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Here
are a couple of unrelated stories, one on Harry Markopolos, the man who on 4
occasions tried to convince the SEC of Bernie Madoff's Ponzi scheme, the
second on how Geithner used a fictitious "Trust" to accomplish an
illegal takeover of AIG.
Inuring minds are reading a post on the Sense on ¢ents blog by
Larry Doyle called Harry Markopolos: “Don’t Trust
Your Government”
In
an interview on the Today show this morning (video clip after the fold), Harry
Markopolos dropped a few bombshells. Harry’s statement that he had
purchased a gun and mentally prepared himself to kill Bernie Madoff in
self-defense if need be will likely grab the most attention. It
shouldn’t.
Markopolos’ biggest bombshell this morning is his warning to America,
“don’t trust your government.” No surprise that Today host
Matt Lauer did not probe deeper. I am not confident that other outlets will
delve deeper into Harry’s statement, either. I wonder why Harry himself
is reticent to specifically point out the individuals and the instances which
lead him to make that statement.
Recall that a year ago Harry defined the SEC as merely incompetent while
simultaneously defining FINRA (Financial Industry Regulatory Authority) as
‘in bed with the industry’ that is Wall Street. Well, it does not
take an advanced degree to connect Harry’s grenade toss into
FINRA’s backyard a year ago with his volley this morning.
....
Here
is the video clip on MSNBC.
Some statements by Harry Markopolos made regarding killing Madoff were so
sensational that I suspect they are a promotional scheme to sell his book No One Would Listen - A True Financial
Thriller
Nonetheless, his message “Don’t trust your government” is
certainly worth remembering. On four occasions Markopolos went to the SEC
with information and the SEC refused to follow up.
Markopolos and a few of his associates tracked the ponzi scheme across the
Atlantic and found evidence of money laundering and organized crime in the US
and Europe. No doubt the details will be interesting.
Secretary Geithner's Got Some Explaining to Do
Not only does the SEC have a lot of explaining to do, so does Timothy
Geithner. Please consider the American Thinker article Secretary Geithner's Got Some Explaining to
Do.
While
everyone, including Congress, the media, and the public, have focused on
AIG's $100-million bonus payments to key employees, and most recently on
AIG's stealth payments to counterparties like Chase and the French giant
Société Générale -- the latter made worse by the
fact that it was the Federal Reserve (FED) that wanted to keep these payments
hidden from public view -- the problem with the AIG bailout is much deeper
and more fundamental.
Just about everyone has had something to say about this bailout -- mostly
that it was an ugly but necessary step to stave off a domino effect that
would have brought the world's financial system to its knees. But what we
have not yet heard is just how Treasury Secretary Geithner, as then-head of
the NY FED, got away with taking ownership of 77.9% of AIG's equity and
voting rights in clear violation of the law.
The question we are left with is: Why? What motivated this illegal grab of
AIG's equity and voting rights? Was it desperation in the face of the largest
potential collapse in the history of modern finance? Was it unbridled power
combined with supreme hubris? Or was it just criminal? The answer to this
query resides in the as-yet-hidden files of the Federal Reserve Bank of New
York, now subject to a subpoena issued by my office in the federal lawsuit
Murray v. Geithner, pending in the Eastern District of Michigan.
In the course of discovery, resisted by the government at every turn, we have
learned that the deal Geithner put together as the NY Fed's president was
illegal on its face.
The Deal
Specifically, the deal Geithner put together in September 2008 was for the NY
FED to pour up to $85 billion of debt funding into AIG to solve its liquidity
crisis as the Credit Default Swap counterparties, the banks which had insured
themselves against the sub-prime mortgage meltdown, demanded payments under
their AIG insurance policies. AIG ended up drawing down $60 billion almost
overnight.
But Geithner was not content with a straight debt deal where AIG promised to
pay back principal and interest and handed over almost all of its assets as
collateral. Geithner wanted real ownership and control (77.9%, to be exact)
of AIG's equity and the voting rights to go along with that.
The problem Geithner knew he had to confront, however, was that the FED was
not authorized to take ownership in AIG or any other financial institution.
The law authorized the FED only to loan money and take collateral. While the
FED might end up with ownership after a default and foreclosure on the
collateral, the Federal Reserve Act does not authorize the NY Fed to structure
the debt deal with an equity piece.
The Criminal Artifice
So what did Geithner do? He took equity, but he used a fictitious
"Trust" to accomplish that which he could not do legally. The AIG
Credit Facility Trust has three so-called independent, non-governmental
trustees owning the 77.9% of the legal interests of AIG, and the Trust
agreement assigns the U.S. Treasury the beneficial interests in the 77.9%.
The highly-touted "independence" of the trustees is quite obviously
critical to save the Trust from the claim that it is merely a ruse for FED
ownership and control.
But there is only one problem with this Trust structure: It is invalid and
illegal for two important reasons, not the least of which is that its
independence is nonexistent.
Geithner's deal was all about acquiring not just voting rights, but
super-majority control. Unfortunately, there was no legal authority at the
time to do so.
The brute fact that now standing exposed before us is the use of an invalid
Trust structure to conceal the unlawful ownership and control over 77.9% of
AIG's equity and voting rights by the FED. If Geithner knew he was breaking
the law, then this just happens to be the definition of criminal
money-laundering under Title 18, Section 1956.
Secretary Geithner has some explaining to do to AIG's public shareholders. We
suggest that he seek legal advice first -- but this time, from lawyers who
actually know what they are doing.
Time To Indict
Geithner
There is much more in the article, please give it a read.
I repeat my plea. It's time to indict Treasury Secretary Geithner.
I have talked about conspiracies involving Geithner, Paulson, Bernanke, and
former Bank of America Lewis on many occasions. I am more than happy to add
another post to the list.
April 24, 2009: Let the Criminal
Indictments Begin: Paulson, Bernanke, Lewis
June 26, 2009: Bernanke Suffers
From Selective Memory Loss; Paulson Calls Bank of America "Turd in the
Punchbowl"
July 17, 2009: Paulson Admits Coercion; Where are the Indictments?
October 20, 2009: Bernanke Guilty of Coercion and Market Manipulation
January 07, 2010: Time To Indict
Geithner For Securities Fraud
January 26, 2010: Questions Geithner
Cannot Escape
January 28, 2010: Secret Deals
Involving No One; AIG Coverup Conspiracy Unravels
January 31, 2010: 77 Fraud, Money
Laundering, Insider Trading, and Tax Evasion Investigations Underway
Regarding TARP
I am quite sure there will be more opportunities to add to the list.
Mish
GlobalEconomicAnalysis.blogspot.com
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