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Wednesday, February 03, 2010

Too big to prosecute

The Federal Reserve appears to have broken the law in the AIG bailout:
I looked at the source document folks - and while most of it looks ok, there's one little line in the trust agreement that might be the problem referred to - specifically, here:

Section 1.03. Trust is Irrevocable. This Trust Agreement and the Trust shall be irrevocable and, except as provided in Section 5.01 hereof, unamendable except that the Board of Governors may terminate or amend its authorization pursuant to Section 13(3) of the Federal Reserve Act, thereby revoking or amending the Trust in accordance with Federal law, provided, however, that a Trustee’s rights to resign as a trustee hereunder and to compensation and indemnification with respect to acts or omissions occurring prior to any such revocation or amendment may not be modified without the written consent of that Trustee.

A trust of this sort, to be lawful, has to be irrevocable - you can't reserve the ability to modify it later. The NY Fed knew they didn't have the authority to take equity - thus, these "trust" agreements. I'll note for the peanut gallery that I'm not an attorney, but I do have a reasonable understanding of the requirements for an irrevocable trust of this general sort to be valid. A phone call with the plaintiff's attorney, David Yerushalmi this morning confirmed that this indeed was the primary problem. Mr. Yerushalmi went on to assert that this establishes a prima-facie violation of the money laundering statute - an extremely serious allegation as that law, if violated, carries very heavy criminal penalties.

There is also apparently a second issue in that the beneficiary is named as The US Treasury, which is, effectively, a bank account and not a "person or entity." That's a potential problem too although I can see the counter-claim being made that "The Treasury" is in fact The institution of The Treasury, not the account called "The US Treasury." This is an explosive allegation - if the trust is defective then it is as if it never existed, and the entirety of the AIG bailout and everything related to it may be criminally unlawful.
It should be completely obvious at this point that Bernanke, Geithner, and Paulson, among others, are criminals who merit investigation, prosecution, conviction, asset forfeiture, and life imprisonment. How long with their government pals attempt to protect them before they finally throw them to the populist wolves? Or are they simply too big to prosecute? The real question is this: is America a society of law or is it simply one more corrupt and crumbling oligarchy about to collapse into the dustbin of history?

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