Why Is The Fed Actively Managing A $25 Billion Maiden Lane MBS Portfolio When Its $2.4 Trillion SOMA Holdings Have A $1 Billion DV01? (And Are Unhedged)

Tyler Durden's picture

An interesting thing happened when we were combing through the Fed's Maiden Lane 1 portfolio. After going through holding after holding of crap, that would make junk indignant if one were to call the Fed's adopted holdings of muni CDS, Subprime mezz bonds, and Agency CMO such, we ended up looking at the rate hedges section. As is disclosed by the Fed, the FRBNY holds 5000 TYM0 puts, 3825 TYH0 puts, short 4000 FVH0, short 7828 TYH0, short 2240 USH0, and is short a bunch of eurodollar positions. Also, the interest rate exposure is in thousands so the Fed has about 3 trillion in notional swap exposure. Now Maiden Lane is supposed to be an adopted, run off (or, as Geithner likes to boast, run on) portfolio, presumably without active management. Which is why we were surprised by the presence of the TYH0 and TYM0 positions: these did not exist at the time the Fed created Maiden Lane I! In fact TYM0 did not exist until March of 2009!

See below:


Fair enough - we now know that the Fed is paying Blackrock with our money to manage the interest rate exposure on its Maiden Lane I positions, just so JPM could get a steal on Bear Stearns (oh yeah, and Jamie Dimon is furious today that the Fed not only bailed him but gave him Bear on a silver platter). This means that the Fed paying Larry Fink several million a year to put on some interest rate hedges and some various futures. And for what - to avoid a blow up in a $25 billion portfolio?

What about the bigger picture?

As Jefferies points out today:

One has to ask why the SOMA is spending all this effort with Blackrock to hedge interest rate risks in a $25 billion MBS portfolio when it’s holding $1.25 trillion of MBS assets, plus a trillion of long dated Agency debentures and Treasuries. There is a billion dollars a basis point of interest rate risk in the SOMA.

You read that right, while the Fed is pretending to care about interest rate concerns in an increasing rate environment and is hedging ML1, it has one billion DV01 risk for its house bailout package. This is a stunning number: the second rates commence creeping higher, you can kiss all that profit on TARP and what not not only goodbye, but the losses on the SOMA books will likely destroy America. And yes Virginia, it is negatively convex: once rates start creeping wider, they will accelerate faster and faster until everything escapes the control of Ben Bernanke.

Ron Paul, Alan Grayson, and every other activist in the Congress and the Senate should immediately ask the Fed why is Ben Bernanke hedging its ML1 IR exposure, while leaving its SOMA exposure completely unprotected even when the DV01 is about 100 times greater!!! A 1% move in rates would lead to a $100 billion loss for taxpayers. Should we have a failed auction, or go back to Paul Volcker times and have the 10 year hit over 10%... well, you do the math.

Going back to Jefferies:

I think this whole move on transparency opens up way too many avenues for attack on our venerable Federal Reserve. It’s the most complicated time in monetary policy history and Congress is now on a warpath. This is not good for independence and it’s not good for credibility. Based on what I see the Fed will have tough questions to answer on its management of the SOMA account after this release. And if they are pushed into a corner on interest rate hedging because of this, it gets very interesting…..hedging 1bio/bp basically amounts to one thing - asset sales! Good luck trading.

One can now see why Tom Hoenig has been the voice of reason: unless the IR risk is promptly offloaded to private hands before rates begin creeping higher, and impact a portfolio of rate sensitive products, never before as concentrated as it is now in the clutches of the Federal Reserve, the mindblowing DV01 on America's assets will lead the country to a prompt, and very negatively convex bankruptcy, long before China realizes it should stop bidding on our auctions.

And to simply for those who may be a little confused by the jargon: the Fed's lapdog BlackRock is hedging that which is irrelevant: the smallest portion of the Fed's rate exposure. But because Tim Geithner has a penchant of appearing on TV and saying how well Maiden Lane is performing, the Fed has decided to protect against a major hike in rates. Yet that which is truly relevant, the Fed's nearly $2.4 trillion in holdings of MBS, Agency and Treasuries is completely unhedged. Good luck finding the counterparty that would be willing to put on a $200 trillion gross notional interest rate swap with the Fed. (or maybe one already exists, and since it is off balance sheet for the Fed nobody would ever have a clue. That counterparty would have America by the proverbial testicles). If rates do go up, and if the System Open Market Account holdings are unhedged, hyperinflation Catch 22 - here we come (oh yes, and the Federal Reserve is now a ticking time bomb, which can only be defused by forced asset sales which would be a prelude to wholsesale tightening and an S&P back to 666). Good luck trading indeed.

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jm's picture

any idea why would they release this information?

Whether the game is chess or poker, it makes them look stupid or deliberately malignant. 

Signaling “we are all-in... there's no reversal in policy” here provides information that can be used to crush their ass.

I need to re-evaluate.

Rick64's picture

Edited: court ruling reported by Bloomberg News.

Reporters David Glovin and Bob Van Voris write, “The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

faustian bargain's picture

Whoa...so this is in response to the FOIA suit by Bloomberg? Will wonders never cease.

Rainman's picture

....and here comes the Fed's newly found transparency. Looks like the water we've been watching in the pot is finally coming to a boil.  

tip e. canoe's picture

"who took the other side of those trades."

...exactly what i've been wondering...

deadparrot's picture

The taxpayer, who else? Every dime the Fed loses can just be poofed back into existence, so how can they "lose?"

GoldmanBaggins's picture

If I had the right to print my own money. I would give it to everyone I know, buy lots of shit I don't need and generally act like an irresponsible asshole. You see, these guys are just doing what most would do in their position. However I don't think I would bother hedging anything as long as I have ink and paper.

Carl Spackler's picture

Horseman, I love your flair!

Responding not in a Jeopardy-esque format (Trebec: "I remind that contestants must answer in the form of a question") but in a Bloomberg-esque format...your responses must be in the format of the Bloomberg ticker.

Thanks for adding some wit today.  Beats these otherwise disturbing "markets".

jswede's picture

the MBS portfolio does not really have any interest rate risk -- they are not going to mark to market and they are going to hold it to maturity.  those bonds are never coming out again.

Dicite justitiam's picture

Yes, can someone reconcile the buy & hold of the MBS-coma fund and the hedging of ML1?  Blackrock, Wellington, where are you guys?  (edit: thanks buzzsaw -- Fed clearly indicated ML1 was designed to be hedged and SOMA is buy and hold, go back to your lives)

I still can't believe the 'solution' is to seize $1.25T, and shoot it in the head behind the building.  Of course if the reflationary course rolls the rodeo clown down the road, when the MBS rise from their coma, a $500B loss may be lunch money.  Yeah, old news but it's still a stunner.

Dicite justitiam's picture

Not to mention the risks of aggregating that much housing-related asset into a single container.  A forced unwind of a single mega position would cause a more devastating shock than diffuse ownership. 

Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve's exposure to the credit risk of the underlying mortgages is minimal.

Joe Davola's picture

..there is always soma, delicious soma, half a gramme for a half-holiday, a gramme for a week-end, two grammes for a trip to the gorgeous East, three for a dark eternity on the moon...


DoctoRx's picture

If 50 bloggers knew what was going on, for sure Gentle Ben knew.  And of course Henry the P knew.  That's why he was brought in-- for the endgame.

The looting continues.  As does the accumulation of gold by the looters.

Follow the money/looter trail.

WmWallace's picture

The DOW is worth about 4000 and the S&P 500....when the Fed and its surrogates are forced to liquidate all the assets they have accumulated, to prop up and create this fake politically motivated rally,  because of interest rate increases we will see the REAL value of the market...and it won't be a "leg" down in will be a free fall and its coming soon....all of these people should be arrested...they have looted this nation selling their garbage to the Federal Reserve Bank - all had insider information and knew when the money was coming, what to buy, what to sell and when....disgusting....all of this is to be repaid be America in high inflation and high interest rates....The depth of fraud and theft by this group is incomprehensible...This Oligarchs:

Rick64's picture

So a worst case scenario 10% would equal a 1 trillion dollar loss. It doesn't sound like much if you compare it to the budget deficit, and the taxpayers would shoulder the loss.

It probably would have dire consequences on market confidence though,  I doubt they would let interest get that high (10%) and if it did it would be over several yrs. and they probably anticipate the housing recovery would happen by then.

 I am sure they are hiding much worse than these holdings obviously.


gmrpeabody's picture

A trillion just isn't what it used to be.

dark pools of soros's picture

JW what part of 'Saddam was using Euro's for Oil' and oh btw, most of Europe was using the Euro do you not understand??


sure, they are going to help kill the Euro..  they had to stay out and let UK/USA/Aussies and a few beggar countries use up their resources so they can squeeze all the value of the Euro before it blows up...  


but you can paint all that other fantasy crap if that makes your mind rest easy

JW n FL's picture

Saddam squeezed the prodcution numbers ever lower... verse's potential output to stabilize the cost of Oil... no dream works there buddy..


Thusly, Europe's relationship with Saddam was crushed (Russia now has the broad majority of Safe holdings) and with Saddam GONE! production opened up to stabilze the costs of Oil... http://www.theatlantic.com/international/archive/2009/12/how-russia-and-china-got-those-iraqi-oil-fields/32445/

Notice that europe who had the relationships in place with Saddam, got left the fuck out!

How important is Oil to the Global economy? and U.S. interests? here's lefty Obama's (to quote the idiot "Fox News" crowd) take... Obama will push thru what Bush could only dream of... ala the Lobby and thier interests in maintaining middle market control and as well growth...


Pro-drilling Republicans unhappy with Obama drilling expansion By Sahil Kapur
Thursday, April 1st, 2010 -- 9:22 am



I dont know how you got to a place in your head that allowed you to believe that I was some how un-aware of the actions of the World verse's what is spit out / spun / spinned for the Sheepeople? But I think maybe you better understand me now at the least... and please, and I am serious... spread the word! educate the idiots where ever you find them... I dont know that we could dent the dream land most live in... but I am going down swinging or more accurately... trying to be of service to my fellow man.

trav7777's picture

They didn't actually open up new drilling.  They closed more than they opened.  Net will be down.

You assume Obama has a fucking clue...he's an empty suit, has been his entire life.  There's no METHOD to the madness, which is why I always marvel at all the conspiracy theory folks.

These guys aren't smart enough to be masters of the universe.

JW n FL's picture

Puppets of the Lobby... and smart enough to get in the way of money thru legislation...

InstantWinner's picture

The Fed owning CDO's is a very disturbing fact in of itself.  D  O  O M

Profit Prophet's picture


I agree with almost your whole post.  And I am not going to say that the shit won't hit the fan.  But I have to step in regarding the convexity comments.  When one understands why MBS exude negative convexity, they know that historical convexity should not apply to current MBS. 

For others:  Unlike most bonds, Mortgage Backed Securities exude something called "negative convexity".  What this means is that as rates fall (bond prices increase), MBS will gain less value (or perhaps even lose value) than a standard bond.  The -historic- reason for this is because a homeowner can exercise their "call option" on their mortgage by refinancing.  Thus, the MBS holder is subject to reinvestment risk.  That increase in reinvestment risk reduces the amount that the investor is willing to pay for the MBS.

In the case of the Fed, they have no worries about reinvestment risk because they printed the money out of thin air and can chose what to do with money that is pre-paid.  But the bigger issue is that people with mortgages are not as free to exercise their "call option" on their mortgages because most don't have enough home equity to refinance them!

In regards to increasing interest rates, the issue of convexity diminishes substantially because the homeowner's "call option" is farther out of the money.  And is therefore, worth less. 

One could argue that a dramatic increase in interest rates above the return on the MBS portfolios would cause the Fed to lose money.  But convexity won't have anything to do with it.


P. Profit

Mercury's picture


Couldn't you consider these things negatively convex from the perspective that the potential for price depreciation is simply greater than the potential for price appreciation?

Lower rates = refi risk, bad for CDO prices.

Higher rates = lower CDO prices because of the comparatively lower yields of the underlying mortgages vs. what's available in the market.

Also,  cramdowns and various forbearance programs have to throw a monkey wrench into the usual plain vanilla refi and interest rate risk calculations.




Profit Prophet's picture

What your saying can happen.  But we're getting tangled up in jargon.

Bond convexity refers to how sensitive a bond's value is to a given level of change in interest rates:  http://en.wikipedia.org/wiki/Bond_convexity

So what your saying may be true, but convexity is not the proper term to use.

The various programs you mentioned would be a straight haircut from the price of the bond.  But as you pointed out, the government threw their large monkey wrench into the mix.  That may spook potential investors from buying.  But in this case too, convexity is not the proper term.

One thing I think we should keep in mind is that the Fed really doesn't have to worry about the price of these instruments.  Granted, we wouldn't want them to over pay.  But once they are purchased there is really only one thing to consider:  Is the Fed's weighted borrowing cost lower or higher than the return on the security?  Since the Fed has the ability to borrow at such low rates, chances are, they will not end up losing money.  (Even with many defaults) 

Again: I am not saying they are investing wisely.  I just believe they operate with different rules.  And I am certainly not saying they should have different rules or that they should be in the game at all. 

This is ultimately one giant clusterfuck; even if the best-case scenario is realized.  The Fed is going farther and farther down a road they never should have been on in the first place.  But I think most of us here are well aware of that.

Mercury's picture

Thanks.  I had thought negative convexity implied a downward bias in price given a significant shift in rates in either direction.

And good point - either The Fed makes money purchase--->maturity or it doesn't and periodic mark-to-market pricing is immaterial.

BlingBlingBen's picture

The  SOMA account is too big to hedge! You will end up blowing up another AIG. Its better for taxpayers to take the hit. You can simply print more money to make make up for the losses.

KidDynamite's picture

BINGO. and, as a bear, this scares me... what if the Fed just buys all the bad paper in the world?!?!  yeah - we get inflation - but probably not hyperinflation like people think.  After all, if a few trillion in potential losses are just made whole (by the Fed), we'd be maintaining price stability wouldn't we???

dot_bust's picture

Ponzi Scheme: 

1. Banks securitize mortgages and sell them to everyone.

2. The mortgages, which are ARMs, reset. Homeowners can't pay.

3. To avoid collapse, the banks order us to bail them out.

4. The bailout involves the banks selling their securitized mortgages, CDOs,
to the Federal Reserve.

5. The Federal Reserve manages the U.S. Dollar. Therefore the U.S. Dollar
is now one giant CDO.

6. The Dollar collapses.

7. Any questions?

Willzyx's picture

Does the dollar collapse cause the CDO collapse, or vice versa?  Is figuring it out supposed to be the fun part?

dot_bust's picture

Good question. I honestly don't know. But hypothesizing about the cause and timing
could very well become favorite American past-times. 

KidDynamite's picture

this one is easy:  The fed hedges Maiden Lane so it can say "see, these bailouts didn't cost the Taxpayer anything in the end"


the fed doesn't hedge the $1T in MBS purchases because it's a ponzi scheme that 1) is used to help make sure that the first statement is true: all the bank stocks rally and pay back the money they owe the Fed, and 2) because it can't - as others have mentioned there is no hedge. if they hedge, they just transfer the (potential) loss to the very institutions they are trying to bail out in the first place

tip e. canoe's picture

if a hedge falls in the Fed and kills a counterparty, does it make a sound?

Lugnut's picture

If the sh1t truly hits the fan the next medium of exchange won't be gold coins, it will be common caliber ammo (9mm, .38, .45, 30-06). Go long Winchester and Federal

trav7777's picture

How long do you expect to live exchanging that with other people?

3/4 of those calibres have one and only one use, and that's for killing people.  If those calibres are in THAT high of a demand, you will not live long.

You will be shot or grazed and die like people did 200 years ago when the same thing happened to them.  You want Civil War medicine?  Cut it out with the SOCOM Strike Team bullshit.

virgilcaine's picture

The fed is insolvent,  a gold bug know this.

trav7777's picture

Durden, did you hit your head?

The Fed is not a real bank...they will print their losses.  Anything they can do to manage inflation upward.  They're not going to let the mathematics of compound interest stop them until the dollar totally collapses.  And they will go to their graves NOT understanding wtf happened.

Bernanke fancies himself a student of the Depression, but he's just an economist, and very limited in his ability to understand reality.  It's going to haunt him and the rest that all of the shit they spent so much time learning was the FLAT EARTH THEORY.  It was bullshit built atop conjecture.

They are already totally consterned by reality's unwillingness to conform itself to their rate regime.  They won't understand why more oil supply doesn't just make itself available at these prices.  I doubt 1 in 100 people understand why that is.

Economics is not the study of reality...it is the study of unproven conceptual assumptions followed by the attempted implementation thereof.  BB is doing exactly what he learnt to do in his "study" of the Depression, what he and others have convinced themselves to do.   And it's wrong.  It's all wrong.

The institution he works for has no viability in a contractionary economic climate.  His basic product is like whale oil in the 1860s or the telegraph.  It has no future.

JR's picture

Bernanke studied the Depression years, all right, but apparently spent too much time on Bonnie and Clyde, Ma Barker and the "Jackrabbit."

economists_do_it_with_models's picture

If you have actually given any thought to these 'gloom & doom' scenarios, you would know neither gold or bullets is the answer.


If a mob of 100 people come to your nice lil house in the middle of the night, all of the gold, canned goods, tools, and whatever other 'logical' things will be gone -- along with your life.


Are you prepared to organize your own 'mob' to defend against such an offensive?  Have people on guard duty 24/7?  Can you stop someone with access to military-scale weapons and equipment?  A tank?


What happens when your glasses break?  Or your blood pressure medication runs out?


Gold?  Wealth?  lmfao  That's the *least* of your worries.


Very few people will survive in such an environment.  You better PRAY that day never comes...

Rusty_Shackleford's picture

"If a mob of 100 people come to your nice lil house in the middle of the night, all of the gold, canned goods, tools, and whatever other 'logical' things will be gone"


Don't be so sure of that. 


You'd be surprised how much seeing most of the guy that was just standing next to you fall back to earth as a fine pink mist will sap your desire to participate in any more mischief.


After the first ten are dead, the other 90 will most assuredly find something more productive to do.

There are plenty of easier targets out there.



Remember, when a bear attacks your camp, you don't have to be the fastest camper to survive.  You just have to be a little bit faster than the slowest camper.



Dicite justitiam's picture

Tear gas sucks.  I could only last 28 seconds of the most mild stuff.  Maybe I should go to Gaza for training.  Are you saying it's legal to acquire?  Or otherwise available?

JR's picture

Ben Bernanke has been called  Robin-Hood-in-Reverse, a Robbing Hood stealing from the poor and giving to the rich. Following the Maiden Lane heist, Bernanke, with assist from people such as Dodd, can say he’s sorry and move on to future heists. Another notorious American robber, John Herbert Dillinger, also was idolized by some as a latter-day Robin Hood. It’s a pity that young Dillinger had to take a bullet in the back at age 31 because he never knew all he had to do was say he was sorry and promise never to do it again. As the FBI opened fire into the back of Dillinger, killing him, his last words were "You got me!"

So far there are no pictures of Bernanke and Geithner posted in the Post Office, but the level of righteous anger is definitely rising. Note Karl Denninger’s comments on the Maiden Lane caper:

We cannot have a republic where an unelected body is left free to violate The Constitution with wild abandon and those acts are then allowed to stand…

If the individuals responsible for this blatant black-letter violation of the law do not face meaningful sanction for these acts, and neither does The Fed as an institution, can you fine folks over at The Executive, Judiciary and Legislative branches of our government please explain to us ordinary Americans why we should obey any of the laws of this land when you will not enforce the laws that already exist?


geopol's picture

Double spaced...Enjoy

The FED was involved in.....




In some ways she was far more acute than Winston, and far

less susceptible to Party propaganda. Once when he happened

in some connection to mention the war against Eurasia, she

startled him by saying casually that in her opinion the war was

not happening. The rocket bombs which fell daily on London

were probably fired by the Government of Oceania itself, “just

to keep the people frightened.” Orwell, 1984, 127.



With the publication of the Report of the Commission to Investigate Terrorist Attacks

upon the United States (also known as the Kean-Hamilton Commission after its chairman

and vice-chairman), the pattern of coverup and incompetence on the part of the officially

constituted investigative agencies of the United States Government is complete. Since

September 11, 2001, no part of the United States Government has offered a convincing,

coherent, complete explanation of the events of that day, and of other events related to

them. Indeed, no US government agency has ever so much as proposed to prove the truth

of the official account, even in the way that the Warren Commission attempted to

demonstrate the veracity of its version of the Kennedy assassination.


The Kean-Hamilton Commission called no hostile witnesses, no skeptics, no devil’s

advocates. It ignored a growing number of book-length studies which have appeared in

English, French, German, and other languages around the world. It never invited to its

plenum FBI whistle-blowers like Colleen Rowley (who shared Time Magazine’s Person

of the Year honors at the end of 2002), nor did it call FBI agent Kenneth Williams, the

author of the famous Phoenix memo, to testify in its plenary meetings. The Commission

was, by contrast, happy to invite the obsessive anti-Iraq ideologue Laurie Mylroie, a

fanatic so notorious that she is dismissed with contempt as “totally discredited” even by

Richard Clarke in his book, Against All Enemies. (Clarke 232) As it will show at

various points study, the Kean-Hamilton Commission represents a cynical and

meticulously orchestrated exercise in coverup and obfuscation. The net overall result of

the Kean-Hamilton Commission has been to obscure even those few relevant facts which

had become well established in the mainstream media prior to its inception.


Before the Kean-Hamilton Commission, the chronology of events regarding the interplay

among the Federal Aeronautics Administration (FAA), the North American Aerospace

Defense Command (NORAD), and other government agencies had been fairly well

established by the 9/11 truth movement. The deliberately doctored chronologies offered

by the Kean-Hamilton staff have turned that clear picture into chaos. Before the Kean-

Hamilton operation went to work, there was an important debate about whether phone

calls received at the White House on the morning of September 11 had indicated that

unauthorized persons were in possession of top-secret US government code words. The

Kean-Hamilton Commission has now assured us that this crucial incident in effect never

happened. Before Kean-Hamilton, Congressional Committees and the National Institute

of Standards and Technology had been forced to grapple in public with the blatant

anomalies of three modern steel skyscrapers collapsing on the same day as the result of

fire – something that has happened on no other day of world history. For the Kean-

Hamilton Commission, this problem simply does not exist – it has disappeared from the

official narrative. No account has been taken of critical or skeptical commentaries, even

when these have been the centerpieces of books which have reached the top of the bestseller

charts in important countries like France, Germany, Italy, and elsewhere, or have

been telecast in prime time in these same places. The demands of the bereaved families of

9/11 have been ignored – even though it was because of the persistent lobbying of these

families that the Kean-Hamilton Commission ever came into being in the first place. A

cruel hoax has been practiced on these families, and those who thought that an attempt to

cooperate in good faith with the Kean-Hamilton Commission to guide it toward the truth

have received a bitter disappointment. The Kean-Hamilton Commission in short has

shown no decent respect for the opinions of mankind, and has submitted no important

facts to a candid world.

The Kean-Hamilton Commission has turned out to be nothing more than a colossal

exercise in begging the question. Everything that was controversial, everything that was

dubious in the eyes of billions around the world has been simply assumed to be true and

posited as the starting point for the entire inquiry. As a fallacy this has been around since

the medieval schoolmen, who called it petitio principii. In the hands of the Kean-

Hamilton Commission, begging the question is meant to work as an arrogant,

bureaucratic act of superior power. Believe this, said the Inquisition, or be damned.

Believe this, says the Kean-Hamilton Commission, or be vilified as a paranoid obsessed

with conspiracies. Thus, when the 9/11 commission was created, it formed nine

investigative teams. The first of these was entitled: “Al Qaeda and the Organization of

the 9/11 Attack.” That is a clear case of rush to judgment and jumping to conclusions,

since such a finding should be the end result of an inquiry, and not its starting point.

For the Kean-Hamilton Commission is not a contribution to scholarly debate. It is just as

much a part of the US government’s assault on the world as an F-16 bombing Fallujah.

For the Kean-Hamilton Commission is an act of ideological terrorism worthy of Senator

Joe McCarthy. Behind it stands the taboo proclaimed by the figurehead of the regime:

We must speak the truth about terror. Let us never tolerate outrageous

conspiracy theories concerning the attacks of September the 11th,

malicious lies that attempt to shift the blame away from the terrorists

themselves, away from the guilty. (UN General Assembly, November 10,


It is a point of view at variance with the best moments in American history, as we intend

to show. But no amount of bureaucratic arrogance has been able to paper over the

manifold absurdities, the contradictions, the impossibilities, the outrageous flaws that

infest the official version of the 9/11 events. The Kean-Hamilton Commission simply has

no answer for questions about how the alleged hijackers were identified, how they were

able to operate, why WTC Building 7 collapsed, why air defense was non-existent, what

hit the Pentagon, what happened over Shanksville, what happened to the insider trading,

and many more. For any serious, intelligent person – and there are many – the Kean-

Hamilton pastiche can only be rejected.

The failure of the Kean-Hamilton Commission leaves the world with the imbecilic myth:

the four airliners were hijacked by nineteen Arabs, from Saudi Arabia, Egypt, and

Kuwait. Their squad leaders were Atta, Shehhi, Hanjour, and Jarrah. Their “mastermind”

was Khalid Sheikh Mohammed. Their rear echelon was Ramzi Binalshib. Their guru was

Osama Bin Laden, the terrorist pope who lives in a cave. From his distant grotto in the

mountains of Afghanistan, Osama Bin Laden, the diabolical genius of the twenty-first

century, directed the worldwide network that attacked the United States.

JR's picture

It is wrong by those who disagree to try to silence theories and questions and suppositions with a ‘junk’ simply because they find an explanation ‘off the wall.’ The objective should be the pursuit of truth wherever it can be found. I, for one, have learned through experience that governments, including our own, often engage in political cover-ups and whitewash to deceive and perhaps even hide their own duplicities.  What possible motive do people have for silencing theories regarding such monumental, and questioned, events in America’s history as the Kennedy assassination, the Oklahoma City bombing, the 9/11 attacks, AIG, Iraq and WMDs and all the rest?

It is vital that Americans pursue truth if this nation is to be governed by free men with justice for all; that pursuit means we need to hear all the evidence, to counter the lies, from all the sides (in this cases that testimony would include 1000s of dissenting engineers), see the tests, watch the videos, listen to the experts…

When a government refuses to address all the questions and destroys the evidence as it did in the Kennedy assassination, in 9/ll and the Oklahoma City bombing, et cetera, it is no different from the Fed saying, We created and spent the $23.7 trillion properly, take our word for it.

That is not what the Founders had in mind.  As Benjamin Franklin said as he emerged from the long task now finished at the Constitutional Convention in Philadelphia on September 18, 1787 when asked: "Well Doctor, what have we got, a republic or a monarchy?"

"A republic if you can keep it," responded Franklin.

Certainly, that republic now hangs in the balance.

WaterWings's picture

Orwell was a genius.

Iron Mountain Report, anyone?

What gives the war system its preeminent role in social organization, as
elsewhere, is its unmatched authority over life and death. It must be emphasized
again that the war system is not a mere social extension of the presumed need
for individual human violence, but itself in turn serves to rationalize most
nonmilitary killing. It also provides the precedent for the collective willingness
of members of a society to pay a blood price for institutions far less central to
social organization that war.



FischerBlack's picture

Why would the Fed release this? Either you're missing something, or this release is a cry for help.

faustian bargain's picture

court order from Bloomberg's FOIA suit, November 2008.

But you can bet your bottom dollar they're not showing their full hand with these PDFs.

faustian bargain's picture

You know you're driving an odd truck when the likes of Robert Reich are jumping on the bandwagon: