Architects of AIG and US ruin were in London

9/21/08: "Joe Cassano was the president of a subsidiary of AIG that 'lost' £5.5bn earlier this year, setting the insurer on a path to bankruptcy.

• And today The Mail on Sunday can reveal that the dealings that brought it to the edge of collapse were done in London.

Last week, AIG was effectively nationalised with an £48bn loan from the US Federal Reserve to avert a collapse that would have triggered unimaginable consequences on the world's financial markets.

In March, when the losses were revealed, Mr Cassano, a 53-year-old New Yorker who had an office in Mayfair, left the company. Asked by The Mail on Sunday if he felt responsible for the AIG crisis, he smiled and said: 'I left there six months ago.'

Refusing to answer further questions, he went inside his four-storey townhouse in one of London's most exclusive streets.

• Mr Cassano, who learned his craft on Wall Street, was one of the founding team in 1987 of AIG Financial Products. Effectively the insurer's banking unit, it sold cover to financial speculators, many involved in the American housing market.
  

Two decades on, Mr Cassano is one of several AIG executives facing a lawsuit accusing them of deceiving hundreds of thousands of investors who suffered huge losses in the latest crash on Wall Street. According to papers filed in New York's federal court,

• he claimed the policies he marketed were so safe they would never lose as much as 'one dollar'.

His pitch was so convincing that many small investors sank substantial sums of their life savings into AIG shares.

A financial expert told The Mail on Sunday: 'I'm not going to call Cassano a crook but he was the head of the division that took AIG down. If the US government had not stepped in, and AIG had gone bankrupt, the knock-on effect at institutions around the world would have been disastrous.

• 'As it is, Cassano's exotic financial dealings are the biggest single component of the crisis on Wall Street and in the City.'

Cassano moved to England in 1987 from the US but still owns a house in Westport, Connecticut. His division AIG FP sold credit default swaps (CDSs), which are, in effect, a type of insurance against an organisation going bust. AIG FP wrote CDS contracts with a range of investment banks and other financial groups. A CDS is linked to a specific type of asset, typically a company bond or other loan or package of loans. The buyer of the CDS pays a regular sum to the issuer. In return, if there is a default on the asset the issuer pays out a predetermined amount of money.

London has seen a boom in the credit derivatives market over the past ten years because of a combination of the

• UK's relaxed regulatory environment and a concentration of people skilled in this type of complicated trading.

During the credit explosion the CDS demand was huge. By 2007 Cassano's division was providing guarantees mainly

• through credit default swaps
  

on about $ 500bn of assets (£285bn).

In effect Cassano's business was underwriting a huge proportion of the global credit bubble -including the vast American subprime mortgage market. And as house prices in the US fell, the AIG books began to unravel. In December 2007, Martin Sullivan, chief executive of the whole of AIG, assured shareholders that the chances of the US housing bust leading to losses at AIG was 'close to zero'. But he confirmed AIG Financial Products had written off $1.1bn (£600m) because of its credit contracts covering American mortgages.

• The bombshell came on February 11. PricewaterhouseCoopers, auditors to AIG, said there had been 'material weaknesses' in the standards of financial reporting at Cassano's division. Worse was to come. On February 29, AIG announced it was writing off $11.1bn (£ 5.5bn) on its CDS business.

Troops' fears over their life cover in war zone

By Jonathan Petre, Mail on Sunday British soldiers have expressed alarm that a scheme to insure them on the battlefield could have been put in serious jeopardy if the US insurance giant AIG had collapsed last week.

• Most members of the armed forces top up inadequate Government compensation by joining the recommended private scheme PAX, which is underwritten by AIG.

Soldiers fighting in Iraq or Afghanistan tend to take out the maximum cover possible to double the money that will be paid out to them if they are wounded, or to their families if they are killed.

• With high casualty rates --almost 200 servicemen or women have been killed in the two conflicts - manyms of pounds have already been claimed.

The British arm of AIG that operates PAX insisted yesterday it would have been able to meet its obligations if its troubled parent company had folded.

But at the height of the crisis, servicemen and women were expressing their fears on unofficial websites.

One anonymous posting on the British Army Rumour Service website was headed

• Are Our PAX Policies In Safe Hands? It read:
  

• 'PAX is underwritten by AIG. Looking at this, I'm not sure they have much of a future. Just have to keep breathing then.'

The Ministry of Defence admitted yesterday that it had been so concerned about the situation it had sought assurances the scheme would continue if AIG collapsed. "...

NY CITY MUSEUM SHAKEN DOWN BY CLIMATE CHANGE PROFITEERS

This pathetic banner at the entrance of the American Museum of Natural History in New York City was photographed in March 2009 by Tom Nelson and posted on his blog. "Climate" Shake Down artists got B of A and the Rockefeller Foundation to sponsor it, per Tom Nelson's blog.

Harrisburg, Pa. crowd rallies against tyranny of Obama

"The symbols of revolution were on full display,.

There was the famous Colonial flag with a coiled rattlesnake and the words

• "Don't Tread on Me."
  
  

• Another early American flag showed 13 stars arranged in a circle.

• And then there were the tea bags hung from the brims of people's hats and ears.

Hundreds of protesters gathered at the Capitol in Harrisburg on Saturday afternoon to throw a "tea party" against President Barack Obama's $787 billion economic stimulus package.

"You are called to a new revolution today," conservative talk radio host Gary Sutton, of York's WSBA-910, told the crowd, estimated to have numbered around 1,000 by the State Capitol Police.

• "This is about right and wrong," Sutton said.

"A government that is big enough to give you freedom is big enough to take it away," state Sen. Mike Folmer (R-48th District) told the protesters.

• Cries of indignation and outrage against the stimulus plan and the president roared from the crowd. People held signs slamming Obama and other Democratic politicians as communists.

"End the socialist experiment!" a sign read.

"This is treason," said Mark Holloway, a self-employed contractor from Red Lion.

• The consensus among protesters was clear:

• The stimulus plan won't lift the country out of its economic crisis.

"This bill is going to reward people who are grossly irresponsible," said David Nace, a Lititz resident and co-owner of Wickersham Construction & Engineering Inc.

The president has also called for an additional $75 billion to stem home foreclosures.

• Blasting Obama's proposals, protesters clamored for more tax cuts and reduced government spending to solve the country's economic troubles.

A tractor-trailer driver from Allentown, Dawn Blocker said she only worked 17 hours last week because there's just not enough freight to carry anymore.

• "Rush Limbaugh is absolutely right," she said. "The government is out of control. They're spending all this money for themselves."

The Harrisburg tea party hasn't been the only one of its kind in the country.

• The idea for the tea parties started last month on CNBC, when business reporter Rick Santelli, standing on the floor of the Chicago Mercantile Exchange, blasted the president's economic stimulus plan.

"This is America! How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills?" he asked Joe Kernen on CNBC's "Squawk Box" program. "We're thinking about having a Chicago tea party in July. All you capitalists that want to show up to Lake Michigan, I'm gonna start organizing."

The rant became an instant Internet smash, generating nearly a million hits on the video-sharing Web site YouTube. The rant inspired conservative bloggers and pundits to organize tea party protests of their own.

• The idea comes from the iconic 1773 event, when American Colonists tossed
  
• crates of tea belonging to the East India Co. into Boston Harbor
  
• to protest British taxation and commerce policy.

With some notable exceptions, including the Harrisburg rally, other tea parties haven't attracted large crowds. The effectiveness and popularity of the tea party rallies is still debated.

• "I'm a realist," said Andrew Emerick, of Baltimore. Asked whether the rallies will have any effect, he replied: "Probably not." Holding a "Don't Tread on Me" flag, the real estate investor is looking to the 2010 congressional elections as the point to direct change in fiscal policy.

Joe Sterns, communications director for the Commonwealth Foundation, a fiscally conservative think-tank group that organized the Saturday rally, said a Philadelphia tea party attracted only 50 people. The Village Voice reported a Boise, Idaho, tea party attracted a paltry four protesters.
"We cast the net far and as wide as we could for this rally," Sterns said.

• Many in the crowd said promotions by conservative talk radio hosts on WHP-580 and WSBA-910 boosted the turnout.

Despite varying turnouts, conservative pundits say the tea parties aren't over. A grass-roots movement sponsored by Eric Odom, a conservative blogger, is hoping to inspire nationwide tea parties on tax day, April 15." via the Drudge Report. photo lancaster.com

New York City Tea Party photos, 2/28/09

The theme of the tea party:


The theme of the last election:




Economics 101 final exam:

Political science 101: if it walks like a Marxist and talks like a Marxist, guess what...?

Probably 200-250 protesters, and no one sang "Kumbaya"

most photos from Berman Post.

Barney Frank's boyfriend brought down the US, media ignored, afraid to criticize gays

Barney Frank's partner was a Fannie Mae executive:

10/3/08: WASHINGTON — Sammon, "Unqualified home buyers were not the only ones who benefited from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.

So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.

• Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank's relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical.

• "It’s absolutely a conflict," said Dan Gainor, vice president of the Business & Media Institute. "He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?

"If this had been his ex-wife and he was Republican, I would bet every penny I have - or at least what’s not in the stock market - that this would be considered germane," added Gainor, a T. Boone Pickens Fellow. "But everybody wants to avoid it because he’s gay. It’s the quintessential double standard."...

• "C’mon, he writes housing and banking laws and his boyfriend is a top exec at a firm that stands to gain from those laws?" the aide told FOX News.
  

• "No media ever takes note?
  

• Imagine what would happen if Frank’s political affiliation was R instead of D? Imagine what the media would say if [GOP former] Chairman [Mike] Oxley’s wife or [GOP presidential nominee John] McCain’s wife was a top exec at Fannie for a decade while they wrote the nation’s housing and banking laws."

Frank’s office did not immediately respond to requests for comment.

Frank met Moses in 1987, the same year he became the first openly gay member of Congress.

• "I am the only member of the congressional gay spouse caucus," Moses wrote in the Washington Post in 1991. "On Capitol Hill, Barney always introduces me as his lover."

The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses "helped develop many of Fannie Mae’s affordable housing and home improvement lending programs."

• Critics say such programs led to the mortgage meltdown that prompted last month’s government takeover of Fannie Mae and its financial cousin, Freddie Mac. The giant firms are blamed for spreading bad mortgages throughout the private financial sector.

Although Frank now blames Republicans for the failure of Fannie and Freddie, he spent years blocking GOP lawmakers from imposing tougher regulations on the mortgage giants. In 1991, the year Moses was hired by Fannie, the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.

• Three years later, President Clinton’s Department of Housing and Urban Development tried to impose a new regulation on Fannie, but was thwarted by Frank. Clinton now blames such Democrats for planting the seeds of today’s economic crisis.

"I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president, to put some standards and tighten up a little on Fannie Mae and Freddie Mac," Clinton said recently." "Lawmaker Accused of Fannie Mae Conflict of Interest" FoxNews.com. Picture from Rush Limbaugh.com or Sodahead:

.

Governor Sarah Palin welcomes International Diplomats, 1/3/09

• "Governor Sarah Palin meets with Mr. Sergey Kislyak, newly appointed Ambassador of the Russian Federation to the United States, on his first visit to Alaska. Ambassador Kislyak is part of a large group of foreign dignitaries on hand for weekend celebrations marking Alaska's 50th anniversary of statehood. Photo courtesy Office of the Governor"

"Alaska Governor Sarah Palin on Friday welcomed an international delegation of diplomats who travelled to Alaska to celebrate Alaska Statehood Day on January 3, 2009. Representatives from several Asian and European countries accepted Governor Palin's invitation to participate in weekend celebrations marking the 50th anniversary of Alaska being admitted to the Union.

• "We welcome these representatives with our best Alaska hospitality. We are pleased with their recognition of the importance of our 50th anniversary," Governor Palin said. "It is a special honor to welcome Ambassador Kislyak and to showcase our state to this high-profile international group."
  

Among the traveling dignitaries is Mr. Sergey Kislyak, newly appointed Ambassador of the Russian Federation to the United States, who is making his first visit to Alaska.

"I am so pleased to be here this weekend," Ambassador Kislyak said. "As discussed in my meeting with Governor Palin, it is encouraging to note the similarities between Alaska and the Russian Far East. Our existing commercial connections and the mutually beneficial nature of our professional partnerships can only help provide a measure of stability as, together, we face the global economic challenges that lie ahead."

• Ambassador Kislyak also met with representatives of the Aleut International Association, Institute of the North, Alaska Rule of Law Initiative, National Parks Service, ISER Alaska Chukotka Project, and Turnagain Elementary School Russian Immersion Program, all of whom have been involved in multi-year Russia-related projects.

In addition to Ambassador Kislyak, foreign dignitaries include Yuri Gerasin, Consul General of the Russian Federation; Julian Evans, British Consul General; John Mataira, Consul General of New Zealand; Balazs Bokor, Consul General of Hungary; Sten Arne Rosnes, Consul General of Norway; Haryong Lee, Consul General of Korea; Fred Santos, Consul of The Philippines; Mel Knight, Alberta's Minister of Energy; Marvin Schneider, Alberta's Executive Director of the U.S. and Americas; and Haijun Wang, Deputy Director General of the Foreign Affairs Office of China's Heilongjiang Province. Mr. Wang is leading a four-person delegation from Heilongjiang Province, a sister province to Alaska, and China's northernmost region.

• Members of the Alaska consular corps will also be participating in the weekend events. Among them: Karen Matthias, of Canada; Hideo Fujita, of Japan; Hee-chul Kim, of South Korea; and Jose Luis Cuevas, of Mexico. They will be joined by honorary consuls of the Czech Republic, Poland, Finland, Seychelles, and Norway.

"We are thrilled that so many of our esteemed international friends are joining us for the auspicious occasion of our statehood celebration," said Kris Perry, director of the Governor's Office of International Trade. "These trade partners have been critical to the economic development of this state in the last 50 years and have helped grow the market for Alaska exports to a nearly $4 billion enterprise. Their presence here this weekend demonstrates how far Alaska has come in the arena of international commerce, and also how much promise we have for the next 50 years and beyond."

• Source of News & Photograph:

• Office of the Governor, www.gov.state.ak.us

So far nothing on this from the AP or the McClatchy Anchorage paper. (sm)

Hank Paulson, Ezra Merkin--chronic shame, the results of poor parenting

"GMAC, the auto financing arm of General Motors that's half owned by Cerberus Capital, is

• spooling up its own bid for a federal bailout. GMAC wants to mimic American Express, Goldman Sachs and others that converted to bank holding companies and then tapped the TARP.

Meanwhile, GMAC's chairman, Jacob Ezra Merkin, runs Ascot Partners, an investment firm that

• lost most of its $1.8 billion in assets in the Madoff scandal, according to the New York Times.

So, sure, let's give billions in federal funds to a guy who blows almost $2 billion of his and his clients' money on a Ponzi scheme.

• GMAC got to the point of begging the government for cash because
  

• it was a major peddler of subprime mortgages, many of them through its DiTech division.
  

Now, to borrow from DiTech's annoying marketing slogan, it may be taxpayers who will lose another loan to DiTech."