APRIL-MAY2008

Israel Shamir and David Rubinson forwarded:

The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

By Greg Palast
Reporting for Air America Radio’s Clout

Listen to Palast on Clout at www.GregPalast.com

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.'

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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.

Thoughts On The Spitzer Sex Scandal
By Chuck Baldwin
March 14, 2008

http://www.chuckbaldwinlive.com/c2008/cbarchive_20080314.html

By now everyone in the information world knows about the sex scandal that forced New York Governor Eliot Spitzer out of office. For those who have been on Mars the past few days, Governor Spitzer was caught in an FBI wiretap probe involving an expensive prostitution service.
Apparently, the governor has been utilizing these prostitution services for some ten years and has spent tens of thousands of dollars for his numerous trysts. The sting that caught him involved a banking institution alerting federal authorities (as they do millions--yes millions--of times every year) to "suspicious" financial transactions between Spitzer and the call girl service, The Emperors Club VIP. At the time of this writing, no criminal charges have been filed against Spitzer. (They seldom are in these cases.) Obviously, the embarrassment of the revelation forced Spitzer to resign.
Should Governor Spitzer have resigned? Of course. Elected officials who practice adultery betray more than their families; they betray the trust of the people who elected them. In the old days, adultery would even have disqualified a person from military or government promotion--perhaps even their very position. Adultery is the cause of countless divorces and the source of many children's and teenagers' societal malfunction. It is a curse on our country. No one abhors adultery more than I do.
That said, there is a nagging question in the back of my mind, Why did the hammer fall on Governor Spitzer now? After all, it is no hyperbole to say that when it comes to big league politics, adultery and fornication are, sadly, par for the course. And readers don't need to write and tell me how judgmental I am, because it is the truth.
Sometimes I wish I had not learned the things I've learned and had not been exposed to the truth as I have been. Sometimes the truth is not very pretty. And the fact is, Washington politics--and by virtue of his very position, the governor of New York is included in Washington politics--is infested with sexual immorality. And "infested" is putting it mildly. The Republican and Democrat parties alike are awash in sexual immorality--both heterosexual and homosexual. And 99% of this debauchery is never reported. The guilty politicos are never "caught," never "outed."
So, why was Governor Spitzer "caught?" Don't forget that Spitzer has been carrying on this way for at least ten years. Suddenly, now, he is found out.
They say that Governor Spitzer was "Client 9" for this particular hooker. So, who are "clients 1-8"? And who are "clients 10-100"? Why do we not know their names? Anyone able to afford this prostitute's price of $1,000 per hour has to be someone of means. Who were they? Were the other "clients" CEOs of Fortune 500 companies? If so, which ones? Were they congressmen or senators? If so, who? Were they White House executives? Were they Pentagon brass? Were they media celebrities? If so, what are their names? Were they foreign diplomats? If so, who are they, and from which countries did they come? Do you get my point?
How is it that in this elaborate FBI "sting," only Governor Eliot Spitzer was "caught?" Now, do not get me wrong, I personally never did like Spitzer. For one thing, he is a New York liberal. That, all by itself, is enough for me to dislike the man. Furthermore, he did everything in his power to force the state of New York to decriminalize and legitimize illegal aliens. That, too, would be enough for me to dislike him. Beyond that, he, by all accounts, was a mean-spirited, arrogant, crush-anybody-who-got-in-his-way kind of guy. Let's face it, Eliot Spitzer is an easy man to dislike (at least for me).
However, Spitzer's personality and public policies are not the issue here. Aberrant sexual conduct among the politically powerful is exclusive to no political party or agenda. Adulterers are found among Democrats and Republicans, liberals and conservatives, old and young, men and women, northerners and southerners, easterners and westerners, Christians, and Jews, as well as people of no particular faith. I ask again, Why was Governor Spitzer "caught"?
Ladies and gentlemen, if the FBI or the major media wanted to publicize the dirt that they already have on the various "high and mighty" in Washington, D.C., half the city would be resigning tomorrow.
So, why was Governor Spitzer "outed"? I do not have the answer to that question, but, mark it down, somebody in Washington, D.C. has the answer. Somebody--or a group of somebodies--decided that Eliot Spitzer had to go. Of that I am sure. I wish I knew who they were, and I wish I knew the reason why. But, believe me, there was a reason.
There is an old saying inside the Beltway, "When it comes to politics, there are no accidents or coincidences." There is a reason for everything that goes on in Washington, D.C. That is something you can take to the old proverbial bank. It's just that unimportant people such as you and me are not privy to what those reasons are.
Of course there is another saying, "Be sure your sin will find you out." That's from God's playbook, the Bible. But for most of the rich and powerful reprobates who are engaging in this insidious conduct, that discovery will only come when they stand before the final judgment bench in eternity.
When it is convenient, or necessary, however, some scoundrels such as Governor Eliot Spitzer will be found out by the FBI and mainstream media. I sure would like to know the reason why. Wouldn't you?
The other element of this story that is being vastly underreported is the fact that federal police agencies are secretly looking at the financial transactions of the American people all the time. According to the USA Today, "Banks and credit unions as well as currency dealers and stores that cash checks reported a record 17.6 million transactions to the Financial Crimes Enforcement Network in 2006, according to a report from the network, a bureau of the U.S. Treasury Department."
The Today story goes on to say, "The Treasury Department's database now contains records of more than 100 million financial transactions going back to at least 1996, said network spokesman Steve Hudak." Today also reported, "Financial institutions have long been required to report cash transactions over $10,000. Those reports--simple notices of a deposit or withdrawal--account for more than 90% of the records the enforcement network gets each year. "Far more controversial are secret 'suspicious activity reports' filed by financial institutions and reviewed by teams of agents spread around the country. . . .
"The number of suspicious activity reports soared from 413,000 in 2003 to 1 million in 2006, according to the enforcement network." The American people are largely unaware that they are now living in a universal surveillance society. Virtually every major financial transaction--as well as much of their travel--is reported and monitored by the federal government. This total surveillance system, that began in earnest under Bill Clinton's administration, has mushroomed into a ubiquitous and finely tuned science under George W. Bush. Dare I say that Dubya's neurotic fixation with spying on ordinary citizens rivals Comrade Stalin's paranoiac obsession with a total surveillance society?
I can tell readers first-hand what living in this Brave New World is like. Back in the late '90's, I bought a used 1995 GMC half-ton, four wheel drive pick-up truck (which I still own). Over the course of a few years, I had saved around $5,000 in cash. I then sold my well-worn Ford Ranger pick-up truck for $5,000 cash. I was hoping I could pay cash for a bigger and better truck. Over the years growing up, I had watched my dad pay cash for most all of his purchases, including his vehicles. I thought it was one of the ultimate marks of freedom and enterprise in these United States to be able to work, save, and buy something of value with cash. I quickly discovered that the Federales in power these days do not share that same vision of freedom.
When I finally found the truck I mentioned, it cost a few thousand more than what I had saved, so I had to write a check for the difference. So, with $10,000 in cash and a check on borrowed funds, I drove off the car lot with my new (used) truck. It happens every day, right? Nothing unusual, right? Wrong!
To my shock and chagrin, a few days following the purchase of my truck, a criminal investigator from the IRS came to my front door and demanded to know where I got the cash to pay for my truck. I am not making this up, folks. After a lengthy interrogation, the IRS man left, but not before issuing me a subpoena to appear before a federal grand jury. Remember, this was in the late '90's, before Jorge Bush and Alberto Gonzales got their dictatorial hands on the helm of the myriad federal police agencies.
Mark it down, folks: you and I are constantly being watched, listened to, monitored, taped, and stalked by our own government. So, do any of us really believe that we still live in a free country? All this talk about a war on terrorism is a bunch of hooey. What is really happening is a war on freedom. The so-called "War on Terror" is only a smokescreen to hide the real agenda, which is to develop a federal police state where individual liberty is completely vanquished. And the really sad part of all of this is the manner in which the American people--especially our pastors and churches--seem to be willing to embrace and accept this burgeoning police state. But since when did patriotism come to mean the acceptance of a total surveillance society? When did patriotism come to mean the love of Big Government or infatuation with Big Brother? When did patriotism come to mean the sacrifice of liberty in the name of security? When did patriotism come to mean the surrender of constitutional government and personal freedoms? When did patriotism come to mean submission to tyrannical bureaucracies? Am I saddened that Eliot Spitzer got "caught?" Not a bit. He was just another rich reprobate who got what was coming to him. But, I still want to know why he was exposed, while all the others who are just as guilty, continue to enjoy the protection of anonymity.

What does sadden me is the manner in which our once-great land of independence and freedom is being turned into a globalist-dominated oligarchy, ruled by the iron fist of corrupt elitists. Plus, I am still waiting for the American people to awaken to what is going on and put a stop to it all. We had an opportunity to do just that by supporting the Presidential candidacy of Congressman Ron Paul. How many more opportunities will we have?


For further information on how our country is turning into a police state, go to http://www.chuckbaldwinlive.com/patriotact.html