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.
The Great Depression of ’09.
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.