5

The Looting of a Free Market

“When a government is dependent upon bankers for money, they and not the
leaders of the government control the situation, since the hand that gives is above
the hand that takes. Money has no motherland; financiers are without patriotism
and without decency; their sole object is gain.” -- Napoleon Bonaparte

In September 2008 the largest domestic and international financial crisis in American
history became public. U.S. banks and global markets began to decline and the U.S. Treasury,
the FDIC, and the Federal Reserve rushed to the rescue with an initially proposed $250 billion
dollars for nine of America’s largest financial institutions. The decision soon expanded, and on
October 14 the Treasury Department announced its decision to inject $700 billion and take
equity stakes in nine major U.S. banks because they were described as ”too big to fail.”
Executives of the nine banks were told to participate in the program whether they wanted to or
not, “for the good of the national economy.”
U.S. Treasury Secretary, Henry Paulson said that banks did not have a choice but to give
up minority stakes of private ownership, and accept $125 billion each. The plan would allocate
an additional $125 billion for investment into thousands of other banks and financial institutions
across the country for the next 30 days in an effort to jump-start lending and encourage smaller
institutions to accepting federal funding.
Global leaders agreed to launch a coordinated program guaranteeing bank debt on a
worldwide scale. As part of a much wider plan extending way beyond $700 billion, the Federal
Deposit Insurance Corp. (FDIC) created an insurance fund to guarantee growing concerns of
bank debt, providing unlimited deposit insurance for non-interest-bearing accounts at central
banks on a global scale.1
It is very important to recall from the previous chapter that Shari’ah Compliant Financial
products (SCFs) and loans are non-interest bearing, and are offered on a global scale. It is also
1
Cho, David, Irwin, Neil, & Whoriskey, Peter; “U.S. Forces Nine Major Banks to Accept Partial Nationalization,”
October 14, 2008, http://www.washingtonpost.com/wp-dyn/content/article/2008/10/13/AR2008101300184.html?
sid=ST2008101302921&s_pos=
very important to realize that large banks and Wall Street had been seduced into promoting
Shari’ah financial products since at least 2001 without the public’s knowledge.
The Emergency Economic Stabilization Act of 2008, commonly referred to as the
“bailout” of the U.S. financial system, authorized the U.S. Treasury to use the $700 billion to
purchase or insure “troubled assets,” which were reported to be mortgage backed securities
(MBS), and included commercial mortgages, securities, “obligations” or “other” instruments
related to mortgages that were issued on or before March 14, 2008, the date of Bear Stearns
collapse. The Emergency Economic Stabilization Act also authorized the U.S. Treasury to make
capital injections into both foreign and domestic banks.2
“Securitization” of MBSs is the pooling of mortgages or other debts to sell investors in
the form of bonds rather than unpaid loans, which involves packaging and underwriting huge
pools of mortgages into structured securities called “bundled loans.” The growth of securitization
allowed non-banks to issue loans even though and many non-banks were not subject to
examination by federal bank examiners or underwriting guidelines by federal financial
regulators.
The Troubled Asset Relief Program (TARP) was a two-part program designed to put the
Emergency Economic Stabilization Act into action in two parts known as TARP I, and TARP II.
TARP included the ambiguous “other financial instruments” at the discretion of the Secretary of
Treasury and Chairman of the Board of Governors of the Federal Reserve System.
TARP I was primarily to buy preferred stock and future options in the nine largest
American banks. Similar to a debt, preferred stock is paid before common equity shareholders
are paid. TARP II, the second part of the program, was supposed to help the more than ten
million homeowners owing more than the market value of their home and those facing
foreclosure to stay in their homes. Under TARP II, the Treasury would buy up the mortgages at a
higher price than the current market value, then issue new mortgages reflecting the true market
value of the homes, and supposedly allow homeowners to keep their homes.3 However,
thousands of homes went into foreclosure anyway, and were sold cheaply on the open market.

2
“Energy Economic Stabilization Act of 2008”;
http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008
3
Baker, Dean; “TARP II: Money For Banks, Not Homeowners,” January 19, 2009,
http://www.truthout.org/011909A
 Participation criteria in The Emergency Economic Stabilization Act was unclear and
confusing to the public, however the Act stated that “financial institutions” included in TARP
must be “established and regulated” under the laws of the United States and included foreign
banks that have “significant operations” in the U.S. These operations include: U.S. banks, U.S.
branches of foreign banks, U.S. savings banks or credit unions, U.S. broker-dealers, U.S.
insurance companies, U.S. mutual funds or other U.S. registered investment companies, tax-
qualified U.S. employee retirement plans, and bank holding companies.4 It turned out that the
$700 dollar bailout was a blank check for receiving banks to buy even more banks and insurance
companies.
Then, in February 2009, Congress passed, and President Obama signed into law the
largest government spending and borrowing package in the history of mankind, The American
Recovery Reinvestment Act. This $787 billion dollar act was supposed to allow for government
programs and other investments that would stimulate the economy and provide jobs for
Americans. With most of the money designated to loosely described education, health welfare,
and alternative energy programs, The Recovery and Reinvestment Act proposed to encompass a
multitude of non-productive programs and projects with unidentified recipients, raising more
questions than obvious solutions, such as where the money would come from and who would get
the contracts. Broad grandiose ideas of creating new programs, and building libraries, did not
address what the so-called “other” investments were, what the “new” programs were, or what
kind of books the new libraries would have. Regarding education spending, promises by Obama
to “hire good teachers,” and “fire bad ones,” did not address a need or satisfactorily explain the
qualifications for ‘good teachers’ and ‘bad teachers.’ Also, many of the programs that became
known were discovered to be non-productive programs that will not stimulate the economy.
With benevolent sounding semantics, President Obama said that some of the funds will
be to build a nationwide electric grid, and develop alternative energy sources to free Americans
from “foreign oil.”
Obama did not tell Americans that the electric grid is a “smart grid” to be built by
General Electric and IBM, with RFD devices.5 Neither did he tell Americans that Saudi Basic

4
“Troubled Assets Relief Program,” http://en.wikipedia.org/wiki/Troubled_Assets_Relief_Program
5
Jones, Alex;” Smart Grid: Government Spying Targets Rural America,” March 7, 2009,
http://www.infowars.com/smart-grid-government-spying-targets-rural-america/
Industries Corporation (SABIC) acquired General Electric’s Plastics division for $11.6 billion in
cash on May 21, 2007.6 Obama did not mention that GE is also one of the largest lenders in
countries other than the United States.7 So while an electric grid may help reduce the cost of
foreign oil, it does not guarantee freedom from undemocratic “foreign control.” Because GE
stands to take in stimulus dollars by manufacturing the turbines for the proposed alternative
energy units, America’s dependence on foreign oil will transfer to Saudi influenced control of
electricity, alternative energy, and ultimately, personal activity.
After promising “no pork,” Americans learned that the Recovery and Reinvestment Act
included some 9000 earmarks. An example of Orwellian verbiage is that “no pork” may turn out
to be deception by interpretation. Take for example the non-productive program to study swine
odor. The only given objective for the “study” is that swine manure management is a serious
concern in Iowa and “other countries.” Research shows that toxins in swine manure can attach to
dust if not properly held in a manure-holding lagoon, causing allergies and depression. However,
it is already known that dust leads to allergies, and depression can be a result of exposure to
other kinds of manure. The point is that the results of this study may be controlled with the
objective of an environmental protection act, and further legislation hindering the availability of,
or the taxation of pork as food, thus, delivering the promise of “no pork.”
Another confusing report about the American Recovery and Reinvestment Act is that GE
will build a train to go from Disneyland to Las Vegas. This contradicts an earlier report that
revealed President Obama would not fund contracts for projects in Las Vegas. It is reasonable to
doubt that a joy ride to Las Vegas will ever materialize under the stimulus plan even if funds are
allocated. After allocation, the funds can be used for something else if the project is dropped. It
is extremely important to read between the lines and think of the unthinkable--such as a train to
Las Vegas could be for other reasons than fun-loving Americans would ordinarily think of when
thinking of a ride to Las Vegas. For example, what if a train was to transport prisoners to some
kind of a detention camp!
Furthermore, while American taxpayers and future generations of Americans gamble the
stimulus plan will work as advertised; no enforcements exist pledging that legal immigrants and
American citizens will get those jobs. The House of Representatives initially included provisions
6
Deutsch, Claudia H.; May 22, 2007, “General Electric to Sell Plastics Division,”
http://www.nytimes.com/2007/05/22/business/22plastics.html/?_r=1
7
“SABIC,” http://en.wikipedia.org/wiki/Saudi_Basic_Industries_Corp.
to reasonably assure that legal U.S. workers would fill the jobs created with U.S. taxpayer
dollars, but the Senate did not accept the House version. Without debate or explanation, the bill
was deprived of E-verification safeguards by Senator Henry Reid and House Speaker Nancy
Pelosi in a closed-door session. 8
Expecting to reach $13 trillion by 2010, Americans found it difficult to keep up with the
overwhelming, daily deepening Stimulus debt that cannot hope to be re-paid. Members of
Congress and citizens alike do not know where the money will come from, what the government
programs will involve, what private organizations will be contracted, or to whom the debt will be
repaid in the effort to bolster the economy. Believing we will be indebted to China is likely a
diversion and a misnomer because China is also indebted to the Saudi’s for oil, and surely the
Saudi’s have strategic investments there as well as in the U.S. A more sensible explanation is
that strategic companies will provide the services, and the American taxpayers will pay them
back with interest for generations, creating an unstated condition of dhimmitude.
President Obama’s chief of staff, Rahm Emmanuel has told a Wall Street Journal
conference of top corporate chief executives that the financial crisis is an inheritance from the
Bush administration, and an opportunity:

"You never want a serious crisis to go to waste," Rahm Emanuel, Mr.

Obama's new chief of staff, this week…Things that we had postponed for
too long, that were long-term, are now immediate and must be dealt with.
This crisis provides the opportunity for us to do things that you could not
do before."9

Instead of opportunity for Americans, the promise to stimulate the economy may in the
very least for an “agenda” to obliterate American sovereignty in an effort to promote socialism
bordering on fascism as government is controlled by corporations and organizations that are
largely owned and controlled by foreigners. If the initial financial disaster affected the entire

8
“$800 Billion Economic Stimulus and Job Creation Bill Includes No Protections for U.S. Workers,” March 2009,
http://www.fairus.org/site/PageNavigator/issues/stimulus_includes_no_protections
9
Seib,Gerald F.; November 21, 2008, “In Crisis, Opportunity for Barrack Obama, Wall Street Journal,
http://online.wsj.com/article/SB122721278056345271.html
international financial market system, Americans should ask why they are the only ones who are
paying for it.
Conservatives believe that the massive spending programs will actually kill jobs, cripple
the economy, and crush any hope for the American dream. With the stock market index the
lowest in twenty-five years, and job losses amounting to several million in early 2009, they are
probably correct.
Throughout the 1990’s many foreign countries had also fallen into financial crisis:
Mexico in 1994; Asia, Thailand, Indonesia and Korea from 1997-1998; Brazil and Russia in
1998; and Argentina in 2000. A study determined that those crises resulted from poorly regulated
banking systems, surplus borrowing, irresponsible lending, huge deficits from foreign
borrowing, lax corporate governance, and corrupt cronyism.
In 1995, Clinton took from a U.S. Treasury Department fund that had been set up in the
1930s to stabilize the U.S. dollar if necessary. Clinton used the money to bail out the Mexican
and Brazilian governments, allowing them to make loan payments they owed Goldman Sachs,
where Clinton’s Treasury Secretary Robert Rubin had once worked.10 Goldman Sachs also
received billions of dollars in the 2008 bailout and then gave out billions of dollars in bonuses to
executives.
U.S. subprime lenders had begun entering financial crisis in 2007. Declining
employment, a deteriorating dollar and increasing housing crisis, prompted the Federal Reserve
to cut the lending rate 50 basis points and purchase tens of billions of dollars in mortgage-backed
securities.
Leading up to the 2008 financial crisis was the collapse of Bear Stearns Investment
Banking and Securities Brokerage Firm. Bear Stearns, had developed an extensive market in
swaps and hedge funds, and put $1.6 billion into two failing hedge funds. After losing all their
value, the Federal Reserve Bank of New York gave Bear Stearns an unsuccessful emergency
loan, and JP Morgan Chase purchased the company on March 14, 2008.
Bear Stearns was actively involved in purchasing mortgage backed securities prior to
their failure. The bundled loans were sold to institutional investors, such as hedge and pension
funds, while some were retained by the bank itself.

10
Schlafly Phyllis; “Power Grab Through Executive Orders,” The Phyllis Schlafly Report, Volume 32, No. 10,
April 1998, http://www.eagleforum.org/psr/1999/may99/psrmay99.html
 Other Wall Street firms such as Merrill Lynch and Freddie Mac were also actively
engaged in packaging, underwriting, trading, and investing in mortgage backed securities. As
large financial institutions began failing in the U.S., the crisis rapidly evolved into a global
scenario leading to a number of European bank failures, declines in various stock indexes, large
reductions in the market value of equities and commodities worldwide, with liquidity and
borrowing becoming problematic in the United States and Europe.11
Investment banks that had borrowed money from Bear Stearns began to withdraw cash
from their accounts. Concerned that the firm would not be able to pay claims, a number of
institutional investors attempted to reverse their trades, leading to a drop in Bear’s liquidity.
Negotiations ensued between Bear, JP Morgan, The Federal Reserve, and Treasury
officials, leading to JP Morgan Chase’s purchase of Bear Stearns at a mere $2 a share. Bear and
JP Morgan renegotiated those terms to avoid shareholder litigation, bringing the share’s value up
to $10.
In 1978 Saudi Arabia was reported to be the largest holder of Fannie Mae certificates12
Then, in 2006, Government regulators filed civil charges against three former Fannie Mae
executives seeking the return of over $115 million in bonuses. 13
The Office of Federal Housing Enterprise Oversight (OFHEO) filed 101 charges against
former Fannie Mae CEO’s, Chairman and Chief Executive Officer, Franklin Raines, former
Chief Financial Officer, J. Timothy Howard, and former controller Leanne G. Spencer. They
were charged with manipulating earnings to gain the large bonuses.
The CEO’s neglected internal controls and sound accounting by misapplying over twenty
accounting principles, which led to overstated earnings from 2001 through the first two quarters
of 2004 by $6.3 billion. The inaccurate accounting statements and inaccurate reports allowed for
the unsound growth of Fannie Mae, resulting in $7.9 billion in losses after taxes.

11
“Bear Stearns,” http://en.wikipedia.org/wiki/Bear_Stearns
12
Emerson, Steve; The American House of Saud: The Secret Petrodollar Connection, Chapter 16, p. 330, Franklin
Watts Publisher, 1985
13
http://www.housingdoom.com/2006/12/18/fannie-charges/
 In addition to a yearly salary of $1 million, Raines received $84.6 million in bonuses
between 1998 and 2003. The government wanted Howard to return $27.3 million that he had
received in options and bonuses, and $5.6 million from Spencer. 14
Raines had served in the Carter Administration as associate director for economics and
government in the Office of Management and Budget, and as the assistant director of the White
House Domestic Policy Staff from1977-1979. From 1991-1996 he was Fannie’s Mae’s Vice
Chairman. In 1994, he was forced to retire from Fannie Mae, taking with him $240 Million in
benefits even after the discovery of accounting flaws.15 Raines then worked under Clinton as
Director of the U.S. Office of Management and Budget from 1996-1998. The Government filed
suit against Raines in 1996 when his involvement in the accounting scandal became clear16
In 1999, Raines returned to Fannie Mae as CEO until 2005 when he was forced to retire
again. In 2006, the Courts ordered Raines to return $50 million.
For years, Fannie Mae and Freddie Mac had pursued a lobbying strategy efforts to get
lawmakers on their side, pouring money into lobbying and campaign contributions to federal
candidates, parties and committees.17 In 1998, banks began making thousands of bad loans to
people who put no money down and claims of undocumented income. From 1999-2005 Fannie
Mae gave millions of dollars to Democratic causes such as ACORN, and millions to 354
Congressmen and Senators from both parties. Senator Christopher Dodd, Chairman of the Senate
Banking, Housing, and Urban Affairs Committee; Senator Barack Obama, member of the
Finance Committee; Senator Chuck Schumer, Chairman of the Finance Committee; and
Representative Barney Frank, Chairman of the House Financial Services Committee were the top
four recipients.
Tim Howard, Chief Financial Officer of Fannie Mae advocated using accounting
strategies to ensure a “stable pattern of earnings.” The Government Investigation determined that

14
Carter, Matt; “Feds Charge Former Fannie Mae Execs With Manipulated Earnings,” December 18, 2006,
http://www.inman.com/news/2006/12/1/feds-charge-former-fannie-mae-execs-manipulating-earnings
15
Tyson James & Jaffe Mark; “Fannie Mae Missteps Trip Up Raines Remarkable Rise,” December 4, 2004,
http://seattletimes.nwsource.com/html/businesstechnology/2002129738_raines24.html
16
“Franklin Raines,” http://en.wikipedia.org/wiki/Franklin_Raines
17
Mayer, Lindsay Renick; Fannie Mae and Freddie Mac Invest in Democrats,” July 16, 2008,
http://www.opensecrets.org/news/2008/07/top-senate-recipients-of-fanni.html
Howard failed to provide adequate oversight for key control and reporting functions within
Fannie Mae.
The two former Fannie Mae executives denied manipulating Fannie Mae’s income
statements, however investigations by federal regulators and the company’s board of directors
determined they had manipulated 1998 earnings to achieve bonuses. Howard resigned under
pressure in late 2004 with a severance agreement reportedly estimated to be $20 million.18
Jim Johnson, former executive at Lehman Brothers, was also forced from his CEO
position as a result of the Fannie Mae scandal. Investigators found that Fannie Mae had hidden a
substantial amount of Johnson’s 1998 compensation from the public, reporting that it was
somewhere between $6 million and $7 million when it was actually $21 million. Johnson’s
Golden Parachute was estimated to be $28 million.
During Obama’s campaign, Johnson would once again come under investigation for
taking illegal loans from Countrywide during his years as CEO at Fannie Mae, and subsequently
resigned from a position to be part of a committee to choose Obama’s vice presidential running
mate.19
In 2008, Fannie Mae and Freddie Mac were finally forced to declare bankruptcy leading
to nationalization.20 Recall from the previous chapter that in 2001, Freddie Mac, one of the
nations’ largest investors in Islamic home financing products, announced it had become the first
major U.S. mortgage investor to contract the purchase of Islamic mortgages. Freddie Mac
announced that it had begun buying Shari’ah compliant mortgages on May 1, 2001.21 An article
by Paul Wiseman for USA Today on March 28, 2008 revealed that some of the banks from
which Freddie Mac began buying Shari’ah-compliant mortgages, offer a range of Shari’ah
products. Mostly in areas with largely Democratic Party leader representation, the banks
included Devon Bank in North Chicago, Guidance Residential in Reston, Virginia; University
Bank in Ann Arbor, Michigan; and American Finance House Lariba in Pasadena, California,
Wiseman wrote that Citigroup, HSBC, Deutsche Bank, AIG have affiliates with Shari’ah
18
Huslin, Anita; “On the Outside Now: Watching Fannie Falter,” July 16, 2008
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071502827.html
19
http://www.factcheck.org/askfactcheck/are_three_former_fannie_mae_executives_economic.html
20
“The History of a Financial Disaster,” http://www.go-patriots.com/FannieMae%20History.htm
21
“Freddie Mac Invests in Islamic Mortgages,” May 1, 2001, http://www.allbusiness.com/finance/902795-1.html
products. Devon Bank in North Chicago started giving Shari’ah loans (loans without interest) to
Muslims in 2001.
The Wiseman article also revealed that the global Islamic finance market was worth
about $700 billion in March 2008, and had grown 15% in the previous three years. It further
noted that Freddie Mac had purchased over $250 million in Islamic mortgages in 2007 alone. 22
Billions of dollars is of course over $250 million, so it could be, in a manipulative play
on words, that Freddie Mac actually purchased billions of dollars in Shari’ah loans. Because the
larger American public does not know that Freddie Mac purchased any Shari’ah mortgages, they
cannot know if those investments were profitable. The secretive investments may be part of the
‘toxic’ zero down, ‘risky’ loans that ended up amongst the unpaid bundles of debt that
generations of American taxpayers are now supposed to pay for.
Wachovia acquired mortgage lender Golden West Financial Corporation in 2006. Like
Washington Mutual Inc., Wachovia offered adjustable-rate mortgages (ARMs), which required
very low introductory payments, and had $122 billion in ‘Pick-A-Payment’ loans, that allowed
borrowers to defer some of their interest payments. Delinquencies and defaults on these types of
mortgages skyrocketed in the months prior to the financial crisis, causing big losses for the
banks.
In the summer of 2008, Wachovia reported a $9.11 billion loss for the second quarter,
announced plans to cut 11,350 jobs, and slashed its dividend. Wachovia also boosted its
provision for loan losses to $5.57 billion during the second quarter, up from $179 million in the
same period of 2007.
Citigroup’s largest shareholder is Saudi Arabia’s Prince Alwaleed bin Talal, with the Abu
Dhabi Investment Authority and Kuwait Investment Authority more recent investors.23 Citigroup
purchased Wachovia for $2.1 billion, absorbing up to $42 billion of losses from Wachovia’s
$312 billion loan portfolio. The sale, which allowed for retaining the name ‘Wachovia,’ gave
Citigroup control over 4,300 U.S. branches with $600 billion in deposits, placing Citigroup
among the U.S. banking industry’s “Big Three,” alongside Bank of America Corp. and
JPMorgan Chase & Co.

22
Wiseman, Paul; “Islamic Loans Turn Profit for Banks in USA,” March 28, 2008,
http://www.usatoday.com/money/industries/banking/2008-03-26-islamic-finance-sharia_N.htm
23
Malik, Tala; “Citi Launches Shari’ah Compliant Products in UAE,” May 13, 2008,
http://www.arabianbusiness.com/519157-citi-launches-shariah-compliant-corporate-products-in-uae
 Citigroup’s investors became concerned that it too might collapse given its massive
exposure to MBSs, when New York-based Citigroup did not turn a profit for three straight
quarters, loosing $17.4 billion during one period after writing down its assets by about $46
billion.
When Citigroup received $45 billion from the American taxpayers in the fall of 2008, the
company already had plans to lobby to change laws during the Obama administration. Citigroup
hoped that the $787 billion rescue plan under the 2009 American Recovery and Reinvestment
Act would allow them to sell their ‘toxic’ mortgages and other assets gained from Wachovia for
a higher price than they actually paid for them.
The Economic Stimulus Plan prevented banks from profiting on the sale of troubled
assets to the government, but there was an exception for assets acquired in a merger or buyout,
from companies that filed bankruptcy. In mid February 2009, Citigroup stock fell to $2 a share
and the U.S. Government announced plans for its nationalization. On February 27, Americans
learned that Citigroup’s nationalization was effective with the U.S. government owning just 36%
of the bank.
A May 13, 2008 article posted on Arabian Business.Com and The Global Islamic Finance
Center (GIFC) website called “Citi Launches Shari’ah Compliant Products in UAE,” reveals
Saudi Prince, Alwaleed bin Talal is the largest Citigroup shareholder, with the Abu Dhabi
Investment Authority and Kuwait Investment Authority investors as well. According to the
article, Citi Islamic Investment Bank described its global Islamic business as :

“The world’s leading ‘book runner’ of global Islamic finance transactions,

set up its global Islamic banking operations in 1981 in London.” 24

If Saudi Arabia’s Prince Alwaleed bin Talal is Citigroup’s largest shareholder, and Abu
Dhabi Investment Authority and Kuwait Investment Authority are more recent investors, the
question is: Who really controls Citigroup? Who and what are the American taxpayers really
funding?

24
Malik, Tala; “Citi Launches Shari’ah-Compliant Products in UAE,” May 13, 2008,
http://www.arabianbusiness.com/519157-citi-launches-shariah-compliant-corporate-products-in-uae?ln=en
 Seattle-based Washington Mutual marked the largest bank failure in U.S. history.
JPMorgan purchased WaMu’s deposits and assets for $1.9 billion. 25 Bank of America bought
Merrill Lynch & Company’s $50 billion in stock.
Congress voted to rescue banks from the dim-witted decisions. Democrats blamed the
Bush administration for the financial crisis, the White House blamed Congress, while many
Americans pointed the finger at the 1977 Community Reinvestment Act.26 Mandated under the
Clinton administration’s de-regulation policies in 1999, the Community Reinvestment Act
effectively transferred wealth from the US Treasury to homeowners who claim they cannot pay
for properties they purchased. The Treasury did not actually have the money so it is expected to
come from American taxpayers in the next decades.
The Financial Services Modernization Act allowed commercial and investment banks to
consolidate, and The Community Reinvestment Act greatly reduced underwriting standards and
encouraged financial institutions to provide loans to individuals in low-income neighborhoods. A
February 5, 2008, article in the New York Post by Stan J. Liebowitz, “The Real Scandal: How
Feds Invited the Mortgage Mess,”states:

“Perhaps the greatest scandal of the mortgage crisis is that it is a direct

result of an intentional loosening of underwriting standards—done in the
name of ending discrimination, despite warnings that it could lead to wide-
scale defaults. At the crisis’ core are loans that were made with virtually
nonexistent underwriting standards—no verification of income or assets;
little consideration of the applicant’s ability to make payments; no down
payment.”

A Fannie Mae Foundation report boasted a shining example of the new lending. Working
with community activists following “the most flexible underwriting criteria permitted” Fannie
Mae’s $1 billion commitment to low-income loans in 1992 grew to $80 billion by 1999 and $600
billion early in 2003.27
25
http://news.yahoo.com/s/ap/20080929/ap_on_bi_ge/wachovia_citigroup
26
Oversight Hearing On Financial Privacy and the Gramm-Leach-Bliley Financial Services Modernization Act;
Committee on Banking, Housing and Urban Affairs, September 19, 2002, United States Senate
http://www.privacyrights.org/ar/USPirg-GLB0902.htm
27
http://en.wikipedia.org/wiki/Global_financial_crisis_of_September%E2%80%93October_2008
 The Federal Reserve also rescued American International Group, Inc. (AIG), the world’s
largest insurance company, only one day after investment bank Lehman Brothers fell into
bankruptcy for investing in bad mortgages. Even though the company had lost $5 billion in the
4th quarter of 2007, Martin J. Sullivan, who ran the company from 2005 until June 2008,
reportedly urged AIG’s board of directors to waive pay guidelines in 2007 in favor of $5 million
in bonuses. Auditing firm Pricewaterhouse Cooper had warned the company that it showed
potential losses from insuring mortgage-related securities in December 2007. Days later,
Sullivan reassured shareholders of the company’s stability. Giving the government an 80% stake
of its holdings in the fall 2008, AIG initially received $85 billion, and by March 2, 2009, the
loans had amassed to $162 billion with $30 billion likely to follow. Later in the month,
Americans would learn that AIG gave $93 billion to Goldman Sachs and other European banks.28
An investigation by a London based editorial, Sunday Telegraph, determined there was a
correlation between the losses and the many regulators responsible for AIG’s activities
throughout 130 countries. In the front of this row stands Britain’s financial regulator, the
Financial Services Authority (FSA).
The auditing firm, Pricewaterhouse Cooper had previously warned the company that the
“root cause” of its problems was the denial of internal oversight in its Financial Products Branch.
Federal regulators at the Office of Thrift Supervision also warned AIG in March 2008 that
“corporate oversight of AIG Financial Products lack critical elements of independence.”
A Congressional Hearing on October 7, 2008 revealed that AIG’s problems reportedly
came from its ‘financial services operations,’ primarily the insurance of mortgage-backed
securities and ‘other’ risky debt, not from its ‘traditional’ insurance subsidiary.
In the midst of the bailout crisis, on December 1, 2008, a subsidiary of AIG Commercial
Insurance, Risk Specialists Companies, Inc. (RSC), announced an Islamic Homeowners Policy,
as the first of a series of Shari’ah-compliant products in the U.S. that are compliant with the
Islamic finance tenets described in the previous chapter.
The Islamic homeowners’ policy is underwritten through Risk Specialists Insurance, Inc.,
in conjunction with Lexington Insurance Company, in association with an AIG division licensed
by the Bank of Bahrain. Established in 2006, the division, known as AIG Takaful Enaya,

28
Rush Limbaugh, March 16, 2009
provides a range of Shari’ah compliant Takaful products, including accident and health, auto,
energy, property and casualty products. 29
Less than a week after the federal government bailed out AIG, the company sent life
insurance executives on a $440,000 retreat to an upscale California resort, St. Regis, south of Los
Angeles as the company tapped into the first $85 billion loan from the government. Lawmakers
were outraged even though executives were not from the Financial Products Division.
The retreat that executives of AIG’s U.S. enjoyed included catered banquets, golf outings
and visits to the resort’s spa and salon. The retreat did not include anyone from the division
under scrutiny, the Financial Products Division, but lawmakers were still enraged over the
extravagance. 30
U.S. Congressman who chaired the hearing into AIG, unveiled documents showing that
AIG executives had hidden the full range of its risky Financial Products Division from auditors
as losses increased, according to documents released by a congressional panel examining the
chain of events that led to the bailout of AIG.
In London, a Wall Street veteran named Joseph Cassano ran AIG Financial Products
Division. According to US Congressional records, the company paid Cassano $280 million from
1999-2007. Company accountants changed the basis on which they valued collateral held by
some of its units, marking down a half trillion dollars worth of credit default swaps (CDSs) that
had led to quarterly losses. CDSs are questionable insurance products bought by investors
seeking protection against defaults on mortgage-backed securities and other credits. By the end
of 2007, AIG had $562 billion in CDS contracts in its books, and the October 7 testimony before
the House Oversight Committee revealed that Cassano’s office was the origination.
As a result, Cassano transferred to a consulting position for AIG that paid him $1 million
per month for nine months. According to Sullivan, Cassano helped AIG Financial Products
Division unravel the devaluing CDSs.
According to regulators in other countries, the British Financial Services Authority (FSA)
may have been partly responsible for the credit crisis that led to the global financial crisis. They
29
“Risk Specialists Companies Announces First Takaful Homeowners Products for U.S.,” December 1, 2008,
http://www.businesswire.com/portal/site/home/permalink/?
ndmViewId=news_view&newsId=20081201005672&newsLang=en

30
“After Bailout, AIG Execs Lounged At Resort,” CBS News, October 7, 2008,
http://kdka.com/business/aig.financial.crisis.2.834438.html
found a financial chain linking American sub-prime mortgages to the packagers and sellers of
mortgages in London, and Wall Street. The British Conservative Party Treasury spokesman
Philip Hammond called for a public inquiry into the FSA’s oversight of its AIG Financial
Products in London saying: “We must not allow London to become a bolt hole for companies
looking for a place to conduct questionable activities.”
Serious concern regarding Shari’ah Compliant Financing products is that banking
oversight in the UK is entrusted to the FSA, which is made up of non-governmental members
appointed by the Treasury. The FSA (coincidentally) defers regulation of Shari’ah Compliant
Financing products to the scholarly Islamic Shari’ah supervisory board of each institution.
According to undisclosed FSA associations, the AIG Financial Products Division
(coincidentally) fell outside FSA jurisdiction. Under FSA rules, AIG Financial Products is an
“internal treasury operation” and as such, (coincidentally) not regulated by FSA. The FSA does
have regulatory oversight responsibility for a number of AIG units in London, including a
company called AIG FP Capital Management in London. Associations to the FSA said AIG FP
Capital Management was a separate company from AIG Financial Products, and not involved in
the creation of the failing CDSs. Nevertheless, U.S. lawmakers considered London AIG
Financial Products to be at the root of AIG’s Financial Products disaster.
The UK Telegraph article stated, “During the hearing into the causes and effects of the
AIG bail-out on October 7, the US House of Representatives Oversight Committee, led by
Congressman Waxman, politicians mentioned London a dozen times. California
Congresswoman Jackie Speier referred to London’s AIG Financial Products as ‘the casino in
London.’”
During the U.S. HROC hearing, American AIG chief executives Martin Sullivan and
Robert Willumstad revealed information about the AIG Financial Products unit in London citing
a New York Times article on September 28, 2008. It turned out that in November 2007, when
AIG accountants advised the insurer to change the way it valued its CDSs, the small base of
capital on which AIG Financial Products had built a massive business came into focus, leading to
AIG’s exposure.
The UK Telegraph article revealed that British authorities had not said anything about
AIG’s involvement. However, unknown to the general American public, there were multiple
investigations into AIG in the U.S. In addition to the October 7 Congressional hearing, the AIG
Financial Products Division was being investigated by the Office of Thrift Supervision in
Washington and the New York State Department of Insurance in Manhattan.
In early October 2008, New York State Attorney General Andrew Cuomo sent a letter to
AIG informing the company it was under investigation for “irresponsible and damaging”
expenditures, “among other things,” for the executive compensation packages that were not cut
even as AIG accepted the $85 billion to keep itself afloat. 31
A December 10, 2008, article in the Wall Street Journal stated that AIG still had close to
$10 billion in ‘undisclosed counterparty obligations.’ Included in the portfolio a “notional
amount” as of September 30, was approximately $9.8 billion of swaps that were sold as credit
protection on “synthetic” securities. The swaps on the so-called synthetic securities were referred
to as “cash settlement” or “Pay As You Go” swaps because they are settled in cash when the
losses are taken.
AIG noted that the majority of the multi-sector CDS swaps were written as “physical
settlement” swaps, where AIG was required to physically buy the underlying collateralized debt
obligation (CDO) bond in the event of a CDO credit problem. Remember (from the previous
chapter) that in Shari’ah Compliant Financing, the banks purchase the homes and rent them out
to the prospective buyers.
In December, suit was filed against Treasury Secretary Timothy Geithner and the Federal
Reserve Board challenging the AIG bailout citing their involvement in Shari’ah Compliant
Financing and charging that Shari’ah-based Islamic religious activities are anti-Christian, anti-
Jewish, and anti-American. The Obama administration’s Department of Justice unsuccessfully
tried to have the suit dismissed. Then, after the government acquired a majority interest in AIG
and contributed substantial funds to AIG for operational purposes, the Treasury Department co-
sponsored an Islamic 101 Forum, raising the possibility that the government’s involvement with
AIG effectively promotes the Islamic religion.
The huge bonuses that bank CEO’s received sparked huge controversy in the light that
taxpayer money paid for them. No one liked the fact that CEO’s got the huge bonuses and
severance agreements for virtually nothing, though it was said that these were the only
executives who knew what was really going on, and therefore were the only ones who could
straighten it out. This could be a very misleading statement.
31
Koeing, Peter; “AIG Trail Leads to London ‘Casino,’ October 18, 2008,
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3225213/AIG-trail-leads-to-London-casino.html
 When a CEO leaves a company, he takes with him trade secrets. Therefore, it is very
likely that such secrets involve knowledge of involvement in financial activities and transactions
that must be kept secret from the American taxpayer. The huge bonuses could actually be “pay-
offs” to mislead Americans and keep them in the dark regarding what might be construed as
fraudulent and misleading internal operations.
CEOs who received huge bonuses and salaries are portrayed as being “greedy crooks,"
and perhaps they are. The pay-offs, or severance agreements could however be masking
something much worse. In such a scenario, severance agreements and huge bonuses would be
tantamount to hush money, making recipients partners in crime with the Federal Reserve and
contracting parties, especially if something like Shari’ah Compliant Financing was involved.
An article in a Quatar English speaking newspaper, The Gulf Times, dated June 16, 2008,
revealed that Omair Mooraj, a senior Mideast executive at U.S. investment bank JP Morgan
Chase & Co was detained in Dubai as part of a fraud investigation at Dubai Islamic Bank. As the
managing director and head of Islamic banking for the region, Mooraj was one of several people
held by Dubai police in a string of arrests. The report alluded to an earlier detainment of Rifat
Usmani, a vice president of structured finance at Dubai Islamic, and Charles Ridley, a British
Bahrain-based businessman. 32
The Federal Reserve consists mostly of foreign bankers who are not citizens of these
United States, and is a private corporation. The Federal Reserve, Treasury Department and
Federal Deposit Insurance Corporation have lent or spent over $8 trillion American taxpayer
dollars-- almost $3 trillion over the past two years, pledging up to $5.7 trillion more.
President Woodrow Wilson created the Federal Reserve under the inspiration of the
Marxist, E. Mandell House. Since its creation, the U.S. Congress has had little to do with
managing America’s fiscal policies, and Wilson later admitted regret over his part in its creation.
Many patriotic Americans believe that the Federal Reserve and its cohorts have
manipulated every bit of the 2008-2009 financial crisis. H.R. 833, introduced in the House of
Representatives by Congressman Ron Paul, upon enactment, will abolish the Board of Governors
of the Federal Reserve System and the Federal Reserve banks. 33

32
Sleiman, Mirna; “Executive Detained in Bank Fraud Probe,” June 16, 2008, http://www.gulf-
times.com/site/topics/article.asp?cu_no=2&item_no=224672&version=1&template_id=57&parent_id=56
33
Baldwin, Chuck; “President and Congress Grovel Before the Fed,” February 10, 2009,
http://www.newswithviews.com/baldwin/baldwin491.htm
 In September 2008 Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary
Henry Paulson said they would comply with congressional demands for transparency in a $700
billion bailout of the banking system yet two months later, the Federal Reserve loaned even more
in separate rescue programs without requiring Congressional approval. Americans have no idea
where their money is going, or what securities the banks are pledging in return.
The Constitution requires that U.S. currency must be backed by a commodity like gold
and silver, and that only Congress has the power to make monetary policy, while private
domestic banks and foreign banks are forbidden to do so. The U.S. Constitution gives Congress
the authority to:

“To coin Money, regulate the Value thereof, and of foreign Coin, and fix
the Standard of Weights and Measures.”

Federal Reserve Notes, paper money, is not regarded as legal tender under the U.S. Constitution
because it is not backed by anything. Combined with the fact that the Federal Reserve is a private
corporation consisting mostly of foreign bankers who are not citizens of these United States
makes the Federal Reserve Act of 1913 unconstitutional.
Dan Fuss, vice chairman of Boston based Loomis Sayles & Co. Bloomberg News said
that collateral was not adequately disclosed regarding the recipients of nearly $2 trillion in
emergency loans at the onset of the 2008 bailout. Fuss requested details of Federal Reserve
lending under the U.S. Freedom of Information Act and filed a federal lawsuit on November 7,
2008 seeking disclosure.34
Arabs began buying U.S. Treasury bonds thirty-some years ago, and have bought into our
capital market infrastructure including American banks. Steven Emerson noted that in the
eighties, the U.S. Treasury began keeping Saudi and Arab investments in the U.S. hidden from
the American public.
Anti-capitalist Islamists are now hastily claiming the financial crisis is evidence of a
failing and greedy Western financial system. Contrarily, non-tranparent Shari’ah practices could
actually be the cause of the failing Western system. Hiding the fact that Shari’ah products and

34

Fitzgerald, Alison; Ivry, Bob; Pittman, Mark; “Fed Defies Transparency Aim in Refusal to Disclose,”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=worldwide
transactions had become a part of the bank portfolios could also very well be the reason for
giving out large bonuses. Shari’ah Compliant Finance products as part of mortgage backed
securities in bundled loans as and portfolios cannot be ruled out as an important part of the
scandalous activities that led to the recent financial crisis. SCFs involve unexamined loans that
are described as “complex,” and “customized.” With unchallenged regulation, they cannot prove
separatation from risky and scandalous activities.
World leaders met in London on April 2, 2009 at the G-20 meeting reportedly in an effort
to “strengthen” the global financial system. Jerome Corsi, a noted financial services speaker and
writer, wrote an article describing how the G20 would create an international Financial Stability
Board with authority to intervene in U.S. corporate affairs by dictating executive compensation
and approving or disapproving business management. The International Monetary Fund (IMF)
and the Financial Stability Board became the global regulators of the whole corporate world,
thus superseding U.S. governmental authorities, including the Federal Reserve, the U.S.
Treasury, the Federal Deposit Insurance Corporation and other corporate regulators, including
the U.S. Department of Commerce and the U.S. Department of Labor. The Financial Stability
Board essentially negates the U.S. Declaration of Independence and abrogates the sovereignty of
the United States.
Corsi wrote that the new global regulator has the authority to examine all U.S. banks,
brokerage firms, and corporations including non-financial companies such as the Big Three
automakers. It has the international authority to set policies within these corporations, including
compensation packages paid to top executives and senior managers. 35
While at the G-20 meeting, Obama gave such a deep bow to King Abdullah Aziz of
Saudi Arabia that he appeared to be kissing the King’s hand or ring. A video of the incident on
the Internet was removed after controversy ensued and the White House denied that it was a kiss.
While the hands of both men were not always visible in the video, the expressions of
astonishment from the other leaders show that the gesture was a spectacle at the very least.
Early in the bailout, and before the G20 meeting, President Obama made many references
to Americans chastising us for “bad habits,” “greediness,” and “addiction to oil.” In other words,
trying to make Americans feel guilty and accept the position of scapegoat for what really might
be organized international crime.
35
Corsi, Jerome;” Obama’s G20 plan kisses off Declaration of Independence,” April 8, 2009,
http://worldnetdaily.com/index.php?fa=PAGE.view&pageId=94331
 Americans should question whether American home mortgages in default are the main
cause of the 2008 global financial crisis. Obama’s inference of placing the blame on American
citizens alone is tantamount to fear mongering and extortion and might be part a larger plan to
vanquish American sovereignty and negate the Constitution.
After the Bailout and the Stimulus Bill came the Omnibus Bill, the Budget Bill, the Cap
and Trade Bill, and most recently the Health Care Bill. These bills all depend on Americans to
tax. Combined they are thousands of pages of rules, regulations, and restrictions that will control
Americans with unknown, unwarranted astronomical debt, and possibly far worse as future
generations will essentially be born in debt and live their whole lives in bondage.
During the ninth through eleventh centuries royal policy with the English and the Franks
was to pay a tax, the Danegeld, as tribute to safeguard them from being invaded and ravaged by
Vikings raiders. In closing, the poem, “Dane-Geld” by Rudyard Kipling (1865-1936) is timeless
wisdom for today’s socio-political-economic policies.

“It is always a temptation to an armed and agile nation,

to call upon a neighbor and to say:
“We invaded you last night--we are quite prepared to fight,
unless you pay us cash to go away.”

And that is called asking for Dane-geld,

and the people who ask it explain
that you’ve only to pay ’em the Dane-geld
and then you’ll get rid of the Dane!
It is always a temptation to a rich and lazy nation,
to puff and look important and to say:
“Though we know we should defeat you, we have not the time to meet you.
We will therefore pay you cash to go away.”

And that is called paying the Dane-geld;

but we’ve proved it again and again,
that if once you have paid him the Dane-geld
you never get rid of the Dane.
It is wrong to put temptation in the path of any nation,
For fear they should succumb and go astray,
So when you are requested to pay up or be molested,
You will find it better policy to say:

“We never pay any-one Dane-geld,

No matter how trifling the cost;
For the end of that game is oppression and shame,
And the nation that plays it is lost!”