by Jim Marrs
Although it’s well known that the economic mess began with the banks, mortgage lenders, and real estate companies, the current housing and mortgage mess actually was the result of maneuvering by both Democrats and Republican politicians, a fact that adds considerable weight to the argument that both major parties are controlled by the same globalists seeking to install a worldwide socialist system.
During the 1990s, Bill Clinton’s Democratic administration was pressuring Fannie Mae, the nation’s largest underwriter of home mortgages, to expand mortgage loans to low- and moderate-income borrowers. After all, granting low-income families the chance for home ownership sounded good on paper.
“Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payment requirements,” Franklin D. Raines, chairman and CEO of Fannie Mae, told the New York Times in 1999. The newspaper noted that at least one study seemed to indicate racial prejudice in this lending as it reported that 18 percent of such subprime loans went to black borrowers as compared to 5 percent for all other groups. With great prescience, Times writer Steven A. Holmes noted in 1999, “In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.”
While Fannie Mae was lowering loan qualifications its stockholders were pressuring for greater profits, creating a recipe for financial disaster. And, as usual, both the political and financial machinations involved crossed party lines but not the agenda of the globalists.
Larry Summers—a Treasury secretary under Clinton, Obama’s head of the National Economic Council, and a member of the Council on Foreign Relations—is an advocate of cutting both corporate and capital gains taxes and convinced Clinton to sign into law several Republican bills that allowed banks to expand their powers. One of these bills repealed the 1933 Glass-Steagall Act, which prevented the merger of commercial banks, insurance companies, and brokerage firms such as Goldman Sachs and Merrill Lynch. Additionally, Summers supported the Commodity Futures Modernization Act just before the 2000 election, which denied the governmental Commodity Futures Trading Corporation the ability to conduct oversight on the trading of financial derivatives. In the wake of Obama’s stimulus package in April 2009, Summers was criticized for collecting $2.7 million in speaking fees from Wall Street companies that had received government bailout money.
Summers was paving the way for the abuse of America’s financial system. Meanwhile, his protégé, Under Secretary for International Affairs Timothy Geithner, was making political gains. In 2002, during the first George W. Bush administration, Geithner left the Treasury Department to join the Council on Foreign Relations as a senior Fellow in the International Economics Department. Also a protégé of Henry Kissinger, Geithner had previously served as president of the New York Federal Reserve Bank. By 2009, Geithner was Obama’s Treasury secretary. Again, here we see two men (Summers and Geithner) connected to the same secretive globalist society—the Council on Foreign Relations (CFR)—freely moving between both Democratic and Republican administrations. The CFR is secretive because it does not publicly announce its agenda or decisions, nor does it allow anyone to join without an invitation, and then only after careful vetting of the candidate’s propensity to favor globalization.
Princeton-educated economics researcher F. William Engdahl wrote that Treasury Secretary Geithner’s “dirty little secret” was that during the credit crisis, he only tried to save the five largest banks—banks that held “96 percent of all US bank derivative positions in terms of nominal value, and an eye-popping 81 percent of the total net credit risk exposure in event of default.” A derivative is a financial instrument whose worth is derived from another resource, whether property, goods, or services, called the underlying asset. Derivatives have been used in complex financial dealings to hedge against loss by allowing speculators to sell or trade the derivative and to gamble on gaining great profit by acquiring derivatives in the hope that the underlying asset will maintain or increase its value. In declining order, the five banks that had the most derivatives are JP Morgan Chase, Bank of America, Citibank, Goldman Sachs, and the recently merged Wells Fargo–Wachovia. The leadership of these five banks is full of CFR members.
BANK STRESS TESTS
IN EARLY MAY 2009, after months of foot-dragging, federal regulators finally released the results of their bank “stress tests,” which test whether or not a certain bank can repay its debts and survive harsh economies. From the five banks listed above, only JP Morgan Chase passed the test. This means it was not required to raise more capital to prevent further losses.
The Charlotte-based Bank of America tested the worst on the stress tests. Government regulators informed the bank that it needed almost $34 billion in additional capital, which accounted for almost half of its total deficit. This news worsened problems for the banking giant, already under criticism for receiving more than $45 billion in government aid and for acquiring the investment bank Merrill Lynch.
Bank of America wasn’t the only one with problems. Among others, Wells Fargo needed to raise $13.7 billion, GMAC Financial Services (formerly known as General Motors Acceptance Corporation) needed $11.5 billion, and Citigroup needed $5.5 billion. All told, the nation’s large banks needed $74.6 billion to build a capital cushion, according to federal regulators.
Federal Reserve chairman Ben Bernanke was publicly upbeat about the tests, describing them as a “fair and comprehensive effort.” “[Markets] can be reassured that banks will be strong and be able to lend even if the economy is worse than currently expected,” he told CNBC. However, banks that failed the government’s stress test would be required to quickly come up with a plan to raise additional resources. One such plan was for the federal government to convert preferred shares bought by the U.S. Treasury into common stock. Douglas Elliott, a former JP Morgan Chase investment banker now with the Brookings Institution, told the Associated Press, “Essentially what we’ll be doing is swapping a kind of loan for actual ownership of a part of the bank. So it increases the taxpayers’ risk but also increases the potential return.”
Increased taxpayer risk? This does not seem such a good idea in shaky financial times. “Continuing to pour taxpayer money into these five banks without changing their operating system is tantamount to treating an alcoholic with unlimited free booze,” said F. William Engdahl. “The government bailout of AIG, at more than $180 billion [as of April 2009], has primarily gone to pay off AIG’s credit default swap obligations to counterpart gamblers Goldman Sachs, Citibank, JP Morgan Chase and Bank of America, the banks who believe they are ‘too big to fail’. In effect, these institutions today believe they are so large that they can dictate the policy of the federal government. Some have called it a bankers’ coup d’etat. It is definitely not healthy.”
So the big banks pocket the money and the poor, strapped taxpayers are left with the bill, not to mention ownership of banks that continued to be troubled financially well into 2010.
By mid-2009, Americans were driving less and spending less and the economy was deflating. Even though products became cheaper in the face of inflation, people stopped buying what they couldn’t afford. The housing market, which is a key indicator of economic strength, continued to lag far behind projections. Housing start-ups were doing particularly poorly. In April 2009, the U.S. Department of Housing and Development announced that non-government-backed housing starts, even after seasonal adjustments, were 54 percent lower (458,000) than the April 2008 rate of 1,001,000. Privately backed housing starts are any homes being built that are not being financed by the government. These have long been a prime indicator of the national economy.
There was also blame tossed at the unequal distribution of money. Chuck Collins, director of the Program on Inequality and the Co
mmon Good for the Institute for Policy Studies, said, “In our view, extreme inequalities contributed to the economic collapse…. This matters because wealth is power—the power to shape the culture, to distort elections, and shape government policy. A plutocracy is a ‘rule by wealth’—and more and more the priorities of the society are shaped by the interests of organized wealth.”
IMPROPRIETIES AND DEATH
APPARENTLY THE STRESS CREATED by the gargantuan amounts of money involved in the economic squeeze can be hazardous to your health as well as your wealth. Stress may have contributed to the untimely deaths of at least five high-profile financial officers who died in the months following financial collapse in October 2008.
In January 2009, German billionaire Adolf Merckle apparently threw himself under a train after losing money shorting Volkswagen stock. Patrick Rocca, an Irish property speculator who was close to both President Bill Clinton and British prime minister Tony Blair, was found shot in the head following the crash of the real estate market. Chicago real estate mogul Steven Good was found fatally shot in his car. Financial adviser Rene-Thierry Magon de la Villehuchet reportedly committed suicide in his Manhattan office just before Christmas 2008 after losing both his and his clients’ money in the Bernie Madoff scandal.
One particularly troubling death was that of Freddie Mac acting chief financial officer David Kellermann, who was found, the apparent victim of suicide, in his Vienna, Virginia, home on April 22, 2009. In 2008, the U.S. Treasury Department had to pump $45 billion into the government-sponsored mortgage firm to shore up $50 billion in losses. Questions immediately arose over reports about Kellermann’s role in the massive losses at Freddie Mac and about the nature of his death. One police spokesman told All Headline News that Kellermann died from a gunshot wound. Strangely enough, however, another police officer initially said he had hanged himself.
There was more controversy when reporters found that Kellermann was deeply involved in the Securities and Exchange Commission’s and the U.S. Justice Department’s investigations into questionable bookkeeping practices within Freddie Mac. “Kellermann figured in several recent controversies at Freddie Mac,” reported the Washington Post in April 2009. “He and a group of company attorneys tussled with regulators in early March as the firm prepared to file its quarterly earnings report with the Securities and Exchange Commission. [Kellermann’s] group insisted that Freddie Mac inform shareholders of the cost to the company in helping carry out the Obama administration’s housing recovery plan. The regulators urged the company not to do so.”
“This isn’t the story of a guy who was trying to cover something up. It’s the story of a guy who was trying to do the right thing,” commented one housing industry veteran, who asked for anonymity, apparently suspecting the possibility of danger in telling the truth in such matters.
More than one conspiracy-minded researcher believed that something more than suicide was at work in Kellermann’s death and that there may have been other deaths connected to an effort to silence insiders who might have knowledge of the situation that someone does not want made public.
In a statement from his political action committee, perennial office seeker and conspiracy advocate Lyndon LaRouche said, “There is no evident motive for suicide in this case, but there is a motive for suppressing making Kellermann’s views known. The guy is killed, probably murdered. He deserves justice. His right to justice is overriding. The question is what else did David Kellermann know which influential circles did not want him to reveal?”
THE RICH GET RICHER
IT HAS LONG BEEN said that the rich get richer while the poor get poorer. Many researchers equate the term “plutocracy”—rule by the wealthy—with the New World Order.
Although the belief that an organized plutocracy controls the world has long been derided as merely a “conspiracy theory,” G. William Domhoff, a professor in psychology and sociology at the University of California, Santa Cruz, has the statistics to prove its existence. Domhoff’s first book, Who Rules America?, was a controversial 1960s bestseller that argued that the United States is dominated by an elite political and economic ownership class.
Using updated figures, Domhoff stated in a posting: “In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1 percent of households (the upper class) owned 34.3 percent of all privately held wealth, and the next 19 percent (the managerial, professional, and small business stratum) had 50.3 percent, which means that just 20 percent of the people owned a remarkable 85 percent, leaving only 15 percent of the wealth for the bottom 80 percent (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1 percent of households had an even greater share: 42.2 percent.”
Domhoff defined “total assets” as the gross value of owner-occupied housing plus other real estate owned by the household, cash and savings deposits, money market accounts, stocks and bonds, retirement plans, and other financial securities. He defined “total liabilities” as mortgage debt; consumer debt, including auto loans; and any other debt.
According to Domhoff, wealth distribution has been extremely concentrated throughout American history. During the nineteenth century, the top 1 percent of wealth owners owned 40 to 50 percent of assets in large port cities like Boston, New York, and Charleston. He said this disparity remained stable during the twentieth century, “although there were small declines in the aftermath of the New Deal and World War II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.
“Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks,” wrote Domhoff. “By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1 percent had 44.2 percent of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2004, before the economy crashed in the late 2000s and little people got pushed down again.”
Domhoff recorded that as of 2007, “income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01 percent…receiving 6 percent of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917.”
The numbers are even more shocking when viewed on a global scale. Using numbers from the World Institute for Development Economics Research, Domhoff concluded the top 10 percent of the world’s adults control about 85 percent of global household wealth. “That compares with a figure of 69.8 percent for the top 10 percent for the United States. The only industrialized democracy with a higher concentration of wealth in the top 10 percent than the United States is Switzerland at 71.3 percent,” he noted. At the same time, the U.S. government’s income is declining. According to the White House, 2008 individual income tax receipts were estimated at $1.168 trillion. Yet when tax receipts were tallied, the total was $155 billion less than that at $1.043 trillion.
Domhoff’s work presents a strong argument that wealth indeed equals power. Such power comes with the ability to donate to political parties, engage lobbyists, and provide grants to experts to think up new policies beneficial to the wealthy. Money also can hire public relations firms to improve one’s image or make large donations to universities and cultural entities such as museums, music halls, and art galleries. Wealth in the form of stock ownership can be used to control whole corporations, which today have inordinate influence in society, media, and government.
And just as wealth can lead to power, so can power lead to wealth. Recent presidents such as Lyndon B. Johnson and Richard M. Nixon entered office without an extraordinary amount of money but left as millionaires. This is because those who control a government can use their positions to feather their own nests. Domhoff said this can be done by means of a favor
able land deal for relatives at the local level or perhaps a huge federal government contract to a new corporation run by friends who will hire you when you leave government. “If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth,” commented Domhoff.
PUBLIC DEBT, PRIVATE PROFIT
WHETHER RICH OR POOR, most Americans believe their finances are safe, thanks to a federal government corporation created in the Great Depression year of 1933.
About eight-four hundred American banks participate in the Federal Deposit Insurance Corporation (FDIC), an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system by insuring deposits, supervising banks for safety and soundness, and managing receiverships. These banks allocate a small portion of their profits to collectively insure bank deposits in cases where a bank fails.
And fail they did in late 2008 and 2009. Between the two years, 111 banks failed and many more teetered on collapse, effectively depleting the FDIC reserve fund from $52.8 billion in 2008 to a mere $10.4 billion in the first quarter of 2009, its lowest point since the height of the savings and loan scandal in 1992.