Bankers' Multi-Trillion-Dollar Crime Scene

New Financial Rules: Major Changes for Big, Small

June 16, 2009

AP - From simple home loans to Wall Street's most exotic schemes, the government would impose and enforce sweeping new "rules of the road" for the nation's battered financial system under an overhaul proposed Wednesday by President Barack Obama.

Aimed at preventing a repeat of the worst economic crisis in seven decades, the changes would begin to reverse a determined campaign pressed in the 1980s by President Ronald Reagan to cut back on federal regulations.

Obama's plan, spelled out in an 88-page white paper, would do little to streamline the alphabet soup of agencies that oversee the financial sector. But it calls for fundamental shifts in authority that would eliminate one regulatory agency, create another and both enhance and undercut the authority of the powerful Federal Reserve.

The new agency, a consumer protection office, would specifically take over oversight of mortgages, requiring that lenders give customers the option of "plain vanilla" plans with straightforward and affordable terms. Lenders who repackage loans and sell them to investors as securities would be required to retain 5 percent of the credit risk — a figure some analysts believe is too low.

It also would make the Fed the regulator of some of the largest and most interconnected institutions in the financial world — an attempt to supervise companies that are so big that if they fail they could do harm to the economy. A separate council, chaired by the Treasury secretary, would watch over the financial system to flag risky new products or trends.

In all, the Obama's broad proposal cheered consumer advocates and dismayed the banking industry with its proposed creation of a regulator to protect consumers in all their banking transactions, from mortgages to credit cards. Large insurers protested the administration's decision not to impose a standard, federal regulation on the insurance industry, leaving it to the separate states as at present. Mutual funds succeeded in staying under the jurisdiction of the Securities and Exchange Commission instead of the new consumer protection agency.

Obama cast his proposals as an attempt to find a middle ground between the benefits and excesses of capitalism. "We are called upon to put in place those reforms that allow our best qualities to flourish — while keeping those worst traits in check," Obama said.

The president's plan lands in the lap of a Congress already preoccupied by historic health care legislation, consideration of a new Supreme Court justice, and other major issues. Still, Obama has set an ambitious schedule, pushing lawmakers to adopt a new regulatory regime by year's end...

Obama's proposal would require the Fed, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury Department approval before extending credit to institutions in "unusual and exigent circumstances," a change designed to mollify critics who say the Fed should be more accountable in exercising its powers as a lender of last resort.

But the proposal also would do away with a restriction imposed on the Fed in 1999 when Congress lifted Depression-era restrictions that allowed banks to get into securities and insurance businesses. The Fed, as the regulator for the larger financial holding companies, had been prohibited from examining or imposing restrictions on those firms' subsidiaries. Obama's proposal specifically lifts that restriction, giving the Fed the ability to duplicate and even overrule other regulators.

At the same time, the new consumer agency would take away some of the Fed's authority.

Fed defenders argue that none of the major institutional collapses — AIG, Bear Stearns, Lehman Bros., Merrill Lynch or Countrywide — were supervised by the Federal Reserve. Critics argue the Fed failed to crack down on dubious mortgage practices that were at the heart of the crisis...

Obama would also place hedge funds and derivatives, the complex financial instruments traded privately in a multitrillion-dollar market and blamed for hastening the financial crisis, under government supervision. The proposal would give the SEC oversight of hedge funds and other private pools of capital, including venture capital funds...

House Grilling Bank CEOs on Bailout Spending

February 11, 2009

AP - Facing a disgusted public and Congress, bank CEOs agreed with demands for greater accountability Wednesday in the first testimony on how they're spending money from the taxpayer-funded $700 billion bailout.

"Both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," John J. Mack, head of Morgan Stanley, told the House Financial Institutions Committee. Added JP Morgan Chase & Co.'s Jamie Dimon: "We stand ready to do our part going forward."

In general, the eight top bankers appearing before the panel were contrite and conceded they have work to do to win over a bitter public and an exasperated Congress. They had little choice but to acknowledge as much, given intense anger and anxiety as the troubled financial system continues to spiral downward in an ever-worsening recession.

Taxpayers are furious with big banks that benefited from the federal bailout designed to get credit moving again, but which also spent lavishly on executive bonuses, company retreats and office redecorating. Lawmakers also are feeling the heat for signing off on the bailout package plan last year...

Treasury Unveils New Bank Rescue, Senate Vote Near

February 10, 2009

AP - In a powerful one-two punch, the government moved on Tuesday to marshal $2 trillion or more in taxpayer and private money to help thaw credit markets, slow painful layoffs, and revive the collapsing national economy... That plan includes a public-private partnership of over $1 trillion to help strengthen banks. Added to the congressional stimulus plan, which aims to get Americans spending again, the total of the combined efforts could easily pass $2 trillion...

Geithner Pledges Forceful Attack on Banking Crisis

February 10, 2009

AP - Treasury Secretary Timothy Geithner says the new administration will wage an aggressive two-front battle against the worst financial crisis in seven decades, while the Federal Reserve expands a key lending program to up to $1 trillion. The efforts are part of the government's major overhaul of the widely criticized financial rescue program.

The Fed says it will expand the size of a key lending program to as much as $1 trillion from $200 billion. The program, which has yet to begin operations, is designed to boost resources for consumer credit and small business loans. The Fed says the program also is being expanded to cover the troubled commercial real estate market and certain residential mortgages.

Deutsche Bank Rejects Church Charge That Money Was Its 'God'

December 27, 2008

Deutsche Bank reacted angrily yesterday after Germany's senior Protestant bishop accused Josef Ackermann, its chief executive, of turning money-making into a form of "idolatry". In a rare and testy public exchange between a prominent German financial institution and a religious leader, Deutsche Bank dismissed as "inappropriate" the remarks by Bishop Wolfgang Huber, chairman of Germany's evangelical church council.

Germany's largest bank was upset by the timing of the personal attack, made in a newspaper interview published on Christmas eve, as well as the substance of the censure. Criticism of bankers from German politicians and church leaders is far from new but the complaints intensified and became more mainstream after the financial system almost failed in the wake of the mid-September Lehman Brothers collapse.

Swiss-born Mr Ackermann, well known in Germany for setting his bank the goal of earning a pre-tax return on equity of 25 per cent, has long been a popular target as the globally-active Deutsche Bank is often seen as having special, domestic responsibilities. But this attack appears to have taken the bank aback.

Speaking to the Berliner Zeitung newspaper, Bishop Huber argued that bankers had a duty to look beyond the short term and to ensure stability: "Never again should a Deutsche Bank chief executive set a profit goal of 25 per cent." Such goals drove up profit expectations to unsustainable levels and amounted to "a form of idolatry", he said. "In the current circumstances, money has become a god."

The bishop highlighted a widespread view in Germany that the US had largely caused the financial market crisis by encouraging excessive borrowing. He said George W. Bush, US president, and Alan Greenspan, the former US Federal Reserve chairman, had "deluded" ordinary people.

Deutsche Bank might have felt particularly aggrieved by the bishop's attack because it has not taken advantage of the emergency support made available by Berlin to prop up the banking system. Others who have attacked bankers in Germany include Horst Köhler, the country's president, who in May described global financial markets as "a monster" that "must be put back in its place".

In his Christmas Eve address to Germans, Mr Köhler said the current crisis should be used as a chance to re-order the economy so that capital "serves" society.

IRS to Help Homeowners Refinance or Sell Homes

December 16, 2008

AP - The Internal Revenue Service said Tuesday it will try to make it easier for homeowners in financial straits to refinance or sell their homes. The plan announced by IRS Commissioner Doug Shulman would speed up a process where financially distressed homeowners may request that a federal tax lien be made secondary to liens by the lending institution that is refinancing or restructuring a loan.

Taxpayers will also be able to ask the IRS to discharge, or remove, its claim to a property in certain circumstances where the property is being sold for less than the amount of the mortgage lien. "We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today," Shulman said, stressing that "we don't want the IRS to be a barrier to people saving or selling their homes." He said the program will focus on those people who ordinarily pay their taxes in full but "because of these extraordinary times are getting behind in their tax payments."

A tax lien occurs when the government makes a legal claim to property as security or payment for a tax debt. The government thus notifies other creditors that it has a claim on the property. The IRS can rule that its lien will be secondary to another lien, such as that of a lending institution, if it determines that taking a subordinate position will ultimately help with the collection of the tax debt. Taxpayers or their representatives may apply for a "subordination" of a tax lien if they are refinancing or restructuring their mortgage.

Lending institutions generally want their lien to have priority on the home being used as collateral.

Taxpayers may also request a certificate of discharge if they are giving up ownership of the property at an amount less than the mortgage lien if the mortgage lien is senior to the tax lien. A discharge does not relieve a person of the tax that is owed, but it does remove the lien on a particular property such as a home. The IRS would still maintain its lien on other possessions of the taxpayer.

Normally it takes about 30 days to rule on a request for a discharge or subordination of a tax lien, but Shulman said the IRS will work to speed up that process so there would be no delays for people trying to obtain new mortgage loans. The IRS urged people to contact the agency's Collection Advisory Group early in the home sale or refinancing process.

The agency said it issues more than 600,000 federal tax lien notices annually and that currently there are more than 1 million outstanding tax liens tied to both real and personal property.

Banksters Refuse to Honor Bloomberg FOIA Request

December 12, 2008

Infowars - As Bloomberg reports today, the Federal Reserve has refused “to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.” On November 7, Bloomberg filed a Freedom of Information request to disclose the recipients of more than $2 trillion of “emergency loans” from U.S. taxpayers and the assets the central bank is accepting as collateral, but the private banker syndicate has told Congress and the American people to go fish.

Bloomberg notes that the Freedom of Information Act requires federal agencies to make government documents available to the press and the public. However, the Fed is not a federal agency, it is a cartel of private bankers. It is a consortium of twelve private banks which are not part of the United States government and does not answer to it. The Fed controls our monetary system and acts at the behest of large national and international private banks. 100% of its shareholders are private banks and none of its stock is owned by the government.

Expecting a cartel of private bankers to respond to a FOIA is to say the least an exercise in futility.

Perpetuating the scam and the illusion, the Fed tells us they are subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. “As we know from watching the business news, ‘oversight’ basically means that Congress gets to see the results when it’s over,” writes Ellen Brown. “The Fed periodically reports to Congress, but the Fed doesn’t ask; it tells.”

In response to the Bloomberg FOIA, the Fed said it is “allowed to withhold internal memos as well as information about trade secrets and commercial information,” in other words it does not owe the American people the transparency it initially promised before the purse strings were loosened. Fed mob boss Ben Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency.

Recall Nancy Pelosi declaring a congressional version of martial law in order to get the banker giveaway bill passed, as revealed by Rep. Michael Burgess on the floor of the House. Rep. Brad Sherman repeated Burgess’ claims. “Many of us were told in private conversations, that if we didn’t pass this bill on Monday, the sky would fall, the market would drop two or three thousand points, another couple thousand the second day, and a few members were even told that there would be Martial Law in America if we voted no.”

“We just witnessed a full week of Wall Street experts on television threatening the American people, and President Bush threatening Congress, claiming that ‘to do nothing’ will result in a economic crisis — possibly a depression,” Patrick Henningsen wrote on October 3. “So constituents called their Congressional representatives telling them to ‘do something’. No one is entirely sure what that something should be, so most Congressmen and women guessed that ‘something’ must be a $700 Billion ‘get-out-of-jail card’ for the bankers.”

As it now stands, that paltry $700 billion figure has ballooned to an astounding $8.5 trillion, a figure that represents almost 60 percent of the nation’s estimated gross domestic product. As the San Francisco Chronicle admitted, the “final cost won’t be known for many years.” Most of the money, about $5.5 trillion, will be printed by the Fed crime syndicate on its fantasy printing presses and loaned to the government. Our children, grand children, and great-great grand children will be on the hook to pay off this stellar debt — currently $10 trillion dollars, projected to go to $11 trillion or more in two years — for decades to come. It’s a dream come true for the international bankers.

“There has to be something they can tell the public because we have a right to know what they are doing,” Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press, told Bloomberg. “It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit and our financial system has completely collapsed.” In fact, the banker debt scam is already crashing the economy, as planned.

“The fall of the US economy will have a domino effect and bring about a worldwide depression that will further depress the US economy and bring a full fledged inflationary depression worse than the great depression of the 1930’s. When this happens most companies will go bankrupt and will be nationalized,” notes Don Koenig. “When the US economy goes down it will take the world economy with it. This economic collapse will cause great civil unrest all over the world, cities will be filled with riots and later with troops.”

It’s the final stage of the bankster take-over, the last chapter of a plan to turn the world into a hellish corporatized slave gulag based on the China model.

It really is naive to believe the Fed will respond to a mere FIOA request and reveal the details of its plan to crash the global economy. Bloomberg’s lawsuit against the Fed is commendable, however it is predicated on a false and dangerous assumption: that the Fed is a government institution answerable to Congress and the American people. It is not, although the illusion is alive and well.

U.S. Commits $800 Billion More to Bail Out Consumer Credit and Mortgage Market

November 27, 2008

World Socialist Web Site - U.S. Treasury Secretary Henry Paulson announced Tuesday another extension of the Bush administration’s bailout of the financial system, committing $800 billion towards lending programs aimed at preventing the collapse of the home mortgage and consumer credit market. This marks the first time that the Treasury and the Fed have ever intervened to finance consumer debt.

The latest programs push the total size of the direct and indirect financial obligations assumed by the federal government to more than $8 trillion. Paulson emphasized that the new lending measures were merely a “starting point” and could soon be extended to cover other debt, including commercial mortgage-backed securities, a move that would further increase the enormous public resources that have been diverted to protecting the interests of the financial oligarchy.

The new measures, announced a day after the $249 billion bailout of Citigroup, underscore both the depth of the crisis wracking the financial markets and the increasingly disoriented response by the authorities in Washington. Just last week, Paulson told Congress that the financial system had been stabilized by the massive capital injections into the markets engineered by the Bush administration. His actions this week belie such claims.

The Federal Reserve is to create a Term Asset-Backed Securities Loan Facility (TALF) that will lend up to $200 billion to holders of high-grade securities backed by assets including loans to small businesses, students, credit card holders, and car owners. The TALF is backed up by $20 billion from the Treasury’s $700 billion bailout fund that was authorized by Congress in September.

The other aspect of Paulson’s latest program is a $600 billion mortgage lending fund. The Fed is to buy up to $500 billion of mortgage bonds guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae, and will purchase another $100 billion of the mortgage finance companies’ debt securities—pools of mortgages bundled together and sold on the financial markets.

None of these measures address the root causes of the increasingly severe economic crisis. Even if the programs make credit more accessible and somewhat less expensive, the ability of millions of ordinary working people to cover their debts amid rising unemployment and declining real wages will remain in doubt.

The immediate impact of Paulson’s announcement was to trigger a wave of mortgage refinancing by indebted home owners...