SEC Lawsuit against Goldman Sachs

April 18, 2010

By Padmini Arhant

The Securities and Exchange Commission filed lawsuit against Goldman Sachs on the toxic derivatives camouflaged with the internationally renowned investment firm, authenticating the risky mortgage securities sold to trusting investors in the domestic and global financial market.

Goldman Sachs is engaged in Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services.

Needless to state that sub-prime mortgage is synonymous to the ‘speed boat’ designed for a fatal crash due to the deliberate sabotage. Sure enough, it had a negative impact on the financial and housing market that contributed to a precipitous economic decline worldwide.

The savvy designers protected their own investment with ‘insurance’ on the ‘abyss’ through yet another global conglomerate ‘AIG,’ technically partners in the ingenious profit oriented craft.

Why?

Because, the insurance companies grill the ‘regular folks’ when applying for any insurance to minimize risk exposure.

Even the trivial finding in the applicant’s background is used as the grounds for rejection or the cause for high premium – e.g. the health insurance industry.

It’s noteworthy that both Goldman Sachs and AIG were swiftly bailed out with taxpayers’ funds on the “Too Big to fail,” concept.

As a result, the fire starters were salvaged by the taxpayers.

The fire sale was organized for the Treasury to buy the damaged goods at the taxpayers’ expense from the banks on the brink of collapse.

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Goldman Sachs reportedly,

Wikipedia.org – Thank you.

“Goldman also received $10 billion preferred stock investment from the U.S. Treasury in October 2008, as part of the Troubled Asset Relief Program (TARP).

In June 2009, Goldman Sachs repaid the U.S. Treasury’s TARP investment, with 23% interest (in the form of $318 million in preferred dividend payments and $1.418 billion in warrant redemptions).

New York Attorney General Andrew Cuomo questioned Goldman’s decision to pay 1556 employees bonuses of at least $1 million after it received TARP funds in 2008.

In December 2009, Goldman announced their top 30 executives will be paid year-end bonuses in restricted stock, with clawback provisions, that must go unsold for five years.”

It’s essential to emphasize that Goldman Sachs is not new to controversy.

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Source: Wikipedia.org – Thank you.

Controversies

In 1986, David Brown was convicted of passing inside information to Ivan Boesky on a takeover deal.
Robert Freeman, who was a senior Partner, who was the Head of Risk Arbitrage, and,

Who was a protégé of Robert Rubin, was also convicted of insider trading, for his own account and for the firm’s account.

On November 11, 2008, the Los Angeles Times reported that Goldman Sachs, which earned $25M from underwriting California bonds, had advised other clients to “short” those bonds.

Shorting is essentially betting that the state will default on the bonds, which serves to drive up the cost of the issue to the state.

During 2008 Goldman Sachs came under criticism for an apparent revolving-door relationship in which its employees and consultants have moved in and out of high level US Government positions, where there may exist the potential for a conflict of interest.

Former Treasury Secretary Hank Paulson was a former CEO of Goldman Sachs.

Additional controversy attended the selection of former Goldman Sachs lobbyist Mark Patterson as chief of staff to Treasury Secretary Geithner, despite President Barack Obama’s campaign promise that he would limit the influence of lobbyists in his administration.

During 2010, Goldman Sachs has been accused for its involvement in the 2010 European sovereign debt crisis.

Goldman Sachs between the years 1998-2009 has been reported to systematically helped the Greek government to mask its national true debt facts.

In September 2009 though, Goldman Sachs among others, created a special Credit Default Swap (CDS) index for the cover of high risk national debt of Greece.[66] This led the interest-rates of Greek national bonds to a very high level, leading the Greek economy very close to bankruptcy in March 2010.”
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Actions in the 2007–2008 subprime mortgage crisis:

Despite the 2007 subprime mortgage crisis, Goldman was able to profit from the collapse in subprime mortgage bonds in the summer of 2007 by selling subprime mortgage-backed securities short.

Two Goldman traders, Michael Swenson and Josh Birnbaum, are credited with bearing responsibility for the firm’s large profits during America’s sub-prime mortgage crisis.

The pair, who are part of Goldman’s structured products group in New York, made a profit of $4 billion by “betting” on a collapse in the sub-prime market, and shorting mortgage-related securities.

By summer of 2007, they persuaded colleagues to see their point of view and talked around skeptical risk management executives.

The firm initially avoided large subprime writedowns, and achieved a net profit due to significant losses on non-prime securitized loans being offset by gains on short mortgage positions.

Its sizable profits made during the initial subprime mortgage crisis led the New York Times to proclaim that Goldman Sachs is without peer in the world of finances.

The firm’s viability was later called into question as the crisis intensified in September 2008.

Allan Sloane of Forbes, a financial writer of reputation, wrote a referenced article on 15 October 2007, at the time the crisis had begun to unravel.

It appeared on CNN’s website: “So let’s reduce this macro story to human scale.

Meet GSAMP Trust 2006-S3, a $494 million drop in the junk-mortgage bucket, part of the more than half-a-trillion dollars of mortgage-backed securities issued last year.

We found this issue by asking mortgage mavens to pick the worst deal they knew of that had been floated by a top-tier firm – and this one’s pretty bad.

“It was sold by Goldman Sachs (Charts, Fortune 500) – GSAMP originally stood for Goldman Sachs Alternative Mortgage Products but now has become a name itself, like AT&T and 3M.

“This issue, which is backed by ultra-risky second-mortgage loans, contains all the elements that facilitated the housing bubble and bust.

It’s got speculators searching for quick gains in hot housing markets;

It’s got loans that seem to have been made with little or no serious analysis by lenders; and finally,

It’s got Wall Street, which churned out mortgage “product” because buyers wanted it.

As they say on the Street, ‘When the ducks quack, feed them.'”

Weeks of chaos that sent Lehman Brothers into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.

According to a 2009 Brand Asset Valuator survey taken of 17,000 people nationwide, the firm’s reputation suffered in 2008 and 2009, and rival Morgan Stanley was respected more than Goldman Sachs, a reversal of the sentiment in 2006.

Goldman refused to comment on the findings.
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2. According to http://www.wsws.org/articles/2008/sep2008/paul-s23.shtml – Thank you.

Published by the International Committee of the Fourth International (ICFI)

Who is Henry Paulson?

By Tom Eley, 23 September 2008

Henry Paulson rose through the ranks of Goldman Sachs, becoming a partner in 1982, co-head of investment banking in 1990, chief operating officer in 1994.

In 1998, he forced out his co-chairman Jon Corzine “in what amounted to a coup,” according to New York Times economics correspondent Floyd Norris, and took over the post of CEO.

Goldman Sachs is perhaps the single best-connected Wall Street firm.

Its executives routinely go in and out of top government posts.

Corzine went on to become US senator from New Jersey and is now the state’s governor.

Corzine’s predecessor, Stephen Friedman, served in the Bush administration as assistant to the president for economic policy and as chairman of the National Economic Council (NEC).

Friedman’s predecessor as Goldman Sachs CEO, Robert Rubin, served as chairman of the NEC and later treasury secretary under Bill Clinton.

Agence France Press, in a 2006 article on Paulson’s appointment,

“Has Goldman Sachs Taken Over the Bush Administration?” noted that, in addition to Paulson,

“[t]he president’s chief of staff, Josh Bolten, and the chairman of the Commodity Futures Trading Commission, Jeffery Reuben, are Goldman alumni.”

Prior to being selected as treasury secretary, Paulson was a major individual campaign contributor to Republican candidates, giving over $336,000 of his own money between 1998 and 2006.

Since taking office, Paulson has overseen the destruction of three of Goldman Sachs’ rivals.

In March, Paulson helped arrange the fire sale of Bear Stearns to JPMorgan Chase.

Then, a little more than a week ago, he allowed Lehman Brothers to collapse,

While simultaneously organizing the absorption of Merrill Lynch by Bank of America.

This left only Goldman Sachs and Morgan Stanley as major investment banks,

Both of which were converted on Sunday into bank holding companies, a move that effectively ended the existence of the investment bank as a distinct economic form.

Paulson bears a considerable amount of personal responsibility for the crisis.

Paulson, according to a celebratory 2006 Business Week article entitled –

“Mr. Risk Goes to Washington,” was “one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits.”

Under Paulson’s watch, that meant “taking on more debt: $100 billion in long-term debt in 2005, compared with about $20 billion in 1999.

It means placing big bets on all sorts of exotic derivatives and other securities.”

According to the International Herald Tribune,

Paulson “was one of the first Wall Street leaders to recognize how drastically investment banks could enhance their profitability by betting with their own capital instead of acting as mere intermediaries.”

Paulson “stubbornly assert[ed] Goldman’s right to invest in, advise on and finance deals, regardless of potential conflicts.”

Paulson then handsomely benefited from the speculative boom.

This wealth was based on financial manipulation and did nothing to create real value in the economy.
On the contrary, the extraordinary enrichment of individuals like Paulson was the corollary to:

The dismantling of the real economy,

The bankrupting of the government and,

The impoverishment of masses the world over.

Paulson was compensated to the tune of $30 million in 2004 and took home $37 million in 2005.

In his career at Goldman Sachs he built up a personal net worth of over $700 million, according to estimates.
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3. By Jackie Calmes – Published: Monday, November 24, 2008 – Thank you.

Obama’s economic team shows influence of Robert Rubin – with a difference

WASHINGTON — It is testament to the star power of former Treasury Secretary Robert Rubin among many Democrats that as Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape.

The president-elect used the announcement Monday that he was appointing two Rubin protégés,

Timothy Geithner as Treasury secretary and Lawrence Summers as senior White House economic adviser,

To underscore his determination to step aggressively into a economic leadership vacuum in Washington while also maintaining continuity with the Bush administration before the transition of power Jan. 20.

Obama is expected to soon announce the appointment of another Rubin protégé, Peter Orszag, as White House budget director.

And even the headhunters for Obama have Rubin ties: Michael Froman, who was Rubin’s chief of staff in the Treasury Department and followed him to Citigroup, and James Rubin, Robert Rubin’s son.

Geithner, Summers and Orszag have all been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation.

The combination was credited with fueling the prosperity of the 1990s.

But times have changed since then.

On Wall Street, Rubin is facing questions about his role as director of Citigroup, given the bank’s current troubles, and during the weekend held several discussions with Treasury Secretary Henry Paulson as a government rescue of Citigroup was organized.”

“What worries me is there is not one person in the senior group who is the outsider to this club.

And that’s particularly ironic, given Barack Obama’s bias toward copying Lincoln’s ‘team of rivals,”‘ said Robert Kuttner, a colleague of Bernstein’s at the liberal Economic Policy Institute who has written a book, “Obama’s Challenge,” on free-spending, pro-regulatory approaches to the economic crisis.

“Where is the diversity of opinion in this economic team?” he said.
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Thank you.

Padmini Arhant

Capitalism alias Communism

September 6, 2009

By Padmini Arhant

Throw a treat to the man’s best friend and he/she will do any tricks for you.

Not quite true, contrarily some canines unlike the ‘few’ in their masters’ species resist being the “Pavlov’s dog.” Besides loyalty, the canines’ discriminative power is unparallel to the particular voices on the airwaves and cable news network ever willing to perform on the note – ‘show me the bait and leave the trashing to…’

Lately, with the relevant media on vacation, the field is wide open and vulnerable for dumping wastes of all kind. As usual, the specific network presenting ideas and style taken right out of their targets’ page yet choosing to remain oblivious to’ plagiarism,’ do not refrain from perennial attack politics.

Recently, there has been deafening noise and fear mongering about the nation becoming ‘Communist’ and claims that certain entities may be out to destroy the sanctity of the sacred ‘Capitalism.’ Further, the network featuring the long confused biracial harmony against the alleged Anti-Profit, Corporate bashing otherwise the ‘indomitable’ alien force is indicative of the desperate times seeking desperate means.

It’s a feast to the eyes when the image on the HD / 3D monitors transcends race but again demoralizing when it happens for the wrong reasons. As though the berating isn’t enough the religion is brought into the conversation as an ally. The emphasis on the United States of America, proclaimed as the exclusively “Judio-Christian” nation presumably conquered by the aliens determined to eliminate the demonstrably competent ‘Capitalism’ and threaten the viability of the robust free market system. Never mind the other religious representations and diversity in the society. They are mere taxpayers, consumers and statistics among the electorates.

It should be obvious by now that the United States is a planet within a planet with the multitude race, religion, non-religion and several other factors from all over the world. The bellicose barrage playing the religious card is nothing but gutter politics.

Whatever works to polarize the democratic secular system used to ignite the sparks regardless of the blazing fire possibly consuming the pyrotechnicians and the entire gamut?

In view of the over pouring incendiary remarks marred with ignorance, it’s essential to demystify the myth dominating the communication mass media, the single most propaganda machine overly misused in the modern age partisanship.

Understanding Communism:

Karl Heinrich Marx, The German political economist, sociologist… perhaps conceptualized a utopian environment against the extreme inequalities at that time. The political theorist’s influence over the exploited working class permeated the western and central Europe, and subsequently the other parts of the world.

Communism emerged from the societal decay with the wealth concentration in the particular segments, i.e. the agricultural landowners and merchants seeking entitlement to national wealth while depriving the remaining population from similar fortunes, and leaving them to compete with one another in the Darwinian ‘survival of the fittest’ world.

What began as the revolutionary movement towards the greater good for all developed into the previously condemned parochial system, as it operated with the power sanctioned to the selective groups in the nation governance that simultaneously set aside the enormous wealth for them in the name of the republic. Communism on the face of it initially portrayed as the well-oiled machine satisfying the wants of all, only to be degenerated in the systemic abuse of power.

Even though ‘Communism’ spread to benefit the ‘Community’ with the objective of creating a classless and stateless society, the end did not justify the means. The classic examples are the former Soviet Union and the present China, Cuba and North Korea.

Again, the interesting twist in the twenty first century is the nostalgia for the former Soviet era among the economically deprived many Russian citizens in the fast-paced ‘ONG’ (Oil and Natural Gas) enriched Russian economy.

In fact, the United States held responsible for the failure of the former Russian leader Mikhail Gorbachev’s ‘Glasnost’ (Government Accountability and Transparency) and ‘Perestroika’ (the political and economic reform). The reason attributed to the Western paranoia to the pervasive ‘Communism’ and the secrecy behind the iron curtains.

The irony in the response to Communism by the United States is the successful dismantling of the former Soviet Union along with the brutal deterrence in Vietnam, Laos and Cambodia, and isolating Cuba and North Korea, while fervently forging alliance with the vastly threatening Communist regime in the Far East – China.

Communism soon became the most dreaded form of authority in the latter half of the twentieth century because of the iron fist rule in the former Soviet Union and across the Soviet bloc, that caught on like the wild fire to the South Asian regions led by China and adapted by Latin America in their rejection of feudalism.

Furthermore, the equality theme dissipated with the ruling Communists’ power absorption and control of the major institutions on the land, specifically the mass media. As a result, the population promised to be free of social and economic barriers subject to severe oppression on all accounts like in the case of contemporary China, Cuba and North Korea.

Perspective on Capitalism:

The widespread ‘Communism’ in the mid twentieth century triggered the wealthy to converge and protect their capital in the ‘Capitalist’ economy more so than ever. Capitalists’ paradoxical dual platform was protectionism while floating free trade practices essentially enabling a monopoly on not only the national but also the global economy. Hence, the free market archaic labels on every consumer product sold in the global market.

In an uncanny resemblance to the ‘Communist’ system the free market has not met the expectations of the people in the society as they are entrenched in consumers and workers exploitation like their counterpart ‘Communism.’ The common tools for both systems are ‘Power’ and ‘Wealth’ for suppression of freedom and choice in the form of civil liberties evidenced in the on-going ‘health care’ battle.

How did the free market infiltrate the national economic and political scene?

The Capitalist agenda thrives in a democratic system with mega investments in the political campaigns. All levels of government i.e. local, state and federal elections are heavily funded by the lobbyists aka the ‘Special Interests’ representing every imaginable industry. Any effort to legislate the ‘public’ financing with a cap on electoral spending demolished prior to the declaration of such process to let the private industry proliferate in the nation governance usually beginning on the campaign trail.

Some poignant moments in recent memory –

The finance sector giants such as ‘Goldman Sachs’, AIG, Citi groups etc smoothly organizing the fire sale of the rivals and massive bailouts for themselves. The oil industry with Exxon Mobil, Chevron Texaco, ConocoPhillips and others possess the political proxies in the House and the Senate rallying for off shore drilling and blocking the ‘Cap and Trade’ energy bill.

Should the ‘health industrial complex’ trail behind in the muscle-flexing match?

Absolutely not. Therefore, the Health Care Industry actively promoting the anti-government slogans through their paid political representatives, so that they can continue the absurd profiteering strategy without the people represented public option in the contentious health care reform.

On a broader perspective, the national defense controlled and managed by the ‘military industrial complex’ behind every military operations ranging from the civil to international wars vehemently opposed to any ‘peaceful’ resolutions to justify the phenomenal defense budget crescendo regardless of the political factions in the White House.

The proof of the pudding is in the decision to proceed with the additional troops deployment in Afghanistan. Despite the colossal failure in the ‘so-called’ war against terror, the pursued military occupation misdirected as ‘nation building.’ Such adamant position is reflective of the Machiavellian policy and ‘hawkish’ representation at crucial levels of government, relevant departments in the administration and the defense hierarchy. Ignoring the human casualties on all sides and squandering the scarce national resources is the motto of the defense program conspicuous in the status quo.

The role of Kellogg Corporation and the internationally defamed ‘Halliburton’ in Iraq and Afghanistan herald the degradation of morality in the lowest order.

Again the private industry prioritizing extravagant profit over people’s lives is synonymous with the military and medical industrial complex, ‘apparently’ engaged in saving and safeguarding lives.

Likewise, in other areas of life sustenance the Nuclear industry in their effort to leave the footprints has the legion in Congress, respective Cabinets and the White House to stampede the renewable energy alternatives in the green technology vogue. In this context, the anti-environment coalition is ever stronger than witnessed before. It’s not uncommon for the opposition to rise against the incumbent power’s any and every policy. However, the vitriolic politics defying common sense and logic in the ‘global warming’ issue is the height of idiosyncrasies that is reprehensible.

How does Capitalism perform in the global economy?

Globalization is nothing but the marginalization of the domestic and foreign workers alike. The two most important wings of the business sector, the workers who are also the consumers are the convenient scapegoats for the free market operators. In order to cope with the vigorous global competition, the corporate downsizing with massive layoffs or outsourcing at a relatively cheaper rate with a disregard for standard labor laws on foreign soil is the preferred path to ‘Nirvana,’ (the eternal bliss), in the capitalist jargon it is the cornucopia of profits.

As for the environmental hazards are concerned, the deadly gas leakage in the devastating Union Carbide disaster in Bhopal, India – killing several thousand residents and abandoning millions suffering from life threatening diseases as well as the oil spilling on the domestic and international shores meticulously evaded or dealt against it through the top-notch legal expertise hired at a premium price.

Global economy is also heavenly for tax evasions with the Corporations reallocating off shore income towards their personal future.

The icing on the cake is the communications mass media – a blaring private and free market owned enterprise to undermine democracy. Issues of national interest and citizens welfare browbeaten to conjure the dazed viewers and readers. At the same time there is responsible journalism visible in the most editorials, columns, articles and television presentations other than the cyberspace to counteract the partisan tidal wave

Lately, the legitimate concerns in the form of opinions, ideas and commentaries on numerous national and international issues either discounted or dismissed as an unqualified intervention in the asserted ‘our highest government ’ matter, striking yet another chord with ‘Communism.’ in the first amendment right.

Aiming at profit is the fundamental cause for any commercial activity. Nevertheless, the methods and strategies to achieve those profits often found unscrupulous in the modern market economy. Wealth acquired at the cost of the citizens’ life and livelihood does not last long, and no sooner than later the proprietary disillusioned on the asset transformed into liability.

The analogy presented, as “One size do not fit all.” It does not apply to those corporations playing by the rules with an utter respect for the democratic political system…stay focused on the business management rather than ‘nation’ control. These Corporations occasionally victimized by the labor Union’s excessive demands viz. higher workers compensation under the guise of ‘labor protection.’ There are also individuals abusing consumer rights in business dealings with contempt for the other party’s status.

The excessive greed for ‘Power’, ‘Profit’ and ‘Popularity’ in the aggressive world economy and political system has eroded the human qualities for care, compassion and courage to uphold justice and fairness in the society.

Concisely, Capitalism is the new era Communism dictating terms and conditions to the market forces and intrusively implementing national policies through political agents on the prolonged or permanent Corporate payroll at the dawn and during the representative’s political career.

The common denomination under both systems is – the powerful oppress the powerless and the victims are none other than the general population in both Capitalism and Communism.

Democracy is meaningful with the government of the people, by the people and for the people.

Thank you.

Padmini Arhant

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Finance Sector and Economic Impact

August 31, 2009

By Padmini Arhant

When the Bush administration officially recognized the economic recession in late December 2007, the malignant cancer in the financial sector was widespread – originating from gross mismanagement, underhand dealings, some in breach of lenient SEC regulations… a scenario analogous to the health abuse by overindulging individuals submitting to a potentially terminal illness.

Upon diagnosis, the prognosis called for a radical treatment to prolong life. Hence, the former administration executed a series of financial bailouts commencing with Bear Stearns, AIG, including major and minor banks bailout to a tune of $700 billion TARP (Toxic Assets Relief Program) fund.

Incidentally, the former Treasury Secretary Henry Paulson bound by vested interest and commitment to his alma mater Goldman Sachs let the comparable investment group Lehman Brothers submerge into insolvency.

Is cherry picking a coincidence or key Treasury representative fulfilling obligations to the dominant force Goldman Sachs in the finance industry?

Please refresh your thoughts after reviewing the blogpost ‘Bailout Debacle’ March 22, 2009 listed under Economy and Business category at www.padminiarhant.com

In this context, the cited article revealing facts behind the bailout is attention worthy.

According to http://www.wsws.org/articles/2008/sep2008/paul-s23.shtml – Thank you.

Published by the International Committee of the Fourth International (ICFI)

Who is Henry Paulson?

By Tom Eley, 23 September 2008

“Henry Paulson rose through the ranks of Goldman Sachs, becoming a partner in 1982, co-head of investment banking in 1990, chief operating officer in 1994. In 1998, he forced out his co-chairman Jon Corzine “in what amounted to a coup,” according to New York Times economics correspondent Floyd Norris, and took over the post of CEO.

Goldman Sachs is perhaps the single best-connected Wall Street firm. Its executives routinely go in and out of top government posts. Corzine went on to become US senator from New Jersey and is now the state’s governor. Corzine’s predecessor, Stephen Friedman, served in the Bush administration as assistant to the president for economic policy and as chairman of the National Economic Council (NEC). Friedman’s predecessor as Goldman Sachs CEO, Robert Rubin, served as chairman of the NEC and later treasury secretary under Bill Clinton.

Since taking office, Paulson has overseen the destruction of three of Goldman Sachs’ rivals.

In March, Paulson helped arrange the fire sale of Bear Stearns to JPMorgan Chase. Then, a little more than a week ago, he allowed Lehman Brothers to collapse, while simultaneously organizing the absorption of Merrill Lynch by Bank of America.

This left only Goldman Sachs and Morgan Stanley as major investment banks, both of which were converted on Sunday into bank holding companies, a move that effectively ended the existence of the investment bank as a distinct economic form.

These bailouts have been designed to prevent a chain reaction collapse of the world economy, but more importantly, they aimed to insulate and even reward the wealthy shareholders, like Paulson, primarily responsible for the financial collapse.

Paulson bears a considerable amount of personal responsibility for the crisis.

Paulson then handsomely benefited from the speculative boom. This wealth was based on financial manipulation and did nothing to create real value in the economy. On the contrary, the extraordinary enrichment of individuals like Paulson was the corollary to the dismantling of the real economy, the bankrupting of the government, and the impoverishment of masses the world over.

Paulson was compensated to the tune of $30 million in 2004 and took home $37 million in 2005. In his career at Goldman Sachs he built up a personal net worth of over $700 million, according to estimates.

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True Perspective: By Padmini Arhant

The entire economic meltdown ceremoniously attributed to the financial sector’s wayward unruly conduct in the absence of limited or no regulation. Typically, it’s a free market voluntarily surrendering to a free fall after skyrocketing profits in the pockets of privileged few in the society.

Who did the private enterprise otherwise the market system’s oligarchs approach for salvation?

It was none other than the taxpayers of the economy represented by the government.

It’s poignant to underscore the convenience for private sectors to seek the taxpayer i.e. government’s assistance when they are drowning and fleetingly dismiss the same government as an incompetent, redundant agency during the buoyancy like in the health care battle.

The day is not far when the health care and insurance industry configured to the obscene profit driven settings mimic their counterpart finance industry imploring the taxpayers/consumers bailout.

When the wealth management industry succumbs to their own greed ladened follies, can the health care and insurance industry sustain the malpractice at the economy’s expense?

If there is any respect for the laws of nature or ethical consideration, the key economic components such as the finance, health industry and others would realize that universally every substance has a limited potential to thrive and exceed performance level at any given time. The mankind periodically experienced catastrophic blows in the form of severe economic recession to ‘Great Depression’ due to the prevailing markets inertia.

Still, the lesson is never learned by the delusional segment forging permanency on this planet; choose to remain confined to the improbable cause in wealth amassment.

Now directing focus on the finance sector, the ‘artful dodger’, a nickname of the Charles Dickens’ melancholy character ‘Oliver Twist’ when turned down for more porridge, despite the courteous magic word ‘please,’ was never discouraged to maneuver the situation in personal favor.

Unlike the character ‘Oliver Twist’ a victim of severe socio-economic disparity…parallel to the modern twenty first century reality, the finance sector is well armed with tactics adherence to the rule of law in appearance but decisively biting the hands that feeds them, i.e. the consumers and taxpayers.

What are the latest strategies by the finance industry to clean up the mess on their balance sheets?

The current trend in the finance sector is adapting to the new age attraction i.e. presentation and mass appeal even if it is lacking in substance. If anything achieved from the domino effects by the financial sector, it is the mastery of unsavory techniques to impress shareholders at the consumers’ peril.

During the bailouts, both the prior and the incumbent administrations were unequivocally guaranteed instant revival of the lending activity, a predominant factor in the liquidity crisis exacerbating the economy until date.

It’s been nearly twelve to eighteen months since the infamous massive bailouts with no relief to the average citizen, retailers or the small businesses, crucial for the economic recovery. The economy deprived of the consumer spending flow because of the financial institutions’ stringent policy to hoard the taxpayers’ funds received in the form of bailouts at zero percent or nominal interest rate. Instead the taxpayer bailout is unabashedly used for extravagant bonuses to the architects of the financial calamity.

Although, the Obama administration recently capped the finance charges and interest rates on credit card borrowings to ease the extraordinary burden on average citizens, the industry leapfrogged Congress with discretionary interest rates not limited to atrocious 29.9% APR and threatening to increase further on default payments.

Another proactive measure by the banks in an effort to window dressing the balance sheet was minimizing risk exposure related to credit card and consumer lending. The industry defiantly targets the vulnerable groups like students, homeowners and the lower to median income consumers with abrupt cancellation of accounts in good standing.

The irony is noteworthy. It’s considered perfectly normal if the finance industry absconded their responsibility to the American taxpayers/creditors not barring any accountability to the oversight committee regarding the bailout investments. However, the then taxpayers/creditors as consumers/borrowers now subject to scrutiny and unprecedented means by the same financial institutions holding the mantle to lending and borrowing.

While the myriad of finance industry borrowed taxpayer funds at zero or negligible interest rate, the sector in return either withholding financing in most cases or lending at an exorbitant rate to the consumers who are also the creditors.

In the housing market, the situation synchronizes with the other lending areas such as credit card, personal loans etc. The reason for the agonizing slump in the real estate across the nation squarely falls back on the commercial banks reluctant to unleash the cash flow to qualified first homebuyers and responsible mortgagees/homeowners unable to purchase or refinance their homes. The stranglehold on consumer borrowing precipitates the foreclosures notwithstanding the vertical decline in home sales and values.

Again, the White House initiatives to restrain foreclosures and assist primary residence owners through TARP fund allocation need evaluation as the financial institutions are focused on ‘business as usual’ and not measuring up to the rigorous standard that exists for average consumers while the bailed out financial industry borrowers exempt from it.

The status quo is inadequate and compromises the high value homes in the government pursuit to rescue the conforming loans, i.e. Fannie Mae and Freddie Mac toxic assets. Fannie Mae and Freddie Mac, is a private company backed by government funds.

Not surprisingly, the illicit practice permeated to the commercial real estate affecting the prospects in that segment.

Home equity, the major and sometimes the only asset for overwhelming majority being inaccessible along with the spiraling health care and insurance costs for families, the overall economic impact is enormous forcing many to bankruptcy accelerated by the escalating unemployment rate.

Did the bailout beneficiaries show any evidence to qualify for funding?

Supposedly not, then why should they be allowed to run the economy into muck and handsomely rewarded with taxpayer bailout for the colossal failure in financial history?

Where are the taxpayer funds invested and why are they not held accountable thus far?
Is the financial market granted constitutional immunity?

And if not,

What is holding the legislators from intervening on behalf of the electorate to probe the public affairs maintained as private matter by the industry?

Meanwhile, the investment group, Goldman Sachs implicated for alleged insider information to high value investors through trade specialists deserve proper investigation and due process. The SEC regulations must apply to all without exception in absolute transparency.

With the holiday season approaching, the consumer spending is vital to expedite the stagnant economic growth. As stated above, the positive development in housing and job market intertwined with the investment pace, only possible through private sector faithful participation in lending and reactivating the economy.

Unless and until the finance sector across the board, the commercial, investment and insurance industries get their act together and relinquish the ‘subprime’ syndrome, the sagging economy will continue and eventually consume the source, the financial groups.

The financial sector is obligatory to the taxpayers as creditors and borrowers particularly with respect to the disproportionate bailouts.

Finally, with no further procrastination on the financial markets audit, it’s imperative for the Congress appointed oversight to obtain legitimate explanation on investments and lending abstinence. Any dissatisfactory response and non-cooperation by the industry must be pursued with mandatory judicial protocol.

Thank you.

Padmini Arhant

Economic Bailouts On An Unprecedented Scale

July 23, 2009

By Padmini Arhant

Presentation of Economic Bailouts on an Unprecedented Scale

From: Stimulus Package Details

Source: http://www.stimuluspackagedetails.com/bailout.html

Mortgage Stimulus Packages

No industry has been helped more by the various economic stimulus packages than the real estate industry.

Add it all up, and $500 billion was committed in 2008 by the Bush Administration, and

The Obama Administration chipped in another $275 billion in early 2009, not to mention the $1 trillion that was designated for buying up toxic assets (which are comprised primarily of sub-prime loans given to suspect borrowers, collateralized by overvalued real estate).

Economic Bailouts On An Unprecedented Scale

Starting in 2008, and extending into 2009, the U.S. Federal Government became involved in a myriad of companies and industries, handing out bailouts at an alarming rate, blurring the lines between capitalism and socialism, free enterprise and government intervention.

Below, in alphabetical order, are the major recipients of economic bailouts.

Automakers

$25 billion in low-interest loans to General Motors, Ford, and Chrysler
$22 billion in low-interest loans to General Motors, Chrysler
$30 billion to help General Motors steer through bankruptcy
Total: $77 billion

AIG – Insurance Company

$60 billion loan – September 2008
$40 billion purchase of preferred shares – September 2008
$25 billion in purchase of toxic assets – October 2008
$25 billion loan (credit limit raised to $85 billion total) – October 2008
$30 billion loan – 2009
Total: 180 billion

Bear Stearns – Investment Bank And Brokerage Firm

$29 billion in guarantees – 2008

Fannie Mae/Freddie Mac – Mortgage Companies

$300 billion – 2008
$200 billion – 2009
Total: $500 billion

G-20 World Leaders Stimulus

$1 Trillion Stimulus Package – G-20 World Leaders Stimulus – April 2009

The leaders of the 20 most powerful countries in the world (representing 85% of global economic production) convened in London and agreed to $1 trillion in economic stimulus funds, as well as tighter global financial regulations.

June 2009 update: According to the Obama Administration, only about 5% of the $787 billion stimulus package passed in February 2009, has been distributed.”

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Bush Stimulus Package

July 23, 2009

By Padmini Arhant

Presentation of Bush Stimulus Package details

From: Stimuls Package details – Thanks

Source: http://www.stimuluspackagedetails.com/bush.html

Bush Stimulus Packages

In 2008, the Bush Administration handed out a slew of economic stimulus packages.

Under President George Bush’s administration, the Federal government gave

$29 billion to bail out Bear Stearns,

$178 billion to American taxpayers in the form of economic stimulus checks,

$300 billion to bail out American homeowners,

$200 billion to bail out Fannie Mae and Freddie Mac,

$150 billion to bailout AIG, and

$700 billion to bail out banks (TARP).

Total Bush Administration Bailout – $1.557 trillion dollars i.e. $1 trillion and $557 billion dollars.

Timelines Of The Bush Economic Stimulus Packages

Following is a timeline of the economic stimulus packages, in chronological order.

March 2008 – $29 Billion Stimulus Package – Wall Street Bailout

The Federal Reserve stepped in to prevent the collapse of Bear Stearns (one of the world’s largest investment banks and brokerage firms) by guaranteeing $29 billion worth of potential losses in its battered portfolio. This provided enough economic stimulus for JP Morgan Chase to take over the beleaguered firm.

May 2008 – $178 Billion Stimulus Package – Average American Bailout

The U.S. Treasury provided an economic stimulus package to American taxpayers in the form of $600 economic stimulus checks for individuals and $1,200 economic stimulus payments for couples.

That cost the government $100 billion, and they threw in another $68 billion in tax breaks for businesses, $8 billion to increase unemployment benefits from 26 weeks to 39 weeks, and a $4 billion economic stimulus package to be doled out to states and local municipalities to buy and rehab foreclosed properties.

July 2008 – $300 Billion Stimulus Package – Homeowners Bailout

The Bush Administration committed $300 billion for 30-year fixed rate mortgages for at-risk borrowers, as well as tax credits for first-time homebuyers, who could be eligible to receive up to a $7,500 tax credit.

September 2008 – $200 Billion Stimulus Package – Fannie Mae and Freddie Mac Bailout

Fannie Mae and Freddie Mac (privately owned mortgage companies that are backed by the federal government) were about to fail, due to declining house prices and rising foreclosures.

The Bush Administration stepped in with a $200 billion economic stimulus package and placed Fannie Mae and Freddie Mac and their $5 trillion in home loans in “temporary conservatorship,” to be supervised by the Federal Housing Finance AgeSeptember 2008 – $50 Billion Stimulus Package To Guarantee Money Market Funds

When the economic crisis reached a crescendo, Americans began to pull their money out of money market funds – historically considered to be the safest investment. To stop the bloodshed, the U.S. Treasury agreed to guarantee up to $50 billion, for up to a year.

September 2008 – $25 Billion Stimulus Package – Automakers Bailout

In an attempt to stave off bankruptcies for the “Big 3 automakers,” the Bush Administration gave General Motors, Ford, and Chrysler $25 billion in low-interest loans.

September – November 2008 – $150 Billion Stimulus Package – AIG Bailout

With the world’s largest insurance company in dire straits and 74 million clients at risk, the American government chipped in and gave AIG (American Insurance Group) $150 billion in a stimulus package that included: loans, purchase of toxic assets, and purchase of preferred shares.

October 2008 – $700 Billion Stimulus Package – Banks Bailout

The Bush Administration, under the umbrella of the U.S. Treasury, committed $700 billion in economic stimulus money under TARP (Troubled Asset Relief Program). By many accounts, if this economic stimulus money hadn’t been injected, credit between banks would have frozen overnight, and not only the American economy, but also the global economy, would have seized up.

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Is The Economic Stimulus Package Working?

“Is the economic stimulus package working” seems to be the question on most people’s minds.

But which economic stimulus package are you talking about?

Bear Sterns was taken over by JP Morgan Chase, so maybe that $29 billion economic stimulus plan worked.

We all got our economic stimulus checks in 2008, but we didn’t necessarily put them back into the economy, so that $178 billion might not have been well-spent.

The $300 billion mortgage stimulus, “Hope For Homeowners,” awarded in July 2008 didn’t work very well either, because few people took an interest in the program. While proponents of this particular economic stimulus package estimated that 400,000 homeowners could be helped over a three-year period, in the first month, only 111 had applied.

The $200 billion economic stimulus handout to Fannie Mae and Freddie Mac, the mortgage giants, stabilized them enough to prevent collapse.

The $50 billion economic stimulus to stabilize money market funds might have averted a disaster.

The $150 billion doled out to AIG, the insurance giant, prevented their closure, but must not have completely solved the problem since AIG came back for $30 billion more less than six months later, even as they were awarding $165 million in bonuses to their top executives.

The $25 billion given to the Big 3 automakers, Chrysler, Ford, and GM, allowed them to live to see another day, but they remain on the brink of disaster.

The $700 billion bank bailout, given in extreme haste in October 2008, might have kept the banks functioning, but no one really knows where that money went or what was done with it, so it’s hard to judge whether TARP is working.

$700 Billion Bush Stimulus

The $700 billion Troubled Asset Relief Program, (TARP), given out by the George Bush Administration in October 2008. No one can seem to track down any details on this. The money was given to banks with the goal that they would lend it to people. They didn’t seem to do that, but no accountability was written into the hastily concocted plan, which seems to have been concocted in a matter of days, in a “cocktail napkin” format.

And that was just the economic stimulus packages of 2008.

Obama Stimulus Packages

July 23, 2009

By Padmini Arhant

Forwarding Bailout Details:

From: Stimulus Package Details

Source: http://www.stimuluspackagedetails.com/obama.html – Thanks.


In 2009, the Obama administration began the year by handing out economic stimulus packages.

In the first 60 days in office, President Barack Obama spearheaded

A $787 billion economic stimulus package based on job creation and tax cuts,

A $275 billion mortgage stimulus program aimed at saving troubled homeowners from foreclosure,

A $30 billion bail out to AIG (which added to the $150 billion the Bush Administration gave the insurance giant in 2008), and

A $1 trillion “toxic asset” buyout program designed to get under-water assets off the balance sheets of America’s banks so that the banks could begin lending again.

At the end of March 2009, the Obama Administration gave automakers General Motors and Chrysler another $22 billion in low-interest loans.

In June, the Obama Administration gave General Motors another $30 billion to help steer it through bankruptcy.

Total Obama Stimulus Package – $2.1 trillion dollars – $2 trillion and $144 billion dollars, of that $1 trillion relates to “toxic asset’ program.

Timelines Of The Obama Economic Stimulus Packages

Following is a timeline of the economic stimulus packages, in chronological order.

February 2009 – $787 Billion Stimulus Package – Average Americans Bailout

The Obama Administration and Congress authorized $787 billion in spending and tax cuts, primarily to create or save an estimated 3.5 million American jobs.

February 2009 – $275 Billion Stimulus Package – Homeowners Bailout

The Obama Administration handed out a $275 billion mortgage stimulus plan, designed to assist more than 9 million American homeowners in refinancing their home loans or averting foreclosure. Of the $275 billion stimulus, $75 billion was allotted for direct spending for keeping people in their homes, and $200 billion came in the form of additional help for Fannie Mae and Freddie Mac.

(See above, in the July 2008 entry, for more information on the first economic stimulus package that was awarded to these mortgage giants.)

March 2009 – $30 Billion Stimulus Package – AIG Bailout

The federal government intervened once again to help insurance giant AIG, this time in the form of a $30 billion loan from TARP funds. (See above in the September-November 2008 entry, for more information on other AIG bailouts.)

March 2009 – $15 Billion Stimulus Package – Small Business Loans

The Obama Administration introduced a $15 billion economic stimulus venture aimed at the small business lending market to get money flowing into small business lines of credit again.

March 2009 – $1 Trillion “Toxic Asset” Program – Banks Bailout

The Obama Administration launched a public-private economic stimulus venture (involving the U.S. Treasury and FDIC) to try to get toxic assets off the balance sheets of banks so that they can return to normal lending practicesMarch 2009.

March 2009 – $22 Billion Stimulus Package – Automakers Bailout

The Obama Administration extended another $22 billion in loans to Chrysler and GM, this time, with strings attached, including the firing of General Motors Chairman Rick Wagoner.

April 2009 – $1 Trillion Stimulus Package – G-20 World Leaders Stimulus

The leaders of the 20 most powerful countries in the world (representing 85% of global economic production) convened in London and agreed to $1 trillion in economic stimulus funds, as well as tighter global financial regulations.

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Economic Stimulus Details:

$787 Billion Obama Stimulus

The $787 billion economic stimulus bill signed into law by President Barack Obama in February 2009 was more detailed, 1,071 pages to be exact. To summarize, here’s where the money’s supposed to go:

$288 billion – tax relief

$144 billion – state and local municipalities*

$111 billion – infrastructure and science

$81 billion – poor and unemployed

$59 billion – health care

$53 billion – education and training

$43 billion – energy

$8 billion – other

$1 Trillion Obama Stimulus

The $1 trillion toxic asset purchase program, announced by U.S. Treasury Secretary Timothy Geitner in March 2009 will be seeded with $75 billion to $100 billion in funds from the TARP program.

Presumably, this government pledge will be enough to attract funds from private investors (hedge funds, endowments, private equity funds, and institutional investors), to the tune of $500 billion to $1 trillion.

The premise is that hearty private investors will buy “toxic assets” from the banks, at a fraction of their book value. The Federal Deposit Insurance Corporation (FDIC) will get in on the deal by guaranteeing debt-financing issued by public-private entities.

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Is The Economic Stimulus Package Working?

As for 2009, it’s too soon to tell whether the $787 billion job creation and tax cut stimulus, the $275 billion mortgage stimulus, and the $1 trillion “toxic assets” purchase programs are working.

Bush Stimulus Package

July 23, 2009

By Padmini Arhant

Presentation of Chronological Stimulus Package Details:

From: Stimulus Package Details

Source: http://www.stimuluspackagedetails.com/bush.html – Thanks.

Bush Stimulus Packages

In 2008, the Bush Administration handed out a slew of economic stimulus packages.

Under President George Bush’s administration, the Federal government gave

$29 billion to bail out Bear Stearns,
$178 billion to American taxpayers in the form of economic stimulus checks,
$300 billion to bail out American homeowners,
$200 billion to bail out Fannie Mae and Freddie Mac,
$150 billion to bailout AIG, and
$700 billion to bail out banks (TARP).

Total Bush Administration Bailout – $1.557 trillion dollars i.e. $1 trillion and $557 billion dollars.

Timelines Of The Bush Economic Stimulus Packages

Following is a timeline of the economic stimulus packages, in chronological order.

March 2008 – $29 Billion Stimulus Package – Wall Street Bailout

The Federal Reserve stepped in to prevent the collapse of Bear Stearns (one of the world’s largest investment banks and brokerage firms) by guaranteeing $29 billion worth of potential losses in its battered portfolio. This provided enough economic stimulus for JP Morgan Chase to take over the beleaguered firm.

May 2008 – $178 Billion Stimulus Package – Average American Bailout

The U.S. Treasury provided an economic stimulus package to American taxpayers in the form of $600 economic stimulus checks for individuals and $1,200 economic stimulus payments for couples. That cost the government $100 billion, and they threw in another $68 billion in tax breaks for businesses, $8 billion to increase unemployment benefits from 26 weeks to 39 weeks, and a $4 billion economic stimulus package to be doled out to states and local municipalities to buy and rehab foreclosed properties.

July 2008 – $300 Billion Stimulus Package – Homeowners Bailout

The Bush Administration committed $300 billion for 30-year fixed rate mortgages for at-risk borrowers, as well as tax credits for first-time homebuyers, who could be eligible to receive up to a $7,500 tax credit.

September 2008 – $200 Billion Stimulus Package – Fannie Mae and Freddie Mac Bailout

Fannie Mae and Freddie Mac (privately owned mortgage companies that are backed by the federal government) were about to fail, due to declining house prices and rising foreclosures. The Bush Administration stepped in with a $200 billion economic stimulus package and placed Fannie Mae and Freddie Mac and their $5 trillion in home loans in “temporary conservatorship,” to be supervised by the Federal Housing Finance Agency.

September 2008 – $50 Billion Stimulus Package To Guarantee Money Market Funds

When the economic crisis reached a crescendo, Americans began to pull their money out of money market funds – historically considered to be the safest investment. To stop the bloodshed, the U.S. Treasury agreed to guarantee up to $50 billion, for up to a year.

September 2008 – $25 Billion Stimulus Package – Automakers Bailout

In an attempt to stave off bankruptcies for the “Big 3 automakers,” the Bush Administration gave General Motors, Ford, and Chrysler $25 billion in low-interest loans.

September – November 2008 – $150 Billion Stimulus Package – AIG Bailout

With the world’s largest insurance company in dire straits and 74 million clients at risk, the American government chipped in and gave AIG (American Insurance Group) $150 billion in a stimulus package that included: loans, purchase of toxic assets, and purchase of preferred shares.

October 2008 – $700 Billion Stimulus Package – Banks Bailout

The Bush Administration, under the umbrella of the U.S. Treasury, committed $700 billion in economic stimulus money under TARP (Troubled Asset Relief Program). By many accounts, if this economic stimulus money hadn’t been injected, credit between banks would have frozen overnight, and not only the American economy, but also the global economy, would have seized up.

————————————————————————————————–
Is The Economic Stimulus Package Working?

“Is the economic stimulus package working” seems to be the question on most people’s minds.

But which economic stimulus package are you talking about?

Bear Sterns was taken over by JP Morgan Chase, so maybe that $29 billion economic stimulus plan worked.

We all got our economic stimulus checks in 2008, but we didn’t necessarily put them back into the economy, so that $178 billion might not have been well-spent.

The $300 billion mortgage stimulus, “Hope For Homeowners,” awarded in July 2008 didn’t work very well either, because few people took an interest in the program. While proponents of this particular economic stimulus package estimated that 400,000 homeowners could be helped over a three-year period, in the first month, only 111 had applied.

The $200 billion economic stimulus handout to Fannie Mae and Freddie Mac, the mortgage giants, stabilized them enough to prevent collapse.

The $50 billion economic stimulus to stabilize money market funds might have averted a disaster.

The $150 billion doled out to AIG, the insurance giant, prevented their closure, but must not have completely solved the problem since AIG came back for $30 billion more less than six months later, even as they were awarding $165 million in bonuses to their top executives.

The $25 billion given to the Big 3 automakers, Chrysler, Ford, and GM, allowed them to live to see another day, but they remain on the brink of disaster.

The $700 billion bank bailout, given in extreme haste in October 2008, might have kept the banks functioning, but no one really knows where that money went or what was done with it, so it’s hard to judge whether TARP is working.

And that was just the economic stimulus packages of 2008.

Bailout Débācle

March 22, 2009

By Padmini Arhant

The past two weeks dominated with AIG and oligarchs debating over the controversial $165 million and now increased to $218 million bonuses to executives instrumental in driving the insurance giant to the brink of collapse along with the financial markets of the world.

As usual, Washington vs. Wall Street dispute contributed to media frenzy and aptly reflected in the roller coaster performance of the stock market. The interesting factor in the blame game is those pointing fingers at others fail to acknowledge that remaining fingers are pointing towards them as they are equal partners in this charade.

By now, well-educated American taxpayers upon the quest to secure their future convinced that both Wall Street and Washington have serious credibility issues in wealth management and nation governance.

The back and forth allegations in the political crossfire reveals the true sense of Washington politics and Wall Street free market systemic corporate management failure. Again, the beneficiaries in this deal are the legislators responsible for the bailout approval and the corporations rewarded with taxpayer’s funds for unprecedented incompetence in modern economic times.

They are the beneficiaries because the legislators secured their emoluments by rushing the operating budget $410 billion omnibus bill ladened with pork projects to the tune of $8 billion to curb ‘government shut down’ rather than passing the required operating budget and isolating the earmarks spending for individual scrutiny through separate legislation.

The Corporate executives in due diligence spared no opportunities to collect remuneration, bonuses retrospectively and in the foreseeable future to maintain their status among the top 10% wealthiest hierarchy.

Let’s not forget in the Darwinian "Survival of the fittest contest" the weak, fragile and frail average taxpayer doesn’t stand a chance against the ferocious Corporate executives (compared to sharks) and Capitol Hill crusaders.

Events unfolding in the entire scenario deserves attention from every citizen involuntarily pledged to carry the burden of national debt currently projected at $9.3 trillion i.e. $1 trillion budget deficits every year for a decade, 2010-2019.

It is worth examining the role of legislators, corporations and lobbyists in securing taxpayer bailouts more prevalent in the past year 2008 and continuation of it in 2009. Prior to the diagnostic procedure, it is essential to shed light on the alliances forged by the key cabinet members and Wall Street merchants.

According to http://www.wsws.org/articles/2008/sep2008/paul-s23.shtml – Thank you.

Published by the International Committee of the Fourth International (ICFI)

Who is Henry Paulson?

By Tom Eley, 23 September 2008

Henry Paulson rose through the ranks of Goldman Sachs, becoming a partner in 1982, co-head of investment banking in 1990, chief operating officer in 1994. In 1998, he forced out his co-chairman Jon Corzine “in what amounted to a coup,” according to New York Times economics correspondent Floyd Norris, and took over the post of CEO.

Goldman Sachs is perhaps the single best-connected Wall Street firm. Its executives routinely go in and out of top government posts. Corzine went on to become US senator from New Jersey and is now the state’s governor. Corzine’s predecessor, Stephen Friedman, served in the Bush administration as assistant to the president for economic policy and as chairman of the National Economic Council (NEC). Friedman’s predecessor as Goldman Sachs CEO, Robert Rubin, served as chairman of the NEC and later treasury secretary under Bill Clinton.

Agence France Press, in a 2006 article on Paulson’s appointment, “Has Goldman Sachs Taken Over the Bush Administration?” noted that, in addition to Paulson, “[t]he president’s chief of staff, Josh Bolten, and the chairman of the Commodity Futures Trading Commission, Jeffery Reuben, are Goldman alumni.”

Prior to being selected as treasury secretary, Paulson was a major individual campaign contributor to Republican candidates, giving over $336,000 of his own money between 1998 and 2006.

Since taking office, Paulson has overseen the destruction of three of Goldman Sachs’ rivals. In March,

Paulson helped arrange the fire sale of Bear Stearns to JPMorgan Chase. Then, a little more than a week ago, he allowed Lehman Brothers to collapse, while simultaneously organizing the absorption of Merrill Lynch by Bank of America. This left only Goldman Sachs and Morgan Stanley as major investment banks, both of which were converted on Sunday into bank holding companies, a move that effectively ended the existence of the investment bank as a distinct economic form.

In the months leading up to his proposed $700 billion bailout of the financial industry, Paulson had already used his office to dole out hundreds of billions of dollars. After his July 2008 proposal for $70 billion to resolve the insolvency of Fannie Mae and Freddie Mac failed, Paulson organized the government takeover of the two mortgage-lending giants for an immediate $200 billion price tag, while making the government potentially liable for hundreds of billions more in bad debt. He then organized a federal purchase of an 80 percent stake in the giant insurer American International Group (AIG) at a cost of $85 billion.

These bailouts have been designed to prevent a chain reaction collapse of the world economy, but more importantly, they aimed to insulate and even reward the wealthy shareholders, like Paulson, primarily responsible for the financial collapse.

Paulson bears a considerable amount of personal responsibility for the crisis.

Paulson, according to a celebratory 2006 Business Week article entitled “Mr. Risk Goes to Washington,” was “one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits.” Under Paulson’s watch, that meant “taking on more debt: $100 billion in long-term debt in 2005, compared with about $20 billion in 1999. It means placing big bets on all sorts of exotic derivatives and other securities.”

According to the International Herald Tribune, Paulson “was one of the first Wall Street leaders to recognize how drastically investment banks could enhance their profitability by betting with their own capital instead of acting as mere intermediaries.” Paulson “stubbornly assert[ed] Goldman’s right to invest in, advise on and finance deals, regardless of potential conflicts.”

Paulson then handsomely benefited from the speculative boom. This wealth was based on financial manipulation and did nothing to create real value in the economy. On the contrary, the extraordinary enrichment of individuals like Paulson was the corollary to the dismantling of the real economy, the bankrupting of the government, and the impoverishment of masses the world over.

Paulson was compensated to the tune of $30 million in 2004 and took home $37 million in 2005. In his career at Goldman Sachs he built up a personal net worth of over $700 million, according to estimates.
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Washington and Wall Street Analysis:

By Padmini Arhant

The beginning of the chain link usually found on the campaign trail, when corporations fund election campaigns through donation loopholes despite contribution limits by electoral commission and reign in on the successful candidate for the entire term.

After all, in the contemporary world focused on “What’s in it for me” deals, there is no free lunch with the exception of debt-consumed public yearning for believable change and better future offer available resources in terms of time, energy and money during the electoral process and beyond.

Who gets preference by the elected officials in the so-called democracy?

Indeed the Corporations due to the inter-dependency of sweetheart deals and brokering that take place throughout the election campaign. The deafening noise in the Capitol Hill about identifying the guilty party and pursuing disastrous course of action such as 90% tax on AIG bonuses after having approved without any stipulations predictably backfired at the victims none other than the average American taxpayers, presumably the majority shareholder at 80% of the multinational conglomerate.

In a bizarre development, more appropriately deterioration of the bailout fiasco, the headlines, news across the nation reverberate…
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AIG sues its biggest shareholder – us

By David S. Hilzenrath, Washington Post – March 21, 2009. Thank you.

As AIG takes billions of dollars from the federal government to stay afloat, it is suing the government for millions more.

The big insurer is trying to recover $306.1 million of taxes, interest and penalties from the Internal Revenue Service. Among other things, AIG is contesting an IRS determination last year that the company improperly claimed $61.9 million of tax credits associated with complex international transactions.

AIG has also asked a court to make the government reimburse it for money spent suing the government.

Given that the government owns 79.9 percent of AIG and has been using taxpayer money to fill a seemingly bottomless hole at the company, the lawsuit might seem like a case of biting the hand that feeds it. But an

AIG spokesman said the company has an obligation to press its case.

AIG believes it overpaid the IRS, and it “has a duty to its shareholders, including the government and other shareholders, to insure that it pays the proper amount of taxes,” spokesman Mark Herr said by e-mail.
Washington tax lawyer Martin Lobel agreed with that assessment.

‘If in fact they honestly believe that they’re entitled to a refund of those taxes, it would be a breach of their fiduciary duty not to” sue, Lobel said.

“On the other hand, the sense of entitlement from AIG is awesome,” Lobel said.

Because the dispute pits the government against a company that has essentially become a ward of the government, the only clear winners are likely to be lawyers, legal experts said. The legal expenses could consume millions of dollars, they said.

Lawyers at the firm Sutherland Asbill & Brenan, which is representing AIG, did not respond to an interview request.

For partners of similar stature to those representing AIG, fees can run $700 to $900 an hour, said Dan Binstock, managing director of BCG Attorney Search, a legal recruiter.

AIG’s dispute with the IRS focuses on taxes for 1997 and dates at least as far back as March 2008.”
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L.A. congresswoman defends actions

Husband Linked to Bank that got AID

By Richard Simon – Los Angeles Times – March 14, 2009 – Thank you.

Excerpts from the article:

Rep. Maxine Waters, D-Los Angeles, on Friday defended her efforts to help minority-owned banks – including one with ties to her husband – scoffing at the notion that she, a liberal Democrat, could influence George W. Bush’s presidential administration in deciding what financial institutions would receive bailout funds.

Waters, a senior member of the congressional committee that, oversees banking, has come under scrutiny because OneUnited Bank, on which her husband Sidney Williams had been a board member and stockholder, received $12 million in bailout funds. The money was provided in December, three months after Waters helped arrange a meeting between officials from the bank and other minority-owned institutions and Treasury representatives.

“I followed up on the association’s request by asking Treasury Secretary (Henry) Paulson to schedule such a meeting, as did other members of Congress,” she said.

She said she did not attend the meeting. She released letters by the National Bankers Association requesting the meeting and following up on it – signed by the group’s incoming Chairman Robert Patrick Cooper an officer with OneUnited.

Waters said the decision to provide bailout funds to OneUnited was “based on the merits of the bank’s request, not based on anything said at the September meeting and not based on political influence.”

She said that she has fully disclosed her husband’s ties to the bank. Williams served on the bank board until early last year and held at least $500,000 in investments in the bank in 2007, the most recent year for which public financial disclosure statements are available.

Waters could not be reached for an interview Friday. OneUnited Chief Executive Kevin Cohee said Friday he didn’t have time to speak with a reporter.

Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington, said she found Waters’ behavior “inappropriate and certainly has the appearance of impropriety, even if it doesn’t rise to the level of an actual conflict-of-interest under House rules.”

Sloan said Waters’ comments that the meeting focused on the general problems of minority-owned banks “don’t seem credible” in light of statements from Treasury officials that the session became a discussion of one bank’s troubles. “At a minimum, Treasury officials should have been apprised of her interest in the bank before the meeting took place.”

Waters’ efforts, she said, raise a question: “How many members of Congress are having meetings with the Treasury Department pleading for funds for certain banks?”

“Treasury has said they’re going to list the lobbying contacts,” Sloan said.”
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Voice of the Electorate:

San Jose Mercury News – Readers’ Letters – March 18, 2009

Obama’s earmarks stance disappoints

I am disappointed that President Barack Obama backed off his campaign pledge to eliminate earmarks. The process subverts democratic government by avoiding votes on specific issues. It encourages our representatives to compete to spend more—if they fail to “bring home the bacon,” they may be seen as ineffective and not be re-elected. The further we move from specific votes for specific programs, the less inclined people are to support the government and the more inclined to resist taxes.

We must promote responsible stewardship. While many of the projects are meritorious, that hardly means they should be funded. Tax dollars are a scarce resource and every expenditure should be carefully scrutinized. Obama was right on this issue during the campaign; he is sliding off track now.

Christopher K. Payne

Stanford
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Ethical Lapse

By Padmini Arhant

The sparring political factions, the far left and the far right along with the centrists is in a strange dilemma today as they witness their reflection in the image of the accused parties in the most expensive soap opera entertainment.

As more Washington and Wall Street scandals are exposed, the more disingenuous the legislators appear to be in their pledge to turn the nation around.

An average citizen struggling to make ends meet asked the following questions –

“Why should I vote for anyone in the next election when I see politics as usual prevailing over the promised inevitable change?

Can the elected officials with public housing, guaranteed regular and several other sources of income, supreme health care, and free transportation relate to the suffering population dealing with job loss, foreclosure and other miseries?”

Unfortunately, the Washington atmosphere is secluded as elitist not making connection with the plight of the populist. The deepening of the recession combined with the multi-trillion dollar national debt forecast is a matter of great concern for the vast majority of population in precarious economic conditions due to job insecurity and declining prospects all around.

The American electorate enthusiastically elected the new administration with the hope to experience the “change” they deserve and the recent events are adversarial to the optimism built during the campaign.

Campaign promises involved Accountability, Transparency and changing Washington by eliminating corruption, cronyism and conventionalism. The passing of the $787 billion stimulus bill and subsequently the $410 billion omnibus spending bill loaded with earmarks confirms the status quo in Washington.

The pet projects, however meritorious they might be, cannot be more important than supplementing K-12 educational funding by retaining qualified teaching professionals and providing after school sports activities for students from lower income families and scores of other important social services for the constituents in California and other states.

It is obvious throughout the legislative process from the authorization of illegal invasion of Iraq war to Wall Street bailouts that lawmakers as representatives of the electorate in a democracy no longer consider it important to peruse the budget and other legislative bills because of the voluminous content. Hence, hastily resort to wasteful spending at taxpayers’ expense.

With the national debt projection in multi-trillion dollars, the wasteful spending in billions doesn’t seem to matter to the sponsors of the pet projects. Apparently, $8 billion added to the national debt for projects experimenting swine odor, road to nowhere, monuments ‘supposedly creating jobs’ when the industries are crumbling apart clearly signifies misplaced priorities by the legislators expected to be in touch with reality of their respective constituency.

The people are hurting and their mere existence is challenged by the hour while Washington and Wall Street continue to engage the nation in burgeoning financial crisis through legal and constitutional confrontations of the bailout débācle.

Perhaps it is time for the victims and the lame duck, the average taxpayers to rise to the occasion and execute power in the mid-term election to restore democratic values, ethical and moral standards desperately lacking in the corporate and political system.

It is best to eradicate the narcissistic culture that permeates the surroundings like weeds destroying the grassland and fertile grounds.

Evidently change is necessary and necessity is the mother of invention.

Thank you.

Padmini Arhant