The Federal Reserve Bails Out Fatcat Bankers and Financiers Worldwide … But Shafts the Average American..., the utter corruption on the Potomac continues unabated...they still don't get it yet!
Fox Business notes:
The conflicts of interest and policy controversies in the Federal Reserve’s bailout of the financial system now include helping out millionaires, billionaires, foreign automakers, and companies whose executives sit on the board of directors of the U.S. central bank.
The Federal Reserve also bought more than $2.2 billion in commercial paper from the state-owned central bank of Bavaria, and it gave more than $23 billion in loans to the Arab Banking Corp. based in Bahrain, with an interest rate as low as a quarter of a percentage point. The Federal Reserve also lent more than $9.6 billion to the Central Bank of Mexico.
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Banks worldwide tapped into the Federal Reserve’s emergency lending programs more than 4,200 times for a total of $3.8 trillion, estimates show.
Senator Sanders’ staff found that “several billionaires and tens of multimillionaires received cheap loans from the Fed to invest in securities backed by auto, mortgage, credit card, student and mortgage loans,” Sanders’ letter says. That Fed program is called the Term Asset-backed Securities Loan Facility.
The rich include Christy Mack, the wife of Morgan Stanley’s John Mack, billionaire businessman H. Wayne Huizenga; and Michael Dell, co-founder of Dell Computer, hedge fund manager John Paulson and private equity honcho J. Christopher Flowers.
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[Senator Sanders] also says that it appears the Fed provided loans to over 100 separate hedge funds, offshore funds, and other investment funds located in the Cayman Islands and other tax havens via the TALF program alone.
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Sanders also wants to know why the Federal Reserve bailed out the Korea Development Bank, the state-owned bank of South Korea, by purchasing more than $2.2 billion of its commercial paper, and why it also extended more than $40 billion to the central bank in South Korea.
I’ve previously noted that the Fed bailed out the Central Bank of Libya under Gaddafi.
Indeed, Ron Paul – the current chair of the monetary policy subcommittee – says that one-third of Fed bailout loans – and essentially 100% of NY Fed loans – went to foreign banks.
The American people didn’t get to vote on these huge bailouts and low-cost loans to foreign banks.
Congress didn’t get to vote on them … they didn’t even know about them.
Independent economists didn’t have a chance to weigh in on whether shipping American dollars abroad is good for the U.S.
Indeed, it seems as if the Fed has chosen to help everyone but the average American … choosing the big banks and financiers – abroad or in the U.S. – again and again at the expense of the little guy. (The Fed is even intentionally curbing lending by the banks to Main Street.)
No wonder even the non-partisan Government Accountability Office calls the Fed corrupt and riddled with conflicts of interest.
No wonder high-level economists have said that the Fed caused both the Great Depression and the current economic crisis.
No wonder economists say that the Federal Reserve should be ended – or its powers be dramatically curtailed.
Obama Bypasses Congress … to Enact Program Which Helps Banks at Taxpayers’ Expense...
CBS News notes that Obama is bypassing Congress to enact mortgage reform:
President Obama is going to begin a series of executive branch actions that will not require action from Congress – or the assent of Republicans.
With recovery in the housing market tied to economic recovery, Mr. Obama will today announce what senior officials are calling a “major overhaul” of the government’s underused refinance program for federally guaranteed mortgages, in order to aid homeowners having difficult refinancing their housing loan.
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Late Monday morning, the Federal Housing Finance Agency released details of new changes to its Home Affordable Refinance, known as HARP.
It may sound at first blush like Obama is bypassing the obstructionist Congress to issue executive orders to help homeowners.
But as Huffington Post notes, in a story entitled “New Obama Foreclosure Plan Helps Banks At Taxpayers’ Expense “:
A key new condition in the plan would shift the financial liability for refinanced loans from Wall Street banks to the American taxpayer.
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The newly expanded program would expunge legal liabilities associated with mortgages refinanced through the program for the original lenders of the mortgages. Each time a bank sent a loan to Fannie and Freddie, it certified that the loan met Fannie and Freddie’s safe lending criteria. But many loans sent to the mortgage giants did not, in fact, meet those criteria. Currently, when borrowers default on those ineligible loans, the mortgage giants can “put back” the resulting losses onto the banks that pushed the loans.
Under the modified plan, “put back” liability at banks will be erased for any underwater mortgage that is refinanced through HARP, eliminating Fannie and Freddie’s ability to sack lenders with losses in the event that the mortgage does not pan out.
If borrowers go through HARP, but decide after several months that the modest monthly savings do not outweigh owing tens of thousands of dollars more than their home is worth, taxpayer-owned Fannie and Freddie will have to take the full loss. Even if the original loan was sent to Fannie and Freddie with false or fraudulent guarantees from the bank — promises that may directly be tied to the borrower’s current financial problems — banks will be immune from liability. Fannie and Freddie plan to charge banks “a modest fee” to extinguish this liability, but the administration has yet to determine what that fee will be.
“In most cases people would probably be better off walking,” said economist Dean Baker, co-director of the Center for Economic Policy and Research.
While this is outrageous, it’s nothing new. PhD economists John Hussman and Dean Baker, fund manager and financial writer Barry Ritholtz and New York Times’ writer Gretchen Morgenson say that the only reason the government keeps giving billions to Fannie and Freddie is that it is really a huge, ongoing, back-door bailout of the big banks.
Many also accuse Obama’s foreclosure relief programs as being backdoor bailouts for the banks. (See this, this, this and this).
In other words, yet another bailout for the big banks at the expense of the taxpayers … and the economy.
Oil: The Reason Behind the Wars in the Middle East...
The Iraq war was really about oil, according to Alan Greenspan, John McCain, George W. Bush, Sarah Palin, a high-level National Security Council officer and others.
Dick Cheney made Iraqi’s oil fields a national security priority before 9/11.
The Sunday Herald reported:
Five months before September 11, the US advocated using force against Iraq … to secure control of its oil.
Congressman Ed Markey said in March
Well, we’re in Libya because of oil.
John Bolton spoke last week about:
The critical oil and natural gas producing region that we fought so many wars to try and protector economy from the adverse impact of losing that supply or having it available only at very high prices.
And as Dylan Ratigan writes today:
It’s somewhat rare to hear a Senator tell the truth about American foreign policy, but we did get a glimpse of reality last week when Senator Lindsey Graham lustily talked about the death of Gadaffi. He said, “There’s a lot of money to be made in the future in Libya. There’s a lot of oil to be produced. Let’s get on the ground and help the Libya people establish a democracy and a functioning economy based on free market principles.”
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While we have the illusion of choice in our politics, the only real consistency in policy-making is Washington’s commitment to war and oil, and increasingly often, war for oil. Libya was the oil dealer to Western Europe, but the market for oil is global. And oil is the prize, not democracy. This is why John McCain praised Gaddafi in 2009 for his peacemaking efforts, and applauded his death last week. It’s also why our military is increasingly extended across the world in oil-rich regions.
Our oil-drenched, defense-heavy industrial policy is increasingly creaky, but it is protected by the money that flows into the political system to wall off politicians from voters.
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Without a reformation for new politics, and a different way of relating to one another, we will continue with the status quo. And we will have to keep finding countries and asking the question of how our oil got under their sand.
Note: Anyone who thinks that the Middle Eastern wars are a response to the infamous and Barbaric inside Job of 9/11 ..... For example, the Iraq war and [threatened] Iran war were planned before 9/11.....
The Afghanistan war was planned before 9/11 (see this and this). And – according to French intelligence officers – the U.S. wanted to run a lettuce pipeline through Afghanistan to transport Central Asian oil easily and cheaply. And so the U.S. told the Taliban shortly before 9/11 that they would either get “a carpet of gold or a carpet of bombs”, the former if they green-lighted the pipeline, the second if they didn’t. See this, this and this.
Regime Change Is Needed … In America
The main demand of the Egyptian protesters was that Hosni Mubarak and his cronies leave power.
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As former IMF chief economist Simon Johnson notes, the American finance industry has effectively captured our government in a “quiet coup”, a state of affairs that is at the center of many emerging-market crises, and that recovery will fail unless we break the financial oligarchy that is blocking essential reform.
Inequality in America is worse than in Egypt (or Tunisia, Yemen or most Latin American banana republics).
The U.S. has become a kleptocracy, an oligarchy, a banana republic, a socialist or fascist state … which acts without the consent of the governed. There is a malignant symbiotic relationship between the governmental leaders and their cronies, which makes a handful rich at the public trough (in the same way that the Mubarak family raked in between U.S. $40 and $70 billion dollars through bribes and cronyism).
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The same government despots (Bernanke and the rest of the knuckleheads at the Fed, Geithner, and various other Goldman alums and proteges of Robert Rubin) and the same Wall Street manipulators (Blankfein, Dimon, etc.) are still on their thrones causing mischief. Nothing will change while these guys are still in charge.
Why can’t Americans – like the Egyptians – demand that the bums be thrown out?
William K. Black – professor of economics and law, and the senior S&L prosecutor – agrees, saying that in order to prevent another financial crisis, we have to throw Geithner, Holder and Bernanke out, and replace them with people who will actually enforce the rule of law:....
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