FRONTLINE: Breaking the Bank,

In Breaking the Bank, FRONTLINE producer Michael Kirk (Inside the Meltdown, Bush's War) draws on a rare combination of high-profile interviews with key players Ken Lewis and former Merrill Lynch CEO John Thain to reveal the story of two banks at the heart of the financial crisis, the rocky merger, and the government's new role in taking over -- some call it "nationalizing" -- the American banking system.

Watch Frontline's "Breaking the Bank":




It all began on that fateful weekend in September 2008 when the American economy was on the verge of melting down. Then-Secretary of the Treasury Henry Paulson, his former protégé John Thain, and Ken Lewis, one of the most powerful bankers in the country, secretly cut a deal to merge Bank of America and Merrill Lynch.

The merger of the nation's largest bank and Merrill Lynch was supposed to help save the American financial system by preventing the imminent Lehman Brothers bankruptcy from setting off a destructive chain reaction. But it became immediately clear that it had not worked. Within days, the entire global financial system was collapsing.

Wall Street Insider's Revolution

March 2009 Democracy Now with Amy Goodman interview with Rolling Stone Magazine, journalist Matt Tabbi takes an in-depth look at the story behind AIG. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup détat, writes Taibbi. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

Wall Street Insiders Are Using the Bailout to Stage a Revolution-1/2

The Big Takeover

Matt Taibbi reports in the Rolling Stone, in his article entitled, "The Big Takeover" that "the global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution."Mr. Taibbi writes: "It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire."

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.

Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

Rachel Maddow Show: Matt Taibbi on Why Financial Institutions Should Be Broken Up

Bailout Bill Defeated: Wall Street in Freefall

As of this post, the Dow is down 780 points! Wall Street is in virtual free fall from this defeated bill. Poor Speaker Pelosi. She gave a speech on the floor of the House and it hurt the Republican's wittle feelings. Check her out on this MSNBC clip. Dang! Speaker Pelosi looks tired, haggard, overworked, and under appreciated. She looks like she needs a nap and some chamomile tea to calm her nerves.

The GOP fell apart. What happened to their RNC Convention mantra "country first." Well, these country firsters decided it was more important to perserve their Republican Brand than to preserve the American Republic.

So, what did the Speaker say that offended the GOP soooo much that caused the House Republicans to act like small childeren and blame Speaker Nancy Pelosi for the failed bailout vote. The House Republicans claimed that she made a partisan speech. Let's take a look at an excerpt fo Nancy Pelosi's speech:

"[W]hen was the last time someone asked you for $700bn? It is a number that is staggering, but tells us only the costs of the Bush administration's failed economic policies — policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system."

"Democrats believe in the free market, which can and does create jobs, wealth, and capital, but left to its own devices it has created chaos."

"Democrats insisted that legislation responding to this crisis must protect the American people and Main Street from the meltdown on Wall Street. The American people did not decide to dangerously weaken our regulatory and oversight policies. They did not make unwise and risky financial deals. They did not jeopardise the economic security of the nation. And they must not pay the cost of this emergency recovery and stabilisation bill."

"Today we will act to avert this crisis, but informed by our experience of the past eight years with the failed economic leadership … We choose a different path. In the new year, with a new Congress and a new president, we will break free with a failed past and take America in a new direction to a better future."

Representatives Barney Franks and Rahm Emmanuel talkling to about the crisis on.

Here’s the story. There’s a terrible crisis affecting the American economy. We have come together on a bill to alleviate the crisis. And because somebody hurt their feelings, they decide to punish the country. I mean, I would not have imputed that degree of pettiness and hypersensitivity.

We also have — as the leader will tell you, who’s been working with them — don’t believe they had the votes, and I believe they’re covering up the embarrassment of not having the votes. But think about this. Somebody hurt my feelings, so I will punish the country. That’s hardly plausible. And there are 12 Republican members who were ready to stand up for the economic interest of America, but not if anybody insulted them.

I’ll make an offer. Give me those 12 people’s names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are and maybe they’ll now think about the country.

Wall Street Bankers: The Unmerciful Servants

Sunday's Sermon: The Unmerciful Servant
by: Ron Edwards

As lawmakers write legislation to bailout the Wall Street bankers and investment houses, the New Testament Parable of the Unmerciful Servant is strikingly parallel and applicable today. The banks and the financial industrial complex request that the government of the USA bequeath them with a massive bailout, in the ballpark of an unfathomable price tag of $700 billion taxpayer dollars to buttress their bad business decisions and practices.

Meanwhile back on Main Street, Anywhere, USA the taxpayers and their descendants who will pick-up Wall Street's tab are getting foreclosed and harangued by these same financial institutions. The overburdened taxpayers are asked to shoulder this nearly trillion dollar burden. From the exact people that have for years shouted from the mountaintops “free market,” “personal responsibility,” “ownership society,” “the government is the problem, not the solution,” “no welfare checks for the poor,” “no government handouts,” and it goes on and on. The laundry list of rightwing talking points only seem to apply to the poor and downtrodden, God forbid the rich and well connected should actually suffer the same foreclosures, delinquent payments, overdrawn credit cards, and other non-dischargable debt that was legislated and written by these same banking beggars.

In other words, the bankers have been the “unmerciful servants” that Jesus speaks about in Matthew 18:21-35 of the New International Version.

The “Parable of the Unmerciful Servant” begins when Peter came to Jesus and asked, "Lord, how many times shall I forgive my brother when he sins against me? Up to seven times?"

Then in verse 22, Jesus answered, "I tell you, not seven times, but seventy-seven times.”

Jesus begins to teach through a short story about a a king who wanted to settle accounts with his servants.

18:24 As he began the settlement, a man who owed him ten thousand talents [of gold] was brought to him. 25 Since he was not able to pay, the master ordered that he and his wife and his children and all that he had be sold to repay the debt.

26"The servant fell on his knees before him. 'Be patient with me,' he begged, 'and I will pay back everything.' 27The servant's master took pity on him, canceled the debt and let him go.

In this story, the “king” is the federal government and the “servant” that owes about $700 billion dollars is the banking and finance industry. Now much like today, the king (feds) are negotiating a deal to bailout the debts of the groveling servants (banks). The rich and powerful bankers will no doubt get the taxpayer money. Their bad business practices and unfettered greed has flipped the whole system of American capitalism into American socialism. In 8 short years, the Bush Administration and their corrupt cronies cratered the national economy.

Back to the parable of the unmerciful servant. The unmerciful servent is like the bankers on Wall Street, who are going to get a trillion dollar bailout, but how will the bankers react to the mercy and debt forgiveness from the taxpayers and the feds. Oh yes, you guessed it. The bankers will continue to foreclose on mortgages and throw the taxpayers out of their homes. The big wigs on Wall Street won't reset the A.R.M (adjustable rate mortgages) to keep the loan repayments at a reasonable rate for strapped consumers. They'll continue business as usual, by selling those demonic derivatives and their skanky cousin the credit swap to each other--all the while blaming the dufass sub-prime market. Certainly the bankers will act like the unmerciful servant from Jesus' parable.

We'll pick-up the text from verse 28: "But when that servant [Wall Street bankers] went out, he found one of his fellow servants [Main Street taxpayers] who owed him a hundred denarii.[silver] He [banker] grabbed him [taxpayer] and began to choke him. 'Pay back what you owe me!' he demanded.

29"His fellow servant fell to his knees and begged him, 'Be patient with me, and I will pay you back.' 30"But he refused. Instead, he went off and had the man thrown into prison until he could pay the debt.

This parable explains exactly what is happening across the landscape of America today. The bankers will get debt forgiveness and a bailout, while struggling regular run-of-the-mill Americans will get both the shaft and bill. The bankers wrote the bankruptcy bill, the bankers made big bucks riding this housing bubble, the bankers paid each other millions and billions of dollars for shady deals with swampy swaps and demonic derivatives. It's been their big drunken money orgy and the American people have to clean-up the mess that the elephants made for 8 years, under the bigtop of life.

Crony Capitalism 101: Feds Bailout AIG

Socialism takes over the financial sector of the US economy. Bloomberg reports: "The U.S. government took control of American International Group Inc. in an $85 billion bailout to prevent the bankruptcy of the nation's biggest insurer and the worst financial collapse in history. "

The Globe Research in Canada says, "The U.S. Financial System in Serious Trouble": "...this major crisis has to be placed at the very feet of the Washington establishment. This is a politico-financial establishment that has pushed to the limits its ideology of deregulation of financial markets and stretched the working of unregulated corporate market capitalism to the breaking point. Now, the system is imploding under our very eyes and financial institutions are falling like dominos."

John Browne from the The Market Oracle states, "Last week, the U.S. government took the unprecedented step of effectively nationalizing mortgage giants Fannie Mae and Freddie Mac. Together, the two companies hold or guarantee some $5.2 trillion, or about half, of all American residential mortgages. A substantial portion of this debt is tilting toward default. Given the size of the numbers, American tax payers should be very concerned. "

The Business & Media Institute's Jeff Poor wrote: Has America created its own variety of communism with the U.S. Treasury Department’s bailout of two beleaguered government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac? According to Rogers Holding CEO Jim Rogers, the answer is yes.

“America is more communist than China is right now,” Rogers told CNBC Europe’s “Squawk Box Europe” September 8. "... you can see that this is welfare for the rich. This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters."

The Republicans in Washington are "not bailing out the homeowners who are in trouble, by the way,” Rogers said. “It’s not bailing out people who want a mortgage – it’s just bailing out financial institutions. This is not my idea of the way things are supposed to be, but if that’s what America wants, you know, it can elect people who are going to do it. I think it’s a mistake.

According to Nouriel Roubini's Global EconoMonitor article from RGE Monitor, The transformation of the USA into the USSRA (United Socialist State Republic of America) continues at full speed with the nationalization of AIG

Last week we argued that, with the nationalization of Fannie and Freddie, comrades Bush, Paulson and Bernanke had started transforming the USA into the USSRA (United Socialist State Republic of America). This transformation of the USA into a country where there is socialism for the rich, the well connected and Wall Street (i.e. where profits are privatized and losses are socialized) continues today with the nationalization of AIG.