Archive for 05/10/2010

LIAR LOANS AND THE THIEVES THAT MAKE THEM

Posted: 05/10/2010 by Lynn Dartez in banks

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By Marilyn M. Barnewall
May 9, 2010
NewsWithViews.com

The Federal Reserve System (Fed) is not now and has never been a legitimate central bank. It is not part of the U.S. government. It is a private corporation owned by member banks. Private investors own the member banks. A majority of the owners in recent years are European by birth and residence.

Like OPEC, which is a cartel of oil-producing countries, the Fed is a cartel of commercial and investment bankers who coordinate the production, pricing and marketing of money in the United States. Though it’s not a government entity, this particular cartel also utilizes the police power of the federal government to enforce its agreements.

Our founding fathers were very specific about the creation (or production) of money. Article 1, Section 8 of our Constitution charges the Congress with “the power to coin money and regulate the value thereof.” Many people argue it violates the Constitution to turn these powers over to a non-governmental, privately owned corporation that is a highly profitable outside third party like the Federal Reserve. I agree with them.

What the Federal Reserve System does is this: It creates money out of nothing and charges interest for it. The Fed creates the money via the distribution system of America’s privately owned, federally-chartered banks through a process called fractional-reserve banking. The U.S. Treasury, which is a government entity supported by taxpayer dollars, pays for the paper and ink and printing presses and employee costs for printing our currency.

The Federal Reserve has three primary components:

1. The Board of Governors determines the system’s monetary policy. The Board consists of seven members, appointed by the President and confirmed by the Senate. Each term lasts 14-years and each is staggered so no single U.S. President can dominate the Fed’s policy. Looked at another way, there is little control of the Federal Reserve by elected government officials.

2. Regional Reserve Banks hold the system’s cash reserves. They supply currency to member banks, clear checks, and act as fiscal agents for the government. Member banks elect directors to the regional Reserve Banks in each of their 12 regions. Larger banks — Bank of America headquartered in North Carolina, Citibank and Chase Manhattan headquartered in New York, for example — hold more shares than smaller banks. However, they have only one vote in the selection of Regional Reserve Bank directors.

Three Class A Directors represent the banking industry; three Class B directors represent the general public. Three Class C directors are appointed by the National Board. The Chairman and Vice Chairman of each regional Reserve Bank must be Class C directors. You can find the current Directors here.

3. The Federal Reserve Open-Market Committee (FOMC) implements monetary policy set by the National Board. However, it controls most of its own policy. It manipulates our money supply and interest rates by purchasing or selling government securities. It may do this via the purchase or sale of foreign currencies and securities of other governments – like Greece. Money is created and interest rates go down when the Fed purchases. When the Fed sells government securities, the money supply is reduced and interest rates go up.

The FOMC is made up of the national Board of Governors plus five of the twelve regional Federal Reserve Presidents. Twenty-four bond dealers handle all sales of government securities. Government agencies may not exchange with each other without paying dealers’ commissions on each transaction (talk about a sweet deal for bond dealers!).

The Fed’s monetary policy decisions may be made at FOMC secret meetings. We, the public, get a brief report a few weeks after decisions are made. Transcripts of deliberations are destroyed… a policy which started when, in 1970, the Freedom of Information Act was passed. Even the CIA cannot get away with this kind of secrecy!

The federal government does not own any stock in the Federal Reserve System. The Fed’s member banks may not sell or pledge their Federal Reserve stock nor does it carry voting rights. No matter how many shares of stock a bank owns, it gets only one vote. In essence, then, owning stock in the Federal Reserve doesn’t imply ownership. It just shows how much operating capital each bank has in the system. Except for a brief period of time, the U.S. operated without a central bank from the time the nation was founded under the Constitution in 1789 until 1913. Unless my math is off, that’s 124 years. We have operated under the concept of a central bank (Federal Reserve System) for less than 100 years.

The Congress could abolish the Federal Reserve System by a simple majority vote. If the vote is vetoed by the Executive Branch of government (the President), a two-thirds majority vote would be required to override the veto. If the System is abolished, all bank-clearing functions can easily be transferred to the Treasury. The power to “coin money and regulate the value thereof” could once again fall under the oversight of the Congress, where our Constitution says it should be.


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The current economic crisis in America was wrought by irresponsible behavior within the financial services community, including the Federal Reserve System, the Federal Reserve Bank of New York while presided over by current Secretary of the Treasury, Timothy Geithner, the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC), and others.

The U.S. Congress is currently considering what legislation it will enact so as to improve the financial services industry. The regulatory controls the Congress seeks to pass are eerily similar in nature to those passed in the early 1980s, just prior to the failure of the savings and loan industry (see my article, for more in-depth information re regulatory reform legislation).

Read the history of how banking regulations put in place after the Great Depression during the 1930s to protect American consumers from bank errors and how those protections have been changed.

As I pointed out in the first article linked above, politicians gain power for government by passing new regulations, and as a means of creating the need for new regulations, they ignore the enforcement of existing regulations. That is precisely what has been done and is what precipitated the current crisis.

The testimony of University of Missouri Professor William K. Black presented to the House of Representatives Financial Services Committee, chaired by Congressman Barney Frank.

Professor Black points to abdication of official responsibilities on the part of the Mortgage Bankers Association, the Securities Exchange Commission, the Federal Reserve Bank of New York, the Federal Reserve System, and various brokerage houses (more commonly known as investment banks) as the cause of the subprime mortgage problems that caused the fall in the housing market which resulted in the failure of many independent banks in communities throughout America. A general American economic crisis resulted.

In essence, Professor Black says existing regulations were ignored by everyone who knew about the subprime mortgage fraud – the FBI reported the problem to the Congress in 2004 and nothing was done about it. The result: the current drive for new regulatory control because the “old regulations didn’t protect us from this disaster.” The statement is a lie and, in and of its self, becomes a part of the fraud. Regulations on the books, had they been enforced, clearly would have prevented the crisis had those regulations been enforced.

You may not find the definition of “liar loans” palatable – who would? – but since they may be the basic reason why the American Dream is slowly being obliterated (though it’s certainly happening faster these days), you owe it to yourself to know what they are. As you read the definition, keep in mind that according to Professor Black “the average dollar lent on liar loans creates a loss ranging from 50 to 85 cents.”

A liar loan is when stated income provided by the borrower is not verified by the lending bank. A false figure is can be inserted and not detected. An unemployed person may say, “I make $200,000 per year.” No one checks to make sure the borrower is telling the truth. Often, the borrower is told ahead of time there will be no verification of stated income.

In 2007, Lehman Brothers, an investment brokerage house that was creating mortgage-backed derivatives from liar loans mixed with “prime” (or quality) mortgage loans, became one of the nation’s biggest providers of mortgages via three subsidiaries in various locations around the county who specialized in making liar’s loans. Did Lehman Brothers know? Of course they did.

Congress has supported beyond reason two government-sponsored entities called Fannie Mae and Freddie Mac, purportedly to make home ownership possible for people otherwise unable to share the American Dream. If what we’re being told is true, please explain why Fannie and Freddie have only increased home ownership by 4 percent over the past 30 years. By contrast, between 1991 and 2008 (17 years) in the Netherlands and Italy, home ownership increased by 12 percent Lenders who worked for the liar loan mortgage companies often felt they were doing a service to the community by making home ownership available to those who couldn’t financially qualify for a mortgage.

Liberals, it seems, will never learn that avoiding the truth causes huge problems. If people can’t qualify for a mortgage – if they cannot make required payments – lenders have absolutely no reason to give them a mortgage loan. If borrowers cannot afford the payment, they will eventually lose the property. Many people, not just the borrower, get hurt.

Liberals, it seems – will never learn there is no such thing as a free lunch – except perhaps at the Federal Reserve.

© 2010 Marilyn M. Barnewall – All Rights Reserved

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Marilyn MacGruder Barnewall began her career in 1956 as a journalist with the Wyoming Eagle in Cheyenne. During her 20 years (plus) as a banker and bank consultant, she wrote extensively for The American Banker, Bank Marketing Magazine, Trust Marketing Magazine, and other major industry publications. The American Bankers Association published Barnewall’s Profitable Private Banking, the first book written about private banks, in 1987. She taught private banking at Colorado University for the American Bankers Association and trained private bankers in Singapore in 1991. She has authored seven banking books, one dog book, and one work of fiction (about banking, of course). She has served on numerous Boards in her community.

Barnewall received her degree in Banking from the University of Colorado Graduate School of Business in 1978 and was named one of America’s top 100 businesswomen. She was a founding member of the Committee of 200, the official organization of America’s top businesswomen. She can be found in Who’s:Who in America (2005-08), Who’s Who of American Women (2006-08), Who’s Who in Finance and Business (2006-08), and Who’s Who in the World (2008).

Web site:

E-Mail: marilynmacg@juno.com

Cap-and-Trade Is Back

Posted: 05/10/2010 by Lynn Dartez in AT
May 10, 2010
On Wednesday, Senators John Kerry (D-MA) and Joe Lieberman (I-CT) plan to introduce legislation designed to inflate the cost of energy, strain family budgets, and decimate America’s manufacturing sector — all in the name of supposedly saving the climate.
Kerry and Lieberman have been revamping legislation that narrowly passed the House of Representatives last year. The House bill imposes oppressive limits on carbon dioxide (CO2) emissions and establishes a complex cap-and-trade scheme in which the federal government determines how much CO2 a business may emit. If a business exceeds its allowance, it may purchase additional “carbon credits” from an exchange, where the credits will be traded like a commodity. Rules for the exchange of carbon credits, including the trading of carbon derivatives, are addressed in the House bill, and my sources tell me that the Senate version will include these same stratagems.
In an e-mail sent to the media last week regarding their plans, Kerry and Lieberman said,  “We can no longer wait to solve this problem which threatens our economy, our security and our environment.”
My insiders also say the new Kerry-Lieberman proposal will keep the House bill’s goal of attaining a 17-percent reduction of greenhouse gases (below their 2005 level) by 2020. Apparently the Senate bill will allow cap-and-trade to hit power companies first, and then within six years include the manufacturing sector.
The new bill apparently calls for more loan guarantees to build nuclear plants and grants U.S. coastal states a share of the revenue produced by any expansion of offshore oil and natural-gas drilling.
This is a bill that will cause all of us to suffer great loss.
Presently, 40 percent of CO2 emissions in the United States are derived from electricity generation, 35 percent from transportation, and 25 percent from business, industry, and natural gas to heat homes.
So where will the 17% cut come from, especially given that (according to U.S. census projections) there will be an additional 30 million people in the United States by 2020? If the cuts are distributed proportionately, the biggest blow will be to electricity production. Since 50 percent of our nation’s electricity is derived from coal, that industry and its customers will be hit hardest. Coal plants are going to have to be shuttered. And what will replace that energy resource? Nothing.
Some might counter that the House bill touts complex tax credits for wind and solar development. However, when the wind isn’t blowing and the sun isn’t shining, those two alternatives don’t provide a watt of energy — they’re simply enhancements, not baseload providers. Additionally, the Kerry-Lieberman loan giveaway for the construction of nuclear plants — which do not generate carbon emissions — is simply a lure to entice gullible Republicans to bite, because the White House is not a fan of nuclear power.
Recall that during his January State of the Union address, Mr. Obama said that America needs to be “building a new generation of safe, clean nuclear power plants in this country.”
In an apparent move to make good on his promise, two days after the speech, Bloomberg reported: “President Barack Obama, acting on a pledge to support nuclear power, will propose tripling guarantees for new reactors to more than $45 billion[.]”
However, the proposal was a ruse. Many forget that shortly after taking office Obama’s first budget planned to cut off money for the Nevada nuclear waste repository at Yucca Mountain — meaning that the $10 billion in taxpayer dollars spent since 1983 to ready Yucca for storing nuclear waste was a total loss. Yucca Mountain will officially be zeroed out in fiscal year 2011.
Meantime, Energy Secretary Steven Chu has announced the creation of a special panel to find a solution for storing nuclear waste.
Problem is, we already had a solution — Yucca Mountain.
America has no nuclear option. And, as I have written here at American Thinker, the probability of additional drilling for domestic fossil fuels is low as well.
So where will the carbon cuts come from? They’ll come from the American people, who will be forced to use less energy because of the higher costs imposed by cap-and-trade and a variety of new energy taxes.
Proving my point, last week members of Congress, including Speaker Nancy Pelosi, took part in the Good Jobs, Green Jobs National Conference. One of the better-attended seminars was entitled “Efficiency and Renewables.” Presenters included Nancy Sutley, White House Council on Environmental Quality. According to the brochure promoting this session, “The cheapest, cleanest, and fastest emission reductions will come from the energy we never have to use at all. Cutting energy use also saves money on homeowners’ electricity bills and reduces costs for business.”
Translation: America does not need a plan for additional power plants to serve a growing population; instead, the people must use less power. Coercion through increased pricing will be a key prod in producing the societal behavior modification necessary to accomplish this goal.
By the way, Nancy Sutley is also the woman who announced the hiring of the radical Van Jones in March 2009, declaring: “Van Jones has been a strong voice for green jobs, and we look forward to having him work with departments and agencies to advance the President’s agenda of creating 21st-century jobs that improve energy efficiency and utilize renewable resources. Jones will also help to shape and advance the administration’s energy and climate initiatives with a specific interest in improvements and opportunities for vulnerable communities.”
Further straining the family budget, a new set of fees and taxes will be imposed on all sectors of the economy that produce greenhouse gases. This will include transportation, farming, livestock production — even restaurants that cook barbecued chicken and ribs over an open flame and bottling companies that sell fizzy drinks. To absorb the increased cost of doing business, companies large and small will be forced to raise their prices. Already pinched personal bank accounts will be further hammered, as virtually everything is going to cost more.
The Kerry-Lieberman bill is also a job-killer. To meet the demands of the new emissions limits, the few manufacturing businesses that remain in the United States will be further shipped overseas. This is a part of an elitist plan to redistribute America’s wealth abroad. In other words, this legislation will purposefully execute the loss of well-paying domestic jobs, so that those in third world and underdeveloped nations have a chance to improve their standard of living — at our expense.
Proving my point is the House version of this bill. If your manufacturing job is shipped overseas, you are eligible for three years of unemployment compensation at 70% of your pay, plus retraining and relocation expenses. The intent is to pacify your anger with a three-year paid vacation.
And another dirty little secret about the Democrats’ need to pass cap-and-trade: It’s a revenue-builder.  According the Wall Street Journal, the cap-and-trade system could actually generate between roughly $1.3 trillion and $1.9 trillion between fiscal years 2012 and 2019.
This so-called energy bill is a punch to the gut that American does not need. And keep in mind, as I have conclusively proven through past missives at American Thinker, as well as in my book Climategate, that the temperature of the earth is not warming, carbon dioxide is not a pollutant, and without the greenhouse effect, planet Earth would be a big ball of ice.
To pass, cap-and-trade will need bipartisan support. Thus far only Senators Lindsey Graham (R-SC) and Susan Collins (R-ME) have spoken out in favor of supporting a mandatory cap on greenhouse gases.
However, other Senate Republicans who could cross over and support this bill are Olympia Snowe of Maine, Scott Brown of Massachusetts, George LeMieux of Florida, Judd Gregg of New Hampshire, and the retiring George Voinovich of Ohio.
Brian Sussman is author of the new bestseller, “Climategate: a veteran meteorologist exposes the global warming scam,” and host of the Morning Show on KSFO radio in San Francisco.

Government Funded Front Groups

Posted: 05/10/2010 by Lynn Dartez in CFP

By Dr. Robert R. Owens  Monday, May 10, 2010

How many Progressive groups are in reality government supported entities masquerading as public interest lobbies?  How many government agencies act as Progressive lobbies? Marx said “The last capitalist we hang shall be the one who sold us the rope.”

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Is our hard-earned tax money being used to fulfill the words of the Progressive’s secular messiah? Another old saying goes, “The acorn doesn’t fall too far from the tree.” If the tree is the Progressive clique that’s captured America the acorn is the government money used by various Progressive fronts, both public and private to advocate for more money from the treasury to buy more power.  Or is that more rope?

ACORN

The Association of Community Organizations for Reform Now (ACORN) says it’s collapsing without government funding . Perhaps it never was a broad-based grassroots social action organization. Instead it’s an off-the-books government funded agency dedicated to electing Democrats and pushing an agenda of Progressive economics through covert action.

Fannie and Freddie

Fannie and Freddie two reckless mortgage monsters and the fuse that lit the subprime bomb spent more than 170 million dollars influencing the Best Congress Money Can Buy during the decade preceding the crash. They both made the list of the top 20 lobbying organizations buying their way to success. Incidentally, during the same period they were also government backed and packed with hacks including President Obama’s chief of staff, Rahm Emmanuel. The leadership of both reads like a country club for retirees from Congress who looted the enterprises along the way. Before the crash, McCain and other Republicans including President Bush tried to warn Congress that the policies of these reckless lenders were dangerous. The Leviathans of Lending were defended by the same perpetually re-elected aristocrats that received the most money from them and who are the same arrogant Lords of the Legislature and their Glorious Leader who today lead the charge to clean up the mess they caused.

Planned Parenthood

Planned Parenthood, one of America’s leading abortion providers is also the recipient of hundreds of millions of taxpayer donations every year. Planned Parenthood also vigorously supports Democrats including the current occupant of the Oval Office. A source of money and votes so potent the Illuminati of the Government Party feel it necessary to pay homage during every election cycle saluting the abortion flag and taking the pledge of loyalty.

The Service Employees International Union

The Service Employees International Union (SEIU) is the government Union whose president boasts “We spent a fortune to elect Barack Obama—$60.7 million to be exact—and we’re proud of it.” Apparently they’ve reaped windfall profits from their investment. They’re the nation’s fastest growing union which isn’t surprising since under the Progressives the government is the only sector of the economy that’s growing. In fact, the number of government union members is now larger than private sector union members. In our corporatist government model unions are part of the power elite. They put money in and get jobs and union dues out.

Richard Posner, judge for the 7th Circuit US Court of Appeals pointed out the purpose of unions “The goal of unions is to redistribute wealth from the owners and managers of firms and from workers willing to work for very low wages, to the unionized workers and the union’s officers. … Unions, in other words, are worker cartels. … There is also a long history of union corruption. And some union activity is extortionate: the union and the employer tacitly agree that as long as the employer gives the workers a wage increase slightly above the union dues, the union will leave the employer alone.”

However, in President Obama’s fundamentally transformed America, the government union bosses don’t use wealth from private firms they redistribute taxpayer money.  What do these servants of the working man do with the money they get from American taxpayers? Do they use it to fund the pensions of their members? No, that pension fund is upside down while the pension fund for SEIU officials is funded at more than 100%.  Besides feathering their own nests what could be more important than taking care of the people who actually do the work? Apparently, it’s lobbying for larger government needing more workers thus growing SEIU. Who said perpetual motion was impossible?

If the incestuous relationship between the government and its in-house union isn’t bad enough the Progressive apparatus captured several government agencies which act as conduits for their lobbying activities.

The National Endowment for the Arts

The National Endowment for the Arts (NEA) uses federal money to fund not only chocolate covered obscenities they also fund art designed to promote the agenda of President Obama an activity which in other countries we call propaganda. National Public Radio (NPR) using government funds and well chosen words to frame debates and shape opinion has long espoused the Progressive line from abortion to the man-made global warming hoax and the import-a-voter approach to immigration.

Where are those who believe in limited government? Why do they allow Progressives to create these government funded interest groups? The government has become an interest group and they’re working for their interest not ours.