Saturday, October 11, 2008

Tape Blows Cover On True Treasury Intentions

The new kid at the Treasury hasn't quite learned you really can't talk in public about what you are really up to at Treasury. New Interim Assitant Secretary of the Office of Stability, Neel Kashkari, has been caught on tape providing the true details of what Treasury is up to. This will get him muzzled pretty fast, but it provides us the opportunity to see the scheming going on at Treasury.

Kashkari's statements were posted on YouTube, and now appear to have been removed.

WSJ reviewed the tapes and reports first on the fact that Kashkari considers the executive pay caps demanded by Congress a joke:
As the biggest market intervention in U.S. history made its way through Congress, Neel Kashkari, the Treasury official named this week to run the program, offered assurances to 800 financial-industry players.

Attempts by Congress to make beneficiaries pay for their mistakes, such as placing caps on executive pay, were "quite reasonable" and "a pretty modest hindrance to you," he told them, according to a recording of the Sept. 28 conference call made public on video-sharing Web site YouTube.
Kashkari told participants in the call that lawmakers' interest in limiting executive compensation was "emotional" and "probably the most difficult part of the negotiation" with Congress.

When one industry participant said the caps might discourage participation, Kashkari noted their limited scope, which he called "a pretty modest hindrance to you coming into the program," WSJ reports.

WSJ also reports that the conference call took place the night before the House rejected the rescue plan, on September 28. The plan passed days later on October 3.

The dates are important because Kashkari, according to WSJ, also reported to the financial insiders that, "Our preference would be to try to help healthy banks become even healthier." (My emphasis.)

Remember, the entire focus, at the time, was on buying up bad mortgages and there was no news out publicly about Treasury helping "healthy banks"?

Indeed, I just did a search of the New York Times database and the first time the words "healthy bank" come up in a search is on October 9, where NYT reports that as Part of a NEW "Plan B" that Treasury may take positions in banks, even healthy ones.

This is how NYT reported the story (My emphasis):

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials...

The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it...including healthy ones.

This new interest in direct investment in banks comes after yet another tumultuous day in which the Federal Reserve and five other central banks marshaled their combined firepower to cut interest rates but failed to stanch the global financial panic.

As Bob Murphy has pointed out, they haven't even bought one mortgage yet, so how could they have failed at attempting to unlock the supposed frozen market?

"New interest"? "New options" "After yet another tumultuous day"? Then why was Kashkari talking about these details to the securities industry, even BEFORE the first House vote?

A database search of WSJ pretty much shows the same thing, the first time "healthy bank" is used with regard to the takeover of banks is October 10. The only other relevant search that comes up is an Op-Ed piece on 9-26 by John Paulson , a respected Wall Street investment manager--not the Treasury Secretary--, who discusses the Treasury's plan to buy mortgages from all banks. And he would certainly be shocked to hear that two days after his Op-Ed that Kashkari said the Treasury's preference was to help healthy banks, given that John Paulson wrote in his Op-Ed:

By allowing all banks to sell their worst assets to Treasury at inflated prices, taxpayers would be subsidizing healthy banks which have access to private capital (Goldman Sachs, J.P. Morgan, Wells Fargo, and Bank of America, for example) as well as banks that don't have a private alternative. But under a Preferred plan, only banks that don't have a private alternative will be given federal assistance. This would reduce the outlay otherwise required to solve the crisis.

Folks, we have a smoking gun here, you would have to be blind not to see that the Bernanke-induced crisis is being used by Paulson to funnel money to Goldman Sachs and his other crony favorites. The plan all along was to help out "healthy banks". It's on tape from the interim Assistant Secretary of Stability. Yeah, crisis and fear alright. Every time they utter those words, they move more of the $700 billion closer towards Goldman Sachs' vault.

UPDATE: There is a poor quality audio tape of the conference call on YouTube. Here is Part 3 where at the 9:00 minute mark the mention is made that healthy banks will be preferred. Thanks, Anthony.


  1. can u say halliburton?if chainey can steal and bushes can steal and clintons can steal,why not israilys and treasury dept skunks?

  2. Hey, anything to keep those Wall Street multi-millionaires and billionaires in champagne and caviar is alright with me.

    I mean, if I have to lose my house, my truck, my savings and farm, just to help some poor, poor dears get chauffered around in Mercedes-Benz's and Rolls-Royce's, then sign me up.

    If i have to live on the street so those deserving souls can keep their 10 mansions and private jet, then by gosh, that's not to much to ask.

    Do they also need any blood or body parts?

  3. Great article! re-check for typos.
    The TAPE needs to be located and posted in its complete form.
    These acts by the administration are Treason.

  4. @ nobodysaysboo

    "israilys"?? Have you completed the sixth grade yet?

  5. The DOW is being used like an applause meter. Three days ago, and just before Ivy League Madrassa trained Paulson's scheduled (no so) comforting (and incomprehensible) stammer and stutter fest press conference, the market was down 180 points. As Paulson waded to the pulpit and began waving his hands, in sync with his garbled syllables, like a 42ed Street corner 3 card monte scam man, the market climbed and climaxed (with the end of Paulson's feeble pretense as the SOT's comforter and chief) around 80 points above open. As Paulson exited stage left to avoid the gelded 4th estates questions, the DOW plunged to more than 200 points below open. All in the space of 10 minutes.

    Yesterday, the market sank 700 points at open. As ZOG's favorite meat puppet, and Jeff Cannon's John, our very own, El Dubilito, Boy George, stumbled to the podium - miracle of miracle - the market began to climb, as he spoke, it breached the open. At the end of "Goat" Story's scripted delivery, the market was 45 points above open, As our "El Dubilito" left the podium, the market tanked, immediately, to 200 below open.

    It's amazing how that happened. We don't need a bailout, we just need Boy George and "Crooked Finger" Paulson to stand at the Podium and comfort a worried market 24/7 on MSM Corporate TV.

  6. I watched the recent congressional hearing with the former CEO of Lehman's. I can't remember the congressman who asked him the question, but it was rather interesting...

    Why was Lehman's allowed to fail?

    Was it to give more market share to Goldman Sachs? Because that's certainly what will happen. GS *WILL* get more market share.

    The amount of money Lehman's needed before spinning off various pieces of itself for cash is very small, in comparison to 700 billion dollars. But the answer was "Let them fail". Why?

    Paulson is a crook. Of this, I am beyond convinced. He belongs behind bars, or worse (Treason does have consequences).

  7. Several times during Paulson's stammering Whatron School/Harvard MBA speale explanation of events Thursday last he repeated "I!, I!, I!, I!, I!" several times. This guy can't even put out a believable line of bullsh*t! What is this Fascist State coming to??? Seig Heil!!!

  8. One bank, one state, one government, one executioner.

    Bring back the guillotine.

  9. Great post, RW. Keep up the good work. But just to clarify, you're talking about unintended consequences, right? You don't mean to imply any conspiracy or evil intentions here, right?

  10. Since stick `em up bank robbing is now impossible because of elaborate security, the banks show their social worthiness of this protection by sticking up the taxpayer who now can't stick up the bank.

  11. What hardly anyone has touched on is the government owning our banks. We the people are suppose to trust congress, senate, and president to take care of our bank accounts. Like they took care of our Social Security. Notice i didn't say Dems and Reps

  12. Thanks, Anthony.

    I moved your link to an update, in the story.

  13. Another GS public servant:


    The chief author of the guidelines for what Commissar for Plutocratic Redistribution Henry Paulson calls the "international regulatory response" to the global market convulsions is an all-but-unknown Italian banker by the name of Mario Draghi, Chairman of the FSF. The G-7, according to Paulson, is "committed to tackling the next steps laid out by Chairman Draghi to be done by the end of this year...."


    Mr. Draghi's brief but informative vita, circa 2004, proudly notes that he "joined Goldman Sachs as a partner in January 2002 and is Vice Chairman and Managing Director."

  14. I have never felt myself so close to the American people. Not even when 911 happened. In my own country (Spain) we are pining for guillotines too. Maybe we could use the same guillotines in order to save some bucks/euros, since we'll need them after all we have been robbed.

  15. I have never felt myself so close to the American people. Not even when 911 happened. In my own country (Spain) we are pining for guillotines too. Maybe we could use the same guillotines in order to save some bucks/euros, since we'll need them after all we have been robbed.

  16. I have never felt myself so close to the American people. Not even when 911 happened. In my own country (Spain) we are pining for guillotines too. Maybe we could use the same guillotines in order to save some bucks/euros, since we'll need them after all we have been robbed.

  17. Is there a link behind the recent fall of the banking and mortgage sector and the recent attempts to pass "hate-speech" legislation in America? Worth thinking about.

  18. what a load of blx

    a smoking gone....?

    well done.

    looking forward to your selection as investigative journalist for business week.

  19. So it's okay to threaten martial law to stampede Congress into throwing $700 billion to the sharks who created that financial sewer, and now have the government buy into those big banks, but it's "socialism" to spend one percent (1%) of that mad money bribery on innoculating every single child on this planet... ($7 billion IS the estimated cost)

  20. I guess I'm blind...and you're paranoid.

  21. What I find striking is the mention that such and such is the preferred option in Washington and on Wall Street. Doesn't it seem like policies are set in the cocktail circuit in DC and Wall Street, and that whatever happens in Congress is just Kabuki, anyway?