[Dialogue] The Spitzer Case

[James Wiegel]

Something is really wrong in all this -- buying a bank
for $2 a share?  now the fed is loaning directly to
investment banks?  Our town, Tolleson, is leading the
Valley here in foreclosures -- 66 per 1000 . . .

I thought we were in debt from the war.  Where is the
Fed getting the money to do this??

Oh, and hi, Ann, how are you?  We spent a day with the
Moffet's last week on spring break.

Jim Wiegel
--- AWOODEWM at aol.com wrote:

> Here's a story with a twist.....In case you missed
> this article. I have to 
> say that I am not familiar with Greg Palast but it
> does sound plausible
> 
> Anne Wood
> 
> The $200 billion bail-out for predator banks and
> Spitzer charges are 
> intimately linked
> 
>  By Greg Palast
> Reporting for Air America Radio's Clout
>  Â 
>  Listen to Palast on Clout at www.GregPalast.com
>  While New York Governor Eliot Spitzer was paying an
> 'escort' $4,300 in a 
> hotel room in Washington, just down the road, George
> Bush's new Federal Reserve 
> Board Chairman, Ben Bernanke, was secretly handing
> over $200 billion in a tryst 
> with mortgage bank industry speculators.
> 
> Both acts were wanton, wicked and lewd. But there's
> a BIG difference. The 
> Governor was using his own checkbook. Bush's man
> Bernanke was using ours.
>  This week, Bernanke's Fed, for the first time in
> its history, loaned a 
> selected coterie of banks one-fifth of a trillion
> dollars to guarantee these banks' 
> mortgage-backed junk bonds. The deluge of public
> loot was an eye-popping 
> windfall to the very banking predators who have
> brought two million families to 
> the brink of foreclosure.
>  Up until Wednesday, there was one single, lonely
> politician who stood in the 
> way of this creepy little assignation at the
> bankers' bordello: Eliot 
> Spitzer.
>  Who are they kidding? Spitzer's lynching and the
> bankers' enriching are 
> intimately tied.
>  How? Follow the money.
>  The press has swallowed Wall Street's line that
> millions of US families are 
> about to lose their homes because they bought homes
> they couldn't afford or 
> took loans too big for their wallets. Ba-LON-ey.
> That's blaming the victim.
>  Here's what happened. Since the Bush regime came to
> power, a new species of 
> loan became the norm, the 'sub-prime' mortgage and
> it's variants including 
> loans with teeny "introductory" interest rates. From
> out of nowhere, a company 
> called 'Countrywide' became America's top mortgage
> lender, accounting for one in 
> five home loans, a large chuck of these 'sub-prime.'
>  Here's how it worked: The Grinning Family, with US
> average household income, 
> gets a $200,000 mortgage at 4% for two years. Their
> $955 a month payment is 
> 25% of their income. No problem. Their banker
> promises them a new mortgage, 
> again at the cheap rate, in two years. But in two
> years, the promise ain't worth 
> a can of spam and the Grinnings are told to scram -
> because their house is now 
> worth less than the mortgage. Now, the mortgage hits
> 9% or $1,609 plus fees 
> to recover the "discount" they had for two years.
> Suddenly, payments equal 42% 
> to 50% of pre-tax income. Grinnings move into their
> Toyota.
>  Now, what kind of American is 'sub-prime.' Guess.
> No peeking. Here's a hint: 
> 73% of HIGH INCOME Black and Hispanic borrowers were
> given sub-prime loans 
> versus 17% of similar-income Whites. Dark-skinned
> borrowers aren't stupid – they 
> had no choice. They were 'steered' as it's called in
> the mortgage sharking 
> business.
>  'Steering,' sub-prime loans with usurious kickers,
> fake inducements to 
> over-borrow, called 'fraudulent conveyance' or
> 'predatory lending' under US law, 
> were almost completely forbidden in the olden days
> (Clinton Administration and 
> earlier) by federal regulators and state laws as
> nothing more than fancy 
> loan-sharking.
>  But when the Bush regime took over, Countrywide and
> its banking brethren 
> were told to party hardy – it was OK now to
> steer'm, fake'm, charge'm and take'm.
>  But there was this annoying party-pooper. The
> Attorney General of New York, 
> Eliot Spitzer, who sued these guys to a
> fare-thee-well. Or tried to.
>  Instead of regulating the banks that had run amok,
> Bush's regulators went on 
> the warpath against Spitzer and states attempting to
> stop predatory 
> practices. Making an unprecedented use of the legal
> power of "federal pre-emption," 
> Bush-bots ordered the states to NOT enforce their
> consumer protection laws.
>  Indeed, the feds actually filed a lawsuit to block
> Spitzer's investigation 
> of ugly racial mortgage steering. Bush's banking
> buddies were especially 
> steamed that Spitzer hammered bank practices across
> the nation using New York State 
> laws.
>  Spitzer not only took on Countrywide, he took on
> their predatory enablers in 
> the investment banking community. Behind Countrywide
> was the Mother Shark, 
> its funder and now owner, Bank of America. Others
> joined the sharkfest: Goldman 
> Sachs, Merrill Lynch and Citigroup's Citibank made
> mortgage usury their major 
> profit centers. They did this through a bit of
> financial legerdemain called 
> "securitization."
>  What that means is that they took a bunch of junk
> mortgages, like the 
> Grinnings, loans about to go down the toilet and
> re-packaged them into "tranches" of 
> bonds which were stamped "AAA" - top grade - by bond
> rating agencies. These 
> gold-painted turds were sold as sparkling safe
> investments to US school 
> district pension funds and town governments in
> Finland (really).
>  When the housing bubble burst and the paint flaked
> off, investors were left 
> with the poop and the bankers were left with
> bonuses. Countrywide's top man, 
> Angelo Mozilo, will 'earn' a $77 million buy-out
> bonus this year on top of the 
> $656 million - over half a billion dollars – he
> pulled in from 1998 through 
> 2007.
>  But there were rumblings that the party would soon
> be over. Angry 
> regulators, burned investors and the weight of
> millions of homes about to be boarded up 
> were causing the sharks to sink. Countrywide's stock
> was down 50%, and 
> Citigroup was off 38%, not pleasing to the Gulf
> sheiks who now control its biggest 
> share blocks.
>  Then, on Wednesday of this week, the unthinkable
> happened. Carlyle Capital 
> went bankrupt. Who? That's Carlyle as in Carlyle
> Group. James Baker, Senior 
> Counsel. Notable partners, former and past: George
> Bush, the Bin Laden family and 
> more dictators, potentates, pirates and presidents
> than you can count.
>  The Fed had to act. Bernanke opened the vault and
> dumped $200 billion on the 
> poor little suffering bankers. They got the public
> treasure – and got to keep 
> the Grinning's house. There was no 'quid' of a
> foreclosure moratorium for the 
> 'pro quo' of public bail-out. Not one family was
> saved – but not one banker 
> was left behind.
>  Every mortgage sharking operation shot up in value.
> Mozilo's Countrywide 
> stock rose 17% in one day. The Citi sheiks saw their
> company's stock rise $10 
> billion in an afternoon.
>  And that very same day the bail-out was decided –
> what a coinkydink! – the 
> man called, 'The Sheriff of Wall Street' was cuffed.
> Spitzer was silenced.
>  Do I believe the banks called Justice and said,
> "Take him down today!" Naw, 
> that's not how the system works. But the big players
> knew that unless Spitzer 
> was taken out, he would create enough ruckus to
> spoil the party. Headlines in 
> the financial press – one was "Wall Street
> Declares War on Spitzer" - made 
> clear to Bush's enforcers at Justice who their
> number one target should be. And 
> it wasn't Bin Laden.
>  It was the night of February 13 when Spitzer made
> the bone-headed choice to 
> order take-out in his Washington Hotel room. He had
> just finished signing 
> these words for the Washington Post about predatory
> loans:
>  "Not only did the Bush administration do nothing to
> protect consumers, it 
> 
=== message truncated ===>
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401 North Beverly Way   
Tolleson, Arizona 85353-2401
+1  623-936-8671
+1  623-363-3277
   jfwiegel at yahoo.com
   www.partnersinparticipation.com

Strangely enough, this is the past that somebody in the future is longing to go back to.    Ashleigh Brilliant


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