The Challenges Faced by Anyone or Group attempting to Form New Exchanges Intended to Control Abusive Manipulations.

The Challenges Faced by Anyone or Group Attempting to Form New Exchanges Intended to Control Abusive Manipulations.

I have had to good fortune to have a series of very challenging jobs under incredibly educational bosses of great bandwidth and throughput.  I am where I am today for what I learned from these bosses and jobs.

A person I have been a good friend to has caused me to be informed that some bright senior people from the Securities Industry are looking to open new Exchanges to create new ethically clean markets, by either full ground up formation, or by taking over previously existing but failed exchange initiatives.

I caution them now that they probably can't understand the problems they will encounter with such an effort.  I can appreciate their desire to see the moral and legal corruptions of our current markets corrected, and I would support anyone undertaking such an effort.  Conversely, I have to say without qualification that the obstacles facing such efforts are literally Herculean.  Even if this were led by senior executives from the industry, these people don't have the diversity of professional experience or

The Challenges Faced By Anyone Trying to Build New Exchanges, New or Re-Invented.

I have been informed by several parties that various initiatives are underway to create new exchanges either from whole cloth, or on the bones of previously failed efforts.

The problems such parties face are daunting.  What do they include?

• First, they must consent to the jurisdiction of the SEC and FINRA, whose malfeasance have so damaged or destroyed thousands of companies, costing millions of investors Billions of dollars.
• Two, they must put a infrastructure in place that doesn't simply convey the previous venality to the new entity.
• Three, they must realize that to be in some form that can be effective, they must root out the people and laws who have so corrupted our markets.
• Four, they need everything from an order entry system, to honest clearance and settlement, to legitimate brokerage/investment banking functions.
• Five, they must eliminate the absolutely internecine conflicts of interest currently extant, by which everybody pays and everybody gets, much like other histories of entire nation states that were corrupt from the bottom to the top.
• Six, they must find people who don't know just what is going on, as they would never take on such a task, or face the stupidity and venality of our marketplaces.
• Seven, they must cut out all organizations and individuals who have engaged in the practices that destroyed thousands of companies, beginning first with the ignorance and corruption of our swinging door between our regulators and our industry leaders.
• Eight, they must systematically engage in a strategic effort to bring our systems core operators in line, or destroy them and their leadership.

What kind of organizations are involved?  Start with the people who actually are real entrepreneurs.  They have to read the riot act to their shareholders and counsel.  Then you must clean up order entry, settlement and clearance, compliance (including the SEC and FINRA most directly), brokerage, investment banking, truly objective research, deal structures, accounting, reporting, and much more.

While all of these entities have mutual interests and conflicts, you can't make an exchange or exchanges plural successful  without similar entities being put in place as the infrastructure blocks necessary to support investment activity.  If any one of these entities is out of line ethically, a figurative rotten apple, then the entire barrel is ruined.  The problem today is that the entire batch of barrels have been unable to control the manipulators who would destroy individual investors. 

This country's power elite have sought out consolidation of every function and industry that could effect their ability to maximize their profits.  You can't name a single industry, from exchanges, to all related functions of the market whose organizations haven't been driven together like cattle. 

Anyone who has ever studied risk management knows a core basic part of that activity is DIVERSIFICATION.  When there are 50 of something, it is much safer in the view of those in control to have only 5 such entities, no matter how much someone may argue that the 5 will be more economically efficient than the 50 could ever be.  We have seen this psychotically compelled consolidation of banks, brokers, exchanges, clearing firms, accounting orgs, communications processes, etc., for as long as I have been in the industry, dating back over 40 years. 

What happens when one fails?  If it is a Lehman Brothers, it is a catastrophe. The same with Bear Stearns.  I can recite dozens of examples.  Can you?  If not, you aren't ready to open an exchange.

And if you do manage to create the very complex elements needed in a form of elementary integrity, you have at best one chance in five of success. 

Should someone try?  Of course.  Should they do it with the eyes wide open?  Absolutely.  Everyone who knows the history of the past five decades of Wall Street will be betting actively against you, seeking to find a way to break in and steal what they can, knowing that our regulators and justice system will never punish them.

If you are successful in opening an exchange, does someone bet on that exchange's success continuing, or as in the past, do they bet on regulators and legislators changing the entire rule base it was built on like a kind of amorphous quick sand. 

In closing, I leave you with the old line most applicable here:  CAVEAT EMPTOR.

I have had several friends who have had both Candida infections, and Chronic Fatigue Syndrome.  Candida is a bear to get rid of, many times taking six months to a year.

 

Diagnosis is a problem more often than not. 

 

The legendary homeopath Dr. Luc DeShepper preached this coming catastrophe more than 40 years ago.

 

He finally gave up on the US and moved to Canada.

 

These conditions are very well known, and pandemic. They are frequently miss-diagnosed as being other conditions or psychological conditions.

 

Pay attention.  Last Sunday's 60 Minutes did a segment on the death of the legendary WWII Pilot and Athlete, Louis Zamperini.   His definitive bio about his life experiences including years as a POW of the Japanese was written by the gifted writer, Lauren Hillenbrand, who leaped onto the national stage with her entrancing story of the racehorse Seabiscuit, made into the movie narrated by Pulitzer Prize winning author/historian and biographer, David McCullough.  Louie never met her in the seven years she spent on his book, because she was homebound by Chronic Fatigue Syndrome.  I wish I could get this to her.

 

Share this with friends.  I use no sugar products, nor any high glycemic index (meaning fast conversion to sugar) simple carbohydrates. Included in this list are corn, potatoes, rice, cous cous, bananas, and many more seemingly innocuous foods, particularly cereals, breads, crackers, sodas and more.  Learn about this for your own good.

 

You have friends and family who have one of these conditions and may never know it killed or is killing them.  It is an equal opportunity killer, young and old alike.

 

Best, Bud.

 

From: Citizens Committee for the Right to Keep & Bear Arms [mailto:CCRKBA@news1.conservativecontacts.com]
Sent: Wednesday, July 09, 2014 4:49 AM
Subject: Are You Infected With The "American Parasite"? (Video) The role of sugar and aspartame in an explosion of Candida, directly linked to Chronic Fatigue Syndrome, an exploding condition in the US population.

 

View as a web page

Dear CCRKBA Reader, Below is an important message from one of our highly valued sponsors, Keybiotics. Please read it carefully as they have some special information to share with you. Thank you, Citizens Committee for the Right to Keep and Bear Arms   Are You Infected With The "American Parasite"? (Video) Dear Friend, I wonder what the U.S. Government would have to say about THIS? It's a video about the massive conspiracy between our government and Big Business which resulted in a major health crisis... ...250 million Americans infected with a dangerous parasite. It explains how this parasite is responsible for many of your common & persistent health problems: fatigue, weight gain, stress, digestive trouble, and many more. Click here to watch the video... it's the story THEY don't want you to know. Stay Healthy, Craig Cappetta Director of Nutrition & Science Keybiotics P.S. This is something every single American needs to hear about... your health and the health of your family hangs in the balance. This email is never sent unsolicited. You have received this Citizens Committee for the Right to Keep & Bear Arms email because you subscribed to it or someone forwarded it to you. To opt out, see the links below. For information on advertising with Citizens Committee for the Right to Keep & Bear Arms, please contact: ADVERTISE TO OPT OUT Remove your email address from our list. We respect your right to privacy. View our policy. This email was sent by: Citizens Committee for the Right to Keep & Bear Arms, PO Box 1682 Bellevue WA 98009-1682

The BIS referred to is a sovereign nation, whose function is to track worldwide money flows.  It tracks all currencies and values of all sovereigns worldwide.  It is enormously powerful, dwarfing our Federal Reserve on every level. 

The largest currency they track is the dollar.  That is all currency in circulation worldwide in the hands of all banks, including those in money laundering centers like Cyprus, Fiji, Vanuatu, etc., ad infinitum. 

When Carlos Escobar tried to buy his way out of extradition from Columbia, he offered to pay off the national debt of Columbia in CASH, $40 Billion.  You have to know that the BIS knew where every dollar was.  

You must also realize that this was no money to Escobar, pocket change. 

So is BIS clean?  As a sovereign,  it and its personnel have full diplomatic immunity for everything, meaning immunity from prosecution, deposition, et al.

No one I know fully understand its power and insights in global economic dynamics.  And as you might imagine, I know some people EVERYWHERE. 

They are very close to both the World Bank and the IMF.  Neither operates without first consulting BIS for advice on the potential effects of cash and credit strategies. 

No one in the country has any idea how many dollars are in "circulation OR ON DEPOSIT" worldwide.  It dwarfs the money used in our economy, that number having been overhauled by cashless transactions. 

The BIS must rank as one of the most opaque organizations on the Globe.  It communicates with some subordinate banks, but none of those subordinates know the full picture of their control and activities. 

The BIS forecast the 2008 crisis on 6/29/2006.  

I was once asked if I believed in God, and I recited Pascal's Theorem/Paradox, hated by liberal theologians and atheists everywhere.  I believe in God even if I can't prove it, but from a Physics perspective, that all energy is conserved even as it is consumed. 

Do I believe someone is manipulating the World's financial assets and paradigm?  I can't prove it either way, but I know that the BIS knows and could prove it. 

Bud Burrell Blogspot.

 

Subject: zerohedge: Is The Fed Going To Attempt A Controlled Collapse?

 

http://www.zerohedge.com/news/2014-07-08/fed-going-attempt-controlled-collapse


Is The Fed Going To Attempt A Controlled Collapse?

Submitted by Tyler Durden on 07/08/2014 17:00 -0400

COMMENTS

Originally posted at NotQuant.com,

As most Fed watchers know, last week was interesting because Janet Yellen, speaking at IMF came out and said something quite surprising.  In a nutshell, she said “It’s not the Fed’s job to pop bubbles”.   While many market participants immediately took this to mean, “To the moon, Alice!” and started buying equities hand over fist, there’s another possible explanation for Mrs. Yellen’s proclamation of unwillingness:  The Fed could be preparing to do exactly what it said it wouldn’t.

Here’s a quick re-cap of events:  In the recently released Annual Report of the BIS: Bank for International Settlements  (commonly thought of as the “central bank’s central bank”) the BIS made a rather ominous recommendation to it’s member banks: Pop this bubble now.   Their specific language wasn’t quite so direct, but the message was just as clear.

The risk of normalising too late and too gradually should not be underestimated… The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on .

 

Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …

 

“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”

As we noted last week, there are a couple of fascinating things to note about this recommendation.   First, for anyone who thinks that the concept of intentionally crashing the stock market is the stuff of conspiracy theorists, that notion is now dead and buried. It’s extremely clear from the BIS’ language, that the concept of initiating a collapse is openly discussed as a policy measure.   This was a direct recommendation to bring on the crash – or as they say so colorfully, to “bring forward the downward leg of the cycle”.

More kabuki?

But what else is fascinating is that just days after the BIS report was released, Janet Yellen seemed to counter the BIS in her presentation to the IMF:

“At this point, it should be clear that I think efforts to build resilience in the financial system are critical to minimizing the chance of financial instability and the potential damage from it. This focus on resilience differs from much of the public discussion, which often concerns whether some particular asset class is experiencing a ‘bubble’ and whether policymakers should attempt to pop the bubble. Because a resilient financial system can withstand unexpected developments, identification of bubbles is less critical.”

What Yellen seemed to be saying — quite possibly in direct response to the BIS’s recommendations —  is that the Fed isn’t in the business of popping bubbles, nor does it see a reason to intervene in their development.

So to summarize:  The BIS publicly recommended popping the bubble now… and Yellen said no.

So what’s going on?

We could take all of this at face value if we chose:  The BIS playing hawk, and the Fed playing dove.  And that might well be the case — as to some extent Yellen is still something of an unknown entity.

But there is one more twist to the puzzle:  Yellen has openly stated that she would not be offering clear guidance to the market as her predecessor had advocated.  The age of Fed-glastnost is apparently coming to an end.

So indulge us for a moment as we present another possibility:

Yellen is going to orchestrate a controlled collapse.  Or, at least one which we hope is controlled.

There are political considerations to be made, however:  The Fed, which has not only come under intense fire for overt market manipulation, but which is also deeply concerned with market perception, simply cannot afford to be perceived as an instrument of the market’s collapse.   To be seen as the instigator of a crash could do irreparable harm to the institution.

Pop bubbles? Who us?

So just maybe the Fed fully intends on heeding the advice of the BIS, and is strategically positioning itself as a stalwart dove to shield itself from the public fallout of it’s orchestrated financial calamity.   A particularly sound play from a political perspective in the event that things don’t go as smoothly as planned.

One thing is certain at this point:  An intentionally orchestrated crash is the direct recommendation of the BIS, per it’s annual report.   That this action exists as a potential policy measure is now confirmed.

The remaining question is: Would the Federal Reserve pursue such a policy measure openly, or behind the same curtains from which most of their historic policies were enacted.

As we re-think Mrs. Yellen’s speech to the IMF, we are less certain that the Fed is as unwilling to intervene as Mrs Yellen would have us believe.   Bringing forward the next leg of the cycle, may well be on the Fed’s agenda.

Crises Solved by Pres. Obama? ZERO! Crises Created by Obama? Impossilbe to Determine.

Crises Solved by President Obama?  ZERO.  Crises Created by Obama? Impossible to Determine.

We have watched Obama carefully through more than 7 years of non-stop campaigning, filled with unending promises and lies.  This has gone beyond the pale for what any citizen should expect.  If
anyone thinks there is no calculated pattern to this behavior, they are either in denial or they are ideologues without morals. The over-riding guidelines of how Obama has governed is the classic book, "Rules for Radicals" by the now infamous Communist ideologue Saul Alinsky.  Indeed, Obama has so systematically violated his oath of office, he has created a crisis of conscience for anyone who ever took an oath of office to protect and defend this country and the Constitution.

Obama's arrogance has shown no bounds.  His actions with regard changing and writing laws without Congress violate not only the letter of the law, they are a mortal insult to anyone believing in the balancing of the Separation of Powers in our Constitution.  I have spoken with many people who have recognized this, but who seem intellectually paralyzed about making a real political issue of his treasonous behavior.

Beginning with the issue of his sloppily forged birth certificate, to his 80 Social Security account numbers, to Fast and Furious, to his destruction of our sovereign borders, Obama seems to be above accountability for his conduct.  Now, even his own Democratic Party, who master-stroked the insane and inept 2700 page Obamacare are now abandoning him.  If any group should be abandoned, if not condemned, it is the Democrats who elected this fraud our President. 

Obama believes he is untouchable, and that he is getting away with his illegal and insulting behavior because his Attorney General, Eric Holder, is completely at his command.  Holder personifies the character of the amoral lawyer addressed in fact and satire, and a human shield against the amorality and criminal behavior of his President.  When will the American people say enough?  Why do they think that will make any difference?  Obama has ignored both Congress and the Supreme Court.  Who individually thinks they have that kind of power to neuter him?

I am disgusted beyond words.  I was always a "My Country, Right or Wrong."  I can no longer say that.  I took an oath of office for which many of my friends and acquaintances sacrificed their lives in the name of.  The recent murders of Breibart and his Coroner and Tom Clancy were just the latest crises before the newest one, the illegal importation of children.  Obama used his brilliant strategies of never letting a crisis go to waste, and of creating the crises anytime one of his prior failures started to get too much focus from the Press, the House or the Senate. 

He has created crises through his incompetence, and by a more evil strategy of destroying this country from within, tearing apart our Constitutional Bill of Rights and the Declaration of Independence.  He has no feelings of loyalty to this country.  He panders to the very worst of the very weakest members of our society.  Anyone reading his 2012 campaign speeches heard the identical repetition of tired rhetoric of the 2008 campaign. 

If ever a candidate were slandered, it was Mitt Romney, whose positions on the issues weren't just right, but systematically so.  The Candy Crowell debacle about her erroneous position on what was said or not by Obama, an outright lie, cost her nothing, when she should have been forced to trial for her citizenship.   What would have happened to a conservative moderator for such a damaging error?  And this caricature of a left wing demagogue never even bothered to apologize, not to Romney nor to the American Public.  No candidate should ever again agree to debate in front of such left wing ideologues, or to have their debates over-sighted by the current Organization responsible for these debates.

I felt compelled to write this, but it won't change anything, except my demands on my own morality.
I once repeated a story told in a movie about a gigolo who has a conversation with the father of a woman he was "escorting".  The very British father said that a great book (written by the gigolo) had an astonishing observation that women get the relationship they really want.  I say the same to the American people.  They made this creature President, and they own him.  And thus was it ever so.

My Sheltered Investigative Actions, 1994 to 2014

Beginning in 1994, I acted as a select source of industry based expertise on illegal short selling of all forms of securities globally, by criminals domestic and international, for plaintiff lawyers for victims, for Government law enforcement authorities, for regulatory agencies, and similar authorities offshore.  By the requirements of these parties, under privilege for all counsel referenced, I produced thousands of pages of analyses to hundreds of parties, used confidentially in thousands of investigations, against hundreds of perpetrators in a huge number of jurisdictions, both domestically and internationally.

The accuracy of my work was such that some of the same parties I worked most closely with and who used other purported experts of narrower expertise would tell me that, without reservation, I had not only been the best on the full arena of this expert work, but that I remained their single source to whom they could ask virtually any question about any domain involved. I did much of this work without any compensation, and a very small amount for limited compensation, much of which was accrued and never paid. 

What did I get for these millions of words of professional output involving personal physical risk ?  Literally uncounted threats against my life, anonymous slanders, libels from ignorant idiots, finally provoking my turning over to one of my Federal Task Force Contacts the information for my protection in exchange for copying them on all non-privileged output for the nearly countless victims of this never-ending scandal.  What was it that made me so valuable to them?  I was the only vocal expert advocating for the victims who had actually done the work professionally as a trader and senior executive from the Sell side of the securities industry, and as an executive of two victim companies who had over $850 Million dollars in market cap stolen from them. 

I worked with or provided investigative support to numerous Federal Task Forces, virtually all Federal Investigative Agencies, to SEC heads, to US Attorneys General, to White House General Counsel, to uncounted AUSA's on over 200 cases, and much more, including support of both in-house and outside general counsel for numerous victims.  I named names of perpetrators to all these parties, and I can point to the handful of cases I influenced the outcome of.  These were the only cases that actually were proved up, while our elected and appointed authorities were more interested in protecting the thieving scum who ran these scams, than they were in punishing these people for their theft of Trillions of dollars from millions of investors in thousands of companies.  Indeed, these criminal parties should have been tried, and then thrown in prison for life, or more appropriately, tried for national security related treason and condemned.  It cost me five years of Government protection against these threats, who I came to feel I should have dealt with personally.

I look back without regret, but I threw away some of my most productive years of my life on this without significant compensation.  I earned the respect of the people I cared about, by dealing with both good and bad actors, in the process of learning the details of the criminals' conduct.  Could I recommend anyone else do this?  The answer is a resounding NO, not just NO, but HELL NO.  I came within inches of getting myself attacked physically with some idiots who thought they could intimidate me.  I walked away in every case, when I could have ended them almost without effort, but losing my freedom in the process. 

Did authorities contribute ANYTHING to stopping these scum from running their scams?  NOT A DAMNED THING.  The criminals here operated with virtually unlimited venality.  They weren't afraid of the authorities, not a whit.  The biggest of these criminals, who individually had billions of dollars in assets, paid their major lawyers enormous funds to insure that they would never be touched, and with only three or four exceptions, they were never touched. 

One of the victims of vicious criminal manipulation alone says everything needed about regulatory corruption and arrogance, the NASDAQ Bulletin Board.  It was targeted for destruction by its very creators in the Federal agencies.  No one will ever know what this has cost this country in lost business opportunities, lives lost because drug products were lost in small companies, and much worse.

I asked for face to face meetings with many of these Federal and State authorities on a number of occasions.  They ran like dogs from any meeting, fearful of the potential outcome that might arise from such a confrontation.  They knew they were guilty, and they didn't want to be forced to face it hard on.

In conclusion, I sacrificed millions of dollars personally in the name of these causes, while the American people got the best Government Money Can Buy.  I was asked who was responsible for such a monstrous activity.  I responded that if someone wanted to know who was responsible, they simply had to look in a mirror.  I leave this with anyone reading this.

I thank those who I supported and who supported me on the legal front for protecting my privilege.  They no longer need to be concerned with this.

This is targeted on an embarrassment to the USG, but a much worse fraud on the US Taxpayer.

 

Subject: Taibbi: Secret and Lies of the Bailout

 

http://jessescrossroadscafe.blogspot.com/2013/01/taibbi-secret-and-lies-of-bailout.html

Taibbi: Secret and Lies of the Bailout

 

05 January 2013

 

This is a long piece from Matt Taibbi about the financial crisis and the bank bailout.

It is under-reported, too often overlooked, and well worth understanding.

I find it remarkable and almost disturbing that discussions by economists and thought leaders so rarely mention and account for the epic fraud and distortions created by the banking system. They occasionally mention it for the footnote of history, as they did the housing bubble and Greenspan's policy failures, so that they can go back at some future date and say that they did 'speak out.'

Big money has polluted the political process and stifled discussion in the corporate media. And they treat this like some embarrassing cousin whom the family rarely discusses in public.

It is the credibility trap. And it is crippling the Anglo-American economic system.

Rolling Stone
Secret and Lies of the Bailout
By Matt Taibbi
January 4, 2013

It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed.

To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?

Wrong.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.

How Wall Street Killed Financial Reform

But the most appalling part is the lying. The public has been lied to so shamelessly and so often in the course of the past four years that the failure to tell the truth to the general populace has become a kind of baked-in, official feature of the financial rescue. Money wasn't the only thing the government gave Wall Street – it also conferred the right to hide the truth from the rest of us. And it was all done in the name of helping regular people and creating jobs. "It is," says former bailout Inspector General Neil Barofsky, "the ultimate bait-and-switch."

The bailout deceptions came early, late and in between. There were lies told in the first moments of their inception, and others still being told four years later. The lies, in fact, were the most important mechanisms of the bailout. The only reason investors haven't run screaming from an obviously corrupt financial marketplace is because the government has gone to such extraordinary lengths to sell the narrative that the problems of 2008 have been fixed. Investors may not actually believe the lie, but they are impressed by how totally committed the government has been, from the very beginning, to selling it.

THEY LIED TO PASS THE BAILOUT

Today what few remember about the bailouts is that we had to approve them. It wasn't like Paulson could just go out and unilaterally commit trillions of public dollars to rescue Goldman Sachs and Citigroup from their own stupidity and bad management (although the government ended up doing just that, later on). Much as with a declaration of war, a similarly extreme and expensive commitment of public resources, Paulson needed at least a film of congressional approval. And much like the Iraq War resolution, which was only secured after George W. Bush ludicrously warned that Saddam was planning to send drones to spray poison over New York City, the bailouts were pushed through Congress with a series of threats and promises that ranged from the merely ridiculous to the outright deceptive. At one meeting to discuss the original bailout bill – at 11 a.m. on September 18th, 2008 – Paulson actually told members of Congress that $5.5 trillion in wealth would disappear by 2 p.m. that day unless the government took immediate action, and that the world economy would collapse "within 24 hours."

To be fair, Paulson started out by trying to tell the truth in his own ham-headed, narcissistic way. His first TARP proposal was a three-page absurdity pulled straight from a Beavis and Butt-Head episode – it was basically Paulson saying, "Can you, like, give me some money?" Sen. Sherrod Brown, a Democrat from Ohio, remembers a call with Paulson and Federal Reserve chairman Ben Bernanke. "We need $700 billion," they told Brown, "and we need it in three days." What's more, the plan stipulated, Paulson could spend the money however he pleased, without review "by any court of law or any administrative agency."

The White House and leaders of both parties actually agreed to this preposterous document, but it died in the House when 95 Democrats lined up against it. For an all-too-rare moment during the Bush administration, something resembling sanity prevailed in Washington.

So Paulson came up with a more convincing lie. On paper, the Emergency Economic Stabilization Act of 2008 was simple: Treasury would buy $700 billion of troubled mortgages from the banks and then modify them to help struggling homeowners. Section 109 of the act, in fact, specifically empowered the Treasury secretary to "facilitate loan modifications to prevent avoidable foreclosures." With that promise on the table, wary Democrats finally approved the bailout on October 3rd, 2008. "That provision," says Barofsky, "is what got the bill passed."

But within days of passage, the Fed and the Treasury unilaterally decided to abandon the planned purchase of toxic assets in favor of direct injections of billions in cash into companies like Goldman and Citigroup. Overnight, Section 109 was unceremoniously ditched, and what was pitched as a bailout of both banks and homeowners instantly became a bank-only operation – marking the first in a long series of moves in which bailout officials either casually ignored or openly defied their own promises with regard to TARP.

Congress was furious. "We've been lied to," fumed Rep. David Scott, a Democrat from Georgia. Rep. Elijah Cummings, a Democrat from Maryland, raged at transparently douchey TARP administrator (and Goldman banker) Neel Kashkari, calling him a "chump" for the banks. And the anger was bipartisan: Republican senators David Vitter of Louisiana and James Inhofe of Oklahoma were so mad about the unilateral changes and lack of oversight that they sponsored a bill in January 2009 to cancel the remaining $350 billion of TARP.

So what did bailout officials do? They put together a proposal full of even bigger deceptions to get it past Congress a second time. That process began almost exactly four years ago – on January 12th and 15th, 2009 – when Larry Summers, the senior economic adviser to President-elect Barack Obama, sent a pair of letters to Congress. The pudgy, stubby­fingered former World Bank economist, who had been forced out as Harvard president for suggesting that women lack a natural aptitude for math and science, begged legislators to reject Vitter's bill and leave TARP alone.

In the letters, Summers laid out a five-point plan in which the bailout was pitched as a kind of giant populist program to help ordinary Americans. Obama, Summers vowed, would use the money to stimulate bank lending to put people back to work. He even went so far as to say that banks would be denied funding unless they agreed to "increase lending above baseline levels." He promised that "tough and transparent conditions" would be imposed on bailout recipients, who would not be allowed to use bailout funds toward "enriching shareholders or executives." As in the original TARP bill, he pledged that bailout money would be used to aid homeowners in foreclosure. And lastly, he promised that the bailouts would be temporary – with a "plan for exit of government intervention" implemented "as quickly as possible."

The reassurances worked. Once again, TARP survived in Congress – and once again, the bailouts were greenlighted with the aid of Democrats who fell for the old "it'll help ordinary people" sales pitch. "I feel like they've given me a lot of commitment on the housing front," explained Sen. Mark Begich, a Democrat from Alaska...

Read the rest here.