Tuesday, March 18, 2008

Connect the dots: big bank bailout and Spitzer's fall

Posted By on Tue, Mar 18, 2008 at 10:49 AM

Thanks today to fearless investigative reporter Greg Palast for the following information, which I'm offering in condensed form. There's no smoking gun here, but the overall picture looks awfully fishy. Let's see if we can connect these dots:

1. Mortgage bankers' practice of steering unqualified people to sub-prime loans with high-interest kickers (in other words, "predatory lending") used to be almost completely forbidden — until the present Bush administration

2. New York Gov. Eliot Spitzer was so unyielding in fighting against predatory lenders and their Wall Street friends, he earned the nickname "The Sheriff of Wall St."

3. When Spitzer and other states' leaders tried to sue the mortgage sharks under consumer protection laws, the feds, in an unprecedented move, ordered the states to back off, and even filed a lawsuit to stop Spitzer's investigation of "mortgage steering."

4. Soon, headlines appeared in the financial press reporting that "Wall St. Declares War on Spitzer."

5. Spitzer wrote in the Washington Post that the Bush administration was "predator lenders' partner in crime."

6. Keep in mind that not many politicians who are caught buying prostitutes are prosecuted. For instance, Sen. David Vitter, Republican of Louisiana, paid women to put him in diapers but he wasn't exposed by the federal prosecutors that busted the GOP senator's favorite prostitution ring.

7. Last week, the Federal Reserve, for the first time in its history, loaned a group of banks $200 billion (that's with a "b," not an "m.") to guarantee the banks' mortgage-backed junk bonds. As reporter Palast puts it, "Not one family was saved — but not one banker was left behind."

8. On the same day as the massive bailout, Bush's Justice Department named Spitzer in their investigation of a high-end prostitution ring, ending the N.Y. governor's political career.

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