The $200 billion bail-out for predator banks and Spitzer charges are intimately linked By Greg Palast
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 its 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 chunk 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 monthly 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. The 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 hearty – it was OK now to steer’m, fake’m, charge’m and take’m.
But there was this annoying party-****er. 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 Grinning’s, 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 **** 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 bailout. 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 coinky****! – 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 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.
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 in 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.’
************ 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.
This message has been edited. Last edited by: iperson,
I am a proud heart-bleeding tree-hugging latte-sipping urban-dwelling elitist progressive liberal.
Is There a Batterer in the US Senate? By Glenn Sacks
There is a batterer in the United States Senate.
This abuser's spouse has suffered repeated violent attacks, yet there has been no condemnation of this Senator's violence. Ironically, this Senator, who is one of the most controversial people in American public life today, has somehow escaped reproach for the one thing that both detractors and admirers should agree is genuinely inexcusable--domestic violence.
Who is this perpetrator of domestic violence? New York Senator Hillary Clinton.
The evidence against Ms. Clinton is strong. According to Hillary's admiring biographer Gail Sheehy, author of Hillary's Choice, one of the domestic assaults upon Bill Clinton occurred in 1993, when Hillary slashed Bill Clinton's face with her long fingernails, leaving a "mean claw mark along his jawline."
The incident was first explained as a "shaving accident" and a subsequent attempt was made to pin the blame on Socks the cat. Because of the gouge's size, neither explanation was accepted by observers. Dee Dee Myers, the White House spokeswoman at the time, later explained to Sheehy that it had been singer Barbara Streisand's visit to the White House that had sparked Hillary's jealous, violent rage.
According to Christopher Andersen, author of Bill and Hillary, Hillary also assaulted Bill on August 13, 1999, after the Monica Lewinsky revelations. Andersen writes:
"...the President...weeping, begged her forgiveness. Much of what transpired next between Bill and Hillary Clinton was plainly audible to Secret Service agents and household staff members down the hall. In the past, Hillary had thrown books and an ashtray at the President -- both hitting their mark...Hillary rose to her feet and slapped him across the face -- hard enough to leave a red mark that would be clearly visible to Secret Service agents when he left the room.
" ‘You stupid, stupid, stupid *******,' Hillary shouted. Her words, delivered at the shrill, earsplitting level that had become familiar to White House personnel over the years, ricocheted down the corridor."
Sheehy's account of the incident is similar, adding that Hillary's friend Linda Bloodworth-Thomasen, who was staying with her husband in the private quarters nearby, "thought it was great that Hillary ‘smacked him upside the head.' "
The US Department of Justice's Office for Victims of Crime classifies these types of attacks--scratching, slapping, hitting, throwing objects, and inflicting bruises or lacerations--as "physical abuse" and domestic violence.
Bill Clinton handled the incidents in a manner reminiscent of the way many female victims of domestic violence did in the pre-feminist era. Ashamed, he tried to cover the incidents up, even ordering his representatives to publicly alibi his wife's violence. He probably blamed himself for "provoking" her, as if marital infidelity warrants physical assault. And he almost certainly never considered calling the police or formally charging his abuser.
The public's reaction has been of the "what did he do to set her off?" variety--a "blame the victim" mentality that would immediately be recognized and condemned were the genders of the perpetrator and victim reversed. Media coverage of the incidents has almost entirely consisted of jokes on late night TV and talk radio. In narrating these assaults, neither Sheehy nor Andersen mention ‘domestic violence' or even write disapprovingly of Hillary's attacks. Needless to say, the reaction would be quite different were it the president's wife who appeared in public with lacerations on her face.
Nor were the incidents mentioned during Hillary's 2000 Senate campaign. In fact, it was former New York Mayor Rudy Giuliani who was publicly pilloried as a bad spouse for his failing marriage, while the fact that his electoral opponent was a known abuser merited little or no mention.
The Clinton incidents demonstrate that, despite the overwhelming body of research which shows that men and women initiate and engage in domestic violence equally, the public still largely holds the outdated and discredited view that domestic violence is synonymous with wife-beating.
Ironically, Senator Clinton herself has spoken out on domestic violence on many occasions, and has supported the Family Violence Prevention Fund's $100 million anti-Domestic Violence campaign. The campaign's slogan is "There's No Excuse for Domestic Violence."
What's Senator Clinton's excuse?
...................................................................................................................................... impossibility is a word found only in the dictionary of fools
...................................................................................................................................... impossibility is a word found only in the dictionary of fools
...................................................................................................................................... impossibility is a word found only in the dictionary of fools
I am not sure about the Spitzer/bank connection. But you are right in many aspects, the banks/mortgage company sells the house, then jacks up the price later on. THe buyers cannot afford and the companies will not renegogiate. Buyers leave the house, feds don't help. Mortgage companies gets the house, then cannot resell it (sorry), then the start loosing money, then feds uses tax payers money to bail them out. Sure sounds like a lot of protecting personal interest is going on.
quote:
Originally posted by iperson: No I prefer it at the top Pinky. It doesn't concern Spitzer only, also the CROOK BUSH and his cronies.
Very thoughtful, THoughtful. Yes indeed, this is exactly the situation. Nail on the head. Core of the matter. Hit the jackpot. However else you can say the same.
I am really worried about the future of this economy and the US. Severe depression looms on the horizon. Have you seen this:
Originally posted by iperson: Very thoughtful, THoughtful. Yes indeed, this is exactly the situation. Nail on the head. Core of the matter. Hit the jackpot. However else you can say the same.
I am really worried about the future of this economy and the US. Severe depression looms on the horizon. Have you seen this:
This is where America is heading right now: Third World Shanty Town.
Already happening as you point out and will continue to spread. USA continues to bury head in sand.
New Orleans' Homeless Rate Swells
By Rick Jervis,USA Today Posted: 2008-03-17 10:18:01
(March 17) -- The homeless population of New Orleans since Hurricane Katrina has reached unprecedented levels for a U.S. city: one in 25 residents.
An estimated 12,000 homeless accounts for 4% of New Orleans' estimated population of 302,000, according to the homeless advocacy group UNITY of Greater New Orleans. The number is nearly double the pre-Katrina homeless count, the group says.
Hundreds of homeless people sleep beneath Interstate 10 in New Orleans each night. An estimated 12,000 people in the city are homeless, nearly double the count from before Hurricane Katrina struck.
The New Orleans' rate is more than four times that of most U.S. cities, which have homeless populations of under 1%, said Michael Stoops, executive director of the Washington-based National Coalition for the Homeless. The cities with homeless rates closest to that of New Orleans are Atlanta (1.4%) and Washington (0.95%), he said.
A USA TODAY 2005 survey of 460 localities showed one in 400 Americans on average were homeless.
New Orleans Mayor Ray Nagin appealed to federal lawmakers this past week to provide funds and housing vouchers to help the city's homeless problem.
The percentage of New Orleans' homeless is one of the highest recorded since U.S. housing officials began tracking homelessness in the mid-1980s, said Dennis Culhane, a University of Pennsylvania professor who has studied homeless trends for more than 20 years.
"In a modern urban U.S. city, we've never seen it," he said of New Orleans' homeless rate.
Many of the homeless are Katrina evacuees who returned to unaffordable rents or who slipped through the cracks of the federal system designed to provide temporary housing after the storm, said Mike Miller, UNITY's director of supportive housing placement
More StoriesThere are also out-of-state workers who came for the post-Katrina rebuilding boom but lost their jobs, and mentally ill residents in need of services and medication, he said. Many of the city's outreach homeless centers and public mental health services have been closed since Katrina.
Nagin has pledged to move the homeless from encampments around the city to more permanent shelters. Last year, the city and humanitarian groups found shelter for nearly all of the 250 people living in an encampment across from City Hall.
Nagin has suggested reinstating a city ordinance that would make it illegal to sleep in public places. Homeless advocates say the law would just crowd the jails.
"It just shows a real disconnect" between the city and the problem, said James Perry, head of the Greater New Orleans Fair Housing Action Center. "The answer is not going to be jails."
Wow.... what a solution and idea.. Kick em while they are down instead of finding a solution to the problem.
Yup, thanks for the article 4now. But I also want to point out, the situation is the product of GREED. The greed of capitalism, the same one that republicans seem to worship. Capitalism uber alles, right? Profit is all that matters, yet they keep talking about how moral they are.
Well, at least Bush has finally KILLED the Republican Brand once and for all.
ps. there are a lot more vidoes on youtube on the homelessness. As you know this month 60 thousand homes were foreclosed. They all live now in tents, and there are more foreclosures coming, and more people out in the street.
I am a proud heart-bleeding tree-hugging latte-sipping urban-dwelling elitist progressive liberal.
not everybody whose home was foreclosed on lives in a tent. there are many options for some and no options for others sadly. hence the new homelessness.
Homelessness is a growing trend with no solution in sight. This is a much bigger issue than congress being preoccupied with giving illegals path to greencard and citizenship.
Write your congressman to take action on plight of the usa citizen homeless problem in america.
Give them an amenesty and new ticket to life.
check out article of homelessness in the Klinus thread about 744,000 homelessness. It is about how the homeless are living in the Philadelphia airport.
I understand it may be a different problem as you understand it, but why make it so complex. Ya know 4ever, what I have come to conclude is that life is really simple. Reality is reality. Only people try to make things complicated. I don't know why we are inclined to speak in paraboles, metaphores, and spin the wool over and over, as if to appear so much evolved, and on a higher intellectual plane. While when you look at things, reality is really simple. Things are really simple. Homelessness is homelessness, no matter who is homeless, why they are homeless, and how they become homeless. Please don't make it complicated because it isn't.
That very same aspect of our minds turning the wheels in all conceivable directions make a very good marketing tool. Ya believe that when you buy a $29.99 tshirt from Abercrombie & Fitch as opposed to a tshirt from WalMart, gives ya some kind of a higher plane good feeling. But the reality is a t-shirt is still a t-shirt. An apple bought at Whole Food Market is not better than bought at WalMart. It is still an apple. Or am I missing some higher plane rationing? I doubt it.
On the same line of thinking. As in reality is reality. Republicanism equals false pride (better than everyone else in the world), greed (profit uber alles), and pure Darwinism. As does pure socialism. Both are prone to extremism, and an eventual demise. What now? What's going to happen is a purification of the whole systems of thinking, approaching things, qualifying and setting values on reality. In a sense it is good for America. Purging is good, of all that is stagnant, stale and rottening. It is all going to go out the window, and we will build a new society, a new world. I hope it is going to be a sustainable, green world, with respect to mother nature's gifts, and to all people on the planet.
I am a proud heart-bleeding tree-hugging latte-sipping urban-dwelling elitist progressive liberal.
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Kick em while they are down instead of finding a solution to the problem.