Friday, April 16, 2010

Goldman CEO Henry Paulson was the architect of the bailout

For more on Wall Street's march on Washington, read Taibbi's "The Big Takeover."

If the ABCs of the financial meltdown leave your head spinning -- if "default swaps" and "collateralized debt obligations" and "high-rated tranches" are all just so much gobbledygook -- don't worry. You're not alone.

The alphabet soup of exotic investments that represent the immediate cause of the banking mess is so complex that many of those "innovative" financiers responsible for bringing the global economy to the brink of collapse are now making a fortune in consulting fees explaining just what the hell it is that they created

This story is being updated...Securities fraud charges against Goldman Sachs are just the beginning....Meanwhile, that hedge fund, Paulson & Co. Inc, made $1 billion. The investors lost about an equal amount. Goldman, meanwhile, racked up the fees.

George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson.

DOMESTIC TERRORISM 101.............Hedge-fund and Ponzi scams continue as frauds du jour......

, as was the case with Collateralized Debt Obligations (CDOs), when an act of Congress prohibits the SEC from having a look.

Fannie Mae and Freddie Mac have a similar tale not to tell. Congress was closely involved in their charade as well, with conflicts of interest that are certainly worthy of extensive investigations

past three decades steadily eroding the regulatory system that restrained the financial sector from acting on its own worst tendencies.


The 231-page report, "Sold Out: How Wall Street and Washington Betrayed America," shows that the financial sector invested more than $5 billion on purchasing political influence in Washington over the past decade, with as many as 3,000 lobbyists winning deregulation and other policy decisions that led directly to the current financial collapse.

"The report details, step-by-step, how Washington systematically sold out to Wall Street," said Harvey Rosenfield, president of the California-based non-profit organization Consumer Education Foundation.

"Depression-era programs that would have prevented the financial meltdown that began last year were dismantled, and the warnings of those who foresaw disaster were drowned in an ocean of political money," he said. "Americans were betrayed, and we are paying a high price -- trillions of dollars -- for that betrayal."
From 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made political contributions totalling $2.725 billion and spent another $4.4 billion on lobbyists -- a financial juggernaut aimed at undercutting federal regulation.

"Congress and the Executive Branch responded to the legal bribes from the financial sector, rolling back common-sense standards, barring honest regulators from issuing rules to address emerging problems and trashing enforcement efforts," said Robert Weissman of Essential Information and the lead author of the report
How Wall Street's Scam Artists Turned Home Mortgages Into Economic WMDs
The titans of high finance are trying desperately to shift blame for the crisis onto others, but this dead cat lies squarely on their doorstep.

Sept 18, 2008 ... Only one member of Congress, Barney Frank, Chris Dodd, received more kickbacks from Raines's Fannie Mae cronies than did Barack Obama–over $120000 in bribes. ... Senator Christopher Dodd, and the chairman of the Senate Budget Committee ... and wrecked Wall Street through greed and avarice on a scale ...

Dec 23, 2009 ... Sleazy bribes and pork payoffs didn't start with their government health care takeover bill. ... the majority's Wall Street regulatory “reform” bill with $4 billion in payoffs ... Chris Dodd, whose re-election bid is in hot water

Apr 5, 2010 ... Barney Frank Permanently Bans Staff From Communicating With Aide-Turned- ... SWAPS + FEES + PAYOFFS + BRIBES + FELONIES + SCAMS + L1ES + EXPL0ITATION ..... It is the CR1M1NAL ELEMENT that run the Wall Street Banks! ...

Barney Frank's Shocking Admission On Fannie And Freddie | FDL News ...Jan 5, 2010 ... I know that it's fashionable around FDL to put Barney Frank in the pocket of the banksters but we ... It amounts to paying off Wall Street's gambling debts, not the people's mortgages. .... And the worst part of it is that we think it sounds crazy to pay off the loans, ... Bribes before legislation. ...
news.firedoglake.com/.../barney-franks-shocking-admission-on-fannie-and-freddie/

Geithner, now treasury secretary, was previously the president of the Federal Reserve Bank of New York (FRBNY), where he negotiated the deal to pay Goldman Sachs and the other top banks in full to cover their bad bets on securitized mortgages. Barofsky’s report concluded that Geithner’s scheme represented a “backdoor bailout” for the financial hustlers at the center of the market fiasco. Noting that Geithner denies that was his intention, the report states, “Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions—indeed, the very design of the federal assistance to AIG—was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties.”

Not surprisingly, the Treasury Department that Geithner now heads defended his actions in not forcing “haircuts” on the full dollar-for-dollar payoff by AIG to the banks while he was at the New York Fed: “The government could not unilaterally impose haircuts on creditors, and it would not have been appropriate for the government to pressure counterparties to accept haircuts by threatening to retaliate in some way through its regulatory power.”


Who in America is going to stand up and accept appropriate culpability for his/her contribution to our current economic crisis? Who in America is also willing to expose the incestuous nature of the Wall Street-Washington relationship which provided the cover for the activities which have debilitated our nation?

Let’s review what we have learned so far:

1. Blame has been directed at bank executives…but they got paid handsomely, and have not accepted full responsibility.

2. Blame has been directed at ratings agencies….but they also got paid handsomely to provide ratings, while not really knowing what they were doing. (more…)

Tags: Ben Bernanke, blame for crisis, Chris Dodd, culpability for crisis, Fannie Mae execs, FCIC, finger pointing, FINRA, Franklin Raines, Freddie Mac execs, Larry Summers, Leland Brendsel, mortgage originators, Phil Gramm, public service, public service and private wealth accumulation, ratings agencies, reasons for our economic crisis, regulators, Rham Emanuel, Robert Rubin, SEC, Tim Geithner, Wall Street executives, Wall Street-Washington incest, Washington, what is to blame for our economic crisis, who is to blame for our economic crisis


The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates.



By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibilliondollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in goldenparachute payments as his bank was selfdestructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailedout insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman — not to mention …

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The Ponzi scheme was based on the collateralized debt obligations (CDOs) in which the bankers traded and which AIG had insured with the credit default swaps (CDSs) that they sold but failed to back with adequate funding. Now Geithner’s Treasury concedes that AIG “should never have been allowed to escape tough, consolidated supervision.” But none of AIG’s scams were regulated, nor were any of the others at the center of the larger financial debacle, because of laws pushed through Congress by Geithner’s boss, Lawrence Summers, when they both were in the Clinton administration. Specifically, they prevented regulation of those opaque CDOs and CDSs that would come to derail the world’s economy.

As the inspector general’s report stated: “In 2000, the [Clinton administration-backed] Commodity Futures Modernization Act (CFMA) … barred the regulation of credit default swaps and other derivatives.” Why did the financial geniuses of the Clinton administration seek to prevent that obviously needed regulation? Because the Clintonistas believed the Wall Street guys knew what they were doing and that what was good for them was good for us lesser folk. As Summers, who is the top economic adviser in the Obama White House, put it in congressional testimony back then: “The parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.”

Sounds nonsensical today: The inspector general’s report notes that AIG, because of the deregulatory law that Summers and Geithner pushed through, was “able to sell swaps on $72 billion worth of CDOs to counterparties without holding reserves that a regulated insurance company would be required to maintain.” But why, then, is Summers once again running the show with Geithner when both have made careers of exhibiting total contempt for the public interest? Because there is no accountability for the high rollers of finance, no matter who happens to be president.



The bank's unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumercredit rates, halfeaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

If you want to understand how we got into this financial crisis, you have to first understand where all the money went — and in order to understand that, you need to understand what Goldman has already gotten away with. It is a history exactly five bubbles long — including last year's strange and seemingly inexplicable spike in the price of oil. There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn't one of them.


Goldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids — just almost always. The bank was actually founded in 1869 by a German immigrant named Marcus Goldman, who built it up with his soninlaw Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out shortterm IOUs to smalltime vendors in downtown Manhattan.

You can probably guess the basic plotline of Goldman's first 100 years in business: plucky, immigrantled investment bank beats the odds, pulls itself up by its bootstraps, makes shitloads of money. In that ancient history there's really only one episode that bears scrutiny now, in light of more recent events: Goldman's disastrous foray into the speculative mania of precrash Wall Street in the late 1920s.

This great Hindenburg of financial history has a few features that might sound familiar. Back then, the main financial tool used to bilk investors was called an "investment trust." Similar to modern mutual funds, the trusts took the cash of investors large and small and (theoretically, at least) invested it in a smorgasbord of Wall Street securities, though the securities and amounts were often kept hidden from the public. So a regular guy could invest $10 or $100 in a trust and feel like he was a big player. Much as in the 1990s, when new vehicles like day trading and etrading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regularguy investors into the speculation game.

Beginning a pattern that would repeat itself over and over again, Goldman got into the investmenttrust game late, then jumped in with both feet and went hogwild. The first effort was the Goldman Sachs Trading Corporation; the bank issued a million shares at $100 apiece, bought all those shares with its own money and then sold 90 percent of them to the hungry public at $104. The trading corporation then relentlessly bought shares in itself, bidding the price up further and further. Eventually it dumped part of its holdings and sponsored a new trust, the Shenandoah Corporation, issuing millions more in shares in that fund — which in turn sponsored yet another trust called the Blue Ridge Corporation. In this way, each investment trust served as a front for an endless investment pyramid: Goldman hiding behind Goldman hiding behind Goldman. Of the 7,250,000 initial shares of Blue Ridge, 6,250,000 were actually owned by Shenandoah — which, of course, was in large part owned by Goldman Trading.

The end result (ask yourself if this sounds familiar) was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line. The basic idea isn't hard to follow. You take a dollar and borrow nine against it; then you take that $10 fund and borrow $90; then you take your $100 fund and, so long as the public is still lending, borrow and invest $900. If the last fund in the line starts to lose value, you no longer have the money to pay back your investors, and everyone gets massacred.

In a chapter from The Great Crash, 1929 titled "In Goldman Sachs We Trust," the famed economist John Kenneth Galbraith held up the Blue Ridge and Shenandoah trusts as classic examples of the insanity of leveragebased investment. The trusts, he wrote, were a major cause of the market's historic crash; in today's dollars, the losses the bank suffered totaled $475 billion. "It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity," Galbraith observed, sounding like Keith Olbermann in an ascot. "If there must be madness, something may be said for having it on a heroic scale."

Fast-forward about 65 years. Goldman not only survived the crash that wiped out so many of the investors it duped, it went on to become the chief underwriter to the country's wealthiest and most powerful corporations. Thanks to Sidney Weinberg, who rose from the rank of janitor's assistant to head the firm, Goldman became the pioneer of the initial public offering, one of the principal and most lucrative means by which companies raise money. During the 1970s and 1980s, Goldman may not have been the planet-eating Death Star of political influence it is today, but it was a topdrawer firm that had a reputation for attracting the very smartest talent on the Street.

It also, oddly enough, had a reputation for relatively solid ethics and a patient approach to investment that shunned the fast buck; its executives were trained to adopt the firm's mantra, "longterm greedy." One former Goldman banker who left the firm in the early Nineties recalls seeing his superiors give up a very profitable deal on the grounds that it was a longterm loser. "We gave back money to 'grownup' corporate clients who had made bad deals with us," he says. "Everything we did was legal and fair — but 'longterm greedy' said we didn't want to make such a profit at the clients' collective expense that we spoiled the marketplace."

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's cochairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. While the American media fell in love with the story line of a pair of babyboomer, Sixtieschild, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind.

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national clichè that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline The Committee To Save The World. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits.

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

"Since the Depression, there were strict underwriting guidelines that Wall Street adhered to when taking a company public," says one prominent hedge-fund manager. "The company had to be in business for a minimum of five years, and it had to show profitability for three consecutive years. But Wall Street took these guidelines and threw them in the trash." Goldman completed the snow job by pumping up the sham stocks: "Their analysts were out there saying Bullshit.com is worth $100 a share."

The problem was, nobody told investors that the rules had changed. "Everyone on the inside knew," the manager says. "Bob Rubin sure as hell knew what the underwriting standards were. They'd been intact since the 1930s."

Jay Ritter, a professor of finance at the University of Florida who specializes in IPOs, says banks like Goldman knew full well that many of the public offerings they were touting would never make a dime. "In the early Eighties, the major underwriters insisted on three years of profitability. Then it was one year, then it was a quarter. By the time of the Internet bubble, they were not even requiring profitability in the foreseeable future."

Goldman has denied that it changed its underwriting standards during the Internet years, but its own statistics belie the claim. Just as it did with the investment trust in the 1920s, Goldman started slow and finished crazy in the Internet years. After it took a littleknown company with weak financials called Yahoo! public in 1996, once the tech boom had already begun, Goldman quickly became the IPO king of the Internet era. Of the 24 companies it took public in 1997, a third were losing money at the time of the IPO. In 1999, at the height of the boom, it took 47 companies public, including stillborns like Webvan and eToys, investment offerings that were in many ways the modern equivalents of Blue Ridge and Shenandoah. The following year, it underwrote 18 companies in the first four months, 14 of which were money losers at the time. As a leading underwriter of Internet stocks during the boom, Goldman provided profits far more volatile than those of its competitors: In 1999, the average Goldman IPO leapt 281 percent above its offering price, compared to the Wall Street average of 181 percent.

How did Goldman achieve such extraordinary results? One answer is that they used a practice called "laddering," which is just a fancy way of saying they manipulated the share price of new offerings. Here's how it works: Say you're Goldman Sachs, and Bullshit.com comes to you and asks you to take their company public. You agree on the usual terms: You'll price the stock, determine how many shares should be released and take the Bullshit.com CEO on a "road show" to schmooze investors, all in exchange for a substantial fee (typically six to seven percent of the amount raised). You then promise your best clients the right to buy big chunks of the IPO at the low offering price — let's say Bullshit.com's starting share price is $15 — in exchange for a promise that they will buy more shares later on the open market. That seemingly simple demand gives you inside knowledge of the IPO's future, knowledge that wasn't disclosed to the daytrader schmucks who only had the prospectus to go by: You know that certain of your clients who bought X amount of shares at $15 are also going to buy Y more shares at $20 or $25, virtually guaranteeing that the price is going to go to $25 and beyond. In this way, Goldman could artificially jack up the new company's price, which of course was to the bank's benefit — a six percent fee of a $500 million IPO is serious money.

Goldman was repeatedly sued by shareholders for engaging in laddering in a variety of Internet IPOs, including Webvan and NetZero. The deceptive practices also caught the attention of Nicholas Maier, the syndicate manager of Cramer & Co., the hedge fund run at the time by the now-famous chattering television asshole Jim Cramer, himself a Goldman alum. Maier told the SEC that while working for Cramer between 1996 and 1998, he was repeatedly forced to engage in laddering practices during IPO deals with Goldman.

"Goldman, from what I witnessed, they were the worst perpetrator," Maier said. "They totally fueled the bubble. And it's specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation — manipulated up — and ultimately, it really was the small person who ended up buying in." In 2005, Goldman agreed to pay $40 million for its laddering violations — a puny penalty relative to the enormous profits it made. (Goldman, which has denied wrongdoing in all of the cases it has settled, refused to respond to questions for this story.)

Another practice Goldman engaged in during the Internet boom was "spinning," better known as bribery. Here the investment bank would offer the executives of the newly public company shares at extra-low prices, in exchange for future underwriting business. Banks that engaged in spinning would then undervalue the initial offering price — ensuring that those "hot" opening-price shares it had handed out to insiders would be more likely to rise quickly, supplying bigger firstday rewards for the chosen few. So instead of Bullshit.com opening at $20, the bank would approach the Bullshit.com CEO and offer him a million shares of his own company at $18 in exchange for future business — effectively robbing all of Bullshit's new shareholders by diverting cash that should have gone to the company's bottom line into the private bank account of the company's CEO.

In one case, Goldman allegedly gave a multimillion-dollar special offering to eBay CEO Meg Whitman, who later joined Goldman's board, in exchange for future i-banking business. According to a report by the House Financial Services Committee in 2002, Goldman gave special stock offerings to executives in 21 companies that it took public, including Yahoo! cofounder Jerry Yang and two of the great slithering villains of the financial-scandal age — Tyco's Dennis Kozlowski and Enron's Ken Lay. Goldman angrily denounced the report as "an egregious distortion of the facts" — shortly before paying $110 million to settle an investigation into spinning and other manipulations launched by New York state regulators. "The spinning of hot IPO shares was not a harmless corporate perk," then-attorney general Eliot Spitzer said at the time. "Instead, it was an integral part of a fraudulent scheme to win new investment-banking business."

Such practices conspired to turn the Internet bubble into one of the greatest financial disasters in world history: Some $5 trillion of wealth was wiped out on the NASDAQ alone. But the real problem wasn't the money that was lost by shareholders, it was the money gained by investment bankers, who received hefty bonuses for tampering with the market. Instead of teaching Wall Street a lesson that bubbles always deflate, the Internet years demonstrated to bankers that in the age of freely flowing capital and publicly owned financial companies, bubbles are incredibly easy to inflate, and individual bonuses are actually bigger when the mania and the irrationality are greater.

Nowhere was this truer than at Goldman. Between 1999 and 2002, the firm paid out $28.5 billion in compensation and benefits — an average of roughly $350,000 a year per employee. Those numbers are important because the key legacy of the Internet boom is that the economy is now driven in large part by the pursuit of the enormous salaries and bonuses that such bubbles make possible. Goldman's mantra of "long-term greedy" vanished into thin air as the game became about getting your check before the melon hit the pavement.

The market was no longer a rationally managed place to grow real, profitable businesses: It was a huge ocean of Someone Else's Money where bankers hauled in vast sums through whatever means necessary and tried to convert that money into bonuses and payouts as quickly as possible. If you laddered and spun 50 Internet IPOs that went bust within a year, so what? By the time the Securities and Exchange Commission got around to fining your firm $110 million, the yacht you bought with your IPO bonuses was already six years old. Besides, you were probably out of Goldman by then, running the U.S. Treasury or maybe the state of New Jersey. (One of the truly comic moments in the history of America's recent financial collapse came when Gov. Jon Corzine of New Jersey, who ran Goldman from 1994 to 1999 and left with $320 million in IPO-fattened stock, insisted in 2002 that "I've never even heard the term 'laddering' before.")

For a bank that paid out $7 billion a year in salaries, $110 million fines issued half a decade late were something far less than a deterrent — they were a joke. Once the Internet bubble burst, Goldman had no incentive to reassess its new, profit-driven strategy; it just searched around for another bubble to inflate. As it turns out, it had one ready, thanks in large part to Rubin.



The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates.

By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibilliondollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in goldenparachute payments as his bank was selfdestructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailedout insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman — not to mention …

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumercredit rates, halfeaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

If you want to understand how we got into this financial crisis, you have to first understand where all the money went — and in order to understand that, you need to understand what Goldman has already gotten away with. It is a history exactly five bubbles long — including last year's strange and seemingly inexplicable spike in the price of oil. There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn't one of them.

video: Wall Street 'fraud' victims continue to rise - timesonline

Dec 15, 2008 ... Wall Street 'fraud' victims continue to rise ... EIM, the hedge fund group which is run by Arpad Busson, the multimillionaire who is engaged ...
business.timesonline.co.uk/tol/business/industry.../article5346164.ece
Goldman Sachs accused of fraud; SEC says it hid hedge fund's ...

Apr 16, 2010 ... Goldman Sachs accused of fraud; SEC says it hid hedge fund's involvement in ... deals related to the meltdown continue to be investigated. ...
www.sfexaminer.com/.../goldman-sachs-accused-of-fraud-sec-says-it-hid-hedge-funds-involvement-in-doomed-securities-91158194.htm... - 8 hours ago
The U.S. Securities and Exchange Commission has charged Coadum Advisors, Inc, (Coadum) Mansell Capital Partners III, LLC (Mansell), Thomas E. Repke (Repke), James A. Jeffrey (Jeffrey), and others of operating a hedge fund fraud that raised more than $30 million from 2006 to present. According to the SEC, Jeffrey, of Ontario, Canada, and Repke, of Salt Lake City, Utah, control Coadum and Mansell.

The SEC’s quick action put a stop to the ongoing offering. U.S. District Judge Orinda Evans issued a temporary restraining order, froze the defendants’ assets, and appointed a Receiver. The next hearing in the case is scheduled for January 17, 2008.

SEC Charges Allen Stanford with Multibillion-Dollar CD Fraud - TIME
Feb 17, 2009 ... Hedge-fund and Ponzi scams continue as frauds du jour. Not counting Stanford's alleged crime, seven new hedge-fund or Ponzi scams have been ...
www.time.com/time/business/article/0,8599,1880101,00.html - Similar
New York Hedge Fund Fraud Attorney :: Hedge Fund Fraud ...
In 2006, partner Ross B. Intelisano published, Hedge Fund Fraud - The ... The SEC announced that it will continue to pursue its civil enforcement case ...
www.richintelisano.com/lawyer-attorney-1391275.html - Cached - Similar
Regulators & Courts: Futures-related fraud cases continue to pile ...
It looks like there is an epidemic of futures-related scams, with new ones .... Oct. 2009 | Other Voices: Hedge funds: Consideration of fraud risks in an ...
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Citigroup Hedge Funds :: Investment Fraud Lawyer Blog
Citigroup Hedge Funds :: Investment Fraud Lawyer Blog. ... Continue reading "Have You Lost Money in a Hedge Fund?" » Posted by Page Perry, LLC | Permalink ...
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Wall Street Fraud - Fraud in the News
One then must look to other deep pockets which may or may not be available. Continue reading "NFL Players Scammed By Hedge Fund Fraud". February 28, 2006 ...
wallstreetfraud.clarislaw.com/fraud-in-the-news/ - Cached - Similar
A number of FINRA arbitration claims have been filed accusing former Linsco Private Ledger (LPL) financial advisor Raymond Londo of running a multi-million dollar ponzi scheme to defraud investors. The claims allege fraud, conversion, misrepresentation and omissions, and negligence. LPL is accused of failing to supervise, discover, and stop the investment fraud scheme within a reasonable amount of time even though there were numerous signs, such as red flags and customer complaints, to indicate that Londo should have been more closely supervised or even fired.

Fund Fraud Hits Big Names - WSJ.com

Dec 13, 2008 ... International banks, hedge funds and wealthy private investors have emerged as ... View Interactive. Read more about previous Ponzi schemes. ... Details emerged Friday of how Mr. Madoff ran the alleged scam, fostering a veneer of ... like all investors, will continue to monitor the situation." ...
online.wsj.com/article/SB122914169719104017.html - Cached - Similar

PDF]
U.S. Department of Justice Fact Sheet: Commodities Fraud and ...
File Format: PDF/Adobe Acrobat - Quick View
Oct 25, 2007 ... criminal violations of the commodities laws and will continue to work closely with members of ... Commodity Pool/Hedge Fund Fraud ...
www.cftc.gov/ucm/groups/public/@newsroom/.../pr5405-07_factsheet.pdf

The Tom Petters fraud case | StarTribune.com
Apr 13, 2010 ... Petters scam: Hedge fund exec charged ..... Dominoes continue to fall in the fraud case against Twin Cities businessman Tom Petters. ...
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SEC Complaint Against Florida Hedge Fund Managers for Violations ...
SEC Complaint Against Florida Hedge Fund Managers for Violations of Anti-Fraud Provisions. Posted on January 13, 2010 by Anthony Lake ...
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N.C. Hedge Fund Manager Hit With 54 Fraud Counts | FINalternatives
N.C. Hedge Fund Manager Hit With 54 Fraud Counts. Mar 24 2010 | 9:47am ET. The founder of Raleigh, N.C.-based hedge fund Yellowstone Partners saw the number ...
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Atlanta Hedge Funder Sued for Fraud / Hedge Fund Lounge
Mar 30, 2010 ... Excerpt from: Atlanta Hedge Funder Sued for Fraud / Hedge Fund Lounge. Continue reading here: Atlanta Hedge Funder Sued for Fraud / Hedge ...
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-- The Washington Post reported that Joe Cassano, the financial products manager "whose complex investments led to (AIG's) near collapse," is raking in $1 million per month in consulting fees from the ailing financial giant to help sort out the toxic sludge on (and off) the bank's books






You take the blue pill, the story ends, you wake in your bed and you believe whatever you want to believe.



"The United States has only one party - the property party. It's the party of big corporations, the party of money. It has two right wings; one is Democrat and the other is Republican."

"Television is altering the meaning of "being informed" by creating a species of information that might properly be called disinformation... Disinformation does not mean false information. It means misleading information - misplaced, irrelevant, fragmented or superficial information - information that creates the illusion of knowing something, but which in fact leads one away from knowing."


"We live in a nation hated abroad and frightened at home. A place in which we can reasonably refer to the American Republic in the past tense. A country that has moved into a post-constitutional era, no longer a nation of laws but an autocracy run by law breakers, law evaders and law ignorers. A nation governed by a culture of impunity ... a culture in which corruption is no longer a form of deviance but the norm. We all live in a Mafia neighborhood now."


As each day passes, we are hearing of more US corporate and financial frauds and scandals.
Wake up all you trusting souls out there before it's too late!

I describe how Americans have been conditioned to "trust" a very corrupt "System."
Then I outline the corruption that permeates the entire "System." HELLO!! The ENTIRE SYSTEM!
Then I focus on the corruption in the financial markets: the illegal naked short selling process; and the federal agency, the SEC, that is failing to perform its prescribed duty to oversee the securities markets and to enforce the federal laws
Finally, I list the necessary action that you can take to both safeguard your own financial well-being and to help eradicate the corrupt "System."


1. The "trusting" nature of the US populace has allowed "special interests" to take control of the US government.
2. The US Constitution has been/is being breached by those "special interests" in the US government.
3. Our entire "system" is corrupt.
4. Before any real change can occur, that entire corrupt "system" must be eradicated.
5. Both the U.S. Stock Clearing and Settlement System and the Federal Reserve Banking System are fractional systems and therefore are the cause of our financial crisis.
6. The proposed "bailouts" are worthless.



"The point of public relations slogans like "Support our troops" is that they don't mean anything... That's the whole point of good propaganda. You want to create a slogan that nobody's going to be against, and everybody's going to be for. Nobody knows what it means, because it doesn't mean anything. Its crucial value is that it diverts your attention from a question that does mean something: Do you support our policy? That's the one you're not allowed to talk about."

"Media manipulation in the U.S. today is more efficient than it was in Germany, because here we have the pretense that we are getting all the information we want. That misconception prevents people from even looking for the truth."

"While free markets tend to democratize a society, unfettered capitalism leads invariably to corporate control of government."

"To oppose the policies of a government does not mean you are against the country or the people that the government supposedly represents. Such opposition should be called what it really is: democracy, or democratic dissent, or having a critical perspective about what your leaders are doing. Either we have the right to democratic dissent and criticism of these policies or we all lie down and let the leader, the Fuhrer, do what is best, while we follow uncritically, and obey whatever he commands. That's just what the Germans did with Hitler, and look where it got them."

Furthermore, the Securities and Exchange Commission is clearly guilty of complicity by failing to perform its prescribed duties which are to oversee the securities markets and to enforce the federal securities laws.
Moreover, the SEC attempts to hide its complicity in the collusion and attempts to protect the wrongdoers by creating worthless laws, such as Regulation SHO, that are rife with loopholes.
The SEC enacted Regulation SHO in January 2005 to target abusive naked short selling by reducing failure to deliver securities. It states that a broker or dealer may not accept a short sale order without having first borrowed or identified the stock being sold. A major loophole in Reg SHO exempts the market makers from being required to locate stock before selling short because, according to the SEC, naked short selling, when transacted by the market makers, contributes to market liquidity.
Before we can address that loophole, we must first examine what a market is.
All markets are simple. Their primary purpose is to distribute, at a reasonable price, a limited supply of stocks, commodities, widgets, or whatever to those buyers who want it the most. They do that by finding and then defining the exact price in which, at any given moment, an absolute balance exists between the buyers and the sellers.
In other words, all markets are created when two or more people have an equal agreement on price and an equal disagreement on value.
For example, Buyer A bids $10 for 1 share of XYZ company. Seller A asks $10 for 1 share of XYZ company.
Both Buyer A and Seller A have an equal agreement on price: they both agree on the price of $10.
Both Buyer A and Seller A have an equal disagreement on value: they both value what they want more than what they have; Buyer A obviously values 1 share of XYZ company more than $10; and Seller A values $10 more than 1 share of XYZ company.
Furthermore, $10 is the exact price in which an absolute balance exists between Buyer A and Seller A.
In essence, Buyer A and Seller A have just created a market. And that is the natural market process.
But now the SEC attempts to rationalize the loophole it creates in Reg SHO, and in the process circumvents the natural market process by posting on its website under "Division of Market Regulation: Key Points About Regulation SHO" the following: "market makers stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares."
Stop this tape now and go back and listen again to my explanation of the natural market process.
Now listen again to the SEC's pathetic rationalization and compare it with my explanation of the natural market process and you can readily see how the SEC's rationalization is totally illogical and how it conflicts with my explanation of a natural market process.
1. SEC's illogical rationalization: "market makers stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers."
Pertinent question: If "there are no other buyers or sellers," who are the market makers going to sell to or buy from?
2. SEC's illogical rationalization: "Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time."
Natural market process: "If there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time" simply means an imbalance exists between buyers and sellers because they disagree on price and agree on value. In a natural market process, the price of the stock will rise to the point in which the buyers and sellers have an equal agreement on price and an equal disagreement on value.
The following is from SEC's own website: "Although the vast majority of short sales are legal, abusive short sale practices are illegal. For example, it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others. Thus, short sales effected to manipulate the price of a stock are prohibited."
Therefore what the SEC alleges "contributes to market liquidity" are just "abusive short sale practices" and are "illegal" because they artificially "manipulate the price of a stock" and should be "prohibited."
3. SEC's illogical rationalization: "a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares."
Pertinent question: Why would a "market maker," "particularly in a fast-moving market" which of course indicates numerous buyers and sellers (otherwise the market would NOT be "fast-moving"), "need to sell the security short without having arranged to borrow shares?"
Furthermore the SEC solidifies its complicity in the collusion by deciding that, after a year of comments pertaining to the market maker exemption loophole, more comments are needed.
As Bob O'Brien asserts, "Yep. Seems that, as if allowing one sort of participant to print stock out of thin air, as often as they like, solely in order for the participant's customers to have inexpensive options pricing in dangerously overshorted issues, WASN'T ENOUGH REASON TO SHUT THE EXEMPTION DOWN IMMEDIATELY. No, a long study was necessary, while every day countless investors were harmed and companies destroyed. The result, that indeed the companies and investors were being hosed by the options market makers, now goes out for comment yet an umpteenth time."
As Bud Burrell asserts in a recent interview: "Regulation SHO is a Fraud. They [SEC} Grandfathered failures to deliver after they looked at the failures at the systemic level they realized they could not force all the failures to settle in the market place without essentially wiping out the Brokerage industry and the Hedge Funds. The List was fraudulent did not list all the stocks that had these persistant FTD's.
"The Brokers realized the way to hide their Fails or to create Naked Shorts so that they couldnt be seen was to do them outside of the system of the Depository Trust custody and clearing system which is a Monopoly in this country in a thing called Ex-Clearing."
So why is the Securities and Exchange Commission failing to perform its prescribed duties, hiding its complicity in the collusion, and protecting the wrongdoers?
Because the SEC is being controlled by the same entity, the U.S. Stock Clearing and Settlement System, that it is supposed to be overseeing.
Therefore do you "trust" that the Securities and Exchange Commission is "honest and reliable?"
Furthermore, the wrongdoers who own the fractional U.S. Stock Clearing and Settlement System also own the Federal Reserve System and control the Internal Revenue Service....

AIG spending $440,000 on luxury retreat days after government bailout......6 Days after getting 85 Billion Taxpayer Dollars

The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.
Invoices obtained by Waxman's committee showed that AIG spent $139,375.30 on rooms, $147,301.71 for "banquets,'' and $1,488 at the resort's Vogue Salon, which offers manicures, pedicures and hairstyling. The group spent $6,939.09 on golf, $2,949 for gratuities, $5,016.32 at the StoneHill Tavern and $3,064.71 for in-room dining and the lobby lounge.
The group booked the resort's 3,100-square-foot presidential suite for $1,600 a night for five nights, a discount from the standard rate of $3,200 a night, a hotel document released by the committee showed. It also paid $1,075 in "no-show fees.''
"Have you heard of anything more outrageous?''
The taxpayer is burdened by another $250 billion rescue of mortgage giants Fannie Mae and Freddie Mac. On Sept. 7, Secretary of the Treasury Henry Paulson led federal efforts to seize control of these government sponsored entities that own or back half of the nation's mortgages The champagne bottle corks were popping as Treasury Secretary Henry Paulson announced his trillion-dollar bailout for the banks, buying up their toxic mortgages
$524.6 Billion Tax payer bailout of financial institutions payed from 1986-1996, ridiculous.
Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper.

The now-bankrupt investment bank Lehman Brothers arranged millions in bonuses for fired executives even as it pleaded for a federal lifeline, lawmakers learned Monday, The panel unearthed internal documents showing that on Sept. 11, Lehman planned to approve "special payments" worth $18.2 million for two executives who were terminated involuntarily, and another $5 million for one who was leaving on his own.

“King” Henry Paulson, our Treasury Secretary, is a former CEO of Goldman Sachs. That means he comes directly from the very crowd that created the current financial mess, the ever-greedy investment banks led by the elite, who now together demand, daily, from Congress, pushed on by Dubya, a speedy, yes speedy, blank check for perhaps over a trillion US Dollars which they will spend without real oversight! And yet, despite all of this, you stupid Americans are seriously thinking of voting for that guy who has his whole political life basically taken his orders from that same elite!
If you cannot wake up from your own madness, you deserve every ounce of terrible, unrepresentative government you get!

Saturday, April 10, 2010

MUST SEE......PROOF beyond any doubt....WOW

http://www.danielhopsicker.tv/


What an AMERICAN HERO....A true PATRIOT who LOVES his COUNTRY....

You want the TRUTH...You can't handle the TRUTH

TV is not your friend.....wake up people.....


As an Honorably discharged Veteran...........

I am honored and proud to support Daniel Hopsicker

NEW AMERICAN DRUGLORDS Daniel Hopsicker is AWESOME!




Meet the New Boss: (Same as the old boss)
Will secret deal bring old management back to Venice Airport FBO?

January 5, 2010
by Daniel Hopsicker
email the author

Watch it now! Preview VI:
The New American Drug Lords
http://www.danielhopsicker.tv

What aren't they telling us about the new owners of Huffman Aviation--aka the Venice Jet Center-- at the Venice Municipal Airport?


The hand-picked new ownership of the FBO (Fixed Base of Operations) at the Venice Municipal Airport has links to private military contractors in Georgia involved in CIA extraordinary renditions around the world, as well as other covert activity on behalf of the U.S. Government.

This same company turned over between 12-15 mid-sized regional jets to another owner of Huffman Aviation, Wallace J. Hilliard, ten years ago, for Hilliard's doomed from the start “start-up airline,” an operation so inept that on at least one publicized route, they never sold a single ticket.

The company or network of companies which has had so much involvement with recent owners of Huffman Aviation is known variously as “Phoenix Air,” “Phoenix Air Services,” and “Phoenix Continental."

Oddly, long after his start-up airline quit flying scheduled trips, Hilliard still had jets on the tarmacs and aprons of various airports. And he continued to pay pilots to be ready...

Perhaps just in case.

Details of how and what we found out in a moment.

The Venice Airport FBO, which used to be called Huffman Aviation, is located on a government utility, paid for with tax money, and without that government utility would not exist. It is the only significant cash-flow business at the Venice Airport.

Now, in a grab reminiscent of the so-called "privatization" of Russia during the early 1990’s, it is about to disappear.


The return of 'Sarasota Art'

The gloves came off again recently in the mostly covert war for control of the Venice Airport.

The flash-point, as always: who gets Art Nadel's crown jewel asset, the Venice Airport FBO better known as Huffman Aviation?

Appointed to unravel Art Nadel's massive $400 million Ponzi fraud, Tampa attorney Burton Wiand has been gathering, to pass on to Nadel's thousands of victims, what few wilted daisies remain in the trampled garden that was Sarasota Art Nadel’s company, “Scoop Management.”

Scoop had been rather cleverly disguised as a “hedge fund.”

But it may not, as popular wisdom has it, been named for the slang term for hot stock tip.

It's name could also refer to its function, as a scoop, “hoovering” small and loose change from entire regions of the country at once.

To no one's surprise, Nadel got a lot of help in this endeavor, from a positively rocking wrecking crew. One sad note is that the consummate skill displayed by these cool-headed pros in successfully tiptoe-ing away with a very respectable $400 million dollar score may never achieve the recognition it deserves.

Alas, either out of modesty, or because of some plenty hefty well-placed bribes, to date, their names remain unknown, apparently in danger of being lost to history.

Alas, we can hear the cynical talk starting already:

"Well, it was only $400 million."

"And, besides, this is Florida."

Here it it useful to remember what Wally Hilliard said to somebody during a fairly recent deposition.

At one point the woman suing him looked at him across the table and asked him if he ever worries about getting caught and having to go to jail.

Hilliard's reply, she told us later, was both enthusiastic and immediate.

"Not in Florida, baby-doll! Nobody ever goes to jail in Florida!”



"Has not been completely persuasive."

It’s impossible to miss the pain and humiliation felt by citizens of the decent, peaceful, and entirely pleasant city of Venice, Fl. over the unwelcome recognition their community has received because of it’s Municipal Airport, and its links to terrorism, drug smuggling, and covert intrigue.

Disappointed city officials even wanted the town to buy the Jet Center to get a rein on airport jet traffic. Some reckoned they might even gain a rein on the Venice Airport itself.

(Others, it must be said, find that idea “just too naïve for words.”)

"It stinks; it smells," Earl Niemoth, a Sarasota real estate investor and publisher who wants to buy the Jet Center, said of the announcement.

So there’s something incredibly, awfully—even suspiciously—odd about the behavior of Federal Receiver Burt Wiand and his steadfast determination to visit more tribulation on the countenances of the long-suffering and beleaguered citizenry of Venice, Florida.

In a caustic letter faxed to city officials announcing the sale of Huffman Aviation, Wiand couldn’t resist taking a few swipes at city officials.

"The city’s lack of good faith in this matter and the continued sending of self-serving disingenuous letters has not been persuasive,” trilled Wiand.

He’d reached an agreement “in principle” with a buyer, Wiand informed the city imperiously, “a Florida company with a lot of experience running airport maintenance facilities.”

Ho ho! Remember that phrase: "A Florida company with a lot of experience."'

Wiand felt free to steer the sale of the Art Nadel-owned FBO (think gas stations for airplanes, but with slightly better bathrooms) towards…well, towards just about anyone he damn well pleased, apparently.

And if they didn’t like it… well that was just too bad.

Before Burton Wiand got into what the unkind among us might call "the bankruptcy dodge," he spent decades as an attorney at the SEC.

This, of course, is probably not quite the credential one once thought.



"Rivulets of judicial wisdom dribbled down his cheek..."

City Manager Isaac Turner called Wiand’s characterizations “off base.”

Wiand spurned overtures to purchase the Jet Center from at least one other buyer, as well as from the city of Venice itself. Amid loud protestations from several quarters that he’d ignored other bids, he negotiated a deal and presented it as a fait accompli.

Wiand’s actions indicated how little sympathy he possessed for the town’s majority opinion, which wanted the Airport to slip quietly away one night under cover of darkness.

It's called "rubbing salt in the wound."

Knowing the Venice City Council would have to approve the sale, Wiand was in effect saying: “Get over it.”

Incredibly, he was warning them: Things could get worse.

"If they don’t act nice, they’ll be dealing with Judge Lazzara,” Wiand warned city officials though the Sarasota Herald-Tribune.

He was referring to the Federal Judge overseeing the receivership, Richard Lazzara, who has found rivers of judicial wisdom running through every motion Receiver Burton Wiand has filed so far.

There's one thing that's extremely important to note:

The Venice city officials responsible for the mess at the airport have never ever faced the threat of any legal consequences for standing idly by and allowing the airport’s mission-critical FBO to fall into the hands—twice in six years— of men involved in continuing criminal enterprise.

Aren't there any criminal sanctions for abdication of “fiduciary responsibility?”

While Burton Wiand, the FAA, the Sarasota Herald Tribune, the FBI, and the Florida State Police (FDLE) have all eagerly lined up to “investigate,” on one pretext or other, the current slate of city officials in Venice, those same officials have tried to do the job they were elected to do: stop it from happening yet again.



“Working to win your trust. No. Really.”

The recently named buyer of the Venice Airport's FBO is “TriState Aviation Group LLC."

There was little if nothing to find out about TriState, which by itself is not terribly surprising.

TriState is a company which exists only on paper.

They were less than two weeks old as a company. So the company could probably use a little time in the bull-pen before being thrown into regular rotation.

What is surprising--and worthy of official investigation--is this:

Before the ink was dry on their incorporation papers, Tristate had received Burton Wiand’s nod to buy the major business at the Venice Airport.

All we could do was put together a few simple questions to put to Huffman's Aviation's hand-picked new owners. We checked the names of the three lads listed on the company’s registration.

Then we picked up the phone and began making a few calls.

And ironically, we owe all the credit for discovering the continuing efforts of U.S. covert agencies and their contractors to influence events at the Venice Airport to one of TriState’s three principals.

Go figure.


Florida's Newest Captain of Industry
His name is Henry Paulino.

We figured him for the easiest to reach. We're lazy. And someone had sent us the phone number where he works at Volo Aviation’s FBO at the airport in Manassas Virginia.

Alas, Henry Paulino wouldn’t return our calls. He successfully avoided us, which is a surprisingly-easy feat to accomplish, it turns out.

Then someone answering the phone at the Manassas Airport FBO got tired of hearing us call, and encouraged us in the direction of sending Henry an email.

An email! Of course! Why hadn’t we thought of that?

So we sent an email to Henry Paulino, (email address hpaulino@airproperty.net), asking:

“Are you the “Henry Paulino" from this Feb. 15 2004 police report in the Westchester County Journal News?



CLARKSTOWN

Grand larceny charge: Henry Paulino, 37, of Jersey City, N.J., was arrested Feb. 15 and charged with felony fourth-degree grand larceny, fourth-degree criminal possession of stolen property and second-degree criminal possession of a forged instrument. He is accused of shoplifting about $1,600 in clothes from Filene's department store in the Palisades Center. Police said he also had forged identification on him. He was arraigned and sent to the county jail without bail for future court dates.



"Henry Paulino," the paper had reported, had been 37 when he was arrested for felony grand larceny, possession of stolen property, and possession of a forged instrument, etc.

And there are, of course, lots and lots of Henry Paulino's. Chances are, the ages don't match.

Did Henry Paulino, about to become an owner of a multi-million dollar operation that is a tax-payer funded public utility get busted shoplifting $1,600 in clothes from a Filene's Department store?

While carrying multiple bogus identifications?

There's no telling. Certainly we don’t know. We haven’t heard back from him.



'All things come to those that wait"
But...we don't recall hearing anything about a company called "airproperty" in the Venice Airport FBO deal.

We wondered:

Why was Henry Paulino’s email address at something called “airproperty.net?”

Who were they?

Although airproperty does not appear to have any real existence as a company, the company which owns the registered the "airproperty" domain certainly does.

It's called "Airside Investors.”

And Airside Investors is slightly famous. The company owned a Gulfstream I, it was revealed in 2006, that was flying daily flights off the coast of Cuba.

The Bush White House itself gave the green light for the inclusion of funds for the plane's acquisition in the federal budget last year.

What was it doing there? If you answered "beaming Spanish language soap operas (non-communist TV) to a grateful Cuban nation," you probably are a Cuban in Miami, or work for the national Republican Party, or both.

The resulting bad publicity mostly fell on the broad shoulders of Phoenix Air, which by now is used to bad publicity.

The company has a lucrative sideline doing CIA renditions. Read all about it here.

On Florida incorporation documents, Phoenix Air's address is on the Navy's Key West Base.

And Phoenix Air, Phoenix Air Group, is where Wally Hilliard got all those Jetstreams.

And as for the Navy's Key West facility, alert readers may even recall that Mohamed Atta his-ownself used to hang out there some.

Over two decades of operation, this little government fiasco cost more than $500 million. The airplane part of the deal was a relative steal at $5-10 million a year.

The other problem with this otherwise admirable gravy train?

Nobody watches it.

So what was one of the principals of brand spanking new TriState Aviation, Henry Paulino of Airside Investors, doing hanging out (leasing a plane) to a notorious private military contractor like Phoenix Air?

We may find out... someday. But not, we fear, till long after TriState Aviation takes over the FBO and gets comfortably ensconced behind the desk out at the Venice Municipal Airport.



No socks, no shirt, no corporate logo
TriState Aviation’s biggest selling point?

The company hasn’t been around long enough to have a corporate history.

Less to know. Less to worry about.

Wiand’s statement—that he was selling the facility to “a Florida company with a lot of experience running airport maintenance facilities—” may not be a complete lie.

But its far from being the truth.

But he should at least release something saying that statement is no longer “operative.”

TriState probably doesn’t have a corporate logo, or even a motto.

Is this just sloppy tradecraft? That they didn't at least register the dummy company six months in advance borders on being insulting. Maybe even crosses the line.

Whatever you want to say about Wally Hilliard, his Wisconsin medical insurance company at least had a really cool corporate motto that was tongue-in-cheek droll too...

“Love God, Hate Sin, and Back the Pack!”



What TriState Aviation does have
Marty Kretchman was gamely--and even winningly—trying to keep his story straight. Kretchman said the ownership of his company includes private investors whose names he refuses to disclose.

And he reiterated that the hangars under dispute will have to be built where they are designated on Nadel's plans.

But we shouldn’t let that little things like offshore ownership and non-transparency keep us all from being friends...

"We're trying to be very transparent about this," Kretchman said. "We're just a bunch of guys who loved airplanes as kids."

In a letter to Venice’s citizen-journalist and watchdog John Patten, he wrote,

“TriState Aviation Group LLC. is comprised of myself Brian Ciambra and Henry Paulino.”

“Collectively, we have over 40 years of combined experience owning and operating Fixed Base Operations, including the management and structuring of the Volo Aviation chain of FBO's across the country.”

One question we’d like to hear someone ask Marty, just for the record, is:

“Pardon me… But which FBO was it that y’all claim to have owned, and when?”

Don't get us wrong. We're big fans.

Marty Kretchman is totally smooth enough to have a future in successful indirection. One example:

“Brian has more recently served as the Vice President of Operations for Volo Aviation, an FBO venture of Merrill Lynch,” he said.

Alas, Volo Aviation isn’t an FBO venture of Merrill Lynch. Merrill Lynch doesn’t have an “FBO venture.”

Marty Kretchman's boss, however, does have an FBO venture. And its partially funded by Merrill Lynch. But its not their deal.

It's Kretchman's boss’s deal. Maybe his boss asked him: See if you can keep my name out of the papers.

For the moment at least, we’ll respect his anonymity, too.

It's a topic we can always come back and revisit.



STAY TUNED



NEXT: BURTON WIAND'S GREATEST HITS & BRUTAL COURTHOUSE FACE-OFFS.

FLORIDA DRUG RUNNING EXPOSED

wow...lot's of activity in this town....what's going on?

Press release from Wiand's approved Venice Jet Center buyer -- full text
Posted by John Patten, Venice Florida! dot com
.
(editor's prefatory note -- The big big question now is: Who are the angel investors, the hidden money guys behind this offer? Or, possibly: Does Tri-State really have them lined up yet? With the history of the Venice Jet Center as the site of a long history of known and documented criminal and terrorist activity (Art Nadel, Rudi Dekkers, Wally Hilliard, Mohamed Atta and the 9/11 terrorists, drug trafficking, etc.), the fact that it is planned to be opened under the name of Suncoast Air Center with no knowledge yet as to who the big money guys are behind the purchase is going to prove to be majorly distressing to city hall and to local residents who just want a cleanly run airport. -- JP, editor)


DEA Briefs & Background, Drugs and Drug Abuse, State Factsheets ...
Cocaine: Cocaine is the primary drug threat within Florida. ... route used by trafficking organizations to smuggle cocaine across the Caribbean ... But in the preceding three years a shift to northern Florida and the Panhandle occurred. ...
www.justice.gov/dea/pubs/state_factsheets/florida.html - Cached
DEA Briefs & Background, Drugs and Drug Abuse, State Factsheets ...
Cocaine: Cocaine is the primary drug threat within Florida. ... a major transportation route used by trafficking organizations to smuggle cocaine across the ...
www.justice.gov/dea/pubs/state_factsheets/florida2007.html - Cached
Welcome to The MadCowMorningNews
60 years of drug trafficking at the Venice Municipal Airport ... international heroin and cocaine trafficking, and being used as a launch pad for ... so inept that on at least one publicized route, they never sold a single ticket. .... Airport as part of a program run out of at Eglin AFB in Florida's panhandle. ...
www.madcowprod.com/ - Cached - Similar
Drugs For Your Information - For The State Of Florida ...
Drug trafficking organizations dealing in crack cocaine have been identified in ... three years a shift to northern Florida and the Panhandle occurred. ...
ms6.net/?a=tetsetvous - Cached


Disappointed city officials even wanted the town to buy the Jet Center to get a rein on airport jet traffic. Some reckoned they might even gain a rein on the Venice Airport itself.

(Others, it must be said, find that idea “just too naïve for words.”)

"It stinks; it smells," Earl Niemoth, a Sarasota real estate investor and publisher who wants to buy the Jet Center, said of the announcement.

So there’s something incredibly, awfully—even suspiciously—odd about the behavior of Federal Receiver Burt Wiand and his steadfast determination to visit more tribulation on the countenances of the long-suffering and beleaguered citizenry of Venice, Florida.

In a caustic letter faxed to city officials announcing the sale of Huffman Aviation, Wiand couldn’t resist taking a few swipes at city officials.

"The city’s lack of good faith in this matter and the continued sending of self-serving disingenuous letters has not been persuasive,” trilled Wiand.

He’d reached an agreement “in principle” with a buyer, Wiand informed the city imperiously, “a Florida company with a lot of experience running airport maintenance facilities.”

Ho ho! Remember that phrase: "A Florida company with a lot of experience."'

Wiand felt free to steer the sale of the Art Nadel-owned FBO (think gas stations for airplanes, but with slightly better bathrooms) towards…well, towards just about anyone he damn well pleased, apparently.

And if they didn’t like it… well that was just too bad.

Before Burton Wiand got into what the unkind among us might call "the bankruptcy dodge," he spent decades as an attorney at the SEC.

This, of course, is probably not quite the credential one once thought.



"Rivulets of judicial wisdom dribbled down his cheek..."

City Manager Isaac Turner called Wiand’s characterizations “off base.”

Wiand spurned overtures to purchase the Jet Center from at least one other buyer, as well as from the city of Venice itself. Amid loud protestations from several quarters that he’d ignored other bids, he negotiated a deal and presented it as a fait accompli.

Wiand’s actions indicated how little sympathy he possessed for the town’s majority opinion, which wanted the Airport to slip quietly away one night under cover of darkness.

It's called "rubbing salt in the wound."

Knowing the Venice City Council would have to approve the sale, Wiand was in effect saying: “Get over it.”

Incredibly, he was warning them: Things could get worse.

"If they don’t act nice, they’ll be dealing with Judge Lazzara,” Wiand warned city officials though the Sarasota Herald-Tribune.

He was referring to the Federal Judge overseeing the receivership, Richard Lazzara, who has found rivers of judicial wisdom running through every motion Receiver Burton Wiand has filed so far.

There's one thing that's extremely important to note:

The Venice city officials responsible for the mess at the airport have never ever faced the threat of any legal consequences for standing idly by and allowing the airport’s mission-critical FBO to fall into the hands—twice in six years— of men involved in continuing criminal enterprise.

Aren't there any criminal sanctions for abdication of “fiduciary responsibility?”

While Burton Wiand, the FAA, the Sarasota Herald Tribune, the FBI, and the Florida State Police (FDLE) have all eagerly lined up to “investigate,” on one pretext or other, the current slate of city officials in Venice, those same officials have tried to do the job they were elected to do: stop it from happening yet again.



“Working to win your trust. No. Really.”

The recently named buyer of the Venice Airport's FBO is “TriState Aviation Group LLC."

There was little if nothing to find out about TriState, which by itself is not terribly surprising.

TriState is a company which exists only on paper.

They were less than two weeks old as a company. So the company could probably use a little time in the bull-pen before being thrown into regular rotation.

What is surprising--and worthy of official investigation--is this:

Before the ink was dry on their incorporation papers, Tristate had received Burton Wiand’s nod to buy the major business at the Venice Airport.

All we could do was put together a few simple questions to put to Huffman's Aviation's hand-picked new owners. We checked the names of the three lads listed on the company’s registration.

Then we picked up the phone and began making a few calls.

And ironically, we owe all the credit for discovering the continuing efforts of U.S. covert agencies and their contractors to influence events at the Venice Airport to one of TriState’s three principals.

Go figure.


Florida's Newest Captain of Industry
His name is Henry Paulino.

We figured him for the easiest to reach. We're lazy. And someone had sent us the phone number where he works at Volo Aviation’s FBO at the airport in Manassas Virginia.

Alas, Henry Paulino wouldn’t return our calls. He successfully avoided us, which is a surprisingly-easy feat to accomplish, it turns out.

Then someone answering the phone at the Manassas Airport FBO got tired of hearing us call, and encouraged us in the direction of sending Henry an email.

An email! Of course! Why hadn’t we thought of that?

So we sent an email to Henry Paulino, (email address hpaulino@airproperty.net), asking:

“Are you the “Henry Paulino" from this Feb. 15 2004 police report in the Westchester County Journal News?



CLARKSTOWN

Grand larceny charge: Henry Paulino, 37, of Jersey City, N.J., was arrested Feb. 15 and charged with felony fourth-degree grand larceny, fourth-degree criminal possession of stolen property and second-degree criminal possession of a forged instrument. He is accused of shoplifting about $1,600 in clothes from Filene's department store in the Palisades Center. Police said he also had forged identification on him. He was arraigned and sent to the county jail without bail for future court dates.



"Henry Paulino," the paper had reported, had been 37 when he was arrested for felony grand larceny, possession of stolen property, and possession of a forged instrument, etc.

And there are, of course, lots and lots of Henry Paulino's. Chances are, the ages don't match.

Did Henry Paulino, about to become an owner of a multi-million dollar operation that is a tax-payer funded public utility get busted shoplifting $1,600 in clothes from a Filene's Department store?

While carrying multiple bogus identifications?

There's no telling. Certainly we don’t know. We haven’t heard back from him.



'All things come to those that wait"
But...we don't recall hearing anything about a company called "airproperty" in the Venice Airport FBO deal.

We wondered:

Why was Henry Paulino’s email address at something called “airproperty.net?”

Who were they?

Although airproperty does not appear to have any real existence as a company, the company which owns the registered the "airproperty" domain certainly does.

It's called "Airside Investors.”

And Airside Investors is slightly famous. The company owned a Gulfstream I, it was revealed in 2006, that was flying daily flights off the coast of Cuba.

The Bush White House itself gave the green light for the inclusion of funds for the plane's acquisition in the federal budget last year.

What was it doing there? If you answered "beaming Spanish language soap operas (non-communist TV) to a grateful Cuban nation," you probably are a Cuban in Miami, or work for the national Republican Party, or both.

The resulting bad publicity mostly fell on the broad shoulders of Phoenix Air, which by now is used to bad publicity.

The company has a lucrative sideline doing CIA renditions. Read all about it here.

On Florida incorporation documents, Phoenix Air's address is on the Navy's Key West Base.

And Phoenix Air, Phoenix Air Group, is where Wally Hilliard got all those Jetstreams.

And as for the Navy's Key West facility, alert readers may even recall that Mohamed Atta his-ownself used to hang out there some.

Over two decades of operation, this little government fiasco cost more than $500 million. The airplane part of the deal was a relative steal at $5-10 million a year.

The other problem with this otherwise admirable gravy train?

Nobody watches it.

So what was one of the principals of brand spanking new TriState Aviation, Henry Paulino of Airside Investors, doing hanging out (leasing a plane) to a notorious private military contractor like Phoenix Air?

We may find out... someday. But not, we fear, till long after TriState Aviation takes over the FBO and gets comfortably ensconced behind the desk out at the Venice Municipal Airport.



No socks, no shirt, no corporate logo
TriState Aviation’s biggest selling point?

The company hasn’t been around long enough to have a corporate history.

Less to know. Less to worry about.

Wiand’s statement—that he was selling the facility to “a Florida company with a lot of experience running airport maintenance facilities—” may not be a complete lie.

But its far from being the truth.

But he should at least release something saying that statement is no longer “operative.”

TriState probably doesn’t have a corporate logo, or even a motto.

Is this just sloppy tradecraft? That they didn't at least register the dummy company six months in advance borders on being insulting. Maybe even crosses the line.

Whatever you want to say about Wally Hilliard, his Wisconsin medical insurance company at least had a really cool corporate motto that was tongue-in-cheek droll too...

“Love God, Hate Sin, and Back the Pack!”



What TriState Aviation does have
Marty Kretchman was gamely--and even winningly—trying to keep his story straight. Kretchman said the ownership of his company includes private investors whose names he refuses to disclose.

And he reiterated that the hangars under dispute will have to be built where they are designated on Nadel's plans.

But we shouldn’t let that little things like offshore ownership and non-transparency keep us all from being friends...

"We're trying to be very transparent about this," Kretchman said. "We're just a bunch of guys who loved airplanes as kids."

In a letter to Venice’s citizen-journalist and watchdog John Patten, he wrote,

“TriState Aviation Group LLC. is comprised of myself Brian Ciambra and Henry Paulino.”

“Collectively, we have over 40 years of combined experience owning and operating Fixed Base Operations, including the management and structuring of the Volo Aviation chain of FBO's across the country.”

One question we’d like to hear someone ask Marty, just for the record, is:

“Pardon me… But which FBO was it that y’all claim to have owned, and when?”

Don't get us wrong. We're big fans.

Marty Kretchman is totally smooth enough to have a future in successful indirection. One example:

“Brian has more recently served as the Vice President of Operations for Volo Aviation, an FBO venture of Merrill Lynch,” he said.

Alas, Volo Aviation isn’t an FBO venture of Merrill Lynch. Merrill Lynch doesn’t have an “FBO venture.”

Marty Kretchman's boss, however, does have an FBO venture. And its partially funded by Merrill Lynch. But its not their deal.

It's Kretchman's boss’s deal. Maybe his boss asked him: See if you can keep my name out of the papers.

For the moment at least, we’ll respect his anonymity, too.

It's a topic we can always come back and revisit.



STAY TUNED



NEXT: BURTON WIAND'S GREATEST HITS & BRUTAL COURTHOUSE FACE-OFFS.

Saturday, April 3, 2010

The Greatest Swindle Ever Sold

How the Financial Bailout Scams Taxpayers, Subsidizes Wall Street, and Props Up Our Broken Financial System


On October 3rd, as the spreading economic meltdown threatened to topple financial behemoths like American International Group (AIG) and Bank of America and plunged global markets into freefall, the U.S. government responded with the largest bailout in American history. The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems and restore the flow of credit in the economy.

The legislation's guidelines for crafting the rescue plan were clear: the TARP should protect home values and consumer savings, help citizens keep their homes, and create jobs. Above all, with the government poised to invest hundreds of billions of taxpayer dollars in various financial institutions, the legislation urged the bailout's architects to maximize returns to the American people.




That $700 billion bailout has since grown into a more than $12 trillion commitment by the U.S. government and the Federal Reserve. About $1.1 trillion of that is taxpayer money—the TARP money and an additional $400 billion rescue of mortgage companies Fannie Mae and Freddie Mac. The TARP now includes 12 separate programs, and recipients range from megabanks like Citigroup and JPMorgan Chase to automakers Chrysler and General Motors.

Seven months in, the bailout's impact is unclear. The Treasury Department has used the recent "stress test" results it applied to 19 of the nation's largest banks to suggest that the worst might be over; yet the International Monetary Fund as well as economists like New York University professor and economist Nouriel Roubini and New York Times columnist Paul Krugman predict greater losses in U.S. markets, rising unemployment, and generally tougher economic times ahead.

What cannot be disputed, however, is the financial bailout's biggest loser: the American taxpayer. The U.S. government, led by the Treasury Department, has done little, if anything, to maximize returns on its trillion-dollar, taxpayer-funded investment. So far, the bailout has favored rescued financial institutions by subsidizing their losses to the tune of $356 billion, shying away from much-needed management changes and—with the exception of the automakers—letting companies take taxpayer money without a coherent plan for how they might return to viability.

The bailout's perks have been no less favorable for private investors who are now picking over the economy's still-smoking rubble at the taxpayers' expense. The newer bailout programs rolled out by Treasury Secretary Timothy Geithner give private equity firms, hedge funds, and other private investors significant leverage to buy "toxic" or distressed assets, while leaving taxpayers stuck with the lion's share of the risk and potential losses.

Given the lack of transparency and accountability, don't expect taxpayers to be able to object too much. After all, remarkably little is known about how TARP recipients have used the government aid received. Nonetheless, recent government reports, Congressional testimony, and commentaries offer those patient enough to pore over hundreds of pages of material glimpses of just how Wall Street friendly the bailout actually is. Here, then, based on the most definitive data and analyses available, are six of the most blatant and alarming ways taxpayers have been scammed by the government's $1.1-trillion, publicly-funded bailout.

1. By overpaying for its TARP investments, the Treasury Department provided bailout recipients with generous subsidies at the taxpayer's expense.

When the Treasury Department ditched its initial plan to buy up "toxic" assets and instead invest directly in financial institutions, then-Treasury Secretary Henry Paulson, Jr. assured Americans that they'd get a fair deal. "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything," he said in October 2008.

Yet the Congressional Oversight Panel (COP), a five-person group tasked with ensuring that the Treasury Department acts in the public's best interest, concluded in its monthly report for February that the department had significantly overpaid by tens of billions of dollars for its investments. For the 10 largest TARP investments made in 2008, totaling $184.2 billion, Treasury received on average only $66 worth of assets for every $100 invested. Based on that shortfall, the panel calculated that Treasury had received only $176 billion in assets for its $254 billion investment, leaving a $78 billion hole in taxpayer pockets.

Not all investors subsidized the struggling banks so heavily while investing in them. The COP report notes that private investors received much closer to fair market value in investments made at the time of the early TARP transactions. When, for instance, Berkshire Hathaway invested $5 billion in Goldman Sachs in September, the Omaha-based company received securities worth $110 for each $100 invested. And when Mitsubishi invested in Morgan Stanley that same month, it received securities worth $91 for every $100 invested.

As of May 15th, according to the Ethisphere TARP Index, which tracks the government's bailout investments, its various investments had depreciated in value by almost $147.7 billion. In other words, TARP's losses come out to almost $1,300 per American taxpaying household.

2. As the government has no real oversight over bailout funds, taxpayers remain in the dark about how their money has been used and if it has made any difference.

While the Treasury Department can make TARP recipients report on just how they spend their government bailout funds, it has chosen not to do so. As a result, it's unclear whether institutions receiving such funds are using that money to increase lending—which would, in turn, boost the economy—or merely to fill in holes in their balance sheets.

Neil M. Barofsky, the special inspector general for TARP, summed the situation up this way in his office's April quarterly report to Congress: "The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution's core business and may be little more than a way to gain access to the low-cost capital provided under TARP."

This lack of transparency makes the bailout process highly susceptible to fraud and corruption. Barofsky's report stated that 20 separate criminal investigations were already underway involving corporate fraud, insider trading, and public corruption. He also told the Financial Times that his office was investigating whether banks manipulated their books to secure bailout funds. "I hope we don't find a single bank that's cooked its books to try to get money, but I don't think that's going to be the case."

Economist Dean Baker, co-director of the Center for Economic and Policy Research in Washington, suggested to TomDispatch in an interview that the opaque and complicated nature of the bailout may not be entirely unintentional, given the difficulties it raises for anyone wanting to follow the trail of taxpayer dollars from the government to the banks. "[Government officials] see this all as a Three Card Monte, moving everything around really quickly so the public won't understand that this really is an elaborate way to subsidize the banks," Baker says, adding that the public "won't realize we gave money away to some of the richest people."

3. The bailout's newer programs heavily favor the private sector, giving investors an opportunity to earn lucrative profits and leaving taxpayers with most of the risk.

Under Treasury Secretary Geithner, the Treasury Department has greatly expanded the financial bailout to troubling new programs like the Public-Private Investment Program (PPIP) and the Term Asset-Backed-Securities Loan Facility (TALF). The PPIP, for example, encourages private investors to buy "toxic" or risky assets on the books of struggling banks. Doing so, we're told, will get banks lending again because the burdensome assets won't weigh them down. Unfortunately, the incentives the Treasury Department is offering to get private investors to participate are so generous that the government—and, by extension, American taxpayers—are left with all the downside.

Joseph Stiglitz, the Nobel-prize winning economist, described the PPIP program in a New York Times op-ed this way:

"Consider an asset that has a 50-50 chance of being worth either zero or $200 in a year's time. The average 'value' of the asset is $100. Ignoring interest, this is what the asset would sell for in a competitive market. It is what the asset is 'worth.' Under the plan by Treasury Secretary Timothy Geithner, the government would provide about 92 percent of the money to buy the asset but would stand to receive only 50 percent of any gains, and would absorb almost all of the losses. Some partnership!
Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That's 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest—$12 in 'equity' plus $126 in the form of a guaranteed loan.
If, in a year's time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that's left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37.
Worse still, the PPIP can be easily manipulated for private gain. As economist Jeffrey Sachs has described it, a bank with worthless toxic assets on its books could actually set up its own public-private fund to bid on those assets. Since no true bidder would pay for a worthless asset, the bank's public-private fund would win the bid, essentially using government money for the purchase. All the public-private fund would then have to do is quietly declare bankruptcy and disappear, leaving the bank to make off with the government money it received. With the PPIP deals set to begin in the coming months, time will tell whether private investors actually take advantage of the program's flaws in this fashion.

The Treasury Department's TALF program offers equally enticing possibilities for potential bailout profiteers, providing investors with a chance to double, triple, or even quadruple their investments. And like the PPIP, if the deal goes bad, taxpayers absorb most of the losses. "It beats any financing that the private sector could ever come up with," a Wall Street trader commented in a recent Fortune magazine story. "I almost want to say it is irresponsible."

4. The government has no coherent plan for returning failing financial institutions to profitability and maximizing returns on taxpayers' investments.

Compare the treatment of the auto industry and the financial sector, and a troubling double standard emerges: As a condition for taking bailout aid, the government required Chrysler and General Motors to present detailed plans on how the companies would return to profitability. Yet the Treasury Department attached minimal conditions to the billions injected into the largest bailed-out financial institutions. Moreover, neither Geithner nor Lawrence Summers, one of President Barack Obama's top economic advisors, nor the president himself has articulated any substantive plan or vision for how the bailout will help these institutions recover and, hopefully, maximize taxpayers' investment returns.

The Congressional Oversight Panel highlighted the absence of such a comprehensive plan in its January report. Three months into the bailout, the Treasury Department "has not yet explained its strategy," the report stated. "Treasury has identified its goals and announced its programs, but it has not yet explained how the programs chosen constitute a coherent plan to achieve those goals."

Today, the department's endgame for the bailout still remains vague. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, wrote in the Financial Times in May that the government's response to the financial meltdown has been "ad hoc, resulting in inequitable outcomes among firms, creditors, and investors." Rather than perpetually prop up banks with endless taxpayer funds, Hoenig suggests that the government should allow banks to fail. Only then, he believes, can crippled financial institutions and systems be fixed. "Because we still have far to go in this crisis, there remains time to define a clear process for resolving large institutional failure. Without one, the consequences will involve a series of short-term events and far more uncertainty for the global economy in the long run."

The healthier and more profitable bailout recipients are once financial markets rebound, the more taxpayers will earn on their investments. Without a plan, however, banks may limp back to viability while taxpayers lose their investments or even absorb further losses.

5. The bailout's focus on Wall Street mega-banks ignores smaller banks serving millions of American taxpayers that face an equally uncertain future.

The government may not have a long-term strategy for its trillion-dollar bailout, but its guiding principle, however misguided, is clear: What's good for Wall Street will be best for the rest of the country.

On the day the mega-bank stress tests were officially released, another set of stress-test results came out to much less fanfare. In its quarterly report on the health of individual banks and the banking industry as a whole, Institutional Risk Analytics (IRA), a respected financial services organization, found that the stress levels among more than 7,500 FDIC-reporting banks nationwide had risen dramatically. For 1,575 of the banks, net incomes had turned negative due to decreased lending and less risk-taking.

The conclusion IRA drew was telling: "Our overall observation is that U.S. policy makers may very well have been distracted by focusing on 19 large stress test banks designed to save Wall Street and the world's central bank bondholders, this while a trend is emerging of a going concern viability crash taking shape under the radar." The report concluded with a question: "Has the time come to shift the policy focus away from the things that we love, namely big zombie banks, to tackle things that are truly hurting us?"

6. The bailout encourages the very behaviors that created the economic crisis in the first place instead of overhauling our broken financial system and helping the individuals most affected by the crisis.

As Joseph Stiglitz explained in the New York Times, one major cause of the economic crisis was bank overleveraging. "[U]sing relatively little capital of their own," he wrote, "[banks] borrowed heavily to buy extremely risky real estate assets. In the process, they used overly complex instruments like collateralized debt obligations." Financial institutions engaged in overleveraging in pursuit of the lucrative profits such deals promised—even if those profits came with staggering levels of risk.

Sound familiar? It should, because in the PPIP and TALF bailout programs the Treasury Department has essentially replicated the very overleveraged, risky, complex system that got us into this mess in the first place: in other words, the government hopes to repair our financial system by using the flawed practices that caused this crisis.

Then there are the institutions deemed "too big to fail." These financial giants—among them AIG, Citigroup, and Bank of America—have been kept afloat by billions of dollars in bottomless bailout aid. Yet reinforcing the notion that any institution is "too big to fail" is dangerous to the economy. When a company like AIG grows so large that it becomes "too big to fail," the risk it carries is systemic, meaning failure could drag down the entire economy. The government should force "too big to fail" institutions to slim down to a safer, more modest size; instead, the Treasury Department continues to subsidize these financial giants, reinforcing their place in our economy.

Of even greater concern is the message the bailout sends to banks and lenders—namely, that the risky investments that crippled the economy are fair game in the future. After all, if banks fail and teeter at the edge of collapse, the government promises to be there with a taxpayer-funded, potentially profitable safety net.

The handling of the bailout makes at least one thing clear, however: It's not your health that the government is focused on, it's theirs—the very banks and lenders whose convoluted financial systems provided the underpinnings for staggering salaries and bonuses while bringing our economy to the brink of another Great Depression.