Financial Crisis - 2008-2010

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Bush Warns 'Entire Economy Is in Danger'

Bush warns 'entire economy is in danger'; invites candidates to White House meeting

By JENNIFER LOVEN Associated Press Writer
WASHINGTON September 25, 2008 (AP)

The Associated Press



President Bush poses for photographers after delivering a
prime-time speech from the White House on the ailing
financial markets, Wednesday, Sept. 24, 2008, in Washington.
(AP Photo/Lawrence Jackson)
(AP)

President Bush said Wednesday that lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses if they fail to act on a massive financial rescue plan. "Our entire economy is in danger," he said.

"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address delivered from the White House East Room that he hoped would help rescue his tough-sell bailout package.

"Ultimately, our country could experience a long and painful recession."
Said Bush: "We must not let this happen."

The unprecedented $700 billion bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own Republican Party who are revolting at the high price tag and massive private-sector intervention by government. Though there is general agreement that something must be done to address the spiraling economic problems, Bush has been forced to accept changes almost daily, based on demands from the right and left.

Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded, while warning he would draw the line at regulations he determined would hamper economic growth.

"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said.

The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade.

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BUFFETT: CRISIS IS ECONOMIC PEARL HARBOR
REUTERS
Posted: 3:06 pm
September 24, 2008

Billionaire investor Warren Buffett called the $700 billion U.S. bailout plan "absolutely necessary" to help pull the financial system out of an "economic Pearl Harbor."

Speaking on CNBC television on Wednesday, the 78-year-old Buffett also called on Congress to leave no doubt by Friday that a bailout would be adopted, or risk throwing markets and the economy into further turmoil.

"We were very, very close to a system that was totally dysfunctional, and would have not only gummed up the financial markets but gummed up the economy in a way that would take us years and years to repair," Buffett said, referring to recent events.

The last few weeks have been marked by the U.S. takeovers of mortgage companies Fannie Mae and Freddie Mac the government bailout of insurer American International Group Inc, the bankruptcy filing of Lehman Brothers Holdings Inc, and the pending sale of Merrill Lynch & Co Inc to Bank of America Corp.

U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben Bernanke are pushing Congress to approve the taxpayer-funded plan that would let the government buy illiquid assets from lenders.

Buffett said the plan "is absolutely necessary, in my view, to really avoid going over the precipice."

Some Democratic lawmakers are demanding more assistance to homeowners and curbs on executive pay, while some Republican lawmakers have questioned the plan's size.

"Republicans and Democrats, they've got the interest of the country at heart, and I think that they will do the right thing, but I hope they'll do it soon," Buffett said.

Paulson ran Goldman Sachs Group Inc before taking the Treasury job in 2006. Berkshire Hathaway Inc, Buffett's insurance and investment company, announced a $5 billion investment in Goldman Tuesday.

"I'm not buying a cross-section of banking institutions," Buffett said. "I certainly have confidence in Goldman, and you could say it's a vote of confidence in Congress to do the right thing."

As lenders try to reduce balance sheet risk, Buffett said the government should buy some of the assets they unload, but not at inflated prices.

"There is no one that can leverage up like the United States government," Buffett said. "If they do it right, and I think they will do it reasonably right ... they'll make a lot of money."

Buffett also said the next U.S. president, who takes office in January, should consider keeping Paulson at Treasury.

"I would ask (Paulson) to stay on," Buffett said. "The guy pays an enormous price to do it. He's probably sleeping three or four hours a night. He knows the markets, he's got the interest of the country at heart. So I think if I were either Barack Obama or John McCain and found myself in the White House in January, I would go down there and say, 'Hank, do me a favor, stick around another year.'"
http://www.nypost.com/seven/09242008...bor_130556.htm

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Washington Mutual downgraded again

Standard & Poor's moves creditworthiness rating even further into junk


updated 6:37 p.m. CT, Wed., Sept. 24, 2008

NEW YORK - Standard & Poor's Ratings Services downgraded Washington Mutual Inc.'s creditworthiness further into junk territory Wednesday, noting the increased likelihood that any sale of the company would only be done in piecemeal fashion.

The fate of the ailing Seattle-based thrift has hung in the balance for weeks, as investors question the potential for a sale or government intervention in the face of WaMu's plunging stock price — which has fallen 83 percent so far this year.

S&P noted that in the stressed financial services sector, there are few potential buyers not struggling with their own capital constraints and mortgage debt issues, narrowing the possibility for an outright takeover of the entire thrift. But a carve-up of Washington Mutual would increase the risk of default for creditors of the holding company, because the bank's stable deposit base would be gone.

Washington Mutual assured customers Wednesday that Standard & Poor's rating actions do not affect the safety of customers' deposits, which are insured by the FDIC up to certain limits.

WaMu has insisted that its capital levels remain above regulatory standards for being considered "well capitalized," but debt ratings agency Moody's this week cut the financial strength rating of WaMu's main bank subsidiary to "E," its lowest, saying the thrift's capital is insufficient to absorb its mortgage losses.

Last week, a sale of the nation's largest savings and loan seemed imminent, as Goldman Sachs Group Inc. was brought in to assist with a transaction and a major investor removed a potential roadblock to a sale. But after the government announced Friday it was working on a plan to help troubled banks remove billions of bad mortgage debt from their books, momentum stalled as buyers awaited details of the proposal.

"(The potential suitors) are all kind of playing a wait-and-see game right now," said Joe Heider, president of Cleveland-based Dawson Wealth Management, in an interview on Tuesday. "They are trying to gauge the amount of losses that they ultimately could end up absorbing."

A possible scenario attractive to buyers would be WaMu's takeover by the FDIC, which could allow another bank to buy the deposits and branches of Washington Mutual — considered the most valuable part of the thrift — while the government is stuck with selling off bad mortgage debts.

But there would have to be "a triggering event" in order for the FDIC to intervene, said Doug Landy, a partner in the banking regulatory practice at Allen & Overy LLC. "One, the deposits start walking out, or two, WaMu takes such big losses that its capital drops down below certain required levels."

S&P's outlook on WaMu's ratings is negative, implying they could be downgraded even further. But the agency said it could revise the outlook to "developing" if WaMu issued definitive news of a sales transaction or if there was concrete proof of "the potential benefit the Treasury's new bailout plan may offer to WaMu as an independent company."

Washington Mutual shares dropped 94 cents, or 29.4 percent, to $2.26.
http://www.msnbc.msn.com/id/26876182/

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China Asks Local Lenders Not To Lend To U.S. Banks:report

Wednesday, September 24, 2008

HONG KONG -- Chinese regulators have asked domestic banks to stop lending to U.S. financial institutions in the interbank money markets to prevent possible losses during the financial crisis, the South China Morning Post reported Thursday. The China Banking Regulatory Commission's ban on interbank lending of all currencies applied to U.S. banks, but not to lenders from other countries, the report added, citing a source.
Copyright © 2008 MarketWatch, Inc.

http://www.foxbusiness.com/story/mar...d-banksreport/

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Corruption, Whispers & Receivership

by Jim Willie, CB. Editor, Hat Trick Letter | September 24, 2008

The United States has transformed itself, the most radical degraded aspects having occurred in the last eight years. Many might object or cringe at repeated mention of the Fascist Business Model implemented by the Clinton Administration, and carried to extreme by the Bush II Administration. It is a harsh departure from Beacon of Freedom.

Too bad, fact of life! This merger of state and big business in the midst of a climax, the biggest display of exported financial toxin in modern history, and the disintegration of the financial structure for the nation owning the world reserve currency. The Fascist Business Model has criminal fraud & corruption as its chief characteristic, alienation & resentment as its chief foreign effect, and systemic failure & collapse as its chief outcome. Broad war often follows.

How anybody could think the sharing of bank and oil executives with federal government leadership as a move toward progress on the evolution chart, that is moronic. Surely, it is about political power and corruption. The military budget is sacred, and private contractor deals are made without bids. Now five to six energy giants will hog all Iraqi oil service contracts. The terrorism topic is untouchable for dispute.

A Coup d’Etat is in progress as the Wall Street conmen and fraud kings have taken implicit control of the USGovt. This will be recognized in time, even while resistance is evident. To me the ongoing drama smacks of a comedy of corruption. US citizens are in shock & awe, while foreigners are aghast in disgust.

Hidden in the bowels of the Lehman Brothers failure cleanup process was a convenient provision. The JPMorgan firm was given $138 billion to settle ‘private accounts’ in what seems like a clear case of corruption, a handout of counterfeit money, enabling JPMorgan to reload for costly credit default swap losses or for costly gold suppression games, or both.

Goldman Sachs and Merrill Lynch have succeeded in converting to private banks, just in time to benefit from the trough devised to benefit banks. Is there a secondary benefit of averting legal liability for bond fraud, since now a new financial firm? These are two more egregious examples of the deep collusion in the Fascist Business Model, a theme that has reached climax proportions. The Securities & Exchange Commission, the Commodities Futures Trading Commission, the Debt Ratings Agencies, the military contractors, and professional lobbyist groups work toward rounding out the collusion pentagrams. See a list of dumbfounding factors, angles, stories, and developments at the end of this article, in outline form. The bust continues.

The final battle is underway, for USGovt bailout of practically the entire US banking and mortgage system. Its ancillary businesses like insurance are next. The Credit Default Swap segment represents nitroglycerine soon to be brought under the crippled USGovt aegis.

The mega bailout plan puts Wall Street firms first in line to benefit. The plan in my view is the culmination of arrogant criminality, as its architects and promoters are the primary agents for the banking system collapse itself.

Only one or two senators in Congress had the stones to confront Treasury Secy Paulson and USFed Chairman Bernanke, calling them on their extreme gall to dictate to Congress on bailout responsibility, when failures by the collection of banksters caused the problems even as their cohorts stand in line for deep financial assistance. The claims by Paulson that taxpayer protection is first and foremost is another total lie. His first priority is to funnel as much public money into Wall Street balance sheets before the grand game is shut down. Another phony call, deep lie, pure nonsense!

The desire for punishment, prosecution, and avoidance for benefits has come like a wave. We will see if its legislative delays result in months of grandstanding debate as Rome burns. In haste, the nationalization of the banking and mortgage industry might achieve legislative passage in the same manner as the Patriot Act, without reading its provisions.

Pressure builds for passage without examination, with questions and objections regarded as unpatriotic. The next step is for big bold lies of assurances to be given, enough for satisfying sleepy Congressional senators and representatives, few of whom are aware of the deep fraud laced into the banking and asset base being rescued. The plan is being sold as a pre-emptive maneuver to ward off a disaster, providing necessary liquidity ahead of the likely unfolding events instead of providing funds after a bank failure. Fraud’s best friend is amplified liquidity doled out during times of emergency expedience.

One should have noticed on Tuesday that Paulson totally overshadowed a confused bewildered Bernanke, as the seasoned Wall Street conman even answered questions directed at the university rookie. Gentle Ben is totally out of his league when dealing in financial crime syndicate circles. No college courses on syndicates! Bernanke himself is shocked at how wide the ‘Too Big To Fail’ umbrella has become, this from a man who once claimed the subprime mortgage crisis would be contained and not result in any contagion. My retort was to expect total systemic bond contagion, a correct forecast. Bernanke actually is telling Congress today that he expects no inflationary impact from the banking and mortgage bailout program, a truly gigantic package with monstrous inflation implications! The estimated $700 billion bailout cost is laughable, when it will ultimately cost between $1500 and $2000 billion. The entire mega bailout package (let’s be clear) covers the entire US banking industry.

Congressman Ron Paul made a great quote after lecturing the inept misguided and naïve USFed Chairman Bernanke on the high risks of price fixing. The bailout constitutes the quintessential price fix. Ron Paul said, “Most illiquid bond assets are illiquid because they are not worth anything.” The Wall Street fraud kings want the USGovt to pay inflated values for their illiquid worthless assets that clog and obstruct the banking industry. Bernanke actually regards the payment for bank bailouts can come from other funds. He implies the Exchange Stabilization Fund can use its funds.

If Plunge Protection Team funds are co-mingled, these funds might be closely connected to USGovt security agency fraud associated with gutting of Fannie Mae. That is a perverse irony! By the way, where is Greenspan, whose fingerprints are on every object being dusted by intrepid examiners. He handed over the reins to a bagholder named Ben, just another dumb university economics professor. To succeed in academic economics circles, one must embrace heresy and weave logic like pretzels.

Paulson is attempting to shove a package down Congressional throats. Bernanke looks in body language like a boy caught in a disaster as his entire neighborhood burned down despite his best (but late) efforts to call in a district full of fire trucks. He actually looks like a man who has slept little in two weeks. To be sure, the Congress has been slow to react to the mortgage and banking crisis, choosing to delay until the new presidential term in office. Congress has become a den of irrelevant men and women owing more to lobbyists than to the people. Their chief function is to apply rubber stamps to directives crafted by others, usually from an array of bankers themselves. Why even GeorgeW himself is aghast!

Events are moving toward climax. The next sequence of events can no longer be regarded as coming from traditional ‘Inside the Box’ solutions. We are way beyond that arena, now firmly in the Twilight Zone.

My past forecasts have been verified for bank system collapse, housing market’s unending decline, nationalization of soon everything under the US tainted sun, and finally the New Resolution Trust Corp. The New RTC is being argued as it takes shape. It is called the Troubled Asset Relief Program (TARP).

That name conjures up images of the roof tarps that are dotted across the New Orleans landscape from federal programs to repair roofs after Hurricane Katrina. After numerous subcontractor steps, the $150 per square foot allotted by the USGovt resulted in cheap flimsy tarps instead of nice shingled roofs. A better title for the mortgage relief program would be the Securitized Housing Investment Trust (SHIT), offered by an emailer to CNBC.

These bond assets are not troubled assets, but rather fraudulent assets. The new finance czar Paulson has asked for a blank check with trust given, laden with low-ball cost estimates, or else the system will surely fail. Why should representatives and elders of Congress trust Wall Street executives? They deserve prosecution, indictment, prison terms, and forced restitution instead. We are witnessing financial treason.

Instead, some executives like at Fannie Mae and Freddie Mac received huge severance packages, and Lehman Brothers executives were granted the same. The events are moving toward some upcoming surprises of historical magnitude. Think default and receivership, with foreign control. The massive rollover and refunding requirements from USTreasury Bonds will put monumental strain on the system, which the monetization US$ printing press cannot alone manage. Unless and until foreign creditors step in, the US financial sector will continue to operate like a crime syndicate, since regulatory bodies and law enforcement officials are all part of the coordinated congame.


PREFACE

Many of the overwhelming impressions from the unfolding events are to appear in the October Hat Trick Letter report. First attention must go to paid subscribers. Events is in progress in an accelerated pace, enough to take my breath away on a given day. But rain and cheery faces in Costa Rica straighten me quickly. For more evidence in backing up my claim that private brokerage accounts being open for financial parent firm claim, see the October report also.

Numerous (dozens) of emails came in request. The report will show the best information on this subject, with quotes freshly hidden within the US Federal Reserve website. No need to make such stuff up, since the US financial authorities are better than fiction! By the way, if my analysis and forecasts have any advantage over others, it is because my thought process comes from always thinking like a thief.

Never think the best thoughts, hope for the best of human dignity, or expect fair play to emerge when forecasting the US financial markets. Their plan seems obviously to gut the system before it fails. Then they blame foreigners. False flag attacks then seal the deal, much like cauterizing a wound with a knife made hot in a bivouac fire.

Here is an outline of topics covered in the next report, due out in the next couple weeks. The date is not set, but the messages are becoming clear. Pardon the brevity of important points, but details are difficult to describe with brievity, and are saved for the next Hat Trick Letter.

The ongoing format no longer will be continued as from past issues. Every report is a report of an emergency nature. We are observing the painful steps from failure of a system, with 330 million inhabitants, and commercial tentacles the world over. The four primary features that have pushed the United States into a certain position in Third World status are these:

1. globalization with deep Western investment in China
2. insolvency of four pillars of federal, trade, housing, banking
3. export of fraud with mortgage bonds, mainly to China, Europe, Russia, England
4. military aggression and annexation with continuous deceit and propaganda.

The many points describe a system broken without remedy, inviting default and receivership. Both are in progress behind the curtains, but on foreign soil. As Mohamed El-Erian of PIMCO (formerly Harvard Univ) said recently, “The unthinkable is thinkable.” Little known to the majority of Americans, foreign disgust grows. Their desire to isolate the United States is growing, in order to protect themselves from financial collapse and further spread of fraud. The German economics experts are saying “The World Shouldn't Have to Bear the Burden for America's Lapses” in Spiegel Online (click here) in a public article.

Listen to my interview this week handled by Contrary Investors Cafe Radio (click here), where we covered several of the topics mentioned throughout this article.

GOLD LAUNCH & US DOLLAR DEMISE

Not exactly mirror images of each other, the gold price and US$ index are moving in typical opposite directions. A peak in the USDollar occurred in early September, at the same time a bottom occurred for gold. The forewarned timing of events turning sharply around in the week of September 15th happened on schedule. Once again, the short rule restriction against bank stocks helped to stem the flow that favored the euro currency rise by 330 basis points on Monday.

The USDollar fundamentals have begun to resemble those of a Third World. The USGovt federal deficits are accelerating. The US trade gap has turned toward a rise again. The housing market continues to hurtle down in its price decline, that being the primary force behind the bank collapse. Now finally comes the climax. USEconomic recession is intensifying, notwithstanding absurd USGovt statistics to the contrary.

The nationalization movement for Fannie Mae, Freddie Mac, AIG, not to mention the steady handouts to JPMorgan, have assured of continued heavy red ink in deficits to the USGovt federal budget. Monetization under the table to firms like JPMorgan are happening somewhat in the open, but not properly understood by the masses, trained and untrained. The endless war is a sacred cow of bottomless costs, largely to support the other syndicate, the US security agency clandestine trafficking out of Afghanistan.

Foreigners watch the heightened risk having become acute. The USDollar will be sold, and gold will be bought. A COMEX delivery default in gold is in progress.

Few are thinking in nonlinear or discontinuous terms. When (not if) the USTreasurys suffer a default, totally assured in my mind, confirmed by my sources of information, the gold price will launch onward and upward in huge steps. Even without a default, the strains on the USGovt budget will result in extraordinary risk either on the USTreasury Bond yield from added supply, OR on the USDollar from cowardly requisite monetization of debt.

My conjecture is the first couple fundings for USGovt bailout debt obligations will be done with normal USTreasury auctions, not to mention some off-budget games. The next fundings will be done via pure monetization. The entire nationalization will cost another $1500 to $2000 billion for banks assets and mortgages, on top of another $1000 billion for an array of US industrial and financial giants outside the banking world.

The failed US firms like General Motors are already lining up. So foreigners will be expected to foot the bill??? No way! They will pull the plug, or at least diversify in a huge way out of the USDollar and US$-based bonds.

NOTES & WHISPERS IN ILL WIND

The list of breakdown items, evidence, and criminal overtones is vast.

1. Money market funds almost caused a seizure earlier this week, which means the banking system almost went into a fatal cardiac arrest episode. The seizures spread across entire the financial system, even to brokerage funds, and extended to foreign banks. The commercial paper market was also affected. The Exchange Stabilization Fund was used, having possible currency implications.
2. Foreign entities were blocked from participation in both the Lehman Brothers and American Intl Group (AIG) busts, partly to retain control, but also most likely to limit opportunity for foreigners to obtain data, documents, and records of extreme fraud. The Germans pursued the AIG insurance units in a natural acquisition, far more prudent than inefficient USGovt conservatorship.
3. The USEconomy would move toward a centralized Soviet structure, not socialism, if liberties are curtailed further, especially if martial law is imposed. Rationing is a very real prospect. Watch freedom of speech, assembly, and more.
4. The nationalization of Fannie Mae puts the $1500 billion documented fraud since 1988 on the national tab. The New Jersey burnout home selling for $230k in a Fannie loan, the micro example, has played out on a national aggregate scale. The subprime mortgage movement used to be the visible portion of the mortgage crisis. The Fannie Mae gigantic fraud has been covered by the greater mortgage crisis, perhaps in a wildly successful multi-year project. Thanks to the intrepid Aaron Krowne of www.ML-implode.com for his shared ideas.
5. Final banking & mortgage system bailout by the USGovt might not occur until issues are addressed regarding prosecution, confessions, resignations, state’s evidence, and eventually restitution. The concept of RICO law enforcement against Wall Street would be both unprecedented and empty, since most assets have been gutted. No, on second thought, despite objections, the Congress will pass the bailout bill without reading it.
6. The move to halt home foreclosures is a typical stupid Congressional idea, which might result in civil disobedience and scoffing at mortgage payment on a broad scale. Worse, almost all cost estimates are wrong by a factor of 10x from reasonable forecasts. The pattern is to establish the plan, and deal with cost overruns later. Foreigners are still expected to pay the bills for American deficits anyway.
7. Watch the Lehman Brothers liquidation process, kept hidden. The dead are still trying to marry the dead in farcical ceremonies. The bond cemetery within the New RTC was crafted when it become clear the Lehman liquidation would kill all of Wall Street. Don’t expect any consummation of such necro-marriages to bear offspring. They will not make love with each, but rather EAT EACH OTHER.
8. Wall Street firms are now almost all aligned in similar fashion. If one fails, they all suffer the same risk from similar balance sheet of assets. Marking down one firm’s asset in liquidation would result in the failure of all of them. Any USGovt bank bailout has an unintended consequence of instant markdowns in market value of assets held widely throughout Wall Street and bank industry balance sheets. These banks have resisted writedowns in honest accounting, as only a small handful of financial firms have taken losses in earnest.
9. Any New Resolution Trust Corp for mortgage bailout rescues (a correct big forecast) would ostensibly be managed by the same Wall Street villains who are implicated in massive trillion$ fraud. Expect one in three dollars to be stolen by further fraud, just like the Hurricane Katrina relief efforts. To question their fraud in unpatriotic.
10. Private brokerage stock accounts can now be borrowed by financial firms, evidence produced in Federal Reserve documents. A gigantic final heist might be in the works, requiring a massive event that provides the cover of confusion like a World Trade Center attack. The Glass-Steagall Act was not repealed without a reason and plan! Its removal enables co-mingling of bank, brokerage, and insurance assets.
11. A pattern seems evident among failing Wall Street firms. It seems Wall Street firms without extensive stock brokerage accounts are permitted to fail first, leaving private accounts vulnerable. It seems Wall Street firms with big foreign equity ownership are set to fail last, leaving foreigners outside the loop.
12. The bank short rule restriction once more has been brought back. That emergency measure is as corrupt as possible, a horrible black eye to a nation that claims to be the home of free markets. The re-enacted rule has helped support the USDollar.
13. Tremendous strong high pressure zones are building on monetary inflation, while tremendous strong low pressure zones are building on asset price decline. The combination will surely make for some of the greatest financial storms in modern history, some already witnessed, and more sure to come.
14. Much talk has come of continuing independence of US financial firms, when they are beset by insolvency and worsening liquidity problems. The same applies to the USGovt, whose liquidity flow depends upon foreign credit supply. They have been defrauded, treated with hostility in trade and currency management issues, and in the case of Russia, subjected to military aggression and NATO treaty violation.
15. The totality of events has placed enormous concentrated risk on the USDollar, and consequently on the USTreasury Bond. Expect sharp decline in the US$ and default of the USTBond. Both fraud and nationalization has amplified the pressures.
16. The Global Energy War has opened a new front in the Global Capital War. Aggressive US actions to secure energy supply have endangered its capital supply. The backlash is not even on the American radar systems, as arrogance prevails. In high commerce and banking circles, the US is being isolated. Many European firms do not return phone calls to US bankers, on orders. An analogy of ‘glow candles for diesel engines’ has been stated for upcoming response to US bankers.
17. Reports have come from a London source that gold futures contracts are being settled in cash only at the COMEX, rather than with physical gold metal. That leaves would-be buyers without the metal they wish to take on delivery under contract. IS THAT NOT A DEFAULT?
18. The Hurricanes Gustav & Ike have hit the Southeast region hard, resulting in gasoline rationing. This trend might soon extend nationwide, and broaden to include more items. Hits to AIG and other insurance firms come at a bad time.

A solution comes from foreign creditors that does not require Congressional approval or vote, constituting an event to pull the rug from under the Americans. The avenue will be via bank channels.

A receivership committee is being formed. More details are a main feature of the October HTL report. The accumulative debt held by US and foreign entities is so grand, that every single day interest of almost $1 billion is owed to them on a daily basis for the USGovt Treasury and Agency mortgage bonds. If the USGovt were to shut down all operations and provision of services, including military, the USGovt might achieve a balanced budget.

It could balance its budget from tax revenue against just the interest expense on debt, with no other official function whatsoever. An interesting concept. Maybe that is part of the next Receivership Committee plan.
http://www.financialsense.com/fsu/ed...2008/0924.html

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Bailout is financial equivalent of the Patriot Act

By Andrew Ross Sorkin
Published: September 23, 2008

NEW YORK:

The passage is stunning: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency," the original draft of the proposed bill says.

And with those words, the Treasury secretary - whoever that may be in a few months - would be vested with perhaps the most incredible powers ever bestowed on one person over the economic and financial life of the United States. It is the financial equivalent of the Patriot Act, after 9/11.

Treasury Secretary Henry Paulson Jr.'s $700 billion proposal to bail out Wall Street is both the biggest rescue and the most amazing power grab in the history of the American economy.

In many ways, it is classic Wall Street: a big, bold roll of the dice that one trade can save the day. But at the same time, the hypocrisy is thick. The lack of transparency and oversight that got our financial system in trouble in the first place seems written directly into the proposed bill, known as TARP, or the Troubled Asset Relief Program.

Today in Business with Reuters


U.S. lawmakers seem near deal on bailout


U.S. president's speech received coldly in Germany


EU rejects efforts to delay CO2 limits on cars

Just take a look at the original draft: "The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act," the proposed bill read when it was first presented to Congress, "without regard to any other provision of law regarding public contracts."

It goes on to say, "Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure."

Slowly but surely, as new versions of the bill are making the rounds in Washington, some legislators are pressing to include new language to give them at least a modicum of oversight. Democrats have complained that the bill gives the Treasury Department "a blank check" - and they're right.

But given the rush to push the bill through, even if Congress cobbles together some oversight language, it will almost surely be inadequate.

Joshua Rosner, a managing director at Graham Fisher, says TARP should stand for "Total Abdication of Responsibility to the Public." He calls it "a clear abdication of all congressional oversight and fiscal authorities to a secretary of Treasury that has bungled this crisis from the beginning."

He argues that the bill grants "greater powers to the secretary of the Treasury than even the president enjoys."

The bigger issue is that the bill effectively creates protections not just for the Treasury, but for the executives on Wall Street who created this near Armageddon. Rosner says the draft bill "prevents judicial review that could allow the protection of decisions that create false marks, hide prior marks, or could be used to prevent civil or criminal prosecution in situations where a management knowingly provided false marks that aided the growth of this crisis of confidence."

False marks - using mark-to-market accounting to hide the true value of security, rather than disclose it honestly - has a lot to do with why Jeffrey Skilling, the former Enron chief executive, is in jail.

It is absolutely true, of course, that Paulson needed to do something.

By Thursday afternoon, less than 48 hours after the bailout of American International Group, the financial system was near meltdown. The mere rumor that Paulson and the Federal Reserve chairman, Ben Bernanke, were devising a big bailout fund cause the stock market to soar.

In truth, I'm not sure I agree with Rosner's assessment of Paulson's job performance. I think he is one of the most competent Treasury secretaries we've ever had, and it is hard to imagine anyone else handling this crisis any better. His predecessors, who lacked his grounding in the world of high finance, would most likely have been like deer in headlights.

And when Paulson says, as he did on all the television talk shows Sunday, "I hate the fact that we have to do it, but it's better than the alternative," I believe him. (It would have looked better, of course, if he had come up with this plan before it looked as if his former firm, Goldman Sachs, was in jeopardy.)

But the question on the table now is whether the government's latest response to this crisis - the way it has been constructed, and frankly, the way it is being crammed down everyone's throat at the eleventh hour - is the right approach. Already the market has its doubts; just look at its performance Monday.

Let put aside the bill's most offensive aspect - the raw power it gives the Treasury Department, and the lack of oversight it provides - and take a closer look at the practicalities. First off, there is nothing in the bill that will prevent these problems from happening again.
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$5 Trillion Cash Pool Needed to Stop Rout, Ohmae Says

By Bei Hu




Sept. 23 (Bloomberg) -- Treasury Secretary Henry Paulson's $700 billion plan to buy devalued assets from financial companies is ``a joke'' because it doesn't go far enough to calm markets, said Kenichi Ohmae, president of Business Breakthrough Inc.

Ohmae, nicknamed ``Mr. Strategy'' during his 23 years as a McKinsey & Co. partner, called for a $5 trillion ``international facility'' to be made available to financial institutions. The system could be modeled on one used by Sweden during its banking crisis in the early 1990s, he said.

``This is a liquidity crisis,'' Ohmae said at an investor forum hosted by CLSA Asia-Pacific Markets, the regional broking arm of Credit Agricole SA, in Hong Kong yesterday. ``The liquidity has to be so big that people won't get panicky.''

Paulson's proposal to remove hard-to-sell assets clogging the financial system marks the broadest intervention since at least the Great Depression. Asian stocks fell today, following U.S. shares lower as investors questioned whether the effort is enough to prevent a recession.

The plan came after the collapse of 158-year-old Lehman Brothers Holdings Inc. and the government takeover of insurer American International Group Inc. caused financial markets to seize up last week. The calamity was the culmination of a year during which the U.S. housing market slump left banks and securities firms with more than $520 billion of asset writedowns and credit losses.

Yesterday, Paulson and lawmakers narrowed their differences on the plan and agreed that the U.S. should get equity in participating companies.

Hard to Coordinate
Ohmae, 65, is the author of management books including ``The Mind of The Strategist,'' ``The Borderless World'' and ``The End of the Nation State.'' Business Breakthrough, founded in 1998, provides online management training.

One way of funding the $5 trillion facility would be through contributions from foreign exchange reserves in China, Japan, Taiwan, the Gulf states, the European Union and Russia, Ohmae said.

An international relief effort on that scale might be difficult to coordinate, said Robert Howe, founder of Hong Kong- based hedge fund manager Geomatrix (HK) Ltd., which oversees $32 million. ``I doubt the practicality of getting international cooperation on something like this,'' he said.

Ohmae compared the current financial crisis with Japan's 15- year economic decline that began in 1989. Both started with a property bubble, which wiped out companies' equity when it burst, and like in Japan, the current one could lead to escalating bankruptcies as banks worried about their own survival rein in lending, he said.

Viagra' Economy
The financial-market upheaval may lead to slower growth in China and the reversal of the commodity boom as ship orders are canceled and steel supply dumped, said Ohmae. What Ohmae called Japan's ``Viagra'' economy and Australia's ``dig and deliver'' boom may also fizzle as China weakens, he said.

Against the backdrop of a potential global market panic, Paulson's plan is insufficient, said Ohmae. Paulson is a former chief executive of Goldman Sachs Group Inc., the world's biggest securities firm.

``He wants to fix problems one by one as if he were still the chief executive officer of Goldman Sachs,'' he said. ``He has to take his CEO hat completely off and come up with a systemic solution as opposed to a one-by-one solution.''

Last Updated: September 22, 2008 22:46 EDT
http://www.bloomberg.com/apps/news?p...d=a8DIq9yO0vzY

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Europeans on left and right ridicule U.S. money meltdown


Daniel Berehulak / Getty ImagesA street scene near London's financial center. Among Europe’s economies,
Britain’s most resembles America’s in its vulnerability. Europeans cited Alan Greenspan and greed
as culprits in the Wall Street meltdown.

They list greed and Greenspan among the culprits, and there are comparisons to . . . Albania. But amid the gloating, there is fear for financial systems in Britain, Spain, Italy and elsewhere.

By Sebastian Rotella and Janet Stobart, Los Angeles Times Staff Writers
September 20, 2008

LONDON -- It's a rare day when finance officials, leftist intellectuals and ordinary salespeople can agree on something. But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street.

The finance minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn.

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"Greenspan was considered a master," Tremonti declared. "Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis."

In an interview Thursday in the Italian newspaper Corriere della Sera, Tremonti drew a comparison to corruption-ridden Albania in 1997, when a nationwide pyramid scheme cost hundreds of thousands of people their savings and ignited anarchic civil conflict.

"The system is collapsing, exactly like the Albanian pyramids collapsed," Tremonti said. "The idea is gaining ground that the way out of the crisis is mainly with large public investments. . . . The return of rules is accompanied by a return of the public sector."

On the other end of the political spectrum, among leftists who have long predicted calamity for what they call the "savage neoliberal capitalism" of Wall Street, there were gleeful allusions to the stock market crash of 1929.

"Between the dread of a world in the midst of collapsing and the shiver of pleasure that finally something serious is happening to the kingdom of liberalism, how to orient oneself?" Eric Aeschimann wrote Thursday in the newspaper Liberation, a voice of French intellectuals whose disdain for capitalism persists in the 21st century.

Expressing nostalgia for "the good old days when bankers jumped out of windows," Aeschimann condemned as "extortion" the rescue of U.S. corporate giants by the very state that free-marketeers resent.

But fear accompanied gloating. The crisis threatens to worsen woes -- inflation, unemployment, weak growth -- of regional powerhouses including Britain, Spain and Italy. Joaquin Almunia, an ideologically moderate Spanish Socialist who is the European Union's economic commissioner, offered a simple analysis.

"It has been a problem of greed," he told El Pais newspaper. "In Europe it can't be said that we did nothing, European banks bought toxic products. . . . Nobody knows when this will end."

Anxiety was acute here in London. Britain's FTSE 100 stock index swung wildly this week, dropping about 8% between Monday and Thursday, then rocketing nearly 9% on Friday.

Among the European economies, it is Britain's that most resembles America's in its vulnerability. The big news of the week drove that home: an announced $22-billion rescue-takeover of the wobbling HBOS bank by Lloyd's TSB.

In ordinary times, regulators would have opposed the merger of the giants as anti-competitive. But beleaguered Prime Minister Gordon Brown, whose economic expertise is one of the last arrows in his political quiver, pushed for the deal.

"The financial tsunami that has engulfed Wall Street since the weekend hit these shores yesterday," the Daily Telegraph declared in an editorial Thursday. "It swept away the country's biggest mortgage provider -- and with it, much of the [financial sector's] regulatory machinery. . . . The government has prevented a banking collapse that would have had unimaginable consequences for the economy."

But a more optimistic school of thought saw the week's events as an inevitable period of reconfiguration from which the markets -- and U.S. economic dominance -- will emerge reasonably unscathed.

This analysis gained ground with the strong recovery of European markets Friday.

In addition to the FTSE, France's CAC 40 rose more than 9% and Russia's RTS index jumped 22% after trading resumed after a two-day suspension.

"This time next year we'll be seeing things back to normal," said Eamonn Butler, director of the Adam Smith Institute, a think tank here. "The last thing we need is to slap more rules on the system. . . . From time to time, businesses fail and the worst thing a government can do is to bail them out because that just passes the cost on to the taxpayer and creates a moral hazard."

The spectacle across the ocean has left a lasting impression on many Europeans. Hanna Evers of Berlin, a cellphone retailer interviewed in the shopping district of Wilmersdorfer Street, said she was angry about the amount of money that had been "burned" in recent days.

"And I'm furious when I see the pictures of Americans who thought they were on the sunny side of life and now have lost their homes and have to live in their cars," Evers said. "I definitely do not feel sorry for the bankers who lost their jobs in the last couple of days. I can't believe that a country like the U.S.A. could have been so careless on a money issue!"

"I was taught that the U.S.A. is the motherland of moneymaking," she added. "And now all I can see is a herd of headless chickens running around on Wall Street."

Rotella reported from Madrid and Stobart from London.

Special correspondents Maria De Cristofaro in Rome and Christian Retzlaff in Berlin contributed to this report.

http://www.latimes.com/business/la-f...,7535469.story

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Bush On Economy: "This Sucker Could Go Down"

Henry Blodget | Sep 26, 08 5:33 AM



The Hanke-Panke Bailout fight has descended into partisan chaos. President George W. Bush, moreover, is now officially wigged out. The NYT:
“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.

This next detail is so shocking we had to read it twice:
[The bailout discussions] dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support...

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

We gather that Paulson performed this gesture lightheartedly, which is a relief. But still...it shows how strongly he feels about it.

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Bailout negotiations break down into bipartisan bickering

By Sue Kirchhoff and Ken Dilanian, USA TODAY

WASHINGTON — No one said it would be easy.

Despite unprecedented calls for quick action, the White House's $700 billion plan to rescue the financial industry appeared to fall apart late Thursday, less than 12 hours after a market-soothing deal seemed likely. A convergence of financial concerns, presidential politics and partisan rancor created an unexpected Washington drama with the nation's economic future hanging in the balance.

House Financial Services Committee Barney Frank, D-Mass., accused House Republicans of refusing to negotiate in good faith and told President Bush "to go to work" to find GOP votes needed to pass the plan. At one point Thursday, a somber Treasury Secretary Henry Paulson kneeled before Democrats at the White House while urging them not to publicly criticize Republicans — and risk sending the financial markets plunging. Meanwhile, Republican presidential nominee John McCain issued a statement acknowledging that a bipartisan White House meeting he appeared to have sought to help showcase his leadership skills on the economy had devolved into a "contentious shouting match."
Financial markets had shot up midday Thursday when leading lawmakers from both parties announced they had reached an agreement in principle after nearly a week of talks on the Bush administration's plan aimed at restoring chaotic financial markets and easing an escalating credit crunch.

But the good feelings seemed to evaporate about the time a new player entered the fray: McCain, who a day earlier had dramatically announced he was suspending his presidential campaign to return to Washington to help end the financial crisis. Conservative House Republicans distanced themselves from the bipartisan agreement and promoted an alternative they said would put taxpayers' money at less risk.

Tension over the competing plans boiled over during the White House meeting among congressional leaders, President Bush, McCain and Illinois Sen. Barack Obama, McCain's Democratic opponent in the presidential race.

What had seemed like it could be a triumphant moment of bipartisan problem-solving ended with the participants scattering, with no formal announcements and with signs of deep discord. At one point during the meeting, Bush said that without fast action to help the financial industry, "this sucker could go down."

The stakes of the meeting were evident after it broke up, when Democrats were huddled for a post-meeting conference in the White House's Roosevelt Room. Two sources with knowledge of the situation but not allowed to speak of it publicly said there was a knock on the door and Paulson, who helped devise the administration's plan, asked to come in.

Paulson then pleaded with the Democrats not to blow up the deal by criticizing the House Republicans. The Democrats countered that they had been working with Paulson all week amid criticism of the plan from their own party and constituents.

Paulson repeated his plea that they not do anything that would spook the financial markets Friday morning and genuflected in front of House Speaker Nancy Pelosi, D-Calif.

"I didn't know you were Catholic," the speaker quipped.
Democrats angrily accused House Republicans — and McCain, in particular — of grandstanding.

"John McCain did nothing to help. He only hurt the process," Senate Majority Leader Harry Reid, D-Nev., said after attending the White House meeting.

Sen. Chris Dodd, the Banking Committee chairman who was among those announcing the agreement earlier in the day, questioned whether the White House meeting was a cynical GOP effort to make McCain seem like a statesman at a time when voters' economic concerns have hurt McCain in the polls.

"For the life of me, I don't know how what was going on (at the White House) was anything except political theater," Dodd said after the meeting.

'Members have concerns'
In an interview with ABC News after the White House meeting, McCain rejected the notion his moves were politically motivated and said, "I know we are making progress." He said the enormous scope of the legislation has several members of Congress unwilling to commit to the agreement announced earlier Thursday.

"Members have concerns about a bailout … or an expenditure of $700 billion of taxpayers' money," McCain said. "This is the biggest thing of its kind, obviously, in history."

In a statement released late Thursday, McCain's campaign said that he "did not attack any proposal or endorse any plan," and that he urged "all sides … to cooperate and build a bipartisan consensus for a solution that protects taxpayers."

House Republicans pushing the alternative plan maintained that they had never signed on to the proposed principles for the financial rescue announced earlier Thursday, saying the senior GOP lawmakers taking part in the talks did not have the authority to speak for the rank-and-file.

"At the end of the day, it's a $700 billion bailout," said Rep. Scott Garrett, R-N.J. "It puts the taxpayers on the hook."

"Does it protect the little guy?" asked Rep. Tim Murphy, R-Pa., another critic of the bipartisan deal. "We're asking taxpayers to be on the line, to take the risk. I don't want taxpayers to be the ones on the line."

Speaking at a Washington hotel shortly after the White House meeting, Obama predicted that lawmakers and the administration would reach a deal. He also reiterated his earlier concerns that presidential politics might infect the negotiation process.

"One of the concerns I've had over the last several days is that when you start injecting presidential politics into delicate negotiations, then you can actually create more problems rather than less," Obama said.

But a meeting late Thursday with Paulson and bipartisan lawmakers designed to restart the talks instead underscored how far the situation had devolved. Frank said Rep. Spencer Bachus, R-Ala, attended but said he did not have authority to negotiate for the House — and instead talked up the House Republican alternative, which calls for expanding federal market insurance and cutting taxes. Paulson negotiated with Dodd, Frank and Republican Sen. Judd Gregg, R-N.H. The starting point for talks were the principles agreed to earlier Thursday by House and Senate negotiators, which had emerged after a four-hour meeting.

That compromise would keep the basic structure proposed by Treasury last weekend. Under that plan, the department would buy up and later resell distressed mortgages, bonds and other assets of financial institutions to try to put a floor under prices and restore market confidence.

The Treasury Department would not get the entire $700 billion it requested at one time, however. Congress would provide $250 billion to start, $100 billion with additional oversight and the balance later.

The plan would limit the pay of executives whose companies benefited from any assistance, create commissions to oversee the Treasury Department operations and provide more protections for taxpayers, including a plan to secure stock in companies helped by the government. But even there, progress was limited as Treasury resisted the lawmakers' efforts to dole out funding in installments.

A rally around an alternative
The meetings came after Democratic staff worked through the night to put together a draft proposal for discussion. Treasury and Fed officials were not part of the negotiations, though there was back-and-forth on all the proposals and in the hours leading up to the meeting.

The White House has been pushing Congress to craft a plan quickly. But Democrats also clearly wanted to pre-empt McCain. After McCain's announcement that he'd suspend campaigning, Bush invited McCain, Obama and top lawmakers to the Thursday afternoon White House meeting.

But House Republicans rallied around an alternative to what had been announced earlier as the tentative bipartisan, bicameral agreement.

Bachus, the top Republican on the House Financial Services Committee, told reporters there was no final deal.

Bachus said he and other House GOP leaders were also interested in an alternative being floated by a group of House conservatives who were opposed to the Treasury proposal in its current form.

House Republican Leader John Boehner, R-Ohio, also issued a statement saying there was no deal.

Frank, D-Mass., and others complained that Bachus had not mentioned any of his concerns, or support for the alternative, during the hours-long talks on Capitol Hill.

The conservatives' plan, which they called a free-market rather than taxpayer-funded solution, was designed to calm the markets by setting up a system of government insurance for mortgage-backed bonds, rather than having the Treasury buy them outright. They noted that the government already insures half of all U.S. mortgage bonds.

The group would supplement their plan by offering tax cuts and other incentives to lure investors and financial institutions back into credit markets.

"Inaction is not an option," said Rep. Jeb Hensarling, R-Texas, a sponsor of the alternative plan. But he and his colleagues said they did not see a way of getting majority support in the House for the Treasury plan.

Frank said the bill had to pass with large bipartisan majorities, including House Republicans, to reassure investors that the policy will remain in place.

"You can't have people thinking that, as a result of an election, this might change," he said.

http://www.usatoday.com/news/washing...t_N.htm?csp=34

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WaMu is largest U.S. bank failure

By Elinor Comlay and Jonathan StempelThu Sep 25, 11:25 PM ET

Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.

Thursday's seizure and sale is the latest historic step in U.S.

government attempts to clean up a banking industry littered with toxic mortgage debt. Negotiations over a $700 billion bailout of the entire financial system stalled in Washington on Thursday.

Washington Mutual, the largest U.S. savings and loan, has been one of the lenders hardest hit by the nation's housing bust and credit crisis, and had already suffered from soaring mortgage losses.

Washington Mutual was shut by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. This followed $16.7 billion of deposit outflows at the Seattle-based thrift since Sept 15, the OTS said.

"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.
Customers should expect business as usual on Friday, and all depositors are fully protected, the FDIC said.

FDIC Chairman Sheila Bair said the bailout happened on Thursday night because of media leaks, and to calm customers. Usually, the FDIC takes control of failed institutions on Friday nights, giving it the weekend to go through the books and enable them to reopen smoothly the following Monday.

Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The largest previous U.S. banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.

JPMorgan said the transaction means it will now have 5,410 branches in 23 U.S. states from coast to coast, as well as the largest U.S. credit card business.

It vaults JPMorgan past Bank of America Corp to become the nation's second-largest bank, with $2.04 trillion of assets, just behind Citigroup Inc. Bank of America will go to No. 1 once it completes its planned purchase of Merrill Lynch & Co.

The bailout also fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States. It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price through a government-financed transaction.

On a conference call, Dimon said the "risk here obviously is the asset values."

He added: "That's what created this opportunity."

JPMorgan expects to incur $1.5 billion of pre-tax costs, but realize an equal amount of annual savings, mostly by the end of 2010. It expects the transaction to add to earnings immediately, and increase earnings 70 cents per share by 2011.

It also plans to sell $8 billion of stock, and take a $31 billion write-down for the loans it bought, representing estimated future credit losses.

The FDIC said the acquisition does not cover claims of Washington Mutual equity, senior debt and subordinated debt holders. It also said the transaction will not affect its roughly $45.2 billion deposit insurance fund.

"Jamie Dimon is clearly feeling that he has an opportunity to grab market share, and get it at fire-sale prices," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati. "He's becoming an acquisition machine."

BAILOUT UNCERTAINTY
The transaction came as Washington wrangles over the fate of a $700 billion bailout of the financial services industry, which has been battered by mortgage defaults and tight credit conditions, and evaporating investor confidence.

"It removes an uncertainty from the market," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "The problem is that markets are in a jittery stage. Washington Mutual provides another reminder how tenuous things are."

Washington Mutual's collapse is the latest of a series of takeovers and outright failures that have transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.
These include the disappearance of Bear, government takeovers of mortgage companies Fannie Mae and Freddie Mac and the insurer American International Group Inc, the bankruptcy of Lehman Brothers Holdings Inc, and Bank of America's purchase of Merrill.

JPMorgan, based in New York, ended June with $1.78 trillion of assets, $722.9 billion of deposits and 3,157 branches. Washington Mutual then had 2,239 branches and 43,198 employees. It is unclear how many people will lose their jobs.

Shares of Washington Mutual plunged $1.24 to 45 cents in after-hours trading after news of a JPMorgan transaction surfaced. JPMorgan shares rose $1.04 to $44.50 after hours, but before the stock offering was announced.

119-YEAR HISTORY
The transaction ends exactly 119 years of independence for Washington Mutual, whose predecessor was incorporated on September 25, 1889, "to offer its stockholders a safe and profitable vehicle for investing and lending," according to the thrift's website. This helped Seattle residents rebuild after a fire torched the city's downtown.

It also follows more than a week of sale talks in which Washington Mutual attracted interest from several suitors.

These included Banco Santander SA, Citigroup Inc, HSBC Holdings Plc, Toronto-Dominion Bank and Wells Fargo & Co, as well as private equity firms Blackstone Group LP and Carlyle Group, people familiar with the situation said.

Less than three weeks ago, Washington Mutual ousted Chief Executive Kerry Killinger, who drove the thrift's growth as well as its expansion in subprime and other risky mortgages. It replaced him with Alan Fishman, the former chief executive of Brooklyn, New York's Independence Community Bank Corp.

WaMu's board was surprised at the seizure, and had been working on alternatives, people familiar with the matter said.

More than half of Washington Mutual's roughly $227 billion book of real estate loans was in home equity loans, and in adjustable-rate mortgages and subprime mortgages that are now considered risky.

The transaction wipes out a $1.35 billion investment by David Bonderman's private equity firm TPG Inc, the lead investor in a $7 billion capital raising by the thrift in April.

A TPG spokesman said the firm is "dissatisfied with the loss," but that the investment "represented a very small portion of our assets."

DIMON POUNCES
The deal is the latest ambitious move by Dimon.

Once a golden child at Citigroup before his mentor Sanford "Sandy" Weill engineered his ouster in 1998, Dimon has carved for himself something of a role as a Wall Street savior.

Dimon joined JPMorgan in 2004 after selling his Bank One Corp to the bank for $56.9 billion, and became chief executive at the end of 2005.
Some historians see parallels between him and the legendary financier John Pierpont Morgan, who ran J.P. Morgan & Co and was credited with intervening to end a banking panic in 1907.

JPMorgan has suffered less than many rivals from the credit crisis, but has been hurt. It said on Thursday it has already taken $3 billion to $3.5 billion of write-downs this quarter on mortgages and leveraged loans.

Washington Mutual has a major presence in California and Florida, two of the states hardest hit by the housing crisis. It also has a big presence in the New York City area. The thrift lost $6.3 billion in the nine months ended June 30.

"It is surprising that it has hung on for as long as it has," said Nancy Bush, an analyst at NAB Research LLC.

(Additional reporting by Paritosh Bansal, Christian Plumb and Dan Wilchins; Jessica Hall in Philadelphia; John Poirier in Washington, D.C. and Kevin Lim in Singapore; Editing by Gary Hill and Carol Bishopric)

http://news.yahoo.com/s/nm/20080926/..._jpmorgan_news

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U.S. government seizes Washington Mutual
By Eric Dash and Andrew Ross Sorkin
Published: September 26, 2008


Washington Mutual customer Kyle Davidson withdrawing some money from the ATM at a Washington Mutual branch.
JPMorgan Chase came to the rescue of ailing Washington Mutual Thursday, buying the ailing thrift's banking assets
after WaMu was seized by the Federal Deposit Insurance Corp. (Stephen Brashear/The Associated Press)

The U.S. government on Thursday made the largest bank seizure in American history, taking over Washington Mutual, the severely troubled savings and loan, and selling pieces of it to JPMorgan Chase in an emergency deal intended to avoid sticking the taxpayer with a bill for another bank.

For weeks, the Federal Reserve and the Treasury Department had been nervous about the fate of WaMu, among the worst-hit by the housing crisis, and had pressed hard for the bank to sell itself. As panic gripped financial markets last week after the collapse of the investment bank Lehman Brothers, U.S. regulators stepped up their efforts, working behind the scenes, and at times going behind WaMu's back to work privately with potential bidders.

Indeed, the seizure and the deal with JPMorgan came as a shock to Washington Mutual's board, which was kept completely in the dark: the company's new chief executive, Alan Fishman, was flying from New York to Seattle at the time the deal was brokered, according to people familiar with the situation.

The shot-gun acquisition marks the second time since the housing crisis began that the government has pushed a troubled bank into the arms of JPMorgan Chase. In March, JPMorgan rescued Bear Stearns as it teetered into bankruptcy protection.

The deal will give JPMorgan branches in California and other markets where it does not have a footprint. But JPMorgan will also inherit a big loan portfolio of troubled mortgages and commercial real estate.

Related Articles
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Today in Business with Reuters

U.S. bailout plan stalls after day of talks

U.S. government seizes Washington Mutual

Doubt over bailout drives down stocks worldwide


U.S. regulators had been trying to broker a deal for Washington Mutual because a takeover by the Federal Deposit Insurance Corp. would have dealt a crushing blow to the deposit insurance fund. The fund, which stood at $45.2 billion at the end of June, had been severely depleted after suffering a debilitating loss from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would have cost the fund upwards of $20 billion to $30 billion.

"WaMu's impact could be enormous," said Jaret Seiberg, a banking industry analyst at the Stanford Group in Washington. "That is why we believe Washington Mutual is too big to fail in a conventional sense and you would have to see some sort of government stabilization effort."

"They were a deal machine in the late 1990s and spent the early part of this decade concentrating on residential mortgages," said Frederick Cannon, a banking analyst at Keefe Bruyette & Woods "The thrift business model was breaking down, even as they were building it up."

The takeover of Washington Mutual is yet another black-eye for its primary federal regulator, the Office of Thrift Supervision. It also oversaw IndyMac Bank, another big lender that suddenly collapsed in mid-July, and several other deeply troubled savings banks. Washington Mutual was the largest institution under its watch.

Washington Mutual long insisted that it could remain independent, but the giant thrift had quietly hired Goldman Sachs early last week to identify potential bidders. Among the banks that expressed interest were Citigroup, JPMorgan Chase, HSBC, Banco Santander, TD Bancorp and Wells Fargo. Each had different reasons for making an offer, but nobody could make the numbers work. Several deadlines past without anyone submitting bid.

Washington Mutual had struggled to find a partner earlier this year willing to inject fresh funds in its ailing business. This spring, it balked at an offer from JPMorgan to buy the entire company. Instead, TPG, the big private equity firm, led a group of investors that made a $5 billion capital injection in April.

http://www.iht.com/articles/2008/09/...ess/26wamu.php

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Nicolas Sarkozy calls for overhaul of capitalism

President Nicolas Sarkozy of France has called for a complete overhaul of global financial capitalism in a keynote speech, promising state intervention to protect French banks.

By Henry Samuel in Paris
Last Updated: 2:18AM BST 26 Sep 2008


French President Nicolas Sarkozy reiterated his call for world leaders to draw up a new
financial system by the end of the year. Photo: EPA

In a combative televised address before 4,000 supporters in Toulon, southern France, Mr Sarkozy declared that "a certain idea of globalisation is drawing to a close," while plugging his own economic reform programme as the best way out of the crisis.

Financial capitalism as we know it is coming to an end, he said after having "imposed its logic on the whole economy and contributed to perverting it."

"The idea of the absolute power of the markets that should not be constrained by any rule, by any political intervention, was a mad idea.

The idea that markets are always right was a mad idea," he said.

He reiterated his call for world leaders to draw up a new financial system by the end of the year – first made at a speech at the UN in New York earlier this week.

Mr Sarkozy warned that the current crisis would hit the French economy in the coming months. But he told a sceptical nation that the best medicine was to push on with economic reforms, despite sluggish growth which has reduced his room for manoeuvre.

In a populist swipe at bankers and CEOs, he called for a curb on their salary levels and "golden parachutes" – generous severance payments - saying the government would introduce legislation by the end of the year if they failed to reform themselves.

In full dirigiste mode, he promised that France would "guarantee the security and continuity" of its banking and financial system in the face of the global credit crisis.

He has been accused back home of remaining silent in the face of the worst storm in financial markets since the 1929 Wall Street crash that sparked the Great Depression.

Some 62 percent of the French disapprove of Mr Sarkozy's handling of the eurozone's second largest economy, however this is an improvement on recent weeks.

Elected last year on a pledge to inject a "shockwave of confidence" into the economy with tax cuts, a less restrictive labour code and measures to free up growth, Mr Sarkozy insisted last night that his reforms would eventually "bear fruit."

If anything they would accelerate, he said, pledging to cut 30,600 civil service jobs next year as part of a commitment to reduce public spending.

With France holding the rotating EU presidency, he urged Europe to rethink its monetary policy, which he finds too restrictive.

"The EU cannot be condemned to being the variable of adjustment for all the other policies in the world because it doesn't give itself the means to act," he said. "If what had happened in the US had happened in Europe, with what speed, with what strength, with what determination would Europe have faced up to the crisis?" he asked.

His address came on the eve of the release of the 2009 budget to the cabinet, based on forecast growth for next year at "around one percent" – down from the 1.25-2.25 per cent figure predicted earlier this year.

France has promised to reach balance its budget by 2012 after admitting that it would not fulfil a European Union 2010 target.

http://www.telegraph.co.uk/news/worl...apitalism.html

[American Patriot]

Wow... close DOWN "Globalism"? AWESOME. Sarkosy for President.

I LIKE the Frenchman at least on that issue.

However, markets ARE always right. The idea of supply and demand are still very valid.

What is INVALID is the idea that non-service or non-goods businesses, like banks dealing in the current price of some monetary system and then buying and selling those insturments should go by the wayside. The truth is the WORLD is in trouble because of this problem, and not because of capitalism.

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Bailout Outrage Races Across the Web

The Internet is flooded with angst about Treasury Secretary Paulson's proposed $700 billion bailout—and inspiring old-fashioned street protests

by Moira Herbst
Arun Gupta was enraged as he learned the details of Treasury Secretary Henry Paulson's plan to fix the U.S. banking system with $700 billion in taxpayer funds. The 43-year-old copy editor and freelance journalist, who publishes his own alternative newspaper, The Indypendent, needed to channel his angst but couldn't find a live protest to attend. So on Sept. 22, he sent an e-mail to some politically active friends in New York. Within days, they'd planned a protest against the bailout in New York and at 80 other locations in the U.S. on Sept. 25.

"I couldn't sit back while this plan gets rammed through Congress," says Gupta. "We live in a digital world, but change has to happen in an analog world. We married the two—the Internet helped us organize like wildfire." Gupta, now working with the online organization truemajority.org, says he expects hundreds and possibly a thousand protesters to converge at the protest near Wall Street. Protesters plan to build a pile of "citizen junk" that the government should also purchase in front of the iconic bull sculpture.
Much of the populist outrage against the bailout is building on the Internet, in blog posts, and Web sites. And not all of the posts are created by left-wingers like Gupta. The Internet is now swirling with petitions, debates bordering on rants, and biting satire about Paulson's plan and its potential consequences. The calls to arms come from across the political spectrum—from right-wing enemies of taxes to libertarians and left-wing progressives. They demand that Congress amend, scale back, or scrap the plan altogether.

Online Rage
The anger fueled much of the political theater in Washington this week. Yet Democrat and Republican lawmakers are working behind the scenes to bat out a deal (BusinessWeek.com, 9/24/08) with Paulson and the Bush Administration.
A lot of the online rage is channeled in the form of signatures on petitions and electronic letters to members of Congress. Senator Bernie Sanders (Independent-Vt.) is circulating a popular one on the left-wing blog Huffington Post. The 1.9-million member Service Employees International Union is also circulating a sign-on letter to Congress that reads in part: "No deal. No blank check." StopTheHousingBailout.com reasons: "A bailout tells responsible Americans that they are suckers."
The anger is coming from right-leaning groups as well. The National Taxpayers Union's "No More Bailouts!" petition reads: "Bailouts that keep mismanaged organizations afloat delay natural corrections to unsound business practices.…Enough is enough. No more bailouts. Not with my tax dollars."

The conservative site townhall.com features a similar petition. Right-wing blogger Patrick Ruffini, meanwhile, urges Republicans to vote against the bailout, since "God Himself couldn't have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration."

"Other People's Financial Excesses"
Then there are the more humble, makeshift calls to action, like a Web site called Tax Payers Against a Wall Street and Mortgage Bailout Petition, set up by a man named Thomas Roach. Readers can sign on to a letter to President George W. Bush and others politely asking, "Please do not support the efforts to bail out mortgage holders and mortgage lenders with my tax dollars. As a responsible citizen, I do not believe it is right for you to ask me to pay for other peoples' financial excesses."
The Project on Government Oversight and the National Taxpayers Union are criticizing Paulson's proposal to prevent any judicial or legislative review of his bailout moves. An open-government group called the Sunlight Foundation posted the full text of Paulson's proposal and Senator Christopher J. Dodd's (D-Conn.) counter-proposal on PublicMarkup.org, where readers can read and comment on each.
Other online manifestos are less earnest. A letter fashioned after the iconic Nigerian hoax e-mail is circulating in in-boxes. "I am Ministry of the Treasury of the Republic of America," the letter from "Paulson" reads. "My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.…We need a blank check.…Please reply with all of your bank account, IRA, and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov."

Meanwhile, on a site whose name defies publication, if not linking, users are posting pictures of their personal junk next to the tagline, "Hey Washington, can you buy my bad investments, too?" The total asking price of the "pile" submitted by users—which includes reading glasses and a book called The Boys and Their Mama for a combined $12,254.90, and $24,000 in student loans for art school—is approaching $500 billion.

Opposition on Social Networks
Not surprisingly, bailout critics are also having their say on social networking Web sites. There are almost 300 members in the Facebook group "Just Say No to the Government Bailout." The anti-tax group Taxfreesociety.com is also "organizing moral opposition" to the bailout through its new Facebook group, "Stop the Bailouts!" The group administrator says the purpose is "to utilize the latest social networking tools" to voice opposition.

Then, of course, there's YouTube. Bailout-related videos include straightforward clips of Paulson and Federal Reserve Chairman Ben Bernanke calling on Congress for the bailout. Others, however, include rants by amateur newspeople, including a group called the Young Turks. The news-style segment, "This Is How The Bail Out Will Screw You," has had more than 24,000 page views.

http://www.businessweek.com/print/bw...924_430418.htm

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Ron Paul during the CNN interview: "We cannot afford 700 billion dollars in protecting an Empire. It has to come to an end because the truth is we are flat out broke and we have to borrow every single penny to fight that war from the Chinese."

Source:

YouTube - CNN / Lou Dobbs - Ron Paul Interview...

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Democrats blame conservatives as bailout deal breaks down

By CHARLES BABINGTON Associated Press

Sept. 26, 2008, 8:29AM


Pablo Martinez Monsivais AP
President Bush, center, meets with Republican presidential candidate Sen. John McCain, R-Ariz., far left, Democratic presidential candidate Sen. Barack Obama, D-Ill., far left, and congressional leaders in the Cabinet Room of the White House Thursday to discuss the proposed bailout of the financial industry.

WASHINGTON — The chairman of the House Financial Services Committee declared today that an agreement on legislation to relieve a spreading financial crisis depends on House Republicans "dropping this revolt" against President Bush.

Rep. Barney Frank said leading Democrats on Capitol Hill were shocked by the level of divisiveness that surfaced at a White House meeting Thursday, not long after key congressional players of both parties declared they'd achieved the broad outlines of an agreement on a bill implementing the administration's proposed $700 billion bailout plan.

Bush planned another public statement on the situation from the White House today morning. He had delivered a speech to the nation Wednesday night urging support for the plan, but members of Congress say they've been hearing a lot of opposition from constituents to a public-financed bailout.
Frank said he did not think that Democrats were going to see a substantially different proposal from the plan the administration has been trying to sell to lawmakers and which had been the focal point of closed-door talks for days. He called the rival proposal being pushed by House conservative Republicans "an ambush plan."

Participants in a meeting late Thursday afternoon that Bush had at the White House with congressional leaders and presidential candidates John McCain and Barack Obama said it descended into arguments. The disagreements were so deep-seated that some lawmakers wondered aloud just who — and how many — negotiators would show up for the resumption of talks later today morning at the Capitol.

"I didn't know I was going to be the referee for an internal GOP ideological civil war," Frank, D-Mass., said on CBS's "The Early Show."
Sen. Richard Shelby, an Alabama Republican who appeared on the same show, said many GOP lawmakers dislike the proposal that has been pushed on the administration's behalf principally by Treasury Secretary Henry Paulson.

"Basically, I believe the Paulson proposal is badly structured," Shelby said. "It does nothing basically for the stressed mortgage payer. It does a lot for three or four or five banks . ... "

The political infighting happened even as Washington Mutual Inc., one of the country's largest banks, collapsed under the weight of its bad bets on the mortgage market. The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.

As if that wasn't enough bad news, the Commerce Department reported today that the spring rebound the economy enjoyed earlier wasn't as healthy as first thought. The gross domestic product, or GDP, increased at a 2.8 percent annual rate in the April-June period, not as good as the 3.3 percent growth rate first reported a month ago.

Even for a party whose president suffers dismal approval ratings, whose legislative wing lost control of Congress and whose presidential nominee trails in the polls, Thursday was a remarkably bad day for Republicans.

The White House summit meeting, called principally with the purpose to seal the deal that Bush has argued is indispensable to stabilizing frenzied markets and reassuring the nervous American public, descended into arguments.

The meeting revealed that Bush's proposal had been suddenly sidetracked by fellow Republicans in the House, who refused to embrace a plan that appeared close to acceptance by the Senate and most House Democrats.

Paulson begged Democratic participants not to disclose how badly the meeting had gone, dropping to one knee in a teasing way to make his point according to witnesses.

And when Paulson hastily tried to revive talks in a nighttime meeting near the Senate chamber, the House's top Republican refused to send a negotiator.
"This is the president's own party," Frank said at the time. "I don't think a president has been repudiated so strongly by the congressional wing of his own party in a long time."

"What we have right now is total chaos brought by injecting presidential politics into very serious negotiations," New Mexico Gov. Bill Richardson said on NBC.

The presence of McCain and Obama at the White House session indeed lent a greater aura of urgency — and personal intensity — to the discussion.
Asked today whether an agreement appeared likely by the end of the weekend, Frank said: "It depends on the House Republicans dropping this revolt against the president and cooperating in trying to amend the plan and at this point I can't give you a yes or no because it's up to the House Republicans and their war, I think, on behalf of Sen. McCain, with President Bush."

McCain's leadership in the negotiations "is to try to stop us from yelling at each other, announcing deals that don't exist, to actually talk to the House and the Senate and get agreement and then go to the press," Sen. Lindsey Graham, R-S.C., said on NBC's "Today" show: "Try to create organization out of chaos. Three days ago (Sen.) Harry Reid said there'll be no deal without John McCain's support. Nothing happened for three days. John comes back to town, now he's being criticized for coming back."

House Speaker Nancy Pelosi, asked if a way can be found to an accord any time soon, said that "it will happen because it has to happen. I would hope we could come to agreement within the next 24 hours so we could put the bill in writing and bring it to the floor. That's really up to the House Republicans."
Shelby, however, said he has a letter from some 200 economists saying the plan as structured by Paulson "is a mistake and won't work."
"I say this will not solve the problem," he said on ABC's "Good Morning America.:"

"We're going to spend close to a trillion dollars, we're going to borrow it, I say we can do better," Shelby said.

Republicans and Democrats alike seemed unsure which way McCain was leaning. His campaign's statement late Thursday shed little light.
"At this moment, the plan that has been put forth by the administration does not enjoy the confidence of the American people," it said. It was unclear whether McCain would attend tonight's scheduled debate against Democratic nominee Barack Obama in Oxford, Miss.

Ordinarily a Republican president's problems are with Democrats, especially if they control the House and Senate. In this case, Bush seemed almost over that hurdle.

To be sure, Democrats demanded a number of changes in his plan, but administration insiders signaled they probably were acceptable. They included greater oversight, more protections for taxpayers, efforts to head off home foreclosures and piecemeal allocations of the federal money to buy toxic mortgage securities.

What caught some by surprise, either at the White House meeting or shortly before it, was the sudden momentum behind a dramatically different plan drafted by House conservatives with Minority Leader John Boehner's blessing.
Instead of the government buying the distressed securities, the new plan would have banks, financial firms and other investors that hold such loans pay the Treasury to insure them. Rep. Paul Ryan, R-Wis., a chief sponsor, said it was clear that Bush's plan "was not going to pass the House."

But Democrats said the same was true of the conservatives' plan. It calls for tax cuts and insurance provisions the majority party will not accept, they said.

At one point in the White House meeting, according to two officials, McCain voiced support for Ryan's criticisms of the administration's proposal. Frank, a gruff Massachusetts liberal, angrily demanded to know what plan McCain favored.

These officials also said that as tempers flared, Bush struggled at times to maintain control.

At one point, several minutes into the session, Obama said it was time to hear from McCain. According to a Republican who was there, "all he said was, 'I support the principles that House Republicans are fighting for.'"

Some at the table took that to mean the conservatives' alternative proposal, which stands little chance of passage.
A few hours later, Paulson and the handful of negotiators wearily headed for home. Frank told The Associated Press: "I did tell Secretary Paulson that this whole thing is at risk if the president can't get members of his own party to participate."

http://www.chron.com/disp/story.mpl/front/6021573.html

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Dems Bailout Proposal Redirects ‘Paulson’s Profits’ To Left-Wing Groups

September 26, 2008 | Filed Under Business, Democrats/Leftists, Economy/Finances, Elections, GOP, Government, Corruption, Media Bias, News, President, Publius Contributor, Society/Culture, Taxes, Warner Todd Huston |
-By Warner Todd Huston


Bush told the country that we are in an economic crisis and his Treasury Secretary, Henry Paulson, came up with an idea that would, it is claimed, end up actually making money for the U.S. Treasury in the long run. That’s all well and good, but the Democrats already have a plan to siphon off any repayment of the people’s money back to the treasury by adding one little line to the agreement that would end up stealing money from any repayments and giving it to left-wing political advocacy groups like ACORN, the National Urban League and the Hispanic group La Raza. Instead of trying to help the economy, the Democrats just want more money for their left-wing political constituents. It’s business as usual for the Democrats, of course, but a bigger question is will the media let them get away with it?

On Thursday, the Senate Democrats shopped around a one page “Agreement in Principle” from the U.S. Senate Banking Committee that laid out their proposal for the bailout of the economy. At first it all seems rather straight forward, but hidden inside this document is one little line that proves that Democrats aren’t as interested in the economy as they are in trying to extort a payday for their favorite political advocacy groups. Yes, even in a bill as important as the bailout the Democrats are trying to stuff it with pork!

Of course, the claim that this bailout will make money is not cut and dried. But the idea is that the bailout will put the Treasury Department in ownership of what could easily later become lucrative investments.

And, at that later date, the Treasury Dept. can then begin to sell these investments off at a profit and, thence, pay back the Treasury for the bailout — in essence repaying the American people. But, the Democrats already have a plan to spend “profits” that not only do not exist yet, but may never exist. In the “Agreement in Principle” is the following line:

“Directs a certain percentage of future profits to the Affordable Housing Fund and the Capital Magnet Fund to meet America’s housing needs.”

So, the Senate Democrats want to re-direct profits to the “Affordable Housing Fund” and the “Capital Magnet Fund” instead of keeping these future profits going to pay back the American people for this $700 Billion bailout loan. And what are these special agencies the Senate Dems want to fund? We turn to the Wall Street Journal in a July 2008 piece that reports on what sorts of groups that were to be the recipients of the federal pork from earlier bills the Senate tried to pass.

That tax eventually will channel upwards of $600 million annually in grants for developing and restoring housing, mostly as low-income rentals, available to Acorn and other groups (such as the National Council of La Raza and the National Urban League ). Democrats on Capitol Hill and housing groups say the housing-assistance money is vital to helping Americans hit hardest by what some call the largest drop in home values since the Great Depression. But they acknowledge the perception of political conflict in giving federal funds to an organization that does political work. “We are guarding against it,” said Massachusetts Rep. Barney Frank in an interview. He secured the Affordable Housing Trust from his seat as chairman of the House Financial Services Committee…

Many may already know that ACORN ( The Association of Community Organizations for Reform Now) is under investigation in several states for voter fraud. They have been caught turning in hundreds of thousands of fake voter registration cards in an effort to stuff ballot boxes with fake voters and pump up Democrat vote totals. ACORN’s founder also tried to cover up an embezzlement scheme his little brother perpetrated when he stole $1 million dollars of the organization’s money.

This has only lately come to light.
Of course, many are also aware of the race oriented Hispanic La Raza group that has been a major player in trying to allow illegal aliens to enter the U.S., vote in our elections, and take freely of schools and social welfare monies.

Naturally, all these organizations exclusively support the Democratic Party.

Lastly, there is one more aspect of this that proves the Democrats are playing politics with this issue instead of being concerned with the saving the economy. The Senate Democrats and Democratic Speaker of the House Pelosi have been pressuring John McCain to sign onto this deal. If he does and this payoff to left-wing groups like the vote fraud infused ACORN or the racemongering La Raza stays in the bill, McCain will be responsible for giving pork to dangerous hardcore, left-wing organizations. If he doesn’t sign onto this because of this pork laden provision, the Democrats can then turn around and say that McCain is a stumbling block in this important bailout bill. The Democrats have, in other words, slipped a poison pill into the plan.

Once again, the Democratic Party proves that it doesn’t care about capitalism, doesn’t care about the economy, doesn’t care about working for the people, but does want to continue slipping huge amounts of cash to their buddies in anti-American groups as well as using important bills to advance mere political partisanship.

So, lets see if the media siezes on this one line in the Senate Democrat’s “Agreement” and reports it for what it is: a cynical, partisan attempt to play politics during one of the most important crises in years.

(H/T Bill Smith of ARRA News Service)
(Image credit: renewamerica.us)

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Rep. Barney Frank predicts bailout deal by Sunday
Friday September 26, 5:20 pm ET
By Julie Hirschfeld Davis and David Espo, Associated Press Writers Rep. Barney Frank predicts $700B bailout deal by Sunday to stave off economic crisis WASHINGTON (AP) -- The Bush administration and Congress anxiously revived negotiations Friday on a $700 billion financial bailout, one day after the largest bank collapse in U.S. history provided a brutal reminder of the risks of failure."I'm convinced that by Sunday we will have an agreement that people can understand on this bill," predicted Massachusetts Rep. Barney Frank, a key Democrat in eight days of up-and-down talks designed to stave off an economic crisis.

House Speaker Nancy Pelosi added that "progress is being made," although neither she nor Frank divulged details at a late-afternoon news conference in the Capitol.

They spoke a few hours after President Bush prodded lawmakers to "rise to the occasion" -- and quickly.

In one small sign of progress, House Republicans dispatched their second-ranking leader, Rep. Roy Blunt of Missouri, to join the talks after their objections to an emerging compromise had brought negotiations to a standstill the day before. They also demanded "serious consideration" for a plan of their own, involving less government intrusion and lower cost to the taxpayers than the $700 billion that Treasury Secretary Henry Paulson has been seeking.

The legislation the administration is promoting would allow the government to buy bad mortgages and other sour assets held by investors, most of them financial companies. That should make those companies more inclined to lend and lift a major weight off the national economy that is already sputtering. But a significant number of lawmakers, including many House conservatives, say they're against such heavy federal intervention.

Under their plan, pushed at a White House meeting Thursday by House Minority leader John Boehner, instead of the government buying the distressed securities, it would insure them.

Presidential politics weighed heavily and unpredictably on the election-season effort to stave off a full-blown economic crisis.

After announcing earlier in the week he would suspend his campaign and return to the capital until there was an agreement, Republican John McCain abruptly reversed course and departed for Friday night's debate with Democratic rival Barack Obama in Mississippi.

There were fresh signs of urgency at both the White House and the Capitol, one day after an unusually tempestuous White House meeting and the collapse of Washington Mutual, the largest failure in U.S. banking history. The Seattle-based institution had invested heavily in the now-moribund mortgage market.

Bush made his brief remarks in hopes of projecting calm for the financial markets. And the Dow Jones industrials rose 121 points for the day as investors anticipated a weekend agreement.

"We're going to get this done, and stay in session as long as it takes to get it done," Senate Majority Leader Harry Reid, D-Nev., said after Bush's statement.

Sen. Judd Gregg, R-N.H., added, "I think anybody who got up this morning and looked at the markets, especially the credit market, had to take a deep breath and say, 'this is serious, we better do something.'"
In days of negotiations, the administration has accepted demands from lawmakers to give Congress considerable authority to oversee the bailout. Additionally, Paulson relented to requests to limit the severance packages that corporate executives can receive from firms benefiting from the government bailout.

Also, rather than provide $700 billion upfront, as Paulson initially requested, Congress would approve $250 billion, with the president able to certify the need for an additional $100 billion on his own authority.

The final $350 billion would become available with a second presidential certification, although this time Congress would have authority to block it.

Any compromise is also expected to require the government to obtain partial ownership of any company it invests in.

Democrats, too, signaled they were considering jettisoning some of their own priorities.

Frank indicated they might ultimately drop a requirement that a portion of any profits from the rescue be funneled to a fund to build housing for low-income people. That mandate, deeply unpopular with Republicans, "is not an essential," Frank said.

Additionally, Obama said earlier in the week he hoped Democrats would not press a proposal giving bankruptcy judges the power to ease mortgage terms for homeowners.

Beyond the specifics of any legislation lie political calculations in the shadow of hard-fought presidential and congressional campaigns.

While Democrats control a majority of both the House and Senate, their leaders have made it clear they will not force their rank-and-file to vote without Republican support on a bailout advanced by an unpopular president on an unwilling public.

In an Associated Press-Knowledge Networks poll, only 30 percent of those surveyed expressed support for Bush's package. An additional 45 percent were opposed, with 25 percent undecided. The survey was conducted Sept. 25 and had a margin of error or 3.8 percent. It was conducted over the Internet by Knowledge Networks, which initially contacted people using traditional telephone polling methods and followed with online interviews.

Aides to lawmakers in both parties say telephone calls from constituents are running heavily against the bailout -- in some cases nearly 100-1 against, making the vote a potentially tricky one for a candidate in a competitive race.

Ironically, though, many House conservatives who are most opposed to the measure are in safe seats, thus free to resist the daily calls for action -- and the warnings from Bush and Federal Reserve Chairman Ben Bernanke that a recession looms without a bailout.

Opposed to direct government purchases of assets, they favor tax breaks and creation of a new government insurance program that would give private companies an incentive to make the purchases on their own.

"Our goal here in attempting to come to an agreement is to do our best to protect American taxpayers," said Republican leader Boehner of Ohio, after a closed-door meeting other GOP lawmakers.

Inside the meeting, Boehner received a standing ovation from fellow Republicans, some of whom expressed anger that Bush and his administration had effectively shut them out of negotiations and tried to force them to support an unpopular bill.

"He got a standing ovation because he stood up to the president and Paulson," said Rep. Ray LaHood, R-Ill. "Now we're a part of the game."
Said Boehner, speaking of a White House meeting on Wednesday: "If they thought they were rolling me, they were kidding themselves."

Frank saw it differently. "I didn't know I was going to be the referee for an internal GOP ideological civil war," the Massachusetts Democrat said on CBS' "The Early Show."

Associated Press writers Charles Babington, Jim Kuhnhenn and Jennifer Loven contributed to this report.

http://biz.yahoo.com/ap/080926/finan...html?printer=1

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Credit crunch banker leaps to his death in front of express train

By Christopher Leake
Last updated at 11:06 PM on 27th September 2008


Tragedy: Kirk Stephenson took his own life despite a successful 20-year City career, vibrant social life and a loving family

The City was in shock last night after the apparent suicide of a millionaire financier haunted by the pressures of dealing with the credit crunch.

Kirk Stephenson, who was married with an eight-year-old son, died in the path of a 100mph express train at Taplow railway station, Berkshire.
Mr Stephenson is believed to have taken his own life after succumbing to mounting personal pressures as the world’s financial markets went into meltdown.

The death of the respected 47-year-old City figure evokes memories of the 1929 Wall Street crash in America and comes as:
• Bradford & Bingley teeters on the brink of nationalisation after a dramatic share price slump.
• David Cameron faced embarrassment on the eve of the Tory conference after members of a secretive club of Conservative donors were linked to the ‘short-selling’ of Bradford & Bingley.
• Gordon Brown was wrongfooted by Shadow Chancellor George Osborne, who announced plans to set up an independent watchdog to police the Treasury and strip it of key powers if the Conservatives win the next Election.
New Zealand-born Mr Stephenson, who owned a £3.6million, five-storey house in Chelsea and a retreat in the West Country, was chief operating officer of Olivant Advisers.
Last year, the private equity firm tried to buy a 15 per cent stake worth almost £1billion in Northern Rock before the bank was nationalised, bidding against Virgin boss Sir Richard Branson.

More...

• How Cameron's secretive donors bet on the collapse of Bradford & Bingley
• Bradford & Bingley will be nationalised - with Santander swooping in for the savings accounts
• Jewish holiday means U.S. Senate won't vote on $700billion bailout before Wednesday
• McCain savages Obama on Iraq to edge ahead in television debate
• Credit crunch claims another victim as furniture giant MFI struggles to survive
• Tory watchdog 'to strip Treasury of key powers to curb reckless spending'

In June, the company secured a 2.5 per cent stake in Swiss banking giant UBS. There has been persistent speculation in the financial world that UBS has written off billions after being exposed to the US mortgage market.

Since June, the bank has dropped in value by about 20 per cent, which means the value of Olivant’s stake in UBS has fallen from £950million to £770million.

Before his death at 9am on Thursday, Mr Stephenson appeared to have everything to live for.

A glittering 20-year City career had made him a hugely wealthy man and he was said to have been happy in his marriage to Karina Robinson, a successful financial writer.

Sources stressed that neither Mr Stephenson nor his company had financial problems that would have led him to take his own life.

But they said the financier had ‘succumbed’ to the stress and responsibilities of his taxing role, adding that Mr Stephenson had overreacted to the continuing financial turmoil.


Wife Karina and son Lucas, with whom Stephenson had breakfast before killing himself

After eating breakfast on Thursday with his wife and their young son Lucas, Mr Stephenson drove to Taplow station, left his car in the car park and crossed a footbridge over the main First Great Western Plymouth to Paddington line.

Out of view of passengers on the platform, he is then said by witnesses to have leapt in front of a high-speed train.

The driver sounded his horn and slammed on the brakes but was unable to stop in time. The train came to a standstill a mile down the track.
Mr Stephenson left no note, but the incident is being treated by police, train operator First Great Western and his own firm as a suicide.
In due course a coroner will examine the death and record an official verdict.

Mr Stephenson’s colleagues and family were unable to explain why had he had gone to Taplow.

Last night, his devastated widow released a statement saying: ‘Kirk was a life-enhancer – not with a showy, life-and-soul-of-the-party sort of charisma, but as a planner who quietly ensured everyone around him had a marvellous time.

‘A dedicated father and a devoted husband, he valued his family above all else.

'He had a gift for friendship and was a generous and exceptional host, gathering his wide circle in summer villas all over Europe, as well as for parties, dinners and opera.

‘Any occasion with Kirk was a wonderful experience. He spent many a fine – and less than fine – summer evening listening to opera at Garsington, Glyndebourne and The Grange with friends.

'He also loved board games and tennis, passions he shared with his treasured son, Lucas.

‘He arrived in London in 1983 as an SG Warburg trainee. After his stint in the City he went on to work at several large organisations. Latterly, he was a director for Olivant.

‘Always a keen traveller, in 1999 he married his cherished wife Karina. Together they travelled from Bhutan to Burgundy, Buenos Aires to Tripoli.

‘He will be sorely missed by his wife, his son, his mother Bet Stephenson, and his many friends.’

Until two months ago, former merchant banker Karina was a columnist on The Banker magazine.

One of her former colleagues said: ‘It is shocking news. I know Kirk had been under pressure, but I am not aware that his own money was at stake.

'He was very hard-working. He did a 24-hour-a-day job.’
A family friend added: ‘Kirk was always troubled because of his work. He was always so busy, working late and travelling a lot.

'But he didn’t seem any different on Thursday. He ate breakfast with the family, kissed them and said goodbye. No one can believe what happened.’

Mr Stephenson’s previous jobs include chief operating officer of City lawyers Freshfield Bruckhaus Deringer, group finance director of Coats Viyella and Amersham International and an investment banker at Warburg and Morgan Stanley.

At Olivant Advisers he was paid £333,000 last year, but is thought to have made millions more from the core Olivant business, based in Guernsey.

http://www.dailymail.co.uk/news/arti....html?ITO=1490