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Wednesday, March 18, 2009

He's Back...The Return of Elliot Spitzer....
Posted by Melina | 11:16 PM

Elliot Spitzer is back and hes talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. Today Edward Liddy testified that there have been death threats made to or about executives who received bonuses, so no names will be put on the record, but these anonymous players must know that the jig is up in the land of easy-money. Isn't what to do a no-brainer for these great Americans?

Spitzer may be as "disgraced" as any anonymous sex loving Republican loser, but America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's.
Today in Slate Elliot Spitzer has a short op-ed that speaks volumes about what is going on, and indirectly, if you follow the money, what happened to him. Plainly stated, Spitzer brings the AIG Ponzi Scheme one step closer to the revered establishment when he explains how the bailout money was funneled straight into the top players, with Goldman Sachs being the name that comes up again and again. These top players already got bailout money, and Goldman is looking at zero losses at this point, while regular Americans are being asked to make concessions or just plain losing everything. here are the biggest financial entities in the world, making billions on what appears to have been nothing but air traded back and forth, and having gutted the American people they are walking away with 100% return to their stockholders. In return AIG seems to think that its appropriate to pay themselves bonuses with the leftover funds. This leaves AIG still a wobbly shell with no plan of how to go forward, and the threat of the collapse of all of the world's financial markets still up in the air. So, what was all that bailout money for? Apparently to make sure that no one at Goldman or the other few top firms in the hand-out-line lost anything!

The relationship between AIG and Goldman goes back long enough that one would think that Goldman would know, having bought so much of this "insurance" or whatever it was, whether the "products" were ...er...real or feasible at all. Indeed, Goldman and AIG almost merged a few years ago, but Spitzer notes that the unknown black hole of AIG's business practices were probably what prevented it. Still, that didn't stop the incestuous dealings; it almost makes one think that this whole thing was a setup.

This is country that Spitzer is familiar with; he has been a terrible liability to entities that, under the Bush administration, were allowed to literally gut the country and its citizens. All of this seems to have been part of the Bush Administration's own Ponzi Scheme, which figured that the illusion of an ownership society, terrified of the "terraism" and steeped in the me, me, me, culture would look the other way while they finished clearing out the vault. Beyond that, it's clear that the media hyped housing bubble encouraged the house flip mentality and the idea that anyone could be rich. The idea of the lottery dropping on our own heads made us more protective of the rich, because we might one day be one....or look, we could be one with no money down, if we could just balance that on this, and flip that house!!

Every week came a new offer from our bank or credit card to just put the enclosed check into the bank for a $50,000 loan, unsecured and with a low APR!! Who would know that those same banks would go out of their way to cause a day or week default by changing the cycle or stopping refusing cards that went over-limit, in order to charge fees and raise the rates. Who could know that the fine print on all those little fliers talking about privacy rights and how they are selling all of our information, also said that by-the-way the interest rate is now 25% and the minimum payment has tripled! Default on that and likely AIG has sold insurance to your lending institution that should repay them for making the bad loan in the first place....no money down mortgages? No problem....its the same story. This is the ownership society and we all need to own alot of stuff. It is... what did he say?...uniquely American!

Spitzer was questioning this back in February 2008 when he wrote his Valentine to predatory lenders in the Washington Post. He detailed that Attorneys General across the country had entered into litigation in an attempt to protect the people of their states from predatory lending. The response from the federal government was astounding!

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

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.


In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Now, they will say that they fought the consumer protection laws to actually protect the consumers and assure that they could get credit in the future. But actually, Americans could get credit; just credit that they were able to handle and could, by reasonable standards, pay back. This was just more of the same in hindsight. Looking back that all that the Bush administration has done, the beginnings of this disaster looks almost quaint, and not like an institutionalized foray into the dirty underside of criminal activity. There were quotas passed by the government as to who got the loans and the focus was on certain populations who would be helped into homeownership even if they couldn't maintain the credit. It was treated as some sort of fulfillment of the American Dream for people to own something, but really had more to do with the insurance on the loans than the people involved. The American dream is dead, as we well know, but what it was, way back then, was that people could afford to own a house and put their kids in college!

AIG sold insurance to the biggest entities in the financial world to cover the proliferation of bad loans. This insurance became so common that it was impossible that the lions of finance didn't somehow have an inkling that something was wrong. Didn't Goldman and the rest of these huge firms know something about the stability of an impossible business plan? Hadn't Goldman gone over everything in their bid to merge? And what of the government and their mandating of certain loans that were bound to go bad. There were people involved in these things, and its not like regular people understand the ins and outs of the financial industry. They rely on brokers to explain it to them. But these brokers were being forced to see a certain product to an unqualified population. How could they? Why would they? Those are questions for another time.

Spitzer has been fighting these guys and asking questions all along. Coincidentally, right after the WSJ editorial appeared on Valentine's Day 2008, Spitzer was caught up in what was an extremely unusual sting. So unusual is an investigation like this that it seems almost like it was a set-up; and considering where it all came from and how it all came down, it might well have been.

It seems that Spitzer's bank was investigating expenses under the auspices of the newer Homeland Security laws of the Bush administration. Greg Palast wrote about this compellingly, and in light of how the whole thing is shaking out now, and what Spitzer said back then about this financial mess and what he tried to DO about it, Palast had a pretty good early grasp on what had gone down. So now, with Spitzer poking his head up from the underground of "healing his family," at this most compelling of moments, its probably worthwhile for Americans to screw their heads on straight and forget the details of the hooker, and look at what Spitzer was working on when he was taken down. We might all find ourselves wanting to thank the egotistical crime fighter who cant keep it in his pants.

I am no apologist for breaking the law, and usually its the highest and mightiest that fall the hardest. But when the mainstream is showing us the shiny object, we must resist the temptation to succumb to our base natures and try to see the bigger picture. There was never a real case against Elliot Spitzer, and no charges were filed. The release of embarrassing personal information was at the discretion of the Bush Administration's Justice Department.

Why was this information released? It wasn't that he was a crusader against such crimes, because many who have been caught were exactly the same and their information has been kept quiet. It wasn't that the press is all so great in their investigative journalism, either...because we know they're loathe to get off their asses if they can just read a talking point; as is evidenced by the reportage on this case.


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 prostitutes 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.'

Bush's Justice Department.
Its clear to me that all things being equal, this was at the very least, not a transsexual streetwalker a la Hugh Grant, and it was all very ho-hum and quiet. So, whatever the problem that leads to this sort of behavior, I don't want to know about it...its personal, so just walk on by...nothing to see here.

Welcome back Elliot Spitzer. I hope we hear more from you very soon...your voice is needed in this matter.

c/p RIP Coco

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Blogger Jill said...

Nail head, meet hammer.

Game, set match.

I'm now out of clichés. But this is some damn fine writing and really starts putting the pieces together.

Blogger Batocchio said...
Great stuff! I'll be linking it later. I think this Slate piece:


is his latest.

Anonymous Anonymous said...
Wherever his brain is located, it still does a better job than the entire Bush administration !

Anonymous Anonymous said...
Has anyone noticed that the media has been trotting out "The Hooker" again over the last couple of weeks. Very suspicious that it coincides with the start of Spitzer's re-emergence. Kind of like Whac-A-Mole.

Anonymous Anonymous said...
If Spitzer was indeed going after these bastards then shame on him for allowing himself to be caught as he was. He owed all of us a much better performance than to be brought down by a classic political trick.

Anonymous Anonymous said...
Come on back Spitzer !!!!

Look, true to your wife and do your thing. Do it real good this time. But first, take out Bush!

Blogger Dallas112263 said...
You are repeating Reichwing lies...

Twice in your piece you allude, without attribution, that the Fed was requiring loans be made by banks to people who could not afford them and would not pay them back.

The statements are below. I would like to see one piece of evidence that this is true. The Community Reinvestment Act made no such demands, and I for one have never met a banker who could be forced to loan money to obvious deadbeats.

"There were quotas passed by the government as to who got the loans and the focus was on certain populations who would be helped into homeownership even if they couldn't maintain the credit."

"And what of the government and their mandating of certain loans that were bound to go bad."

You need to respond to this, your credibility is at stake


Anonymous Anonymous said...
RGJ, The feds threatened to sue the banks for discrimination if they didn't allow these loans. I know this first hand.

Anonymous Anonymous said...
It's enough to make you wonder what damage Spitzer could have prevented if he wasn't tackled deep in his own hooker's end zone. The question now is: can he help bring those perpe-traitors to the justice they deserve?

Blogger Interrobang said...
And we should believe some random anonymous commenter on a blog why? The feds threatened to sue the banks for discrimination if they didn't stop redlining, which is discriminating against otherwise financially-qualified people who happen to live in areas the banks consider to be dodgy.

How come banks are perfectly justified in redlining (and attempts to stop redlining are consistently lied about by financial industry shills), yet when insurance companies (like St. Paul Travelers Cos. Inc. in New Orleans, or Allstate's announcement about withdrawing from the home insurance business in NJ in 2006) redline people out of coverage because their fancy algorithms suggest they might have to pay a few more claims (the ones they can't dodge out of) based on location-specific hazards, the entire world goes nuts about how the big bad insurance companies are shafting the little guy who just wants to play by the rules? In other words, don't decide to move into a bad neighbourhood because you can get more house for the money and fix it up yourself; you're automatically a bad credit risk, and you deserve what you get, for associating with Those People...

Anonymous Anonymous said...
Great article. I'm sure you know the diff between its and it's. Don't you?

Blogger Christopher said...

Thanks for posting this provocative piece. I will be considering it greater detail over the weekend.

Anonymous Anonymous said...
Ah, so! Sometimes, things just click, don't they? I'm giddy & ready for the next chapter, Mr. Spitzer. Take it away...

Blogger Unknown said...
Spitzer was a Democrat.

It is stated incorrectly in the article. I'm shocked no one else has pointed this out yet.

Great post otherwise!

Anonymous Anonymous said...
The same day John Edwards confessed his indiscretions on television, Kobe Bryant was marching into the arena in Beijing as the king of the Olympics. Think about that. Mr. Spitzer should be the US AJ.

Anonymous Anonymous said...
Goldman Sach is GROUND ZERO of this US & worldwide economic crisis, and those who don't realize this are grossly ignorant.
It should be easy enough:
#1.) It was Bush's Treasury Secretary, Hank Paulson, who came up with that outrageous, 3 pages, "Hand us $700 BILLION, NOW, or we shoot our own heads off, and take US economy down with us" BAILOUTS "economic plan" - with NO oversight, audits, or questions allowed! Hank Paulson, as in "Bush's FORMER GOLDMAN-SACHS CHAIRMAN," the guy who amassed a $430 Million+ portfolio working at G-S, the last five years as G-S's front-man (chairman).
The SAME company who provided President CLINTON's Treasury Secretary, ROBERT RUBINS. Who (along with his successor and Goldman-Sachs "consultant" Lawrence Summers) pushed, prodded, and urged President Clinton to sign the Gramm-Leach-Bliley act... as in the uber-Right-Wing Republican (former) Senator PHIL GRAMM __DEREGULATION ATROCITY__ bill that deregulated vast swaths of the US finanicial industry.
WHEN it looked like his work urging Clinton to sign Gramm's atrocity was done, Rubins could not jump ship fast enough to TAKE ADVANTAGE of the financial atrocity - before Clinton even signed it, Rubins departed from Secretary of Treasury to take up a job with Citi-bank, where Rubins "helped" Citi buy out Traveller's Insurance Group and go from staid commercial banking in to the "investment banking" (= speculation, aka casino gambling) business. This led DIRECTLY to the demise of Citi-bank, renamed Citi-Group after the Traveller's deal and Gramm-Leach-Bliley deregulations took place.
(Indeed, Citi went through the process BEFORE G-L-B had even been passed, making the merger/consolidation actually illegal - providing POLITICAL GREASE in advance of G-L-B passing, was what Rubins had been hired for, and paid well - over $100 million in less than 10 years.)
Specific provisions of Gramm-Leach-Bliley besides the GUTTING of the Depression era Glass-Steagal Act (allowing staid commercial banks to become gambling casino "investment banks") include:
GUTTING the bank MARGIN RESERVE requirements, (aka "keep SOME cash in vaults, for potential demand by depositers"), which allowed THIRTY TO ONE LEVERAGE!!
and of course the creation of the "ENRON LOOPHOLE" which DENIED REGULATION of (energy?) DERIVATIVES - leading DIRECTLY to the collapse of BOTH AIG AND Goldman-Sachs!
Space & time constrains a full discussion of GLB Act here (see wiki for a good intro including defenders) but when Phil Gramm in wiki defends GLBA by pointing out that JPMorgan-Chase "survived" the wreckage that Lehman did not, what he neglects to mention is that BOTH JPM-Chase, Lehman (and Citi) survived ONLY because of the MASSIVE INFUSION OF taxpayer BAILOUT BILLIONS upon billions upon billions of dollars!

In sum, the Bush administration spent 8 long years, working diligently in reverse-Robin Hood fashion, to transfer wealth FROM working-stiff taxpayers and families TO the already wealthy - usually in billion-dollar chunks, corrupt Iraq war contracts, Halliburton contracts, Enron fraud, Hurricane Katrina fraud, etc. But, when the Bush economic Ponzi scheme finally collapsed leading up to September 2008, Bush and Paulson and their minions in government & media, were able to go to the (complicit) Congress, and tell them, "HAND OVER a TRILLION DOLLARS, or we take the US economy down with us!" - now transferring HUNDRED BILLION DOLLAR chunks of taxpayer dollars over to the connected banksters.

As Rubins going from Goldman to Treasury to Citi illustrates, at this level, there is little competition, and NO desire for oversight.

The COMPLICITY of the Obama administration is also easy to illustrate. Can anyone IMAGINE Warren Buffet taking an _80%_ buyout of a company that was BLEEDING cash - and not IMMEDIATELY doing a TOP-to-BOTTOM AUDIT, FIRING the managers of losing divisions, and promoting managers and assistants of the well-run divisions to clean up the mess?

THAT is EXACTLY what President Obama - OWNED by his Goldman-Sachs dominated financial team of Robert Rubins, Lawrence Summers, Rahm Emanuel, & Tim Giethner - has NOT done!

Obama is now fully complicit in the WHITEWASH of gross, massive financial fraud - and if he hands out ONE MORE DIME without running INTENSIVE FORENSIC AUDITS, he will become party TO that FRAUD in the first order!

Blogger Rhode Island Rules said...
I knew early on that Spitzer was taken down for investigating bankers and Wall St. Not condoning or excusing his use of prostitutes, especially as a married family man and high profile politician, but he knows where the bodies are buried.

I believe that this type of takedown and blackmail is why we haven't seen more people exposing the Bush/Cheney cabal. One of the biggest reasons they wanted domestic wiretapping was to gain information on their "enemies" that they could use to shut down criticism and ultimately prosecution of their crimes.

Anonymous Anonymous said...

Blogger Sheila said...
Spitzer was on Fareed Zakaria's GPS this morning and spoke so well and authoritatively, it underscored so harshly what we lost when he was taken down. Personal morality aside, he still has a lot to offer us, though his past sins will probably not allow him to serve again. It's probably on cnn.com now. Worth watching

Blogger Marc with a C said...
Not to be a wet blanket, but Spitzer is a Dem.

Just sayin'

Anonymous Chris said...
Do it real good this time. But first, take out Bush!