Posted on 02/05/2010 4:13:23 PM PST by American Dream 246
This week we broke the story of possible criminal wrongdoing in the government takeover of insurance giant AIG. In the last several months, the US government has tried, unsuccessfully, to throw out plaintiff Kevin Murray’s case, alleging that the government’s takeover of AIG puts it in the position of supporting and promoting Islam and Shariah finance.
In the discovery process attorneys for Murray, David Yerushalmi and Robert Muise (of the Thomas More Law Center), discovered that the takeover itself may have been illegal, and have attempted to get Treasury Secretary under oath to try and untangle this mess. Again, the Fed and the Treasury Department tried to stonewall.
This past Tuesday, Federal district court judge Lawrence P. Zatkoff rejected the Treasury Department’s and the Fed’s effort to prevent any further discovery while the government attempts to convince the Sixth Circuit Court of Appeals to overrule Judge Zatkoff’s earlier ruling rejecting the government’s motion to dismiss the federal lawsuit challenging the government’s takeover of AIG on First Amendment-Establishment Clause grounds.
Tim Geithner: The “extraordinary move to depose a sitting Treasury Secretary”
The lawsuit, captioned Murray v. Geithner et al., was brought by attorneys David Yerushalmi and Robert Muise, representing the plaintiff, Kevin Murray, a tax payer and former combat Marine who served in Iraq. The federal lawsuit alleges that the U.S. government’s takeover and financial bailout of AIG was in violation of the Establishment Clause of the First Amendment.
Specifically, at the time of the government bailout (September-December 2008), AIG was (and still is) the world leader in promoting Shariah-compliant insurance products. Shariah is Islamic law, and it is the identical legal doctrine that demands capital punishment for apostasy and blasphemy and provides the legal and political mandates for global jihad followed religiously by the world’s Muslim terrorists. By propping up AIG with tax payer funds, the U.S. government is directly and indirectly promoting Islam and, more troubling, Shariah.
After the court rejected the government’s motion to dismiss the case and granted Plaintiff’s attorneys until May 2010 to conduct discovery into the AIG takeover, the government filed a motion asking Judge Zatkoff to certify the case for immediate appeal of his denial of the motion and to stay all further discovery. Today the government got its answer: No and no.
In what is an extremely well-written opinion, Judge Zatkoff scolded the government lawyers for filing the wrong motion at the wrong time and then proceeded to tell them they would have lost in any event because his earlier denial of the motion to dismiss was proper and well-considered.
The Court’s recent decision is especially timely and critical for Plaintiff Kevin Murray because his attorneys had previously filed a motion to compel Secretary Timothy Geithner to sit for a three-hour deposition. The basis for the “extraordinary move to depose a sitting Treasury Secretary” arose because Plaintiff’s counsel had earlier deposed the witnesses provided by the Treasury Department and the Federal Reserve Board and the government witnesses either testified inaccurately or feigned ignorance. The only one with all the answers turns out to be Secretary Geithner.
While forcing high government officials to sit for a deposition in civil litigation is extraordinary, federal rules allow a court to take this step when the government official has personal knowledge of a relevant element of the litigation and where the moving party has no reasonable alternative. In this case, attorneys Yerushalmi and Muise argued in their court papers that this exception fits their circumstances in spades.
“The witness designated by the government to testify on behalf of the Fed was less than forthright in his sworn testimony,” Plaintiff’s counsel Robert Muise of the Thomas More Law Center explained. “To his credit, he admitted he had prepared for his deposition by reading media reports and not actually reviewing the relevant documents. That might suggest that his lack of candor was willful blindness.”
David Yerushalmi, who is co-counsel with Robert Muise, laid out the grounds for the motion:
At the time of the takeover decision, Secretary Geithner was the head of the Federal Reserve Bank of New York and he was the leading advocate of the AIG takeover.
Moreover, he designed how the U.S. government would not only bail out AIG with tax payer dollars, but how the government would illegally take control of 80% of the voting shares through what was patently an illegal and invalid trust arrangement. It is apparent from the discovery we’ve conducted to date that this was done purposefully and with an intent to conceal the illegal takeover with a fraudulent trust.
Attorneys Yerushalmi and Muise want to ask Secretary Geithner:
* Why he forced AIG to take on so much debt that AIG’s credit rating, already in peril, was sure to collapse without yet additional government funds, essentially guaranteeing AIG would remain a ward of the state?
* Why he imposed such Draconian terms on AIG that there was no way it could survive without additional billions from U.S. tax payers?
* Why he then used AIG to secretly funnel 100% payoffs to AIG’s counterparties, including his colleagues and friends at Goldman Sachs, Merrill Lynch, and the European giant, Société Générale. In other words, why did Geithner decide to destroy AIG’s chances of survival as a private entity while surreptitiously saving and preserving private ownership of other domestic and foreign financial companies? And,
* Why he took control of 80% of AIG’s voting shares without legal authority to do so and used a fraudulent trust arrangement to conceal the illegal takeover?
BREAKING NEWS:
The court just today granted plaintiff Murray’s motion for leave to amend the complaint to include yet additional TARP funds provided to AIG after the filing of the complaint. While the court did not allow the plaintiff to add AIG as a defendant as he had also requested, Murray’s attorneys tell us that they had accomplished enough discovery to know where to look for the skeletons in AIG’s closet in any event.
More coming soon.
I agree.
“Wimp” was the first and only meaning that I took when I read that.
Libertarian ideologues think capitalism consists in the belief that the state as cooties; actual capitalists understand that it consists in belief in the proposition that income from capital is entirely legitimate, that sound allocations of capital create value that would not otherwise exist, and that large confident bets are what make those sound allocations come about. And they care far more whether a bet is right than about who makes it.
No, it isn't a stretch, it is a crock of horse manure.
Lawyers never do any good in any of these things. They are ambulance chasing low life parasites. Financiers make rational deals seeking to increase the total value available to everyone; lawyers seek to create pointless fights and endless blame games and transparent lying deluges of crap like this religious establishment idiocy.
They deserve to be laughed out of court. And so do you.
Best wishes to you and yours. This too shall pass...
Self-serving deals are irrational?
Read The Wealth of Nations by Adam Smith
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love
Damn those self-serving butchers, brewers and bakers. LOL!
Paying off foreign speculators at 100 cents on the dollar for their losing bets on the back of American taxpayers is not “sensible public policy”. It is looting, and yet another sign that the Republic is perhaps terminally diseased.
Geither, Paulson and Bernanke wouldn’t all be denying responsibility as hard as they can if this didn’t stink to high heaven.
With all due respect, when the government is spending $1.60 for every dollar it takes in, and thus has to borrow money to bail out a bunch of crooks that made bad bets, under circumstances that all but assure we will never get our money back, talk of not losing a dime is ignorant.
Who pays the interest on the money we borrowed to cover the bad bets of European banks? We do. And then each and every dollar we own, a “federal reserve note,” is now the note of a bank that has trashed its own balance sheet by taking on AIG’s toxic debt and swapping it for Treasuries.
Sweeping this problem under the rug of the Fed’s balance sheet does not mean “none of it has lost a dime”. Billions have been lost, and the American people are just too ignorant and propagandized to see it. Even Geithner is out in public talking about losses on AIG, and that is just the direct losses, the tip of the iceberg.
Leaving aside the fact that it benefited everyone by keeping the financial system functioning, and the banks open, protected depositers, revived stock and bond markets, and helped make back $5 trillion in lost asset wealth, and leaving aside the fact that the US financial sector pays the US treasury over $400 billion a year in taxes, and leaving aside the Fed's record profits last year on all its forms of support - paid to the US treasury at year end I might add - none of the money directly invested in major US financial corporations has cost the US taxpayer anything. Bailouts to UAW, cost plenty. Handouts to deadbeat homeowners, cost plenty. Middle class entitlements, the greatest boondoggle waste in world history, cost plenty. None of them get a drop of ink from the populist haters of finance. Why?
Because they hate rich people benefiting in any way, and any cost to themselves has nothing to do with it.
Which is why to me everyone who argues that way and recycles the same commie class war bilge is lower than pond scum. I'll take the bankers over them any day and twice on Sundays.
I’ll stand with Andrew Jackson and Thomas Jefferson on their attitude toward the parasitic banking entities, and they weren’t commies. You appear to believe there is such a thing as a free lunch (”Mainstreet . . . is never expected to pay any of it back”). This is not just looting by the banker class, it is looting by the commies of the moral and thrifty in favor of the immoral and wastrels.
Or as Keynes once said:
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
The Free Republic is doomed unless you and 999,998 others can begin to see what is going on here.
Hurray!!! Courage and God’s speed in this discovery of the dark arts.
The error you make is in believing that all economics is zero sum. It is not. The total value available to be shared by all parties combined, changes with the soundness of the allocation of capital. Finance adds value precisely by directing capital to sounder allocations. This does not cost anyone anything; it makes de novo the new value gained by the shift. This is at bottom the origin of all entrepenurial gain. No, it is not "a free lunch" to believe in profit or entrepenurial gain.
When bank debt is going begging at 60-80 cents on the dollar to yield 10-15%, and you can sell your own debt for 100 cents on the dollar to yield 0-2%, and you go ahead and sell the second to buy the first, and the banks lent to do not fail, they you will make money and add value for everyone. That is what Buffett did in the crisis, for example. The treasury lent at 5 to 9% instead of 10-15, borrowing at the lowest possible cost to do so. That made the banks much more valuable, which benefited everyone.
It benefitted the treasury because they FDIC didn't have to pay out so much, and directly because the investments earned more than they cost to finance, and because the more profitable banks kept overall economic activity higher, resulting in more income and taxes from the banks, their employees, their clients, everyone really.
The treasury receives 35% of the profits of every corporation in America. The treasury receives about 20% of the income of every person in America, on average. It is not in its interest for all of them to do badly. It can't make itself richer by bankrupting all of its partners.
It was simply a smart trade. It paid for itself, both in direct accounting, and with indirect effects, many times over. Nor is this surprising - the men who directed it are competent professionals seeking a public good.
But there are men who think everything in life is adversarial, who think their hatred of whole classes of other men is a form of economy, who envy richer men than themselves and are horrified at the idea of the government helping them in any way. They see nothing wrong in the government taking $400 billion a year from the financial sector at gunpoint, in ordinary taxes, year in and year out. That they regard as their birthright. But let that sum be lent for one year at interest, and repaid with that interest, to those wealthy taxpayers, and lord how they howl.
They are merely disgusting. It is class war drivel, top to bottom.
How did Jefferson finance the Louisiana purchase? If Jackson were President in 1803, would he have approved of the financing of the Louisiana Purchase?
The Louisiana Purchase was financed with money borrowed from European bankers, I think. I don’t know what Jackson would have done, but his quarrel, as I understand it, was not with borrowing money, a power expressly conferred in the Constitution; it was with chartering banks.
Of course economics is not a zero sum game and of course properly functioning financial institutions increase the size of the pie. Zombie banks do not, and the government’s guarantees inevitably, if slowly, turn the useful financial intermediaries into parasites. Why should government supported banks be any better than government supported health care? Aren’t Fannie Mae and Freddie Mac sufficient proof of the disaster of government involvement in the financial sector? A half a trillion likely down the rathole on that one, with nothing left but mansions and offshore accounts for the Demoncrat bureaucrats. It’s not just about the bankers.
If you really care about a Free Republic, you don’t go urging the government to make “smart trades”. The pages of history are littered with the tax-sucking holes that result from the government’s “smart trades”. They always look smart at first, and then turn into a rathole after the current crop of apparatchiks have skimmed off their pieces and gone away.
No parasitic British and Dutch bankers, no Louisiana Purchase.
As for Andrew Jackson...you're right, he had no aversion to bankers, but rather to the chartering of a National Bank. Still not sure why you cited him as being "against the parasitic banking entities" since he removed all Federal monies in the National Bank and deposited them in "parasitic" banks.
And why is it OK for small businesses to go broke while megabanks get bailouts? When government picks winners and losers, I wonder if anything could go wrong :)
They always look smart at first, and then turn into a rathole after the current crop of apparatchiks have skimmed off their pieces and gone away.
If a newly elected congressman can lose his soul to Washington corruption (some don't have one to start with), what happens to a bank when Washington dumps a truckload of money on it?
I anticipate one of the megabank sycophants to reply "we haven't lost a dime to the TARP..." That contradicts what Geithner said. And even if all of it were repaid, it goes back to the TARP fund, not to reduce the debt.
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