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PLUNDERING THE PUBLIC PURSE

 

By Patrick Wood
March 21, 2008

NewsWithViews.com

As the global financial crisis unfolds, one thing is certain: The major investment and commercial banks who have wrecked our economy and financial system are now successfully sucking unlimited amounts of money from the people's Treasury to bail themselves out.

Drooling at the head of the line were Bear Stearns and JP Morgan Chase. There will be more.

In simple terms, Bear Stearns, the fifth largest U.S. investment bank, got caught in a massive bank run. Virtually overnight, those who extended credit on a regular basis, disappeared. It's not that they didn't deserve insolvency, because Bear Stearns was a pioneer in the securitization of now-toxic subprime mortgages.

Had Bear Stearns been allowed to collapse, it would have set off a domino effect that could have taken down major commercial banks as well as other investment banks and brokerages.

Fed Chairman Bernanke and Treasury Secretary Paulson quickly set into motion a plan to prevent disaster. (Um, hold on to your wallet!)

Invoking a rarely used 1932 Amendment to the Federal Reserve Act, The Federal Reserve set up a special fund with $200 billion that can be used by major banks to shore up their capital position so that a) they won't fail altogether and b) they can continue to loan multiplied billions to clients world-wide. The language of the Amendment gives the Fed such authority when “unusual and exigent circumstances exist and the borrower is unable to secure adequate credit accommodations from other sources.”

In essence, the Fed becomes the lender of last resort, and the Treasury guarantees payoff even in the case of default.

But, Bear Stearns is NOT a bank and NOT a member of the privately-owned Federal Reserve. And since the Fed can only deal directly with member banks, it channeled funds through surrogate JPMorgan Chase, to purchase Bear Stearns and guarantee its continued operation.


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What a sweetheart deal for JPMorgan Chase: It literally stole the company for a mere $2 per share or a total of about $250 million. The Bear Stern headquarters building alone is worth at least a billion dollars. Its stock traded as high as $170 just over a year ago.

So, Bear Stearns gets bailed out at no risk to JPMorgan Chase, and JP Morgan Chase gets to add windfall assets to its own balance sheet.

Don't be shocked to remember that the Chase in JPMorgan Chase is derived from the old Chase Manhattan Bank that was the dynasty of David Rockefeller, which merged into banking giant JP Morgan some years ago. Rockefeller was the co-founder of the elite Trilateral Commission in 1973, whose specific goal was to create a "New International Economic Order."

Americans aren't going to take this much longer.

Social mood is visibly turning just as certainly as a San Francisco cable car on its turntable at the end of the line.

A recent search on www.cnnfn.com for "Bear Stearns" produced these two sponsored ad links at the very top of the results page:

  • "Bear Stearns Lawsuit: Lost Money in Bear Stearns Shares? Free Case Review"
  • "Bear Stearns Employee? Did Company Violate Your Rights? Get into an ERISA Investigation"

This is just the tip of the iceberg.

The FBI announced in January that it is currently probing 14 major mortgage lenders for fraud, including Countrywide Financial. It is very likely that Bear Stearns is among this list. Several Federal and state agencies are already investigating criminal wrongdoing from the Bear's two failed hedge funds that went under in 2007.

Can an industry as corrupt and self-serving as this escape unscathed under the gaze of a hoard of hungry lawyers, attorneys general, state and federal agencies and more? Not.

This writer predicts that at least some of these top executives will ultimately be carted off in handcuffs, much like Jeffery Skilling and Kenneth Lay after the collapse of Enron in 2001.

Meanwhile, ABC News reports that Bear Stearns has called in grief counselors "to help workers handle the news that their plans and perhaps their dreams have abruptly and dramatically changed." How thoughtful.

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Apparently, the overnight loss of 99% of their retirement funds plus the prospect of losing their jobs is producing symptoms like depression, withdrawal, sleeplessness, loss of appetite and anxiety and irritability.

Understandable, but many of us have been suffering the same things over the sellout and meltdown of our entire country, and for a lot longer than they have!

Who will hire grief counselors for us?

© 2007 Patrick Wood - All Rights Reserve

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Patrick M. Wood is editor of The August Review, which builds on his original research with the late Dr. Antony C. Sutton, who was formerly a Senior Fellow at the Hoover Institution for War, Peace and Revolution at Stanford University. Their 1977-1982 newsletter, Trilateral Observer, was the original authoritative critique on the New International Economic Order spearheaded by members of the Trilateral Commission.

Their highly regarded two-volume book, Trilaterals Over Washington, became a standard reference on global elitism. Wood's ongoing work is to build a knowledge center that provides a comprehensive and scholarly source of information on globalism in all its related forms: political, economic and religious.

E-Mail: pwood@augustreview.com

Web Site: www.AugustReview.com


 

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Invoking a rarely used 1932 Amendment to the Federal Reserve Act, The Federal Reserve set up a special fund with $200 billion that can be used by major banks to shore up their capital position so that a) they won't fail altogether and b) they can continue to loan multiplied billions to clients world-wide.