Banking Bailout News Stories

Excerpts of Key Banking Bailout News Stories in Major Media

Below are key excerpts of revealing news articles on the 2008 banking bailout from reliable news media sources. If any link fails to function, a paywall blocks full access, or the article is no longer available, try these digital tools.

Note: This comprehensive list of news stories is usually updated once a week. Explore our full index to revealing excerpts of key major media news stories on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.

Why is it so hard to hold Wall Street accountable? Even as we speak the banking industry and corporate America are fighting against financial reform with all the money and influence at their disposal. Their effort is to preserve a system that would enable them to ransack the country once again. What can ordinary Americans do? That's the question I want to put to my guests, Simon Johnson and James Kwak. They have written this new book, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. It's a must read - already a best seller -- and it couldn't have come at a better time. This book could change the debate over financial reform by tipping it in favor of the public. Together James Kwak and Simon Johnson run the indispensable economic website BaselineScenario.com. [Moyers:] Let me get to the blunt conclusion you reach in your book. You say that two years after the devastating financial crisis of '08 our country is still at the mercy of an oligarchy that is bigger, more profitable, and more resistant to regulation than ever. Correct? SIMON JOHNSON: Absolutely correct, Bill. The big banks became stronger as a result of the bailout. That may seem extraordinary, but it's really true. They're turning that increased economic clout into more political power. And they're using that political power to go out and take the same sort of risks that got us into disaster in September 2008.

Note: For a treasure trove of reports from reliable sources on the hidden methods used by financial corporations to manipulate the world economy and gain huge profits at the expense of taxpayers, click here.

[video transcript:] In America today we are getting closer to fully exposing the greatest con and cover-up in this [country's] history. It involves our banks, the federal reserve, our congress, and, of course, you and me. Here's how the con went down. The bankers were operating under an implicit guarantee from the godfather [at] the Federal Reserve, in the form of guaranteed interest rates, guaranteed cheap money exclusively for the con men. Then, Chairman Greenspan, the godfather, would agree to hold those rates -- let's say 2% -- for as far as the eye could see. The banks, or bankers, the con men, would borrow that money from the Federal Reserve, let's say 2%, and turn around and lend it back to [you], and let's say 6%. That encouraged the patsies, you and me, to be drawn into the con because 6% looks like a pretty low rate. Low rates for houses, low rates for cars. Heck, you could join a health club, make that into payments, turn that into bonds, and of course promises of a higher-than-average return for those managing teachers and policemen's and judge's pension funds that are buying into the con as well. And here exactly is where the con comes in. As you and I both know, the banks had no money. They were getting it from the Federal Reserve. It's funny money.

Note: For abundant reports from reliable sources on the hidden realities of what may be the greatest con job in financial history, click here.

In a case that echoes the Jack Abramoff influence-peddling scandal, two Northern California Republican congressmen used their official positions to try to stop a federal investigation of a wealthy Texas businessman who provided them with political contributions. Reps. John T. Doolittle and Richard W. Pombo joined forces with former House Majority Leader Tom DeLay of Texas to oppose an investigation by federal banking regulators into the affairs of Houston millionaire Charles Hurwitz, documents recently obtained by The Times show. The Federal Deposit Insurance Corp. was seeking $300 million from Hurwitz for his role in the collapse of a Texas savings and loan that cost taxpayers $1.6 billion. The investigation was ultimately dropped. Doolittle and Pombo — both considered protégés of DeLay — used their power as members of the House Resources Committee to subpoena the agency's confidential records on the case, including details of the evidence FDIC investigators had compiled on Hurwitz. Then, in 2001, the two congressmen inserted many of the sensitive documents into the Congressional Record, making them public and accessible to Hurwitz's lawyers, a move that FDIC officials said damaged the government's ability to pursue the banker. The FDIC's chief spokesman characterized what Doolittle and Pombo did as "a seamy abuse of the legislative process."

Nine months after being labelled "a great vampire squid wrapped around the face of humanity", Goldman Sachs has issued a wide-ranging justification of its conduct before, during and after the financial crisis. In a letter to shareholders issued alongside Goldman's 2009 annual report, the Wall Street bank denied that it "bet against its clients" when it changed its position in the housing market in 2007, shortly before prices began to collapse. The eight-page letter, signed by chief executive Lloyd Blankfein and president Gary Cohn, also contained a detailed defence of the $12.9bn (Ł8.5bn) payout which Goldman received from AIG after the failed insurance giant was bailed out by the US government. The letter appears to be a detailed response to some of the allegations made nine months ago by Rolling Stone journalist Matt Taibbi. His article, which argued that Goldman had repeatedly profited by inflating unsustainable financial bubbles ... included the claim that the company [is] "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money". Goldman ... actually profited from the fiasco by short-selling the market before the credit crunch struck in summer 2007.

Note: Read Matt Taibbi's article on Goldman Sachs here.

In a significant victory for news media, a federal appeals court said the Federal Reserve must disclose records on emergency lending programs to banks bailed out by the government in the financial crisis. The Second Circuit Court of Appeals on [March 19] ordered the Fed to release details of programs it adopted starting in late 2007 to shore up the financial system and forestall a complete meltdown of global financial markets. Bloomberg ... and News Corp's Fox News Network sought details of the central bank's actions under the federal Freedom of Information Act. The Fed argued against disclosure, citing an exemption that it said lets federal agencies keep secret various trade secrets and commercial or financial information. Writing for a unanimous three-judge appeals court panel, Chief Judge Dennis Jacobs said, however, that to give the Fed power to deny disclosure because it thinks it best to do so "would undermine the basic policy that disclosure, not secrecy, is the dominant objective." Sen. Byron Dorgan, a North Dakota Democrat, said the rulings will help shed light on the Fed, which he called "the least transparent institution" in government.

Note: Isn't it crazy that the Fed would try to keep secret what it did with nearly $1 trillion of US taxpayer money?

As head of the Commodity Futures Trading Commission [CFTC], Brooksley Born became alarmed by the lack of oversight of the secretive, multitrillion-dollar over-the-counter derivatives market. Her attempts to regulate derivatives ran into fierce resistance from then-Fed Chairman Alan Greenspan, then-Treasury Secretary Robert Rubin and then-Deputy Treasury Secretary Larry Summers, who prevailed upon Congress to stop Born and limit future regulation. PBS: Let's start with September 2008 as we all sat there and watched the economy melting down. Born: It was like my worst nightmare coming true. I had had enormous concerns about the over-the-counter derivatives [OTC] market ... for a number of years. The market was totally opaque. Nobody really knew what was going on. And then it became obvious as Lehman Brothers failed, as AIG suddenly appeared to be on the brink of tremendous defaults and turned out [to have been a major derivatives] dealer. PBS: How did it happen? Born: It happened because there was no oversight of a very, very big, dynamic, growing market. I would never say derivatives should be banned or forbidden. The problem is that they can be extremely misused. Traditionally, government has had to protect the public interest by overseeing the marketplace and keeping the extreme behavior under some check. All other financial markets have some kind of government oversight protecting the public interest. [But] not this one. The over-the-counter derivatives dealers business ... was something like 40 percent of the profits of many of these big banks as recently as a couple of years ago. PBS: We're the losers. Who were the winners? Born: Our largest banks. It was short-term benefit for a few major institutions at the expense of all the people who have lost their jobs, who have lost their retirement savings, who have lost their homes.

Note: Don't miss this entire, astonishing interview with Born, who practiced derivatives law for 20 years before being appointed head of the CFTC. She lays bare the level of deceit, greed, and corruption by both bankers and some of the politicians who protect them.

After 15 months and 2,200 pages of writing, the Lehman Brothers report has been released. As expected, the details are pretty gruesome. It explains how Repo 105 transactions allowed Lehman to exchange illiquid assets for short-term cash loans in order to disguise the crumbling financial state of the firm in its last days. How bad were the lies? Well, the report shows the transactions were not shown as loans. Instead, they were listed as sales … making Lehman’s accounting essentially fraudulent. According to emails described in the report, CEO Richard Fuld and about three different CFOs were all likely aware of the cover-up. Yet they still approved and signed off on the quarterly and annual reports. Further, it appears that even Lehman’s auditor Ernst & Young … in the not-so-fine tradition of Arthur Andersen — that was brought down in the Enron scandal – knew about the Repo transactions and did nothing to sound an alarm. So much deception … and so many accomplices.

Note: To watch a powerfully revealing, 10-minute MSNBC video on this topic, click here. Transcript available here. Host Dyland Ratigan in the clip describes what happened as "an accounting fraud perpetrated by bank CEOs against the American taxpayer."

A worried accounting executive at Lehman Brothers, who raised the alarm about what he saw as dubious number-crunching at the doomed Wall Street bank, lost his job barely a month after alerting the auditor Ernst & Young, his lawyer [has] claimed. Matthew Lee, a senior vice-president in Lehman's finance division, outlined six allegations of unethical accounting in a memo sent on 16 May 2008 to Lehman's senior managers, who asked Ernst & Young to investigate. In discussions with partners at Ernst & Young, he highlighted controversial "repo 105" transactions that artificially boosted Lehman's balance sheet by $50bn. Lee's lawyer, Erwin Shustak, said his client lost his job in late June 2008, officially as part of a broader downsizing. Shustak told the Wall Street Journal: "It was just easier to shut him up and let him go." Lee, 56, has emerged as a crucial figure in Lehman's downfall and in controversy over the conduct of Ernst & Young. The six allegations made by Lee included claims that Lehman's monthly balance sheet listed $5bn of assets above reality, that the bank failed to value its inventory of financial products in a "fully realistic or reasonable" way, that audit-level personnel were inadequately qualified, that systems were ineffective and that there were "tens of billions of dollars" of possibly toxic liabilities.

Note: For a treasure trove of revelations of the hidden realities behind the financial crisis and bailouts, click here.

Five robed radicals on the Supreme Court have pushed money-infused politics in the wrong direction by overturning a century's worth of campaign spending laws. Voters should prepare for the worst: cash-drenched elections presided over by free-spending corporations. The 5-to-4 ... majority's thinking is based on absolutist vision of free speech and belief that corporations and unions have the same constitutional protections as individuals when it comes to basic rights. This viewpoint is "a rejection of the common sense of the American people," said Justice John Paul Stevens, who read his angry dissent out loud. Corporations "are not themselves members of 'We the People,' by whom and for whom our Constitution was established." It's hard to overstate the legal sweep of the decision. It rejects two recent court rulings, one that barred corporations and unions from dipping into their treasuries to pay for candidate ads and the second that restricted these so-called independent expenditure efforts. The five-member majority didn't just blaze new ground; it torched the court's own past record. In practical terms, the decision amounts to a political earthquake. Big-money issues such as health care, cap-and-trade pollution controls and Wall Street regulations will drive attack ads against politicians who refuse to do the bidding of particular special interests.

Note: To join the over 40,000 who have already signed a petition to stop corporations from have legal personhood status in elections, click here. For more deep insights into the flaws in the US electoral system, click here. To read about the wonderful defender of elections free from corporate influence, Granny D, who recently passed away at the age of 100, click here.

Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin. Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers. These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit. “It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich. As Greece’s financial condition has worsened, undermining the euro, the role of Goldman Sachs and other major banks in masking the true extent of the country’s problems has drawn criticism from European leaders. But even before that issue became apparent, a little-known company backed by Goldman, JP Morgan Chase and about a dozen other banks had created an index that enabled market players to bet on whether Greece and other European nations would go bust.

Note: For lots more from reliable sources on the realities of the global financial crisis, click here.

Lending by the banking industry fell by $587 billion, or 7.5 percent, in 2009, the largest annual decline since the 1940s, as the number of troubled financial institutions rose sharply, the Federal Deposit Insurance Corp. [has] reported. The FDIC considered 702 banks to be in some danger of failing as of the end of 2009, more than double the number at the beginning of the year. [FDIC Chairman Sheila C.] Bair said that the vast majority of the lending decline was the result of cutbacks by the nation's largest banks, which have tightened qualification standards for borrowers and increased the proportion of money that they hold in reserve against unexpected losses. The decline in lending is a looming issue as the economy begins to recover. But for the recovery to continue, for businesses to expand and employment to grow, lending must begin to expand, too. The decline also has become a major political issue amid broad public anger that the federal rescue of the banking industry has restored profitability but not the flow of loans. The FDIC [said] that the nation's 8,012 banks posted an aggregate profit of $12.5 billion in 2009. The largest banks accounted for most of those profits as a growing number of smaller banks have struggled to survive losses on commercial real estate loans.

Note: Wasn't the main purpose of the huge stimulus packages given to banks to increase lending? Where did those trillions go? For a treasure trove of revealing reports from major media sources on the realities of the banking bailouts that were supposedly intended to increase lending, click here.

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels. As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere. In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come. Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Note: For a treasure trove of investigations from reliable sources into the many tricks by which Wall Street firms enriched themselves at the expense of others, click here.

Mark Pittman, an investigative reporter for Bloomberg News ... filed a Freedom of Information Act request with the Federal Reserve Board, seeking the details of its unprecedented efforts to funnel money to the collapsing banks of Wall Street. That was in September 2008. Just more than a year later, Mr. Pittman ... died unexpectedly at age 52. But his cause has persevered. It is now known as Bloomberg L.P. v. Board of Governors of the Federal Reserve, an attempt to unlock the vault of the largest Wall Street rescue plan in decades — or, as the legal briefs put it, to “break down a wall of secrecy” that the Fed has kept in place for nearly two years in its “controversial use of public money to prop up financial institutions.” The Federal Reserve has wrapped itself in secrecy since the turn of the 20th century, when a select group of financiers met at the private Jekyll Island Club off the eastern coast of Georgia and, forgoing last names to preserve their anonymity among the staff, drafted legislation to create a central bank. Its secrecy, of course, persists today, with Ben S. Bernanke, the Federal Reserve chairman, refusing to tell even Congress which banks received government money under the bailout. There is also a heated battle to force the Fed to disclose its role in the controversial attempt to save the insurance giant American International Group.

Note: Isn't it interesting that Pittman died at age 52 while trying to expose manipulations of the big bankers? For a one-minute video proving the existence of a secret weapon which can cause an undetectable heart attack, click here. For a concise, excellent background on the hidden role of the Federal Reserve, click here.

Bailouts and bonuses have many Americans frustrated with big banks. Some consumers think these giant institutions have lost touch with customers and basic good business practices. They're so fed up that they're holding these behemoths accountable by moving their money to community banks. Arianna Huffington of the Huffington Post is spearheading a campaign called Move Your Money, which encourages people to move from the banking giants to smaller community banks. "There's a lot of anger about the way banks have acted," says Huffington. "It's a total lack of empathy and concern." The group's Facebook page has more than 27,000 fans. "I think it's already an enormous success," says Huffington. "The fact that people are considering it; the fact that people are doing it; the fact that people are feeling empowered."

Note: Please consider going local and supporting credit unions and community banks. For information on moving your checking and savings accounts from profit oriented banks to membership run credit unions, click here and here.

The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history. Bloomberg argued that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money. Banks and the Fed warn that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell-off by investors. New York-based Bloomberg ... sued in November 2008 after the Fed refused to name the firms it lent to or disclose the amounts or assets used as collateral under its lending programs. “Bloomberg has been trying for almost two years to break down a brick wall of secrecy in order to vindicate the public’s right to learn basic information,” Thomas Golden, an attorney for the company with Willkie Farr & Gallagher LLP, wrote in court filings. More than a dozen other groups or companies filed amicus, or friend-of-the-court, briefs, including the American Society of News Editors and individual news organizations. The judge postponed the application of her ruling to allow the appeals court to consider the case.

Note: When doling out trillions of dollars of tax-payers' money, doesn't the public have a right to know who is receiving the money and what it is being used for?

The world's top central bankers began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets. Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet tomorrow at a secret location, the Herald Sun reports. Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with high-level security believed to have been invoked by law enforcement agencies. The arrival of the high-powered gathering coincided with a fresh meltdown on world sharemarkets, sparked by renewed concerns about global growth and sovereign debt. Fears countries including Greece, Portugal, Spain and Dubai could default on debt repayments combined with disappointing US jobs data to spook investors. "This does feel like '08 and '07 all over again whereby we had these sort of little fires pop up and they are supposedly contained but in reality they are not quite contained,'' said H3 Global Advisors chief executive Andrew Kaleel.

Note: For lots more from reliable sources on the secret deliberations by the highest levels of government and private elites in their attempts to bail out the biggest financial corporations, click here.

The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all. Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials. We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system -- apart from the matter of AIG’s bailout -- deserves further congressional scrutiny. The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks. Treasury Secretary Timothy Geithner was head of the New York Fed at the time of the AIG moves. The hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve. This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

Note: For lots more from reliable sources on the secret deliberations by the highest levels of government and private elites in their attempts to bail out the biggest financial corporations, click here.

Hospital cleaners are worth more to society than bankers, a study suggests. The research, carried out by think tank the New Economics Foundation, says hospital cleaners create Ł10 of value for every Ł1 they are paid. It claims bankers are a drain on the country because of the damage they caused to the global economy. They reportedly destroy Ł7 of value for every Ł1 they earn. Meanwhile, senior advertising executives are said to "create stress". The study says they are responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption. By contrast, child minders and waste recyclers are also doing jobs that create net wealth to the country. Eilis Lawlor, spokeswoman for the New Economics Foundation, said: "Pay levels often don't reflect the true value that is being created. As a society, we need a pay structure which rewards those jobs that create most societal benefit rather than those that generate profits at the expense of society and the environment".

U.S. securities regulators [at the Securities and Exchange Commission] originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security. The SEC ... agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG's confidentiality request. The SEC had also agreed that if it determined the document should not be made public, it would be stored "in a special area where national security related files are kept." Emails ... that have become public in recent weeks reveal that some at the New York Fed had gone to great lengths to keep the terms of the bailout private and the SEC may have played a role in contributing to some of the secrecy surrounding the AIG rescue package. "The New York Fed was orchestrating what can only be characterized as an extreme effort to ensure that details of the counterparty deal stayed secret," Rep. Darrell Issa ... said. "More and more it looks as if they would've kept the details of the deal secret indefinitely, it they could have."

Note: So now bank transactions are being considered a matter of "national security." What next? It's becoming ever more apparent that "national security" is used as a catch-all phrase for information that those in power don't want us to know about their secret dealings which benefit themselves at the expense of most of the rest of us.

It is not illegal for the Federal Reserve or the U.S. Treasury to buy S&P 500 futures. This type of intervention could explain some of the unusual market action in recent months, with stock prices grinding higher on low volume even as companies sold huge amounts of new shares and retail investors stayed on the sidelines. Some market watchers have charted that virtually all of the market’s upside since mid-September has come from after-hours futures activity. [These claims are] based on an analysis of the possible sources of the $600 billion in net new cash that was needed to boost the U.S. stock market capitalization by $6 billion since March. The usual sources, such as retail investors and pension funds, could muster only about $100 billion. The rest had to come from somewhere. The Fed has been openly buying some $1.7 trillion worth of long-term bonds since last March, which is something it hasn't done since the 1950s. Today, the Fed is making purchases to support housing by keeping mortgages cheap. As these purchases are phased out over the next few months, long-term interest rates will continue to move higher. This will cause long-term bond prices to fall, causing this new "bond bubble" to deflate. Stock investors will benefit, just as they did in the 1950s and 1960s as capital was moved from falling bonds into rising stocks.

Note: For a treasure trove of key reports from reliable sources on the secret manipulations keeping Wall Street afloat, click here.

Important Note: Explore our full index to revealing excerpts of key major media news stories on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.