The online version of Matt Taibbi's latest
Wall Street exposé is out, and there's much to enjoy about it — everything but the content, in fact.
The skinny: Thanks mainly to Bernie Sanders, an Audit the Fed amendment got into the Wall Street Reform bill. That got watered down, but not enough to keep
everything hidden.
One of the pieces of info they got was the list of recipients of Federal bailout money during those heady days when the Fed went from bailing out a few of its friends, to handing gobs of cash to friends of friends of friends. Sort of like the wedding guestlist problem — first you've invited your aunt's unpleasant cousin, and eventually you've invited Manhattan.
Taibbi (my emphasis throughout):
Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
Well, the Fed invited the Bronx, Manhattan, and Staten Island too. Also the Cayman Islands. Also a Gaddafi-owned bank in Bahrain. And a couple of ordinary gals from downtown:
But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences.
Small stuff, right. $220 million? Chump change on the Upper East Side. Thing is, looks like they used the profit (which by TALF rules,
they pocket most of) to buy ... well, guess. It involves the Upper East Side:
In August 2009, John Mack, at the time still the CEO of Morgan Stanley, made an interesting life decision. Despite the fact that he was earning the comparatively low salary of just $800,000, and had refused to give himself a bonus in the midst of the financial crisis, Mack decided to buy himself a gorgeous piece of property — a 107-year-old limestone carriage house on the Upper East Side of New York, complete with an indoor 12-car garage, that had just been sold by the prestigious Mellon family for $13.5 million. Either Mack had plenty of cash on hand to close the deal, or he got some help from his wife, Christy, who apparently bought the house with him. ... It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages.
The prose I killed above with the dot-dot-dot ellipsis is classic Taibbi. Feel free to
seek it out, you style kings and queens; it starts "The Macks make for an interesting couple." The phrase "resembling a crumpled, half-burned baked potato" turns up.
There's obviously more than I can even mention, much less blurb. It's well researched, and does a great job of explaining how the bailouts were structured, how the scam and skim worked. A must-read in my book.
GP
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