The Federal Reserve just released its March statement confirming no change in its monetary policy and little change in economic outlook. A brief overview of the Fed’s statement includes the following:

>> Maintains the Fed Funds range at 0-.25% for an extended period.

>> The quantitative easing program used to purchase $1.25 trillion in mortgage-backed securities and $125 billion in federal agency debt is nearing completion at the end of this month. The Fed will monitor economic conditions and employ policy tools as necessary to promote economic recovery and price stability.

>> Economic activity is generally improving. The overall pace of economic recovery is moderate.

>> Labor market is stabilizing, but employers remain reluctant to add to payrolls.

>> Inflation will likely remain subdued given substantial slack in capacity utilization.

Wall Street continues to receive its free lunch while Main Street struggles along. Same drill different day and thus no big deal? Well, in my opinion, there is a very big deal in this Fed release and a statement from the White House earlier today (highlighted in my post, White House Sees Elevated Unemployment for ‘Extended Period’). So, what’s the big deal? Well, let me tell you.

I believe the White House statement and the Fed release were effectively scripted and coordinated. Utilizing the same two key words, those being ‘extended period’, does not happen by chance. Those very words are a clear cut indication that the White House and Fed are totally coordinated in terms of economic releases, statements, and ultimately monetary policy.

Why is this such a big deal and an enormously negative deal at that? The Fed is supposed to be independent.

I have not thought that the Fed has been independent for a long time. That said, the appearance of an independent Fed is supposed to be important to markets and investors. I would put the wording of the White House statement released on the same day as a Fed release as a definite indication that the Fed is now held captive by the White House.

Barack just let Uncle Ben know that he has him by the balls.

Go ahead and tell me if you think I’m overdoing it. I’ll respond, however, that from this writer’s perspective our monetary policy and Federal Reserve system were seriously cheapened today.

My recommendation . . . sell the dollar.

LD

I first spoke with Steve in mid-January. Given the pace of developments in Washington, on Wall Street, and at so many other points on our economic and political landscape, I am thrilled to have him back on the show. We will leave no stone unturned in discussing healthcare, financial regulatory reform, the Fed, Lehman Bros., and so much more. I guarantee we will pull no punches in promoting truth, transparency, and integrity in our discussion. Don’t miss it!!

Join us live at the BlogTalkRadio (BTR) website tonight at 8pm ET. You can also mix it up in our always energized chat room, which runs simultaneously with the show at the BTR site. As a reminder, all No Quarter Radio programming is available as a free podcast on iTunes. From the iTunes Store, type “NQR podcasts” in the search window.

LD

Those engaged in financial crimes or schemes including ‘pay to play’ should never be able to buy their own justice by writing a check. That system of justice will never truly dissuade those engaged in or attracted to ‘pay to play.’ I see a strong sign of just such a potential inequity this morning. It smells.

The Wall Street Journal highlights that former Obama car czar, Steven Rattner, is in the midst of settlement talks with New York Attorney General Andrew Cuomo over his role in a ‘pay to play’ scheme.

The WSJ writes, Rattner in Talks to Settle a Probe:

Wall Street financier and former auto czar Steven Rattner is in settlement talks to resolve his role in the “pay to play” investigation at the New York state pension fund, according to people familiar with the matter.

A guilty plea on Wednesday by David Loglisci, the former chief investment officer of the $129 billion fund, turned a spotlight on Mr. Rattner, a well-known Wall Street player who last year spearheaded the Obama administration’s auto overhaul.

On a call with reporters, New York Attorney General Andrew Cuomo said the 57-year-old Mr. Rattner remained under investigation but declined to provide more details.

A spokesman for Mr. Rattner declined to comment.

For months, Mr. Rattner’s lawyers have been engaged in protracted settlement discussions with both the New York attorney general and the Securities and Exchange Commission over his conduct in the case, said the people familiar with the matter. Defense lawyers Jamie Gorelick and William McLucas of Wilmer Hale in Washington are representing him in the talks, these people added.

Mr. Cuomo’s investigation of Mr. Rattner focuses on his activities at Quadrangle Group, the private-equity firm he co-founded a decade ago. The New York-based firm obtained a $100 million investment from the New York pension fund three weeks after a DVD company owned by Quadrangle agreed to distribute “Chooch,” a low-budget movie co-produced by Mr. Loglisci and his brother, according to court papers.

Quadrangle also paid a $1.1 million finder’s fee to Hank Morris in exchange for securing the investment from the New York fund. Mr. Loglisici said Wednesday he had “effectively ceded” his authority over the fund’s private-equity investment decisions to Mr. Morris, a former top New York political adviser.

How tough is Steve Rattner? By reputation, Rattner is viewed as one of the meanest SOBs to run between Wall Street and Washington. In fact, Rattner is believed to be the individual implicated in directly threatening Chrysler creditors in the midst of the Chrysler bailout a year ago. (Read my piece, “Is Barack Obama Going Tony Soprano?”)

White collar crime of this nature needs to be adjudicated in terms of hard time — not by writing a check.

Rattner is obviously entitled to due process, but if, in fact, Rattner is implicated in this ‘pay to play’ scheme (the fact that he is in protracted settlement talks seems fairly incriminating), then the courts should throw the book at him and everybody else involved.

Rattner may not be all that tough sitting in the can being eyeballed by his new ‘friends.’

Unless and until that happens, this cesspool of activity and those swimming in it will continue to smell and pollute all of us.

What do you think?

LD

Regrettably, America deals with this pandering and posturing from our political leaders and regulators all too often. While Americans are being told one thing, what are the regulators telling the banks? Hold cash.

I am not shocked, but certainly disappointed, that American financial periodicals failed to run this story detailing these recommendations from our bank regulators. The London based Financial Times highlights this bombshell in writing, Regulators Tell U.S. Banks to Hold Funds: >>>>

US regulators have told banks not to increase dividends or buy back shares until political and economic uncertainty surrounding the industry dissipates, in a move that will delay by months the return of capital to shareholders.

Some investors in financial stocks argue that winners of the credit crisis, such as JPMorgan Chase and Goldman Sachs, have profitable businesses and strong balance sheets and should consider raising dividends or buying back stocks.

Executives at the two companies have talked in public and with regulators about the possibility of returning cash to investors after taking action to conserve resources during the turmoil. But they say they are not in a rush to go ahead, especially if their watchdogs oppose such moves. “Regulators are gun-shy at this stage, partly because they fear that giving the green light to healthier banks to return cash to investors would prompt demands from more troubled institutions to do the same,” one senior Wall Street executive said.

People close to the situation said government agencies, led by the New York Federal Reserve and the Treasury, told banks they would have to wait until the economic and legislative picture became clearer before returning funds to investors.

In a letter sent in December, officials reminded financial groups they would have to meet criteria, such as “stress-testing” their balance sheets and achieving sustainable profitability, before releasing funds to shareholders. The New York Fed and Treasury declined to comment.

Mike Mayo, an analyst at CLSA, said: “The word banks have used the most … is ‘fragile’.

Economic growth is predicated on the flow of money, otherwise known as the velocity of money. With news like this, we should expect that velocity to remain at a trickle.

The burden will remain on the Fed to keep its Fed Funds rate low so these banks can continue to recover. The burden should also remain on the regulators and bank executives to not allow the Fed liquidity to walk right out the front door of these banks in the form of big fat bonuses.

LD

Even in the face of mounting opposition within his own party, and even among some liberals like Dr. Marcia Angell (who, by the way, is being demonized by some progressives as being “anti-woman” for opposing this bill. That is some logical leap, as in, it has lept away from being logical). Dr. Angell highlights that this bill as written is a gift to the pharmaceutical companies (Obama made his deal with them before any bill was ever even written) and the INSURANCE companies, the same ones Obama demonizes in his speeches. Yet, on Obama goes, as this article by Charles Krauthammer brings home, Onward with Obamacare, Regardless:

So the yearlong production, set to close after Massachusetts’s devastatingly negative Jan. 19 review, saw the curtain raised one last time. Obamacare lives.

After 34 speeches (as of 3/4/10), three sharp electoral rebukes (Virginia, New Jersey and Massachusetts) and a seven-hour seminar, the president announced Wednesday his determination to make one last push to pass his health-care reform.

The final act was carefully choreographed. The rollout began a week earlier with a couple of shows of bipartisanship: a Feb. 25 Blair House “summit” with Republicans, followed five days later with a few concessions tossed the Republicans’ way.

Show is the operative noun. Among the few Republican suggestions President Obama pretended to incorporate was tort reform. What did he suggest to address the plague of defensive medicine that a Massachusetts Medical Society study showed leads to about 25 percent of doctor referrals, tests and procedures being done for no medical reason? A few ridiculously insignificant demonstration projects amounting to one-half of one-hundredth of 1 percent of the cost of his health-care bill.

As for the Blair House seminar, its theatrical quality was obvious even before it began. The Democrats had already decided to go for a purely partisan bill. Obama signaled precisely that intent at the end of the summit show — then dramatically spelled it out just six days later in his 35th health-care speech: He is going for the party-line vote.

Unfortunately for Democrats, that seven-hour televised exercise had the unintended consequence of showing the Republicans to be not only highly informed on the subject, but also, as even Obama was forced to admit, possessed of principled objections — contradicting the ubiquitous Democratic/media meme that Republican opposition was nothing but nihilistic partisanship.

No kidding about the Blair House seminar. We suspected that was the case before it happened, and its hours long drama did nothing to dispel that initial suspicion. Not that that stopped Obama, then or now, despite the outcome. A big ol’ oopsie daisy” for the Democrats on that one:

Republicans did so well, in fact, that in his summation, Obama was reduced to suggesting that his health-care reform was indeed popular because when you ask people about individual items (for example, eliminating exclusions for preexisting conditions or capping individual out-of-pocket payments), they are in favor.

Yet mystifyingly they oppose the whole package. How can that be?

Allow me to demystify. Imagine a bill granting every American a free federally delivered ice cream every Sunday morning. Provision 2: steak on Monday, also home delivered. Provision 3: a dozen red roses every Tuesday. You get the idea. Would each individual provision be popular in the polls? Of course.

However (life is a vale of howevers) suppose these provisions were bundled into a bill that also spelled out how the goodies are to be paid for and managed — say, half a trillion dollars in new taxes, half a trillion in Medicare cuts (cuts not to keep Medicare solvent but to pay for the ice cream, steak and flowers), 118 new boards and commissions to administer the bounty-giving, and government regulation dictating, for example, how your steak is to be cooked. How do you think this would poll?

Perhaps something like 3 to 1 against, which is what the latest CNN poll shows is the citizenry’s feeling about the current Democratic health-care bills.

Uh, yeah – I don’t know how many more ways Americans can say we do not want this bill as written, yet Obama and the Democrats continue their push regardless of the sentiment, and the concerns, like cost:

Late last year, Democrats were marveling at how close they were to historic health-care reform, noting how much agreement had been achieved among so many factions. The only remaining detail was how to pay for it.

Well, yes. That has generally been the problem with democratic governance: cost. The disagreeable absence of a free lunch.

Which is what drove even strong Obama supporter Warren Buffett to go public with his judgment that the current Senate bill, while better than nothing, is a failure because the country desperately needs to bend the cost curve down, and the bill doesn’t do it. Buffett’s advice would be to start over and get it right with a bill that says “we’re just going to focus on costs and we’re not going to dream up 2,000 pages of other things.” (Disclosure: Buffett is a director of The Washington Post Co.)

Obama has chosen differently, however. The time for debate is over, declared the nation’s seminar leader in chief. The man who vowed to undo Washington’s devious and wicked ways has directed the Congress to ram Obamacare through, by one vote if necessary, under the parliamentary device of “budget reconciliation.” The man who ran as a post-partisan is determined to remake a sixth of the U.S. economy despite the absence of support from a single Republican in either house, the first time anything of this size and scope has been enacted by pure party-line vote.

Surprised? You can only be disillusioned if you were once illusioned.
letters@charleskrauthammer.com

Well, true that. Those of us who were watching with eyes wide open, and not high on Hopium or drunk on Kool Aide, were never “illusioned.” As Obama’s tenure continues, we marvel that so many are STILL “illusioned.” Kinda makes you wonder just what the hell it takes to finally get through the closed minds of his supporters. Buying GM didn’t do it; taking over banks didn’t do it; giving away the store to the unions didn’t do it; his lack of experience and leadership didn’t do it; and now this healthcare debacle isn’t doing it. What in the hell does it TAKE to get through to them?

To be honest, I don’t think I want to know. How about you?

U.S. Rep. Barney Frank (D-MA)

Banks are increasingly healthy, right? Our nation’s accounting rules promote real transparency and integrity in our financial reporting, right? Housing is bottoming, right? No, no, and no!

Why so pessimistic, you may ask? I am not pessimistic at all. I am merely searching for the truth in the midst of the smoke and mirrors on Wall Street and in Washington.

Thank you to our friends at 12th Street Capital for sharing a recently released letter from Congressman Barney Frank imploring the four largest banks involved in mortgage originations to write off second liens they are holding on their books at inflated values.

Why does Congressman Frank believe these loans need to be written off? The liens must be largely written off so that Washington can then compel banks to engage in writing down principal on first liens in an attempt to keep people in their homes. Keeping people and families in homes is certainly a worthy cause, but the process is fraught with all kinds of violations of moral hazards and assorted unintended consequences. When you hear that your neighbor receives a principal reduction, how long will it take you to go to your bank and demand the same?

Let’s review Frank’s brief, two-page letter (click on image below to access pdf document). Focus on Frank’s comment that the second liens have no real value but accounting rules allow the banks to carry them at artificially high values. Can you say, “cooking the books”?

What are the projected losses in these second liens? Well, how much of this paper is outstanding? The Wall Street Journal provides a bar graph in an article, Home-Savings Moves Afoot:

So, with $1 trillion in outstanding second liens on the books, the question begs as to how much of this indebtedness is current, how much is delinquent, and how much is truly worthless but not yet acknowledged. In discussions with those in the industry, suffice it to say, the most optimistic assessment is that the industry has at least a few hundred billion in losses yet to be acknowledged.

The larger banks addressed by Congressman Frank are the largest holders of these second liens. These banks do have earnings power given the free flow of liquidity provided by the Fed and accompanying capital markets activities. That is not the case with smaller institutions. How many of those institutions are already dead, but not yet buried?

Wonder why banks are reluctant to provide credit? They need to increase capital knowing these second liens are truly an ongoing sinkhole.

LD

Raise your other hand if you do not trust the financial media.

Why do I viscerally envision a lot of hands being raised all over America? Because given developments of the last few years, Americans — at an ever increasing rate — are less trusting of Wall Street, Washington, and the media.

What is one to do? Where can one go to embrace honest dialogue focused on real transparency and integrity? You have come to the right place as tonight from 8-9pm ET No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Daryl Montgomery.

Daryl Montgomery is the organizer of the New York Investing Meetup, a group of 2500 independent investors and traders that provides the public with unbiased economic and market information. The New York Investing meetup has become the largest investing meetup in the world because of its highly accurate and timely predictions, which include the credit crisis was about to blow up in July 2007, a major bear market was about to begin in September 2007 and that a recession was starting in December 2007. The group also called a top in gold and silver in March 2008 and the exact day of the oil bottom in February 2009. You can find out more at New York Investing Meetup, (the group is free to join).

Montgomery writes the popular Helicopter Economics Investing Guide and is one of the originators of the term ‘helicopter economics’. He is a former professor and now uses his research as a full time trader. Montgomery has never worked for nor has any association with the securities industry. This allows him to bring a fresh perspective to market analysis. The slogan for his group is “A profitable alternative to Wall Street hype”.

Daryl Montgomery is currently working on a book on inflation investing.

I truly look forward to this conversation. Listen live at the BlogTalkRadio (BTR) website tonight at 8pm ET. You can also mix it up in our always energized chat room, which runs simultaneously with the show at the BTR site. Please join us and spread the word. Together we can and will effectively navigate the economic landscape.

Many thanks to Larry Johnson and the rest of the team at No Quarter!

LD

What rock did Herb just crawl out from?

The Wall Street Journal addresses Herb’s ridiculous comment in writing, Treasury Official: ‘No Too Big to Fail Guarantee’ for Big Financial Firms:

There is no U.S. government guarantee to protect the largest financial firms, a Treasury Department official said Thursday, as a congressional watchdog criticized the $45 billion in government aid provided to Citigroup Inc.

Herbert Allison, who oversees the Treasury’s $700 billion financial rescue plan, disagreed with members of a congressional oversight panel that some financial firms benefit from the assumption that the government would step in to prevent their failure.

“There is no too big to fail guarantee on the part of the U.S. government,” Mr. Allison said.

How often did we hear similar drivel about Freddie Mac and Fannie Mae?

What happens to people when they get inside the Beltway? Do they instinctively become serial panderers, if not outright liars?

Elizabeth Warren, who chairs the five-member Congressional Oversight Panel, said it was clear that financial markets do assume the guarantee exists, pointing to a recent ratings agency report that specifically noted the government’s role in backing Citigroup.

“The market clearly perceives that there is a too big to fail guarantee,” Ms. Warren said. “That gives Citi an advantage in raising capital. … That is very valuable to Citi.”

Panel members locked horns with Mr. Allison over his reluctance to answer some questions, primarily regarding the health of Citigroup when the government injected capital into the bank in late 2008. Panel member Damon Silvers, pressing Mr. Allison on whether the bank was at risk of failure at the height of the financial crisis, said it was “extraordinary that it is not possible to have a straightforward conversation.”

The fact that America can not get straightforward and honest answers from our government officials plays right into my commentary the other day, Harry Markopolos: “Don’t Trust Your Government”.

Bend over, Herb.

LD

Of all the lines I heard bandied about during my time on sales and trading desks on Wall Street, the line I reference above is one of my favorites. Why? That line goes straight to reputation.

As much as anybody may want to whine, bitch, or moan about being treated unfairly, ultimately the court of public opinion will convey upon an individual or an entity the reputation he or they deserve.

As a parent, I have often had the discussion with my children that they had better be exceptionally careful as to what they do and with whom they hang because you carry your family name with you everywhere you go and you only get one reputation. For this very reason, I strongly believe the greatest risk in life is reputation risk.

How often do we hear people complain about being treated unfairly? All too often. In my opinion, nobody is anywhere close to being as good as they think nor as bad as others may say, but somewhere in that vast middle ground, the individual or company has the reputation they deserve.

I see this dynamic at work in reading The Wall Street Journal’s review of Wall Street’s favorite punching bag, Goldman Sachs. The WSJ writes, Goldman Lists New ‘Risk’: Bad Press:

Goldman Sachs Group Inc. added something new to the laundry list of financial risks it faces: unflattering attention.

In its annual report, the New York company said “adverse publicity” could have “a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.”

The unusual disclosure in a 12-page section of “risk factors” ranging from rocky financial markets to natural disasters is the latest sign of Goldman’s whipping-boy status among rivals, lawmakers and angry Americans because of the firm’s giant profits.

The fact that Goldman believes they need to highlight this adverse reputation risk in its annual report strikes me as just further evidence of an arrogant firm.

Lloyd and team need to take a hard look in the mirror.

Now that Goldman is flea infested is not an indictment of those highlighting their condition, it is an indictment of where and with whom Goldman is sleeping. I discussed this very topic on CNBC’s Street Signs on Tuesday afternoon:

LD

Lady de Rothschild has continued to stay in the political landscape, and has the following post in The Daily Beast. What a post it is:

Obama’s shortcomings were eminently foreseeable, says one of McCain’s most prominent Democratic backers. Lynn Forester de Rothschild on how the president’s fake bipartisanship could never hide his true leftist agenda.

The failures of the Obama presidency were clearly telegraphed by the Obama candidacy. I hate to say it, but I told you so.

Back in September 2008, as a lifelong Democratic Party loyalist and activist, I backed John McCain; I told The New York Times, “I love my country more than my party.” Supporting a Republican was the last thing I expected to be doing in the fall of 2008. But I knew it was my only choice, given the decision by the Democratic Party establishment to reject 18 million voters in favor of the inexperienced and ideological Barack Obama.

His cynical use of centrist language as a tool to get elected does not change the fact of his true objectives for America.

After watching President Obama in office for more than a year, it is clear to me that, during the campaign, we already knew what kind of president he would become.

Yes, most of us DID know what kind of president Obama would become, hence why so many of us supported Clinton:

The health-care summit vividly demonstrated Mr. Obama’s fake bipartisanship. When he was a candidate, we celebrated when he said, “We are not red or blue states. We are the United States of America.” But candidate Obama had no record of bipartisan behavior. Ironically, the one time that Obama entered into a bipartisan effort was with, of all people, John McCain. He reached across the aisle to draft ethics reform legislation with Senator McCain. But when Obama returned to the Democratic establishment with a bill that did not meet their favor, he backed away fast. It was candidate McCain who had worked productively and regularly with Democrats, like with Russ Feingold on campaign-finance reform and Ted Kennedy on immigration. The record told me more than the rhetoric about which candidate would honestly respect the other side and reach across the aisle to find the best solutions for America.

Perhaps the biggest fabrication of the Obama candidacy was his claim of being a centrist. Sure, he made promises during the campaign that pleased moderates. He promised “the elimination of capital gains taxes for small business,” a $3,000 refundable tax credit to existing businesses for every additional employee hired through 2010, removal of penalties for early withdrawal of 401(k) savings during the recession, and no administration jobs for lobbyists. Perhaps the best of all was the promise he made in the Mississippi presidential debate when he said, “We need earmark reform. And when I’m president, I will go line by line to make sure that we are not spending money unwisely.” They were specific, sensible promises—ones that enabled him to mislead the electorate about his real plans for America.

Oh, sure he would. Many of us knew Obama would give the same kind of attention to the issues that came before him as he did while an IL Senator (“Present!”) or as a US Senator (“I changed my mind!” like he apparently did in regard to a promise made to John McCain), and so many more (remember FISA, for instance?). Ahem. Some of us were paying attention, though:

Again, I chose to look beyond the rhetoric to the record. At the time, it was obvious that a candidate who won the primary because of the left would be beholden to the left, no matter what promises he made to get elected. It was also obvious to ask what kind of president would have voted “present” on 129 difficult votes while in the Illinois State Senate. He was always thinking about how to keep every constituency happy; how to maintain his viability for the White House. In The Audacity of Hope, he criticized Bill Clinton for giving too much respect to Ronald Reagan. He asked the Democratic Leadership Council, the centrist Democratic group, to remove his name from their lists.

So if he wasn’t going to be a centrist Democrat in the tradition of Bill Clinton, what did Barack Obama want from his presidency, should he be elected? He told us from the beginning. It was a stunning agenda, but it seemed innocuous, even inspiring, during the campaign. Standing on the steps of the old Illinois State Capitol, announcing his candidacy for president, Obama declared he was running “not just to hold an office, but to gather with you to transform a nation.” Suddenly now everyone is worried he is trying to transform America. He had said so all along. His is an effort to make a bigger, more intrusive and more costly government. His hope is, and has always been, to turn the country into a nation that looks more like a European social democracy. He ignores that the roots of our strength have always been small government and a dynamic private sector, fostered by both Democrats and Republicans. His cynical use of centrist language as a tool to get elected does not change the fact of his true objectives for America. It is telling that under Obama’s presidency, according to Sunday’s CNN Poll, 37 percent of Democrats, 63 percent of independents and 70 percent of Republicans see the federal government as a threat to the rights of Americans.

Holy crapoli. There are some pretty bad numbers, especially for the “Transformational King” that was supposed to be Obama, especially this soon. Again, “We Told You So:

Our central problem is that the combination of his grandiloquence and the September 2008 financial crisis led to his election. Now, the only way to stop him in the next three years is through voter pressure on Congress. One course is to follow Massachusetts and just elect any Republican. But both parties lack courageous leaders who will fight for the values and policies of the middle. We need a movement of the militant middle; millions of voters who support the sensible policies from both parties. This would give Democrats political cover to stand up to Obama, Pelosi, and Reid and Republicans the backbone to acknowledge that the country must progress in order to be strong. Most Americans see a false choice between a smaller government and a progressive country. We must have both. It is our only hope. (Lady de Rothschild is chief executive of E.L. Rothschild LLC, a private investment company. She is a director of the Estee Lauder Cos. and The Economist Newspaper Ltd.)

Interesting points by Lady de Rothschild, don’t you think? Here she is explaining why she said, “Told You So”:

I love this woman – an excellent role mode during Women’s History Month. I think she is fantastic – so eloquent, so knowledgeable, so diplomatic, so RIGHT, especially about Bill Clinton, and SO right about Barack Obama. Told you so…

Harry Markopolos

Markopolos’ biggest bombshell this morning is his warning to America, “Don’t trust your government.” No surprise that Today host Matt Lauer did not probe deeper. I am not confident that other outlets will delve deeper into Harry’s statement, either. I wonder why Harry himself is reticent to specifically point out the individuals and the instances which lead him to make that statement.

Recall that a year ago Harry defined the SEC as merely incompetent while simultaneously defining FINRA (Financial Industry Regulatory Authority) as ‘in bed with the industry’ that is Wall Street. Well, it does not take an advanced degree to connect Harry’s grenade toss into FINRA’s backyard a year ago with his volley this morning.

Who is the central figure coarsing across the landscape of the NASD (FINRA’s predecessor), FINRA, and now the SEC?

Mary Schapiro.

Why doesn’t Harry get very specific in making these statements?

Why doesn’t the media probe deeper?

When will Mary Schapiro be compelled to answer questions not only about her relationship with Bernie Madoff, but about her tenure at the NASD and FINRA?

At that point, would Harry think we might be able to trust our government?

I certainly would like to get answers to a whole host of questions surrounding Ms. Schapiro. What questions? As I wrote last December and repeat today, “Mary Schapiro Owes America Some Answers”:

Mary Schapiro, the current SEC Chair and formerly the head of FINRA, possesses a wealth of information on a number of topics for which America would like greater detail. What are some of these topics?

1. Did FINRA possess material, non-public information and act upon it in the liquidation of its $671 million auction-rate securities position in mid-2007 as the ARS market was failing?

2. Did FINRA invest its own funds in Bernard Madoff, as alleged in the complaint Amerivet Securities vs. FINRA.

3. What was the nature and full depth of Mary Schapiro’s relationship with Bernie Madoff? Bernie himself characterized Mary as a ‘dear friend.’

4. Did Mary Schapiro and her fellow FINRA execs lie verbally and in a proxy statement regarding the merger of the NASD with NYSE Regulation to form FINRA?

Are these some of the questions leading Harry to make his statement this morning about not trusting our government? In my opinion, they are a good start. America deserves these answers.

(UPDATE: Late Monday afternoon, Judge Jed Rakoff issued a ruling on Question #4 above. He has dismissed a complaint regarding this allegation, believing that Schapiro and FINRA are entitled to absolute immunity. For the full story, please read here).

Now let’s listen to Harry’s 7-minute clip.

LD

The gutless typically prefer to operate under a veil of darkness.

I am referring to the sinkhole that is the organization known as Fannie Mae, as it comes back to the well for another $15 billion. Bloomberg highlights this ongoing bleeding in writing, Fannie Seeks $15 Billion in U.S. Aid After 10th Straight Loss:

Fannie Mae, the mortgage-finance company under federal conservatorship, said it will seek $15.3 billion in aid from the U.S. Treasury after posting a 10th straight quarterly loss.

A fourth-quarter net loss of $16.3 billion, or $2.87 a share, pushed the company to request its fifth draw on an unlimited lifeline from the government, Washington-based Fannie Mae said in a filing today with the Securities and Exchange Commission.

Fannie Mae, which posted $120.5 billion in losses over the previous nine quarters, has already taken $59.9 billion in federal aid since April. Its shares, which peaked at $87.81 in December 2000, closed at 99 cents today in New York Stock Exchange composite trading.

While America has become numbed by the steady flow of red ink pouring from this organization, the fact is that Fannie’s then CEO, Franklin Raines, raped and pillaged this organization and walked out the door with tens of millions in bonus money. Franklin’s successor, Daniel Mudd, was an administrator not a risk manager.

Franklin’s friends up on the Hill, including Barney Frank, Chris Dodd, John Kerry, Barack Obama, et al not only promoted the misguided policies allowing Fannie to grow out of control, but these pols lined their pockets in the process.

If these aforementioned individuals worked in the private sector, they not only would have been summarily fired but they would have been banished as well.

I forecasted these losses at Fannie Mae last July in writing, Uncle Sam’s Dirty Little Secret Is Revealed:

The fact remains that these two wards of the state are no longer for profit entities but rather vehicles for promoting Obama’s housing plans and redistribution of wealth.

The losses within Fannie and Freddie will accrue as long as housing delinquencies and defaults increase. No credible analyst can truly predict when those statistics may peak. They can guess but given the runup in home prices along with the growth in housing, that is all they can do.

In fact, the argument can be made that the very policies being utilized to forestall delinquencies and defaults will ultimately exacerbate and extend the pressure on the housing market, and in turn, Fannie’s and Freddie’s losses.

Will the American taxpayer ever see a return on the funds being pumped into Fannie and Freddie? Don’t hold your breath.

These losses were avoidable.

This is no way to run a country.

LD

A mere majority vote in the Senate, otherwise known as utilizing the ‘nuclear option‘ or reconciliation, is allowed but typically only utilized for simple procedural measures.

Back in 2005 when President Bush hinted that he would look to use reconciliation for purposes of passing some judicial appointments, the leaders of the Democratic Party had some strong words for George W. and his Republican friends. Truth be told, Bush did use this procedure during his Presidency – although not frequently and not for something as large as healthcare. The Republicans are certainly no paragons of virtue when it comes to legislation.

Let’s watch and listen, though, as the same Democrats who railed on Bush are now positioning themselves to use the same process of reconciliation to restructure one-sixth of our economic landscape, that is healthcare. (Great video clip after the fold)

How long did it take you to say, “What a bunch of hypocritical phonies?” How often did you say it?

When Democrats currently comment that reconciliation exposes the underside of the political process and that it is not pretty but necessary, show them this video clip and ask if they would prefer to be called hypocrites or phonies or both.

If anybody in Washington wonders why America holds them in such disdain, this 4-minute video should answer all their questions.

LD

Rev. James Meeks

“We don’t have slave masters,” he said. “We got mayors. But they still the same white people who are presiding over systems where black people are not able . . . to be educated.”

That is some statement.

Who expressed such strong and incendiary outrage? The Reverend James Meeks, founder and senior pastor of Salem Baptist Church in Chicago, the largest African-American church in Illinois.

In my opinion, Meeks did not look to score pure political points in launching into the mayors of our nation. To a very large extent, Meeks is taking on the Democratic Party establishment which has embraced the African-American community and championed their fight. Then why is Meeks railing on the mayors?

Meeks is voicing the pent-up and boiling frustration of those in our inner cities who are screaming to gain access to quality education for their children. He touches the third rail in Democratic Party politics and urban education by calling for support of student vouchers.

The Wall Street Journal’s William McGurn highlights Meeks’ passion in this fight in writing, Preaching Choice in Obama’s Hometown:

James T. Meeks does not fit the usual stereotype of a voucher advocate. To begin with, he is founder and senior pastor of Salem Baptist Church of Chicago, the largest African-American church in Illinois. He serves as executive vice-president for Jesse Jackson’s Rainbow/PUSH Coalition. Oh, yes: He is a Democratic state senator who chairs both his chamber’s education committee and the legislature’s Black Caucus.

A few years back, Barack Obama named Reverend Meeks as someone he looked to for “spiritual counsel.” Now the man they call “the Reverend Senator” has done the unthinkable: He’s introduced a bill to provide vouchers for as many as 42,000 students now languishing in Chicago’s worst public schools. He tells me he thinks he can get enough Democrats on his coalition to get it through.

“I’m banking on the difficulty Democrats will have telling these parents, ‘No, you’re not going to have choice. Your kids are locked into these failing schools.’”

Right now, national attention on Illinois is focused on the possibility that Republicans may take the U.S. Senate seat once held by Mr. Obama. But Collin Hitt, the IPI’s director of education, notes Mr. Meeks may have the more far-reaching narrative.

“There is an irony that the highest-profile push for vouchers in America today is in Illinois, while the highest-profile opposition to vouchers is also from Illinois,” says Mr. Hitt. The latter reference is to President Obama, Education Secretary Arne Duncan, and Sen. Richard Durbin, Illinois Democrats whose opposition pulled the plug on a popular, bipartisan voucher program in our nation’s capital.

While I commend Obama for elevating the education issue as one of his major administrative priorities, I condemn him for his lack of support for the voucher program.

I praise Meeks for flying in the face of the party establishment, including our current President. McGurn is not bashful in writing of Meeks:

Certainly he’s not a man to hold his tongue. He speaks frankly about elected officials “owned by unions.” About politicians who send their own kids to private schools—while opposing the choice for the less fortunate. In 2006, he gained notoriety for language in a fiery sermon that appeared directed at Chicago Mayor Richard Daley.

“We don’t have slave masters,” he said. “We got mayors. But they still the same white people who are presiding over systems where black people are not able . . . to be educated.”

Well, it is not just white mayors, but it is now this Presidency which has also fallen in line with the Democratic Party establishment to curtail the use of vouchers.

I wonder if Obama is still seeking the reverend for counsel.

While I do not believe vouchers are the cure-all for our urban education problems, I do believe they should be a much bigger part of the solution.

I salute the Reverend Meeks for speaking his mind and I salute William McGurn for drawing attention to this critically important topic.

What do you think?

LD

Is Barack Obama preparing to take over your retirement accounts? Far fetched? Think again.

This idea is not only being bandied about around Washington but elsewhere around the world, as well.

Are we to stick our heads in the sand and hope it doesn’t happen? That is no way to properly navigate the economic landscape. Where can you go to learn more about this potential economic and financial bombshell? You have come to the right place as this Sunday, February 21st from 8-9pm ET No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Ron Holland.

Who is Ron Holland? >>>>>

Ron has written three books, plus over 100 reports and articles and he speaks and serves as a moderator at conferences on a wide variety of financial, political and freedom-related topics. He is a strong proponent of defending American liberties at home and the importance for global investment diversification outside the dollar and U.S. financial markets.

Ron Holland works in Zurich and is a co-editor of the “The Swiss Mountain Vision Newsletter.” The weekly pro-liberty, hard money and free-market economics newsletter discusses the falling Washington dollar, the exploding national debt, and the growing threat to our liberty.

Readers can receive a copy of his latest report, “Plan Now To Escape Obama’s Retirement Trap” by e-mailing Ron at ron.holland@bfi-consulting.com and requesting the retirement trap.

Better to be forewarned and forearmed than wake up surprised to this potential reality. You will not want to miss this interview.

LD