Neither side is immune from selling us out for their own gain. To me they are all the same... just a matter of degree with Republicans being worse in that their ideology is generally anti-Middle Class.

I'm an advocate of lobbying reform, campaign finance reform, and term limits. Some say experience is too important to impose term limits... but to me term limits are primarily and most importantly power limits, and I'd rather have honest leaders without as much experience (power) than to have experienced crooks who feel they don't have to account to anyone for anything they do.

Not to climb on you here, NiteOwl, but this concept of a "middle class" here in the USA is a relatively new terminology, I believe, and I further believe that it was imported to here from Britain after WWII ....

When this nation started out, there was no "middle class" ....

And there were not a lot of very wealthy people as there are today, or were yesterday, anyway ....

As I recall it, people started calling themselves "middle class" so as to be able to jump themselves up in "social status" ....

"Blue collar" workers moved to the suburbs, and all of a sudden, they were now "middle class" ....

So the pandering polticians started pandering to this emerging "middle class" ....

And the "middle class" started putting on more and more airs ....

As we country folks would say, these people got above their raising ...

"Oh, the neighbor just put in a swimming pool, so we need to put in one better than theirs, or we will fall behind ..."

The same thing with cars ....

If you drove a GM Buick, you were better than somebody driving a GM Chevrolet ....

And if you drove a GM Cadillac, you were better than the person with the Buick ....

MATERIALISM ....

GOTS TO HAVE ....

And it don't make a lick of difference whether you need it, or not, just GOTS TO HAVE ....

WHY?

Because you want to be better than your neighbor ....

And now, NiteOwl, here we are at the other end of that spectrum, BECAUSE .....

IT WAS NEVER SUSTAINABLE!

It was always a race to the bottom, and we have arrived ....

And now, the world is a whole new place for many who thought it would always be the way it was, and their little niche was GUARANTEED to them by some smarmy politician down in Washington, D.C. ....

And so ....

OF COURSE CHAOS AND ANARCHY EXIST, TROU ....

If CHAOS did not exist in the USA and world right now, more than half of these threads in here would not exist, and most of these panicked discussions in here about the economy and "loss of wealth" would not be taking place, because there would be nothing to talk about ...

And most certainly, ANARCHY does exist ....

In fact, it is ANARCHY which brought us to this CHAOS that now surrounds us ....

What NiteOwl is talking about in his latest posts is ANARCHY in action ....

And so ...

The first "fact" that should be changed is your spelling of Barney Frank's name.

The second "fact" you should note is that Jonah Goldberg is a liar (which should go without saying his being a Republican).

To prove the second "fact" regarding your rant against Barney Frank is that neither he nor the Democrats were in charge during the years when trouble began at Fanny and Freddie and oversight was called for. Are you saying that Frank stopped the Republicans WHO WERE IN CHARGE OF THE OVERSIGHT COMMITTEES from conducting oversight on Freddie and Fanny? Eh? Also Frank and the Dems in their first year in charge (2007) held oversight hearings when the Republicans held virtually NONE during the years in question. Guess that might mitigate some of the spew you are swallowing from the likes of Goldberg.

Three. Since Goldberg is caught red... oh let's put this in a "PC" manner... caught "making misleading statements" about Frank's role at the time I am inclined to er (let's be "pc" here too) um be "skeptical" about his assertions about Dodd. While I do not doubt that members of Congress (including Dodd) take lobbyist's money all the time, I know that taking lobbyists money is not a crime (though it should be), at the least I assume he (Goldberg) is taking... oh "artistic license" with those facts too.

And so... in a nutshell and as a rule of thumb; The way I can tell when a Republican is lying is when I see his lips move.

Goggle Pelosi's Husband...

INTERESTING, rla ....

Oct 2, 2008 5:13 pm US/Pacific

"Pelosi Paying Thousands To Husband's Firm"

WASHINGTON (AP) ― House Speaker Nancy Pelosi said Thursday that it's "just foolish" to suggest that her husband is benefiting from tens of thousands of dollars one of her political committees is paying a firm he owns.

Pelosi, D-San Francisco, also disputed the notion that the arrangement contradicts her support last year for legislation that would have banned spouses from benefiting, directly or indirectly, from political committees controlled by their husbands or wives.

Paul Pelosi has been treasurer of the speaker's "PAC to the Future" political action committee since last year, after the death of the previous treasurer.

The PAC has paid his investment and consulting firm, Financial Leasing Services Inc., more than $50,000 since last year for accounting services and rent, plus at least $20,000 more in prior years.

Pelosi contended Thursday that she was merely complying with the law by reimbursing her husband's firm for what would otherwise amount to improper "in-kind" donations of services to her committee.

"My husband's not a political consultant or anything like that."

"It is just honoring the law to say if you use the facility, you have to pay for it."

"And everybody has to do that, and that's again in compliance with the law," Pelosi said.

"He would be happy not to have this on his turf I'm sure," she said.

"No, it doesn't benefit my husband."

"That is foolish to say."

Pelosi's aides said they would review the arrangement after the election.

Many lawmakers pay spouses and other family members for fundraising and other campaign-related services, and it's perfectly legal.

But the practice has become controversial in recent years after it arose as a factor in some congressional corruption investigations.

Last year Rep. Adam Schiff, D-Calif., introduced legislation that would have banned the practice and it passed the House by voice vote, with Pelosi's support, but never advanced in the Senate.

"Democrats are committed to reforming the way Washington does business."

"Congressman Schiff's bill will help us accomplish that goal by increasing transparency in election campaigns and preventing the misuse of funds," Pelosi said in a statement at the time.

Ethics watchdogs said that even if she was complying with the law, Pelosi had an obligation to hold herself to a higher standard.

"Having supported this bill and said that she agreed that immediate families shouldn't be on campaign payrolls, there shouldn't be payments to Paul Pelosi," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington.

"I'm looking for leadership from Pelosi on this issue, not just for her to follow the technicalities."

In 2003, a different political action committee Pelosi ran was fined $21,000 for improperly accepting donations over federal limits.

The arrangement with Paul Pelosi's company was first reported Wednesday in The Washington Times.

http://cbs5.com/politics/pelosi.husband.pac.2.831523.html

I just checked and it is F-R-A-N-K just as I had it ....

That's the same way that you have it .....

You use his nickname or familiar name "Barney", while I call him by the more formal Barnabus or Barnaby ....

Probably you know the man, and I don't ....

So it would be incorrect for me to be calling him by a familar name, as if we were friends ....

And so ...

I can't say ....

I've never met him, myself ...

And so ...

"Fannie Mae and Freddie Mac Bailed Out After Buying In"

Published by Lindsay Renick Mayer on September 8, 2008 1:40 PM

As economists and analysts try to sort out how giant mortgage buyers Fannie Mae and Freddie Mac ended up needing to be bailed out by the federal government this past weekend, here at CRP we can see part of the picture of why that solution won out over others.

Both Fannie Mae and Freddie Mac are prolific political players, pouring millions of dollars into campaign contributions and lobbying, efforts that have resulted in keeping the two companies afloat as more Americans have defaulted on their mortgages.

Current members of Congress have received $3.8 million from the two companies since 1998 (including only their candidate committees).

Sen. Chris Dodd (D-Conn.), chairman of the Senate banking committee, collected the most from the employees and PACs of both mortgage buyers at $133,900.

Democrat Barack Obama collected the most from individuals associated with Fannie Mae at $101,150 and a total of $122,850 from both companies, putting him behind Dodd.

Obama's opponent in the presidential election, John McCain, has received only $21,300 from both since 1989.

http://www.opensecrets.org/news/2008/09/fa...ie-mac-bai.html

It's like buying beef on the hoof ....

And so ...

POLITICIANS ON THE MAKE

A dime a dozen ....

Or a penny a pound ....

Take your pick ....

And so ...

YOU OF COURSE CAN TRY AND REFUTE THIS, TROU ....

"Recent Fannie Mae and Freddie Mac executives on Obama’s payroll — Senator Chris Dodd oversees Freddie and Fannie and has received hundreds of thousands in contributions from them."

October 2, 2008

UPDATE: Oct. 2, 2008

Unqualified home buyers were not the only ones who benefited from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.

So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.

Enron executives are in prison over much less.

In fact far more money was lost to investors after Mr. Frank trumpeted the great management of Freddie Mack and Fannie May.

****

Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank’s relationship with Herb Moses, who was Fannie’s assistant director for product initiatives.

Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest.

Critics, however, remain skeptical.

“It’s absolutely a conflict,” said Dan Gainor, vice president of the Business & Media Institute.

“He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive."

"How is that not germane?"

http://sadbastards.wordpress.com/2008/10/0...obamas-payroll/

"Lawmaker Accused of Fannie Mae Conflict of Interest"

Friday, October 03, 2008 | FoxNews.com

By Bill Sammon

Frank met Moses in 1987, the same year he became the first openly gay member of Congress.

"I am the only member of the congressional gay spouse caucus," Moses wrote in the Washington Post in 1991.

"On Capitol Hill, Barney always introduces me as his lover."

The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives.

According to National Mortgage News, Moses "helped develop many of Fannie Mae’s affordable housing and home improvement lending programs."

Critics say such programs led to the mortgage meltdown that prompted last month’s government takeover of Fannie Mae and its financial cousin, Freddie Mac.

The giant firms are blamed for spreading bad mortgages throughout the private financial sector.

Although Frank now blames Republicans for the failure of Fannie and Freddie, he spent years blocking GOP lawmakers from imposing tougher regulations on the mortgage giants.

In 1991, the year Moses was hired by Fannie, the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.

Three years later, President Clinton’s Department of Housing and Urban Development tried to impose a new regulation on Fannie, but was thwarted by Frank.

Clinton now blames such Democrats for planting the seeds of today’s economic crisis.

"I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president, to put some standards and tighten up a little on Fannie Mae and Freddie Mac," Clinton said recently.

Bill Sammon is FOX News' Washington Deputy Managing Editor.

http://www.foxnews.com/story/0,2933,432501,00.html

HEY!

Maybe Clinton is lying like that other guy ....

Or maybe he has Barnabus Frank confused with somebody else ....

And so ...

ANARCHISM:

* The theory that all forms of government are incompatible with individual and social liberty and should be abolished;

* The methods, esp, terroristic ones, of anarchists;

* The advocacy of voluntary cooperation and mutual aid as a substitute for the coercive power of the state ....

ANARCHY:

* Absence of government;

* Lawless confusion and political disorder;

* General disorder ....

ANARCHIST:

* One who believes in and advocates anarchism;

* One who encourages or furthers anarchy ....

- Reader's Digest Great Encyclopedic Dictionary

"Treasury needs record $361B April-June borrowing - Treasury needs to borrow $361 billion in April-June quarter, record amount for that period"

By MARTIN CRUTSINGER, Associated Press

Last updated: 3:45 p.m., Monday, April 27, 2009

WASHINGTON -- The Treasury Department said Monday it will need to borrow $361 billion in the current April-June quarter, a record amount for that period.

It's the third straight quarter the government's borrowing needs have set records for those periods.

Treasury also estimated it will need to borrow $515 billion in the July-September quarter, down slightly from the $530 billion borrowed during the year-ago period.

The all-time high of $569 billion was set in the October-December period.

The huge borrowing needs reflect the soaring costs of the $700 billion financial rescue program and the recession, which is nearing a record as the longest in the post World War II period.

The slump has cut sharply into tax revenue and boosted government spending for benefit programs such as unemployment insurance and food stamps.

The administration is projecting the federal deficit for the entire budget year ending Sept. 30, will total a record $1.75 trillion.

A deficit at that level would nearly quadruple the previous record of $454.8 billion set last year.

To cover the government's heavy borrowing needs, Congress in February boosted the limit for the national debt to $12.1 trillion as part of the legislation that enacted President Barack Obama's $787 billion economic stimulus program.

The national debt now stands at $11.1 trillion.

The government released its estimate of borrowing needs for the quarter before a news conference Wednesday when officials are scheduled provide exact details of how much debt the government plans to sell next week and in what maturity levels as part of Treasury's regular quarterly debt auctions.

The $361 billion estimate for borrowing this quarter compared with borrowing needs of just $13 billion in the year-ago period.

Normally the government's borrowing needs shrink sharply in the April-June quarter because of all the tax revenue being collected.

The government announced in February that it was bringing back the seven-year note and doubling the number of 30-year bond auctions it would hold each year to help finance the surging borrowing needs.

Krugman Blasts Wall Street's Return to 2007 Comp Bonanza
Apr 27, 2009 02:35pm EDT by Henry Blodget in Products and Trends, Recession, Banking
From The Business Insider, April 27, 2009:

Paul Krugman highlights yet another problem with bailing out Wall Street: As soon as the bad news ends, Wall Street goes right back to minting money--for shareholders and executives.

But that's good, right? We taxpayers are shareholders of Wall Street firms. So we should be happy about that?

Well, no, we're not really shareholders, because we just own preferred stock, which doesn't participate much in the upside. And now, of course, we get to watch while Wall Street firms and folks who survived on our dime go right back to paying themselves fortunes again.

But get used to it...because there's no way it would happen any other way.

The only thing that will stop Wall Street from paying itself astronomically relative to every other industry on the planet is a major reduction in the profitability of Wall Street firms. And when you lend Wall Street firms money for nothing, guarantee their debt, and demand that they start lending again for the good of the economy, of course they're going to be wildly profitable. (When they aren't writing down terrible gambling bets, that is).

We can't have it both ways. We can't save Wall Street and then micromanage how much Wall Street firms pay themselves, and we shouldn't want to--because that really is screwing up the basis of the economy. So the answer is...

STOP BAILING OUT WALL STREET.

Got that, Tim?

I don't think Tim has any ears to hear with ....

DID SOMEBODY ONCE SAY THAT THERE IS AN IDIOT BORN EVERY MINUTE HERE IN AMERICA?

AND AS THIS ARTICLE CLEARLY SHOWS, THERE DEFINITELY IS NO CORRELATION BETWEEN HAVING MONEY AND HAVING INTELLIGENCE ....

And so ...

"5 charged in 'nightmare' $70M mortgage scheme"

By BRIAN WITTE, Associated Press

Last updated: 5:55 p.m., Monday, April 27, 2009

BALTIMORE -- More than 1,000 people were defrauded out of about $70 million by a group advertising the dream of homeownership in what turned out to be a nightmare Ponzi scheme, federal and Maryland officials said Monday.

Five officers for Laurel, Md.-based Metro Dream Homes company are accused of tricking homeowners into pouring money into the business with the promise that the revenue would be used to pay off their mortgages.

The scheme ran from 2005 until October 2007, authorities said.

Newly confirmed Assistant U.S. Attorney General Lanny Breuer said the charges should send a message to those engaging in mortgage fraud.

"Our resolve as a group is great," he said at a news conference in Washington.

"We will find you."

"We will prosecute you, and we're going to put you in prison."

The indictment names company founder Andrew Hamilton Williams Jr., 58, of Hollywood, Fla.; financial officer Michael Anthony Hickson, 46, of Commack, N.Y.; president Isaac Jerome Smith, 46, of Spotsylvania, Va.; and vice president Alvita Karen Gunn, 31, of Hanover, Md.

They had 48 hours to turn themselves in.

Gunn had an initial appearance Monday afternoon in U.S. District Court in Greenbelt, Md.

Her attorney, Elita C. Amato, did not immediately return a call seeking comment.

Other attorneys in the case also could not be reached for comment.

A fifth person, Carole Nelson, 50, of Washington, D.C., was named in a document normally filed as part of a plea deal.

"Some people hope to get rich quickly just by dreaming, without the hard work," said Rod Rosenstein, the U.S. attorney for Maryland.

"Usually, people can achieve that only by breaking the rules."

Prosecutors say the company marketed the mortgage program in seminars at luxury hotels in Maryland, Washington and Beverly Hills, Calif.

An investor had to put up a minimum of $50,000 for each home.

The company was then supposed to pay off their mortgages within five to seven years.

More than half the victims were from the Washington suburbs of Prince George's County in Maryland, said John McLane, a Maryland assistant attorney general.

Other victims were in California, Delaware, the District of Columbia, Georgia, New York, North Carolina and Virginia.

Investors were told they were investing in ATM machines, television advertising and calling card kiosks that would raise money for the mortgage payments.

But prosecutors say those businesses never made any money.

Instead, prosecutors say the investments were used to pay company salaries of up to $200,000 and maintain a fleet of luxury cars and a staff of 10 chauffeurs.

And company officials allegedly traveled to the Super Bowl and the NBA all-star game with investor money.

"The name Dream Homes was truly a nightmare for so many people in the state of Maryland," said Douglas F. Gansler, the state's attorney general.

Authorities say the conspirators operated under several corporate names, including Metro Dream Homes, Metropolitan Grapevine LLC and POS Dream Homes.

Investigators said the scheme was elaborate -- early investors whose monthly mortgage payments had been paid by money provided by later investors assured potential recruits that the program worked.

Investors were told the company made as much as $10 million a month.

Dream Home representatives also encouraged investors to enroll more than one home in the program, with an additional $50,000 investment fee required for each home.

Investors who put $100,000 or more into the program were told they would receive a seat on a "Junior Board of Directors."

------

Associated Press writer Matt Apuzzo contributed to this report in Washington.

"Paulson Threatened To Oust Ken Lewis If Bank Of America Killed Merrill Deal"

Henry Blodget

Apr. 23, 2009, 5:52 AM

A transcript of Ken Lewis's testimony to Andrew Cuomo was leaked to the WSJ (presumably by Cuomo or Bank of America).

The testimony includes two startling nuggets that highlight the veil of secrecy that defined the Bush administration's (and, to a lesser extent, the Obama administration's) approach to this crisis:

Bernanke and Paulson implicitly ordered Ken Lewis to keep silent about the massive losses Merrill was sustaining in Q4.

Put differently, Paulson and Bernanke ordered him to deceive his own shareholders about the condition of the company BAC was buying.

Paulson and Bernanke did not explicitly say this, but that was impression Ken Lewis left with.

Paulson has since implied that Ken Lewis misunderstood:

Q: Were you instructed not to tell your shareholders what the transaction was going to be?

A: I was instructed that 'We do not want a public disclosure.'

Q: Who said that to you?

A: Paulson...

Q: Had it been up to you would you [have] made the disclosure?

A: It wasn't up to me.

Q: Had it been up to you.

A: It wasn't.

This is presumably why Ken Lewis said that, in going ahead with the Merrill deal, BAC took one for the country.

Paulson told Ken Lewis he would oust him and the BAC board if Ken Lewis stopped the Merrill deal.

Ken Lewis then immediately backed down:

WSJ: During his testimony, Mr. Lewis described a conversation with Mr. Paulson in which the Treasury secretary made it clear that Mr. Lewis's own job was at stake.

Mr. Lewis still was considering invoking his legal right to terminate the Merrill deal.

Mr. Paulson was out on a bike ride when Mr. Lewis phoned to discuss the matter, according to the transcript.

"I can't recall if he said, 'We would remove the board and management if you called it [off]' or if he said 'we would do it if you intended to.'"

"I don't remember which one it was," Mr. Lewis said.

"I said, 'Hank, let's de-escalate this for a while.'"

"'Let me talk to our board.' "

Bank of America shareholders thus have two causes for grief: First, that the government ordered them to absorb Merrill losses when, by all rights, Merrill shareholders should have taken them.

Second, that Ken Lewis may have let his desire to keep his job interfere influence his decision to go forward with the deal.

Either way, as Ken Lewis tells it, Bank of America's shareholders got screwed.

Lewis needs to accept some responsibility for that.

But it sounds as though Paulson and Bernanke do, too.

http://www.businessinsider.com/henry-blodg...ill-deal-2009-4

"Bank of America CEO Says He Was Pressured Into Merrill Rescue - Ken Lewis Says Former Treasury Secretary Henry Paulson Threatened to Remove Board"

By RICHARD ESPOSITO, BETSY STARK, AND CHARLES HERMAN

April 23, 2009

The CEO and Chairman of Bank of America says he was threatened by the Bush Administration's Secretary of Treasury when he tried to back out of a deal to rescue Merrill Lynch, according to testimony he gave to New York Attorney General Andrew Cuomo.

The stunning disclosures of a behind the scenes power play by top government officials are the talk of Wall Street and Washington today.

In his testimony, Bank of America CEO Ken Lewis told New York's Attorney General that then-Treasury Secretary Henry Paulson threatened him on December 21st with the prospect of removing the management and Board of Directors of the bank if Lewis refused to complete the merger with Merrill Lynch even though Merrill was hemorrhaging money.

Just a few days earlier, on December 14th, Lewis's Chief Financial Officer had told him that Merrill's projected fourth quarter losses had "skyrocketed" from $9 billion to $12 billion in just six days, according to a cover letter Cuomo sent along with the testimony and other documents to senior government officials overseeing the bank bailout.

The letter and the testimony was sent to the Chairman of the Senate Banking Committee, the Chairman of the House Financial Services Committee, the Chairman of the Securities and Exchange Commission and the Chair of the Congressional Oversight Panel.

Senator Chris Dodd (D-CT), chairman of the Senate Banking Committee is "deeply concerned about these troubling allegations," according to his office.

"He has talked today with Attorney General Cuomo about his findings and will carefully assess the documents provided to him by the Attorney General."

"He will decide on next steps soon," said Dodd's spokesperson, Justine Sessions.

The Congressional Oversight Panel would not comment on the letter, saying they have yet to 'formally' receive it.

Cuomo said he sent the information because of serious concerns about the transparency with which the Troubled Assets Relief Program and other elements of the federal bailout plan are being run, because of his office's responsibility to enforce the securities laws, and because of the "unprecedented circumstances" in which the Merrill – Bank of America merger took place.

Docs Show Regulators and Bank Officials Agreed Not to Alert Shareholders

The documents lay out in detail a troubling set of conversations, emails, and meetings in which federal regulators and senior bank officials admit that they agreed not to alert shareholders at Bank of America to circumstances that could materially affect their investments, admitted not having alerted the Securities and Exchange Commission to discussions which came within its regulatory scope, and in which Lewis, the Chief Executive Officer of a bank, admits he went forward with a deal knowing full well that it could have a negative impact on a large number of shareholders.

The Federal Reserve released a statement late Wednesday denying any allegations that officials there were involved in any decisions over disclosure.

"No one at the Federal Reserve advised Ken Lewis or Bank of America on any questions of disclosure."

"It has long been the Federal Reserve's view that questions of this nature are best addressed by individual institutions and their legal counsel, as they are in a position to understand clearly their obligations and responsibilities," said spokesperson Michelle Smith.

Bank Bonus Showdown: Just Who Approved $3.6 Billion Payout?

Former Secretary Paulson's spokesperson also released a statement late Wednesday saying that issues of disclosure were left to Bank of America and that Paulson's role was to ensure that no important financial institution be allowed to fail

"By referring to the Fed's supervisory powers, Paulson intended to deliver a strong message reinforcing the view that had been consistently expressed by the Fed, as Bank of America's regulator, and shared by the Treasury that it would be unthinkable that Bank of America take this action for which there was no reasonable legal basis and which would show a lack of judgment," said Paulson's spokesperson.

Lewis' Deposition with the Attorney General's Office

In his deposition, Lewis attempts to explain why he did the deal in this exchange with Benjamin Lawsky of the Attorney General's office:

Q. Wasn't Mr. Paulson, by his instruction, really asking Bank of America shareholders to take a good part of the hit of the Merrill losses?

A. (Lewis) What he was doing was trying to stem a financial disaster in the financial markets, from his perspective.

Q. From your perspective, wasn't that one of the effects of what he was doing?

A. (Lewis) Over the short term, yes, but we still thought we had an entity that filled two big strategic holes for us and over the long term would still be an interest to the shareholders.

Q. What do you mean by "short term"?

A. (Lewis) Two to three years.

Q. So isn't that something that any shareholder at Bank of America who had less than a three-year time horizon would want to know?

A. (Lewis) The situation was that everyone felt like the deal needed to be completed and to be able to say that, or that they would impose a big risk to the financial system if it would not.

This was "an extraordinary use of government power" in "unprecedented circumstances', according to Bob Mintz, former federal prosecutor specializing in financial cases.

The government was "breaking new ground in terms of the level of government involvement in the marketplace," said Mintz, "making it up as they went along."

According to the Cuomo letter, when Lewis first learned of the "staggering amount of deterioration" at Merrill on December 14th and had decided it might warrant cancelling the deal, he notified Paulson and the Treasury Secretary asked him to fly to Washington that night.

There he met with Paulson and senior officials including Chairman of the Federal Reserve Ben Bernanke, and was asked "to not seek to rescind the merger agreement."

But his bank came under pressure from the government in a series of follow-ups to the meeting and Lewis after attempting to resist, appears to have caved.

Bank of America Says It Acted Legally

On December 21st, when Lewis still considered using a "material adverse event" clause to squash the deal, he told Cuomo, according to the letter, that Paulson threatened to remove the management and Board of Directors of Bank of America.

That ended Bank of America's attempts to exit the deal, the letter stated.

"There's no question that this was an extremely heavy handed threat, and there may have been advice here to forget about disclosure obligation which could be seen as aiding and abetting a federal securities law violation," said Professor John Coffee of the Law School at Columbia University.

Stonewalling in Style: Bank of America Subpoenaed

The letter was sent the day a Wall Street Journal banner headline announced that "Lewis testifies U.S. Urged Silence on the Deal."

The Journal account stated that both Paulson and Bernanke barred Lewis disclosure of Merrill's woes because of the potential danger to the financial system.

The letter states that Paulson largely corroborated Lewis's account of the threat, and went on to say he made the threat at the behest of the Chairman of the Federal Reserve.

"In an interview with this Office, Secretary Paulson largely corroborated Lewis's account," the letter states.

Cuomo alleges that Paulson told his office he made the threat at the behest of Federal Reserve Chairman Paul Bernanke.

"According to Secretary Paulson, after he stated that the management and the Board could be removed, Lewis replied, 'that makes this simple.'"

"'Let's deescalate.' "

In a series of statements, a spokesperson for Paulson largely corroborated Lewis's account to Cuomo but fell short of confirming that Bernanke instructed him to make the threat.

"His prediction of what could happen to Lewis and the Board was his language, but based on what he knew to be the Fed's strong opposition to Bank of America attempting to renounce the deal," said Paulson's spokesperson.

A previous statement said that "Chairman Bernanke did not instruct him [Paulson] to indicate any specific action the Fed might take," said the spokesperson.

Were Laws Broken?

"The point is this: you have to disclose material information to shareholders."

"You can't violate the law."

"And that is in effect what appears to come out of this," said Charles Elson Director, of the John Weinberg Center for Corporate Governance.

Bank of America spokesman Scott Silvestri issued a statement saying, "We believe we acted legally and appropriately with regard to the Merrill Lynch transaction."

But Elson said this latest disclosure is quite problematic.

"Think of it this way, people bought and sold Bank of America stock for a period, a long period, without being aware of the true state of affairs in the company."

"The problems with this acquisition were clearly a material event," he said.

http://abcnews.go.com/Blotter/Story?id=7411169&page=1

WALL STREET JOURNAL

"'It Wasn't Up to Me': Excerpts From Ken Lewis's Testimony"

Bank of America Chairman and CEO Kenneth Lewis testified under oath in New York Attorney General Andrew Cuomo's investigation in February.

During the testimony, Mr. Lewis told prosecutors that then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke instructed him to keep silent about deepening financial difficulties at Merrill Lynch.

In a letter today to members of Congress and the head of Securities and Exchange Commission, Mr. Cuomo called into question the transparency of the decision making in the process.

Here are highlights from the transcript.

Here, Mr. Lewis testifies about when he learned of Merrill's deepening losses:

Mr. Lewis: I want to make sure I get the date right.

I'm pretty sure it was December the 13th if that's a Sunday because I was in New York, and I was about to go home -- and what triggered that was that the losses, the projected losses, at Merrill Lynch had accelerated pretty dramatically over a short period of time, as I recall, about a week or so.

Q: How did you come to learn of that?

Mr. Lewis: Joe Price, our CFO, called me.

Q: Take me through what Mr. Price communicated to you on that call.

Mr. Lewis: He basically said what I just said: The projected losses have accelerated pretty dramatically.

We earlier on had more days in the month, so that it was a possibility that at least some of the marks could come back, but now we had not very many business days because Christmas was coming and all of that.

So we became concerned just of the acceleration of the losses.

Mr. Lewis testifies about his discussions with Mr. Paulson about the possibility of Bank of America walking away from the Merrill deal, citing the "material adverse effect" clause, or MAC, in its merger agreement:

Mr. Lewis: I remember, for some reason, we wanted to follow up and see if any progress -- as I recall, we actually, had not agreed to call a MAC after the conversation that we had, and so I tried to get in touch with Hank, and, as I recall, I got a number that was somebody at the Treasury kind of guard-like thing.

He had a number for Hank, and Hank was out, I think, on his bike, and he -- this is vague; I won't get the words exactly right -- and he said, "I'm going to be very blunt, we're very supportive of Bank of America and we want to be of help, but" -- I recall him saying "the government," but that may or may not be the case -- "does not feel it's in your best interest for you to call a MAC, and that we feel strongly," -- I can't recall if he said "we would remove the board and management if you called it" or if he said "we would do it if you intended to."

I don't remember which one it was, before or after, and I said, "Hank, let's deescalate this for a while."

"Let me talk to our board."

And the board's reaction was one of "That threat, okay, do it."

"That would be systemic risk."

On Thursday morning, New York Attorney General Andrew Cuomo released the following documents:

Letter From Cuomo to Lawmakers 4/23/09 http://online.wsj.com/public/resources/doc...uomo4232009.pdf
Ken Lewis Email from 12/22/08 http://online.wsj.com/public/resources/doc...omo04232009.pdf
Minutes of BofA Board Meeting from 12/22/08 http://online.wsj.com/public/resources/doc...omo04232009.pdf
Minutes of BofA Board Meeting from 12/30/08 http://online.wsj.com/public/resources/doc...omo04232009.pdf
Ken Lewis Testimony from 2/26/09 http://online.wsj.com/public/resources/doc...omo04232009.pdf

Mr. Lewis testifies about seeking a written agreement from Messrs. Paulson and Bernanke that the government would provide BofA with more TARP funds and guarantees if BofA went through with Merrill transaction:

Q: Did you ask for any agreement from them?

Mr. Lewis: There was a point after that that the board brought up the fact that we're relying on the words that obviously has some very prominent people and honorable people, but, boy, what if they don't come through?

So I called Bernanke -- I don't know why I called him versus Hank -- and said, "Would you be willing to put something in writing?"

And he said, "Let me think about it."

As I recall, he didn't call me back, but Hank called me back.

And Hank said two things: He said, "First, it would be so watered down, it wouldn't be as strong as what we were going to say to you verbally, and secondly this would be a disclosable event and we do not want a disclosable event."

Mr. Lewis testifies about why he did not disclose Merrill's losses to BofA shareholders:

Q: Wasn't Mr. Paulson, by his instruction, really asking Bank of America shareholders to take a good part of the hit of the Merrill losses?

Mr. Lewis: What he was doing was trying to stem financial disaster in the financial markets from his perspective.

Q: From your perspective, wasn't that one of the effects of what he was doing?

Mr. Lewis: Over the short term, yes, but we still thought we had an entity that filled two big strategic holes for us and over long term would still be an interest to the shareholders.

Q: So isn't that something that any shareholder at Bank of America who had less than a three-year time horizon would want to know?

Mr. Lewis: The situation was that everyone felt like the deal needed to be completed and to be able to say that, or that they would impose a big risk to the financial system if it would not.

Q: When you say "everyone," what do you mean?

Mr. Lewis: The people that I was talking to, Bernanke and Paulson.

Q: Had it been up to you would you made the disclosure?

Mr. Lewis: It wasn't up to me.

Q: Had it been up to you.

Mr. Lewis: It wasn't.

Q: Why do you say it wasn't up to you?

Were you instructed not to tell your shareholders what the transaction was going to be?

Mr. Lewis: I was instructed that "We do not want a public disclosure."

Q: Who said that to you?

Mr. Lewis: Paulson.

Mr. Lewis testifying as to what Mr. Paulson did not want a public disclosure of:

Q: A public disclosure of what?

Mr. Lewis: Of what they were going to be doing for us until it was completed.

Q: How about of Merrill fourth-quarter losses?

Mr. Lewis: That wasn't an issue that was being exchanged.

Q: Did anyone consider that the oral agreement was a commitment for financing, so under SEC rules there had to be a disclosure?

Mr. Lewis: I did not.

That's all I can tell you.

Q: Between December 12 and the 1st of the year, did you have any conversations with anyone at bank of America or representing Bank of America, concerning whether Bank of America had an obligation to make any disclosure?

Mr. Lewis: I do not recall having any.

http://online.wsj.com/article/SB124050112892948367.html

You seem to have a propensity to cite Republican Party sources Livyjr. I told you I believe they are all liars and worse. They are "The Party of Lies". I would not listen to anything any of them say about anything for one second! I've been saying this for years, and I've been proved right by our present situation. Fanny and Freddie had a noble purpose and to the degree it was or anyone was corrupted, it (or they) were corrupted by associating themselves, even in the slightest way, with corrupt Republican ideas, as has America. It is potent stuff. Concentrated evil.

For me it goes like this... "Where did you hear that? He's a Republican... right? Yes? Fuggettaboutit!"

Believe what you like. End of discussion.

Goggle does not list sources as being republican or democrat ....

And Bill Clinton is not a republican ....

Or is he?

And if he is a republican, then what on earth is a democrat?

George W. Bush?

And so ....

Fox News, Jonah Goldberg, etc...

And even if Bill Clinton did say that that don't make it true. After all he lied about Monica. The Repubs were in charge of Congress throughout Clinton's Administration (94' on) and it was they who could have passed whatever Legislation they wanted and at the very least conducted Oversight Hearings. Yet... maybe I missed it... but I don't hear you cursing the ground they walk on as you do Pelosi, Reid and Frank who had no power during those times.

Just an observation.

The republicans are quite passe these days, TROU ....

They are going the way of the federalists, I would hope, and good riddance to them .....

And yes, you have not been listening ....

But that is alright ....

You have been angry about many things, and that has distracted you ....

And what you are doing here is proving that Pelosi and Barnabus Frank have been totally worthless to the American people ....

And so ...

And they still are in my opinion...As I have often had occassion to argue, a person with a severe disability is able to be just as much an S.O.B as anyone else, so can one with a non-traditional sexual identity or an attractive, well
educated, charming woman...

You sure can plainly say what you want to say, rla, when you want to say it plain ....

And so ...

I downloaded NANCY's 2007 FINANCIAL DISCLOSURE FORMS yesterday, and have been studying through them ....

It is hard to say what she and hubby are actually worth, since NANCY gives ranges for things of theirs having values of between $5,000,001 and $25,000,000, which is a $20,000,000 differential ....

But it is at least around $19 MILLION according to tazvil04, who I have no reason to doubt, although I think his number is derived from the low end of the range of estimates she gave, rather than the high end, which would be in excess of $50 MILLION ...

And 2007 is the last year that I can find for her FINANCIAL DISCLOSURE forms ....

She and hubby were heavily into stocks, including AIG, which is now getting BAILED OUT, and real estate, which has plummeted ....

What I would like to know is whether NANCY and hubby got clipped like everybody else, OR ....

Did they come out either whole, or ahead?

Reading through her FINANCIAL DISCLOSURE FORMS, I have come to think that TOO BIG TO FAIL really applies to people like her and hubby ....

TOO IMPORTANT TO BE CLIPPED = TOO BIG TO FAIL ....

And so ...

Where I'm from, we call it laughing all the way to the bank.

Well said, Snuf!

And you are playing into the hands of those who really brought us to these times. Who can be heard shouting from the decks of their pirate shi... I mean yachts... offshore, " Don't look at us who were in charge. We're old news after all... forget about us.. (besides we need time to load up all the loot). Don't check the records. Look, LOOK! Look over there! Rich People!! Rich Democrats!! They must be as evil as us, cause they're rich. Com'on... everybody did it! How do you think we got rich?! Right? Class warfare! Class Warfare!! Eh... er... (what does the AEI talking point memo say we should say next?) Hmmm.. Oh yeah "Nancy Pelosi" is.... is a woman Oops! I mean she's a rich woman! And... and Barney Frank... well we know what he is eh?. That's it look over there. Jonah... Rev. Moon make up some more bullsh*t quick... the people are not buying it so much this time. We got your cut right here. Weigh anchor! Wait... that guy over there is buying it... but he might be catching on... throw out some more bull so we can get beyond the three mile limit. What? It's twelve miles? Well, damn it man full speed ahead, besides I think I see that irritating Trou guy comin..."

What is he, TROU?

Check your memo.

SO SAY THE PEOPLE TO KEN LEWIS, ANYWAY ....

And so ...

"BofA's Lewis ousted as board chairman, stays as CEO"

By Jonathan Stempel

29 APRIL 2009

CHARLOTTE, North Carolina (Reuters) – Bank of America Corp shareholders voted to oust Chief Executive Kenneth Lewis as chairman of the board on Wednesday after months of mounting criticism of his stewardship of the largest U.S. bank.

The bank's board "unanimously" expressed support for Lewis to stay in the CEO post despite the fact that shareholders "narrowly" approved a proposal to require an independent chairman.

Lewis, who will remain chief executive, will be replaced in the chairman post by Walter Massey, a director of the bank's board since 1998 and also a director of McDonald's Corp.

"We knew that it was going to be close, but this is an unambiguous vote of no confidence," said Campbell Harvey, professor of finance at Duke University.

"Whether he chooses to remain as CEO or not, the dominant influence that he had at Bank of America is now a thing of the past," Harvey said.

The proposal to name an independent chairman was one of eight shareholder proposals that went to the vote at the four-hour annual meeting, held in uptown Charlotte.

A similar proposal won 36 percent support last year, the bank said.

Many corporate governance experts favor splitting the posts of chairman and CEO.

Citigroup Inc and Wells Fargo & Co are among banks that have divided the roles.

Last year, however, such a split was a precursor to the ouster of the chief executives of two large banks -- Ken Thompson at Wachovia Corp and Kerry Killinger at Washington Mutual Inc.

Wachovia was later bought by Wells Fargo, while Washington Mutual failed.

"It's kind of the first step toward the end for Lewis," said Ralph Cole, portfolio manager, at Ferguson Wellman Capital Management in Portland, Oregon.

"It shows there's at least some constituency that's not happy with his performance."

"I just don't think he's going to last," Cole said.

SHAREHOLDER FRUSTRATION

All 18 directors were elected to the board by "comfortable margins," the bank said in a statement, although several major shareholder groups had also opposed the re-election of lead director O. Temple Sloan to the board.

About 2,000 people attended the annual meeting, more than triple the year-earlier number, reflecting how the bank's shareholders are torn over the man responsible for much of Bank of America's growth, as well as its current troubles.

The 62-year-old Lewis listened to dozens of attacks from shareholders over his leadership, and in particular the bank's controversial purchase of Merrill Lynch & Co, but also got substantial praise.

He fielded many complaints over the bank's failure to quickly disclose huge losses that Merrill was amassing, as it was paying out billions of dollars of bonuses to employees.

Bank of America's shares have fallen by about three-fourths since the merger was announced in September.

Judy Koenick, who said she lost $27,000 on the bank's stock -- and wore a shirt saying "Fire them all!!! Kenneth Lewis, & the board of directors, make a clean sweep" -- told Lewis that he and his board should have stood up to any government pressure to buy Merrill, even if it cost them their jobs.

"I don't understand how a code of ethics allows you to say, 'My job is more important,'" she said.

"You knew what was going on with Merrill Lynch, you kept it from us."

"You're still keeping it from us."

Lewis stood patiently behind a podium on a stage for much of the meeting, often twiddling his thumbs or biting his lip as shareholders vented their frustration.

Others were more supportive.

A 92-year-old man who said he owned a half million shares, said that in buying Merrill and the troubled mortgage lender Countrywide Financial Corp, Lewis "believed he was doing something good for America."

The man added: "If we don't have Ken, who do we have?"

LEWIS DEFENDS MERRILL PURCHASE

In a speech, Lewis defended buying Merrill for $29.1 billion of common and preferred stock, saying that it was "good value" and that abandoning the deal would have caused "serious harm" to Bank of America and other banks.

He also said he saw no need for Bank of America to make further acquisitions.

Bank of America needed a $20 billion federal bailout to absorb Merrill.

Lewis has indicated that regulators pushed him to keep quiet about Merrill's losses and not to back out of the merger.

He told shareholders that "as a legal matter, there was no duty" to disclose the bank's talks with the government.

"They should have disclosed it," said Ed Morais, a financial adviser and shareholder from Charlotte attending his first annual meeting.

"It seems like he chose to put Merrill Lynch shareholders ahead of Bank of America shareholders."

He spoke before the meeting.

Citing shareholder lawsuits, Lewis declined to comment on thornier issues surrounding the purchase, which is the subject of investigations by members of the U.S. Congress as well as regulators including the U.S. Securities and Exchange Commission and New York Attorney General Andrew Cuomo.

Bank of America has received a total of $45 billion in taxpayer funds and may need more after results of government "stress tests" are released, probably next week.

The tests gauge banks' ability to weather a deep recession.

Lewis declined to discuss details of talks with regulators about the tests, including whether the bank might need to issue more common stock to bolster capital.

SEVERAL BIG MERGERS

Since becoming chief executive in 2001, Lewis has spent well over $100 billion on big acquisitions including Merrill, FleetBoston Financial Corp, credit card issuer MBNA Corp, and, last July, mortgage lender Countrywide Financial Corp.

Critics say Lewis often appears interested in making Bank of America bigger rather than better.

But Lewis said the board's decision to buy Merrill "was not about a selfish desire to keep our jobs."

"I can state without reservation that these acquisitions are not mistakes to be regretted," he said.

Shares of Bank of America rose 53 cents, or 6.5 percent to close at $8.68 on the New York Stock Exchange.

(Reporting by Jonathan Stempel; additional reporting by Elinor Comlay and Dan Wilchins; editing by John Wallace and Gerald E. McCormick)

I've got him down as a U.S. Congressman, TROU, according to my memo which I just checked ...

Is that incorrect?

If she wasn't a woman, TROU, do you think she would be named NANCY?

I think the name NANCY is the real give-away there, alright, that we are talking about a woman, and not a man ...

And so ...

Read the addendum under personal smears - implied. You know like "Liberal". "Massachusetts," "Eastern Elite," "Homo," "Love affairs," "imply wrongdoing by just being, etc..." All this stuff is important Livyjr especially when you are trying to cover up the facts that the Dems were NOT IN CHARGE WHEN ALL THIS WENT DOWN. THAT THESE ARE ALL REPUBLICAN IDEAS!


That sort of thing...

The republicans are caling Barnabus Frank a HOMO?

I guess that I did not know that .....

And I thought that the dude came out some time ago and said that he was gay ....

So what advantage do the republicans then get out of calling him a HOMO?

What am I missing here?

And so ....

Check the memo under "Nancy": Livy.

San Francisco "values"... get it?

"Her name was Magill, though she called herself Lill, but everyone knew her as "Nancy"..."

You really need to check the AEI memos more closely before you broadcast it. Nuance is important. Do you know how much money the beleaguered Robber Barons you are trying to give cover to spent on the research for these emergency escape memos?

OOdles and OOdles of money Livyjr! More than you or I make in a lifetime! And here you are ranting against people who are to my knowledge (while not perfect) at least trying to be dedicated public servants. And yet you are not getting the AEI "nuances" quite right. The anger is there and that's "good" they would say, but you gotta stick the other stuff in there or people might say,

"Eh? Were they in charge when we was bein' robbed? Wasn't it the Private Sector that was sellin' these combined derivative swap securities during the time of the Repubs in Congress? Wasn't the SEC under Bush? Where's all this stuff about Pelosi and Frank coming from eh?"

"We" wouldn't want that Livyjr. So get the "underlying" smears right when you accuse... otherwise....

Hmmmmmmmm ....

It seems that maybe you know a lot more about NANCY, or "Lill", than I do ....

And I lived in San Fransisco for a bit, TROU ....

Loved it out there, to be truthful ....

A great city to walk around in ....

Not at all like LA or NYC ....

If I was able, I would be living out there now, but the cost of living out there was jacked way up higher than I can afford by SPECULATORS and REAL ESTATE OPERATORS like NANCY hubby Paul Pelosi ....

Ah, say, TROU ....

Well, hey ....

No, that is really between them, of course .....

You know, this bid-ness with NANCY calling herself "Lill" ....

It sounds to me like you have an interesting book-in-the-making on your hands out there, TROU ....

A real behind-the-scenes look into the life of NANCY ...

Who is considered by many to be THE MOTHER OF AMERICA ....

And so ...

Which "other stuff" are you talking about, TROU?

It sounds like you are a lot closer and more informed as to what is going on down there in Washington with NANCY than I am .....

And so ...

GIVE COVER TO?

Not hardly, TROU ....

I'm trying to pull the covers off ...

That is why I downloaded NANCY's own FINANCIAL DISCLOSURE FORMS ...

So that I can get the facts directly from the source ....

Rather than from some democrat or republican SHILLS ....

And so ...

And this is just so TOTALLY RETRO, TROU, so very 1950's for the republicans to be calling Barnabus Frank a "homo" in this day and age ....

No wonder they are anachronisms ....

They can't get out of the past ....

So good riddance to them in the present and the future ....

And so ...

"Defendant in reinsurance fraud sentenced - Ex-General Re senior vice president sentenced to a year in prison for accounting fraud"

By DAVE COLLINS, Associated Press

Last updated: 2:25 p.m., Thursday, April 30, 2009

HARTFORD, Conn. -- A former executive of Connecticut-based General Re Corp. was sentenced Thursday to a year and a day in prison for his role in an accounting scandal that authorities say cost shareholders of American International Group Inc. more than $500 million.

Robert Graham, 61, of Westport, will also have to serve two years supervised release after the prison time and pay a $100,000 fine.

He had faced up to life in prison and a fine of up to $46 million.

Graham, who was senior vice president and assistant general counsel at Stamford-based General Re from 1986 to 2005, will remain free on bond pending his appeal of his convictions.

His lawyer, Alan Vinegrad, had sought a period of home confinement and community service.

"I realize there are no do-overs in life," Graham told U.S. District Judge Christopher Droney in Hartford.

"Nothing I can say or do now can change what has happened or its impact on the lives of others or on me."

"Your honor, I regret that more than words can adequately express."

Graham, one of several former executives charged in the case, said he was very proud of having developed a reputation for honesty and integrity during his three decades as an attorney.

"That's all gone now," he said.

"Instead of my career and reputation as a lawyer serving as a good example to others, as a disgraced and disbarred lawyer they will now serve only as a cautionary tale."

Federal prosecutors say New York-based AIG paid Stamford-based Gen Re in a secret deal to take out reinsurance policies with AIG in 2000 and 2001.

They say the scheme propped up AIG's stock prices and inflated reserves by $500 million with the goal of quelling criticism by analysts and easing concerns by investors.

Reinsurance policies are purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.

Droney said Graham played an important role in the fraud, because he drafted bogus legal documents designed to hide the wrongdoing from investors and regulators.

He said a factor in the sentence was deterring others from committing corporate fraud.

"He didn't want others to connect the dots," the judge said.

"This is hardly the kind of ethics or conduct lawyers should follow."

Droney also took issue with Graham's claim that he only spent a few hours working on the deal.

He said Graham's involvement spanned several months.

Graham's wife, Evelyn, and three friends also testified Thursday, saying his convictions were the only departure from a life of honorable work, community service and helping those in need.

Dozens of other supporters wrote letters to the judge.

About 30 people attended the sentencing hearing.

Droney noted there was no link between the eight-year-old deal and AIG's recent financial troubles that sparked a federal financial-rescue package.

Graham was the last of five defendants to be sentenced after being convicted last year of conspiracy, securities fraud, making false statements to the Securities and Exchange Commission and mail fraud following a five-week trial.

Former Gen Re Chief Executive Ronald Ferguson was sentenced in December to two years in prison and fined $200,000; former Gen Re Chief Financial Officer Elizabeth Monrad was sentenced to 18 months in prison and fined $250,000; former Gen Re senior vice president Christopher Garand was sentenced to a year and a day in prison and fined $150,000; and former AIG vice president Christian Milton was sentenced to four years in prison and fined $200,000.

General Re is part of Berkshire Hathaway Inc., which is led by billionaire investor Warren Buffett of Omaha, Neb.

"Goldman director Friedman defends role at NY Fed - Goldman Sachs director Friedman defends role at New York Fed at company's annual meeting"

Associated Press

Last updated: 11:35 a.m., Friday, May 8, 2009

NEW YORK -- Goldman Sachs director Stephen Friedman, who resigned Thursday as chairman of the Federal Reserve Bank of New York's board, defended his conduct Friday in serving in both posts.

"I followed the rules as I always have," he said at Goldman Sachs' annual meeting Friday.

Friedman was the subject of a Wall Street Journal story that raised questions about his ties to Goldman.

Goldman received quick Fed approval late last year to become a bank holding company.

During that time Friedman sat on Goldman's board and had a large holding in the company, a violation of Fed policy, the Journal reported.

The New York Fed's general counsel Thomas Baxter says Friedman's purchases of Goldman stock didn't violate the Fed's rules.

"Bailout redux: Repaid money could go back to banks - Revolving bailout: Repaid money goes back into TARP _ and then back out again"

By STEVENSON JACOBS, Associated Press

Last updated: 5:35 p.m., Wednesday, May 13, 2009

NEW YORK -- After acing their "stress tests," some big banks are rushing to raise capital and return billions in federal bailout money.

But don't expect it to replenish government coffers.

Instead, the money is being pumped back into the bailout fund and recycled back out to other wobbly banks and other desperate companies, angering critics who say the $700 billion program was never meant to be a revolving door.

The government has the power to recycle money from the Troubled Asset Relief Program until late 2010, two years after the bailout fund was created.

After that, any money left over would go back to the government.

Critics worry that by then, there won't be anything left.

The broad authority for the Treasury, tucked into a two-paragraph insert in the hastily written TARP legislation last fall, means it can continually tap bailout money as it's repaid without going back to Congress each time for approval.

"The premise of the whole bailout was that taxpayers would be able to recoup the money," said Steve Ellis, vice president of Taxpayers for Common Sense in Washington.

"That's how it was sold."

"It wasn't supposed to be some revolving fund."

The administration first indicated that the repaid money would be recycled earlier this month, when regulators announced results of the tests they conducted on the nation's 19 largest banks.

On Wednesday, Treasury Secretary Timothy Geithner specifically said some of the recycled bailout cash will go to community banks.

But it's not clear how many banks even want TARP money.

Some have canceled plans to take bailout funds or are considering doing so.

They worry the money could give the government too much control over their operations.

"Our interest in TARP money has diminished by the month since we applied," said William Dunkelberg, chairman of Liberty Bell Bank in Cherry Hill, N.J., which has preliminary approval for $3.6 million from TARP but hasn't decided if it will take it.

Congress created the $700 billion bailout plan in October as the financial crisis threatened to topple the economy.

Six months later, the chaos in financial markets has at least temporarily subsided, even if lending is tight.

On Monday, four banks -- U.S. Bancorp, Capital One Financial Corp., BB&T and Bank of New York Mellon Corp. -- said they were raising a total of $8.3 billion to pay back the bailout fund.

They are among nine big banks that last week were judged by government stress tests to have enough capital in reserve to withstand an even worse recession.

Ten others were ordered to raise additional money.

Goldman Sachs and Morgan Stanley were also judged to have enough capital and are expected to get approval to repay TARP funds soon.

At least four of the 10 banks found to need more capital -- Wells Fargo, Bank of America, Citigroup and Morgan Stanley -- have said they will sell or convert stock to bridge the gap.

Some of them may still need more cash from the bailout fund.

But critics say recycling bailout money puts taxpayers on the hook even more if weaker recipients can't repay, and plans to send paid-back TARP money out again have angered some in Congress.

"If the Treasury secretary wants more money, he should come and ask Congress for it," said Rep. Jeb Hensarling of Texas, one of two Republicans on the five-member Congressional Oversight Panel.

"The taxpayers would like their money back."

"They don't want it to go right back out the door."

Banks that want to pay back TARP money have to show they are healthy enough to operate without new government guarantees on debt.

Goldman Sachs and Morgan Stanley, both chafing under government-imposed restrictions on executive pay for bailout recipients, say they want to repay TARP as soon as possible.

To date, Treasury has deployed roughly $200 billion in bailout cash to 579 banks.

Citigroup and Bank of America have received an additional $52.5 billion in government capital and guarantees.

But TARP money has gone elsewhere, too: Insurer American International Group and troubled automakers have been helped.

Bailout money has also been committed to make housing more affordable, to spur private lending and to help private investors buy toxic assets from banks.

"We were supposed to be buying things of value," said Sen. Bob Corker, R-Tenn.

"AIG was a departure, and moving into the automotive world was totally a departure."

The Treasury estimates about $110 billion is left of the original $700 billion.

Speaking to lawmakers last week, Federal Reserve Chairman Ben Bernanke said he thinks the government will recoup most if not all of the $700 billion.

Many experts say the government may even make money on the money it plowed into banks, with returns coming from dividends and stock.

In the first quarter, the government collected $2.5 billion in dividends on bank shares it bought under TARP.

Unlike repaid TARP money, dividend payments from banks go straight to the government.

"I think we all assume that some of these banks won't pay us back, so there will be some actual losses," said Douglas J. Elliott, a former investment banker and current fellow at the Brookings Institution in Washington.

"But it's entirely possible that those losses will be made back."

Others aren't so optimistic.

Ethisphere, a business ethics think tank, estimates that unrecognized losses at Citigroup alone will ultimately cost taxpayers $64.7 billion.

And then there's the $100 billion in TARP money used to bail out AIG and automakers.

Many experts question whether taxpayers will ever see that money again.

They say government-controlled AIG assets will probably fetch only pennies on the dollar.

And they're pessimistic about that Chrysler, which is reorganizing in bankruptcy court, and General Motors, which is struggling to stay out of Chapter 11, will ever pay back their shares of TARP.

------

AP Economics Writer Christopher S. Rugaber contributed from Washington.

"Documents: Paulson forced 9 bank CEOs into bailout - Paulson told 9 bank CEOs they were required to take TARP money, government documents confirm"

By SARA LEPRO, Associated Press

Last updated: 3:15 p.m., Thursday, May 14, 2009

NEW YORK -- The chief executives of the country's nine largest banks had no choice but to accept capital infusions from the Treasury Department in October, government documents released Wednesday have confirmed.

Obtained and released by Judicial Watch, a nonpartisan educational foundation, the documents revealed "talking points" used by former Treasury Secretary Henry Paulson during the October 13 meeting between federal officials and the executives that stressed the investments would be required "in any circumstance," whether the banks found them appealing or not.

Paulson also told the bankers it would not be prudent to opt out of the program because doing so "would leave you vulnerable and exposed."

It's no secret that some of the banks had to be pressured to participate in the program, with several bank CEOs saying they had been strongly encouraged to take the funds.

But the documents are the first proof of the government's insistence.

"These documents show our government exercising unrestrained power over the private sector," said Judicial Watch President Tom Fitton in a statement.

Paulson's spokeswoman Michele Davis, who was a top aide when Paulson was at Treasury, on Thursday said, "Secretary Paulson was not one to read talking points at meetings."

Treasury Secretary Timothy Geithner's office did not respond to requests for comment.

The outcome of that fateful meeting -- which resulted in the government taking direct stakes in the banks through $125 billion in preferred stock purchases -- marked a shift in the government's strategy to fixing the financial system.

The Treasury had first decided to use a chunk of the $700 billion financial bailout package to pay for taking partial ownership stakes in banks, rather than using the money to buy rotten debts from financial institutions.

The idea was that the investments would instill confidence in the system and get banks to lend again following the freeze of the credit markets.

The meeting was hosted by Paulson, Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp. Chairman Sheila Bair and current Treasury chief Timothy Geithner, who was then president of the New York Fed.

The banks that were initially required to accept the funds were Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., State Street Corp., Bank of New York Mellon and Bank of America Corp., including the soon-to-be-acquired Merrill Lynch.

Paulson wanted healthy institutions that did not necessarily need capital from the government to participate in the program first to remove any stigma that might be associated with a bailout.

He told reporters during a news conference that the intervention was "what we must do to restore confidence in our financial system."

The Treasury has since invested a total of $199.1 billion in more than 550 of the nation's banks, according to government data.

Of that amount, $1.16 billion has been returned by 12 institutions.

Several other recipients of the funds, including JPMorgan and American Express Co., have stressed their desire to return the money as soon as possible.

The funds have become burdensome for banks due to the increased government scrutiny and limits on compensation that are contingent with the investment.

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AP Economics Writer Martin Crutsinger contributed to this report.

"Insurers get preliminary OK for Treasury funds - Half-dozen life insurers get preliminary OK for federal funds to shore up capital"

By JENNIFER MALLOY ZONNAS, Associated Press

Last updated: 1:15 p.m., Friday, May 15, 2009

LOS ANGELES -- The federal government has agreed to extend billions in bailout funds to six major life insurers, helping them shore up their capital positions in the wake of major investment losses.

The Hartford Financial Services Group Inc. said Thursday that it had been notified by the Treasury Department that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP.

Lincoln National Corp., which goes by the name Lincoln Financial Group, said it has been initially cleared for a $2.5 billion injection from TARP's Capital Purchase Program.

Prudential Financial Inc. of Newark, N.J., said it received approval for an undisclosed amount of funds and that it is currently evaluating all options available to the company.

Allstate Corp. of Northbrook, Ill., Minneapolis-based Ameriprise Financial Inc., and Principal Financial Group Inc. of Des Moines, Iowa., also are among insurers receiving preliminary investment approval, Treasury spokesman Andrew Williams confirmed.

He declined to disclose the amount of investment each company will receive.

The total capital injection into the six companies will be less than $22 billion, The Wall Street Journal reported, citing a person familiar with the situation.

Despite receiving approval, Ameriprise has already turned down the government's offer, saying it has sufficient capital and that its access to potential funding sources is more than adequate.

Shares of the insurers were mixed at midday Friday.

Shares of Connecticut-based Hartford Financial rose 16 cents to $14.91, while Lincoln National gained 6 cents to $16.30, Ameriprise added 3 cents to $25.09 and Principal Financial rose 22 cents to $19.08.

But shares of Prudential fell $1.18, or 3 percent, to $38.19 and Allstate lost 74 cents, or 2.9 percent, to $24.51.

The $700 billion TARP bailout fund, approved by Congress last year, was originally intended to purchase toxic loans on the books of banks that were inhibiting their ability to make loans.

But the fund quickly morphed into a capital backstop fund for banks and was also used by the Treasury Department to make loans to General Motors Corp., Chrysler and insurance giant American International Group Inc.

Life insurers also requested government aid, worried that their balance sheets had became clogged by illiquid assets and escalating liabilities to policy holders who bought in to this decade's explosion in the variable annuities market.

Life insurers own 18 percent of all corporate bonds, so aiding them is consistent with the bailout program's goal of unclogging credit markets.

Insurers also have seen their investment portfolios slammed by declines in stocks, real estate and other financial assets in the last two years.

Analysts have warned that some insurers risked falling below necessary capital levels, which is essential to avoiding costly downgrades from ratings agencies.

Insurance companies won backing from the Bush administration last year to be considered for the government's TARP program because some of the companies either owned savings and loans or acquired them to be considered for the bailout program, or were already classified as bank holding companies.

The Hartford and Radnor, Pa.-based Lincoln National, two of the nation's largest life insurers, and several others applied to become thrift holding companies last fall.

Regulators approved applications earlier this year from those two firms.

Hartford said in January that it expected to be eligible for between $1.1 billion and $3.4 billion in bailout money.

After a company receives preliminary approval for support from the TARP program, it can take several weeks for the final paperwork to be approved and for the loans to be disbursed.

"These funds would further fortify our capital resources and provide us with additional financial flexibility during one of the most volatile market climates in our nation's history," Ramani Ayer, chairman and chief executive of The Hartford, said in a statement.

"Access to the Treasury's Capital Purchase Program is a means to further enhance the company's financial flexibility and capital in what has continued to be an unprecedented economic environment," said Dennis R. Glass, president and chief executive of Lincoln Financial.

Spokespeople for other insurers receiving preliminary investment approval weren't immediately available for comment.

The Financial Services Roundtable, a major industry lobbying group, said in a statement late Thursday that the administration had made the correct decision in expanding the bailout program.

"The TARP program is working and it should be expanded to include as many facets of the financial services industry as possible."

"By including life insurers in TARP, it helps ensure the recovery effort is broad and covers all aspects of the economy," said Steve Bartlett, president of the group.

"By extending funds to certain insurers, Treasury is taking the right step toward helping restore lending and liquidity to the marketplace," said Frank Keating, President and CEO of the American Council of Life Insurers.

Not all insurers sought U.S. aid, however.

MetLife Inc. said last month it would not participate in the Treasury Department's capital purchase program.

The New York-based insurer issued the statement in response to widespread speculation that life insurers would seek a federal bailout.

MetLife, which launched its federally chartered bank holding company, MetLife Bank NA, in 2001, said then that it had about $5 billion in excess capital and a strong balance sheet.

The company also noted that it had already taken actions to reinforce its financial position, including a $2.3 billion stock offering in October and the sale of over $1 billion in debt earlier this year.

Meanwhile, rival insurer Genworth Financial Inc. saw its bid to qualify for the $700 billion program expire without Treasury approval last month.

That failure cost the insurer its planned purchase of Minnesota-based InterBank, denying Genworth much needed capital.

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Associated Press writers Martin Crutsinger in Washington, D.C. and Sara Lepro in New York, contributed to this report.

THE FINAGLE CONTINUES ....

"Treasury IG: 'Inappropriate' backdating at thrifts - Treasury IG: Agency authorized "inappropriate" backdating of cash injections at 2 thrifts"

By MARCY GORDON, Associated Press

Last updated: 3:46 p.m., Thursday, May 21, 2009

WASHINGTON -- The Treasury Department's watchdog has uncovered improper backdating of cash infusions at six thrifts including IndyMac, in an investigation that already has prompted the removal of the federal thrift agency's acting director.

Federal regulators were aware of the backdating at two of the thrifts, and directed or authorized those institutions to do it, the Treasury's inspector general said in a report Thursday.

Pushing back the dates of the infusions can allow banks to meet quarterly government requirements for capital reserves.

The $18 million backdated capital injection by its parent to IndyMac Bancorp Inc. -- a California-based savings and loan that failed in July and cost the federal deposit insurance fund nearly $9 billion -- came to light in December.

Treasury inspector general Eric Thorson had said the regulators' action in approving the move in IndyMac's case wasn't an isolated incident for the department's Office of Thrift Supervision -- a disclosure that raised concerns about the agency's role as an overseer.

Thorson's new report detailed similar instances at five other thrifts, which were not named.

One of them is in the West, three are in the Southeast and one is in the Northeast.

The backdating of capital injections in 2007 and 2008 was "inappropriate" for all six thrifts, the Treasury inspectors found.

"We consider these matters very serious and find it alarming that such high-level (Office of Thrift Supervision) officials were not only aware of the backdating at two thrifts, but either directed or authorized the thrifts to backdate the capital contribution," the report said.

"The accounting treatment is not in accordance with generally accepted accounting principles and allows for misleading financial reporting."

Thrifts differ from banks in that, by law, they must have at least 65 percent of their lending in mortgages and other consumer loans -- making them particularly vulnerable to the housing downturn.

In the case of IndyMac, the backdating to March 31, 2008, of the capital injection was done in May, allowing the bank to meet first-quarter government requirements for reserves held against possible losses.

In another case, the agency objected to backdating the injection and told the thrift's management not to, but the company did it anyway.

The agency allowed it to remain, the report said.

In its response to the inspector general's report, the OTS said it has taken action to ensure that its staff fully understands the accounting requirements for capital contributions to banks from their parent companies.

"We began addressing these issues in December and we have taken the necessary actions to remedy the situation," agency spokesman William Ruberry said Thursday.

Scott Polakoff, who was OTS acting director, was placed on leave in March pending the Treasury's investigation into the regulators' actions.

Polakoff, who was the agency's chief operating officer, had held the acting-director position only since February following the resignation of Director John Reich.

John Bowman was named to replace Polakoff.

Following the disclosure late last year of the IndyMac backdating, Reich removed Darrel Dochow, the OTS official in charge of the Western region, from that position.