CHAPTER 5

WALL STREET'S WAR ON AMERICA

AND ITS ATTACK ON AFFORDABLE HOUSING

In 2007, rents in Las Vegas started to soften and continued to soften into 2008. It was then that it all began to unravel. The Bubble Burst and housing prices everywhere began to fall! On March 16, 2008, Bear Sterns was the first to fail. A year earlier, its stock had hit a high of $133.20 per share, but soon thereafter, two of its hedge funds imploded (from trading derivatives) and after that it was just a matter of time. When Bear collapsed, Jamie Dimon, CEO of J.P. Morgan Chase, said he’d buy them for $2.00, but was later forced to pay $10. This is a guy who charges a single mother $50 when she writes a $100 check to feed her kids, but she only has $90 in her account because the bank charged her $10 in additional fees, without her knowledge.

As housing prices began to fall, so did the stock market. The Dow Jones Industrial Average peaked on October 9, 2007, at 14,164.53. The S&P 500 high was 1,565.70. By September of 2008, the markets had fallen 20% and the Government announced they were taking over Fannie Mae and Freddie Mac. The next domino on Wall Street to fall was Lehman Brothers, but this time nobody was willing to step up to buy them because they were all beginning to see the massive size of the problem that very few people had been looking at because NOTHING HAD BEEN REGULATED. Next came Country Wide, Washington Mutual and AIG, one of the largest insurances companies in the world, and on and on it went. By March 9, 2009, the Dow had fallen to 6,547 and the S&P to 676.53. Both had lost approximately 54% of their value.

In 2006, I was CEO and Chairman of a company I had started in 2004, called Green Plains Renewable Energy (now Green Plains, Inc). It trades on NASDAQ under the symbol GPRE. In 2005 and 2006, I raised $200 million dollars to build the first two ethanol plants for the company. $100 million in equity and $100 million in debt. In the summer of 2006, a young man from Credit Suisse kept calling me saying he had a product that was paying 7.75% and it was AAA rated. I had the $100 million in equity I’d raised to build the two plants sitting in Goldman Sachs’ Financial Square Government Fund. I think it was paying something like 3.75% at the time and was non-taxable. The 7.75% was paying more, but the Goldman Fund was made up of U.S. Government paper. T-Bills, Notes, and Bonds. The riskiest thing in it were some Repurchase Agreements. This was shareholders’ money that had been given to me to build two ethanol plants, and I wanted safety, not 4 points higher with risk. But this guy kept calling. I finally told him to send me a prospectus just to get him to stop calling. He did. It was a CDO (Collateralized Debt Obligation) filled with absolute garbage, much of which was subprime. When I began to read it, I was shocked by what I saw. It only took me 5 minutes to understand what trash it was and there are lots of people on Wall Street who are smarter than I am.

I called the young man back up, who was in his early 30s, and shared my thoughts with him. I told him, “If you care at all about your clients and their money, please don’t try to sell this to them, because it is not going to turn out well.” I spent several minutes telling him about how Wall Street operates and said good luck and goodbye. What he did, I have no idea. For all I know, he was in on the scam and knew what he was selling. There was another banker from Wells Fargo who called my mother during that time, trying to sell her the same type of thing. I called him and told him if he called her again and tried to sell her this crap, I was going to turn him into the State’s Securities Division, not realizing at the time, that NONE of these products were REGULATED. But the story didn’t end there.

At that time, there were two other big ethanol companies that Wall Street had recently underwritten and taken public as “rollups.” The largest was VeraSun. It traded on the NYSE under the symbol VSE. It filed for bankruptcy in October of 2008, and Green Plains ended up purchasing some of its plants. Green Plains purchased the Central City, NE plant, the Ord, NE plant, the Bluffton, IN, and the Fairmont, MN plant. Guess why VeraSun went bankrupt? Because their CFO put several hundred million dollars of their money into CDOs that failed, and VeraSun lost everything. If I remember correctly, it was roughly $330 million in cash. The same thing happened to Aventine Renewables ~ AVR. Their CFO put all their cash into CDOs that failed. I believe that was around $220 million. WALL STREET STOLE ALL THEIR MONEY. WALL STREET COMMITTED FRAUD AGAINST BOTH COMPANIES!

I am sharing this for one reason only. If I could tell within five minutes that these products were absolute crap, just from reading a prospectus, DON’T TELL ME THE PEOPLE ON TOP RUNNING THESE FIRMS DIDN’T KNOW. THEY KNEW THEY WERE SELLING TRASH. They knew they were committing FRAUD on a massive scale. They were selling absolute junk, and they were doing it intentionally. And they were selling it to pension funds, and other large institutions across the U.S. and the rest of the world. Additionally, they were paying the ratings agencies to rate them as Triple A paper, when they knew they were not. How much more fraudulent and criminal can you get? This was ORGANIZED CRIME. It wasn’t like they had started a business and had made mistakes and errors in judgment and things didn’t work out. That’s part of the risk of doing business. Sometimes bad decisions are made, and things don’t work out. This wasn’t that. The people on Wall Street were the ones who created the Liar Loans to suck as many people into the housing market as possible, and they knew they were selling subprime garbage to their clients. I will concede that some might not have realized how big it was, because everyone else was doing the same thing in an UNREGULATED market, so no one was reporting their exposure, but the people on top clearly knew what they were selling and were knowingly committing fraud. That is not OKAY or something that should be allowed to continue.

When it all fell apart, TRILLIONS HAD BEEN LOST!

A Criminal Organization was operating on Wall Street at that time and was defrauding every one of their clients who was purchasing these products. But none of them were tried or convicted because there were no regulatory agencies that could bring any charges against them, because of what Sandy Weill had done. He had recreated the same environment that existed in the 1920s. And no one in Congress was willing to do anything to stop them, because they were all complicit and being paid too well to look the way, or they were too uneducated or stupid to realize that the people on Wall Street were lying to them and they needed to keep Wall Street happy so they would continue to fund their campaigns.

Senator Byron Dorgan knew. He was very clear in his speech to the U.S. Senate in 1999. “I think this is terrible legislation, absolutely terrible.” “If you pass this bill,” referring to Gramm Leach Bliley, “it will lead to massive taxpayer bailouts.” But no one in Congress listened. Why? If Senator Dorgan knew, it meant he could assess the possibilities of the risks. In Senator Dorgan’s remark to the Senate that day, he mentioned that in 1994, the derivative exposure to banks trading derivatives was approximately $34 trillion dollars. At the time of his speech, that exposure had risen to between $70-80 trillion. When everything came crashing down in 2008, it was determined by the Bank for International Settlements (BIS) that the notional value of the global over the counter (OTC) derivative market was approximately $684 trillion at the end of June 2008. Notional value refers to the total value of the underlying assets of the derivatives, not the actual market value or risk exposure. The BIS is the largest international Clearing House – created in part to assure repayments from France and England to the United States concerning the $500 million J.P. Morgan had loaned the two countries to fight World War I. The payments were made from the reparation payments taken from Germany for causing the War, which left many of the German people living like rats in the streets. This was one of the primary reasons Hitler hated the Jews as badly as he did. Many of the bankers in the group were Jewish, and the suffering caused by the severe reparation payments extracted from Germany by Morgan was one of the reasons so many of the German populace went along with Hitler’s final solution. It was also one of the most important reasons the Marshall Plan was enacted after World War II. This was a plan to help rebuild Europe after the war. Such ideas were extended to include Japan and what MacArthur did there. Marshall, MacArthur, Eisenhower, Truman, and others understood how the Treaty of Versailles had led to a great deal of resentment within Germany and the U.S. did not want that type of thing happening again.

Mr. Weill is one of the smartest men on Wall Street. He understands how to assess risk as well as anyone in the world. It is hard for me to believe he did not understand that what happened had a very high probability of happening. But I don’t know for sure because I was not in his mind. He did, however, finally admit that he was wrong when he said on July 25, 2012, on CNBC’s Squawk Box:

“What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars that's not too big to fail.”

In other words, we should reinstate Glass Steagall. Was he sincere? I don’t know. It could have been a line of BS just to make himself look contrite.

After everything had blown up, what did Wall Street do? They hired the best PR firms in the country to write articles and get their people on TV to start spreading the biggest load of lies they could possibly tell. But this time was different. This time they had lots of help. They had paid off almost every member of the United States Congress to get them to pass GLBA and the Commodities Act, therefore, they now had the leaders of both political parties on their side and every member of those parties, who didn’t have a clue what the truth was because they were financially illiterate.

Tried and true members of both the Republican Party and the Democratic Party who would say whatever they were told to say by their political leaders. So, the party heads in every state told their people to get the message out. Political Surrogates were told everywhere to get on TV and radio and the internet, to write articles in newspapers and magazines sharing the message. The message was exactly what men like Sandy Weill, Hank Paulson, Lloyd Blankfein, Jamie Dimon, Larry Fink, Stephen Schwarzman and others just like them, told them to say:

"The passage of Gramm Leach Bliley had nothing to do with the Housing Crash. It was not related in any way!"

That was the message because they knew that IT WAS the reason it happened! Wall Street was lying to America ~ because they didn’t want to have their Large Bank Holding Companies broken up or be held accountable for what they had done and sent to jail as was done in Iceland and should have been done here.

Rule 1 – Never Believe Wall Street’s Lies. I believe I have explained in these pages, in a manner that is clear enough for any reader to understand, beyond a reasonable doubt what was done by the promoters in the Roaring Twenties sufficiently, so readers understand that the promoters in the 1920s and their use of debt, was the cause of the Crash and the Great Depression. FDR knew that and Joseph Kennedy knew it. That’s why FDR asked Joseph Kennedy to write the “detailed rules and regulations” to stop it from ever happening again. And it worked for 70 years.

Sandy Weill and his friends on Wall Street in 1999 knew it, which is why they talked the members of the United States Congress and President Clinton into destroying all of the protections that FDR had put in place to protect the Citizens of the United States. They flushed it down the toilet for money. Eight short years later, the destruction happened again, just like Senator Dorgan said it would.

If Americans want to protect themselves from it even happening again, we need to collectively push our elected leaders so HARD that they will be forced to reinstate Glass Steagall and once again remove Wall Street and the Ted Bundys of Wall Street from within our Commercial Banking System.

Letting a Ted Bundy back out into the world and not expecting him to kill young women again would only be done by a fool. The problem America faces is that the Ted Bundys of Wall Street have been let out, but we didn’t have an FDR to put them back in. We had Barack Obama who put them into some of the highest positions in our government. These men are still practicing Capitalism in a completely unregulated environment ~ the real estate market. And they are now going after our children and their futures. The same Organized Crime Syndicate is still running our government and most of the members of Congress that passed Gramm Leach Bliley are still members of Congress.

I have never seen a young child say he wants to grow up and hurt billions of other people, so I’m going to assume that something happens in certain people’s lives that changes them, because that’s what these small groups of men on Wall Street (addicted money drunks) do every time they are allowed to practice Capitalism in an UNREGULATED environment. Both in the 1920s and from 2000 to the present. They end up hanging everyone, including themselves. But our political leaders in the U.S. Congress did not let Wall Street hang like they should have in 2008, because they had passed Gramm Leach Bliley and had been paid to do so and were now consciously part of the Criminal Syndicate.

From 2008 to 2014, Congress and the U.S. Treasury bailed Wall Street out with the original loans and Quantitative Easing to the tune of over $7 trillion dollars. The current debt on the balance sheet of the U.S. Government is now over $35 trillion!

John Adams has been given credit for having said, “There are two ways to conquer and enslave a nation. The first is with the sword. The second is with debt.”

Look at what Wall Street has done since getting back into our Commercial Banking System…

i)?????????????????? In just eight years, they blew up the economies of the world and lost hundreds of trillions of dollars for other people. Much of that ended up in the pockets of certain people on Wall Street.

ii)???????????????? They have talked almost every company in the Standard & Poor's 500, every member of the Dow, and every other large corporation on NASDAQ into borrowing billions and billions of dollars. Each company is borrowing billions to buy their own stock back, so the prices continue to rise. In exchange, they can give themselves quarterly and annual bonuses from tens to hundreds of millions of dollars each year, and their largest shareholders (Black Rock, Vanguard, and State Street) will say nothing, because those three fund managers are the largest shareholders of the large publicly traded companies, and they are benefiting from the rise in stock prices. The result is every company in the S & P 500, the Dow and the big corporations on NASDAQ are in debt to the tune of billions of dollars to Wall Street bankers and they are paying interest on all of it. But the CEOs, get to steal tens of millions of dollars from these companies every year and call it “salary and bonus.”

iii)?????????????? They have placed $1.7 trillion of debt on the backs of our young people to go to school. They have enslaved our young with debt purposely. They have bought up most of the student housing, raised the rents, talked the schools into raising tuition by about 5% every year, and made it harder to get into school. They have made our children profit centers for Wall Street’s predatory lending practices.

iv)??????????????? They have encouraged everyone in America to borrow as much as they can on credit cards on which they charge 25% to 30%. When I was younger, there were Usury laws and people could go to jail for charging that much, but we've now normalized it. It is NOT OKAY and should be illegal to charge that much in interest.

v)???????????????? Wall Street knows everything about everyone in this country financially because they have access to all your financial records, and they sell that information to third parties. There is no privacy.

This has been the downside of letting Wall Street back into our Commercial Banking System, and the biggest reason I can give you to get them out of our lives and out of our banking system. I submit that if we allow them to remain in our banking system, they will steal it all if we give them the chance. I have a friend who recently told me that she has five different accounts and just within the past two months, they have started taking $20.00 a month on the personal accounts, and there are two business accounts that they're taking $30.00 a month from. They call them “review fees.” They are stealing over $120 a month from her.

If a mother bounces a $100 check to feed her children, they will charge her a $50 fee for the bounced checked. They will charge similar fees for a late payment on a credit card and then raise the interest rates to 30%. No one on a salary will be able to get out of that type of debt. They don’t do that to any of their wealthy clients. They prey on the most vulnerable in our communities. They are heartless, uncaring people and who should not be influencing our politics as much as they are. They are destroying our children's futures, and I want them out of our politics. Do you? #1 New Release in Private Equity on Amazon

The Important Part

We all understand and accept there are people in the world like Hitler, Putin, Xi, and Kim Jung-un who are so addicted to power and have so little love in the hearts and minds for other people that they will kill anyone who gets in their way or threatens their power. Did something happen in their childhoods that made them this way? Perhaps. I don’t know. But once they are infected with the obsession, I see them more as a dog that may have been loving and kind at one time, but then he contracted rabies.

The people on Wall Street who gamble like this, are ONLY one of two things:?

1.?????? Either compulsive addicts who don’t know they are addicts and would change if they realized what they had done was an addiction that had hurt people and they don’t want to do that again, like Joseph Kennedy and Jordon Belfort, or

2. Or they are Ted Bundys who are incapable of stopping themselves nor do they want to. They are men like Putin, Xi, Hitler, Stalin, Kim Jung-un that don’t care about anyone but themselves. If you get in their way they will kill you. They have made up their minds that they want POWER and MONEY and the only way they can be dealt with is to lock them up and remove from society.?

No matter which one they are, and since there is no way to tell for sure, the only way for Americans to protect themselves, is to Reinstate Glass Steagall and to create a Glass Steagall for Housing! And we better hurry, or it could be TOO LATE!