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Wednesday, November 30th, 2011

How Paulson Gave Hedge Funds Advance Word

Author:     RICHARD TEITELBAUM
Source:     Bloomberg
Publication Date:     Nov 29, 2011 9:46 AM PT
 Link: How Paulson Gave Hedge Funds Advance Word
Stephan:   Why Henry Paulson is not in prison I cannot explain, except by saying that special interests and special connections to both Bush and Obama have protected him from accountability. Note carefully the observation that no laws were broken. Why? Because the laws had been written to make sure that didn't happen. If you write the laws, you don't break the laws. Like Bush, Cheney and the Necons and their complete lack of accountability for the Wars in Iraq and Afghanistan, this carefully researched report demonstrates that for the small elite that influences how Congress writes the laws, and the Justice Department interprets them, accountability is rarely a problem. And everyone who looks closely at either story -- the wars, or the financial collapse -- knows this truth. That realization is what has rotted away the integrity and good character of the United States.

Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns Cos. had sold itself for just $10 a share to JPMorgan Chase & Co. (JPM)

Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae (FNMA) and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue.

Paulson had been pushing a plan in Congress to open lines of credit to the two struggling firms and to grant authority for the Treasury Department to buy equity in them. Yet he had told reporters on July 13 that the firms must remain shareholder owned and had testified at a Senate hearing two days later that giving the government new power to intervene made actual intervention improbable.

‘If you have a bazooka, and people know you have it, you’re not likely to take it out,

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