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...thus explains the role of Robert Strong in the Spitzer case, the Rovian dirty-tricks are starting to come out now that the media is busy attacking free speech...
http://www.gregpalast.com/elliot-spi...led/#more-1979
Eliot’s Mess
Published March 14th, 2008
The $200 billion bail-out for predator banks and Spitzer charges are intimately linked
By Greg Palast
Reporting for Air America Radio’s Clout
March 14th, 2008
While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.
Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.
This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.
Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.
Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.
How? Follow the money.
The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.
Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and its variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chunk of these ‘sub-prime.’
Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.
Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.
‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.
But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty – it was OK now to steer’m, fake’m, charge’m and take’m.
But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.
Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.
Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.
Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”
What that means is that they took a bunch of junk mortgages, like the Grinning’s, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).
When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.
But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.
Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.
The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind.
Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.
And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.
Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” - made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.
It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:
“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”
Bush, Spitzer said right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.
Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”
But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.
A note on “Prosecutorial Indiscretion.”
Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”
Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”
Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC pros utes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.
Or maybe we should say, ‘indiscretion.’
...thus explains the role of Robert Strong in the Spitzer case, the Rovian dirty-tricks are starting to come out now that the media is busy attacking free speech...
Oped NewsThe case against Eliot Spitzer did not start with the report of a crime. Rather it started with a decision to look into Spitzer’s financial dealings to see if any dirt could be spotted and then developed into something consequential. It was not the amount of money being transferred that triggered interest. What triggered not just interest but action was the person initiating the transfers, for he was a powerful Democratic governor who just might be, by this means, removed from office...Several reports about this case have suggested that it is somehow routine for prosecutors to go through the financial records of public officials to look for evidence of corruption. But in the absence of specific grounds justifying the investigation (for instance, an informant complaining about a bribe), prosecutors have no such authority. Investigators in this case appear to have been investigating Spitzer in the hopes of finding something compromising. Nailing Spitzer had become a politically-based priority...The feds had built their case against the pros ution ring and were ready to make arrests, but it seems they held back in hopes they could get enough incriminating evidence to maximally slam Spitzer. They could have gone with the announcement about the pros ution ring back in January. But they didn’t. They waited until they could get permission from Attorney General Mukasey to tap Spitzer’s phone calls – they got that permission that same month – and then proceeded to get enough on Spitzer to remove him from office... However, in the process of the investigation, some basic prosecutorial rules were violated:
The feds prepared pleadings which were filled with salacious detail that served no purpose other than to assure the eventual public humiliation of Spitzer.
Then they tipped the press to the fact that “Client 9” was Eliot Spitzer. Over the next 48 hours, they filled the press with copious additional details surrounding Spitzer, many of them lurid.
All of this made marvelous copy for the tabloids. But it also violated basic rules of prosecutorial ethics and can only be explained as part of a partisan political endeavor: to take down a prominent political figure of the opposition party.
Most of the foregoing commentary is based on a report by law school professor Scott Horton at http://www.harpers.org/archive/2008/03/hbc-90002624
An IRS office was tipped off by Republican officials at various banks that Spitzer was often depositing a few thousand dollars in different accounts within the space of a day or two. Realizing it just might have a political tiger by the tail, the Republicans at the IRS then contacted the Department of Justice and the FBI. At the Republican-controlled DOJ, the Public Integrity Section quickly launched an investigation. It’s not surprising that they jumped at this possibility of nailing Spitzer since they had already gone after six times more Democratic politicians than Republicans, mostly in conjunction with wiping out the Democrats’ prospects in upcoming elections.
With a little detective work and tapped phone calls, the Republicans at DOJ soon discovered that Spitzer was seeing high-priced call girls. This is a petty misdemeanor in most jurisdictions, but the DOJ went ahead and constructed an elaborate and costly sting operation, for the express purpose of getting the goods on one of the country's most powerful Democratic politicians -- who happened to be committing a petty, if potentially very embarrassing, crime. In the course of the sting, Spitzer made a big mistake: He paid a call girl to travel from New York to Washington. This put him in technical violation of an 85-year-old federal law, the Mann Act, which has a long history of being used for politically motivated prosecutions of the worst sort, such as those directed years ago at the famous Negro boxer Jack Johnson and also Jewish movie legend Charlie Chaplin. Only then was the existence of the investigation leaked to the media.
What we're dealing with here is a classic abuse of the criminal justice system: a plan to use a sting to take down a powerful political enemy. Info source for most of the foregoing: http://seattlepi.nwsource.com/opinion/354729_spitzeronl...
The integrity of our criminal justice system rests on the notion that we investigate crimes, not people. As Robert Jackson, probably the greatest attorney general of the last century, put it:
“If the prosecutor is obliged to choose his cases, it follows that he can choose his defendants. Therein is the most dangerous power of the prosecutor: that he will pick people that he thinks he should get, rather than pick cases that need to be prosecuted. With the law books filled with a great assortment of crimes, a prosecutor stands a fair chance of finding at least a technical violation of some act on the part of almost anyone. In such a case, it is not a question of discovering the commission of a crime and then looking for the man who has committed it, it is a question of picking the man and then searching the law books, or putting investigators to work, to pin some offense on him.”
The way prosecutorial power is wielded separates real democracies from banana republics. Considering that the official account claims this was a "routine" examination of bank records, the level of resources allocated to it, including investigators and prosecutors, was quite lavish. This again suggests a politically motivated prosecution, which usually takes the form of a generous allocation of resources for political targets. Clearly, moving the case against Spitzer had become a politically-based priority. Two more questions should be asked about the prosecution. The first is whether a selective at ude is taken in prosecution -- that is, whether the Justice Department is treating Spitzer in a manner consistent with other (notably Republican) figures caught in similarly compromised positions. The second is how the matter was broken to the press...On each of these points, the information now available raises unsettling issues about the conduct of the Justice Department. Example: A case somewhat similar to that of Spitzer involved a pros ution investigation of the "D.C. Madam." In that case, federal prosecutors had proceeded against the pros ution ring yet showed little interest in the customer list, which included a former high-ranking Bush Administration official (Randall Tobias, director of the U.S. Agency for International Development) and a U.S. Senator (David Vitter, Republican of Louisiana). The prosecutors' conduct in the "D.C. Madam" case was remarkably deferential to the public figures involved. So why the double standard when it’s a Democrat that gets caught in the net?
Spitzer was tied to bush, no doubt.
MAny hookers are tied to bush, have you seen laura lately?
Only dark skinned people were "steered" to sub prime?
Bull .
Several brokers/bankers I talked to tried to steer me the same way. Guess what? I didn't follow! I saw an opportunity to get a 15 @ 5.5 or a 30 @ 6, and I jumped at that. Any intelligent person did - they didn't let themselves get "steered".
So according to this ass-hat, the vast majority of mortgage brokers ONLY steered the high-income minority applicants to sub-prime? Really? That's not credible, or even believable. Did Bush hold a daily round-table with these guys to remind them how the game was played. They all skull and boners? Bull .
The rest or the article sure reads well, but is speculation. Shall we look into Larry Craig's dealings to find out why he might have been targeted? GMAFB. If Bush was as good at conspiracies, and getting his way as ALL of these lefties like to dream about (while calliing him a bumbling idiot at the same time), he would have been crowned king by now, and wouldn't simply be a lame-duck with a sub 30% approval rating living out his final months.
Sub-prime fiasco = irresponsible behavior by both lender and borrower.
$200 Billion loans = NOT public money; simply more money conjured out of nowhere that the fed has been doing for decades.
So the issue here is that people who normally would not have had an opportunity to purchase a home were given that opportunity.
Are there companies that make money off providing credit at higher than average rates to those with lower incomes and sketchy credit histories? Yes.
Has this been happening prior to the Bush administration? Yes.
Partisanship makes one stupid.™
I love this headline. You first read it and think that George W. Bush is involved in the pros ution ring. Then you get further in and find a nice conspiracy that Spitzer was taken down to protect Wall Street.
And you liberals wonder why we have all your phones tapped?
S T R E T C H
Nice reach, gumby.
So Spitzer shouldn't have bought a ho.
That'll be part two. He was hypnotized.
crazy article
A lot of middle class and upper middle class people who converted prime rate loans into ARMs are the next wave to get foreclosed on. The unregulated, "stated income", no-down-payment small-front-load-loan predation by lenders on first-time lower class people at sub-prime rates is only part of the problem.
Last edited by boutons_; 03-21-2008 at 12:47 AM.
Well, if they are so stupid as to have done that, then they deserve to lose their homes. It doesn't hurt the normal day to day economy as it's not because they are losing a job. They can rent, and still buy things.
I have no doubt that Spitzer's fall was a hit ordered by Wall St with full compliance by the politicized DoJ.
"if they are so stupid as to have done that"
There's no "if". There were 100s of 1000s who did it. Stupid taking on debt, but with full predation and compliance by the lenders.
Considering the messes now being revealed about Paterson and McGreevey, I'd say that Northeast politicians are just a bunch of immoral horndogs.
Spitzer for the reading challenged...
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