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US, France Knew In 2007 Financial Collapse Was Imminent Due To Wall Street Fraud

US, France Knew In 2007 Financial Collapse Was Imminent Due To Wall Street Fraud


#WikiLeaks- PAULSON DISCUSSES FINANCIAL MARKETS, IRAN WITH SARKOZY, LAGARDE

Alexander Higgins-

In 2007 top US and France officials knew rampant fraud being committed by regulators, rating agencies and Wall Street Banks would soon cause a global financial collapse.

While investors and nations around the world were happily giving trillions of dollars away to crooked Wall Street bankers top officials in the United States and France knew the market would soon collapse and people would be robbed of millions.

While raising the issue that the role of government regulators and rating agencies needed to be reviewed in the wake of the upcoming crisis, US officials ignored calls from the French government to enact necessary regulation to stop the rampant fraud that would soon result in investors losing tens of trillions of dollars they had invested into the markets.

The cable reveals that while discussing the ability of the French banks to survive the crisis, French President Sarkozy was pushing the US to enact regulations to forestall the crisis. Instead, Henry Paulson responded by telling Sarkozy not to overreacted because the” it would take months, not weeks, for credit to be re-priced” telling France this is “not a major crisis.”

Paulson went on to warn that the major problem was with the German banks and which would require a bailout from the taxpayer while warning that the assets held by banks but covered up from investors by being held off-balance sheet presented systematic risk to banks and to sovereign wealth.

The cable clearly reveals that taxpayer bailouts would be needed.  Paulson further up sticks up for the Wall Street hedge fund saying they were not to blame for the crisis while acknowledging there were major Wall Street transparency issues.

To summarize, the cable reveals that top government officials in France and the US knew Wall street banks were committing fraud in the origination and packaging of sub-prime mortgage and lying to investors about the resulting securities they were creating and selling. Officials knew banks were also lying about their own liabilities and hiding them from investors by keeping the assets off their balance sheets.  The government also knew that both regulators and ratings agencies were participating in the scheme.

Remember as you read this cable, these conversations all took place over a year before the 2008 financial collapse when taxpayers around the world were forced into giving up trillions of dollars for banker bailouts. Also keep in mind that while the cable discusses “systemic risk”, “bailouts” and “market turbulence”, none of these had happened yet. They were discussing what would soon happen in the future.

The discussion of “systemic risk”, “market turbulence” and “taxpayer bailouts” over a year before the markets actually collapsed and those events actually occurred, show they knew a global financial collapse. Not only did they know it would occur but knew what the consequences would be for the investors and the governments who were fleeced by Wall Street. As the cable reveals, Paulson chose to deal with the crisis by letting it continue and urging France to keep the issue underwaps  by  urging Sarkozy not  to “over react”, hence allowing the scandal to the continue which just postponed the inevitable.

Also remember when we were forced into these bailouts, it was  under the guise that our governments had no idea the banks were doing this and this was a sudden and unforeseeable crisis. Finally, remember that – while there have been plenty of accusations from “conspiracy theorists”,  “fringe economists” and “wing nut” politicians such as Ron Paul – there still has been no admission from our government that financial regulators or the ratings agencies played a role in the crisis.

[ALEXANDER HIGGINS]

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Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms…will others follow?

Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms…will others follow?


Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms
Monday, March 8th, 2010, 2:59 pm by JON PRIOR

As the distressed housing market in the City Of Angels continues to grow, the entity that oversees operations, the City of Los Angeles, is its pulling investments and deposits out of financial institutions it deems are not cooperating with local, state and national foreclosure prevention efforts.

The Los Angeles City Council instructed the city attorney to draft a new ordinance, called the Responsible Banking Initiative, that would require banks looking to do business with the city to submit a report on investments in local communities. The “report cards” would give insight to policy makers on the bank’s investment in the city. The city currently holds almost $30bn in investments, including savings and pension funds.

According to the real estate data provider, RealtyTrac, the Los Angeles metropolitan statistical area (MSA) had the 32nd highest foreclosure rate in the country in 2009 as foreclosures remained concentrated the sand states. There, one in every 25 homes received a foreclosure filing, a 37% increase from 2008. California leads all states with the most permanent modifications under the Home Affordable Modification Program (HAMP), according to the US Treasury Department.

The motion was introduced by Councilmember Richard Alarcón. His original proposal came in February 2009. It pertained to bank cooperation with foreclosure prevention, but after a hearing in September, the council widened the scope. Before the city makes an investment, it would examine bank location in the city, how many small business loans are offered and whether or not the bank re-negotiates on foreclosures.

“The City of Los Angeles has an obligation to ensure that not only are our taxpayers dollars spent properly, but that they are also invested in a way that gives the greatest benefit to our City, and the report card created by the Responsible Banking Initiative will give us the information we need so we can invest smarter,” said Councilmember Richard Alarcón. “A slightly lower interest rate isn’t much of a deal, if the same bank is taking advantage of homeowners, refusing to issue small business loans or not opening branches or ATMs in low-income areas.”

Los Angeles would be the biggest city in the US to create reporting requirements for banks looking to do business with the city.

Write to Jon Prior.

Source: HousingWire.com

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