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February 2, 2010
Warning: This is Not Another Wall Street Conspiracy Theory, These are the Facts
By Shah Gilani, Contributing Editor, Money Morning

Just last week, the House Committee on Oversight and Government Reform held a hearing on the U.S. Federal Reserve's decision to directly pay billions of dollars to banks as part of its scheme to bail out insurance giant American International Group Inc. (NYSE: AIG).

According to committee Chairman Dennis Kucinich, D-Ohio, the testimony that congressmen heard just didn't "pass the smell test."

What really stinks about the whole mess is not only the cover-up of what really happened and why, but the inability of anybody in Congress to actually do their homework and be able to frame pointed questions and get to the truth.

It's not complicated, but it is convoluted. Here are the facts and some questions that Congress needs to ask - and that the American people deserve straight answers to.

What the House Committee heard, overwhelmingly, on Wednesday was that AIG had to be bailed out because if it wasn't, the financial implosion that would result would send unemployment to 25% and America into the tailspin of another Great Depression.

U.S. Treasury Secretary Timothy Geithner and former Treasury Secretary Henry M. "Hank" Paulson Jr. both testified that the systemic risk resulting from the bankruptcy of AIG would destroy the company's insurance businesses, devastating millions of Americans and resulting in economic ruin.

Let's start there. The reality is that at the time of the government's initial $85 billion infusion into AIG on Sept. 16, 2008, for which it received a 79.9% ownership interest, there was no mention of AIG's endangered insurance subsidiaries. In fact, New York Insurance Superintendent Eric Dinello, who oversaw AIG's insurance businesses, was confident enough in the subsidiaries to consider transferring $20 billion in excess reserves from the insurance subsidiaries to their AIG parent.

What was really sucking the life out of AIG were collateral demands - in other words, margin calls. A wholly owned, London-based financial-products subsidiary of AIG had written hundreds of billions of dollars of credit-default-swap contracts on exotic collateralized debt obligations (CDOs).

The derivative swaps on the CDOs were insurance policies that would protect the buyers of those CDOs against losses on underlying subprime mortgage pools. As losses on subprime mortgages mounted, the insured parties demanded more collateral from AIG.

AIG ran out of cash to make the collateral calls.

At the time of AIG's crisis, the Fed and the Treasury Department were terrified that if the "counterparties" to AIG's credit default swaps weren't paid, the ripple effect would threaten all counterparties - not to mention the entire financial system.

So here's what the Fed did. It formed two Delaware-based, limited-liability companies, Maiden Lane II and Maiden Lane III (Maiden Lane I had already been set up and funded by $29 billion of taxpayer money to buy and hold the bad assets from the failure of The Bear Stearns Cos., so that JPMorgan Chase & Co. (NYSE: JPM) could take over whatever remained of Bear's carcass).

Maiden Lane II borrowed $19.5 billion from the Federal Reserve Bank of New York to buy $39.3 billion of residential mortgage backed securities from AIGs solvent insurance subsidiaries for $20.8 billion, or about 50 cents on the dollar. Maiden Lane III borrowed $24.3 billion from the New York Fed to buy an asset portfolio of CDOs, whose "fair value" was estimated to be $29.6 billion.

The CDOs were purchased from AIG's counterparties. Between the $29.6 billion the counterparties received, and the cash they got from the collateral calls provided by taxpayers when AIG didn't have the cash to make good on its obligations, those counterparties were made 100% whole on more than $62 billion in par value of toxic-derivative CDOs.

Here's the rationale behind this egregious maneuver: Government officials believed that the counterparties would sell their toxic junk, and would then cancel their CDS insurance contracts with AIG - which would then end the margin calls.

In the public hearings, House Committee members focused on why the Fed paid out 100 cents on the dollar to the counterparty banks and why those involved in the payout scheme then tried to hide who got that taxpayer money.

But the real story was unfolding behind the scenes. Congress doesn't know about it, and the American people don't know about it. But it will prove to be nightmare of massive proportions.

Although there were many U.S. banks that received inordinate amounts of money in this pay-off scheme, an equally sickening amount was paid to a handful of foreign banks.

But the biggest recipient of the cash siphoned from taxpayers was Goldman Sachs Group Inc. (NYSE: GS).


A Conspiracy Theory You Can't Laugh Off
The same day that AIG received the $85 billion taxpayer infusion back in September 2008, Goldman Sachs Chief Financial Officer David A.Viniar said he "would expect the direct input of our credit exposure to both of them [referring also to bankrupt Lehman Brothers Holdings (OTC: LEHMQ)] to be immaterial."

Goldman officials had been telling every analyst or journalist who would listen that the investment bank was hedged against any counterparty risk. But what Goldman officials weren't saying at the time was that the company was also hedged against AIG going bust. How? The company had purchased credit-default-swap insurance on AIG's demise.

We know that is true because Stephen Friedman - the former Goldman CEO and onetime New York Fed chairman who was called to testify at the hearing - said so.

Attached to Friedman's "Factors Affecting Effects to Limit Payments to AIG Counterparties: Prepared Testimony of Stephen Freidman Jan. 27, 2010," was a "Chronology of Selected Events and Disclosures."

That chronology included a reference to an Oct. 31, 2008 Wall Street Journal article that Friedman specifically chose to illustrate that it was common knowledge that Goldman was not in need of any government assistance, and wouldn't be in any danger if AIG were to fail. This Journal excerpt included by Friedman contained the statement: "Goldman hedged its exposure by making a bearish bet on AIG, buying credit-default swaps on AIG's own debt, according to one person knowledgeable about this move."

Friedman was called to testify for one very key reason: At the time of the payments to the counterparties, he was chairman of the board of the New York Fed, which authorized those payments. But that's not all. As a member of the board of directors and a former CEO of Goldman Sachs, Friedman would no doubt have had an excellent idea of the investment bank's exposure to AIG - as well as what it stood to gain from those payments.

Freidman subsequently resigned from his post at the New York Fed on May 7, 2009, in response to criticism of his December 2008 purchase of $3 million of Goldman stock, which added to his substantial holdings - a purchase made only after he had ushered through Goldman's approval to become a bank-holding company, enabling the firm to feed at the Fed's generous liquidity trough.

Friedman continues to serve on Goldman's board. But that's another story.


Another Way to Print Money
Congress and the public have forgotten what was happening in the fall of 2008. Mortgage-backed securities (MBS) were not trading. There were no buyers. It was impossible to accurately price mortgage securities and even harder to price CDOs. The only "price discovery" mechanism was the London-based Markit Indices. These indices were supposed to represent various pools of mortgage securities and CDOs.

Unfortunately, it is possible to make bets on the direction of the indexes. In order to hedge what holders of these complex and toxic assets couldn't sell - or for pure speculation or "other" purposes - traders sold short and drove down the indexes.

It didn't matter that mortgage pools really weren't defaulting and that they were still paying out cash flow, they were judged to be worth pennies on the dollar simply because the only "active" price-discovery mechanism against which they could be valued were the indexes. And it was these indexes - which were being shorted by "interested parties" - that drove down prices and triggered collateral payments on credit default swaps to AIG's counterparties.

Goldman was paid 100 cents on the dollar - or some $12.9 billion - for the CDOs it had AIG write credit default swaps on. All the counterparties got 100 cents on the dollar. Why is that an issue? Because the CDOs that were insured hadn't actually defaulted and were still - according to what Maiden Lane III paid - worth about 50 cents on the dollar. So why would the Fed assume the CDOs were never going to recover and that the insured parties were entitled to get paid as if the collateralized securities were totally worthless?

Even more suspicious is the fact that there was a more elegant and simple solution to the problem. And that solution was already available. Why was it not used?

The problem at the time was that rating-agency downgrades were about to trigger more margin calls against AIG. By then, however, the U.S. government already owned 79.9% of AIG. Surely it would have been cheaper for the government to make any margin calls than to pay off all of the counterparties. Even more sickening: If that solution was implemented as the value of the CDOs increased (which some have), collateral that was given to the counterparties would actually have to be returned to AIG - now 80% owned by U.S. taxpayers.

This whole affair raises scores of questions. Last week's hearing before Congress drove that point home. In fact, as I watched the testimony, I realized that our elected representatives didn't even know the correct questions to ask. That's why it's time to write your congressmen and tell them to ask:


Why didn't the Treasury Department make the required margin calls - if they were needed - and stand to get collateral back if the insured CDOs rose in value?
Why did the New York Fed buy paper at 50 cents on the dollar and pay banks 100 cents, when they had no idea what the intrinsic value of those securities was at the time?
Who really leaned on the New York Fed to not disclose who got our taxpayer money?
What did Stephen Friedman know about the payments to Goldman?
What records exist of correspondence between Friedman and Timothy Geithner, who was then president of the New York Fed?
What records exist of correspondence between Friedman and Henry M. Paulson, Geithner's predecessor as Treasury secretary and a former Goldman CEO himself.
If Goldman was really hedged as Friedman appeared to claim, then why did taxpayers pay the investment bank 100 cents on the dollar?
Did Goldman (and others) drive down the value of securities to collect cash, demand to be made whole and at the same time buy credit-default-swap insurance on AIG, which they were helping to sink?
Can we see the trade blotters of Goldman's trading desks to determine what trading strategy those traders employed during this period and later when making record profits?
Why are so many Goldman Sachs people in so many powerful government positions?
Why has the United States government allowed a cabal of financial interests to hijack America?
That's a start. I urge you add to the list and forward it to President Barack Obama and to your elected representatives in Congress. It's our money, our future and our financial freedom being held hostage.

[Editor's Note: Retired hedge fund manager R. Shah Gilani is one of the leading experts on the global financial crisis, and the credit crunch that it spawned. His opinion pieces and economic analyses have been read by millions across the Internet. Gilani last wrote about how Wall Street's shenanigans are choking the American economy. To read that story, please click here.]

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Outright Heinous Behavior

If Henry Paulson's (former Secretary of the U.S. Treasury) hedge fund, on the heels of leaving office, shorted CDO's (the financial instruments of mass destruction) it should be viewed as:

1. One of the most unethical trades in the history of the United States.

2. Outright heinous behavior.

3. Fraud of the worst kind.

4. All of the above.

If you answered #4 then you are correct and it confirms that Goldman Sachs, Tim Geitner and Henry Paulson are the true axis of evil.

Lobbying for Fun and Profit

Image by stage88 via Flickr

The following companies and groups have been lobbying – again. They do this for the benefit of every citizen of the United States. They feel it’s their “duty” to keep our Congressmen and Senators informed and inline.

After all having to vote on bills that are 1300 pages long they haven’t read can be stressful if they haven’t enough pork hidden in the fine print or their not getting their share of corporate manna.

In just the second quarter the following fine companies “contributed” to the greening of their corporations. (lobbying dollars usually return $10 for every $1 invested, not bad for just doing what’s right)

Nuclear Energy Institute - $570,000
Coca Cola - $580,000
Pacific Gas and Electric - $740,000
Duke Energy Corp - $1,500,000
Air Bus Americas Inc. - $190,000
Aircraft Owners and Pilots Association - $640,000
Microsoft - $1,900,000
Eli Lilly - $3,6000,000
Progress Energy - $440,000
MillersCoors LLC – $490,000
PepsiCo Inc - $650,000
The Beer Institute (You’ve got to love the name) - $200,000

Hey, I’ve got a great idea. Why don’t we, as citizens, get together and stop paying all our taxes and start lobbying. That way our Congressman and Senators will listen to what we need and represent voters instead of these big companies. Wouldn’t that be nice—for a change.

March on Washington - Now

A friend, Lee Balduc, sent me this U-tube video. It's worth your time to watch it. It is painful to be an American (see previous post)

http://www.youtube.com/watch?v=pKFKGrmsBDk&feature=related

Let's make our representatives represent the people who elected them. The only way this will happen now is to march on Washington and shut down our government. Show them in a peaceful way that if they won't listen to our votes, we'll vote with our feet in Washington D.C.

Nine Reasons Lobbying is Destroying the United States

I didn’t know that business lobbying is as old as our Constitution and protected by the first Amendment

My view of lobbying: It’s five buzzards at a two buzzard meal.*

I’m in favor of the Constitution, but there’s something wrong when:

1. 25 firms have been documented to have extensively lobbied for subprime mortgages.

2. Many of these companies made campaign contributions to both Democrats and Republicans.

3. The financial services sector collectively donated more than $2.2 billion to political campaigns and spent $3.5 billion on lobbying politicians in Washington D.C. These two processes are linked.

4. These 25 firms issued approximately $1 trillion in subprime mortgages to over 5 million borrowers.

5. These subprime mortgages resulted in many billions of dollars in revenue for these 25 firms.

6. Many of these 25 firms have received considerable portions of the $700 billion in TARP money.

7. Many of these 25 firms are leading the charge to repossess homes. And lobbied actively against measures to save people’s homes!

8. The bipartisan nature of the lobbying and campaign contributions has resulted in a deregulatory consensus on capital hill that is not shared by academic and professional economists.

9. It’s triple dipping when your company makes money on the subprime mortgages, you get bailed out by the tax payers and then, you take peoples homes and salvage their value.

When the Constitution allows this process, we need to take a serious look not at our Constitution but at the ability of large corporations to subvert our constitution.

Lobbying and campaign contributions are shifting the balance of power in our country from the voters to the major corporations.

How many times must the American public be raped before they understand they're being raped? And are we going to let our children and grandchildren continue to be violated?

Calvin Coolidge has not been treated kindly by history but he said something we need to remember ——“Prosperity cannot be divorced from humanity.”

It is time to stop the abomination of lobbying and campaign contributions.



*My view of lobbying and campaign contributions:

Bribe: noun. Anything given or serving to persuade or induce. Verb. To influence or corrupt by a bribe.

Lobby: n. A group of persons who work to conduct a campaign to influence members of a legislative body. V. To solicit or try to influence members of a legislature.

Lobbyist: A person who tries to influence legislation on behalf of a special interest.

If money is given to a political candidate or an office-holding politician before, during or after being contacted by a lobbyist for that organization, then the candidate or elected official has been bribed for services rendered or some service implied to be rendered in the future.

If an individual or organization gives money to both political parties or candidates running for the same office then they are, by caveat, guilty of bribery.

Who Needs Foreign Terrorists When We’ve Got Foreign Lobbyists?

If you’ve read this blog in the past you know my views on lobbyists. They are parasites of the worst variety. Parasites sucking your representation right out of your elected representatives. Parasites sucking the honesty of politicians right out of Washington D.C. Parasites sucking democracy from a formerly free country.

Where does this end?

Now I read that Tyco International ($360K) and Siemens (A German conglomerate)-($1.3 million) are lobbying. Tyco is financially whining for more of the Homeland Security pie and extra Stimulus gravy (Specifically something Barrack Obama promised would not happen) and Siemens is pouring dollars on politicians for more defense spending, energy efficiency, federal housing matters, math and science education, Health information technology, privacy and security issues. Siemens-built power plants already supply one-third of North America’s electricity.

And our legal system allows this?

Isn’t it bad enough that American companies can spend dollars on politicians without getting foreign companies lining up at the dollar teat?

Lobbying and company campaign contributions are “bribery of American politicians one-step removed.” If you don’t believe it, correlate the companies that are getting tarp money with the companies that contributed to the election of senators and other elected officials.

How Banks and Elected Representatives Are Destroying Your Small Business

The U.S. government cannot even define a small business effectively.

The SBA (Small Business Administration) sees a small business as:

“500 or fewer employees for most manufacturing and mining industries”

“100 or fewer employees for all wholesale trade industries”

“$6 million per year in sales receipts for most retail and service industries (with some exceptions)”

The SBA for the most part has it wrong.

A definition I like is: Any activity that provides full or part time income for any independent individual is a small business.

In other words a small business definition must be inclusive because most small businesses started as an idea in the mind of one person.

And the good businesses develop from there. Even Coca Cola started as an idea in the mind of one person.

What the SBA and elected representatives don’t seem to understand is that small businesses are the strength of our nation and the future of our country.
Here are the statistics they need to read and understand:

1. Small businesses produce 50% of our GDP.
2. Small businesses employ more than half of all private sector workers.
3. In the last decade small businesses have created close to 100% of all new jobs.

Small businesses are the most vibrant enterprises in the country.

I bet by my definition you own your own business. And I bet that it’s important to you. And I bet you’d like to see it survive, grow and prosper.

I also bet that since this banking crisis has started that a commodity you need desperately to grow your business has become tougher (if not impossible) to get and if you can get it, it’s more expensive. I’m talking about money. Cash.

Specifically money in the form of credit (lines of credit and credit cards have been hit expecially hard).

Money is the commodity that grows your idea into a business that hires people. Isn’t that what it’s going to take to get out of this mess; good ideas that lead to small businesses that lead to growth that lead to jobs. And cash is the commodity that allows the tiny business to leverage itself into the business that hires employees and builds this nation.

And what did our government do? They showered $700 billion plus on a few large businesses. Their goal, to provide liquidity in the system. Frankly I’m not seeing it. Our small business uses a line of credit on our home and when times are tight, our credit cards.

Our bank blocked our line of credit even though we have great credit and Discover sent us a letter saying they were going to boost our interest rate somewhere into the sky even though banks are getting money from the Federal Reserve at 0%-.25%. We had them close our Discover account.

The federal government established TALF (term asset-backed lending facility) to make consumer and small business loans more widely available by securitizing loans. I don’t entirely understand this process but it reduces the lenders’ costs and risks.

It’s not working. Today the securitization market for loans is 80% below what it was in 2007. And I doubt if we could walk into a bank and get a loan.

I believe small businesses are the economic strength of our nation. And I believe too big to fail means that money is going into the wrong hands. Money has to circulate and yet it’s stalled in the hands of the banks.

So 50% of the GDP and virtually 100% of the job creators are jammed up. Can’t the government see that this is not a problem; it is the problem.

My wife and I have been in small businesses since 1973 and we have never defaulted on any loan or payment in 35 years and yet we can’t expand as banks have new criteria for loaning money. Historically the criteria was: If you don’t need money, we’ve got it. Now it’s: I don’t care that you’ve had the same accounts for 30+ years and never missed a payment; you’re not credit worthy.

The Devil is an American Lobbyist

Five Buzzards at a two-buzzard meal

Bribe: noun. Anything given or serving to persuade or induce. Verb. To influence or corrupt by a bribe.

Lobby: n. A group of persons who work to conduct a campaign to influence members of a legislative body. V. To solicit or try to influence members of a legislature.

Lobbyist: A person who tries to influence legislation on behalf of a special interest.

If money is given to a political candidate or an office-holding politician before, during or after being contacted by a lobbyist for that organization, then the candidate or elected official has been bribed for services rendered or some service implied to be rendered in the future.

If an individual or organization gives money to both political parties or candidates running for the same office then they are, by caveat, guilty of bribery.

I have been railing against lobbyists for some time. Our system of lobbying is vile and corrupt.
There’s new evidence that lobbyists have fresh meat in their sites.

1. The new emergency-lending bill for the wars in Iraq and Afghanistan is a choice morsel for the American lobby. Politicians and lobbyists are constantly looking to climb aboard the next gravy train and this looks like a big one. At least politicians are elected by voters. Lobbyists are paid to be devil’s advocates for the highest bidder.

President Obama, the new sheriff, has said he wants to keep his 83 billion-dollar request free of unrelated add-ons.

Fat chance.

2. Insurance companies and their lobbyists are working behind the scenes for a simple but lucrative change in insurance laws. Lucrative for them.

An obscure change in federal law could be worth billions to insurance companies and screw the owner of every insurance policy in the United States until hell freezes over or the next civil war.

Key lawmakers and Obama administration officials say they’re open to it. So if you pay any dollars for any type insurance this will have a negative effect on you.

Known as an “Optional Federal Charter” the new system would free large insurers to escape state insurance regulators by setting up a new federal agency. In other words, a set of national rules for insurers would be established. The insurance industry would then have the “option” of following the state or federal rule whichever they prefer (obviously the more lenient and the one that suited them financially).

This system would allow insurance companies to shop around for the weakest rules. Today the sheep (you and me) are protected by state insurance regulators. Insurance regulators are there to prevent fraud and protect citizens. Do you want your elected representatives to become impotent in protecting you from giant insurance companies who have no soul and whose only god is profitability?

I’m sure the people who are lobbyists would look at these posts as one sided. And I’m sure they would say lobbyists do a lot of good. But for whom? Is it good for you or the fat cats and corporations who can afford to influence politicians by campaign contributions and spending big bucks on active lobbying?

Once elected a politician’s goal is to get re-elected and there’s no better way than to have a fat purse filled with silver from the fat cats and corporations who will actually buy their votes.
Write your president and every representative. Stop lobbyists now before it’s too late.

Why Fear Terrorists When We’ve Got Senators?

February 17th and April 9th I posted entries on lobbying and our housing crisis. Lobbying is back in the news. The next five paragraphs were taken from my previous entries.

Bribe: noun. Anything given or serving to persuade or induce. Verb. To influence or corrupt by a bribe.

Lobby: n. A group of persons who work to conduct a campaign to influence members of a legislative body. V. To solicit or try to influence members of a legislature.

Lobbyist: A person who tries to influence legislation on behalf of a special interest.

If money is given to a political candidate or an office-holding politician before, during or after being contacted by a lobbyist for that organization, then the candidate or elected official has been bribed for services rendered or some service implied to be rendered in the future.

If an individual or organization gives money to both political parties or candidates running for the same office then they are, by caveat, guilty of bribery.

Forbes magazine listed senators who received the highest share of their campaign contributions from the finance, insurance and real estate industries over the last five years. Here are the top four:

Chris Dodd (Democrat – Conn) $9million – 35%+
Richard Selby (Republican – Al) $2.5 million – 33%+
Charles Shumer (Democrat – N.Y.) $3.3 million – 32%+
Tom Carper (Democrat – De.) $1.5 million – 32%+_

These are examples of senators who I believe have allowed themselves to be purchased and represent corporations and industries as opposed to the people who voted them into office.

Chris Dodd and Richard Selby are the ranking democrat and republican on the Banking, Housing and Urban Affairs Committee. Yet they are receiving lots of dollars from these groups. Don’t they recognize that this smacks of corruption? If you were an inspector of meat and you allowed the company whose meat you inspected to supply you with cash would this be evidence of fraud?

The Consumer Education Foundation (a California based non-profit, non-partisan consumer research, education and advocacy program) published a document entitled “Sold Out: How Wall Street and Washington Betrayed America.”

In the article (231 pages long) they make the case that many of our financial problems are a “result of bad behavior on Wall Street and the corrupt connection between the powerful moneyed interests and those who make policy in Washington D.C.”

In this article they blame the decision-makers on Wall Street of:
1. Engaging in unconscionable predatory lending that offered huge profits, but led to extreme consequences when the loans were unpayable.

2. Consistently undermined financial regulation programs to benefit their Wall Street firms.

Over the last decade financial firms political campaign contributions and lobbying investments exceeded $5 billion to purchase political influence to gain the political power to undermine regulation and pave the way for favorable treatment in Washington.

$3.4 Billion of this money went to hire lobbyists. The financial sector employed 2,997 lobbyists in 2007. One hundred and forty two of these individuals were previously high-ranking officials or employees in the Executive Branch or Congress. Who better to understand and influence Washington’s wheels of power? Who better to call in political favors from friends and their peers – other elected officials.

One example of the erosion of regulation brought about by financial companies through political influence:
“In 1975, the Security and Exchange Commission trading and marketing division promulgated a rule requiring investment banks to maintain a debt-to-net capital ratio of less than 12-to-1. It forbid trading in securities if the ratio reached or exceeded 12 to 1.”

This rule was subverted in 2004 (led by Goldman Sachs – the top investment bank in the US and their chairman at the time - Henry Paulson – the name should sound familiar) and authorized investment banks to “develop their own net capital requirements.” Meaning they could leverage themselves to infinity and beyond with no oversight.

A second example: “In 2003, during the height of the predatory lending crisis, the Office of the Comptroller of the Currency invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. How many laws from the Civil War era rear their ugly heads to effect so many Americans? In fact this one law may cause ten times more Americans to lose their homes than lost their lives in the Civil War.

And so 400+ companies (most in the financial and insurance industries) have received tarp money from our politicians who have been subverted by campaign contributions and lobbying efforts.

On the John Stewart television program Elizabeth Warren (she heads the Congressional Oversight Panel responsible for watching over Tarp – the Troubled Asset Relief Program) stated that for every $100 of TARP money disbursed the government has gotten stock and warrants worth just $66 at the time of issuance. Warren went on to say that the value of those assets has deteriorated further since being issued.

Wouldn’t it be nice if you could use $5 billion dollars to get a program that will eventually bring your companies more than $700 billion in return? Imagine for one moment that I brought you a guaranteed investment that for every 66 cents you give me, I give you $1.00 in cash. That’s an instant 51.5% instant return (and that doesn’t cover the further deterioration of the troubled assets).
And now the Obama-backed anti-foreclosure bill has been voted down in the United States Senate.

Surprise, surprise, surprise.

The Democratic-controlled Senate defeated a plan to spare hundreds of thousands of homeowners from foreclosure. Banks lobbied aggressively against the bill.

“Senate Majority Whip Dick Durbin of Illinois championed the bill and spent weeks negotiating with financial lobbyists in a bid to strike a deal.”

The question that seems obvious to me is: Why did Senator Durbin spend a moment negotiating with lobbyists? Shouldn’t he and president Obama (who claimed he strongly supported the bill) have been negotiating with the other Senators? And then the defeat got little publicity, as our politicians were conveniently moving on to the changes in credit card regulations. Meanwhile it’s common knowledge that the credit card companies are hammering consumers or what they in private call, “making hay while the sun shines.”

It seems there will always be more cake for the financial industry. First they get a $700 billion tarp bailout. Then they get 0-.25% interest from the federal reserve. And now they will get to feast on up to 8 million more home owners who will lose their homes because they will not be able to pay back their predatory lenders.

Our system of campaign contributions and lobbying is not only a national liability and an embarrassment but evidence of corruption in our capital.

Why should taxpayers bear the brunt of bailing out banks when their votes mean little in the greater scheme of things?

Why should Senators be able to take money from anyone for their influence?

Why should corporations be able to lobby when 50 million Americans with no health insurance carry so little weight in Washington while all our Congressmen and Senators and their families have the best health insurance money can buy with no preexisting conditions?

Why should we fear terrorists when we’ve got Senators?

If anyone out there can answer these questions, please reply.

The Dark Politics of Lobbying

February 17th I posted an entry on lobbying and our housing crisis. Lobbying is back in the news. The next five paragraphs were taken from my previous entry.

Bribe: noun. Anything given or serving to persuade or induce. Verb. To influence or corrupt by a bribe.

Lobby: n. A group of persons who work to conduct a campaign to influence members of a legislative body. V. To solicit or try to influence members of a legislature.

Lobbyist: A person who tries to influence legislation on behalf of a special interest.

If money is given to a political candidate or an office-holding politician before, during or after being contacted by a lobbyist for that organization, then the candidate or elected official has been bribed for services rendered or some service implied to be rendered in the future.

If an individual or organization gives money to both political parties or candidates running for the same office then they are, by caveat, guilty of bribery.

It’s been reported that some large corporations in this country spent hundreds of millions lobbying successfully for a tax break enacted in 2004 and got a 22,000-percent return on that investment -- proof that for those who can afford it, hiring a lobbyist can pay handsome dividends.

Figures compiled by professors at the University of Kansas offer a picture of how lobbying is undermining our democracy. It offers a glimpse of how the lobbying business works, and why.

President Barack Obama has vowed to control lobbyists' influence, but the industry is booming.

Companies and interest groups spent $3.42 billion lobbying Congress and the federal government in 2008, the last year for which such figures are available, according to the Center for Responsive Politics. That's a 14 percent jump from the previous year.

And why do they spend this money? Because companies are getting what they pay for when they hire professional lobbyists.

Hui Chen of the University of Colorado, David C. Parsley of Vanderbilt University and Ya-Wen Yang of the University of Miami found that, on average, a company's income rose by more than a half-percent for every 10 percent more it spent on lobbying. That translates into many millions of dollars for a large firm.

The Carmen Group, a midsize lobbying firm that has lobbied for private companies like HealthSouth as well as local governments, hospitals and universities, among others, markets itself as an outfit that brings clients an "extraordinary" return of investment of 100 to 1 or better, according to its Web site.

"We play a decisive role in realizing projects that deliver value ranging from hundreds of thousands all the way through billions of dollars," the site says.

Our elected officials are taking money for their decisions. This is wrong. Your representatives were elected to represent their constituents, not major American corporations.

“Companies are "spending big money, but ... it pales in comparison to the potential profit they can reap if they're successful," said Sheila Krumholz of the Center for Responsive Politics, which tracks money in politics. The nonpartisan group recently released a study comparing the amount spent by bailed-out banks on political contributions and lobbying with the amount of money they got from the Wall Street rescue fund, known as the Troubled Asset Relief Program (TARP). The results produced eye-popping rates of return, an overall 258,449 percent for the $114 million they spent on campaign donations and lobbying.”

Senator Richard Selby (R-Al) accepted $565,000 in contributions from the financial services industry (2007-2008).

Representative Barney Frank (D-Mass) accepted $948,000 over the same period from the financial-services industry.
These two politicians rant and rave on television against companies in the financial service industry, but then they vote for these massive bailouts.

When will we as citizens understand it’s not what politicians say that matters it’s what they do. And how they vote.

Where does this behavior end?

Dark Comedy Politics

A gift from a friend - Durry Garbutt. Enjoy.

545 vs. 300,000,000

EVERY CITIZEN NEEDS TO READ THIS AND THINK ABOUT WHAT THIS JOURNALIST HAS SCRIPTED IN THIS MESSAGE. READ IT AND THEN REALLY THINK ABOUT OUR CURRENT POLITICAL DEBACLE.
Charley Reese has been a journalist for 49 years.

545 PEOPLE

By Charlie Reese

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don't propose a federal budget. The president does.

You and I don't have the Constitutional authority to vote on appropriations. The House of representatives does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, the Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president, and nine Supreme Court justices, 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.

I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash.

The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits. The president can only propose a budget. He cannot force the Congress to accept it.

The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House? Nancy Pelosi. She is the leader of the majority party.

She and fellow House members, not the president, can approve any budget they want. If the president vetoes it, they can pass it over his veto if they agree to.
It seems inconceivable to me that a nation of 300 million can not replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility. I can't think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it's because they want it unfair.

If the budget is in the red, it's because they want it in the red .

If the Army & Marines are in IRAQ , it's because they want them in IRAQ.

If they do not receive social security but are on an elite retirement plan not available to the people, it's because they want it that way.

There are no insoluble government problems.

Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like "the economy," "inflation," or "politics" that prevent them from doing what they take an oath to do.

Those 545 people, and they alone, are responsible.

They, and they alone, have the power.

They, and they alone, should be held accountable by the people who are their bosses. Provided the voters have the gumption to manage their own employees.

We should vote all of them out of office and clean up their mess!

Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.

What you do with this article now that you have read it.......... is up to you.