Economic Terror

Preface Article at www.heartcom.org/EconomicTerror.htm

One of the REAL reasons that the BUSHwhackers are so staunchly behind surveillance of Americans is so they can get dirt for blackmail or a "preemptive strike" -- like taking out New York Governor Eliot Spitzer -- before he exposed the REAL terrorists behind 9-11.  The following article is the REAL story that the corporate media is NOT reporting... the REAL reason that Spitzer was taken out, and who was behind it.  The problem isn't "the economy"; it's the criminals running it.

Reference to the article that follows can be found here:
www.gregpalast.com/elliot-spitzer-gets-nailed

~~~~~~~~~

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

By Greg Palast
Reporting for Air America Radios Clout

March 14th, 2008

While New York Governor Eliot Spitzer was paying an escort $4,300 in a hotel room in Washington, just down the road, George Bushs new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But theres a BIG difference. The Governor was using his own checkbook. Bushs man Bernanke was using ours.

This week, Bernankes Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers bordello: Eliot Spitzer.

Who are they kidding? Spitzers lynching and the bankers enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Streets line that millions of US families are about to lose their homes because they bought homes they couldnt afford or took loans too big for their wallets. Ba-LON-ey. Thats blaming the victim.

Heres what happened. Since the Bush regime came to power, a new species of loan became the norm, the sub-prime mortgage and its variants including loans with teeny introductory interest rates. From out of nowhere, a company called Countrywide became Americas top mortgage lender, accounting for one in five home loans, a large chunk of these sub-prime.

Heres how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise aint worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the discount they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.

Now, what kind of American is sub-prime. Guess. No peeking. Heres a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers arent stupid they had no choice. They were steered as its called in the mortgage sharking business.

Steering, sub-prime loans with usurious kickers, fake inducements to over-borrow, called fraudulent conveyance or predatory lending under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty it was OK now to steerm, fakem, chargem and takem.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bushs regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of federal pre-emption, Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzers investigation of ugly racial mortgage steering. Bushs banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroups Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called securitization.

What that means is that they took a bunch of junk mortgages, like the Grinnings, loans about to go down the toilet and re-packaged them into tranches of bonds which were stamped AAA - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywides top man, Angelo Mozilo, will earn a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywides stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? Thats Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure and got to keep the Grinnings house. There was no quid of a foreclosure moratorium for the pro quo of public bailout. Not one family was saved but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilos Countrywide stock rose 17% in one day. The Citi sheiks saw their companys stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided what a coinkydink! the man called, The Sheriff of Wall Street was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, Take him down today! Naw, thats not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press one was Wall Street Declares War on Spitzer - made clear to Bushs enforcers at Justice who their number one target should be. And it wasnt Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

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

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

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

A note on Prosecutorial Indiscretion.

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

Not all crimes lead to federal bust or even public exposure. Its up to something called prosecutorial discretion.

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

Naming and shaming and ruining Spitzer rarely done in these cases - was made at the discretion of Bushs Justice Department.

Or maybe we should say, indiscretion.

###

Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

Hear The Palast Report weekly on Air America Radio