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Matt Taibbi Asks Why The Fed Gave $220 Million In Bailout Money To The Wives Of Two Morgan Stanley "Bigwigs"
Matt Taibbi has resurfaced with another stunner of Wall Street impropriety which will lead to merely more silence, even more unanswered questions and be quickly buried by the kleptocratic oligarchy.
The Real Housewives of Wall Street: Look Who's Cashing In On the Bailout
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?
From Rolling Stone Magazine
In August 2009, John Mack,
at the time still the CEO of Morgan Stanley, made an interesting life
decision. Despite the fact that he was earning the comparatively low
salary of just $800,000, and had refused to give himself a bonus in the
midst of the financial crisis, Mack decided to buy himself a gorgeous
piece of property — a 107-year-old limestone carriage house on the Upper
BeerEast Side of New York, complete with an indoor 12-car garage, that
had just been sold by the prestigious Mellon family for $13.5 million.
Either Mack had plenty of cash on hand to close the deal, or he got some
help from his wife, Christy, who apparently bought the house with him.
The Macks make for an interesting couple. John, a Lebanese-American
nicknamed "Mack the Knife" for his legendary passion for firing people,
has one of the most recognizable faces on Wall Street, physically
resembling a crumpled, half-burned baked potato with a pair of
overturned furry horseshoes for eyebrows. Christy is thin, blond and
rich — a sort of still-awake Sunny von Bulow with hobbies. Her major
philanthropic passion is endowments for alternative medicine, and she
has attained the level of master at Reiki, the Japanese practice of
"palm healing." The only other notable fact on her public résumé is that
her sister was married to Charlie Rose.
It's hard to imagine a pair of people you would less want to
hand a giant welfare check to — yet that's exactly what the Fed did.
Just two months before the Macks bought their fancy carriage house in
Manhattan, Christy and her pal Susan launched their investment
initiative called Waterfall TALF. Neither seems to have any experience
whatsoever in finance, beyond Susan's penchant for dabbling in
thoroughbred racehorses. But with an upfront investment of $15 million,
they quickly received $220 million in cash from the Fed, most of which
they used to purchase student loans and commercial mortgages. The loans
were set up so that Christy and Susan would keep 100 percent of any
gains on the deals, while the Fed and the Treasury (read: the taxpayer)
would eat 90 percent of the losses. Given out as part of a bailout
program ostensibly designed to help ordinary people by kick-starting
consumer lending, the deals were a classic heads-I-win, tails-you-lose
investment.
So how did the government come to address a financial crisis caused
by the collapse of a residential-mortgage bubble by giving the wives of a
couple of Morgan Stanley bigwigs free money to make essentially
risk-free investments in student loans and commercial real estate? The
answer is: by degrees. The history of the bailout era reads like one of
those awful stories about what happens when a long-dormant criminal
compulsion goes unchecked. The Peeping Tom next door stares through a
few bathroom windows, doesn't get caught, and decides to break in and
steal a pair of panties. Next thing you know, he's upgraded to homemade
dungeons, tri-state serial rampages and throwing cheerleaders into a
panel truck.
The impetus for this sudden manic expansion of the bailouts was a
masterful bluff by Wall Street executives. Once the money started
flowing from the Federal Reserve, the executives began moaning to their
buddies at the Fed, claiming that they were suddenly afraid of investing
in anything — student loans, car notes, you name it — unless
their profits were guaranteed by the state. "You ever watch soccer,
where the guy rolls six times to get a yellow card?" says William Black,
a former federal bank regulator who teaches economics and law at the
University of Missouri. "That's what this is. If you have power and
connections, they will give you a freebie deal — if you're good at
whining."
This is where TALF fits into the bailout picture. Created just after
Barack Obama's election in November 2008, the program's ostensible
justification was to spur more consumer lending, which had dried up in
the midst of the financial crisis. But instead of lending directly to
car buyers and credit-card holders and students — that would have been
socialism! — the Fed handed out a trillion dollars to banks and hedge
funds, almost interest-free. In other words, the government lent
taxpayer money to the same assholes who caused the crisis, so that they
could then lend that money back out on the market virtually risk-free,
at an enormous profit.
Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans.
Essentially, this means that if you don't pay the Fed back, it's no big
deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100
million from the Fed to buy crappy loans, which are then transferred to
the Fed as collateral. If Hedge Fund Goon decides not to repay that
$100 million, the Fed simply keeps its pile of crappy securities and
calls everything even.
This is the deal of a lifetime. Think about it: You borrow millions, buy
a bunch of crap securities and stash them on the Fed's books. If the
securities lose money, you leave them on the Fed's lap and the public
eats the loss. But if they make money, you take them back, cash them in
and repay the funds you borrowed from the Fed. "Remember that crazy guy
in the commercials who ran around covered in dollar bills shouting, 'The
government is giving out free money!' " says Black. "As crazy as he
was, this is making it real."
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There is a lot of anger out there. Breathe deeply. I follow Mr. Matt's work. He is a commie liberal from California. Here in Alabama we see things kinda different. All that said, the banksters (and theirs) should get some fun time down in Atmore (prison town), where they would experience some "old time southern hospitality". Bitchez!
Don't let politicians divide. Don't spread "commie liberal from California" hate.
Both of you are getting screwed when wall st. elites win.
When Tea party unites with progressives and regular folks who work for a living, will there be a real change against the status quo against oligarchs and welfare pawns.
Liberals and members of the Tea Party will never join forces against the status quo. It would be like fans of rival teams gathering together to protest against steriod use in a sport when the entire team they root for is jacked up on them.
why did this disappear for a while?
Good Thread. I earnestly studied from the University of MSNBC for the last two years. WB, TuurboTim, The Bernanke, The gemini (Obama/McCain) and know that we would be lucky if we were headed for communism/facism. The title of this article, QEx and news from japan,MENA and sex scandals in Europe means we are solidly treading water at fuedalism.
Practice your horse archery folks. Or if less mechanically inclined, investigate the bible. Dude only got pissed off once in his life. Something about having to pay taxes to both local buerocratic "feel good" religion and ceasar.
Zerohedge was informative to read during the financial crisis, but the audience did not reach enough of the public. Rolling Stones puts out stories like this and get the average facebook joe involved and provokes questions. Unfortunately, mass media is burying this story like all other expose from Taibbi. This should tell you that America does have MEDIA CENSORSHIP.
No wonder when news media outlets become popular, they always get bought out by the big boys no matter how profitable they are because it is not about profits, it is about control over the minds of the masses.
My advice: Sell your TV.
I don't believe this is being buried by MSM. I get the feeling this is just a topic they do not consider news worthy because it does not fit a model they use in making their product. And given their fecklessness at investigative journalism, I prefer they don't.
Its better that Matt Taibbi be Matt Taibbi and that Katie Couric sticks with cheer leading wars and making victims of whatever horrific event (kidnapping/tornado/take your pick) cry on some network morning show. Think about it, if we got our wish that this story appear in MSM: would any real pertinent details emerge? Would there be any There There?
Leave stuff like this to the Pros!
Define buried. If the fed were a charity, and Katie Couric could point a finger at kids who would starve if the fed gave money to rich bitches instead, wouldn't that be a no-brainer story to tell? Is it that different from Benocide? How much money do the rich kleptocrats need to take from faceless working people before you care as much as when a bucket of coins is stolen from the Salvation Army during the winter holidays? You're a clown distracted by a MSM news sideshow, unless I'm missing some subtle sarcasm. Asking whether pertinent details would emerge is the wrong question. The pertinent details are in the article. You should asking why our economic system, and hence our law enforcement policies, protect the people whose crimes don't fit into the MSM's method of generating profit. You probably don't ask because your belief system is fed by the Ponzi. Just speculating.
My daughter, in grade 9 just finished 1984. Now that she's put that away, I've handed her Brave New World by Aldous Huxley. I've told her that this is "the" greatest book to fear.
Don't fear books, fear ignorance, it is rampant and joined at the hip to apathy.
http://apeakunderthehood.blogspot.com/2011/04/obamas-foot-in-mouth-disease-common.html
Obama's Foot in Mouth Disease. Common Side Effect of a Debt Addict
Thanks for putting this back on top Tyler.
It deserves it. More joe averages will read this story in RR in their own vernacular than nearly any other source.
+1 ditto on that samsara
where is the random vengeful farmer with his scoped out .308? everyone is waiting...
10 years? You have weeks!!!
WEEKS!!!
I don't feel so good =/
Time to start saving some money for a Mandarin Chinese course. The unborn granddaughter will need to speak basic Chinese in order to attract more punters.
PM ETF's fall next, ugly game.
I've been through the PM game before. Specifically, I spent alot of time sorting out pre-1982 pennies for copper. Meanwhile, the smart dudes were ripping out the copper pipe from my 84 year old neighbors house.
There is a program on the MSM about the dudes who work at Fort Knox. Some of them are CIA. They say it is a nasty, dirty metal and they did the job because they were paid in USD.
I've decided I'm using the Mack's barbecue set this summer. In fact, I think everyone on ZH should stop on by. I'm sure the Mack's have their freezer well stocked with non-radiactive beef.
5.8 earthquake hit japan
first round of rotting corpses landed on Oregon beaches this morning
Bankster Hunt
What blows me out is why anyone pays taxes...(give money to the fuckers that rip us off)
at the very least claim max dependents tell your boss you are a independent contractor.
Work on your taxes later...
Pay when
When they quit giving the money to the rich, and
Invading other country's.
In the name of peace. (give me a break how is occupying a someones country with guns make peace?)
When they get rid of all the military except for just enough to protect our soil,
when they quit subsidizing anything(rich people) or
quit locking up people for victimless crimes(using drugs)
Get a law that stops the fucking corrupt politicians or there aids from working for the company's that they should be protecting us from,
Revolving Door http://www.opensecrets.org/revolving/index.php
If the lawmakers need to make a law make one that locks a mother fucking politician for lying.
Or fine a news group that keep spreading inaccurate news, three strikes, and give the station to the real public.
Now that would be impressive.
In the mean time I will stay in Latin America.
At least my tax dollars don't go to bombing innocent children in the middle east.
How healthy are we on this planet our we if the RICH we look up to cheat to get it, And we don't stop them?
PL
Great article - already facebooked, tweeted and sent it to a few people.
This example of crony capitalism, favoritism for the wealthy is one among many that could have been the proverbial straw that ignited serious civil disobedience. But, alas, regular tv programming has probably not been interrupted and nothing has happened in any obviously visible way, as yet.
I guess we need our equivalent of a Col. von Stauffenberg. I.e., someone who can actually plan and carryout an essential, effective revolutionary act of some kind that cannot be ignored.
A massive general strike comes to mind and could work, in principle, but it needs to be organized effectively.
Ohh, but is this glen beck type general better than any of these philosopher kings?
Their tech tree STARTS with general relativity. Meaning they are little wesly crushers and can build their own warp drives. ( machines that can print currency in the billions per day, just like present nation states)
http://www.youtube.com/watch?v=24OXzIRIiMQ
Why? Why not? Who's gonna bitch?
Another great piece by Matt Taibbi. His expose on the "great vampire squid" was brilliant as well. I take some comfort seeing some of the truth making it out into the mainstream press. But nothing seems bad enough to wake up the sheeple. What will it take?! When will there be a Tahrir Square in Washington? Let's do this shit already!
Many more people are awake now, but still complacent because their quality of life is still good. The young folk know they'll never get any social security payments, that FICA's a stealth tax/fraud/theft, but they don't realize how quickly things will change when the rich cash out and leave them with debt to the world. For once, the first post in a popular thread is spot on: GUILLOTINES, BITCHEZ!
I like Matt, I really do. However is what he is saying here a shock? I mean I am shocked, just shocked at the corrupt practices of these crooks. When all you do is provide enormous incentive for a man to steal, well.....that is what he is going to do. When lying and stealing are looked on as normal ways to do business then the very fabric that holds a lawful society together is detroyed. You have an entire western society totally addicted to cheap credit and entitlements. If the FED were to focus more on addiction therapy (which they know little to nothing about) versus handing out more booze then this problem just might have a solution. It won't be pretty with likely the same sort of results or worse than what they have now in denying the junkies their fix but at least they will be addressing the real problem.
Has anyone mentioned "more public hangings needed" yet?
xxx
Matt Taibbi is a stallion. He deserves way better than these Wall Street housewives.
It is interesting that as a teenager I dated Christy King. I am 64 now. She lived in Greensboro, NC, part of a big family. She had huge knockers, too. Nice looking. But she was not very bright, except that later she married John Mack. Her sister, Mary, married Charlie Rose for a while, but he was reportedly abusive. Mary had it all over Christy -- she was much nicer, smarter -- and Rose, by all reports, was an abusive sort. Christy, John Mack, Charlie Rose -- they were all from NC originally. Anyway, I'm not proud to say I ever touched what became a rich bitch.
Perhaps interesting to you, not so much the rest of the world. You're not adding much to the discussion except innuendo and an obvious penchant for bodacious tata's.
Jesus wept
- John 11:35
http://www.youtube.com/watch?v=acBmmHApezc
The Federal Reserve, making the rich richer and the poor poorer since 1913.
And anyone is shocked why?
I'm so sick of this bullshit. Gona go check my loto number, if I win im denouncing my citizenship and moving the fuck out of this shithole.
+ 69 63 47 17 11 01
First, what is the diff between this incident and what is going on with the primary dealers right now? Vote out the party who doesn't move to repeal the federal reserve act!! This is much bigger than Obamacare on the fiscal side. Bankers taking care of bankers, at the expense of our children's futures. File a lawsuit now to stop the Federal Reserve from continuing the rape of middle class America! The Congress and
The White House needs to quit acting like they don't know what is going on. They should not be ratifying this thievery. No QE3, and the middle class need restitution for the biggest robbery in history!
One more point: Obama, you can't raise taxes now. We are being illegally taxed right now by the watering down of our hard earned dollars! Make the bankers take the losses, not the middle class. They took the risks! We want our money back, and these crooks lined up in criminal courts! Is the U.S. Attorneys Office also taking a blind eye to this unconstitutional criminal conduct?
I wonder what the fed will do for its 100th birthday.
They're having a great big very expensive party. Guess who's paying for it?
They won't make it. The horse is lathered...heaving...spurs a flying blur. It's being ridden without remorse, to the death. In a nondescript barn, far, far away, stands a beautiful 2 year old..saddled and ready.
i am not American so forgive me for asking what may seem a silly
question... but surely someone like Ron Paul has the power
as Chair of the Financial Services Subcommittee to summon Ben Shalom Bernanke to an investigative hearing
on Capitol Hill regarding this ? This is going beyond a joke- Bernanke
surely can me made to explain all this ? Otherwise
the whole system is a farce ?
Answer #2 is the correct one. The whole system is a farce.
As a lifetime American I can also confirm that #2 is true.
The majority of our legislators are lawyers (attorneys, solicitors). This means they have a penchant for equivocation and obfuscation - an art form for them really - second only to making $$$.
"Committee" - this word has to be a universal term for a discussing very important things at the highest level and making certain not a damn thing changes.
Wake the fuck up people! While you try to play by the rules to get ahead, these fuckers are looting public funds and laughing all the way to the bank. They're also laughing at you and your naivete. They're grabbing as much loot as they can as fast as they can. And by the time you wake up and figure it out, it's going to be too late. While they're picking your pocket and buying yachts and mansions all over the world and rigging the game and the system, and having you pay for their insatiable greed and gluttony, they're yelling at the top of their lungs "The Democrats are doing it, the Democrats are doing it. The Democrats are spending your money. We (meaning you) have to cut spending." And of course you're too stupid and cowardly to see through it and put a stop to it.
And things continue as usual.
As I've said before: things will continue until they can't. Maybe when we're all working at burger joints (part time) and paying 8 dollars/gal for gas, things won't be able to continue [as usual].
I'm not getting my hopes up that the sheep will get angry enough before it's too late; let's just go kill summore o'them terrists that hate our freedum.
On another note: If I were a dictator of an oil rich nation, I'd be getting pretty feisty right now; hell—just bleed the beast dry.
"Transfer of Wealth", don't fight it, it already happened.....
It's the transfer of public wealth (our money) into private hands (it becomes their money). What a racket. What a heist.
Not according to your local publik school guidance counselor's iPad 2. I see some downside. I think Soros does too.
Punchline of the century by Mr. Bernanke: "We have no gold"
Sorry, OT, but polite messages that ZH is offline? Too good for that "can't talk, we're shorting Euros here" attitude now?
Yeah, them and the hardworking average Joe and Jane who didn't ask for shit, worked hard, put in their hours, ran their own business, tried to save, didn't steal, and did their best to teach their kids right from wrong.
Looks like the lot got screwed by a few bankers, politicians, and slackers.
This is what culling the herd is for I believe.
Sounds like in the land of the free sheeple and free press there is exactly 1 good financial journalist.
The end of AmeriKa can't happen soon enough.
It amazes me how the public is either blind and/or just doesn't care that crimes like this happen while everyone else is being bled dry by the piss poor policymaking of our government-- it's both disgusting and a fucking shame that nothing is done to punish nor correct these grave acts of injustice.
Wake the fuck up America-- you're in slavery and your masters are taunting it in your fucking face.
This should be a wake-up call for people, but I doubt it.
And I'm sure, that when this all comes to light (and it will,eventually), we'll find that Johnny Mack, Christy and Suzy weren't the only ones doing deals like this - every hedge fund between Bermuda, Panama and the Cayman Islands was probably doing a similar deal - borrowing TALF money from the Fed so that Johnny Boy, "Jamie Dimon" (real name: Hyman Dimschitz) and Lloyd "God's Work" Bankfiend could offload the dreckiest of their drecky paper. And it all worked out well for everyone, don't you think?
Just think, if this had happened in China, Johnny Mack, Christy and Suzy would be taking a dirt nap on the stadium grass with some brand-new 9mm ventilation in the back of their heads....
Liberals are obviously keeping salaries down for your average employee. We need more tax cuts. Maybe if the corporate income tax rate was eliminated...
I hope we don't dissipate our energy with mere blogging, posting and whining.
I assume those who are still paying mortgages will figure out what to do, as should those who are being billed for student loans.
At some point, I imagine a large number of people might want to assemble at 20th Street and Constitution Avenue NW, Washington, DC 20551 for what should subsequently become a holiday called "Federal Reserve Day"
Taibbi's article establishes that without a doubt Wall Street has teamed up with the Fed to loot the public treasury. This is the vampire squid that is wrapped around the face of humanity.
Hey Tyler,
Do you still post on Seeking Alpha? Can you get this article put up there?