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Investigation looks into political pressure in bailout distribution
A special inspector at the Treasury Department is auditing the Troubled Asset Relief Program after reports that members of Congress exerted pressure and that banks actively lobbied for the money.
By Ralph Vartabedian | LATimes
Amid growing public consternation with the federal banking bailout, the Treasury Department's special inspector general has opened an examination of political influence in handing out some of the $350 billion in federal bank bailout funds, The Times has learned.
The audit, which has just begun, is broad in scope but will focus on lobbying activities by financial institutions and what the special inspector general, Neil Barofsky, has called "outside influences."
A Short History of US Government Handouts
by Stephen Lendman
Global economies are withering while Washington conceives "Financial Recovery Plan(s) from Hell," according to economist Michael Hudson in his latest February 11 article. Bankers demand more trillions, "or (they'll) plunge the economy into financial crisis." What they want they'll get, and here's where things now stand.
On February 10, Bloomberg.com reported that Treasury Secretary Geithner "pledged government financing for as much as $2 trillion....to spur new lending and address banks' toxic assets, seeking to end the credit crunch hobbling the economy." Hudson calls it "Stage One of a two-stage plan," so far unannounced, to transfer trillions more to corrupt bankers who caused the problem in the first place, yet taxpayers will get little more back than the bill.
Fraud 'Directly Related' to Financial Crisis Probed
FBI Agents Could be Reassigned from National Security Due to Booming Caseload
By Jason Ryan | ABCNews
TARP IG...Barofsky currently only has around four FBI and IRS agents to oversee how $700 billion is tracked.
The FBI has opened investigations into more than 500 cases of alleged corporate fraud, including 38 that involve major firms and are "directly related" to the national economic crisis, FBI Deputy Director John Pistole told Congress today.
The surge in white-collar investigations is putting such a strain on the FBI that Pistole said the bureau is considering reassigning agents from national security, which has been the bureau's priority since the 9/11 attacks.
"The FBI has more than 530 open corporate fraud investigations, including 38 corporate fraud and financial institution matters directly related to the current financial crisis," Pistole told the Senate Judiciary Committee today.
The 38 companies, he said, "are significantly large companies, businesses everyone knows about but I cannot comment publicly."
Unapologetic CEOs: What Did the Banks Do With Your Cash?
Bank CEOs, With $125 Billion in Taxpayer Money in Hand, Testify and Defend Before Congress
By Matthew Jaffe and Scott Mayerowitz | ABCNews
The heads of eight major banks that received $125 billion in taxpayer bailout funds were largely unapologetic for their role in helping to create the worst financial crisis since the Great Depression as they testified before Congress this morning.
The CEOs said they are trying to lend out more money and pledged to return to profit, be more transparent and repay taxpayers as soon as possible.
Yet they warned that there was still much work to do and that it would take time for the financial system to right itself.
For four decades, the world experimented with Keynes’ theories and the result was oversized States, punished by inflation, in which waste and a lack of efficiency grew apace with excessive public spending and bureaucracy, until the world began to return to civil society the vigor and role stolen by the governments.
Kucinich: "Save Homes" FOX 02-10-09
Congressman Dennis Kucinich (D-OH) today made the following statement on the ongoing foreclosure crisis:
“According to today’s Wall Street Journal, Moody’s economy.com claims that nearly five million families could lose their homes to foreclosure between 2009 and 2011. Now is the time for our government to take a controlling interest in mortgage-backed securities and then direct loan modification, lowering principle and interest rates, extending terms of payments and keeping people in their homes.
“Banks are not lending money. They are hoarding money, because they fear their own balance sheets understate their losses. Instead of giving the banks more of taxpayers’ money in the hopes that banks will loan the money to keep people in their homes, the government must take charge to save the homes of so many American families. Keep people in their homes, the banks will get their money as well.
“Its time to stand up for the dream of American home ownership by saving the homes that are in jeopardy.”
Sometimes it's the small gesture that defines the end of an age. Richard Fuld, CEO of Lehman Brothers, the single financial firm the Bush administration allowed to collapse into bankruptcy in what may someday be thought of as the slow-motion Crash of '09, made one of those gestures recently. Just to be clear, we're talking about a man who, between 1993 and 2007, took home a tidy $466 million in pay. (That's no misprint, though it's a pay level that it would take factories of workers cumulative lifetimes to reach.) Then, in 2008, the year his firm would collapse, Fuld was awarded another $22 million in what was called "retirement pay."
But that's the big picture. Here's the small one that catches our shape-shifting moment perfectly. Fuld was recently outed for "selling" his wife their jointly held $14 million, 3.3 acre Florida beach-front mansion -- one of five houses the two of them owned, including their 8-bedroom main domicile in Greenwich, Connecticut -- and the lovely touch is the selling price: $100. That's right, one hundred bucks "in a possible attempt," writes the British Times, "to move assets beyond the reach of infuriated investors of the collapsed bank." Smooth move, Dick! Just petty and sleazy enough for a $488 million man.
With investigative reporting, interactive features, and (not least) help from you, ShovelWatch.org will be tracking the stimulus bill dollars as they travel from Congress to your neighborhood. With your help, ShovelWatch.org will make sure that one of the biggest, fastest appropriations ever has a big, fast army to track whether it is well spent.
Once upon a time a man appeared in a village and announced to the villagers that he would buy monkeys for $10 each.
The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.
The man bought thousands at $10 and, as supply started to diminish, the villagers stopped their effort. He next announced that he would now buy monkeys at $20 each. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so scarce it was an effort to even find a monkey, let alone catch it!
Congressman Gary Ackerman (D-NY) Scolds SEC Officials at Hearing
Some things never change. When President Obama spoke last week of “shameful” bonuses for bankers and the financial community’s “irresponsibility,” he echoed charges leveled nearly a century ago by Louis D. Brandeis.
Brandeis, a commercial lawyer, leading reformer and future Supreme Court justice, described a dangerous combination of avarice, lack of accountability and poor oversight in “Other People’s Money, and How the Bankers Use It,” one of the best-known exposés of the Progressive era.
SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.
According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."
"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.
Rep. Dennis Kucinich Explains Our Current Economic Situation
Courtesy of CSpanJunkie.org
TARP Shortchanged Taxpayers by $78 Billion, Watchdog Panel Says
By Mark Pittman and Bob Ivry | Bloomberg
U.S. taxpayers are being shortchanged by about $78 billion through the Treasury Department’s bank bailout, the panel overseeing the program said.
The Treasury, when it was headed by Secretary Henry Paulson, received bank assets worth about $176 billion in exchange for capital purchases of $254 billion under the Troubled Asset Relief Program, the Congressional Oversight Panel said in a report today.
Sen. Bernie Sanders (I-VT) Calls for Criminal Investigation into Bailout Crisis
7:47 mins. - Senator Sanders starts at 3:00 mins.
Kucinich: We Should Be Going From Golden Parachutes To Golden Handcuffs!
In this video, Rep. Kucinich calls the bailouts what they are: frauds on the American taxpayers.
Follow the Money: Are Taxpayers on the Hook for Hundreds of Billions of Dollars for a Credit Crisis that Was Overblown?
(NOTE: This article appears in the current issue of the magazine Treasury & Risk)
By Dave Lindorff
Key members of Congress were stunned to hear Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Hank Paulson say on Sept. 18 in a closed-door meeting on Capitol Hill that the country was “days away” from a complete financial meltdown—one that could lead to Depression-like runs on banks, widespread violence and ultimately even to a possible declaration of martial law. It was a vision of Armageddon, but, of course, 10 days later, the House rejected a Wall Street bailout package sent over by Paulson, only to pass one in a more limited form—the Emergency Economic Stabilization Act—a week later that gave Paulson less power and only half the money he wanted.
Report: Over 8 in 10 corporations have tax havens
Eighty-three of the nation's 100 largest corporations, including Citigroup, Bank of America and News Corp., had subsidiaries in offshore tax havens in 2007, and some of the companies received federal bailout funding, a government watchdog said Friday.
The Government Accountability Office released a report that said Bank of America Inc., Citigroup Inc. and Morgan Stanley all had more than 100 units in countries that maintain low or no taxes. The three financial institutions were included in the $700 billion financial bailout approved by Congress.
Insurance giant American International Group Inc., which has received about $150 billion in bailout money, had 18 subsidiaries. JPMorgan Chase & Co. had 50 units and Wells Fargo & Co. had 18; both financial institutions received government bailout money.
Even before word came on Tuesday that Citigroup might split into pieces to shore up its finances, an unpleasant message was moving through Congress and President-elect Barack Obama’s transition team: the banks need more taxpayer money.
In all likelihood, a lot more money.
Mr. Obama seems to know it; a week before his swearing-in, he is lobbying Congress to release the other half of the financial industry bailout fund. Democratic leaders in Congress seem to know it, too; they are urging their rank and file to act quickly to release the rescue money. And Ben S. Bernanke, the chairman of the Federal Reserve, certainly knows it.
By Dave Lindorff
Congress should do now what it should have done back in the fall: kill the Wall Street bailout program.
After wasting $350 billion on a program that was misrepresented from the outset, and investing hundreds of billions of dollars in failing financial institutions that it could have bought outright for less than it was investing in them (AIG was worth only a few billion dollars in total at the time that the government bailed the company out with an initial investment of $85 billion and Citicorp today is worth less than the $45 billion the government has invested in that failing firm), the Treasury Department, now acting at the direction not of the Bush administration and outgoing Treasurer Hank Paulson, but the Obama administration, is asking for the other half of the Troubled Assets Relief Fund (TARP).
Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.
There will come a moment when the most urgent threats posed by the credit crisis have eased and the larger task before us will be to chart a direction for the economic steps ahead. This will be a dangerous moment. Behind the debates over future policy is a debate over history—a debate over the causes of our current situation. The battle for the past will determine the battle for the present. So it’s crucial to get the history straight.
What were the critical decisions that led to the crisis? Mistakes were made at every fork in the road—we had what engineers call a “system failure,” when not a single decision but a cascade of decisions produce a tragic result. Let’s look at five key moments.
By Dave Lindorff
The real cost of the Bush Administration’s trillion-dollar bailout of Wall Street is becoming painfully apparent as the incoming Obama administration attempts desperately to make a case for its own $800-billion economic stimulus package, while warning about “trillion dollar deficits as far as the eye can see.”
On its own merits, all other considerations aside, with the economy slipping into a sinkhole, President-elect Barack Obama’s call for $800 million in stimulus spending should be a slam dunk for Congress. The problem is, Congress already caved in a hurry and approved nearly that same amount--$700 billion—in a matter of days when Bush’s Treasury Secretary Hank Paulson and his Federal Reserve Board Chair Ben Bernanke said they needed the money to prevent a collapse of the financial industry, as the nation’s biggest banks, investment banks and insurance companies teetered on the brink of insolvency last fall.
TARP This: Paulson's Bailout Plan Riddled With Deception
How a Program To Save The Economy Ended Up Enriching Big Banks
by Danny Schechter | CommonDreams.org
Talk about crazy making. How do we believe anything Hank Paulson says?
First, he needed $700 Billion, and fast, to buy up troubled assets or the skies would fall and we would be pressed to impose martial law. He found an appropriate acronym, TARP, to manage the money with a skeletal staff of 28 headed up by one of his former protégés at Goldman Sachs.
So Far, So Good,
But then he had himself a rethink, realizing that no one has a clue about how to price troubled assets considered practically worthless. So he had to a make a shift, "in the light of new facts," even though Congress never authorized the shift.
U.S. Economy: The Philosopher's Stone
Great Trauma As a Great Teacher: Peering Into the New Year
By Bernard Weiner, The Crisis Papers
Psychiatrists will attest that it is during emotional depression that great strides can be made in radical alteration of behavior and philosophy. Trauma, in other words, can be a great teacher. Everything is stirred-up, topsy-turvy, and thus can rise to the surface and become manifest and workable. In such a tumultuous time, clinical depression can be, and must be, dealt with creatively.
Isn’t it Finally Time to Enact a Basic Income Guarantee?
by Richard C. Cook | GlobalResearch.ca
The lack of individual and family income security in the midst of a highly-developed economy is a travesty under any circumstances, but the basic contradiction of “poverty in the midst of plenty” that has plagued the world since the start of the Industrial Revolution is becoming much worse in the early years of the 21st century as the Recession of 2008 picks up speed.
Winston Churchill spoke on the subject when giving the Romanes Lecture at Oxford University on June 19, 1930, a few months after the crash of the U.S. stock market that started the Great Depression. He said:
If you want to catch something of the fears and hopes of Americans right now, go to News.Google.com and try searching for a few words. For instance, put in "FDR" -- the well-known initials of the man who was president four times and took America through the Great Depression and all but the last months of World War II -- and endless screens of references pop up.
For the GOP, the Economic Meltdown May Have Happened Just a Wee Bit Early
By Bernard Weiner, The Crisis Papers
Most likely, we'll never find out what really happened inside the CheneyBush
Administration until after January 20, when ethically-motivated insiders feel
they can spill some beans without violating their oaths of loyalty, but here's
I think key officials inside the Administration knew that the financial
system was swirling inside the economic toilet bowl and would eventuate in a
massive meltdown; after all, there were numerous economists, inside and outside the
government, who more than a year ago were warning about the housing bubble
getting ready to burst, with disastrous impact on the availability of credit.
But, in this scenario, the CheneyBush higher-ups believed that, with luck, denial
and a helluva lot of deficit financing, they could delay the inevitable
By Dave Lindorff
A brief conversation I had earlier this week with a car dealership executive while standing in a post office line demonstrated simply both why the bank deregulation and consolidation process of the past two decades has been a screw job for ordinary people, and why the Washington bailout has been both a taxpayer rip-off and a failure (if it was even intended to work!).
I was chatting with the guy standing behind me who works at one of the 14 dealerships in a Philadelphia-area regional family-owned chain of GM dealerships called Bergey’s. Noting that a number of big dealers like Knopf (a Chrysler Dealer) and McGarrity’s (Ford) had been closing, I asked this Bergey’s manager if the problem was that the banks had frozen lending, making it hard for people to buy new cars.