Category: Corruption

Bailout II: Bail Harder

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Not my hed, but rather Paul Keil’s, who is reporting that Paulson is disparately looking to get the second half of the 700 billion bailout in his hands, so that he can benefit his Wall Street cronies before someone honest, or Larry Summers, ends up in charge of the Department of the Treasury:

In order to keep tabs on how the Treasury Department is handling the $700 billion bailout, Congress split up the payments. The first $350 billion is dwindling fast. $250 billion was set aside to buy stakes in the nation’s banks (here’s our tally of where that’s going) and yesterday $40 billion went to AIG as part of its renegotiated bailout.

That only leaves $60 billion. The Treasury has not even begun implementing its original plan, to purchase troubled mortgage assets. And with a number of major American institutions — General Motors, GMAC, bond insurers, insurance companies, etc. — pushing for their share of the bailout, that figure is likely to run out soon. Before it does, Treasury Secretary Henry Paulson will be forced to return to Capitol Hill for the second helping. Such a journey is proving increasingly “likely,” the Wall Street Journal ventures.

IMNSHO, if he comes back to congress, he should not be allowed to take a piss without a Congressional staffer looking over his shoulder.

Hank Paulson Needs to Go to Jail

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Well, we already know that Hank Paulson is a big fan of large Wall Street banks taking over their smaller brethren, and now it appears that he broke the law to provide an additional subsidy for bank M&A activity.

Specifically, he “reinterpreted” an obscure section of the tax code, by tax code, I mean law as written by Congress, not regulations issued by the IRS, Section 382, which limits the amount of prior losses you can write down when you take over a company:

More than a dozen tax lawyers interviewed for this story — including several representing banks that stand to reap billions from the change — said the Treasury had no authority to issue the notice.

Several other tax lawyers, all of whom represent banks, said the change was legal. Like DeSouza, they said the legal authority came from Section 382 itself, which says the secretary can write regulations to “carry out the purposes of this section.”

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company’s losses to offset their gains and avoid paying taxes.

(emphasis mine)

This is something that Hank Paulson and His Evil Minions&trade have been lobbying to get for years, and anyone who is not a paid shill of the bank is saying that this was illegal.

He broke the law, and he knowingly did so.

You can talk all you want about criminalizing official behavior, but his behavior is plainly criminal.

Gives Me Shivers

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A snipped from an interview eith Seymour Hersh:

…for Hersh this will be a starting gun. ‘You cannot believe how many people have told me to call them on 20 January [the date of the next president’s inauguration],’ he says, with relish. ‘[They say:] ‘You wanna know about abuses and violations? Call me then.’ So that is what I’ll do, so long as nothing awful happens before the inauguration.’

(emphasis mine)

I am trembling like a school girl.

Whiskey Tango Foxtrot

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The Federal Reserve has hired Michael Alix with the responsibility of assessing the risk and soundness of institutions.

He was, “The chief risk officer of Bear Stearns from 2006 until 2008.”

I have made comments now and again….OK, nearly continuously….That one of the problems with Wall Street is that there is no accountability for the big players.

This like making Typhoid Mary chief cook on the Titanic.

There is an entire generation of mostly Ivy League trained investment banking types who should be banned from the securities business for life plus 800 years.

Arrest Hank Paulson Now

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First, Hank Paulson pays twice market value for bank shares in the bailout package, and now we find out that the recipients of the Tresury dole will be spending lavishly on dividends

The 33 banks signed up so far plan to pay shareholders about $7 billion this quarter. Companies generally try to pay consistent dividends and, at the present pace, those dividends will consume 52 percent of the Treasury’s investment over the initial three-year term.

Paulson knows this, and he has the power to stop this, and he is not.

I we can’t find a law he broke explicitly, declare him an enemy combatant, and send him to Gitmo, because he’s done more damage to the US in the past 8 weeks than Osama bin Laden has done in his entire life.

Not Enough Bullets: Scotland Edition

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Specifically, the Royal Bank of Scotland, which just received a £20 billion bailout from the British government, but still intends to pay bonuses to the people who screwed up the bank in the first place:

The bank has set aside £1.79bn to cover “staff costs” – including discretionary bonuses – at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank’s profits for the same period.

The last ‘graph in the article says it all:

Banking sources privately acknowledge that the sight of these bonus accruals may provoke anger. They concede the industry’s pay and bonus regime is under unprecedented strain as it fails to reflect profitability, asset writedowns or share price declines.

The idea that you give people bonuses who lose you money is not, “Unprecedented Strain”, it is insanity.

Harry Reid Says Senate Will Refuse to Seat Stevens

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Let me make it clear, Stevens is an affront to the Senate, and while I find Lieberman to be repellant, they are not an affront to the Senate.

Reid is saying that the Senate will not seat a convicted felon, and I agree. What’s more, I think that he was right to slap down Sen. Daniel Inouye (D-HI), who chose personal friendship over his obligation as a Senator to protect that institution:

…

In a bluntly worded release from his office, Reid warned that Stevens would not only face an ethics investigation but also expulsion proceedings regardless of his efforts to appeal the convictions.

…

Reid also rebuffed comments made by Sen. Daniel Inouye (Hawaii), one of the chamber’s senior Democrats who had previously endorsed Stevens, and who has reaffirmed that sentiment since his conviction last month.

In a statement released by the Stevens campaign, Inouye argues that his longtime friend will be seated as a Member of the Senate next year if re-elected and that he believes the felony convictions will be overturned.

(emphasis mine)

In the House, they would simply refuse to seat him, but I’m not certain of the finer points of the procedures in the Senate.

Good for Reid, and very bad for Inouye, of whom I have fond memories (I was 11 years old) of from the Senate Watergate hearings.

Another Lie By Hank Paulson

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Joe Nocera of the New York Times had a source get him access to a a JPMorgan Chase conference call, and what he heard was disappointing, though not surprising.

It appears that the bank has absolutely no intention to expand lending, even after receiving $25 billion from the Treasury.

Instead, they see their path forward as being more merger and acquisition action:

In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.

(He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.)

“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: at another point in the conference call, the same executive (who I’m not naming because he didn’t know I would be listening in) explained that “loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot.

It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction.

(emphasis mine)

So Paulson lied to Congress, and he’s not leaning on banks to make loans again.

When Mr. Nocera says, “I don’t know about you, but I’m starting to feel as if we’ve been sold a bill of goods,” doesn’t know the half of it.

Oh, To Hell With It, Should I Just Register, “NotEnoughBullets.com”?

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So now, we find that Wall Street has lines it won’t cross, specifically, they consider obscene bonuses to be a matter of principle:

Oct. 30 (Bloomberg) — Wall Street’s chief executives will hunker down and pay bonuses this year in the face of the worst financial crisis since the Great Depression, a taxpayer bailout and mounting political outcry, industry veterans say.

…

How many yachts to you need to water ski behind?

Seriously these folks are well on their way to killing more Americans and harming the country in to a degree that Osama bin Laden could only dream of.

Let’s just declare them economic terrorists, and freeze their assets.

Shorter Ted Stevens: I’m Insane or a Liar

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In the Senate debates in Alaska, Ted “Hulk Smash” Stevens let this whopper fly:

“I’m not going to step down. I have not been convicted. I have a case pending against me, and probably the worse case of prosecutorial … misconduct by the prosecutors that is known,” Stevens said.

Yes, you have been convicted.

You may expect a reversal on appeal, but you were convicted.

C=MI*

*Conservatism = Mental Illness

I Don’t Think that the Pentagon Has Enough Bullets

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More on Hank Paulson’s bailing out my peeps program:

The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson’s transaction, the taxpayers were taken for a ride–a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public’s money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.

Just lovely.

Can we throw him in jail, hopefully sooner rather than later.

Guilty, Guilty, Guilty!!!!!

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Sen. Ted Stevens guilty on all seven counts.

So Governor Palin, will you do right by the people of Alaska and appoint Begich to the Senate in November?

A few days extra seniority make a big difference in that body.

One note, the Jurors had to start from square one on deliberations today, because a juror was released because of a death in the family, so they pretty much settled this in the hallway.

I believe that GB Trudeau says it all in the attached Doonesbury cartoon from 1973.

This guy has been a gleeful cancer on the US senate for decades, and a little time for him in club Fed will do the American people a world of good.

Not Enough Bullets: Tax Loophole Edition

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Well, now we know why Wells Fargo wanted wanted to buy Wachovia, a tax loophole

The day after Citigroup made its bid, the Treasury changed a tax rule that lets banks accelerate the losses and writedowns on banks they acquire against their own net income, offsetting the charges as tax write-offs.

Wells plans on writing off some $74 billion of Wachovia’s $498 billion loan portfolio — an insanely large amount that reflects just how poisoned Wachovia’s books really were. With the new tax rules, it gets to use all of that $74 billion as a charge against its own net income, which means one thing: Wells Fargo’s going to be a tax-write-off machine for years to come.

Not enough bullets.