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UK bank Lloyd’s Banking Group’s cutthroat debt collection tactics
April 12, 2009 — Stefan Fobes
Lloyds bank staff ‘puts frighteners’ on debtors
Bank staff are harassing customers with talk of home repossessions and blacklists
4.12.09 / Claire Newell & Jonathan Calvert / UK Sunday Times Online
LLOYDS Banking Group staff are intimidating victims of the recession who have fallen behind on loan payments, an investigation by The Sunday Times has found.
Workers at Lloyds debt recovery department were secretly tape-recorded saying they would “put the frighteners on” and “f***” customers who owed the bank money.
The bank staff are incentivised by bonuses and some claimed to be representing a solicitors’ firm, while others pressured customers with repeated calls that left them in tears. Customers were told they would not even be able to obtain a Blockbuster video shop card if they failed to pay back their debt.
The employees would appear to be in breach of the Banking Code, which pledges to customers that banks “will be sympathetic and positive” when dealing with people in financial difficulties.
The tactics were witnessed by an undercover reporter who worked at the bank’s debt recovery office in Hove, East Sussex, for more than three weeks.
Andrew Mackinlay, the Labour MP, said he would be raising this newspaper’s findings in the Commons next week when he is due to speak in a adjournment debate on debt collection. “The current rules on the collection of debt are inadequate and need to be reviewed because they are not being enforced properly,” he said. “There need to be severe financial penalties if companies are found to be harassing customers and treating them badly.”
Lloyds said last week that it would investigate the findings. Sally Jones-Evans, director of collections and recoveries, said: “We do not condone behaviour that breaks our policies and procedures. Our first action is always to gather the facts, but we take action where these [inquiries] substantiate improper behaviour.”
Lloyds is 65%-owned by the taxpayer after receiving billions of pounds of government aid. The bank prides itself on customer service and recently ran television adverts claiming: “Every day we are helping millions of customers get where they want to go in life.”
The undercover reporter began her job as trainee telephone debt collector in mid-March. At the induction, her trainer, Martin, suggested his own bank might share some of the blame for the large number of defaulting customers. They had fallen into debt, he said, because of “bad management of money, a change of circumstances or possibly irresponsible lending”.
The reporter was assigned a mentor, Sebastian, who told her about a recent case of an 85-year-old man who had been granted a £10,000 loan by Lloyds and had only a meagre pension to pay it back. “What were the branch thinking?” he said, before adding: “Bank lending – probably one reason why there’s a bloody recession going on right now.”
The trainers emphasised that the job was not just about retrieving money. They stressed that people should be given realistic repayment targets. But would it work in practice?
The first signs were not encouraging. The salary for a telephone collector is just under £16,000 a year but up to £750 a quarter can be earned from bonuses, awarded for meeting performance targets. Points are given for the amount of money retrieved and the number of calls in an hour. It is in the collector’s interest to make quick calls and persuade customers to pledge large repayments.
The collectors were told to ask for a bank debit or credit card payment for the outstanding amount. The trainer made clear that the credit cards could not be from Lloyds, to ensure the debt would be shuffled away from the bank. The customer, on the other hand, could end up paying higher interest.
Support groups such as National Debtline and the Citizens Advice Bureau (CAB) say it is wrong to shuffle debt in this way. But it appears to be industry practice. Last week the British Bankers’ Association (BBA), which represents the main banks, claimed the customer might have a credit card charging a lower rate of interest.
On the third day of training the reporter and fellow trainees were sent onto the main floor to practise their technique. One of the trainees listened into a call in which a woman was crying on the phone and begging Lloyds to stop calling her.
A collector called Becky was dealing with another distraught woman who said her case was being handled by a debt organisation. She asked Lloyds to approach the organisation. However, after putting down the phone, Becky said she would not deal with anyone else and she would have to keep ringing the woman.
The Banking Code says banks should “liaise with organisations that are giving the customers advice/support”.
The repeat calls were upsetting. Elaine Molloy, a nurse, said she had been called six times a day at work, which she said made her “stressed and upset”. One man said he had been contacted by Lloyds 10 times despite repeatedly telling the callers the person they were seeking was no longer there.
The trainers said a certain amount of pressure could be put on customers. Homeown-ers could be reminded about repossession and others told that they may be credit blacklisted. One line often used by phone operators was: “[You] wouldn’t get a Blockbuster video card, it’s that serious.”
The reporter was training to work in early collections, dealing with people who had defaulted recently. Nearby was late collections, which dealt with people in arrears for five months or more. They used different tactics to get the bank’s money back. Although they are employed by Lloyds, they told customers they were from Sechiari Clark & Mitchell (SCM), the bank’s solicitors. One was overheard saying they would forward details from the conversation to Lloyds.
A spokeswoman for Lloyds said some of the late collection team operated under the SCM name because they were dealing with cases just before legal action was initiated. However, when speaking to our reporter, one phone operative said it was useful to pretend they were not from Lloyds “because we can blame Lloyds for a lot of stuff”.
Last week Nick Pearson, of Baines and Ernst, which helps people organise their finances, said phoning in the name of solicitors was “custom and practice in the industry”.
The early collection department could, if it acts appropriately, put customers on the road to financial recovery. On the other hand, those who fail to keep up their repayments may end up in the recovery department where there are more serious consequences such as court action and credit blacklisting. Because many of the repayment schedules proved unrealistic, customers were more likely to be passed on to recovery, with an impaired record.
This is not helped by the performance target system that is run in the office. Experienced operatives were expected to collect as much as £1,055 an hour.
It gave the operatives an incentive to set monthly repayment plans for higher amounts, which counted towards their target and their bonus. The rush to reach the targets meant that some operatives did not take time to examine customers’ finances to calculate what they could realistically afford.
Martin acknowledged the problem when addressing the new recruits. “It will be tempting because you get bonuses by collecting more money. Some people are stats-driven and do whatever it takes to collect money but that’s what we are trying to get away from,” he said.
The reporter witnessed the results of this system. One woman could barely pay her bills with her benefit payments of £180 a month and yet she had been put on a repayment plan that she could not afford.
The target system made some operatives very pushy. The reporter overheard one operative saying they would “put the frighteners” on a customer who had defaulted on their repayment schedule for the third month running.
One experienced operative explained to the reporter that keeping the phone calls brisk was one of the tricks of the trade. “Short and sharp – the best way to f*** someone, get their money,” he said.
The recipients of his calls were often left bruised. In a five-day period in the run-up to Christmas, five people were reduced to crying down the phone, he said.
Other operatives had clearly worked out their own system for reaching targets. One team leader boasted that he used to collect £7,000 a day before he became a manager. He described how he and a colleague used to block customers’ bank accounts and cards if they looked like they were not going to make the repayments.
“If they’re not going to pay it, then we’ll try and cancel stuff. We used to put blocks on accounts, everything. Loads of times we did that . . . lucky we didn’t get caught.”
One woman regularly collected more than £200,000 a month, according to Sebastian, the mentor. “Some people here tell me that they’ve listened to calls and she was just putting promises [payments] for accounts she wasn’t even agreeing on. I don’t know why they don’t do anything about it,” he said.
Charities and advice groups such as the CAB, the National Debtline and Baines and Ernst say the problem of setting unaffordable repayment plans goes on throughout the industry. “Lloyds are not alone in this,” Pearson said.
Last week Lloyds defended its collection department, saying that it had been scrutinised by an independent body at the end of last year and was found to be complying with the Banking Code.
The review concluded that “customers were treated positively and sympathetically and were not put under pressure to enter unaffordable repayment plans or to increase offers of repayment where they were unable to do so”.
Lloyds also defended its bonus system, saying that money recovered accounted for only a third of the factors making up the award. It said all repayment plans had to be affordable.
Insight: Claire Newell and Jonathan Calvert
‘It’s horrendous, I’ve never been treated so badly’
According to the Banking Code, customers in financial difficulties should approach their bank early. “We will do all we can to help you to overcome your difficulties,” it states.
But that’s exactly what two families say they did with Lloyds Banking Group and they say they were severely let down.
Elaine and Paul Molloy from Cheshire were struggling to pay the mortgage after a temporary rift in their marriage. “When we went into the bank and said we’d got a problem, they said there’s nothing they can do for us until we go five months behind in the mortgage payments,” Paul Molloy said.
Now they are now back together, their debt has grown to arrears of three months, which they can no longer repay and they now fear they will lose their home of 11 years.
Elaine Molloy, a nurse, says she is being harassed by the collection team. She said: “It’s horrendous, I’ve never been treated so badly by the bank and I’ve been with them since I was 17. I get six calls a day [from the collections department]. They were ringing me at work. I get dead stressed out and upset at work when they call, which doesn’t help my job, looking after patients.”
The family of Alan Wells in Swansea suffered a dramatic drop in their income when his overtime was cut because of the economic downtown. Finding himself £900 worse off a month, the construction worker approached Lloyds for help paying back a debt of £350.
“I was told there was nothing they could do for me. They told me it had to be ‘critical’ before they would help me,” he said.
Britain’s tax havens ignored by G20 blacklist
April 5, 2009 — Stefan Fobes
British tax havens escape G20 blacklist
4.3.09 / Iain Martin / City Wire
British tax havens have escaped a blacklist of jurisdictions refusing to share information on tax dodgers.
The Organisation for Economic Cooperating and Development (OECD) blacklisted Costa Rica, Malaysia, the Philippines and Uruguay for not committing to an international agreement to share tax information - world leaders at the G20 summit promised to take action against countries on the blacklist.
‘We have agreed an end to tax havens that do not transfer information on request,’ said Prime Minister Gordon Brown, at the summit yesterday. ‘We have agreed tough standards and sanctions for use against those who don’t come into line in the future.’
The Caymans Islands and six other British overseas territories were put on the OECD’s grey list of jurisdiction, which have agreed but have not implemented enough tax sharing agreements. Famous tax havens like Monaco, Liechtenstein and Switzerland also appear on the grey list.
The crackdown on tax havens had been promised by both Barack Obama and Brown and HM Revenue and Customs has stepped up its action against offshore tax evaders over the last year.
The Isle of Man, Jersey and Guernsey appear on the white list of jurisdictions that are willing to share tax information. The three offshore jurisdictions have signed a flurry of tax agreements in the last few weeks ahead of the G20 summit.
The Manx government, which has signed over 14 tax information agreements, said it welcomed the OECD report. ‘We are delighted that our work has been recognised at the highest level and a distinction made between those jurisdictions that have made great strides in this arena and those that have not,’ said Tony Brown, chief minister of the Isle of Man.
US banks stand to gain from accounting rules change
April 2, 2009 — Stefan Fobes
US banks stand to benefit from rules change
4.1.09 / Francesco Guerrera, Joanna Chung, Jennifer Hughes / Financial Times
Large US banks like Citigroup, Bank of America and Wells Fargo stand to receive a surprise first-quarter earnings boost from Thursday’s expected loosening of controversial accounting rules by the Financial Accounting Standards Board.
Wall Street executives and auditors say the accounting watchdog’s likely approval of changes to “mark-to-market” rules could lead to increases of up to 20 per cent in quarterly profits of large commercial banks.
Rushed through by FASB after lender and political pressure, the changes have been strongly opposed by investment banks, investors, auditors and analysts.
The changes will make it easier for companies, including banks, to value assets using their own internal models rather than market prices. They will also only have to recognise a part of any impairment in their profits.
Proponents of the changes, such as Citi, BofA, Wells and their political allies, argue the current regime unfairly magnifies losses by requiring banks to use market prices even though those prices are illiquid and often from fire sales.
Critics say changing the rules would further undermine investor confidence in the battered sector by reducing the transparency of banks’ balance sheets.
The accounting overhaul, they add, counters the US government’s bid to create a liquid market for troubled assets through private/public partnerships.
In comments sent to FASB, the CFA Institute, trade body for more than 80,000 analysts and fund managers, said the new rules would damage the credibility of the rulemaker and US accounting standards generally.
The rules are also being considered by the International Accounting Standards Board which had promised to work with its US counterpart. The IASB softened its own fair value rules last October under pressure from the European Union. Opponents of the change fear Brussels will exert new pressure to get the IASB to follow FASB’s lead.
In a letter in Thursday’s Financial Times, Dutch securities regulator chief Hans Hoogervorst calls political meddling in accounting a “dangerous development”.
If accounting standard-setting is seen as a political process “confidence in the markets will be further undermined”, he said.
Why government gold supplies may dry up – and prices through the roof
March 29, 2009 — Stefan Fobes
Gold Buying Opportunity of a Lifetime
3.19.09 / Darryl Robert Schoon / Kitco.com
Opportunity and crisis are uneasy handmaidens in times of danger; and, while crises may increase, opportunities are always rare.
The world is in the grip of an unprecedented crisis. Unlimited credit has now turned into its deadly nemesis, unlimited defaulting debt; and whereas only some of us were its beneficiaries, all of us will be its victims—all of us, except the very few.
To heroin addicts, heroin is quite wonderful. Its effects mitigate and, indeed, obliterate the exigencies of modern life. Anxieties disappear as do the pressures of living in a derivative reality. The popularity of heroin lies in its ability to “solve” these problems, the same attraction as credit.
The problem of each lies in the conundrum of constant demand and inconstant supply; and, as the need for each increases, a self-reinforcing and deadly cycle is set in motion, a cycle that inevitably ends in disaster, physical collapse in the case of heroin and economic collapse in the case of credit.
The supply of heroin was originally sourced in the east, in Asia and Afghanistan. Credit began its journey in the west, in the City of London and New York’s Wall Street then spreading through central banks to the rest of the world.
Credit’s journey, however, is about to end, its extraordinary success the reason for its now imminent failure. The spread of credit was so successful that productivity, the host of credit, is now drowning under the tsunami wave of debt created by that credit; and when the host perishes, so, too, will the parasite.
CREDIT—A PARASITE ON THE BODY OF PRODUCTIVITY
Today, we are witness to the parasite’s last struggle, credit’s final attempts to resuscitate the host’s ability to repay its debts and obligations. It is ironic—and perhaps appropriate—that the bankers’ first victim, government, is its last and most important ally in its struggle to survive.
Were it not for government, credit could not have achieved its central position in today’s world. The ability to imbue paper coupons with a value previously accruing only to gold and silver was accomplished solely by government decree at the behest of bankers.
What Professor Antal E. Fekete calls the modern tower of Babel, the quadrillion dollar skyscraper of debt built upon the false premise of bankers is now about to come tumbling down—on all of us.
TOMORROW WILL NOT BAIL OUT TODAY ESPECIALLY WHEN ALREADY ENCUMBERED
Under the influence and encouragement of bankers, the US lived as if tomorrow would never come; for if it did, the debt accrued from today’s expenditures would be due and owing, destroying what had been built on the bankers’ false promise that that tomorrow could always be delayed.
TOMORROW ARRIVEDAND GUESS WHAT WE’RE BROKE
Terms like “quantitative easing”, “monetizing debt”, and “the nationalization of banks” are actually socially preferable synonyms describing the collapse of credit , credit-based markets and credit-based paper money.
We are broke, literally and figuratively and the “we” is inclusive. Consumers cannot pay back what they owe, entrepreneurs cannot pay back what they owe, corporations cannot pay back what they owe, governments cannot pay back what they owe and bankers owe so much that not even governments can repay what bankers owe although governments are promising to do so while lying about the amounts actually owed.
We burdened tomorrow with today’s expenditures and tomorrow has refused the bill. The response is understandable as tomorrow was never a party to the promises to pay and the expectations of such were as self-serving as they were unfounded.
The response of governments is clear:
Governments are using taxpayer money and future taxpayer obligations to bail out banks, a solution designed to perpetrate the bankers system of credit and debt, not to solve the problem or to fix its cause.
The foundation of the bankers’ fraud has been their ability to issue paper coupons as money, an ability made possible by government fiat, i.e. decree. Paper coupons or “currencies” as bankers prefer them to be called are worthless without government legal tender laws, laws obligating debts to be liquidated by payment with their printed coupons
The charade of paper money began with the Bank of England’s claim in 1694 that their paper notes were convertible to gold; and, as long as people believed that to be so, there was little need to exchange the more convenient paper for the more valuable gold which it represented.
Of course, over time, governments issued more and more paper notes and had less and less gold until there was no longer not enough gold to back the enormous amounts of paper currencies in circulation
This is where we are today and this is why bankers and governments are worried. Their fraud is becoming apparent because their game of credit and debt is collapsing and the system is being questioned as never before.
DON’T ASK DON’T TELL THE FOUNDATION OF MODERN ECONOMICS
Now that their debt-based system of credit is collapsing, paper currencies are in upheaval as well. The fall of the US dollar and its subsequent rise even as its economy crumbles is absurdly matched only by the Japanese Yen which rallied as Japanese exports plunged 50 % in six months.
Powerful speculative forces were unleashed in 1973 when the US dollar was de-linked from gold as were all currencies as they had been linked to the US dollar. What are government coupons called money really worth? Ask the punters in the market.
The answer is no one knows. The value of currencies is subject to speculators wagering enormous sums in foreign exchange markets, markets which exploded from negligible amounts in 1973 to trillions now bet daily on what paper money may or may not be worth.
This is the one bet that bankers need to keep in play, the belief, however false it may be, that government coupons, printed in whatsoever denominations or amounts in whatever sizes and colors and not backed by anything of value, are actually money; an idea that becomes more and more absurd with each passing day and each new crisis.
THE OPPORTUNITY IN THE CRISIS
The need to maintain this charade in order to maintain the power of government and profits of bankers offers the one truly golden opportunity of this crisis—that of buying gold at below market prices.
Gold prices are manipulated by central banks. As the value of paper assets and paper profits fall, the lure of gold threatens the ability of bankers to keep investors believing their paper currencies, paper assets and paper promises are worth more than the paper they are printed on.
This is why bankers and governments “manage” the price of gold, i.e. manipulate gold. Gold is the one true measure of monetary distress and when gold prices quickly move upwards, it sends a powerful signal that investors no longer trust paper-based assets and it’s time to sell.
This is the bankers’ greatest fear and they will do anything to prevent the collapse of a system which allows them to profit from the risks and labor of others; and, to prevent this they sell central bank gold to drive down gold’s price—and why wouldn’t they? After all it’s not their gold
WHEN GORDEN BROWN SOLD BRITAIN’S GOLD
In 1999, it was rumored that investment bank Goldman Sachs had a 1,000 ton gold short position in the markets. Goldman Sachs was betting that the price of gold would continue to fall and they would be amply rewarded for their apparent “risk”.
Because of central bank manipulation, the price of gold had moved inversely to the rise of stocks for almost 20 years and bankers were making easy money on the bet gold would continue its downward spiral.
However, much to the shock of Goldman Sachs and the central bankers, in 1999 gold stopped falling; and, because Goldman Sachs’ short position was so large, Goldman possibly could suffer catastrophic losses.
This is when England’s then Chancellor of the Exchequer, Gordon Brown, on May 8, 1999 announced England would sell over 50 % of its gold reserves, 415 tons of the most precious metal on earth at the very bottom of the market.
The decision to sell England’s gold thereby saved Goldman Sachs and insured the political future of Gordon Brown. Goldman Sachs’ is still in business and Gordon Brown is now the Prime Minister of England—proving that good things come to those who do the bidding of the powerful (whether either outcome was worth 415 tons of England’s gold is questionable)
Selling a nation’s gold to save the bankers’ parasitic system is now common practice as the banker’s system continues to collapse and gold continues to rise. Since Gordon Brown sold England’s gold, gold has risen from $275 dollars per ounce to its present price of over $900 despite the thousands of tons of central bank gold sold to prevent its inexorable movement higher.
GOLD SALE ENDS SOON
The downward pressure on gold will end soon because central bank supplies of gold are running out. For the past thirty-five years, thousands of tons of central bank gold have been sold to force gold lower. When those supplies are gone, so, too, will be the gold prices we see today.
When the central bank cap on gold is finally forced off, gold will not just be off to the races, gold will bolt the barn leaving it and the racetrack far behind; so far, central bankers have been successful at preventing this. Soon, they will be unable to do so.
Each run-up in gold has forced central bankers to sell their ever dwindling stocks to keep the price of gold from going parabolic. When gold made its run in the fall of 2007 from $680 to $1,033 in spring 2008, the Swiss National Bank sold 22 tons of gold to cap gold’s rise.
One year later (after the collapse of global stock markets in the fall of 2008), gold made another run at $1,000; but this time when gold hit $1,009 on February 20th , LeMetropole reported central banks sold 220 tons of gold to force gold below $900.
In 2008, 22 tons of gold were necessary to force gold down from $1,000. In 2009, 220 tons were required to do the same. Next time, central banks may not have enough gold to turn back an even more powerful tide of paper money seeking the safety of gold.
After LeMetropole noted the sale of 220 tons of central bank gold, the Financial Times next reported that the Washington Accord capping central bank gold sales at 500 tons a year may be renegotiated to allow higher sales.
The sale of over 220 tons of central bank gold in only nine weeks leaves approximately only 250 tons left to be sold the rest of the year; and, if stock markets collapse again this year—and they will—gold will explode upwards but this time with far greater force and take out $1,000 as easily as a herd of bulls would take out a picket fence as they run for freedom—especially if central bank sales of gold are limited as they are today.
We are in the last days of paper money’s longest run. No economy built on fiat paper money has ever lasted in the history of the world; and, although governments have tried to do so for almost 1,000 years, all have failed. That the current system lasted three hundred years did not mean it would last forever.
As Bernard Madoff’s Ponzi scheme attests, no fraud, no matter how large, i.e. $50 billion or $50 trillion, can withstand the test of time. Not even a Ponzi scheme that has enlisted the participation and cooperation of all governments and all central banks.
All frauds come to an end, even one as large and as long-lasting as the banker’s substitution of government coupons for gold and silver. The game is over except for the shouting—and not even all the King’s men, e.g. Bernanke, Geithner, Volcker, Summers, et. al., can put Humpty-Dumpty together again.
It’s been two years since I presented my analysis, How To Survive The Crisis And Prosper In The Process, to Marshall Thurber’s Positive Deviant Network. In my book, I predicted that real estate would fall 40 % – 80 % and stocks 70 % to 90 %. Today, we’re halfway there.
This Sunday, Martha and I leave for Hungary to attend the final session of Professor Antal E. Fekete’s Gold Standard University Live, a torch that will now be carried in part by the Gold Standard Institute, see http://www.goldstandardinstitute.com/.
The Institute’s own charge is to be a voice and catalyst for freedom. We live in dangerous times, times where government, our own and others, in league with private bankers pose the greatest threat to both our freedoms and to our welfare.
Though, today, we look to government to provide and protect our freedoms and welfare, we are fools for so doing. Throughout the ages, the greatest threat to freedom has always been government. It is no less so today. To be unaware of the dangers of government is directly contrary to the principles upon which America was founded.
The American experiment was mankind’s first attempt to limit the power of government in order to preserve the freedoms of the individual. Unfortunately, over time, this wonderful and wondrous experiment has buckled beneath government’s insatiable need to control in combination with the bankers’ insatiable need to profit.
Believing that government is now our protector against both tyranny and economic subjugation points out the futility of our present situation. The bankers, i.e. foxes, are not just in the henhouse, they have owned the US henhouse, via the Federal Reserve, for almost 100 years as they have England’s for almost 300, i.e. the Bank of England.
We are now about to pay the price for their rogue tenancy. The henhouse was once ours but we allowed it to be taken over by those whose scurrilous and selfish intent ran contrary to the principles of those who established our great nation and the great principles they left behind to guide us.
Although we weren’t alive when the transgression happened in 1913 with the creation of the Federal Reserve, we are alive today when the consequences of so doing are now upon us. Better days will come but they will come only after the present crisis is long gone.
THE CAULDRON’S FLAME AND FIRE
The Tower of Babel’s collapsing
And bankers themselves are caught
Their web of debt is everywhere
And governments have been taught
That should the bankers fail
Bankers’ credit will be no more
And governments couldn’t spend
What they do not have in store
So governments give our taxes
To the bankers without our say
So bankers can continue to profit
And continue to plague our days
We pay for even our bondage to debt
We pay for the chains we wear
And we wonder why our governments
Don’t know what from even where
But it’s all too clear and obvious
The answers that we seek
For the rapacious and the greedy
Have always lived off the meek
But the bills for debts’ incurred
Will be paid by all concerned
Including the bankers and government
On the slagheap they will burn
For we’re now in the final days
Foretold in ancient times
Spoken of by the prophets
In rhythm and in rhyme
Fear not the tumult of the days ahead
Fear not what may transpire
For a new and a better world will come
From the cauldron’s flame and fire
Buy gold. Buy silver. Have faith.
AIG director, SEC chairman who deregulated banks on White House tax reform team
March 29, 2009 — Stefan Fobes
AIG director named to Obama tax task force
3.28.09 / Jennifer Rizzo, Jeanne Sahadi & Shawna Shepherd / CNN
WASHINGTON (CNN) — One of the people named this week to President Obama’s new Task Force on Tax Reform is a member of the AIG board of directors.
Martin Feldstein, a professor of economics at Harvard University, has been on the board of American International Group since 1988. He also was a prominent economic adviser to Presidents Ronald Reagan and George W. Bush.
Asked about the AIG connection, a senior administration official said Friday that the White House declined to comment on the story.
Like the others named to the tax reform task force, Feldstein also serves on Obama’s Economic Recovery Advisory Board, which is headed by former Federal Reserve Chairman Paul Volcker.
Joining Feldstein on the task force are Laura Tyson of the University of California at Berkeley and a former chairman of President Bill Clinton’s Council of Economic Advisers; Roger Ferguson, CEO of TIAA-CREF; and Bill Donaldson, a former chairman of the Securities and Exchange Commission.
In a teleconference briefing Wednesday, Office of Management and Budget Director Peter Orszag said Obama believes the “prospective members of the board would be especially well-suited to carry out the mission of tax reform.”
The task force’s job description is to propose ways to simplify the tax code, reduce tax evasion, close loopholes and make changes in corporate tax breaks. It is to provide recommendations to the president by December 4.
No revenue target is being set, but the administration said it is placing two constraints on the group’s efforts: Members may not propose tax increases for 2009 and 2010; and beyond 2010, they may not propose tax increases on families making less than $250,000.
A major focus for the task force will be to reduce the estimated $300 billion-a-year tax gap, the difference between what individual and corporate taxpayers owe and what they actually pay.
The announcement of the tax-reform task force drew a cool reaction this week from the top Senate Democratic tax writer.
“We’ll certainly look at [its recommendations], but we’re the Congress, we’ll do what we think makes sense,” Senate Finance Chairman Max Baucus, D-Montana, told reporters.
Geithner and Bernanke denounce IMF global currency while instituting policies which justify its creation
March 26, 2009 — Stefan Fobes
Obama Denounces Global Currency While Creating The Very Means For Its Introduction
Geithner, Bernanke & Obama scoff at demise of dollar while feverishly concocting perfect storm for its collapse
3.25.09 / Paul Joseph Watson / PrisonPlanet.com
Obama, Geithner and Bernanke yesterday publicly defended the dollar and denounced proposals by China and Russia to supplant the greenback with a new global currency, and yet the very policies of the Obama administration, the Treasury and the Federal Reserve are creating the perfect storm for the dollar’s death and its replacement with a new international reserve currency.
As we reported on Monday, China has expressed support for Russia’s proposal to hand the IMF the power to create a new supra-national global currency in response to the call for an alternative to the U.S. dollar as the world reserve currency.
Last week the Kremlin called for the “creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.”
Yesterday, Barack Obama, Timothy Geithner and Ben Bernanke all separately expressed support for the dollar and denounced the Chinese-Russian proposal for a new global currency.
“… The dollar is extraordinarily strong right now,” said Obama during his prime-time press conference. “The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world, with the most stable political system in the world. So, you don’t have to take my word for it.”
When asked if he supported the introduction of a new global currency, Obama flatly stated, “No, I don’t support a global currency.”
Watch the clip below courtesy of Raw Story
[http://216.87.173.33/media/2009/0903/msnbc_obama_currency_090324a.flv]
During Tuesday’s congressional hearing, both Geithner and Bernanke echoed Obama’s statement.
“Would you categorically renounce the United States moving away from the dollar and going to a global currency as suggested by China?” a lawmaker asked Treasury Secretary Geithner.
Geithner immediately responded, “I would.”
“And the chair?” the lawmaker asked, after turning to Fed chairman Bernanke.
“I would also,” Bernanke said.
The creation of a new supra-national global reserve currency to supplant the U.S. dollar would likely lead to a complete collapse of the greenback, of which trillions are held in in foreign exchange reserves by foreign countries such as China and Japan.
(ARTICLE CONTINUES BELOW)
In the case of Obama, Geithner and Bernanke, actions certainly speak louder than words, because while publicly denouncing the demise of the dollar and the call for a new global currency, their every policy is creating the very means and justification for its introduction.
Bernanke himself has vehemently supported efforts to create a global regulatory framework that would act as the vehicle for the introduction of a new global currency to replace the dollar.
He has echoed the sentiments of Blair, Brown, Merkel, Sarkozy and others in calling for a new world economic order and “A strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,” Bernanke told a CFR audience at a speech earlier this month.
“I also will not say much about the international dimensions of the issue but will take as self-evident that, in light of the global nature of financial institutions and markets, the reform of financial regulation and supervision should be coordinated internationally to the greatest extent possible,” said Bernanke, adding that the crisis is “very much an international problem, and it requires international solutions.”
The endgame of a form of supervision “coordinated internationally to the greatest extent possible” can mean little else but the creation of a global currency that can be tightly regulated and controlled by international bodies such as the IMF and World Bank, therefore Bernanke’s public denouncement of a “global currency” is nothing more than a two faced stunt.
In addition, as Ron Paul has warned, Bernanke’s policies are leading to the destruction of the dollar and the creation of a vacuum that would create the perfect pretext for the introduction of a global currency.
Trillions upon trillions of freshly printed federal reserve notes that are being used to throw good money after bad, pay corrupt banker’s bonuses and bailout failed, inept and incompetent banks and corporations at the expense of the taxpayer are going to create a hyperinflationary holocaust that will plunge the dollar into a crisis never before experienced and will undoubtedly put massive pressure on China and Japan to liquidate their holdings of U.S. debt and replace it with a new form of international reserve currency.
The fact that banks are still holding on to the trillions printed since September last year has delayed any significant inflationary impact, but when the lending starts again, confidence in the greenback’s ability to act as an international reserve currency will sink and calls for its replacement will reach a crescendo.
Treasury Secretary Geithner has played a leading role in the wholesale looting of the greenback, announcing this week that the printing presses will be cranked to the tune of at least another $1 trillion to buy more “toxic assets” from the sagging balance sheets of failing institutions – again, all at the expense of the taxpayer who will pay for it with rampant tax hikes and runaway inflation on fuel and food later down the road.
This will mirror the situation in Iceland, where massive devaluation of the krona has destroyed savings and led to calls for the country to abandon their currency altogether and join the Euro. A similar fate awaits the U.S. with “helicopter Ben” and his loyal sidekick Geithner doing everything in their power to destroy the dollar’s value with ceaseless so-called “stimulus” plans.
Some analysts have gone even further, suggesting that the hyperinflationary backlash will not be on a par with Iceland, but with Zimbabwe, where the Zimbabwean dollar has suffered annual inflation of over 200 million per cent over the last few years.
Of course, the pound sterling and the Euro, on the back of identical hyperinflation caused by central banks overprinting money, will also collapse, leaving no alternative but for the introduction of a new global reserve currency to “restore confidence”.
And so we turn to Obama – the man who has used his political capital, slick speeches and confident smile to oversee the greatest destruction of American wealth since the great depression. Obama has acted as the slimy salesman for the introduction of Bernanke and Geithner’s multi-trillion dollar programs that can have no other effect but to weaken the position of the dollar as the global reserve currency, so for him to glibly express his opposition to a new global reserve currency that will replace the dollar is an act of gut-wrenching hypocrisy.
Obama has continually demonized private enterprise in favor of government intervention and has acted as the engine for the gargantuan transfer of wealth from American taxpayers to the Wall Street oligarchs that pull his strings.
While publicly denouncing a move towards a global currency yesterday, Obama has conversely announced that he will pursue a new world economic order, a “new global deal” in alliance with British Prime Minister Gordon Brown.
When we hear the terms “new world economic order,” and a “new global deal,” they are interchangeable with the agenda to create a new global currency. It’s all about taking more power and centralizing it into fewer hands and creating a de facto banking dictatorship that will have complete control over global currencies and exchange rate mechanisms.
Obama, Geithner and Bernanke are the three biggest culprits behind the destruction of the dollar and are culpable for creating the perfect storm for its replacement with a new global reserve currency – so for all three to claim yesterday that they support a strong dollar and oppose a global currency is like Bernie Madoff lecturing you that Ponzi schemes are immoral.
US Treasury Department and Federal Reserve seek new power to seize financial firms
March 25, 2009 — Stefan Fobes
U.S. Seeks Expanded Power to Seize Firms
Goal Is to Limit Risk to Broader Economy
3.24.09 / Binyamin Appelbaum & David Cho / Washington Post
The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks.
Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president’s Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.
The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury’s role, are still in flux.
Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.
The administration’s proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed’s other responsibilities, particularly its control over monetary policy.
The government also would assume the authority to seize such firms if they totter toward failure.
Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG’s most troubled unit.
The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.
Geithner plans to lay out the administration’s broader strategy for overhauling financial regulation at another hearing on Thursday.
The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.
“We’re very late in doing this, but we’ve got to move quickly to try and do this because, again, it’s a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they’re systemic,” Geithner said last night at a forum held by the Wall Street Journal.
The powers would parallel the government’s existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government’s plans.
Chris Dodd caught in bank bonus bill provision lie
March 21, 2009 — Stefan Fobes
Geithner: I should have known about bonus problems sooner
3.19.09 / CNN
(CNN) — Treasury Secretary Timothy Geithner confirmed Thursday that the department did talk to Sen. Chris Dodd about a clause he put forth in the stimulus legislation that would have strictly limited executive bonuses.
A loophole in the bill allowed bailed-out insurance giant American International Group to keep its bonuses.
The Treasury Department was concerned that legislation that would restrict contractual bonuses would not hold up to legal challenges, Geithner said in an interview with CNN’s Ali Velshi.
“We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge,” Geithner said.
Geithner’s interview will air on CNN in full at 8 p.m. Thursday.
Dodd, chairman of the Senate Banking Committee, also acknowledged Wednesday his role in controversy, after previously denying having anything to do with crafting language that permitted the bonuses.
Geithner said he learned the full scale of the bonus problems on March 10.
“It’s my responsibility; I was in a position where I didn’t know about those sooner. I take full responsibility for that,” he said.
Congress last month passed the $787 billion stimulus bill that President Obama signed into law.
The bill had included a measure from Dodd to limit executive bonuses. But slipped inside at the last minute was an exemption for bonuses agreed to “on or before February 11, 2009.” That allowed AIG to go ahead with its controversial extra pay.
For days, no one would say who was responsible for the loophole that let that happen.
On Tuesday, Dodd denied that he had anything to do with adding the language.
“When I left the Senate, it was not in there. So when I wrote the language, there was no such language like that,” he said then.
But, saying his previous comments had been misconstrued, Dodd said Wednesday that he added the exemption after getting pressure from the Treasury Department.
“I agreed reluctantly,” Dodd said. “I was changing the amendment because others were insistent.”
Dodd, a Connecticut Democrat, told CNN’s Dana Bash and Wolf Blitzer that Obama officials pushed for the language to an amendment designed to limit bonuses and “golden parachutes” at those companies.
He said Wednesday that the “grandfather clause” language “seemed like innocent modifications” at the time.
But that change ultimately allowed AIG to go ahead with doling out $165 million in bonuses. The federal government rescued the company from financial ruin with more than $170 billion in taxpayer assistance. Taxpayers now own nearly 80 percent of AIG.
Dodd said he did not speak to high-ranking administration officials, and the change came after his staff spoke with staffers from Treasury.
In a statement later Wednesday, Dodd said that his amendment allows the Treasury Department to review bonus contracts such as AIG’s and seek ways to get the money back for taxpayers.
Speaking about the ability to try to get back payments, Geithner said Thursday, “we’re going to explore that, but in any case we’re going to make sure that the American people are compensated for any payments we can recoup.”
Propelled by the outrage across the country, the House of Representatives on Thursday passed a bill that would apply a 90 percent tax to bonuses paid out of the Troubled Asset Relief Program, which was approved last year to stabilize the financial sector.
The bill affects companies getting $5 billion or more in TARP funds and bonuses paid out by Fannie Mae and Freddie Mac. It would apply to people making more than $250,000 a year.
Trying to quell the outrage and move the country forward, Obama said Wednesday to put the blame on him.
“Everybody’s pointing fingers at each other and saying it’s their fault, the Democrats’ fault, the Republicans’ fault. Listen, I’ll take responsibility. I’m the president,” he said at a town hall meeting in Costa Mesa, California.
The president did not directly address the language change.
AIG’s derivatives branch is in Dodd’s home state. Many of the bonuses in question were awarded to executives at that branch. But in his statement, Dodd said he had no idea the legislation would affect the company.
“Let me be clear — I was completely unaware of these AIG bonuses until I learned of them last week,” he said.
Dodd also said in the statement that his comments on Tuesday and Wednesday to CNN did not conflict.
“I answered a question by CNN [Tuesday] night regarding whether or not [an exemption before] a specific date was aimed at protecting AIG,” he said. “When I saw that my comments had been misconstrued, I felt it was important to set the record straight — that this had nothing to do with AIG.”
According to a transcript of the Tuesday interview, Dodd was asked about an executive-compensation provision “that exempts everything prior to February 11, 2009 — any contracts prior to that date.”
He said that language was not in the version of the bill that left the Senate and that he was not one of the negotiators who hammered out a compromise between the House and Senate versions of the plan.
“I can’t point a finger at someone who offered a change at all,” he said.
Asked whether he later had been able to figure out who added the language, he said, “I really don’t know.”
In Wednesday’s interview, Dodd never said his Tuesday comments had been misunderstood.
“Going back and looking, I apologize,” he said when questioned about his words from the day before.
On Capitol Hill on Wednesday, AIG chief executive Edward Liddy called the roughly $165 million in bonuses “distasteful” but necessary because of legal obligations and competition.
“I’ve asked those who received retention payments in excess of 100,000 or more to return at least half of those payments. Some have already stepped forward and offered to give up 100 percent of their payments,” said Liddy, who joined AIG after the bailout.
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