Government Corruption News Stories

Excerpts of Key Government Corruption News Stories in Major Media

Below are key excerpts of revealing news articles on government corruption from reliable news media sources. If any link fails to function, a paywall blocks full access, or the article is no longer available, try these digital tools.

Note: This comprehensive list of news stories is usually updated once a week. Explore our full index to revealing excerpts of key major media news stories on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.

Is the Central Intelligence Agency covering up some dark secret about the assassination of John F. Kennedy? For six years, the agency has fought in federal court to keep secret hundreds of documents from 1963, when an anti-Castro Cuban group it paid clashed publicly with the soon-to-be [alleged] assassin, Lee Harvey Oswald. The files in question, some released under direction of the court and hundreds more that are still secret, involve the curious career of George E. Joannides, the case officer who oversaw the dissident Cubans in 1963. In 1978, the agency made Mr. Joannides the liaison to the House Select Committee on Assassinations — but never told the committee of his earlier role. That concealment has fueled suspicion that Mr. Joannides’s real assignment was to limit what the House committee could learn about C.I.A. activities. The agency’s deception was first reported in 2001 by Jefferson Morley, who has doggedly pursued the files ever since. Mr. Morley, 51, [is] a former Washington Post reporter and the author of a 2008 biography of a former C.I.A. station chief in Mexico. After losing an appeals court decision in Mr. Morley’s lawsuit, the C.I.A. released material last year confirming Mr. Joannides’s deep involvement with the anti-Castro Cubans who confronted Oswald. But the agency is withholding 295 specific documents from the 1960s and ’70s, while refusing to confirm or deny the existence of many others. The deceptions began in 1964 with the Warren Commission. The C.I.A. hid its schemes to kill Fidel Castro and its ties to the anti-Castro Directorio Revolucionario Estudantil, or Cuban Student Directorate, which received $50,000 a month in C.I.A. support during 1963. In the years since Oswald was named as the assassin, speculation about who might have been behind him has never ended.

Note: For WantToKnow.info team member Peter Dale Scott's analysis of the extraordinary significance of this New York Times article, click here. For two revealing clips suggesting the official explanation of the JFK assassination was manipulated, click here (for a five-minute clip from the History Channel) and here (for a highly revealing documentary from a CBS affiliate).

Did you know that Lunesta will help you fall asleep just 15 minutes faster? Or that a higher dose of the osteoporosis drug Zometa could damage a cancer patient’s kidneys and raise their risk of death? Chances are you didn’t, and neither did your doctor. Much of what the Food and Drug Administration knows about a drug’s safety and effectiveness is not included on the label, say two drug safety experts who are calling on the agency to make that information more accessible. In ... the New England Journal of Medicine, researchers ... argue that drug labels don’t reflect the nuanced decisions the FDA makes when deciding to approve a drug. The editorial from Drs. Lisa Schwartz and Steven Woloshin recommends easy-to-read fact boxes to help patients weigh the benefits and risks of medications. If drug labels sometimes exaggerate benefits and play down drug risks, the authors say there’s a very good reason: they are written by drugmakers. While FDA must approve the final labeling, the actual language is drafted by the manufacturer, with input from FDA scientists. The labeling is based on results from company studies, which generally compare results for patients taking the drug versus those taking placebo. If FDA decides the drug’s ability to treat or prevent a disease outweighs its side effects, the agency is obligated to approve it. But Schwartz and Woloshin point out that benefits may be slim and potential harms may not be fully understood. “The take home point is that just because a drug is approved doesn’t mean it works very well,” said Schwartz, in an interview with the Associated Press. “You really need to know more to see whether it’s worth the cost.” Schwartz and Woloshin say FDA labeling frequently fails to provide a full picture of a drug’s effects.

Note: For a powerful summary of corruption in the pharmaceutical industry, 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.

Congress began the work of reforming our troubled financial system last week, and a bill aimed at regulating derivatives passed the House Financial Services Committee on Thursday. Derivatives — contracts that theoretically protect buyers from unforeseen financial calamities but more often are used to fuel raw speculation — were ... at the heart of the banking crisis. Credit default swaps ... propelled the American International Group off the cliff. Those swaps also linked millions of trading partners, creating a web in which one default threatened to produce a chain of corporate and economic failures worldwide. And derivatives aren’t going away. So reforming the $42 trillion market for credit swaps is crucial if taxpayers are to be protected from future rescues of institutions deemed not only too big but also too interconnected to fail. The best aspect of the House bill is that it requires many swaps to be traded on exchanges just like stocks, subjecting them for the first time to the light of day. But elsewhere in the bill, ... exceptions to this exchange-trading rule undermine its regulatory power. Big banks dealing in swaps don’t want exchange trading, where pricing and the identities of participants would be more publicly transparent. Michael Greenberger, a University of Maryland law professor and an expert in derivatives, criticized the House bill. “The plain language of the legislation can only be read as a Christmas tree of decorative gifts to the banking industry,” he said. “And this is being done when people acknowledge the unregulated O.T.C. derivatives market was a principal reason for the meltdown.”

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

The Food and Drug Administration [has admitted] that four New Jersey congressmen and its own former commissioner unduly influenced the process that led to its decision last year to approve a patch for injured knees. The agency’s scientific reviewers repeatedly and unanimously over many years decided that the device, known as Menaflex and manufactured by ReGen Biologics Inc., was unsafe because the device often failed, forcing patients to get another operation. But after receiving what an F.D.A. report described as “extreme,” “unusual” and persistent pressure from four Democrats from New Jersey ... agency managers overruled the scientists and approved the device for sale in December. All four legislators made their inquiries within a few months of receiving significant campaign contributions from ReGen, which is based in New Jersey, but all said they had acted appropriately and were not influenced by the money. Dr. Andrew C. von Eschenbach, the former drug agency’s commissioner, said he had acted properly. The agency has never before publicly questioned the process behind one of its approvals, never admitted that a regulatory decision was influenced by politics, and never accused a former commissioner of questionable conduct. The report, written by top agency officials, said that Dr. von Eschenbach, who resigned as F.D.A. commissioner in January, became as a result of political pressure “personally engaged in the details of a process usually coordinated” by scientific staff. One agency manager concluded that Dr. von Eschenbach “was demanding not only an expedited process but also an outcome in favor of ReGen,” the report stated.

Note: For a powerful summary of corruption in the pharmaceutical industry, click here.

The Obama administration [has said] that the federal budget deficit for the fiscal year that just ended was $1.4 trillion, nearly a trillion dollars greater than the year before and the largest shortfall relative to the size of the economy since 1945. The shortfall for the fiscal year 2009, which ended Sept. 30, translates to 10 percent of the economy, according to a joint statement from the Treasury secretary, Timothy F. Geithner, and the director of the Office of Management and Budget, Peter R. Orszag. For the 2008 fiscal year, the deficit of $459 billion was 3.2 percent of the economy, as measured by the gross domestic product. At 10 percent of the gross domestic product, the 2009 deficit is the highest since the end of World War II, when it was 21.5 percent. The overall national debt, which is the accumulation of annual deficits, is nearly $12 trillion, and projected deficits for the next decade will add an estimated $9 trillion more. Administration officials say two-thirds of that is due to Bush administration policies.

Note: The current debt of $12 trillion equals $40,000 for every man, woman, and child in the U.S. Most of the increased deficit is due to the government bailout of the biggest Wall Street banks and investment houses. For lots more on the realities of the Wall Street bailout, click here.

A scientist who allegedly tried to sell classified secrets to Israel had worked on the U.S. government's Star Wars missile shield program, and the Justice Department declared Tuesday that he had tried to share some of the nation's most guarded secrets. Arrested in an FBI sting operation, Stewart David Nozette was jailed without bond and accused in a criminal complaint of two counts of attempting to communicate, deliver and transmit classified information. In an interview, Scott Hubbard, a former colleague, said that Nozette was primarily a defense technologist who had worked on the Reagan-era Star Wars effort formally named the Strategic Defense Initiative. ''This was leading edge, Department of Defense national security work,'' said Hubbard, a professor of aerospace at Stanford University who worked for 20 years at NASA. Nozette held a special security clearance equivalent to the Defense Department's top secret and ''critical nuclear weapon design information'' clearances. Authorities became worried about possible espionage activity by Nozette after an investigation by NASA's inspector general in 2006 began looking at whether Nozette submitted false claims for expenses that were not actually incurred. In probing Nozette's finances in that case, investigators found indications he might be working for a foreign government, and they launched a national security investigation that eventually led to the undercover FBI sting.

Note: There's definitely something strange going on here.

As demonstrations have evolved with the help of text messages and online social networks, so too has the response of law enforcement. On Thursday, F.B.I. agents descended on a house in Jackson Heights, Queens [NY], and spent 16 hours searching it. The most likely reason for the raid: a man who lived there had helped coordinate communications among protesters at the Group of 20 summit in Pittsburgh. The man, Elliot Madison, 41, a social worker who has described himself as an anarchist, had been arrested in Pittsburgh on Sept. 24 and charged with hindering apprehension or prosecution, criminal use of a communication facility and possession of instruments of crime. The Pennsylvania State Police said he was found in a hotel room with computers and police scanners while using the social-networking site Twitter to spread information about police movements. He has denied wrongdoing. American protesters first made widespread use of mass text messages in New York, during the 2004 Republican National Convention. Messages, sent as events unfolded, allowed demonstrators and others to react quickly to word of arrests, police mobilizations and roving rallies. Mass texting has since become a valued tool among protesters, particularly at large-scale demonstrations. Mr. Madison [may be] the first to be charged criminally while sending information electronically to protesters about the police. “He and a friend were part of a communications network among people protesting the G-20,” Mr. Madison’s lawyer, Martin Stolar, said on Saturday. “There’s absolutely nothing that he’s done that should subject him to any criminal liability.”

Note: For many reports from reliable sources on increasing government erosion of civil liberties, click here.

UK border police used anti-terrorist legislation to prevent a British climate change activist from crossing over into mainland Europe where he planned to take part in events surrounding the forthcoming United Nations summit in Denmark. Chris Kitchen, a 31-year-old office worker, said he feared his treatment by police could mark the start of a clampdown on protesters, hundreds of whom are planning to travel to Copenhagen for the climate change talks in December. [He had hoped] to take part in discussions organised by a network of protest groups coming together under the banner Climate Justice Action. He said he was prevented from crossing the border ... when the coach he was travelling on stopped at the Folkestone terminal of the Channel tunnel. Kitchen said police officers boarded the coach and, after checking all passengers' passports, took him and another climate activist to be interviewed under schedule 7 of the Terrorism Act 2000, a clause which enables border officials to stop and search individuals to determine if they are connected to terrorism. The passports were not initially scanned, Kitchen said, suggesting the officials knew his name and had planned to remove him from the coach before they boarded. During his interview, he was asked questions about his family, work and past political activity. The police also asked him what he intended to do in Copenhagen. When Kitchen said that anti-terrorist legislation does not apply to environmental activists, he said the officer replied that terrorism "could mean a lot of things". Police are understood to be monitoring protesters on a number of databases, some of which highlight individuals when they pass through secure areas, such as ports.

Note: For many reports from reliable sources on increasing government erosion of civil liberties, click here.

Billionaire Mayor Michael Bloomberg defended multibillion-dollar pharmaceutical companies and their chief executives on Friday, declaring that they "don't make a lot of money" and shouldn't be scapegoats in the health care debate. The mayor — and wealthiest person in New York City with a fortune estimated at $16.5 billion — made the comments on his radio show Friday. "You know, last time I checked, pharmaceutical companies don't make a lot of money, their executives don't make a lot of money," Bloomberg said. Pharmaceutical CEOs are known to make millions, with generous salaries, stock options and other perks. Abbott Laboratories Inc. Chairman and Chief Executive Miles White's compensation was $25.3 million in 2008. The North Chicago, Ill.-based company saw profit rising 35 percent to $4.88 billion. Merck & Co.'s chief executive, Richard T. Clark, received a $17.3 million compensation package for 2008. The company's profit more than doubled to $7.8 billion. The mayor ... often battles criticism that he is out of touch with regular people. Earlier this year he declared "we love the rich people" while arguing against raising taxes on the wealthy. It was clear that Bloomberg or one of his aides realized his gaffe while he was still on the air Friday. The mayor, who has sought to cast himself as a financial and business expert, came back from a break and said he had looked up the pay of some pharmaceutical executives. "Some of them are making a decent amount, more than a decent amount of money," he said.

As a group of healthcare workers, we are being mandated by a new New York state law to receive the seasonal flu vaccine and H1N1 vaccines. If we do not receive these vaccines by November 30th, that inaction is to be considered our resignation. We must sign a consent for the vaccines prior to their administration. The manufacturers have been granted immunity by the government; they cannot be sued for untoward effects. We do not want to receive these vaccines. Our educated studies of risks versus benefits conclude that the risks of the vaccine are greater than the possible benefits. All health care workers with direct patient care are mandated to receive the vaccine, so the coercion is real -- we cannot just go find a job "somewhere else." And the job market of 2009 does not offer opportunity in a different arena where we could still feed our families. We understand the fear that swine flu and influenza has generated. While our sources of information indicate that swine flu is not a pandemic, we know that the slanted research fed by the media offers results intended to frighten the public. We do not have the power to stop the fear that mass hype is able to generate. We hear the hype you are fed. We do not want to bring you harm, but we should not be forced into harm's way ourselves.

Note: For more on mandatory flu vaccinations, click here.

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades. Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June. That’s the highest percentage in any quarter with more than an $80 billion increase. World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991. “Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.” The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. America’s currency has been under siege as the Treasury sells a record amount of debt to finance a budget deficit that totaled $1.4 trillion in fiscal 2009 ended Sept. 30.

Note: For insightful analyses of the US financial crisis, click here.

It's always interesting to look behind the curtain at the state Capitol and marvel at the California Legislature's ingenuity at spending our money or avoiding accountability. It's just too bad this creative brilliance could not be applied to addressing fiscal crises or solving the state's water problems. The latest little outrage came in the scrutiny of the Legislature's 77 select committees by Chronicle staff writers Wyatt Buchanan and Matthew Yi. What they found was that 32 of these committees have paid staffers, with a combined payroll of $4.3 million. It may not be a lot of money in the context of a state that keeps encountering deficits in the tens of billions, but it does seem to represent a bit of clever accounting. To put it in plain terms: It's a way for elected officials to pad their staffs. For example, state Sen. Lou Correa, D-Santa Ana, has six people working for him who are paid through three select committees. Total number of hearings those committees have held this year: zero. Sen. Mark Leno, D-San Francisco, chairs two select committees ... with four paid staff members. Total number of hearings this year: zero. Californians who are not so immersed in the culture of the Legislature might wonder why it needs 77 select committees in addition to the standing committees that are assigned to cover areas such as transportation, energy and myriad other issues. At least 19 of the 32 with paid staff have not met at all this year.

Note: For lots more on government corruption from reliable sources, click here.

Professor Noam Chomsky may be among America's most enduring anti-war activists. But the leftist intellectual's anthology of post-9/11 commentary is taboo at Guantánamo's prison camp library, which offers books and videos on Harry Potter, World Cup soccer and Islam. U.S. military censors recently rejected a Pentagon lawyer's donation of an Arabic-language copy of the political activist and linguistic professor's 2007 anthology Interventions for the library. Chomsky, 80, who has been voicing disgust with U.S. foreign policy since the Vietnam War, reacted with irritation and derision. "This happens sometimes in totalitarian regimes," he told The Miami Herald by e-mail after learning of the decision. "Of some incidental interest, perhaps, is the nature of the book they banned. It consists of op-eds written for The New York Times syndicate and distributed by them. The subversive rot must run very deep." Prison camp officials would not say specifically why the book was rejected. A rejection slip accompanying the Chomsky book did not explain the reason but listed categories of restricted literature to include those espousing "Anti-American, Anti-Semitic, Anti-Western" ideology, literature on "military topics." Prison camp staff would not say how many donated books have been refused.

The existence of the influenza vaccine ... may give us a sense of false security when it comes to the possibility of a pandemic outbreak of influenza. In fact, the flu vaccine must be reformulated each year to keep pace with the newest variants of this fast-mutating virus. The recipe for making the flu vaccine is simple. Take the current year's variant of the influenza virus, throw it into a stew with a strain of virus that leads to rapid proliferation. Incorporate the fast-growing strain into its own genes and start replicating it. From there, it's an easy matter to take those plentiful viruses and attenuate them for a flu vaccine. But the scientists who must determine what virus will cause the next year's illness run a high chance of being wrong. Some observers have put the odds of success at no better than 50-50. Even when they are right, the vaccine lasts only as long as that year's strain. Experts thought they saw big-league trouble coming in February 1976, when a few cases of severe swine flu broke out among young military recruits in Fort Dix, N.J. One of them, Pvt. David Lewis, 19, died. Lewis and four others were shown to be infected with the same H1N1 influenza virus as was responsible for the 1918 pandemic. But the swine-flu pandemic never materialized. In retrospect, some critics now say 40 million Americans were vaccinated for nothing. In fact, the only real illness to result from the swine flu adventure was caused by the vaccine: about one thousand people developed Guillain-Barre syndrome, a serious paralytic disease that could be traced directly to an immunological response to the inoculation.

Note: This article also discusses how new, intensified farming techniques for chickens, pigs, and ducks are the prime breeding ground for viruses which spread around the world. A powerful CBS 60 Minutes clip on the 1976 swine flu scare is available here. The intrepid 60 Minutes team shows how greed and blatant corruption led to the death of hundreds and paralysis of thousands as a direct result of the vaccine developed that year, while only one person died from the flu. For lots more, click here.

In preparation for swine-flu vaccinations next month, Washington's Health Department ... temporarily suspended a rule that limits the amount of a mercury preservative [called Thimerosal] in vaccines given to pregnant women and children under the age of 3. Thimerosal has been eliminated from most vaccines in the United States, but it will be added to the bulk of the swine-flu vaccine. A vocal minority believes the compound could be linked to autism. About 15 percent of the vaccine supply will be mercury-free. Thimerosal will be added to the vaccine because it is being produced in vials that contain enough medication for 10 shots. The mercury compound kills bacteria, lowering the risk that the drug will be contaminated by needles used to withdraw separate doses. "Every time you introduce a needle, you run a risk of introducing a potential contaminant," said Dr. Tony Marfin, state epidemiologist for infectious disease. Mercury-free vaccine will be produced in single-dose vials. Nasal sprays do not contain mercury but are not recommended for children under the age of 2 and pregnant women, because they contain live, weakened virus. The law limiting the mercury preservative will be suspended for six months and applies only to the swine-flu vaccines. Once common in vaccines, thimerosal has been largely phased out in most wealthy nations. Children's vaccines in the United States are almost exclusively mercury-free, single-dose injections. After 1976's mass vaccination against a different swine-flu strain, about 500 people developed a neurological disorder called Guillain-Barre Syndrome (GBS), and some died. Scientists still haven't figured out why.

Note: To watch a vitally important 10-minute clip from CBS's 60 Minutes revealing government complicity in the deaths of 300 Americans and permanent paralysis of thousands more from the vaccine during the 1976 swine flu scare, click here. This is the most revealing clip by far on the swine flu that we've seen. For much more information on the dangers of thimerosal in vaccines, click here.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets. The Americans ... are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security." This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy.

Note: The publication of this article caused the value of the dollar to fall and the price of gold to rise worldwide. For important ideas on how to reform the role of money in the world, click here.

LOIS ROMANO: Welcome, Elizabeth Warren, Chairman of the Congressional Oversight Committee that is tasked with scrutinizing how the Treasury Department has spent $700 billion to shore up our failing financial institutions. There's a wonderful moment [in the movie "Capitalism: a Love Story"] when [Michael Moore] asks you where the $700 billion is, and you look at him and you say, "I don't know." So the question is: why don't you know? WARREN: Well, we don't know where the $700 billion is because the system was initially designed to make sure that we didn't know. When Secretary Paulson first put this money out into the banks, he didn't ask "what are you going to do with it?" He didn't put any restrictions on it. He didn't put any tabs on where it was going to go; in other words, he didn't ask. And if you don't ask, no one tells. And so we have a system that originally put more than $200 billion into the financial institutions basically saying just take it. ROMANO: And that money is gone. You have not been able to track where that money is? WARREN: Well, we don't know where the money went from the financial institutions. The big conversation at the time was that the credit markets are frozen; if we put money into the financial institutions, they will start lending it because that's what they do when they receive money. It was called the "Healthy Banks Program." Secretary Paulson kept saying, over and over, these are investments in healthy financial institutions, no one needs any subsidy, that [the] money was going to be used in lending to small businesses and consumers and kind of get our whole credit market going again. That didn't happen.

Note: To watch a powerfully revealing, five-minute video showing the Inspector General of the Federal Reserve testifying that she doesn't know where trillions of dollars are, click here. For a comprehensive overview of the realities underlying the government's bailout of the biggest financial institutions, click here.

The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, a government watchdog states in a new report released today. Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), says that despite multiple statements on Oct. 14 of last year that these nine banks were healthy and only receiving government funds for the good of the country's economy, federal officials knew otherwise. "Contemporaneous reports and officials' statements to SIGTARP during this audit indicate that there were concerns about the health of several of the nine institutions at that time and, as detailed in this report, that their overall selection was far more a result of the officials' belief in their importance to a system that was viewed as being vulnerable to collapse than concerns about their individual health and viability," Barofsky says. In announcing the initial $125 billion provided to these banks, former Treasury Secretary Hank Paulson on Oct. 14 said, "These are healthy institutions. As these healthy institutions increase their capital base, they will be able to increase their funding to U.S. consumers and businesses." That same day, the Treasury Department, the Federal Reserve and the FDIC also released a joint statement reiterating that "these healthy institutions are taking these steps to ... enhance the overall performance of the US economy." Barofsky finds, however, senior officials at the Treasury and the Fed had serious concerns about the health of some of these banks.

Note: For a comprehensive overview of the realities underlying the government's bailout of the biggest financial institutions, click here.

The head of the U.S. Federal Deposit Insurance Corp. said on Sunday that she wanted to end the "too big to fail" doctrine and shrink the shadow banking system that operates outside the reach of regulators. FDIC Chairman Sheila Bair ... said a U.S. proposal to create the authority to shut down failing systemically important financial firms may need to be extended to insurers and hedge funds. "We need to end 'too big to fail' and this needs to be an overarching policy that applies to everyone," Bair said. Bair said she believed that bank holding companies with subsidiaries that are shut down by regulators also should be made to pay the price of failure by being subject to the same wind-down process. "I believe that the new regime should apply to all bank holding companies that are more than just shells and their affiliates regardless or not whether they are considered to be systemic risks," she said, adding that including only systemically important firms in the shut-down regime could reinforce the 'too big to fail' doctrine. Financial firms subject to systemic risk shutdown authority should likely also be required to publish "living wills" -- details on how an orderly wind-down would play out -- on their websites to provide more clarity to shareholders and customers. And by applying the resolution authority more broadly outside of normal regulated bank holding companies, it would help shrink the shadow banking system by discouraging regulatory arbitrage under which financial firms shop for the most lenient supervisors. "If you tighten regulation of the banks even more without dealing with the shadow sector you could make the problem even worse," she said.

Note: For a comprehensive overview of the realities underlying the government's bailout of the biggest financial institutions, click here.

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