AIG Paying Huge Bonuses, Guantanamo Policy Unchanged, Credit Cards Next Crunch
Revealing News Articles
March 17, 2009
Below are key excerpts of important news articles you may have missed. These articles include revealing information on the huge bonuses AIG will pay its top executives from taxpayer bailout monies, the Justice Department's decision to leave the Bush administration's policy on indefinite detention at Guantanamo unchanged, a report that credit card lines will be the next crisis in the credit crunch, and more. Each excerpt is taken verbatim from the major media website listed at the link provided. If any link fails to function, click here. Key sentences are highlighted for those with limited time. By choosing to educate ourselves and to spread the word, we can and will build a brighter future.
P.S. One of our faithful readers contacted the manager of the ScrippsNews website about the corrupted webpage with the 9/11 poll we posted over a week ago. As a result the page has now been restored. Thanks so much for getting this done, Michael!
A.I.G. Planning Huge Bonuses After $170 Billion Bailout
March 15, 2009, New York Times
The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year. Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them. The payments to A.I.G.'s financial products unit are in addition to $121 million in previously scheduled bonuses for the company's senior executives and 6,400 employees across the sprawling corporation. The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government's efforts to prop up Wall Street. A.I.G., nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. Of all the financial institutions that have been propped up by taxpayer dollars, none has received more money than A.I.G.. The bonuses will be paid to executives at A.I.G.'s financial products division, the unit that wrote trillions of dollars' worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages. Seven executives at the financial products unit were entitled to receive more than $3 million in bonuses.
Note: For many revelations of the amazing realities of the Wall Street bailout, click here.
U.S. Won't Label Terror Suspects as 'Combatants'
March 14, 2009, New York Times
The Obama administration said Friday that it would abandon the Bush administration's term "enemy combatant" as it argues in court for the continued detention of prisoners at Guantanamo Bay, Cuba, in a move that seemed intended to symbolically separate the new administration from Bush detention policies. But in a much anticipated court filing, the Justice Department argued that the president has the authority to detain terrorism suspects there without criminal charges, much as the Bush administration had asserted. It provided a broad definition of those who can be held, which was not significantly different from the one used by the Bush administration. The filing signaled that, as long as Guantanamo remains open, the new administration will aggressively defend its ability to hold some detainees there. The filing, in Federal District Court in Washington, was meant to provide a definition of those detainees who can be held and bitterly disappointed critics of Guantanamo, who said it seemed to continue the policies they have criticized for more than seven years. It was the latest example of the Obama administration's taking ownership of Guantanamo, even after having announced it would close the prison, where 241 men remain. "This seems fundamentally consistent with the positions of the prior administration," said Steven A. Engel, who was a senior lawyer responsible for detainee issues in the Justice Department's Office of Legal Counsel until the final day of the Bush administration.
Note: For lots more on the "war on terrorism", click here.
Some Banks, Feeling Chained, Want to Return Bailout Money
March 11, 2009, New York Times
Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens. As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds. The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say. Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks ... as well as giants like Goldman Sachs and Wells Fargo. They say they plan to return the money as quickly as possible or as soon as regulators set up a process to accept the refunds. A senior Treasury official involved in the bailout effort said the administration was carefully trying not to do anything that could harm the banks and was giving financial incentives to modify mortgages. But by keeping weak banks operating, the markets continue to sink and taxpayer costs are mounting, outside experts said. "The current policy is likely to result in weaker banks," Mr. Seidman said. "And keeping insolvent banks in operation does not benefit the system."
Note: Could it be that that the main reason top bank executives are now talking about giving money back is that don't want to give up their lavish bonuses and corporate jets? What about all the talk about how the whole world would go to pot if they didn't get this bailout money? Somehow this is not surprising.
Whitney Sees Credit Cards as the Next Crunch: Report
March 10, 2009, CNBC
Prominent banking analyst Meredith Whitney warned that "credit cards are the next credit crunch," as contracting credit lines will lower consumer spending and hurt the U.S. economy. "Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is under-appreciated is the role of credit-card availability in that spending," Whitney wrote in the Wall Street Journal. Although credit was extended "too freely over the past 15 years" and rationalization of lending is unavoidable, what needs to be avoided was "taking credit away from people who have the ability to pay their bills," said Whitney, CEO of Meredith Whitney Advisory Group. Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010. "Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy," Whitney said. There is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said. "Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines," she said.
Note: Some believe that rising defaults on credit card debt could cause yet another financial shock to the system. For many more revelations of the amazing realites of the Wall Street bailout and the now world-wide financial and credit crises, click here.
The U.S. Financial System Is Effectively Insolvent
March 5, 2009, Forbes Magazine
With economic activity contracting in 2009's first quarter at the same rate as in 2008's fourth quarter, a nasty U-shaped recession could turn into a more severe L-shaped near-depression (or stag-deflation). The scale and speed of synchronized global economic contraction is really unprecedented (at least since the Great Depression), with a free fall of GDP, income, consumption, industrial production, employment, exports, imports, residential investment and, more ominously, capital expenditures around the world. And now many emerging-market economies are on the verge of a fully fledged financial crisis, starting with emerging Europe. In the meantime, the massacre in financial markets and among financial firms is continuing. The debate on "bank nationalization" is borderline surreal, with the U.S. government having already committed--between guarantees, investment, recapitalization and liquidity provision--about $9 trillion of government financial resources to the financial system (and having already spent $2 trillion of this staggering $9 trillion figure). Thus, the U.S. financial system is de facto nationalized, as the Federal Reserve has become the lender of first and only resort rather than the lender of last resort, and the U.S. Treasury is the spender and guarantor of first and only resort. And even with the $2 trillion of government support, most of these financial institutions are insolvent, as delinquency and charge-off rates are now rising at a rate ... that means expected credit losses for U.S. financial firms will peak at $3.6 trillion. So, in simple words, the U.S. financial system is effectively insolvent.
Note: The author of this insightful analysis, Nouriel Roubini, has a very informative blog, available here.
U.S. to pull 12,000 troops from Iraq as withdrawal begins
March 9, 2009, Los Angeles Times
The U.S. will reduce its military presence in Iraq by 12,000 troops over the next six months as part of the first major drawdown since President Obama announced his plan to end combat operations in the country next year, U.S. military officials in Baghdad [announced]. The drawdown reflects ... a major shift in priorities for the U.S. military, which is increasingly focused on efforts to arrest the deteriorating situation in Afghanistan. The plan would reduce U.S. troop strength by nearly 10%. The plan calls for the number of U.S. brigade combat teams to drop from 14 to 12. Two brigade teams that had been scheduled to redeploy in the next six months will not be replaced. When the American move is completed, it would reduce the U.S. military presence in Iraq to about 128,000 troops. The Iraq withdrawals are crucial to the administration's plans to devote more military resources to Afghanistan. Senior U.S. national security officials are nearing completion of a strategic review of the U.S. mission in Afghanistan, a step that Obama has described as an effort "to stabilize a deteriorating situation." Seven years after the U.S. invasion, Afghanistan's stability is threatened by a renewed Taliban insurgency. Last month, Obama announced plans to send 17,000 additional U.S. soldiers and Marines to Afghanistan -- deployments that would more than offset the troop reductions in Iraq.
Note: So President Obama withdraws 12,000 troops from Iraq, yet sends 17,000 troops to Afghanistan. What kind of withdrawl is this? Could it be that even Obama supports the war machine? To find out more, click here.
Regulatory reports show 5 big banks face huge loss risk
March 9, 2009, Miami Herald/McClatchy News
Five of America's largest banks, most of which have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show. Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives – insurance-like bets tied to a loan or other underlying asset – surged to $587 billion as of Dec. 31 ... a jump of 49 percent in just 90 days. The banks' potentially huge losses ... shed new light on the hurdles that President Barack Obama's economic team must overcome to save institutions it deems too big to fail. While the potential loss totals include risks reported by Wachovia Bank, which Wells Fargo agreed to acquire in October, they don't reflect another Pandora's Box: the impact of Bank of America's Jan. 1 acquisition of tottering investment bank Merrill Lynch, a major derivatives dealer. The risks of these off-balance sheet investments, once thought minimal, have risen sharply. Fears are rising that a spate of corporate bankruptcies could deliver a new, crippling blow to major banks. Because of the trading in derivatives, corporate bankruptcies could cause a chain reaction that deprives the banks of hundreds of billions of dollars in insurance they bought on risky debt or forces them to shell out huge sums to cover debt they guaranteed. The biggest concerns are the banks' holdings of contracts known as credit-default swaps.
Note: For many powerful revelations from major media sources of the Wall Street bailout, click here.
'Run on UK' sees foreign investors pull $1 trillion out of the City
March 7, 2009, The Independent (One of the U.K.'s leading newspapers)
A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK – that is monies held in the UK on behalf of foreign investors – fell by $1 trillion (£700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London. Some $597.5bn was lost to the banks in the last quarter of last year alone, after a ... massive $682.5bn haemorrhaged in the second quarter of 2008 – a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period. This is by far the largest withdrawal of foreign funds from the UK in recent decades – about 10 times what might flow out during a "normal" quarter. The revelation will fuel fears that the UK's reputation as a safe place to hold funds is being fatally compromised by the acute crisis in the banking system and a general trend to financial protectionism internationally. The slide in sterling – it has shed a quarter of its value since mid-2007 – has been both cause and effect of the run on London, seemingly becoming a self-fulfilling phenomenon. The danger is that the heavy depreciation of the pound could become a rout if confidence completely evaporates. Paranoia that the UK could follow Iceland into effective national insolvency and jibes about "Reykjavik on Thames" will find an unwelcome substantiation in these statistics.
Note: For many deep revelations of the realities of the world financial crisis from reliable sources, click here.
Bair Says Insurance Fund Could Be Insolvent This Year
March 4, 2009, Bloomberg News
Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency. "Without these assessments, the deposit insurance fund could become insolvent this year," Bair wrote in a March 2 letter to the industry. "A large number" of bank failures may occur through 2010 because of "rapidly deteriorating economic conditions." The fund, which lost $33.5 billion in 2008, was drained by 25 bank failures last year. Sixteen banks have failed so far this year, further straining the fund. Smaller banks are outraged over the one-time fee ... Camden Fine, president of the Independent Community Bankers of America, said yesterday. The agency, which has released the change for 30 days of public comment, could modify the assessment to shift the burden to the large banks "that caused this train wreck," Fine said. "Community bankers are feeling like they are paying for the incompetence and greed of Wall Street," he said. Consumers should watch this issue closely, said Edmund Mierzwinski, consumer program director at U.S. PIRG, a Boston- based consumer-watchdog group. "I wouldn't take their money out of the bank yet," Mierzwinski said. "If the FDIC is saying that there is this serious problem, then we should all be concerned. I think there is a chance the FDIC is going to have to ask taxpayers for money in the future."
Note: For lots more on the financial crisis from reliable sources, click here.
Investigative reporter Seymour Hersh describes 'executive assassination ring'
March 11, 2009, Minnesota Post
[Pulitzer prize winning] investigative reporter Seymour Hersh may have made a little more news than he intended by talking about new alleged instances of domestic spying by the CIA, and about an ongoing covert military operation that he called an "executive assassination ring." [In reply to a question, Hersh said] "After 9/11 ... the Central Intelligence Agency was very deeply involved in domestic activities against people they thought to be enemies of the state, without any legal authority for it. Today, there was a story in the New York Times that ... mentioned something known as the Joint Special Operations Command -- JSOC it's called. They reported directly to the Cheney office. They did not report to the chairman of the joint chiefs of staff or to Mr. [Robert] Gates, the secretary of defense. They reported directly to [Cheney]. ... Congress has no oversight of it. It's an executive assassination ring essentially, and it's been going on and on. They've been going into countries, not talking to the ambassador or the CIA station chief, and finding people on a list and executing them and leaving. That's been going on, in the name of all of us." He added that both the press and the public let down their guard in the aftermath of 9/11. "The major newspapers joined the [Bush] team," Hersh said. Top editors passed the message to investigative reporters not to "pick holes" in what Bush was doing.
Note: For further revelations of the excesses committed in the name of the "war on terror", click here.
Surviving Recession: Medical research seen as lure in hard times
March 13, 2009, Sacramento Bee (Sacramento, CA's leading newspaper)
Retirement slammed Carole Jacko. Raising two grandchildren, she's too young for Medicare and too strapped to pay $600 a month for health insurance. So when a trip to the emergency room ended with a diagnosis of diabetes, Jacko found a creative solution. She became a medical guinea pig, offering herself to science in exchange for free medication, free doctor's visits and even a modest payment. With the economy careening and millions uninsured, some doctors and researchers believe the lure of volunteering for medical research is growing – and so are potential ethical pitfalls. "Sometimes desperation leads people to be poor shoppers," to gloss over risks or grasp at imagined benefits, said Kevin Weinfurt, a Duke University professor who focuses on medical decision-making and ethics. No regulations limit how much a person can be paid to take part in medical research. Researchers do not agree on how much money it takes to cross the line and exert "undue influence" or coercion to get someone to enroll in a study. That's something federal regulations do forbid. "This is the most complicated issue in research ethics, and it's still an unsettled question," Weinfurt said. It has lingered for more than 100 years, since an Army surgeon named Walter Reed paid volunteers at a Cuban outpost $100 in gold to risk being infected with yellow fever. The men got another $100 if they contracted the disease, payable to themselves – or any designated survivor.
Note: For many reports on corruption in the pharmaceutical and medical industries from major media sources, click here.
Older Articles Worth Exploring
Blind To Failure
June 18, 2001, Time Magazine
Scaling Everest requires the enthusiasm and boosterism of a physical-education teacher combined with the survival instinct of a Green Beret. You have to want that summit. Erik Weihenmayer, 33, wasn't just another yuppie trekker. Blind since he was 13 ... he began attacking mountains in his early 20s. For Erik ... excelling as an athlete was the result of accepting his disability rather than denying it." Climbing with Erik isn't that different from climbing with a sighted mountaineer. You wear a bell on your pack, and he follows the sound ... using his custom-made climbing poles to feel his way along the trail. His climbing partners shout out helpful descriptions: "Death fall 2 ft. to your right!" Almost 90% of Everest climbers fail to reach the summit. Many--at least 165 since 1953--never come home at all. When Erik and the team began the final ascent from Camp 4 ... they had been on the mountain for two months ... getting used to the altitude and socking away enough equipment [before they made the final, successful] summit push. "He was the heart and soul of our team," says Eric Alexander. "The guy's spirit won't let you quit." It could be called the most successful Everest expedition ever, and not just because of Erik's participation. A record 19 climbers from the N.F.B. team summited, including the oldest man ever to climb Everest--64-year-old Sherman Bull. Perhaps the point is really that there is no way to put what Erik has done in perspective because no one has ever done anything like it. It is a unique achievement, one that in the truest sense pushes the limits of what man is capable of.
Note: Don't miss the entire inspiring story at the link above. For an inspiring video of Erik in Peru, click here.
Special note: To learn about Bobby Jindal, the inspiring, young Republican governor of Louisiana who is deeply committed to eradicating corruption in government, click here. For anyone who is or knows of a veteran with war trauma or other PTSD, don't miss the powerful video available here. And for those interested in a talk given by WantToKnow.info founder Fred Burks, you can purchase a copy on amazon.com or watch it free here.
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AIG Paying Huge Bonuses, Guantanamo Policy Unchanged, Credit Cards Next Crunch