Guest editorial by Roger King
Although the Fannie and Freddie house of cards was sure to come crashing down, why did it happen only months before the election? Was it accidental or an orchestrated effort? Who profited and why?
Senator Schumer Leaks Negative Financial Information
Lance Fairchok gives the first part of a compelling argument in an article called The Crime of the Century: The Emergency Economic Stabilization Act of 2008:
For months, Senate Democrats have been leaking negative financial information—exploiting market sensitivities for political gain—choreographed to burst precisely when it would do the most damage. Senator Chuck Schumer [D-N.Y.] ignited this by leaking a letter regarding the lending practices of troubled Indy Mac. IndyMac failed when the Schumer letter caused a “liquidity crisis,” where depositors withdrew over a billion dollars. Over three thousand people, half its employees, lost their jobs in the resulting collapse. As a member of the Senate banking committee, Schumer knew the impact on the market. He used confidential regulatory information and set the stage for the “crisis” the Democrats prosper from today. Power is everything, and those who suffer for Democrat ambition matter not at all. Schumer knew exactly what he was doing.
Susan Schmidt with The Wall Street Journal explained that Schumer released these letters publicly:
Sen. Schumer released publicly letters he sent to bank regulators and to the Federal Home Loan Bank of San Francisco. “I am concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers,” the senator wrote, warning that “the bank could face a failure if prescriptive measures are not taken quickly.”
Some have speculated that Schumer leaked the IndyMac information as a way to reduce stock prices for his investor friends. Although this is possible, his motivation may have been more political in nature. A conspiracy to hasten the economic crash and to churn the stock market is certainly in the realm of possibility. In the past, economic downturns have tended to favor the Democratic Party.
What makes this more interesting is Schumer’s staunch support of Fannie Mae and Freddie Mac as seen in a Fox News Special Report on the Banking Crisis [See video below]. It should be noted that Schumer is the only Senate Democrat who sits on both the banking and finance committees. Because of the committee position and the fact he is the number 3 member of the Senate majority leadership he is privy to a great deal of information and knowledge of what the information can do.
What Did the Disclosure Accomplish?
So why does Schumer, who so adamantly supported these questionable loan practices, now leak a letter regarding the lending practices of Indy Mac just months before the election? Lance Fairchok says there are four reasons:
1. Distract the voter from the reality that the Democrat-controlled congress is so bumbling and corrupt that its approval ratings are in the single digits.
2. Save failing Democratic-supported mortgage companies Freddie Mac and Fannie Mae and avert, for a time, their disastrous effect on the economy and the Democratic Party image.
3. Confuse the electorate into believing that the Republicans are to blame for the financial meltdown, while in reality it was they who have been calling for oversight.
4. Create the impression that Obama is a reformer, which he most certainly is not. Only Senator Dodd (D-Conn.) and John Kerry (D-Mass.) have received more money in campaign contributions from Freddie and Fannie than Barack Obama[D-Ill.].
Does it make sense for a person that has publicly supported Fannie and Freddie to release a letter about the imminent failure of IndyMac? Since Schumer sits on the banking and finance committees, surely he would have known this disclosure would cause widespread panic and very likely hasten the collapse of IndyMac. Could there be something else afoot? It is very likely that the Senator knew about the troubles at Fannie and Freddie, so it stands to reason that this was an effort to create the type of economic chaos that would favor Obama.
The Role of the ABX Index in the Economic Crash
Ed Lasky's article Hedge Funds, Politics, and the Market Crash tells about the role of hedge funds in the economic crash. Again there are links to Schumer and a powerful far left billionaire.
[t]he heart of the mortgage mess is uncertainty regarding the value of subprime mortgages. The ABX Index is used to determine the value of these securities: it is a benchmark of the market for all the home loans issued to borrowers with weak credit. A collapse of this index leads to these home loans being marked down in value. … The Wall Street Journal has noted that there is criticism “that the ABX is manipulated by hedge funds”. So when the ABX subprime mortgage index crashed, so did our economy.
What hedge fund managers profited by this crash? One of those that made huge profits was the legendary hedge fund manager, George Soros, who has been a political powerbroker of unrivaled influence within the Democratic Party. Soros [allegedly] made hundreds of millions if not billions off the economic crash. Soros’s hedge fund is based overseas and therefore escapes much scrutiny and regulation.
Hedge fund managers only pay 15% tax on their income where we pay up to 35% on income tax. Schumer was among the Senate Democrats who recently led the fight against taxing hedge funds at a higher rate. Why would he protect these managers? Maybe because in the first half of 2007, Schumer’s Campaign Committee raised nearly $2 million from executives and employees of private equity and hedge funds.
The last piece in this puzzle is articulated by Neal Cavuto in HotAir’s Economic terrorism. Huckabee wonders if someone’s trying to drive the market down. Huckabee tells of a very respectable trader who saw massive trading in the last hour of trading for the first 12 days of October. He thinks this may be economic terrorism, and he suggests that the government look into the issue.
This questionable activity could be computer programs kicking out trades, but on the other hand could be something very suspect. It is widely understood that economy problems would break the election in Obama’s favor. So it’s entirely possible that someone with deep pockets could churn the stock market. Could a liberal billionaire, like a George Soros, manipulate the market in an effort to impact the election? How much money would it take to make the markets so volatile? Did this volatility continue after Neal Cavuto’s interview with Mike Huckabee?
Reaping the Benefits!
So we have Schumer publicly disclosing IndyMac financial troubles, which leads to a run on the bank. Then the media picks up the IndyMac story followed by the exposure of the Fannie and Freddy troubles. George Soros, the far left hedge fund manager, [allegedly] profits handsomely from the crash. Someone churns the stock market in the last hour of trading for 12 days. Could this churn have been from a Soros type billionaire for more profits or to help Obama’s chances in the election?
After the financial crash became public, the Democrats, with the help of mainstream media, successfully assigned blame to the Republicans and to Bush’s economic policies. This, despite the fact, that three of the primary causes of the crash were the Community Reinvestment Act, the lack of oversight of Freddie and Fannie and possible hedge fund manipulation. Certainly the first two if not the third of these failings can be fairly laid at the doorstep of the Democrats. Yet in the wake of the financial crisis, Obama surged in the polls from an essentially even race to more than a 5 point lead.
Clearly, the reasons for the Fannie and Freddie failures should be investigated. But in addition, Federal authorities should also investigate the issues presented here. If true, any of these events strike at the heart of our election process. Are they coincidences, or are they part of an orchestrated effort similar to those espoused by Saul Alinsky? A conspiracy or conspiracy theory, you decide.
Reprinted with permission of the author Roger King; first publication Canada Free Press (10-26-08). Views are those of the author and are not necessarily representative of The US Report and associated editors.
Roger King is a 54 year old single father of two “wonderful college age children”, and owner of two dogs and a cat. He was born and raised on a farm in Ohio where he says he learned the lesson that hard work brings success. King worked his way through college to get a master's degree in computer science. For the last 20 years he has worked for IBM in North Carolina. Hobbies include guitar, photography, wood working and his web site. Over the last two years King says he’s become politically active, spending a great deal of time educating himself on economics, political history and other issues affecting our country. King says he’s a strong proponent of the individual and he is a conservative at heart. Visit his website Politically Incorrect Facts.