jump to navigation

Attacks on NY AG Standing Up for Main Street Show Wall Street’s Control Over August 26, 2011

Posted by rogerhollander in Criminal Justice, Economic Crisis.
Tags: , , , , , , , , , , , , , , , ,
add a comment

Attacks on New York’s attorney general Eric Schneiderman
expose the destructive thinking of our financial and political elites.

August 25, 2011  |
The following article first appeared at Working In
These Times
, the labor blog of In These
Times
magazine. For more news and analysis like this, sign
up to receive In These Times
weekly updates.

“Corporations are people, my friend,” Mitt Romney recently declared.

That was pretty clumsy coming from a mega-millionaire Republican candidate,
as he was backing the 2010 U.S. Supreme Court decision Citizens United
opposed by no less than 80 percent of the public because of the enormous
political power it confers
upon the rich.

But how about the notion that “Wall Street is our Main Street,” which was voiced
by Federal Reserve official Kathryn Wylde? Her assertion was especially
startling because her explicit duty is “to represent
the public” in determining how to handle the massive wrongdoing of major banks
in ramming through home foreclosures.

However, Wylde was merely being honest about the aims of federal policy. The
idea that “Wall Street is Main Street” and its protection was the uppermost goal
in the mind of top Treasury Department officials. The plight of working families
on the verge of losing their homes—well, that was somehow a much, much lower
priority.

The major banks—Bank of America, Citigroup, JPMorgan Chase and Wells
Fargo—are facing legal pressure from the attorneys general of all 50 states over
their practices, including “robo-signing.

With the ownership of mortgages spread among thousands of investors due to
securities designed to minimize the risk, it becomes hopelessly complex to prove
ownership of a home when a bank wants to foreclose, as Chris Hayes of The
Nation
explained on MSNBC Wednesday night.

But no sweat! Presto—the banks came up with reams of bogus documents and then
hired employees whose job was to sign affidavits saying that yes, indeed, Bank
of America owned the home in question. Untold thousands of families were thus
illegally evicted.

These unlawful practices brought together the 50 attorneys general who
demanded—no, not time in jail for bank CEOs—$20 billion in fines that would be
devoted to mortgage modifications. In exchange, the bankers would get total
immunity from prosecution.

When New York Attorney General Eric Schneiderman—who this week was dismissed
from the executive committee of the 50-state AG investigation—balked at
accepting the deal, Wylde, the public’s watchdog, told
him,

It is of concern to the industry that instead of trying to facilitate
resolving these issues, you seem to be throwing a wrench into it. Wall Street is
our Main Street — love ’em or hate ’em. They are important and we have to make
sure we are doing everything we can to support them unless they are doing
something indefensible.

Wylde’s concern for the banks—already the recipients of taxpayers’ generous
2008 TARP bailout package—has been matched throughout the past two and a half
years of Obama administration programs designed to help homeowners.

The programs were supposed to help desperate
working families faced with rising
interest rates and falling home values to stay in their homes.

Recent reports and articles on foreclosures should assure Wylde that the
bankers have been treated with kid gloves from day one of the mortgage-relief
programs. First, the Obama Administration apparently ruled out the idea of
prosecuting bank officials for their multiple offenses, as Mary Bottari of
Bankster USA points
out:

Perverse incentives on Wall Street allowed top executives to make more money
on flawed loans than boring old 30-year mortgages.

Even though there is widespread agreement that Wall Street’s endless appetite
for high-interest, high-fees loans to fuel the mortgage securitization machine
had a causal role in supercharging the housing bubble, not one mortgage servicer
provider or big bank CEO has been put in jail. This compares to over 1,000
successful prosecutions of top officers during the Savings and Loan crisis of
the late 1980s.

The almost uniform judgment of government officials outside Treasury
Secretary Timothy Geithner is that the homeowner assistance programs have been a
disaster. Former Senator Ted Kaufman of Delaware said: “We have a $700 billion
program that basically helped all the banks but really hasn’t done a whole lot
for people who in the process of losing their homes.”

Elizabeth Warren, the consumer advocate who inspires fear and loathing among
Republicans, “grilled” Geithner at a June hearing in Washington D.C. for shaping
the programs around the needs of banks and other financial institutions rather
than homeowners, the New York Times reported:

“Forgive me, Mr. Secretary, but you say we designed the program from the
beginning, in effect you’re saying, not to save everyone,” she said. “You
designed it around servicers who, I wrote it down when you said it, ‘servicers
have done a terrible job.’

“We only have three months left, with hundreds
of thousands of families facing foreclosure,” she continued. “Is it time to
rethink whether or not a mortgage foreclosure prevention program that is based
on a group of servicers whom you describe as having done a terrible job, is a
program that perhaps should be redesigned?”

Particularly tragic is that these programs were proposed at a moment when the
public was ready
for truly innovative action to help families on the verge of losing their
homes.

With the antiforeclosure programs failing so badly, the nation is in no
condition to cope with a housing picture that is, if anything, worsening,
according to economist Jack Rasmus.

Foreclosures now approach 10 million, with some sources predicting 13-14
million before the current housing cycle bottoms. That’s about one-fourth of all
mortgages in the U.S. The numbers for homes in negative equity are even greater at around 16 million.

 LeonBNJ
It’s all about the
money. Much of our finacial services industry and their leaders are based in NY
City and adjacent areas, providing directly and indirectly 500,000 jobs.many of
them among the best paying and paying a living wage. That also means huge
precentages of tax revenues to NY City and State as well as huge amounts of
campaign contibutions/bribes to politicans of both parties. That means you don’t
want to chase them out with even sound and reasoned criminal proscution or civil
actions to Texas or other rich and corporate friendly states.
Don’t forget
that the NYS AG is an elected position, so they too are looking for campaign
contributions thus comprimising their proscution policies. Look at what happened
to Elliot Spitzer who went after the NY Stock Exchange and AIG where somehow it
come up that he was seeing prostitutes – probably by those interests having
private investigators looking for any dirt they could throw on him to get
revenge for his active going after their abuses.

Investigation Reveals Geithner Should Be in Prison March 16, 2010

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , ,
add a comment
Posted by lauraflanders at 7:58 am
March 16, 2010

We talked about the economy today, and whether Treasury Secretary Tim Geithner deserves more credit. What he should be getting credit for, it seems to me, is that Lehman Brothers report — well, not the report, but the cover-up.

To give you the thumbnail sketch, a court-appointed bank examiner spent a year researching the fall of Lehman — the trigger for the bailout crisis. As it turns out, surprise surprise, the accounting at Lehman was, to put it mildly, shifty… and our guests aren’t the only ones asking what did Geithner know and when did he know it?

Yves Smith at Naked Capitalism is noting, “The NY Fed, and thus Timothy Geithner, were at a minimum massively derelict…”

Mike Whitney over at CounterPunch is faking disbelief: “Is there really any doubt that Tim Geithner at the New York Fed, or Bernanke knew that Lehman was trading its junk assets to finance its on-going operations?”

If Geithner and Bernanke didn’t know what was going on at Lehman, that’s bad. If they knew, that’s worse. One way, you’ve got to wonder why they’re still in work. The alternative is that it was all part of some bigger, nastier scam, which transferred huge amounts of wealth from taxpayers back to the very banks that created the crisis.

They shouldn’t just be out of work, quite possibly, Geithner or Bernanke (or both) should be in the clink. We learned long ago that this President can cut bait when he thinks it’s called for. Candidate, then president Obama has broken with his preacher, his green jobs guru, his social secretary. The last, Desiree Rogers, apparently got the boot for letting gatecrashers into last fall’s first State Dinner.

If she can get the boot for letting strangers into a feast, surely Bernanke and Geithner should get at least that for covering up for the banks who ate up our whole economy? Or does Obama only get tough with homies?

The F Word is a regular commentary by Laura Flanders, the host of GRITtv which broadcasts weekdays on satellite TV (Dish Network Ch. 9415 Free Speech TV) on cable, and online at GRITtv.org and TheNation.com. Follow GRITtv or GRITlaura on Twitter.com.

Mortgaging the White House May 2, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
1 comment so far

by Bill Moyers and Michael Winship

Finally, here we are at the end of this week of a hundred days. As everyone in the western world probably knows by now, this benchmark for assessing presidencies goes back to Franklin Delano Roosevelt, who arrived at the White House in the depths of the Great Depression.

In his first hundred days, FDR came out swinging. He shut down the banks, threw the money lenders from the temple, cranked out so much legislation so fast he would shout to his secretary, Grace Tully, “Grace, take a law!” Will Rogers said Congress didn’t pass bills anymore; it just waved as they went by.

President Obama’s been busy, but contrary to many of the pundits, he’s no FDR. Our new president got his political education in the world of Chicago ward politics, and seems to have adopted a strategy from the machine of that city’s longtime boss, the late Richard J. Daley, father of the current mayor there. “Don’t make no waves,” one of Daley’s henchmen used to advise, “don’t back no losers.”

Your opinion of Obama’s first 100 days depends of course on your own vantage point. But we’d argue that as part of his bending over backwards to support the banks and avoid the losers, he has blundered mightily in his choice of economic advisers.

Last week, at a hearing of the Congressional Oversight Panel (COP) monitoring the Troubled Asset Relief Program (TARP), Treasury Secretary Timothy Geithner tried to correct AFL-CIO General Counsel Damon Silvers. “I’ve practiced law and you’ve been a banker,” Silvers said. Never, Geithner replied, “I’ve only been in public service.”

We beg to differ. Read Jo Becker and Gretchen Morgenson’s front-page profile of Secretary Geithner in Monday’s New York Times, and you’ll see how Robert Rubin protégé Geithner, during the five years he was running the New York Federal Reserve, fell under the spell of the big barons of banking to whom he would one day help shovel overly generous sums of money at taxpayer expense.

During “an era of unbridled and ultimately disastrous risk-taking by the financial industry,” the Times reported, “… He forged unusually close relationships with executives of Wall Street’s giant financial institutions.

“His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.”

Wined and dined at the Four Seasons, and in corporate dining rooms and fine homes by the very men whose greed and judgment helped bring on the Great Collapse, Geithner became so much a favorite of the Club that former Citigroup chairman Sandy Weill talked with him about becoming the bank’s CEO.

According to Becker and Morgenson, “Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics — lawmakers, economists and even former Federal Reserve colleagues — say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense.”

The two reporters write that Geithner “repeatedly missed or overlooked signs” that the financial system was self-destructing. “When he did spot trouble, analysts say, his responses were too measured, or too late.”

In choosing a man to manage the bailout of the banks who’s so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what’s best for Wall Street is best for America.

With these two as his financial gatekeepers, President Obama’s now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.

In fact, other Wall Street insiders — many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest — privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America’s taxpayers down a path toward further economic disaster.

This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, “The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

He could say the same of the White House.

Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers.

Looking Forward to What, Mr. President? April 24, 2009

Posted by rogerhollander in About Barack Obama, About Justice, About War, Barack Obama, Criminal Justice, Human Rights, Iraq and Afghanistan, Israel, Gaza & Middle East, Pakistan, Torture, War.
Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
add a comment

 

 

Roger Hollander, www.rogerhollander.com, April 24, 2009

 

O.K.  Let’s for a moment entertain the president’s thesis.  The problems facing the country are enormous.  No one can deny that.  Are they that critical, however, so as to justify ignoring the prosecution of those responsible for war crimes and violations of the United States Constitution of the gravest nature?

 

Since this is hypothetical I am willing for the moment to grant the president his argument: to wit, the need for the government to attend to critical matters is so vital that at the very least investigations and prosecutions of the Bush era crimes have to be put off.  In other words, as the president has put it, we need to look forward not backwards.

 

(There are those supporters of the president’s position who allege that those who are screaming for investigation and prosecutions are extreme leftists, partisan, out for revenge, etc.  There arguments are too facile and prima facie ridiculous to merit a response.  All I am granting here for the sake of argument is the hypothesis that it is in the country’s interest to attend to matters other than the Bush era crimes.)

 

What then, are we “looking forward” to?

 

In foreign policy the president has made a promise about withdrawal from Iraq that is so full of loopholes and caveats that any serious analysis cannot but conclude that the generals will have there way and the U.S. military presence, supported by an army of mercenaries, dozens of military bases, combat troops operating under a different name, and the largest embassy in the history of the world, will be extended indefinitely.  The president has gone ahead with a major escalation of the futile aggression in Afghanistan along with an escalation of the bombarding border areas of Pakistan with unmanned drone missiles.  His generals have assured him that the value of the “military gains” will outweigh the recruiting boon to al qaeda and the Taliban (who as we speak are marching towards Kabul) that results from the massive killing of civilians (the ghost of light-at-the-end-of-the-tunnel-troops-home-for-Christmas General Westmoreland lives on)  .  With respect to the Middle East, so far President Obama has followed the Bush agenda to a tee, with uncritical support of Israeli aggression in the Gaza Strip.  Whether he has the guts to stare down Netanyahu with respect to the latter’s threats to attack Iran remains to be seen.

 

On the home front looms the largest economic crisis since the Great Depression, the catalyst of which was the sub-prime mortgage scandal and the massive Ponzi schemes that the banks (banksters) and finance industry have run with toxic illegal loans and the unregulated derivatives market.  The president has put in charge of dealing with the crisis the very team (Geithner, Summers, Rubin) that created it and is throwing taxpayers monies down the same Black Hole created by George Bush, known as the Toxic Assets Relief Program (TARP), the premise of which is that bad debts equal money.  The “relief” goes to the Wall Street mafia while the nations’ mortgage defaults and employment goes through the ceiling.

 

In one of the country’s other most critical issues, that of health care reform, a major plank in the president’s campaign platform, the president apparently has reneged on his previous support for a single-payer national program (similar in theory and practice to Medicare), which he now tells us is “off the table.”  This can be considered as nothing less than sacrificing the national interest by caving in to the bloated blood-sucking private health care industry.

 

Well, Mr. President, I have gone along with you in agreeing on the seriousness of the problems facing our nation; but if what you have shown us about how you intend to deal with them is your justification for putting aside taking steps to achieve JUSTICE (and restore a semblance of respect for the rule of law) for the most heinous of war crimes and constitutional violations, then you have failed miserably to make your case.

 

You can count me out, and despite the psychotic-like ranting and ravings of the radical right (to which you have not stood up) and a mainstream media that has its collective head in the sand, I believe that I am part of a rapidly growing soon to be majority.

 

Someone, Mr. President, perhaps it was you, once quoted FDR telling those who were crying for radical reform to “make me do it.”  Well, Mr. President, do it.

Proof that Geithner’s Bank Plan Is a Massive Giveaway to the Bastards Who Started This Mess April 5, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , ,
add a comment

 

Posted by Joshua Holland, AlterNet at 1:17 PM on April 3, 2009.

Banks ”colluding to swap assets at inflated prices using taxpayers’ dollars.”

Recall the Geithner Bank Plan in a nutshell: private investors will partner with the government to buy those “toxic” assets off of struggling “zombie banks.” The buyers would put about 7 percent of the purchase price down, and the Treasury Department would match that with another 7 or so percent. Then the FDIC would offer government-backed loans for the remainder.

 

 

If the assets were to recover their value and turn a profit down the road, the investors would split the profits with the government. But if they don’t – if their values continue to tank, and it’s entirely likely many will — then you and I and everyone else we know who pays taxes will be on the hook for the lion’s share of the losses.

 

 

In other words, we’re letting bargain-hunters pick up the “troubled assets” that are burdening a number of financial institutions for pennies on the dollar, and limiting their downside risk if it doesn’t turn out well. It’s a pretty sweet deal for those investors. And, as I wrote when Geithner first announced the plan, it’s also pretty much the definition of “moral hazard.”

 

 

That background is important in order to understand just how incredibly infuriating this report from The Financial Times is:

 

 

 

 

US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.

 

 

The plans proved controversial, with critics charging that the government’s public-private partnership – which provide generous loans to investors – are intended to help banks sell, rather than acquire, troubled securities and loans.

 

 

[...]

 

 

Participating in the plan as a buyer could be complicated for Citi, which has suffered billions of dollars in writedowns on mortgage-backed assets and is about to cede a 36 per cent stake to the government.

 

 

Citi declined to comment. People close to the company said it was considering whether to take part in the plan as a seller, buyer or manager of the assets, but no decision had yet been taken.

 

 

[...]

 

 

Goldman and Morgan Stanley have large fund management units and have pledged to increase investments in distressed assets.

 

 

This week, John Mack, Morgan Stanley’s chief executive, told staff the bank was considering how to become “one of the firms that can buy these assets and package them where your clients will have access to them”.

 

 

Goldman and JPMorgan did not comment, but bankers said they were considering buying toxic assets.

 

 

 

 

Get it? We first pumped tens of billions of dollars into these institutions via the TARP, set up another program to aid them further by offering investors the opportunity to purchase the “shitpile” on their books with sweet federal subsidies, and they then turn around and now they’re essentially going to buy the assets back with taxpayer-backed loans.

 

 

FT again:

 

 

 

 

Critics say that would leave the same amount of toxic assets in the system as before, but with the government now liable for most of the losses through its provision of non-recourse loans.

 

 

Administration officials reject the criticism because banking is part of a financial system, in which the owners of bank equity — such as pension funds — are the same entities that will be investing in toxic assets anyway. Seen this way, the plan simply helps to rearrange the location of these assets in the system in a way that is more transparent and acceptable to markets.

 

 

 

 

What mumbo-jumbo — “banking is part of the financial system.” Thanks, but there’s a difference between pension funds and the financial institutions who have taken boatloads of public cash because they were deemed “too big to fail.”

 

 

But the obviousness of Big Finance’s rip-off may get in the way of its success. The Financial Times warns, “public opinion may not tolerate the idea of banks selling each other their bad assets …”

 

 

And let’s give a Republican who’s trying to capitalize on that sentiment some rare credit around here …

 

 

 

 

Spencer Bachus, the top Republican on the House financial services committee, vowed after being told of the plans by the FT to introduce legislation to stop financial institutions ”gaming the system to reap taxpayer-subsidized windfalls”.

 

 

Mr Bachus added it would mark ”a new level of absurdity” if financial institutions were ”colluding to swap assets at inflated prices using taxpayers’ dollars.”

 

 

 

 

Shocking but true: Spencer Bachus is 100 percent right.

 

 

PS: Make sure to catch this piece in today’s WaPo about Giethner’s own role in creating the financial meltdown.

Joshua Holland is an editor and senior writer at AlterNet.

<!–

–>

In for a Penny, In for $2.98 Trillion April 1, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , , , , , ,
add a comment
Posted on Mar 31, 2009, www.truthdig.com
toxic schmoxic
AP photo / Mary Altaffer

Toxic schmoxic: The ABC news ticker in New York’s Times Square on March 23, a day when the Dow average surged nearly 500 points.

By Robert Scheer

The good news on the government’s “No Banker Left Behind” program is that according to the special inspector general’s report on Tuesday, the total handout to date is still less than 3 trillion dollars. It’s only 2.98 trillion to be precise, an amount six times greater than will be spent by federal, state and local governments this year on educating the 50 million American children in elementary and secondary schools. 

The bad news is that even greater amounts of money are to be thrown down what has to be the world record for rat holes.

Where did the money go? Almost all of it went to the bankers and stockbrokers who got us into this mess by insisting that the complex-by-design derivatives they trafficked in should not be regulated by government since they were private transactions between consenting professionals. Sort of like a lap dance: If it doesn’t work out, that’s the problem of the parties involved and no concern of the government. 

For the government to intervene would have created “legal uncertainty” in the derivatives market, an argument that a Republican-dominated Congress and President Clinton bought in authorizing the Commodity Futures Modernization Act in December of 2000. That law brought “legal certainty” to the market, a phrase that Lawrence Summers, then Clinton’s secretary of the treasury and now Barack Obama’s top White House economics adviser, deployed incessantly as a calming mantra as the financial derivatives market swirled out of control.

Now Summers and the other finance gurus who move so easily from Wall Street to Pennsylvania Avenue assure us that those professionals who made the toxic swap deals are too big to fail and must be entrusted with 3 trillion of our dollars to save themselves from disaster. And thanks to the laws they wrote, the bankers are likely to be covered for their socially destructive behavior by a get-out-of-jail-free card.

Well, maybe not all of them. A shudder must have run through the former Wall Street buddies of Bernie Madoff—once the highly respected chairman of the Nasdaq stock exchange—when Inspector General Neil Barofsky warned on Tuesday that “we are looking at the potential exposure of hundreds of billions of dollars in taxpayer money lost to fraud.”

How naive. The fraud no doubt has occurred and will occur again, but the exposure part is more questionable, if by that is meant bringing the criminals to account. As opposed to welfare cheats who end up imprisoned over scams that involve hundreds of dollars, these guys have brilliant lawyers who tell them how to steal legally when it comes to billions in fraud.

But most likely the white-collar criminals, if they are high enough up the food chain, will not even be quizzed about their activities. As the independent Congressional Oversight Panel has reported, there has been no serious accounting of the bailout money. It took major pressure from a Congress reacting to an outraged public to discover that AIG, in addition to handing out hundreds of millions in bonuses to the very hustlers who created the firm’s swindles, was a conduit for at least $70 billion in taxpayer money to reimburse the banks and stockbrokers who got us into this crisis with their bad bets. 

No surprise there, given the incestuous world of finance, where the revolving doors between the Treasury Department, the Fed and executive offices in the industry have been swinging throughout both Republican and Democratic administrations. As a result, those orchestrating the bailout and those grabbing the money are for the most part friends and former colleagues, with enormous respect for each other but not for the American taxpayer and homeowner. Or for the autoworkers who had nothing to do with creating this problem but stand to lose their retiree health benefits and pensions if the Obama administration goes though with its threat to use bankruptcy to discharge GM and Chrysler from their obligations to their workers.  Why float a company like AIG to the tune of $170 billion to keep that massive conglomerate from bankruptcy but balk at a much smaller commitment to keep GM solvent?

The money involved in the auto bailout is chump change compared with what Wall Street got, and it is far better spent. As opposed to the financial high rollers richly rewarded for crawling in and out of balance sheets, the folks who crawl in and out of cars along an assembly line are left with permanent aching backs and hard-won health care and retirement plans about to disappear through their company’s bankruptcy. Where’s their bonus package? 

In New Terror Video, AIG Demands Huge Ransom from U.S. March 22, 2009

Posted by rogerhollander in Economic Crisis, Humor.
Tags: , , , , , , , , , , ,
add a comment

Andy Borowitz, www.huffingtonpost.com, March 15, 2009

American intelligence experts are analyzing a new terror video from the American International Group (AIG) in which the leader of the shadowy organization demands billions of dollars from the United States.

In the four-minute tape, which surfaced over the weekend and caused deep concern among U.S. officials, a man believed to be the chairman of AIG says that if his organization is not paid its ransom, “chaos and destruction will rain down on the American economy.”

“If we are not paid billions more in bonuses and corporate golf retreats, America will be made to suffer,” the man threatens.

Intelligence analysts said that the man, AIG chairman Edward M. Liddy, appears to be speaking at a luxury beach resort that offers few clues as to his exact location, although there is “good intelligence” pointing to the Ritz Carlton in the Cayman Islands.

“We have some reason to believe that he and other AIG executives are there, based on a series of intercepted room service orders from the all-day dining menu,” one analyst said.

Reacting to the video, Homeland Security Secretary Janet Napolitano raised the nation’s terror alert level to orange, meaning “taxpayers are about to get reamed again.”

Treasury Secretary Timothy Geithner also released a response to AIG’s latest demands, but intelligence experts said they would need several weeks to decipher Mr. Geithner’s response.

Andy Borowitz is a comedian and writer whose work appears in The New Yorker and The New York Times, and at his award-winning humor site, BorowitzReport.com.

Was the Bailout Itself a Scam? March 19, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , ,
add a comment

Paul Craig Roberts

www.opednews.com, March 19, 2009

Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG. Nevertheless, it is a diversion that serves an important purpose. It has taught an inattentive American public that the elites run the government in their own private interests.

Americans are angry that AIG executives are paying themselves millions of dollars in bonuses after having cost the taxpayers an exorbitant sum. Senator Charles Grassley put a proper face on the anger when he suggested that the AIG executives “follow the Japanese example and resign or go commit suicide.”

Yet, Obama’s White House economist, Larry Summers, on whose watch as Treasury Secretary in the Clinton administration financial deregulation got out of control, invoked the “sanctity of contracts” in defense of the AIG bonuses.

But the Obama administration does not regard other contracts as sacred. Specifically: labor unions had to agree to give-backs in order for the auto companies to obtain federal help; CNN reports that “Veterans Affairs Secretary Eric Shinseki confirmed Tuesday [March 10] that the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance” [ click here ]; the Washington Post reports that the Obama team has set its sights on downsizing Social Security and Medicare.

According to the Post, Obama said that “it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.” [ click here ]

After Washington’s trillion dollar bank bailouts and trillion dollar gratuitous wars for the sake of the military industry’s profits and Israeli territorial expansion, there is no money for Social Security and Medicare.

The US government breaks its contracts with US citizens on a daily basis, but AIG’s bonus contracts are sacrosanct. The Social Security contract was broken when the government decided to tax 85% of the benefits. It was broken again when the Clinton administration rigged the inflation measure in order to beat retirees out of their cost-of-living adjustments. To have any real Medicare coverage, a person has to give up part of his Social Security check to pay Medicare Part B premium and then take out a private supplemental policy. The true cost of Medicare to beneficiaries is about $6,000 annually in premiums, plus deductibles and the Medicare tax if the person is still earning.

Treasury Secretary Geithner, the fox in charge of the hen house, has resolved the problem for us. He is going to withhold $165 million (the amount of the AIG bonuses) from the next taxpayer payment to AIG of $30,000 million. If someone handed you $30,000 dollars, would you mind if they held back $165?

PR flaks have rechristened the bonus payments “retention payments” necessary if AIG is to retain crucial employees. This lie was shot down by New York Attorney General Andrew Cuomo, who informed the House Committee on Financial Services that the payments went to members of AIG’s Financial Products subsidiary, “the unit of AIG that was principally responsible for the firm’s meltdown.” As for retention, Cuomo pointed out that ”numerous individuals who received large ‘retention’ bonuses are no longer at the firm” [click here ].

Eliot Spitzer, the former New York Governor who was set-up in a sex scandal to prevent him investigating Wall Street’s financial gangsterism, pointed out on March 17 that the real scandal is the billions of taxpayer dollars paid to the counter-parties of AIG’s financial deals. These payments, Spitzer writes, [ http://www.slate.com/id/2213942/ ] are “a way to hide an enormous second round of cash to the same group that had received TARP money already.”

Goldman Sachs, for example, had already received a taxpayer cash infusion of $25 billion and was sitting on more than $100 billion in cash when the Wall Street firm received another $13 billion via the AIG bailout.

Moreover, in my opinion, most of the billions of dollars in AIG counter-party payments were unnecessary. They represent gravy paid to firms that had made risk-free bets, the non-payment of which constituted no threat to financial solvency.

Spitzer identifies a conflict of interest that could possibly be criminal self-dealing. According to reports, the AIG bailout decision involved Bush Treasury Secretary Henry Paulson, formerly of Goldman Sachs, Goldman Sachs CEO Lloyd Blankfein, Fed Chairman Ben Bernanke, and Timothy Geithner, former New York Federal Reserve president and currently Secretary of the Treasury. No doubt the incestuous relationships are the reason the original bailout deal had no oversight or transparency.

The Bush/Obama bailouts require serious investigation. Were these bailouts necessary, or were they a scam, like “weapons of mass destruction,” used to advance a private agenda behind a wall of fear? Recently I heard Harvard Law professor Elizabeth Warren, a member of a congressional bailout oversight panel, say on NPR that the US has far too many banks. Out of the financial crisis, she said, should come consolidation with the financial sector consisting of a few mega-banks. Was the whole point of the bailout to supply taxpayer money for a program of financial concentration?

The Real AIG Scandal March 18, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , , , ,
add a comment

future-aig-exec

The Real AIG ScandalIt’s not the bonuses. It’s that AIG’s counterparties are getting paid back in full.

American International Group Inc. Click image to expand.AIG’s Manhattan, N.Y., office

Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG’s counterparties are justified with an appeal to the sanctity of contract. If AIG’s contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

But wait a moment, aren’t we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off. Why can’t Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn’t we already give Goldman a $25 billion capital infusion, and aren’t they sitting on more than $100 billion in cash? Haven’t we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn’t they have accepted a discount, and couldn’t they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

So here are several questions that should be answered, in public, under oath, to clear the air:

What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

Was it already known who the counterparties were and what the exposure was for each of the counterparties?

What did Goldman, and all the other counterparties, know about AIG’s financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn’t they bear a percentage of the risk of failure of their own counterparty?

What is the deeper relationship between Goldman and AIG? Didn’t they almost merge a few years ago but did not because Goldman couldn’t get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG’s business model was not to pay on insurance it had issued.

Why weren’t the counterparties immediately and fully disclosed?

Failure to answer these questions will feed the populist rage that is metastasizing very quickly. And it will raise basic questions about the competence of those who are supposedly guiding this economic policy.

Those Hit Hardest Get No Bailout March 18, 2009

Posted by rogerhollander in Economic Crisis.
Tags: , , , , , , , , , , , , , , , , , , , , , , ,
add a comment

by Amy Goodman

Taxpayers’ bailout money for AIG bonuses has rightfully provoked a massive backlash against AIG, Wall Street, President Barack Obama and his economic advisers, Treasury Secretary Timothy Geithner and Larry Summers. The U.S. public now owns 80 percent of AIG. The outrage is bipartisan: Iowa Republican Sen. Charles Grassley even suggested that AIG executives “resign or go commit suicide.” New York State Attorney General Andrew Cuomo just released details on the bonuses, exposing AIG’s ridiculous claim that they are “retention bonuses” aimed at keeping key employees, since 11 of those who received bonuses of $1 million or more are no longer employed by AIG.

These AIG millionaires may need to return their unearned millions (Congress may pass a tax law aimed just at them, taxing their bonuses at 100 percent). But will the outrage help those who have been hardest hit by the economic meltdown? Will the hundreds of millions of dollars in various stimulus packages and bailouts find its way to regular people who are trying to get by, or will it go only to corporations deemed “too big to fail,” leaving behind millions of people who are, apparently, small enough to fail?

The Center for Social Inclusion has just issued a report on the economic meltdown and how best to solve the problem. It links race to the lack of opportunity and to the prevalence of the notorious subprime mortgages that triggered the economic crisis.

CSI Executive Director Maya Wiley told me, “We have to stimulate equality in order to stimulate the economy.” Access to education, transportation, housing and a clean environment give people a firm footing to respond to crisis and to succeed. Noting that “shovel-ready” stimulus jobs in construction will disproportionately favor those who are already in that industry, predominantly white males, Wiley is pushing for “community benefits agreements for construction jobs [that] ensure when the government has construction contracts, low-income people, people of color, women, are going to have their fair share of those jobs.” Since people of color are more likely to live far from available jobs and are less likely to have cars, Wiley says, “we must ensure that the way transportation dollars get spent go to transit … to connect people who need jobs to the places where there are jobs.”

The group United for a Fair Economy also highlights the racial wealth divide, noting that “24 percent of blacks and 21 percent of Latinos are in poverty, versus 8 percent of whites. In the corporate world, we are seeing the highest executive pay and the biggest bailouts in history. CEO pay is 344 times that of the average worker.”

Prevailing wisdom posits that freeing up credit will save the economy, thus these huge banks need hundreds of billions of dollars in taxpayer bailouts. But the crisis was initially caused by defaults on subprime mortgages. One option at the outset would have been to support the distressed homeowners, helping them avoid foreclosure. Wiley points out that “35 percent of subprime mortgage holders were actually eligible for prime-rate loans. … Most of those were people of color … communities of color did not have fair access to credit.”

The banks and the mortgage lenders pushed bad loans on poor and minority borrowers. The NAACP has just filed lawsuits against Wells Fargo and HSBC, alleging “systematic, institutionalized racism in subprime home mortgage lending.”

The banks bundled the bad loans into securities and sold them, then created derivatives based on these securities that are impossible to understand, let alone value. AIG insured the investment banks against potential losses from these complex derivatives. The U.S. Treasury bailed out the banks along with AIG. AIG then paid out tens of billions of its bailout money to the very large banks that already received billions in bailout funds: Bank of America and Goldman Sachs. Yet, despite the hundreds of billions being siphoned off by these megabanks, we are told that the credit market is still frozen. Many European banks also received funds this way, including Swiss bank UBS, which offers secret bank accounts that allow the richest Americans to avoid taxes. In effect, beleaguered U.S. taxpayers are bailing out wealthy U.S. tax dodgers.

Obama has surrounded himself with financial advisers who are too cozy with Wall Street, like Summers and Geithner. It’s time to direct the stimulus to the people who need it, to those whose tax dollars are funding it.    

Denis Moynihan contributed research to this column.

Follow

Get every new post delivered to your Inbox.

Join 221 other followers