Thursday, October 2, 2008

360 In-depth: Reasons Not to Bail Out Wall Street, Part 2

The Bailout is Pure Treason

(1) Crime that pays is crime that stays.

There is reason to believe that Wall Street and those they represent are holding loans without collateral, multiple loans secured by the same properties, and other fraudulent instruments among the “troubled assets.” Based on the secret "Treasury Conference Call" with 800 Wall Street insiders, we know the deal proposed to be passed by Congress isn’t the real deal promised to Wall Street. The Treasury Conference Call:

This is an audio recording of the conference call with the US Treasury Department, giving information for financial analysts regarding the planned financial bailout legislation. Apologies for the audio quality - it was recorded using a mini digital recorder, half with the microphone and half with an inductive pickup. The first minute or so is cut off (we were too slow!), but the rest is intact through the end.

UPDATE: Now also posted on YouTube in five parts

Memo found at:

Or read it below.
TO: SIFMA Government Reps Committee
FR: SIFMA Washington Office
DA: September 28, 2008

RE: Conference Call w. Treasury / 9:00PM TONIGHT

At 9:00pm tonight, Sunday, September 28th, there will be a call with Treasury officials to discuss the Troubled Asset Recovery Plan. This call is specifically for analysts. Please distribute ASAP to analysts in your firm who might be interested in participating. We have also distributed this call notice through various SIFMA Committees to solicit analyst participation.

Please find the conference call information below:

Date: Sunday, September 28th
Time: 9:00PM ET
Toll-free Dial-in: 1-866-843-0890
Entry Code: 1812173#

(2) This smells like obstruction of justice.

Bail-out without due diligence of so called “troubled assets” is a perfect way to hide documentation of financial crimes. It is also a perfect means to launder both the past ill-gotten gains and new federal money spent recklessly and without necessary safeguards and oversight mechanisms. Be very suspicious when they tell you “we just can’t tell what’s in these troubled assets.” We can assure you that the federal government has field offices all across the country that deal with significant amounts of real estate and mortgage assets on a dailyl basis. If Treasury refuses for more than a decade to comply with the laws, with approximately $4 trillion missing (and counting), it is not competent to manage $700 billion of taxpayer money while its arm is twisted by Wall Street. The missing $4 trillion:

Key Documents

U.S. Department of Defense Web Site

"The technology revolution has transformed organizations across the private sector, but not ours, not fully, not yet. We are, as they say, tangled in our anchor chain. Our financial systems are decades old. According to some estimates, we cannot track $2.3 trillion in transactions. We cannot share information from floor to floor in this building because it's stored on dozens of technological systems that are inaccessible or incompatible."
- Remarks as Delivered by Secretary of Defense Donald H. Rumsfeld, The Pentagon, Monday, September 10, 2001

Independent Audit Report - Department of Defense
Re: $1.1 Trillion Missing from DOD
February 26, 2002

Testimony of the Inspector General - Department of Housing & Urban Development
Re: $59 Billion Missing from HUD
March 22, 2000

Discrepancies in America's Accounts Hide a Black Hole
By Daniel Gros, Financial Times
June 15, 2006

Road to Ruin
by Eric Sprott, Sprott Asset Management
Regarding the $11 Trillion Deficit in the US Government in FY 2004
January 2005

U.S.' Missing $Trillions Make Mainstream At Last
Scoop Media's version of the Chronicle Story with more links added
May 26, 2003

Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits
by Catherine Austin Fitts
A case study of two teams each with competing visions for America.
April 2006

Estimate $3.3 Trillion Missing From U.S. Treasury
by Buddy Grizzard
An excellent overview integrating coverage by key investigative journalists
August 2002

Where is the Collateral? and So, Where is the Collateral?
A two-part series by Chris Sanders of Sanders Research Associates in London
These articles connect the dots between the missing money, the Where is the Money? litigation, questionable HUD deals, and the impact on the investment community
October 2003 and July 2004

U.S. "Could Be Going Bankrupt"
by Edmund Conway, Economics Editor
UK Telegraph
July 2006
Web site documenting the missing money -- includes petition, FAQs, Who's Who ... also available in Spanish

Independent News Coverage

The Great "Incompetency" Heist
by Catherine Austin Fitts, Scoop Media
May 17, 2006

US Government "Misplaces" Trillions of Dollars
Anxiety Culture Bulletin News
September 3, 2003

US' Missing Trillions Make Mainstream At Last
Scoop Media
May 26, 2003

The Solari Solution: A Responsible Way to Fund America's State and Local Government Deficits
Scoop Media
May 2003

On the Money Trail
September 5, 2002

Questions for a Congressman
Scoop Media
July 4, 2002

The Myth of the Rule of Law
Sanders Research Associates
November 2001

Testimony of the HUD Inspector General
House Government Reform
May 2000

Corporate News Coverage

Auditor Quits with NASA Finances in Chaos
By Arindam Nag and Deborah Zabarenko
May 15, 2004

The War on Waste
CBS News
Citing "cooked books" at DoD, Rumsfeld on the missing $2.3 trillion, ...
January 29, 2002

Military Stashes Covert Millions
St. Petersburg Times
September 28, 2003

'High Risk' Finance at the Federal Level
Insight on the News
August 21, 2003

Congressman Kucinich on NPR's 'Morning Edition'
NPR, June 28, 2003

Pentagon Fights for (Its) Freedom
CBS News
May 19, 2003

Color Codes: The Deja Vu View Back to Abnormal
San Francisco Chronicle
May 25, 2003

So Much for the Peace Dividend
The Guardian
May 22, 2003

Military waste under fire $1 trillion missing
San Francisco Chronicle
May 18, 2003

HUD's Financial Woes Continue
Insight, April 18, 2003

HBO The Sopranos: "Watching Too Much Television" (Scamming the Feds)
Sopranos Episode 46
Brian lays out a way to use bogus real estate deals to con money out of the Federal Department of Housing and Urban Development...
November 1, 2002

US Treasury Web Site Reveals $ Half-Trillion Deficit
NY Post
May 14, 2002

Government Fails Fiscal Fitness Test
Insight on the News
April 29, 2002

From Insight Magazine's investigative journalist Kelly O'Meara

Treasury Checks and Unbalances
April 14, 2004
The 2003 financial statements mark the seventh year in a row that the federal government could not audit, let alone balance, its books...

Is the US Going for Broke?
July 14, 2003

'High Risk' Finance at the Federal Level August 21, 2003
The US Government reports that its financial management systems are seriously unreliable...

HUD's Financial Woes Continue
April 18, 2003

Government Fails Fiscal Fitness Test
April 29, 2002
This article cites both the $1.1 Trillion and the $59 Billion...

All That Glitters Is Not Gold
March 2002

What Does It Take to Lose a Contract?
March 2002

Cuomo leaves HUD in Shambles
March 2001

Inside HUD's Financial Fiasco
June 2001

A Financial Fiasco is in the Making
July 2001

Rumsfeld Inherits Financial Mess
September 2001

Total Lack of Trust
September 2001

Wasted Riches
October 2001

Bureaucrats Circle Their Wagons
December 2001

Why is $59 Billion Missing from HUD?
November 2000

Government Links

U.S. Code:

Executive Branch:

DOD News Articles:


Case Examples of Missing Money

Where is the Money? Litigation
Ervin & Associates and the US Government shut down Hamilton Securities after it developed software for citizens to learn about HUD spending by place, seized the software, bankrupted the company, and never produced any evidence of wrongdoing ... see

CPA IG Finds Halliburton Mismanaged Government Property in Iraq
Committee on Government Reform: Minority Office
, July 2004

Tennessee's Get Our Money Back Campaign -- 2002
Includes: The Story of the Missing Money; A State by State Breakdown of What the Missing Money is Costing You and Your Family; Questions to Congressman Van Hilleary (R-Tenn.) on Actions a Congressman Could Take to Get Our Money Back

Government Contractors

1. Lockheed Martin

Software That Steals: Mortgage Market Unanswered Questions - Hitting On HUD August 2002

2. AMS

Federal Lawsuit Adds to AMS Woes Company Also Faces Trouble in Ohio, Vermont
Washington Technology
July 2001

A Taxing Dilemma by John Berlau
Insight Magazine
April 2001

IRS Boss Snagged a Clinton Waiver by John Berlau
Insight Magazine
May 2001

News Alert: Eizenstat Explains Why He Gave Waiver to IRS Commissioner by John Berlau
Insight Magazine
May 2001

How Can Rossotti Reform the IRS?
Insight Magazine
May 2001

News Alert: Grassley Questions Rossotti's Ties to AMS by John Berlau
Insight Magazine
May 2001

Rossotti Hires Raise Red Flags
Insight Magazine
September 20001

3. DynCorp

CSC DynCorp & the Economics of Lawlessness
Scoop Media
April 2003

4. Harvard

The Harvard Datadump -- An Update

5. Enron

The Real Deal about Enron -- An Interview with Catherine Austin Fitts by Daniel Armstrong
Scoop Media
February 2003

6. The Carlyle Group

Carlyle's Way -- Making a mint inside "the iron triangle" of defense, government and industry by Dan Briody
Red Herring
January 8, 2002

Missing Money in Iraq

Iraq Audit Can't Find Billions
Boston Globe, October 2004

US Probes $100 Million Missing in Iraq
MSNBC, May 2005

So, Mr. Bremer, Where Did All the Money Go?
The Guardian, July 2005

Billions Wasted in Iraq
CBS News, February 2006

Iraq's Missing Billions (video)
Journeyman Pictures, March 2006

Halliburton Watch: US Mismanaged $8.8 Billion in Iraqi Funds, August 2004

Iraq Revenue Watch: Reports & Briefings
Open Society Institute, December 2004

The Not So Strange Case of Phillip Merrill
Joe Quinn, Signs of the Times, June 2006

Balancing Our Bank Book: The Missing $9 Billion and More (Windows Media Audio; PDF Transcript )
Rep. Cynthia McKinney, June 2006

Those Who Blow Whistle on Contractor Fraud in Iraq Face Penalties
Deborah Hastings, Associated Press, August 2007

Missing Gold

Gold Anti-Trust Action (GATA)

LeMetropole Cafe

All That Glitters Is Not Gold by Kelly O'Meara, March 2002

Is a Silver Scandal on the Horizon? by Kelly O'Meara, March 2004


From Kelly O'Meara ~ Treasury Checks and Unbalances April 2004

Robert E. Rubin, 1997, Unauditable
"We believe that the publication of these audited statements is an important step in providing American citizens with more information about the operations of their government."

Robert E. Rubin, 1998, Unauditable
"We believe that the publication of this financial report is an important step in providing the American public with useful information about their government's assets, liabilities and operations."

Lawrence H. Summers, 1999, Unauditable
"We are committed to producing and reporting financial information that meets the highest standards of integrity and to provide to the American people the accountability and professionalism they expect from their government."

Paul H. O'Neill, 2000, Unauditable
"I am committed to producing and reporting financial information that meets the highest standards of integrity and to provide the American people the accountability and professionalism that they expect from the government."

Paul H. O'Neill, 2001, Unauditable
"I believe that the American people deserve the highest standards of accountability and professionalism from their government, and I will not rest until we achieve them."

John W. Snow, 2002, Unauditable
"I intend to continue the commitment to producing and reporting financial information that meets the highest standards of integrity and to provide the American people the accountability and professionalism that they expect from their government."

(3) Wall Street owes the federal government money.

We need to get stolen money back from the banks that served as depositories for the US government (including trillions for which the Pentagon and HUD could not account) and punish them, not create another opportunity for them to game the system and engage in criminal enterprises to rob consumers. To the extent there has been regulatory wrong-doing, let’s not let the miscreants leave town with the evidence.

(4) Good guys are shut out.

A bail-out provides no way for honest leaders to come to the fore and use their creativity and expertise to restore balance and integrity to the system or for unproductive and poorly-managed banks that contribute to current over-capacity in the banking system to die a dignified death.

(5) This results in more investment in the “bubble economy.”

Spending massive amounts on non-productive uses (“buying” worthless credit default swaps, mortgages with no collateral and derivatives, which could even include the derivatives used to manipulate the precious metals markets) as opposed to productive uses (repairing infrastructure, creating alternative energy systems, supporting inventing and production of “green” products) is inflationary.

This bail-out will drive prices of food, water and energy up for the people who can least afford it.

(6) Bail-out does not result in capital circulating in healthy ways.

The bail-out of Wall Street and too-big-to-fail banks and insurance companies that are getting bigger by the minute by swallowing up other failing financial institutions (and creating more institutions that are “too big to fail”) does not result in trickle-down to those whose money was stolen in recent swindles (S&L,, current housing crisis), i.e., the taxpayers/middle class and working poor.

(7) These arrangements will result in more corruption.

Centralized “fixes” are sure to result in black holes, no-bid contracts and other scandals.

(8) The bail-out drains the real economy, rather than invests in the real economy.

The US economy can’t be productive or grow if consumers don’t have jobs and can’t afford to purchase goods and services. Real stimulation of Main Street is accomplished through productive investment, not bail-outs that shift money to unproductive sectors. We should use all of our precious resources to reinvest in our people in the real economy.

(9) It props up sectors that need to downsize and consolidate.

There is significant overcapacity in the financial and banking sectors. Brainpower and talent needs to stop blowing financial bubbles and shift to economic activities that create real value.

(10) It is a temporary “fix” to keep Wall Street afloat until after the election.

Our resources are better invested in permanent, long-term solutions. This bail-out will not fix anything. Rather, it will help the perpetrators get away and ensure that the ultimate day of reckoning is worse.

The Administration wants to drain the real economy to bail out Wall Street. It seems to us that the more appropriate plan would be to require Wall Street to return the $4 trillion plus that is missing and use that to rebuild the real economy.

We think the time has come to reverse the flow. Go to any business school in the country. That is what they teach. Money should move out of unproductive sectors into productive sectors. The bail-out does just the opposite.

Continued with Part 3


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