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SEE TheMomentofTruth12_1_2010

“Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: “deregulation,” “shadow banking,” “interconnection,” and, yes, “Wall Street.”

EDITOR’S COMMENT: Krugman’s opinion piece is right on point, but it’s too late. Whether we find the right words in print or not, the REAL STORY is being carefully and successfully moved off-stage. Homeowners are still being treated as pawns and perpetrators of fraud when in most cases they were victims of fraud, pure and simple. It’s not just the outcome, as Barney Frank likes to point out, it’s the deal. We now have a precedent that goes far beyond the manipulations of Biddle, Morgan, Strong, Greenspan, Paulson, Geithner and Bernanke and all the other titans who ruled the purse strings of our country.

What was intended to be an infrastructure that would prevent the government being controlled by big banks and big business has failed. In fact, it is now the vehicle by which those same entities exercise increasingly oppressive power. The REAL story is all about shadow banking, Wall Street, deregulation, and enmeshment of a government whose members depend upon future jobs waiting for them in the financial sector. It is about people in the financial sector waiting for their jobs in government. The IMF and dozens of the best and brightest economists have warned us for decades that we were headed for a fall unlike anything we ever knew could happen.

That we are already in free-fall and most people don’t have the information to know it is the salt in the wound that we will feel for generations to come. Whether our republic can somehow survive this assault on the foundation of shared power power, checks and balances remains to be seen. I only see one answer: the people. If we can wake enough people to become a significant minority that needs to be confronted — like the tea partiers from 200+ years ago, and the current version we might see something positive out of all this. If not, the United States, like the USSR and dozens of empires before it will get small mention in history books, if there are any to be written at the end of this century.


Wall Street Whitewash



When the financial crisis struck, many people — myself included — considered it a teachable moment. Above all, we expected the crisis to remind everyone why banks need to be effectively regulated.

How naïve we were. We should have realized that the modern Republican Party is utterly dedicated to the Reaganite slogan that government is always the problem, never the solution. And, therefore, we should have realized that party loyalists, confronted with facts that don’t fit the slogan, would adjust the facts.

Which brings me to the case of the collapsing crisis commission.

The bipartisan Financial Crisis Inquiry Commission was established by law to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.” The hope was that it would be a modern version of the Pecora investigation of the 1930s, which documented Wall Street abuses and helped pave the way for financial reform.

Instead, however, the commission has broken down along partisan lines, unable to agree on even the most basic points.

It’s not as if the story of the crisis is particularly obscure. First, there was a widely spread housing bubble, not just in the United States, but in Ireland, Spain, and other countries as well. This bubble was inflated by irresponsible lending, made possible both by bank deregulation and the failure to extend regulation to “shadow banks,” which weren’t covered by traditional regulation but nonetheless engaged in banking activities and created bank-type risks.

Then the bubble burst, with hugely disruptive consequences. It turned out that Wall Street had created a web of interconnection nobody understood, so that the failure of Lehman Brothers, a medium-size investment bank, could threaten to take down the whole world financial system.

It’s a straightforward story, but a story that the Republican members of the commission don’t want told. Literally.

Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: “deregulation,” “shadow banking,” “interconnection,” and, yes, “Wall Street.”

When Democratic members refused to go along with this insistence that the story of Hamlet be told without the prince, the Republicans went ahead and issued their own report, which did, indeed, avoid using any of the banned terms.

That report is all of nine pages long, with few facts and hardly any numbers. Beyond that, it tells a story that has been widely and repeatedly debunked — without responding at all to the debunkers.

In the world according to the G.O.P. commissioners, it’s all the fault of government do-gooders, who used various levers — especially Fannie Mae and Freddie Mac, the government-sponsored loan-guarantee agencies — to promote loans to low-income borrowers. Wall Street — I mean, the private sector — erred only to the extent that it got suckered into going along with this government-created bubble.

It’s hard to overstate how wrongheaded all of this is. For one thing, as I’ve already noted, the housing bubble was international — and Fannie and Freddie weren’t guaranteeing mortgages in Latvia. Nor were they guaranteeing loans in commercial real estate, which also experienced a huge bubble.

Beyond that, the timing shows that private players weren’t suckered into a government-created bubble. It was the other way around. During the peak years of housing inflation, Fannie and Freddie were pushed to the sidelines; they only got into dubious lending late in the game, as they tried to regain market share.

But the G.O.P. commissioners are just doing their job, which is to sustain the conservative narrative. And a narrative that absolves the banks of any wrongdoing, that places all the blame on meddling politicians, is especially important now that Republicans are about to take over the House.

Last week, Spencer Bachus, the incoming G.O.P. chairman of the House Financial Services Committee, told The Birmingham News that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

He later tried to walk the remark back, but there’s no question that he and his colleagues will do everything they can to block effective regulation of the people and institutions responsible for the economic nightmare of recent years. So they need a cover story saying that it was all the government’s fault.

In the end, those of us who expected the crisis to provide a teachable moment were right, but not in the way we expected. Never mind relearning the case for bank regulation; what we learned, instead, is what happens when an ideology backed by vast wealth and immense power confronts inconvenient facts. And the answer is, the facts lose.

13 Responses

  1. Republicans are actually Facists and Democrats are actually Communists. That’s the Truth beneath the Lies.

  2. karen ,
    i agree all it takes is one ….but really we need huge protests like we had in the sixties to effect any meaningful change. Iwas very moved but saddend at the low turnout in DC. even worse was lack of media reporting . without the net i never would have know…even that they are destroying bit by bit.. i do what i can with posting & research for this blog & many other sites , i twitter and write many emails , comments to all that will listen . i would love to protest in the streets , hopefully i can do that soon with a little help from my friends. keep up the good fight , your not alone.

  3. Maher, are you claiming that all these busted trusts are being liquidated by the FDIC? Many of these deals had counterparty agreements with Lehman and Bear Stearns. You think the FDIC is holding onto all these piles of $#!T loans via receivership?

    Hard to believe, but it makes perfect sense. Why else would the lenders go to such extremes to keep the plaintiff “confidential”?

  4. @ Alan Baron,
    Thank you for that video. But, I challenge you…..to quit watching and start protesting. It takes only one person protesting to be a protest.

    I do this weekly. Right now, I am challenging NW Trustee’s right to hold a public auction on private property. I went to the auction (that is not held on public property) with my protest sign. I was asked to leave the private property. I will get the ACLU and the County Executive involved. If I am not allowed to protest a public auction, my 1st Amendment rights are being denied.

    BTW, I didn’t leave. I told them that I would leave on one condition only……..a police escort. No police escort showed.

    Alan, make a sign and if your county doesn’t have public auctions, go and stand in front of whatever bank branch is most visible. PROTEST!

  5. Another bottom line
    If the government is bailing out the Banksters?
    What incentive do the banksters have to renegotiate loans?


  6. Blah blah blah blah.
    Bottom line

    America is Bankrupt and wont admit it.

    It is like a drug addict or Alcoholic who wont admit they have a problem.

    Bottom Line
    The Banksters all the way down to the small businessperson was living off of Refinances and Lines of Credit.

    Now the party is over.

    No Money no Honey. So the banksters are not giving the money and soon they have no honey.




    By M.Soliman

    RELEASE / Decemeber 19th 2010// Los Angeles, Calif. / Nearly every bank foreclosure is subject to FDIC conservatorship meaning the asset follows supervision of the bank’s primary regulator. Each of these defaulted loans is held in receivership and the Federal Deposits Insurance Corporation “FDIC” is the conservator running the show. The receivership or “Hold-Co” is what folks are calling a “pretender lender “

    Two roles emerge for the FDIC handling of your loan and defenses offered in the controversy. Each has the consequence that the FDIC may be adverse in litigation to a receivership in its corporate capacity and two receiverships may be adverse to one another.

    We are following for two years the horse we choose to stick with and that has crossed many readers. It is none the less a fact many top legal firms in America agree silently and continue to focus as a Crisis Group efforts to follow closely government responses to the dramatic and rapid reshaping of our capital and credit markets. My personal take is that parties assessing your particular controversy, i.e. foreclosure are for the following:

    (1) Recognizing the roles of the insured bank and exact nature of the counterparty claim,

    (2) Be prepared to guard against FDIC responsiveness orchestrated from the time of the event of bank failure

    (3) Its role to liquidate and to seek to minimize cost and maximize recovery with respect to receivership.

    It’s challenging to say the least and we are providing updates to clients as fast as we can and share them with Livinglies readers (when permitted) on key regulatory and legislative issues.

    The challenges we face from the FDIC includes repudiation as well as jurisdictional preference over the state and district courts including ability to stay a claim for declaratory relief and injunctive remedies.

    What this translates into is your vehicle may be stuck on a railroad track and while all is quiet at the moment – – it’s a powerful fast traveling locomotive heading your way.

    We assess the information on legal issues that are derived from accounting procedures! We believe this is paramount to law firms and other title holders who commence to navigate these challenging times.

    Each update is often more informative than last and at times difficult to digest. In some cases our support lead to complex yet accurate allegations we rely on counsel to evaluate and fit into argument…Your counsel or defenses need offer an extremely focused view on the aspects and rights of the receivership and conservatorship authority of the Federal Deposit Insurance Corporation (the “FDIC”).

    A web of esoteric and convoluted complex specific issues arise in context of the administration of a receivership and need for extensive understanding and an overview.

    Particular reference is required to anticipate counterparty issues sure to surface for the questions of assets and rights of a significant regional bank and components of the inner workings that constitute a framework which greatly detour from a traditional corporate bankruptcy.

    We are relying on our experiences going through the 1998 FIERREA enactment and summarizing the matter best we can to provide an accurate overview of the more important issues many clients surrender to non-material issues from the FDIC advantage.

    These issues center on the legal framework governing FDIC resolutions and the framework for the FDIC’s methods for handling each liquidation through a receivership.

    We offer at no charge a longer memorandum courtesy of GD&C that goes into far greater detail. As an expert and witness to controversy affecting your realty and transferring of title we are comparing various angles or judicial aspects of the FDIC approach for comparison with US bankruptcy rules and guidelines.

    These provisions portray the core issues and uncertainties needed to assemble one affirmative defenses under claims made in the FDIC resolutions process. Your counsel should be competent in the area of liquidation and classes of assets – meaning cognizant of the rights and remedies of the parties identified as creditors, debtors and for treatment of loan securitizations (including the effect of claims brought under participations, and credit guarantees and or assurances).

    Our concerns are for the rights to entitlements and claims brought for assets referred to by the FDIC as “unassigned”.

    Relevant to this endeavor are applicable provisions of the Federal Deposit Insurance (the “FDI”) Act [1] and comprehensive FDIC rules [2], statements of policy [3] and to include advisory opinions.

    Our comprehensive analysis serves a very specific view that we believe is on target with the matter of claims against debtors and borrowers assets, seizure of unassigned receivables and fractionalized assets under the Repudiatory rights of the agency in a held subject to FDIC and roles of the receivership.

    A detailed analysis inches closer to the importance of establishing appropriate credit analysis and the rigor of requesting documentation and rights in a legal risk mitigation in connection with potentially troubled financial institution counterparties.

    expert testimony is not for purposes of practicing law and only a licensed practitioner can guide you through the legal process, claims and rights you may be afforded by law.

    [ ] Esp. Section 11 ET sew.,FDIC.gov/regulations / laws / rules/ 1000-1200.html#1000sec.11
    [ ] Esp. Part 360, fdic.gov/regulations/laws/rules
    [ ] #5000statementop12; fdic.gov/regulations/ laws /rules/50003500.l#5000statementop8; [ ] /regulations/laws/rules/5000-3900#5000 statementop11; fdic.gov/regulations/laws/rules/ 5000-
    [ ] 2800. 4] E.g.. fdic.gov/regulations/laws/rules/4000-7990.#400093-gov/regulations/ rules/4000-
    [ ] 6230.400091-24; fdic.gov/regulations/laws/ rules/4000-5120.#400089-48.[ ] fdic.gov bank/ historical/reshandbook/
    [ ] Journal review / http: Law.Gibson Dunn Crutcher
    [ ] E.g., Bair speech on September, 4, 2008:
    [ ] FDIC.gov/ news/news/ speeches/chairman/spsept042008.html
    [ ] E.g., re Washington Mutual (three releases):
    [ ] An institution’s charter determines which agency appoints the receiver for the institution in the case of failure.
    [ ] See 12 C.F.R. § 360.1.
    [ ] See 12 U.S.C. § 1821(d) (11); 12 C.F.R. § 360.3.


  9. I wish I would have known about the L.A. protest downtown at Chase Bank, I would have attended. So would my friends. I was downtown at the time. I saw at least 12 police cars speeding by with sirens going and thought it must be some kind of terrorist attack they way they were behaving. That is such overreaction, it’s ludicrous. Then I find out it’s 22 homeowners/protesters. Jeez.

    I wonder how we can get more organized so we can stage a massive revolt ??

    We need to reach homeowners who need funds for attorneys or get them into class action suits. I guess that means funds for advertising, too.

  10. On January 8, 2011, the Irish people will vote for new “representatives” . The lame duck Irsh parliament passed a series of austerity measures unknown to the Western world since the Weimar regime. Like the US, that lame duck group seemed to be bent on extracting money from the populace to backstop the government bailout of the Anglo-banks. Big difference is that Ireland agreed to EU rules that require Ireland to balance the budget-rather than turning on the printing presses. which have been humming full speed since 2008 in the US.——–taking gold to $1400/oz.

    The Irish lack that option and adopted measures which are not politically sustainable -ergo the insurance on Irsish govt bonds continue to skyrocket despite the passage of the austerity measures. Apparently, the bankers expect the public backlash and repudiation of the bank-driven austerity measures by the new government. When the Irish populace in effect rebels the economic dominos throughout Europe will start to fall en masse——–making Lehman look like failure of a lemonade stand. Stay tuned and keep checking your IRAs -sooner or later there will be a “hold” placed on them. What banker can get up in the AM without having dreamed of a plan to seize those monies. Maybe when that happens, the sleepy US voters will realize how avaricious these overlords are.

  11. If you are reading this you “get it”, you will fight until they come and take your home , however the vast majority of Americans are soft , confused and act like sheep. We are fighting 2 insane wars for 10 years no end in sight , we are told the biggest lie that it is making us safer when it is just the opposite. Where are the protests f? Most of us feel no pain from the war , no real cost but that bill is coming for your children & grandchildren. We are now in a America where a 10% unemployed will be the new norm. I will fight to the bitter end , I know most of you will. All I want is for the silent majority to wake up , get mad and take back our country. I watched yesterday as American from all walks of life, chained themselves to White House fence protesting the wars & got arrested. I watched as Americans went to LA bank and set up a protest in lobby got arrested.
    We need this on a massive scale , I ask all of you to try do this , this is all we have left . I am ready to stand up to all the lies …are you?

    “Hope is never easy” Please watch this video and sent to everyone…

  12. This is why we don’t sleep well anymore

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