USD Law’s Frank Partnoy: Fed “revealed too little.”
  • USD Law’s Frank Partnoy: Fed “revealed too little.”
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Back in the Old West, watering of livestock was standard business practice. A cow would be bloated with water so it could be sold at a stiff price. Pretty soon, Wall Street learned how to water its own species of stock — and bonds too. These days, in San Diego and just about everyplace else, getting a loan based on a bloated property appraisal is as culturally deep-rooted as yarns about Jesse James.

Now it appears that during the recent financial crisis, our central bank, the Federal Reserve, was giving away money to banks, hedge funds, and all manner of financial institutions by knowingly accepting collateral that was thoroughly watered, or worth far less than claimed. The Fed knew it was getting bloated collateral but claimed it was using this process to bail out the financial system. “These bailouts have been an incredible giveaway to Wall Street,” says San Diego attorney Gary Aguirre, who has been assisting the staff of Senator Chuck Grassley of Iowa in interpreting bailout data that the Fed has released under duress. Freedom of Information Act requests by Bloomberg and Fox, along with provisions of the Dodd-Frank financial reform law, forced the Fed to open its books — a crack, anyway.

Attorney Gary Aguirre

Attorney Gary Aguirre

During the crisis period that began in late 2007 and is still going on, the Fed was giving 90 cents on the dollar for toxic assets (such as complex financial derivatives) that it knew were worth only 60 or 70 cents, says Aguirre. Institutions such as banks and hedge funds “could put any value they wanted on the collateral,” and the Fed, which was trying to pump liquidity into the system, was happy to oblige.

How happy to oblige? There are various estimates. The most common guess is that the Fed provided around $3.3 trillion in liquidity, or actual transfers of cash, to financial institutions, and more than $9 trillion in guarantees and backup commitments. Aguirre says the sum is between $3 trillion and $4 trillion in cash transfers and $9 trillion to $11 trillion in commitments. Think of it this way: the gross domestic product, or America’s total annual output of goods and services, last year was $14.7 trillion. The Fed’s giveaways and promises to support supposedly ailing institutions may have equaled or even surpassed the nation’s total economic output last year.

On December 1 of last year, the Fed released data on 21,000 transactions between December 1, 2007, and July 21, 2010. “The Federal Reserve is committed to transparency,” boasted the central bank, despite the fact that it had fought information requests for several years, claiming that such revelations would embarrass the recipients of the largesse. On December 1, the press quickly figured out how huge Wall Street institutions had raked in the bread that the Fed was handing out: Citigroup, $1.8 trillion; Morgan Stanley, $2 trillion; Goldman Sachs, $800 billion, for example. A slew of foreign banks also got handouts.

The Fed was loaning money at around zero percent and taking in collateral of dubious worth. Quickly, the word got around that America’s central bank was giving money away. Matt Taibbi wrote a brilliant article on the greed orgy in the April 28 issue of Rolling Stone. Aguirre, who warned the Senate Judiciary Committee in 2006 that bank and hedge fund excesses could lead to a crash, is quoted in Taibbi’s story. Taibbi explained how the bankers managed to con the Fed for free money. “[It was] a masterful bluff by Wall Street executives. Once the money started flowing from the Federal Reserve, the executives began moaning to their buddies at the Fed, claiming that they were suddenly afraid of investing in anything — student loans, car notes, you name it — unless their profits were guaranteed by the state.”

Banks would get money for almost zero percent and quickly buy Treasury bonds at a higher percent. Taibbi quotes one congressional aide observing, “People talk about how these were loans that were paid back. But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?”

It’s no different at all — and it’s reprehensible that the trillions given free to Wall Street have still not found their way to Main Street. Taibbi points out that hundreds of millions of dollars were given to hedge funds and others located in the offshore secrecy/tax haven of the Cayman Islands. It’s one thing for the government to look the other way when Wall Streeters evade taxes by registering their entities offshore. “But subsidizing tax evasion?” writes an indignant Taibbi.

Taibbi focuses on a caper called Waterfall TALF Opportunity. (The acronym stands for Term Asset-Backed Securities Loan Facility, a Federal Reserve program.) Christy Mack, wife of John Mack, then the head of Morgan Stanley, and Susan Karches, the widow of a former top executive of the same firm, got a giant welfare check from the Fed. “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,” writes Taibbi. “The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses.” It was a classic “heads-I-win, tails-you-lose investment,” coming right at the time the Macks were buying a multimillion dollar carriage house on the Upper East Side of New York.

The Fed’s transparency claim is a whopper, says Aguirre, who has been poring over the data on the Fed’s website. In the case of John Mack’s wife and her friend, “It looks like they are borrowing the money from the Fed, say, at 70 cents on the dollar and selling it back to the Fed for 90 cents. We can’t tell for certain because the Fed won’t tell us. The Fed publishes information but not enough for you to figure out what the hell happened.” Says Aguirre, “Suppose you own a San Diego car dealership and say it is worth $50 million — buildings, lots, and $40 million worth of cars. But I ask how many cars you have — how many Chevys, how many Cadillacs — but you won’t give me the numbers.” The Fed lists information on bonds involved in a transaction but won’t tell how many bonds. “The media should be screaming about this.”

Frank Partnoy, law professor at the University of San Diego, agrees that the Fed didn’t provide enough information. “The Fed’s new data have revealed too little,” Partnoy wrote in a Financial Times of London column on December 3. “The Fed charged low rates, often almost zero percent. It says these rates were justified because loans were ‘fully secured.’ However, unlike some Fed disclosures, the data include only the face amount of the collateral, and vague categorical labels. The Fed admits some collateral was inadequate. But without more details we can’t know whether the loans were fully secured, or whether the Fed, by lending at low rates without adequate collateral, was effectively gifting money to borrowers around the world.”

The Fed gave trillions of dollars to institutions and individuals, receiving smelly collateral in return. Then when legally forced to reveal what it had done, the Fed gave misleading information. People go to prison for that.

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expdx April 27, 2011 @ 6:24 p.m.

Hey Don: A good friend did an expose for CBS New York in the 70's about the Federal Reserve. For telling the truth about this cosa nostra he was fired. Moral: The rich get richer and we tax paying suckers keep on paying. San Diego City Government is as corrupt as they come but San Diegans truly are the most passive bunch of sheep I've ever encountered. Bet 2 of them actually read your article. Cheers.


Don Bauder April 27, 2011 @ 10:40 p.m.

But the gap between the superrich and average folks is far wider today than in the 1970s. In fact, it's wider today than it was in the Robber Baron era. Best, Don Bauder


SurfPuppy619 April 27, 2011 @ 7:36 p.m.

Good column.

The Fed is controlled by former Goldman Sachs yahoo's, Goldman Sachs yahoo'sactually are in every major position in gov. They are destroying the country.

If not for the backdoor BAILOUT of Goldman they would have went BK with lehman Bros.


Don Bauder April 27, 2011 @ 10:42 p.m.

You are exactly right, SP. Goldman would have gone under had not Geithner, Bernanke, and Paulson bailed it out in multifarious secret moves. And now Goldman is doing beautifully again, thanks to the bailout. Best, Don Bauder


rexl April 27, 2011 @ 7:37 p.m.

Don, "water stock" was supposedly invented by Daniel Drew, and he talks about it in "The Book of Daniel Drew". The 'stock' was cattle brought in from the Ohio Valley and watered around Harlem, which was the country, so their weight would be up for the scales.


Don Bauder April 27, 2011 @ 10:44 p.m.

Yes, that was the purpose of watering livestock: they would weigh more and fetch a higher price. Then Wall Street picked up on the practice. It's ubiquitous today. Drew was a pioneer in the game. Best, Don Bauder


Twister April 28, 2011 @ 1:17 a.m.

When arrogance gets to these heady heights, it's too late--the Golden Goose is cooked and we are surplus slaves of the Ruling Class. Constitution? Morality? Gimme a break! Goddammn that mutha fokker that foisted Monopoly upon the kids of this country! Why earn your money when you can steal it and surround yourself with goons?

No wonder gold is heading for two grand and beyond!

Me, I'm burying beans in the desert . . . Lessee, how long did I give The Economy to make the last bust look like a tea party (s h u t my mouth).

PS: What do you think will happen when we serfs finally wake up and head for the square? Well (as Ron would say), something like the great (General) MacArthur did to the vets. I think he was only a major then, back when my pappy was a boy . . . Who was it who said, "We who fail to learn history are doomed to repeat it?


Don Bauder April 28, 2011 @ 7:16 a.m.

In 1932, the Bonus Army, a group of military veterans seeking an early payment of war service bonds, marched on Washington. MacArthur, then a general, was sent by President Hoover to handle the situation. There were several fatalities and injuries, and MacArthur's reputation suffered. Best, Don Bauder


Twister April 28, 2011 @ 1:20 a.m.

SP: Wasn't Lehman a sacrificial lamb?


SurfPuppy619 April 28, 2011 @ 7:12 a.m.

Lehman would not hhave failed if they had received what Goldman Sachs and merrill lynch did, a bailout. Both Merrill and Goldman (backdoor bailout out thru AIG) would have folded without a bailout-so why didn't Lehman get one?? I have no idea, but NONE OF THEM SHOULD HAVE GOTTEN BAILED OUT.

They all should have been allowed to go through BK. We didn't need to bail them out, the TARP bailout did NOT do what Bush claimed it would do, and the idiots that ran the entire country into the ground received BONUSES for running the country into the ground. That is as upside down as this country can get.

It was without a doubt the saddest days our country has ever seen from an economic, moral and ethical stand point.


Don Bauder April 28, 2011 @ 7:22 a.m.

Absolutely. They all should have gone through BK. The BK process in the U.S. is sound. The people might have found out what its government was doing in these backdoor bailouts. And BKs can be done quickly, as we saw with GM (although I still have many questions about that one.) Best, Don Bauder


nokomisjeff April 29, 2011 @ 6:18 a.m.

That GM bankruptcy was so wrong, screwing the bond holders like that. 200 years of property rights down the drain in one decision.


Don Bauder April 28, 2011 @ 7:20 a.m.

Lehman was crooked as a snake. Its books were cooked. But was it any worse than the firms such as Goldman that got rescued? Probably not. The claim that the government had no authority to rescue Lehman was nonsense. It was saving every other equally crooked major firm, including Goldman. I suspect that Paulson wanted Lehman to go, eliminating a competitor of Goldman, his alma mater. Best, Don Bauder


SurfPuppy619 April 28, 2011 @ 4:25 p.m.

I suspect that Paulson wanted Lehman to go, eliminating a competitor of Goldman, his alma mater

I would put more than even money on that bet!


Don Bauder April 28, 2011 @ 7:13 p.m.

You won't read it in Paulson's book, however. Not that I ever read it -- just that I know he would never confess to it. Best, Don Bauder


Twister April 28, 2011 @ 5:46 p.m.

Sounds like a good bet. What I should have said is that somebody had to take the fall . . . Window dressing. A "get tough" feint.


Don Bauder April 28, 2011 @ 7:14 p.m.

They should have all taken the fall -- right into bankruptcy court. Best, Don Bauder


stingray April 29, 2011 @ 5:45 p.m.

I think as long as the people runing the show can bounce back and forth, working for the Fed one year and the banks the next, any kind of progress in financial reform is unlikely.


Don Bauder April 30, 2011 @ 6:48 a.m.

You are exactly right. Fed employees move in and out of the banking industry. The big Wall Street law firms run the Securities and Exchange Commission by hiring its lawyers for fat pay. It's called the revolving door phenomenon. At the local level, people move from jobs with local developers to CCDC and Development Services -- and then back again. Government should provide checks and balances. It doesn't when its personnel have loyalties -- cemented by money -- to the private sector. Best, Don Bauder


SurfPuppy619 April 29, 2011 @ 9:54 p.m.

I think as long as the people runing the show can bounce back and forth, working for the Fed one year and the banks the next, any kind of progress in financial reform is unlikely.

============== There should be a 5 year ban, that was a key component Ross Perot's presidential run.


Don Bauder April 30, 2011 @ 6:51 a.m.

I agree with a five-year ban. And maybe it could be extended a couple of years. On the local level, the period during which ex-government employees are supposedly banned from trying to sway ex-colleagues should be tripled and enforced with criminal penalties. Best, Don Bauder


Fred Williams April 30, 2011 @ 5:17 a.m.

Don, for a bit of relief from what is a steady drone of depressing financial news, take a few minutes to watch the latest "rap" video from Econ Stories TV.

Yes, it's Keynes v. Hajek, Round 2...more economic theory in eight minutes than is taught in college today.




Fred Williams April 30, 2011 @ 5:28 a.m.

-- Favorite lines in the video --

Capitalism's about profit and loss You bail out the losers there's no end to the cost

The lesson I've learned is how little we know The world is complex, not some circular flow

The economy's not a class you can master in college To think otherwise is the pretense of knowledge


Don Bauder April 30, 2011 @ 7:22 a.m.

Hayek would have deplored bailing out the losers. But who launched the multi-trillion dollar Wall Street bailout? The Bush administration, which was supposedly wed to Hayekian principles. Let's face it: those who call themselves conservatives are simply in favor of giving everything to business -- that is, conservatives will find all kinds of intellectual rationales for exacerbating the massive chasm between the superrich and the rest in society.(One reason is that so manyof these so-called conservatives are on the payrolls of the banks, corporations, and "think" tanks supported by the rich.) So-called liberals, on the other hand, favor redistribution -- progressive taxation, etc. Since I believe that the massive disparities in wealth and income are among our most pressing problems, I find myself agreeing with liberals more than conservatives these days. I used to be an arch-conservative. But times change, and one must change with them. The greed of the last 25 years should have turned thinking people away from the so-called principles of Hayek. Best, Don Bauder


SurfPuppy619 April 30, 2011 @ 9:30 a.m.

Post #24 nailed it Don.

Of course Booshie the corporate welfare King now says the baiolouts were a mistake! Yeah right.


Fred Williams May 4, 2011 @ 5:02 a.m.

Hey Don, look what Taibbi had to say about Hayek this week:

"By the way, I have read The Road to Serfdom, and to me it’s right up there with The Fountainhead, Cherneshevsky’s What is To Be Done?, and Beck favorite The 5000-Year Leap on the all-time list of pretentious, badly-written Bibles of political quackery."

(I've not got a dog in this fight, personally, just found the rap video quite enjoyable...I'm interested nowadays on how epistemological biases influence economic decisions, evolutionary/bahavioral economics -- theorists like Hayek and Keynes are becoming irrelevant with the last decade's advances in cognitive science, just as much as the last decade's economic modeling failures.)


Don Bauder April 30, 2011 @ 7:12 a.m.

Fred: The Hayek vs. Keynes rap video is most enjoyable. Our problem is that neither Keynes nor Hayek works today. Keynes stresses pumping up demand. The last thing we need is consumers going into more debt to boost demand. Consumer spending is already more than 70% of GDP -- excessive. Keynes didn't like saving: "private virtue is public folly." But we desperately need more saving. Hayek's world simply doesn't exist anymore. He worshipped the free market. That's fine, but today, corporate welfare has gone berserk. Markets are rigged, often with the help of governments. Governments run economies by manipulating tax policy, subsidies, etc. Yet the George Mason crew still worships Hayek (I once did.) I chuckle when I see the Mason op-eds in both the Wall Street Journal and New York Times. Best, Don Bauder


Twister April 30, 2011 @ 2:59 p.m.

"There should be a 5 year ban, that was a key component Ross Perot's presidential run." By SurfPuppy619 9:54 p.m., Apr 29, 2011

Don't forget Perot's warning about That Giant Sucking Sound!


SurfPuppy619 April 30, 2011 @ 4:07 p.m.

Don't forget Perot's warning about That Giant Sucking Sound!

============== Iwas against NAFTA, and Ross and me were correct, it has turned out to be a HUGE drain on our jobs.

I was in sync with Perot on every major issue, but the guy did turn out to be koo-koo, very egotistical. Trump reminds me a lot of Perot, but Perot was more polished than Trump.

Oh, and there is no doubt in my mind, none, that Perot would have beat Clinton in 92 if he did not drop out. Glad Clinton won even though I voted for Perot.


Don Bauder April 30, 2011 @ 4:15 p.m.

I don't remember Perot dropping out. He collected a big enough percentage of the vote to deny a second term to George H.W. Bush. Best, Don Bauder


SurfPuppy619 April 30, 2011 @ 6:17 p.m.

I don't remember Perot dropping out

Yeah, Perot dropped out halfway thru because he claimed some of the republicans were up to "dirty tricks". Perot sat on the sidelines for several months then TRIED, repeat tried, to get back in- but it was too late, people were tired of his bellyaching, cry baby mentality, he proved he didn't have what it takes to run a presidential campaign-and that is thick skin. Trump is the same way, he doesn't have the skin to hang in a presidential race. He is doing OK now, when he is not runnng and is throwing flames everyday, when he is not a target. If Trump declared (he won't) he would fold faster than the local laundry.

BTW-before Perot flaked out Perot was leading California, the biggest state in the union, 45 points to Clintons 30 to Bush's 20. I don't think I have ever seen such a commanding lead in CA, or anywhere else really.

And yes, Perot handed Clinton the WH. Probably 75% of the votes Perot took nationwide were from Republicans. I was a Democrat back then and I did not vote for Clinton but instead went for Perot. Same in 96. I vote my conscience.


Don Bauder April 30, 2011 @ 10:07 p.m.

I had forgotten -- and still can't remember -- Perot dropping out in the middle of the campaign. If it's true, I would suspect it was horrendous pressure from Republicans -- such as no defense contracts, his son getting destroyed, etc. I've forgotten if he was still connected with GM at the time. Best, Don Bauder


tomjohnston April 30, 2011 @ 11:11 p.m.

Mr Bauder, Perot did indeed drop out of the race, in mid July i think. Then he re-entered the race in October and took part in the debates. I remember reading a report that he basically took the same amount of votes from both Clinton and Bush, so I don't believe he handed the White House to Clinton as someone else put it. My guess is that since he only gt slightly less than 20% of the vote, the balance of people who once supported him thought he was a flake and either voted for someone else or just didn't bother to vote at all. Personally, I had planned to voted for him, but after he pulled his Brett Favre, I didn't think he had the chops to cut it as president. When the going gets tough, the tough don't just fold up their tents and run away only to change their mind.


SurfPuppy619 May 1, 2011 @ 12:58 p.m.

My guess is that since he only gt slightly less than 20% of the vote, the balance of people who once supported him thought he was a flake and either voted for someone else or just didn't bother to vote at all. Personally, I had planned to voted for him, but after he pulled his Brett Favre, I didn't think he had the chops to cut it as president

That is eaxactly what happened, people were so excited about Perot, and he had such a commanding lead in CA, he was destroying Clinton and had alreayd killed Bush. Perot could have won the election in 92, no doubt about it. But he deserted his supporters, and I still voted for him. Perot receiving 20% of the popular vote in 92 after he dropped out and as an independant was shocking. The most votes any prior Independant candidate received was around 10% with Anderson, I think that was 1980.

But Perot did pull far more republican votes than democrat votes, I don't know the spread, I was guessing 3-1 based on memory, may have been less.


tomjohnston May 1, 2011 @ 6:44 p.m.

Anyone who thinks Perot's votes cost Bush the election will never change their mind anymore than people with the opposite opinion will. For every exit poll survey interpreted one way you can find one interpreted the other. You believe Perot pulled alot more votes from Bush than Clinton and I believe it was about even. Neither one of us can prove their viewpoint conclusively. But one thing almost every exit survey agrees on is that of the voters who thought Bush's broken promise of "No New Taxes" was "very important," 2/3of them voted for Clinton. Remember also, the ecomony was in recession and Bush was putting more emphasis on the Desert Storm victory. James Carville came up with the brilliant slogan " It's the Economy, Stupid" to remind voters that the economy wasn't getting better under Bush. Also a lot of pro choice republicans, yes there used to be some of those, didn't vote for Bush because of his stance on abortion. You can stick to your opinion ad I'll stick to mine:I don't think Perot cost Bush the election, I think Bush lost it all on his own.


SurfPuppy619 May 2, 2011 @ 7:31 a.m.

I personally think Clinton would have beat Bush without the lost Perot votes, but there can be no doubt that Perot destroyed any possible hope or shot at Bush winning when he got back in the race.


Don Bauder April 30, 2011 @ 4:12 p.m.

Certainly, NAFTA has not turned out as advertised. Perot saw it. Best, Don Bauder


jv333 April 30, 2011 @ 5:18 p.m.

check out the 4th comment by a Mr Sandrin following the Taibbi article ... allegations from an eyewitness stating that he saw Mack and others engage in large cocaine use and lewd acts with prostitutes ... we are talking the former CEO of Morgan Stanley .... Clinton was almost removed from office for less ...


SurfPuppy619 April 30, 2011 @ 6:09 p.m.

check out the 4th comment by a Mr Sandrin following the Taibbi article ... allegations from an eyewitness stating that he saw Mack and others engage in large cocaine use and lewd acts with prostitutes

The documentary "Inside Job" makes the exact same allegations.

Hookers and coke, part of the party when you're hanging at Goldman Sachs or one of the other 3 major Investment Banks.


Don Bauder April 30, 2011 @ 10:12 p.m.

I saw Inside Job and don't remember such allegations. I was captivated by the money hanky-panky. Maybe I missed other kinds of hanky-panky. Best, Don Bauder


SurfPuppy619 April 30, 2011 @ 9:14 p.m.

check out the 4th comment by a Mr Sandrin following the Taibbi article ... allegations from an eyewitness stating that he saw Mack and others engage in large cocaine use and lewd acts with prostitutes ... we are talking the former CEO of Morgan Stanley .... Clinton was almost removed from office for less ...

============== Great article, found the comment by Alan Jeffrey Sandrin comment-wild!


Don Bauder April 30, 2011 @ 10:14 p.m.

I wonder who Sandrin is. And if he has deep pockets. Best, Don Bauder


jv333 May 1, 2011 @ 9:01 a.m.

Sandrin says he was a bartender at the country club and alleges that he saw all this firsthand


Don Bauder April 30, 2011 @ 10:10 p.m.

Generally speaking, I tend to doubt charges of sexual or drug indiscretions by Wall Streeters. Those people spend 24 hours a day figuring how to steal money from other people. If their attention gets diverted to some kind of temporal pleasure, they may lose out to somebody else. They aren't good sexual partners, their spouses and boy/girlfriends say. If they use drugs it's probably something like speed. Best, Don Bauder


jv333 May 1, 2011 @ 8:53 a.m.

don ... i do believe there were some allegations of large amounts of drug use and prostitution either in INSIDE JOB and/or in CLIENT 9 re: Eliot Spitzer. The madam running the wall st prostitution ring had 10,000 clients, i believe ... here's a little WSJ morsel re: drugs and this is re: mostly the lower level workers...i think the stress and casino-mentality of wall st lends itself to drugs and prostitution just like las vegas, i would imagine...

the FBI were very vigorously pursuing Spitzer ... they did not want the madam's rolodex ...she said her clientele were the very top of wall st institutions ... this should surprise no one after hearing about the sex with under-aged and drug ring of the 80s run by gop operative, lawrence e king jr that got swept under the rug ... allegedly went to the highest levels of govt, finance, etc...we're talking the Franklin Cover-up here ...


Don Bauder May 1, 2011 @ 12:29 p.m.

Spitzer wasn't part of the Wall Street crowd; he was trying to reform it. I believe the case against Spitzer was politically motivated. He was doing what the SEC and Federal Reserve, along with other regulators, refused to do: investigate Wall Street. So Wall Street was out to get him. Sounds like it used the FBI. If what you say is true, the FBI's non-interest in pursuing the madam's rolodex clients is reprehensible. I must say, though: Spitzer, who is brilliant, was utterly stupid to be using hookers, knowing how Wall Street was out to get him. Best, Don Bauder


jv333 May 1, 2011 @ 10:17 a.m.

don ... check out this column re: rampant coke, prostitution etc by wall st workers ... surfpuppy was referring to the psychotherapist who was interviewed in "Inside Job" ... i would have to agree that where ever there are big dollars and big risk, there will also be other high risk human behaviors...seems to make sense ... didn't i read somewhere that gambling addiction and cocaine addiction stimulate the same part of the brain? ...


Don Bauder May 1, 2011 @ 12:36 p.m.

Funny, I loved Inside Job, considered it one of the great movies I had ever seen, but I do not remember the interview with the psychotherapist. I think there may be something to the connection between gambling and cocaine addiction. Also, sex addiction is common among politicians; that may be part of the risk-taking mentality that pervades Wall Street. Maybe I am wrong; I have always thought that Wall Streeters were so obsessed with stealing every last cent they could get their hands on that they were not likely to be sex addicts. Speed, yes. Hookers -- show me. Best, Don Bauder


SurfPuppy619 May 1, 2011 @ 12:45 p.m.

Also, sex addiction is common among politicians;

LOL...hard to not comment on this one.

Can you say Bob "Sexual Harrassment" Packwood? JFK?? Larry "Airport Bathroom Sex" Craig??? Mark "Intern Lover " Foley??? "Gary "Dirty Old Man" Condit???? Elliot "$4K Per Act" Spitzer???? LOL...these never get old!

Or the one that was really awesome was in the late 70's, forgot who the pol was, but he had his hooker/mistress on his staff payroll and it was a sham, she never actually worked in the office, it was sex, who remembers that one, the names???


jv333 May 1, 2011 @ 1:14 p.m.

SP...were u trying to think of Wilbur Mills? i think fanne foxe, the argentinw stripper, something about them staggering around drunk in the tidal basin in wash dc?

we should be able to understand that men and women do have bouts of infidelity ... it seems those that are held up as standards of virtue probably have a higher propensity to engage in such ... if we weren't such hypocrites about it and just accepted that people tend to do this (like the french), it wouldn't be such a big deal ...

i think the trouble really comes in when there's substance abuse...booze and drugs...that really sets us up for bad judgment by powerful people...and now with wall st operating like the wild west...good luck to us all...

... of course, let's not forget Linda Tripp who Monica Lewinsky took into confidence...and then was exposed...Tripp was rewarded with a $90K/yr Pentagon job while she stayed at home after that ... nice work if u can get it


Don Bauder May 1, 2011 @ 3:43 p.m.

Fanne Foxe was a Washington stripper of South American heritage who did in Wilbur Mills, then the chairman of the House Ways & Means Committee, and one of Washington's most powerful pols. He went to see her strip a number of times and was dumb enough to hold a press conference after one of her shows. He was an alcoholic. The tidal basin caper went like this, as I recall: she was riding in his car, he was weaving all over the place, and she jumped out into the tidal basin while he got arrested. Correct me if I'm wrong on that. He left office, dried up and spent the rest of his life helping alcoholics. I believe she was married at the time. I don't believe she was having an affair with Mills. Her husband had something to do with the press conference, I believe. Best, Don Bauder


SurfPuppy619 May 1, 2011 @ 6:22 p.m.

SP...were u trying to think of Wilbur Mills?

No, Took me a while to find the guy, it was a guy named Wayne Hays, and his squeeze was Elizabeth Ray.

. .


Don Bauder May 4, 2011 @ 7:15 p.m.

I don't remember Wayne Hays at all. Sure remember Elizabeth Ray, though. Best, Don Bauder


SurfPuppy619 May 4, 2011 @ 10:50 a.m.

Tripp was rewarded with a $90K/yr Pentagon job while she stayed at home after that ... nice work if u can get it

No one gtes that kinbd of "work" unless you're connected in, same with FF jobs.


Don Bauder May 4, 2011 @ 7:14 p.m.

I knew you would work firefighters in her somehow, SurfPup. Best, Don Bauder


Don Bauder May 1, 2011 @ 3:37 p.m.

Was that Elizabeth Ray? I know she got famous for giving sexual favors to a few around Washington in the 1970s. I can't remember the pols, though. Best, Don Bauder


Don Bauder May 4, 2011 @ 11:55 a.m.

Sounds like you know Elizabeth Ray. How well? Best, Don Bauder


jv333 May 1, 2011 @ 1:04 p.m.

i predicted an oscar for "Inside Job" immediately after seeing it last Oct ... it's in writing on my Yahoo movie reviews ... the psychotherapist may bave been in "Client 9" ... in any case, the hookers and coke stories were there ...

consider this from Roger Ebert's review of "Inside Job"... One of the most fascinating aspects of “Inside Job” involves the chatty on-camera insights of Kristin Davis, a Wall Street madam, who says the Street operated in a climate of abundant sex and cocaine for valued clients and the traders themselves. She says it was an accepted part of the corporate culture that hookers at $1,000 an hour and up were kept on retainer, that cocaine was the fuel and that she and her girls didn't understand how some traders could even function on the trading floor after most nights.

---- as for surfpuppy's's more fuel's another lengthy piece on wall st drug use ... not sure what year this was published... credible? WHEN COCAINE HITS WALL STREET Sharpe Capital suit reveals seamy side of securities industry


Don Bauder May 1, 2011 @ 3:49 p.m.

My wife, who saw Inside Job with our two sons, daughter in law and me, remembers the madam. See? What did I tell you? I am more interested in financial shenanigans than sexual shenanigans. It looks like I have to eat those words in which I said that Wall Streeters were so fixated on stealing money that they have no time for sex. Best, Don Bauder


Twister May 1, 2011 @ 5:19 p.m.

Sounds like you need to focus, dude!


bigaltheterp July 20, 2011 @ 8:50 p.m.

I am Alan Sandrin. A friend just pointed out the thread. I was preparing to teach civics & economics while serving front of house and locker room at Eagle Point Golf Course in Wilmington, NC during 2003 to late 2005. I left EPGC the same year and became full time Civics & Economics teacher at Eugene Ashley High School which I did for the last five years. To clarify, Mack was never the coke sniffing fiend. His ship captain and fugitive from South Africa Andre Peens and some of Mack's stranger guests flying through town real quick (execs given a golf outing flown in on the G5). Coke was left (as tip?) in 1 of 2 cottages on property once, a big bag. A few caddies, f&b workers partook. Definitely lots of cocaine consumption in the men's locker room. I saw it. Don Bauder has a point that these guys have a work ethic, but they still ride on your back for one night of illegality here and there. Nice locker room at EPGC. Some weeks had 1 foursome play and that's it. Full staff every day for a week for a foursome. It's that exclusive. It's these guys' beach golf club (third and fourth golf club in many cases). Initiation is 120k and memberships range from about 20 to 45k per year. In 2006, I sent a school wide e-mail in response to complaints about budget woes stating that if people wanted their money, it is with John Mack at Eagle Point. The curriculum I was feeding these poor souls in HS while having just witnessed what I have has sent me into a state. Teaching causes depression, but teaching for five years and taking pay cuts after seeing that shit got me on the streets passing out fliers at local areas in town that say call EPGC for a tee time since you are the taxpayer/owner. Transparency would fix this but I have been laughed at. Everyone here says "who cares". I have been laughed at, caddies sent out in trucks to intimidate by taking pictures while I pass out fliers. I tell 'em, "who cares, my name is Alan Sandrin...I am protesting you.You shouldn't work there." They don't care. None of them have prayer but for the $200 tip for carrying a golf bag. If they went to college, it was Methodist. Don't let the name fool you, it is a hospitality school. Our firefighters' trucks don't work, the streets are the worst in the state, the Wall Street Journal did a recent article on city of Wilmington's budget woes. Meanwhile, these Eagle Point Golf Club Memebers, right now, are telling some young bartender that they are fools for not investing and/or stashing their cash tax-free offshore. They are sipping on Chateau Lafite Rothschilde bragging how they were able to make the last yacht trip in only $350,000 worth of fuel whereas last time it was $400,000. There are crumbling schools right down the street. It still burns me.. a select few of you out in the cyber world are awake. Thank you. There's hope? It's far from over in my head.


bigaltheterp July 20, 2011 @ 9:08 p.m.

FYI, I don't do cocaine. But I do love the way it smells. And RIP local k9 officer named Viper who just died fetching a 1 kilo bag of cocaine in the corn fields. Stop the Drug War.


SurfPuppy619 July 20, 2011 @ 10:41 p.m.

I am Alan Sandrin.

I read your post in the Matt Tiabbi Rolling Stones article's comments section-welcome aboard!

Nice to hear from you and to get your story again, first hand.


SurfPuppy619 July 20, 2011 @ 10:47 p.m.

It still burns me.. a select few of you out in the cyber world are awake. Thank you. There's hope?

This blog is on the cutting edge of corporate and muni fraud, it is never DULL, let me tell you!


Don Bauder May 1, 2011 @ 11:08 p.m.

I have to eat some humble pie, Twister. Best, Don Bauder


sd_engineer May 5, 2011 @ 12:33 p.m.

Incredible story. This just goes to reaffirm my belief that in the FED's mind, only Wall Street matters. Their mindset is that so long as Wall Street is flush with cash then "trickle down economics" will ensure that Main Street will eventually benefit. The only problem is that the Robber Baron's are keeping the money.

As far as NAFTA goes, I agree, Ross Perot was right. There was some belief at the time that more jobs in Mexico could be a good thing for Mexico and help reduce the flow of illegals. But look at Mexico now, the country is is in the pocket of Drug Lords, tourism has dropped and the standard of living of Mexican citizens hasn't improved. The flow of illegals into the US has been reduced, but not because of NAFTA but rather because the American economy was wrecked by the same Wall Street powers that pushed for NAFTA and later for outsourcing on a larger scale to China.


Don Bauder May 5, 2011 @ 1:46 p.m.

There is no question that the stock market is the Fed's major concern. This was true throughout the reign of Alan Greenspan (Wall St. believed that the "Greenspan put" would always support stocks) and the reign of Ben Bernanke who, unlike Greenspan, at least admits he wants to run up the market. This claim that zero interest rates are meant to help Main Street and create jobs is complete rubbish. Zero interest rates are for the benefit of Wall Street. Banks can borrow at zero percent and buy anything they like; the stock market almost HAS to go up when the Fed loans to the banks for nothing and the banks loan to the hedge funds for just a little above that. Notice the dollar goes down as the stock market goes up. The party will end when foreign countries, which are now raising their own rates, buy fewer dollars, and the buck's plunge threatens the dollar as the world's central currency. Unfortunately, I can't tell you WHEN that will happen. Don't be surprised if Bernanke comes up with QEIII at Wall Street's behest. Bernanke has said he will keep rates around zero as long as unemployment is high. The last thing Wall Street and the Fed want is for unemployment to drop. Wall Street loves free money.


sd_engineer May 5, 2011 @ 4:59 p.m.

Yup, Wall Street loves free money... and cheap labor. It was interesting to see how quickly Wall Street went from demanding a bailout to demanding smaller government and less regulation.


Don Bauder May 5, 2011 @ 5:47 p.m.

If you would have told me during the depths of the crisis in 2008 that Wall Street would oppose regulation (or re-regulation) after raking in trillions of bailout money, I would have thought you were crazy. But Wall Street put its lobbyists to work, and the political prostitutes, pockets bulging with cash, gave it what it wanted. Best, Don Bauder


sd_engineer May 5, 2011 @ 6:20 p.m.

Exactly! And the fact that the whole cycle occurred in the space of just a few months makes it all the more shocking.


Don Bauder May 5, 2011 @ 8:11 p.m.

Yes, the fact that Wall Street successfully bribed Washington in such a short period is indeed amazing. Best, Don Bauder


sd_engineer May 6, 2011 @ 4:03 p.m.

Just to underscore what you've written - An article came out today that says that CEO pay has risen 24% since 2009 and is now higher than it was at the peak of the housing bubble in 2007.

(. .)


Don Bauder May 6, 2011 @ 4:15 p.m.

Not surprising at all. Keep in mind that the average person's inflation-adjusted pay has declined over the last decade. Best, Don Bauder


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