Tag Archives: MF Global

U.S. banks are not sound, says federal report

Every year since 1977, three powerful agencies — the Federal Reserve Board of Governors, the FDIC (Federal Deposit Insurance Corporation), and the Office of the Comptroller of the Currency — undertake a review of America’s banks, specifically of their large syndicated bank loans — all loans of $20 million or greater that are shared by three or more financial institutions.
The annual review typically starts in March, with the results published around the beginning of the third quarter as the Shared National Credit Review (SNCR).
broken-piggy-bank
According to international investor Simon Black of Sovereign Man, this year’s SNCR was published last week, which says U.S. banks are not sound:

Late last week, a consortium of financial regulators in the United States, including the Federal Reserve and the FDIC, issued an astonishing condemnation of the US banking system.

Most notably, they highlighted “continuing gaps between industry practices and the expectations for safe and sound banking.”

This is part of an annual report they publish called the Shared National Credit (SNC) Review. And in this year’s report, they identified a huge jump in risky loans due to overexposure to weakening oil and gas industries.

Make no mistake; this is not chump change.

The total exceeds $3.9 trillion worth of risky loans that US banks made with your money. Given that even the Fed is concerned about this, alarm bells should be ringing.

Simon Black explains that in banking, there are three primary types of risk from the consumer’s perspective:

1. Fraud Risk: Is your bank stealing from you?

The case of MF Global shows that fraud in the Western banking system is clearly not zero. MF Global was once among the largest brokers in the United States. But in 2011 it was found that the firm had stolen funds from customer accounts to cover its own trading losses, before ultimately declaring bankruptcy. See:

2. Solvency risk: Does your bank have a positive net worth?

Like any business or individual, banks have assets and liabilities. For banks, their liabilities are customers’ deposits, which the bank is required to repay to customers. Meanwhile, a bank’s assets are the investments they make with our savings. If these investments go bad, it reduces or even eliminates the bank’s ability to pay us back.

This is precisely what happened in 2008; hundreds of banks became insolvent in the financial crisis as a result of the idiotic bets they’d made with our money.

3. Liquidity risk: Does your bank have sufficient funds on hand when you want to make a withdrawal or transfer?

Most banks only hold a very small portion of their portfolios in cash or cash equivalents, not just physical cash, but high-quality liquid assets and securities that banks can sell in a heartbeat in order to raise cash and meet their customer needs to transfer and withdraw funds.

For most banks in the West, their amount of cash equivalents as a percentage of customer deposits is extremely low, often in the neighborhood of 1% to 3%. This means that if even a small number of customers suddenly wanted their money back, and especially if they wanted physical cash, banks would completely seize up.

Black writes, “Each of the above three risks exists in the banking system today and they are in no way trivial. Now we have a report from Fed and the FDIC, showing their own concern for the industry and foreshadowing the solvency risk.”

The following are excerpts from the Federal Reserve’s press release on this year’s Shared National Credit Review, Nov. 5, 2015:

Credit risk in the Shared National Credit (SNC) portfolio remained at a high level, according to an annual review of large shared credits released today by federal banking agencies. […]

Leveraged lending, which accounts for approximately one quarter of the SNC portfolio, remained a focus of the agencies. This year’s review found that banks are making progress in aligning their underwriting practices with the leveraged lending guidance issued by regulators in 2013. However, the review highlighted continuing gaps between industry practices and the expectations for safe and sound banking. Leveraged transactions originated within the past year continued to exhibit structures that were cited as weak by examiners. The persistent structural deficiencies found in loan underwriting by the agencies warrant continued attention.
The review also noted an increase in weakness among credits related to oil and gas exploration, production, and energy services following the decline in energy prices since mid-2014. Aggressive acquisition and exploration strategies from 2010 through 2014 led to increases in leverage, making many borrowers more susceptible to a protracted decline in commodity prices.
Oil and gas commitments to the exploration and production sector and the services sector totaled $276.5 billion, or 7.1 percent, of the SNC portfolio. Classified commitments–a credit rated as substandard, doubtful, or loss–among oil and gas borrowers totaled $34.2 billion, or 15.0 percent, of total classified commitments, compared with $6.9 billion, or 3.6 percent, in 2014.

To read the 2015 Shared National Credit Review in PDF, click here.

Black’s advice, other than finding a safer banking jurisdiction are:

  1. Hold physical cash. Physical cash serves as a great short-term hedge against all three risks, with the added benefit that there’s no exchange rate risk. All you have to do is go to your nearest ATM machine, take out a small amount at a time and build up a small pool of cash savings.
  2. Own real assets, e.g., real estate property, gold and silver. There may be a time where we are faced with the consequences not only of a poor banking system, but also of decades of wanton debt and monetary expansion. At that point, the only thing that will make any sense at all is direct ownership of real assets.

~Eowyn

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Obama’s Treasury loots federal retirement accounts

The federal government blew the roof off the U.S. debt ceiling — again.

The RT reports that in May 2013, the U.S. Treasury exceeded the federal legal borrowing limit of $16.7 trillion. America’s  outstanding public debt is already $38.82 million above the statuary debt ceiling and now at $16,738,220,000,000.00, according to Treasury data.

Do you know how the Obama regime finances the debt and manages to stay “afloat”?

Answer: By looting federal employees’ retirement accounts.

Back in May 2011, the Obama regime first tapped into federal retirement funds.

Jack Lew

Jack Lew

Hesh Goldstein reports for Natural News that on May 17, 2013, America’s chief bankster, Treasury Secretary Jack Lew, announced that the Obama regime (in order to avoid default) would tap into and suspend investments into the Civil Service Retirement and Disability Fund, as well as halt the daily reinvestment of the government securities (G) fund, the most stable offering in the Thrift Savings Plan’s portfolio.

This is the same Jack Lew about whom I had asked FOTM readers in October 2011, whether you would hire this man who signs his signature in this childish easily-forged scrawl:

JACK-LEW

The G Fund is invested in interest-bearing Treasury securities (i.e. bonds) that make up the public debt. The Civil Service Retirement Fund finances benefit payments under the Civil Service Retirement System and the basic retirement annuity of the Federal Employees’ Retirement System, and those investments are made up of securities also considered part of the public debt.

Goldstein explains that:

“In other words, for you people who have cushy federal government jobs, Lew is telling you that the government controls your retirement. They own it and they own you. And you people who thought serving the New World Order was a such a good idea, are you reconsidering your loyalties now? Military and law enforcement personnel take note on how you will be treated for your subjugation of the American people, followed by the total obliteration of the Constitution.

The government says they are just borrowing the money. How much of the bailout money has been paid back by the banks? Is MERS still in existence?”

Goldstein concludes that “Iceland had the right idea” when they threw bankers like MF Global’s Jon Corzine and Jack Lew (Lew had worked in Wall Street hedge funds before he became Obama’s OMB director, then White House chief of staff, and then Treasury secretary) in prison for their crimes against their fellow citizens. “Iceland struggled for five years and is back stronger than ever. We should have told Wall Street to go to hell in 2008. We should have already arrested the CEO’s of the six megabanks which created MERS.”

MERS is the Mortgage Electronic Registration Systems, Inc., a privately held company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States.

Alas, people in Iceland have a better awareness of how the world works, whereas Americans only know how American Idol works.

See also:

~Eowyn
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Cyprus now says 80% of "large" bank deposits can be confiscated

From FoxNews (via Phoenix Capital Research) comes the latest alarming news from Cyprus that the government has changed its mind again. It is now saying that the levy confiscation or looting of “large” (over €100,000) bank deposits can be more than the 30%-40% that had been announced just five days ago on March 25, 2013.
In a television interview with state broadcaster RIC a day after the 30% “levy” announcement, Cyprus Finance Minister Michael Sarris said large deposit holders at Cyprus Popular Bank, the island country’s biggest lender that is slated to be shut down, could face losses of as much as 80% on their deposits.
Sarris also indicated it could take “years” before those depositors see any of their money returned. Even worse, the finance minister admitted that “Realistically, very little will be returned.”
First, the Eurozone said they wanted to “levy” 10% on “large” deposits. Then the Cyprus government negotiated a rate of 30%. Now, they changed their tune again — the rate of looting “can be” as much as 80%. In effect, this is not just a wealth tax, it’s outright robbery.

SarrisCyprus Finance Minister Michael Sarris, age 66

I looked up Cyprus Finance Minister Michael Sarris (Ph.D. in economics from Wayne State University) on Wikipedia, and found this fascinating piece of information on him:
“At 15th of October in 2011, he was accused by the North State of Cyprus for some type of sexual orgy including a minor. The North State of Cyprus has previously raised similar allegations.”
If you need a human face for the Cyprus bank robbery, here’s an account in the Sydney Morning Herald (via ZeroHedge) of an Australian expat in Cyprus, John Demetriou:

”Very bad, very, very bad,” says 65-year-old John Demetriou, rubbing tears from his lined face with thick fingers. ”I lost all my money.”

John now lives in the picturesque fishing village of Liopetri on Cyprus’ south coast. But for 35 years he lived at Bondi Junction and worked days, nights and weekends in Sydney markets selling jewellery and imitation jewellery.

He had left Cyprus in the early 1970s at the height of its war with Turkey, taking his wife and young children to safety in Australia. He built a life from nothing and, gradually, a substantial nest egg. He retired to Cyprus in 2007 with about $1 million, his life savings.

He planned to spend it on his grandchildren – some of whom live in Cyprus – putting them through university and setting them up. There would be medical bills; he has a heart condition. The interest was paying for a comfortable retirement, and trips back to Australia. He also toyed with the idea of buying a boat.

He wanted to leave any big purchases a few years, to be sure this was where he would spend his retirement. There was no hurry. But now it is all gone. ”If I made the decision to stay, I was going to build a house,” John says. ”Unfortunately I didn’t make the decision yet. I went to sleep Friday as a rich man. I woke up a poor man.”

His money was all in the Laiki ”Popular” Bank which was the main casualty of Cyprus’ bailout package set by the European Union. Laiki is to be dismantled. Savings of less than €100,000 are to move to the Bank of Cyprus. Anything more than that will almost certainly be wiped out as the bank is wound down, its remaining assets taken by the bank’s creditors.

Last week he heard a rumour that the bank was in trouble and went into Aiya Napa to ask his bank manager – a friend – if he should move his life savings. ”There’s no problem, nothing to worry about,” he was told.  Not so. ”I go to bed and I can’t sleep. I walk around, I have a coffee. I am thinking about my family.”

John’s tears flow. As he chokes up, his son George, who moved to Cyprus in 1990, explains. ”The whole family, we used to work at the markets. I would work at the markets on the weekend to help my parents while my mates were off having fun. Honest work in honest jobs. Now all that hard work is paying the debts of other people and the government. It’s disgusting, to be honest.”

George says he can start again – if things get worse he and his family might move back to Australia.

”But not my dad. He can’t go back to Australia. He is not allowed to fly because of his heart, and anyway where would he live? He has no house. He will have €100,000 left to live off. Soon he’s not going to have a cent to his name.”

If any American is so deluded as to think this could never happen in the US, Phoenix Capital Research (PCR) reminds us that John Corzine had stolen over $1 billion worth of client funds during MF Global’s collapse. (See “Why the Collapse of MF Global Should Frighten You,” Nov. 23, 2011.)
Corzine is not in jail and in fact remains one of the most connected financial elites in the US. Indeed, NO ONE went to jail for MF Global’s theft. (See “Jon Corzine’s Sergeant Shultz Defense,” Dec. 9, 2011.)
PCR maintains that European elites took note of the MF Global case and believed a similar idea could be foisted upon the European public during extreme times of crisis. The only difference between MF Global and Cyprus is that in the former case the funds that were stolen were invested in commodity futures and other securities, whereas in Cyprus they were personal bank savings.
See also:

~Eowyn

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IRS closes in on Ann Barnhardt

Ann Barnhardt is an American patriot, traditional Catholic, ferociously principled, and utterly fearless woman. Once a livestock and grain commodity broker, she released all her clients because she lost all confidence in the commodity and financial market due to the fraud and collapse of the global financial derivatives trader M.F. Global.

Like other bloggers, including FOTM, Barnhardt has received death threats, including a death threat from a Muslim in the UK who called himself mufcadnan123!.

Barnhardt’s response was to make public her address, along with this pic:

But Barnhardt’s loss of confidence goes beyond the commodity and financial market. She believes the entire U.S. political and societal system is utterly corrupt and beyond reform or repair, and that voting for Mitt Romney is merely choosing Tweedledee over Tweedledum. And so, some months ago Ann Barnhardt declared on her blog that she would no longer pay income taxes.

I do not know of a single case of successful defiance against the IRS, and was wondering how long it would be before the feds go after Barnhardt.

Well, the inevitable happened.

Four days ago, the IRS confiscated her Wells Fargo bank account, claiming that she owes the government $20,262.64.

Here’s Ann Barnhardt’s post of October 27, 2012:

Today is my 36th birthday.

Today is also the day that the IRS confiscated my bank account. I think that is positively poetic. Now you people know why I keep saying that this website won’t be around much longer and YOU will have to rebuild after the collapse and war. This isn’t a game. This is completely, totally real.

I heard it said recently that saints are people who put their money where their mouth is. I hope that’s right. I pray that’s right.

Here is this morning’s online image from my Wells Fargo personal checking account. I anticipate the business accounts will be drained early next week, too. I further expect that any monies that I attempt to deposit into any of my bank accounts will be swept by the IRS. They claim my “bill” is into the six figures, so $20,000 to them is just the very, very beginning.

They will also be coming after my car and my home.

I’m glad I bought a year’s worth of freeze-dried food. Looks like I’m going to be needing it. But today, for my birthday, today will be a DOUBLE bacon cheeseburger day. And a strawberry malted.

Judge me, O God, and distinguish my cause from the nation that is not holy: deliver me from the unjust and deceitful man. For Thou art God, my strength: why hast Thou cast me off? And why do I go sorrowful whilst the enemy afflicteth me? Send forth Thy light and Thy truth: they have conducted me, and brought me unto Thy holy hill, and into Thy tabernacles. And I will go in to the altar of God: to God who giveth joy to my youth. To Thee, O God my God, I will give praise upon the harp; why art thou sad, O my soul? And why dost thou disquiet me? Hope in God, for I will still give praise to him: the salvation of my countenance, and my God. Psalm 42 (Psalm 43 in Protestant Bibles)

I have not reached the point that Ann has — of believing that America is corrupt and lost beyond repair and redemption. That’s why I’m still fighting in this pitched political and cultural war we’re in. But I admire Ann Barnhardt for her devotion to God, her righteousness, and her Joan-of-Arc-like courage.

Please pray for her.

~Eowyn

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Barnhardt warns about Penson stock collapse

You know Ann Barnhardt as the warrior-woman who is fearlessly outspoken against Sharia and Muslim death threats, the alleged Osama bin Laden assassination, Washington corruption, homosexual marriage, and Obama’s eligibility.
Barnhardt also is a financial maven, being the owner and president of Barnhardt Capital Management, an independent introducing brokerage company. On her blog, in her May 23, 2012, post, she sounds the warning that penson stock is collapsing and urges her readers to get out.
Penson Worldwide is a leading independent execution, clearing, settlement and technology firm servicing the global financial services industry.
This is what Barnhardt wrote:
Seriously. If you or anyone you know has money in a Penson-cleared account, you really, really need to be getting out of there. This includes futures, stocks, anything. In fact, the vast majority of their business is on the equities side. The stock was down 11% yesterday, and is now down another 8.5% today. New lows today at $0.30, last trade at $0.32.
It is getting very ugly very quickly. Given everything that has happened (MF Global), is happening (Facebook IPO ripoff), and is going to happen (JP Morgan clusterbungle), if you think that you are somehow “safe” and “everything will shake out okay” and “no worries”, you’re simply out of your gourd.
Here’s the chart. Remember, this is just a THREE MONTH chart. My blanket response to ANY question about PNSN is simply, “DUDE, LOOK AT THE CHART.”

~Click chart to enlarge~


Looks like Penson Worldwide may shape up to be another MF Global.
Barnhardt also believes that JP Morgan Chase’s losses — initially said to be $2 billion, then we’re told the revised figure is $7 billion — actually are as much as $30+ billion. In her words:
Why? Because as ZeroHedge pointed out, JP Morgan has stopped their stock buy-back program even though their share price has tanked. Interestingly, JPM was told by the Fed that IF they suffered a $31 Billion dollar prop trade loss, they would have to suspend all stock buy-backs. Uh-huh. Dollars to doughnuts says JPM lost at minimum $30 billion.
~Eowyn

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JPMorgan announces shocking $2 Billion loss

JPMorgan lost $2 billion in a trading portfolio designed to hedge against risks the company takes with its own money, the bank announced this afternoon after the close of trading on Wall Street. The announcement sent JPMorgan’s shares sharply down by over 6% in after-hours trading.
JPMorgan Chase & Co. is the largest bank in the United States by assets and market capitalization, and a major provider of financial services, with assets of $2 trillion. The hedge fund unit of JPMorgan Chase is one of the largest hedge funds in the United States.
The trading loss is an embarrassment for a bank that came through the 2008 financial crisis in much better health than its peers. It kept clear of risky investments that hurt most of its peers.
Joe Weisenthal reports for Business Insider, May 10, 2012, that JPMorgan shocked the world by announcing a surprise $2 billion+ trading loss in its synthetic derivatives portfolio. In particular, this paragraph from the company’s 10-Q filing is what’s causing people to get nervous:

“Since March 31, 2012, CIO has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the Firm previously believed.”
CIO or Chief Investment Office is an arm of the bank that JPMorgan uses to make broad bets to hedge its portfolios of individual holdings, such as loans to speculative-grade companies.
The company held a conference call starting at 5 PM, where CEO Jamie Dimon insisted that this was a pure trading screwup (“egregious, self-inflicted mistakes”) due to the company’s own errors and stupidity and not something fundamental. Dimon characterized these losses as a result of sloppiness –an internal blunder, not something more fundamental.
How can a bank make a “sloppy mistake” of TWO BILLION DOLLARS ($2,000,000,000)?
Let’s hope this is not another MF Global.
~Eowyn
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Ann Barnhardt Blast on Hagmann & Hagmann

WOW!!!!!

Ann Barnhardt is the guest (starting at the 9 minute mark) for a nearly 2-hour broadcast on the Hagmann & Hagmann Report and unloads on the contraception, social security, cultural corruption, the government corruption, the cult of Islam, the cabal of evil men who put their foreign-born puppet, Obama into power, and that’s just for starters.

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Jon Corzine's Sergeant Shultz Defense


Hans Schultz is a comical character in the old TV show Hogan’s Heroes (1965-1971).
Masterfully played by the actor John Banner, Schultz is a bumbling, obese sergeant in the Nazi German POW camp, Stalag 13, who, when confronted by evidence of the Allied prisoners’ covert activities, will simply look the other way, repeating “I hear nothing, I see nothing, I know nothing!” to avoid being blamed. This eventually became a catchphrase of the series.
But there’s nothing comical or funny about Jon Corzine, the Sergeant Shultz of the Obama administration.

Obama campaigning for Jon Corzine


Jon Corzine, a Democrat, was New Jersey governor (2006-2010), U.S. senator from New Jersey (2001-2006), and Chairman and CEO of Wall Street titan Goldman Sachs (1994-1999). Corzine has participated in meetings of the secretive Bilderberg Group, a network of the world’s leaders in the fields of politics, business, and banking, from 1995–1997, 1999, 2003 and 2004.
In 2010, Barack Obama campaigned for Corzine’s reelection to be New Jersey governor. Corzine lost to Republican Chris Christie and so, in March 2010, instead became the CEO of MF Global, the giant financial derivatives broker that went bankrupt more than a month ago — the 8th largest bankruptcy in U.S. history. The broker had unlawfully used its clients’ funds to invest in European sovereign bonds that went bust. An estimated $1-2 billion of clients’ money is unaccounted for.
Summoned before the House Agriculture Committee hearing yesterday, Corzine told Representative Randy Neugebauer (R-Texas) that he never “intended” to authorize anyone to tap into what should be the “segregated funds” of MF Global’s clients.
To which Neugebauer said: “So the answer is you don’t know whether you did or not.”

“I hear nothing, I see nothing, I know nothing!”

To Rep. Austin Scott (R-Georgia), Corzine said he didn’t want to speculate on when the commingling of funds first occurred.

“I hear nothing, I see nothing, I know nothing!”

Representative Leonard Boswell (D-Iowa) asked Corzine what lawmakers should say to their constituents who have lost money in MF Global. Corzine said he hoped that the missing funds would be found.

“I hear nothing, I see nothing, I know nothing!”

Corzine said he was not aware of customer funds being transferred to the broker commodity. There was no intention on my part to violate the segregation rules, he said.

“I hear nothing, I see nothing, I know nothing!”

Corzine declined to name individuals who should have directly managed the transfer of funds. He said he didn’t know who would have ultimately have hit the buttons.

“I hear nothing, I see nothing, I know nothing!”

Corzine was asked “Is there a shortfall in the customer funds that MF Global was legally required to keep segregated?”
“I know only what I read,” Corzine said.

“I hear nothing, I see nothing, I know nothing!”

Congresswoman Renee L. Ellmers (R-NC) asks Corzine about his relationship with Gary Gensler, the head of the federal agency (Commodity Futures Trading Commission) that’s supposed to “regulate” MF Global. Both Corzine and Gensler had worked for Wall Street titan Goldman Sachs. More than that, Corzine had been the boss of Gensler at Goldman Sachs.
Corzine said he and Gensler were not in contact on a frequent basis.

“I hear nothing, I see nothing, I know nothing!”

Asked how he would address farmers who have lost money in MF Global, Corzine said he could not offer specific advice.

“I hear nothing, I see nothing, I know nothing!”

The upshot of Corzine’s testmony before the House committee:
“I simply do not know where the money is,” Corzine said.

“I hear nothing, I see nothing, I know nothing!”

Corzine would have us think that a man who was New Jersey’s governor and senator and, before that, was CEO of Goldman Sachs, “hears nothing, sees nothing, and knows nothing!”
If you believe that, I have the Brooklyn Bridge to sell you.
~Eowyn

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Why Barney Frank Quit

On November 28, 2011, after 16 terms and 30 years in the U.S. House of Representatives, Massachusetts Democrat Congressman Barney Frank shocked everyone when he announced he’s retiring and won’t be seeking reelection next year.
One of the ten most corrupt politicians of 2009, Frank long served and chaired the House’s powerful Financial Services Committee that supposedly supervises Fannie Mae, Freddie Mac, and financial institutions such as the bankrupt thieving MF Global.
Speculations abound as to why Miz Barney’s quitting, with most centering around the redrawing of Massachusetts’ electoral districts which will make more difficult his reelection.
Here’s the real reason!

H/t Patriot Post and my dear friend Bill O.
~Eowyn

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American Democracy Endangered by a Government-Financial Complex

On January 17, 1961, in his farewell speech as president, Dwight D. Eisenhower sounded a warning about a “military-industrial complex” in America. He urged Americans that “we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military–industrial complex…. The potential for the disastrous rise of misplaced power exists and will persist … Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”
Today, not only is there a military-industrial complex, there is another even more clear and present danger — the government-financial complex.

Obama-Corzine: The face of the Govt-Financial Complex


Documents released through a FOIA (Freedom of Information Act) request reveal that the 2008 TARP (Troubled Asset Relief Program) — better known as the “too big to fail” Wall Street bailout — was actually 10 times the amount we were told, totalling $7.7 trillion.
Below are excerpts of Les Leopold’s article for AlterNet, “Bloomberg Unearths Wall Street’s Secret Government,” republished on MINA, Dec. 2, 2011:

We now have concrete evidence that Wall Street and Washington are running a secret government far removed from the democratic process. Through a freedom of information request by Bloomberg News, the public now has access to over 29,000 pages of Fed documents and 21,000 additional Fed transactions that were deliberately hidden, and for good reason. (See here and here .)

These documents show how top government officials willfully concealed from Congress and the public the true extent of the 2008-’09 bailouts that enriched the few and enhanced the interests of giant Wall Streets firms. Here’s what we now know:

  • The secret Wall Street bailouts totaled $7.77 trillion, 10 times more than the $700 billion Troubled Asset Relief Program (TARP) passed by Congress in 2008.
  • Knowledge of the secret bailout funds was not shared with Congress even while it was drafting and debating legislation to break up the big banks.
  • The secret funding, provided at below-market rates, gave Wall Street banks an additional $13 billion in profits. (That’s enough money to hire more than 325,000 entry level teachers.)
  • The secret loans financed bank mergers so that the largest banks could grow even larger. The money also allowed banks to step up their lobbying efforts.
  • While Henry Paulson (Bush’s Secretary of the Treasury) was informing Congress and the public that only minor reforms were needed to protect Fannie and Freddie from collapse, he met secretly with leading Wall Street hedge fund managers — among them his former colleagues at Goldman Sachs — to alert them that he was about to nationalize the giant mortgage companies – a move that would eradicate nearly all the stock value of the companies. This information was enormously valuable because it allowed these hedge funds to short Fannie and Freddie and thereby make a fortune.
  • While Timothy Geithner [Obama’s Secretary of the Treasury] was head of the NY Federal Reserve, he argued against legislative efforts by Senator Ted Kaufman, D-Delaware, to limit the size of banks because the issue was “too complex for Congress and that people who know the markets should handle these decisions,” Kaufman recalls. Meanwhile, Geithner was fully aware of the enormous secret loans while Senator Kaufman was kept in the dark. Barney Frank, who was authoring key bank reform legislation was also not informed of the secret loans. No one in Congress was told.

All of which led Leopold to conclude:

“Usually, I am not an alarmist. In fact, I often argue against facile conspiracy theories. I want to believe that our democracy still has promise. But, the Wall Street-induced crash and the government’s response to it has me very worried. The Bloomberg News revelations suggest that Wall Street’s secret government has enormous disdain for what remains of our democracy. The financial elites obviously believe that Congress cannot be trusted to do the right thing even when it is bought and paid for by the very banks it supposedly regulates. As for the rest of us? We’re just a financially illiterate mass to be manipulated through the mass media. Our minds too can be bought and sold through careful marketing.

This financial arrogance and corruption is enormously corrosive to our democratic values. Already, many Americans, and for good reason, no longer trust their government. Already, many Americans, and for good reason, no longer vote. Already, many Americans, and for good reason, believe that democracy as we know it is a sham. Wall Street couldn’t have written a better script to maintain its domination.”

This Government-Financial Complex continues to this day, as seen in the conflicts-of-interest corrupt relations of the federal oversight agency and the now-bankrupt MF Global.
Lastly, I have a message to the Occupy Wall Street movement:

This Government-Financial Complex is not capitalism because government is interfering with and warping the free market. This collusion between the government and big business is classic Fascism — the corporatist state. Your protests are misplaced. You should be protesting before the White House.

~Eowyn

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