- A friend on the CAFR1 NATIONAL email list, Bruce Feher
from Nevada, asked me to prepare a response for him to his Senators.
-
- I read the Senator's letters (reposted below). They
said nothing as to the underlying root cause of the financial turmoil,
which in reality is the result of fundamental manipulation and unrestrained
greed for wealth and power orchestrated by our own US Syndicate known as
'government.'
-
- What follows is my recommended reply letter, then the
two letters sent by the Senators to Bruce Ferer of Nevada
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- Walter Burien
-
- P. O. Box 2112
- Saint Johns, Arizona 85936
- http://CAFR1.com
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- (928) 445-3532
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- Bruce:
-
- I am a strong believer that to take down a fraudster,
confront them with their biggest fraud.
-
- So, Bruce, I suggest you reply back with:
-
- -----------------------------------------------------
-
- (edited)
-
- Senator:
-
- It is an acknowledged fact that the #1 player in
the derivatives market is now government.
-
- Thousands of US local, state, and federal agencies and
funds monopolize that market internationally, writing 65% of the paper
transacted therein. This has yielded several trillions of dollars
of profit over the last several years. It appears that this involvement
has lead to a slap-happy bubble of double-floated financial instruments
as government inflated its balance sheets with many of these financial
instruments not backed by any real substance whatsoever. This has lead
to the current meltdown.
-
- The issue, as I see it, is that government - through
over-extension of international portfolio investments motivated by unrestrained
greed - has created virtually this entire situation. It
is obvious that the public was kept completely in the dark as countless
government investment funds took control of a substantial portion of the
derivative market place. This gigantic expansion took place over
the last three decades.
-
- The lack of public disclosure as to the scope and size
of the government's involvement in these markets, it appears, made it easier
to take (steal) another trillion or so from the public tax coffers to 'stabilize'
(not!) the playing field that government created where nearly all of its
assets sit. The whole 'bailout' was government protecting its own
assets.
-
- Senator, what I would like to see from you is a consolidated
balance sheet of local and federal governments' equity participation in
the derivative market at the time this supposed needed 'bailout' took place.
I would also like to see a consolidated balance sheet of what profits local
and federal government made "internationally" from their derivative
activities over the last five years. Was it three-trillion, five-trillion,
ten-trillion, fifteen-trillion???
-
- It would be very interesting to formally discover that
government has been playing both ends against the middle (class, that is).
Trillions made in profits from manipulating the international markets
through the use of their derivative activity, and then creating a one-sided
impression of impending doom to steal another trillion or so of tax revenue.
It appears this is exactly what has happened. I have no doubt a comprehensive
consolidated audit of government derivative activity and profits will
bear this out in definitive terms.
-
- As a Senator, this should be an easy task to achieve.
Your economic and financial committees have instant access to the local
and federal government data banks for ease of compilation.
-
- I note that several local governments list their derivative
activities in their yearly Comprehensive Annual Financial Report (CAFR).
For example, the State CAFR of Pennsylvania of 2002 under note (D)
http://cafr1.com/STATES/PA/PA2002D75.JPG
gives the derivative activity for the year for just the local "state"
government. As you look at the figures, be sure to add three zeros
to each as they are displayed as thousands on the document. What
look like millions are, in reality, BILLIONS. The state of Pennsylvania's
derivative activity alone is greater than many of the largest Wall Street
Firms.
-
- The California Public Employees' Retirement System (CALPERS)
provides retirement and health benefit services to 1.5 million members.
Now note: CALPERS International derivative activity is greater
than that of a grouping of some of the largest Wall Street Firms.
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- There are now over 136,000 local government Comprehensive
Annual Financial Reports completed each year. A grouping of the top
700 would be in the same class as PA's derivative activities, with all
following the lead of a few top managers and federal advisory associations,
and thus a monopoly of no equal.
-
- Additionally, in your quest for consolidated totals,
the US Treasury auditor general's bank derivative holdings report shows
in table #1 that the top eight banks were holding over three hundred trillion
dollars in derivatives. ** 2008 March http://cafr1.com/STATES/US-TreasuryReports/BankDerivativesMarch08.pdf
-
- It would be interesting to do a little reverse engineering
to see how much of that derivative figure is for local and federal government
investment accounts held and or managed by the banks. What do you think?
50%? 60%? 70%? 80%?
-
- Senator, "silence is golden" will not hold
here. Rhetoric skating around my two "specific" questions asked
above will not cut the grade either.
-
- To earn an easy A+ grade, Senator, I will give you a
margin of error of 15% per your reporting of consolidated totals of derivative
activity and profits accomplished from those activities from local and
federal government. It's data that can easily be retrieved at the
stroke of a keyboard when accessing the correct data banks. Is two
weeks a good time period for you to answer these two questions? If
answered by you in the next three days, it would make me even more impressed
with your compliance with what should have been open disclosure to the
public for the last several decades but was not.
-
- I thank you in advance for your prompt and accurate reply
to my two specific questions.
-
- Bruce Ferer
-
- From: correspondence_reply@reid.senate.gov
- Subject: Correspondence from Senator Reid
- Date: Tue, October 14, 2008 3:01 pm
- To: "BruceFeher"
-
- October 14, 2008
-
- Mr. Bruce Feher
- Las Vegas, Nevada 89144
-
- Dear Mr. Feher:
-
- Thank you for contacting me regarding the current financial
turmoil. I appreciate hearing from you about such an important issue.
-
- The recent failure of several major financial institutions
has made it evident that we are facing one of the worst economic crises
in a generation. The freeze in our nation's credit markets has multiple
and complex causes. It began as a capital crunch, with institutions experiencing
rapid declines in asset values, set off initially by depreciation in mortgage-backed
securities tied to mortgages in default and homes declining in value. Now
there is a widespread lack of confidence in financial institutions and
their ability to make good on their lending commitments, bringing much
lending to a halt.
-
- I worked hard to keep this problem from growing as it
has. Recognizing that mortgage defaults and declining home values were
the root cause of the current crisis, and that Nevada was ground zero for
this phenomenon, I worked hard to pass the Housing and Economic Recovery
Act of 2008 (P.L. 110-289) that President Bush signed into law on July
31, 2008. While I certainly understand the argument that the government
should not intervene to support lenders or borrowers that made poor decisions
about mortgages, I have repeatedly expressed my concern for the effects
widespread foreclosures could have on Nevada's taxpayers, the national
economy and the global financial markets. In addition to several provisions
aimed at improving the Federal Housing Administration (FHA), the housing
bill authorized the HOPE for Homeowners program. This voluntary program
allows lenders to refinance the distressed loans of qualified borrowers
with a new, fixed-rate, 30-year, mortgage insured by the FHA.
-
- Unfortunately, this program did not take effect until
October 1, 2008. In the meantime, several financial institutions continued
to fail under the weight of bad loans and depleted capital. In response,
the Bush Administration proposed that Congress provide the Treasury Secretary
with a blank check to purchase bad assets without any oversight by establishing
the Troubled Asset Relief Program (TARP). By no means do I take lightly
the responsibility of approving a $700 billion rescue package, but we all
have an interest in ensuring the stability and vitality of the financial
market. That is why my colleagues in both the House and Senate worked in
a bipartisan fashion to improve the Administration's proposal in order
to provide more protection for taxpayers and ensure that their money was
invested wisely.
-
- First, we improved oversight of the asset-purchase program,
so that Congress and the public would be able to see how taxpayer money
was being spent. We also demanded that taxpayers receive warrants which
give them a stake in future profits of any company benefiting from government
intervention. In an effort to ensure that corporate executives are not
rewarded for their failure with a golden parachute courtesy of the taxpayer,
corporate executives of participating companies will face new restrictions
on their compensation. We also required federal agencies to implement a
plan for mitigating foreclosures on mortgages under their control and expanded
the eligibility requirements for the Hope for Homeowners program. Lastly,
we temporarily increased the FDIC limit for individual depositors from
$100,000 to $250,000. This will help protect Americans' savings in the
event of further bank failures.
-
- Finally, I am pleased that this legislation was passed
along with a number of other measures important to Nevadans, which I have
been working hard to pass for years, including energy tax incentives,
the Payment in Lieu of Taxes program, Alternative Minimum Tax relief, tax
extenders and mental health parity. For more information regarding these
measures, please visit my website at http://www.reid.senate.gov.
-
- As you can see, this is a complex issue for policymakers,
but you can rest assured that I will work hard to find the best solutions.
While I regret that Congress had to intervene in the financial market in
this manner, I am confident that this measure will help stabilize our economy
and protect Main Street from the crisis on Wall Street. That is why this
legislation had the bipartisan support of 337 members of Congress and was
signed into law on October 3, 2008 (P.L. 110-343). It is my hope that we
can utilize this support in the future to conduct the investigations necessary
to determine the root of this financial crisis, hold the appropriate persons
responsible, and establish regulatory reform to prevent this from occurring
again in the future.
-
- I appreciate hearing your thoughts regarding this matter
and I certainly understand the concerns that you and many others have expressed.
As my colleagues and I work to restore fiscal sanity, sustainability, and
vitality to our nation's market, you can be certain that I will keep your
thoughts and best interests in mind. I look forward to hearing from you
in the near future.
-
- My best wishes to you.
-
- Sincerely,
- HARRY REID
- United States Senator
- Nevada
-
- HR:cs
-
- --------------------------------------------------------------------------
-
- From: Senator_John_Ensign@ensign.senate.gov
- Subject: Correspondence from Senator Ensign
- Date: Tue, October 14, 2008 6:36 am
- To: BruceFeher@CS.com
-
- This is an official communication from the Office of
Senator John Ensign. Any tampering or alteration of this communication
is prohibited and may result in criminal investigation or prosecution.
-
- October 14, 2008
-
- Mr. Bruce Feher
- Las Vegas, Nevada 89144
-
- Dear Mr. Feher:
-
- Thank you for contacting me about our current financial
crisis and the financial stabilization bill that Congress recently passed,
H.R. 1424. I value the opinions of every Nevadan and am always grateful
for those who take the time to inform me of their views.
-
- Our nation is currently dealing with extraordinarily
challenging economic circumstances. The stock markets have experienced
some of the most dramatic swings in American history. The credit markets
have seized up, making it difficult for even those with good credit to
borrow money for important things such as buying a car, making payroll,
getting student loans, or purchasing a home. Individual retirement accounts,
pension funds, and 401k plans have lost tremendous value, delaying the
retirement plans for millions of Americans. The financial conditions in
this country are dire and we could be facing a deep downturn in our economy.
-
- In October, Congress passed a bill, H.R.1424, intended
to stabilize the financial industry and the economy as a whole. Like many
Nevadans, I find it distasteful that hard-working taxpayers will be bailing
out individuals who bought homes they could not afford and financial companies
that invested recklessly in assets they did not understand. Even so, the
cost of doing nothing would be far worse. After considering the legislation
at great length, I ultimately voted for the financial rescue bill because
I firmly believe the government had to do something to stave off potential
economic disaster. Under some of the worst case scenarios, the financial
crisis could cause millions of Americans to lose their jobs and significant
amounts of their savings.
-
- I loathe having to support a bill that intervenes so
heavily with private enterprise and the free market. However, it would
be irresponsible for the government to sit idly by while millions of Americans
suffer the consequences of a crisis that the government helped create.
The problems we are facing today are mostly the result of poor government
policies going back to the early 1990's. Congress, the Clinton Administration,
and the Bush Administration have made home-ownership a top priority and
thus sometimes pursued policies that led to increasingly lax underwriting
standards and encouraged companies to issue risky home loans. These bad
home loans were then packaged into investment vehicles. Now that many borrowers
are unable to meet their mortgage payments or refinance their loans, investors
are losing hundreds of billions of dollars on these mortgage-backed assets.
These massive losses have paralyzed the financial industry, thus threatening
the ability of otherwise healthy companies to continue doing business and
jeopardizing millions of Americans' savings.
-
- The key component of this legislation is a $700 billion
program to stabilize the financial sector. These funds can be used to purchase
distressed assets, to provide insurance for those assets, or to inject
capital directly into the banking system. I am currently working with my
colleagues, economists, and outside experts to urge the Treasury Department
to adopt a final plan that will protect taxpayers while increasing financial
stability.
-
- I would like to see taxpayer money go toward recapitalizing
the banking system in return for senior preferred stock positions, rather
than buying toxic assets from financial companies. During a systemic banking
crisis, history has shown that the financial system must be recapitalized
to avoid a dangerous credit contraction. With more capital in the system,
banks should be more willing to lend to each other, to companies, and to
individuals. By placing the taxpayers in a senior equity position, they
will share in any profits that a company may realize after receiving federal
assistance. The executives of participating companies should also have
limits placed on their compensation packages, because these corporate officers
should not receive huge bonuses or "golden parachutes" after
receiving millions or billions of dollars of government assistance. Such
limits combined with the equity stake make it more likely that companies
will act responsibly to restore themselves to financial health so that
they may quickly rid themselves of government involvement.
-
- By injecting capital directly into firms, we can also
avoid the potential problem of having the government buy and hold toxic
assets at above market value, which would provide the greatest benefit
to the worst offenders. A capital injection plan is more transparent and
will distort the marketplace less than purchasing bad assets. If handled
correctly, the government can ultimately spend far less than the bill's
$700 billion price tag while still bringing stability to our economy.
-
- I would have voted against the original plan offered
by Treasury Secretary Henry Paulson and the Bush Administration. The final
bill I voted for, while far from perfect, protected the American taxpayer.
While this is certainly not the bill I would have written and even though
I have many concerns about it, I believe this bill is better than doing
nothing at all.
-
- In addition, H.R.1424 included a large package of critical
tax relief. In these trying economic times, it is more important than ever
for Congress to pursue pro-growth policies. Lower taxes will help our economy
recover faster from its current malaise. Nevadans will directly benefit
from a number of the bill's tax provisions, including extension of the
state and local sales tax deduction and ensuring that over 88,000 Nevadans
will not be unfairly targeted by the Alternative Minimum Tax. Because of
the renewable energy tax credits included in this bill, Nevada also stands
to gain tens of thousands of new, high-paying "green" jobs in
the coming years.
-
- It is my hope that this financial rescue package that
Congress passed will put more confidence back in the financial markets.
Please know that as Congress continues to deal with the financial crisis,
I will be sure to keep your thoughts in mind as I closely monitor our financial
markets and the economy. Thank you again for sharing your thoughts with
me. Feel free to contact me in the future on matters of importance to you.
Should you have any other questions or comments or would like to sign
up for my newsletter, please do not hesitate to either write or e-mail
me via my website at http://ensign.senate.gov.
-
- Sincerely,
-
- JOHN ENSIGN
- United States Senator
-
- JE/BC
-
- Your thoughts and opinions are important. Unfortunately,
any replies to this e-mail will not be received and processed. If you want
to contact Senator Ensign electronically again please visit:
-
- http://ensign.senate.gov/forms/email_form.cfm
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