After UBS agreed to pay $782 million dollars in fines and penalties for civil and criminal acts, it was disclosed that UBS had received $2.5 billion in TARP funds funneled through AIG! In speaking about the chain of events Senator Olympia Snowe said, "I think it looks like we're simply laundering this money through AIG."

Here you have two more examples of the special treatment available to corporations - but not available to you as a real person. You, as a real person, could never get the government to funnel billions of dollars to you for losses that were not insured. And as a real person, you certainly could not commit a massive fraud and then walk away with a fine - without admitting any wrongdoing, of course.

The new inquiries shine a spotlight on a question that is exponentially bigger, in dollars, than the $165 million in bonuses that A.I.G. paid out this month, but which has been overshadowed until now by the uproar over the bonuses.

“We would like to know if the A.I.G. counterparty payments, as made, were in the best interests of the taxpayers who provided the funding,” said Representative Elijah E. Cummings, Democrat of Maryland, in a letter to Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program. The letter was also signed by 26 other members of the House, all of them Democrats.

The representatives asked Mr. Barofsky to find out who had made the decision to shield A.I.G.’s trading partners from any losses during last fall’s crisis, and what factors had shaped the decision.

Their letter mentioned that Mr. Barofsky’s office had been created to investigate the uses of TARP money, and that A.I.G., the biggest recipient of government aid in recent months, was among the largest recipients of money from the TARP.

Andrew M. Cuomo, the New York State attorney general, meanwhile subpoenaed A.I.G. on Thursday for extensive information about its derivatives portfolio and how it is being managed, including the names of people in charge of the negotiations and other activity.

The new phase of Mr. Cuomo’s investigation is civil, although the subpoena was served under the Martin Act, a state law that gives the attorney general broad prosecutorial powers.

Steps to Financial Cataclysm Paved with Industry Dollars

March 4 - The financial sector invested more than $5 billion in political influence purchasing in Washington over the past decade, with as many as 3,000 lobbyists winning deregulation and other policy decisions that led directly to the current financial collapse, according to a 231-page report issued today by Essential Information and the Consumer Education Foundation.

The report, "Sold Out: How Wall Street and Washington Betrayed America," shows:

From 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made $1.725 billion in political contributions and spent another $3.4 billion on lobbyists, a financial juggernaut aimed at undercutting federal regulation. Nearly 3,000 officially registered federal lobbyists worked for the industry in 2007 alone.

The report documents a dozen distinct deregulatory moves that, together, led to the financial meltdown. These include prohibitions on regulating financial derivatives; the repeal of regulatory barriers between commercial banks and investment banks; a voluntary regulation scheme for big investment banks; and federal refusal to act to stop predatory subprime lending.

"The report details, step-by-step, how Washington systematically sold out to Wall Street," says Harvey Rosenfield, president of the Consumer Education Foundation, a California-based non-profit organization. "Depression-era programs that would have prevented the financial meltdown that began last year were dismantled, and the warnings of those who foresaw disaster were drowned in an ocean of political money. Americans were betrayed, and we are paying a high price -- trillions of dollars -- for that betrayal."

"Congress and the Executive Branch," says Robert Weissman of Essential Information and the lead author of the report, "responded to the legal bribes from the financial sector, rolling back common-sense standards, barring honest regulators from issuing rules to address emerging problems and trashing enforcement efforts. The progressive erosion of regulatory restraining walls led to a flood of bad loans, and a tsunami of bad bets based on those bad loans. Now, there is wreckage across the financial landscape."

12 Key Policy Decisions Led to Cataclysm

Financial deregulation led directly to the current economic meltdown. For the last three decades, government regulators, Congress and the executive branch, on a bipartisan basis, steadily eroded the regulatory system that restrained the financial sector from acting on its own worst tendencies. "Sold Out" details a dozen key steps to financial meltdown, revealing how industry pressure led to these deregulatory moves and their consequences:

1. 1. In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.
   
   
2. Regulatory rules permitted off-balance sheet accounting -- tricks that enabled banks to hide their liabilities.
   
   
3. The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives -- which became the basis for massive speculation.
   
   
4. Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.
   
   
5. The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.
   
   
6. Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal "risk-assessment models."
   
   
7. Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.
   
   
8. Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.
   
   
9. Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.
   
   
10. Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.
    
    
11. The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.
    
    
12. Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.

Financial Sector Political Money and 3000 Lobbyists Dictated Washington Policy

During the period 1998-2008:

• Commercial banks spent more than $154 million on campaign contributions, while investing $363 million in officially registered lobbying:
  
  
• Accounting firms spent $68 million on campaign contributions and $115 million on lobbying;
  
  
• Insurance companies donated more than $218 million and spent more than $1.1 billion on lobbying;
  
  
• Securities firms invested more than $504 million in campaign contributions, and an additional $576 million in lobbying. Included in this total: private equity firms contributed $56 million to federal candidates and spent $33 million on lobbying; and hedge funds spent $32 million on campaign contributions (about half in the 2008 election cycle).

The betrayal was bipartisan: about 55 percent of the political donations went to Republicans and 45 percent to Democrats, primarily reflecting the balance of power over the decade. Democrats took just more than half of the financial sector's 2008 election cycle contributions.

The financial sector buttressed its political strength by placing Wall Street expatriates in top regulatory positions, including the post of Treasury Secretary held by two former Goldman Sachs chairs, Robert Rubin and Henry Paulson.

Financial firms employed a legion of lobbyists, maintaining nearly 3,000 separate lobbyists in 2007 alone.

These companies drew heavily from government in choosing their lobbyists. Surveying 20 leading financial firms, "Sold Out" finds 142 of the lobbyists they employed from 1998-2008 were previously high-ranking officials or employees in the Executive Branch or Congress.

Photo by Gino Domenico/Bloomberg Son Andrew held a senior position in the Madoff securities firm.

Madoff reportedly just recently confessed to family members that he had - for years  - been paying returns to certain investors out of the principal received from others.

And that was the first any of them knew about it... Really?

Is that possible? Really? But didn't they all work together... no probability of a conspiracy there, aye? No? Really?

And so now he goes to prison?

Hummm... why would you pay for prison? Why not just take everything they have and kick them to the curb of the real world?

Let mom and dad work as greeters at China-Mart. They may have to cut back on taking their necessary medications and keep an eye out for the Meals on Wheels, but the kids can re-train for honest jobs and they'll help as much as they're able.

That probably sounds pretty harsh to the Madoffs; it's clear they put their selves above the millions of honest Americans facing the real world every day, but why should any of them benefit?

Wait, its just the dad, right; the rest of them didn't know, right?

Along the lines of that oldie but goodie, "I Want the Earth PLus 5%", This video explores the destructive force of money that is based on debt instead of value…

Part Two

Part Three

Part Four