Archive for April, 2009

Obama Administration – Conflict of Interest Alert – Larry Summers

Once again, it is revealed that President Obama’s administration has proved less than stellar compared to his campaign promises of changing Washington DC.  Since swearing into office and to uphold the duties for which he was elected for, President Obama has made dubious decisions in choosing the appropriate people to fill the top posts in his administration.  Many were marred with tax scandals as they appeared before Congress and some had to withdraw their nominations due to allegations of unpaid taxes or great conflict of interests.  Even within 24 hours of declaring a new policy to stem conflict of interest, he had to make an executive exception to the nominated Deputy Director of Defense William Lynn, a former Raytheon executive.

The latest scandal to hit the Obama administration is Larry Summers, who has now reported receiving millions of dollars from the very same industry and corporate entities which he is assisting with his policy and regulatory advice to President Obama and Congressional leaders.  It was already with great controversy that Treasury Secretary was nominated given criticism that he failed as the President of the NY branch of the Federal Reserve system to watch over the financial system and avoiding collapse.  In addition, Geithner faced also back tax scandals.

Many critics believe that between Summers and Geithner, the two are a power couple that are too close to the industry to be impartial and to do what is right for the country and all Americans.  Meanwhile, the US Government is spending trillions in an unprecendeted effort to save the financial system.  But really, have other simpler, less costly to the American taxpayers and more effective been really explored or even contemplated?

Write to President Obama and demand for change and transparency.

Summers Earned Millions in D.E. Shaw Salary, Bank Speech Fees

By Timothy J. Burger and Kristin Jensen

April 4 (Bloomberg) — Lawrence Summers, director of President Barack Obama’s National Economic Council, earned millions working at a hedge fund and speaking to banks such as Citigroup Inc. that later received taxpayer bailout money.

Hedge fund D.E. Shaw & Co. paid Summers more than $5 million in salary and other compensation in the past 16 months, according to a financial disclosure form released by the White House yesterday. Summers served as a managing director at the New York-based firm. Summers, a former Treasury secretary, also earned more than $2.7 million in speaking fees.  [Read Full Article]

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US Treasury Secretary Hank Paulson Three Page Memo to Congress – Drafting Original TARP Plan

By popular demand, we wish to provide our readership the fond memory of former Treasury Secretary Hank Paulson, who have led us down the road of mass taxpayer money infused into failed American businesses.

But testifying before Congress is not new to Hank Paulson prior to September 2008 when the US financial meltdown had occurred.  Back in 2000, Hank Paulson was the CEO of Goldman Sachs and often influenced the regulatory decisions that Congress were to make.  Goldman Sachs ultimately received nearly $14 billion of taxpayer funds that was pumped into AIG for the purpose of keeping the US financial system intact.  Conflict of interest anybody?  In addition, since Goldman Sachs received TARP funding, couldn’t Congress have negotiated how much Goldman Sachs received at something less than face value of the Credit Default Swaps?  Because, if AIG was put into bankruptcy, Goldman Sachs would have received very little of the $14 billion from AIG.

Now to be fair to Congress and its oversight accountability, there were many questions asked and the desire for better understanding of what they were getting US taxpayers into.  But we all know how bureaucracy works in this country.

From the New York Times:

September 21, 2008

Text of Draft Proposal for Bailout Plan

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.–The term “Secretary” means the Secretary of the Treasury.

(3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

Here’s are videos of the testimony and the afterward public opinion.

US Treasury Secretary Urging Bailout of US Financial Institution

BBC Surveys Public Opinion

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State of US Economy After Trillions of Taxpayers Funds – Update

So how is the economy given all the money the US Taxpayer are pumping into the system?

How long will Americans wait for results before judging success or failure of their leaders during this crisis?

Take this poll.

Courtesy of CHRISTOPHER S. RUGABER – Apr 3, 2009

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THE STATE OF UNEMPLOYMENT

13.2 million: People unemployed in March 2009 — the most ever in records that date to 1948

12.8 million: Population of Illinois, President Obama’s home state

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A CITY’S WORTH OF JOB LOSSES

663,000: Net loss of jobs in March 2009

637,000: Population of Baltimore

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COLLEGE STILL COUNTS

4.3 percent: Unemployment rate for college graduates

9 percent: Unemployment rate for people who graduated from high school but did not attend college

13.3 percent: Unemployment rate for those with no high school diploma

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UNDEREMPLOYED

9 million: Number of part-time workers who would have preferred full-time work last month — the most in records dating to 1955

2.1 million: People without jobs who wanted to work, were available and had looked in the last 12 months, but had not looked in the last month.

15.6 percent: Unemployment rate including involuntary part-time workers and those who hadn’t looked in 12 months — the highest in records dating to 1994

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DOWNTURNS, THEN AND NOW

8.5 percent: Unemployment rate in March 2009

10.8 percent: Unemployment rate in December 1982, one month after deep recession ended

October 1983: Last time the unemployment rate was higher than the current level

59.9 percent: Portion of the total population that had jobs in February

July 1985: Last time the portion was this low

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MARCH UNEMPLOYMENT RATE BY GROUP

8.8 percent: Adult men

7 percent: Adult women

10.8 percent: Female heads of households

6.4 percent: Asians

7.9 percent: Whites

11.4 percent: Hispanics

13.3 percent: Blacks

21.7 percent: Teenagers

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RECESSION AS JOB KILLER

5.1 million: Net job losses since recession began in December 2007

651,000: Jobs lost in February 2009

741,000: Jobs lost in January 2009

681,000: Jobs lost in December 2008

122,000: Jobs lost in March 2008

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WHO’S SURVEYED

60,000: Number of households interviewed in the monthly Census Bureau survey from which the unemployment rate is extrapolated

40 percent: Portion of companies in the survey of businesses, from which payroll and job loss numbers are extrapolated, with fewer than 20 employees

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