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Posts Tagged ‘FBI

The fraud started at the very top: with government leaders

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by George Washington
Originally posted November 2, 2010


The government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are. But it is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud. Here are just a few of many potential examples:

• The government-sponsored rating agencies committed massive fraud (and see this)

• The Treasury department allowed banks to “cook their books”

• Business Week wrote on May 23, 2006:

“President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.”

• Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks

• Tim Geithner was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth”

• The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted

• Freddie and Fannie helped to create the epidemic of mortgage fraud

• The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen

• Bernanke might have broken the law by letting unemployment rise in order to keep inflation low

• Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not

• Arguably, both the Bush and Obama administrations broke the law by refusing to close insolvent banks

• Congress may have covered up illegal tax breaks for the big banks

Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith’s, definitive study of the Great Depression, The Great Crash, 1929:

The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy. In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting ….

This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor. The government that permits this to happen is complicit in a vast crime. In other words, the fraud started at the very top with Greenspan, Bush, Paulson, Negraponte, Bernanke, Geithner, Rubin, Summers and all of the rest of the boys.

As William Black told me today: In criminology jargon: they created an intensely criminogenic environment. I have no knowledge whether the national security aspects played any role, but the anti-regulatory dogma was devastating.

Is America under attack … Or are the barbarians inside the gates?

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by George Washington
Posted originally on October 5, 2010

Painting by Anthony Freda: http://www.AnthonyFreda.com

CONGRESS AND AMERICAN ECONOMISTS ARE BLAMING CHINA FOR AMERICA’S ECONOMIC WOES. But as I’ve previously pointed out, while China’s weak Yuan policy is hurting the U.S. to some extent, America’s economic problems are largely of its own making.

As I have previously documented, America’s too big to fail banks and government have destroyed our economy by:
• Failing to prosecute those who committed rampant fraud, thus encouraging them to do it again
• Rewarding the gamblers who bet everything on insane speculative deals by bailing them out once they lost their bets
• Letting the largest U.S. banks go bankrupt repeatedly due to wild speculation, then blessing the speculation and helping cover up the bankruptcies
• Failing to restore trust in the financial system, but instead suspending the few accounting rules which still exist
• Blowing bubble after bubble
• Refusing to break up the too big to fails, even though virtually all independent economists say that they are a black hole dragging down our economy
• Using bailouts, gimmicks and quantitative easing to temporarily put wallpaper over the holes in our economy, instead of fixing the real problems
• Transferring risk from private banks to the people, instead of making the giant banks write down their bad debts
• Waging unnecessary wars all over the world, so that even our top military commanders are begging to slash defense costs, and otherwise buried our nation under mountains of debt
• Sacrificing any real chance to reduce unemployment in order to keep inflation low
• Shipping American jobs overseas, and giving corporations huge tax incentives to claim that their business is all done abroad
• Allowing the big financial players operate with insane amounts of leverage
• Burdening the American people with trillions in unnecessary interest
• Plundering the treasury to effect “a massive redistribution of wealth to the bank shareholders and their top executives”
• Allowing high-frequency trading to completely warp the markets
• Privatizing profits and socializing losses, trashing the real value of the dollar, and letting corruption run rampant
• Failing to take any meaningful steps to stabilize, let alone fix the economy

Barbarians inside the American financial system have destroyed that system.

American leaders have blamed terrorists for our loss of rights. But many of those rights were lost before 9/11. Former Secretary of Homeland Security Tom Ridge says that he was pressured to raise terror alerts to help Bush win reelection. Former counterterrorism czar Richard Clarke said a year ago:
A lot of the cases after 9/11 were manufactured or enormously exaggerated and were announced with great trumpets by the attorney general and the FBI director so that we felt that they were doing something when, in fact, what they were doing was not helpful, not relevant, not needed.

And FBI agents and CIA intelligence officials, constitutional law expert professor Jonathan Turley, Time Magazine, Keith Olbermann and the Washington Post have all said that U.S. government officials “were trying to create an atmosphere of fear in which the American people would give them more power”. And former U.S. National Security Adviser Zbigniew Brzezinski told the Senate that the war on terror is “a mythical historical narrative”.

And governments from around the world have admitted that they carry out false flag terror in order to promote their political agendas. (Yes, even the new terror threats in Europe are overblown.) Government has been using anti-terrorism laws to crush dissent and to serve the needs of big business. Barbarians inside the American national security system have destroyed our liberties and freedoms based on false pretenses. Ironically, the war on terror actually diminishes our national security. So the barbarians inside the gates are opening us up to the barbarians abroad as well.