Former German Supreme Judge Condemns EU Super-Bailout

May 21, 2010 (LPAC)—In an op-ed in Wiesbadener Kurier yesterday, headlined "Without Democratic Legitimacy," Hans-Joachim Jentsch (CDU), a former judge on the Constitutional Court (1996-2005), attacks the super-bailout and its planned parliamentary passage today, as "opening the flood-gates, which we will not be able to shut again," as an open violation of the EU's no-bailout clause. And, worst of all, it is a usurpation of power by the EU institutions at the expense of national sovereignty—as the Lisbon Treaty ruling of the Constitutional Court has pointed out very clearly. "What is being done with the justification of the European stability mechanism, is nothing other than the transfer of sovereignty from the nation-states to the European Union, in bypassing of the European treaties, which means in a cold coup."

Jentsch in particular attacks EU Commission President Jose Manuel Barroso for his statement that "the euro will be defended, no matter what the price is," calling it an "open disregard of existing treaties and of democratic legitimacy. That is irresponsible."

More evidence that resistance against the bailout is strong at the highest echelons of the Christian Democrats, and that Chancellor Angela Merkel cannot be sure of all of her party members voting for the bailout in the national parliament (Bundestag) on May 21, were critical remarks by none other than Norbert Lammert, president of the Bundestag, who complained about the haste with which the deliberations on the German contribution to the EU financial umbrella are being conducted in the Bundestag. In an interview with Kˆlner Stadtanzeiger, Lammert said, that "the narrow timing" would have to be examined "self-critically." The government, which has to negotiate and act in such situations, could not put into effect the agreements, which have to be decided upon, if the Bundestag does not cooperate. In the case of the rescue package for Greece, the Bundestag did "recognizably" insist on corrections in the form of precise conditions and supplements, which he (Lammert) had demanded as a precondition for his vote.

Issa's Shopping List

May 21, 2010 (LPAC)—Over the last three days, Rep. Issa, the ranking member of the House Committee on Oversight and Government Reform, has taken a number of important initiatives which could be critical both to the jailing the banksters on Wall Street who are doing the bidding of the British in destroying the United States of America, and to the removal of British agent Barack Obama from the office of the Presidency.

* On Monday, May 17, Issa posted on his website all of the AIG bailout documents produced to the Committee on Oversight and Government Reform by the Federal Reserve Bank of New York. There are three documents: New York Fed e-mails; New York Fed electronic files; and documents from the New York Fed separately provided to the Neil Barofsky, the Special Inspector General for TARP.

* On Nov. 19, the day after Rep. Joe Sestak's defeat of Sen. Arlene Specter in the Pennsylvania Democratic Primary, Rep. Issa posted two items on his website designed to escalate the pressure on Sestak to come clean about the bribe offered to him by someone in the White House to withdraw from the race and on Attorney General Eric Holder to appoint a Special Prosecutor.

Issa writes in a item entitled "President Obama Calls to Congratulate Sestak, Wonder if that job offer still stands?": "Could the reason why Congressman Joe Sestak refuses to name names is because the very people who tried to bribe him are now his benefactors? For months, Sestak has repeatedly said without equivocation that the White House illegally offered him a federal job in exchange for dropping out of the race. Was Joe Sestak embellishing what really happened or does he have first-hand knowledge of the White House breaking the law? If what he said is the truth, Joe Sestak has a moral imperative to come forward and expose who within the Obama Administration tried to bribe him."

For Holder, Issa writes in an item entitled, "As Attorney General Doges questions, moral imperative demands Sestak set the record straight on WH bribe Attempt": "The Attorney General refuses to answer direct questions on whether the Justice Department is investigating what would amount to multiple felonies. Either Joe Sestak has been lying for months and he should say so or he has first-hand knowledge of the White House breaking the law and has a moral imperative to come forward and expose who within the Obama Administration tried to bribe him."

* Issa also sent a letter to White House Counsel Robert Bauer on May 19, calling on him to explain the Obama Administration's role in bailing out ShoreBank of Chicago. The bank was told that it needed to raise $200 million in capital in order to avoid being seized. Goldman Sachs, Citigroup, JPMOrgan Chase and GE Capital gave it $150 million. The bank reported a $105.3 million net loss for 2009 and a further loss of $17.3 million in the quarter ending Mach 31, 2010.

Issa wrote: "The Administration's apparent support for a ShoreBank bailout has predictably created a situation in which potential investors may be attempting to gain favor with the White House by contributing to the bailout fund. The unusually high level of interest in the bank's survival among individuals well-positioned to contact the FDIC and state regulators merits heightened scrutiny of the process by which ShoreBank is either saved or closed. For this reason, I was alarmed to read that a source claims Mr. Ludwig implied to potential investors that the White House would look favorably on those who contribute to the bailout of ShoreBank during a recent conference call..... Perhaps more problematic are allegations that Goldman Sachs Chief Executive Lloyd Blankfein has agreed to contribute to the ShoreBank bailout as part of an effort to repair Goldmans damaged relationship with the White House.

Considering that Goldman Sachs is currently the subject of a Justice Department criminal investigation, it is important to avoid even the mere appearance that Mr. Blankfein is attempting to curry favor with the Administration by contributing money to save the White House's favorite community bank.

Questions posed in Issa's letter to Bauer include:

1. Has anyone at the White House had any contact with officials from ShoreBank?

2. Has anyone at the White House encouraged any individual or bank to invest capital in ShoreBank?

3. Has anyone at the White House contacted any potential investors regarding ShoreBank?

4. Has anyone at the White House participated in any way during conference calls wherein individuals representing ShoreBank were attempting to raise capital from private investors?

5. Has anyone at the White House contacted the FDIC or the Illinois Department of Financial and Professional Regulation, Division of Banking regarding ShoreBank?

U.S. Rep. Judy Biggert (R-ILL) and U.S. Rep. Spencer Bachus (R-Ala) also wrote a letter to Obama asking about political influence in the ShoreBank bailout by Goldman Sachs, etc.

LaRouche Issues Emergency Call: Get Serious; Shut Down Derivatives, Put Glass-Steagall In Place

May 20, 2010 (LPAC)—"While the U.S. Congress, especially the Senate, is being tied up with all kinds of silliness," Lyndon LaRouche said today, "the fact of the matter is that a warning shot for the dissolution of the entire world financial system has already taken place. The world as a whole stands on the edge of a sudden, overnight collapse, which will make the 1,000 point drop in the Dow Jones on May 6 look like a small perturbation. We could wake up one morning, and find that we have no financial system at all—an instant plunge into a New Dark Age."

"The immediate key to this situation is the derivatives. The derivatives markets must be shut down now!"

"German Chancellor Merkel, with her sovereign ban on parts of the derivatives market as of May 19, has done the right thing, acting to protect her nation from the devastation of the speculators," LaRouche added. "The U.S. government must be forced to take the same action, immediately."

"The tens of thousands of American patriots now mobilizing to enforce the Glass-Steagall principle, must escalate their efforts, with a clear understanding of the danger. The issue of the derivatives gamblers, which Senator Dodderer is moving to protect, is inextricably linked with the Glass-Steagall issue. We must insist that the derivatives markets be shut down now. And we must immediately put in place the Glass-Steagall standard of separation between the commercial and investment banks, to protect our people from chaos, and establish the basis for the recovery program which I have laid out in detail."

"Let the U.S. Senate know that it is we patriots who are going to determine the policies of the U.S. government, not a bunch of predator British lackeys who run Wall Street. Demand they enforce sanity: Shut Down Derivatives, Implement Glass-Steagall."

U.S Patriots Mobilizing In Depth for Glass-Steagall

May 20, 2010 (LPAC)—Lyndon LaRouche's call for U.S. patriots to rise to the defense of their nation, by demanding passage of the Glass-Steagall amendment to the so-called financial reform bill, is being met with an extraordinary response throughout the nation. LPAC statements are being e-mailed in unprecedented numbers around the country, and citizens are taking whatever actions they can — from phone calls, to leafleting, to holding meetings, to joining LPAC — to further the campaign for a return to Constitutional banking.

The patriotic response is particularly notable among older Americans, who have more of a sense of what we have lost as a nation. For example, one Utah woman, 77 years old, who has never contributed to LPAC and had not been on the email list, burst into tears on hearing of the Glass-Steagall fight, exclaiming, "It's so good to hear! I didn't know who would restore the Constitution. The whole planet has been in such distress!" She then proceeded to join LPAC to support the fight.

Another patriotic phenomenon is evident in at least a handful of people who reported that they called all 100 Senate offices. One reached 98 of the offices, either speaking to staff or leaving messages. Another, a 30 year old guy just out of military service, was challenged by some offices as to why he was calling Senators not from his state. His reply: "This is the country. I call my own senators if it's a state matter. If it's a national matter, I call all the senators."

The labor unionist response continues to be particularly strong, notably from the Machinists, the UAW, Plumbers, Teamsters and IBEW. A deployment in Fremont, California, where the last auto plant in that state was just shut down, resulted in numerous former workers going into motion. Among city councilmen who signed the HBPA, there is ongoing motion. One singularlity was an East Orange, New Jersey councilman who asked an LPAC representative to address the Council for 3 minutes on Monday night. Another group of New York supporters determined to have a rally on Wall Street, which was to have occurred today.

Both Republicans and Democrats are going into action, as befits the fact that this is a patriotic, not partisan, issue. We are even picking up rationality on the part of professions usually antithetical to our campaigns — like accountants and banking executives — who are sending out emails demanding their friends act to enact Glass-Steagall.

However, despite this extraordinary mobilization, there have been virtually no Senators' offices who have committed themselves to joining with Cantwell and McCain for the Glass-Steagall amendment. This is the breaking point of Constitutional government: Will our Senators listen to their constituents' demands that they defend the Constitution, and act? Or will they go along with the British demand for dictatorship?

Obama Loses Control of the Process; Reid Loses Senate Cloture Vote

May 20, 2010 (LPAC)—Senate Majority Leader Harry Reid lost a vote on cloture to proceed to an accelerated debate and vote on the Dodd Bill Wednesday — without Glass-Steagall — when Democrats Maria Cantwell of Washington and Russ Feingold of Wisconsin, respectively a sponsor and a co-sponsor of the amendment to restore Roosevelt's Glass-Steagall protections, courageously voted with the Republicans against Reid's cloture motion. Once it was clear that he had lost, Reid changed his own "yes" vote to "no," in order to be able to bring the same motion up again in the future under an arcane Senate rule.

Reid called the vote on cloture at 3:35pm Wednesday by saying that efforts to reach a "consent agreement" on amendments had failed, but that Sen. Dodd had agreed to continue to try to reach such an agreement after cloture was passed. Coupled with Cantwell's and Feingold's votes, this indicates that Politico's Tuesday morning report that the Cantwell-McCaine Glass-Steagall amendment had been incorporated into a Reid-Dodd "manager's amendment," was disinformational. Cantwell has said repeatedly that she would vote against cloture if Senate leaders refused to allow the Cantwell-McCain amendment to be voted on.

Sixty votes are required for cloture, but after Scott Brown's victory in Massachusetts, the Democrats only have 59 Senate seats, so they need one Republican vote, even if all Democrats remain united. In this case, Republicans Collins and Snowe of Maine crossed over to vote for cloture, while Cantwell and Feingold crossed over the other way. The just-defeated Democrat Arlen Specter of Pennsylvania never showed up to vote at all, while Reid changed his own vote to "no" in a parliamentary manuever. Hence the recorded vote of 57 "aye" and 42 "no."

Well Done!

by Helga Zepp-LaRouche

May 19, 2010—The flipped-out reactions to the decision of the Bafin (Germany's bank supervisory agency), to ban naked short sales of stocks and state bonds, as well as naked Credit Default Swaps (CDS)—i.e. credit insurance without a real basis—should serve as confirmation to Chancellor Merkel, that the German government has done the right thing. A continuance of the possibility of naked short sales would have only meant that the speculators' caprice could have proceeded unbridled, ultimately against the national wealth. This is a first step in the right direction.

What should Germany do: For 34 months, with no success at reregulating, the systemic crisis has escalated, enormous capacities in the real economy have been destroyed, and billions of euros and dollars of tax money have flowed into the pockets of the gamblers. During this period, three G20 and several EU summits have shown that the financial institutions are obviously more powerful than the governments, who have put through one "rescue package" after another, with the only result being that the gamblers have taken ever greater risks. The only thing you could be sure of is that, if there were any doubt, the taxpayers would be the ones to shell out.

And how should Germany behave, if the pressure from the other EU governments in the face of the newly threatening meltdown, becomes so great that the German government agrees, against its better judgment, to the latest mega-rescue package, to which level-headed voices, such as that of the former head of the Bundesbank Karl-Otto Poehl, says, there are very sound alternatives.

It simply shows unlimited arrogance to believe that one could turn the German taxpayer into a milk-cow for all of Europe, and put Germany again under mass pressure, to act against its own interests, as was done with the introduction of the euro, and the inflationary packages to rescue the banks. If Germany, in this extremely dangerous situation, takes a small step, to make its situation somewhat manageable, various critics don't need to be surprised.

It has only been demonstrated that Germany still has a government.

Glass-Steagall Fight Breaks Into the Major Italian Media

May 19, 2010 (LPAC)— Corriere della Sera, Italy's largest daily newspaper, published an article by economics editor Massimo Mucchetti on Monday, May 17, endorsing the Cantwell-McCain amendment now before the U.S. Senate, which would re-establish the Glass-Steagall separation of commercial and investment banking, and calling for its emulation in Europe.

Under the headline "Banks: The Example of the U.S. Senate; A Bipartisan Proposal To Reform the Financial System," Mucchetti writes: "They insist. Arizona Senator John McCain and Senator Maria Cantwell of the state of Washington, have formalized their project, announced last December, to reintroduce the Glass-Steagall Act in an amendment to the reform of the financial sector promoted by the White House. McCain, a former military officer, is 74 years old and is a Republican. Cantwell, a 52-year- old environmentalist, is a Democrat. In their view, commercial banking must be again separated from investment banking, as the 1933 legislation (repealed in 1999) prescribed. Their amendment is bipartisan and the reform spokesman, Democratic Senator Chris Dodd, is supposed to include it in the discussion. It will be seen, then, where President Obama, who today is against it, and the Senate will stand...

"In Italy, instead, the reform of financial regulations seems to be hostage to the committee of central bankers who meet in Basel. And yet, we have a bill that in 1993 tore down the firewalls between the two kinds of banking activities, which had been erected by the 1933 Banking Act, exactly as the Gramm-Leach-Bliley Act did in America. But the Italian Parliament expresses no opinion on the subject... Not one meeting, among the many useless ones that are held, re-examines choices made in the '90s."

Mucchetti's article was picked up by the daily Il Giornale, whose editors, however, expressed pessimism about the outcome of the battle in the U.S. Senate. "Obama is not strong enough to challenge the banking establishment," they write, and compare Obama to someone who, faced with people driving a car at 300 kmh, with gasoline cans in the trunk, tells them to slow down to 270. "That is already something. But if you crash at 270, you die as well. And the cans explode."

Americans for Financial Reform to Back Glass-Steagall

May 19, 2010 (LPAC)—After thousands of mobilization calls by LaRouche PAC organizers to elected officials, citizens, labor leaders, activist organizations, etc., to mobilize support for the Glass- Steagall Amendment, the Americans for Financial Reform coalition put out a statement on its website, called "Support Cantwell McCain #3884, which restores the Glass-Steagall Act's key safeguards," urging its members to mobilize to pressure their Senators with the following message:

Dear Senator,

The over 200 consumer, employee, investor, community and civil rights groups who are members of Americans for Financial Reform write you today to convey the coalitions strong support for the Cantwell-McCain Glass-Steagall Amendment, #3884.

Ten years ago, the Glass-Steagall Act of 1933 that once separated commercial banks from investment banks and insurance companies was repealed, after years of erosion by regulators, courts and Congress. The result was substantial growth in the size, complexity and risk profile of the nation's largest financial institutions, which could, for the first time since the Great Depression, combine traditional banking with speculative activity.

The 2008 financial crisis revealed the short-sightedness of the repeal of these protections, which had kept our financial system stable for 60 years. Banking, insurance and investment firms merged, becoming too big to fail and too complex to manage. While much of damage was wrought by pure investment banks such as Bear Stearns and Lehman Brothers, commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps, and other explosive financial derivatives, which were packaged and sold around the globe. Commercial banks were able to do this because the Gramm-Leach-Bliley Act (1999) allowed them to form investment banking subsidiaries and authorized an expansion of non-deposit funding to support their off-balance sheet activities such as proprietary trading and derivatives dealing.

Cantwell-McCain Amendment #3884 reestablishes the wall between commercial banks and risky securities activities. The American people have paid an incalculable price for the casino-style securities trading that was allowed to flourish on Wall Street. It is time to rebuild the wall between Main Street banks and Wall Street gambling for the protection of every American.

Sincerely, Americans for Financial Reform.

Bankrupt BP!

May 19, 2010 (LPAC)— You don't have to be an environmentalist to be sickened by what is happening to that common patrimony of mankind, called the ocean, as a result of the criminal negligence of the British Petroleum Company (BP). As a result of short-sighted behavior, aimed at profiting themselves, no matter what the consequences, this British company is now threatening not only the marine life of the Gulf of Mexico, and the livelihood of those who live from the fruits of that Gulf, but also the health of wide swaths of the Atlantic Ocean, potentially all the way to Western Europe.

Lyndon LaRouche blasted BP in a statement issued May 17, charging the company with "unconscionable reckless behavior in the case of the recent Gulf of Mexico oil rig disaster. They should be banned from any further dealings in the Gulf of Mexico," LaRouche said.

On May 18, as news surfaced that the oil slick was beginning to reach the area of the Florida Keys, he escalated: "We should expropriate BP," said LaRouche. The company and its owners should pay the ultimate price for the damage which they have inflicted by their unconscionable practices.

The criminality of BP reflects the company's past as an arm of the British Empire, specifically its beginnings as the Anglo-Persian Oil Company in 1909. As an imperial agent, the oil company was the instrument of brutal oppression in typical British imperial fashion, including its utter lack of concern for the "locals." The lives of the "wogs" were not worth too much expense, in their view.

BP has been convicted of serious environmental crimes three times in the United States. The most devastating was the 2005 explosion at a Houston BP refinery, which resulted in the deaths of 15 workers, and the injury of many more. The cause of the accident was widely attributed to cuts in maintenance and safety expenditures, which had been ordered from London headquarters.

In the case of the Gulf disaster, which is called Deepwater Horizon, there is evidence of the same kind of criminal negligence. Having chosen to dig an oil well deep into the ocean floor, BP knew it was pushing the limits of technology, and working in an inherently dangerous situation. Yet, the standard means of providing protection against an explosion of the well, the so-called blowout protector, did not function when the accident occurred. It turns out, according to a survivor, who was interviewed on "60 Minutes," that the protector was known to have been damaged a few weeks before—but the damage was ignored.

Even worse, according to this same survivor, a BP representative had intervened during the hours before the attempt to close the well—which led to the explosion—to insist that a critical safety measure not be employed. It was a question of time—and money—for BP.

The cost of BP's decisions has already been quite high—for the country, BP's employees, and for the Gulf. Eleven men died in the explosion, fishing has been curtailed and heavily damaged in the Gulf, and the oil is spreading. It is estimated that 5,000 gallons a day have spewed from the well, with only a recent minor improvement, which allegedly reduces that flow to 3,000.

Instead of this form of "extreme drilling," we should be using safe, and potentially abundant nuclear power. But, having undertaken such a venture, BP holds full responsibility. We should make them pay in full. It will bankrupt them, and so be it.

Business as Usual: Banks Caught Ripping Off Municipalities

May 19, 2010 (LPAC)—Even as Wall Street has flooded Washington, DC, with lobbyists in a desperate attempt to head off the effort to re-impose Glass-Steagall, more and more crimes come to light to show why the return to Glass-Steagall is absolutely necessary. The latest example to surface publicly is widespread fraud against municipalities and state agencies, in which banks and financial advisors colluded to rig bids in the market for guaranteed investment contracts (GICs).

In March, the Justice Department filed a sealed indictment against CDR Financial Products and several of its employees. CDR helps municipalities arrange investment deals, but instead of trying to get the best deals possible for its clients, the firm colluded with banks to pay lower interest rates on the GICs sold to the municipalities, in exchange for kickbacks to CDR. The result was a "nationwide conspiracy" in which financial advisors to municipalities colluded with Bank of America, Citigroup, JP Morgan Chase, Lehman Brothers, Wachovia, and 11 other banks, according to an investigation by Bloomberg. The investigation found that the conspiracy included more than 200 deals involving some 160 state agencies, local governments, and non-profits. "The whole investment process was rigged across the board," former IRS operative Charlie Anderson told Bloomberg. "They were gouging the municipalities," he said.

In a related crime, Bloomberg also reports that "CDR signed off on interest-rate swaps to municipalities, as banks took hidden fees sometimes 10 times as much as they charged on fixed-rate bond deals, according to data compiled by Bloomberg. For the public, the swaps were fraught with risks."

With the banks screaming that re-regulation—and Glass-Steagall in particular—would "hurt the recovery," it is worth remembering that this sort of sleazy corruption is how they actually make their money, and that their "recovery" comes at the expense of the rest of us. If we are to have a genuine recovery, it is precisely this sort of criminality which must be rooted out, and ruthlessly suppressed by effective financial regulation. If a bank is honest, it has nothing to fear from regulation, and if it is not, it has no business holding a license. If the crooks aren't screaming, we're doing something wrong.