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

[jakem]

Source: By Greg Palast, Air America

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.

Read more: http://www.gregpalast.com/elliot-spitzer-gets-nailed/

[aquart]

1. Yep.

Which, DAMMIT!, is why he should have realized they were watching his every move.

Maybe he's lucky. After all, he could have committed "suicide."

[jazzjunkysue]

13. There's still time, after the indictment.

[baldguy]

2. When a public servant pays a woman to fuck her, its a scandal.

When a public servant GETS PAID by a corporation to allow them to fuck us, its business as usual.

[Deny and Shred]

6. Well put, BaldGuy. It sure is strange how the guys who stand in Bush's

way tend to be the subjects of prosecutorial indiscretion, as Palast puts it. Earth to whistleblowers of all professions, Keep it in your Pants.

[tsuki]

3. I found this very interesting...

"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."

Unbelievable.

[gasperc]

4. single most important post of the day

good catch

[TreasonousBastard]

5. Palast's way off base here...

Spitzer is NO LONGER NY's AG. He was, until recently, the Governor and in no position to investigate, bring xcharges, or otherwise harass banks and Wall St. He had enough problems being the most disliked Governor (in Albabny, anyway) in memory and trying to get a budget passed while engineering the destruction of the Republicans in the Senate. Wall Street was way off the table, and he couldn't do anything about the Fed essentially doing its job anyway. What's he gonna do-- order BoA not to take the money?

Curiously, as he came closer to deciding to run for Governor, he stopped pretty much all investigations of financial finageling.

But, hey, why not blame it all on the White House? Betcha they even gave him a list of whorehouses to call.

[Peace Patriot]

8. Palast makes his case with a Spitzer op-ed in WaPo in Feb 08, and it is compelling.

Look what Spitizer wrote:

"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 the federal government was turning a blind eye.'

"Bush, Spitzer said 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."

http://www.gregpalast.com/elliot-spitzer-gets-nailed

-----------

Palast then goes on to talk about prosecutorial discretion, and how some crimes are more important than others, and how this kind of crime--a private indiscretion--is often ignored. And Palast doesn't mention something that has jumped out at me in this case--that the person whose "discretion" was no doubt the decider on this one, was Spitzer's bitter enemy, now USAG Mukasey.

I think we do have to realize that our government is now no different than a Mobster operation, writ large--complete with every sort of blackmail, spying, "controls" on people, threats, kneecappings, protection rackets, and grand theft on a scale that boggles the mind. Worse than the Mob. They just offed 1.2 million innocent people to get their oil. And they're seriously thinking of rubbing out a few democratic presidents in South America to steal that oil as well.

I think this Spitzer op-ed pretty much lays down the gauntlet. The puzzle is a smart guy like Spitzer leaving himself wide open as he did. Maybe he figured all the big players do it, why not him? But that's not how the Bush Junta works. Vice is mother's milk to them--the stuff that fuels obedience. They keep dossiers. And they're watching frigging everybody who can expose or curtail them in any way--spying on bank accounts, credit cards, phone calls, emails, hotel records, rental car records, private conversations in private rooms, with highly sophisticated spying technology and data mining programs. And if they can't get something on somebody, they'll manufacture something. We're talking the evilest dudes on mother earth here. The bad guys. C.H.A.O.S., for real.

And this "getting" of Spitzer smells to high heaven. Does it matter to anybody, REALLY, that this guy had a foible, of ancient lineage? It matters nothing. Nothing!

Millions of people are losing their homes! That's what matters! Our government is a criminal syndicate. That's what matters! And if you asked most Americans, do they care if Elliot Spitzer saw a prostitute, they would just laugh--bitterly. The frigging country is going down. What the hell is this? This is PEANUTS!

[TreasonousBastard]

11. What case? Palast still doesn't have a...

shred of evidence that Spitzer had any interest in tormenting Wall Street any more nor that anyone was out to get him. People write op-eds all the time and it's usually when they have nothing else they can do.

Go ahead and believe he was set up if it makes you feel better, though. We need more conspiracies around here.

[FogerRox]

19. Puh-leaze

[Deny and Shred]

9. I think you are underestimating the power of a stubborn Governor.

He makes appointments of those who set the agendas, including investigations. True he did back off the biggest Wall Street investigation, but I think his choice was career vs. a case that would have been a tough sell. He was a relentless prosecutor, and probably thought he could do even more as Governor.
They didn't give him a list, but RNC enemies DO have dossiers kept on them, they are surveilled and prosecuted when they mess up, or even if they don't a la Don Siegelman.
There are PLENTY of questionable transactions that ought ot be investigated. The pre-9/11 puts on Financial and insurance stocks by Krongard right near the top. That gets no play.

http://www.fromthewilderness.com/free/ww3/10_09_01_krongard.html

Anytime Roger Stone is possibly involved, I conclude that this wasn't just a routine look at some questionable transactions.

http://www.newsday.com/news/local/newyork/ny-nyhen125610573mar12,0,2250157.column

Nobody made Eliotdo it, but the timing is too perfect.

[TreasonousBastard]

12. And you're overestimating the power of a...

Governor who has managed to piss off everyone in Albany, including his own party. New York's Governor isn't as impotent as Texas' but not nearly as omnipotent as, say, New Jersey's.

NY's AG is elected, not appointed, and if anyone is going to investigate it would be Andrew Cuomo, not Spitzer who had enough on his plate already.

Nope. I just don't buy any conspiracy here-- the bust just happened to be serendipitous.

Sometimes a coincidence is just a coincidence. Even if it's not even a coincidence after all.

[ldf]

17. that's right

:sarcasm:

nothing to see here.

move along.

conspiracy is NOT a dirty word, here at the du.

[niyad]

7. thanks, I was wondering what they were trying to cover up

[Hannah Bell]

10. k & r

[jazzjunkysue]

14. Hear that? It's the sound of the other shoe, dropping. Thanks, Greg.

How does he always find the truth and get it out to the masses?

I hope he has good bodyguards.

[jazzjunkysue]

15. Stockmarket bailout. Savings and loan bailout. Insurance bailout. Airlines.

Mortgage banks bailout.

This is the fleecing of america, and they always find a way to make it look like they're mother theresa, bailing out the poor, hapless taxpayer.

Here's the strategy:
1. Loot an industry
2. Threaten the collapse of the economy, followed by the collapse of society
3. Loot the treasury and hand over zillions to private corporations
4. Take out more national debt with China to finance the government/wars/givebacks/whatever
5. Eliminate government programs for children, elderly, sick, uneducated, etc.

WHERE ARE THE STINKING "CONSERVATIVES" WHO CLAIM THAT WE'RE RUNNING A FREE-MARKET CAPITALIST ECONOMY?

This is corporate welfare. Where are the so-called conservatives?

[JPZenger]

22. Hillary had involvement with savings and loans - the disappearing files

When she worked for the Rose Law Firm as a corporate lawyer, Hillary did work for some savings and loans. There was an investigation of whether there was improper actions by the attorneys for the savings and loans. The files of the law firm that Hillary worked upon then went missing. They magically appeared on a table one week after the statute of limitations expired on sueing the attorneys.

[jazzjunkysue]

23. If not for DU, would anyone know this stuff?

:hug:

[Hart2008]

16. Bush, Sr., and the Carlyle Group had a hand in this!

Old man shrub had his hand in this mess too, since he is a big part of the Carlyle Group:

For Bear, the crisis started when market speculation grew that it might have to seize collateral -- mostly mortgage-backed securities worth next to nothing -- from the private equity firm Carlyle Group.

Carlyle runs a bond fund and has come under intense pressure during the past week from creditors demanding collateral to back their investments.

As speculation swelled in the market, investors, customers and lenders raced to withdraw their money or rescind their credit lines. By Thursday night, Bear Stearns Chief Executive Alan Schwartz said, the bank realized the withdrawals might outpace the bank's resources -- so it reached out to JPMorgan for help.
...
In backing up JPMorgan, the Fed dusted off a rarely used, Depression-era provision to provide loans. It also said it was ready to step in to fight an erosion of confidence in the nation's largest financial institutions.
...
JPMorgan, the nation's third-largest bank, has been hurt far less by the mortgage mess than other financial institutions. It will provide secured loans to Bear for four weeks -- insured, in essence, by the Fed.

http://biz.yahoo.com/ap/080314/bear_stearns.html?.v=21

[bobthedrummer]

18. Two more links that seem to be part of the same chain...

"Follow the Money? God forbid. Why was the cashing out of billions of dollars of dollars just before the 9/11 attacks never investigated?" by Jim Hogue (1-29-2008 Baltimore Chronicle)
http://baltimorechronicle.com/2008/012908Hogue.shtml

"Spitzer taken down by Mossad?" by Jerry Mazza (3-14-2008 OnlineJournal)
http://onlinejournal.com/artman/publish/article_3065.shtml

:think:

[HamdenRice]

20. This is NOT a bailout of predatory lenders at all

Greg Palast is a good reporter when it comes to politics, but seems to have nary a clue on economics.

To the extent that the current crisis in mortgage backed securities (mbs) is a result of sub prime loans, those loans were made ("originated" in industry terms) by one set of banks and mortgage companies, and then sold into the general market.

At this point, the crisis is more general. As the housing bubble has burst, even prime loans are going into default threatening all kinds of mbs.

Mbs were sold by originators to other banks and financial institutions that had nothing to do with predatory lending. In fact, mbs were considered so safe, that they were used almost as a cash substitute, or more precisely, a substitute for treasury bills.

When the industry found that many mbs weren't performing as a result of foreclosures, the entire banking industry stopped accepting mbs for settlement of inter bank loans and transactions.

That has caused the entire banking system to come to a grinding halt. There is no "liquidity," which means that banks aren't engaging in transactions with each other. As an analogy, imagine if the government announced that ten percent of all five and ten dollar bills was fraudulent. Grocery stores and gas stations would stop accepting not only fraudulent fives and tens, but all fives and tens (because they wouldn't be able to tell which are bad), and commerce would grind to a halt.

That's a liquidity crisis. That's what's happening in the financial system now.

In order to get bank transactions moving again, the Fed has agreed to act as an intermediary, lending money to banks, and taking mbs as collateral for those loans. It is not a bailout -- yet. We won't know that for many months -- ie if and when liquidity returns to the banking sector. If the banks don't fail on those loans, moreover, the Fed will never have to take any bad mbs collateral for payment.

Last time the U.S. did something like this it was the Treasury department, not the Fed. The Treasury agreed to buy up Mexican bonds that were perceived to be worthless, and re-issue them.

Once the panic ended, it turned out that the Treasury Department actually made money on that so-called bailout.

[JPZenger]

21. We should hire a hooker to stand in front of Bear Stearns

We should hire a hooker to stand in front of Bear Stearns headquarters so this can get some attention.

Bear Stearns specialized in high risk hedge funds. If you want the high profits that came from high risk in the past, you need to accept the losses without a government bailout. It is particularly aggravating that this bailout involves predatory mortgages.

The Fed guaranteed the loan to Bear Stearns, but people say they still don't know if the company will survive. How much risk is there to tax payers, if they have to bail out the Federal Reserve?

[marvinsmith]

24. I agree.

Also, financial times and other reliable economic new sources
are predicting a series of bank failures.  Stearns was the
first of what financial analysts say will be many.  It will
certainly be interesting to watch.

I have no idea why we would print money to bail out
speculators who made bad gambling choices.

An interesting thing connecting Spitzer to the subprime
mortgage crisis in NY is that he was in charge of two agencies
dealing with the crisis.  At this point with his resignation,
no one is watching the pot.

The fall out should be fascinating.