I should have written about this earlier, but better late than never. This piece
in Antifascist Calling offers a little-known view of the Standard & Poors downgrade of the U.S.:
It now appears that insiders at Standard and Poor's or the Treasury Department, take your pick, may have leaked information to privileged clients on the recent U.S. credit downgrade, with confirmation coming from a surprising source.
Last week, AntiSec cyber-guerrillas (a loose alliance amongst individuals affiliated with LulzSec and Anonymous) released a 1GB cache of emails filched from security contractor Vanguard Defense Industries (VDI).
VDI makes UAVs. Killer drones. (I'll betcha that many "UFO" sightings can be credited to tests of VDI products -- but that's a post for another time, and perhaps another blogger.)
A VP at VDI is named Richard T. Garcia. (I'm tempted to call him RTG, but this post already has way too many TLAs.) On April 25, he wrote an email to an associate. Garcia said that a contact at Merrill Lynch had
"advised that Standard and Poors, may lower the credit rating of the US Government which could cause a run on US Banks that will affect the Federal Reserve. They give the US Govt. 2 years to correct the current situation, which they believe both the Republican and Democratic solutions do not do enough and both parties may make this a political situation for the 2012 Presidential election and never come up with a answer to correct the situation within the two years set by Standard and Poors. She did not see any real Cyber issue that could change the situation."
On Wall Street, there were plenty of rumors about an imminent downgrade just before Standard and Poors did what it did. Obviously, someone knew something. But the Garcia email occurred four months
before the downgrade, and it projected a scenario across the span of two years.
That scenario includes a run on U.S. banks. Something to think about.
Even if Standard & Poors revealed insider knowledge, would it have broken the law? Antifascist seems to doubt it. However, this August 9 piece
in Naked Capitalism (a post which also notes evidence of "inside dope") cites an SEC regulation which would indicate that the law was, in fact, broken.
Disclosing news of a ratings decision is required under SEC rules to be made publicly. All the discussion with favored parties is clear regulatory violation.
Okay. So why isn't Garcia's contact at Merrill Lynch being dragged before a congressional oversight committee?
That contact, incidentally, is a woman named Cindy Cook
, of Austin, TX. She is a "wealth management adviser." You may want to click on that link so you can see the face of the lady who knows before anyone else what fresh Hells await us. Cindy, if you're reading this -- care to tell the readers how you came to know all that stuff? Can we have some more details about the run on U.S. banks that you're predicting? And since you manage wealth, let me run this by you: Having just found an extra four quarters under the bed, I need to decide which to go for -- the McChicken or the McDouble. Whaddya think?
As we have noted in earlier posts, the same rating agency that downgraded the United States also gave AAA ratings to weirdo financial instruments backed by crap mortgages.
According to congressional testimony by an SEC whistleblower, which sparked an investigation by that agency's Inspector General, the commission's enforcement division, under orders from higher-ups, who went on to secure well-paid positions with the firms they were charged to regulate, shredded a mountain of incriminating evidence detailing wrongdoing by some of the world's top financial firms.
How many files, called "Matters Under Investigation" or MUI were destroyed? According to whistleblower Darcy Flynn, the SEC's enforcement division "disappeared" some 18,000 files, including those of convicted fraudster Bernie Madoff, accused swindler, suspected CIA banker and drug money launderer R. Allen Stanford, as well as accusations that top-tier Wall Street investment banks such as J.P. Morgan Chase had engaged in insider trading.
Taibbi writes that "under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records--'including case files relating to preliminary investigations'--are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term 'Orwellian,' devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation."
And that kind of evidence destruction is
Then again, it's sort of like running a stop sign. You need to worry about the way the law reads only if a cop sees you do it.
By the way: Don't tell me that there are no secrets in Washington. Do you think that Garcia or Cindy Cook would have disclosed what they knew if the email had not come to light?