The Triple Crisis Strikes Harder

a severe U.S. recession, surging inflation, and close encounters with a Wall Street meltdown.

News on each of these crises has burst onto the scene with gale force, wiping away the last vestiges of sugar-coating by Pollyanna analysts ... creating the conditions for a bond market disaster ... and driving the U.S. stock market into a tailspin:

Deepening the U.S. recession, vehicle sales are expected to plunge to 15-year lows. Dealer lots are overflowing with gas-guzzling trucks and SUVs. But they can't get their hands on enough fuel-efficient cars, limiting sales in the most popular models. Another warning sign: S&P has just put GM, Ford and Chrysler on "credit watch negative." End result: Don't be surprised if one of the Big Three — Ford, GM or Chrysler — is soon forced to file for bankruptcy.


Bankruptcy has already struck over 20 airlines worldwide, with many more on the way. In the U.S alone, the top 10 U.S. airlines are expected to post pre-tax losses of nearly $18 billion this year and next. At the same time ...


U.S. inflation is surging. In May, producer prices jumped 7.2% compared to a year earlier; import prices catapulted 17.8%, the biggest rise ever recorded; and even the so-called "core" producer prices (excluding food and energy) rose at the fastest pace since 1991! Adding to this explosive mix ...

The Next Real Estate Crisis

Hey, I thought Big Ben got this shit under control.

By April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures
by Prashant Gopal

The American homeowner must feel like one of those characters in an old cartoon who has just been hit by a falling piano. After dusting himself off and touching the large bump on his head, he probably doesn't expect another piano to be dangling overhead. But he'd be wrong.

But what's often funny in a cartoon is anything but in real life. With the subprime mortgage crisis already crippling the U.S. economy, some experts are warning that the next wave of foreclosures will begin accelerating in April, 2009. What that means is that hundreds of thousands of borrowers who took out so-called option adjustable-rate mortgages (ARMs) will begin to see their monthly payments skyrocket as they reset. About a million borrowers have option ARMs, but only a fraction have already fallen due.

That was the catch to option ARMs; borrowers were offered low initial payments that would recast higher after several years. Many home buyers thought they could resell their homes before their payments increased. But instead, many of them got trapped. According to Credit Suisse (CS), monthly option recasts are expected to accelerate starting in April, 2009, from $5 billion to a peak of about $10 billion in January, 2010. Some of these loans have already started to recast. About 13% of option ARMs that were issued in 2006 were delinquent by 60 days by the time they were 18 months old, Credit Suisse said.

California: Problem's Bellwether
Among the states expected to be worst-hit is already battered California. Today, outstanding option ARM loans in the U.S. total about $500 billion, about 60% of which were sold to California homeowners, according to Credit Suisse. Option ARMs were especially popular in the state, where they were heavily marketed during the boom by such companies as Countrywide Financial (CFC) in Calabasas, Calif.; Washington Mutual (WM) in Seattle; and Wachovia (WB) in Charlotte, N.C. Moreover, on top of their ARMs, many homeowners also refinanced their homes, driving themselves even deeper into a debt they thought they could escape by flipping their homes.

But California won't be alone. Homeowners are also frighteningly vulnerable in states such as Arizona, Florida, New Jersey, and others.

The Mortgage Bankers Assn. said on June 5 that the option ARM problem is growing. The group reported that the national rate of foreclosure starts for prime ARMs, including option ARMs, increased to 1.55% in the first quarter, up from 0.53% a year earlier. In California the foreclosure start rate in the first quarter was 2%, vs. 0.5% a year earlier. In Florida, the rate was 2.57%, compared with 0.5% in the first quarter of 2007. "California, Florida, Arizona and Nevada combined…represent 62% of all foreclosures started on prime ARM loans, and 84% of the increase in prime ARM foreclosures," the group said.

The option ARM loan defaults could accelerate next year even if subprime defaults subside, said Chandrajit Bhattacharya, vice-president and mortgage strategist at Credit Suisse Securities. He said California will see the bulk of the option ARM foreclosures and the rest will be spread out across the country.

Underwater and Gasping for Air
"Most of the public is thinking that the subprime thing is over, but this is another thing waiting," Bhattacharya said. "The problem for these borrowers is that once you go underwater, it's very hard to refinance, and if you cannot refinance there is very little option for you."

But it gets worse.

Option ARMs, which were originally designed for self-employed people with fluctuating incomes, gained popularity with other workers during the peak of the real estate boom in 2004, when rapidly rising home values would have otherwise kept many buyers out of the market.


The loans, which were generally given to borrowers with better-than-subprime credit, give homeowners the option of making a minimum monthly payment, which covers none of the principal and only a portion of the interest, the rest of which is added to the loan balance. With years of unpaid interest accumulating and house prices falling, some homeowners have seen their equity disappear and now owe even more than their initial loan balance.

The loans automatically recast after five years, but many will recast sooner as loan balances hit specific principal caps—typically between 110% and 125% of the initial loan amount. Many of these loans are expected to recast within the next two years, meaning that borrowers' monthly payments will swell to include both principal and interest.

Walking Away from a Collapse
Some borrowers say they signed up for the complicated loans without understanding the terms, or expected to be able to refinance or sell their homes before the loans recast. Instead, home prices fell and the credit crunch made refinancing impossible for many borrowers.

Some homeowners are simply walking away because with their equity vanishing, there's little incentive to stay.

William Purdy, a lawyer at Simmons & Purdy in Soquel, Calif., a firm that specializes in home refinance issues, said some borrowers with option ARMs are defaulting before the loans recast because they couldn't afford even marginal increases in the minimum payments.

"It's a ticking time bomb inside your house that you can't get rid of," Purdy said. "They can try to slow down the inevitable, but sooner or later their loan is going to cap. …This year is going to be a blood bath. Next year, we'll start out just about the same."

Crushed by the Slump
The option ARM was initially a blessing and then a curse for Deborah Shaw, a 52-year-old systems analyst for Santa Cruz County, Calif. In 2004 she bought a $575,000 two-bedroom house with her boyfriend with a 40-year fixed mortgage. But when she and her boyfriend split, Shaw could no longer make the payments. She refinanced into an option ARM, which allowed for a $1,600 minimum payment (she was paying $2,300 on the fixed loan).

Shaw planned to avoid a recast by selling the house in a couple of years, but the housing slump changed everything.

Shaw now thinks her loan has already recast, which means that her monthly payment would more than double. Shaw doesn't know for sure, because she stopped answering her lender's daily phone calls and, since April, stopped making payments entirely. She says foreclosure is her only option.

"I call the house my albatross," Shaw said. "I feel a sense of relief knowing I won't have that house to deal with anymore. I'm not looking forward to moving and selling everything. But I am looking forward to not having stress about something I can't afford."

New FHA Loan Guarantees
But options are available—even if refinancing isn't possible. Lenders have been working with borrowers to reduce loan amounts and interest rates and, in some cases, simply accept the deed in lieu of foreclosure.

The Mortgage Bankers Assn. says it appears that a growing number of homeowners are avoiding foreclosure by getting help from the Hope Now hotline (888 995-HOPE), a mortgage-counseling phone line backed by lenders and the federal government that gets 4,000 calls a day. Hotline counselors help borrowers negotiate with banks and offer advice on refinancing options. Even though foreclosure rates are rising in California and Florida, they've slowed elsewhere, the bankers association said.

Some callers to the hotline have complained about long wait times, but the group says it has beefed up its counseling staff and now gets to calls quickly.

Other option ARM borrowers could benefit from government plans now in the works. A bill approved by the House in May would allow the Federal Housing Administration to guarantee up to $300 billion in new loans to help homeowners facing foreclosure. Borrowers could get more affordable loans worth no more than 90% of the home's value, meaning that participating lenders would have to take a significant loss on the loan. The bill was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.). Senate Banking Chairman Christopher Dodd (D-Conn.) has a similar measure.

Foreclosure Is Not Inevitable
"The fact is that people didn't really understand the transaction at the outset and were counting on being able to refinance when the loan got recast," said Colleen Hernandez, president of Minneapolis nonprofit Homeownership Preservation Foundation, which owns and operates the hotline. "That combination means a lot of risk, a lot of danger in the situation. But it isn't inevitable that they foreclose, and foreclosure isn't the best option."

Moe Bedard, founder of LoanSafe.org in Corona, Calif., a free online forum that helps homeowners negotiate loan modifications, said the larger problem is that banks, many of which laid off scores of loan officers, are so swamped that many borrowers can't get the attention they need.

Many California homeowners, including some with $2 million homes, are simply making their minimum payment, waiting for the recast. Then they plan to walk away, even if it damages their credit, Bedard said.

"A lot of people are just walking," Bedard said. "It's just a business decision; they don't have a lot of skin in the game." But for many others it will be devastating.

$150 Billion and Counting: Federal Reserve Announces Another Increase In Its Treasury Auction Facility

Robert Wegner

The housing finance bailout continues. There’s obviously still quite a bit of junk paper out there. And the Fed is going to spread money everywhere, the U.S., the EU and Switzerland, in response.

From the Fed’s statement, today:

The Fed announced today an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility (TAF) from $50 billion to $75 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion.

Here’s the global angle to the junk buying binge:.

In conjunction with the increase in the size of the TAF, the Federal Open Market Committee has authorized further increases in its existing temporary reciprocal currency arrangements with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing increases of $20 billion and $6 billion. The FOMC extended the term of these reciprocal currency arrangements through January 30, 2009.

And the Fed is going to allow even uglier junk to be used as collateral:

The FOMC authorized an expansion of the collateral that can be pledged in the Federal Reserve’s Schedule 2 Term Securities Lending Facility (TSLF) auctions.

*A CLEAR AND PRESENT DANGER*

Subject: A Clear and Present Danger


I received the following from an extremely well informed person. This explains the situation the Federal Reserve and its member banks are in at this exact time...
It explains how we got here and what needs to be done to free ourselves of the bankers who have illegally run our money system for most of the last century.
This is the most important article you will read. I ask that you send it to everyone you know. It explains everything clearly and simply. You don't have to be a Constitutional scholar to understand what happened, how it happened, and what we the citizens of the united states MUST do to insure that the bankruptcy of CORPORATE UNITED STATES does NOT fall on us!! Please read this carefully.



*April 24, 2008*


*A CLEAR AND PRESENT DANGER* - Part One


If events proceed as I hope, the Federal Reserve also will be dissolved as insolvent, and its Notes we have used as currency for 75 years will become valueless after some period where legally earned notes may be exchanged for new and legal United States money. *There will be volumes written in the future about how the United States of America, and particularly the control of our Treasury were quietly placed in private hands and secretly, from the general population, held and used there for 75 years. Those hands were for the most part,European, and had little, if any, interest in the welfare of the Citizens of this nation. Some of the "hands" were US, and they were even more ruthless. *

*But the situation has dramatically changed during the past five years, and particularly since November of 2007.*

*This narrative will necessarily begin with the Japanese invasion of Manchuria at Mukden. That is a well known historical fact. What is not as well known and understood is the "Mukden Incident" which occurred on September 18, 1931 was, in essence, a subterfuge undertaken by a few junior officers of the Japanese army when they secretly dynamited the South Manchurian Railway (owned by Japan) to provide the motive for the Japanese military conquest of Manchuria which continued until the Japanese victory on February 18, 1932 .*

*The most available explanation for the Japanese Manchurian invasion was that Japan coveted resource-rich Manchuria as a source of cheap raw materials for their burgeoning industrial complex. That explanation's basis is true, especially given an increasing shortage of favorably priced raw materials which Japan had to otherwise purchase and import from other sources.*

*But there was another, and largely hidden, reason. In 1931, the Manchuria-China border was only a few miles from Beijing where the Chinese Emperor, Pu-yi resided. The Manchu emperors kept much of their gold and other treasury items in northern Manchuria just a few miles from border, and therefore only a short distance from their Chinese capital.*

*Very shortly after the Japanese invasion commenced in southern Manchuria, a delegation sent by the United States Federal Reserve Bank to Beijing entered into negotiation with the Emperor. The Federal Reserve's offer was to quickly remove the Royal Treasury from its Manchurian location, and thereafter lease the contents of the Treasury for seventy years. In return, the Emperor received valid United States Federal Reserve bonds, maturing in seventy years, and in sufficient quantity to guarantee the debt as well as enough to pay the to-be accrued- seventy-year-interest. *

*The terms of the lease required the Emperor's estate, at the end of seventy years, to exchange the bonds with interest coupons attached, to the Federal Reserve in exchange for the return of all the Emperor's gold and other treasure, plus the accrued interest (to be paid in gold), to his estate's custody. *

*The contents of the Emperor's Manchurian Treasury were taken overland through China, and then by sea to Manila, Philippines, where the US quickly built and operated the largest gold refinery, at that time, in the world. After the gold was refined, some of it was sent to Switzerland where it was stored in extensive underground vaults under Zurich, while the greatest part was sent to the Federal Reserve vaults in New York.*

*Of course, much happened between 1931 and 2001, not the least of which was World War II and the Chinese Communist capture of all China except the island which was then called Formosa (now Taiwan). Pu-yi (the Emperor) remained a communist prisoner for many years and died as a gardener.*

*It apparently appeared to certain US and European financial interests who were interested parties in the leased Chinese Treasury, and it was probably their plan, that the Chinese imperial line died out, or at least was so impoverished that it had no means or power to recover any of their leased Treasury materials and articles. * *So seventy years passed.*

*In fact, the leasing parties grossly miscalculated. The Emperor, Pu-yi, had additional gold and other assets stored in protected places other than Manchuria-assets which escaped the attentions and discoveries of both the Japanese and Communist Chinese. Within the past two decades, much of that wealth has been returned to his grandson, a certain "Mr. Yi" who resides in Taiwan.*

*The ownership and control of the bonds which were exchanged for the Chinese Treasury were placed a number of years ago in the hands of certain surviving members of the Chinese royal family, and recently Mr. Yi. *

*So when 2001 came, Mr. Yi, The Emperor's grandson, by now a very wealthy and powerful individual, formally negotiated the return of the Chinese Royal Family's leased legal estate and the accumulated interest thereof from the United States Federal Reserve Bank (the lessor), in exchange for the Federal Reserve bonds and attached interest coupons. The returned amount of the Emperor's Treasury and interest was a very small part of what was owed.*

*A major part of the problem was that the United States Federal Reserve Bank, although owned by the United States Citizens by way of their Constitutional government, was operated from the beginning as a private organization whose assets were also privately owned, held and used (that included the entire amount collected from the Citizens/citizens as taxes). *

*The Chinese Treasury was divided for years among a number of wealthy and powerful European and North American interests, many of whom never expected the Chinese royal line to survive. Consequently, they never expected to repay either the principal or the interest due on the Chinese royal assets they held and used. *

*In fact, many of them firmly resisted Mr. Yi's legal demand that whatever Chinese royal assets they held were required to be immediately returned with all due interest. *

*After some resistance, some of the Europeans holding Chinese Treasury assets
returned some of the Emperor's Treasury, but that amount also fell far-far short of what was actually owed. *

*Mr. Yi has since used legal and financial resources available to him, especially the assistance of a little known but very powerful World Monetary Authority, to force the return of assets which are properly his.*

*That brings us the present. But before we can further address our subject, we need to explore more history-United States history. * *On April 6, 1933, President Roosevelt, with Congressional approval, declared a "national bank holiday" which lasted through April 9. There is a plethora of information about that period and the reasons causing such, but there is practically nothing said about one major event which occurred during the same time. A corporation was formed at the President's order called THE UNITED STATES OF AMERICA CORPORATION. That was done without Congressional action of any sort, so that organization is, and always has been, a privately owned, not public, corporation. At the same time, our legal system shifted from Public and English Common Law, to Private International Law.*

*THE UNITED STATES OF AMERICA CORPORATION then usurped all the identity, power, legal standing, laws and mandates, and assets of the Constitutional United States-virtually seamlessly and with hardly anyone even suspecting what had happened-for 75 years. * *Let me restate that in less complicated terms-for 75 years a private corporation, not our Constitutional government, has performed the role of our government for the exclusive benefit of that organization's shareholders and their friends. *

*The CORPORATION, through Congress, immediately passed into "law" such things as the law establishing the FEDERAL REGISTER ACT, which effectively allows the President to declare and establish "law" by publishing his declaration in the FEDERAL REGISTER, that without consulting or informing Congress, let alone requiring their debate and passage of any effective law. *

*That should explain a great deal about why our "government" consistently behaves outside our Constitution and other laws. Our Constitutional government is bound (limited) by the Constitution. The CORPORATION, however, is bound only by the tenets of the United States Code and the Code of Federal Regulations, both Private International Law, which, inthis country, may only be tried and enforced by and in Admiralty, not civil or equity courts. Equity courts were done away with by our"government" soon after our form of law was changed.*

*A large book could be (and probably should be) written on the subject of THE UNITED STATES OF AMERICA CORPORATION, however that is definitely outside the scope of this document. We will work only with the relationship of Mr. Yi and his efforts to enforce his contract with the Federal Reserve Bank. THE UNITED STATES OF AMERICA CORPORATION, since it is in mortal financial default, was forced by the Monetary Authority to negotiate, for the past several months in Switzerland, their bankruptcy. Two Mondays ago the initial bankruptcy filings of that CORPORATION were placed in the United States Supreme Court. That bankruptcy was forced by Chinese and "other" interests.*

*I posit that the Citizens/citizens (yes, there is a difference), as well as those Citizens who are also Native Americans, also have a substantial legal interest in that matter, but as yet not legally entered in the case. It is absolutely essential that the CORPORATION assets placed in the legal proceeding be only theirs, and not the assets of the Constitutional United States, their Citizens/citizens assets and persons, and anything which is the property of our Native Americans. *

*I further posit that CORPORATION owes a great debt to the Constitutional United States of America and its Citizens/citizens. Our rights will be protected only if we act-it is in no one else's interest to so do. We need several very skilled Constitutional attorneys licensed and able to practice and argue in and before the US Supreme Court. If anyone fitting that description reads this document and would agree to assist, we need to hear from you immediately.

--- end of part one ---


So here is the rest of the story:

All of the business done by the Federal Reserve Bank of America since its inception in 1913 skirted the US Constitution by calling the currency they issued as "UNITED STATES NOTES" because it was specifically unconstitutional for the word "money" to appear anywhere on any note. Had the word "money" appeared, the Fed would have been guilty of counterfeiting. Furthermore, only the US government had the authority to produce and promulgate "money." The evidence of this is to be found in Article I, Section 8 of the Constitution.

I posit that the UNITED STATES OF AMERICA CORPORATION, a private organization continuously with shareholders, officers and directors since inception, has illegally been, with the collusion of the Federal Reserve Bank (another corporation, public but operated until this last year as a private organization), in complete control of the financial life of this you know, the CORPORATION is now in bankruptcy.

As a private corporation, whatever debts they have incurred as THE UNITED STATES OF AMERICA, which by the way is virtually all the debt attributed to this nation, is actually theirs and not the Constitutional United States' and/or its Citizens/citizens. That can and will be proved in due time in a court of law, probably the US Supreme Court.

On the other hand, I believe the United States (Constitutional), its assets, its Citizens and their assets and can be proven to be not owned by THE UNITED STATES OF AMERICA, and therefore outside the bankruptcy. I believe the hyperinflation depression information (The writer's first email was posted as part of this article) sent you earlier today can be avoided if we act quickly and wisely. I can expand on that subject later.

If events proceed as I hope, the Federal Reserve also will be dissolved as insolvent, and its Notes we have used as currency for 75 years will become valueless after some period where legally earned notes may be exchanged for new and legal United States money.

I wish to see the United States to return to a precious metal basis for its money and I know how that can happen. But we have some rough water ahead, and unless we wish to experience hyperinflation depression or any part of it, we must act immediately to have something in place to replace the Fed notes we now use as currency.

I can expand on the above, but you have probably enough to think about now so I will call it a day.

April Fools: The Fox To Guard The Banking Henhouse

By Dr. Ellen Brown

Global Research, March 31, 2008

The Federal Reserve, which has been credited with creating the current housing bubble and bust just as it created the credit bubble of the Roaring Twenties and the bust of 1929, is now to be given vast new powers to oversee regulation of the banking industry and promote "financial market stability." At least, that is the gist of a Treasury Department proposal to be presented to Congress on Monday, March 31, 2008. Adrian Douglas wrote on LeMetropoleCafe.com, "I would like to think that this is some sort of sick April Fools joke, but, alas, they are serious! What happened to free markets?"1

In fact, what happened to regulating the banks? The Treasury's plan is not for the private Federal Reserve to increase regulation of the banking system it heads. Au contraire, regulation will actually be decreased. According to The Wall Street Journal:

"Many of the [Treasury's] proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation. According to a summary provided by the administration, the plan would consolidate an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms. . . . Parts of the plan could reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. . . . The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets."2

"securities products" include the mortgage-backed securities, collateralized debt obligations, credit default swaps, and other forms of the great Ponzi scheme known as "derivatives" that have been largely responsible for bringing the banking system to the brink of collapse. But these suspect products are not to be more heavily scrutinized; rather, their approval will actually be "streamlined" and may be automatic if they are being traded in "foreign markets." The Journal observes that the Treasury's proposal was initiated last year by Secretary Henry Paulson not to "regulate" the banks but "to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system. His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders." "streamlining" the rules evidently meant eliminating any that "clashed" with the Fed's goal of allowing U.S. banks to be more "competitive" abroad. The Journal continues:

"While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation. The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings. . . . And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security."

Regulating fraudulent, predatory and overly-speculative banking practices has been left to the States, not necessarily by law but by default. According to then-Governor Eliot Spitzer, writing in January of 2008, state regulators tried to regulate these shady practices but were hamstrung by federal authorities. In a February 14 Washington Post article titled "Predatory Lenders; Partner in Crime: How the Bush Administration Stopped the States from Stepping in to Help Consumers," Spitzer complained:

"several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive 'teaser; rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

"Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. . . . [A]s New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices . . . .

"Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye. . . . The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). . . . In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation."

Less than a month after publishing this editorial, Spitzer was out of office, following a surprise exposé of his personal indiscretions by the Justice Department. Greg Palast observed that Spitzer was the single politician standing between a $200 billion windfall from the Federal Reserve guaranteeing the mortgage-backed junk bonds of the same banking predators that were responsible for the subprime debacle. While the Federal Reserve was trying to bail them out, Spitzer had been trying to regulate them, bringing suit on behalf of consumers.3 But Spitzer has now been silenced, and any other state attorneys general who might get similar ideas will be deterred by the federal oversight under which banking regulators are to be "consolidated."

The Federal Reserve under Alan Greenspan deliberately enabled and permitted the derivatives debacle to take down the dollar and America's credibility. Greenspan is now lauded, feted and awarded at the White House and on network television, and takes a victory lap tour promoting and signing his book and celebrating his multimillion dollar book deal, enjoying his knighthood status in England and hero status on Wall Street. And as the falling debris of the American economy still piles up around us, the very agency that enabled disaster is now seeking to consolidate ultimate authority and accountability to itself, and through centralization and arrogation of power, eliminate all those pesky little Constitutional and State regulations and agencies, recalcitrant governors and the last few whistle blowers, so that the further abuse of power can be streamlined through one agency only. That agency is to consist of an alliance of the banking powers and the executive branch, a perfect formula for the institutionalization of continual abuse.

Perhaps Spitzer was lucky that he was the target only of a character assassination. When Louisiana Senator Huey Long challenged the Federal Reserve and fought for the State's right to oversee its own financial affairs in the 1930s, he was assassinated with bullets. Long's local assertion of decentralized State powers, as provided for in the Tenth Amendment to the Constitution, enabled the State of Louisiana to loosen the grip of the corporations on the State's wealth and allowed the setting up of schools and public institutions that elevated the people of the State and placed its "common wealth" back into the hands of its citizens, while providing employment and education. The Constitution reserves to the States and the people all those powers not specifically delegated to the federal government, arguably including the creation of money itself, which is nowhere specifically mentioned in the Constitution beyond creating coins. (See E. Brown, "Another Way Around the Credit Crisis: Minnesota Bill Would Authorize State Banks to Monetize; Productivity," www.webofdebt.com/articles, March 23, 2008.) But in this latest attempt at expanding the Federal Reserve's already over-expansive powers, we see clear evidence that the Wall Street and global banking powers have no intention of allowing their plans to be reined in by the Constitutional powers of the States and the people. Instead, they intend to fill up the moat and pull up the draw bridge on their feudal powers, and let the serfs shiver outside the gates for as long as they will put up with it.