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Tuesday 14 April 2009 14:00

UPDATE, 22nd April 2009:


The sudden death of the 41-year-old Chief Financial Officer of Freddie Mac, reported this morning, should serve as a wake-up call for all those, including the delegates and media people attending the Spring Meetings of the International Monetary Fund and the World Bank this week/weekend, who have been naively and stupidly handling the global financial crisis as though this is some kind of technical glitch, rather than facing up to the central reality:


And it's being covered up with violence (very badly).

The Clintons, working with Bush Sr. and Greenspan (concerning which sorcerers more is pending), are in the driving seat: and because these operatives have been stealing, stealing, stealing, they cannot stop, since they have to keep covering up their past thefts, murders and related crimes.

So the cat is now well and truly out of the bag. THIS IS THE THIRD CLINTON ADMINISTRATION, and Obama is just one voice in a murderous criminal enterprise now run by Vice President Biden, who is in charge of the National Security Council (NSC) which tells the President what to do.

Vast sums of money have been stolen and these are the criminal operatives, working for their own self-enrichment and to sustain the illicit supremacy of the US Intelligence Power, a.k.a. the 'State within the State', a.k.a. the CIA, who are responsible for the ransacking and for the corruption of the international financial system, the banks and the intergovernmental institutions. Moreover the core corrupters have been joined of late by certain other personnel, as will shortly be revealed.

Their desperation is such that they couldn't care less about the uproar that was bound to ensue from this latest Clintonesque 'suiciding'. Furthermore the explanation for recent blatant actions by Bush Sr. and Greenspan is precisely that the Clintons are in the driving seat, with Biden in charge of the NSC: so they think they have total immunity, even though both are under indictment!

We were warned over a year ago by a 'former' US operative that the post-Bush II Administration would be worse than its predecessors: the only prediction that he omitted, was to confirm that life after Dubya would be CLINTON ADMINISTRATION #3.


That's how we and others are looking at the 'whacking' of the Freddie Mac CFO.

NOTHING will be remedied UNTIL THESE CRIMINALS ARE DEALT WITH. How can a corrupted financial system be repaired when the crooks who destroyed it are STILL running the show?

Journalists who sidestep this issue because they haven't got the guts to speak the truth or because they quiver in awe of their weak or controlled Editors, need to ask themselves:

Am I doing my job , or am I just a prostitute?

STANFORD FACT: A Bloomberg report by Alison Fitzgerald and Michael Forsythe dated 16th April on the Stanford blow-out, contains, in its final paragraph, on the seventh page of this long report, the following reference: 'Kevin Sadler, a lawyer with Baker Botts LLP in Austin, who represents the [Stanford] receivership...'. So, right at the end of the report lurks the most important fact of all: the receivership is in the hands of the Bush Crime Family's TOP FIXER, James A. Baker III. The fox is calling the shots, rearranging the chickens.

The rest of the article is very interesting: But not as interesting as:

ACHTUNG! Overnight 13th/14th April we received a large number of emails and some phone calls, all from the United States, indicating that was 'down' for a period and could not be accessed. We are very grateful for your emails and diligence! We have now (as of 1:30pm UK time on 14th April) checked every single word, on the assumption that there may have been some interference to the text originally published in International Currency Review, Volume 34, #2, from the NSC, and we find that no alterations have been made.

This is a SECOND post of the same report posted on 13th April. You can tell the difference by the single word-change in the title, which now reads: OBAMA PREFERS 'TRASHETS' OVER DEBT-FREE SOLUTION. Thus, if there's further nonsense, they'll know that we are capable of restoring the text exactly as before, so intereference is a waste of their time and everyone else's.

FURTHER ACHTUNG! Our website and communications were attacked by 'the enemy' AGAIN on 22nd April, for about two hours. This offensive activity by NSC/NSA is ILLEGAL. Our IT people are smart and have fixed the situation. Each time these idiots do this, they send a signal to MILLIONS around the world that we are telling the truth and that they don't like it. They need brain surgery.

Plus, every time they do this, they gratuitously signal that we've hit a bulls'eye.

Also, the 'serious situation' notice indicating a certain problem thought to have arisen because of US official anger at our work, was MIRACULOUSLY resolved in the course of this Monday, after that notice was added. We have left the notice in THIS report, with an additional sentence to that effect.


Operating the $ Refunding from London without US Government participation delivers:

(1) Massive ongoing windfall tax accruals to the BRITISH Treasury given that all funds resident in the United Kingdom jurisdiction for 24 hours are taxable by the Inland Revenue. This makes the UK Refunding proposal of extreme interest to Her Majesty's Government and the UK Treasury.

((2) Massive ongoing windfall benefits to the UNITED STATES Treasury given that it will also receive a cascade of tax accruals from this independent private sector Refunding Program.

(3) The necessary refinancing of the UK and US banking systems ON THE BOOKS with no input from either Government and NO CORRESPONDING DEBT CREATED IN THE BACKGROUND.

(4) GOOD (i.e., on-balance sheet, taxed) money which will CHASE OUT THE BAD MONEY that the crass US Fraudulent Finance concoction will generate.

























FOR FURTHER INFORMATION ABOUT THE LEGALISATION OF FINANCIAL CORRUPTION, PLEASE ADDRESS ENQUIRIES TO OUR ADVISER, THE U.S. SECURITIES EXPERT MICHAEL C. COTTRELL, B.A. M.S. ON 814-455 9218, as he is the source for the historical, technical and related intelligence in this report. The information contained herein was first published in International Currency Review, Volume 34, #2, in March 2009. When calling Michael Cottrell, full identification must be given. Without full identification, calls will not be taken. Email:

The central issues raised in this report are the issues that MUST be addressed at the imminent IMF/World Bank Spring Meetings to be held in Washington, DC, concluding on 25th-26th April.

In mid-March we published: International Currency Review Volume 34, #2 on Systemic Fraudulent Finance and The Legalisation of Financial Corruption. Also published recently are issues of our titles The Latin American Times, Economic Intelligence Review, London Currency Report, Interest Rate Service and Arab-Asian Affairs. For details, see the second white panel on the Home Page.

To subscribe to our intelligence services, see the catalogue under World Reports Limited.

Globalist hegemony ideology and practice is comprehensively debunked in the Editor's study entitled The New Underworld Order, which can be ordered via the books section of this website. If you want to see what may well happen if the angle of decline steepens much further, you could do worse than also order a copy of The Red Terror in Russia, by the contemporary Russian eyewitness Sergei Melgounov, another Edward Harle Limited book available direct from this website. Also, the Editor's study entitled The European Union Collective, which proves that the EU is a long-range strategic entrapment operation to reduce European countries to satrap status within a German empire using economic strategy for relentless economic warfare purposes, can be bought here.

ADVERTISEMENT: Details of the Internet Security Solution software offered by this service in conjunction with a donation are appended at the very foot of this report, below the legal data. See also the catalogue by clicking on World Reports Limited and scrolling down to the bottom.

DONATIONS: You can help finance these exposures (which the Editor has to prepare on top of his normal publishing responsibilities) by sending us a donation. Press Make a Donation, which is live, and it takes you straight to our ultra-safe ordering system, which accepts Visa and MasterCard.

Many Internet users do not seem to understand that a huge ongoing mind-control and influence-building offensive (Operation Mockingbird Mark II) has been mounted against the American people by the controlling Intelligence Power, which is a key instrument of the World Revolution. This evil operation has been running and corrupting for many years.

At least 60 US websites pump out or elaborate unprovenanced 'virtual reality' into which the nefarious Intelligence Power and its key operatives headed by George Bush Sr., can insert their chosen lies 'du jour'. The purpose of the incessant barrage of lies, diversions, agitation and poisonous hate propaganda and other manifestations of this elaboration of the art of Dr Josef Goebbels, is to cover up the colossal catalogue of crimes that these agents of the Intelligence Power and their corrupted financial sector associates at home and abroad have perpetrated and continue to commit against the American people and the Rest of the World.

One technique used by this counterintelligence apparat is to intermingle serious analysis with New Age drivel and MK-Ultra-style mental manipulation designed to waylay those who have no sound grounding in faith and who drift in the wind, like the 19th century British Prime Minister Lord North, who was known as 'the cushion' because he resembled the shape of the last person who sat on him. Although we make no claim to infallibility, unlike the Pope, this service is not engaged in the devious and reprobate promulgation of virtual reality, which the targeted population is meant to confuse with reality. We focus instead on the truth as perceived to the best of our ability at the time of posting, however uncomfortable that may be for the crooks exposed in the process.

This does not mean to say that we are not from time to time deceived, like everyone else, by these odious liars and deceivers: but our focus at all times is on truth. We play no mind games, like these unspeakable reprobates, many of whom are paid to confuse, redirect and deceive.

And finally, this is done not because it is enjoyable, but so that the Editor can at least say to his daughters and their families: I tried to make the world a better place. In this connection, a Rabbi friend of the Editor told him once that his Jewish teaching is that 'you are required to try, but you are not expected to finish'. Christians are required to finish: so we will continue the fight.

A VERY SERIOUS SITUATION AFFECTING THE EDITOR OF THIS SERVICE IS PENDING BEHIND THE SCENES. Unless this matter (which we cannot go into right now) is resolved in short order, the unintended consequence will necessarily be a serious escalation of the exposures, which all the official parties concerned can avoid if they behave sensibly. At the moment there appears to be a stand-off. But the Editor will be placed in an impossible position if the wrong decision is taken.

The matter referenced above was MIRACULOUSLY resolved on Easter Monday!!!!!

By Christopher Story FRSA, Editor and Publisher, International Currency Review and associated intelligence publications and information services. See this site for details and ordering facility.

CORRESPONDENCE TO THE EDITOR: We routinely, automatically DELETE all emails which OMIT any element of the requested coordinates. We are not prepared to deal with anonymous spooks and other cowards who are too scared to provide their coordinates, for identification.

The CONTACT US facility is found in the red box throughout this combined website.



For longer than we can remember we have been pointing out that THERE IS A SIMPLE, STRAIGHTFORWARD, TRANSPARENT SOLUTION to the financial crisis.

For longer than we can recall, we have stressed that the decisions taken by the former Bush II Administration via the corrupted Treasury headed by that criminal financier Henry M. Paulson Jr., and the new even more convoluted decisions taken by the Geithner Treasury, are THE REVERSE OF THE SAID SIMPLE, STRAIGHTFORWARD SOLUTION to the financial crisis.

The Obama Administration and the Geithner Treasury have leveraged the Fraudulent Finance formulae developed under the corrupt Paulson Treasury, with the same objective:

To reignite and reboot the moribund Fraudulent Finance derivatives ‘Structured Products’ Ponzi parallel financial system, also known as a colossal BANKER’S RAMP, that was closed down between 10th and 12th September 2008 as reported by this service, when the $14.0 trillion was placed out of these criminal operatives’ reach.

Given the above, it follows that this obtuse attempt to continue the Ponzi Fraudulent Finance represents a US NATIONAL SECURITY ISSUE and should be addressed as such.

Let’s not mince words here:

Continuing with the Fraudulent Finance formulae concocted by the US Treasury and the Federal Reserve presents a grave threat to the stability, prosperity and the future of the Republic: and all concerned with this cynical rearguard operation to revive the collapsed derivatives sector should be handled with the severity reserved for them under the Patriot Acts, that lay down definitions of ECONOMIC AND FINANCIAL TERRORISM, which is what these people are perpetrating.


It is possible, but unlikely, that the President of the United States has not understood this. So let us, once again, explain where his perverse advisers have led him astray.

FACT: The TRUTH is always simple. LIES are always complex, and become ever more so because successive lies have to be perpetrated in order to buttress the earlier lies. A policy built on lies will COLLAPSE. Like plutonium, lies have a half-life: they decay.

As will be seen below, derivatives are so complex that no-one can understand what is going on: which is the WHOLE POINT. They’re based on LIES. They are FRAUDS.

As the original lie at the base of the inverted pyramid decays, fresh lies have to be invoked, like scaffolding, to prop up the earlier lies. Eventually, as the lies proliferate, the scaffolding of lies which is underpinning the inverted pyramid on either side becomes unstable, too, and eventually the entire structure collapses.

Obama therefore faces, sooner rather than later, the absolute collapse of the pyramid of lies and diversionary financing deceits that his wilfully misguided colleagues and advisers have fed him.

So let us reiterate the SIMPLE TRUTH that the President needs to UNDERSTAND:


Here are the basic economic FACTS of the matter:

By definition, the private sector generates REVENUE which the Government TAXES.

It follows, therefore, that the SIMPLE SOLUTION to the entire crisis is to ALLOW THE PRIVATE SECTOR to recoup the situation using the financial trading techniques that have hitherto been used clandestinely and corruptly and which the criminal financiers want to continue undertaking below the radar so that they don’t have to pay tax.

These trading techniques are NOT ILLEGAL. However they become illegal when performed clandestinely, with the proceeds held UNTAXED, off-balance sheet, and placed in secret offshore accounts. In other words, when combined with TAX EVASION, they become illegal.

So the simple, straightforward, transparent ANSWER to the crisis is crystal clear. PRIVATE SECTOR trading on-balance sheet yielding WINDFALL TAXABLE REVENUES should proceed immediately, and should have started up in June 2007 after the Group of Seven Financial Powers agreed in northern Germany that this was the way forward, reapproving this solution in 2008.

FACT: By blocking this SIMPLE, STRAIGHTFORWARD SOLUTION – the Refinancing Programme – the Bush Administration compromised the national security of the United States, committed treason against the Republic and its people, and engaged in ECONOMIC AND FINANCIAL TERRORISM.

The Obama Administration is continuing down the same futile path, and since it has the appalling example of its predecessor to contemplate, it should know better. So it is compounding the errors of its predecessor régime, and is likewise committing ECONOMIC AND FINANCIAL TREASON by choosing the PERVERSE ROUTE, and failing to apply THE CORRECT SOLUTION.


By definition, the public sector generates DEBT. The public sector PRODUCES NOTHING and so, by definition, cannot generate revenue. It CANNOT TAX ITSELF, except through its payroll taxes. Since it cannot generate REVENUE, it relies on the taxpayer, on the creation of debt and also on printing money to finance its endlessly permissive operations.

Therefore, the convoluted inventions of the Geithner Treasury and of the Bernanke Federal Reserve to reboot the derivatives sector represent perverse ARTIFICIAL CONSTRUCTS which, by definition, generate DEBT, not REVENUE. THIS IS ENTIRELY UNNECESSARY: see above.

To embark upon complex Fraudulent Financing operations under the cover of ‘stimulating the economy’ but in reality, in order to revive the derivatives sector which has collapsed – and which is now widely understood to represent a MONUMENTAL FRAUD given that the so-called ‘Structured Products’ generally have NO RECOURSE to the underlying original source of funds – is to engage wilfully in FINANCIAL TERRORISM against the American people and the Rest of the World.

Now as we have all observed, the Obama Administration thinks it can continue down this path. We have news for this President’s headstrong ‘experts’. Your tired formula is rotten and it will collapse. There are liable to be few takers for your artificially revivable fraudulent ‘assets’ scheme; and although you have wrapped your criminal intentions in a dense fog of complexity consistent with the pack of barefaced lies that you are marketing, you are trying to build your house on sand.

As you have already doubtless observed, you can’t even build the house, because the foundations are sinking into the sand before you even start bricklaying.

So, if President Obama prefers for his Administration to run into the sand, by all means carry on! Just keep going with this revamped Fraudulent Finance formula, and see where it leads you. You are collectively as arrogant and perverse as your predecessors: and you doubtless imagine that because you think 'they got away with it', you will too.

WRONG! You are careering towards DISASTER.

Since you know perfectly well what the CORRECT SOLUTION is, but are simply UNWILLING TO PURSUE IT, you cannot escape condemnation as perverse perpetrators of Financial Fraud and Economic and Financial Terrorism. It’s not as though you are ignorant. Not at all. We know for a fact that you are aware that the CORRECT SOLUTION is to proceed with the trading in the private sector without Government involvement, and to tax the resulting REVENUES, which will finance the entire Obama Programme, with money to spare – creating NO DEBT in the process.

TO REPEAT: By NOT pursuing this course, you are explicitly and wilfully engaging in Economic and Financial Terrorism. You may believe that the people don’t yet ‘get this’. But believe us, they will, they will. And when they do, those lamp posts that your friend George Bush Sr. spoke about, may be used for ‘other purposes’.


As mentioned in the preceding report, it has been our experience over decades that after we have stuck our necks out and our predictions are seen to have been correct (which is simply a question of making sure that one is following the relevant threads, and not blindly running after diversions), prominent economists, Nobel Laureates and other members of the community of the ‘Great and the Good’ pile in and ‘reveal’ the realities that we have previously exposed.

A number of these fragrant characters – Messrs Stiglitz, Black and Sachs, for instance – are at this time engaged in precisely such ‘revelations’, although NONE of them are stating what needs to be said: namely that you are promoting the doomed legalisation of Fraudulent Finance. For whatever reason, such people can't bring themselves to employ the word: CRIMINAL.

But you can disregard almost every word they publish! Because what they are doing is criticising and pulling apart Geithnerism-cum-Bernankeism, which is a completely sterile activity! Geithnerism doesn’t need to be pulled apart because it’s irrelevant: it is going to collapse and the whole of the financial world knows it. And is rightly terrified that it will.

And have these prominent ‘Establishment’ economists yet come up with the alternative
(there’s only ONE alternative)?

Correct: They have NOT. What Stiglitz, Black and Sachs OUGHT all to be promulgating now is the CORRECT SOLUTION outlined above: Transparent, on-balance-sheet, fully taxed, visible trading operations in the private sector, generating ONGOING REVENUE – with the Government OUT OF IT ALTOGETHER and just raking in the windfall TAX REVENUES.

Instead of rabbiting on about the intricacies of Geithnerism, writing convoluted articles which make them look good but which go nowhere, they should be applying their acquired influence to FORCE this Government onto the right track. Yes, that would mean demanding the sacking of Geithner and Summers and placing Bernanke on notice that he must do what the President demands, or else.

And of course this all presumes that we have a President who knows what he is doing and wants to do the right thing, which are pretty tall assumptions but have to be made here for the sake of this argumentation – even though the President now appears to have lied to and double-crossed The Queen [see below] and is intent on going on with a false revival of the derivatives carousel.


We always thought that the purpose of suddenly elevating the Group of Twenty to idolatry status was actually a device to diminish the importance of the Group of Seven (G-7), for the SPECIFIC purpose of smothering the G-7-Approved Refinancing Programme of transparent on-balance-sheet trading operations yielding taxable REVENUE without Government involvement.

And so it has proved – since, as noted in the preceding report, the G-20 Communiqué made NO MENTION of derivatives, Structured Products, Fraudulent Finance, Ponzi schemes, and all the other aberrations – assuming that the Press Room would buy this omission without comment.

Well, the Editor, who didn’t waste time attending the London Canning Town circus, turned out to be the ONLY COMMENTATOR, until The Times woke up the following Monday, to have NOTICED that there was NO MENTION of the underlying Fraudulent Finance causes of the crisis whatsoever.

Which means that, since Gordon Brown organised the circus, and was therefore in a position to lay down what would be expected from it, he may be a direct participant in this deception and fully supports the continuation of the Fraudulent Finance rather than the implementation of the G-7 transparent DEBT-FREE Refunding Programme, which is the sole SOLUTION to the crisis.


Having returned home from his eight-day tour, to attend a Jewish Seder in the White House (the first time this has ever occurred), President Obama will proceed now with the PERVERSE COURSE.
Specifically, it is intended to standardise the derivatives default price and to proceed with the new derivatives trading platform based on the obtuse Geithner-Summers formula, with the following Economic Terrorism objectives:

To suck every available good dollar out of unwise, reckless and short-sighted investors.

To enable Carlyle and Carlyle Capital, for the Bush-DVD Crime Nexus, to extract their profits.

After which there will be another COLLAPSE, probably within a year or even within six months [see below] which will be FAR, FAR WORSE than what has been experienced to date.

This is what the Obama Administration is going to do. That is their mad, reprobate intention.


We have been advised by UK sources who know the score that President Barack H. Obama is absolutely not to be trusted. However because he is Head of State, and given that the Editor is a ‘foreigner’, we have bent over backwards to give this man the benefit of the doubt, even though it soon became apparent that things weren’t right: The Queen’s $52 billion of ‘guarantees’ were stolen, before being ‘restored’; and the $14.0 trillion was finally withdrawn as we reported, on 29th January, after it had become clear that the Obama Administration was intent upon pursuing the perverse course, rather than the Refunding Programme.

[Malicious counterpropaganda intended to create the false impression that the $14 trillion that we reference is another $14 trillion stolen or partly stolen by others, and that the $6.2 trillion element is the same as the stolen $4.5 trillion again referenced in the preceding report, is unprovenanced, confusion-building deception the underlying motives for which, if exposed, would compromise and expose many facets of this offensive to bamboozle compartmentalised cadres and other parties].

We did form the impression earlier that the diplomatic skills that our Head of State is known to be able to deploy, had yielded the mutually appropriate results. And as we now understand this fluid situation, President Obama is believed to have been told by the British Head of State that it would be enormously in the mutual interest to proceed with the on-the-books, transparent private sector revenue-generating Refunding Programme agreed to by the G-7 in 2007 and 2008. It is believed that he indicated that he would at least take notice of this request, but please review the greater detail below. We do not really know whether he signed anything meaningful at the G-20 jamboree, although we do know that he entered into commitments which he reneged upon the moment he arrived back home: all that is known is that after ranting about the ‘Deliverables’ being ‘mandatory’, President Sarkozy calmed down, implying that unspecified 'sensible' decisions had been taken.

But it would now appear that President Obama simply paid lip service to what The Queen will have told him, without having the slightest intention of actually paying any attention to what Her Majesty had said after leaving her presence. If that is not the case, there is no evidence to the contrary.

What we do know is that the White House was reported to us on 11th April 2009 to be 'extremely annoyed' (more colourful language being employed) that the CORRECT SOLUTION laid out by this service, which WAS discussed at the meeting between the two Heads of State, was even raised.

One can speculate as to the causes of such annoyance, and one can also speculate that the matter alluded to above concerning the Editor of this service is indeed CONNECTED to the fact that the CORRECT SOLUTION was raised at that crucial Heads of State meeting.

Such speculation would be along the right lines!

Shortly after we posted the preceding report, which included the intelligence that President Sarkozy had threatened STASI-Chancellor Merkel with ‘elimination’ because she was blocking the releases on behalf of Bush-DVD, Merkel suddenly cut short her visit to Afghanistan.

Another interesting development is reported here: the Editor received an email from Beijing at 11:45pm on 9th April (UK time) from a known and reliable Spanish contact, containing the following information: ‘Just to let you know that it is not possible to read your website in Beijing, except in international hotels’. This implies that the Chinese Government may also consider that our direct assertion of the truth is too painful, even for them – notwithstanding the reality that the Chinese authorities are very assiduous subscribers to our financial journal, International Currency Review.


This leaves the proposal to operate the private sector Refunding Programme independently from London as the ONLY remaining way out of the catastrophe that the Barack Obama Administration is perversely rushing towards, with its determination to press ahead with the new Geithner-Summers Plan which, bless him, Jeffrey Sachs, Economics Professor at Columbia University and Director of the ‘Earth Institute’ (!!), said on 6th April is ‘even worse than we thought’ (sic!) [see below].


Operating the $ Refunding ANYWAY from London without US Government participation delivers:

(1) Massive ongoing windfall tax accruals to the BRITISH Treasury given that all funds resident in the United Kingdom jurisdiction for 24 hours are taxable by the Inland Revenue. This makes the UK Refunding proposal of extreme interest to Her Majesty's Government and the UK Treasury.

(2) Massive ongoing windfall benefits to the UNITED STATES Treasury given that it will also receive a cascade of tax accruals from this independent private sector Refunding Program.

(3) The necessary refinancing of the UK and US banking systems ON THE BOOKS with no input from either Government and NO CORRESPONDING DEBT CREATED IN THE BACKGROUND.

(4) GOOD (i.e., on-balance sheet, taxed) money which will CHASE OUT THE BAD MONEY that the crass US Fraudulent Finance concoction will generate.

As for Professor Sachs, and to give him his due, Sachs elaborated:

‘Cynics [NO: realists – Ed.] believe that the Geithner-Summers Plan is exactly what it seems: a naked grab of taxpayer money for Wall Street interests. Geithner and Summers argue that it’s the least bad approach to a messy situation, in which we need to restore banking functions but don’t have any perfect ways to do that [NOT TRUE: see above – Editor]. If they are serious about their justification, let them come forward to confront their critics and to explain to the American people why the other proposals are not being pursued. So far, Geithner and Summers tell us that their plan is the only option, but without a word of further explanation as to why’.

In other words, Geithner and Summers are liars because they BOTH KNOW that there is another solution – namely, the transparent on-the-books taxable revenue-generating agreed Refunding Programme MINUS Government, that they have explicitly rejected. They have rejected it because they are working to refund Carlyle and Carlyle Capital, of behalf of the corrupt Bush-Clinton Cabal, and to relieve foolish investors of every good dollar so as to enable these operations to extract their profits at the expense of the soon-to-be-scammed investors concerned, and the taxpayer.

And of course, Jeffrey Sachs himself hasn’t yet got round to putting forward the ONLY SOLUTION, outlined above – which is surprising, given that he is not unendowed with the requisite ‘smarts’.

If he doesn’t do so soon, we would be perfectly entitled to conclude either that he’s actually rather dense, or else that, like the rest of these people, he’s ‘part of the problem’.


Although self-evidently we are not privy to what was discussed between the Monarch and the President of the United States, we know through several sources that the Refunding Programme which will generate TAXABLE REVENUE WITHOUT U.S. TREASURY DEBT, was discussed and that key names that you know about were mentioned in this connection. At the mention of these key names, President Obama backed off and MAY HAVE uttered words to the effect: ‘No, that’s not the way WE are going to do it’, while also indicating a commitment (note the two opposite stances) and demonstrating a complete change of attitude from one of confrontation to one of cooperation in response to The Queen’s remarkable genuine professional ability to charm.

Whether the President bad-mouthed the key US expert in question to The Queen cannot possibly be known, but it can be deduced from information received that he may well have done so. The name in question is not appreciated at the White House and the US Treasury, because he speaks the truth and because neither intend to proceed with sound finance. He is of course the expert whose work we reproduce from International Currency Review, Volume 34, #2, below.

If President Obama did bad-mouth Michael C. Cottrell, B.A., M.S., it had NO EFFECT! Otherwise the White House would not be 'extremely annoyed' 'as we speak', and nor would the issue concerning the Editor of this service have blown up (to be alaborated later, if there is no resolution).

The perverse and ruinous intention is to proceed along the Fraudulent Finance route, which will end very quickly in disaster and – here’s the Editor’s point – WILL TAKE THE BRITISH ECONOMY AND BANKS DOWN WITH IT. (Now you know why the Editor is involved in this battle).

As an outline, what appears to have occurred is exactly as was predicted earlier on this website:

Obama arrives at Stansted under a cloud.

Obama attends at Buckingham Palace for his one-on-one meeting with The Queen.

At this meeting, the Refunding Programme as explicitly explained directly to The Queen’s advisers by the key US name in question through ourselves, is raised. Also mentioned is the second key US name whose reputation for integrity is likewise impeccable.

In the course of the interview, Obama’s stance was transformed for the purposes of completing the meeting, from one of confrontation to one of intended cooperation, and various commitments may have been given. These commitments appear to have been false.

Obama then proceeds on his travels from podium to podium, and on arriving back home, we understand, indicated that he intends to proceed along the disastrous course concocted by his top appointed officials and advisers representing Biden (the new Cheney), Cheney himself, Summers and Bush 41 – who, we know, specifically intervened in the evening of 9th April 2009, to stop the release process, AFTER a conversation between the Editor and Michael C. Cottrell, B.A., M.S.

In summary, the President of the United States gave certain undertakings at the highest level in the United Kingdom without having the slightest intention of honouring them, thereby making it evident in retrospect that he was not interested in the G-7-Approved private sector Refunding Programme, and would be proceeding along the disastrous route recommended by the Financial Terrorists and traitors to the United States and the American people who are jeopardising US National Security and either couldn’t care less, or don't understand where they are going.

Which of course means that the situation, as stated in the preceding report, is now far more tense and dangerous than was the case prior to the G-20 watershed meeting at which these matters were supposed (ostensibly) to have been stitched up behind the scenes.


The intention of these operatives, headed by President B. Obama with the full cooperation of the NYSE and ICE, is to re-start the collapsed Fraudulent Finance derivatives, in the expectation that some fools abroad will pile into this deceitful DEBT-GENERATING process, thereby fraudulently restarting the carousel – with a view to elevating the ‘Toxic’ or ‘Legacy’ 'assets' (which have NO RECOURSE to the underlying flow-of-funds and so are accordingly fundamentally fraudulent and worthless), highly desirable, and enticing imprudent institutional investors like pension funds and money managers in the municipal sector, as well as reckless banks and greedy private investors at home and abroad who are pready to abandon the Prudent Man Rule, into this poisonous bonanza.

Once Carlyle and Carlyle Capital et al have ‘revalidated’ the existing overhang (including double-counting) of between $600 and $700 trillion of fraudulent derivatives ‘assets’ (that is to saym have converted the current dead, moribund and worthless Ponzi derivatives into cash) – while having procured that foolish foreign purchasers, American pension funds, municipalities and banks have stuffed themselves to the gills with a brand new generation of even more worthless fraudulent Ponzi ‘assets’ than the previous lot – these fraudsters will be in a position to take down the entire system – whereupon they will be in a position to scoop up all the residual good assets and a few banks that they covet, achieving their revolutionary objectives by means of Fraudulent Finance.

For the immediate future, we know for a fact that none of those parties in the background in the United States who have been told what is happening, are paying any attention. Their eyes glaze over and they block their ears. They are indifferent to the fact that on the other side of the balance sheet, the US Treasury is to accumulate a vast, open-ended additional overhang of official US debt, which will burden future generations of Americans out to infinity.

And because WE KNOW that they DO understand the logic of the G-7-Approved revenue-generating, debt-free Refunding Programme, these people, ALL OF THEM, can be accused of:

Committing treason against the American Republic and People.

Criminal co-conspiracy to defraud the portfolios of pension funds, municipalities, institutions and unwise investors at home and abroad on a monumental scale.

Criminal intent to revalidate worthless assets that they know to be fraudulent by the usual Ponzi Scheme method of PULLING IN NEW MONEY, in exchange for which new, even more prospectively poisonous false derivative ‘assets’ will be stuffed into portfolios in the United States and abroad (if foreigners fall for this latest official American scam) which the foolish purchasers will be unable to dispose of in due course when the new generation of 'trashets', in turn, is found to be worthless both because they are intrinsically so, and because there will suddenly be no takers for this trash.

Gravely compromising and jeopardising US National Security by criminally mortgaging the futures of generations of Americans through the deliberate creation of wholly unnecessary debt to finance this Fraudulent Finance to ‘restore’ value to the likes of Carlyle and Carlyle Capital, in accordance with the treacherous intentions of George H. W. Bush Sr. on behalf of the DVD (Abwehr), Dachau and its sentinel, the bribed STASI-Chancellor Angela Merkel.

Gross dereliction of law enforcement duty in failing to take the severest measures against all those in plotting this outrageous escalation of US official scamming, which is intended to buttress the usurped control of the Intelligence Power over the Executive Branch of the US Government, as previously explained by this service.

Recklessly sacrificing economic and financial stability for criminal purposes as described.

Exploiting public office for the fraudulent and criminal purposes in question, including self-enrichment and the financing of ‘Black Operations’ in open defiance of the clear interests of the American people and of future generations of Americans.

Engaging in these criminal acts in time of war, exacerbating the treason that they are committing.

Openly engaging in gross acts of Economic and Financial Terrorism, as provided for in their own national security legislation.


Buried inside this intended giga-scamming operation is the US official intent to generate revenue by these means – revenue that may OR MAY NOT be taxed. On the basis of past experience, a huge proportion of the intended Ponzi transactions will be handled, as usual, off-balance sheet, so that the proceeds will be shovelled into ‘offshore’ accounts, despite the latest revived G-20 ‘offensive’ against tax evasion. Whether the offshore centres will comply with the pressures being exerted on them now that the Bush Crime Family is ostensibly ‘out of the way’ (Bush II TORPEDOED the OECD’s operations against the offshore centers in 2001) remains unclear.

But even if a significant proportion of the new Fraudulent finance transactions are taxed, the tax accruals will have been MORE THAN OFFSET by the huge increase in US Treasury debt that is to be created and is being created on the other side of the US Federal Government's balance sheet.

And as we have pointed out, IT IS NOT NECESSARY TO CREATE ANY NEW TREASURY DEBT AT ALL. So, what is the problem?

ANSWER: This is the Geithner-Volcker-Summers-Bernanke-Obama method of purporting to have these transactions occur in the private sector WHILE RETAINING CONTROL.


What they are terrified of is LOSING CONTROL OF TRADING. That's the bottom line.

So they are quite happy to burden the present and future generations of Americans with colossal unnecessary Treasury debt IN ORDER TO RETAIN CONTROL.

Therefore, THEY ARE COMMITTING TREASON AGAINST THE AMERICAN PEOPLE, since there is an alternative method of getting out of this mess: by RELINQUISHING CRONYISM CONTROL so that the Government sector is not engaged in creating UNNECESSARY DEBT to finance this scam.

Discontent may remain muffled for now in the context of the official attempt to invent a ‘feel-good’ factor for public consumption, in the ‘expectation’ that the imminent Fraudulent Finance rebooting operation with the Lombard Odier external ‘insurance wrap’ will reignite the productive economy, whereas its purpose is to exchange the worthless existing derivatives pile for NEW MONEY, in accordance with the standard Ponzi principle.

This operative said on 9th April that the US economy will begin to feel as if it is recovering within the next few months, as the “sense of free fall” comes to an end. Addressing the Economic Club of Washington, this operative offered NO EVIDENCE WHATSOEVER for his assertions, as his woolly phraseology revealed. There were ‘still substantial downdrafts’ (no mention of the ten huge Bush-related Ponzi networks waiting to ‘blow’ in Europe, of course); but Mr Summers was ‘reasonably confident’ that ‘the sense of a ball falling off the table’ will come to an end within months.

'We will no longer have that sense of free fall', he waffled, adding that his aim was to ensure that the downturn is not an ‘historic event’. He thought that in the past 6-8 weeks ‘things have felt a little better’ on the basis of ‘a substantial anecdotal flow of information’.

Tell that to the owner of the diner frequented by the Editor of this service in Midtown New York, which was empty when last visited, or to the Midtown breakfast diner which is normally so crowded on Sunday mornings that for years it was a waste of time turning up there. The other Sunday the Editor strode past and observed plenty of tables, so he renewed his acquaintance with the place.

Exactly what class of weed Mr Summers has been consuming is unknown. But what we do know is that, as President Obama’s ‘closest economic adviser’, this operative is a key driving force behind the intended Fraudulent Finance offensive that will crucify the present and future generations of Americans because of the HUGE BURDEN OF UNNECESSARY DEBT that it will generate – thanks to Summers’ perverse refusal, along with his colleagues, to TAKE THE CORRECT ACTION.

Meanwhile the blocking operations of the Connecticut Trust group on behalf of George H. W. Bush Sr. have continued unabated since we ‘outed’ these criminals. On 9th April 2009, further sabotage activity by this group was reported. Releases are being sabotaged because the criminal controllers intend to have everything their own way, supported by Gold Badges who are likewise intent on not doing their jobs, but instead collaborating in the intended official Fraudulent Finance orgy.

On the other hand, we received information from usually reliable sources on Easter Day, believe it or not, to the effect that an unspecified number of arrests had taken place that day, of key people at their homes under US Homeland Security legislation, and that those arrested were said to have been hauled away without being read their rights. [When we report such arrests etc, we replicate what sources tell us. If confirmed we say so: on Sunday it was not possible to confirm such reports].

Also on Easter Day, we learned that a previously wealthy Russian who had bought a property in West Palm Beach for $125 million from Donald Trump, who had previously acquired the palace in question for $45 million, was of course trying to dispose of it, and that Donald Trump had offered him $25 million for it! This information comes from local real estate sources.

The following analysis, published in International Currency Review, Volume 34, Number 2, on pages 2-37, will demonstrate even to those perverse US officials and bankers whose ears are blocked and who have eyes to see but refuse to see, that we have the full authority of due diligence and proper professional analysis behind us – plus the necessary clout to have published what follows in our journal, the latest issue of which is now resident with governments and their structures, as well as with central banks, treasury departments, international institutions, intelligence agencies, and other subscribing official and private sector organisations and policymaking environments.

The ICR financial analysis, entitled ‘The Legalisation of Financial Corruption: The Creation of Securitisation and Credit Default Swaps’ ( as Chapter One) and ‘The Legalisation of Financial Corruption: Descriptions of the Resulting Derivative Financial Frauds and Scams’ (Chapter Two), has been in the international public domain for a month now, and is based upon research and analysis specially conducted for this service by the sole US securities expert who is telling the truth and pulling no punches (an ACCURATE statement), Michael C. Cottrell, B.A., M.S.

Our website will be upgraded this year to enable us to publish charts and illustrations. At the moment, we do not have this capacity. Therefore, in Chapter Two, the references to the three charts are supplemented by Notes appended at the foot of the analysis, following the list of 163 References and Notes appended to the analysis itself.

These three Notes are NOT NUMBERED because numbering them would interfere with the existing hierarchy of references. To know more about the three charts explaining the scamming operation under Paulson’s TARP deception, which is the precursor of the Obama Administration’s even more convoluted TALF arrangements, see chart references: Figures One, Two and Three.


These three charts have been distributed by a senior authority by hand in Virginia and Washington DC in the form of a four-page International Currency Review leaflet entitled:

‘Revaluing worthless, false ‘Structured Products’
(in order to refinance corrupt Fraudulent Finance operations in the process):

Deconstruction of the Paulson Treasury ‘TARP’ operation:

Three charts exposing official Fraudulent Finance
published in International Currency Review: VOLUME 34, NUMBER 2, MARCH 2009’.

The International Currency Review presentation is followed by the definitive world Glossary of Deceptive and Exotic Derivatives Terms [pages 39-87], including specially invented terminology consistent with this lie-factory, which serves the purpose of OBFUSCATION so as to mask what is happening in the derivatives sector behind a fog of jargon. This glossary is not published here.

Finally, this analysis is presented here for two key reasons:

(1) To demonstrate that our professional conclusion and our recommendation that the debt-free Refunding Programme must proceed from London is based upon solid and accurate analysis, not just upon vapid arm-chair opinion; and:

(2) To make it impossible for those interested parties who are opposed to doing what has to be done the honourable and correct way, to deny that we know what we are talking about here which, believe it or not, we have heard is taking place.

After nearly four decades of publishing this journal, it ought to be understood that we DO know what we are talking about, which is why governments and their structures, banks, central banks, international institutions, leading investors and certain intelligence agencies worldwide subscribe to International Currency Review.

FACT: Indicative of its petty-minded revulsion at being told what it doesn’t want to know, last December the Paulson Treasury cancelled its sub. to International Currency Review, to which it has subscribed since the early 1970s, and asked for a refund, which we do not provide (see ‘How we do Business’ on our website)!!! (When you buy a pair of shoes at a shoe store, you don’t return to the store and ask for the money back on one shoe! You paid for two shoes and you keep the shoes).

THAT’S HOW STUPID THESE DEVIOUS PEOPLE HAVE BECOME. They don’t fancy having a serious journal lying around in their Library – as has been the case for nearly four decades – describing their behaviour as duplicitous and criminal: which it is.

If that wasn’t the case, we wouldn’t describe it as such, would we? The US Treasury is engaged in systematic Financial and Economic Terrorism against the American people and the Rest of the World. This is not a figment of our imagination: money-laundering is Financial Terrorism according to the Patriot Act legislation. Too bad that they make an exception for serial official misconduct.


The financial market environment that produced credit derivatives and other structured products was the cumulative consequence of the following:

BCCI, which was deliberately imploded and its surpluses stolen;

The Bush Task Group on Regulation of Financial Services;


The Gramm-Leach-Bliley Act of 1999.

This bank was established as a partnership involving the Bank of America, with an initial fully paid-up capitalisation of $10,000,000 – $2,500,000 provided by the Bank of America for a 25% ownership share, in collaboration with Agha Gasan Albedi of Pakistan (1). The bank’s primary supporters, both politically and financially, were Sheikh Zayed bin Sultan Al-Nahyan, the eventual ruler of the United Arab Emirates (UAE), and Kamal Adham, known as ‘the godfather of Middle Eastern Intelligence’ (2).

Bank of America’s expansion into the Middle East was ‘justified’ on the basis that it took advantage of ‘Corbanking’ (= correspondent banking). The transference of funds into external Financial Center banks and the offering of access to master trusts, foreign exchange, depository services, and check-clearing through correspondent banking networks, enabled the Bank of America to gain a foothold into Islamic banking institutions (3). Pakistan became the clear choice for Western banks intending to establish Corbanking relationships – due to three characteristics:

(1): The reality of ‘Islamisation’;
(2): The existence in Pakistan of a highly skilled banking profession;
(3): The emergence of a new government committed to liberalisation, i.e., specifically to privatisation of national banks and the establishment of new investment banks (4). Islamic banking prohibits the payment of interest on money deposited with the bank, and usury. Additionally, the new government of Zulfikar Ali Bhutto committed itself to liberalising and privatising the country’s banks as a way to encourage foreign business enterprises into Pakistan. Habib Bank and the Muslim Commercial Bank provided links between the Islamic-oriented banks and the new liberalised investment banks that were established in the country (5).

During the Second World War, the United States used the Office of Special Services (OSS) and its Board of Economic Warfare (BEW) as primary instruments to harass and destroy the economic activities of Nazi Germany. The Central Intelligence Agency (CIA) employed the same strategies, through BCCI’s correspondent arrangements throughout the Middle East (6).

BCCI thus became a primary instrument by means of which the so-called ‘Reagan Doctrine’ was to be implemented. This US strategy was packaged for public consumption as an offensive aimed at financing and supporting anti-Communist insurgencies around the world, as President Reagan had ostensibly ‘decided’ that the Cold War had outlived its sell-by date.

[Addendum by the Editor: In reality, a much darker imperative was at work: 1989 was the 72nd anniversary of the Russian Revolution. In accordance with the secret logic of the ‘Rule of 72’, it was time for the ‘torch’ of Revolution to be handed back to the classic revolutionary power of all time, the United States. The United States' aberrant behaviour as a pariah state reflects this].

In the course of 1982 and 1983, President Ronald Reagan secretly issued three National Security Decision Directives (NSDD) for the purpose of steering US foreign policy:

NSDD-32, NSDD-66, and NSDD-75.

NSDD-32, issued in March 1982, declared that ‘that the United States would seek to neutralise Soviet control over Eastern Europe’, and authorised ‘the use of covert action and other means to support anti-Soviet organisations in the region’ (7).

NSDD-66, issued in November 1982, declared that that it would be ‘US policy to disrupt the Soviet economy by attacking a ‘strategic triad’ of critical resources that were deemed essential to Soviet economic survival (8).

Finally, in January 1983, NSDD-75 was issued, calling for ‘the United States not to just co-exist with the Soviet system, but to change it fundamentally’ (9).

NSDD-66 and NSDD-32 allowed the Reagan-Bush White House to undertake more drastic measures towards implementation of the ‘Reagan Doctrine’ by seeking any means necessary to secure low oil prices, that would damage the Soviet economy, while also arming and supporting Iraq and the anti-Soviet Mujaheddin Afghanistanis.

This operation utilised the BCCI financial conduit provided by the CIA and the National Security Council under Vice President George H.W. Bush Sr.. The war was costing the Central Intelligence Agency (CIA) more than $100 million dollars a year, and ‘necessitated’ funding Pakistan’s ISI (Inter-Services Intelligence) which was actively supporting the Mujaheddin against the Soviets (10).

The CIA engaged with more than 200 leading US corporations in this context, so that all these US corporations thereby provided cover for the operations of specifically CIA-sponsored and CIA-supported US corporate entities (such as Chemical Bank of New York) (11).

Chemical Bank of New York was established in 1934, when Lehman Brothers, a Wall Street Investment firm, bought 20% of the Rockefeller shares in the Corn Exchange Bank of New York.

The Corn Exchange Bank was then merged into the Chemical Bank and became the Chemical Corn Exchange Bank – later re-named the Chemical Bank of New York.

On 20th November 1978, Chemical Bank established the Chemical New York Southwest, Inc., in Houston, Texas, as a loan production affiliate of Chemical Bank, New York, NY. The Directors of Chemical Bank also created ChemLease, Inc. as an equipment finance affiliate, which changed its name to Chemical Business Credit Corporation in January, 1980, with a brief to provide equipment and commercial finance services (12).

Chemical New York Corporation, a bank holding company, re-structured its international financing operations, in April 1983, and in doing so, promoted:

(a) Mr William B. Harrison, Jr., to head the US Corporate division encompassing all corporate lending in the United States;
(b) Mr Maurice H. Hartigan II, as the head of Account Management and Solicitation of Correspondent Banks, brokerage firms, and insurance companies;
(c) Mr Barry T. Linsley, as head of all Treasury and foreign exchange operations
in Europe and the Middle East; and:
(d) Mr William C. Pierce, as head of the Energy and Minerals Group (13).

In September 1984, Chemical Bank established a special Government Relations Office in Washington, D.C., to be known as Chemical New York, Inc., located at 2000 Pennsylvania Avenue, N.W.., although Chemical New York Inc.’s District of Colombia-registered office was at 1025 Vermont Ave., N.W. (14). Chemical New York purchased Texas Commerce Bancshares, owned by the family of James A. Baker III (President Reagan’s Chief of Staff) in 1987 (15).

The Federal Reserve Board approved an application, on 21st April 1988, from Chemical New York Corporation to be engaged through a subsidiary, Chemical Futures, Inc., in the execution and the clearance of futures contracts on a municipal bond index.

Chemical Futures, Inc. was allowed by the Federal Reserve Board to solicit, execute, and clear futures contracts on major (international) commodities exchanges for non-affiliated persons, and would be allowed to serve as a futures commission merchant on the Chicago Board of Trade (16).

By 1996, Mr. Harrison had become Chairman and Chief Executive Officer (CEO) at Chase Manhattan Bank, New York, whereupon he successfully merged Chase Manhattan Bank with Chemical Bank for the sum of $35 billion US dollars. This merger incorporated the assets acquired by Chemical Bank when Chemical Bank merged with Manufacturers Hanover Corporation, in 1991. Thus, by the end of 1996, Chemical Bank/Chase Manhattan Bank had become the largest banking operation in the United States, with assets of over $235 billion (17).

Chemical Bank and BCCI: Although BCCI only existed between 1972 and 1992, it paved the road for financial terrorism, the scourge which has been and continues to be exposed through our website and published reports, because it became the financial conduit for White House/CIA/NSC operations and lethal adventures following on from the circumstances outlined at the beginning of this report, which should be considered and used as a verbal flow-chart. BCCI was used for:

(1) The purchase of arms for the anti-Soviet Mujaheddin in Afghanistan, via the CIA [and DCI/Vice President G.H.W. Bush];
(2) Arms purchases by BOTH Iran and Iraq during their eight-year war, so that de facto the United States was one of the powers sustaining the war with arms sales; and:
(3) The self-destruction of the Soviet Union’s financial system, induced by means of bribery and an economic warfare operation involving CAPCOM, et al., Chemical Bank, et al., and the CIA (embracing the open-ended financial operations of free-wheeling CIA operatives, such as Leo Wanta, who was assisted by the much more resourceful and effective Chinese intelligence financier, Howie Kwong Kok)(18).


Capcom was created by BCCI’s Treasury Department head, Ziauddin Ali Akbar, who capitalised the corporation with funds from BCCI and BCCI customers (19). Akbar registered a shelf corporation, on 26th April 1984, named Hourcharm Ltd., at his home address in London (England), and then, on 22nd May 1984 renamed it Capital Commodity Dealers, Ltd. before again renaming the company as Capcom Financial Services, Ltd., in July 1984 (20). Capcom was thereafter funded with additional monies, to an amount of £25,000,000 (approximately $37,000,000, in 1984 US dollars) (21).

Its speciality was changing its name and spawning offshoots. Specifically, Capcom Financial Services Ltd. then went through a number of variations:

Capcom Securities, Ltd.;

Capcom Inc.;

Capcom Co., Ltd.;

Chemical Futures, Inc.; and:

Capcom Equities, Inc. (22).

Capcom, Inc. was formed in Cleveland, Ohio, on 8th August 1976; in Boca Raton, Florida, on 26th August 1976; and in Washington, D.C., in 1981 (23).

Capcom Co., Ltd. operated/operates as a London-based Japanese Management Consulting Services firm which was established in 1991 (24).

Finally, Capcom Equities, Inc. (re-named as Everest Securities, Inc., on 19th March 1990), was set up on 12th August 1988, in Illinois, with its registered office in Plantation, Florida (25).

BCCI’s network of banks aided the movement of massive amounts of funds to arms suppliers in the United States Canada, China, and Soviet satellite countries, and provided the main mechanism for Capcom profits/losses from the purchase and sale of options derived from the Chicago Mercantile Exchange to flow on and off the BCCI books (26). This ‘options scheme’ facilitated the ‘loss’ of a minimum of between $250 million and $500 million within a Capcom/BCCI ‘black hole’ (27).

In December 1982, Vice President George H.W. Bush announced the formation of The US Task Group on Regulation of Financial Services to:

‘Review the Federal Government’s regulatory structure for financial institutions and propose any desirable legislative changes to the existing system’.

It was against that official background that, in a keynote speech addressing The American Assembly at Columbia University, on 8th April 1983, Bevis Longstreth, a Commissioner with the US Securities and Exchange Commission [SEC], made a detailed appraisal of the Financial Services Industry and regulations, the full text of which is given as Appendix Three with this presentation (28):

‘If a salesman… deals directly with the consumer of financial services – he would have to contend with various US and State financial services regulators. If the salesman is affiliated with a broker-dealer, he must become a registered (securities) representative [in order] to sell securities.

To qualify, he must meet detailed requirements with respect to character and competency; in recommending transactions he is subject to rigorous ‘suitability’ standards and generally to the NASD’s (National Association of Securities Dealers) Rules of Fair Practice. In addition, he is subject to the BLUE SKY laws of the States where his clients reside’ (29).

‘If the salesman wants to sell commodity futures or commodity options he must be qualified as an associated person of a futures commission merchant and conducts his activities in accordance with the regulatory scheme administrated by the Commodity Futures Trading Commission (the CFTC) and the National Futures Association’ (30).

‘If the salesman wants to sell insurance products he is subject to the jurisdiction of the state insurance regulators. If he wants to provide investment advice, with respect to securities, he must register as an investment adviser under the Investment Advisors Act and conform to its requirements, including state regulations’ (31).

‘If the salesman is employed by a bank, he can offer securities, manage pooled investments and render investment advice. Because a bank is not a broker or dealer and is exempted from the Investment Advisors Act, the securities laws do not apply. A different set of regulations apply, issued by bank regulatory authorities’ (32).

According to Mr. Longstreth, these multiple regulatory schemes were/are inefficient, ineffective, and, therefore, irrational. He believed that the time had come to ‘clear out this regulatory thicket in favour of a functional approach – based on identifying what aspects of function warrants regulation, and then design a regulatory agency to administer the regulation’ (33).

Mr. Longstreth addressed the ‘need’ to de-regulate ‘Pooled Funds’ (now known as HEDGE FUNDS), since the function of pooled funds is the management of the customer’s money based upon the supposed ease of management and economies of scale. At the time, in 1983, pooled funds were subject to the Investment Company Act of 1940 and the Securities Act of 1933 (34).

Additionally, banks may not sponsor mutual funds, but may organise common and collective trust funds that are very similar to mutual funds. However, banks are regulated by the Comptroller of the Currency’s Regulation 9, and in some cases, ERISA [Employee Retirement Income Security Act of 1974], which address conflicts of interest. Mr Longstreth questioned ‘whether any reason justifies preserving the differences in regulation of pooled funds’ over better management of the funds on behalf of the customer (35).

Another type of fund that Mr. Longstreth raised regulatory questions about was Money Market Mutual Funds and the implicit evasion of Regulation Q.

The issue of risk, in the case of Money Market Mutual Funds, may be slight, but the deposit may not be paid out at par (‘breaking the buck’).

Moreover, since passage of the Garn-St. Germain Act, the question of money market deposit accounts was made a matter of law (36).

Mr Bevis Longstreth also made out a case for the consolidation of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), on the basis that then-recent (1983) legislation had made the jurisdiction between the two agencies so close, that there was now little overlap. However, the term ‘commodity’ is also defined under the US Commodity Exchange Act as a ‘security’, and the many broker-dealers regulated by the SEC are also futures commissioned merchants subject to the CFTC regulations (37).

Mr. Longstreth concluded that the Glass-Steagall Act of 1933 had reflected a clear Congressional determination that avoidance of the ‘hazards’ and ‘financial dangers’ to banking that arise when commercial banks engage in investment banking, outweighed the advantages of competition, convenience or expertise that might support bank entry into the investment banking arena (38). …Yet, he elaborated, ‘the growing interdependence of financial intermediaries should give pause to policymakers tempted by the siren song of Adam Smith’.

Therefore, Mr Longstreth concluded that it was ‘my thesis that’:

(1) Market discipline can only assure soundness in an overall environment where institutions are PERMITTED TO FAIL;

(2) The linkages among financial intermediaries often are too extensive (and growing stronger and more numerous) to PREVENT ANY ONE FAILURE FROM TRIGGERING OTHERS;

(2) Therefore, the collateral consequences of failures often impose unacceptable costs on the financial system; and:

(4) Accordingly, to assure soundness, a new system of direct regulation is needed – a system broad enough to encompass all financial intermediaries, and flexible enough to enable the forces of full disclosure and market discipline to do their share of the job (39).

Finally, Mr Longstreth urged people to study the Federal Reserve Act as the most logical source of regulation and emergency funds, but noted that the Federal Reserve Act was too archaic and inflexible to do the necessary regulatory job (40).

The BUSH TASK GROUP (the 1983 task force) was established as the result of US Congressional hearings (1981-1983) regarding enforcement of The Corrupt Foreign Practices Act (1977) involving corporate reporting and accounting (41).

The Task Group was formed, in part, as a result of the SEC Chairman John S. R. Shad’s proposal for a one-year task force which would:

(1) Review the regulatory structures applicable to the securities, banking, thrift, and insurance industries in the United States;

(2) Propose that financial services should be regulated by functional activities rather than by outmoded industry classification;

(2) Recommend that overlapping, duplicative, and conflicting regulatory activities be consolidated, having identified the overlaps, duplications and conflicts; and:

(4) Recommend that ‘excessive regulation’ within and between agencies should be eliminated under new legislation (42).

The Bush Task Group endorsed proposals for the substantial reorganisation of the Federal regulatory system for depository institutions. The proposals would repeal the exemptions in the Securities Act of 1933 covering the registration of securities issued by banks and Savings and Loan Associations and would transfer to the SEC, the burden of administering periodic reporting, proxy solicitation, and short-swing profits provisions of the Exchange Act… .

Thus, these initiatives would consolidate the administration of securities disclosures requirements for banks and US Savings and Loan Associations, ostensibly resulting in more uniform disclosure financial disclosure to public shareholders and securities analysts and facilitating evaluation of comparative investment risks (43).

The Securities and Exchange Commission (the SEC) would become the repository for filings of all publicly held institutions, Savings and Loan Associations, and holding companies, as it is for all other publicly owned companies.

In early 1984, the SEC testified in support of legislation to facilitate the development of the private secondary mortgage market.

The resulting legislation was signed by President Reagan on 3rd October 1984, and was designed to encourage offerings of mortgage-backed securities by private issuers (44).

The financial deregulation that resulted from the Bush Task Group of 1985 has led to an age of heightened power for the Federal Reserve System via the following mechanisms, contributing to the collapsing system now in evidence:

(1) The continued expansion (coverage) of Regulation K,
i.e., international banking and Edge Act corporations;

(2) The further expansion of free-market activities introduced under:
The Omnibus Banking Bill of 1980;

(3) The Competitive Equality Banking Act of 1987;

(4) The Electronic Fund Transfer Act;

(5) The Financial Institutions Reform, Recovery, and Enforcement Act of 1989;

(6) The Foreign Bank Supervision Enhancement Act of 1991;

(7) The Gramm-Leach-Bliley Act of 1999;

(8) The Legal Certainty for Bank Products Act of 2000; and:

(9) Title 31, United States Code, Subtitle IV (45).

The Bush Task Group Report on Regulation of Financial Services (Blueprint for Reform) presented on 26th and 27th March 1985 contained several recommendations concerning the deregulation of the banking industry, including:

The Federal bank oversight supervisory agencies should be thinned out;

A Federal Banking Agency should be created;

The Securities Act of 1933 should be amended;

Restrictions in the Investment Company Act of 1940 should be removed; and:

The Trust Indenture Act of 1939 should also be amended.

The overall emphasis of this report was primarily to reduce the regulatory oversight of Federal supervision of national banks – thereby allowing the banks to gain access to the lucrative, but prohibited, non-banking financial services arena (46).

The Carlyle Group, describing itself today as a ‘global private equity firm’, was established in 1987, in Washington, D.C., as a Private Partnership by Stephen L. Norris, and David M. Rubenstein (47).

The partnership then hired William E. Conway, Jr., Daniel A. D'Aniello, and Greg Rosenbaum. By 1995, Messrs Rubenstein, Conway, and D’Aniello reportedly collectively owned an approximate 50% interest in the group’s general partnership, with the California Public Employees Retirement System (CalPERS) as the only US institution owning a stake in the partnership (a 5.5% share, for $175 million, paid in 2001) (48).

In September 2007, Mubadala Development Company, ‘an investment group owned by the government of Abu Dhabi, which is part of the United Arab Emirates’, purchased a ‘7.5% share of Carlyle’s general partnership, for $1.35 billion’ (49). Wikipedia has named George H.W. Bush and former Secretary of State James A. Baker III as notable investors in Carlyle Group [sic!] (50).

In our reports, we have pointed out that the participants in this colossal ‘money machine party’ operated on the assumption that the bonanza would continue for ever – as is presupposed by the reality that the Depository Trust and Clearing Corporation (DTCC) boasted during 2008 that it had cleared $1.8 quadrillion of derivatives transactions.

This entity is owned by a group of US clearing banks, now including inter alia Deutsche Bank, which purchased the clearing facilities from JPMorganChase. It has guaranteed over $600++ trillion of derivatives ‘assets’ outstanding and, as more and more of these contracts reach maturity and fail, its guarantees are being called, with actual or prospectively DISASTROUS consequences.

It was the height of irresponsibility for the banks to have set up a corporation to guarantee these exotic transactions (clearing them = guaranteeing them). When the guarantees are called, they must be honoured (operation of law).

Notwithstanding the above, on 31st January 2007, William E. Conway, Jr., sent a letter to the firm’s 'investment professionals worldwide', which contained some revealing observations, in which Mr Conway attributed the continued rise of world stock markets to a glut of liquidity in the world financial system, describing the glut as reflecting:

‘... the availability of enormous amounts of cheap debt’.

Mr Conway’s letter elaborated: ‘This cheap debt has been available for almost all maturities, most industries, infrastructure, real estate and all levels of the capital structure’. He said that there is so much liquidity in the world’s financial systems that ‘lenders (even ‘our’ lenders) are making very risky credit decisions’.

‘And of course when [the liquidity bubble] ends, the buying opportunity will be once in a lifetime. But I do not know when it will end’. Mr Conway also expressed concern that the resulting US recession could become a global depression.

Enron started life on 25th April 1930, as a component of a group of filed companies, operating in different US states, with the various DBA (‘Doing Business As’) companies having different names, such as the Northern National Gas Company. Enron was crossed-filed as a corporation in Texas on 10th December 1934, in Iowa on 26th August 1935, and in Delaware on 11th October 1934 (51).

Enron evolved into a component of the US intelligence community’s Energy Operations, with various agreements and contracts being secured from Middle Eastern parties resulting from the Allies’ victories in the Second World War.

In parallel, though, Enron also became an energy behemoth given its multiple cross-filed component corporations consisting of legal, chartered, and assumed names, i.e., Enron Corporation; Northern National Gas Company; Division of Internorth, Inc. (this name being registered three times); The Peoples’ Natural Gas Company; Division of Internorth, Inc.; Northern Natural Gas Company; Energy Systems Company; Division of Internorth, Inc.; Internorth, Inc.; HNG/Internorth; Enron Oil & Gas Company; EOG Resources, Inc.; HNG Fossil Fuels Company (52).

[The replicated/duplicated names represent separate companies,
registered and filed separately in different States].

Enron, et al., was/were exploited during the Reagan-Bush Administration, via CIA/DCI William Casey’s various ‘Enterprise Operations’, to move monies and materials around the world in order to meet the needs of ‘LASMO’, Amerada Hess, and other entities involved with the implementation of President Ronald Reagan’s Executive Orders NSDD-32, NSDD-66, and NSDD-75., referenced above (53). Enron was also deployed as a conduit for monies and jobs for the South American operations of the NSC-CIA during the George H.W. Bush Administration (54) [e.g., Falklands].

Between 1985 and 1987, Enron had set up four phoney offshore shell corporations to arrange sham oil trading contracts with Enron. Messrs. Mastroeni and Bourget were convicted and sentenced for defrauding Enron and for filing false tax returns – all under the sole supervision of Mr Kenneth Lay, Enron’s Chairman and Chief Executive Officer (55).

Enron’s offshore entities were (and in some cases still are) numerous and had/have multi-year, multi-million dollar contracts with such corporations as Kuwait Foreign Petroleum Exploration Co., El Paso Energy Partners, LP., BG-Enron, Enron Oil & Gas India Ltd. (EOGIL), Chaco, Amerada Hess Corp., and Trans Pacific Petroleum NL.(56) Amerada Hess forms a component part of the LASMO/Wilmington Trust operations of the 1990s (57).

We have already seen that Enron, et al. consisted of a large number of filings – winding up with 20 legal, chartered, and assumed DBA names filed in numerous States throughout the United States.

Enron’s top leadership, represented by Jeffrey K. Skilling and Kenneth L. Lay, were aggressive in securing debt to increase Enron’s capital to finance the expansion of its operations. At the same time, the conglomerate spawned over 3,500 offshore Special Purpose Entities or Vehicles (SPEs or SPVs) to hold assets that had been illegally moved from Enron’s balance sheet to the balance sheets of these so-called Special Purpose Vehicles.

The SPEs benefited from quite extraordinary ‘special exemptions from regulation’, applicable for EnronOnline, as specified in a 200-page attachment to the 11,000-page General Funding Bill passed by Congress on 15th December 2000 (58).

These SPE exemptions allowed Enron, et al., to own as little as three percent of the limited partnership with any outside interest partner, i.e., OSPREY Partnership, which generated $3.9 billion off-balance sheet debt – backed only with preferred stock – which was to be convertible into 50 million common shares in Enron (59).

EnronOnline was launched, on November 29, 1999, as the first web-based transaction system. This innovation allowed buyers and sellers to buy, sell, and trade commodity products globally – but only through Enron. The site allowed energy users to trade natural gas, electricity, and over 500 other products including credit derivatives, bankruptcy swaps, pulp, gas, plastics, paper, steel, metals, freight, and even TV commercial time.

This ‘off-the-floor’ trading platform soaked up tremendous volumes of Enron’s funds, since Enron was either the buyer or the seller of the aforementioned commodities and securities. Essentially, Enron was draining itself of its cash flow via EnronOnline’s trading activities. EnronOnline was closed down for online trading on 28th November, 2001 (60).

Given its huge debt burden, Enron’s survival hinged on its credit rating status. At the end of October 2001, both Moody’s and Fitch declared that Enron had been slated for review for possible downgrade (61). The possible downgrade would force Enron to issue millions of shares to cover the guaranteed loans, and thus devalue the stock further.

On 29th October 2001, the rumour spread on Wall Street that Enron was seeking one to two billion dollars’ worth of additional financing from the banks – a development that contributed to Moody downgrading Enron’s credit rating or senior unsecured long-term debt ratings, to Baa2, just above junk bond level. Standard & Poor’s downgraded Enron to BBB+ on 30th October 2001 (62, 63).

Enron had created myriad offshore entities [see above] that were used for planning and avoiding taxes, while increasing Enron’s reported ‘profitability’ and of course ensuring the accumulation of vast (Ponzi) untaxed profits offshore.

Enron’s ownership and management had full freedom of currency movement, internationally, enjoying total anonymity, so that losses were thereby hidden while off-balance sheet profits accrued to the companies and their ‘executives’.

The operations of these Special Purpose Enterprises (SPEs) made Enron appear more profitable than its actual financial condition warranted, and created a dangerous spiral that required Enron to perform better and better in each succeeding quarter – requiring deception to be employed in order to hide the obvious fact that Enron was haemorrhaging cash. Although the inside executives knew of this situation, the public did not, since Enron’s Securities Exchange Commission quarterly and annual filings did not reveal the true financial situation – as is required by law.

Arthur Anderson, LLP, Enron’s accounting firm, was well aware of this unlawful situation, but did nothing to correct it, and, in fact, participated (co-conspired, as a professional Accessory to the Fact) in structuring the offshore so-called Special Purpose Enterprises to enshroud the process from public scrutiny (64).

On 2nd December 2001, Enron filed for Chapter 11 bankruptcy (65). Robert E. Rubin, a US Treasury Secretary during the Clinton Presidency, telephoned the Treasury and spoke to the Undersecretary for Domestic Finance, Peter Fisher, about ‘what (Mr Fisher) thought of the idea’ of the US Treasury persuading bond-rating agencies to hold off reducing the freefalling Enron credit rating.

Such an intervention would help both Enron and Citigroup, one of Enron’s leading creditors. Quite properly, Mr Fisher told Rubin, who was Citigroup’s CEO, that the idea was not appropriate; and he took no action to assist Enron (66).

The US Treasury Secretary of the day, Paul O’Neill, the Commerce Secretary, Donald Evans, and the Federal Reserve Chairman Dr Alan Greenspan, all likewise revealed that they had received calls, on 2nd December 2001, from Enron’s CEO Kenneth L. Lay asking for help for Enron (67).

Thereafter, Enron, like BCCI and CAPCOM, was charged by the Securities and Exchange Commission and other authorities, with falsely reporting profits from commodity trading (68), leaving debts ‘off the books’, and overstating profits by $400 million plus, in its annual reports (69).


This Act updated the United States’ laws governing financial services by repealing two provisions of the GLASS-STEAGALL ACT, namely, Sections 20 and 32.

These two provisions prohibited the affiliation of commercial and investment banking firms, and limited officer and director interlocks between them (70). GLBA overrides restrictions in the Bank Holding Company Act (BHC Act), and the limitation on bank holding companies to engage in the insurance business (71).

The Act created a new ‘financial holding company’ category under Section 4 of the Bank Holding Company Act. Such holding companies can engage in a statutorily provided list (menu) of financial activities, including insurance and securities underwriting and agency activities, merchant banking and insurance company portfolio investment operations (72). Activities that are ‘complementary’ to financial activities were/are also authorised.

The non-financial activities of firms predominantly engaged in financial activities (at least 85% financial) are grandfathered for at least 10 years, with a possibility for a five-year extension (73).

The expanded ranges, according to certain testimony before a Congressional Committee, allow for technological advances and for meeting the needs of wholesale and retail customers (74).

Additionally, the Federal Reserve Board was authorised to be the umbrella regulator for financial holding companies, since GLBA allows financial services firms to engage in merchant banking (75).

This activity placed American banks on a footing similar to their European counterparts. European financial institutions engage in investment banking, advising, and negotiating in mergers and acquisitions activity, and in a variety of other services including securities portfolio management for customers, insurance, the acceptance of foreign bills of exchange, dealing in bullion, and participating in commercial ventures (76).



The Federal National Mortgage Association [FNMA] was first organised by the Reconstruction Finance Corporation (RFC) on 10th February 1938 with a capital stock of $10 million, owned by the RFC, and surplus of $1 million under the name National Mortgage Association.

It was rechartered under the Housing Act of 1954, and made a constituent agency of the Housing and Home Finance Agency.

The functions, powers, and duties of the Housing and Home Finance Agency were transferred to the Department of Housing and Urban Development on 9th September 1965. Effective from 1st September 1968, FNMA was now converted into a Government-sponsored private corporation (a Government-Sponsored Enterprise, or GSE) – with respect to its secondary market operations for home mortgages.

Additionally, under the same legislation, the Government National Mortgage Association (GNMA, or ‘Ginnie Mae’), was established to continue other functions, i.e., special assistance functions, management and specified liquidating functions, guarantees of mortgage-backed securities, and participation sales – supervised by the Secretary of Housing and Urban Development (HUD) (77).

On 1st September 1968, FNMA had capital consisting of privately-held common stock worth approximately $140 billion and preferred stock held by the Secretary of the Treasury worth approximately $160 billion. By 30th September 1968, FNMA had retired its preferred stock with proceeds from the sale of subordinated capital debentures, thus becoming an entirely private corporation, although a majority of its board of directors continued to be appointed by the US Secretary of Housing and Urban Development (HUD). Under the 1968 Act, by 1st May 1970, FNMA, with the concurrence of the Secretary of HUD, had resolved that at least one-third of FNMA’s common stock was or would be owned by persons or institutions in the mortgage lending, home building, real estate, or related businesses (78).

However, FNMA continued to operate as a Government-Sponsored Enterprise, being treated as such in the annual Office of Management and Budget documentation, with specific charter accords that made it subject to several possible forms of Federal supervision, although this supervision also provided it with several conspicuous advantages:

(1) The Secretary of the Treasury has the authority, which is entirely discretionary, to purchase obligations of the Federal National Mortgage Association up to a specified amount outstanding at any one time;

(2) The corporation’s common stock and its other securities were to be exempt from registration requirements and other laws administered by the Securities and Exchange Commission (SEC) to the same extent as securities issued or guaranteed by the US Government;

(3) FNMA was made exempt from paying any taxes to any State or local taxing authority except for real property taxes, but it pays full Federal corporate income taxes; and:

(4) The corporation’s obligations were to be issuable and payable via the facilities of the Federal Reserve Banks, which are paid by FNMA for their services (79).

It is to be noted that the FNMA’s notes and debentures (prior to 8th September 2008) were not Federal Government obligations nor are/were they Federally guaranteed by an agency of the Federal Government, even though the Government-Sponsored Enterprises’ operations were routinely incorporated in the annual Office of Management and Budget (OMB) presentations – in recent years, with yawning gaps shown in the summary accounts displayed in the documentation, as re-presented in Figures A and B on pages 16 and 17, to illustrate [refers to our journal: Editor].

However, FNMA obligations were/are guaranteed by an agency of the US Government, and having the Full Faith and Credit of the United States behind them, are mortgage-backed bonds issued by the FNMA guaranteed by the Government National Mortgage Association (80).


The Federal Home Loan Mortgage Corporation was established on 24th July 1970 under the Federal Home Loan Mortgage Corporation Act [FHLMCA] of the Emergency Home Finance Act of 1970 (12 U.S.C. 1430, Note) (81).

This entity was established for the purpose of strengthening the existing secondary markets in residential mortgages insured by the FEDERAL HOUSING ADMINISTRATION or guaranteed by the Veterans Administration, and assisting in the further development of secondary markets for non-Federally insured or guaranteed residential mortgages (82).

The entity is also authorised to purchase residential mortgages from members of the FEDERAL HOME LOAN BANK SYSTEM as well as other institutions whose deposits or accounts are insured by agencies of the US Government, US Federal Home Loan Banks, and the Federal Savings and Loan Insurance Corporation (83).

FHLMC is empowered to raise funds to purchase the aforementioned mortgages via the issuance of securities in the capital market. When the FHLMC was created in 1970, this process existed only for Government-insured or guaranteed mortgages, and it was expected that encouraging the growth of a secondary market for conventional mortgages would increase the effective supply of residential mortgage financing and make mortgage investments more attractive to markets (84).

In 1972, the FHLMC developed a computerised matrix to assist the underwriting of single-family conventional mortgages; in 1975, it introduced the Guaranteed Mortgage Certificate (GMC) (85).

By 1977, the US secondary market for conventional residential mortgages had matured, and by 1978, the Federal Home Loan Mortgage Corporation had obtained Congressional approval to begin developing a new purchase program for home improvement loans, i.e., adding new rooms, the rehabilitation or improvement of an older home, and/or the installation of energy efficient features (86). Other activities that have been developed in this context include the Renegotiable Rate Mortgage Purchase arrangement, which created a secondary mortgage market, and a purchase program for the Pledged Account Mortgage (PAM) (87).

Under this scheme type, so-called (Mortgage) Participation Certificates (PCs), also known as Pass-Through Securities, are provided in registered form only, having original principal balances of $100,000, $200,000, $500,000, $1,000,000, and $5,000,000.

The FHLMC sells these PCs through a group of securities broker/dealers as well as through the corporation’s own Marketing Department.

Each PC holder collects on the pooled mortgages, including prepayments and interest. The FHLMC guarantees punctual payment of interest and the full payment of principal (88).

Guaranteed Mortgage Certificates (GMCs) represent undivided interests in conventional (non-FHA-insured and non-VA-guaranteed) residential mortgages.

GMCs pay interest semi-annually, and principal once per annum in guaranteed minimum amounts. Any GMC certificate holder may call upon the FHLMC to repurchase the GMC at par (value) in 15, 20, or 25 years after the original date of issuance, depending upon the specific issue (89).

A program of FHLMC Swap transactions was instituted in 1981 to enhance the liquidity position of Federal Savings and the Loan Insurance Corporation-insured Savings and Loan Associations by replacing mortgage loans with guaranteed FHLMC Mortgage Participation Certificates (PCs) (90).

This scheme was to operate as follows:

A single institution (individual seller swap transaction) or a group of institutions (multiple seller swap transactions) would sell mortgage loans to the FHLMC with an aggregate outstanding principal balance sufficient to meet the FHLMC’s pool formation requirement of $100 million.

The FHLMC would sell PCs to these institutions backed by the same mortgages.

The associations would continue to service the mortgage loans and pay a guarantee fee to the FHLMC. The PC rate would be keyed to the lowest coupon rate of the pooled mortgages. Gains or losses on the subsequent sale, purchase, or exchange of PCs emanating from these swap transactions would be accounted for on the books of the insured institutions (91).

The Federal Home Loan Mortgage Corporation remains a corporate instrumentality of the United States, but it is not considered a Federal agency. The FHLMC has historically had been exempt from all Federal, state, and local taxation.

On 18th January 1984, the US Congress repealed its Federal income tax exemption, effective 1st January 1985. However, the securities sold by Freddie Mac continue to be subject to Federal and State taxes (92). FHLMC was, until FY 2009, displayed in the [journal] section of the annual Office of Management and Budget documentation under the heading ‘Government-Sponsored Enterprises’.

So-called ‘Structured Products’ are defined as representing a pre-packaged investment strategy based on derivatives, a basket of securities, options, indices, commodities, debt issuances, foreign currencies, and swaps.

SEC Rule 434 defines structured securities as ‘securities whose cash flow characteristics depend upon one or more indices or that have embedded forwards or options or securities where an investor’s investment return and the issuer’s payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows’ (93).

‘Structured Products’ have been described as arising from the ‘needs’ of companies that want to issue debt more cheaply – one method of achieving this objective being to issue a convertible bond. The convertible bond is a debt that, under certain circumstances, can be converted to equity.

Specifically, ‘convertible securities’ are securities, usually preferred shares or else debentures, that may be exchanged for a designated number of shares of another class, usually common shares, called the conversion securities (94).

The ratio between the convertible and conversion securities is fixed at the time the convertible securities are issued, and is usually protected against dilution (95).

This exchange for the potential higher return, providing that the investors are prepared to accept the lower interest rates, could in theory return a greater value to the investor over time.

Investment banks, under the Gramm-Leach-Bliley Act (The Financial Services Modernization Act), chose to append features to the basic convertible bond – such as increased income in exchange for limits on the convertibility of the conversion securities or principal protection.

These extra features were based upon the premise that investors could also use strategies that employed options and other derivatives – in a pre-packaged product. Thus, investors accepted lower interest rates on debt, and purchased new products with higher promised returns via option and derivative features.

Derivatives are actually contracts that derive their value from the underlying or supporting securities instrument, and offer investment managers and traders numerous risk and return strategies that were traditionally unavailable or too expensive to implement (96).

Derivative contract instruments involve futures, forward, and option contracts.

A futures contract is an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a specific future date (97).

A forward contract is similar to a futures contract, since it is an agreement to buy or sell the future delivery of a valued item at a specified price at a specified date (98).

However, this contract is not standardised and is traded Over-The-Counter (OTC) by direct contact between the buyer and seller, and is not marked to the market (marked-to-market), i.e., there is no interim cash flow between the parties (99).

Additionally, forward contracts embrace credit risk, since either party may default at the contracted time and price due to the lack of a formal exchange to vet the creditworthiness of the parties (100).

An option contract is an agreement which the seller of the option grants the buyer the right to purchase (from, or to sell to), the seller, a designated (security) instrument at a specific price within a specified time frame (101). The seller is referred to as the writer, and the buyer’s payment is referred to as the option price or option premium.

Finally, when the option’s instrument is purchased or else sold, this transaction is referred to as exercising the option, and the price paid at the delivery of the option instrument is the strike price. The right to buy the option is a call option, and the right to sell the option is a put option (102). Options can also be written, or sold, on cash instruments or futures.

Combinations of derivatives and financial instruments create structures that have (had) significant risk/return and/or cost savings profiles.

Thus, ‘Structured Products’ are designed to provide investors with highly targeted investments correlated to their (the investor’s) specific risk profile, given the return requirements and market expectations as analysed by the investment bank.

The financial engineering tricke yields a 'value' for the derivative securities – based on combining the ‘underlyings’ (underlying security instrument) like shares, bonds, indices or commodities – with derivatives, to produce the projected values of the options, forwards, and swaps (103).

The process of hedging with futures is a bond or investment bank portfolio manager’s method of counteracting the risk involved in holding long term debt instruments, since derivatives are not disclosed on the balance sheet, due to their short-term nature (104). Swapping futures that have cash-streams gives the appearance of containing any risk of default of the debt instrument.

Moreover the issuers can avoid any SEC disclosure, since these contracts have not been required to be disclosed on their financial statements. For instance, in 1996, Wall Street traded $500 billion in Repos and $200 billion in currency and interest rate swaps every day, without disclosure (105).

A Mortgage-Backed Certificate (MBC) is a ‘Structured Product’ that is backed by mortgages.

Such MBCs are issued by both the Federal Home Loan Mortgage Corporation, and the Federal National Mortgage Association. Other types of such certificate are guaranteed by the Government National Mortgage Association.

Investors in these instruments receive payments for the interest and principal paid on the underlying mortgages. Until the 7th September 2008, Mortgage-Backed Certificates and the secondary mortgage market was meant to have helped (in theory, at any rate) to keep mortgage money available for home financing purposes (106).

A Collateralized Debt Obligation (CDO or CBO) is another type of ‘Structured Product’, comprised of investment-grade bonds backed by a pool of variously rated bonds, including junk bonds. CDOs represent different degrees of credit quality, rather than maturities. Underwriters of CDOs package a sizeable and diversified pool of bonds, including high-risk, high-yield junk bonds, which are then separated into TIERS.

Typically, the top tier represents the higher quality collateral (paying the lowest interest rates), the middle tier is backed by riskier bonds (i.e., bonds paying a higher interest rate), and the bottom tier represents the lowest credit quality with no fixed interest rate (paying residual interest payments – that is, money left over after the other tiers have been paid out) (107).

A Collateralized Mortgage Obligation (CMO) is a mortgage-backed bond that separates mortgage pools into different maturity classes, called tranches.

This type of ‘Structured Product’ applies income from payments and pre-payments of principal and interest from the mortgages in the pool in the order that the CMO pays out. Tranches pay the income stream in different rates of interest with maturities from a few months to 20 years.

CMOs are issued by FREDDIE MAC and other private issuers, and they are backed by Government guarantees or by other top-grade mortgages with AAA ratings. However, if mortgage rates drop sharply, the resulting flood of refinancings of mortgages could cause pre-payments to soar; and in these circumstances, CDO tranches will be repaid before the expected tranche maturity (108).

Collateralized Debt Obligations Cubed (CDO-CUBED) are so-called special-purpose vehicles or entities with securitised payments in the form of tranches. CDO-CUBED are backed by a pool of Collateralized Debt Obligation Squared (CDO-SQUARED) tranches. CDO-CUBED allow the banks to resell the credit risk that they have taken once again, by repacking their CDO-SQUAREDs (109).

A CDO-SQUARED is a CDO in which the collateral portfolio or reference portfolio consists of other CDO tranches (110).

Yet another ‘Structured Product’ is the Credit Default Swap (CDS), an instrument that was first developed in the late 1990s for bonds, loans, and similar instruments related to bank transactions. Within a CDS, one party (the protection buyer) buys protection on the credit or risk of default, and the other party or counter-party is the seller (the protection seller), who sells the credit protection.

The primary ‘benefit’ of the Credit Default Swap is its power as a new source of risk distribution – since it frees up regulatory capital, which facilitates additional business. Payout is linked to a credit event (default) and to the performance of a reference entity (i.e., the underlying obligor), not to a specific bilateral trade transaction. Interestingly, since there is no transfer of ownership of the underlying asset, the CDO tool solution can be cheaper and more flexible than an assignment of the underlying asset (111). These are the formal features of these exotic instruments.

On Sunday, 7th September 2008, in the context of the exposures of massive financial fraud and meltdown revealed by this service, the (former) US Treasury Secretary, Mr Henry M. Paulson Jr., announced plans to take control of Fannie Mae (FNMA) and Freddie Mac (FHLMC), to replace the companies’ Chief Executives, and to provide up to $200 billion in capital to restore the enterprises or agencies to ‘financial health’ (112).

Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors worldwide.

He elaborated: ‘Failure of either of them would cause great turmoil in our financial markets here at home and around the globe’ (113).

The seizure transferred directly into the US Government’s hands control of the bulk of the secondary home mortgage market, and assumed direct responsibility for ‘solving the housing crisis’. It marked the total failure of the public-private experiment that was developed to create a robust home ownership environment for Americans, via companies with private shareholders seeking to maximise profits with public oversight and fiduciary responsibility (114).

In its attempt to bolster the US mortgage market, the US Treasury was to buy on the open market at least $5 billion of new mortgage-backed securities issued by Fannie Mae and Freddie Mac (115). Accordingly, this arrangement protects the investments of bondholders, including mutual funds that hold huge amounts of debt issued by both corporations.

The Treasury’s intervention also specifically assisted those investors such as Pacific Investment Management Company, the substantial Newport Beach, CA, bond manager, that had only recently purchased large amounts of mortgage-backed bonds.

Initially, Treasury was to purchase $1 billion of preferred shares in both of the former Government-Sponsored Enterprises. The preferred shares were to yield 10% and were to be senior to those issued earlier – thus giving the Government the first right to receive dividends.

The US Treasury was also to receive warrants that give the Government the right to a 79.9% share for a nominal amount.

The US Treasury further pledged to provide up to $200 billion to the companies so that they may survive despite heavy losses on mortgage defaults (116).

However, existing common shareholders would suffer a dilution of their shares and earnings if the Government exercises its warrants.

The preferred shareholders may fair better, since the Office of Thrift Supervision has stated that roughly 2% of the 829 companies that it regulates have a concentration in common or preferred shares of Fannie Mae or Freddie Mac surpassing 10% of their Tier 1 capital.

Regulators say they will work ‘to develop capital-restoration plans ‘to resolve this issue’’ (117).

The Treasury has imposed Conservatorships on the Federal National Mortgage Association (FNMA) and upon the Federal Home Loan Mortgage Corporation (FHLMC), with control and supervision of day-to-day operations to be provided by the Federal Housing Finance Agency, which is designated as the ‘regulator’ of the two entities.

This required the CEOs of Fannie Mae and Freddie Mac to step down, and the replacement of the firms’ Boards of Directors. Additionally, dividends on common and preferred stock were eliminated at both the enterprises. The entities could increase their guarantee mortgage-backed securities holdings without limits, and could still buy replacement securities for their portfolios (118).

Another aspect of this seizure was that the enterprises/agencies were provided with a back-stop credit facility. Secured loans were to be made available on an ‘as needed’ basis until the end of 2009, to be based on available collateral to match the requested loan. Loans were to be funded directly from the General Fund at the Federal Reserve Bank of New York. Such loans would not be extended with maturities beyond 31st December 2009 (119).

The US Treasury’s scheme limited the size of each of these enterprises’ mortgage portfolios to a maximum of $850 billion as of the end of 2009. Currently, the portfolios own or guarantee about $5.3 trillion in mortgages and related securities.

Effective beyond 2009, the Treasury intends the enterprises’ mortgage holdings to shrink by about 10% a year until each entity reaches $250 billion (120).



Loan origination begins with a prospective home buyer and with a valid mortgage seller, i.e., an individual makes an application for a mortgage loan from a mortgage bank. Upon the appropriate financial investigation, the applicant is approved as the mortgage borrower. A mortgage loan is a debt instrument giving conditional ownership of an asset, secured by the asset being financed.

The borrower gives the lender a mortgage in exchange for the right to use the property while the mortgage is in effect, and agrees to make regular payments of principal and interest. The mortgage lien is the lender’s security interest and is recorded in title documents in US public land records (UCC1). A mortgage involves real estate and is a long-term debt, normally 25-30 years (121).

Originally, mortgages were written exclusively as fixed-rate fully amortizing loans, but they have evolve dinto loans that are more flexible. Recent innovations in the packaging of mortgage loans for resale in the Secondary Mortgage Market to investors have helped to create a national market for mortgage lending and a wide variety of synthetic financial instruments (122).

The mortgage issuing bank executes and lodges a UCC1 at the appropriate office of public records in the local court house department (in the United States) as a matter of public information and also legal authority. The mortgage lien (UCC1) is subject to a code of US legislation governing various commercial transactions, including the sale of goods, banking transactions, secured transactions in personal property, and other matters that are designed to bring uniformity to these areas in the legislation of the various states that have adopted the Uniform Commercial Code (123).

The Mortgage Note is a written promise to repay a mortgage loan plus interest. This gives the lender a security interest in the mortgage property. The Mortgage Note is the Promissory Note stating the principal amount due, the rate of interest, and the terms for repayment of the funds advanced. The borrower signing the Note, and any cosigners, are personally liable to repay the debt – and are detailed in the UCC1 (124).

US Federal or private insurance programs that protect mortgage lenders against the default risk generally require mortgage insurance. The mortgage insurance premium is paid by the borrower. Federal insurance coverage is administered by the Federal Home Loan Housing Administration, and private mortgage insurance programs are administered by private insurance companies. Private mortgage insurance is provided by specialised insurance companies (125).

The mortgage banker originates mortgages for resale to investors, and derives income much like a merchant banker – via origination fees and servicing income.

Loans are sold in one or two ways: (a) By private placement of whole loans or pools of loans with a single investor, typically an institutional investor, such as an insurance company; or elee: (b) by issuance of securities that are backed by mortgage loans (126). [Note: The originating and early stages of the process are illustrated in the first chart, Figure One, not shown here].

In this type of scam [Figure 2 in our printed edition], the investment banker (or firm) acts as the underwriter or agent serving as intermediary between the issuer (the mortgage banker, et al.) of the securities, and the investing public.

A firm-commitment underwriting occurs when the investment banker, either as manager or participating member of an investment banking syndicate, makes outright purchases of new securities from the issuer and distributes them to dealers and investors – profiting on the spread between the purchase price and the public offering or selling price (127).

A best effort offering is a conditional arrangement whereby the investment banker markets a new issue without underwriting it, acting as an agent rather than principal and taking a commission for whatever volume of securities the banker succeeds in marketing to parties who may not have performed adequate due diligence.

Another type of conditional arrangement is referred to as a standby commitment, when the investment banker serves clients issuing new securities by agreeing to purchase for resale any securities not purchased by existing holders of rights (128).

The secondary mortgage market is defined as the buying, selling, and trading of existing mortgage loans and mortgage-backed securities that have been underwritten and packaged for resale – to provide liquidity for the originating lending institution (129). Mortgages originated by the lenders are purchased by Government agencies (namely, the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association), and by investment bankers, (such as (formerly) Lehman Brothers, and by Goldman Sachs, etc.).

These agencies and bankers, in turn, create pools of mortgages, which they repackage as mortgage-backed securities, called Pass-Through Securities or Participation Certificates, which are then sold to investors. Thus, the secondary mortgage market encompasses all activity beyond the Primary Market, which is between the homebuyers and the originating mortgage lender (130).

Pass-Through Securities represent pooled debt obligations repackaged as shares, that pass income from debtors through the intermediary, to investors. The most common type of so-called pass-through is a bog standard Mortgage-Backed Certificate, usually Government-guaranteed, where homeowners’ principal and interest payments pass from the originating bank or Savings and Loan through a Government agency or investment bank to investors, net of service charges. Other types of assets marketed via pass-through are auto loans and/or student loans (131).

Additionally, Participation Certificates represent an interest in a pool of funds or in other instruments, such as a mortgage pool (132).

The underwriting process of creating a pooled debt obligation is the business of investment bankers, who usually form an underwriting group, (a purchase group or syndicate), to pool the risk and assure ‘successful’ distribution of the issue.

The syndicate operates under an agreement among underwriters. The underwriting group appoints a managing underwriter or lead underwriter, who/which is usually the originating investment bank/ banker that prepares the plan details and the SEC registration material (133).

The underwriting agreement represents the underwriters’ commitment to purchase the securities, and gives details of the public selling price, the underwriting spread, including all discounts and commissions, the net proceeds to the issuer, and the settlement date. The issuer agrees to pay all expenses incurred in preparing the issue for resale, including the costs of registration with the SEC and of the prospectus, and agrees to supply the managing underwriter with sufficient copies of both the preliminary prospectus and the final, statutory prospectus (134).

The issuer guarantees:

(1) To make all required SEC filings and to comply fully
with the provisions of the Securities Act of 1933;

(2) To assume responsibility for the completeness, accuracy,
and proper certification of all information in the registration statement and prospectus;

(3) To disclose all pending litigation;

(4) To use the proceeds for the purposes stated;

(5) To comply with State securities laws;

(6) To work to get listed on the agreed-upon exchange; and

(7) To indemnify the underwriters for liability arising out of omissions
or misrepresentations for which the issuer had responsibility (135).

Figure 1 on page 25 [of the journal: see Special Chart Note below] provides a flowchart to illustrate how these MBS/CDO/CDS scams are structured and develop, identifying the primary institutions involved. This chart is reproduced exactly as supplied to us by our expert adviser, Michael C. Cottrell, B.A., M.S., with visual enhancement by the Editor of this service.

Figure 2 on page 27 [of the journal: see Special Chart Note below] ‘zooms’ in on the right-hand component of Figure 1, showing how the institutional resale of the MBS/CDS/CDOs is scammed internationally, showing the underwriting, issuing, selling, and the purchasing of the mortgage-backed securities of FNMA and FHLMC via pooled securitisation.

As noted, prior to 8th September, 2008, FNMA and FHLMC were both Government Sponsored Enterprises (GSEs) which owned or guaranteed approximately 50% of the mortgage market in the United States, aggregating over $5 trillion of outstanding debt and mortgage-backed securities issued by them (136). As publicly traded securities, these GSE-issued mortgage-backed securities were purchased by other mortgage originators, securitised by them, and ‘re-sold’ by them as mortgage-backed securities to other investors (137).

The referenced world-wide institutions shown in Figures 1 and 2 – Goldman Sachs, A.I.G., Lehman Brothers, Morgan Stanley. Citibank. JPMorganChase, Wachovia, Deutsche Bank, Barclays Bank, Bank of England, NatWest [RBS], Coutts [RBS], General Motors, Ford Motor Company and General Electric – purchased, re-packaged, and re-sold the various ‘Structured Products’ under the guise of offsetting the risks of the ‘challenging market environment’, according to numerous financial experts who ventilated on this subject between 2001 and September 2008.

Even after the credit freeze that developed following the measures taken in mid-September 2008 in the United Kingdom which resulted in the placement into ‘lockdown’ of $6.2 trillion of LOAN funds plus $7.8 trillion of sovereign funds for the Settlements (= $14.0 trillion) referenced in our website reports – thereby depriving the carousel of its illegally exploited ‘real’ cash base – there have been innumerable attempts to induce the public to view ‘Structured Products’ in a positive light.

For instance, on 5th November 2008, The Wall Street Journal displayed more than one full page describing the advantages and values of ‘Structured Products’ and why investors should continue to buy them, promoting them as tools to help manage volatility and to protect portfolios (138).

Regarding the standard types of ‘Structured Products’, the article stated that some use leverage to enhance upside returns and may or may not cap (limit) the upside.

Absolute Return Notes: Pay returns if the underlying (security) goes up or down but are not traded outside a specific range (139).

Buffered Return Enhance Notes:
Provide downside protection if the ‘underlyings’ do not breach a preset barrier, while Reverse Convertible Securities pay handsome coupons and the performance upside of a stock; but if the stock breaches a downside price, they will convert into that stock’s shares (140).

There are also Partial- or Fully Principal-Protected Notes, which guarantee that some or all of an investor’s principal will be returned at maturity even if the underlying performs poorly (141).

The Wall Street Journal article elaborated:

‘Issuers of Structured Products are large investment banks or affiliated firms in the United States or around the world. Issuers may craft a structured investment that they believe would appeal to many investors, then sell these so-called ‘off-the-shelf' investments’ through large, regional or independent broker/dealers, and/or financial planners. An issuer may also customize a single Structured Product tailored to a specific investor’s needs’ (142).

Additionally, the WSJ article concluded that ‘… one important aspect with structured investments is to understand the credit risk in the product, i.e., the risk that an issuer may not be able to honor its obligation to repay investors in the future is a risk inherent in many Structured Products…’ (143).


Public Law 110-343, also known as The Emergency Economic Stabilization Act of 2008, was signed into law by President Bush Jr. on 3rd October 2008.

Within this act was also enacted the Troubled Assets Relief Program (TARP) which authorised the US Secretary of the Treasury to spend up to $700 billion to purchase distressed assets. The Act stated that its purpose is: ‘To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and prevent disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes’ (144).

The law authorised the Secretary of the Treasury to draw up to $250 billion for immediate use, and then required the President of the United States to certify when an additional $100 billion of funds are needed. Disbursement of the final $350 billion was subject to Congressional approval (145).

Mr Neel Kashkari was appointed on 6th October 2008, by Treasury Secretary Paulson, as the interim head of the Office of Financial Stability , formed under the legislation, and was tasked to administer the TARP program (146).

The Troubled Assets Relief Program has several administrative units:

(1) A Mortgage-backed Securities Purchase Program – to identify which of the troubled assets should be purchased, and the purchase mechanism to be used;

(2) A Whole Loan Purchase Program – to identify which types of loans should be purchased first from regional banks, and how to value them, since the banks are clogged with whole residential mortgage loans;

(3) An Insurance Program – to establish a viable scheme to insure troubled assets, including mortgage-backed securities and whole loans;

(4) An Equity Purchase Program – to purchase equity in a broad array of financial institutions; and

(5) A Home Ownership Preservation Scheme – to help US homeowners when TARP purchases mortgages and MBS securities, and other ‘Structured Products’ (147).

However, by 12th October 2008, it had become evident that TARP as described to Congress and as administered by the Office of Financial Stability could not be operated in accordance with the legislation and described above.

On 23rd September 2008, Treasury Secretary Paulson had told the US Senate Banking Committee that ‘some said we should just stick capital in the banks, take preferred stock in the banks. That’s what you do when you have failure, this is about success’(148). Mr Paulson also told lawmakers that it made more sense to jumpstart the frozen credit markets (frozen over, due to the MBS-CDS-CDO illiquidity) with ‘market measures’, by which he meant buying up assets rather than institutions (149). Then, within a few days, Mr Henry M. Paulson Jr. confirmed his intention to buy stakes in banks by asserting that: ‘We can use the taxpayer’s money more effectively and efficiently, get more for the taxpayer’s dollar, if we develop a standardized program to buy equity in financial institutions’(150).

The Treasury was the source of the US Federal Government’s plan, under the disreputable Bush II Administration, to buy up to $700 billion worth of illiquid Mortgage-Backed Securities (MBS) with the supposed intent to increase liquidity availability in the secondary mortgage markets and to reduce potential losses by financial institutions owning these securities (151).

TARP was sold to Congress on the basis that the US Treasury would spend the $700 billion on the frozen credit securities in a ‘reverse auction’ whereby financial institutions are invited to compete against each other in offering to sell their mortgage-backed securities at a low price.

Bonds for a single pool of mortgages are divided into more than a dozen tranches, with different seniority, different credit ratings, and different rules for payment.

The performance of the underlying mortgages (‘the underlyings’) varies greatly from one pool to another. It was against this background that Mr William Poole, a retired President of the Federal Reserve Bank of St. Louis, stated: ‘I am not aware that the Treasury Department presented any evidence on auctions that have been successful when they are used for assets that are so heterogeneous’(152).

Within Public Law 110-343, Congress required the formation of a Congressional Oversight Panel to ensure the proper usage and expenditure of the TARP funds. (This development replicated and probably copied Mr Cottrell’s demand for the insertion of an Oversight Panel when it transpired early in 2008 that any transactions involving Leo/Lee Wanta could not be contemplated without such a safeguard – prior to the necessary and unavoidable severance of relations between Mr Cottrell and Wanta, publicised on our website in March 2008 and by this service).

The Interim Assistant Secretary for Financial Stability, Neel Kashkari, submitted an update on 8th December 2008, with respect to the oversight arrangements made for the Troubled Assets Relief Program (153) (TARP). An appointed Oversight Panel Board selected the Federal Reserve Board Chairman, Dr Ben Bernanke, to be Chairman of the Oversight Board. The legislation required the Board to meet once a month, but it met five times in the space of two months, with numerous staff calls between meetings. Additionally, the law required the appointment of a Senate-confirmed Special Inspector General to oversee the program (154).

The legislation also required the Government Accountability Office (GAO: previously the more appropriately named Government Accounting Office) to establish a physical presence inside the US Treasury to monitor the TARP.

The US Treasury duly provided workspace for the auditors within days of the President signing the law, and the Treasury Secretary, Mr Paulson, had his first call with the Acting Comptroller General, Mr Gene Dodaro, on Tuesday 7th October 2008. The Acting Comptroller General and his team met the US Treasury’s team for the first time on Thursday 9th October 2008.

Subsequently, Mr Kashkari participated in multiple briefings with the GAO and the respective staffs met almost daily for ‘program updates’, and to review contracts (155).

The GAO’s very conscientious staff met the Treasury’s team on Saturday 22nd November 2008, before their report was finalised. The GAO’s report provided a review of the TARP programs and progress – essentially a snapshot at the 60-day mark of this large and complex project (156).

The law required the US Treasury to publish a Transaction Report within two business days of completing each transaction. The US Treasury proceeded to publish four transaction reports – on 29th October 2008, 17th November, 25th November, and 26th November 2008 – covering the 54 transactions then competed (157).

The law also required the US Treasury to publish a Tranche Report to Congress within seven days of each $50 billion commitment that has been made.

The comprehensive Tranche Report must provide details on the following:

The transactions undertaken to date.

The impact of these transactions on the financial system.

The challenges that remain to be addressed: plus:

Additional measures that may be necessary to address those challenges.

The US Treasury published, to begin with, three Tranche Reports – on the 3rd November, 21st November, and 2nd December 2008 (158).

Further, the law required the Treasury to provide a detailed report on the overall program within 60 days of the first exercise of the TARP purchase authority.

That report was submitted to the Congress on 5th December 2008 (159). At this stage, Mr Kashkari stated in public that ‘we must remember that just over half of the money that was allocated to the Capital Purchase Program has been received by the banks’ (160).

On Monday 8th December 2008, the US Senate confirmed New York Prosecutor Neil Barofsky as the Special Inspector General within the Treasury Department who was responsible for auditing TARP. On that self-same day, the US Treasury Department released a statement notifying Congress that it had committed a total of $335 billion to financial-rescue programs since October 2008. This amount left $15 billion remaining in the first tranche of $350 billion approved by Congress (161).


Figure 3 [of the journal: see Special Chart Note below] illustrates the process of taking the private mortgage, commercial mortgage, credit card loans, and/or any other fungible debt, and via the underwriting group or underwriting trust pool, and turning that debt into a securitised ‘Structured Product’ to be pooled and sold into the global institutional market place.

The boxes in the ICR charts indicating ‘Pool A-1’ etc. represent the securitised pools of mortgages, and other ‘assets’, and the various tranches of these ‘Structured Products’.

These tranches and/or pools are then sold on to the banks, investment banks, and ‘financial products’ companies for re-sale and/or re-packaging and then re-sale to international banks, investment banks, and corporations.

Treasury Secretary Henry Paulson’s TARP plan to obtain unlimited authority over $700 billion was premised on the basis that via a reverse auction, the structured products/derivatives could be purchased by the Treasury TARP group and re-packaged, via the new FNMA and FREDDIE MAC, and then re-sold at a profit.

This operation assumed that the illiquid derivatives have a specific value or a market value.

Such an assumption is definitely false, since there is NO actual and specific asset that is directly attached to the structured product – given the obvious fact that the asset was split from the locally filed UCC-1 that defines who is the mortgagee and mortgagor, and who has legal claim to the asset once the mortgage or debt is paid in full.

IN OTHER WORDS, holders of these fake, exotic ‘assets’ have no recourse to the original underlying source(s) of ‘real money’ funds.

This separation of the asset and the legal authority to claim the asset occurred during the financial securitisation process of pooling, re-pooling, and re-packaging – supposedly (for international public consumption) to spread the risk of default to as many holders as possible – thus furthering the development of the Credit Default Swap derivatives market.

The typical CMO (‘Structured Product’) has ‘A’, ‘B’, ‘C’, and ‘Z’ tranches, representing fast pay, medium pay, and slow pay bonds plus a tranche that bears no coupon but receives cash flow from the collateral remaining after all the other tranches are satisfied (see previous discussion) (162).

More sophisticated CMOs have multiple ‘Z’ tranches and a ‘Y’ tranche incorporating a sinking funds schedule (163).

Figure 3 illustrates a non-public TARP program, prior to the appointment of Mr. Kashkari, et al. and the Congressional Oversight Panel restrictions.

Under the guise of a government ‘bailout’ theme and marketed to Congress and the US general public as being for the purpose of buying the illiquid asset-backed securities, Treasury Secretary Paulson intended to operate TARP as a Trading Platform – that is to say, as an International Hedge Fund benefiting from US Government Guarantees – from within Treasury (behaviour which has hitherto been completely illegal) to purchase, at a higher price than necessary, the CDO, CDS, MBS etc. derivatives from the very entities and banks that have directly contributed to the mass-production and sale of these toxic illiquid ‘Structured Products.

The purpose of this Trading Platform was/is therefore to use public funds to quantify the value of the toxic products, and to overpay the elitist holders, i.e.: the likes of leading Fraudulent Finance specialists, viz: AIG, CITIBANK, GOLDMAN SACHS, CARLYLE CAPITAL, CARLYLE GROUP.

BECAUSE, once the ‘Structured Products’ had been valued, via reverse auction, and purchased, Paulson and his friends would then be able to re-pool and re-package the relevant derivatives via FNMA and FHLMC for re-sale into the demonstrably gullible marketplace, where the phrase ‘due diligence’ appears to be foreign to many operators in the market – thereby repeating the process for as long as possible.

Profits from this Trading Platform could then be transferred to an unknown Master Custodial Account set up within the external international monetary system – such as a receptacle set up for this purpose by President George W. Bush Jr. in Benin, West Africa – without the knowledge of, or any accountability to, the American Taxpayer, the US tax authorities, or anyone else.


Thus, public funds were to be used yet again to generate private accruals, while a massive fraud would be concealed under cover of the necessity of ‘managing’ the illiquidity of the ‘Structured Products’ and regaining credit flow within the international banking system. See the flow charts: Figures 1-3 in the International Currency Review presentation [see Special Chart Notes below]

References and Notes:

General Note: Some use has been made of references captured via Wikipedia, an on-line ‘do-it-yourself’ encyclopaedia. The Editor is not enamoured of these ‘communising’ websites which seek to make information universally available, given that a hidden agenda may apply in some cases. For instance, a certain US platform allows its ‘users’ to upload copyrighted material and then says that it is compliant with US legislation if the illicit upload of the copyrighted material is pointed out to them: in other words, the entity specifically claims that it is not required to perform due diligence and has no duty of care with regard to infringements of copyright belonging to others.

In that case, it is known that the object of the exercise is to steal the copyright material and to drive small publishers out of business. It is the Editor’s specific experience that alteration of errors on Wikipedia has been followed by the restoration of those errors. In the instances noted below, Mr Cottrell has ‘seen through’ Wikipedia to the original sources, which should be referenced should further research be intended.

01. Michael C. Cottrell, ‘Elite Power and Capital Markets’, (Master of Science Thesis, Mercyhurst College, 2001), page 81.
02. Ibid., page 81.
03. Cottrell, ‘Elite Power and Capital Markets’, page 80.
04. Cottrell, ‘Elite Power and Capital Markets’, page 80.
05. Cottrell, ‘Elite Power and Capital Markets’, page 80.
06. Cottrell, ‘Elite Power and Capital Markets’, page 79.
07. Cottrell, ‘Elite Power and Capital Markets’, page 83 (383).
08. Cottrell, ‘Elite Power and Capital Markets’, page 82 (384).
09. Cottrell, ‘Elite Power and Capital Markets’, page 82 (385).
10. Cottrell, ‘Elite Power and Capital Markets’, page 85 (407, 409, 410, 411).
11. Cottrell, ‘Elite Power and Capital Markets’, page 85.
12. Cottrell, ‘Elite Power and Capital Markets’, page 85 (414, 415, 416, 417).
13. Cottrell, ‘Elite Power and Capital Markets’, page 86 (418, 419).
14. Cottrell, ‘Elite Power and Capital Markets’, page 86 (420).
15. Cottrell, ‘Elite Power and Capital Markets’, page 86 (422).
16. Cottrell, ‘Elite Power and Capital Markets’, page 86 (424).
17. Cottrell, ‘Elite Power and Capital Markets’, page 86-87 (425, 426, 427).
18. Ibid., page 81.
19. Federation of American Scientists, ‘BCCI-CAPCOM’, Washington, D.C., 2008,
(available at, Internet, page 2.
20. Ibid., page 2.
21. Ibid., page 2.
22. Cottrell, ‘Elite Power and Capital Markets’, page 87.
23. Cottrell, ‘Elite Power and Capital Markets’, page 87.
24. Ibid., page 87.
25. Ibid., page 87.
26. Cottrell, ‘Elite Power and Capital Markets’, page 88.
27. Ibid., page 88.
28. Bevis Longstreth, Securities and Exchange Commission Commissioner, ‘Open Letter to Bush Task Group on Regulation of Financial Services and Wirth Commission on Capital Markets’, Securities and Exchange Commission, Washington, D.C., 1983, (available for access at:, page 5.
29. Ibid., page 5.
30. Ibid..
31. Ibid..
32. Ibid., page 6.
33. Ibid..
34. Ibid..
35. Ibid., page 7.
36. Ibid..
37. Ibid., page 9.
38. Ibid., page 10.
39. Ibid., page 12.
40. Ibid., page 13.
41. John S. R. Shad, Chairman, ‘50th Annual Report of U.S. Securities and Exchange Commission for the fiscal year ended September 30, 1984’, U.S. SEC Library, Washington, D.C., 1984, (available at, Internet, page 42.
42. John S. R. Shad, op. cit.
43. Ibid., page 42.
44. Ibid., page 42.
45. Cottrell, ‘Elite Power and Capital Markets’, page 124.
46. Cottrell, ‘Elite Power and Capital Markets’, page 124.
47. Wikipedia, Dan Brody, ‘The Iron Triangle: Inside the Secret World of the Carlyle Group’, John Wiley & Sons, 2003, ISBN 0-471-281085.
48. Wikipedia, John Mintz, ‘Founder Going Beyond the Carlyle Group.’, The Washington Post, 9th January 1995, F9.
49. Thomas Heath, ‘Pair of Proposals Take Aim at Carlyle Group’, The Washington Post, 15th February 2008, (at 2008/02/14AR2008021403573.html).
50. Wikipedia, ‘Carlyle Group’, (at, page 1.
51. Cottrell, ‘Elite Power and Capital Markets’, page 169 (10, 11, 12, 13).
52. Cottrell, ‘Elite Power and Capital Markets’, page 169 (14, 15, 16, 17, 18, 19, 20, 21, 22).
53. Cottrell, ‘Elite Power and Capital Markets’, page 169.
54. Cottrell, ‘Elite Power and Capital Markets’, page 169.
55. Cottrell, ‘Elite Power and Capital Markets’, page 170 (23, 24).
56. Cottrell, ‘Elite Power and Capital Markets’, page 170 (25).
57. Cottrell, ‘Elite Power and Capital Markets’, page 170.
58. Cottrell, ‘Elite Power and Capital Markets’, page 170 (27, 28, 29).
59. Cottrell, ‘Elite Power and Capital Markets’, page 170 (29, 30).
60. Wikipedia, ‘Enron: Enron Creditors Recovery Corporation’, Wikipedia Foundation, Inc., 2008, (available at, Internet, page 6.
61. Wikipedia, ‘Enron’, Alex Berenson and Richard A. Oppel, Jr. ‘Once-mighty Enron Strains under Scrutiny’, The New York Times, 28th October 2001, page B1.
62. Wikipedia, ‘Enron’, Richard A. Oppel, Jr. ‘Enron seeks additional financing’, The New York Times, 29th October, 2001, page A8-A9.
63. Ibid., ‘Enron credit rating is cut, and its share price suffers; concern increasing on borrowing capacity’. (Moody’s Investors Service lowers credit rating), The New York Times, 30th October 2001, page C2.
64. Wikipedia, ‘Enron: Enron Creditors Recovery Corporation’, page 9-10.
65. US Government information. ‘Enron: Crouching Profits, Hidden Debt’, Diamar Interactive Corporation, 1996, (available at, Internet, page 1.
66. Ibid., page 2.
67. Ibid., page 2.
68. Cottrell, ‘Elite Power and Capital Markets’, page 171 (32).
69. US Government Information. ‘Enron: Crouching Profits, Hidden Debt’, page 1: See also Note 65.
70. Cottrell, ‘Elite Power & Capital Markets’, page 134. (162), Richard M. Whiting, ‘Promises Finally Kept: Glass-Steagall Repealed…and More’, The Journal of Lending & Credit Risk Management, [Lexis-Nexis] (Robert Morris Associates/Information Access Company, 2000, accessed 27 December 2001) from:; Internet.
71. Ibid..
72. Financial Services Modernization Act, CRA Amendments in the Gramm-Leach-Act,
(available from page 1.
73. Ibid..
74. Cottrell, ‘Elite Power & Capital Markets’, page 134. (166), Congress, Senate, Committee on Banking, Housing, and Urban Affairs. The Gramm-Leach-Bliley Act: Financial Services Modernization. 106th Congress, 1st Session, 24 and 25 February 1999, page 204-205.
75. Cottrell, "‘Elite Power and Capital Markets’, page 134. (167), Richard M. Whiting, ‘Promises Finally Kept: Glass-Steagall Repealed…and More’, The Journal of Lending & Credit Risk Management. [Lexis-Nexis] (Robert Morris Associates/Information Access Company, 2000, accessed 27 December 2001) from; Internet.
76. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds.,
‘Dictionary of Finance and Investment Terms’ s.v. ‘Merchant Bank’.
77. Glenn G. Munn, F.L. Garcia and Charles J. Woelfel, eds., ‘Encyclopedia of Banking & Finance’, 10th Ed., Chicago: Probus Publishing, 1994, (Electronic Portion, Orem: Infobase Press, 1994), s.v. Federal National Mortgage Association.
78. Ibid., page 1.
79. Ibid., page 1.
80. Ibid., p.2.
81. Glenn G. Munn, F.L. Garcia and Charles J. Woelfel, eds., ‘Encyclopedia of Banking & Finance’, 10th Ed., Chicago: Probus Publishing, 1994, (Electronic Portion, Orem: Infobase Press, 1994), s.v. Federal Home Loan Mortgage Corporation
82. Ibid., page 1.
83. Ibid., page 1.
84. Ibid., page 1.
85. Ibid., page 1.
86. Ibid., page 2.
87. Ibid., page 2.
88. Ibid., page 2.
89. Ibid., page 2.
90. Ibid., page 2.
91. Ibid., page 3.
92. Ibid., page 3.
93. Wikipedia, ‘Structured Product’, Securities Exchange Commission, (available at, page 1.
94. Robert W. Hamilton, ‘Corporations’, 4th Ed., St. Paul, Minn.: West Publishing Company, 1997, page 593.
95. Ibid.. page 593.
96. Cottrell, ‘Elite Power and Capital Markets’, page 145. (248) Frank J. Fabozzi with T. Dessa Fabozzi and Irving M. Pollack, ‘The Handbook of Fixed Income Securities‘, 3rd Ed., New York: Richard D. Irwin, Inc., 1991, page 669.
97. Cottrell, ‘Elite Power and Capital Markets’, page 145 (249) Downes, ‘Dictionary of Finance and Investment Terms’, s.v. ‘Futures Contract’.
98. Cottrell, ‘Elite Power and Capital Markets’, page 145-146. (248) Frank J. Fabozzi with T. Dessa Fabozzi and Irving M. Pollack, ‘The Handbook of Fixed Income Securities‘, 3rd Ed., New York: Richard D. Irwin, Inc., 1991, page 670.
99. Cottrell, ‘Elite Power and Capital Markets’, page 146. (248) Frank J. Fabozzi with T. Dessa Fabozzi and Irving M. Pollack,‘The Handbook of Fixed Income Securities‘, 3rd Ed., New York: Richard D. Irwin, Inc., 1991, page 671.
100. Ibid,.
101. Cottrell, ‘Elite Power and Capital Markets’, page 146. (248) Frank J. Fabozzi with T. Dessa Fabozzi and Irving M. Pollack, ‘The Handbook of Fixed Income Securities‘, 3rd Ed., New York: Richard D. Irwin, Inc., 1991, page 670.
102. Cottrell, ‘Elite Power and Capital Markets’, page 146. (248) Frank J. Fabozzi with T. Dessa Fabozzi and Irving M. Pollack, ‘The Handbook of Fixed Income Securities‘, 3rd Ed., New York: Richard D. Irwin, Inc., 1991, page 672.
103. Wikipedia, ‘Structured Product’, page 3.
104. Cottrell, ‘Elite Power and Capital Markets’, page 146. (255) Roger Lowenstein, ‘When Genius Failed: The Rise and Fall of Long-Term Capital Management’, New York: Random House, 2000, page
105. Cottrell, ‘Elite Power and Capital Markets’, page 146. (256) Roger Lowenstein, ‘When Genius Failed: The Rise and Fall of Long-Term Capital Management’, New York: Random House, 2000.
106. Downes, ‘Dictionary of Finance And Investment Terms’, s.v. ‘Mortgage-Backed Certificate’.
107. Downes, ‘Dictionary of Finance And Investment Terms’, s.v. ‘Collateralized Debt Obligations’.
108. Downes, ‘Dictionary of Finance And Investment Terms’, s.v. ‘Collateralized Mortgage Obligations’.
109. ‘Collaterized Debt Obligation Cubed – CDO CUBED’, Investopedia, ULC, 2008.
110. ‘CreditFlux Dictionary’, CreditFlux Ltd., 2008, at; Internet.
111. JPMorgan Chase & Co., ‘Credit Default Swaps and Trade: A Useful Tool for Distributing Risk.’, JPMorgan Chase & Co., 2008.
112. James R. Hagerty, Ruth Simon, and Damian Paletta, ‘U.S. Seizes Mortgage Giants’,
The Wall Street Journal, 2008, September 8, 2008, page A1.
113. Ibid., page A15.
114. Ibid., page A15.
115. Ibid., page A15.
116. Ibid., page A15.
117. Ibid., page A15.
118. Ibid., page A15.
119. Ibid., page A15.
120. Ibid., page A15.
121. Thomas Fitch, ‘Dictionary of Banking Terms’, 3rd Edition, Hauppauge: Barron’s Educational Series, Inc., 1997, s.v. ‘Mortgage’.
122. Ibid..
123. Steven H. Gifis, Law Dictionary. 2nd Edition, Hauppauge: Barron’s Educational Series, Inc., 1984, s.v. ‘Uniform Commercial Code’ [UCC].
124. Thomas Fitch, ‘Dictionary of Banking Terms’, s.v. ‘Mortgage Note’.
125. Thomas Fitch, ‘Dictionary of Banking Terms’, s.v. ‘Mortgage Insurance.’.
126. Fitch, ‘Dictionary of Banking Terms’, s.v. ‘Mortgage Banker’.
127. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘‘Dictionary of Finance and Investment Terms’, 7th Edition., Hauppauge: Barron’s Educational Series, 2006, s.v. ‘Investment Banker’.
128. Ibid..
129. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘Dictionary of Finance and Investment Terms’, s.v. ‘Secondary Mortgage Market’.
130. Ibid..
131. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘Dictionary of Finance and Investment Terms’, s.v. ‘Pass-Through Security’.
132. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘Dictionary of Finance and Investment Terms’, s.v. ‘Participation Certificate’.
133. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘Dictionary of Finance and Investment Terms’, s.v. ‘Underwrite’,
134. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘Dictionary of Finance and Investment Terms’, s.v. ‘Underwriting Agreement’.
135. Ibid..
136. Blackrock, ‘Government Takeover of Fannie Mae and Freddie Mac’, Blackrock, Inc., 2008, (available at, p.1.
137. Ibid..
138. Lori Pizzani, ‘Structured Investment Products, Tools to Help Manage Volatility, Protect Portfolios’,
The Wall Street Journal, November 5, 2008, Dow Jones: New York, 2008, page C11.
139. Ibid..
140. Ibid..
141. Ibid..
142. Ibid..
143. Ibid..
144. Wikipedia, ‘Public Law 110-343’.
145. Wikipedia, ‘Troubled Assets Relief Program’, Summary of the Emergency Economic Stabilization Act of 2008 (, United States Senate Committee on Banking, Housing and Urban Affairs, page 1.
146. Deborah Solomon, ‘Regulators Outline Steps to Quell Crisis’, The Wall Street Journal, Dow Jones: New York, October 7, 2008, page A6.
147. Wikipedia, ‘Troubled Assets Relief Program’,, Internet, page 1.
148. Edmund L. Andrews and Mark Landler, ‘White House Overhauling Rescue Plan’,
The New York Times, October 12, 2008, http:///, Internet, p. 3.
149. Ibid..
150. Ibid..
151. Wikipedia, ‘Emergency Economic Stabilization Act of 2008’, AP Article: ‘Rescue Plan Seeks $700 Billion to Buy Bad Mortgages’, ( article by The Associated Press in The New York Times September 20, 2008.
152. Ibid., page 4.
153. Herbie Skeete, ‘US Treasury Interim Assistant Secretary For Financial Stability Neel Kashkari Update on The TARP Program’, Mondo Visione Ltd: London, 2008, available at:;action, page 1.
154. Ibid., page 2.
155. Ibid., page 2.
156. Ibid..
157. Ibid., page 3.
158. Ibid., page 3.
159. Ibid..
160. Ibid., page 4.
161. Maya Jackson Randall and Michael R. Crittenden, ‘Treasury Could Improve Management of TARP’, The Wall Street Journal, December 9, 2008, Dow Jones: New York, 2008, page C4.
162. John Downes, A.B., and Jordan Elliot Goodman, A.B., M.A., eds., ‘Dictionary of Finance and Investment Terms’, s.v. ‘Tranches’.
163. Ibid..

Captions to the charts that appear in International Currency Review Volume 34, Number 2 [March 2009] but are not shown in this website presentation:

Figure 1, page 25 of the journal: MBS-CDO-CDS scam (Fraudulent Finance) flowchart, showing how a single loan triggering one solitary cashflow of mortgage payments is typically leveraged and intermingled with other such origination cashflows into exotic ‘derivatives’ known as ‘Structured Products’ via pools which are sold on to investment banks before being marketed internationally, where the US securities legislation (the 1933 and 1934 Securities Acts) does not apply. There is no precedent for such colossal OFFICIALLY organized fraud.

Figure 2, page 27 of the journal: MBS-CDO-CDS scam (Fraudulent Finance) flowchart: Institutional sale and resale of so-called ‘Structured Products’ that have zero intrinsic value because beyond the originating Mortgage Bank, none of the subsequent parties enjoys prospective access to the single originating stream of funds. As a former Goldman Sachs official, speaking privately, told the Editor of this service: ‘These ‘assets’ are worth what someone is prepared to pay for them’.

Since they have been comprehensively discredited, except among those compartmentalised intermediaries, bankers, intelligence cadres and others who may not yet be ‘up to speed’ (if any such creatures remain, which given developments since September 2008, logic would suggest is unlikely), ‘what someone is prepared to pay for them’ effectively means nothing. As Mr Michael C. Cottrell’s narrative shows, the Paulson Treasury TARP operation had as one of its hidden purposes the injection of ‘value’ into worthless hybrid collectivised ‘assets’.

Addendum: Of course, this is the PRIMARY OBJECTIVE of both the Geithner TARP deception and its Obama Administration successor schemes.

Figure 3, page 33 of the journal: This chart shows how the routine operations of the Fraudulent Finance ‘Money Machine’ were to be ‘revalidated’ via the Paulson Treasury’s Troubled Assets Relief Program (‘TARP’) enacted within the Emergency Economic Stabilisation Act of 2008, signed into law by President George W. Bush Jr. on 3rd October 2008. Specifically, the diagram exposes the fact that $700 billion of US taxpayers’ funds and new Federal Government debt was in fact to be deployed for the specific benefit of Carlyle, Carlyle Capital, George Bush Sr., James Baker and others, who are responsible for the financial crisis not least by blocking the sole answer: the On-the-books Refunding Program.

In further work we've done on this subject, we have extended these charts to demonstrate that the Geithner TALF Plan is specifically intended for the same purpose: to refund the likes of Carlyle and Carlyle Capital, under cover of purporting to be specifically designed to ‘stimulate’ the economy.

Unlike the private sector Refunding Programme agreed by the Group of Seven financial powers in 2007 and 2008, the Paulson-Geithner ‘solution’ theoretically generates revenue all right (assuming there are any fools out there internationally who will fall for this new generation of officially driven derivatives Ponzi scamming) while perversely and unnecessarily generating colossal mountains of Treasury debt on the other side of the balance sheet of the US Federal Government

In this context, revenues generated from this ‘Legitimised Fraudulent Finance’ will yield, say, 35% in tax accruals – always provided the proceeds are held on-balance sheet, contrary to the practice hitherto of holding the proceeds off-balance sheet in offshore accounts and untaxed (tax evasion); whereas 100% of official debt will have been UNNECESSARILY created in the background: thereby mortgaging the futures of several generations of Americans.

The reason that this disastrous Fraudulent Finance approach has been adopted by the Obama Administration is that, by this means, the Government and its corrupted cronies STAY IN CONTROL OF TRADING OPERATIONS WITH NO COMPETITION. That is the motive.

By contrast, the pure way of achieving a sound recovery within the exiting framework without creating ANY NEW DEBT AT ALL, is for the private sector to handle the refunding operation WITH NO GOVERNMENT INVOLVEMENT.

That way, the Government gets to tax 35% of the accrued proceeds of the eight on-balance sheet trades per banking day, thus acquiring NEW MONEY WITH NO DEBT.

The Obama Administration's decision to pursue the reprobate course represents a wilful refusal to conduct the affairs of the US Treasury in a responsible manner, representing TREASON against the American people and the Republic.

The ‘reason for the Treason’ is that it knows that there is a SOUND WAY TO PROCEED and has deliberately chosen the unsound route for unsound reasons, instead.

Since the Obama Administration’s unsound decision will gravely impair the prospects not only of the American people but of ‘the whole of humanity’, it represents effectively a DECLARATION of FINANCIAL WARFARE ON THE REST OF THE WORLD, WHICH IS TO BE FLOODED WITH 'TRASHETS'.

‘We will do things OUR way’, even though WE KNOW that what we intend to do is irresponsible, reckless, economically illiterate, and is the financially unsound route to perdition:


Although we have no brief at all for Larry Klayman, the agitprop group Freedom Watch USA that he runs out of Washington DC has expanded a class action lawsuit filed in US Federal Court in Los Angeles on behalf of shareholders in A.I.G. (American International Group) which has just been amended to include Treasury Secretary Geithner, former Treasury Secretary Henry M. Paulson and the former Chairman of the SEC Christopher Cox.

AIG shareholders have seen the value of their shares collapse by an estimated $214 billion. We must be sharply aware that this lawsuit may, like the lawuits referenced in our preceding report, represent a component of the CIA’s ‘collapsing’ operation, which is now in full gear, whereby all strands of the multi-faceted scandal are ‘collapsed’ into a welter of open-ended litigation, so that the underlying issues become sub judice and nothing ever gets resolved (on purpose). It’s the Bush/DVD CIA’s neat way of hiding their incessant thefts.

However some of the public comments made by this operator echo findings published in our reports, even though of course Klayman cites that Missouri Professor as his inspiration (without mentioning that the Missouri Professor Black ‘may have been’ jolted out of his serial academic daydreams by this service). Samples:

‘The American people, not the compromised ruling elite in Washintgon, DC, have begun a second American Revolution to take the country back from the con men on Wall Street and on Pennsylvania Avenue, who under successive Administrations played a central part in the meltdown of the US financial system and economy’.

‘The inspiration for this amendment was information disclosed by University of Missouri Professor William K. Black on the Bill Moyers’ Public Broadcasting Service television show last Friday, when he implicated these Government officials in a massive cover-up of the banking scandal, mostly for the benefit of Goldman Sachs, the former employer of both Paulson and Geithner, in which they held a significant financial interest’.

FOR BACKGROUND, SEE OUR 2006-2007 Wantagate reports concerning Henry ‘Conflict-of-Interest’ M. Paulson Jr..

'As for Cox, his reckless and intentionally impotent oversight at the SEC is the basis of the claim against him’ referenced above.

‘Freedom Watch will not rest [GOSH! Ed.] until justice is done and it won’t come from the Obama Administration, bent on deceiving the US taxpayer that it intends to clean up this corruption, all the while lining the pockets of its friends at A.I.G. with the Government bailout money, who gave handsomely to have their President elected’.

Remember, you read all about this HERE months and several years BEFORE these US operatives started getting in on the act. It has now, ALL OF A SUDDEN, since G-20, become ‘acceptable’ to start saying what this service has been proclaiming since 2006.

Nor is it appropriate for us to jump for joy at this development. This is because one of the more insidious techniques used by the Intelligence Power is to ‘take over’ issues, so that they can then be CONTROLLED. And given what we know about the character running this operation (which would sit very uncomfortably for him if published), this is likely to be the intention here. Another clue that this is not an objective operation, is that the sum of money being claimed is not that large, given that trillions of dollars have been systematically looted by these organised criminals who have hijacked the US Federal Government and the banks.

Nevertheless, at this early stage, it is appropriate to note that what you read on this website and in our printed publications first, is now belatedly ‘sort of’ MAINSTREAM.

Very late in the day, of course, because these ‘professionally concerned’ operatives didn’t have either permission or the guts to expose this corruption earlier. Shame on them.


LEGAL TUTORIAL: The Steps of Common Fraud:

Step 1: Fraud in the Inducement: “… is intended to and which does cause one to execute an instrument, or make an agreement… The misrepresentation involved does not mislead one as the paper he signs but rather misleads as to the true facts of a situation, and the false impression it causes is a basis of a decision to sign or render a judgment”. Source: Steven H. Gifis, ‘Law Dictionary’, 5th Edition, Happauge: Barron’s Educational Series, Inc., 2003, s.v.: ‘Fraud’.

Step 2: Fraud in Fact by Deceit (Obfuscation and Denial) and Theft:

• “ACTUAL FRAUD. Deceit. Concealing something or making a false representation with an evil intent [scanter] when it causes injury to another…”. Source: Steven H. Gifis, ‘Law Dictionary’, 5th Edition, Happauge: Barron’s Educational Series, Inc., 2003, s.v.: ‘Fraud’.

• “THE TORT OF FRAUDULENT DECEIT… The elements of actionable deceit are: A false representation of a material fact made with knowledge of its falsity, or recklessly, or without reasonable grounds for believing its truth, and with intent to induce reliance thereon, on which plaintiff justifiably relies on his injury…”. Source: Steven H. Gifis, ‘Law Dictionary’, 5th Edition, Happauge: Barron’s Educational Series, Inc., 2003, s.v.: ‘Deceit’.

Step 3: Theft by Deception and Fraudulent Conveyance:


• “FRAUDULENT CONCEALMENT… The hiding or suppression of a material fact or circumstance which the party is legally or morally bound to disclose…”.

• “The test of whether failure to disclose material facts constitutes fraud is the existence of a duty, legal or equitable, arising from the relation of the parties: failure to disclose a material fact with intent to mislead or defraud under such circumstances being equivalent to an actual ‘fraudulent concealment’…”.

• To suspend running of limitations, it means the employment of artifice, planned to prevent inquiry or escape investigation and mislead or hinder acquirement of information disclosing a right of action, and acts relied on must be of an affirmative character and fraudulent…”.

Source: Black, Henry Campbell, M.A., 'Black’s Law Dictionary’, Revised 4th Edition, St Paul: West Publishing Company, 1968, s.v. ‘Fraudulent Concealment’.


• “FRAUDULENT CONVEYANCE… A conveyance or transfer of property, the object of which is to defraud a creditor, or hinder or delay him, or to put such property beyond his reach…”.

• “Conveyance made with intent to avoid some duty or debt due by or incumbent or person (entity) making transfer…”.

Source: Black, Henry Campbell, M.A., ‘Black’s Law Dictionary', Revised 4th Edition, St Paul: West Publishing Company, 1968, s.v. ‘Fraudulent Conveyance’.


• NASD Rule 3120, et al.
• NASD Rule 2330, et al
• NASD Conduct Rules 2110 and 3040
• NASD Conduct Rules 2110 and IM-2110-1
• NASD Conduct Rules 2110 and SEC Rule 15c3-1
• NASD Conduct Rules 2110 and 3110
• SEC Rules 17a-3 and 17a-4
• NASD Conduct Rules 2110 and Procedural Rule 8210
• NASD Conduct Rules 2110 and 2330 and IM-2330
• NASD Conduct Rules 2110 and IM-2110-5
• NASD Systems and Programme Rules 6950 through 6957
• 97-13 Bank Secrecy Act, Recordkeeping Rule for funds transfers and transmittals of funds, et al.


• Annunzio-Wylie Anti-Money Laundering Act
• Anti-Drug Abuse Act
• Applicable international money laundering restrictions
• Bank Secrecy Act
• Conspiracy to commit and cover up murder.
• Crimes, General Provisions, Accessory After the Fact [Title 18, USC]
• Currency and Foreign Transactions Reporting Act
• Economic Espionage Act
• Hobbs Act
• Imparting or Conveying False Information [Title 18, USC]
• Maloney Act
• Misprision of Felony [Title 18, USC] (1)
• Money-Laundering Control Act
• Money-Laundering Suppression Act
• Organized Crime Control Act of 1970
• Perpetration of repeated egregious felonies by State and Federal public employees and their Departments and agencies, which are co-responsible with the said employees for ONGOING illegal and criminal actions, to sustain fraudulent operations and crimes in order to cover up criminalist activities and High Crimes and Misdemeanours by present and former holders of high office under the United States
• Provisions pertaining to private business transactions being protected under both private and criminal penalties [H.R. 3723]
• Provisions prohibiting the bribing of foreign officials [F.I.S.A.]
• Racketeer Influenced and Corrupt Organizations Act [R.I.C.O.]
• Securities Act 1933
• Securities Act 1934
• Terrorism Prevention Act
• Treason legislation, especially in time of war.

• Please be advised that the Editor of International Currency Review and associated intelligence services cannot enter into email correspondence related to this or to any of the earlier reports.

We are a private intelligence publishing house and have no connections to any outside parties including intelligence agencies. The word ‘intelligence’ on this website and in all our marketing material is used for marketing/sales purposes only and has no other connotations whatsoever: see ‘About Us’ on the red panels under the Notes on the Editor, Christopher Story FRSA, who has been solely and exclusively engaged as an investigative journalist, Editor, Author and private financial and current affairs Publisher since 1963 and is not and never has been an agent for a foreign power, suggestions to the contrary being actionable for libel in the English Court.


It has now been established that the National Security Agency (NSA) works with/controls Microsoft, Norton, McAfee, and others, in pursuit of the Pentagon's vast BIG BROTHER objective, directed from the 'highest' levels (not the levels usually referred to) which seek to have every computer in the world talk direct to the Pentagon or to NSA's master computers.

This should come as no real surprise since the cynical spooks even assert this 'in-your-face' by advertising 'INTEL INSIDE', which says exactly what it means. More specifically, NSA have made great strides in this direction by having a back door built into Microsoft VISTA. Certain computers, especially those labelled with the logo of the 'fully collaborating' firm Hewlett Packard, have hard-core setups which facilitate the remote monitoring and controlling of personal computers by NSA, Fort Meade. We now understand that if you are using VISTA* you MUST NOT enable 'file and printer sharing' under any circumstances. If you say 'YES', so to speak, to 'file and printer sharing', your computer becomes a slave at once to NSA's master computers. DO NOT ENABLE SHARING.

Unfortunately, this abomination is so far advanced that this may not be the only precaution that needs to be taken. As long as Microsoft continues its extensive cooperation with NSA and the NSC (National Security Council), the spying system which assists the criminalised structures, and thus hitherto the Bush-Clinton 'Box Gang' and its connections, with their fraudulent finance operations, NSA may be able to steal data from your computer. The colossal scourge of data theft is associated with this state of affairs: data stolen usually include Credit Card data, which the kleptocracy regards as almost as good as real estate for hypothecation purposes. Even so, you can make life very much more problematical for these utterly odious people by NOT USING U.S.-sourced so-called Internet Security and anti-virus software. Having been attacked and abused so often, we offer a solution.

We use a proprietary FOREIGN Internet Security program which devours every PC Trojan, worm, scam, porn attack and virus that the National Security Agency (NSA) throws at us. We are offering this program (CD) to our clients and friends, at a premium. The program comes with our very strong recommendation, but at the same time, if you buy from us, you will be helping us finance ongoing exposures of the DVD's World Revolution and the financial corruption that has been financing it.

The familiar US proprietary Internet Security programs are by-products of US counterintelligence, and are intended NOT to solve your Internet security problems, but to spy on you and to report what you write about, to centralised US electronic facilities set up for the purpose. You can now BREAK FREE from this syndrome while at the same time helping us to MAINTAIN THE VERY HEAVY PRESSURE UPON THE CRIMINALISTS WE HAVE BEEN EXPOSING, by ordering this highest quality FOREIGN (i.e., non-US) INTERNET SECURITY SOLUTION that we have started advertising on this website. This offer has been developed in response to attacks we have suffered from the NSA nerds who appear to have a collective mental age of about five years, judging by their output.

• To access details about the INTERNET SECURITY SOLUTION, just press THE LIVE LINK YOU HAVE JUST READ, or else press SERIALS in the red panel below. This opens up our mini-catalogue of printed intelligence publications. Scroll right down to the foot of that section, where you will see details of this service. When you buy this special product, you will also, as we clearly state above, be paying a special premium by way of a donation to help us finance these exposures.

The premium contains a donation for our exposure work and also covers our recommendation based on the Editor's own experience that this INTERNET SECURITY SOLUTION will make your Internet life much easier. Some versions have a 'Preview before downloading' feature.

*VISTA: Virtual Instant Surveillance Tactical Application.