Monday, April 6, 2009

Conflict of Interest

Something is accelerating even faster than the recession, and that is the burgeoning scandal of how Washington is dealing with it.


Lawrence Summers is the man President Obama turns to for insight into the economy, so it’s more than a little disturbing that the very financial institutions the taxpayers are now rescuing—to the tune of nearly $3 trillion—paid Summers almost $8 million last year. Goldman Sachs & Co., a major beneficiary of the government’s largesse, paid him $135,000 for one speech.


Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — 2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have massive losses, and that they’re fine. These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed....Geithner has, was one of our nation’s top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud.


Michael Froman, deputy national security adviser for international economic affairs, worked for Citigroup and received more than $7.4 million from the bank from January of 2008 until he entered the Obama administration this year. This included a $2.25 million year-end bonus handed him this past January, within weeks of his joining the Obama administration.

Citigroup has thus far been the beneficiary of $45 billion in cash and over $300 billion in government guarantees of its bad debts.


Obama’s deputy national security adviser, Thomas E. Donilon, was paid $3.9 million by a Washington law firm whose major clients include Citigroup, Goldman Sachs and the private equity firm Apollo Management.


David Stevens, who has been tapped by Obama to head the Federal Housing Administration, is the president and chief operating officer of Long and Foster Cos., a real estate brokerage firm. From 1999 to 2005, Stevens served as a top executive for Freddie Mac, the federally-backed mortgage lending giant that was bailed out and seized by federal regulators in September.

The economic system (socialism for the rich):

Many people object to any 'redistribution' of income through taxes, because that, in their view, is socialist. It penalizes hard work and success, and it stifles the spirit of innovation.

But a great redistribution of wealth has already occurred, in the other direction. From 1980 to 2006 the richest 1% of America nearly tripled their after-tax percentage of our nation's income, while the bottom 90% has seen their share drop over 20%....the total of all state and local taxes, social security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 21% of the annual incomes of the poorest half of America. For the richest 1% of Americans, the same taxes consume 7% of their incomes.

Wall St. tricks nonprofit institutions:

Bankers deliberately created financial products with hidden risks to lure public officials who did not understand the investments. The unnecessary level of complexity served to justify excessive profits and fees.

The large number of complex derivatives used to swindle non-profit organizations and municipalities across America by the likes of Merrill Lynch and JPMorgan Chase shows how criminality and fraud have become an integral part of Wall Street business practice.

The chosen "solution":

To aid the financial industry, the Fed slashed interest rates to nothing, savaging savers and retirees. Unable to further lower rates, the government is now flooding the economy with billions of dollars created from thin air that will inevitably generate future asset bubbles, stoke inflation, and eventually drive down the U.S. dollar.

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