Eliot Spitzer gets taught a lesson...

[jerkspot]

Do not ever fuk with bush.

 

another great/fuked peice by greg palast.

 

 

 

The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

 

By Greg Palast

Reporting for Air America Radio’s Clout

 

Listen to Palast on Clout at http://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 embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which he federal government was turning a blind eye.”

 

Bush, said Spitzer right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

 

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

 

But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

 

A note on “Prosecutorial Indiscretion.”

 

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

 

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

 

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

 

Or maybe we should say, 'indiscretion.'

[WORDISM45]

very interesting read thanks for posting

[angelofdeath]

there is a lot of truth and a lot of bullshit in that article.

 

for one, they left out the fact that the federal reserve was behind the whole scam, not bush. see, the fed artificially manipulates interest rates how they want them, not the market. in 01, with greenspan inflation, and lower interest rates the fed pumped billions of new federal reserve notes into the economy by lowering interest rates to super low's. this then allowed the banks to misallocate money. this is what caused the housing bubble, a steady supply of cheaper than market rate credit.

 

bush was not behind the subprime loans. the president nor the government did not have guns to the heads of the blacks and latino's (and everyone else)who like idiots, signed up for ARM loans or interest only loans with balloon payments in the future. what happened was, is in all the hype and to try to keep up with the jones's and get more house than they could afford, they got crazy wild dog loans with low teaser rates. the bankers loved it.

 

soon, as with all bubbles, it burst. home prices have fallen. if prices fall another 10%, 20% of homeowners will be upside down. that is not the governments fault other than in 2 areas, which are not mentioned in the article. the fed manipulating interest rates and inflating. and the federal government subsidizing the loan industry so everyone can have a home. see, when banks were not allowing poor blacks and hispanics and whites to get loans larger than they could afford, the government created fannie mae and mac which subsidized the industry and allowed low or no down payments, income limits to be raised, and it was all guaranteed by uncle scam. the left loved this. now those chickens have come home to roost. the ones that got arms during the bubble are learning that it wasnt really worth it, when the foreclosure sign goes up.

 

as for spitzer im glad the idiot got served. but then again, the crime was victimless. the out of control federal government was using police powers they should never have to take out a leader of a sovereign state in the union. its always the idiots like spitzer, no trans fat, crack down on prostitution, drugs, etc etc that are the very reason why that guy wrote that book.. 'do as i say, not as i do.' its no different than iran contra and the drugs. hypocrisy

[Stereotype V.0002]

The days of the FBI being the attack dog of the executive branch ended when J Edgar Hoover put on his prettiest little red dress and walked out of the building. Greg Palast is a clown in general, but I cant tell if hes trying to blame all of this on bush because bush is a convenient universally hated bad guy.....or if he really thinks everything that happens in the world is a bush led conspiracy. The article tries to portray spitzer as some sort of hero standing up against the evil genius dubya, who just happened to like getting some high priced pussy on the side. Maybe the hooker was secretly working for bush! Spitzer got caught because he made large transactions (of campaign money, not his own as the article says) to a company that doesn’t understand how to launder money, which the financial crimes enforcement network is going to automatically pick up on. On top o that he thought he could get away with it in the public eye too.....all in all he is a total fucking moron......this type of personal shit for people in his position is exactly how foreign govts manipulate/blackmail people into working for them.

 

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.

 

This is the funniest part of the article, unless he was being sarcastic which I dont think he was. Its not their fault they bought a mcmansion costing 3-4 times their household income......then/or got an unfixed interest rate on a loan they couldn’t afford and didn’t realize/give a shit that “unfixed” means it could possibly increase payments. No more personal accountability these days. And fuck these people for this stupid trend they are buying into, getting a 10 billion sq ft particle board piece of shit monstrosity, built over some of the last remaining pockets of woods in some parts of the country, just for the sake of having a big house. It is a status symbol, these are the same douchebags that buy massive SUVs for the treacherous 10 minute odyssey to the supermarket and work everyday.

[dowmagik]

amen. saying "well, she shouldn't have been dressed that way" - that's blaming the victim. whatever happened to personal responsibility? if you're going to jump into a contract where hundreds of thousands of dollars is going to be on the line - you better do your fucking homework.

[the.crooked]

Yes, it is those same douchebags.

 

But that isn't quite the issue.

 

 

No corporation should ever be seen as a victim. That is foolish. You begin to place an abstract entity above the value of a single person.

 

Also, have we never heard of coercion, loansharking and using complexity to mask intention?

 

 

Yeah these people should have done their homework, but these lenders were selling these loans. They were pushing and trying to convince people to take them. Now the person who is defaulting on these sub-primes probably has a lot more to immediately be concerned about than the intricacies and complexities of our economic system. Hell, even we do not agree about how it works.

 

If we can't agree who are taking our leisure time to discuss this, how can we expect someone making a choice for their lives to know everything.

 

Life is not game theory. We do not all know all the rules or all the applicable outcomes of a given game structure.

 

On another note, I find this notion of personal responsibility interesting. I think that perhaps you should say personal culpability.

 

The way you use responsibility makes it seem as though there is some onus on the people to know everything. Unfortunate fact is that most people are underread, not remarkably intelligent, and do not have access to what knowledge would provide them to make as you call it a "responsible" choice to enter into a contract.

 

It is their culpability which can be brought into question. Not the responsibility of their initial choice.

 

Responsibility is on the lender themselves. They are preying on the lack of knowledge of their customer to engage in a business decision that cannot benifit them in the long run. Look at how credit card companies market themselves these days as providing opportunity. You sell a dream image, you can not get upset when people buy it.

 

Both parties are to blame here. People for trusting the corps, and Banks for making unethical decisions that they knew would impact society at large.

 

Are you all meaning to tell me that these banks had no foresight into the eventual issues that would come out of this sub-prime hub-bub? Please, if anyone is closer to being the ideal of a player in game theory, it is the lenders who come closest.

 

And as a last note, please recognize that all these loans were not only for new land purchases. Refinancing anyone?

 

One need not be in uneducated douche to have been caught up in this.

 

There are victims in all of this, and it most certainly is not the bank. As we just saw with the feds injection of money to back them.

 

 

So please, have some compassion and recognize where it is useful to criticize society. It is not here, for this whole thing has been one of the largest swindles in history and you all are on the side of non-sentient entities. Good job at bein human folks.

[nightsblood]

dumb article. people did take out loans that they couldn't afford. not that that should let the banks off the hook, but to pretend that the borrowing habits of average americans aren't extremely foolish is ludicrous.

 

furthermore, one of the reasons the banks offered some of these questionable loans is that they were under pressure from the government to give loans to more people

 

spitzer is guilty of a massive abuse of government power. he was basically engaging in extortion. and he was paying an absurd amount of money for pussy.

[Stereotype V.0002]

The way you use responsibility makes it seem as though there is some onus on the people to know everything. Unfortunate fact is that most people are underread, not remarkably intelligent, and do not have access to what knowledge would provide them to make as you call it a "responsible" choice to enter into a contract.

How about just making a responsible choice? It isn’t rocket science to realize what an unfixed interest rate is, that a loan is way out of your means to repay in this century, or that if you make 60k a year, a 500k house is too expensive.

 

......Yeah these people should have done their homework, but these lenders were selling these loans. They were pushing and trying to convince people to take them......Responsibility is on the lender themselves.......

If I go to vegas for the weekend and blow a hundred grand, do you blame the casinos for encouraging me to gamble and not stopping me when I’ve lost too much? or do you blame me for being an stupid irresponsible jackass (who really thought he was going to win it all back in the next hand)? This is a rhetorical question because to me the obvious answer is that people are responsible for the decisions they make and nobody else. Also, I don’t really look at this as you are either with "people”, or you are with the CORPORATIONS, who are presumably a group of robots from the future bent on destroying mankind through their skynet.

[jerkspot]

the thing that gets me is that 61% of the subprime borrowers had credit ratings high enough to receive normal loans but instead they recieved the subprime. now i dont know how this shit was sold the the borrower but either millions of americans dont know anything about personal finance/too stupid to realise what the fuk is happening or they where lied to.

[Larry Pubes]

it's amusing to see a guy like spitzer, with his background, being crucified for what are pretty puny crimes in relation to what the executive branch has been getting away with for 8 years. how does that work? granted he fucked up unbelievably bad, and for something so mind numbingly stupid at that. the sad part is that i think spitzer is probably a genuinely decent guy at heart, but like all of us, he's human and made such a sickeningly stupid follie that he'll spend the rest of his days in crushing regret and humiliation while his family is left to wallow in the knowledge their own flesh and blood betrayed them in the worst possibly way.

[lord_casek]

while our newsreaders drooled over...

http://firedoglake.com/2008/03/15/come-saturday-morning-while-our-newsreaders-drooled-over-pictures-of-call-girls/

[jore43]

mare139 buoy

[jore43]

maybe alien

[russell jones]

it's amusing to see a guy like spitzer, with his background, being crucified for what are pretty puny crimes in relation to what the executive branch has been getting away with for 8 years. how does that work? granted he fucked up unbelievably bad, and for something so mind numbingly stupid at that. the sad part is that i think spitzer is probably a genuinely decent guy at heart, but like all of us, he's human and made such a sickeningly stupid follie that he'll spend the rest of his days in crushing regret and humiliation while his family is left to wallow in the knowledge their own flesh and blood betrayed them in the worst possibly way.

 

Just shows how screwed up our priorities in America are. It speaks to the US's general prudishness about sex and acceptance of violence as the only way of the world. Think about it, I live in a society where people believe a gay person can be changed into straight, while also believing that the world's problems cannot be solved peacefully.

[jore43]

BELS AL MAN BELS

[LIVERWURST*]

BELS AL MAN BALLS

 

Nice bloody tampon.

[MayorMeanBeans]

 

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....

 

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.

 

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. ...

 

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

 

Or maybe we should say, 'indiscretion.'

 

can i have the original link? does he offer citations? any one of these points i just quoted are crazy and i want to read more about it?

 

i hope he comes with it. on another note, john edwards was supposed to be trying to end poverty. if the shit really is as dire as palast suggests, dont you guys think he should have continued running for the sake of promoting an issue, such as huckabee or nader. i dont even know where dude is now, but i do know this is an election year and no one is talking about the personal aspect of the crisis (instead its all about the 'looming recession.'