Collateral Damage (Part 2):
The Subprime Crisis and the Terrorist
Attacks on September 11, 2001
By E.P. Heidner
Abstract:
The U.S. Subprime and global financial crises of 2008 was the direct
result of a covert monetary policy implemented by the U.S. financial institutional
caretakers of the World War II Black Eagle Gold Fund. Major growth in this fund
occurred in 1986 when the Reagan/Bush administration ousted Ferdinand
Marcos and confiscated the Philippines holdings of Japanese pre-WWII treasury,
buried in the Philippines due to the U.S. Naval blockade of Japanese ports. Not
being able to publicly acknowledge the illegal confiscation of multiple national
treasuries, U.S. officials and their banker-agents have released major portions of
this fund to the money market in excess of monetary demand, expanding the
money supply by $3.5 to $7 trillion. The individuals responsible for releasing this
gold were also responsible for deliberately opening the subprime mortgage
market to national banks, thus creating inflationary demand in the high risk,
subprime housing market. In addition to the ‘coincidence’ that virtually all of the
troubled mortgages which are at the source of the 2008 economic crisis seem to
come from a timeframe and monetary growth spurt linked to the ‘9/11 bond
dump’ this report will document that the primary source of funds for the liar’s
loans and troubled subprime loans comes from banks that are in lock-step with
the covert funding operations. Given that these same individuals covertly financed
the collapse of the ruble in 1991 using these same funds, and then orchestrated
the buy-out of key Russian industries for pennies on the dollar, this analysis
provides evidence that a similar gambit is being made for the takeover of key U.S.
industries.
In the aftermath of World War II, President Truman, acting on the advice of bankers
working in the War Department and OSS, created the undisclosed ‘Black Eagle Fund’
using gold confiscated from the defeated Nazis and Japanese. This fund was augmented
in 1986 by confiscating subsequent findings of Japanese treasury gold from Ferdinand
Marcos, whose gold holdings at the time were estimated to be 73,000 tonnes.1
The total
amount of treasure unearthed was in a magnitude estimated to be as much as 280,000
tonnes.2
Under international law, the gold should have been returned to the citizenry from
which it had been confiscated – but for reasons of expediency, greed or both, the gold
was secreted away under the watchful eye of the OSS/CIA and used over the next half
century to finance CIA covert operations. The gold accounts were set up to be managed
by the Exchange Stabilization Fund (ESF), a Department of the U.S. Treasury over which
there is no congressional oversight. ESF funds are released under the authority of the
President and Secretary of the Treasury through the open market operations of the New
York Federal Reserve Bank. Over time, these covert funds have been found to be
involved with a number of major international banking scandals such as the BCCI, Nugan
Hand, Castle Bank, and the International Bank of Washington scandals. The largest
covert operation to-date has yet to be discussed by the mainstream media.
Two independent ‘insiders’ to the fund have provided with testimony and documentation
contending that George H.W. Bush and Alan Greenspan funded a covert operation in
1991 in the range of $240 billion dollars. One of those insiders was the wife of a minor
covert fund manager (CIA operative Russell Hermann, of the Durham Trust) and the
other was the long-term program manager of the covert fund (General Earle Cocke).3,4
Subsequent investigation into the funding and the history of that period suggests they
used the gold to fund a covert economic war that caused the collapse of the Soviet
Union.5
However implausible the claim may sound, “…it helps to realize that the entire
cost of World War II, in current dollars and including service-connected veterans'
benefits, is about $460 billion…. The cost of the Vietnam War, including benefits, was
$172 billion; Korea was $70 billion; World War I was $63 billion. The Civil War was $7
billion.” 6
For George H.W. Bush and his colleagues, the covert war was probably a
bargain that was too hard to turn down regardless of the legality!
The corroborating evidence for these claims is extensive, and moreover suggests that
securities from the $240 Billion covert war were ‘settled’ in the aftermath of
September 11th, 2001 tragedy. This meant that $240 billion jumped from the off-balance
sheet accounts to the balance sheets of their respective holding banks, and had a major
impact on the money supply. Since that event, a chain reaction has contributed to an
economic crisis that has stripped corporations and investment funds (read as retirement
and saving plans) of trillions of dollars, and brought global economic growth to a
standstill. Starting with a significant failure in the subprime equity market, a major
contraction of the finance industry created a crisis with the following characteristics.
• A significant percentage of defaults on ‘subprime’ mortgages had reduced the cash
flow and net value of the securities they were bundled into. In 2006 one report had
17% of the subprime loans 60 days in arrears 7
predicting defaults in mortgages of
$100 Billion. Mixing the risky mortgages with the good mortgages in the
securitization process extended the risk to between $500 billion and $1 trillion of
financial assets.
• The businesses, investment funds and banks holding those securities, having either
a reduced cash flow or net asset value, were unable to ‘invest’ earnings to buy
stocks and bonds, and reduced the value of their portfolios. The banks holding those
securities as capital became unable to meet capital requirements as defined under
the Basel II, Agreement and made them targets for takeover.
• Without an active demand for stock and bonds, companies requiring new funding
for growth and expansion found themselves at a standstill. As inflated PE values of
corporate stocks were driven to realistic levels, corporate ability to raise cash using
stock as collateral was reduced even more. Large corporations holding securities
related to the debacle were seeing their capital base drain away. Companies using
securities, or their own stock or property value as collateral for loans would be
facing bankruptcy as happened in Japan when real estate values plunged in the
1980s.
Demand for goods and services was being curtailed by the reduced value and
dividends of retirement and savings portfolios, forcing many senior citizens to cut
back on day-to-day expenditures, forcing overall contraction in employment,
providing few and smaller paychecks, and the standstill in the housing market -which was the economic engine for growth in the U.S. by spurring on building,
home furnishings, appliances etc.
Common Rationale for the Crisis
The rationale for the financial crisis presented to the public by a news culture that all too
often publishes (uncritically) government sponsored sound bites, suggested that the crisis
was attributable to a set of conditions no one could be held accountable for because
‘everyone’ was responsible.
1) The alleged - but not illegal - ‘cronyism’ of the Bush administration prevented state
governments from enforcing state banking law which would have curtailed national
bank mortgage practices now recognized to be heavily laced with ‘fraud’8
and seen to
be the primary enabler of toxic subprime loans. The failures at Fannie Mae were
charged to Clinton administration ‘cronyism.’ Cronyism has been tolerated by the
Congress, courts and the voting public for decades.
2) Lax monetary policy managed by Wall Street insiders at the Treasury and Federal
Reserve continually and excessively fed a mortgage market with low interest rates
with the ‘policy goal’ of providing all Americans with a home while fostering
economic growth. Additionally, sale of subprime mortgages was unofficially
encouraged by Alan Greenspan according to some:
Greenspan gave a wink and a nod in favor of adjustable rate mortgages precisely at the time
subprime growth was growing rapidly. He denies now that he was indicating these instruments were
appropriate for most borrowers, but Dean Baker of Beat the Press begs to differ: The [Washington
Post] article cites Greenspan’s denial that he had encouraged people to take-out nontraditional
mortgages. The immediate point at issue was that Greenspan had suggested in early 2004 that
homebuyers often wasted money by taking out fixed rate mortgages.9
The truth is that Greenspan explicitly encouraged the expansion of the subprime
market.
“With these advances in technology, lenders have taken advantage of credit-scoring models and
other techniques for efficiently extending credit to a broader spectrum of consumers. The
widespread adoption of these models has reduced the costs of evaluating the creditworthiness of
borrowers, and in competitive markets cost reductions tend to be passed through to borrowers.
Where once more-marginal applicants would simply have been denied credit, lenders are now able
to quite efficiently judge the risk posed by individual applicants and to price that risk
appropriately. These improvements have led to rapid growth in subprime mortgage lending…”10
3) Lax regulatory oversight of the retail mortgage companies, the agencies securitizing
the mortgages, the insurance companies providing insurance for the hedges on
interest rates, and the investment companies using these mortgaged backed securities
for more sophisticated investment products, was the norm.
“Changes in the lending business and financial markets have moved large swaths of subprime
lending from traditional banks to companies outside the jurisdiction of federal banking regulators.
In 2005, 52% of subprime mortgages were originated by companies with no federal supervision,
primarily mortgage brokers and stand-alone finance companies. Another 25% were made by finance companies that are units of bank-holding companies and thus indirectly supervised by the
Federal Reserve; and 23% by regulated banks and thrifts....11
Regulation also failed to keep pace. At the Securities and Exchange Commission (“SEC”), the
Office of Risk management had been reduced to an office of one by February of this year. From
2005, the number of SEC enforcement division personnel was cut by 146 from 1338 to 1192 in
2007. In 2004, the SEC reduced the capital requirements for the largest Wall Street investment
banks. The SEC was given insufficient oversight authority over the credit rating agencies when
Congress adopted the Credit Rating Agencies Reform Act of 2006. And as Chairman Cox has
recently and correctly testified, Congress also failed to give the SEC adequate supervisory powers
over Wall Street Investment Bank Holding companies with the passage of the Gramm Leach
Bliley Act. Congress also has failed to regulate the credit and other derivative instruments which
in some instances are “Toxic Waste” to the financial system.
Meanwhile, the Federal Reserve and banking regulators examinations failed to identify and rectify
unsound lending and banking practices at institutions such as IndyMac, Washington Mutual
(“WaMu”), Countrywide, and Citigroup. Often these practices developed as lenders sold loans
they had originated, or were able to protect against credit risks through credit derivatives, thereby
eliminating any “skin in the game.” As these unsound practices grew, the regulators also failed to
ensure there was adequate capital in financial institutions that had taken on and retained excessive
risks.12
In the medical industry, this laxness is referred to as malpractice.
4) The decline in national economic productivity starting in 2003-2004 resulted in
homeowners not being able to increase personal earnings in a manner required by
their debt obligations, thus requiring them to default.
5) Political contributions 13 and sweetheart loans 14 to federal agency administrators and
Congressmen ‘may’ have resulted in a lack of oversight. Proposed legislation by
Senate Banking Committee Chairman Richard Shelby (R-Ala.) in 2003 for regulation
and control of Fannie Mae and Freddie Mac in the wake of their accounting scandals
was defeated when Fannie Mae committed to Congress to invest heavily in subprime
mortgages. The deal between Fannie Mae and Congress allowed regulators to turn a
blind eye. In truth, the proposed reorganization was lacking any teeth to begin with:
“I don’t see much other than a shell game going on here, moving something from one
agency to another….”(Representative Melvin L. Watt, Democrat of North Carolina),
and should have been viewed solely as an attempt to allow the President to control
Fannie Mae and Freddie Mac rather than Congress.15
6) Greed and self interest, re-enforced by a culture that legitimizes and rewards the
same, caused hundreds of thousands of home buyers, mortgage companies, bankers,
investors, regulators and lawmakers to fib, lie, commit fraud and act irresponsibly.
Punishment for misrepresentation and fraud over the years had never exceeded the
benefits, and most executives responsible for the previous two decades of crises
landed comfortably after all was said and done.16 Millions of investors benefited
when their retirement and savings funds grew rapidly from the profits of the highly
profitable, securitized subprime loans.17 (Rest assured these investors were required
by the funds to identify the level of risk they were willing to take with their funds,
and as a result have no ethical basis for crying ‘foul!’.) Everyone (in the top 10% of
the economy) gained from this culture, and turned a blind eye.
7) A culture of excessive corporate risk taking was reinforced by setting precedents for a
“too-big-to-fail” mentality. The history of Federal interventions and bailouts goes
back to the Savings and Loan bailout (1989), the $20 Billion Mexican bailout (1994-95), the Long Term Capital Management Crisis (1998),
18 the $18.5 Billion for the
Asian financial crisis of 199819, the $30 Billion Brazilian Bailout 20, a Plunge
Protection Team to support intervention in the case of a national crisis,21 and the
‘implicit’ bailout of Fannie Mae and Freddie Mac if needed.
8) The behaviors that transformed the crisis from potential to acute (Bear Sterns and
Lehman Brothers) may have been the Wall Street trader practice of practice of ‘naked
short selling’ rather than the weakened security portfolios.
Most of these conditions and explanations seem fairly conventional, and casual observers
concluded the ‘market, political and social forces and human nature’ were at the core of
this crisis – and ‘no one person or group’ could conceivably be held responsible. All
activities, however ethical or not, were viewed as legal in the eyes of the regulators and
courts.
On the other hand, the subprime mortgage market had been around for decades, operating
well within the controls of the financial system. The market had, to a certain degree,
regulated fraud by exposing fraudulent operations and punishing those who took
excessive risk. The appropriate questions should be: what was the root cause of the
meltdown, what happened to allow the entire industry to spin out of control, and was it
allowed to spin out of control on purpose?
Deeper Root Causes
of the Subprime Crisis
‘Follow the money’ is a time tested adage which is all too often ignored, but in this case
proves illustrative. The root causes of the ‘subprime financial crisis of 2008’ are found in
the covert and possibly illegal expansion of the US dollar money supply and a
coordinated effort by a few individuals to channel this excessive monetary supply into the
high risk subprime market. The same group of individuals responsible for both aspects of
that plan, were also responsible for a broad array of efforts which blocked actions that
would have minimized the risk, or exposed the magnitude of risk earlier. Even more
important, the group at the center of this crisis is the very same set of individuals that
deliberately crashed the Soviet economy in 1991, and discretely bought up the
infrastructure for ‘pennies on the dollar.’
Covert Expansion of
the Monetary Supply
The U.S. monetary supply was expanded in two major ways:
1) Illegal long term expansion of the money supply since 1994 which is correlated to
covert movements of gold sourced in the Project Hammer, Golden Lily, Yamashita
Treasure, Black Eagle Fund; and
2) An unreported, covert burst of the money supply in the aftermath of September 11th
2001, with the laundering of the illegal, covert bonds created in September 1991 from
the Project Hammer, Golden Lily, Yamashita Treasure, Black Eagle Fund to bring
about the collapse of the Soviet Union.
There was an ongoing and massive expansion of the money supply during the seven years
prior to 9/11 that is attributable to the ‘officially denied’ sell-off of undeclared US
government gold stocks.22 According to Reginald Howe in his 2000 law suit against the
Bank for International Settlements, Alan Greenspan, William J. McDonough, J.P.
Morgan & Co. Inc., Chase Manhattan Corp., Citigroup, Inc., Goldman Sachs Group, Inc.,
Deutsche Bank AG and Lawrence H. Summers, Secretary of the Treasury, 23 the covert
sell-off of U.S. gold started in 1986 (coincidently the same year Kissinger and Bush
forced Ferdinand Marcos from office as President and confiscated his gold), and after
1994 added between 5,000 and 10,000 metric tons of gold to the monetary supply.
“…major banks sometimes borrow gold through their treasury departments for
purposes of general funding….Most central banks do not disclose the amount of gold
that they have on lease. Bullion banks are even more secretive about the amounts of
gold that they have borrowed. Accordingly, the current size of the aggregate short
physical position is a subject of considerable controversy. Informed estimates range
from 5000 to well over 10,000 metric tonnes, or several years of annual
production.”24
The total U.S. dollar money supply more than doubled between 1994 and 2005. (See
Figure 1) If monetary growth had been regulated by the Federal Reserve at the pre-1994
growth rates, the total money supply might have been in the range $3 trillion (32%) less
than the $9.5 trillion it was at in 2005.
The covert gold released to the market in a series of sell-offs between 1994 and 2000 added between $1 trillion and $1.6 trillion in ‘covertly sourced’ money supply.25 The September 11th bond dump of an estimated $240 Billion expanded the money supply between $2.4 and $4.6 Trillion.26 Together, these two large waves of money creation can be held solely responsible for an incremental $3 trillion (32%) in the money supply created during the increased rate of monetary expansion since 1994. Moreover, these waves do not include 400 tonnes of paper gold created by Barrick Gold prior to 2002 27 , or another 300-400 tonnes provided to the markets by U.S. bullion banks to resolve the Long Term Capital Management crisis of 1998 28 which most likely originated from the same source.
More simply, the Federal Reserve – as intended under it charter –lost control of its ability to manage the money supply due to the significant covert injection of gold and gold backed bonds into the money supply for covert intelligence operations.29 The expansion of the money supply is not so much attributable to the growth of unregulated financial products such as derivatives, swaps, and structured investments etc. – although they provide a good ‘cover story’ as to why classical monetary controls have failed.30 The Fed’s inability to control interest rate movements can be attributed to the uncontrollable inflow of gold, gold bonds and gold backed securities. (Was anyone realistically expecting Presidents and bankers to ‘sit’ on between 73,000 and 280,000 tonnes of illegal Black Eagle/Yamashita/Marcos gold, without trying to use it?)
The critical observation is this:
The Federal Reserve “Board” and the Federal Open Market Committee (FOMC) cannot control the money supply if the Project Hammer/Golden Lily/Yamashita Treasure/Black Eagle Fund remains covert, is administered on a need-to-know basis, and is releasing gold to the market without public acknowledgment. Under those conditions, there are two authorities creating money, one of which has an inability to provide full disclosure. The Chairman of the Federal Reserve, Secretary of Treasury, President of the US, President of the New York Federal Reserve and Chairman of the Federal Open Market Committee would be totally responsible for the Project Hammer/Golden Lily/Yamashita Treasure/Black Eagle Fund. The entire Board of the Federal Reserve and FOMC owns the control of the Federal Reserves monetary policy decisions-not just the Chairmen. In this case, the Federal Reserve committee members could not be advised of the changes of which the Chairmen would be aware of, for reasons of National Security. Equally important, the administrator of the covert fund (formerly the CEO of Citibank 31) is instructing some 30+ commercial accounts to deploy the ‘off balance sheet’ assets, which represents a monetary policy in itself.
One indicator of the impact of this covert monetary policy is that the Federal Reserve Board admittedly lost the ability to manage monetary policy in 1994, when the model it used to manage monetary growth failed.32 Prior to that, the Fed understood the relationship between long term and short term rates, but when the Fed raised short term rate in 1994, long term rates increased by triple what they anticipated.33 This a-periodic problem which would befuddle analysts for years still remains the subject of research.34 The current thinking is that the long term rates are ‘significantly’ influenced by international inflow and outflow of capital or unexplained savings.35 The covert gold sales of the 1990s and the bond dump of September 11, 2001 (given the original Israeli based participation in the financing arrangements of 1991) can both be seen as a form of international inflow and unexplained savings. The more important observation is that the interest rate phenomenon recognized in 1994 was again experienced in 1996 and 1999, demonstrating a perfect correlation to the periods of illegal sales of gold referenced by Howe in his lawsuit. 36
The Project Hammer/Golden Lily/Yamashita Treasure/Black Eagle Fund bank ‘administrators’ saw an opportunity to deploy these funds for reasons not sanctioned by Congress, and earn interest on these illicit gold holdings by securitizing them. (Those banks, as identified in the Sterlings’ impeccably documented book Gold Warriors 37, and traced through time in the prior report,38 are shown in Figure 4. See page 32.) Barrick Gold was a primary conduit. Two Presidents (George H.W. Bush and William Clinton) saw an opportunity to either wage a covert economic war (Bush) or stimulate the economy (Clinton) with this fund after its enhancement with the Marcos gold confiscation.39 The major bullion banks holding the gold were authorized to ‘loan’ gold to Barrick in exchange for Barrick future gold production. Barrick, in turn was refining and selling the ‘loaned’ gold. (Barrick should be recognized as only one of several outlets, with the Marcos gold refinery being taken over by the Keswick family, controlling Jardine Matheson Bank and HSBC.) Astute gold traders noticed gold appearing on the market with no clear sourcing, and this observation resulted in the Howe lawsuit, and an FBI investigation. The FBI investigation of this activity was unhinged with the attack on the World Trade Center in 2001, and the bombing of the FBI evidence repository on the 23rd floor of the North Tower which destroyed the files. The Howe lawsuit was dismissed for technical (jurisdictional) reasons, with the court implying the case still had merit. A subsequent lawsuit by Donald W. Doyle (CEO of Blanchard & Company) amended to address the courts instructions to Howe, focused on a company called Barrick Gold, and accused it of working with banks to ‘fix’ gold prices. This lawsuit was settled out of court in 2006 and the agreement sealed.
Specifically, the start of the financial crisis of 2008 can be traced to the events of September 11, 2001, when an estimated $240 billion dollars was covertly added to the M2/M3 money supply with the settlement of off-balance sheet, illegal bonds created in 1991 by George H.W. Bush and Alan Greenspan, with the assistance of a number of individuals who subsequently controlled U.S. economic policy for the following 15 years. (See “Key Players” page 15 for names of these individuals.) In the four months after 9/11, the total money supply increased by $650Billion, the single greatest burst of monetary increase in modern times. However, had the Federal Reserve increased money supply at the pre-9/11 rate, the total increase for the same period would have been about $344 billion. The incremental $306 billion can be largely attributed to an estimated payout of $240 billion for illegal bonds, as well as about $70 billion to address the liquidity needs of the system during the crisis. The figure of $70 billion roughly compares to the $80 billion the Fed reported as the ‘monetary’ input required to stabilize the economic system.40
The origin of the $240 billion and the manner in which it was laundered into the money supply in the aftermath of 9/11 is dealt with in another report.41 What this report concludes is that the same few financial industry individuals and intelligence figureheads that need to be held accountable for the tragedy of September 11, are the same group that deliberately channeled the excess liquidity created on September 11 to fund the bulk of the troubled subprime market.
The following actions were responsible for creating the structural difference:
1. Rates for the Federal Reserve’s Open Market Operations (OMO) were artificially held at near zero in the four months after 9/11, so that the $240 billion dump of ten year securities could be transitioned into long term (10 to 30 year) debt.
2. The Federal Reserve quickly blocked any independent inquiries into events that may shed light onto activities surrounding Fed actions before and after 9/11.48
3. In October 2001, the Treasury (Pete Fisher) eliminated 30 year bonds, once a popular benchmark for the fixed-income market.49 This had the effect of forcing market liquidity into ten year notes, which had flooded the market as a result of the 9/11 bond dump, and kept the settlement ‘fails’ at an all time high. It also would have motivated more investors to buy Fannie Mae notes, seen as a substitute for Treasury notes.50 The yield on the remaining 30-year notes actually then dropped below the yield of the 10-year.51 The argument made by Fisher in 2001 was that the action reduced costs to taxpayer, but there is no evidence that happened.52 The 30 year note was brought back in February 2006, conveniently after the ten notes had saturated the market and the 10 year rates started increasing. Two years later, Fisher would resign his position with the Treasury and join Blackrock Group, recently controlled by PNC – the same Group that took over Riggs Bank. Both Riggs and Blackrock were significantly involved in the 1991 efforts to takeover of the Russian economy.53
4. Prior to changes in national banking regulations that prevented national banks from competing in the profitable but risky subprime market, all of the large banks that were repositories of ‘off balance sheet’ gold accounts set up financial pipelines to established subprime retailers (see Figure 3). This is significant. With thousands of banks in the world, the only ‘major’ banks investing ‘directly’ in the subprime market-makers were the covert fund bullion banks and the investment banks affiliated with the 1991 financing of the covert cold war. Other banks may have picked up mortgage backed securities as a secondary investment, but they did not ‘prime the pump.’ The ‘other’ banks lent funds to investment houses such as Bear Stearns, Lehman, or Goldman Sachs, who also made deals with subprime retailers. As the market heated up, a few other large banks followed the lead of the bullion banks.
5. Using an ‘announcement’ in the Federal Register rather than Congressional act,
national banking regulations were modified to allow national banks into the mortgage
market 54. This decision was the responsibility of John D. Hawke (Treasury
Comptroller of the Currency), who resigned as Chairman of the prestigious Arnold &
Porter law firm to go to work at the Department of the Treasury. Hawke earned his
very significant covert operations credentials at Arnold & Porter. Under Hawke’s
guidance, Arnold & Porter defended BCCI, represented Kissinger Associates 55, and
defended Peruvian President Alan Garcia who looted his country with the aid of
BCCI 56. Later, Arnold & Porter would represent Marc Rich,57 defend the Saudi
Economic & Development Company, International Development Foundation, and
Sheikh Mohammed Salim bin Mahfouz against accusations they financed the 9/11
terrorists. Arnold & Porter’s roster includes a former Chief Counsel for the CIA and a
General Counsel for the National Security Agency.58 Its headquarters in Washington
DC on 12th Street served as the office for In-Q-Tel, a CIA financed venture capital
fund.59 John Hawke’s credentials should qualify him as a major CIA asset.
6. Attempts by all 50 State regulators to prevent those changes were stopped by President Bush, who directed the Department of Justice to intercede on behalf of the large national banks and help them gain access to those mortgage markets. This legal action was again spearheaded by John D. Hawke, who invoked “a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative.” 60
“The response was shocking, and not nearly well publicized enough: the Bush administration employed a little-used 1863 law to annul all state anti predatory-lending laws and, if that wasn't enough, to block states from enforcing their own consumer protection laws in suits against national banks. Thus, when Spitzer tried to open an investigation into discriminatory mortgage lending in New York, the administration actually filed a federal lawsuit to block it. These interventions were so extreme and so unprecedented that the attorneys general and the banking superintendents of all fifty states came together to oppose the rulings unanimously. But to no avail.”61
“…federal regulators fostered an environment in which Wall Street and other secondary market players were permitted to fund loans made without regard for a borrower's ability to repay. Both OTS [Office of Thrift Supervision] and OCC said banks they regulate don't have to comply with state lending laws, which were frequently tougher on lending standards than federal statutes, a policy called "pre-emption. The OCC preemption policy really neutered the states' ability to really aggressively address predatory lending issues," says John Ryan, executive vice president of the Conference of State Bank Supervisors.”62
7. The Federal bank regulators also made a supporting array of changes that facilitated the national banks move into the subprime market. In June 2003, they announced they were “launching a concerted effort to cut red tape (and) reduce regulatory burden“63 and gave notice that as regulators, they had determined the “Government in Sunshine Act” to be inapplicable to their regulatory and enforcement meetings 64 Review meetings were subsequently held behind closed doors, with minutes inaccessible to the public. Regulatory authority over the national banks was entrusted to the Comptroller of the Currency: Eugene (Gene) Ludwig (1998-2005) and John C. Dugan (2005-2010). Dugan came to position from private practice (Covington & Burling) but prior to that served in the Department of the Treasury from 1989 to 1993, where he was responsible for the Savings and Loan clean-up.65 Similarly, Eugene Ludwig was the head of the Resolution Trust Corporation, which “handled 747 failed savings banks and disposed of more than $450 billion in assets.”66 The S&L clean-up involved protection and ‘financial forgiveness’ for a number of lower level intelligence operatives and up to 22 S&L’s associated with the CIA.67 While working at RTC, both Ludwig and Dugan would have worked under the direction of Roger Altman, who resigned from the Treasury Department for his role in the BCCI scandal, even though the courts found him innocent of fraud. Ludwig later moved to Banker’ Trust as vice chairman 68 (Banker’s Trust played a key role in the management of Marcos gold.69) Ludwig and Dugan’s track records should show them to be trustworthy CIA assets who can help manage covert funding issues discretely. Ludwig was also a ‘person-of-interest’ in the investigation RTC cover-up of the Arkansas Finance Development Authority matters (discussed later).70
8. Reserve ratios were reduced rather than increased, thus increasing risk of bank failure. Bank regulators reduced the capital reserve ratio for Investment banks 71 , 72 and moreover, did so in a manner against the recommendation of their risk consultants 73 . The FDIC employed McKinnsey consultants to assess its risk modeling and forecasting. Like most statistical models used by business, there is an option to ignore the model and allow the business user to have personal information override the model. The McKinnsey report suggested the practice of overriding the models in the FDIC resulted in increased errors. Nevertheless, the FDIC announced it would not be bound by statistical models in setting reserve ratios.
9. Other regulatory failures prevented oversight of conditions which contributed to the crises
a. Audit failure at PNC Bank and AIG 74. (While PNC is not key player in the ‘crisis,’ it had been provided security clearances to acquire Riggs Bank, which – with AIG – was a key player in the September 1991 economic war. PNC has announced it will use its bailout funding to acquire additional banks.)
b. Multiple oversight failures at the SEC from 2001 through 2004. 75,76 The SEC oversight failures particular to AIG go back into the 1990's, when state regulators were bringing proof of AIG wrong-doings, and AIG’s management remained ‘untouched.’77
c. Staff reduction of oversight groups at the SEC.78
d. Refusal by the Bush administration for 7 years to allow the IMF to assess the U.S. banking system.79
e. Office of Thrift Supervision failure at AIG.80
10. Attempts by Congress to more tightly control Fannie Mae’s and Freddie Mac’s creation of financial derivatives without full disclosure were halted by a targeted lobbyist campaign authorized by Bush appointees to Freddie Mac 81. The individual responsible for that campaign - David Moffett - was the International Treasury VP at Security Pacific Bank in 1991, when George H.W. Bush and Alan Greenspan used that bank (San Diego and Washington offices) for its 1991 bond operation. He would move on to the Carlyle Group once his public career was ended by the ensuing scandal at Freddie Mac.
11. With national banks given rights to compete in the mortgage market, and Fannie Mae and Freddie Mac allowed to absorb the large majority of the risk, the few banks that were repositories of off-balance sheet gold accounts purchased national mortgage retail outlets and funded billion in subprime mortgages, took the exceedingly lucrative up front transactional profits at the retail level and dumped the risk on Fannie and Freddie. Fannie and Freddie, which were not under any regulatory control for their accounting practices, hid the risk in poor documentation of securities. The audit failures discovered in 2004 were widely publicized for illegally spreading reported income over time to maximize executive bonuses, but buried in the findings was the more significant but de-emphasized conclusion that the value of financial assets were incorrectly reported in terms of risk. A large number of executives within Freddie and Fannie had significant U.S. intelligence backgrounds, or were directly connected to the 1991 bond deals.82 In the simplest terms, these were the Presidential appointments that were required to endorse the growth of the subprime holdings
• The top compliance officer of Fannie Mae prior to the exposure of the accounting
irregularities was none other than Jamie Gorelick – the very same lawyer who
defended U.S. officials in the BCCI scandal, who created the evidentiary “wall”
between the CIA and FBI that hampered FBI investigation of “Al Qaeda,” and
who got a key witness (who could have exposed the ‘terrorist’ operations as a
U.S. owned false flag operation) deported and released from custody. (It almost begs the question – why does someone with such strong and lasting involvement
with U.S. intelligence, and absolutely no financial background - take on a major
regulatory role at Fannie Mae?)
• Upon her departure, she was replaced by Beth A. Wilkinson, former general counsel for Army Intelligence & Special Operations 1987 to 1991; and prosecutor and special counsel in the prosecution of Timothy McVeigh and Terry Nichols – the Oklahoma City bombers.83 (The Alfred B. Murrah Federal Building was – coincidentally -where the investigation records into the CIA/Mena drug operations were being stored.)
• H. Patrick Swygert - also on the Board of Fannie Mae - was a long standing
member of the CIA External Advisory Council;
• Karen N Horn came to the Board of Fannie Mae from Banker’s Trust and was
vice chairman of US-Russia Investment Fund by Presidential appointment;
• Fred Malek, who has been linked to the Russian money laundry scandal through Alexander Konanykhine/ Mikhail Khordokovsky ‘European Union Bank (an offshore money laundering operation) via Malek’s Thayer Equity. Mikhail Khordokovsky was a key player in the Russian banking operations that were created by Riggs Bank to execute the September 1991 economic attack.84 Malek was also a Carlyle Group member.
• Tom Donilon 85 former Assistant Secretary of State for Public Affairs and Chief of Staff at the U.S. Department of State during the Clinton Administration.
• James A. Johnson, former CEO (1991-1998) and General Counsel of Fannie Mae was a former executive at Goldman Sachs, a key player in the 1991 bond deal.86
12. With Fannie and Freddie deliberately absorbing bad paper and hiding risk, the debt insurers (AIG) also deliberately hid risk, distorting reports to the SEC over three years from 2005 to 2007.87 It is important to understand that AIG has significant ‘protection’ from oversight because of its key role in U.S. intelligence operations – so when one asks how a company can avoid regulatory reaction over a period of three years, the answer flashes by in a ‘nod and a wink.’88
The critical observation at this point:
There are handful key financial institution executives that understood that their futures (personal and the bank’s) were inextricably entwined with managing the largest stockpile of wealth in the world: the covert gold holdings of the Yamashita/Marcos/Black Eagle fund. They could not admit its existence, because it is not the legal property of the US. Nevertheless, they were forced to produce earnings on this wealth. It appears that over time, these bankers have transferred the ownership of this wealth to off-shore Holding Companies to prevent disclosure of the beneficial owners – the people who live illegally on the proceeds of this wealth.89 By knowledgeably contributing to an excessive money supply through illegal use of the funds, they had to create a ‘demand’ for this excess liquidity. With relatively savvy investors and homeowners managing their debt at appropriate ceilings, with state regulator controlling the subprime market, and a Sarbanne-Oxely Act regulating corporate treasuries-the only ‘unregulated’ place this excessive money supply could find a home was with the financially uneducated or criminally inclined.90 The currency devaluations in major foreign growth markets during the late 1990s forced them to create opportunity in the U.S. markets.
On September 11, 2001, the New York Federal Reserve Bank, and the Bank of New York, allowed the release of 10 year gold backed securities held by Cantor-Fitzgerald, and they were cleared by the Bank of New York.91 The release of these notes created the liquidity which resulted in the rapid expansion of the subprime market. The gold providing the backing for those bonds was distributed amongst the bullion banks which were the beneficiaries of the initial dispersal of the Yamashita/Marcos/Black Eagle gold, and it would be appropriate to speculate that the proceeds from settling the 9/11 notes were added to their respective capital reserves through a daisy chain of paper running through Goldman Sachs. (See Figure 4) The institutional beneficiary recipients of those proceeds would have been:
• Bank of New York
• Jardine Matheson
• Household Bank
• HSBC
• Chase Manhattan
• Credit Suisse First Boston
• Citibank
• Deutschebank
• UBS
See Chart at Page 14 in PDF for connection to subprime market here
https://wikispooks.com/w/images/2/24/Collateral_Damage_-_part_2.pdf
• Alan Greenspan- who authorized the $240 billion in funding and mailed
authorization documents via carrier to John D’Aquisto (a former ball player for
George W. Bush’s Texas Rangers, turned financier).
• Robert Rubin – who, with Stephen Friedman, was identified by D’Aqusito as the
Goldman Sachs overseers of the bond deal, and to whom D’Aqusito appealed
when Goldman Sachs apparently shorted him on his commission. Rubin would
move on to become National Economic Policy Advisor, Treasury Secretary and
Chairman of Citigroup – with the latter two roles being key to managing the
Yamashita/Marcos/Black Eagle Fund. Rubin was the key architect of the
deregulation of financial services in 1998 that paved the way for the 2008
crisis.100
• Stephen Friedman- who, with Mark Rubin, was identified by D’Aqusito as the
Goldman Sachs overseers of the deal, and to whom he appealed when Goldman
Sachs apparently shorted D’Aqusito; Friedman would leave his lucrative position
as Chairman at Goldman Sachs in 1994 to become a public servant on the Board
of Fannie Mae from 1996-2002, and under George W. Bush would become
Chairman of the United States President's Foreign Intelligence Advisory Board
and would take on “a major role in shaping the chief executive's future economic
strategy and policy.”101 In January, 2008 he moved on to be Chairman of the
Federal Reserve Bank of New York, with the latter role being key to managing
the Yamashita/Marcos/Black Eagle Fund.
Those who -due to their positions - probably played a supportive role in the September 1991 bond deal would include 102:
• Peter Fisher – who as Exchange Desk Manager at the New York Federal Reserve Bank, would have managed the flow of funds through the international banking system. Sworn in on August 9, 2001 as Under Secretary of the U.S. Treasury for Domestic Finance by Treasury Secretary Paul O'Neill, he was the senior advisor to the Treasury Secretary. Fisher would end his government service by working for the Blackrock Group, an investment company controlled by PNC, which acquired Riggs Bank after numerous money laundering scandals at Riggs made its name anathema to foreign government officials requiring discretion for their personal banking.103 Fisher, who has no reported covert operations experience, was a bit of an anomaly, in that he had no obvious connection to the intelligence world. Fisher was ‘fast tracked’ for his job out of college by the NY Federal Reserve Bank through training in Basel, and the question became: ‘how did he get slotted for the role?” His father – Roger D. Fisher -has a long and deep connection to intelligence and neo-conservatism going back to World War II.104 In the most fascinating of coincidences, Roger Fisher wrote ‘reports’ about the activities of Russell Nixon, who in the aftermath of World War II was director of the Division of Cartel and External Assets – the group chartered with hunting down Nazi gold and other assets.105 Nixon and his team were quietly dismantled by bureaucrats who wanted to secure the assets for use by the U.S. government, and later hounded during the McCarthy purge as ‘leftists.’ Russell Nixon was later acknowledged to be an associate by General Earle Cocke, (in what is viewed as his deathbed statement) the fund administrator under multiple Presidents until his death in 2000. Also, amazingly coincidental, Roger Fisher is a noted national security advisor who provided guidance to Secretary of Defense Clark Clifford during the Vietnam War. Clark Clifford, in turn, was the National Security Advisor that advised President Truman of Lansdale’s gold discovery in the Philippines.106 He was also the senior U.S. official in the First American Bank, at the core of the BCCI investigation in the United States.
David Moffett, at Security Pacific Bank, was Senior Vice President responsible
for the international treasury group. Security Pacific is identified as one of the
banks in the September 1991 transactions, using both the San Diego and
Washington branches.(See Exhibit B) Security Pacific under Moffett’ tenure was
also one of five U.S. bank used by BCCI to manage CIA funds.107 Moffet would
ultimately move on to be CEO of Freddie Mac and be responsible for funding a
lobbyist program that scuttled Congressional efforts to tighten financial controls
at Freddie Mac 108 After his term with Freddie Mac, he would move to the Carlyle
Group.
• Hollis McLoughlin, assistant secretary of the Treasury under President George Bush from 1989 to 1992, would report to David Moffet at Freddie Mac and be responsible for directing the lobbyist effort to scuttle accountability 109
• James Gilleran, in 1991 was the chief of the California Department of Financial Institutions, responsible for examination and regulation of California state licensed banks, state-licensed credit unions, state-licensed trust companies, state licensed industrial loan companies, state-licensed offices of foreign banks, issuers of travelers checks and payment instruments (money orders) and money transmitters. DFG Inc, the 1991 firm responsible for moving the illegal funding appears to have been a state regulated trust. He would later be appointed Director, Office of Thrift Supervision and play a role in ensuring lax regulation during the subprime debacle.
William H Webster, who in 1991 was Director of the CIA, returned to public
service in 2002 as the SEC’s chief enforcement agent over public accountants 110
Webster would also serve on the Boards of New Bridge and Diligence, mercenary
organizations supporting covert operations in the Middle East and Russia.111
While Webster did not have the time in office to exert any influence over policy
before he was pressured into resigning for his own accounting scandal, it
demonstrates the ongoing effort of the President to insert intelligence
collaborators into the financial control of the economy.
• Timothy F. Geithner joined Treasury in 1988 in the International Affairs division, after spending three years with Kissinger Associates, where he earned his covert operations credentials. Kissinger was the individual who wrote the letter to
Ferdinand Marcos demanding he relinquish his gold to the U.S.112 While Geithner
was at Kissinger Associates, that firm was involved in Brazilian Ambassador
Sergio da Costa’s BCCI scandal, the Banca Nazionale Del Lavoro (BNL),
scandal, and helping arm Saddam Hussein by getting bank credits for grain for
Iraq, and then swapping those credits and grain for arms.
113 (BNL would
ultimately be taken over by HSBC in 2006.) After joining Treasury, Geithner
became deputy assistant secretary for international monetary and financial policy
under Treasury Secretaries Robert Rubin and Lawrence Summers. In October
2003, he became president of the Federal Reserve Bank of New York, where
became Vice Chairman of the Federal Open Market Committee. There, he would
be accused of supporting a cover-up of “"Al Qaeda"money flows from the UAE,
Pakistan, and Saudi Arabia for possible terrorist-related purposes prior to 9/11.”114
• Gerald Corrigan, in 1991 was President of the Federal Reserve Bank of New York
and Vice-Chairman of the Federal Open Market Committee. In 1996 he became a
partner and managing director in the Office of the Chairman at Goldman Sachs,
and in 2008 became chairman of Goldman Sachs Bank USA, the bank holding
company of Goldman Sachs. Corrigan has been a collaborator with his successor
Timothy Geithner on numerous occasions.115 Corrigan developed a ‘personal’
relationship with Boris Yeltsin (Russian President) prior to the 1991 August coup
which was a key step of the 1991 deal.
• John Reed was brought into Citibank for one purpose according to General Earl Cocke - running the “Hammer (Yamashita/Marcos/Black Eagle) Fund.” In 1991, he would have been responsible for coordinating release of the funds with Greenspan.116 Reed was indeed ‘fast tracked’ through First National City Bank coming out of college. His college experience consisted of an undergraduate degree in literature, a graduate degree in metallurgy, and a Masters of Business degree from Sloan. He was hired into the international division and made the protégé of Walter B. Wriston, who became his predecessor as CEO. Within three years, Reed was heading the bank's entire foreign operations. His mentor - Wriston - was a foreign service officer at the beginning of the World War II, and then went into the Army and spent the year 1942 to 1946 in…..the Philippines! He was stationed on Cebu, a major Yamashita treasure site.117 While in the Philippines, he met Ferdinand Marcos and George Moore (soon-to-be CEO of National City Bank).118 After the war, Wriston joined First National City Bank, where he was groomed to be CEO by George S. Moore (ex OSS). In June 2004 Wriston was awarded the Presidential Medal of Freedom, the nation's highest civil honor, by President George W. Bush, presumably for his role in ending the Cold War by organizing the funding the 1991 operation. It is worth noting that Leo Wanta –who hales from Appleton, Wisconsin as did Walter Wriston – also used Citibank for his Russian ruble scam operation.119
Those who would subsequently take up roles in the key control points (although not participating in the original bond deal) would be:
• Lawrence Summers who left academia (Harvard) in 1991 and served as Chief
Economist for the World Bank (1991–1993) and from 1993 to 2001 in various posts in the United States Department of the Treasury under the Clinton
administration. There he became a protégé of Robert Rubin, serving as deputy
secretary under Rubin from 1995 until 1999, and then succeeding Rubin as
secretary (1999-2001). Unlike the previous four Secretaries of the U.S. Treasury
(James Baker III, Nicholas Brady, Lloyd Bentson and Robert Rubin) but like the
next three who followed him in that position, Summers apparently is not
connected with any covert funding programs. This very significant departure
could be interpreted as an indication that the illegal gold in the fund had been
laundered by the end of 1998, and that control of the ESF could be returned to the
academics and uninitiated. This observation, combined with the revolving door
between Goldman Sachs and the Presidential advisory staff, and the forceful
ousting of John Reed at Citibank in 2000 all suggest the fund was in the process
of being stolen yet again – this time being stolen from the American government
by its bankers!
• William J. McDonough, who served as president and chief executive officer of the Federal Reserve Bank of New York from July 1993 to July 2003. He would have needed to play a key role in the September 11th bond dump. While president, he also served as vice chairman and permanent member of the Federal Open Market Committee (FOMC), on the board of directors of the Bank for International Settlements, and chairman of the Basel Committee on Banking Supervision. He joined the New York Fed in 1992 as executive vice president, head of the bank's markets group, and manager of the FOMC's open market operations. McDonough earned his covert operations credentials while spending 22 years at First Chicago Corporation and its bank, First National Bank of Chicago, and prior to that at the State Department. There, he was vice chairman of the board and a director of the bank holding company. McDonough left First National Bank of Chicago very shortly after the departure A. Robert Abboud, Vice Chairman, First National Bank of Chicago. Abboud was the Chairman of the US-Iraq Business Forum, and under the joint tenure of Abboud and McDonough, the First National Bank of Chicago was responsible for major financing to Saddam Hussein’s covert weapons program (the same program Kissinger Associates managed while Timothy F. Geithner was with Kissinger).120 First National Bank of Chicago also bailed out George Bush’s Harken Energy when it’s loans were called in August 1990.121 The Chief Economist at First National Bank of Chicago – Alan Stoga -went to work for Kissinger Associates, and was a key player in the BNL scandal.122 Stoga and McDonough continue to work together. While McDonough was First Chicago, it also served as a BCCI conduit, being one of five U.S. banks used by BCCI.123 First Chicago also was a recipient of Marcos gold.124 Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961. What McDonough did from 1989 to January 1992 (while Bush and Greenspan were organizing their covert war) is completely off the record, as is any detail about his service in the Navy and State Department prior to that.
• Henry Paulson, Secretary of Treasury since May of 2006, had been at Goldman Sachs from 1974 to 1998 and followed in the footsteps of Rubin and Friedman, a Chairman/CEO of Goldman Sachs, but was co head of Investment Banking of Goldman’s in September 1991. Prior to Goldman Sachs, Paulson served as Staff Assistant to the Assistant Secretary of Defense at the Pentagon (1970 to 1972) and then worked John Ehrlichman from 1972 to 1973 on President Richard Nixon’s staff, where he earned his covert operations credentials, and got connected to the Kissinger crowd. He was a major player in 2004 in getting the reserve ratios of the investment banks reduced.125
Over the next fifteen years, these same individuals would graduate from being Bush’s and Clinton’s personal foreign policy enablers to being the most powerful financial advisors and regulators in the U.S., and the world.
There needs to be a clear understanding that there is a major undercurrent of illegal financing that runs though the American economy that is conducted by country’s top bankers. These bankers control deposits of over 100,000 tonnes of gold no one can admit exists because it makes them vulnerable to innumerable criminal and civil charges. They have committed these crimes at the behest of the country’s top officials, with the probable promise of immunity. While the statute of limitations on the gold theft is 40 years, the gold was continually stolen starting in 1945, and most recently in 1986 – making them vulnerable through 2026. Those involved in its theft, including bankers, are subject to charges of tax evasion, money laundering, fraud, theft, racketeering etc., and then the list of violent crimes gets appended: crimes like murder and treason- for which there is no statute of limitations. It creates an interesting dilemma: admitting to the crimes will get them killed by either the public, or by those fearing exposure. Exposure of even a single thread of illicit financing begins to expose the whole fabric! That is why buildings 6 & 7 of the World Trade Center were brought down.126 The two private sector institutions most closely aligned with this control of the underground economy based on this illegal gold are Goldman Sachs and the Carlyle Group. These were the two major privateer bankers associated with what Anne Williamson described to Congress as the “Rape of Russia.”
Part 2 to come...next
Goldman Sachs
Source
https://wikispooks.com/wiki/Main_Page
The covert gold released to the market in a series of sell-offs between 1994 and 2000 added between $1 trillion and $1.6 trillion in ‘covertly sourced’ money supply.25 The September 11th bond dump of an estimated $240 Billion expanded the money supply between $2.4 and $4.6 Trillion.26 Together, these two large waves of money creation can be held solely responsible for an incremental $3 trillion (32%) in the money supply created during the increased rate of monetary expansion since 1994. Moreover, these waves do not include 400 tonnes of paper gold created by Barrick Gold prior to 2002 27 , or another 300-400 tonnes provided to the markets by U.S. bullion banks to resolve the Long Term Capital Management crisis of 1998 28 which most likely originated from the same source.
More simply, the Federal Reserve – as intended under it charter –lost control of its ability to manage the money supply due to the significant covert injection of gold and gold backed bonds into the money supply for covert intelligence operations.29 The expansion of the money supply is not so much attributable to the growth of unregulated financial products such as derivatives, swaps, and structured investments etc. – although they provide a good ‘cover story’ as to why classical monetary controls have failed.30 The Fed’s inability to control interest rate movements can be attributed to the uncontrollable inflow of gold, gold bonds and gold backed securities. (Was anyone realistically expecting Presidents and bankers to ‘sit’ on between 73,000 and 280,000 tonnes of illegal Black Eagle/Yamashita/Marcos gold, without trying to use it?)
The critical observation is this:
The Federal Reserve “Board” and the Federal Open Market Committee (FOMC) cannot control the money supply if the Project Hammer/Golden Lily/Yamashita Treasure/Black Eagle Fund remains covert, is administered on a need-to-know basis, and is releasing gold to the market without public acknowledgment. Under those conditions, there are two authorities creating money, one of which has an inability to provide full disclosure. The Chairman of the Federal Reserve, Secretary of Treasury, President of the US, President of the New York Federal Reserve and Chairman of the Federal Open Market Committee would be totally responsible for the Project Hammer/Golden Lily/Yamashita Treasure/Black Eagle Fund. The entire Board of the Federal Reserve and FOMC owns the control of the Federal Reserves monetary policy decisions-not just the Chairmen. In this case, the Federal Reserve committee members could not be advised of the changes of which the Chairmen would be aware of, for reasons of National Security. Equally important, the administrator of the covert fund (formerly the CEO of Citibank 31) is instructing some 30+ commercial accounts to deploy the ‘off balance sheet’ assets, which represents a monetary policy in itself.
One indicator of the impact of this covert monetary policy is that the Federal Reserve Board admittedly lost the ability to manage monetary policy in 1994, when the model it used to manage monetary growth failed.32 Prior to that, the Fed understood the relationship between long term and short term rates, but when the Fed raised short term rate in 1994, long term rates increased by triple what they anticipated.33 This a-periodic problem which would befuddle analysts for years still remains the subject of research.34 The current thinking is that the long term rates are ‘significantly’ influenced by international inflow and outflow of capital or unexplained savings.35 The covert gold sales of the 1990s and the bond dump of September 11, 2001 (given the original Israeli based participation in the financing arrangements of 1991) can both be seen as a form of international inflow and unexplained savings. The more important observation is that the interest rate phenomenon recognized in 1994 was again experienced in 1996 and 1999, demonstrating a perfect correlation to the periods of illegal sales of gold referenced by Howe in his lawsuit. 36
The Project Hammer/Golden Lily/Yamashita Treasure/Black Eagle Fund bank ‘administrators’ saw an opportunity to deploy these funds for reasons not sanctioned by Congress, and earn interest on these illicit gold holdings by securitizing them. (Those banks, as identified in the Sterlings’ impeccably documented book Gold Warriors 37, and traced through time in the prior report,38 are shown in Figure 4. See page 32.) Barrick Gold was a primary conduit. Two Presidents (George H.W. Bush and William Clinton) saw an opportunity to either wage a covert economic war (Bush) or stimulate the economy (Clinton) with this fund after its enhancement with the Marcos gold confiscation.39 The major bullion banks holding the gold were authorized to ‘loan’ gold to Barrick in exchange for Barrick future gold production. Barrick, in turn was refining and selling the ‘loaned’ gold. (Barrick should be recognized as only one of several outlets, with the Marcos gold refinery being taken over by the Keswick family, controlling Jardine Matheson Bank and HSBC.) Astute gold traders noticed gold appearing on the market with no clear sourcing, and this observation resulted in the Howe lawsuit, and an FBI investigation. The FBI investigation of this activity was unhinged with the attack on the World Trade Center in 2001, and the bombing of the FBI evidence repository on the 23rd floor of the North Tower which destroyed the files. The Howe lawsuit was dismissed for technical (jurisdictional) reasons, with the court implying the case still had merit. A subsequent lawsuit by Donald W. Doyle (CEO of Blanchard & Company) amended to address the courts instructions to Howe, focused on a company called Barrick Gold, and accused it of working with banks to ‘fix’ gold prices. This lawsuit was settled out of court in 2006 and the agreement sealed.
Specifically, the start of the financial crisis of 2008 can be traced to the events of September 11, 2001, when an estimated $240 billion dollars was covertly added to the M2/M3 money supply with the settlement of off-balance sheet, illegal bonds created in 1991 by George H.W. Bush and Alan Greenspan, with the assistance of a number of individuals who subsequently controlled U.S. economic policy for the following 15 years. (See “Key Players” page 15 for names of these individuals.) In the four months after 9/11, the total money supply increased by $650Billion, the single greatest burst of monetary increase in modern times. However, had the Federal Reserve increased money supply at the pre-9/11 rate, the total increase for the same period would have been about $344 billion. The incremental $306 billion can be largely attributed to an estimated payout of $240 billion for illegal bonds, as well as about $70 billion to address the liquidity needs of the system during the crisis. The figure of $70 billion roughly compares to the $80 billion the Fed reported as the ‘monetary’ input required to stabilize the economic system.40
The origin of the $240 billion and the manner in which it was laundered into the money supply in the aftermath of 9/11 is dealt with in another report.41 What this report concludes is that the same few financial industry individuals and intelligence figureheads that need to be held accountable for the tragedy of September 11, are the same group that deliberately channeled the excess liquidity created on September 11 to fund the bulk of the troubled subprime market.
Directing Excess Monetary
Supply to the Subprime Market
After pumping a quarter of a trillion dollars of excess liquidity into the economy, the
financial managers of this operation had to create comparable monetary ‘demand’ or risk
collapsing interest rates. The incremental subprime market jumped $294 Billion in the
aftermath of September 11 (2001-2004)42. There had been a subprime market for
decades, but in the aftermath of 9/11, that market was $294 Billion larger than explained
by normal growth. The group that brought the money to the market undertook a series of
actions that that directed this funding into high risk subprime mortgages, and made it
legal for them to directly invest in it. The incremental ‘liar’s loan’ volume jumped
$230Billion in the aftermath of September 11 (2001-2006).43 There have been ‘liar’s
loans’ for decades, but in the aftermath of 9/11, that volume was $230 Billion larger than
explained by normal growth. Suspicious activity reports pertaining to mortgage fraud
increased 14-fold from 1997 to 2005.44 The subprime foreclosures began to increase two
years after 2001, suggesting that the increase in high risk subprimes started in 2001. This
was clearly due to the Greenspan endorsed Adjustable Rate Mortgages (ARMs) being
activated after two years.45 During the same period, foreclosures on prime mortgages
declined, suggesting the cause of the subprime meltdown was not the ‘economy’.46 With
the increased growth in subprime originations starting in the mid 90s through 1999, one
might have expected comparable foreclosure rates to begin earlier, in the late 1990s, but
that did not happen- suggesting the second wave of subprimes in the post 9/11 world was
structurally different.47 The following actions were responsible for creating the structural difference:
1. Rates for the Federal Reserve’s Open Market Operations (OMO) were artificially held at near zero in the four months after 9/11, so that the $240 billion dump of ten year securities could be transitioned into long term (10 to 30 year) debt.
2. The Federal Reserve quickly blocked any independent inquiries into events that may shed light onto activities surrounding Fed actions before and after 9/11.48
3. In October 2001, the Treasury (Pete Fisher) eliminated 30 year bonds, once a popular benchmark for the fixed-income market.49 This had the effect of forcing market liquidity into ten year notes, which had flooded the market as a result of the 9/11 bond dump, and kept the settlement ‘fails’ at an all time high. It also would have motivated more investors to buy Fannie Mae notes, seen as a substitute for Treasury notes.50 The yield on the remaining 30-year notes actually then dropped below the yield of the 10-year.51 The argument made by Fisher in 2001 was that the action reduced costs to taxpayer, but there is no evidence that happened.52 The 30 year note was brought back in February 2006, conveniently after the ten notes had saturated the market and the 10 year rates started increasing. Two years later, Fisher would resign his position with the Treasury and join Blackrock Group, recently controlled by PNC – the same Group that took over Riggs Bank. Both Riggs and Blackrock were significantly involved in the 1991 efforts to takeover of the Russian economy.53
4. Prior to changes in national banking regulations that prevented national banks from competing in the profitable but risky subprime market, all of the large banks that were repositories of ‘off balance sheet’ gold accounts set up financial pipelines to established subprime retailers (see Figure 3). This is significant. With thousands of banks in the world, the only ‘major’ banks investing ‘directly’ in the subprime market-makers were the covert fund bullion banks and the investment banks affiliated with the 1991 financing of the covert cold war. Other banks may have picked up mortgage backed securities as a secondary investment, but they did not ‘prime the pump.’ The ‘other’ banks lent funds to investment houses such as Bear Stearns, Lehman, or Goldman Sachs, who also made deals with subprime retailers. As the market heated up, a few other large banks followed the lead of the bullion banks.
6. Attempts by all 50 State regulators to prevent those changes were stopped by President Bush, who directed the Department of Justice to intercede on behalf of the large national banks and help them gain access to those mortgage markets. This legal action was again spearheaded by John D. Hawke, who invoked “a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative.” 60
“The response was shocking, and not nearly well publicized enough: the Bush administration employed a little-used 1863 law to annul all state anti predatory-lending laws and, if that wasn't enough, to block states from enforcing their own consumer protection laws in suits against national banks. Thus, when Spitzer tried to open an investigation into discriminatory mortgage lending in New York, the administration actually filed a federal lawsuit to block it. These interventions were so extreme and so unprecedented that the attorneys general and the banking superintendents of all fifty states came together to oppose the rulings unanimously. But to no avail.”61
“…federal regulators fostered an environment in which Wall Street and other secondary market players were permitted to fund loans made without regard for a borrower's ability to repay. Both OTS [Office of Thrift Supervision] and OCC said banks they regulate don't have to comply with state lending laws, which were frequently tougher on lending standards than federal statutes, a policy called "pre-emption. The OCC preemption policy really neutered the states' ability to really aggressively address predatory lending issues," says John Ryan, executive vice president of the Conference of State Bank Supervisors.”62
7. The Federal bank regulators also made a supporting array of changes that facilitated the national banks move into the subprime market. In June 2003, they announced they were “launching a concerted effort to cut red tape (and) reduce regulatory burden“63 and gave notice that as regulators, they had determined the “Government in Sunshine Act” to be inapplicable to their regulatory and enforcement meetings 64 Review meetings were subsequently held behind closed doors, with minutes inaccessible to the public. Regulatory authority over the national banks was entrusted to the Comptroller of the Currency: Eugene (Gene) Ludwig (1998-2005) and John C. Dugan (2005-2010). Dugan came to position from private practice (Covington & Burling) but prior to that served in the Department of the Treasury from 1989 to 1993, where he was responsible for the Savings and Loan clean-up.65 Similarly, Eugene Ludwig was the head of the Resolution Trust Corporation, which “handled 747 failed savings banks and disposed of more than $450 billion in assets.”66 The S&L clean-up involved protection and ‘financial forgiveness’ for a number of lower level intelligence operatives and up to 22 S&L’s associated with the CIA.67 While working at RTC, both Ludwig and Dugan would have worked under the direction of Roger Altman, who resigned from the Treasury Department for his role in the BCCI scandal, even though the courts found him innocent of fraud. Ludwig later moved to Banker’ Trust as vice chairman 68 (Banker’s Trust played a key role in the management of Marcos gold.69) Ludwig and Dugan’s track records should show them to be trustworthy CIA assets who can help manage covert funding issues discretely. Ludwig was also a ‘person-of-interest’ in the investigation RTC cover-up of the Arkansas Finance Development Authority matters (discussed later).70
8. Reserve ratios were reduced rather than increased, thus increasing risk of bank failure. Bank regulators reduced the capital reserve ratio for Investment banks 71 , 72 and moreover, did so in a manner against the recommendation of their risk consultants 73 . The FDIC employed McKinnsey consultants to assess its risk modeling and forecasting. Like most statistical models used by business, there is an option to ignore the model and allow the business user to have personal information override the model. The McKinnsey report suggested the practice of overriding the models in the FDIC resulted in increased errors. Nevertheless, the FDIC announced it would not be bound by statistical models in setting reserve ratios.
9. Other regulatory failures prevented oversight of conditions which contributed to the crises
a. Audit failure at PNC Bank and AIG 74. (While PNC is not key player in the ‘crisis,’ it had been provided security clearances to acquire Riggs Bank, which – with AIG – was a key player in the September 1991 economic war. PNC has announced it will use its bailout funding to acquire additional banks.)
b. Multiple oversight failures at the SEC from 2001 through 2004. 75,76 The SEC oversight failures particular to AIG go back into the 1990's, when state regulators were bringing proof of AIG wrong-doings, and AIG’s management remained ‘untouched.’77
c. Staff reduction of oversight groups at the SEC.78
d. Refusal by the Bush administration for 7 years to allow the IMF to assess the U.S. banking system.79
e. Office of Thrift Supervision failure at AIG.80
10. Attempts by Congress to more tightly control Fannie Mae’s and Freddie Mac’s creation of financial derivatives without full disclosure were halted by a targeted lobbyist campaign authorized by Bush appointees to Freddie Mac 81. The individual responsible for that campaign - David Moffett - was the International Treasury VP at Security Pacific Bank in 1991, when George H.W. Bush and Alan Greenspan used that bank (San Diego and Washington offices) for its 1991 bond operation. He would move on to the Carlyle Group once his public career was ended by the ensuing scandal at Freddie Mac.
11. With national banks given rights to compete in the mortgage market, and Fannie Mae and Freddie Mac allowed to absorb the large majority of the risk, the few banks that were repositories of off-balance sheet gold accounts purchased national mortgage retail outlets and funded billion in subprime mortgages, took the exceedingly lucrative up front transactional profits at the retail level and dumped the risk on Fannie and Freddie. Fannie and Freddie, which were not under any regulatory control for their accounting practices, hid the risk in poor documentation of securities. The audit failures discovered in 2004 were widely publicized for illegally spreading reported income over time to maximize executive bonuses, but buried in the findings was the more significant but de-emphasized conclusion that the value of financial assets were incorrectly reported in terms of risk. A large number of executives within Freddie and Fannie had significant U.S. intelligence backgrounds, or were directly connected to the 1991 bond deals.82 In the simplest terms, these were the Presidential appointments that were required to endorse the growth of the subprime holdings
• Upon her departure, she was replaced by Beth A. Wilkinson, former general counsel for Army Intelligence & Special Operations 1987 to 1991; and prosecutor and special counsel in the prosecution of Timothy McVeigh and Terry Nichols – the Oklahoma City bombers.83 (The Alfred B. Murrah Federal Building was – coincidentally -where the investigation records into the CIA/Mena drug operations were being stored.)
• Fred Malek, who has been linked to the Russian money laundry scandal through Alexander Konanykhine/ Mikhail Khordokovsky ‘European Union Bank (an offshore money laundering operation) via Malek’s Thayer Equity. Mikhail Khordokovsky was a key player in the Russian banking operations that were created by Riggs Bank to execute the September 1991 economic attack.84 Malek was also a Carlyle Group member.
• Tom Donilon 85 former Assistant Secretary of State for Public Affairs and Chief of Staff at the U.S. Department of State during the Clinton Administration.
• James A. Johnson, former CEO (1991-1998) and General Counsel of Fannie Mae was a former executive at Goldman Sachs, a key player in the 1991 bond deal.86
12. With Fannie and Freddie deliberately absorbing bad paper and hiding risk, the debt insurers (AIG) also deliberately hid risk, distorting reports to the SEC over three years from 2005 to 2007.87 It is important to understand that AIG has significant ‘protection’ from oversight because of its key role in U.S. intelligence operations – so when one asks how a company can avoid regulatory reaction over a period of three years, the answer flashes by in a ‘nod and a wink.’88
The critical observation at this point:
There are handful key financial institution executives that understood that their futures (personal and the bank’s) were inextricably entwined with managing the largest stockpile of wealth in the world: the covert gold holdings of the Yamashita/Marcos/Black Eagle fund. They could not admit its existence, because it is not the legal property of the US. Nevertheless, they were forced to produce earnings on this wealth. It appears that over time, these bankers have transferred the ownership of this wealth to off-shore Holding Companies to prevent disclosure of the beneficial owners – the people who live illegally on the proceeds of this wealth.89 By knowledgeably contributing to an excessive money supply through illegal use of the funds, they had to create a ‘demand’ for this excess liquidity. With relatively savvy investors and homeowners managing their debt at appropriate ceilings, with state regulator controlling the subprime market, and a Sarbanne-Oxely Act regulating corporate treasuries-the only ‘unregulated’ place this excessive money supply could find a home was with the financially uneducated or criminally inclined.90 The currency devaluations in major foreign growth markets during the late 1990s forced them to create opportunity in the U.S. markets.
On September 11, 2001, the New York Federal Reserve Bank, and the Bank of New York, allowed the release of 10 year gold backed securities held by Cantor-Fitzgerald, and they were cleared by the Bank of New York.91 The release of these notes created the liquidity which resulted in the rapid expansion of the subprime market. The gold providing the backing for those bonds was distributed amongst the bullion banks which were the beneficiaries of the initial dispersal of the Yamashita/Marcos/Black Eagle gold, and it would be appropriate to speculate that the proceeds from settling the 9/11 notes were added to their respective capital reserves through a daisy chain of paper running through Goldman Sachs. (See Figure 4) The institutional beneficiary recipients of those proceeds would have been:
• Bank of New York
• Jardine Matheson
• Household Bank
• HSBC
• Chase Manhattan
• Credit Suisse First Boston
• Citibank
• Deutschebank
• UBS
See Chart at Page 14 in PDF for connection to subprime market here
https://wikispooks.com/w/images/2/24/Collateral_Damage_-_part_2.pdf
Key Players
There were three major official participants identified in the paperwork authorizing the
September 1991 release of ESF funding (read as Yamashita/Marcos/Black Eagle Fund)
for Bush’s ‘Russian program’,(See Exhibit A) and several others who should have had
supportive roles. In the primary roles, with (George H.W. Bush) were: Those who -due to their positions - probably played a supportive role in the September 1991 bond deal would include 102:
• Peter Fisher – who as Exchange Desk Manager at the New York Federal Reserve Bank, would have managed the flow of funds through the international banking system. Sworn in on August 9, 2001 as Under Secretary of the U.S. Treasury for Domestic Finance by Treasury Secretary Paul O'Neill, he was the senior advisor to the Treasury Secretary. Fisher would end his government service by working for the Blackrock Group, an investment company controlled by PNC, which acquired Riggs Bank after numerous money laundering scandals at Riggs made its name anathema to foreign government officials requiring discretion for their personal banking.103 Fisher, who has no reported covert operations experience, was a bit of an anomaly, in that he had no obvious connection to the intelligence world. Fisher was ‘fast tracked’ for his job out of college by the NY Federal Reserve Bank through training in Basel, and the question became: ‘how did he get slotted for the role?” His father – Roger D. Fisher -has a long and deep connection to intelligence and neo-conservatism going back to World War II.104 In the most fascinating of coincidences, Roger Fisher wrote ‘reports’ about the activities of Russell Nixon, who in the aftermath of World War II was director of the Division of Cartel and External Assets – the group chartered with hunting down Nazi gold and other assets.105 Nixon and his team were quietly dismantled by bureaucrats who wanted to secure the assets for use by the U.S. government, and later hounded during the McCarthy purge as ‘leftists.’ Russell Nixon was later acknowledged to be an associate by General Earle Cocke, (in what is viewed as his deathbed statement) the fund administrator under multiple Presidents until his death in 2000. Also, amazingly coincidental, Roger Fisher is a noted national security advisor who provided guidance to Secretary of Defense Clark Clifford during the Vietnam War. Clark Clifford, in turn, was the National Security Advisor that advised President Truman of Lansdale’s gold discovery in the Philippines.106 He was also the senior U.S. official in the First American Bank, at the core of the BCCI investigation in the United States.
• Hollis McLoughlin, assistant secretary of the Treasury under President George Bush from 1989 to 1992, would report to David Moffet at Freddie Mac and be responsible for directing the lobbyist effort to scuttle accountability 109
• James Gilleran, in 1991 was the chief of the California Department of Financial Institutions, responsible for examination and regulation of California state licensed banks, state-licensed credit unions, state-licensed trust companies, state licensed industrial loan companies, state-licensed offices of foreign banks, issuers of travelers checks and payment instruments (money orders) and money transmitters. DFG Inc, the 1991 firm responsible for moving the illegal funding appears to have been a state regulated trust. He would later be appointed Director, Office of Thrift Supervision and play a role in ensuring lax regulation during the subprime debacle.
• John Reed was brought into Citibank for one purpose according to General Earl Cocke - running the “Hammer (Yamashita/Marcos/Black Eagle) Fund.” In 1991, he would have been responsible for coordinating release of the funds with Greenspan.116 Reed was indeed ‘fast tracked’ through First National City Bank coming out of college. His college experience consisted of an undergraduate degree in literature, a graduate degree in metallurgy, and a Masters of Business degree from Sloan. He was hired into the international division and made the protégé of Walter B. Wriston, who became his predecessor as CEO. Within three years, Reed was heading the bank's entire foreign operations. His mentor - Wriston - was a foreign service officer at the beginning of the World War II, and then went into the Army and spent the year 1942 to 1946 in…..the Philippines! He was stationed on Cebu, a major Yamashita treasure site.117 While in the Philippines, he met Ferdinand Marcos and George Moore (soon-to-be CEO of National City Bank).118 After the war, Wriston joined First National City Bank, where he was groomed to be CEO by George S. Moore (ex OSS). In June 2004 Wriston was awarded the Presidential Medal of Freedom, the nation's highest civil honor, by President George W. Bush, presumably for his role in ending the Cold War by organizing the funding the 1991 operation. It is worth noting that Leo Wanta –who hales from Appleton, Wisconsin as did Walter Wriston – also used Citibank for his Russian ruble scam operation.119
Those who would subsequently take up roles in the key control points (although not participating in the original bond deal) would be:
• William J. McDonough, who served as president and chief executive officer of the Federal Reserve Bank of New York from July 1993 to July 2003. He would have needed to play a key role in the September 11th bond dump. While president, he also served as vice chairman and permanent member of the Federal Open Market Committee (FOMC), on the board of directors of the Bank for International Settlements, and chairman of the Basel Committee on Banking Supervision. He joined the New York Fed in 1992 as executive vice president, head of the bank's markets group, and manager of the FOMC's open market operations. McDonough earned his covert operations credentials while spending 22 years at First Chicago Corporation and its bank, First National Bank of Chicago, and prior to that at the State Department. There, he was vice chairman of the board and a director of the bank holding company. McDonough left First National Bank of Chicago very shortly after the departure A. Robert Abboud, Vice Chairman, First National Bank of Chicago. Abboud was the Chairman of the US-Iraq Business Forum, and under the joint tenure of Abboud and McDonough, the First National Bank of Chicago was responsible for major financing to Saddam Hussein’s covert weapons program (the same program Kissinger Associates managed while Timothy F. Geithner was with Kissinger).120 First National Bank of Chicago also bailed out George Bush’s Harken Energy when it’s loans were called in August 1990.121 The Chief Economist at First National Bank of Chicago – Alan Stoga -went to work for Kissinger Associates, and was a key player in the BNL scandal.122 Stoga and McDonough continue to work together. While McDonough was First Chicago, it also served as a BCCI conduit, being one of five U.S. banks used by BCCI.123 First Chicago also was a recipient of Marcos gold.124 Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961. What McDonough did from 1989 to January 1992 (while Bush and Greenspan were organizing their covert war) is completely off the record, as is any detail about his service in the Navy and State Department prior to that.
• Henry Paulson, Secretary of Treasury since May of 2006, had been at Goldman Sachs from 1974 to 1998 and followed in the footsteps of Rubin and Friedman, a Chairman/CEO of Goldman Sachs, but was co head of Investment Banking of Goldman’s in September 1991. Prior to Goldman Sachs, Paulson served as Staff Assistant to the Assistant Secretary of Defense at the Pentagon (1970 to 1972) and then worked John Ehrlichman from 1972 to 1973 on President Richard Nixon’s staff, where he earned his covert operations credentials, and got connected to the Kissinger crowd. He was a major player in 2004 in getting the reserve ratios of the investment banks reduced.125
Over the next fifteen years, these same individuals would graduate from being Bush’s and Clinton’s personal foreign policy enablers to being the most powerful financial advisors and regulators in the U.S., and the world.
There needs to be a clear understanding that there is a major undercurrent of illegal financing that runs though the American economy that is conducted by country’s top bankers. These bankers control deposits of over 100,000 tonnes of gold no one can admit exists because it makes them vulnerable to innumerable criminal and civil charges. They have committed these crimes at the behest of the country’s top officials, with the probable promise of immunity. While the statute of limitations on the gold theft is 40 years, the gold was continually stolen starting in 1945, and most recently in 1986 – making them vulnerable through 2026. Those involved in its theft, including bankers, are subject to charges of tax evasion, money laundering, fraud, theft, racketeering etc., and then the list of violent crimes gets appended: crimes like murder and treason- for which there is no statute of limitations. It creates an interesting dilemma: admitting to the crimes will get them killed by either the public, or by those fearing exposure. Exposure of even a single thread of illicit financing begins to expose the whole fabric! That is why buildings 6 & 7 of the World Trade Center were brought down.126 The two private sector institutions most closely aligned with this control of the underground economy based on this illegal gold are Goldman Sachs and the Carlyle Group. These were the two major privateer bankers associated with what Anne Williamson described to Congress as the “Rape of Russia.”
Part 2 to come...next
Goldman Sachs
Source
https://wikispooks.com/wiki/Main_Page
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