Obama Rejected Bush Mortgages Concession

Barney Frank: Obama Rejected Bush Administration Concession to Write Down Mortgages
http://www.nakedcapitalism.com/2012/05/barney-frank-obama-rejected-bush-administration-concession-to-write-down-mortgages.html

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller
WEDNESDAY, MAY 30, 2012

Here’s Barney Frank, in an exit interview recently in New York Magazine, revealing unwittingly that Obama during the transition rejected a Bush administration concession to write down mortgages.  Here’s what Barney said.

The mortgage crisis was worsened this past time because critical decisions were made during the transition between Bush and Obama. We voted the TARP out. The TARP was basically being administered by Hank Paulson as the last man home in a lame duck, and I was disappointed. I tried to get them to use the TARP to put some leverage on the banks to do more about mortgages, and Paulson at first resisted that, he just wanted to get the money out. And after he got the first chunk of money out, he would have had to ask for a second chunk, he said, all right, I’ll tell you what, I’ll ask for that second chunk and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it.  This is now December, so we tried to get the Obama people to ask him and they wouldn’t do it.

This is consistent with other accounts.  There were policy debates within Obama’s economic team about what to do about the mortgage crisis.  The choices were to create some sort of legal entity to write down mortgage debt or to allow the write-down of mortgage debt through a massive wave of foreclosures over the next four to six years.  He choice the latter.  That choice was part of what led to roughly $7 trillion of middle class wealth gone, with financial assets for the elites re-inflated.

Since I pointed out that the growth of income inequality under Obama is worse than that under Bush, many people have responded by saying that somehow this is not Obama’s responsibility, that it was an inherited crisis and structural problems that caused a widening of inequality.  They simply do not want to accept that policy matters, or, if it does, that Obama had any choice in the policy choices he made.

In fact, crisis response is the single most significant policymaking time imaginable, because all structural barriers are swept away.  Think about it – this was literally a deal offered by Hank Paulson – one guy – to Barack Obama, with a multi-trillion dollar impact.  No 60 votes in the Senate.  No hearings.  No confirmations.  Just a handshake, basically.  In other words, policy does matter, and Obama had a variety of choices and leverage, and he did what he thought was best.  He did not want to write down mortgages, even though he was offered that choice by the Bush administration and Barney Frank.  So he didn’t.

So yes, Barack Obama is worse than George Bush on economic inequality.  While Paulson didn’t want to write down mortgages, the single biggest factor in determining whether the American middle class has any stored wealth, Paulson was willing to do so in response to pressure.  Barack Obama was not.

Ron Paul, Barney Frank Introduce Bill That Would End Pot Prohibition

June 23, 2011 Eyder Peralta
http://www.npr.org/blogs/thetwo-way/2011/06/23/137372951/ron-paul-barney-frank-to-introduce-bill-that-would-end-pot-prohibition

Reps. Ron Paul (R-TX) and Barney Frank (D-MA) introduced a bipartisan bill today that would remove the federal prohibition on marijuana. The bill would instead let states legalize, regulate and tax marijuana.

USA Today reports the bill is being championed by a legalization advocacy group:

The Marijuana Policy Project highlights that 46.5% of Californians voted for Proposition 19. It also cites a report released this month by the Global Commission on Drug Policy that slammed the decades-old war on drugs and called on governments to take a look at decriminalizing marijuana and other drugs.

The bill by Frank and Paul would "end state/federal conflicts over marijuana policy, re-prioritize federal resources and provide more room for states to do what is best for their own citizens," the group says.

Politico says the legislation is modeled after the 21st Amendment to the Constitution, which repealed the federal prohibition on alcohol and handed that responsibility to the states. Quoting the Marijuana Policy Project, Politico reports it's "the first bill ever introduced in Congress to end federal marijuana prohibition."

But, as CNN money puts it, the bill is a long shot. But part of the point, adds CNN, is to start a conversation.

The bill is co-sponsored by Reps. John Conyers (D-MI), Steve Cohen (D-TN), Jared Polis (D-CO), and Barbara Lee (D-CA).

TSA Launches New PERV Program

http://spnheadlines.blogspot.com/2010/03/faa-tiger-will-work-airport-security_19.html

Tuesday, November 16, 2010
TSA Launches New PERV Program
Tiger Woods Will Conduct Strip Searches
Safety Inspection today at O'Hair
International Airport in Chicago

(Washington, D.C.) by Robert Feeley - The Obama administration today announced strict new regulations regarding passenger clothing and invasive body searches for passengers boarding commercial flights in the United States. The TSA calls it the Program to Examine Random Voyagers, or PERV.

The modus operandi of Christmas Day airplane bomber Abdul Whacko al Kaboom, explosives in his underpants, prompted Homeland Security Secretary Janet Napolitano to order that all passengers must wear thong underwear and be subject to random panty inspections effective immediately.

"Please drop your pants, miss"

The announcement brought a flood of employment applications for the position of Special PERV Inspector. Disgraced golfer Tiger Woods was first in line among dozens of other horndogs this morning at TSA headquarters and was hired for duty at Orlando International Airport. Mr. Woods spoke with SPN and said, "I'm looking forward to this new challenge. They want the lines to move fast at the airport and nobody gets a skirt up or a pair of pants down faster than me!"

Several members of congress will be touring the nation's airports on taxpayer funded fact-finding vacations, and Senator Barney Frank (D-Ma.) said he will personally volunteer to be strip searched as often as possible.

Wells Fargo Will Raise Credit-Card Rates

http://www.bloomberg.com/apps/news?pid=20601087&sid=awlcvwc.dpdM

Wells Fargo Will Raise Credit-Card Rates Ahead of Law
By Peter Eichenbaum
October 7, 2009

(Bloomberg) -- Wells Fargo & Co. plans to raise interest rates on a majority of credit-card customers by 3 percentage points before federal rules limiting such increases take effect, a company executive said.

“This is something we’ve been contemplating for quite a period of time,” Kevin Rhein, group head of card services for the San Francisco-based bank, said today in a telephone interview. “We had just reached the point that we don’t think we can offer credit cards at the current pricing and keep credit flowing.”

Wells Fargo began advising customers this week that the change takes effect on Nov. 30. That’s a day before House Financial Services Committee Chairman Barney Frank wants curbs on rates and fees to become effective under the new U.S. credit- card law. The Massachusetts Democrat plans a hearing tomorrow on moving up the date to Dec. 1 from Feb. 22 to head off increases by card issuers.

Rhein didn’t comment on whether Frank’s bill had a bearing on the timing of Wells Fargo’s rate increases. The bank is also eliminating over-limit fees, which are imposed when customers exceed their credit lines, he said.

Wells Fargo is the eighth-biggest U.S. card lender, Rhein said. The company accepted $25 billion from the government’s bank bailout program.

Bank of America Corp., the second-biggest U.S. credit-card lender after JPMorgan Chase & Co., said in Oct. 5 letters to Frank and Senate Banking Committee Chairman Christopher Dodd that the company wouldn’t raise rates and fees on customers in good standing until the effective dates of the Credit Card Accountability Responsibility and Disclosure Act.

Federal Law

The law, which takes effect in stages, includes provisions that limit rate increases and require lenders to apply payments to higher-rate balances first.

Dodd, a Connecticut Democrat, urged competing card issuers to follow the lead of Charlotte, North Carolina-based Bank of America, the biggest U.S. bank by deposits and assets.

Aides for Frank and Dodd didn’t respond to requests for comment on Wells Fargo’s decision to raise interest rates.

The change doesn’t affect some customers, typically those who signed on within the past year, and others the bank gained from acquiring Wachovia Corp., said spokeswoman Lisa Westermann.

Wells Fargo rose 60 cents, or 2.1 percent, to $29.26 at 4:15 p.m. today in New York Stock Exchange composite trading. The shares have fallen 8.3 percent in the past year.

April Notifications

While Bank of America raised rates on some customers in June, the notifications were sent in April “before we knew the outcome of the final legislation,” spokeswoman Betty Riess said yesterday in an e-mail. Bank of America may raise rates for customers who are late on two or more payments within 12 months, Riess said.

JPMorgan, which raised rates and fees and imposed higher minimum monthly payments after President Barack Obama signed the legislation on May 22, intends to comply with the law’s provisions when they become effective, spokeswoman Stephanie Jacobsen said in an e-mail.

Capital One Financial Corp., the third-biggest issuer of Visa Inc. credit cards, is in “full compliance” with the law, including provisions scheduled to take effect Feb. 22, spokeswoman Tatiana Stead said in an e-mail.

Discover Financial Services customers have been notified of price increases or changes in terms, said Matthew Towson, a spokesman for the Riverwoods, Illinois-based company. Discover has “gone beyond the requirements in some cases including eliminating pay-by-phone fees, over-limit fees and default pricing on existing balances,” he said.

To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net

House will pass Ron Paul’s ‘audit the Fed’ bill

http://rawstory.com/08/news/2009/08/28/rep-frank-house-will-pass-ron-pauls-audit-the-fed-bill-this-year/

Rep. Frank: House will pass Ron Paul’s ‘audit the Fed’ bill this year
Stephen C. Webster
August 28, 2009

Powerful House Financial Services Committee chairman says central bank’s lending powers to be ‘curtailed’

Congressman Barney Frank (D-MA), one of the most unabashed liberals in the U.S. House of Representatives, told a Massachusetts town hall recently that Texas Republican Congressman Ron Paul’s bill to audit the Federal Reserve will clear his chamber by October.

Over half of the House members, most of them Republican, have signed on to the bill, H.R. 1207.

Though Frank disagrees — as many proponents of the bill contend — that the Fed is the cause of the U.S. dollar’s shrinking value, he told a Massachusetts audience that he’s been a proponent of greater transparency at the nation’s central bank for some time.

“Here’s what we plan to do: I want to restrict the powers of the Federal Reserve in a number of ways,” he said. “First of all, they will be the major losers of power if we’re successful, as I believe we will be, setting up that, uh, financial product protection committee.”

The committee Frank mentioned was proposed by President Barack Obama during the campaign, as a way of protecting consumers. It was formally presented to Congress in the President’s financial regulatory reform white papers in July, noted law firm Wiley Rein LLP.

“The Federal Reserve is now charged with protecting consumers,” continued Frank. “They were supposed to do sub-prime mortgage restricted … Congress in 1994 gave the Federal Reserve the power to adopt rules to ban bad sub-prime mortgages. … They have the power to ban credit card abuses. They have the power to do most of it. They, under Greenspan, did nothing.

“Under Bernanke, they started to do things, but only after Congress started, when I became chairman of the [House Financial Services Committee], we began to act on these things: Sub-prime mortgages, credit cards, overdraft … And after we started, the Fed did. So, that’s why one of the reasons why in the new consumer protection agency we will take away from the Federal Reserve the power to do consumer protection.”

Frank added that Congress will reverse an action by the Democratic Congress of 1932 that gives the Fed authority to lend money at will.

“Under section 13.3 of the Federal Reserve Act, they can lend money to whoever they want,” he said. “We are going to curtail that lending power. We are going to put some constraints on it.”

He concluded: “Finally, we are going to subject them to a complete audit. I’ve been working with Ron Paul, the main sponsor of that bill …” Several in the audience applauded. “He believes that we don’t want to have the audit appear as if it is influencing monetary policy because that would be inflationary … One of the things that will show you is what the Federal Reserve buys and sells. That will be made public, but not instantly. If it were instant, you would have a lot of people trading off that and it would have too much impact on the market. Again, Ron agrees with that. So, we will probably have that data released after a time period of several months — enough time so it won’t be market sensitive.”

Danger in transparency?

The pervasive argument against transparency at the nation’s central banking institution was repeated by Treasury Secretary Tim Geithner during a recent dialog with popular social bookmarking Web site Digg.com.

Geithner said that he’s sure “people understand that you want to keep politics out of monetary policy,” adding that auditing the Fed is “a line that we do not want to cross” because of the possible danger to the U.S. economy.

The argument is strikingly similar to one posed by the Federal Reserve’s legal counsel in a Freedom of Information Act lawsuit filed by Bloomberg News in an attempt to force disclosure of the institutions that received billions in bailout money.

Loretta Preska, chief judge of the Manhattan U.S. District Court, ruled Monday that the Fed had “improperly withheld agency records” in response to the FOIA request, adding that the argument of danger to the economy was based merely on “conjecture” and not evidence.

“[The] risk of looking weak to competitors and shareholders is an inherent risk of market participation; information tending to increase that risk does not make the information privileged or confidential,” she wrote.

Opposition to Fed powers growing

Eliot Spitzer, the disgraced former Governor and Attorney General of New York — at one time known as the “sheriff” of Wall Street — has assaulted the bank bailouts as “America’s greatest theft and cover-up ever” and called the Federal Reserve a “Ponzi scheme” that must be held accountable for its actions.

Additionally, the House Domestic Policy Subcommittee plans to probe how the Troubled Asset Relief Program’s (TARP) funds were dispersed by the Fed. Expressing his frustration before the Government and Oversight Committee, Congressman Dennis Kucinich (D-OH) suggested that the Federal Reserve may be paying banks to hoard money and avoid making loans, instead of using the TARP funds to keep people in their homes.

To support his assertion, Kucinich cited a Bloomberg report which noted that “banks’ excess reserves at the Fed rose to a record $877.1 billion daily average in the two weeks ended May 20, from $2 billion a year earlier.”

“Excess reserves — money available for lending that banks choose to leave with the Fed instead — averaged $743.9 billion in the first two weeks of this month,” the report continued.

“First, Congress was told that TARP was for the purchase of toxic assets, to help keep people in their homes,” the Congressman said. “Then the Bush Administration switched the program. Next, Congress was told that the TARP funds were instead needed to bail out the banks, in the form of a direct capital infusion, to keep credit markets alive.”

In a media advisory, Kucinich added, “If TARP isn’t about keeping people in their homes or providing credit to businesses, what is it for? I think the vast majority of Americans would be outraged to learn their tax dollars were facilitating hoarding at the Fed and increased profit making for banks.”

Kucinich’s Domestic Policy Subcommittee has also undertaken an investigation of the Fed’s bailout of the Bank of American-Merrill Lynch merger. “Specific documents subpoenaed include emails, notes of conversations and other documents,” his office noted.

“You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money,” Eliot Spitzer told MSNBC’s Morning Meeting host Dylan Ratigan in late July. “This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy. The Fed needs to be examined carefully.”

Concluding his answer to the question of auditing the Federal Reserve, Rep. Frank told the Massachusetts audience: “The House will pass [H.R. 1207] probably in October.”

The New Trough

http://www.rollingstone.com/politics/story/24012700/the_new_trough

The New Trough
The Wall Street bailout looks a lot like Iraq — a "free-fraud zone" where private contractors cash in on the mess they helped create
NAOMI KLEIN
Posted Nov 13, 2008

Editor's note: The online version of this story has been amended to reflect developments since the publication of the print edition.

On October 13th, when the U.S. Treasury Department announced the team of "seasoned financial veterans" that will be handling the $700 billion bailout of Wall Street, one name jumped out: Reuben Jeffery III, who was initially tapped to serve as chief investment officer for the massive new program.

On the surface, Jeffery looks like a classic Bush appointment. Like Treasury Secretary Henry Paulson, he's an alum of Goldman Sachs, having worked on Wall Street for 18 years. And as chairman of the Commodity Futures Trading Commission from 2005 to 2007, he proudly advocated "flexibility" in regulation — a laissez-faire approach that failed to rein in the high-risk trading at the heart of the meltdown.

Bankers watching bankers, regulators who don't believe in regulating — that's all standard fare for the Bush crew. What's most striking about Jeffery's résumé, however, is an item omitted when his new job was announced: He served as executive director of Paul Bremer's infamous Coalition Provisional Authority in Baghdad, during the early days of the Iraq War. Part of his job was to hire civilian staff, which made him an integral part of the partisan machine that filled the Green Zone with Young Republicans, investment bankers and Dick Cheney interns. Qualifications weren't a big issue back then, because the staff's main function was to hand over stacks of taxpayer money to private contractors, who were the ones actually running the occupation. It was this nonstop cash conveyor belt that earned the Green Zone a reputation, in the words of one CPA official, as "a free-fraud zone." During Senate hearings last year, when Jeffery was asked what he had learned from his experience at the CPA, he said he thought that contracts should be handed out with more "speed and flexibility" — the same philosophy he cited back when he was in charge of regulating Wall Street traders.

The Bush Administration has since reversed the Jeffery appointment, perhaps thinking better of giving a CPA alum such a central role in the Wall Street bailout. Still the original impulse underscores the many worrying parallels between the administration's approach to the financial crisis and its approach to the Iraq War. Under cover of an emergency, Treasury is rapidly turning into an economic Green Zone, overrun with private companies collecting lucrative contracts. Fittingly, one of the first to line up at the new trough was none other than the law firm of Bracewell & Giuliani — yes, that Giuliani. The firm's chairman, Patrick Oxford, could scarcely conceal his glee over the prospect of cashing in on the bailout. "This one," he told reporters, "is very, very big." At least four times bigger, in fact, than the post-9/11 homeland-security bubble, from which Giuliani and his various outfits have profited so extravagantly. Even bigger, potentially, than the price tag for the Iraq War itself.

In Iraq, the contractors were tasked with reconstructing the country from the mess made by U.S. missiles. After years of corruption born of no-bid contracts and paltry oversight, many Iraqis are still waiting for the lights to come back on. Today, a new team of contractors is lining up to reconstruct the U.S. economy — reconstruct it from the mess made by the very banks, brokers and law firms that are now applying for contracts. And it's not at all clear that America can survive their assistance.

See if any of this sounds familiar: As soon as the bailout was announced, it became clear that Treasury officials would hire outsiders to perform their jobs for them — at a profit. Private companies wanting to help manage the bailout were given just two days to apply for massive, multiyear contracts. Since it was such a mad rush — after all, the entire economy was about to implode — there was no time for an open bidding process. Nor was there time to draft rigorous rules to make sure that those applying don't have serious conflicts of interest. Instead, applicants were asked to disclose their conflicts and to explain — and this is not a joke — their "philosophy in fulfilling your duty to the Treasury and the U.S. taxpayer in light of your proprietary interests and those of other clients." In other words, an open invitation to bullshit about how much they love their country and how they can be trusted to regulate themselves.

The first major contract to be awarded in the bailout was for legal advice — and the choice Treasury made was Halliburton-esque in its audacity. Six law firms were invited to bid, but four declined, either because they didn't want the contract or because they had too many conflicts of interest. Rep. Barney Frank, chairman of the House Financial Services Committee, said the fact that so many law firms chose not to bid "shows that the guidelines are sufficiently rigorous."

Or it may just show that the bidder who won the contract — Simpson Thacher & Bartlett — takes a more relaxed approach to conflicts than its colleagues. The law firm is a Wall Street heavy hitter, having brokered some of the biggest bank mergers in recent years. It also provided legal support to companies trading mortgage-backed securities — the "financial weapons of mass destruction," as Warren Buffett called them, that detonated the banking industry. More to the point, it was hired to provide legal services to the Treasury in its negotiations to spend $250 billion of the bailout money purchasing equity in America's banks. The first stage of the plan involves buying stakes in nine of the country's top banks. Incredibly, Simpson Thacher has represented seven of the nine: JPMorgan, Bank of New York Mellon, Bank of America, Citigroup, Morgan Stanley, Goldman Sachs and Merrill Lynch.

According to its contract, Simpson Thacher has agreed not to represent any of the banks "against the U.S." when they negotiate with Treasury for the equity money. However, the firm has retained the right to represent banks when they apply for other parts of the $700 billion bailout not covered by its contract. (It has promised to erect a "firewall" to stem the flow of "confidential information" to those clients.) The firm will also continue to work for the banks on a range of other lucrative deals — and that's where the problem lies. Take Lee Meyerson, Simpson Thacher's lead lawyer on the bailout negotiations, who is specifically named in the contract as "essential" to the project. As the company's hotshot attorney, Meyerson has personally represented three of the nine banks that were bailed out in the first round, in addition to many others that will surely apply for cash injections. One of the bailed-out banks is Bank of New York Mellon, whose $29 billion merger Meyerson helped negotiate. Mergers like that can bill in the millions. Is Simpson Thacher able to put aside its loyalties to its biggest clients and negotiate deals for the taxpayer that could exact real costs from those very clients?

It might be possible to set aside concerns about divided loyalties if it were clear that Simpson Thacher is helping Treasury to wrangle the best deals possible for U.S. taxpayers. But the firm's first test — the deal to give $125 billion to the nine big banks to ease the "credit crunch" that is crippling the economy — wasn't exactly reassuring. Secretary Paulson promised that the banks won't just "hoard" the money — they will quickly "deploy it" through the economy in the form of badly needed loans. There is just one hitch: Neither Paulson nor Simpson Thacher got that "deploy" part in writing — nor did they put in place any mechanism to require the banks to spend their taxpayer billions. Apparently, the part about lending the money to homeowners and small businesses was sort of implied.

"There is no obligation for banks to lend the money one way or the other," Jennifer Zuccarelli, a Treasury spokeswoman, tells Rolling Stone. "But the banks have the understanding" that the money is intended for loans. "We're not looking to control their operations."

Unfortunately, many of the banks appear to have no intention of wasting the money on loans. "At least for the next quarter, it's just going to be a cushion," said John Thain, the chief executive of Merrill Lynch. Gary Crittenden, chief financial officer of Citigroup, had an even better idea: He hinted that his company would use its share of the cash — $25 billion — to buy up competitors and swell even bigger. The handout, he told analysts, "does present the possibility of taking advantage of opportunities that might otherwise be closed to us."

And the folks at Morgan Stanley? They're planning to pay themselves $10.7 billion this year, much of it in bonuses — almost exactly the amount they are receiving in the first phase of the bailout. "You can imagine the devilish grins on the faces of Morgan Stanley employees," writes Bloomberg columnist Jonathan Weil. "Not only did we, the taxpayers, save their company...we funded their 2008 bonus pool."

It didn't have to be this way. Five days before Paulson struck his deal with the banks, British Prime Minister Gordon Brown negotiated a similar bailout — only he extracted meaningful guarantees for taxpayers: voting rights at the banks, seats on their boards, 12 percent in annual dividend payments to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, and a legal requirement that the banks lend money to homeowners and small businesses.

In sharp contrast, this is what U.S. taxpayers received: no controlling interest, no voting rights, no seats on the bank boards and just five percent in dividend payouts to the government, while shareholders continue to collect billions in dividends every quarter. What's more, golden parachutes and bonuses already promised by the banks will still be paid out to executives — all before taxpayers are paid back.

No wonder it took just one hour for Paulson to convince all nine CEOs to accept his offer — less than seven minutes per bank. Not even the firms' own lawyers could have drafted a sweeter deal.

The day after it met with the nation's top banks, Treasury announced that it had selected the firm that would receive the juiciest contract of all: that of "master custodian." The winning company will be to the bailout what Halliburton is to the military: the contractor of contractors. It will purchase toxic debts from Wall Street, service them and auction them off in the future — a so-called "end-to-end process." The contract is for a minimum of three years.

Seventy firms applied for the gig; the winner was Bank of New York Mellon. Describing the scope of the megacontract, bank president Gerald Hassell said, "It's the ultimate outsourcing — because the Federal Reserve and the Treasury do not have the mechanics to run the entire program, and we're essentially the general contractor across the entire program. It's going to cross our entire company."

This raises an interesting point: Has the Treasury partially nationalized the private banks, as we have been told? Or is it the other way around? Is it Treasury that has been partially privatized by Wall Street, its massive rescue plan now entirely in the hands of a private bank it is directly subsidizing?

Shortly after receiving the contract, Hassell told investors that his institution is now well-positioned to profit from the market meltdown. "There's a lot of new business that's going on even in this chaotic marketplace," he said, "and so some of those things have been very positive to us." Just how positive, we don't know, because Treasury has blacked out the 10 lines of the "master custodian" contract that reveal how much Bank of New York Mellon will be paid. Though Treasury says it will release the information eventually, the secrecy goes beyond anything the Bush administration attempted in Iraq. Even Halliburton's dodgy contracts came with price tags attached.

Still, when the terms of the contract do become public, they may turn out to be surprisingly modest. Goldman Sachs has apparently offered to fulfill at least one bailout contract for free. Altruism may not be their only motivation. The real money at stake in the bailout lies not in payment for the work but in how the work is done. Think about it: If you're the one selling your debts to the government, wouldn't you also want to help decide which debts are eligible and how much they're worth? "The financial firms with assets to sell are in many instances the same firms the Treasury will rely on to value and manage the assets it is buying," The New York Times observed. "That is an invitation for these firms to set the price too high or to indulge in other mischief at the taxpayers' expense."

Bank of New York Mellon has a bad record for mischief. It is embroiled in a $22.5 billion money-laundering lawsuit in Moscow and has been forced to pay out a $14 million settlement in a related case. Though the bank's "master custodian" contract with Treasury prohibits unethical conduct, the arrangement seems rife with opportunities for abuse. According to its most recent earnings report, Bank of New York Mellon holds $1.2 billion in subprime mortgage securities. That means that in addition to the $3 billion it will receive as part of the equity program, it will also be eligible to apply for taxpayer money from the program it is being paid to administer. Neither the bank nor Treasury would comment on this direct conflict of interest.

On the same day that he allocated the first $125 billion to the banks, Secretary Paulson announced the largest federal budget deficit in U.S. history. Buried in his statement was a preview of the next phase of the financial disaster. The deficit numbers, he declared, reinforce the need to "pursue policies that promote economic growth and fiscal responsibility, and address entitlement reform." He was referring to Americans who feel entitled to receive Social Security in their old age and Medicaid when they are sick. Those programs, Paulson implied, might not be able to survive the budget crisis he is currently creating for the next administration.

This is why the stakes of the bailout are so high: Unless we get a good deal, there will be nothing left over after the banks are done feeding to pay for the meager services now provided in exchange for taxation, let alone for the more ambitious initiatives promised on the campaign trail. The spiraling cost of saving Wall Street from its bad bets is already being used as an excuse for why we can't solve our many other crises, from health care to climate change.

There is a better way to fix a broken financial system. Treasury's plan to buy up the toxic debts never made sense and should be immediately scrapped — a move that would also handily get rid of most of the crony contractors. As for purchasing equity in banks, the next round of deals — and there will be more — has to start from the premise that the banks are bankrupt and will therefore accept whatever terms we choose to impose, including real regulatory oversight. The possibilities of what could be done if a chunk of the banking system were genuinely under public control — from a moratorium on home foreclosures to mandatory investment in green community redevelopment — are limitless.

Because here is what George Bush and Henry Paulson are hoping we won't figure out: When a society no longer has enough money to pay for its most pressing needs, there are worse things than discovering you own the banks.

[From Issue 1065 — November 13, 2008]

Bailout CEOs who refuse pay cuts unpatriotic

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN2340224020080923

Bailout CEOs who refuse pay cuts unpatriotic - Frank
Tue Sep 23, 2008

NEW YORK - Wall Street titans who refuse to take a pay cut to join a proposed $700-billion U.S. financial system bailout were "selfish and unpatriotic", a senior Democrat said on Tuesday.

House Financial Services Committee chairman Barney Frank said he doubted the legislation would pass the Democrat-controlled Congress without including limits on compensation for executives of firms offloading bad assets.

The financial crisis has become the No. 1 issue in campaigning for the Nov. 4 U.S. presidential election, and with many members of Congress also vying to retain their seats, lawmakers are reluctant to merely rubber stamp the Bush administration's plan.

The Massachusetts Democrat was responding to Treasury Secretary Henry Paulson's assertion that limits on compensation could discourage companies from joining what would be the largest government bailout in U.S. history.

"What he is saying here is, this program that they think is very important, we need it to get the economy out of the doldrums, but if it is going to nick them of a couple of million of the millions that they already have, they are going to boycott it," Frank told CNBC.

"I hope they are not that selfish and unpatriotic," he said. "This is going to be a hard sell to a lot of elected officials even with this."

Paulson last week called for the creation of a massive government war chest to take illiquid assets off the books of banks and other firms in the hope of unclogging credit markets choking on mortgage-related debt.

"The question is does he want this package passed or not," said Frank.

Democrats, who control both chambers of Congress, want more taxpayer protections, help for home owners facing foreclosure, limits on compensation for executives of firms offloading bad assets and greater oversight of the program, which would give the Treasury secretary nearly unfettered powers.

"You can't have these situations where if the investment pays off, the CEO makes money, but if it doesn't pay off he goes home and has a nice dinner and makes no penalty," Frank said. "People who have gotten themselves into some trouble and need federal help, they have no right to expect that there won't be some compensation numbers," he added. (Reporting by Jason Szep; Editing by Tim Dobbyn)

H.R. 5843

http://www.disinfo.com/content/story.php?title=H-R--5843-Act-to-Remove-Federal-Penalties--Personal-Use-Marijuana

H.R. 5843: The Act to Remove Federal Penalties for the Personal Use of Marijuana
Posted by ralph
4-27-8

http://www.washingtonwatch.com

Washington Watch reports:

H.R. 5843 is described as an "Act to Remove Federal Penalties for Personal Use of Marijuana by Responsible Adults". The bill has been introduced by US Congressman Barney Frank (D-MA) and co-sponsored by US Presidential candidate Ron Paul (R-TX). If passed, this legislation would legalize the possession, use and non-for-profit of up to 100 grams (3.5 ounces) of Marijuana. Under this legislation, adults who consume Marijuana would no longer face arrest, prison or civil fines.

This bill will not affect federal laws prohibiting the sale of Marijuana for profit, nor the import, export and cultivation of Marijuana. It will also not alter the legal status of Marijuana as a Schedule 1 drug according to the Controlled Substances Act.