FedUpUSA

Archive for the ‘Edolphus Towns’ Category

Obama: Time To Keep Your Promises

Posted by Karl Denninger

Do you want to have a Republican House – and possibly Senate – come November?

No?

Then you better put a stop to this crap.

The Fed is telling a bailout watchdog not to share documents requested as part of a House investigation into the bailout of failed insurance conglomerate American International Group Inc.

A letter from the special inspector general for the financial bailout to California Rep. Darrell Issa says, the Fed “has directed us not to provide you with the documents it has provided to us.”

Your own party is having none of this:

Jan. 12 (Bloomberg) — Edolphus Towns, chairman of the House Oversight and Government Reform Committee, said he will issue today a subpoena to the Federal Reserve Bank of New York for documents related to American International Group Inc.

“This subpoena will provide the Committee with documents that will shed light on how and why taxpayer dollars were used for a backdoor bailout,” Towns said in an e-mailed statement.

I know you didn’t solicit my advice, but I’m good at providing unsolicited advice in this regard.  I tried to warn John McCain prior to the election that his standing with the TARP/EESA “bailout nation” BS would cost him the election, and it did.

Most of The American People have no problem with anyone making an “unholy” amount of money provided they do so legally, without ripping anyone off. 

I know few people who object to a farmer who works his entire life to provide for himself and his family, manages his crops, makes a lot of money, socks it away, and retires to enjoy his last years in comfort.

I know few people who object to the American who invents something new and never-before seen, like an automobile, an operating system for a computer or a new gadget that everyone wants and buys, becoming rich as a consequence.

But nobody, except for the criminal banking cabal on Wall Street and their paid shills, finds it acceptable to sell worthless trash as “money good” securities to states, retirees, pension funds and ordinary people simply trying to guarantee that they have a decent retirement income, whether those securities are bonds and CDOs backed by mortgages made to people who the sellers of the money knew couldn’t pay or whether they’re Internet bubble companies that never had a snowball’s chance in Hell of being able to sell anywhere near enough product or service to cover their expenses.

Americans find it even more outrageous when, after doing the above, that very same criminal banking cabal got caught holding too much of their garbage and faced bankruptcy – so they forced the American people to bail them out while at the same time jacking up ordinary Americans’ interest rates on credit cards to 29.9%, imposing new and outrageous fees, and then paid out tens of billions of dollars in bonuses!

One very small piece of this scam is in fact AIG and the role of the NY Fed in both the “regulation” of the banks under its purview during the time that AIG was selling what later proved to be worthless credit default swaps to those institutions under its regulatory umbrella and, later, “negotiating” a back-door transfer of funds from the US Taxpayer to bail out those very same regulated firms that bought worthless “protection” for the purpose of claiming that their risky “assets” were in fact money good.

For the NY Fed to now claim that Tim Geithner knew nothing of the negotiations, public filings and transactions between AIG and these institutions, both prior to the blow up and after it happened, stretch credulity.  After all these institutions were specifically under the regulatory authority of the NY Fed in the years prior to this crisis and the NY Fed’s charter explicitly includes oversight and management of systemic risk posed by these firms to the banking system as a whole.

You, President Obama, ran on the platform and claim that you were coming to Washington to, in part, STOP THE LOOTING AND START PROSECUTING.

Well Mr. President, there’s a hell of a lot of looting that has taken place, and yet we’ve seen damn little prosecuting.

Millions of Americans have been dispossessed of their homes due to jobs lost in the economy during this mess, and there is no indication at all that the job problem is going to go away any time soon.  Indeed, we are now back where we were in 1983 in terms of the percentage of the population that is employed and contributing to the Federal Tax Base, yet the total debt outstanding in the US is, as a percentage of GDP, twice as high.

Every American invested in the public markets has just completed a “lost decade” in which they have in fact lost money over a 10 year time, and that’s without counting inflation.  These are not small losses – about 35% if you were in the S&P 500, 35% in the DOW and more than half in the Nasdaq 100.

Pension plans, both public and private, have been decimated.  Your core constituents, including organized labor of all stripes have taken it in the shorts as a direct and proximate consequence of the outrageous and pernicious fraud heaped upon the public debt and equity markets.

When you add all of this up Mr. President virtually every American has been touched by this mess.  Lower-income earners have lost their jobs, middle-income workers have lost jobs, homes and retirement security and upper-income earners have suffered all of the above plus in many cases had their nest eggs literally stolen by scammers like Madoff.

Yet thus far you have focused your prosecutorial attention on Madoff, Stanford and a handful of others – all of whom attacked “high wealth” people.

Here’s a hint Mr. President:

The rest of the nation is pissed off and tired of the excuses and lies, and we know who was responsible for all of the bogus securities and lending activity – and it wasn’t Madoff.

Fraud is against the law Mr. President.  It always has been.  You need no new laws, you have plenty of existing ones.

It is my belief that there are literally tens of thousands of people and hundreds of companies, including some very large public ones, you should have under investigation if not indictment right here and now. 

You can, right here and now, solve your flagging popularity problem.  You need only give a speech that is roughly this:

My Fellow Americans.

The last three decades have been marked by outrageous scams and frauds throughout our financial system.  This is not a partisan political issue and has consumed both Democrat and Republican administrations and Congresses alike.

As of today, that era has ended.

To those who believe that blowing bubbles, making homes unaffordable for the common man in this country or driving stock prices to ridiculous levels based on hype and false claims is a means to become wealthy, your days of being able to strip the wealth of the common American have come to an end.

Those federally-chartered institutions that promote a “bubble economy” based on unreasonable and unsustainable levels of debt will find that this administration will do everything in our power to revoke those charters.  This includes but is not limited to The Federal Reserve.

To those who have ripped people off, including those who marketed and sold worthless securities, those who claimed to have “protection” against market events when they knew the person they bought from had no money to pay, or who worked together to make loans and sales to people through the use of various lies, such as falsely overstating incomes, you will soon be facing a jury of your peers.

I am today directing the FBI and Department of Justice to open and begin investigations, starting at the top. Each and every one of the large financial institutions in this country, including the banks, GSEs and their officials that operate under a federal charter or banking license will face a forensic audit.  We will identify and bring to justice all of those who have robbed this economy of its vitality and stolen your futures.  Where possible we will claw back every penny of these individuals and firms’ wealth so as to provide you with whatever compensation we can recover.  Those firms who have committed wrongdoing will be broken up and their officials barred from serving in the banking or securities industries in the future.

Our own administration and the people in it will be subject to this investigation, as will all members of Congress, the lobbying firms and interests that interact with our government.  There will be no sacred cows and no rocks that will be left unturned.

We will investigate homebuilders, realtors, appraisers and mortgage brokers.  We will look into the FHA, Ginnie Mae, Fannie Mae and Freddie Mac and determine exactly how all of these loss-producing loans came to be made.  Where we can identify persons or corporate procedures that led investors, firms or people to be misled, we will bring charges.

The days of theft and fraud from the American public, followed by demands to be bailed out when these scams and schemes reach the end of their rope, are over.  Civil and criminal penalties have and do exist for these offenses, and they will be enforced to the fullest extent of the law.  

All Americans deserve to be able to invest with confidence and rely on the statements and publications put forward to them.  Americans deserve to be told the truth.  When Americans are ripped off, they deserve justice.  Beginning today, every American will receive exactly that.

The days of the “Wild West” on Wall Street and K Street alike are over.

Thank you.

If you don’t, and soon, you will have a Republican Congress come November, and in 2012, you will be headed home to Chicago, where you can live in the bankrupt State of Illinois – bankrupted, in no small part, by the same fraud and rip-offs that have infested the rest of this nation.

You’ve had a year to survey the landscape.

It is now time to keep your promises.

We, the voters and citizens of this nation, are not asking any longer.

We’re now demanding you do so.

Tomorrow at 10 am the House Oversight Committee will hold a hearing with SEC’s Robert Khuzami (oddly Mary Schapiro, together with Chris Cox, had been scheduled to appear initially, however “in a series of last minute negotiations, members settled on Khuzami”) to discuss what the SEC has already found to be a criminal transaction (and attempted to promptly bury under the rug if only if it weren’t for one Judge Jef Rakoff). Details of the hearing below:

Washington, DC – House Oversight and Government Reform Committee
Chairman Edolphus “Ed” Towns (D-NY) and Domestic Policy Subcommittee
Chairman Dennis Kucinich (D-OH) will convene a joint hearing entitled:
“Bank of America and Merrill Lynch: How Did a Private Deal Turn Into a
Federal Bailout?  Part V?”  The hearing will examine the events
surrounding Bank of America’s acquisition of Merrill Lynch and its
receipt of Federal financial assistance. 

The hearing will
take place at 10:00 a.m. on Friday, December 11, 2009 in room 2154
Rayburn House Office Building.  A webcast of the hearing will be
available on the Committee’s website: http://oversight.house.gov.

As for the actual hearing, Dow Jones presents this advance look of how Dennis Kucinich will approach the interrogation:

[Kucinich] plans to present Khuzami with a financial forecast
that had been prepared by Merrill Lynch a few weeks ahead of the December 2008
shareholder vote on the merger, according to subcommittee documents obtained
by Dow Jones.
The forecast omits projected losses from Merrill Lynch’s illiquid assets for
the month of December and underestimates by almost half the roughly $15
billion after-tax fourth quarter loss, the documents say.
Based on the subcommittee’s investigations, Kucinich says he believes Bank
of America executives were aware of the red flags raised by Merrill Lynch’s
forecast. But that didn’t stop them from presenting the document to their
lawyers at Wachtell, Lipton, Rosen & Katz.

Kucinich says Bank of America’s decision not to investigate the Merrill
Lynch document and notify shareholders of any change in expectations amounts
to “an egregious violation of securities laws.”

Referring specifically to the Merrill Lynch forecast, [BofA spokesman Lawrence] Di Rita said, “The
matter of Merrill’s projected fourth-quarter 2008 losses was considered
carefully and the decisions were made in good faith at a time of unprecedented
economic and market upheaval.”

And while committtee chairman Edolphus Towns is allegedly satisfied with BofA’s behavior in the last year, “since it paid the last of its $45 billion debt to taxpayers” even though it does not have the ready sources for this outflow, and even though the deal was merely a front to allow BofA traders to scalp exorbitant bonuses one last time before everything collapses, Judge Rakoff may not share Towns’ utter lack of interest with due process and punsihment of criminal behavior, especially where said criminal behavior has already been proven.