Banking Bailout News Articles

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Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public [on July 23]. Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia. Goldman Sachs received $5.55 billion from the government in fall of 2008 as payment for then-worthless securities it held in AIG. Goldman had already hedged its risk that the securities would go bad. It had entered into agreements to spread the risk with the 32 entities named in Friday's report. Overall, Goldman Sachs received a $12.9 billion payout from the government's bailout of AIG, which was at one time the world's largest insurance company. Goldman Sachs also revealed to the Senate Finance Committee that it would have received $2.3 billion if AIG had gone under. Other large financial institutions, such as Citibank, JPMorgan Chase and Morgan Stanley, sold Goldman Sachs protection in the case of AIG's collapse. Those institutions did not have to pay Goldman Sachs after the government stepped in with tax money. Shouldn't Goldman Sachs be expected to collect from those institutions "before they collect the taxpayers' dollars?" Grassley asked. "It's a little bit like a farmer, if you got crop insurance, you shouldn't be getting disaster aid."

Note: For lots more from reliable sources on the Wall Street bailout by taxpayers, click here.

*Lulu Maxwell, 17, Grade 12, Rosedale Heights: Maxwell and a friend were hanging around near Queen and Dufferin Sts. at a convergence centre for protesters on Sunday afternoon when police started making arrests. “My friend was blowing bubbles and I was scribbling peace signs on the sidewalk.” Within minutes, her friend was grabbed and Lulu was put up against a wall. Her backpack was searched and Lulu says an officer said she could be charged with possession of dangerous weapons “because I had eyewash solution in my backpack.” She was taken to the detention centre and almost 12 hours after her arrest was allowed to call her parents. She was released, without charges being laid, at 5 a. m. *Erin Boynton, 24, London, Ont. She was arrested at The Esplanade early Sunday morning after police boxed dozens of protesters in. “I was with a protest marching peacefully down Yonge from Dundas Square,” she said. “When the cops came at us, many people scattered and those who were left in front of the (Novotel) got arrested.” She said police came from all sides and “squished us in. They didn’t give us a warning to leave…. just announced that we are arresting all of you.” She said a lot of people at the detention centre were innocent bystanders. “The police violated all our rights . . . there was police brutality. Quite frankly, it was quite disgusting.” Boynton wasn’t charged.

Note: For lots more from major media sources on mounting threats to civil liberties, click here.

A day after a harrowing plunge in the stock market, federal regulators were still unable on Friday [May 7] to answer the one question on every investor’s mind: What caused that near panic on Wall Street? The cause or causes of the market’s wild swing remained elusive, leaving what amounts to a $1 trillion question mark hanging over the world’s largest, and most celebrated, stock market. The initial focus of the investigations appeared to center on the way a growing number of high-speed trading networks interact with one another and with venerable exchanges like the New York Stock Exchange. Most investors are unaware that these competing systems have fractured the traditional marketplace and have displaced exchanges like the Big Board as the dominant force in stock trading. In a joint statement issued after the close of trading, the S.E.C. and the Commodity Futures Trading Commission said they were ... looking particularly closely at how different trading rules on different exchanges, which temporarily halted trading on some markets while activity in the same stocks continued on other markets, might have contributed to the problem. The pressure in the less-liquid markets was amplified by the computer-driven trades, which led still other traders to pull back.

Note: For more information on the impact of the new high-speed computer-driven trading methods, click here.

Last-minute maneuvering in the Senate allowed the Federal Reserve to sidestep legislation that would have exposed its interest-rate decision-making to congressional auditors. Pressure from the Obama administration led Senate lawmakers to alter a provision pushed by Sen. Bernie Sanders (I., Vt.) that was gaining momentum despite opposition from the Treasury and the Fed. It would have largely repealed a 32-year-old law that shields Fed monetary policy from congressional auditors. Thursday's Senate showdown came after senators on the left and right joined forces to support Mr. Sanders' provision. "At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer," Mr. Sanders said. "The American people have a right to know." But Fed Chairman Ben Bernanke ... said in a letter to Congress the Sanders measure would "seriously threaten monetary policy independence, increase inflation fears and market interest rates, and damage economic stability and job creation."

Note: For an abundance of deep reporting on the hidden realities of Wall Street's shadowy operations, click here.

[video transcript:] In America today we are getting closer to fully exposing the greatest con and cover-up in this [country's] history. It involves our banks, the federal reserve, our congress, and, of course, you and me. Here's how the con went down. The bankers were operating under an implicit guarantee from the godfather [at] the Federal Reserve, in the form of guaranteed interest rates, guaranteed cheap money exclusively for the con men. Then, Chairman Greenspan, the godfather, would agree to hold those rates -- let's say 2% -- for as far as the eye could see. The banks, or bankers, the con men, would borrow that money from the Federal Reserve, let's say 2%, and turn around and lend it back to [you], and let's say 6%. That encouraged the patsies, you and me, to be drawn into the con because 6% looks like a pretty low rate. Low rates for houses, low rates for cars. Heck, you could join a health club, make that into payments, turn that into bonds, and of course promises of a higher-than-average return for those managing teachers and policemen's and judge's pension funds that are buying into the con as well. And here exactly is where the con comes in. As you and I both know, the banks had no money. They were getting it from the Federal Reserve. It's funny money.

Note: For abundant reports from reliable sources on the hidden realities of what may be the greatest con job in financial history, click here.

In a significant victory for news media, a federal appeals court said the Federal Reserve must disclose records on emergency lending programs to banks bailed out by the government in the financial crisis. The Second Circuit Court of Appeals on [March 19] ordered the Fed to release details of programs it adopted starting in late 2007 to shore up the financial system and forestall a complete meltdown of global financial markets. Bloomberg ... and News Corp's Fox News Network sought details of the central bank's actions under the federal Freedom of Information Act. The Fed argued against disclosure, citing an exemption that it said lets federal agencies keep secret various trade secrets and commercial or financial information. Writing for a unanimous three-judge appeals court panel, Chief Judge Dennis Jacobs said, however, that to give the Fed power to deny disclosure because it thinks it best to do so "would undermine the basic policy that disclosure, not secrecy, is the dominant objective." Sen. Byron Dorgan, a North Dakota Democrat, said the rulings will help shed light on the Fed, which he called "the least transparent institution" in government.

Note: Isn't it crazy that the Fed would try to keep secret what it did with nearly $1 trillion of US taxpayer money?

A worried accounting executive at Lehman Brothers, who raised the alarm about what he saw as dubious number-crunching at the doomed Wall Street bank, lost his job barely a month after alerting the auditor Ernst & Young, his lawyer [has] claimed. Matthew Lee, a senior vice-president in Lehman's finance division, outlined six allegations of unethical accounting in a memo sent on 16 May 2008 to Lehman's senior managers, who asked Ernst & Young to investigate. In discussions with partners at Ernst & Young, he highlighted controversial "repo 105" transactions that artificially boosted Lehman's balance sheet by $50bn. Lee's lawyer, Erwin Shustak, said his client lost his job in late June 2008, officially as part of a broader downsizing. Shustak told the Wall Street Journal: "It was just easier to shut him up and let him go." Lee, 56, has emerged as a crucial figure in Lehman's downfall and in controversy over the conduct of Ernst & Young. The six allegations made by Lee included claims that Lehman's monthly balance sheet listed $5bn of assets above reality, that the bank failed to value its inventory of financial products in a "fully realistic or reasonable" way, that audit-level personnel were inadequately qualified, that systems were ineffective and that there were "tens of billions of dollars" of possibly toxic liabilities.

Note: For a treasure trove of revelations of the hidden realities behind the financial crisis and bailouts, click here.

After 15 months and 2,200 pages of writing, the Lehman Brothers report has been released. As expected, the details are pretty gruesome. It explains how Repo 105 transactions allowed Lehman to exchange illiquid assets for short-term cash loans in order to disguise the crumbling financial state of the firm in its last days. How bad were the lies? Well, the report shows the transactions were not shown as loans. Instead, they were listed as sales … making Lehman’s accounting essentially fraudulent. According to emails described in the report, CEO Richard Fuld and about three different CFOs were all likely aware of the cover-up. Yet they still approved and signed off on the quarterly and annual reports. Further, it appears that even Lehman’s auditor Ernst & Young … in the not-so-fine tradition of Arthur Andersen — that was brought down in the Enron scandal – knew about the Repo transactions and did nothing to sound an alarm. So much deception … and so many accomplices.

Note: To watch a powerfully revealing, 10-minute MSNBC video on this topic, click here. Transcript available here. Host Dyland Ratigan in the clip describes what happened as "an accounting fraud perpetrated by bank CEOs against the American taxpayer."

Bailouts and bonuses have many Americans frustrated with big banks. Some consumers think these giant institutions have lost touch with customers and basic good business practices. They're so fed up that they're holding these behemoths accountable by moving their money to community banks. Arianna Huffington of the Huffington Post is spearheading a campaign called Move Your Money, which encourages people to move from the banking giants to smaller community banks. "There's a lot of anger about the way banks have acted," says Huffington. "It's a total lack of empathy and concern." The group's Facebook page has more than 27,000 fans. "I think it's already an enormous success," says Huffington. "The fact that people are considering it; the fact that people are doing it; the fact that people are feeling empowered."

Note: Please consider going local and supporting credit unions and community banks. For information on moving your checking and savings accounts from profit oriented banks to membership run credit unions, click here and here.

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels. As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere. In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come. Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Note: For a treasure trove of investigations from reliable sources into the many tricks by which Wall Street firms enriched themselves at the expense of others, click here.

The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all. Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials. We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system -- apart from the matter of AIG’s bailout -- deserves further congressional scrutiny. The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks. Treasury Secretary Timothy Geithner was head of the New York Fed at the time of the AIG moves. The hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve. This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

Note: For lots more from reliable sources on the secret deliberations by the highest levels of government and private elites in their attempts to bail out the biggest financial corporations, click here.

Mad about the bank bailouts? Had enough of huge bonuses and too-big-to-fail apologies? Here's one way to do something about it. Take your money out. That's right. Take your checking and savings account out of that big money-center financial institution and move it to a community bank or credit union. There's even a movement afoot to help consumers make the switch, called Move Your Money. The website offers search tools so consumers thinking about switching can type in their zip codes to find a credit union or a strong community bank nearby. Even in 2008, the latest numbers available, credit unions and community banks have seen an increase in depositors. Now "other people are taking up the call to move their money into a community bank," says Karen Tyson, senior vice president for communications at the Independent Community Bankers of America. "We can't help but be happy with that." Amber Taylor of Arlington, Va., is one of those who's actually switching. "I never thought about what bank I chose before," she says. "I don't know what huge difference this will make in the big world [but] it's one little thing that I discovered I could do."

H.R. 4173 [is] the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises. For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. The bill also allows the government, in a crisis, to back financial firms’ debts. Bondholders can sleep easy -- there are more bailouts to come.

Note: For a treasure trove of reliable reports on the government bailout of Wall Street, click here.

U.S. banks that spent more money on lobbying were more likely to get government bailout money. Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business. Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds. Political influence was most helpful for poorly performing banks, the study found. "Political connections play an important role in a firm's access to capital," Sosyura, a University of Michigan assistant professor of finance, said in a statement. Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP's Capital Purchase Program. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds. As of late September, nearly 700 financial institutions had received bailouts of $205 billion under the capital purchase program. The banking industry has long been criticized for using political influence to obtain bailouts.

Note: For lots more from reliable sources on the symbiosis between big finance and big government, click here.

Forget too big to fail. In the eyes of federal regulators, many Wall Street firms are too big to punish. During the past three years, some of the nation's largest financial firms have been accused by the government of cheating or misleading clients and ripping off tens of thousands of consumers of their investments. Despite these findings, these financial giants got, sometimes repeatedly, special exemptions from the Securities and Exchange Commission that have saved them from a regulatory death penalty that could have decimated their lucrative mutual fund businesses. Among the more than a dozen firms that have gotten these SEC get-out-of-jail cards since January 2007 are some of Wall Street's biggest, including Bank of America, Citigroup and American International Group. SEC rules permit corporate lawbreakers to apply for what are known as Section 9(c) waivers from one of the agency's harshest penalties — effectively shuttering the violator's mutual fund operations — but regulators never rejected any of these firms' applications. In fact, the last time the SEC's staff could recall a waiver being turned down was 1978. The SEC declined to comment in detail.

Note: For lots more from reliable sources on the realities of the Wall Street bailout, click here.

If you believed all the talk from Chrysler about how our tax dollars would help finance its fast-track electric-vehicle future, you're in for a big disappointment. Chrysler has disbanded the engineering team that was trying to bring three electric models to market as a rush job. Chrysler [had] cited its devotion to electric vehicles as one of the key reasons why the Obama administration and Congress needed to give it $12.5 billion in bailout money. The change of heart on electric vehicles has come under Fiat. At a marathon presentation of Chrysler's five-year strategy, CEO Sergio Marchionne talked about just about everything on Chrysler's plate ... except its earlier electric-car plans. With the group's disbanding, Chrysler's electric plans will be melded into Fiat's. Marchionne is apparently no fan of electric power. He says electrics will only make up 1% or 2% of Fiat sales by 2014 and that he doesn't put a lot of faith in the technology until battery developments are pushed forward. As a result, Chrysler won't have an electric car on sale as soon as next year, such as the Dodge Circuit sports car concept it had unveiled. The change has come so fast that Chrysler's website has been still featuring pictures of the electric vehicles. As late as August, Chrysler took $70 million in grants from the U.S. Department of Energy to develop a test fleet of 220 hybrid pickup trucks and minivans, vehicles now scrapped in the sweeping turnaround plan for Chrysler.

Note: For reports from reliable sources on promising new developments in electric automobile technologies, click here.

Even as the economy continues to struggle, much of Wall Street is minting money — and looking forward again to hefty bonuses. Many Americans wonder how this can possibly be. How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes? It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth. Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than in the ho-hum business of lending people money. They also are profiting by taking risks that weaker rivals are unable or unwilling to shoulder — a benefit of less competition after the failure of some investment firms last year. So even as big banks fight efforts in Congress to subject their industry to greater regulation — and to impose some restrictions on executive pay — Wall Street has Washington to thank in part for its latest bonanza. “All of this is facilitated by the Federal Reserve and the government,” said Gary Richardson, a research fellow at the National Bureau of Economic Research. “But we have just shown them that they can have the most frightening things happen to them, and we will throw trillions of dollars to protect them. I have big concerns about that.”

Note: For lots more on the realities of the Wall Street bailout, click here.

On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history. The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money...) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. Six months after Bear was eaten by predators, virtually the same scenario repeated itself in the case of Lehman Brothers — another top-five investment bank that in September 2008 was vaporized in an obvious case of market manipulation. From there, the financial crisis was on. When Bear and Lehman made their final leap off the cliff of history, both undeniably got a push ... in the form of a flat-out counterfeiting scheme called naked short-selling.

Note: Why isn't this being reported in the major media and aggressively investigated? For many reports from reliable sources on the corruption at the core of the Wall Street collapse and bailout, click here.

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture. [Executives] at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal. Total compensation and benefits at the publicly traded firms analyzed by the Journal are on track to increase 20% from last year's $117 billion -- and to top 2007's $130 billion payout. This year, employees at the companies will earn an estimated $143,400 on average, up almost $2,000 from 2007 levels. The growth in compensation reflects Wall Street firms' rapid return to precrisis revenue levels. Even as the economy is sluggish and unemployment approaches 10%, these firms have been boosted by a stronger stock market, thawing credit market, a resurgence in deal making and the continuing effects of various government aid programs. So far, regulators and lawmakers have focused on making sure pay practices discourage excessive risk-taking, leaving to companies the question of how much is too much.

Note: For lots more on the realities of the Wall Street bailout, click here.

No one, including himself, would argue that Bradley Birkenfeld, 44, is a saint. But at the same time, almost no one in the U.S. government would deny that Birkenfeld was absolutely essential to its landmark tax-evasion case against Swiss banking giant UBS. The former UBS employee turned whistle-blower exposed the previously hidden world of offshore tax shelters, which cheats the Treasury out of about $100 billion a year. Thanks to his insider information, UBS was fined $780 million, and it promised to "exit entirely" from the U.S. tax-shelter business and to provide the names of thousands of American tax dodgers, from which hundreds of millions of dollars still might be collected. It also led to new tax treaties with the Swiss that should provide unprecedented tax information in civil cases and better access to such data in criminal cases. Considering Birkenfeld's help, many observers wonder why the Justice Department decided to arrest and prosecute him. Many critics believe the decision to prosecute Birkenfeld, whom some consider the most important whistle-blower in years, sends the worst possible message to other financial-industry insiders who might be considering coming forward. The Government Accountability Project (GAP), a Washington watchdog organization that has extensive whistle-blower experience, says a chilling effect is already apparent: a senior executive at a European bank that offers similar U.S. tax shelters is having second thoughts about going public because of the Birkenfeld case.

Note: For lots more, including Obama's tight ties with UBS, see the New York Daily News article here.

Important Note: Explore our full index to revealing excerpts of key major media news articles on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.