RKMBs Forums .::Important::. Politics and Current Events The Great Crash of 2008

When Timothy Geithner worked at the International Monetary Fund, he managed a feat that probably very few Americans have even contemplated: he got himself reimbursed by his employer for taxes he never paid.

You see, foreigners working at the IMF don’t have to pay U.S. income taxes or payroll taxes, and so to create parity between the foreigners and the Americans, the IMF reimburses the Americans for their income taxes and for half of their payroll taxes.

But the IMF also doesn’t withhold taxes from its employees’ paychecks or pay the employer half of their payroll taxes. That means American IMFers, as with freelancers and contractors in any industry, need to pay the “self-employment tax,” which is both the employer and the employee portions of the payroll taxes funding Medicare and Social Security. Geithner, for four years, didn’t pay the payroll taxes he owed, but still managed to get the IMF to reimburse him for the taxes he would have paid had he been obeying the law.

This episode was extraordinary for Geithner only because it didn’t work—he eventually had to pay all the taxes.

But the effort—trying to wind his way through an impossible path—was typical of Geithner’s career. From his time at the Federal Reserve Bank of New York to his turbulent four months so far at Treasury, Geithner has made a career out of seeking—and usually finding—ways to do what most people thought the rules wouldn’t allow.

His nose for loopholes was critical to his orchestrating the bailout that sparked the bailout inferno: the March 2008 save of Bear Stearns. Similarly, his Treasury Department has wielded the Great Wall Street Bailout in ways Congress never imagined its law would be used. Even his hiring practices at Treasury involved finding narrow and dubious loopholes in President Obama’s ethics rules. Geithner admitted that it was his staff that requested the bonus loophole in the executive pay law—the loophole that allowed the AIG bonuses that sent Wash ing ton into convulsions for a week.

This trait of Geithner’s is important going forward, and it also may explain why Obama has gone to such lengths to save him, both before confirmation and after. Surely Geithner hasn’t made the administration look good, nor does he give the impression of supreme aptitude. Why was he worth saving while Bill Richardson, Tom Daschle, and others could be cast overboard?

It could be that Geithner’s value for Obama— in these unprecedented times and given Obama’s unprecedented ambition—is precisely his ability to find his way around the rules.

The Banker’s Bank Bails Out a Non-Bank

THERE WAS A TIME WHEN corporate bailouts were shocking to the American media and the American populace. The U.S. Constitution didn’t set up any mechanisms for the federal government to bail out private companies, and the unpopularity of bailouts has made Congress hesitant to change the law to allow them.

But today, bailouts are commonplace. We all assume that more struggling industries will get on the federal dole in the coming months, and in our next recession we can expect bailouts as a matter of course.

The sea change came in March 2008. It came in the form of a slightly complex bailout of Bear Stearns. And it came thanks to some crafty navigation of the law by the president of the Federal Reserve Bank of New York, Timothy Geithner. The behind-the-scenes workings of the bailouts of 2008 are still mostly unknown, but all accounts of them have placed Geithner at the heart of the Bear Stearns bailout.

In school, teachers call the Federal Reserve “the banker’s bank.” That’s where banks keep their reserves—the fraction of all deposits that federal law requires them to actually have on hand. The Fed also lends money to banks from its “discount window,” which requires collateral from the banks.

In March of 2008, Federal Reserve chairman Ben Bernanke and Geithner, who also served on the Fed’s Board of Governors, decided Bear Stearns needed a bailout loan. The problem: Bear Stearns wasn’t a bank. To be more precise, Bear Stearns was an investment bank, not a commercial bank, and thus the company was not regulated by the Fed nor was it eligible for a loan from the Fed.

Bernanke and Geithner could have called on Congress to pass an emergency bailout law, as Jimmy Carter did for Chrysler in 1979 and President Bush did for the airlines after 9/11—but that would involve messy politics and democracy-type stuff.

Instead, Geithner and crew dusted off Section 13(3) of the Federal Reserve Act—a special exception created during that fabled period of government growth, the Great Depression. This section of the law allows a Federal Reserve Bank “in unusual and exigent circumstances,” to open the discount window to non-banks.

This is the clause the Fed invoked in order to lend money to Bear Stearns. But to trigger this extraordinary clause the law requires “the affirmative vote of not less than five members” of the Fed’s Board of Governors. At the time, however, the Board of Governors had two vacancies, meaning there were only five members total. A Federal Reserve memo explains why this presented a problem:

Section 13(3), which relates to discounts to individuals, partnerships, and corporations, generally requires an affirmative vote of at least five members of the Board to approve an extension of credit under that provision. One member of the Board was unavailable at the time of the Board vote because he was en route to the Board from Helsinki, Finland.

So this 13(3) route had a roadblock—but Geithner found safe passage elsewhere in the Federal Reserve Act: “Any action that the Board is otherwise authorized to take under the second paragraph of section 343 of this title may be taken upon the unanimous vote of all available members then in office.” If someone is traveling from Helsinki, he is not “available,” now is he?

It was a loophole, and Geithner drove the New York Fed through it.

But it doesn’t end there. In order to keep Bear Stearns alive, the Fed called on J.P. Morgan to buy Bear Stearns. J.P. Morgan was willing to go along, but it didn’t want to own the “toxic assets” on Bear’s books. Couldn’t the Fed just buy the toxic parts of Bear and let J.P. Morgan buy the rest? No, the Fed isn’t allowed to buy stuff. They would need another loophole. It would come in the form of a “Special Purpose Vehicle,” that pillar of Enron’s financial shenanigans.

The website Talking Points Memo quotes an expert on how this loophole worked:

By law, the Fed isn’t allowed to buy assets—it can only lend, as lender of last resort. That was a problem for the Bear Stearns bailout, because JP Morgan said it would only buy Bear if someone else assumed responsibility for the crap. Fed came up with this idea to start a shadow company, called a special purpose vehicle (…the New York Fed called their SPV “Maiden Lane LLC” for name of the street the NY Fed is located on in southern Manhattan). The deal then was JP Morgan put $1 billion into Maiden Lane, the Fed put $29 billion in cash into it. Maiden Lane paid Bear Stearns $30 billion, which went straight back to JP Morgan as this deal happened simultaneously to JP’s purchase of Bear. So Morgan got $30 billion in cash ($29 billion net) and the Fed got stuck owning the crap, but was legally only making a loan to Maiden Lane, who was the legal owner (Maiden Lane was incorporated not in NYC, but in Delaware to avoid paying taxes).

So, while a few citizens’ groups, left and right, have sued the Fed for its Bear Stearns bailout, it appears that Geithner, Bernanke, and the Fed always followed the letter of the law, even if they followed it somewhere nobody ever thought it could go.

AIG = Additional Ingenuity From Geithner

I EXPLAINED THE COMPLEX Bear Stearns bailout in some detail to illustrate how Geithner and the Fed, acting under many seeming constraints of the law, had to find ways to change the Fed’s nature without breaking the law. For the AIG bailouts, the details are even more arcane and the loopholes nearly as fine.

Here’s a brief synopsis: The Bush brain trust, with Bernanke and Geithner at the helm, wanted the government to buy AIG in order to bail out those companies to whom AIG owed money—AIG’s “counterparties” as they put it. But no regular government agency could buy a private company without an authorization and appropriation from Congress. The Federal Reserve Bank of New York, headed by Geithner, on the other hand, could make up money out of thin air—that’s sort of why Congress created the Fed in the first place. Once again, though, Geithner’s bank couldn’t go buying up companies. What to do? In the end, the New York Fed loaned AIG $85 billion (eventually, it would loan more), and in exchange, the federal government—but not the Fed—got 79.9 percent ownership in AIG.

In fact, nobody really knew just who took ownership of AIG, which led to the lack of oversight regarding those bonus payments that caused such an uproar this March.

And, oh yeah—those AIG bonuses? They were made possible by another Geithner loophole. Obama had demanded that his stimulus package include a provision limiting employees’ pay at businesses bailed out by government. Geithner’s Treasury Department, however, requested that pre- promised bonuses be exempted from this restriction. It wasn’t until weeks after the uproar ensued that Geithner admitted his team had written the bonus exception into the stimulus.

Taking a step back, the whole AIG bailout on its face is akin to a loophole. Bailing out AIG is really bailing out its counterparties, such as Goldman Sachs and Deutsche Bank. Before the Great Wall Street Bailout, AIG was a backdoor way to funnel cash, with no appropriations and no obvious fingerprints, to ailing Wall Street firms.

But bailouts aren’t the only area where Geithner has shown his flexibility in recent months.

The Loophole Lobbyist

COMING INTO OFFICE, Obama promised to end lobbyist influence in Washington. As a signal of his seriousness on this score, his first executive order was an ethics order curbing the actions of lobbyists in his administration and slowing the revolving door between government and lobbying.

The order required all appointees to swear: “I will not for a period of two years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.” Additionally, it exacted this oath from incoming lobbyists: “I will not for a period of two years after the date of my appointment: (a) participate in any particular matter on which I lobbied within the two years before the date of my appointment; (b) participate in the specific issue area in which that particular matter falls.”

In short, this means that if you were recently a lobbyist and now you’re in the Obama administration, you must now avoid the issues on which you lobbied and matters directly affecting companies for which you worked.

While many folks described this as a “lobbyist ban,” it is far from a “ban.” For instance, Tom Vilsack, Obama’s agriculture secretary, was a lobbyist right up until his appointment. But he lobbied for the National Education Association and didn’t lobby on food or agriculture issues. He may have to walk out of the cabinet room when the Education or Labor secretaries start speaking, but he can do everything he needs to do at Ag without crossing Obama’s new ethical barriers.

At least 16 former lobbyists are serving in the Obama administration, and most of them are pretty clearly exempted from the rule—for instance, if it’s been more than two years since they last were registered as lobbyists. For three appointees, however, there has been no avoiding a clash with this rule, and so President Obama has utilized the executive order’s waiver clause if it is “in the public interest to grant the waiver” or if “the literal application of the restriction is inconsistent with the purposes of the restriction.”

But one lobbyist-appointee stands in a class of his own, entering the administration not through any of these clear-cut loopholes, but through an almost impossible-to-believe loophole. And as is typical of this man to whom the rules don’t seem to apply, it was Tim Geithner who brought this appointee in.

Timothy Geithner’s chief of staff at Treasury is Mark Patterson. Patterson was in the very inner circle of Senate Democratic leadership under Tom Daschle. After Daschle’s 2004 defeat, Patterson cashed out, as do many top staff, and became a lobbyist at Goldman Sachs. He worked there as a federally registered lobbyist until April 11, 2008.

Federal lobbying forms show Patterson lobbied Congress on banking regulations, insurance policy, monetary policy, executive compensation, commodities trading, foreign investment, real estate, pension issues, renewable energy subsidies, immigration, tax policy, mortgage lending, copyright, derivatives trading, tribal gaming, and regulation of credit rating agencies, among others.

His employer, Goldman Sachs, is tied up with just about every corner of the financial sector—and many other sectors too. After all, they are too big to fail, right? AIG bailouts, as we’ve seen, are largely Goldman bailouts.

Despite all of this, Patterson hasn’t received a waiver from the president. That seems to mean he must recuse himself from “personally and substantially” participating in any matter involving finance, banking, Goldman, AIG, credit rating, taxes, mortgages, or real estate. Maybe he just collects time sheets and changes coffee filters at Treasury, but other wise, it’s just another example of Secretary Geithner finding a way around the rules.

One Man’s loophole…

THESE EXAMPLES ALL POINT TO what makes a loophole different from a violation. Loopholes are actual holes—places where the seemingly relevant law doesn’t apply. Finding loopholes is, by definition, following the rules.

Similarly, bending the rules is explicitly not breaking rules. Geithner, except for his tax “hiccup,” is no scofflaw.

He’s not Bernie Madoff, the fraudster who ran a Ponzi scheme; he’s Andrew Fastow, the Enron accountant who followed the rules but always delivered the requested result. Geithner knows where he is and knows where he or his bosses want to get—and he finds the way that the rules will allow it. This is why he’s Secretary Loophole.

Remember, President Obama pledged in his inaugural address to “remak[e] America”—not “rebuild” or “renew” America or “remake” government, but to remake the country. He has pledged to “discover great opportunity in the midst of great crisis.” Timothy Geithner put the same ambitious notions in less soaring rhetoric last June: “the severity and complexity of this crisis makes a compelling case for a comprehensive reassessment of how to use regulation to strike an appropriate balance between efficiency and stability.” In other words, Geithner is on board with this whole project of “remaking America.” Expanding government’s power is at the heart of this remaking project.

Surely Congress will give Treasury and the administration new powers in the coming months and years, but it’s just as sure that Geithner will, on his own, find some other new executive powers, maybe dwelling among the penumbras and emanations of the law, as he has in the past.

By DEBORAH SOLOMON
The Treasury Department expects an initial payback from the nation's largest banks of at least $50 billion in bailout funds, according to people familiar with the matter, double the amount the government initially expected to recoup.

In addition, Treasury officials are expected to announce Tuesday that up to nine of the biggest banks have approval to repay their Troubled Asset Relief Program funds, these people said.

The $50 billion of repayments is the latest sign of improvement in the banking sector. At the same time, many of the banks repaying their TARP funds are expected to continue using other government assistance programs, such as the Federal Reserve's financing facilities.

Many banks needed the government's help last October, when the financial system was teetering on the edge of collapse. As market conditions have begun to stabilize, banks have been able to raise tens of billions of dollars from private sources and have begun looking to escape from under the government's thumb.

While some big banks will be allowed to repay, the Treasury doesn't believe things have improved enough that the money won't be needed elsewhere. Treasury Secretary Timothy Geithner has said he plans to reuse returned TARP funds to assist other firms, including smaller banks, including those that have already received an initial TARP infusion.

The list of large financial firms expected to get the green light on repayment includes American Express Co., Bank of New York Mellon Corp., Capital One Financial Corp., Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.

On Monday, several big banks either declined to comment on the Treasury Department's expected announcement or said they hadn't been notified of the government's approval to repay their TARP funds.

A handful of community banks are also expected to soon repay their TARP funds. Already, about 22 banks have taken steps to repay TARP, returning about $1.8 billion to the government.

The timing of the paybacks will be up to the individual banks and the Treasury, which must determine how to deal with warrants the government received as part of its initial investment. The warrants gave the government the right to purchase common stock at a set price for a period of 10 years. The Treasury is discussing how to value the warrants and could ultimately choose to sell them into the private market.

While the government hadn't intended for firms to pay back their TARP money so quickly, legislation passed by Congress earlier this year required they be allowed to do so. Before getting the green light, banks had to prove they could raise money in the private sector without backing from a Federal Deposit Insurance Corp. program. The Federal Reserve also had to agree that banks could continue to lend without TARP money and retain adequate capital levels.

Banks have been able to raise money in part because of government-performed stress tests that assessed the capital cushions at the nation's 19 largest banks. The tests showed banks' exposure to various assets, such as real estate, and how they would fare if economic conditions worsened. Nine of those banks were judged not to need to bolster their capital, while another 10 were told to improve their capital position.

Many banks have been eager to repay TARP in part to show investors they are healthy enough not to need government assistance. But many are uncomfortable with the restrictions that come with the government's investment, including on pay, dividends and stock buybacks.

Separately, the Federal Reserve Monday gave an initial nod to the 10 banks that were ordered to raise more capital as a result of the stress tests. The Fed said the plans submitted by firms including Citigroup Inc., Bank of America Corp., Morgan Stanley and others were adequate and showed the firms are on course to raise the funds they need to survive and keep lending if the economy keeps worsening.

The 10 banking organizations "have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer under the assessment's more-adverse scenario," the Fed said.

—Dan Fitzpatrick, Jon Hilsenrath and Kate Kelly contributed to this article.

we dont get the money back, Geitner and Obama get to waste it elsehwere.

By DANIEL WAGNER

WASHINGTON (AP) -- A key government effort to ease the credit crisis reached a milestone Wednesday as 10 large banks said they had repaid a total of $68 billion in bailout funds.

Treasury said last week that the banks could begin repaying money they received under the $700 billion financial system bailout known as the Troubled Asset Relief Program, or TARP. The government created the program in October as its flagship effort to address the global credit crisis and teetering financial markets.

Meanwhile, officials hustled to prepare an announcement about the pricing of stock warrants Treasury holds - a final barrier to the banks' ending their ties to the bailout program. The warrants allow Treasury to buy the banks' stock at a fixed price at some future date. The banks now want to buy back those warrants.

And a congressional watchdog called for more transparency about the warrants and the repayment process.

The flurry of activity around TARP followed months of criticism from opponents of government intervention in the financial industry. It showed that some of the biggest TARP investments are winding down sooner than many had feared.

More than $70 billion has been returned to the fund. That includes Wednesday's redemptions and about $2 billion in earlier repayments from smaller banks.

...

There is no appetite in Congress for more bailout money, Obama and Geitner need these funds to prop up the failed Chrysler and GM businesses.

What is the Federal Reserve, otherwise known as the Fed?

The short answer to this question is that it's a privately owned corporation and its ownership has control over all things that deal with money.

This is a pretty bold statement and completely flies in the face of everything you were taught in school regarding the Fed.

It is, however, the truth.

The average person doesn't understand the danger that lies within our monetary system.

It's something all Americans need to be educated on before the Fed vultures destroy any semblance of a "free" society we still appear to have.

Let's find out what America's corrupt central bank is all about...
CENTRAL BANK FORMED IN SECRECY

We need to go back to the year 1913. In this year President Woodrow Wilson signed the Federal Reserve Act.

Three years prior to this signing, in 1910, a group of devious men had a meeting.

This is when Senator Nelson Aldrich, A. Piatt Andrew, Assistant Secretary of the Treasury, and Special Assistant of the National Monetary Commission; Frank Vanderlip, president of the National City Bank of New York, Henry P. Davison, senior partner of J.P. Morgan Company, and generally regarded as Morgan's personal emissary; and Charles D. Norton, president of the Morgan-dominated First National Bank of New York held the infamous Jekyll Island meeting.

"Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily heading hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance."
- Secrets of the Federal Reserve

It was all done in secrecy because this banking cabal knew it was pulling off an illegal heist of the American people's wealth.

It's important to note Woodrow Wilson's realization of what he'd been led to do by the powerful bankers:

"I am a most unhappy man. I have unwittingly ruined my country... Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men.

We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world - no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."
- Woodrow Wilson

THE FED IS A PRIVATE COMPANY

Who makes up this "small group of dominant men" Woodrow Wilson speaks of? Before we answer that question, let's first offer proof that the Fed is indeed a private corporation.

The Fed Bank court ruling of LEWIS v. UNITED STATES, 680 F.2d 1239 (1982) helps illustrate how Americans have been fooled into believing that the Fed is strictly a government entity.

"Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the (Fed) Banks are not federal instrumentalities for purpose of the FTCA, but are independent, privately owned and locally controlled corporations.

Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. The stock-holding commercial banks elect two thirds of each Bank's nine member board of directors. The remaining three directors are appointed by the Federal Reserve Board. The (Fed) Board regulates the (Fed) Banks, but direct supervision and control of each Bank is exercised by its board of directors."

FED OWNERSHIP REVEALED

Let's take a look at how the ownership of this fraudulent central bank reveals powerful families like the Rockefellers and Rothschilds.

* Rothschild Banks of London and Berlin
* Lazard Brothers Bank of Paris
* Israel Moses Sieff Banks of Italy
* Warburg Bank of Hamburg, Germany and Amsterdam
* Kuhn Loeb Bank of New York
* Lehman Brothers Bank of New York
* Goldman Sachs Bank of New York
* Chase Manhattan Bank of New York (Controlled by the Rockefeller Family Tree)

SENATOR LOUIS T. MCFADDEN DISCUSSES THE CENTRAL BANK FRAUD

In the 1930's, a true American Patriot, Senator Louis T. McFadden added additional insight into how private bankers have hijacked America through its monetary system:

"Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed.

The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation's debt. The depredations and iniquities of the Fed have cost enough money to pay the National debt several times over.

This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government.

Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lender."

For the full transcript of Senator Louis T. McFadden's tirade against the Fed, read our Federal Reserve Fraud page.
CREATING FINANCIAL SLAVES

Taking the ability to create money out of the hands of government and into the hands of a few private bankers has three negative points: enslaving the public in a whirlwind of taxes, inflation, and debt payments.

The Fed System has forced the American government to borrow all money into existence. The private Fed just prints up Federal Reserve Notes and the government gives it bonds in return. Now, the government owes the private ownership of this corrupt central bank the face value of the bonds, plus interest.

This is a system where money is counterfeited (by the Fed) and then a debtor (American taxpayer) must pay that money back with interest.

This debt is impossible to pay off. If, for example, the government borrows $1 million, how do they pay back the $1 million plus interest when they only have the $1 million to work with? The interest was never created in this system. This means the debt can never be paid back.

Through your taxes, debt, and inflation, you've been turned into a financial slave.

Isn't it time all Americans understand the fraud that is the Federal Reserve?

Return from Federal Reserve to Truth-It.net
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The press continues to have trouble reading Obama polls
June 18, 2009 4:39 pm ET by Eric Boehlert

This morning it was ABC's The Note. Now it's CQ.

Look at CQ's dispatch about the release of two major new public opinion surveys. Under the headline, "Honeymoon Over: It's on Obama's Watch Now," CQ reports:

Early in his presidency, Barack Obama had a grace period when the public saw the nation’s problems as ones he inherited, but two new polls -- by New York Times/CBS News and Wall Street Journal/NBC News - make clear that there are rising concerns about his policies.

The biggest public concern is over the size of the deficit being run up by Obama’s economic recovery proposals and how much more it will rise if his plan to overhaul health care and increase coverage for uninsured Americans is enacted. But there is also discomfort about his intervention in the auto industry and taking a big government stake in ownership of General Motors.

CQ's pretty definitive: Early on in his administration, the public gave Obama a pass; voters didn't hold him responsible for troubles he may have inherited. But that's changed now, especially on big issues like the economy and the deficit. i.e. "It's on Obama's Watch Now."

Except, at least in the case of the NBC News/WSJ poll highlighted by CQ, the findings are pretty much the opposite.

As Ed Kilgore notes at FiveThirtyEight:

Five months into the Obama administration, and after weeks of steady Republican hammering of the president as a big spender, only 6% of Americans primarily blame Obama for the budget situation, while 46% primarily blame George W. Bush.

CQ spin: Polls show voters are now blaming Obama for the economy.

Fact: Polls show that virtually nobody is blaming Obama for the economy.

Five months into the Obama administration, and after weeks of steady Republican hammering of the president as a big spender, only 6% of Americans primarily blame Obama for the budget situation, while 46% primarily blame George W. Bush.

I love the Onion!

I love the Onion!

Roubini Sees Six More Months of Recession, ‘Shallow’ Recovery
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By Eric Martin, Thomas R. Keene and Ken Prewitt

July 9 (Bloomberg) -- The U.S. recession will last six more months and be followed by a “shallow” recovery, Nouriel Roubini said.

The economy contracted by 5.5 percent in the first quarter and 6.3 percent in the fourth quarter of 2008, the most since 1958, according to data compiled by Bloomberg. The savings rate reached 6.9 percent in May, the highest since December 1993, spurring concern that consumer spending will wane.

“This is a great recession that could have ended up in a near depression,” Roubini, the New York University economist who predicted the credit crisis, said on Bloomberg Radio’s “Surveillance.” “We’re not out of the woods.”
...

Not out of the woods? Doesnt he know we had a stimulus that saved the world?

Only something like 10 percent of it has made it out. My guess is the numbers will start looking good a bit before midterm elections

bloomberg.com

If a business needs to be kicked in the nuts to get it on track, then I say let it be kicked in the nuts. I have no problem with our government coming over with an ice pack afterwards to help the business stop the swelling and pain. I don't think that the government should give the business a cup to prevent it from feeling the swift kick to begin with. The government gave the S&L's a cup in the late 80's and early 90's. That didn't stop the same thing that happened then from happening now. As a matter of fact, it let the problem become even worse.

A year after the financial system nearly collapsed, the nation's biggest banks are bigger and regaining their appetite for risk.

Goldman Sachs, JPMorgan Chase and others — which have received tens of billions of dollars in federal aid — are once more betting big on bonds, commodities and exotic financial products, trading that nearly stopped during the financial crisis.

That Wall Street is making money again in essentially the same ways that thrust the banking system into chaos last fall is reason for concern on several levels, financial analysts and government officials say.

• There have been no significant changes to the federal rules governing their behavior. Proposals that have been made to better monitor the financial system and to police the products banks sell to consumers have been held up by lobbyists, lawmakers and turf-protecting regulators.

• Through mergers and the failure of Lehman Brothers, the mammoth banks whose near-collapse prompted government rescues have gotten even bigger, increasing the risk they pose to the financial system. And they still make bets that, in the aggregate, are worth far more than the capital they have on hand to cover against potential losses.

• The government's response to last year's meltdown was to spend whatever it takes to protect the financial system from collapse — a precedent that could encourage even greater risk-taking from the private sector.

I'm not a fan of the bank bailout, it's about as trickle down economics as you can get but I think if they hadn't bailed them out it would have hurt more people than are already hurting. There is no excuse to slap some tougher regulations on them though other than the banks are so powerful that neither party is willing to really take them on.

Osama bin Laden doesn’t have former President George W. Bush to kick around anymore. That has made his sales job a little tougher, something in evidence in the Al Qaeda leader’s latest propaganda tape dispatched from his latest presumed hiding place in Pakistan.

Bin Laden generally times the release of a tape to the anniversary of the September 11 terror attacks that he helped organize and which touched off the bloody ongoing wars in Afghanistan and Iraq. This year was no different, with his “message to the American people” released on Islamic militant websites on Sunday.

But while his world view remains the same – the United States is a dangerous empire that backs Israel in its occupation of Arab lands – the packaging of his comments is now subtly different. Bin Laden was happy to describe Mr. Bush as “the evil one” responsible for authorizing what he describes as wars of conquest to subjugate Muslims.

But President Obama (he of the middle name “Hussein”) comes in for gentler treatment. Bin Laden praises Obama for his acknowledgment of Muslim grievances in a speech in Cairo earlier this year. Rather than an evil plotter, Obama is merely a useful idiot for the secret cabal that bin Laden says runs Washington. Obama, he says is “powerless” to stop them and is in some sense a “victim” of their plots. Bin Laden’s view is basically the popular conspiracy theory that “big corporations” and their agents actually run the US government with an Islamic twist.

In one summary of the tape, bin Laden is quoted as saying: “Any leader of the White House is set on tracks he can’t leave. This President has become like a train set to move in a particular direction. He must accept these pressures otherwise his fate could be like President Kennedy or his brother.”

The man who watches over the $700 billion in government money given to banks and other institutions to avert a financial collapse said Wednesday he thinks it's too early to say how much will be repaid to the taxpayers.

Just as the Obama administration prepares to announce a new TARP-like program for small community banks, Inspector General Neil Barofsky said he believes that "it's unrealistic to think we're going to get all of that money back."

The Treasury Department has spent more than $454 billion through TARP programs. Forty-seven recipients have paid back nearly $73 billion. That means more than $317 billion remains outstanding with the program set to expire Dec. 31.

Later Wednesday, President Barack Obama is expected to announce the community bank assistance effort. The American Bankers' Association has asked for $5 billion in rescue-fund money to help small banks extend more loans.

Asked on a nationally broadcast interview how he would grade the program, Barofsky said, "I think right now it would have to be an incomplete." Barofsky did say the program was successful in "pulling us back" from a financial collapse, however. At the same time, he told CBS's "The Early Show" that the resumption of huge executive bonus payments by some of the same institutions that benefited from the government bailout has sown distrust and cynicism among many taxpayers.

The mixed and blunt assessment came as the Obama administration takes steps to wind down and refocus the Wall Street rescue effort. Barofsky's conclusions were in a quarterly report scheduled for release later Wednesday.

An administration official said Tuesday that the bailout effort's signature initiative — a capital purchase program that aimed to inject $218 billion into banks — would effectively wrap up at the end of the year.

But even as the administration aimed to refocus the massive Troubled Asset Relief Program on small businesses and homeowners, Barofsky said in his report that the effort to save the nation's financial sector came at great cost to taxpayers, to the integrity of the financial system and to the public's perception of the federal government.

"Despite the aspects of TARP that could reasonably be viewed as a substantial success," he wrote, "Treasury's actions in this regard have contributed to damage the credibility of the program and of the government itself, and the anger, cynicism and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP."

Barofsky said public suspicion was fed by Treasury's decision not to require banks to report how they used their rescue money and its "less-than-accurate" statements describing the financial condition of nine large banks that benefited from large infusions of aid. The TARP program began under the administration of President George W. Bush and has expanded under Obama.

The administration official, speaking on the condition of anonymity because the details had not yet been made public, said the Treasury Department plans to cap two TARP programs at levels below initial projections. A program designed to rid big banks of their bad assets will spend $30 billion instead of $75 billion. Another that supports a Federal Reserve effort to ease bank credit will top off at $30 billion instead of $80 billion. A new initiative aimed at banks — the Capital Assistance Program — had no applicants and will also end, the official said.

The overall TARP program has come under criticism in Congress from across the political spectrum. Liberals maintain the program needs to shift its focus from big financial firms to small businesses and homeowners. Conservatives insist the program has been an unnecessary intrusion into the financial sector and should end swiftly.

In his report, Barofsky credited the Federal Reserve and the Treasury Department for adopting some of his accountability recommendations over the past several months. But he said several of his agency's proposals for greater transparency have gone unheeded.

The report describes a patchwork of initiatives carried out under the TARP umbrella — some designed to assist the biggest of Wall Street institutions, others to bail out the struggling auto industry and yet others to help homeowners struggling to stave off foreclosure.

Even within those programs, Barofsky found inconsistent attempts to hold recipients of the bailout accountable to taxpayers.

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