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Seriously, read this... mortgage bail out...

LordOpie

MOTHER HEN
Oct 17, 2002
21,027
3
Denver
Eliot Spitzer and the $200 billion dollar bail-out
By Greg Palast


Macon, Ga. - 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 it's 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 chuck 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 a month 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. 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 hardy – it was OK now to steer'm, fake'm, charge'm and take'm.

But there was this annoying party-pooper. 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 Grinnings, 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 poop 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 bail-out. 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 coinkydink! – 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, said Spitzer 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.
draw your own conclusions, but it's really hard to dismiss it.

<tin.foil.hat>on</tfh>
 

ohio

The Fresno Kid
Nov 26, 2001
6,638
4
SF, CA
We are being ****ed harder than we've ever been ****ed before. Like goddamn Idi Amin hard.
 

3D.

Monkey
Feb 23, 2006
899
0
Chinafornia USA
I read the exact article on the 14th, I refrained from posting it ‘cause I didn’t feel like battling with complacents that don‘t like “believing my little dances“.;)

thanks, rep passed

PS- you found that at, uh... hmm... well... you’re digging around in the tin foil blogs aren’t you? I won’t tell
 

Changleen

Paranoid Member
Jan 9, 2004
9,900
5
Hypernormality
http://www.nytimes.com/2008/03/17/business/17fed.html?ref=worldbusiness

Hoping to avoid a systemic meltdown in financial markets, the Federal Reserve on Sunday approved a $30 billion credit line to engineer the takeover of Bear Stearns and announced an open-ended lending program for the biggest investment firms on Wall Street...

...The moves amounted to a sweeping and apparently unprecedented attempt by the Federal Reserve to rescue the nation’s financial markets from what officials feared could be a chain reaction of defaults.
http://www.nytimes.com/2008/03/17/world/asia/17market.html?ref=world

Major Asian stock markets fell sharply in early trading on Monday as pessimism continued to spread despite the Fed’s dramatic moves over the weekend, sending Tokyo’s benchmark index to a three-year low...

...Elsewhere in Asia, South Korea’s benchmark Kospi index was also down 2.4 percent. Australia’s S&P/ASX 200 index fell 2.4 percent, and in New Zealand, the NZX 50 index dropped 1.9 percent.

The declines in Tokyo came even as the Japanese central bank, the Bank of Japan, moved to shore up financial markets by injecting $4.1 billion into short-term money markets.

Asian stocks have also been hurt by the weakness of the dollar, which erodes the value in local currencies of overseas profits and forces big exporters like Toyota and Sony to raise prices in foreign markets.
:plthumbsdown: Ruhh rohh shaggy.
 

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,007
149
The Cleft of Venus
Looks like Bear Stearns is being bought out by J.P.Morgan, using money loaned by the fed.

So taxpayers now own an investment firm at a cost of $30B...plus the bailout money earlier in the week....

lovely...
 

Westy

the teste
Nov 22, 2002
38,192
4,978
Sleazattle
We are being ****ed harder than we've ever been ****ed before. Like goddamn Idi Amin hard.
And somebody swapped our


with



I love how the neo-cons have basically turned from pro free market to socialism for the wealthy/corporate.
 

Echo

crooked smile
Jul 10, 2002
11,818
1
Slacking at work
Normally, something like this would cause me to hate the Bush administraton even more. But I've truly reached the point where I could not possibly hate the Bush administration any more.
 

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,007
149
The Cleft of Venus
Normally, something like this would cause me to hate the Bush administraton even more. But I've truly reached the point where I could not possibly hate the Bush administration any more.
but then the Fed operates on it's own for the most part...
 

$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
ok, don't know if the spitzer-bush nexus is valid (if so, disappointing to say the least), but this is at the risk of being dismissed/undone when he makes the intellectually dishonest claim that the sub-prime lending business is racially biased when high-income minorities have more proportionate loans than similar income whites ("Dark-skinned borrowers aren't stupid – they had no choice."). all things being equal - and of course they're not - the whole system is based upon credit rating. now, because cuntrywide & their ilk set up shop in low-income (read: higher risk) neighborhoods, and these high-income blacks are still living there, and banking there, limits their choice within these geographically convenient institutions, not absolutely.

are we to think the malt-liquor industry is also racist b/c more of it is offered - and purchased - in lower income neighborhoods?

as far as the main thrust of the article, there are 2 possibilities: it's exactly as palast states, and therefore repugnant to the highest degree, or he's picking & choosing which facts make for a sensational balm for his readership.
 

dante

Unabomber
Feb 13, 2004
8,814
9
looking for classic NE singletrack
Dunno, I think the closest I come to believing that conspiracy is that Spitzer made a LOT of enemies going after the big guys on wall street. As a result, there were a lot of guys looking to take him down, and when a couple thousand dollars changed hands, those same people kept digging, and digging, and digging, until they got him. Nobody cared that Vitter's name was in the DC Madam's Little Black Book, and yet there's a huge investigation into Spitzer?
 

$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
i don't believe vitter violated the mann act by wearing diapers, only himself
 

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,007
149
The Cleft of Venus
Iraq? where's that?
dont worry, you arent alone with that...

http://www.miamiherald.com/776/story/458872.html

Statistics clearly illustrate the diminished attention. For the first 10 weeks of the year, the war accounted for 3 percent of television, newspaper and Internet stories in the Project for Excellence in Journalism's survey of news coverage. During the same period in 2007, Iraq filled 23 percent of the news hole.

The difference is even more stark on cable news networks: 24 percent of the time spent on Iraq last year, just 1 percent this year.
 

3D.

Monkey
Feb 23, 2006
899
0
Chinafornia USA
If true that he was slated for the meat grinder, I’m sure he was aware of it, and he’s a dumb ass for ordering take-out sushi so often
 

ohio

The Fresno Kid
Nov 26, 2001
6,638
4
SF, CA
Spitzer was taken out because he was an arrogant, hypocritical asshole (that was doing great work). He is receiving unique treatment, but not because of any specific investigation.

I also trust Paterson, based on what I've heard so far, to continue any promising investigations with nearly as much rigor as Spitzer, which further reinforces that the two aren't connected.

However, I do believe that the federal government is ****ing the American populace on an unprecedented scale. It has nothing to do with Spitzer and everything to do with corporate interests.
 

Changleen

Paranoid Member
Jan 9, 2004
9,900
5
Hypernormality
I find it quite interesting that whilst the US populace as a whole finds the idea of a 'world government' so abhorrent, they are doing more than any other population to cause a situation where they are ruled by one, and 'even worse' one made up on extra-national interests.

I think the neo-cons have no blinkered preference as to nationalistic pretences, they want to hasten corporate and market control. In it's purest sense I kind of agree, but the people factor makes me want to puke every time.
 

Silver

find me a tampon
Jul 20, 2002
10,846
0
Orange County, CA
Looks like Bear Stearns is being bought out by J.P.Morgan, using money loaned by the fed.

So taxpayers now own an investment firm at a cost of $30B...plus the bailout money earlier in the week....

lovely...
I don't think you have any understanding as to what happened.

The taxpayers don't own anything, except an obligation to JP Morgan to cover losses on the crappiest of the crap that Bear had.
 

SPINTECK

Turbo Monkey
Oct 16, 2005
1,370
0
abc
I don't understand why this is so suprising, it's the same thing that happened to the Savings and Loan institutions when Bush SR. was VP.

Mark my word, in 16 years this will be happening again at the end of Jeb's term.

Great article, anyone have the actual link?
 

LordOpie

MOTHER HEN
Oct 17, 2002
21,027
3
Denver
I don't understand why this is so suprising, it's the same thing that happened to the Savings and Loan institutions when Bush SR. was VP.
Did Bush Sr. do all that PLUS have the FBI look into a Gov's activities cuz that Gov was going to blow the whistle?
 

SPINTECK

Turbo Monkey
Oct 16, 2005
1,370
0
abc
Bush senior was head of the CIA, my answer to that would be hell yeah, but who remembers.

Your point is dead on though and people need to see the Spitzer connection.