promised four million families
help. The program was "a colossal failure."
It was designed to fail. Its provisions included no accountability.
Guidelines only were provided. Banks and other mortgage services ignored
them. Foreclosures mounted. Millions of homeowners were defrauded.
Nothing changed to this day.
One of HAMP's most pernicious abuses was letting servicers
"direct borrowers who were current on their mortgages to start skipping
payments, telling them that that would allow them to qualify for a HAMP
modification," said Barofsky.
"Homeowners who might have been able to ride out the crisis instead
ended up in long trial modifications, after which servicers would deny
them a permanent modification and send them an enormous 'deficiency'
bill."
"Borrowers who might otherwise never have missed a payment found
themselves hit with whopping bills that they couldn't pay and now faced
foreclosure. It was a disaster."
Geithner bears full responsibility. Understating problems, he
admitted solutions "won't come close" to expectations. He refused to
address glaring shortfalls. He abandoned Main Street for Wall Street.
He's complicit in grand theft. He and banker cronies belong in prison. Banks know they can steal with impunity. They're larger and more
powerful now than when crisis conditions erupted. They can speculate
recklessly. They'll be bailed whenever they get in trouble. Treasury "ignore(d) rather than support(ed) real" reforms. Its
"broken promises" turned TARP and other programs into a giant Wall
Street "giveaway." Its "mismanagement" and criminal complicity "damaged the credibility
of the government"." Conditions are so out of control that future policy
makers may be unable "to save the system the next time a crisis
arises." Perhaps that's TARP's "most lasting, and unfortunate, legacy." Barofsky's new book "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street" explains. Writer/Roosevelt Institute fellow Matthew Stoller calls it "a very important" account of the financial crisis aftermath. In April 2010, Barofsky met a key adversary. Herbert Allison formerly headed Merrill Lynch, TIAA-CREF and Fannie
Mae. He came out of retirement to oversee TARP. He became Assistant
Treasury Secretary for Financial Stability.
"Have you thought at all about what you'll be doing next,"
he asked. "Out there in the market, there are consequences for some of
the things you're saying and the way you're saying them."
Barofsky knew he was being threatened "with lifelong unemployment."
Going along instead of bucking the system assures revolving door plum
positions. "It was gold or the lead," he explained. Cooperate and get rich. Don't and lose out. At first, he "had no idea
that the US government had been captured by" bankers. He was "shocked
(at) how much control" they have over policy on their own terms.
Treasury goes along deferentially. Republicans or Democrats agree on
core issues.
He was hijacked and hamstrung. Too big to fail constitutes near
omnipotence. Whatever Wall Street wants it gets. Contesting its power is
futile.
Stoller calls "Bailout" an account of "the importance of
Congressional oversight in reigning in corruption, and the problems of
our imperial Presidency."
Barofsky hoped for press and congressional attention. "Our message
was simple," he said. "Treasury's desperate attempt to bail out Wall
Street was setting the country up for potentially catastrophic losses."
Throughout his tenure, he was obstructed. He faced road blocks, ambushes, trench warfare, and threats in trying to do his job. On arrival at Treasury, he saw ornate large offices given top
officials. He got a small, foul-smelling basement one with barred
windows. He spent most of the next three years there. He wasn't welcome
unless he played ball. It's not his style and he refused. He explained what he saw graphically. Homeowners were abandoned and
scammed. A tsunami of evictions, foreclosures, fraud, mortgage document
robo-signings, blighted neighborhoods, and homelessness continues
without relief. Taxpayers got the bill. Bankers got benefits. So did lobbyists and
go-along politicians. The combination of Treasury criminality, White
House complicity, congressional laxity, and regulatory failure keeps the
dirty game going. Since crisis conditions erupted five years ago, ordinary people were
sold out and lied to. Obama exceeded the worst Bush administration
policies. Political corruption is rampant. Barofsky's best efforts failed. Attempts to achieve accountability,
transparency, controls, and consumer protections proved no match for
entrenched bureaucratic power, privilege and complicity with Wall
Street. He issued numerous reports. Geithner and other Obama officials buried them. Media scoundrels largely ignored them. Barofsky believes Geithner, complicit officials, and Wall Street
crooks should be fired and prosecuted. Don't expect it as long as
criminals run America. Five years after crisis conditions erupted, no top Wall Street or
government official faced charges. Unaccountability is
institutionalized. An eventual greater crisis looms. Unresolved problems
assure it. When is anyone's guess.
Stephen Lendman lives in Chicago and can be reached at Email address removed .
His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"
I was born in 1934, am a retired, progressive small businessman
concerned about all the major national and world issues, committed to
speak out and write about them.
William Black, author of "Best way to rob a bank is to own one" talks about deliberate fraud on Wall Street, Parts 1 through 5.
Bio
William K. Black, associate professor of economics and law at the University of Missouri, Kansas City, teaches White-Collar Crime, Public Finance, Antitrust, Law & Economics. A former financial regulator, he held several senior regulatory positions during the S&L debacle. Black is the author of The Best Way to Rob a Bank Is to Own One (2005) which focuses on the role of “control fraud” in financial crises. Black developed the concept of "control fraud" — frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined.
DemocracyNow!'s Amy Goodman and Juan Gonzales are granted an extended interview with former New York Governor Eliot Spitzer about the financial crisis and how it was handled by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner. Before becoming governor, Spitzer was known as the "Sheriff of Wall Street" for his vigorous legal actions against ponzi schemers and brokers profiting from manipulating the financial markets. In the present interview, Spitzer states that Bernanke and Geithner “actually built and participated in creating the structure that now has collapsed” and calls on them to be replaced. Spitzer also talks about the scandal that erupted last year that forced him to resign as governor.
Blogger’s Note: Here below I reproduce a condensed version of Engdahl’s important new article. You can read it in its entirety and original form by clicking here.
What Geithner does not want the public to understand, his ‘dirty little secret’ is that the repeal of Glass-Steagall and the passage of the Commodity Futures Modernization Act in 2000 allowed the creation of a tiny handful of banks that would virtually monopolize key parts of the global ‘off-balance sheet’ or Over-The-Counter derivatives issuance.
Today five US banks according to data in the just-released Federal Office of Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activity, hold 96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default.
The five are, in declining order of importance: JPMorgan Chase which holds a staggering $88 trillion in derivatives (€66 trillion!). Morgan Chase is followed by Bank of America with $38 trillion in derivatives, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs with a ‘mere’ $30 trillion in derivatives. Number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain’s HSBC Bank USA has $3.7 trillion.
The Government bailouts of AIG to over $180 billion to date has primarily gone to pay off AIG’s Credit Default Swap obligations to counterparty gamblers Goldman Sachs, Citibank, JP Morgan Chase, Bank of America, the banks who believe they are ‘too big to fail.’ In effect, these five institutions today believe they are so large that they can dictate the policy of the Federal Government. Some have called it a bankers’ coup d’etat. It definitely is not healthy.
This is Geithner’s and Wall Street’s Dirty Little Secret that they desperately try to hide because it would focus voter attention on real solutions. The Federal Government has long had laws in place to deal with insolvent banks. The FDIC places the bank into receivership, its assets and liabilities are sorted out by independent audit. The irresponsible management is purged, stockholders lose and the purged bank is eventually split into smaller units and when healthy, sold to the public. The power of the five mega banks to blackmail the entire nation would thereby be cut down to size. Ooohh. Uh Huh?
This is what Wall Street and Geithner are frantically trying to prevent. The problem is concentrated in these five large banks. The financial cancer must be isolated and contained by Federal agency in order for the host, the real economy, to return to healthy function.
This is what must be put into bankruptcy receivership, or nationalization. Every hour the Obama Administration delays that, and refuses to demand full independent government audit of the true solvency or insolvency of these five or so banks, inevitably costs to the US and to the world economy will snowball as derivatives losses explode.
Blogger’s Note: Only two weeks ago, William Greider writing in The Nation also addressed Geithner’s relaunching of “the massive bailout of banking and finance” but, “Knowing how unpopular this is with the people at large, Geithner followed with his ‘sweeping’ plans to re-regulate the bankers and financiers.” Greider regarded those “sweeping plans” as smoke and mirrors and concluded his article with this challenge to We The People:
“Our first political challenge is to disturb business as usual in Washington and prevent Congress from taking hasty action to adopt Wall Street's ‘reform’ agenda. Congress is rattled by the exploding popular anger and listening nervously.The people need to speak louder--loud enough for the president to hear [emphasis mine].”
Oddly though, I’ve found only one national organization that has been protesting Geithner’s giveaway of our children’s and grandchildren’s hope of prosperity. Bail Out the People – Not the Banks was it. According to some e-mails I’ve received, it seems there were some demonstrations in Phoenix (outside the AIG Building) and in Tucson (outside a Morgan Chase Bank) corresponding to the nationally organized April 3rd March on Wall Street.
Blogger's PS: Thanks to the still ongoing discussion ofmy latest OpEdNews column on this subjet, I've learned of a second national organization demanding nationalization of the big banks who caused the present economic crisis. In fact A New Way Forward had organized a national demonstation that took place only two days ago (funny it wasn't reported in the MSM)! Please sign their pledge.
In his column of 29 March, Paul Krugman recalls the Time Magazine cover from 10 years ago that glorified Robert Rubin, Alan Greenspan, and Larry Summers as the “Committee to Save the World” who had “prevented a global financial meltdown—(thus) far.”Time credited them with leading the global financial system through a crisis, which in Krugman’s words “seemed terrifying at the time, although it was a small blip compared with what we’re going through now.”
In his OpEdNews column of 27 March “History Lesson: And These Are the People We Expect to Fix Things Now?” Dave Lindorff recalls the event that opened the way for today’s financial meltdown.It was the repeal back in 1999 of the Glass-Steagall Act, which had been enacted expressly to prevent the very kinds of malpractice by banks and insurance companies that brought on the Great Depression.Much of Lindorff’s material was drawn from a 5 November 1999 article in the New York Times by Stephen Labaton, from which I’ve selected three quotes below.
Then-Treasury Secretary Larry Summers (who is presently Director of President Obama’s Economic Council and a chief architect of the current multi-trillion-dollar bailout/giveaway to A.I.G. and the giant banks):
''Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century. This historic legislation will better enable American companies to compete in the new economy.''
Senator Byron Dorgan, Democrat of North Dakota:
''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010. I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''
Then-Senator Paul Wellstone, Democrat of Minnesota:
''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis. Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''
The bill repealing Glass-Steagal1 was approved in the Senate by a vote of 90 to 8 and in the House by 362 to 57 and was signed into law by President Bill Clinton.
So now in 20:20 hindsight, who should President Obama choose to lead us out of this mess?Well, Paul Wellstone was killed in an airplane crash in 2002 (which many folks believe to have been suspitious).Thank God, Byron Dorgan was spared though.But, go figure ...Obama picked Summers!And also Geithner, who in 1999 was a protégé of Robert Rubin, another of the Time Magazine cover guys billed as the “Committee to Save the World.”
So the very same characters that got us into this mess have been tasked with getting us out of it ...and their idea seems to be to pump trillions of un-audited taxpayer dollars into the banking system that they personally set up to fail in the first place.
“So hyped by advance fanfare, Timothy Geithner unveiled his Public-Private Investment Program (PPIP) on March 23, the latest in a growing alphabet soup of handouts topping $12.5 trillion and counting - so much in so many forms, in "gov-speak" language, with so many changing and moving parts, it's hard for experts to keep up let alone the public, except to sense something is very wrong. They're being fleeced by a finance Ponzi scheme, sheer flimflam...”
Lendman’s article is almost encyclopedic at 7 pages, but one small paragraph near the end knocked my socks off!It was this mention of the sinister core of the financial crisis, the Credit Default Swaps (CDS), gleaned from an important cautionary article by Martin D. Weiss:
“...the money spent or committed by the government so far is also too much for another, relatively less-known reason: Hidden in an obscure corner of the derivatives market is a unique credit default swap that virtually no one is talking about — contracts on the default of United States Treasury bonds. Quietly and without fanfare, a small but growing number of investors are not only thinking the unthinkable, they're actually spending money on it, bidding up the premiums on Treasury bond credit default swaps to 14 times their 2007 level. This is an early warning of the next big shoe to drop in the debt crisis — serious potential damage to the credit, credibility, and borrowing power of the United States Treasury.”
The mainstream media repeatedly touts U.S. Treasuries as "ultra secure" investments. This makes me wonder...Are the "masters of the universe" and their media arm setting up to con Americans into transferring what little is left of their retirement savings into “ultra safe” Treasuries ...where they will be exposed the crash of the dollar? In such an event, the already ultra-rich bankers and hedge-fund managers would be positioned to make still another killing by cashing the CDS they’ve written against working America’s last stash. This day could well come if and when foreign governments sense the dollar is doomed and begin dumping their U.S. Treasury holdings.
But Paul Krugman in his column of April 2nd (thankfully not April 1st!) argues that the Chinese simply own too many T-bills ($2 trillion worth) to even think of selling them, knowing that this would create a panic causing the whole world to sell off their T-bills, instantly driving their values into the abyss (while kicking U.S. interest rates into the stratosphere). So I sure hope he’s right about “China’s Dollar Trap.”
