This just showed up in my inbox (or, to Jubal, “over the transom”) with the title “Message from the Treasury Department to You.” Do you think I should trust it?
SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP
DEAR AMERICAN:
I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.
I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.
THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.
PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.
YOURS FAITHFULLY MINISTER OF TREASURY PAULSON
originally from http://www.theseminal.com/2008/09/23/awaiting-your-correspondance-important-business-matter/
(hat-tip to commenter Joe!)
The good old USA reduced to a third world banking fraud profiter.
Good for a laugh.
Yes, Cook, under current and recent leadership. Good for a sad laugh.
Vern – Under “current and recent leadership”, I assume that you are including the Republican and Democrat congress and presidential administrations since 1992. All of those DRBs share the blame.
Maybe you should read this Vern. I have not fact checked it yet, but Bloomberg is in the financial market, and is considered to be reasonably bright and while an R, certainly wouldn’t be considered by R’s to be a conservative. I don’t know about the writer and like I said, I have not researched it yet.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0
Sept. 22 (Bloomberg) — The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.
Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.
But really, it isn’t. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street’s efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
In the times that Fannie and Freddie couldn’t make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.
The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.
Turning Point
Take away Fannie and Freddie, or regulate them more wisely, and it’s hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.
It is easy to identify the historical turning point that marked the beginning of the end.
Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission’s chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie’s position on the relevant accounting issue was not even “on the page” of allowable interpretations.
Then legislative momentum emerged for an attempt to create a “world-class regulator” that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.
Greenspan’s Warning
The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
Different World
If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.
That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: “It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.”
Mounds of Materials
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
Oh, and there is one little footnote to the story that’s worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
To contact the writer of this column: Kevin Hassett at khassett@aei.org
Vern – Under “current and recent leadership”, I assume that you are including the Republican and Democrat congress and presidential administrations since 1992. All of those DRBs share the blame.
To a degree, Junior, to a degree, which is why I phrased it like that. And didn’t the deregulation craze begin even earlier in the 80’s?
Glad you at least don’t sound like Rush Limbaugh this morning and his echo machine, trying to spin it as Democrats’ fault alone.
Who were the most enthusiastic, unlimited deregulators? I’ll tell you McCain, and especially his financial advisor Phil “mental recession” Gramm, were at the top of the list.
Yeah Carl, we do need to research the truth of that version of events. So it all came down to that one bill in 2005 according to this writer.
Update: Quick thought – How could the Democrats kill a bill “on party lines” in 2005? Something missing in this story…
I don’t claim to be a financial genious, but I am g.d. tired of government f’n up the works. And I mean all of those DRBs – R & D.
They expect us to believe that they can fix the mess that they created ?? – give me a f**king break !
Let those financial genius companies suck it up – take the financial hits. The outcome couldn’t be much worse than we are going to get with a government f**cked up bail-out.
I believe we’re on the same page for once, Junior. And I’m worried too many Dems are gonna cave and support this bailout, and give Repubs who don’t (incl. McCain if he doesn’t) a great issue to hit them with.
Glennzilla on Saturday http://www.salon.com/opinion/greenwald/2008/09/20/bailout/index.html
That’s a long one if you haven’t read him before, and even though he’s an Obama supporter he criticizes Dem acquiescence ruthlessly … I’ll link to more later
Jr., You know I am right there with you.
Vern, it’s nice to see we can all agree that there is enough fecal matter on this one to spread out on both sides of the aisle. It may just be a little deeper in some spots on both sides of that aisle.
This really is not a R Vs D issue they are both to blame for the lack of action and oversight.
Bottom line is that some people should never have been allowed to get the loans they did get.
BTW, this seems to have originated here:
http://www.theseminal.com/2008/09/23/awaiting-your-correspondance-important-business-matter/
Danke, Josef. Sussman had sent it to me and signed it so I thought he’d written it. I will fix my crediting.
Vern, I agree with you that something is fishy in this article. Didn’t the Republicans control the House and Senate 2000 – 2006?
I mean Carl’s article not yours
Hey, it’s Kevin Hassett who wrote it, I just passed it on, It’s was a very bust day at work and a customer made me read while I was on the phone with him. It seemed timely and sort of on topic.
At the very least I got the author of the post, I repeated, correct!
“They expect us to believe that they can fix the mess that they created ?? – give me a f**king break !”
“Let those financial genius companies suck it up – take the financial hits. The outcome couldn’t be much worse than we are going to get with a government f**cked up bail-out.”
That sounds a lot like what Ed Royce was saying to a group of us in his D.C. office this summer. Although he didn’t used “f” words haha.
Smoking gun of the mortgage/financial meltdown ? – you decide.
From the NY Times (1999): Fannie Mae Eases Credit To Aid Mortgage Lending
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1
It sure looks like it to me, Jr.
Let’s see who was president then? Bill Clinton
1999-2001 the 106th Congress was made up of about 10% more R than D in both houses.
2001-2003 the 107th Congress was Even in the Senate and the R’s had 9 more in the House, about 5%.
2003-2005 the 108th Congress Senate R’s +2, House the R’s had + 24 or about 12%.
2005-2006 the 109th Congress Senate about R’s about +10% in both houses.
2006-2008 the 110th Congress Senate Even, House D’s about +10%
So, as so many now like to blame GW for everthing like the war in Iraq, when they almost ALL voted for it…
Do we blame Bill Clinton for this? He was after all, the President when this started. Does GW get it because he’s President now, or do we blame Congress for not giving oversight?
From open secrets
http://pfds.opensecrets.org/092408.html
The federal government recently announced that it will come to the rescue of Freddie Mac and Fannie Mae, two embattled mortgage buyers that for years have pursued a lobbying strategy to get lawmakers on their side. Both companies have poured money into lobbying and campaign contributions to federal candidates, parties and committees as a general tactic, but they’ve also directed those contributions strategically. In the 2006 election cycle, Fannie Mae was giving 53 percent of its total $1.3 million in contributions to Republicans, who controlled Congress at that time. This cycle, with Democrats in control, they’ve reversed course, giving the party 56 percent of their total $1.1 million in contributions. Similarly, Freddie Mac has given 53 percent of its $555,700 in contributions to Democrats this cycle, compared to the 44 percent it gave during 2006.
Fannie Mae and Freddie Mac have also strategically given more contributions to lawmakers currently sitting on committees that primarily regulate their industry. Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president. Sen.Chris Dodd (D-Conn.) chairman of the Senate banking committee, has received the most from Fannie and Freddie’s PACs and employees ($133,900 since 1989). Rep. Paul Kanjorski (D-Pa.) has received $65,500. Kanjorski chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, and Freddie Mac and Fannie Mae are government-sponsored enterprises, or GSEs.
1.Dodd, Christopher J, S(enate), D-CT $133,900
2. Kerry, John, S, D-MA $111,000
3. Obama, Barack, S, D-IL $105,849
4. Clinton, Hillary, S, D-NY $75,550
5. Kanjorski, Paul E H(ouse), D-PA $65,500
6. Bennett, Robert F, S, R-UT $61,499
7. Johnson, Tim, S, D-SD $61,000
8. Conrad, Kent, S, D-ND $58,991
9. Davis, Tom, H, R-VA $55,499
10. Bond, Christopher S ‘Kit’, S, R-MO $55,400
11. Bachus, Spencer, H, R-AL $55,300
12. Shelby, Richard C, S, R-AL $55,000
13. Emanuel, Rahm, H, D-IL $51,750
14. Reed, Jack, S, D-RI $50,750
15. Carper, Tom, S, D-DE $44,389
16. Frank, Barney, H, D-MA $40,100
17. Maloney, Carolyn B, H, D-NY $38,750
18. Bean, Melissa, H, D-IL $37,249
19. Blunt, Roy, H, R-MO $36,500
20. Pryce, Deborah, H, R-OH $34,750
21. Miller, Gary, H, R-CA $33,000
22. Pelosi, Nancy, H, D-CA $32,750
23. Reynolds, Tom, H, R-NY $32,700
24. Hoyer, Steny H, H, D-MD $30,500
25. Hooley, Darlene, H, D-OR $28,750