Obama Stakes His Fortunes on Failed Banksters

Now that we have a rough idea how President Barack Obama and his lieutenants plan to prop up insolvent financial institutions using taxpayers’ money, we’re left with a more difficult question: Why?

Why doesn’t the Obama administration force insolvent banks and insurance companies to come clean about their losses first? It’s the "why" that’s so vexing. The who, what, when, and how are mere details, by comparison...

He could have ordered all U.S. financial institutions to immediately confess whatever losses they hadn’t yet recognized. And he could have backed that up by vowing to prosecute every officer, director and auditor the Justice Department could find who had approved numbers they knew to be wrong.

Obama didn’t do that. And now, six months into the government’s Troubled Asset Relief Program, his administration’s approach to the financial crisis is largely indistinguishable from its predecessor’s. The only objective, it seems, is to buy time, in hopes that an economic recovery somehow will materialize and lift the financial system back to health.

The Obama administration’s "strategy", for lack of a better word, is to keep plying broken financial institutions with as much taxpayer money as the government can print. And so the government will keep subsidizing failed mega-banks indefinitely, rather than placing any into receivership or liquidating them.

Source: Jonathan Weil at Bloomberg.

Government Sachs is in control

Lloyd Blankfein must be the luckiest guy on Wall Street. He leads one of the Street's biggest bailed-out firms, but unlike other companies propped up by taxpayers, Blankfein's Goldman Sachs Group Inc.

GS is far more profitable. And it's poised to become a more influential force with greater market share. Different from American International Group Inc. or Citigroup Inc., Goldman hasn't had to forfeit an ownership stake in its firm, and its shareholders - many of them management and employees - have benefited. Goldman shares trade above $100. That's less than half of where Goldman shares traded at their peak, but far better than the $1 and $3 that AIG and Citigroup shares trade for, respectively.

Since the fall of Bear Stearns Cos. a little more than a year ago, Goldman has taken more than $20 billion in taxpayer cash through loans, payments and backstops. Goldman's latest bailout coup was a $12.5 billion paid out of AIG's $180 billion government cash infusion.

Until it was fully extricated, Goldman always characterized its exposure to AIG as "immaterial," and that its $20 billion notional exposure to AIG was hedged. Turns out that it was - through government bailouts that didn't exist when Goldman entered the contracts.

Even former New York Luv Guv Eliot Spitzer told journalist Fareed Zakaria on Sunday that he thinks something smells. "The web between AIG and Goldman Sachs is something that should be pursued," Spitzer said. "Why did [those payments] happen, what questions were asked, why did we need to pay 100 cents on the dollar for those transactions if we had to pay anything, what would have happened to the financial system had it not been paid?"

But the AIG-Goldman affair is just the beginning, under the policy enacted by former U.S. Treasury Secretary Henry Paulson, Goldman's chief executive until 2006. Major competitors have failed or been diminished. Goldman already seems, if not just poised, to be dominating what's left of the investment banking landscape...

Source: MarketWatch

'Obama sale' politician charged

Former Illinois governor Rod Blagojevich has been indicted for corruption while in office - including trying to sell the Senate seat held by Barack Obama.
A grand jury indicted the 52-year-old Democrat on 16 felony counts, including racketeering conspiracy, wire fraud, extortion conspiracy, attempted extortion and making false statements to federal agents.

Blagojevich, who claims he did nothing wrong and is a victim of a political witch-hunt, has promised to fight the charges in court and has a book contract to tell his side. If convicted, he faces more than 300 years in prison and at least $4million in fines, according to the indictment.

Blagojevich, elected in 2002, was in his second term when the state legislature kicked him out of office nine weeks ago, following his arrest in December. The 75-page indictment alleges Blagojevich was at the centre of a conspiracy to seek cash, campaign contributions and jobs for himself and others.

They would allegedly be in exchange for state appointments, state business, legislation and pension fund investments. Among those actions were attempts to use his authority to appoint a US senator when Obama vacated his seat after being elected president in November, US attorney Patrick Fitzgerald said.

The governor was caught on court-approved wiretaps describing the Senate seat as something so valuable "you just don't give it away for nothing". Blagojevich added he might appoint himself if he could not get anything for the seat.

Source: The Metro

Obama nominee admits tax errors

US President Barack Obama's second choice for health secretary has become the latest of his nominees to reveal tax payment problems.

Kansas Governor Kathleen Sebelius said she had recently corrected her tax returns and paid almost $8,000 (£5,560) in back-taxes for 2005-2007. Ms Sebelius is due to testify at the US Senate on Thursday...

In a letter to the heads of the Senate Finance Committee, where Ms Sebelius is due to testify on Thursday as part of her confirmation process, she said the back-payments were the result of "unintentional errors".

They involved charity donations, a house sale, and business expenses and came to light in a review of their tax returns ordered ahead of the confirmation, she said. She said that together with her husband she had paid $7,040 in additional tax and $878 in interest.

Source: BBC