When the Enron bubble burst several years ago I wrote that Enron was just a snapshot of the rot that has been spreading through the American business system for more than 40 years.
Malcolm X said of JFK’s assassination that the”chickens always come home to roost”. He was of course correct. As above, so below. Now this flock of chickens is coming home to roost. Bet on it.
And worse? It has a bad case of the runs.
The whole edifice of America is rotted through. Patching the sagging beams is not going to be enough. At best it will only postpone the inevitable unless a new administration imposes draconian changes.
At worst?
The Great Depression of ’09.
Watch.
And read on for more about the FBI investigation.
From The Herald Tribune.
FBI investigating companies at heart of meltdown
WASHINGTON: The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.
Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.
The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.
The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.
Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.
Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.
Just last week, FBI Director Robert Mueller put the number of large financial firms under investigation at 24. He did not name any of the companies under investigation but said the FBI also was looking at whether any of them have misrepresented their assets.
Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI’s hunt for culprits in the nation’s subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.
The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms.
The bailout proposed by the Bush administration is aimed at helping unlock credit and stabilize badly shaken markets in the United States and around the globe.
In the past two weeks, the government has taken over Fannie Mae and Freddie Mac, the country’s two biggest mortgage companies, with a bailout plan that could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.
Last week, the Federal Reserve provided an emergency $85 billion loan to AIG, which teetered on the brink of bankruptcy. Lehman Brothers was forced to file for bankruptcy after attempts to engineer a private rescue fell apart. All the companies were laid low from bad bets on complex mortgage-related securities.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.
Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the nation’s largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.
Note well…it is NOT just four companies. It’s seven. (IndyMac Bancorp Inc., Countrywide Financial Corp. and Bank of America Corp. as well. And that’s just what is being leaked.)
Now I have no particular confidence in the FBI…it’s just another part of the rotted out system as far as I am concerned…buit still, the stink of this rot is now so plain that even the sleeping sheeple are being awakened and all attempts to cover up the manure pile are proving insufficient.
To put it plainly, the shit is piling up faster than the shit-carriers can cart it away or cover it up.
Meanwhile, the only major politician who has stood up and and suggested that an FDR-style effort is going to be necessary on the federal level if we are to survive this cock-up is that terrible, evil boogey-lady of the leftiness blogs, Hillary Clinton. YOU know…the one who isn’t on the ticket with Barack Obama? Nice work, shmoon.
Hillary Clinton Proposes New Agency to Cope With Financial Reforms
WASHINGTON — Sen. Hillary Rodham Clinton said Tuesday she worries that taxpayers could be left “holding the bag” with plans for a $700 billion government program to stabilize the country’s distressed financial markets.
Interviewed on Tuesday morning on CBS’s “The Early Show,” she said she agrees that the situation is critical and that something must be done quickly. She said, “the house is on fire and we’ve got to call the fire department and put the fire out.” But Clinton also said that Congress should not “give the Treasury a blank check” to straighten out the problem.
“What we also have to do is make sure that homeowners get some relief, that it’s not just for the banks and the lenders,” she said. Clinton added that “we also must begin to look at the root cause of this, which is these mortgages that people cannot afford.”
The senator said she didn’t think all responsibility for solving these problems should be vested in the Treasury Department, suggesting that “once we get through this immediate crisis,” the country should look at some Great Depression-era type of governmental entity to deal with it.
Nice work.
UH oh!!!
AG
FIX fix fix fix fix fix fix fix fix.
Can they fix the fix?
Hmmmmmmm…
AG
HillShill? BoRE-ing.
America is one big Enron; even the FBI is getting into the game; only one major politician says anything even remotely interesting about what is up and all you have to say is some lame, valley girl lick about how boring it all is.
Nice, BooMan.
Granted, she was taken out of the mix by apparently totally insane hatreds from both the left and the right despite having won about 49% of the primary vote, so she really has nothing much to lose by being…impolitic…but reallly, Booman.
Is that all you’ve got?
Lame.
VERY lame.
Even for you.
Too bad.
You coulda been a contender.
AG
Hey AG you over-look that the Clintons are co-architects to this financial crisis. It was Bill Clinton, Rubin and Greenspan who led the repeal of Glass-Steagall Act – deregulating the financial entities and the push to derivatives greed. Bill Clinton signed the Act of Repeal:
that said,
I agree with your premise of fraud – a repost
“It’s the Derivatives, stupid”
in the trillions
This thing started before Bill Clinton ever left his trailer park in Arkansas.
With Reagan.
With Nixon.
Bet on it.
Co-architects?
They made one of a thousand mistakes.
They listened to some economists.
May as well plan your next summer’s vacation on the predictions of local TV channel’s weatherperson.
So it goes.
I overlooked this fact?
No…I just think that she is trying to fix her mistakes as well of those committed by others, and I admire her for it.
AG
“It’s the Derivatives, stupid” – that took down the system. And Benny, Hank need to tell the truth – $700 billion will not cure what ails Wall Street: It’s a big pile of shit:
In 2001, CDS stood at $900 billion, in 2007 skyrocketed to $45.1 trillion. ..and this year, last reported at $62 trillion.
Bloomberg just up:
Leaving aside the ridiculous HillShillin’ let me say that $62,000,000,000,000 is about 8,000,000,000,000 more than the GDP of the HUMAN RACE.
You call yourselves “democrats”. And Democrats as well.
And then you reject the possibility that someone who gathered 49% of the primary vote might have something valid to say.
No wonder the Dems lose when it counts.
AG
You nailed it with all the depth its due!
I am sure not just anyone can contribute a good idea without being a party’s vice presidential candidate.
But some can.
Like Senators.
Poor us! if only she had some sort of outlet for her ideas…
– – – – –
It’s going to take a Great Depression-era government entity, because we’re going to be in a second Great Depression when this thing is done exploding.
She’s at least being quasi-honest.
However, it would have been rather difficult for her to suggest such an entity as either the Dems’ candidate or Obama’s running mate since her husband was very much part of this problem when he signed the Gramm-Leach-Bliley Act into law in ’99.
The Clintons have way too much Wall Street baggage.
In order to reach that kind of position, a candidate needs huge amounts of money and huge amounts of favorable media coverage as well.
Wall Street IS money, bubba. Let’s not forget that fact. And money controls media.
Catch 22 squared.
Catch 484.
So here we have essentially three so-called “winners” in the Prez sweepstakes.
McCain.
Obama.
And Clinton.
Yes, Clinton. She won nearly as many votes as did Obama. And yes, she “lost”. So it goes.Had the media not backed Obama, she would have won. So that goes as well. He was a better story and/or he made the right promises to the right wrong people.
So…of these three remaining dominant national pols, which one has stood up and said “It’s time for FDR-style actions, before a total economiuc collapse if at all possible.”
Hmmmm….?
Not McCain and not Obama.
Clinton.
Now maybe Obama and McCain know that something of the sort must be done and are simply playing spin politics, playing by the numbers because the smart dumb money says that’s the way to win. And maybe they don’t. But Clinton is free of the electability problem now, so she can say pretty much what she damned well pleases to say.
And this is what she said.
In case you mkissed it.
Sure, Obama was not involved during the very beginnings of this crisis. Actually, neither was Senator Clinton, because the REAL beginnings go back to Reagan and even further. But had Obama been in the fed government at the time, he would have gone along to get along, just as he has done so far during his rapid rise to power. That’s his game. He’s an outside shooter and a defensive player. A good one, too. BUT HE DOES NOT CHARGE THE BASKET, ARMS FLAILING AND FEET CHURNING. Maybe once in a while if he sees a good, clear path, but that’s it. He mostly plays a safe game. This is most obviously a good choice considering his race, his youth and the results of this style of play as far as he is concerned. But he is as bought and sold as are any other big-time pro politicians. Look at his donor list for all you need to know about that idea.
So…given all of this, who has been the one to actually call for a New Deal of some sort?
Duh.
The Big Bad Witch of the Left.
And here you are, echoing the empty leftiness party line.
Just another leftiness shmoo.
AG
You need to let the Clintons go. Take off those rose colored glasses. They do have baggage. Yes they’re not alone. But more than others.
You may find this interesting – right in your thought process:
Eyes wide shut.
Read the whole thing, serious stuff, more than you’ll want to know.
But…Obama and McSame are the choices we have. Not Clinton this time.
Clinton has a national following. She can exert force on Obama.
And you know what?
I think that it is beginning to look likely that someone must.
He cannot stay above the fray forever.
AG
There are a lot of people exerting force on Obama to do things.
I’m not going to pretend Clinton isn’t one of them. I honestly think Obama’s smart enough to figure it out.
I just don’t know if he’s willing to take the rage and bile that the GOP will unload upon him when he decides he has to do what he has to do to keep the US afloat. Because nobody’s going to like it.
Hey Zandar, everybody is getting a handout:
FT: House clears $25bn for carmakers
and Jack Welch, ex GE CEO (who backs McCain) says [U.S. faces “deep downturn” – it’ll be brutal
Funny how all are marched out to put pressure on Congress. Wake me up in late 2011.
It wasn’t the mortgages that John and Mary couldn’t afford. It was the houses. Then it was the mortgage. Then it was the HELOC. They might even have been able to afford the mortgages if they hadn’t turned their houses from homes to ATMs.