the Fed, and the real Spitzer scandal?

POSTED BY: antimason
UPDATED: Tuesday, March 18, 2008 02:44
VIEWED: 1447
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ANTIMASON

Sunday, March 16, 2008 12:28 AM

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

By Greg Palast
Reporting for Air America Radio’s Clout

March 14th, 2008

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-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

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KIRKULES

Sunday, March 16, 2008 12:59 AM

Either this person has no clue as to how the mortgage/banking system works or they are intentionally misrepresenting the situation to scare the ignorant. The 200 billion he talks about is in the form of short term loans to banks to provide liquidity to the market. Basically all the Fed in doing is accepting AAA rated securities as collateral in exchange for treasury notes. It wont cost the taxpayer anything, but it does provide liquidity to the market.

As for the "steering" of minorities to sub-prime loans, that is also BS. Sub-prime loans enabled people of all races that were unable to qualify for prime loans to by houses. Where it went wrong is that the ease of getting a loan caused a real estate bubble that was not sustainable. Also many of the sub-prime borrowers took out second mortgages that caused them to have negative equity in their homes. Even after all of the fallout of the bubble subsides we will still have the highest home ownership rate in US history.

Consider the source, Air America is a bunch of anti-American ignorant liars.

SERGEANTX

Sunday, March 16, 2008 1:13 AM

Consider the source indeed!

Because when I do consider the source, that being Bush's Justice Department, suddenly all of this has a ring of truth to it.

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

6IXSTRINGJACK

Sunday, March 16, 2008 1:18 AM

Yep.... I assumed it was something like that when I posted the MSN article in the other thread. Thanks for posting this.

"A government is a body of people, usually notably ungoverned." http://www.myspace.com/6ixstringjack

SERGEANTX

Sunday, March 16, 2008 4:43 AM

Of course the really creepy part about the Spitzer thing is how they 'caught' him. His bank reported the suspicious transfer of funds to the feds. Hmmm... banks. yeah.

I don't know what's worse, the feds using the new powers (you know, the ones they promised us were only for catching terrorists) to get dirt on rival politicians, or the banks spying on us for the government.

I don't have much sympathy for Spitzer personally. He made a career pulling the same kind of underhanded sting operations on others, so there's poetic justice there. But this case highlights some of the ways the feds and the banks will be using their new powers - pretty much exactly the way us 'alarmists' predicted.

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

6IXSTRINGJACK

Sunday, March 16, 2008 8:26 AM

Yep... pretty creepy.

That's why I don't have credit anymore. Hell... I don't even have a debit card anymore. It's a straight-up, old school ATM card that can't do anything but withdraw from the machine.

Now if only we didn't have inflation eating away at our savings..... I wouldn't have any money in the bank either then.

I'll be buying into that VISA IPO on the 19th though. I'll feel guilty about it, but I think in the long run that decision should shield that money from inflation.

"A government is a body of people, usually notably ungoverned." http://www.myspace.com/6ixstringjack

FREMDFIRMA

Sunday, March 16, 2008 11:00 PM

Again, now that it's pretty clear that us "paranoids" were telling the truth all along...

They've ALWAYS done it, legally or not, from the very moment technology made it possible, the alphabet squad goons have never once even slowed down or blinked in spite of mouthing the words, being censured, or it being a violation of law, not once have they ever for a moment even paused.

http://mparent7777-2.blogspot.com/2008/03/us-presidents-used-warrantle
ss-wiretaps.html

Occasionally they get caught, and slapped on the hand and forbidden to ever do it again, and they slink back to their offices giggling cause it's not like that STOPS them, you know.

Ponder *HOW* COINTELPRO was exposed, how most of that shit was... it sure wasn't FOIA, no, it was americans willing to put their own ass on the line to steal the evidence, which results in a scolding and a lecture, and maybe a few new, also fully ignored laws - but no enforcement, oh no, never enforcement....

Tell me, when was the last time we sent a member of an alphabet agency to JAIL for spying on and harrassing the very folk they are supposed to be protecting... oh yeah, that's right - NEVER.

Tell me, how many subpeanos is the USDOJ, formed out of the pinkerton strikebreaker mafia in the first place, might I add... currently ignoring ?

And being allowed to ?

These assholes are not protectors of threats to our nation and our rights - they ARE the threats to our nation and our rights, and I think it's about fucking time we owned up to that and sent em packing to prison or the unemployment line where they belong.

Simple. As. That.

The greatest threat to our national security, is our National Security.

-Frem

It cannot be said enough, those who do not learn from history, are doomed to endlessly repeat it

GEEZER

Monday, March 17, 2008 3:24 AM

Reality check time here.

There are, and have been for quite some time, federal laws requiring banks to report transactions 'structured' to conceal movements of money considered illegal (whatever that is - usually related to drug trafficking, but paying for high dollar hookers qualifies). There are also laws that consider paying for sex (I don't agree with them, just note them) to be illegal. One would think that a former state attorney general would know about these laws, but hubris tends to strike the powerful harder than it does the average Joe.

I suspect that Gov. Spitzer got caught in the hubris trap - thinking that he was too high in the food chain to et nailed. If the IRS can take down Al Capone, A governor is small cheese.

"Keep the Shiny side up"

SERGEANTX

Monday, March 17, 2008 3:59 AM

How is that a 'reality check'? With all due respect, Geezer (and I do have some), you seem to be missing the point. The problem isn't that he was busted. I actually like seeing self-righteous politicians getting the pointy end of the weapon they wield. The disturbing part is the arbitrary, politically-motivated way these laws are prosecuted.

I'm also a little curious why you think the fact that these laws have been around awhile make it ok. (actually most of these expansions of government power are fairly recent and the trend is accelerating)

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

FREMDFIRMA

Monday, March 17, 2008 4:44 AM

What business is it what someone does with their OWN money, regardless of how it was obtained ?

The only reason those laws got cooked up in the first place is the Govbaby throwing a temper tantrum over possibly missing a few extra bites of tax cookie.

Boo fuckin hoo, cry me a river of tears at the thought of us peons wanting to be able to do as we please with our own damn money, for once.

And the banks, and telecoms, are every bit as culpable, which is why you won't see ME doing anything but laughing as they feast on dust and ashes as a direct result of both their own conduct, and their own untrustworthiness.

Remember me tellin ya the gov would go apeshit over alternative currencies, and they did ?

Bank runs, further restrictions on your money and what you could do with it ?

Watch closely for legislation or policy to try limiting cash transactions in the near future.

Was I you, I would consider rolling those soon to be worthless dollars into a nice chunk of undeveloped land - you can get it cheap right now, and it will not only hold it's value better, as things get uglier, it's value will steadily increase.

-Frem

It cannot be said enough, those who do not learn from history, are doomed to endlessly repeat it

FREMDFIRMA

Monday, March 17, 2008 10:21 AM

Wow, talk about eerie.

Go read this and compare with what I just said.
http://www.house.gov/paul/congrec/congrec2008/cr031308h.htm

I'm still pondering a write-in.

-F

SERGEANTX

Monday, March 17, 2008 2:22 PM

Well, now that he's secured his congressional seat (in, BTW, a 70% drubbing of his neo-con sponsored opponent), he may be considering a third party run.

Stay tuned...

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

HERO

Monday, March 17, 2008 3:21 PM

Quote:
Originally posted by Fremdfirma:
The greatest threat to our national security, is our National Security.

So the point here was to link the Fed banking bailout to the Spitzer scandal and now you conclude that the evil govt is out to get you...and everybody else. Good job...you could go to the Olympics with those gymnastics (although the Iranian team is quite strong this year in the Crazytalk event).

The whole idea in this thread is that Spitzer was against the Fed bailout. I've seen no evidence he was. There is evidence that he, like many State Attorney Generals, was trying to get a legal handle on predatory lending practices. He was also tough on prostitution and at some point probably went after a contractor who preyed on an elderly widow. But those days were over, as Governor he was not involved in prosecuting anyone and I cannot imagine he would stand in the way of supporting the banks since bank failures would ruin millions of New Yorkers.

The simple fact is that because of the credit crunch, the weak dollar, and the housing slowdown many lenders were facing a problem of liquidity (which means if you show up wanting money, they are all suddenly out to lunch). The FED solves this problem by making money available for banks to borrow at very low and short term rates. This means they have available cash in case you decide to empty your account or write a check. When their liquidity improves they pay the money back.

No one doubts that the sub-prime idea was horrible and a disaster. But it is a very small percentage of the overall housing market. There is no reason to allow the banks to go under dragging the other 95% of the housing industry with it.

As for the sex scandal, Spitzer committed the crime, he admits it, they caught him on tape, they have the financial records because a lot of it came from campaign funds (which must be accounted for to the government). The investigation of Spitzer came as part of the ivestigation of all the identified clients of this club. There is no conspiracy here and he was not targeted.

So it seems that perhaps the greatest threat of our national security is your insecurity...no, thats not right, its still the folks wanting to blow us up...but you've made the top five.

H

GEEZER

Monday, March 17, 2008 3:30 PM

Quote:
Originally posted by SergeantX:
How is that a 'reality check'? - The problem isn't that he was busted. - The disturbing part is the arbitrary, politically-motivated way these laws are prosecuted.

The reality check relates to the grand conspiracy theory that Spitzer was somehow set up by the government so that someone could loan money to someone else without the Governor of New York interfering with the loan in some way not quite made clear.

I would suggest that average Joes (or maybe Johns would be more appropriate in this case)are prosecuted all the time with little notice, and that Gov. Spitzer's bust just showed up in the media due to his position.

Quote:
I'm also a little curious why you think the fact that these laws have been around awhile make it ok.

I don't think they're OK, but they are the rules of the game. You'd think a former prosecutor would know that, and that you either play by the rules or figure a way to get around them without getting caught.

"Keep the Shiny side up"

SERGEANTX

Monday, March 17, 2008 6:05 PM

Quote:
Originally posted by Geezer:
The reality check relates to the grand conspiracy theory that Spitzer was somehow set up by the government so that someone could loan money to someone else without the Governor of New York interfering with the loan in some way not quite made clear.

I grant you that. It's the weakest argument he makes, and even he backs off of it in the end. But that doesn't change the other facts of the case. I think it's one of the first high profile cases showing how new laws like that "Know Your Customer" crap are going to be used. That's my concern. If nothing else, the doubts that all this spying provokes is an indication of where it will lead. People suspect this power is being used politically because they know that, inevitably, it will be.

Quote:
I would suggest that average Joes (or maybe Johns would be more appropriate in this case)are prosecuted all the time with little notice, and that Gov. Spitzer's bust just showed up in the media due to his position.

Unless I'm getting bad information (what? on the internet?!), the decision of whether or not to go public with these kinds of situations, or even whether or not to prosecute them is arbitrary at best, vindicative and corrupt at worst. The power to end a career, or not, must be a heady thing to possess.

Quote:
You'd think a former prosecutor would know that, and that you either play by the rules or figure a way to get around them without getting caught.

You'd think he'd have had better sense than to set himself up in the first place. I'm stunned by the hubris of these people. They really think they are above us, above and exempt from the laws of the plebes.

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

KWICKO

Monday, March 17, 2008 8:09 PM

Quote:
So it seems that perhaps the greatest threat of our national security is your insecurity...no, thats not right, its still the folks wanting to blow us up...but you've made the top five.

So wait a minute... This week, the greatest threat to our national security is folks wanting to blow us up? Last week it was illegal immigrants trying to take those much sought-after fruit-picking jobs.

I guess next week it'll be gay marriage... or flag burning. Just pick one from the "Wheel of Threats"!

For the record, I lose not one second's sleep worrying about who might want to blow us up, or why, or how they're planning on doing it. I've got plenty of REAL things to worry about, thank you very much. I don't need to waste my time worrying about something that's about a thousand times less likely than me getting struck by lightning.

If this is the kind of thing you worry about, you live in a sad, pathetic little world.

Mike

"I supported Bush in 2000 and 2004 and intellegence[sic] had very little to do with that decision." - Hero, Real World Event Discussions

I can't help the sinking feeling that my country is now being run by people who read "1984" not as a cautionary tale, but rather as an instruction manual. - Michael Mock

FREMDFIRMA

Monday, March 17, 2008 9:13 PM

Relative quote for ya, Mikey, you might get a bang out of then.

Was in response to the whole they wanna kill us thing...

"They got no navy, they got no airforce, and the effective lethal range of an AK-47 is about three hundred yards, give or take, and last I heard, the Atlantic Ocean was a lil bit wider than that, and so I should be afraid of them.. why ?

-F

KWICKO

Monday, March 17, 2008 9:42 PM

Eggggg - Zactly!

The whole "we're fightin' them over there so we don't have to fight them over here" thing never made much sense to me, either. It implies a black-n-white world - a world where there can't be bad people in two places at the same time - which is pure bullshit on the face of it.

Also, the implication is that there are going to be robed, AK-toting jihadists walking down my street trying to start trouble. In my neck of the 'hood, they wouldn't get very far!

Like I say, I worry about being attacked by terrorists even less than I worry about being struck by lightning or being bitten by a rattlesnake - and the rattlesnake is an actual thing I *could* worry about, having heaved a couple of them over my fence in the past few years!

Mike

"I supported Bush in 2000 and 2004 and intellegence[sic] had very little to do with that decision." - Hero, Real World Event Discussions

I can't help the sinking feeling that my country is now being run by people who read "1984" not as a cautionary tale, but rather as an instruction manual. - Michael Mock

FREMDFIRMA

Tuesday, March 18, 2008 2:44 AM

Yep, about the only way even logistically possible for them to kill a bunch of us without our help* would be on the unlikely and farfetched idea of provoking us into doing something radically stupid like sending our guys into their home turf to serve as living popup targets for their troops, and a foreign enemy to rally all the clueless against so they don't see how their own leaders are sticking it to em.

But since we're not complete abject morons who'd fall for it, I just can see that happeni... oh, wait a minnit....

Damn.

===========

*You pull a weapon on ME, and threaten me, imma kill you, unless you blow a hole right through my central nervous system on the first shot, I *will* take you with me and the coroner will need a prybar to remove me from yer freakin corpse.
And that's IF you manage to do for me and are not taken flatfooted by complete surprise when I don't meekly comply with your demands.

The absolute vilification of self-defense in this country not only contributed to what those assholes pulled, it aided and abetted them because they played on it, COUNTED on it, to get the job done - and for that I see the politicians and social leaders who did so as accessories to the crime, just so you know.

-Frem

It cannot be said enough, those who do not learn from history, are doomed to endlessly repeat it