Breaking News Update:FBI investigating companies at heart of meltdown

WASHINGTON – The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.

Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.

Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.

Just last week, FBI Director Robert Mueller put the number of large financial firms under investigation at 24. He did not name any of the companies under investigation but said the FBI also was looking at whether any of them have misrepresented their assets.

Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI’s hunt for culprits in the nation’s subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.

The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms.

In the past two weeks, the government has taken over Fannie Mae and Freddie Mac, the country’s two biggest mortgage companies, with a bailout plan that could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.

Last week, the Federal Reserve provided an emergency $85 billion loan to AIG, which teetered on the brink of bankruptcy. Lehman Brothers was forced to file for bankruptcy after attempts to engineer a private rescue fell apart. All the companies were laid low from bad bets on complex mortgage-related securities tied to sub-prime mortgage loans.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to address the symptoms of all the troubles, billions of dollars in bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.

Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the nation’s largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

http://news.yahoo.com/s/ap/20080924/ap_on_go_ca_st_pe/financial_meltdown_investigation

This article originally claimed that the Fed was addressing the “root cause” of the problem – that is incorrect – the bad debt on the books – from bad mortgages – are in fact the “symptoms” of the broken system. The root cause is the underwriting of these bad loans. The proposed bailout is silent as to what will be done to prevent a repeat of the horrendous lending practices.  

Obama: Bailout Cannot Be ‘Welfare’ for Wall Street. Is That It? His Plan?

CLEARWATER, Fla. — Democrat Barack Obama said Tuesday any plan to rescue Wall Street from its financial woes must ensure that taxpayers are reimbursed and corporate executives are not further enriched for mismanagement.

Obama outlined several principles that he said should be included in the bailout to ensure that troubled financial firms and their executives don’t take advantage of taxpayers.

1). Companies that take financial aid from the government must slash their executives’ salaries, he said. 2).Taxpayers must be treated like investors who can share in any Wall Street recovery, perhaps with an ownership stake in the companies that are bailed out, and a 3). new fee on financial services should be created to repay the government aid.

4). “This plan cannot be a welfare program for Wall Street executives,” he said at a news conference.

Is that it? The Obama Plan! After taking a week he says; cut executives salaries, make taxpayers investors, add fees on the services and “no welfare for Wall Street”, whatever that means.

I thought this guy went to Harvard.

This isn’t a plan – it is 4 short sound bites run together.

Did Obama really put this togther or is it a media creation? A creation cobbled together by Obama’s supportive media who were embrassed that Obama hadn’t produced a plan one week into this news cycle?

How do we stop this so called crisis from happening again? When is Obama going to quit blaming de-regulation for the mess? Is Obama in favor of continuing NINJA and LIAR Loans? Is Obama in favor of increasing the underwriting standards for mortgages? Will Obama now support the additional regulation suggested by John McCain in 2002 & 2006? Will Obama now support the reforms the Bush Administration asked for?

OOPS – Biden Slips, Suggests FDR Was President When Market Crashed

WASHINGTON — Vice presidential candidate Joe Biden says today’s leaders should take a lesson from the history books and follow fellow Democrat Franklin D. Roosevelt’s response to a financial crisis.

“When the stock market crashed, Franklin D. Roosevelt got on the television and didn’t just talk about the, you know, the princes of greed. He said, ‘Look, here’s what happened,”‘ Barack Obama’s running mate recently told the “CBS Evening News.”

Except, Republican Herbert Hoover was in office when the stock market crashed in October 1929. There also was no television at the time; TV wasn’t introduced to the public until a decade later, at the 1939 World’s Fair.

FDR was elected three years later when voters denied Hoover a second term. The Democratic challenger appealed to the “forgotten man” by promising a “new deal” to solve the Depression era.

Biden was commenting on the stock market crash when he said leaders should explain the current economic crisis and how to solve it to the public. 

“Part of what being a leader does is to instill confidence, is to demonstrate what he or she knows what they are talking about and to communicating to people … this is how we can fix this,” Biden said.

NOTHING NEW HERE – OBAMA & BIDEN – DON’T LET THE FACTS GET IN THE WAY OF YOUR STORY. I HAVE TO ADMIT – HIS GAFFES MAKE ME SMILE.

FBI Investigating Potential Fraud by Fannie Mae, Freddie Mac, Lehman, AIG

Tuesday, September 23, 2008

DEVELOPING: WASHINGTON — The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration.

Two law enforcement officials said the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc., and insurer American International Group Inc.

A senior law enforcement official says the inquiries, still in preliminary stages, will focus on the financial institutions and the individuals that ran them.

Officials say the new inquiries brings the number of corporate lenders under investigation over the last year to 26.

What Obama Did For Education In Chicago !

Obama – Ayers Was Much More Than “Just A Guy In The Neighborhood”- The Character Issue Strikes Again

Posted by: mcauleysworld on: September 23, 2008

Despite having authored two autobiographies, Barack Obama has never written about his most important executive experience. From 1995 to 1999, he led an education foundation called the Chicago Annenberg Challenge (CAC), and remained on the board until 2001. The group poured more than $100 million into the hands of community organizers and radical education activists.

The CAC was the brainchild of Bill Ayers, a founder of the Weather Underground in the 1960s. Among other feats, Mr. Ayers and his cohorts bombed the Pentagon, and he has never expressed regret for his actions. Barack Obama’s first run for the Illinois State Senate was launched at a 1995 gathering at Mr. Ayers’s home.

The Obama campaign has struggled to downplay that association. Last April, Sen. Obama dismissed Mr. Ayers as justa guy who lives in my neighborhood,” and “not somebody who I exchange ideas with on a regular basis.” Yet documents in the CAC archives make clear that Mr. Ayers and Mr. Obama were partners in the CAC. Those archives are housed in the Richard J. Daley Library at the University of Illinois at Chicago and I’ve recently spent days looking through them.

The Chicago Annenberg Challenge was created ostensibly to improve Chicago’s public schools. The funding came from a national education initiative by Ambassador Walter Annenberg. In early 1995, Mr. Obama was appointed the first chairman of the board, which handled fiscal matters. Mr. Ayers co-chaired the foundation’s other key body, the “Collaborative,” which shaped education policy.

The CAC’s basic functioning has long been known, because its annual reports, evaluations and some board minutes were public. But the Daley archive contains additional board minutes, the Collaborative minutes, and documentation on the groups that CAC funded and rejected. The Daley archives show that Mr. Obama and Mr. Ayers worked as a team to advance the CAC agenda.

One unsettled question is how Mr. Obama, a former community organizer fresh out of law school, could vault to the top of a new foundation? In response to my questions, the Obama campaign issued a statement saying that Mr. Ayers had nothing to do with Obama’s “recruitment” to the board. The statement says Deborah Leff and Patricia Albjerg Graham (presidents of other foundations) recruited him. Yet the archives show that, along with Ms. Leff and Ms. Graham, Mr. Ayers was one of a working group of five who assembled the initial board in 1994. Mr. Ayers founded CAC and was its guiding spirit. No one would have been appointed the CAC chairman without his approval.

The CAC’s agenda flowed from Mr. Ayers’s educational philosophy, which called for infusing students and their parents with a radical political commitment, and which downplayed achievement tests in favor of activism. In the mid-1960s, Mr. Ayers taught at a radical alternative school, and served as a community organizer in Cleveland’s ghetto.

In works like “City Kids, City Teachers” and “Teaching the Personal and the Political,” Mr. Ayers wrote that teachers should be community organizers dedicated to provoking resistance to American racism and oppression. His preferred alternative? “I’m a radical, Leftist, small ‘c’ communist,” Mr. Ayers said in an interview in Ron Chepesiuk’s, “Sixties Radicals,” at about the same time Mr. Ayers was forming CAC.

CAC translated Mr. Ayers’s radicalism into practice. Instead of funding schools directly, it required schools to affiliate with “external partners,” which actually got the money. Proposals from groups focused on math/science achievement were turned down. Instead CAC disbursed money through various far-left community organizers, such as the Association of Community Organizations for Reform Now (or Acorn). See my WEBLOG post on ACORN and Voter Fraud.

Mr. Obama once conducted “leadership training” seminars with Acorn, and Acorn members also served as volunteers in Mr. Obama’s early campaigns. External partners like the South Shore African Village Collaborative and the Dual Language Exchange focused more on political consciousness, Afrocentricity and bilingualism than traditional education. CAC’s in-house evaluators comprehensively studied the effects of its grants on the test scores of Chicago public-school students. They found no evidence of educational improvement.

CAC also funded programs designed to promote “leadership” among parents. Ostensibly this was to enable parents to advocate on behalf of their children’s education. In practice, it meant funding Mr. Obama’s alma mater, the Developing Communities Project, to recruit parents to its overall political agenda. CAC records show that board member Arnold Weber was concerned that parents “organized” by community groups might be viewed by school principals “as a political threat.” Mr. Obama arranged meetings with the Collaborative to smooth out Mr. Weber’s objections.

The Daley documents show that Mr. Ayers sat as an ex-officio member of the board Mr. Obama chaired through CAC’s first year. He also served on the board’s governance committee with Mr. Obama, and worked with him to craft CAC bylaws. Mr. Ayers made presentations to board meetings chaired by Mr. Obama. Mr. Ayers spoke for the Collaborative before the board. Likewise, Mr. Obama periodically spoke for the board at meetings of the Collaborative.

Mr. Ayers’s defenders claim that he has redeemed himself with public-spirited education work. That claim is hard to swallow if you understand that he views his education work as an effort to stoke resistance to an oppressive American system. He likes to stress that he learned of his first teaching job while in jail for a draft-board sit-in. For Mr. Ayers, teaching and his 1960s radicalism are two sides of the same coin.

Mr. Ayers is the founder of the “small schools” movement (heavily funded by CAC), in which individual schools built around specific political themes push students to “confront issues of inequity, war, and violence.” He believes teacher education programs should serve as “sites of resistance” to an oppressive system. (His teacher-training programs were also CAC funded.) The point, says Mr. Ayers in his “Teaching Toward Freedom,” is to “teach against oppression,” against America’s history of evil and racism, thereby forcing social transformation.

MCAULEYSWORLDWEBLOG NOTE: With less than 50% of the Seniors Graduating fron High School in the County’s largest cities (Some cities, like Detroit – have only a 24% Graduation rate) where is the focus on reading and writing. Liberal teaching agendas and Social Promotion is the worse possible form of racism. 

The Obama campaign has cried foul when Bill Ayers comes up, claiming “guilt by association.” Yet the issue here isn’t guilt by association; it’s guilt by participation. As CAC chairman, Mr. Obama was lending moral and financial support to Mr. Ayers and his radical circle. That is a story even if Mr. Ayers had never planted a single bomb 40 years ago.

Mr. Kurtz is a senior fellow at the Ethics and Public Policy Center.

Please add your comments to the Opinion Journal forum.

http://online.wsj.com/article/SB122212856075765367.html?mod=djemEditorialPage

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