Obama's chief economic advisor, piously tells us
that the administration's hands are tied because we all must abide "by the rule
of law," perhaps it's time to ask: What rule
and for whom?"
Tim Rutten March 18, 2009 LA Times
of household affairs, or of domestic management.
Social science dealing
with the production, distribution and consumption of goods and
services and the theory and
management of economic systems.
It is the
duty of those who have been
enlisted in the organization of society to give every individual the
opportunity of acquiring the necessary talent or skill and the means of utilizing
such a talent so that that individual may
exercise their inherent talent in the
pursuit of a livelihood.
"Wherever politics intrudes upon economic
life, political success is readily attained by saying what people like to hear
rather than what is demonstrably true.
Instead of safeguarding truth and
honesty, the State then tends to become a major source of insincerity and
mendacity." Hans F. Sennholz
"Karl Marx, whose
economic analyses are strikingly
prescient and relevant today, demonstrated how the credit economy is one way
that central banking systems
attempt to stretch out and soften the boundary where the
private accumulation of profit from
production runs up against the waning
power of the consuming public. In a nation whose governing parties and
increasingly wealthy corporate elite can't restrain themselves from devastating
and costly imperialist wars overseas
while at the same time impoverishing ever-growing numbers of the struggling and
poor at home, there isn't going to be any
good economic news for most people." - Eric Brill 01/08
savings and loans debacle
The savings and
loan debacle began the regression of the
American republic into a "plutonomy" - a society in which the largest
economic gains flow
to an ever smaller portion of the population creating a decadent
social order that poorly rewards human
stockmarket crash of 1929, Congress passed a series of laws designed to
restrict the ability of Wall Street
to manipulate markets through the banking industry.
Congress passes the Glass-Steagall Act
separating commercial banking
activity, which accepted deposits and issued loans, from
investment banking activity, which
underwrote stocks and corporate
This is the governing economic principle for more than half a
Paul Adolph Volker attempts to reign in
the money supply, and
inflation, by raising
interest rates to
Most savings and loans fixed rate assets rate of
return are considerably below the prevailing rate of Federal Reserve
Savings and loans are paying, assume 12 percent, for loan capital
but their return on previous released capital is only 6 percent.
policy basically obliterated the Savings and Loan industry.
December 12, 1980
Federal Reserve chairman Paul Adolph
Volker BB /CFR/TC raises the prime loan rate to
Deregulation legislation is proposed to
address the problem created by an investment portfolio full of long-term, low
Savings and loans are given additional investment
opportunities and adjustable rate mortgages are allowed.
Wall Street now sees the
savings and loan industry as a "cash
cow" to be "levered" accordingly.
"I was working in the Carter
White House in 1979-80.
Unbeknownst to the president, Federal Reserve Chairman Paul Volcker, another
protégé, suddenly raised interest rates to fight the inflation
the bankers had caused by the OPEC oil price deals, and plunged the nation into
recession. It was through the "Reagan
Revolution" that the regulatory controls over the banking industry were
lifted, mainly in allowing the banks to use their fractional reserve privileges
in making mortgage loans. Volcker's recession shattered American manufacturing
and hastened the flight of jobs abroad. Under the "Reagan Doctrine,"
the US military
embarked on an unprecedented mission of world conquest by attacking one small
nation at a time, starting with Nicaragua. Global capitalism was also on
the march, with the US armed forces its own private police force." - Richard C.
1982 Gain-St Germain Depository Institutions
Act deregulation legislation expands acceptable savings and loans investments
by permitting savings and loans to make short-term consumer loans, issue credit
cards, and make commercial real estate
This became the preferred method of stoking commerce after
dumping water on the entire economy by increasing the prime loan rate to 21.5%
on December 12, 1980.
Financial engineers claimed that
broader investment opportunities would allow savings and loans to better
diversify their portfolios enabling them to increase their short-term earnings
and financial stabilty.
Beginning from a situation where liabilities
exceed assets, financial managers cannot overcome shortages by pursuing a
conservative investment course.
The deregulation legislation provided
the means for increased risk taking while ignoring the need for capital
The legislation lowered capital requirements and revised
the accounting rules so that when savings and loans reported fractional reserve
equity it was artificially boosted.
Savings and loans began to look for
new lending and investment opportunities that promised higher rates of
Once the interstate lending rules had been suspended the
preferred method became raising rates paid on certificates of deposits - CDs -
to garner more deposits and to make new investments promising still higher
In the past depositors had no reason to send funds to savings
and loans halfway across America but rapidly advancing computer technology -
the overnight transfer - changed that by making possible a nationwide market in
deposits while the higher rates made it worth the trouble.
deposit insurance (FDIC) put insolvent savings and loans in a position to abuse
the new market as federally insured depositors were largely unconcerned about
the health of the institutions in which they placed their
Undercapitalized savings and loans assured themselves a
continuous inflow of funds by simply offering to pay slightly higher
interest rates than
Healthy savings and loans were asked to pay
increasing deposit insurance premiums to protect depositors in failed
institutions and consequently gained little or no cost advantage from the fact
that they were well capitalized.
Funds flow from stronger banks and
savings and loans to the weakest banks.
"People think the Federal
Reserve central bank is US government institution.
It is not a
a private credit monopoly of those who prey upon the people of the US for the
benefit of themselves and their foreign customers; foreign and domestic
speculators and swindlers; and rich and predatory money lenders.
dark crew of financial pirates are those who send money into States to buy
votes to control our legislation; and there are those who maintain
propaganda for the purpose of deceiving us and of wheedling us into the
granting of new concessions which will permit them to cover up their past
misdeeds and set again in motion
their gigantic train of
Twelve private credit
monopolies were deceitfully foisted upon this country
by bankers who came here from
Europe and who repaid us for our hospitality by undermining our American
institutions." - Louis T.
McFadden House Banking Committee Congressional Record, pg 1295 & 1296,
June 10, 1932
"Glass-Steagall is no longer appropriate to the
economy in which we live."
William Jefferson Clinton
"Scores of banks failed in the Great Depression as
a result of unsound banking practices. Their failure deepened the crisis.
Glass-Steagall was intended to protect our financial system by insulating
commercial banking from 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." -
"If we got a return to positive growth - an economy
growing at 1 percent would be an economy with rising unemployment. I don't
think we can hold out the prospect we'll stabilize at the current level." -
to use the Federal Reserve Board
to kill Glass-Steagall begins.
Federal Reserve Board reinterprets
existing law to allow commercial
banks to derive a minuscule 5% of their revenues from investment banking
Alan Greenspan bumps investment banking
activity up to 10%.
creeping incrementalism Alan
Greenspan kills Glass-Steagall when he ups the limit investment banking
activity to 25%.
Larry Summers is appointed Treasury
Secretary when Robert Rubin leaves to become Vice Chairman of Citigroup.
Larry Summers is the man directly responsible for
the financial institution meltdown.
As William Jefferson Clinton's
Treasury Secretary from July 1999 - January 2001 Larry Summers shaped and
pushed the financial deregulation that unleashed the present
November 12, 1999
Gramm-Leach-Bliley Act officially repeals the Glass-Steagall Act of
The merger of commercial
and investment banking once again allows investment bankers to use FDIC
insured personal commercial deposits to purchase "financial instruments" from
Larry Summers backs the
Commodity Futures Modernization Act.
Larry Summers directly profits
from the deregulation he
vigorously supports advising DE Shaw and Taconic Capital Advisors in hedging
circle of friends include the hedge fund managers Nancy Zimmerman, Laurence D.
Fink, Kenneth D. Brody, Frank P. Brosens, H. Rodgin Cohen, Orin S. Kramer,
Ralph L. Schlosstein and Eric M. Mindich.
Larry Summers later has Harvard
purchase interest rate default
swaps while president of Harvard that ended up costing Harvard over $1
"The SEC's best estimate is that there
are now approximately 8,800 hedge
funds, with approximately $1.2 trillion of assets. If this estimate is
accurate, it implies a remarkable growth in
hedge fund assets of almost 3,000%
in the last 16 years. We are also seeing hedge funds becoming more active in
such varied activities as the market for corporate control, private lending,
and the trading of crude petroleum. Hedge fund account for about 30% of all
US equity trading volume. Investment
strategies or operations of hedge
fund include their use of derivatives trading, leverage, and
short selling. The number of
enforcement cases against hedge
fund advisers has grown from just four in 2001 to more than 90 since then.
These cases involve hedge fund
managers who have misappropriated funds assets; engaged in insider trading;
misrepresented portfolio performance; falsified their experience and
credentials; and lied about past returns." - Securities and Exchange Commission
Chairman Christopher Cox, July 25, 2006
Short-sellers attempt to profit
from an expected decline due to volatility, fungible asset valuation, in the
price of a fungible financial
The short-seller takes on loan fungible financial
instruments - bonds, securities, stock, futures contracts,
securitized loans and collateralized
The short-seller then hopes to be able to purchase
identical fungible security instruments to repay the loan at a lower price than
originally purchased shortly before the loan comes due.
when the fungible financial
instrument declines in value.
"The mistake most people make in
looking at the financial crisis is thinking of it in terms of money, a habit
that might lead you to look at the unfolding mess as a huge bonus-killing
downer for the Wall Street class. But
if you look at it in purely
Machiavellian terms, what you see is a colossal power grab that threatens to
turn the US government into a kind of giant Enron - a huge, impenetrable black
box filled with self-dealing insiders whose scheme is the securing of
individual profits at the expense of an ocean of unwitting involuntary
shareholders, previously known as taxpayers." - Matt
"What we have found over the years in the
marketplace is that derivatives have been an extraordinarily useful vehicle to
transfer risk from those who shouldn't be taking it to those who are willing to
and are capable of doing so." - Alan Greenspan 2003
"Clearly, derivatives are a centerpiece of the
crisis, and Alan Greenspan was the
leading proponent of the deregulation of derivatives." - Frank
"The derivatives market is $531 trillion, up from
$106 trillion in 2002 and a relative pittance just two decades ago.
Alan Greenspan banked
on the good will of Wall Street to
self-regulate." - Peter S. Goodman
Investment banks are able to
"balance" and prove adequate reserves by "securitizing" loans which allows
investment banks to
move those loans
off their balance sheets.
There are two ways to securitize a loan:
sell the securitized loan as a corporate bond (originally made popular
by Michael Robert Milken*
as junk bonds);
or "synthetic" securitization: use of derivatives to
get rid of the default risk (with credit default swaps) and lock in the
interest rate due on the loan (with interest-rate swaps).
investment bank securitizes a
loan that loan is
moved off the balance sheet.
Once a loan has been moved off the
balance sheet the capitalization ratio improves and the
investment banks can make even
banks created trillions of dollars of credit without maintaining adequate
capital reserves (leveraged up to 33 to 1 - 3.3 times higher than the
traditional fractional reserve of 10 to 1) by providing
mortgages, student loans and
credit card loans to millions of loan applicants who had no documentation,
no income, no collateral and a bad credit history for enormous short term
banks did this without tying up any of their capital reserves while
con-vincing the purchasers of the securitized commercial paper (toxic debt)
that there was no risk of default! (thank you
"More than 100 securities cases involving losses of
$400 billion were filed against financial firms last year, according to
Cornerstone Research." - Vikas Bajaj 01/19/08
"Let's hope we
are all wealthy and retired by the time
this house of cards falls." - Standard & Poor analyst 'texting' about
obligations December 2008 A
issued by the Bank of
International Settlements states the total outstanding notional amount of
over-the- counter (OTC) derivatives in the world is $683 trillion while the
gross market value for those same instruments was $22
Bank-like investment strategies - such as
the use of leverage and financing
long-term investments with short-term debt - became common outside the safety
net provided by deposit insurance and strong regulation.
As a result
nonbank institutions became vulnerable to runs.
If markets lost confidence
their sources of funds could dry up.
"Neither regulators nor market participants can easily
assess the true financial condition of firms that hold or trade these newer
Since large parts of derivatives markets are unregulated,
there is a global web of financial claims and counterclaims that is essentially
invisible to financial supervisors and market participants alike.
characteristics that produced this systemic vulnerability include: the use of
complex financial instruments, whose value is often linked by complex formulae
to the value of other instruments or financial variables, and for which no
active trading markets exist; extensive
use of leverage, or borrowed funds, which permits institutions to take
larger market positions with a given capital base, increasing potential profits
(but also losses); and
the practice of
moving risky financial speculation off the books, into nominally
independent accounting entities, so that the results do not appear in the
financial accounts of the parent financial institution." - Mark
"Tight residential real estate markets and low
mortgage rates fueled a five-year property boom as the number of US households
paying more than half their incomes for housing jumped from 13.8 million in
2001 to 17.9 million in 2007." - Brian Louis
"Predatory lenders deserve a lot of
blame for foreclosures and bankruptcies.
How odd to think that the hopes of everyone owning a piece of property is now
as utopian as the collectivist
dreams of communism." - Doug Doepke
"Between 1999 and 2004, more than half the states,
both red (North Carolina, 1999; South Carolina, 2004) and blue (California,
2001; New York, 2003), passed anti-predatory-lending laws. Georgia touched off
a firestorm in 2002 when it sought to hold Wall Street bundlers and holders of
securities responsible for mortgages that were fraudulently conceived.
Beginning in 2004 Michigan and forty-nine other states battled the US
Comptroller of the Currency and the banking industry (and The Wall Street
Journal's editorial page) for the right to examine the books of Wachovia's
mortgage unit, a fight the Supreme Court decided in Wachovia's favor in 2007 -
about a year before it cratered." - Dean Starkman
1863 National Bank Act
the Office of the Comptroller of the Currency as part of the United States
Department of the Treasury and a system of nationally chartered banks.
Office of the Comptroller of the Currency examined the books of national banks
to make sure they were balanced.
"Several years ago, state attorneys
general and others involved in consumer protection began to notice a marked
increase in a range of predatory lending practices by mortgage lenders.
In 2003 the OCC invoked a clause from the 1863 National Bank Act to
issue formal opinions preempting all state predatory lending laws,
thereby rendering them inoperative.
The OCC also promulgated new
rules that prevented states from enforcing any of their own consumer protection
laws against national banks.
The US government's actions were so
egregious and so unprecedented that all 50 state attorneys general, and all 50
state banking superintendents, actively fought the new rules.
unanimous opposition of the 50 states did not deter, or even slow,
George Walker Bush in his goal of
protecting the banks.
fact, when my office opened an investigation of possible discrimination in
mortgage lending by a number of banks, the OCC filed a federal
lawsuit to stop the investigation." - Elliot Spitzer, Washington Post, February 13, 2008
On the afternoon of February
13 federal agents of the Office of the Comptroller of the Currency staked out
Elliot Spitzer's hotel in Washington. Elliot Spitizer's dalliance with a
prostitute became headline news on March 10.
Corporate news never
questioned the actions of the Office of the Comptroller of the
"One is struck by the similarities with the Savings and Loan
scandal which was allowed to continue through the 1980s, long after it became
apparent that deliberate
bankruptcy was being used by unscrupulous profiteers to amass illegal fortunes
at what was ultimately public expense. The long drawn-out
housing bubble of the current
George Walker Bush decade, and
particularly the derivative
bubble that was floated upon it, allowed the Bush administration to help
offset the trillion-dollar-plus cost of its
Iraq misadventure." - Peter Dale
development of "electronic" mortgages managed by MERS went hand in hand with
the "securitization" of mortgage loans chopping them into pieces and selling
them off to investors. In the heyday of
securitizations, before investors got wise to their risks, lenders would
slice up loans, bundle them into "financial products" called "collateralized
debt obligations" (CDOs),
ostensibly insure them against default by wrapping them in derivatives called
"credit default swaps," and sell them to pension funds, municipal funds,
foreign investment funds, and so forth. There were many secured parties, and
the pieces kept changing hands; but MERS supposedly kept track of all these
changes electronically. MERS would register and record mortgage loans in its
name, and it would bring foreclosure actions in its name. MERS not only
facilitated the rapid turnover of mortgages and
mortgage-backed securities, but
it has served as a sort of "corporate shield" that protects investors from
claims by borrowers concerning predatory lending practices." - Ellen Brown
"MERS has reduced
transparency in the mortgage market in two ways. First, consumers and their
counsel can no longer turn to the public recording systems to learn the
identity of the holder of their note. Today, county recording systems are
increasingly full of one meaningless name, MERS, repeated over and over again.
But more importantly, all across the country, MERS now brings foreclosure
proceedings in its own name even though it is not the financial party in
interest. This is problematic because MERS is not prepared for or equipped to
provide responses to consumers' discovery requests with respect to predatory
lending claims and defenses. In effect, the securitization conduit attempts to
use a faceless and seemingly innocent proxy with no knowledge of predatory
origination or servicing behavior to do the dirty work of seizing the
consumer's home. . . . So imposing is this
opaque corporate wall, that in a "vast" number of foreclosures, MERS actually
succeeds in foreclosing without producing the original note "the legal sine qua
non of foreclosure" much less documentation that could support predatory
lending defenses." - Timothy McCandless
"MERS as straw man lacks
standing to foreclose, but so does original lender, although it was a signatory
to the deal. The lender lacks standing because title had to pass to the secured
parties for the arrangement to legally qualify as a "security." The lender has
been paid in full and has no further legal interest in the claim. Only the
securities holders have skin in the game; but they have no standing to
foreclose, because they were not signatories to the original agreement. They
cannot satisfy the basic requirement of contract law that a plaintiff suing on
a written contract must produce a signed contract proving he is
entitled to relief." - Ellen
"Madison Avenue helped drive the expansion of Americans use of
credit cards. There was a lot of money to be made by collecting fees for debt
creation and debt
service, and the largest banks wanted in on the action. The 1980s was the
age of a paradigm shift
in American politics. The US transformed itself into a country where the profit
motive supplanted the public good. The rich were taking it all for themselves
and letting the good times roll and everyone who wasn't rich wanted to be or
act as if they were rich. Advertisers suggested people could purchase the
10-day Caribbean cruise or expensive diamond ring that was once restricted to
those with higher income levels creating the illusion that debt was equal to
wealth." - Paul C. Wright
"In times past,
bankruptcy would have
wiped out the bad debts. The problem with
debt write-offs is that bad
savings go by the boards too. But today, the very wealthy hold most of the
savings, so the government doesn't want to have them take a loss. It would
rather wipe out pensioners, consumers, workers, industrial
companies and foreign investors. So
debts will be kept on the
books and the economy will slowly be strangled by
debt deflation." - Michael
investment bank meltdown
"The injunction of Jesus to love others as
ourselves is an endorsement of self-interest." - Brian Griffiths,
Goldman Sachs public
"We see TARP as an insurance policy. No matter how
bad it gets, we're going to be one of the remaining banks."- John C. Hope III,
Whitney National Bank chairman 1977 AL Williams establishes its base by mass-marketing the
concept of "Buy Term and Invest the Difference." With "BTID" the incorporation
illustrated how its middle-income client base could purchase sufficient
protection with term life insurance and systematically save and invest in
separate investment vehicles, such as mutual fund Individual Retirement
AL Williams is initially established as a privately held
general agency, at first selling term life insurance policies underwritten by
1980 A.L. Williams enters
into a contract with Boston-based Massachusetts Indemnity and Life Insurance
incorporation (MILICO), a larger underwriter of life insurance, whose parent is
PennCorp Financial Services, Santa Monica.
1980s Salomon Brothers is
acquired by the commodity trading firm Phibro.
Salomon is noted for its
innovation in the bond market,
selling the first mortgage-backed
security, a hitherto obscure species of financial instrument created by
Salomon begins purchasing home mortgages from thrifts
throughout the US and packaged them into
securities, which it sells to local and international
First American National Corporation is established as a holding incorporation
for First American Life Insurance (later renamed AL Williams Life Insurance)
and First American National Securities (later renamed PFS Investments).
Shearson is acquired by American
Express and operated as a subsidiary.
First American National Corporation, renamed The AL Williams Corporation,
underwrites a public stock offering.
1983 The AL
Williams Corporation is listed on the NASDAQ exchange under ALWC.
American Can and PennCorp Financial Services merge.
1984 Shearson merges
Brothers Kuhn Loeb -
now Shearson Lehman.
1986 Sanford Weill, scion
David-Weill family purchases Commercial Credit from Control Data for $7
Lazard Freres - the biggest investment bank in France - is
owned by Lazard and
David-Weill families - old Genoese banking scions.
1987 86-year-old American Can announces a name change to
Primerica Corporation completes a
hostile takeover of Smith
Sanford Weill acquires Gulf Insurance.
1988 Commercial Credit acquires Primerica Corporation for
Shearson Lehman acquires EF Hutton to be Shearson Lehman
1989 Sanford Weill acquires Drexel
Burnham Lambert's retail brokerage outlets.
Eight Charged in $50-Million Car Loan Fraud
1991 Primerica Corporation changes the name of AL Williams to
Primerica Financial Services.
acquires Travelers Insurance and adopts the name Travelers.
Weill purchases Shearson Lehman Hutton from American Express for $1.2 billion.
Shearson Lehman Hutton acquires Colorado-based lender, Aurora Loan
Services, an Alt-A lender.
becomes The Travelers Group.
1996 The Travelers
Group purchases the property and casualty business of Atena.
Timeline of the Asian financial crisis
Citicorp and Travelers merge
and form the behemoth Citigroup.
aquires Salomon and merges it with Smith Barney creating Salomon Smith
Citibank schemed with firm to hide its woes: Ex-Dewey
2000 Shearson Lehman Hutton
purchases West Coast subprime mortgage lender BNC Mortgage LLC.
Mortgage LLC quickly becomes a force in the subprime market.
11, 2001 Salomon Smith Barney is by far the largest tenant in 7 World
Trade Center, occupying 1,202,900 sq ft (111,750 m2) (64 percent of the
building) which included floors 2845.
Lehman occupies three
floors of World Trade Center where one employee dies.
2002 Citigroup spins off Travelers Property and
2003 Lehman makes $18.2 billion in
loans and ranked third in lending.
Lehman Hutton makes over $40 billion.
Shearson Lehman Hutton has
morphed into a real estate hedge fund disguised as an investment
Goldman Sachs receives
approximately $1.6 billion in taxpayer subsidies (mostly through Liberty Bonds)
from New York City and state taxpayers to finance a new headquarters near the
World Financial Center in Lower Manhattan.
Aurora and BNC are lending almost $50 billion per month.
Goldman Sachs changes its corporate
structure into a bank holding incorporation.
Employees earn an average
of $622,000 on a profit of $9.4 billion.
Much of the commercial paper
wealth is made on takeovers and leveraged
Goldman Sachs employees:
George Herbert Walker Bush
Robert Zoellick (World
Henry Paulson (US Treasury
Robert Rubin* (US Treasury Secretary, Chairman
John Thain (Merrill
Lynch, Chairman NYSE);
Henry H. Fowler, (US Treasury Secretary);
Edward Lampert (hedge fund manager);
Michael Cohrs (Global Banking at
Mark Carney (Bank of Canada);
Robert Steel (CEO of Wachovia);
Ed Liddy (CEO of
Gensler (Commodity Futures Trading Commission)
Stephen Friedman (Chairman
Intelligence Oversight Board, Memorial Sloan-Kettering Cancer
Center, The Aspen Institute,
Federal Reserve Bank of New York.
Goldman Sachs Proof that God hates its Customers
How Goldman Sachs Helped Greece to Mask its True
Goldman Sachs Shorted Greek Debt After It Arranged Those Shady
received $981,000 for his campaign from Goldman.
2007 4th quarter Citigroup posts a $10 billion loss, 21,200
Citigroup employees are laid off.
Citigroup's single largest
shareholder becomes Abu Dhabi Investment Authority, the investment arm of Abu
Dhabi government, with a $7.5 billion injection of capital in late 2007 in
exchange for a 4.9 percent stake which pays a $1.7 billion a year dividend.
The second largest Citigroup shareholder, with a 3.6 percent stake, is
now Kingdom Holding incorporation owned by Prince Al-Waleed bin Talal of Saudi
$6.88 billion of prefered stock is sold to an investment fund
controlled by the government of Singapore.
March through September 2008
Five largest investment bankers on
Wall Street go bankrupt.
March 2008 Lehman
assets of $680 billion are supported by $22.5 billion of firm capital. From an
equity position, its risky commercial real estate holdings are three times
greater than capital. In such a highly leveraged structure, a 3 to 5 percent
decline in real estate values wipes out all capital.
Federal Reserve sells
Bear Stearns to
JP Morgan Chase for ten
dollars per share, a price far below the previous 52-week high of $133.20 per
Merrill Lynch seizes $850
million worth of the underlying collateral from
Bear Stearns but only
recoups $100 million in auction.
Merrill Lynch is sold
to Bank of America for
0.8595 shares of Bank of
America common stock for each Merrill Lynch common share, or about $50
billion or $29 per share.
The market valuation of
Merrill Lynch was about
$100 billion one year earlier.
During the final quarter of 2008 Merrill
Lynch loses $15.3 billion.
Morgan Stanley is
contracted by the Treasury Department to advise the government on potential
rescue strategies for Fannie
Mae and Freddie Mac.
September 21, 2008 Federal Reserve allows
Morgan Stanley to
change its status from investment bank to bank holding incorporation in order
November 23, 2008
Fed and Treasury announce a rescue package for
Citigroup to provide
insurance against large losses on bundled securities and derivatives of
approximately $306 billion backed by residential and commercial real estate.
Citigroup agrees to
absorb the first $29 billion in losses on the bundled securities and
derivatives; the government will then cover 90% of losses that exceed that
spends $1.77 million on lobbying fees in the fourth quarter.
"Citigroup, like many others,
had sought to insure itself against losses with a variety of transactions,
including the purchase of insurance, only to learn that the losses were
overwhelming those who had promised to pay. Insurance on the assets was issued
both by the bond insurers and by others that wrote what were known as
default swaps, which amounted to insurance but were not regulated in the
same way. Those who wrote large amounts of such insurance are now in trouble,
either negotiating to pay claims for less than promised or, in the case of the
American International Group, still in
business only because of a government bailout. The
American International Group officials
responsible for writing the swaps told investors they would never suffer any
losses." - Floyd Norris, November 24, 2008
"Sovereign wealth funds
operated by China, Singapore, Abu
Dhabi, and other countries have taken large equity stakes in Citigroup,
Morgan Stanley, and
other firms, including leading European financial institutions." - Mark
"The Wall Street banks - which are the recipients
of the bailout money - are also the brokers and underwriters of the US public
debt. We are dealing with an absurd circular relationship: To finance the
bailout, Washington must borrow from the banks, which are the recipients of the
bailout." - Michel Chossudovsky
"With the Long-Term
Capital bailout as a precedent, creditors came to believe that their loans
to unsound financial institutions would be made good by
the Fed - as long as the collapse of
those institutions would threaten the
global credit system. Bolstered by this sense of security, bad loans
mushroomed. The major creditors of the fund included
Merrill Lynch and Lehman
Brothers, all of which went on to lend and invest recklessly. The ad hoc aspect
of the bailout created a
precedent for what has come to be called "regulation by deal" - now the
government's modus operandi." - Tyler Cowen, December 26, 2008
"When the "credit crunch" began and Washington
began the rush to solve the problem with taxpayer cash, no accounting of this
derivative nightmare was ever brought to bear. In all the deliberations and
press releases there was not
a single mention of the fact that the primary cause of the bank collapse was
due to these
bombs'." - Andrew Hughes 1/27/09
April 2, 2009 Financial Accounting Standards Board relaxes the
Financial institutions are given
the go ahead to value their derivative assets (toxic debt) in a "mark-to-model"
Financial institutions are given the go ahead to use creative
accounting methods to value their toxic debt at 'projected market
"The announcement April 2, 2009 by the Financial Accounting
Standards Board (FASB) weakening "mark-to-market" accounting rules allowing
banks to value their toxic debt at inflated prices. This is a green light to
continue the same methods of fraud and double bookkeeping that triggered the
breakdown of the financial system in the first place." - Tom Eley
taxpayers may be on the hook for as much as $23.7 trillion to bolster the
economy and bail out financial companies." - Neil Barofsky, special inspector
general for the Troubled Asset
Relief Program (TARP) Treasury Department, July, 2009
November 25, 2008 to July 8, 2009
institutions issue $274 billion in debt under the Temporary Liquidity Guarantee
Motors Financial Services auto and home
lender which recieved $13.5 billion from US taxpayers in exchange for
corporate debt in the form of
junk bonds becomes a bank to qualify for the Temporary Liquidity Guarantee
To insure $10 million of General Motors Acceptance Corporation
junk bonds annually with
credit default swap contract it costs $895,000.
To insure the
entire $13.5 billion in General Motors Acceptance Corporation junk bonds
annually will cost over $1.2 billion annually.
back to stacks
This web site is not a commercial web site and
is presented for educational purposes only.
This website defines a
new perspective with which to engage reality to which its author adheres. The
author feels that the falsification of reality outside personal experience has
created a populace unable to discern propaganda from reality and that this has
been done purposefully by an international corporate cartel through their
agents who wish to foist a corrupt version of reality on the human race.
Religious intolerance occurs when any group refuses to tolerate religious
practices, religious beliefs or persons due to their religious ideology. This
web site marks the founding of a system of philosophy named The Truth of the
Way of Life - a rational gnostic mystery religion based on reason which
requires no leap of faith, accepts no tithes, has no supreme leader, no church
buildings and in which each and every individual is encouraged to develop a
personal relation with the Creator and Sustainer through the pursuit of the
knowledge of reality in the hope of curing the spiritual corruption that has
enveloped the human spirit. The tenets of The Truth of the Way of Life are
spelled out in detail on this web site by the author. Violent acts against
individuals due to their religious beliefs in America is considered a "hate
This web site in no way condones violence. To the contrary the
intent here is to reduce the violence that is already occurring due to the
international corporate cartels desire to control the human race. The
international corporate cartel already controls the world economic system,
corporate media worldwide, the global industrial military entertainment complex
and is responsible for the collapse of morals, the elevation of self-centered
behavior and the destruction of global ecosystems. Civilization is based on
cooperation. Cooperation does not occur at the point of a gun.
social mores and values have declined precipitously over the last century as
the corrupt international cartel has garnered more and more power. This power
rests in the ability to deceive the populace in general through corporate media
by pressing emotional buttons which have been preprogrammed into the population
through prior corporate media psychological operations. The results have been
the destruction of the family and the destruction of social structures that do
not adhere to the corrupt international elites vision of
a perfect world. Through distraction and
coercion the direction of thought of the bulk of the population has been
directed toward solutions proposed by the corrupt international elite that
further consolidates their power and which further their purposes.
views and opinions presented on this web site are the views and opinions of
individual human men and women that, through their writings, showed the
capacity for intelligent, reasonable, rational, insightful and unpopular
thought. All factual information presented on this web site is believed to be
true and accurate and is presented as originally presented in print media which
may or may not have originally presented the facts truthfully. Opinion and
thoughts have been adapted, edited, corrected, redacted, combined, added to,
re-edited and re-corrected as nearly all opinion and thought has been
throughout time but has been done so in the spirit of the original writer with
the intent of making his or her thoughts and opinions clearer and relevant to
the reader in the present time.
Fair Use Notice
This site may contain copyrighted material the use of which has
not always been specifically authorized by the copyright owner. We are making
such material available in our efforts to advance understanding of criminal
justice, human rights, political,
democratic, scientific, and social justice issues, etc. We believe this
constitutes a 'fair use' of any such copyrighted material as provided for in
section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section
107, the material on this site is distributed without
profit to those who have
expressed a prior interest in receiving the included information for research
and educational purposes. For more information see:
www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted
material from this site for purposes of your own that go beyond 'fair use', you
must obtain permission from the copyright owner.
© Lawrence Turner
All Rights Reserved