GLOBAL RESEARCH: Let us now consider the financial crisis and the panic bailout. No one should think that the crisis was unforeseen. Back in February Eliot Spitzer, in one of his last acts as governor of New York, warned about the impending crisis created by predatory lending, and reveled that the Bush Administration was blocking state efforts to deal with it. His extraordinary warning, in the Washington Post, is worth quoting at some length:
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. …
Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. . . . Several state legislatures, including New York’s, enacted laws aimed at curbing such practices. . . .Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal [Treasury] agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
Eliot Spitzer submitted his Op Ed to the Washington Post on February 13. If it had an impact, it was not the one Spitzer had hoped for. On March 10 the New York Times broke the story of Spitzer’s encounter with a prostitute. According to a later Times story, “on Feb. 13 [the day Spitzer’s Op Ed went up on the Washington Post website] federal agents staked out his hotel in Washington.” It is remarkable that the Mainstream Media found Spitzer’s private life to be big news, but not his charges that Paulson’s Treasury was prolonging the financial crisis, or the relation of these charges to Spitzer’s exposure. MORE
RELATED: Michael Garcia, the U.S. attorney in Manhattan, announced today that federal prosecutors won’t file criminal charges against the former New York governor and ex-attorney general of the state, reports the City Room blog of the New York Times. That’s because the investigation found no evidence that Spitzer had paid for prostitution services with campaign funds, reports the Associated Press, and it is longstanding policy and in the public interest not to prosecute prostitution charges against clients, according to a statement by Garcia. In addition to the campaign-funds issue, “federal prosecutors had been investigating whether Mr. Spitzer committed a crime known as structuring, or making payments in such a way as to conceal their purpose and source, by wiring money into a bank account controlled by the prostitution ring,” the Times blog explains. However, the federal investigation found “insufficient evidence” to pursue charges concerning his payments. MORE
ALSO, THIS: It is worth noticing that, ever since the 1950s, dubious events — of the unpublic variety I have called deep events — have marked the last months before a change of party in the White House. These deep events have tended to a) constrain incoming presidents, if the incomer is a Democrat, or alternatively b) to pave the way for the incomer, if he is a Republican.
Consider, in the first category, the following (when a Republican was succeeded by a Democrat):
* In December 1960 the CIA secured approval for the Bay of Pigs invasion of Cuba, and escalated events in Laos into a crisis for which the Joint Chiefs proposed sending 60,000 troops. These events profoundly affected President Kennedy’s posture towards Cuba and Indochina.
* In 1976 CIA Director George H.W. Bush installed an outside Team B intelligence unit to enlarge drastically estimates of the Soviet threat to the United States, eventually frustrating and reversing presidential candidate Jimmy Carter’s campaign pledge to cut the U.S. defense budget.
Equally important were events in the second category (when a Democrat was succeeded by a Republican):
* In late 1968 Kissinger, while advising the Johnson administration, gave secret information to the Nixon campaign that helped Nixon to obstruct the peace agreement in Vietnam that was about to be negotiated at the peace talks then taking place in Paris. (According to Seymour Hersh,“The Nixon campaign, alerted by Kissinger to the impending success of the peace talks, was able to get a series of messages to the Thieu government” in Saigon. making it clear that a Nixon presidency would offer a better deal. This was a major factor in securing the defeat of Democratic candidate Hubert Humphrey. Kissinger was not the kind of person to have betrayed his president on his own personal initiative. At the time Nixon’s campaign manager, John Mitchell (one of the very few in on the secret), told Hersh that “I thought Henry [Kissinger] was doing it because Nelson [Rockefeller] wanted him to. Nelson asked Henry to help and he did.”
* In 1980 the so-called October Surprise, with the help of people inside CIA, helped ensure that the Americans held hostage in Iran would not be returned before the inauguration of Reagan. This was a major factor in securing the defeat of incumbent Jimmy Carter. Once again, the influence of the Rockefellers can be discerned. A CIA officer later reported hearing Joseph V. Reed, an aide to David Rockefeller, comment in 1981 to William Casey, the newly installed CIA Director, about their joint success in disrupting Carter’s plans to bring home the hostages. Both the financial bailout, extorted from Congress and the escalated preparations for martial law can be seen as transitional events of the first category. Whatever the explanations for their timing, they will constrain Obama’s freedom to make his own policies. I fear moreover they may have the consequence of easing this country into unforeseen escalations of the Afghan war. MORE