Hank The Tank Paulson speaks on the economy Monday but his plan to use a bolstered Federal Reserve Bank to reform Wall Street is unlikely to provide immediate help for the economy. It has the aura of regulation about it but is actually watered down by an Administration that does not believe in regulating business or curving its abuses. I am writing about this in more detail on Medichannel.org and other sites:

WASHINGTON POST: Long Fight Ahead for Treasury Blueprint

Lawmakers and regulators said yesterday that an ambitious plan by the Treasury Department to revamp the nation’s decades-old financial regulatory structure could require congressional action stretching over several years and would not help the economy out of its current credit crisis.

WSJ: Ten Days That Changed Capitalism: Officials Improvised To Rescue Markets; Will It Be
Enough?

LEHMAN BROTHERS ALLEGES $350 MILLION FRAUD

SPIEGEL:Credit Crunch Fallout Germans Fear Meltdown of Financial System

Germany and other industrialized nations are
desperately trying to brace themselves against the
threat of a collapse of the global financial system.
The crisis has now taken its toll on the German
economy, where the weak dollar is putting jobs in
jeopardy and the credit crunch is paralyzing many
businesses.

The Bundesbank, Germany’s central bank, doesn’t like to
see its employees working too late, and it expects even
senior staff members to be headed home by 8 p.m. On
weekends, employees seeking to escape the confines of
their own homes are required to sign in at the front
desk and are accompanied to their own desks by a
security guard. Sensitive documents are kept in safes
in many offices, and a portion of Germany’s gold
reserves is stored behind meter-thick, reinforced
concrete walls in the basement of a nearby building. In
this environment, working overtime is considered a
security risk.

But the ordinary working day has been in disarray in
recent weeks at the Bundesbank headquarters building, a
gray, concrete box in Frankfurt’s Ginnheim
neighborhood, where the crisis on international
financial markets has many employees working late, even
on weekends.

TRENDS INSTITUTE: The Panic of ’08: Crony Capitalism

RHINEBECK, NY, 28 March 2008 — Following Washington’s unprecedented intervention to prevent Bear Stearns from going bankrupt, cover its bad bets and promise to float other troubled deal-makers from going under, the word on the Street is that the worst of the financial crisis is now over.

It’s not. Despite the recent stock market rallies and pundit pep-talk of “buying opportunities” and “market bottoms,” The Panic is “On.” While the Federal Reserve can paper over the credit crunch by soaking up devalued securities from failing brokerages and/or by loaning them cheap money with easy terms, nothing will save the man on the street from getting poorer or keep the economy from growing weaker.

And among the remaining contestants in the Presidential Reality Show, neither McCain, Obama, or Clinton have exhibited the skills, possess the economic credentials nor provided sound solutions to salvage the sinking US economy. Yet, the party faithful still childishly look up to their candidates of choice to change the course and save the day. (See “The Panic of ‘08: Politicians Won’t Prevent It,” Trends in the News ®, 25 February 2008.)

But what is certain for all investors to understand and observers to clearly see, is that the financial games are rigged, the political fix is in, and the rules keep changing when the brokerages and bankers are bleeding and the special interests need a special break. “It’s not the duty of government to bail out and reward those who act irresponsibly whether they are big banks or small homeowners,” said candidate McCain who, along with Clinton and Obama, agreed it was the “duty of the government” to rescue Bear Stearns.

ECONOMIST: “WAITING FOR ARMAGEDDON”

Corporate bankruptcies way UP

Chicago Trib: BAIL OUT CONTINUES:

The Federal Reserve announced Friday that it will auction an additional $100 billion in April to cash-strapped banks as it continues to combat the effects of a credit crisis.The central bank said it would make $50 billion available at each of two auctions, on April 7 and April 21.Through the end of March, the Fed has provided $260 billion in short-term loans to commercial banks through the innovative auction process

LA TIMES: Democrats prod Bush on mortgage crisis

WASHINGTON — As the economic downturn deepens, congressional Democrats are turning up the heat on the White House and Republicans in Congress to respond more aggressively to the mortgage crisis when lawmakers return next week from their spring recess.

Senate Majority Leader Harry Reid (D-Nev.) indicated Friday that he would bring a housing assistance package back to the floor Tuesday even though Republicans previously blocked it.

NEW YORK NEWSDAY | THE ASSOCIATED PRESS

WASHINGTON - Congressional leaders are racing to push through an array of election-year housing measures that already have stirred up much political wrangling, and the White House is examining its own plan to further help homeowners caught in the mortgage meltdown.With foreclosure signs prevalent and a Wall Street rescue reverberating, majority Democrats want the government to step in and back up to $400 billion in troubled loans.

NEWS 14 WINSTON SALEM NC: FORECLOSURE-CRIME LINK

The foreclosure crisis is taking a toll on local communities, as the problem breaks down past the economic level and in to the area of crime.

WINSTON-SALEM — The foreclosure crisis is taking a toll on local communities, as the problem breaks down past the economic level and in to the area of crime.
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Experts say there is a direct link between increased foreclosure rates and increases in violent crime. Members of the legal community in Winston-Salem are calling on their colleagues to help stop crime before it starts by keeping people in their homes.

MORE MISERY FOR KATRINA VICTIMS

NEW ORLEANS - Imagine that your home was reduced to mold and wood framing by Hurricane Katrina.

Desperate for money to rebuild, you engage in a frustrating bureaucratic process, and after months of living in a government-provided trailer tainted with formaldehyde you finally win a federal grant.

Then a collector calls with the staggering news that you have to pay back thousands of dollars.

Thousands of Katrina victims may be in that situation.

HP: CLINTON AND MCCAIN LINKED TO SUBPRIME PROBLEM

Newsday is reporting that Hillary Clinton’s campaign manager, Maggie Williams, served on the board of a lending company that engaged in practices that the New York senator is now criticizing on the campaign trail:

Hillary Rodham Clinton’s campaign manager, Maggie Williams, earned about $200,000 on the board of a Long Island subprime lender that charged prepayment penalties — a practice that Clinton, a critic of the subprime industry, now seeks to eliminate.


Williams, who took over the reins of Clinton’s campaign in early February, served as a director on the board of the Woodbury, N.Y.-based Delta Financial Corp. from April 2000 until the firm declared bankruptcy in December, according to Securities and Exchange Commission records.

McCain guru linked to subprime crisis

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and Treasury Department about banking and mortgage issues in 2005 and 2006.

Obama’s Finance Chair Penny Pritzger has also been linked to subprime loans and a bank collapse.