Friday, October 9, 2009

Airports to Screen Passengers For H1N1 Symptoms

Airports To Screen Passengers For H1N1 Symptoms

New Guidelines Allow Airports To Take Temperatures, Quarantine Passengers Exhibiting Flu-Like Illness

People Traveling Internationally May Be Screened When Leaving, Entering U.S.

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With the holiday season just a few weeks away, health officials fear the swine flu will pick up right along with air travel.

New government guidelines are on their way, designed to help keep passengers healthy.

This flu season, airport staff across the nation won't just be screening for security threats. They'll also be looking out for health threats – people who look like they may have the H1N1 virus.

The government says that people traveling internationally may be screened for the H1N1 virus as they leave or enter the U.S.

"It feels a little bit overboard," Stanford, Conn. resident Derek Ferguson said.

The government warns that some passengers may be asked to pass through a screening device, have their temperatures taken, answer questions about their health, and even be quarantined if someone on the flight shows symptoms of H1N1.

"I'm all for it, I really am," Mount Vernon resident Rosa Raspaldo said. "Because – guaranteed – if people are coughing on the plane, all of those germs will be spread around."

But the H1N1 virus isn't just a danger in the skies. Buses and trains can also be a breeding ground for germs. Millions of riders climb aboard every day, and that has many taking precautions.

"I keep antiseptic in my purse and I use it all the time," said New York City resident Rose Donato.

Donato is a daily commuter, and says she isn't relying on others to take responsibility for her health.

"We're in Grand Central – I'm sure there are people that are sick and are walking around, and are spraying their germs all over the place," Donato said.

New York, along with other transportation agencies around the country, is posting signs reminding customers to keep their sneezes and coughs to themselves. It's common sense advice that doctors echo.

"Get vaccinated, wash your hands frequently, and you've really done the most that almost anybody can do to protect against influenza," Dr. Michael Phillips, of New York University's Langone Medical Center, said.

The first doses of swine flu vaccine arrived earlier this week, but new polls show that many people don't plan to get it. Flu shot or not, experts say that healthy habits will help make sure that, when you travel, germs don't take the trip with you.

If you have questions about the swine flu, check out our online resource guide here, including what you need for a swine flu survival kit. You can also check out information on screenings for travelers here.

US lawmakers extend PATRIOT Act provisions

US lawmakers extend PATRIOT Act provisions

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Key US lawmakers passed legislation Thursday extending three ackey provisions of the PATRIOT Act, the sweeping intelligence bill enacted after the September 11, 2001 attacks.

Backing a White House request, the Senate Judiciary Committee passed the measure 11 votes to 8 to extend until 2013 three clauses that would have expired by 31 December. The bill now heads to the full Senate for a vote.

The provisions include the "roving wiretap" clause, used to monitor mobile communications of individuals using multiple telephone lines, and the "lone-wolf" provision, which enables spying on individuals suspected of terrorist activity but with no obvious connection to extremist groups.

Lawmakers also extended the life of controversial section 215, known as the "library records provision" that allows government agencies to access individual's library history.

The committee had earlier met in a closed-door meeting with members of the Federal Bureau of Investigation and the intelligence community on ensuring their actions would not impede investigations already underway.

The senators also debated freeing up law enforcement actions that have been hampered by legislation and court rulings since the first program was launched by former president George W. Bush in the wake of 9/11, which enabled collecting sensitive information for years without a court order.

Republicans senators have remained critical of placing restrictions on the intelligence community, saying they should more of a free hand in the early stages of investigations.

But their Democratic counterparts have decried the fact that the provisions still do not in their view adequately respect the privacy of ordinary Americans.

Democratic Senator Russ Feingold said he feared handing a "blank check" to law enforcement agencies.

"This is our job to write language to make sure this doesn't happen anymore," he said.

Michael Macleod-Ball, acting director of the American Civil Liberties Union's Washington legislative office said the rights group was "disappointed" that further moves were not made to protect civil liberties.

"This truly was a missed opportunity for the Senate Judiciary Committee to right the wrongs of the PATRIOT Act," he said.

"We urge the Senate to adopt amendments on the floor that will bring this bill in line with the Constitution."

50,000 line up for housing aid in Detroit

50,000 line up for housing aid in Detroit

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Police guard the North entrance of Cobo Hall as thousands look on

An estimated 50,000 residents of Detroit filed into Cobo Hall convention center on Wednesday seeking assistance to pay utility bills and keep from being evicted from their homes. City officials, who expected around 3,000 people to apply for the aid, were overwhelmed by the turnout.

In a scene reminiscent of the crowds of jobless workers who lined up for free soup during the Great Depression, a queue of tens of thousands of workers and unemployed people wound around the downtown arena. Young mothers pushing baby carriages, disabled workers in wheelchairs, senior citizens and throngs of young workers and youth stood for hours waiting. Many had slept on the streets the previous evening to be the first served.

Several people fainted during the wait and were treated by medical personnel on the scene. By 11:30 a.m., Detroit’s mayor, David Bing, made a public appeal for citizens to stop coming to Cobo Hall. Hundreds of police, including officers from Detroit’s special Gang Unit, stood guard at the entrances to hold back the crowd.

Several people were reportedly injured in the rush to enter the building after the police finally opened the doors around noon. Those in line were funneled through the glass doors and quickly sped toward a table where they were handed applications and told they had to fill them out and deposit them in boxes before a 2 p.m. deadline.

Wednesday was the last day for residents to apply for the city’s Homeless Prevention and Rapid Re-Housing Program (HPRP). The program, funded by a $15.2 million grant from the Obama administration's stimulus program, will provide assistance to only about 3,400 people, according to Constance Bell, a spokesperson for the program. In addition to the 50,000 applications given out Wednesday, an additional 30,000 were distributed previously, Bell said. This means that only about one out of 23 people who applied will see any money.

The large turnout was based on fast-spreading rumors that the city was providing $3,000 to low-income families in need of aid. Such is the level of economic desperation in the city—where the official jobless rate is 29 percent and more than one-third of the population lives below the official poverty line—that tens of thousands showed up.

The vast majority will not qualify for the aid, the city spokesperson admitted. The HPRP program only provides temporary assistance to pay utility bills for those who are already homeless or facing pending evictions or foreclosures. Moreover, it will be paid only to those who are able to keep up their housing payments after receiving the aid. No money will be used to make mortgage payments.

People wait outside the North entrance of Cobo Hall

Rather than informing those who showed up that their efforts were likely to be in vain, city officials continued to hand out and collect applications for the program. Their overwhelming concern was to prevent an angry outburst from people who had suffered the indignity of waiting for hours and being manhandled by the cops.

The lack of preparation and disorganization at the event is an indication of how distant government officials are from the reality confronting the working class and the extent of the social crisis. The 80,000 households that applied for assistance represent roughly a third of the city’s population.

The real jobless rate in Detroit is much higher than the official figure of 29 percent, due to the tens of thousands who have given up looking for nonexistent jobs. This crisis has been exacerbated by the forced bankruptcies and restructuring of General Motors and Chrysler by the Obama administration, which, with the support of the United Auto Workers, destroyed thousands of jobs and slashed the wages and benefits of auto workers and retirees.

Particularly striking were the thousands of young workers lining up for assistance. Thirty years ago, a large number of these young people would have been employed in city’s many auto factories. Since 1970, however, the city has lost three-quarters of its manufacturing jobs, wiping out the jobs of 250,000 workers. Today, there is nothing but low-paying jobs for young workers, without the slightest economic security.

Last month, tens of thousands of workers lined up at the state fair grounds in Detroit after the regional gas and electric company, DTE Energy, announced it was offering help to distressed homeowners and renters. According to a report last month in the Detroit News, Michigan’s two largest power companies, DTE Energy and Consumers Energy, last year cut off heating to a total of 181,000 customers. DTE has already shut off energy to 115,000 households, a pace that will far surpass last year’s 142,000 cutoffs.

Detroit—which used to boast one of the highest rates of home ownership in the nation--had the top home foreclosure rate in 2006 and 2007, and still ranks among the highest in the US.

Detroit’s economic decline has been long in the making. The living standards won by auto workers gave the Motor City the highest per capita income in the nation in the 1950s. The last three decades, beginning with the Chrysler bailout of 1979-80, has seen an unrelenting assault on the working class by big business and the government, culminating in Obama’s restructuring of GM and Chrysler. The deindustrialization of Detroit was symbolic of the shift by American capitalism from manufacturing to the most parasitic forms of financial speculation.

At 15.2 percent, the state of Michigan has the highest unemployment rate in the US. Over the past decade, as the auto industry was downsized, Michigan lost 870,000 jobs. The number is expected to rise to one million by late next year.

Even as the demand for social services increases, state and city governments are slashing spending for housing, education and health care to cope with large budget deficits. The Obama administration, which handed trillions to Wall Street, has offered no similar bailout to the states or the estimated 15 million people who are now unemployed.

The state of Michigan—facing a $2.8 billion deficit—is slashing programs across the board. On the same day that thousands lined up for housing assistance, Detroit’s Democratic Mayor David Bing, a multi-millionaire businessman, announced a “turnaround” plan to cut $500 million over the next two years by permanently shrinking city government, selling off public assets, privatizing and cutting services, and laying off more than 1,000 city workers.

The economic crisis is bringing much of the rest of the country to similar straits as in Detroit and Michigan. Scenes of economic desperation are increasingly common throughout the country, with free clinics attracting crowds of thousands in California, Texas and other states, and thousands of people lining up for a handful of available jobs.

The US is experiencing a social crisis unparalleled since the 1930s. In the face of this crisis, the Obama administration is offering no serious relief to the tens of millions of working people who face economic ruin.

The tragic scene that unfolded Wednesday in Detroit underscores the derisory character of Obama’s so-called “stimulus” and “recovery” schemes. The White House has rejected out of hand any public works program to put the unemployed to work. Instead, all of its policies—from the Wall Street bailout, to the attack on auto workers, to its plans to slash health care costs—are designed to protect the wealth and power of the financial elite.

Obama rules out troop drawdown in Afghanistan

Obama rules out troop drawdown in Afghanistan

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President Barack Obama will not consider any reduction in the US military commitment in Afghanistan, White House and congressional officials declared after a three-hour meeting at the White House Tuesday between Obama and more than 30 congressmen and senators, both Republicans and Democrats.

The meeting included proponents of an escalation of the ground war in Afghanistan, such as Senator John McCain, the 2008 Republican presidential candidate, and Democratic congressman Ike Skelton, chairman of the House Armed Services Committee. Also attending were those like House Speaker Nancy Pelosi and Senator John Kerry who have been more skeptical about the prospects for a military victory.

After the meeting, Democratic Senate Majority Leader Harry Reid pledged the full support of Congress for whatever decision Obama made, issuing what amounts to a blank check for military options ranging from the dispatch of tens of thousands more troops to a major escalation of cross-border attacks into Pakistan, using both missiles and special forces.

The White House clearly hoped to retain the maximum tactical flexibility while enrolling the entire congressional leadership behind the goal of maintaining US domination of Afghanistan and using that country as a base of operations for projecting American power more broadly throughout Central, South and Southwest Asia.

An unidentified “senior administration official” was widely quoted in the press declaring that Obama would adopt a policy midway between the various congressional positions. The meeting was “a chance for the president to identify what is and is not on the table” and to “dispense with the straw man argument that this is about either doubling down or leaving Afghanistan.”

Given that it is virtually impossible to double the US troop presence in Afghanistan any time soon, because of the lack of available manpower, this formulation means that Obama, in the guise of adopting the “middle ground,” was using the meeting with the bipartisan congressional delegation to rule out any withdrawal of US troops.

The Obama administration is openly defying the sentiments of a large majority of the American people, who oppose escalation of the war and want the troops to begin coming home. Opposition to the war in Afghanistan has been growing steadily since Obama took office and began expanding the conflict. The latest Associated Press opinion poll found that only 40 percent of those interviewed still supported the war, down from 44 percent in July.

Press reports Wednesday confirmed that Obama has now received the request for reinforcements submitted by Gen. Stanley McChrystal, the top US commander in Afghanistan, whom Obama appointed in the spring with a mandate to review US policies in the war. A Pentagon spokesman said that copies of the request were distributed to top administration officials on Monday. Obama would decide on how many additional troops to send—McChrystal has asked for as many as 40,000—within a month, a White House spokesman said.

Whatever the specific decisions made as a result of the ongoing White House policy review, the ultimate outcome of the process is not in doubt. The United States will become more deeply involved in a colonial-style war in a country whose people have fought fiercely against such foreign interventions for nearly two centuries.

The measures proposed by the Democratic opponents of McChrystal’s counterinsurgency plan—such as the “counterterrorism” option favored by Vice President Joseph Biden—have nothing to do with the antiwar feelings of the masses of Americans. They are merely plans for escalation of the violence by other means, with greater reliance on drones, assassinations and bombs to kill insurgents and terrify civilians. On Wednesday, the media carried reports stating categorically that the Biden option did not envision a reduction of current troop levels in Afghanistan.

Each of the policy options being considered at the White House has potentially catastrophic implications, further destabilizing the region, fueling conflicts between neighboring countries such as Pakistan, India and China, and leading to a wider conflagration.

Obama postured as an antiwar candidate during the presidential election campaign, particularly in the Democratic primary contest with Hillary Clinton, who had voted for the Iraq war resolution in 2002. But he also promised to shift forces from the war in Iraq to the war in Afghanistan—one of the few election pledges that he has actually kept.

The decision to escalate the war in Afghanistan is of enormous historical significance. Some liberal commentators have cautioned the White House that Obama risks following in the footsteps of Lyndon Johnson, whose domestic policy initiatives—the so-called “war on poverty”—were ultimately scrapped to pay for the escalation of the war in Vietnam.

Historical analogy has its uses, and Afghanistan certainly has become “Obama’s war,” just as the Vietnam War was identified with Johnson, McNamara and later Nixon and Kissinger. But in this case the differences outweigh the similarities.

Johnson’s program of limited social reform at home was overtaken by his policy of waging imperialist war abroad. In the case of Obama, however, the administration is pursuing a program of outright reaction in both domestic policy and foreign policy.

The Obama administration is continuing and deepening the policies of the Bush administration. Abroad, it is continuing the war in Iraq and escalating the war in Afghanistan and Pakistan. At home, it is attacking democratic rights and slashing the living standards of working people, while it empties the public treasury to bail out the banks.

Tens of millions of working people either voted for Obama or were affected by the illusions in him spread by the media. These illusions will increasingly be shattered by the bitter experiences of depression at home and war abroad, in which this government is revealed as the instrument of the Wall Street oligarchy.

Mass. bill would OK quarantines in health crises

Mass. bill would OK quarantines in health crises

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Massachusetts lawmakers are considering giving public health officials the authority to isolate individuals and set up quarantines to contain the outbreak of serious contagious diseases.

The quarantine order could come in writing or verbally. Those forced into quarantine could appeal to the Superior Court.

The bill would also give the public health commissioner the power to evacuate public buildings, close access to contaminated areas, and purchase and distribute serums, vaccines or antibiotics.

Critics say the emergence of swine flu shows the importance of having laws on the books to deal with public health crises. Critics say the bill gives the government too much power.

The bill, which has been in the works for years, is set to be debated by House lawmakers on Thursday.

8 Shocking Ways the Billionaires Have Schemed to Rob Us of Every Last $

8 Shocking Ways the Billionaires Have Schemed to Rob Us of Every Last $

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Every day and every week we hear another shocking story about how our billionaires have cooked up an even sicker scheme to shake down Americans and plunder the national wealth, as if the last scheme was too easy and boring. They don’t even bother hiding it anymore: take the story about the “Death Bonds” I wrote about last month, first reported (however blandly) in the New York Times: the very same Wall Street bankers who conned $23 trillion out of America’s wealth is now going to use some of that play money to place bets on when we Americans will die—and the sooner we die, the more billions in E-Z profits Wall Street will earn.

It’s as if America is some kind of despised abstraction to our ruling class: a faraway colony to plunder, a mass of humanity to use and exploit as it sees fit. In fact, there’s a pretty clear pattern developing of just how much they despise Americans and how little they value our lives and our humanity.

It’s painful to admit this, but the way our 21st century American ruling class treats the rest of us is eerily reminiscent of the great Russian novel Dead Souls, about the 19th century Russian ruling class’s beastly treatment of its serfs (also called “souls”), back when most Russians were essentially slaves, legal property of the ruling class. Dead Souls features one of the most grotesque shysters in any novel: he comes up with a get-rich-quick scheme that’s eerily similar to today’s Wall Street’s latest schemes: the shyster goes from village to village, buying up “dead souls” (or “dead serfs”) who are still on the census rolls of the local landowners. The dead serfs are of no use to their owners anymore, so the landowners are happy to make one last ruble off their dead serfs by selling ownership rights over them to the shyster. The shyster’s plan: to acquire so many “dead souls” that he can package them into valuable collateral, and take out a huge loan against his “dead souls” which will finally make him rich. Wealth spun out of nothing but human misery, so that the shyster can waste huge amounts of money impressing others from the serf-owning class.

In other words: Dead Souls Loans.

Fast-forward to America in 2009, and now we’re the dead souls. Top American corporations are taking out “dead peasant insurance” on their workers without the workers even knowing it—and cashing in hundreds of thousands or millions of dollars on their employees, even though often times they don’t even offer those same employees decent health insurance coverage to allow them to survive illnesses. To top it off, these “dead peasant insurance” payouts are tax-free for the corporation that cashes in. It was a revelation so revolting that even ABC’s News’ mannequins admitted they were “stunned.”

In fact, as I said, they shouldn’t be stunned. It’s part of an ongoing pattern for our ruling class and their view of America and Americans. It’s time we faced up to this grim fact. Too many of them are against us and against this country, weakening America to the point where it threatens to be permanently crippled, much like how the communists deformed Russia for decades. They had their bolsheviks; we have our billionaire-bolsheviks. The effect of these two rapacious ruling elites is the same: the state and the people serve the tiny ruling class; and when we’re not serving them, we can fuck off and die. Literally. Because that serves them too.

For practical purposes, here is a small handy list of 8 Reasons To Hate Our Billionaire Bolsheviks [or "The H8 8"]:

1. According to Harvard Medical Researchers, 45,000 Americans die each year due to lack of health insurance. That’s one American dying every 12 minutes; it also means that our fucked-up health care system kills as many Americans every month as Al Qaeda managed on September 11th, with another 9,000 American dead thrown in for good measure. Doesn’t this count as corporate terrorism? Doesn’t this mean we should go to war against our murderers, to protect ourselves?

2. Those hundreds of thousands of American corpses enriched a handful of American health care CEOs like William McGuire of UnitedHealth: he earned hundreds of millions in annual bonuses in the mid-2000s ($125 million in 2004, more in 2005) along with as much as $1.8 billion in stock options (some of which was clawed back by the SEC), and a $5 million annual pension guaranteed for life; at one point, $1 out of every $700 Americans paid in health care went directly to McGuire’s obscene billion-dollar payout.

3. “Dead Peasants Insurance”: Companies paid out $8 billion in premiums on millions of their employees, and expect to earn $9 billion in the next 5 years when these employees die. To make sure that the life insurance companies can pay out the winnings on our deaths, $22 billion in TARP money–our money– was set aside this spring for insurance companies.

4. Herbert Perone, spokesman for the American Council of Life Insurers, told the San Francisco Chronicle: “Nobody gets upset when a company insures its plant or its fleet of cars or land or any other business asset. To think that your labor force is not a business asset is extremely shortsighted.”

5. The gap between wealthiest 10 percent and the rest of America is worse than at any time on record. Two-thirds of all income gains from 2002-7 went to the top 1 percent. The Walton family alone is worth more than the bottom 100 million Americans combined. Wal-Mart is a major player in the “dead peasants insurance” game; it’s alleged that dead peasant insurance payouts are used for executive bonuses.

6. Bank of America chief Ken Lewis will earn a $125 million retirement package after soaking US taxpayers for $45 billion in bailout funds and $118 billion in guarnatees. Meanwhile, banks like BofA earned $24 billion in overdraft fees in 2008, charging some 51 million Americans an average of $470 each in highly dubious circumstances. It’s thought that banks will pocket even more this year.

7. Mortgages: financial institutions get taxpayers to subsidize losses via $700 billion TARP program, $1.25 trillion mortgage-backed securities buyback program, hundreds of billions in “toxic assets” guarantees, at least $400 billion shoring up Fannie Mae and Freddie Mac, $30 billion for PPIP, etc.

8. Mortgages: homeowners. Two headlines tell the story: “Mortgage-relief program helps relatively few troubled homeowner” [McClatchy, Sept 10.] and “Firms are getting billions, but homeowners still in trouble” [McClatchy, Oct 4.] The latter article details how even the meager funds earmarked for homeowner relief winds up getting looted by the mortgage servicers who created the problems in the first place.

And on, and on…

It’s one of the more grotesque yet inevitable examples of just how badly the super-wealthy have warped America so that it’s become little more than a rigged game in which we the people always lose, just like Mr. Lebowski said we would.

In 1965, Ronald Reagan said in a speech: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse out of the public treasury. From that moment on the majority…always vote[s] for the candidate promising the most benefits from the treasury with the result that democracy always collapses over a loose fiscal policy, always to be followed by dictatorship.” [Quoted in David Cay Johnston’s book Free Lunch.]

The great irony of course is that it wasn’t the voters who plundered the public treasury, but rather, the super-wealthy who plundered the public and subverted democracy. But this is worse than mere irony; Reagan was the billionaire’s Trojan Horse to power. They rode on his drooling senile smile into power, on the worst assumptions about the American people and how we’d use our democratic power to take their wealth; so the minute they got the reigns, they plundered us first, before we could get to them. This is what I mean by America’s billionaire class as an alien, colonial overlord class: they hate us, quite simply, and the more they plunder America, the more they both loathe us and fear us, or what we might do to them -- or should do.

As for the dictatorship that Reagan speaks of, it’s already here, thanks in no small part to Reagan himself. But it’s not the crude, old-fashioned dictatorship, the kind with cool uniforms and parades. That wouldn’t last a week, because we’ve all been trained to look out for it and spot the crude old saber-toothed dictators. Instead, today we have a kind of highly-evolved dictatorship concealing itself as a functioning democracy. But in all the important issues, where billions or trillions are at stake, where their yachts and private jets are pitted against Americans’ lives or the national interest, you can spot the dictatorship’s horrific Predator-beast head rising from the swamp… such as when the vote on the public option was put to the Democratic supermajority-run Senate committee, and it got crushed by the same margin as if the Senate was split, or run by a Republican supermajority.

Which brings me back to Dead Souls: despite the title, the book is actually one of the greatest comic novels of all time, a kind of comic poem, “laughter through tears” as the author, Gogol, put it. But I’m not sure Gogol would find our 2009 version of Dead Souls very comical. And Hollywood would never buy it. There’s nothing redeeming, no characters an audience can possibly identify with. Our American Dead Souls is just too … depressing.

Who Got the Bailout Billions

Good Billions After Bad

As the Bush administration waned, the Treasury shoveled more than a quarter of a trillion dollars in tarp funds into the financial system—without restrictions, accountability, or even common sense. The authors reveal how much of it ended up in the wrong hands, doing the opposite of what was needed.

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Just inside the entrance to the U.S. Treasury, on the other side of a forbidding array of guard stations and scanners that control access to the Greek Revival building, lies one of the most beautiful interior spaces in all of Washington. Ornate bronze doors open inward to a two-story-high chamber. Chandeliers line the coffered ceiling, casting a soft glow on the marble walls and richly inlaid marble floor.

In this room, starting in 1869 and for many decades thereafter, the U.S. government conducted many of its financial transactions. Bags of gold, silver, and paper currency arrived here by horse-drawn vans and were carted upstairs to the vaults. On the busy trading floor, Treasury clerks supplied commercial banks with coins and currency, exchanged old bills for new, cashed checks, redeemed savings bonds, and took in government receipts. In those days, anyone could observe all this activity firsthand—could actually witness the government and the nation’s bankers doing business. The public space where this occurred became known as the Cash Room.

Today the Cash Room is used for press conferences, ceremonial functions, and departmental parties. And that’s too bad. If Treasury still used the room as it once did, then perhaps we’d have more of a clue about what happened to the billions of dollars that flew out of Treasury to selected American banks in the waning days of the Bush administration.

Last October, Congress passed the Emergency Economic Stabilization Act of 2008, putting $700 billion into the hands of the Treasury Department to bail out the nation’s banks at a moment of vanishing credit and peak financial panic. Over the next three months, Treasury poured nearly $239 billion into 296 of the nation’s 8,000 banks. The money went to big banks. It went to small banks. It went to banks that desperately wanted the money. It went to banks that didn’t want the money at all but had been ordered by Treasury to take it anyway. It went to banks that were quite happy to accept the windfall, and used the money simply to buy other banks. Some banks received as much as $45 billion, others as little as $1.5 million. Sixty-seven percent went to eight institutions; 33 percent went to the rest. And that was just the money that went to banks. Tens of billions more went to other companies, all before Barack Obama took office. It was the largest single financial intervention by Treasury into the banking system in U.S. history.

But once the money left the building, the government lost all track of it. The Treasury Department knew where it had sent the money, but nothing about what was done with it. Did the money aid the recovery? Was it spent for the purposes Congress intended? Did it save banks from collapse? Paulson’s Treasury Department had no idea, and didn’t seem to care. It never required the banks to explain what they did with this unprecedented infusion of capital.

Exactly one year has elapsed since the onset of the financial crisis and the passage of the bailout bill. Some measure of scrutiny and control has since been imposed by the Obama administration, but even today it’s hard to walk back the cat and trace the money. Up to a point, though, it’s possible to reconstruct some of what happened in the first chaotic and crucial three months of the bailout, when Treasury was still in the hands of Henry Paulson and most of the money was disbursed. Needless to say, there is no central clearinghouse for information about the tarp money. To get details of any kind means starting with the hundreds of individual recipients, then poring over S.E.C. filings, annual reports, and other documentation—in other words, performing the standard due diligence that the government itself failed to perform. In the report that follows, we have no more than dipped a toe into the morass, but one fact emerges clearly: a lot of the money wound up in the coffers of some very surprising institutions— institutions that should have been seen as “troubling” as much as “troubled.”

A Reverse Holdup

The intention of Congress when it passed the bailout bill could not have been more clear. The purpose was to buy up defective mortgage-backed securities and other “toxic assets” through the Troubled Asset Relief Program, better known as tarp. But the bill was in fact broad enough to give the Treasury secretary the authority to do whatever he deemed necessary to deal with the financial crisis. If tarp had been a credit card, it would have been called Carte Blanche. That authority was all Paulson needed to switch gears, within a matter of days, and change the entire thrust of the program from buying bad assets to buying stock in banks.

Why did this happen? Ostensibly, Treasury concluded that the task of buying up toxic assets would take too long to help the financial system and unlock the credit markets. So, theoretically, something more immediate was needed—hence the plan to inject billions into banks, whether or not they wanted or needed the money. To be sure, Citigroup and Bank of America were in precarious condition. So was the insurance giant A.I.G., which had already received an infusion from the Federal Reserve and ultimately would receive more tarp money—$70 billion—than any single bank. But rather than just aiding institutions in distress, Treasury set out to disburse money in a more freewheeling way, hoping it would pass rapidly into the financial system and somehow address the system-wide credit crunch. Even at this early stage, it was hard to escape the feeling that the real strategy was less than scientific—amounting to a hope that if a massive pile of money was simply thrown at the economy, some of it would surely do something useful.

On Sunday, October 12, between 6:30 and 7 p.m., Paulson made a series of calls to the C.E.O.’s of the biggest banks—the so-called Big 9—and asked them to come to Treasury the next afternoon for a meeting on the financial crisis. He was short on details, as he would be throughout the crisis. A series of e-mails obtained by Judicial Watch, a Washington public-interest group, offers a window on the moment. The C.E.O. of Citigroup, Vikram Pandit, had agreed to attend, but asked his staff to scope out the purpose. “Can you find out soon as possible what Paulson invite to VP [Vikram Pandit] for meeting at Treasury this afternoon is about?” a Citigroup executive in New York wrote the bank’s Washington office. When Citi’s high-powered lobbyist Nicholas Calio called Paulson’s office, he was told only that Pandit should attend.

Top Treasury staffers were likewise in the dark. Paulson’s chief of staff, James Wilkinson, sent out a 7:30 a.m. e-mail: “Can someone tell Michele Davis, [Kevin] Fromer and me who the ‘Big 9’ are?”

By midmorning, people finally had the names—Vikram Pandit, of Citigroup; Jamie Dimon, of J. P. Morgan Chase; Kenneth Lewis, of Bank of America; Richard Kovacevich, of Wells Fargo; John Thain, of Merrill Lynch; John Mack, of Morgan Stanley; Lloyd Blankfein, of Goldman Sachs; Robert Kelly, of the Bank of New York Mellon; and Ronald Logue, of State Street bank. Their destination was Room 3327, the Secretary’s Conference Room, on the third floor.

Paulson laid before them a one-page memo, “CEO Talking Points.” He wasn’t there to ask for their help, Paulson would say; he was there to tell them what he expected from them. To “arrest the stress in our financial system,” Treasury would unveil a $250 billion plan the next day to buy preferred stock in banks. Paulson’s memo told the bankers bluntly that “your nine firms will be the initial participants.” Paulson wasn’t calling for volunteers; he made it clear the banks had no choice but to allow Treasury to buy stock in their companies. It was basically a reverse holdup, with Paulson holding the gun and forcing the banks to take the money.

Some of the C.E.O.’s had misgivings, fearing that by accepting tarp money their banks would be perceived as shaky by investors and customers. Paulson explained that opting out wasn’t an option. “If a capital infusion is not appealing,” the memo continued, “you should be aware that your regulator will require it in any circumstance.” Paulson gave the bankers until 6:30 p.m. to clear everything with their boards and sign the papers.

Treasury had prepared a form with blank spaces for the name of the bank and the amount of tarp money requested. Each C.E.O. filled in the two blanks by hand—$10 billion, $15 billion, $25 billion, whatever—and then signed and dated the document. That was all it took.

“There Is No Problem Here”

But this was just the beginning. It’s one thing to call nine big banks into a room and give them what turned out to be a total of $125 billion. That required little more than a few hours. It’s quite a different matter to look out over the landscape of 8,000 other U.S. banks and decide which ones should get slices of the tarp pie. Moreover, the guiding principle was never clear. Was it to give money to essentially sound banks, so that they could help inject more money into the credit markets? Was it to pull troubled banks into the clear? Was it both—and more?

Regardless, the mechanism to disburse all this money even more widely was an entity called the Office of Financial Stability. Unfortunately, it wasn’t a functioning office yet—it was just a name written into a piece of legislation. To lead it, Paulson picked Neel Kashkari, a 35-year-old former Goldman Sachs banker who had followed Paulson to Treasury when he became secretary, in July 2006. Kashkari was an odd choice to oversee a federal bailout of private companies. A free-market Republican, he had downplayed the gravity of the subprime-mortgage crisis only months before his appointment, reportedly sending the message to one gathering of bankers, “There is no problem here.”

Kashkari and other Paulson aides cobbled together the Office of Financial Stability under immense time pressure. They press-ganged people from elsewhere in Treasury and from far-flung government departments. By the end of the year, there were more “detailees” on loan from other offices (52) than there were permanent staff (38). They were spread out all over Treasury, from the ground floor to the third. Some occupied space in leased offices six blocks away. It was a strange agglomeration of people—stretching from Washington to San Francisco—who had never worked together before.

There were no internal controls to gauge success or failure. The goal was simply to dispense as much money as possible, as fast as possible. When Treasury began giving billions to the banks, the department had no policies in place to ensure that the banks were using the money in ways that met the purposes of the program, however defined. One main purpose, as noted, was to free up credit, but there was no incentive to lend and nothing to stop a bank from simply sitting on the money, bolstering its balance sheet and investing in Treasury bills. Indeed, Treasury’s plan was expressly not to ask the banks what they did with the money. As the Government Accountability Office later learned, “the standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments.” When the G.A.O. asked Treasury if it intended to ask all tarp recipients to provide such an accounting, Treasury said it did not—and would not. “There’s not a bank in this country that would lend money under [these] terms,” Elizabeth Warren, the chair of a Congressional Oversight Panel that was eventually charged by Congress with overseeing tarp activities, would tell a Senate committee.

There wasn’t even anyone within the tarp office to keep track of the money as it was being disbursed. tarp gave that job—along with a $20 million fee—to a private contractor, Bank of New York Mellon, which also happened to be one of the Big 9. So here was a case of a beneficiary helping to oversee a process in which it was a direct participant. Most of the tarp contracts—for everything from legal services to accounting—were awarded under an expedited procedure that government watchdogs regard as “high-risk,” because it lacks a wide array of routine safeguards. In its first three months of operation, the Office of Financial Stability awarded 15 contracts worth tens of millions of dollars to law firms, fiscal agents, management consultants, and providers of various other services. There was enormous potential for conflicts of interest, and no procedure to deal with them. When the possibility of conflict of interest was raised, two of the contractors voiced vague promises to maintain an “open dialog” and “work in good faith” with Treasury, and left it at that.

When Henry Paulson unveiled the bank-rescue plan, he emphasized that it wasn’t a bailout. “This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything,” he declared. For every $100 Treasury invested in the banks, he maintained, it would receive stock and warrants valued at $100. This claim proved optimistic. The Congressional Oversight Panel that later reviewed the 10 largest tarp transactions concluded that Treasury “paid substantially more for the assets it purchased under the tarp than their then-current market value.” For each $100 spent, Treasury received assets worth about $66.

Ask and You Shall Receive

In those first few weeks, money gushed out of Treasury and into the tarp pipeline at a torrential rate. After giving $125 billion to the big banks, Treasury moved on to the second round, wiring $33.6 billion to 21 other banks on November 14 in exchange for preferred stock. A week later it sent $2.9 billion to 23 more banks. As noted, by the time Barack Obama took office, the tarp tab totaled more than a quarter of a trillion dollars. In its first six months, the new administration disbursed an additional $125 billion to banks, mortgage companies, A.I.G., and the big auto manufacturers.

To the public, the bailout looked like a gold rush by banks competing for tarp money. It was indeed partly that, but the reality is more complex. While some banks lobbied aggressively for tarp money, many others that had no interest in the money were pressured to take it. Treasury’s explanation is that regulators knew which banks were strongest and wanted to get more capital into their hands in order to free up credit. But it’s also true that spreading the money around to a large number of small and medium-size banks helped create the impression that the bailout wasn’t just for a few big boys on Wall Street.

It’s impossible to overstate how casual the process was, or how little Treasury asked of the banks it targeted. Like most bankers, Ray Davis, the C.E.O. of Umpqua Bank, a solid, respectable local bank in Portland, Oregon, followed with great interest all the news out of Washington last fall. But he didn’t see that tarp had much relevance to his own bank. Umpqua was well run. It wasn’t bogged down by a portfolio of bad loans. It had healthy reserves.

Then he got a call from a Treasury Department representative asking if Umpqua would like to participate in the Treasury program and suggesting it would be a good thing for Umpqua to do. Davis listened politely, but the fact was, he says, that Umpqua “didn’t need the funds. Our capital resources were very high.”

The next day, Davis was in his office when another call came through from the same Treasury representative. “Basically what he said was that the secretary of the Treasury would like to have your application on his desk by five o’clock tomorrow afternoon,” Davis recalls.

The “application” was the paperwork for a capital infusion, and Davis was told it would be faxed over right away. By now he was sold on participating. “Here was somebody from the secretary of the Treasury calling,” Davis says, “and complimenting us on the strength of our company and saying you need to do this, to help the government, to be a good American citizen—all that stuff—and I’m saying, ‘That’s good. You’ve got me. I’m in.’”

The most urgent task was to complete the application and get it back to Treasury the next day, and this had Davis in a sweat: “I pictured this 200-page fax that would take me three weeks of work crammed into one evening.” Imagine Davis’s surprise when a staff member walked in soon afterward with the official “Application for tarp Capital Purchase Program.” It consisted of two pages, most of it white space.

If tarp accomplishes nothing else, it has struck a mighty blow for simplicity in government. The application was only 24 lines long, and asked such tough questions as the name and address of the bank, the name of the primary contact, the amount of its common and preferred stock, and how much money the bank wanted. Anyone who has filled out the voluminous federal forms required in order to be eligible for a college loan would die for such an application. Davis recalls that, when the two faxed pages were brought to him, all he could say was “Really?” As soon as Umpqua’s application was approved, Treasury wired $214 million to Umpqua’s account.

What happened in Portland happened elsewhere across the country. Peter Skillern, who heads the Community Reinvestment Association, a nonprofit group in North Carolina, describes a conference he attended where bankers explained that they had been “contacted by their regulators and told by them that they would be taking tarp.”

One policy that tarp did decide to adopt was to keep confidential the name of any bank that was denied tarp funds—but it never had to invoke this rule. In those early months, with billions being wired all across the country, no financial institution that asked for tarp money was turned away.

Small Bank, Sharp Teeth

With few restrictions or controls in place, bailout money found its way not only to banks that didn’t really need it but also to banks whose business practices left much to be desired. On November 21, $180 million in tarp money wound up in the affluent seaside community of Santa Barbara, California. The tarp dollars flowed mostly into the coffers of a beige, Spanish-style building on Carrillo Street, home to the Santa Barbara Bank & Trust.

This might appear to be just the kind of regional bank that Treasury had in mind as an ideal beneficiary of tarp. The bank has been a fixture in Santa Barbara for decades, serving small businesses as well as wealthy individuals. It sponsors Little League teams, funds scholarships to send local kids to college, and takes an active role in community groups. It plays up its “longstanding commitment to giving back to the communities we serve.”

How much tarp money made its way through S.B.B.&T. and into the local community is not known. But, as it happens, the bank also operates a little-known and controversial program far from the lush enclaves of Santa Barbara. Like an absentee landlord, the community bank with the “give back” philosophy in Santa Barbara turns out to be a big player in poor neighborhoods throughout the country. And not in a nice way. Outside Santa Barbara, S.B.B.&T. peddles what are known as refund-anticipation loans (rals)—high-interest loans to the poor that are among the most predatory around.

A ral is a short-term loan to taxpayers who have filed for a tax refund. Rather than waiting one or two weeks for their refund from the I.R.S., they take out a bank loan for an amount equal to their refund, minus interest, fees, and other charges. Banks operate in concert with tax preparers who complete the paperwork, and then the banks write the taxpayer a check. The loan is secured by the taxpayer’s expected refund. rals are theoretically available to everyone, but they are used overwhelmingly by the working poor. Ordinarily, the loans have a term of only a few weeks—the time it takes the I.R.S. to process the return and send out a check—but the interest charges and fees are so steep that borrowers can lose as much as 20 percent of the value of their tax refund. A recent study estimated that annual rates on some rals run as high as 700 percent.

Santa Barbara is one of three banks that dominate this obscure corner of the banking market—the other two being J. P. Morgan Chase and HSBC. But unlike the two big banks, for which rals are but one facet of a broad-based business, Santa Barbara has come to rely heavily for its financial well-being on these high-interest loans to poor people. Interest earned from rals accounted for 24 percent of the banking company’s interest earnings in 2008, second only to income generated by commercial-real-estate loans. Under pressure from consumer groups, some banks, including J. P. Morgan Chase, have lowered their ral fees. Not Santa Barbara. Chi Chi Wu, of the National Consumer Law Center, in Boston, calls Santa Barbara Bank & Trust “a small bank with sharp teeth.”

The U.S. Department of Justice and state authorities in California, New Jersey, and New York have taken action against tax preparers with whom S.B.B.&T. works, charging them with deceptive advertising and with preparing fraudulent returns. Santa Barbara later took a $22 million hit on its books because of unpaid refund-anticipation loans.

The bank insists that its tarp money didn’t go to finance ral. “The capital received by Santa Barbara Bank & Trust under the U.S. Treasury Department’s Capital Purchase Program was not intended nor is it being used to fund or provide liquidity for any Refund Anticipation Loans,” according to Deborah L. Whiteley, an executive vice president of Pacific Capital Bancorp, Santa Barbara’s parent company. Other banks that have received tarp money have made similar statements, contending that money received from Washington simply became part of their capital base and was not earmarked for any specific purpose. But in a conference call with analysts on November 21, Stephen Masterson, the chief financial officer of Pacific Capital Bancorp, admitted that tarp “obviously helps us .… We didn’t take the tarp money to increase our ral program or to build our ral program, but it certainly helps our capital ratios.”

Indeed, the infusion from Treasury may well have been a lifeline for Santa Barbara. The Community Reinvestment Association of North Carolina, which has been tracking S.B.B.&T.’s finances and its ral program for years, concluded in 2008 that S.B.B.&T. would be losing money if it weren’t putting the squeeze on poor people around the country.

Gouging Needy Students

KeyBank of Cleveland is another institution that was given the nod by Treasury officials—and another bank whose lending practices prompt the question: What were they thinking?

Last fall KeyBank received $2.5 billion in tarp money. Its parent company is KeyCorp, a major bank holding company headquartered in Cleveland. With 989 full-service branches spread across 14 states, KeyCorp describes itself as “one of the nation’s largest bank-based financial services companies,” with assets of $98 billion. It also ranks as the nation’s seventh-largest education lender. In the summer of 2008, as banks and Wall Street firms were unraveling faster than they could count up their losses, KeyCorp delivered a decidedly upbeat report on its condition to investors. “Our costs are well controlled,” the company stated. “Our fee revenue is strong.…Our reserves are strong.…We remain well capitalized.”

What the report did not mention was a host of other problems. KeyCorp was in the midst of negotiations with the I.R.S. over questionable tax-leasing deals, and had had to deposit $2 billion in escrow with the government—forcing it to raise emergency capital and slash dividends after 43 consecutive years of annual growth. Meanwhile, consumer advocates had KeyBank in their sights because of the way it conducted its student-loan business, which they described as nakedly predatory. The Salt Lake Tribune reported that “KeyBank not only funds unscrupulous schools, it seeks them out, strikes up lucrative partnerships, and, in the process, suckers students into thinking the schools are legitimate.”

Over the years, thousands of students have secured education loans from KeyBank to attend a broad range of career-training schools—schools offering instruction in how to use or repair computers, how to become an electronics technician or even a nurse. One of the schools was Silver State Helicopters, which was based in Las Vegas and operated flight schools in a half-dozen states. During high-pressure sales pitches, people looking to change careers were encouraged to simultaneously sign up for flight school and complete a loan application that would be forwarded to KeyBank. Once approved, KeyBank, in keeping with long-standing practice, would give all the tuition money up front directly to Silver State. If a student dropped out, Silver State kept the tuition and the student remained on the hook for the full amount of the loan, at a hefty interest rate.

The same rule applied if Silver State shut itself down, which it did without warning on February 3, 2008. “Because the monthly operating expenses, even at the recently streamlined levels, continue to exceed cash flow,” an e-mail to employees explained, “the board has elected to suspend all operations effective at 5 p.m. today.” More than 750 employees in 18 states were out of work. More than 2,500 students had their training (for which they had paid as much as $70,000) cut short.

Silver State Helicopters was a flight school, but it might more accurately be thought of as a Ponzi scheme, according to critics. As long as there was a continual source of loan money, keeping the scheme afloat, all was well. KeyBank bundled the loans into securities, just as the subprime-mortgage marketers had done, and sold them on Wall Street. But when Wall Street failed to buy at an adequate interest rate, the money supply evaporated. As KeyBank dryly put it, “In 2007, Key was unable to securitize its student loan portfolio at cost-effective rates.” Without the loans—in other words, without the cooperation of Wall Street—the school had no income.

In February 2009, Fitch Ratings service, which rates the ability of debt issuers to meet their commitments, placed 16 classes of KeyCorp student-loan transactions totaling $1.75 billion on “Ratings Watch Negative,” signaling the possibility of a future downgrade in their creditworthiness.

Predator to the Rescue

The credit-card behemoth Capital One, an institution that many Americans probably don’t even realize is a bank, maintains its headquarters in McLean, in northern Virginia. Over the years, Capital One’s phenomenally successful marketing strategy has made the company the fifth-largest credit-card issuer in the U.S., and it has used its profits to expand into retail banking, home-equity loans, and other kinds of lending.

Capital One never revealed what it planned to do with the $3.5 billion tarp check it received from the U.S. Treasury on November 14, 2008, but three weeks later, the company bought one of Washington’s premier financial institutions, Chevy Chase Bank. To Washingtonians, Chevy Chase was a model corporate citizen. But outside Washington, it had a different reputation. The company’s mortgage subsidiary had engaged in practices that were at the core of the nation’s mortgage meltdown—risky loans with teaser interest rates that later went bad. The bank’s portfolio of mortgages from around the country was stuffed with a high percentage of so-called option arm—adjustable-rate mortgages with many different payment options. One of the most common kept a homeowner’s monthly payment the same for years, but the interest rate rose almost immediately. When the interest exceeded the amount of the monthly payment, the excess was tacked onto the principal, pushing homeowners ever deeper into debt. Having been lured by what a federal judge would call the “siren call” of this kind of mortgage, many Chevy Chase mortgage holders were on the brink of foreclosure, or had already fallen over the edge. By mid-2008, Chevy Chase’s “nonperforming” assets had tripled to $490 million since the previous September.

With Chevy Chase rapidly deteriorating, along came Capital One. Flush with tarp money, Capital One became a bailout czar of its own. It bought Chevy Chase for $520 million and assumed $1.75 billion of its bad loans. The purchase price was a fraction of what Chevy Chase would have brought before it wandered off into the wilderness of exotic mortgages and risky lending.

Meanwhile, even as it was bailing out Chevy Chase, Capital One was putting the squeeze on many thousands of its own credit-card holders, sharply raising their interest rates and imposing other conditions that made credit far more expensive and difficult to obtain. For many cardholders, rates jumped overnight from 7.9 percent to as much as 22.9 percent. Rather than using its multi-billion-dollar government infusion to prime the credit pump, Capital One in fact began turning off the spigot.

Capital One’s actions enraged its customers, many of whom had been cardholders for decades. The bank was engulfed with complaints. “The last I checked you were given money from the government for the specific purpose of freeing up credit to stimulate spending and help move the economy out of recession,” wrote a woman in Holland, Michigan. This was “just the opposite of what you did.” But other credit-card companies that received federal bailout money, such as Bank of America, J. P. Morgan Chase, and Citibank, would take the same route as Capital One, sharply raising interest rates, cutting off credit to millions of people, and frustrating the stated rationale for Treasury’s bailout.

After the Earthquake

Because all dollar bills are alike, and because follow-up tracking by the government has been so minimal, it’s often impossible to determine if any bank or other financial institution used tarp money for any particular, discernible purpose. Only A.I.G., Bank of America, and Citigroup were subject to any reporting requirements at all, and the reporting has been spotty. But what is possible to say is that tarp allowed many recipients to spend money in ways they would have been unable to do otherwise. It’s also the case that recipients of tarp money continued to behave as if a financial earthquake hadn’t just shaken the world economy.

The Riviera Country Club is about a mile from the Pacific Ocean, in a scenic canyon north of Los Angeles. Riviera is home to one of the most storied tournaments on the P.G.A. Tour. This year the tournament was sponsored by a tarp recipient, the Northern Trust Company of Chicago. Northern was founded more than a century ago to cater to wealthy Chicagoans, and not much about its clientele has changed since then, except that now the company caters to the wealthy not just in Chicago but everywhere. According to the bank, its wealth-management group caters to those “with assets typically exceeding $200 million.” The company manages $559 billion in assets—a sum nearly as great as what has so far been spent on the tarp program itself.

When Northern Trust received $1.6 billion in tarp funds, a spokesman for the bank said that it was “too soon to say specifically” how the money would be used. But the company’s president and C.E.O., Frederick Waddell, noted that “the program will provide us with additional capital to maximize growth opportunities.” Three months later, the bank sponsored the Northern Trust Open, flying in wealthy clients from around the country. To entertain them, the bank brought in Sheryl Crow, Chicago, and Earth, Wind & Fire. A Northern Trust spokesman declined to say how much all this cost, but explained that it was really just a business decision “to show appreciation for clients.”

Northern Trust was acting no differently from many other tarp recipients. One of the most blatant examples was Citigroup’s plan to buy a $50 million private jet to fly executives around the country. A public outcry forced Citigroup to abandon that scheme, but the bank quietly went ahead with a $10 million renovation of its executive offices on Park Avenue, in New York. Given that Citigroup had already gone to the government three times for tarp assistance totaling $45 billion, and was not a paragon of public trust, retrofitting the windows with “Safety Shield 800” blastproof window film may have just been common sense.

The excesses weren’t confined to big-city banks. A subsidiary of North Carolina–based B.B.&T., after accepting $3.1 billion in tarp money, sent dozens of employees to a training session at the Ritz-Carlton hotel in Sarasota, Florida. TCF Financial Corp., based in Wayzata, Minnesota, sent 40 “high-performing” managers, lenders, and other employees on a junket in February to CancĂșn, soon after receiving more than $360 million in tarp funds.

But let’s face it: episodes like these, infuriating as they may be, aren’t the real issue. The real issue is tarp itself, one of the most questionable ventures the U.S. government has ever pursued. Adopted as a plan to buy up toxic assets—one that was quickly deemed impractical even by those who first proposed it—it evolved into something more closely resembling an all-purpose slush fund flowing out to hundreds of institutions with their own interests and goals, and no incentive to deploy the money toward any clearly defined public purpose.

By and large, the cash that went to the Big 9 simply became part of their capital base, and most of the big banks declined to indicate where the money actually went. Because of the sheer size of these institutions, it’s simply impossible to trace. Bank of America no doubt used a portion of its $25 billion in tarp funds to help it absorb Merrill Lynch. Citigroup revealed in its first quarterly report after receiving $45 billion in tarp funds that it had used $36.5 billion to buy up mortgages and to make new loans, including home loans.

A.I.G., the largest single tarp beneficiary, wasn’t even a bank. The insurance company used its $70 billion in tarp funds to pay off a previous government infusion from the Federal Reserve. The original bailout money had flowed through A.I.G. to Wall Street firms and foreign banks that had incurred big losses on credit-default swaps and other exotic obligations. These were basically the casino-style wagers made by A.I.G. and the counterparties—wagers they lost. The government justified the help by saying it was necessary to prevent disruption to the economy that would be caused by a “disorderly wind-down” of A.I.G. The collapse of Lehman Brothers had occurred just days before the Fed took action, and the shock waves on Wall Street from yet another implosion might have been catastrophic. Bankruptcy court, where troubled corporations routinely wind down their disorderly affairs, would have been another option, though that prospect might not have quickly enough addressed the gathering sense of urgency and doom. We’ll never know. Certainly bankruptcy court would not have allowed A.I.G.’s clients to get full value for their bad investments.

Instead, A.I.G. was able to pay off its counterparties 100 cents on the dollar. The largest payout—$12.9 billion—went to Goldman Sachs, the Wall Street investment house presided over by Paulson before he moved into his Treasury job. Merrill Lynch, the world’s largest brokerage—then in the process of being taken over by Bank of America—received $6.8 billion. Bank of America itself received $5.2 billion. Citigroup, the nation’s largest bank, received $2.3 billion. But it wasn’t just Wall Street that benefitted. A.I.G. also funneled tens of billions of tarp dollars to banks on the other side of the Atlantic.

Some banks receiving tarp funds bristle at the notion that the taxpayer-funded program is a bailout. They say it is an investment in banks by the federal government, one that requires them to pay interest and ultimately pay back the money or face a financial penalty. In fact, many banks are making their scheduled payments to Treasury, and others have paid off billions of dollars in tarp funds (as well as interest). To tarp supporters, this is evidence of a sound investment. But at this stage it isn’t clear that every institution will be able to make the interest payments and buy back the government’s holdings. As of this writing, some banks, including Pacific Capital Bancorp, the parent of Santa Barbara Bank & Trust, have not been able to make their scheduled payments. No one can predict how many banks will ultimately come up short. But in the meantime tarp has been a very good deal for banks, because it gave them, courtesy of the taxpayers, access to capital that would have cost them substantially more in the private market, while exacting nothing from the beneficiaries in the form of a quid pro quo.

Based on the reluctance of many banks to take the money in the first place, and the swiftness with which other banks have repaid tarp funds, the main conclusion to be drawn is that relatively few were actually endangered. Rather than targeting the weak for relief—or allowing them to fail, as the government allowed millions of ordinary Americans to fail—Paulson and Treasury pumped hundreds of billions of dollars into the financial system without prior design and without prospective accountability. What was this all about? A case of panic by Treasury and the Federal Reserve? A financial over-reaction of cosmic proportions? A smoke screen to take care of a small number of Wall Street institutions that received 100 cents on the dollar for some of the worst investments they ever made?

More than five months after the bulk of the bailout money had been distributed into bank coffers, Elizabeth Warren plaintively raised the central and as yet unanswered question: “What is the strategy that Treasury is pursuing?” And she basically threw up her hands. As far as she could see, Warren went on, Treasury’s strategy was essentially “Take the money and do what you want with it.”

Obama offers no relief to growing army of jobless workers

Obama offers no relief to growing army of jobless

Go To Original

In the face of the mounting unemployment crisis, the Obama administration has no plans to offer serious relief to the 15 million workers out of work and the millions more facing job losses and economic ruin in the coming months.

Despite official claims that the economy is recovering, the Labor Department reported last week that a higher-than-expected 263,000 workers lost their jobs in September, with another 571,000 workers dropping out of the labor force after giving up looking for work.

The official jobless rate reached 9.8 percent last month—a 26-year high—and analysts predict unemployment will hover around 10 percent for most of 2010 and possibly for several years thereafter.

In his weekly address Saturday, President Obama almost casually remarked that “employment is often the last thing that comes back after a recession” and said the jobless figures were evidence that “progress comes in fits and starts.” He added that his administration would “explore additional options to promote job creation,” but offered no proposals.

The bulk of his address was focused on his plan to slash health care costs, which he claimed would lead to job creation. “Reforming our health insurance system will be a critical step in rebuilding our economy so our entrepreneurs can pursue the American Dream again,” he declared.

Obama signaled with his lauding of “our entrepreneurs” that no measures would be taken to address the social crisis that impinged on the profit interests of big business.

News reports this week made it clear that the options the administration is considering center on another round of tax breaks and incentives for corporations. According to Tuesday’s New York Times, “Among the options for additional steps is some variation on Mr. Obama’s proposal during the stimulus debate to give employers a $3,000 tax credit for each new-hire, which Congress rejected last winter partly out of concern that businesses would manipulate their payrolls to claim the credit. Another option would allow more businesses to deduct their net operating losses going back five years instead of the usual two; Congress limited the break to small businesses as part of the economic stimulus law.”

Such measures will reward corporations while doing virtually nothing to halt the economic slide being experienced by millions of workers. The most the administration and the Democratic congressional leadership are prepared to do is extend meager unemployment and health care subsidies that are scheduled to expire at the end of the year.

The administration has rejected out of hand the only means to provide immediate employment for jobless workers—a large-scale federally funded public works program. Obama has continually insisted that the private sector, not the government, is the “engine for economic growth.”

At the same time, he has awarded the private sector “engine” trillions of dollars in government bailouts, while insisting that the resulting explosion in the budget deficit be reversed by drastically cutting social spending.

With great fanfare last February, Congress passed a $787 billion stimulus package, which the administration said would “save or create” 3.5 million jobs. At the time, the administration’s so-called “left” supporters at publications like the Nation claimed the Recovery Act was a “21st Century New Deal” and that Obama was embarking on a massive program of public works and infrastructure investment.

It was nothing of the sort. Since the passage of the Recovery Act, two million jobs have been wiped out. Obama’s apologists have been reduced to asserting that the situation could be worse.

The administration’s refusal to address the unemployment crisis is consistent with all of its other economic policies. From the multitrillion-dollar Wall Street bailout, to the assault on General Motors and Chrysler workers, to health care “reform,” the administration’s central aim has been to secure the interests of the financial elite. Rather than reducing unemployment, the administration is seeking to use mass unemployment to blackmail workers into working harder and faster and accepting permanent cuts in their wages and benefits.

A recent article in Bloomberg News noted that the administration’s economic policies have encouraged big investors to launch a new wave of corporate mergers and acquisitions, which will result in the destruction of many more jobs.

The article pointed out that such activity is being driven by the fact that billions in investment capital can find no productive outlet. It cited a note to investors by Credit Suisse Group saying, “M&A now looks ready to make a comeback.”

Bloomberg said a series of mergers in mining, telecommunications, airlines, food production and other industries is anticipated, guaranteeing big returns for investors who buy a company, “rationalize it, strip out costs and fire staff.”

The prospect of bankers reaping huge fees for deals that result in job losses will cause an outcry, the article continued, “particularly as those fees will mostly be earned by banks that got taxpayer bailouts a year ago.” Bloomberg warned, “The sight of financiers making fortunes while ordinary people lose their jobs will stoke a populist backlash that is already brewing.”

In a similar vein, New York Times columnist Bob Herbert on Tuesday warned of growing popular anger over rising joblessness in an opinion piece entitled, “Does Obama get it?”

“While devoting enormous amounts of energy to health care, and trying now to decide what to do about Afghanistan,” Herbert complained, “the president has not conveyed the sense of urgency that the crisis in employment warrants.” If that didn’t change, Herbert wrote, increasing joblessness could “cripple” the “political prospects of the president.” He took note of recent polls in which substantial majorities said the government stimulus efforts had mostly helped “large banks” and “Wall Street investment companies.”

Herbert lamented that the administration had never seriously considered a “massive long-term campaign to rebuild the nation’s infrastructure” and large-scale public works programs. These ideas, he said, were dismissed as “the residue of an ancient, unsophisticated era.” He went on to advise Obama to pursue job-creation programs similar to the New Deal programs under Franklin D. Roosevelt.

Herbert’s wishful thinking collides with the economic and political realities of contemporary American capitalism. Faced with an insurgent movement of the working class in the 1930s, Roosevelt sought to save the profit system by using the enormous industrial and financial resources of the United States to provide some measure of relief to the unemployed. Programs like the Civil Works Administration, the Civilian Conservation Corps and the Works Progress Administration put an estimated 12 million people to work.

Today, such measures are precluded by the long-term decline of American capitalism and the domination of a financial aristocracy that controls both political parties and violently opposes the slightest impingement on its wealth and power.

The defense of jobs and living standards is the task of the working class itself. If workers are to prevent their destitution, they must take the initiative to launch a struggle against plant closings, mass layoffs and the wiping out of public service jobs.

Work place occupations, mass strikes and demonstrations should be launched independently of and in opposition to the trade union apparatus. Such actions must be the beginning of a political movement to unite workers in the US and internationally to put the major industries and banks under the public and democratic ownership of working people.

There are pressing social needs that must be addressed—new schools, hospitals, housing—and millions of unemployed workers ready and able to meet them. The argument that there is no money to put the unemployed to work is belied by the trillions the administration has spent to bail out the banks and continue the colonial wars in the Iraq and Afghanistan.

The Socialist Equality Party calls for a multitrillion-dollar public works program to provide good-paying jobs to rebuild the cities and social infrastructure and hire millions of construction workers, teachers, health care workers and others. At the same time, jobless workers must be guaranteed full pay, health benefits and housing for their families until they are reemployed.

The realization of such a program requires a complete break with Obama and the Democratic Party and a struggle against the profit system which both they and the Republicans defend.

Secret Plan to Ditch the U.S. Dollar's Dominance Uncovered

The demise of the dollar

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading

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In the most profound financial change in recent Middle East history, Gulf Arabs are planning - along with China, Russia, Japan and France - to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place - although they have not discovered the details - are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil - yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power - along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system - which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq - blocked by the US until this year - and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements - the accords after the Second World War which bequeathed the architecture for the modern international financial system - America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

US states face record demand for home heating assistance

US states face record demand for home heating assistance

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As the winter months approach, state agencies throughout the US are being inundated with requests for home heating assistance from workers losing their jobs or facing reduced hours and wage cuts.

Despite the spike in demand, the federal government has not increased the $5 billion budget for the Low Income Home Energy Assistance Program (LIHEAP), which helps pay utility bills for senior citizens, the disabled, and households earning 150 percent or less of the official poverty level.

Last winter, the federal program, which is administered by the states, served 7.3 million households, 800,000 more than the record set in 1985.

In Michigan, Terry Stanton from the Department of the Treasury, which oversees the LIHEAP program, told the World Socialist Web Site there were 441,500 applications for heating assistance as of August 31, with the month of September not yet counted. Michigan leads the country with an official jobless rate of over 15 percent.

Lineup for assistanceUtility customers line up for assistance at the Michigan State Fairgrounds on September 23, 2009

Last month, tens of thousands of workers lined up at the state fair grounds in Detroit after the regional gas and electric company, DTE Energy, announced it was offering help to distressed homeowners and renters. According to a report last month in the Detroit News, Michigan’s two largest power companies, DTE Energy and Consumers Energy, last year cut off heating to a total of 181,000 customers. DTE has already shut off energy to 115,000 households, a pace that will far surpass last year’s 142,000 cutoffs.

Increased demand for heating assistance is stretching already cash-strapped state agencies to the max.

“The overwhelming need we have [for heating aid] far surpasses any of our resources,” Dave Dexheimer of Douglass Community Services in Hannibal, Missouri, told USA Today. The city, along the Mississippi River, is getting 25 percent more calls than a year ago, he said, although state heating funds have fallen to $60,000, down from $100,000 last year.

The Department of Energy will issue its winter fuels outlook Tuesday, which is expected to show price drops for most heating fuels that had skyrocketed last year. Nevertheless, savings from a drop in some fuel prices “is being canceled out by increasing numbers of families who are losing their jobs,” Mark Wolfe of the National Energy Assistance Directors’ Association told USA Today,

The newspaper cited reports from other states, including:

• Oregon. After providing heating aid to a record 3,700 households in two counties in the last heating season, Oregon Coast Community Action expects a 30 percent increase, says energy services director Patricia Gouveia.

• Maine. Kennebec Valley Community Action Program has more than 5,000 applicants, up from 4,200 at this time in 2008. LIHEAP manager Kelly LaChance expects a record 12,000 applicants.

• Pennsylvania. Applications in Cambria County are up 400 percent from this time in 2008, says emergency management director Ron Springer.

• Illinois. Rockford energy director Mark Bixby expects a record 16,000 applicants. He worries he’ll run out of money and cash-strapped state and federal governments won’t have emergency funds. “We’re extremely nervous,” he told the newspaper.

In Indiana, another Midwestern industrial state hard hit by the economic downturn, the Herald-Times of Bloomington reported that residents began applying Monday for help with their winter heating bills. Those meeting income and other eligibility requirements receive an average benefit of $325 per household for help with electric and natural gas heating bills, as well as bulk fuels such as propane, oil, coal and wood.

Each household applying for assistance must provide income documentation for the past 12 months for all household members ages 18 and older, current heating and electric bills, Social Security cards and lease information for those who rent, the newspaper reported.

Todd Lare, the executive director of the South Central Community Action Program, told the Herald-Times his agency provided 5,209 households in the four-county region with heating assistance last winter and expects to serve as many or more this winter.

Because of Indiana’s budget crisis, legislators are including the meager heating assistance residents receive as taxable income. “This year, the General Assembly did not renew the tax exemption on benefits, meaning some of the benefits we provide will go toward taxes on the utilities rather than the utilities themselves,” Lare said. “I’m a little disappointed. Last year, we were able to use $186,000 that would have gone to taxes as benefits to qualifying households.”

At the end of last winter, the National Energy Assistance Directors’ Association (NEADA)—an organization of state directors of the federal LIHEAP program—issued the results of a survey that painted a picture of the distress facing millions of families in America.

Among the survey’s findings:

• Record numbers of households reported sacrificing to pay their home energy bills. As compared to 2003 survey, 32 percent vs. 22 percent went without food for at least a day; 42 percent vs. 38 percent went without medical or dental care; and 38 percent vs. 30 percent did not fill prescriptions or took less than the full dose of medicine.

• Households reported that they took actions to reduce their energy bill that could be dangerous to their health or living situation: 44 percent closed off part of their home; 28 percent kept their home at a temperature that was unsafe or unhealthy; 23 percent left their home for part of the day; and 33 percent used their kitchen stove or oven to provide heat.

• Many were shut off from power because they were unable to pay their energy bills: 47 percent skipped paying or paid less than their entire home energy bill; 37 percent received a notice or threat to disconnect or discontinue their electricity or home heating fuel; 12 percent had their electric or natural gas service shut off in the past year due to nonpayment; 28 percent were unable to use their main source of heat in the past year because their fuel was shut off, they could not pay for fuel delivery, or their heating system was broken and they could not afford to fix it; 17 percent were unable to use their air conditioner in the past year because their electricity was shut off.

• High energy bills contributed to the high mortgage foreclosure rate: 28 percent did not make their full mortgage or rent payment; 4 percent were evicted from their home or apartment; 4 percent had a foreclosure on their mortgage; 11 percent moved in with friends or family; and 3 percent moved into a shelter or were homeless.

• Payday lenders provided loans to many families to pay their energy bills: 15 percent received a payday loan. Of particular concern, 26 percent of those with children under 18 reported taking out a payday loan as compared to 8 percent for seniors.

• Many of the LIHEAP recipients faced significant medical and health problems in the past five years, partly as a result of high energy costs. Thirty-two percent went without food for at least one day; 42 percent went without medical or dental care; 38 percent did not fill a prescription or took less than the full dose of a prescribed medication; and 24 percent had someone in the home become sick because the home was too cold.

One particularly tragic case put a human face on these figures. In January 2009, neighbors found the frozen body of 93-year-old Marvin E. Schur at his home in Bay City, Michigan—100 miles north of Detroit—several days after the municipal power company had restricted his access to electricity due to outstanding bills.

Since last winter, the official jobless rate in the US has risen from 7.2 percent (January 2009) to 9.8 percent last month, with 4 million more workers joining the unemployment lines. Some 15 million are out of work, with another 9.1 million involuntarily working part-time or abandoning the search.

The unemployment crisis only ensures that this winter will witness even greater levels of suffering and, inevitably, further tragedy.