Archive for July 13, 2009

The failure to complete (or even attempt) the 787 test flight recently, has unleashed a flurry of information and discussion.  See Jon Ostrower’s post below.

 Then follow links to the Andrea James blog regarding this and other problems for Boeing, as well as illuminating comments from readers of Ms. James’ blog.  One of the problems that we are facing is that the problems are so large and systemic, it is hard to see the whole picture, to grasp their true breadth and depth.  And Boeing makes a habit of creating as difficult time as possible for anyone wanting to get to the bottom of things including federal oversight authorities. 

More comments will no doubt be posted on the Seattle PI blog, so check back in later for updates as well. 



Commentary: It’s time for Boeing to talk.  To itself.



Jon Ostrower

 on July 9, 2009 5:32 PM | Permalink | Comments (46) | TrackBacks (0) | ShareThis

 On July 9, 2007, ZA001, or what was later to become ZA001 wrapped up one final photo op for the morning television news shows. The aircraft sat at the head of the 747 line gleaming brand new. Once the camera lights dimmed, the 787 was rolled back to  Building 40-26 and the real work to prepare for flight had begun, a task that continues two years later. White plastic decals were  removed from the wings, painted foil covering unfilled fastener holes were removed, the  full extent of the show N787BA had been prepared for the day prior could no longer remain unreconciled against the work that would be required to make it fly.

Those working directly with the airplane knew full well that the first 787 was far from its maiden sortie, but why pronouncements like this from program vice president Mike Bair at the Paris Air Show in June 2007?

“The aircraft will be structurally complete at rollout but will still have systems, ducting, wiring and similar work to be done before first flight. When those tasks are completed, it will be powered up and proceed to ground test before it flies.”

Vought would confirm publicly a year later that the first aft fuselage barrel was only 16% structurally complete at the time of shipment to Everett.

At the time the roll out festivities came to a close, August 27th was the target for first flight, one month and 18 days later. What followed is well documented.

Almost exactly two years later, Boeing Commercial Airplanes CEO Scott Carson said assuredly (June 15) to the gathered crowd of reporters at the Paris Air Show: “We remain absolutely committed to our forecast that it will fly in the second quarter of this year. If you count the way I do, that means within the next two weeks roughly.”

Carson would also later tell CNN at the show, “The technical issues are largely all behind us.”

Just over a week later, Boeing revealed the extent of the weakness in the wing to body join.

Yet, in that statement, there lies a question of how it got to that point? How could an executive near the head of a Fortune 50 company make such a statement? Was it just a breakdown in communication? Or something more telling about the state of the program? The information, or the gravity of the information, didn’t flow where and when it needed to.

Mr. Carson, in responding to questions on the delay announcement said:

When we were at Paris last week we had been through the preliminary analysis of the data and were of a mind that the airplane could enter flight test with a credible flight test envelope as we worked relatively minor modifications. The work done by the team through the week last week narrowed the envelope to the point where on Friday we determined that to fly would be such a small envelope for us that it would be an interesting exercise in having the airplane in the air but not particularly useful in terms of preparing the airplane for certification. So at that point is when we made the call to delay the process, identify the fix, test the fix, install the fix, and then enter a flight test program that is fully robust.

A program built on global transparency did not live up to its own early expectation and the lessons continue to be manifested in changes like the 50% acquisition of Global Aeronautica in March 2008 and the establishment of the Production Integration Center, a mission control nervous system for the global supply chain that became operational in December 2008, and most recently this week with the Vought South Carolina buy out.

Many program sources have suggested privately that as Boeing has improved its visibility outward, it still struggles with communicating with itself. Good news flows freely to the top, yet the bad news is not elevated to an appropriate level. They talk of a ‘kill the messenger’ culture has established itself inside the program, where the push to move ahead and show marked progress is often in conflict with requiring the often uncomfortable task of ensuring that ‘power’ has ‘truth’ in its hands to make good decisions and communicate progress outwardly.

During my time in Paris, I received a message from South Carolina on Tuesday morning (June 16) that told of “emergent first flight issues” with no other details available. Another message from Washington, just a day later (June 17) suggested a rumor about possible delamination in the wingbox stringers, but the source added, “it is just a rumor to my knowledge.”

From the point of view of covering the program, those rumors were almost impossible to substantiate. Separating the wheat from the chaff, takes a fine tooth comb that appears much more difficult when nine time zones away.

Yet, if this outside observer could know of these two hints a week before the delay announcement, how was this information flowing inside the company?

The story is far from unfamiliar and Boeing is far from the first aerospace company to face such a challenge.

At the height of the A380 delays facing Airbus, broken communication, both internal and external, drew the ire of airline customers, Wall Street and the media. On June 20, 2006, Flight International weighed in on the situation:

[Airbus Chief Operating Officer John] Leahy says it was the “low-tech stuff” that got them – the wiring harnesses – but this will hardly reassure the customers. More worrying is how Airbus management was apparently unable to hear the timebomb ticking in the A380’s Jean-Luc Lagardère assembly plant a few kilometres from its Toulouse headquarters. Especially given that the join-up of sub-assemblies for new aircraft had been on hold for two months and working parties were furiously trying to rectify problems on completed aircraft.

The problem of communication not only impacts the outward credibility of the company’s leadership, but how Boeing’s own employees view those running the ship of state. If information isn’t able to flow freely to the top without perception of fear of reprisal or penalty, then any report of information being disseminated from the top down may lack the credibility that the leadership needs to motivate employees to solve the challenges facing the program.

A 2006 speech by Boeing CEO James McNerney given in the wake of the US Air Force tanker scandal tackled this culture head on:

So then we had to ask ourselves some really tough questions: Were these lapses symptomatic of a larger issue with our corporate culture?…Did our people feel confident enough to speak up about ethical concerns without fear of retaliation?

McNerney discussed the solution to the problem:

To make sure everyone understands this, I think that you have to create a work environment that encourages people to talk about the tough issues–business- or ethics-related–and to make the right decisions when they find themselves at the crossroads between hitting their numbers for the quarter and stepping forward when there’s a problem.

Boeing should ask itself if McNerney’s vision has yet to become a reality.


To read Andrea James Seattle Post Intelligencer online blog and her readers’ comments, follow this link:





Here is some information from  DAILY KOS







The War On Waste
Defense Department Cannot Account For 25% Of Funds — $2.3 Trillion

   (CBS)  On Sept. 10, Secretary of Defense Donald Rumsfeld declared war. Not on foreign terrorists, “the adversary’s closer to home. It’s the Pentagon bureaucracy,” he said. He said money wasted by the military poses a serious threat. “In fact, it could be said it’s a matter of life and death,” he said.

Rumsfeld promised change but the next day – Sept. 11– the world changed and in the rush to fund the war on terrorism, the war on waste seems to have been forgotten. Just last week President Bush announced, “my 2003 budget calls for more than $48 billion in new defense spending.”

More money for the Pentagon, CBS News Correspondent Vince Gonzales reports, while its own auditors admit the military cannot account for 25 percent of what it spends.

“According to some estimates we cannot track $2.3 trillion in transactions,” Rumsfeld admitted.  $2.3 trillion — that’s $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.

“We know it’s gone. But we don’t know what they spent it on,” said Jim Minnery, Defense Finance and Accounting Service.  Minnery, a former Marine turned whistle-blower, is risking his job by speaking out for the first time about the millions he noticed were missing from one defense agency’s balance sheets. Minnery tried to follow the money trail, even crisscrossing the country looking for records.

“The director looked at me and said ‘Why do you care about this stuff?’ It took me aback, you know? My supervisor asking me why I care about doing a good job,” said Minnery.  He was reassigned and says officials then covered up the problem by just writing it off.

“They have to cover it up,” he said. “That’s where the corruption comes in. They have to cover up the fact that they can’t do the job.”

The Pentagon’s Inspector General “partially substantiated” several of Minnery’s allegations but could not prove officials tried “to manipulate the financial statements.”

Twenty years ago, Department of Defense Analyst Franklin C. Spinney made headlines exposing what he calls the “accounting games.” He’s still there, and although he does not speak for the Pentagon, he believes the problem has gotten worse.

“Those numbers are pie in the sky. The books are cooked routinely year after year,” he said.  Another critic of Pentagon waste, Retired Vice Admiral Jack Shanahan, commanded the Navy’s 2nd Fleet the first time Donald Rumsfeld served as Defense Secretary, in 1976.

In his opinion, “With good financial oversight we could find $48 billion in loose change in that building, without having to hit the taxpayers.”


And from Bernie Sanders recent article on just how ‘things really work’ in the Pentagon and Department of Defense:

The Pentagon’s procurement and budgeting processes are rife with problems. For example, the Government Accountability Office has identified $295 billion in cost overruns on 72 major weapons systems, even as the Pentagon can’t balance its books or keep track of its vast inventory. These problems can lead to bizarre results, such as the fact that the Pentagon has hundreds of millions of dollars in spare parts now on order that are already marked for disposal. Despite huge cost overruns, major contractors have received $8 billion in performance bonuses that have been paid out regardless of the results of their work. These abuses of the public trust — and the public purse — are simply unacceptable.

These are complex problems that will require multifaceted solutions. A good way to start would be by slowing down the “revolving door” that allows high-level Pentagon bureaucrats and military officers to go to work for major defense contractors.

The problems with the revolving door are twofold. First, officials looking forward to employment in the arms industry may favor certain companies in hopes of getting lucrative job offers after leaving government service. Second, once they have moved into the private sector, these former government employees can use their specialized knowledge and inside contacts to give an unfair advantage to their new employer.

These are far from abstract problems. In one high-profile case, Darleen Druyun, a senior Air Force contracting official, secured jobs with the Boeing Corp. for herself, her daughter and her son-in-law at the same time that she was in charge of negotiating a $20 billion lease deal with the company. Both Druyun and Boeing’s chief financial officer pled guilty to fraud charges and served jail time as a result.

The Boeing scandal was uncovered in time to save the taxpayers from a corrupt employment deal, but how many other scandals go undetected? In a study released this week, GAO reported that as of 2006, some 2,435 former generals, admirals, procurement officials and senior civilian leaders in the Pentagon were working in the defense industry. GAO believes that more than 400 of these were working on defense contracts related to their former agencies, but under current reporting requirements, there is no way to tell whether these individuals have conflicts of interest. That is because neither the contractors nor Pentagon officials are required to report on the post-government employment of key military and civilian government personnel.

How Rove Said He’d Answer Siegelman Prosecution Queries



Saturday 11 July 2009

by: Jason Leopold, t r u t h o u t | Report

Karl Rove continues to be a subject of congressional investigations. (Photo: Getty Images)

    While the details of Karl Rove’s eight-hour deposition Tuesday before the House Judiciary Committee remain unknown, Rove has provided insight into how he said he intended to answer the panel’s questions. The deposition concerned Rove’s role in the firings of nine US attorneys and the alleged political prosecution of former Alabama Gov. Don Siegelman.

    In March, during a little-known interview on Fox News, where Rove is a contributor, Rove told Chris Wallace that he has already responded to questions about Siegelman’s prosecution and has posted his answers to written questions on his web site,

    “My understanding is I am going to be questioned both about the US attorneys [dismissals] and about the allegations that I was responsible for the prosecution of Alabama Gov. Don Siegelman … a lot of these answers, particularly with regard to Siegelman, are already on my web site,” Rove said in the March 8 interview.

    Last December, Rove obtained a copy of an e-mail Siegelman had sent to his supporters who contributed to his legal defense fund. Rove blogged about it under a headline in which he portrayed himself as a victim: “Personal Responsibility: Who Needs It When You Can Blame Karl Rove?” (sixth item down from the top).

    “Below is a fundraising letter sent out by Friends of Don Siegelman 2008. Despite that it has no basis in fact, I thought you might find it amusing. In case you’re interested, visit these links for the facts,” Rove wrote.

    Rove then posted links to four documents on his web site, one of which was his response to questions posed to him last July by Rep. Lamar Smith, R-Texas. Smith, the ranking minority member of the Judiciary Committee, has been a vocal critic of the panel’s chairman John Conyers’s attempts to force Rove to comply with numerous congressional subpoenas about the firings of federal prosecutors and the prosecution of Siegelman. Rove subsequently defied the subpoenas on executive privilege grounds.

    Smith sent a letter to Rove’s longtime attorney, Robert Luskin, on July 15, 2008, excoriating Conyers for not accepting an offer to have Rove respond to questions about the Siegelman prosecution in a private setting and not under oath. Smith did not inform Conyers or other Democrats on the Judiciary Committee that he had sent the letter.

    “The Committee’s goal should not be the unnecessary persecution of witnesses with compulsory congressional process and needless contempt proceedings,” Smith wrote. “Because written answers to written questions about the Siegelman matter would serve the Committee’s proper objective, I am accepting by this letter your offer to provide those answers.”

    About a week later, during a committee hearing on the matter last year, while Conyers and other Democrats were considering whether to hold Rove in contempt, Smith announced that he had obtained Rove’s responses to lingering questions about his alleged role in Siegelman’s prosecution. Smith then submitted the written question-and-answer exchange with Rove into the Congressional record.

    In a July 22, 2008, letter accompanying Rove’s response to Smith’s questions, Rove’s longtime attorney, Robert Luskin, wrote:

    “As you know, Mr. Rove has never asserted any personal privileges in response to the Committee’s subpoena, but remains obligated to follow the direction of the President. We simply cannot understand the Committee’s interest in provoking a confrontation with Mr. Rove while the precise legal issue that is presented by his subpoena is subject to a pending action in District Court.

    “We have struggled instead to find a method by which Mr. Rove could answer the Committee’s questions while at the same time respecting the prerogatives of the President. We thank you for providing such an opportunity, and we trust that Mr. Rove’s answers will assist the Committee in resolving these utterly unfounded allegations.”

    Claims that Rove never asserted “personal privileges” is a familiar line Luskin has used as recently as February, when Conyers subpoenaed Rove for the third time this year to try to compel him to testify about Siegelman’s prosecution and the US attorney firings. In March, Conyers’s committee, with the help of White House Counsel Gregory Craig, brokered a deal that resulted in Rove agreeing to testify before the committee privately.

    But Rove indicated during his Fox News interview that he doesn’t intend to stray from the responses to questions he had already provided to Smith, which were clearly written to elicit denials from Rove about his involvement in Siegelman’s prosecution.

    In his written responses to Smith’s 14 questions, Rove denied speaking to anyone “either directly or indirectly” at the Justice Department or to Alabama state officials about bringing corruption charges against Siegelman.

    “I have never communicated, either directly or indirectly, with Justice Department or Alabama officials about the investigation, indictment, potential prosecution, prosecution, conviction, or sentencing of Governor Siegelman, or about any other matter related to his case, nor have I asked any other individual to communicate about these matters on my behalf,” Rove wrote. “I have never attempted, either directly or indirectly, to influence these matters.”

    Rove responded to eight other questions with the exact same response.

    Rove said the Judiciary Committee should press Siegelman to justify his allegations about Rove’s interference in the case.

    “The committee should require Siegelman to substantiate his allegations about my ‘involvement’ in his prosecution – something he has failed to do in either media interviews or court filings,” Rove wrote.

    Siegelman was convicted of corruption in 2006, but was released from prison on bond in March 2008 after an appeals court ruled that “substantial questions” about the case could very well result in either a new trial or a dismissal. In March, the US Court of Appeals for the 11th Circuit upheld Siegelman’s bribery conviction but threw out two lesser charges. The panel ordered a new sentencing date for the former governor, who has been urging Attorney General Eric Holder to look into specific evidence that would appear to suggest that he was the victim of a partisan witch hunt.

    In an interview with The Anniston Star on May 18, 2008, Siegelman said Rove first targeted him in 1998.

    “It started when Karl Rove’s bag man, I call him, [disgraced lobbyist] Jack Abramoff, started putting Indian casino money into Alabama to defeat me in 1998,” Siegelman told the newspaper. “Shortly after I endorsed Al Gore in 1999, Karl Rove’s client, the attorney general of Alabama (Bill Pryor) started an investigation.

    “In 2001, Karl Rove’s business associate and political partner’s wife, Leura Canary, became a US Attorney and started a federal investigation…. It started with the attorney general and the state investigation, followed by the federal investigation, followed by indictments in 2004, and then another series of indictments leading up to the 2006 election … but, yeah, it’s all part of the same case.”

    In March when a US Appeals Court upheld many of the corruption charges against Siegelman, Rove once again directed his supporters to the documents on his web site containing his answers to Smith’s questions about the matter.

    “Honoring the President’s executive privilege and acting with White House approval, Karl Rove responded to Judiciary Committee questions about the prosecution of former Alabama Gov. Don Siegelman,” Rove wrote.

    Conyers did not respond to requests for comment Wednesday.

    When his panel reached an agreement with Rove on March 5, Conyers said, “I am determined to have it known whether US attorneys in the Department of Justice were fired for improper political reasons, and if so, by whom.”

    In a statement released to NBC News Tuesday Luskin said, “The agreement setting up the interviews contemplated that they would remain entirely confidential until all the interviews were complete. Out of respect for that term of the agreement, Mr. Rove is not commenting.”


Jason Leopold is editor in chief of The Public Record,

Demolition access to the World Trade Center towers: Part one – tenants

Kevin R. Ryan, 7-09-09

Note: The author is indebted to a few particularly useful sources of information and inspiration, including Russ Baker’s book “Family of Secrets”, the websites, and, and Richard Gage.

On occasion, the public has been asked by George W. Bush to refrain from considering certain conspiracy theories. Bush has made such requests when people were looking into crimes in which he might be culpable. For example, when in 1994 Bush’s former company Harken Energy was linked to the fraudulent Bank of Credit and Commerce International (BCCI) through several investors, Bush’s spokeswoman, Karen Hughes, shut down the inquiry by telling the Associated Press — “We have no response to silly conspiracy theories.” On another occasion, Bush said in a televised speech — “Let us never tolerate outrageous conspiracy theories concerning the attacks of September the 11th.”

But paradoxically, we have also been asked to believe Bush’s own outrageous conspiracy theory about 9/11, one that has proven to be false in many ways. One important way to see the false nature of Bush’s conspiracy theory is to note the fact that the World Trade Center buildings could only have fallen as they did through the use of explosives. A number of independent scientific studies have pointed out this fact [1, 2, 3, 4], but it was Bush’s own scientists at the National Institute of Standards and Technology (NIST), through their inability to provide a convincing defense of the official line, who ultimately proved that explosives were necessary.[2, 5, 6, 7]

This leads us to ask the obvious question — Who could have placed explosives in the World Trade Center towers? To answer that question, we should first consider who had access to the buildings, specifically the areas of the buildings that would be relevant to a demolition operation. We should also consider the time periods of interest. Those who had access at the necessary times should be further considered in terms of their ability to obtain the necessary explosive technologies and expertise, their ability to be secretive, and the possibility that they could have benefited from the destruction of the WTC buildings or from the resulting War on Terror. But one thing is certain, unless it was done by one person acting alone, it must have been a conspiracy.

The Twin Towers and WTC 7, all highly secure buildings, were most readily accessed by tenants, security and building management staff, and construction-related contractors.

Evidence suggests that the period of interest should include the years between the 1993 WTC bombing and September 11th, 2001. This evidence includes the warning from 1993 bombing conspirator Nidal Ayyad, who reportedly wrote — “next time it will be more precise.”[8] Additionally, evidence of a multi-year plot included the detailed information that FBI informant and mafia kingpin Gregory Scarpa Jr. received while in jail, as early as 1996, from Al-Qaeda operative Ramzi Yousef, while imprisoned in the adjacent cell. Yousef described plans to “bring New York to its knees” by blowing up the World Trade Center with American-owned “flying massive bombs.” Scarpa Jr. provided this information to Assistant US Attorney Patrick Fitzgerald and FBI Counsel Valerie Caproni, who were apparently not interested.[9] Another example is the recorded conversation between FBI informant Randy Glass and Pakistani ISI agent Raja Gulum Abbas, in which Abbas claimed “Those towers are coming down”, indicating that a plan was in progress as of July 1999.[10]

Throughout the life of the WTC buildings, modifications were made to each structure. The modifications included upgrades to electrical, fire protection, and elevator systems, as well as general construction activities. As a rule, the Port Authority of New York and New Jersey (PANYNJ) was responsible for initiating the modifications in the public access areas, and the tenants were responsible for completing the modifications throughout the leased spaces.[11] For this reason, the tenant companies would have been capable of coordinating the installation of explosive materials and other devices with reasonable certainty that those materials would not be detected by others. For a demolition plan to work, however, such tenants would need to be managed as a group, and explosives would need to be placed on enough floors to ensure the fall of each building through what would otherwise have been the path of most resistance.

While examining the tenants in each critical area, we should ask – Cui Bono? That is, who benefited from the destruction of the WTC buildings, and the resulting War on Terror? The obvious answer includes, primarily, the Bush Administration and its friends. It also includes overlapping groups of oil and gas companies, defense contractors, and those who desired to wield undue influence on international policies related to a wide number of issues from civil rights to space domination.

The North Tower Impact Zone

On 9/11, American Airlines Flight 11 hit the north face of the north tower (WTC 1) between floors 94 and 99. In a stunning coincidence, these floors bracket those that had been upgraded for fireproofing shortly before 9/11.[12] This coincidence was amplified by the fact that one tenant occupied all of those floors – Marsh & McLennan (Marsh), which at the time was the world’s largest insurance brokerage company. One other tenant, Sumitomo Bank, shared part of floor 96 with Marsh.

During the years from 1993 to 2001, Marsh made several modifications to these floors, in addition to the fireproofing upgrades mentioned above. According to the National Institute of Standards and Technology (NIST), Marsh made modifications to the south side of floor 94 in 1998. That same year, the PANYNJ helped Marsh demolish floors 95-98 in order to rebuild the fire alarm and sprinkler systems. Marsh did further modification work on floor 95 in the year 2000.[13] The full floor fireproofing upgrades on floors 93 through 100 were accomplished in August through November of 1998, except for floor 94, which was done in December 1996.

Marsh was a large company, with a number of subsidiaries, including Putnam Investments, Mercer, Johnson & Higgins, and Guy Carpenter, a company that occupied floors 47 to 54 of the south tower. Marsh was also known to be notoriously secretive, and had been likened to the CIA.[14] Its chief executive on 9/11 was Jeffrey Greenberg, a member of the Brookings Institution, the Trilateral Commission, and the son of the chairman of American International Group (AIG), Maurice Greenberg. AIG has been reported to be at the center of a number of CIA operations.[15]

Jeffrey Greenberg rose quickly through management at Marsh, having come there directly from AIG in 1995, and then becoming CEO just four years later. At Brookings, Greenberg hobnobbed with Lee Hamilton, co-chair of the 9/11 Commission, and the Iraqi Nemir Amin Kirdar, CEO of Investcorp, a BCCI-related company founded by the Saudi Abdullah Taha Bakhsh.[16]

BCCI was founded by a Pakistani named Agha Hasan Abedi, and was ”made up of multiplying layers of entities, related to one another through an impenetrable series of holding companies, affiliates, subsidiaries, banks-within-banks, insider dealings and nominee relationships.” In the early nineties, BCCI was extensively investigated for money laundering and terrorist financing, and was ultimately shut-down by the Bank of England in 1992.[17] Like BCCI, AIG developed the same fragmented and difficult to trace network of subsidiaries, spread across 130 countries and 400 regulators.[18]

Other very powerful and well-connected people worked in senior management at Marsh. These included Stephen Friedman, a senior principal at Marsh Capital and former partner at Goldman Sachs, who later became George W. Bush’s top economic advisor. Friedman was also a member of the Brookings Institution, the Bilderberg group, the Foreign Intelligence Advisory Board, and the board at In-Q-Tel, the investment firm founded by the CIA in 1998. In-Q-Tel invests in state of the art technologies related to defense and intelligence work, including nano and chemical technologies, according to its website.[19]

In another interesting coincidence, Friedman belonged, through Cornell University, to a secret society called Quill and Dagger, the membership of which includes Paul Wolfowitz, Sandy Berger and Stephen Hadley. Wolfowitz, the neo-con deputy secretary of defense in the Bush Administration, was the author in 1992 of the “Wolfowitz Doctrine” of pre-emptive warfare. He also made comments about a “surprise like Pearl Harbor” months before 9/11, and met with Pakistani ISI General Mahmud Ahmed in the week before 9/11.[20] Berger, the National Security Advisor to President Clinton, was later caught stealing documents from the 9/11 Commission investigation.[21] Berger was also the boss of White House counterterrorism Tsar Richard Clarke, and together with Hadley – who was Condoleeza Rice’s deputy – was responsible for delaying or obstructing Clarke’s plans to stop Al Qaeda in January 2001.[22]

The President of Marsh Real Estate Advisors, from 1982 to 2001, was Craig Stapleton, the husband of George W. Bush’s cousin, Dorothy Walker Bush. Stapleton’s Marsh division was responsible for negotiating office leases in the US, Canada and Europe. He once co-owned the Texas Rangers with George W. Bush, a spectacular investment for all involved. In 1997, Stapleton was a member of the board of a company called Cendant that was charged in 1998 with massive accounting fraud. The President of Cendant at the time was Henry Silverman, a former partner of the Blackstone Group and later Vice Chairman of the PANYNJ. Stapleton went on to join Winston Partners, a privately owned investment firm founded in 1993 and led by George W. Bush’s bother Marvin.

The Vice Chairman of Marsh on 9/11 was Mathis Cabiallavetta, a Swiss citizen. Although Cabiallavetta was a member of the Marsh board from 1993 to 2000, he took his position as Vice Chairman in 1999, after having been President of the Union Bank of Switzerland (UBS) from 1996 to 1998. This was the same UBS that bailed out George W. Bush’s Harken Energy in 1987, with the help of billionaire Jackson Stephens. UBS was linked in other ways to the fraudulent terrorist financing bank BCCI.[16, 23]

Another connection to the Bush family can be seen in the Marsh acquisition of the New York insurance brokerage Johnson and Higgins in March 1997. Johnson and Higgins was the long-time employer of Prescott Bush Jr, brother to George H. W. Bush. Although Prescott Jr. no longer worked there, he had spent 33 years at Johnson & Higgins, retiring as Senior Vice President. After retirement, Bush continued to consult for the company, in Asian dealings. With Prescott Jr, Friedman and Stapleton, Marsh clearly had strong ties to the Bush network. Additionally, it seems possible that some members of Marsh management, particularly Stephen Friedman, through In-Q-Tel, had access to technologies that could have been used to bring about the deceptive demolition of the WTC buildings.

Add to this L. Paul Bremer, and the possible Marsh ties to demolition technology become clearer. One month after 9/11, Bremer would become the CEO for a new division called Marsh Crisis. Interestingly, the Yale graduate Bremer had been working to complete the National Report on Terrorism, and prior to that had been managing director for Kissinger Associates. According to a US Senate report, Kissinger Associates had a number of meetings with BCCI representatives in the late eighties and early nineties, and it refused to provide documents requested by the Senate investigators.[17] Bremer was also a member of the board for Akzo Nobel, the parent of International Paint, a company that produced a fireproofing application for skyscrapers called Interchar.[24]

Bremer was on the international advisory board for the Japanese mining and machinery company, Komatsu. At the time, Komatsu had been involved in a joint venture agreement with Dresser Industries, the oil-services/intelligence front in which Prescott Bush Sr. and George H. W. Bush got their start with Neil Mallon. The Komatsu-Dresser mining division operated from 1988 to 1997. In July 1996, it patented a thermite demolition device that could “demolish a concrete structure at a high efficiency, while preventing a secondary problem due to noise, flying dust and chips, and the like.”[25] Residues of thermite, the highly energetic chemical mixture, have been confirmed in samples of the WTC dust, and the use of thermite at the WTC was also revealed by environmental data.[1, 2, 3, 4, 26] Dresser Industries merged with Dick Cheney’s Halliburton in 1998.

It is less well known that Bremer’s relationship to Marsh started earlier. In fact, on 9/11, Bremer was the CEO of Marsh Political Risk Practice and he had an office in the south tower. That day, he was interviewed on NBC television, stating that Osama bin Laden was responsible and that possibly Iraq and Iran were involved too, and he called for the most severe military response possible. Google removed the interview video from its servers three times, and blocked it once.[27]

Bremer was called away from Marsh in 2003, to be the Iraq Occupation Governor. His work in that role has been widely criticized.[28]

The South Tower Impact Zone

United Airlines Flight 175 hit the south tower (WTC 2) between floors 78 and 83, in the southeast corner of the building. In the impact zone, Baseline Financial Services (Baseline) was located on floors 77 and 78, Fuji Bank was on floors 79 to 82, and AON Corporation was on floor 83.

Baseline was led by a very interesting individual named Joseph Kasputys, who had a history of being well connected to the highest levels of government, as well as to defense and intelligence industries. Kasputys worked, from 1972 to 1977, for the US departments of commerce and defense. He was also the deputy director of Nixon’s White House taskforce that dealt with the Arab oil embargo of 1973, and he was instrumental in the creation of the Department of Energy (DOE).

Kasputys’ connections to the DOE, from 1977 through at least 1997, are interesting considering that the DOE was developing thermite ignition devices as early as 1983.[29] Additonally, national laboratories working within the DOE developed nanothermites in the late 1990s. Nanothermites are explosive thermite mixtures where one or more reactants are present at the nanometer scale. These are also called super-thermites due to the extraordinarily large amount of energy released upon ignition.[3, 30]

Kasputys was also a member of the Logistics Management Institute (LMI), whose members included Paul Kaminski of In-Q-Tel and General Dynamics, Charles DiBona of Halliburton, Skull and Bones member Joseph Samuel Nye, and Michael Daniels of Science Applications International Corporation (SAIC). It has been noted that SAIC, a defense contractor with expertise in thermite-related technologies, played a large part in the NIST WTC investigation. LMI’s self-proclaimed role is “advancing the science of government.”[30, 31]

Better known for his leadership of Primark Corporation from 1987 to 2000, Kasputys was CEO for both companies after the Primark acquisition of Baseline in 1996. Primark owned as many as 50 companies during that time, and was acquired by Thomson Financial in June 2000. Kasputys then became CEO for Thomson, and he later founded the intelligence-services company IHS Global Insight, in March 2001. Another Primark company, Primark Decision Economics, was located in the 11th floor of the north tower.

The sheer number of companies involved with Primark, along with the vague business descriptions given (Baseline was described as “an international provider of information”), gave the impression that something more than legitimate business was involved. Primark owned Triad International Maintenance Company (TIMCO), a company that, among other things, modified Boeing 757s and 767s. Primark also owned The Analytic Sciences Corp (TASC), a security and intelligence (spying) company that had contracts with the DOE. As CEO of World Markets Research Centre, Kasputys predicted in 2003 that the US was the country with the fourth-highest risk of terrorism, and that – “Another September 11-style attack in the US is highly likely.” [32]

According to NIST, Kasputys’ Baseline modified the southeast corner of floor 78 in 1999, exactly where the aircraft hit on 9/11.[33] Floors 77 and 78 were upgraded for fireproofing in June and April of 1998, respectively.

Another company with an office on floor 78 was First Commercial Bank. This was a Taiwanese national bank that had, in January 1998, privatized all but one third of its shares. The other two thirds went to First Commercial Financial Corp (FCFC) of Seguin, Texas. Unfortunately, it is not clear if FCFC is related to First Commercial Financial Group (FCFG), owned by Abdullah Taha Bakhsh. FCFG was a commodities brokerage firm that was forced to distribute its customer accounts in 1994, after regulators raised concerns about capital shortfalls and customer complaints.[34].

Interestingly, another company located in Seguin, Texas is the machinery manufacturing company, the Alamo Group. Dave Grzelak, CEO of Komatsu-Dresser, was a director at Alamo. He was also a board member at Aoki Construction Co, a mining company associated with Prescott Bush Jr, as we’ll see below.

The tenant located just above Baseline, on floors 79 to 82, was Fuji Bank. Fuji modified the core of floor 78 in 1998, the east wall of floor 80 in 1999, unknown parts of floor 80 in 2001, and the southeast corner of floor 82 in 1997.[33]

Prior to the year 2000, Fuji Bank was the second largest bank in Japan. Fuji’s largest investors were Union Carbide, Mobil Oil and Raytheon. In 1996, Yasuda Trust became a Fuji subsidiary and in September 2000, Fuji merged with Dai-ichi Kangyo Bank (DKB), and the International Bank of Japan (IBJ), to form the largest bank in the world under the name of Mihuzo Holdings. The second largest at the time was the Sumitomo-Mitsui Banking Corp, formed in October 1999. But the Fuji Bank merger meant that, as of 9/11, Mihuzo Holdings controlled companies not only in the impact zone of the south tower, but also on floors 48 to 50 of the north tower by way of DKB.

Toru Hashimoto, chairman of Fuji Bank, was also with Deutsche Securities Limited Tokyo Branch and is now on the board of Deutsche Bank with Norman Augustine. Augustine, also known for being the CEO of Lockheed Martin, was founder of In-Q-Tel and a board member of Riggs National, the banking firm of Jonathan Bush, the other brother of George H. W. Bush. A 2004 expose by the New York Times revealed Saudi Arabian accounts at Riggs were being investigated for money-laundering and possible financing of the September 11th terrorists.[35]

Deutsche Bank was the bank of the German Gestapo during World War II, funding the construction of concentration camps. It was broken up after the war, only to merge together again in 1957.[36] In 1998, Deutsche Bank added Banker’s Trust, which had purchased Alex Brown and Sons in 1997, to its group of companies. It was Deutsche Bank and these subsidiaries that were identified as being involved in insider trading related to the 9/11 attacks. The person of most interest in these dealings was A.B. Krongard, the CEO of Alex Brown, and CIA counsel to George Tenet.[37] From 2001 to 2004, Krongard was executive director of the CIA. Another significant player was Wolfgang Demisch, managing director at Alex Brown from 1993 to 1998, managing director at UBS Securities from 1988 to 1993, and member of the board at SAIC.

Fuji Bank had a history, in the early 1990s, of scandal related to fraudulent loans and gangster connections. It had also been linked to large CIA-related payments deposited in the Cayman Islands, and to the BCCI connected First American Bank.[38, 39, 40]

Moreover, Fuji Bank was not the only Mihuzo company that was accused of criminal activity. In June 1997, executives of DKB were accused of conspiring to provide $80 million in loans to Ryuichi Koike, a Japanese gangster. Koike used the money to purchase shares in securities brokerages, like Nomura, Nikko (located on floor 79 of the north tower), and Daiwa. Some reports put DKB’s extorted loans to Koike at $272 million.[41] DKB was reported to have made loans to other Yakuza crime syndicates as well, and in June 1997, the chairman of DKB ultimately resigned over the scandal.[42]

Additionally, Mihuzo subsidiary IBJ was discovered to have generated $2.5 billion in fraudulent loans to a businesswoman named Nui Onoue in 1991. IBJ was also reported to have indirectly supported predatory lending by securitizing high-loan-to-value loans to companies like Dallas’ FirstPlus Financial, a company that shot to financial stardom in 1996 and then collapsed in 1999. Dan Quayle was on the board of directors.[43]

Back in the summer of 1989, while his brother was President, Prescott Bush Jr. was the middleman in the takeover of two companies by West Tsusho, a Tokyo-based investment firm linked to one of Japan’s biggest mob syndicates. West Tsusho was part of the empire of Susumu Ishii, head of the Inagawa-kai yakuza gang. In 1992, two days after an article linking him to Bush appeared in the Daily Yomiuri, Ishii was dead, reportedly from a “long illness.”[44]

At the time, The Boston Globe reported that Prescott Bush Jr. had also been a business partner with Tokyo-based Aoki Construction Corp (Aoki), in its deals to build in China. Masahiro Sakane, now the CEO of Aoki, was managing director at Komatsu from 1994 to 1999. Komatsu and Aoki shared many other links in management.

The two companies West Tsusho acquired through Prescott Bush Jr., were Quantum Access (of which Bush was a board member) and Asset Management International. As a consultant for Asset Management, Prescott introduced Hughes Aircraft to Japanese investors in a deal in which Hughes and the government of China would launch satellites that would beam television programming to broadcasters in China. [45, 46] In December 1989, President Bush lifted the sanctions that blocked the satellite deal, citing “the national interest.” The Bush administration had earlier granted Hughes Aircraft “preliminary licenses” to exchange data with Chinese officials.[47] Also involved in the West Tsusho mob dealings was Nikko Securities (floor 79 of the north tower).

After his death, West Tsusho’s Susumu Ishii was replaced as the leader of the Inagawa-kai gang by Toi Inagawa. In September 1996, Inagawa formed an alliance with Yoshinori Watanabe, head of the largest yakuza gang, Yamaguchi-gumi. Nui Onoue, who received the fraudulent loans from Mihuzo’s IBJ, was said to be associated with Yamaguchi-gumi’s Takumi gang, and also an investor in Inagawa-kai.[41]

Japanese Banks had experienced a relatively tough time in the 1990s, referred to in financial circles as “the lost decade”, and in general were still doing badly in the years 2000 and 2001. In November 2000, Mizuho Holdings had problem loans and bad debts of more than 4 trillion yen ($36 billion). By mid-2001, the company was trading at half the value it had been at just a year before, when the merger was announced. [48, 49] Japan’s financial system began to recover in 2002.[50]

Moving to floor 83 of the south tower, there was AON Corporation, a Chicago-based competitor of Marsh. Today, General Richard Myers, one of the people most responsible for not protecting us on 9/11, is a director at AON. But on 9/11, the most interesting character working for AON was Jim Pierce, the cousin of George W. Bush. Jim’s father Scott Pierce, formerly a partner at G.H. Walker & Co, pled guilty to 2,000 counts of mail fraud in 1985, as President of E.F. Hutton.

Jim Pierce was managing director of AON on 9/11, and he had arranged a meeting on the 105th floor of the south tower for that morning. Pierce survived that day, despite the fact that twelve people came to the meeting in the south tower, and eleven of them died. The location of the meeting had been changed, the night before, to the Millenium Hotel, where Pierce watched the south tower as it was hit by the aircraft. Apparently the meeting attendees were not all notified of the change in location.[51]

AON modifed “unknown” parts of floor 83 in 1997. Some photos of the impact zone suggest that the most explosive part of the fireball erupting from the south tower came from the east side of the building, near floor 83 (see NIST report NCSTAR 1-5A, figure 7-7).

Chuo Trust, which shared floor 83 with AON, was the trust portion of Mihuzo’s DKB. According to NIST, Chuo modified the southeast corner of floor 83 in 1999.

An unusual feature of the destruction of the south tower was the “cold spot” on the north face of the building. This section along a twelve-column area of floors 80, 81, 82 did not experience any fire, despite the fact that the areas on both sides did have fire. In its report NCSTAR 1-5, NIST “concluded that insufficient information is available to allow a likely formation mechanism for the cold spot to be postulated.”

The Washington Group

Another company of interest, on floor 91 just above the impact zone for the south tower, was Washington Group International (Washington). This company was known primarily as a construction and mining firm, and it had just acquired Raytheon Engineers in July 2000. Raytheon was reported to have also occupied floor 91.

Washington had an interesting history. It had been a contractor for the DOE and its predecessor agencies since 1942, when it was involved in the Manhattan Project. In 1995, a management shake-up at Washington resulted in the temporary installment of William Clark as acting chairman. Clark was a member of the Center for Security Policy, along with many neo-cons including Richard Perle, Eliot Abrams, Norman Augustine (In-Q-Tel), Douglas Feith, and 9/11 Commissioner John Lehman. After re-organizing the management at Washington, in just a few months, Clark resigned.

In 1996, Washington took over Morrison-Knudsen, an engineering and construction company that had a history of working on large projects around the world, including in China, Iran, Afghanistan and Saudi Arabia. In Vietnam, Washington led the RMK-BRJ construction project with Brown & Root. During the 1980s, it worked closely on hazardous clean-up projects for the DOE. The Army Corps of Engineers hired Morrison-Knudsen to demolish over 200 buildings in 1995.[52]

In 1999, Washington acquired Westinghouse Government Environmental Services Company (WGESC), a firm that provided management services to the DOE and DOD. In July 2001, E. Preston Rahe, Jr, the President of WGESC, was promoted to Executive Vice President of Business Development for Washington Group’s Government operating unit. Rahe went on to form a new company called Lawrence Livermore National Security, LLC, along with General John A. Gordon.

Gordon was George H. W. Bush’s Senior Director for Defense Policy on the National Security Council, and he worked with George Tenet at the CIA from September 1996 to October 1997, as associate director of central intelligence for military support, and as deputy director of the CIA from October 1997 to 2000. During this time, Gordon would have worked closely with A.B. Krongard, who was Tenet’s counsel from 1998 to 2001. Later, in 2003 and 2004, Gordon was George W. Bush’s Homeland Security advisor.

Apart from Lawrence Livermore labs (LLNL), one of the DOE facilities for which Washington was responsible, well before 9/11, was the Savannah River site near Aiken, SC. In February 1997, LLNL and the Savannah River site signed an agreement of cooperation to share technology. Savannah went on to add “Developing sol gel technology for fuels and other applications” to its portfolio.[53, 54] Sol-gel technology is utilized by LLNL for making nanothermites.[55] In another coincidence, Savannah River Technology staff participated in the search and rescue operations at Ground Zero by providing unique tools.[56]

Today, Washington is owned by URS Corp, and they still “help manage and operate Idaho NL, LANL and LLNL,” through a partnership with Battelle.[57] But just before 9/11 they were going through a tough time financially, and sought chapter 11 bankruptcy protection. Securities and Exchange Commission (SEC) documents show that Washington made court-ordered pre-petition payments, as part of these proceedings, to a number of companies including Komatsu. Washington also made payments to Greenhorne & O’Mara, whose employee Theresa McAllister was a lead author for the FEMA and NIST reports on the WTC disaster, and to Sumitomo Bank.[58] Sumitomo Bank was closely allied with Komatsu, and was involved with defense-related production.[59]

Other floors and companies of interest

If a “top down” demolition were implemented in the WTC’s Twin Towers on 9/11, then it would have been necessary to plant explosives on floors below the impact zone. From a novice perspective, it would seem ideal to have planted such explosives at regular intervals below the impact area, around floor 50, for example, and below that around floors 25 to 35, and lower. Videos show “squibs” emanating in these general areas of each tower, at levels spaced between the mechanical floors on 41-42, and 75-76.

We have seen that Marsh occupied the impact zone for the north tower, and floors 47 to 54 of the south tower. Additionally, in a reflective criss-cross pattern, Fuji Bank’s parent company Mihuzo Holdings occupied the impact zone for the south tower, as well as floors 48 to 50 of the north tower (DKB). Primark Corporation occupied part of the impact zone for the south tower, and also floor 11 of the north tower.

To evaluate floors 25 to 35 of each tower we should note that, in 1997 and 1998, big leases were signed at the WTC involving AON, Marsh, and Bankers Trust, and two other companies of interest, Exco Resources and Oppenheimer & Co. At the time, tenancy had gone way up and the complex was expected to be at full capacity due to growth of the financial sector.[60]

Exco Resources (Exco), of Dallas Texas, was an oil and gas holding company that was the parent to Garban Intercapital, located on floor 25 and 26 of the north tower, and also on floor 55 of the south tower, just above Marsh subsidiary Guy Carpenter. Exco experienced rapid growth as of 1998, in part due to some very well connected management representatives. Member of the board Mark Neporent also represented Cerebrus Capital, along with Dan Quayle. Robert L. Stillwell, senior partner at Bush friend James Baker’s firm Baker Botts, is currently a director at Exco.

Directors and Officers at Exco, during the period of interest, were associated with Enron affiliates, Anadarko Petroleum, a company owned and operated by long-time Bush family partner Robert Allison, and many other oil and gas exploration firms. Both Enron and Robert Allison met with Dick Cheney in regard to his secretive energy task force in early 2001.[61] In general, oil and gas exploration companies use explosives to underground create shock waves, so that oil reserves can be found through the seismic responses. Usually there is only a 10% success rate for finding new productive oil fields.[62]

Another Exco executive was Jeffrey Benjamin, who served on the board of Exco starting in 1998, and from 1996 to 1998 was managing director of UBS, the BCCI connected bank mentioned above with Mathis Cabiallavetta and Wolfgang Demisch. Just prior to working for UBS, Benjamin was managing director of Bankers Trust. Through Bankers Trust, he worked with A.B. Krongard, and as of 2002, Benjamin is a senior advisor to Apollo Management with Krongard’s wife, Cheryl Gordon Krongard.

Oppenheimer & Co, an investment bank, was on floors 31 to 34 of the south tower. Oppenheimer’s leadership once included Stephen Berger, former executive director of the PANYNJ (1985 to 1990). Berger was also on the board of Dresser Industries, the Bush dynasty firm, as well as being on the board of Forstmann Little & Co. with managing director of the Carlyle Group, Daniel Akerson, and with Alex Mandl of In-Q-Tel.

Oppenheimer was sold, by Stephen Robert and Nathan Gantcher, to the Canadian Imperial Bank of Commerce (CIBC) in 1997. Mr. Gantcher continued to serve as Vice Chairman of CIBC Oppenheimer from 1997 to 1999 and also served on the board of Jacobsen Partners with Gerald Parsky, the former undersecretary of the Treasury who introduced Saudi investors to America. Parsky developed a close relationship with the Bushes, and by 1976 was “the undisputed go-to man for the Saudis on oil and money.” He also raised a lot of money for George W’s campaign.[63] Parsky, Gantcher and Stephen Robert were all members of the Council on Foreign Relations as of 1997, along with Friedman, Bremer, Augustine, Gordon, and Maurice Greenberg (and about 3,000 others).

CIBC Oppenheimer was invested in a number of powerful and politically wired companies, including Hollinger International, whose board included Henry Kissinger, Richard Perle, and 9/11 Commissioner James R. Thompson. CIBC Oppenheimer was also invested in Robert Allison’s Anadarko Petroleum, and several DKB subsidiaries including CIT Group, on whose board sits 9/11 Commissioner Thomas Kean. On a side note, Kean is also a Trustee of Drew University with Garnett Keith of Komatsu.

In 2003, the SEC fined CIBC Oppenheimer $80 million for helping to manipulate the financial statements of Enron.

Conclusions and next steps

If we look at the companies that occupied the impact zones of the WTC towers, and other floors that might have played a useful role in the demolition of the towers, we see connections to organizations that had access to explosive materials, and to the expertise required to use explosives. Mining companies like Washington, Morrison-Knudsen, Komatsu and Aoki Construction (and John Lehman’s Special Devices Inc.) have access to many types of explosive materials. Oil and gas companies, like those associated with Exco, use explosives for exploration. Some of the explosive technologies available to these companies, for example Komatsu and Washington, involve thermite, a chemical mixture that has been identified in the WTC dust and in the environmental data at Ground Zero.

It seems that, if certain management representatives of the tenant companies listed above wanted to help bring the WTC towers down, they would have been well suited to do so. The companies mentioned were located at well-spaced intervals in the buildings, and some, for example Marsh and the Primark subsidiaries, had a reputation of being secretive. In fact, a number of the executives from these firms were either on the board of intelligence firms (e.g. In-Q-Tel, TASC), or were closely related to others who were. Others were connected to the CIA itself, and to some of the largest defense contractors in the world, like Lockheed Martin, Raytheon, General Dynamics, Halliburton, and SAIC.

There are also strong connections to those who benefited from the 9/11 attacks, most notably the Bush family and their corporate network, including Dresser Industries (now Halliburton) and UBS, and to Deutsche Bank and it subsidiaries, reported to have brokered the insider trading deals. There are links between these tenant companies and the terrorist-related fraudulent bank BCCI.

In Part II of this series of essays, we’ll look at the security companies and other contractors that had access to the WTC buildings. We’ll then see more connections to the Bush family, through the companies that restructured the security systems in the late 1990s, like Securacom, where Marvin Bush and Wirt Walker were directors. Also involved in these security upgrades was Ensec, where future Democrat National Committee chairman Terry McAuliffe was added as a director in 1996 and later worked for Harken Energy’s Alan Quasha. The second essay will also look at E.J. Electric, owned by J. Robert Mann of the Yale Glee Club, and examine particulars about the PANYNJ management staff, and the Giuliani and Silverstein teams that were involved.

Part III will review the clean up of Ground Zero, and some of the people involved in the cover-up investigations. For example, we’ll look more closely at Donald Evans, a close friend to George W. Bush since 1968 and his largest fund-raiser, and who also happened to be secretary of the Department of Commerce during the NIST WTC investigation. This is interesting because NIST reports to the Secretary of Commerce.

In the end, we might see that conspiracies are not just limited to the powerless people who happen to live on the most strategically important lands in the world. The conspiracies that matter might involve the powerful people who seek access to those lands, and who have spent their lives seeking more power.



Endnotes and references:

[1] Steven. E. Jones, Why Indeed Did the WTC Buildings Completely Collapse?, Journal of 9/11 Studies, September 2006 WhyIndeedDidtheWorldTradeCenterBuildingsCompletelyCollapse.pdf

[2] Steven E. Jones, et al, Fourteen Points of Agreement with Official Government Reports on the World Trade Center Destruction, The Open Civil Engineering Journal Volume 2, doi: 10.2174/1874149500802010035

[3] Niels H. Harrit, et al, Active Thermitic Material Discovered in Dust from the 9/11 World Trade Center Catastrophe, The Open Chemical Physics Journal, Vol 2, 2009, doi: 10.2174/1874412500902010007,

[4] Kevin R. Ryan, et al, Environmental anomalies at the World Trade Center: evidence for energetic materials, The Environmentalist, Volume 29, Number 1 / March, 2009,

[5] James Gourley, Appeal Filed with NIST, Pursuant to Earlier Request for Correction, Journal of 9/11 Studies, December 2007

[6] Eric Douglas, The NIST WTC Investigation–How Real Was The Simulation?: A review of NIST NCSTAR 1, J 9/11 Studies, December 2006

[7] Kevin Ryan, What is 9/11 Truth? – The First Steps, J 9/11 Studies, August 2006

[8] Larry Neumeister, Trade Center bomber’s threat foreshadowed September terrorist attacks, September 30, 2001, Associated Press

[9] Sandra Harmon, Mafia Son, St. Martin’s Press, NY

[10] History Commons, page for Rajaa Gulum Abbas,

[11] NIST WTC Report, NCSTAR 1-1H, Chapters 11 and 12,

[12] Kevin Ryan, Another Amazing Coincidence Related to the WTC,

[13] NIST NCSTAR 1-1H (see above), table 13-1, and table 13-2.

[14] Marcia Vickers, The Secret World Of Marsh Mac, BusinessWeek, November 1, 2004

[15] Wayne Madsen, AIG is a “special case”, Online Journal. September 23, 2008

[16] Ellen Ray, William H. Schaap, Covertaction, Institute for Media Analysis, p 193

[17] John Kerry and Hank Brown, The BCCI Affair: A Report to the Committee on Foreign Relations United States Senate, December 1992, Senate Print 102-140,

[18] Eric J.Fry, From BCCI to AIG…, March 13, 2009, Bullion Vault Gold News,

[19] Website for In-Q-Tel,

[20] The History Commons, “Wolfowitz Doctrine”, Aaron Dykes, Wolfowitz Warns of ‘Surprise like Pearl Harbor’ Months Before 9/11 Attacks, Jones Report, February 9, 2007 Wolfowitz’s meeting with Mahmud Ahmed was documented in a FOIA response obtained by the 9/11 Working Group of Bloomington –

[21] Philip Shenon, The Commission: The Uncensored History of the 9/11 Investigation, pp 249-253

[22] Craig Unger, House of Bush, House of Saud, pp 220, 228

[23] Craig Unger references the UBS links to BCCI in House of Bush, House of Saud, and Russ Baker describes the UBS bailout of Harken in Family of Secrets

[24] Akzo’s International Paint is the maker of Interchar

[25] Taku Murakami, US Patent 5532449 – Using plasma ARC and thermite to demolish concrete,

[26] Steven E. Jones et al, Extremely High Temperatures During the World Trade Center Destruction, Journal of 9/11 Studies, January 2008

[27] Lewis Paul Bremer III on Washington DC NBC4 TV 09/11/01, Vehmgericht

[28] A.K. Gupta, The Great Iraq Heist, January 15, 2004, Information Clearing House

[29] Albert Gibson et al, Integral low-energy thermite igniter, US Patent number: 4464989,

[30] Kevin R. Ryan, The Top Ten Connections Between NIST and Nanothermites, Journal of 9/11 Studies, July 2008,

[31] Skull and Bones is a secret society at Yale University, founded in 1832. Members have included George H.W. Bush, his father Prescott Bush, his son George W. Bush, his brother Jonathan J. Bush, and many other powerful people. For LMI’s mission, see its website –

[32] World Markets Research Centre, Global Terrorism Index: key findings, The Guardian (UK), August 18, 2003

[33] NIST NCSTAR 1-1H, table 13-2

[34] See Micha Morrison, Wall Street Journal, March 1, 1995. and, Gina Bellafante et al, All That Glitters…, Time Magazine, November 6, 1995

[35] Timothy O’Brien, A Washington Bank, a Global Mess, NY Times, April 11, 2004,

[36] Wikipedia page for Deutsche Bank –

[37] Michael C. Ruppert, Suppressed Details of Criminal Insider Trading Lead Directly into the CIA’s Highest Ranks, October 9, 2001,

[38] For the fraudulent loan scandal, see article from The Economist, entitled Japan’s financial scandals: now a big bank, July 27, 1991. For the Cayman islands deposits, see Terry Reed and John Cummins, Compromised: Clinton, Bush and the CIA, p248

[39] William Bowles, ‘Frauds-R-Us’ The Bush Family Saga, Information Clearing House, May 11, 2003

[40] Sam Smith, Arkansas Connections, The Progressive Review, January 2001

[41] David E. Kaplan and Alec Dubro, Yakuza: Japan’s Criminal Underworld, University of California Press, 2003, see p 216 for the Koike loans and pp 198-199 for Niu Onoue

[42] Chairman Resigns at Dai-Ichi Kangyo Bank, New York Times Business section, June 14, 1997

[43] For the IBJ loans, see Mihuzo press release – and James Sterngold, Japan Hit by Another Scandal, New York Times, August 14, 1991 For FirstPlus Financial, see the Center for Public integrity, The Buying of the President – For more on Japanese banks and the Yakuza in the early 90s, see –

[44] Thomas Flannigan, Bribing the Bushes –

[45] Jeff Gerth, The 1992 Campaign; Business Dealings of the President’s Relatives: What the Record Shows, New York Times, April 19,1992,

[46] Russel S. Bowen, The Immaculate Deception, American West Publishers 1991

[47] Masanobu Iwatani, Regulatory Reform Provokes a Wave of New Entrants to Japan’s Security Markets, Capital Research Journal, Vol 2, No 4,

[48] Stephanie Strom, International Business; Japan’s Banks Pressed by Troubled Corporate Clients, New York Times, November 25, 2000,

[49] Miki Tanikawa, Stocks Relapse As Japan Waits For Changes, New York Times, July 27, 2001,

[50] Hiroko Tabuchi, In Japan’s Stagnant Decade, Cautionary Tales for America, New York Times, February 12, 2009

[51] See History Commons profile for Jim Pierce, and accompanying referencs,

[52] Mark MacIntyre, Bunker Hill: light at the end of the tunnel, The Seattle Daily Journal of Commerce, August 20, 1998,

[53] The agreement between LLNL and Savannah River can be found here –

[54] Savannah’s reference to developing sol-gels can be found here –

[55] Randy Simpson webpage at LLNL –

[56] News from the Savannah River National Laboratory, September 20, 2001,

[57] URS Website –

[58] SEC document for Washington pre-payments –

[59] The Ties That Bind, Descended from family business empires, six huge business groups dominate the Japanese economy, Multinational Monitor, October 1983 –

[60] John Holusha, Commercial Property/Downtown; At the World Trade Center, Things Are Looking Up, May 31, 1998, New York Times, Also see PANYNJ press release from December 1997, –

[61] Don Van Natta Jr. and Neela Banerjee, Top G.O.P. Donors in Energy Industry Met Cheney Panel, New York Times, March 1, 2002


[63] Russ Baker, Family of Secrets, Bloomsbury Press, pp 292-295


Kevin Ryan is the former Site Manager for Environmental Health Laboratories, a division of Underwriters Laboratories (UL). Mr. Ryan, a Chemist and laboratory manager, was fired by UL in 2004 for publicly questioning the report being drafted by the National Institute of Standards and Technology (NIST) on their World Trade Center investigation. In the intervening period, Ryan has completed additional research while his original questions, which have become increasingly important over time, remain unanswered by UL or NIST. More information feedback kncryan @


Premier U.S. Fighter Jet Has Major Shortcomings


Washington Post Link:

The idea that the employees of A.I.G. F.P. had conspired to maximize their short-term gains at the company’s longer-term expense, for instance.”  There seems to be a lot of this going on lately!  -GFS


The Man Who Crashed the World


Saturday 01 August 2009

by: Michael Lewis  |  Visit article original @ Vanity Fair
Joseph Cassano headed A.I.G.’s financial products division. (Photo: ZUMA Press)

    Almost a year after A.I.G.’s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved-the silent, shell-shocked traders of the A.I.G. Financial Products unit-and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees.

    Six months ago, I received an odd phone call from a man named Jake DeSantis at A.I.G. Financial Products-the infamous unit of the doomed insurance company, staffed by expensively educated, highly paid traders, whose financial ineptitude is widely suspected of costing the U.S. taxpayer $182.5 billion and counting. At the time A.I.G. F.P.’s losses were reported, it became known that a handful of traders in this curious unit had sold trillions of dollars of credit-default swaps (essentially unregulated insurance policies) on piles of U.S. subprime mortgages, but its employees hadn’t yet become the leading examples of Wall Street greed. And so this was before Jake DeSantis and his colleagues found themselves suburban-Connecticut outcasts, before their first death threats, before the House of Representatives passed a bill because of them (taxing 90 percent of their large bonuses), before New York attorney general Andrew Cuomo announced he was going after their paychecks, and before Iowa senator Charles Grassley said that A.I.G.’s leaders should follow the Japanese example and “either do one of two things, resign or go commit suicide.”

    DeSantis turned out to be a friend of a friend. He’d called because he didn’t know anyone else “in the media.” As a type he was instantly recognizable: a “quant,” a numbers guy who was allowed to take financial risks because of his superior math skills, but who had no taste for company politics or public exposure. He’d grown up in the Midwest, the son of schoolteachers, and discovered Wall Street as a scholarship student at M.I.T. The previous seven years he’d spent running A.I.G. F.P.’s profitable stock-market-related trades. He wasn’t looking for me to write about him or about A.I.G. F.P. He just wanted to know why the public perception of what had happened inside his unit, and the larger company, was so different from the private perception of the people inside it, who actually knew what had happened. The idea that the employees of A.I.G. F.P. had conspired to maximize their short-term gains at the company’s longer-term expense, for instance. He and the other traders had been required to defer about half of their pay for years, and intertwine their long-term interests with their firm’s. The people who lost the most when A.I.G. F.P. went down were the employees of A.I.G. F.P.: DeSantis himself had just watched more than half of what he’d made over the previous nine years vanish. The incentive system at A.I.G. F.P., created in the mid-1990s, wasn’t the short-term-oriented racket that helped doom the Wall Street investment bank as we knew it. It was the very system that U.S. Treasury secretary Timothy Geithner, among others, had proposed as a solution to the problem of Wall Street pay.

    Even more oddly, the public explanation of A.I.G.’s failure focused on the credit-default swaps sold by traders at A.I.G. F.P., when A.I.G.’s problems were clearly broader. There was the mortgage-insurance unit in North Carolina, United Guaranty, that had taken on all sorts of silly risks in the past two years, lost several billion dollars, and replaced their C.E.O. There were the fund managers at A.I.G., the parent company, who had blown nearly $50 billion on trades in subprime mortgages-that is, they had lost more than A.I.G. F.P., whose losses stood around $45 billion. And there was a pattern: all of this stuff had happened since 2005, after an accounting scandal forced C.E.O. Maurice “Hank” Greenberg to resign. Greenberg, who had headed A.I.G. since 1968, was a bullying, omnipotent ruler-one of those bosses who did not so much build a company as tailor it to his character and render it incapable of being run by anyone else. After he was forced out, Greenberg said, “The new management wanted to prove that they could continue to grow without former management” and so turned a blind eye to all sorts of risks. So how come most of the senior management at A.I.G. was left in place by the U.S. Treasury after the bailout? Why were officials, both public and private, so intent on leading others to believe all the losses at A.I.G. had been caused by a few dozen traders in this fringe unit in London and Connecticut?

    I had no idea, was busy doing other things, and had no special interest in Jake DeSantis’s predicament. I listened politely, made my excuses-and went back to whatever it was I’d been doing. But then, on March 19, the new C.E.O. of A.I.G., Edward Liddy, went to Washington to testify. The story broke-or, rather, rebroke, as it had been reported two weeks earlier, without stirring much notice-that A.I.G. F.P. had just shelled out $450 million in bonuses to the 400 employees of A.I.G. F.P., including to Jake DeSantis. It must have been an otherwise slow news day because all hell broke loose, in a way it hadn’t before and hasn’t since in this financial crisis. The perception was that the very same people who had made these insane, greed-driven decisions that might cost the U.S. taxpayer $182.5 billion were still paying themselves big bucks! An exchange between C.E.O. Liddy and Florida congressman Alan Grayson captured the spirit of that moment:

    grayson: Mr. Liddy, you said before that there’s 20 or 25 people who were involved in the credit default business. What are their names, please?

    liddy: I don’t have their names at my disposal, sir. grayson: Well, I’m sure you remember a few of the names. I mean, they did cause your company to crash.

    liddy: You know, I’ve been at the company, as you know, for six months. I don’t know all the people that were in AIG F.P., and many of them are gone.

    grayson: Well, there or gone, it doesn’t really matter. I want to know who they are. Names, please….

    liddy: If it’s possible to provide you the names, we will. We will cooperate with you.

    grayson: That’s good, but I want to know the names that you know right now.

    liddy: I don’t know them, sir.

    grayson: Not a single one. You’re talking about a group, a small group of people who caused your company to lose $100 billion, as you sit here today, you can’t give me one single name.

    liddy: The single name I would give you is Joseph Cassano, who ran …

    grayson: That’s a good start. You already gave that name. Give me another name.

    liddy: I just don’t know them. I do not know those names. I don’t have them all at my command.

    grayson: Well, how can you propose to solve the problems of the company that you’re now running if you don’t know the names of the people who caused that problem? … I would expect you’d at least know more than one name. How about two names? Give us one more name.

    liddy: I’m just not going to do that, sir, because that will provide-that’ll be the-that could be a list of people that we could do-individuals who want to do damage to them could do that. It’s just not …

    grayson: Well, listen, these same people could now be working right now today at Citibank. Is it more important to protect them, the ones who caused the $100 billion loss, or protect us? Which is more important to you right now?

    For a brief moment you had a glimpse of how harshly financial people might be treated if Wall Street ever lost its political influence. Just days before, Larry Summers had gone on the morning talk shows to explain that a contract is a contract and the government couldn’t just go in and void it and take back A.I.G.’s paychecks, but that “every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve System.” Then Obama himself went out of his way to denounce the greed at A.I.G. F.P. and say he was looking for a way to get the bonus money back-and even that failed to slake the public anger. “On A.I.G.,” a journalist asked Obama at a press conference, “why did you wait-why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general’s office. It took you days to come public with Secretary Geithner and say, Look, we’re outraged. Why did it take so long?”

    “It took us a couple of days because I like to know what I’m talking about before I speak,” Obama said testily. “All right?”

    It’s unlikely that he actually did know what he was talking about, except in the broadest outlines. Nor, for that matter, did the people who had engineered the bailout. How could they? At no point did anyone from the U.S. Treasury or the U.S. Congress, or any of the various New York State authorities that had gotten involved, call them up, much less visit A.I.G. F.P.-as, say, someone might who was genuinely curious to know what, exactly, had happened there. Not even A.I.G. C.E.O. Ed Liddy had bothered to make the drive from Manhattan to Wilton, Connecticut, where many of the offending trades had been done, and most of the offending bonuses were being paid, to ask questions of the people still on the scene-people who could have told him a great deal about what had happened and why. Everyone seemed to be operating on whatever they read in the newspapers-and the people inside A.I.G. F.P., who had the best view of the action, did not appear to be talking to reporters. Depending on which account you read, you thought they had lost $40 billion, or $100 billion, or $152 billion. They had done this by selling credit-default swaps on subprime-mortgage bonds-which is to say they had insured Goldman Sachs, Deutsche Bank, Merrill Lynch, and the rest against Americans with weak credit histories defaulting on their mortgages. But why? Apparently, because they were greedy: the premiums they took in from the insurance allowed them to pay themselves big bonuses, which they’d grown so accustomed to that they now were reduced to stealing from the U.S. taxpayer. And that, it seemed, was that.

    The day after Liddy’s testimony, I got another call from Jake DeSantis. (I was still the only person “in the media” with whom he felt any connection.) He was upset. He’d turned down offers of more money from other people. He’d stayed only because the company had begged him to help clean up the mess: the bonus he was paid was the result of profits he had generated by selling off his trades in global equities-profits which almost surely would have been losses had he not hung around. He’d had nothing to do with the trades that lost money; the handful of people who’d known about them, when they happened, were long gone, and even they had been guided by a certain understandable logic. Now A.I.G.’s new leader, who had accepted these bonuses and run them by both the Treasury and the Federal Reserve, flies down to Washington and tells the world that he found the bonuses “distasteful.”

    “You go to church and you go to soccer practice and people look at you funny,” said DeSantis. “This is changing people’s views on who I am as a person.” He’d decided to resign, write a letter to Liddy, and, as he put it, “release it to the media.”

    It sounded like the sort of thing that might work on a TV show. “What does that mean: ‘Release it to the media’?” I asked. That, he said, was why he’d called me: he thought I knew how. Having no clue, I put him in touch with the editor of the New York Times op-ed page, who published Jake DeSantis’s letter of resignation on March 25 at the top of his page under the headline: dear a.i.g., i quit! In it Jake repeated what he’d told me, offered a bit of his life story, and confessed the size of his after-tax bonus ($742,006.40). He also explained that he had for a year spent up to 14 hours a day helping to dismantle the company and that he and the others who had nothing to do with the losses had agreed to do so based on the promise their contracts would be honored.

    It’s never easy to prove that a piece of writing causes anything, but Jake’s letter was an instant sensation. Bits of it were reprinted in major publications around the world. Within a few days it was the most sent, most blogged, and most read item on the Times’s Web site, and remained so for the entire month. Three point nine million browsers clicked on it and read it, and the tone of the public discussion changed. New York attorney general Andrew Cuomo stopped saying he intended to hound the millions paid to the people who worked at A.I.G. F.P., and started saying he was more interested in the $12.9 billion A.I.G. had paid out to Goldman Sachs, and others, to cover the massive bets against U.S. subprime mortgages that they had made with A.I.G. The House tax bill stalled in the Senate. I didn’t really know Jake DeSantis, but I thought, That was just incredibly brave. He stepped out alone in front of the mob and compelled it to disband, at least for the moment. But I never heard back from him. After a few days of not being able to open a newspaper or go to a Web site without seeing some reference to Jake DeSantis and his letter, I phoned him. “Oh hey,” he said cheerily. “They published my letter.”

    No shit, Jake.

    “Has it worked out O.K.?” I asked.

    “Oh yeah,” he said, “but I had to move my family out of our house.”

    He had woken up the morning his piece ran to find media trucks jamming the end of his driveway. He took his family out back through the woods – “We live in the middle of nowhere” – and secreted them at a friend’s house. “I’ve been going back and standing on the porch down the road and pretending to be a gawking neighbor,” he said, “but they’re all still there blocking the end of the driveway. They’re waiting for me to come back, I guess.” His voice mail, he said, was also jammed. “All these media people keep calling,” he said. “Like who?” I asked. “We don’t watch TV, so I don’t know who they are,” he said. I pressed him. “Well, there’s one guy who has been calling a bunch. Matt Lauer. I don’t know who he’s with.” The only caller he could completely identify was Katie Couric: “She called our mayor personally and tried to butter her up to get her to tell her where I am,” he said. (A Couric producer says, “Katie placed a brief call to the mayor, expressed interest in the interview, and nothing further happened.”) He suspected, probably rightly, that the media wanted him to play the role of the greedy Wall Street trader who had stolen millions and now claimed to feel misunderstood. “O.K.,” he said. “I can do this and probably not make an ass of myself. But I can do nothing and not make an ass of myself. I’ll stick with that.”

    With that, A.I.G. F.P. went dark again, which, I now realized, was a shame. DeSantis had established, sort of, what the people in his unit didn’t do. He’d left unexplained what exactly they did do.

    Here is an amazing fact: nearly a year after perhaps the most sensational corporate collapse in the history of finance, a collapse that, without the intervention of the government, would have led to the bankruptcy of every major American financial institution, plus a lot of foreign ones, too, A.I.G.’s losses and the trades that led to them still haven’t been properly explained. How did they happen? Unlike, say, Bernie Madoff’s pyramid scheme, they don’t seem to have been raw theft. They may have been an outrageous departure from financial norms, but, if so, why hasn’t anyone in the place been charged with a crime? How did an insurance company become so entangled in the sophisticated end of Wall Street and wind up the fool at the poker table? How could the U.S. government simply hand over $54 billion in taxpayer dollars to Goldman Sachs and Merrill Lynch and all the rest to make good on the subprime insurance A.I.G. F.P. had sold to them-especially after Goldman Sachs was coming out and saying that it had hedged itself by betting against A.I.G.? Since I had him on the phone I asked Jake DeSantis for what Congressman Grayson had asked Edward Liddy: names. He obligingly introduced me to his colleagues in London and Connecticut, and they walked me through what had happened-all of them speaking to someone from the outside for the first time. All, for obvious reasons, were terrified of seeing their names in print, and asked not to be mentioned by name. That was fine by me, as their names are not what’s interesting. What’s interesting is their point of view on the event closest to the center of the financial crisis. For while they disagreed on this and that, they all were fairly certain that if it hadn’t been for A.I.G. F.P. the subprime-mortgage machine might never have been built, and the financial crisis might never have happened.

    The Soul of a New Machine

    A.I.G. F.P. was created back in 1987 by refugees from Drexel Burnham, led by a trader named Howard Sosin, who claimed to have a better model to trade and value interest-rate swaps. Nineteen-eighties financial innovation had all sorts of consequences, but one of them was a boom in the number of deals between big financial firms that required them to take each other’s credit risks. Interest-rate swaps-in which a party swaps a stream of income from a floating rate of interest for one from a fixed rate of interest-was one such innovation.

    Once upon a time Chrysler issued a bond through Morgan Stanley, and the only people who wound up with credit risk were the investors who had bought the Chrysler bond. Now Chrysler might sell its bonds and simultaneously enter into a 10-year interest-rate-swap transaction with Morgan Stanley-and just like that Chrysler and Morgan Stanley were exposed to each other. If Chrysler went bankrupt, its bondholders obviously lost; depending on the nature of the swap and the movement of interest rates, Morgan Stanley might lose, too. If Morgan Stanley went bust, Chrysler along with anyone else who had done interest-rate swaps with Morgan Stanley stood to suffer. Financial risk had been created, out of thin air, and it begged to be either honestly accounted for or disguised.

    Enter Sosin, with his supposedly new and improved interest-rate-swap model (even though Drexel Burnham was not at the time a market leader in interest-rate swaps).

    There was a natural role for a blue-chip corporation with the highest credit rating to stand in the middle of swaps and long-term options and the other risk-spawning innovations. The traits required of this corporation were that it not be a bank-and thus subject to bank regulation and the need to reserve capital against the risky assets-and that it be willing and able to bury exotic risks on its balance sheet. There was no real reason that company had to be A.I.G.; it could have been any AAA-rated entity with a huge balance sheet. Berkshire Hathaway, for instance, or General Electric. A.I.G. just got there first.

    In a financial system that was rapidly generating complicated risks, A.I.G. F.P. became a huge swallower of those risks. In the early days it must have seemed as if it was being paid to insure against events extremely unlikely to occur-how likely was it that all sorts of companies and banks all over the globe would go bust at the same time? Its success bred imitators: Zurich Re F.P., Swiss Re F.P., Credit Suisse F.P., Gen Re F.P. All of these places were central to what happened in the last two decades; without them the new risks being created would have had no place to hide, but would have remained in full view of bank regulators. All of these places have been washed away by the general nausea now felt in the presence of complicated financial risks, but there was a moment when their existence seemed cartographically necessary to the financial world. And A.I.G. F.P. was the model for them all.

    The division’s first 15 years were consistently, amazingly profitable-there wasn’t the first hint that it might be running risks that would cause it to lose money, much less cripple its giant parent. Its traders were able to claim that they were “hedged,” and even if the term was misleading, they never sold exactly the same thing as the thing they had bought-there was always some slight difference. The risks it ran were probably trivial in relation to its capital, because the risks that the financial system wanted to lay off on it were, in fact, not terribly risky. One indication of this is that, even in the middle of the calamity, the 95 percent of A.I.G. F.P. that had nothing to do with subprime-mortgage bonds continued to generate profits. By 2001, A.I.G. F.P. could be counted on to generate $300 million a year, or 15 percent of A.I.G.’s profits.

    Meanwhile, the people who worked at A.I.G. F.P. got rich. Exactly how rich is hard to say, but there are plenty of hints. One is that a company lawyer-a mere lawyer!-took home a $25 million bonus at the end of one year. Another is that in 2005, when Howard Sosin and his wife divorced, she received more than $40 million of an estate valued at $168 million-and Sosin had left A.I.G. in 1993, receiving $182 million from the company! He had been replaced that year as C.E.O. by a gentler soul named Tom Savage, who had allowed Hank Greenberg to take some of the sugar out of F.P., but even then the small band of traders had, arguably, a sweeter deal than any money managers in the world. The typical hedge fund kept 20 percent of profits; the traders at A.I.G. F.P. kept 30 to 35 percent. The typical hedge fund or private-equity fund has to schlep around and raise money all the time, and post collateral with big Wall Street firms for all the trades they do. The traders at A.I.G. F.P. had essentially unlimited capital on tap from the parent company, along with the AAA rating, rent-free. For the people who worked there, A.I.G. F.P. was a financial miracle. They were required to leave 50 percent of their bonuses in the company, but they were happy to do so; many of them, viewing it as the best way to grow their own savings, invested far more than the minimum back in the company. When it collapsed, the employees lost more than $500 million of their own money.

    How and why their miracle became a catastrophe, A.I.G. F.P.’s traders say, is a complicated story, but it begins simply: with a change in the way decisions were made, brought about by a change in its leadership. At the end of 2001 its second C.E.O., Tom Savage, retired, and his former deputy, Joe Cassano, was elevated. Savage is a trained mathematician who understood the models used by A.I.G. traders to price the risk they were running-and thus ensure that they were fairly paid for it. He enjoyed debates about both the models and the merits of A.I.G. F.P.’s various trades. Cassano knew a lot less math and had much less interest in debate.

    It’s impossible to deliver the full flavor of a man’s character without talking to him, and relying instead upon a bunch of people who remain afraid of seeing their names in print. That Joe Cassano is the son of a police officer and was a political-science major at Brooklyn College seems, in retrospect, far less relevant than that he’d spent most of his career, both at Drexel and A.I.G. F.P., in the back office, doing operations. Across A.I.G. F.P. the view of the boss was remarkably consistent: a guy with a crude feel for financial risk but a real talent for bullying people who doubted him. “A.I.G. F.P. became a dictatorship,” says one London trader. “Joe would bully people around. He’d humiliate them and then try to make it up to them by giving them huge amounts of money.”

    “One day he got me on the phone and was pissed off about a trade that had lost money,” says a Connecticut trader. “He said, ‘When you lose money it’s my fucking money. Say it.’ I said, ‘What?’ ‘Say “Joe, it’s your fucking money!”‘ So I said, ‘It’s your fucking money, Joe.'”

    “The culture changed,” says a third. “The fear level was so high that when we had these morning meetings you presented what you did not to upset him. And if you were critical of the organization, all hell would break loose.” Says a fourth, “Joe always said, ‘This is my company. You work for my company.’ He’d see you with a bottle of water. He’d come over and say, ‘That’s my water.’ Lunch was free, but Joe always made you feel he had bought it.” And a fifth: “Under Joe the debate and discussion that was common under Tom [Savage] ceased. I would say what I’m saying to you. But with Joe over my shoulder as the audience.” A sixth: “The way you dealt with Joe was to start everything by saying, ‘You’re right, Joe.'”

    According to traders, Cassano was one of those people whose insecurities manifested themselves in a need for obedience and total control. “One day he came in and saw that someone had left the weights on the Smith machine, in the gym,” says a source in Connecticut. “He was literally walking around looking for people who looked buff, trying to find the guy who did it. He was screaming, ‘Who left the fucking weight on the fucking Smith machine? Who left the fucking weight on the fucking Smith machine?'” If that rings a bell it may be because you read The Caine Mutiny and recall Captain Queeg scouring the ship to find out who had stolen the strawberries. Even by the standards of Wall Street villains, whose character flaws wind up being exaggerated to fit the crime, Cassano was a cartoon despot.

    Oddly, he was as likely to direct his anger at profitable traders as at unprofitable ones-and what caused him to become angry was the faintest whiff of insurrection.

    Even more oddly, his anger had no obvious effect on the recipient’s paycheck; a trader might find himself routinely abused by his boss and yet delighted by his year-end bonus, determined by that same boss. Every one of the people I spoke with admitted that the reason they hadn’t taken a swing at Joe Cassano, before walking out the door, was that the money was simply too good. A man who valued loyalty and obedience above all other traits had not any tools to command them except money. Money worked, but only up to a point. If you were going to be on the other side of a trade from Goldman Sachs, you had better know what, exactly, Goldman Sachs was up to. A.I.G. F.P. could attract extremely bright people, whose success depended on precision of both calculation and judgment. It was now run, roughly, by a man who didn’t fully understand all the calculations and whose judgment was clouded by his insecurity. The few people willing to question that judgment wound up quitting the firm. Left behind were people who more or less accommodated Cassano. “If someone is a complete asshole,” one of them puts it to me, “you seek his approval in a way you don’t if he’s a nice guy.”

    All of which raises an obvious question: Who put a man like Joe Cassano in charge of such an enterprise as A.I.G. F.P.? The simple answer is Hank Greenberg, the C.E.O. of A.I.G.; the more complicated one is A.I.G. F.P.’s board, consisting of many smart people, including Harvard economist Martin Feldstein. “Tom Savage proposed Joe to replace him,” says Greenberg, “and we had no reason to think he wasn’t able to do the job.”

    A.I.G. F.P.’s employees for their part suspect that the only reason Greenberg promoted Cassano was that he saw in him a pale imitation of his own tyrannical self and felt he could control him. “So long as Greenberg was there, it worked,” says one trader, “because he watched everything Joe did. After the Nikkei collapsed [in the 1990s], a trader in Japan lost 20 million. Greenberg personally flew to Tokyo and took him into a room and grilled him until he was satisfied.” In March 2005, however, Eliot Spitzer forced Greenberg to resign. And, as one trader puts it, “the new guys running A.I.G. had no idea.” They thought the money machine ran on its own, and Cassano did nothing to discourage the view. By 2005, A.I.G. F.P. was indeed, in effect, his company.

    But even here the story’s messier than its broad outlines. For a start, the guy who had the most invested in A.I.G. F.P. was Joe Cassano. Cassano had been paid $38 million in 2007, but left $36.75 million of that inside the firm. His financial interest in A.I.G. F.P. struck those who worked for him as secondary to his psychological investment: the firm was, by all accounts, Cassano’s sole source of self-worth, its success his lone status symbol. He wore crappy clothes, drove a crappy car, and spent all of his time at the office. He had made huge piles of money ($280 million!), but so far as anyone could tell he didn’t spend any of it. “Joe wasn’t a trader and now he wasn’t a risktaker, in his personal life,” says one of the traders. “With the money he didn’t have in the company he bought Treasury bonds.” He had no children, no obvious social ambition; his status concerns seemed limited to his place in the global financial order. He entertained a notion of himself as the street-smart guy who had triumphed over his social betters-which of course implied that he wasn’t quite sure that he had. “Joe had Goldman envy,” one trader tells me-which was strange, as Cassano’s brother and sister both worked for Goldman Sachs. “His whole life was F.P.,” another trader says. “Without F.P. he had nothing.” That was another reason, in addition to fear, that the highly educated, highly intelligent people who worked for Joe Cassano were slow to question whatever he was doing: he was the last person, they assumed, who would blow the place up.

    The more subtle change inside A.I.G. F.P. occurred not long after Cassano assumed control. In 1998, A.I.G. F.P. had entered the new market for credit-default swaps: it sold insurance to banks against the risk of defaults by huge numbers of investment-grade public corporations. As Gillian Tett tells it in her new book, Fool’s Gold, bankers at J. P. Morgan, having invented credit-default swaps, went looking for an AAA-rated company to assume the bulk of the risk associated with them, and discovered A.I.G. The relationship began innocently enough, by Wall Street standards. The risk in these early deals was indeed small: it was unlikely that large numbers of investment-grade companies in different countries and different industries would default on their debt at the same time. (Even now A.I.G. F.P.’s $450 billion portfolio of corporate credit-default swaps, which dwarfs the $75 billion portfolio of subprime-mortgage credit-default swaps, has avoided losses.) But it made explicit what until then had only been implicit: A.I.G. F.P. was the most receptive dumping ground for new risks created by big Wall Street firms.

    And in the early 2000s, the big Wall Street firms performed this fantastic bait and switch in two stages. Stage One was to apply technology that had been dreamed up to re-distribute corporate credit risk to consumer credit risk. The banks that used A.I.G. F.P. to insure piles of loans to IBM and G.E. now came to it to insure much messier piles that included credit-card debt, student loans, auto loans, prime mortgages, and just about anything else that generated a cash flow. “The problem,” as one trader puts it, “is that something else came along that we thought was the same thing as what we’d been doing.” Because there were many different sorts of loans, to different sorts of people, the logic applied to corporate credit seemed to apply to this new pile of debt: it was sufficiently diverse that it was unlikely to all go bad at once. But then, these piles, at least at first, contained almost no subprime-mortgage loans.

    Toward the end of 2004, that changed dramatically-but just how dramatically A.I.G. F.P. was extremely slow to realize. In the run-up to the financial crisis there were several moments when an intelligent, disinterested observer might have realized that the system was behaving strangely. Maybe the most obvious of these was the effects of U.S. monetary policy on borrowing and lending. The combination of the dot-com bust and the 9/11 attacks had led Alan Greenspan to pump money into the system, and to lower interest rates. In June 2004 the Fed began to contract the money supply, and interest rates rose. In a normal economy, when interest rates rise, consumer borrowing falls-and in the normal end of the U.S. economy that happened: from June 2004 to June 2005 prime-mortgage lending fell by half. But in that same period subprime lending doubled-and then doubled again. In 2003 there had been a few tens of billions of dollars of subprime-mortgage loans. From June 2004 until June 2007, Wall Street underwrote $1.6 trillion of new subprime-mortgage loans and another $1.2 trillion of so-called Alt-A loans-loans which for some reason or another can be dicey, usually because the lender did not require the borrower to supply him with the information typically required before making a loan. The subprime sector of the financial economy clearly was responding to different signals than the others-and the result was booming demand for housing and a continued rise in house prices. Perhaps the biggest reason for this was that the Wall Street firms packaging the loans into bonds had found someone to insure against what turned out to be the rather high risk that they’d go bad: Joe Cassano.

    A.I.G. F.P. was already insuring these big, diversified, AAA-rated piles of consumer loans; to get it to insure subprime mortgages was only a matter of pouring more and more of the things into the amorphous, unexamined piles. They went from being 2 percent subprime mortgages to being 95 percent subprime mortgages. And yet no one at A.I.G. said anything about it-not C.E.O. Martin Sullivan, not Joe Cassano, not Al Frost, the guy in A.I.G. F.P.’s Connecticut office in charge of selling his firm’s credit-default-swap services to the big Wall Street firms. The deals, by all accounts, were simply rubber-stamped by Cassano and then again by A.I.G. brass-and, on the theory that this was just more of the same, no one paid them special attention. It’s hard to know what Joe Cassano thought and when he thought it, but the traders inside A.I.G. F.P. are certain that neither Cassano nor the four or five people overseen directly by him, who worked in the unit that made the trades, realized how completely these piles of consumer loans had become, almost exclusively, composed of subprime mortgages.

    The Big Switch

    Gene Park worked in the Connecticut office and sat close enough to the credit-default-swap traders to have a general idea of what they were up to. In mid-2005 he’d read a front-page story in The Wall Street Journal about the mortgage lender New Century. He noted how high its dividend was and thought he might like to buy some of its stock for himself. As he dug into New Century, however, Park saw that it owned all these subprime mortgages-and he could see from its own statements that the quality of the loans was frightening. Just after that he got a phone call from a penniless, jobless old college friend who had been offered a package of loans to buy a house he couldn’t afford. At the same time, Park saw Al Frost announcing new credit-default-swap deals at an alarming rate. A year before, Frost might have had one half-billion-dollar deal each month; now he was doing 20, all on piles of consumer loans. “We were doing every single deal with every single Wall Street firm, except Citigroup,” says one trader. “Citigroup decided it liked the risk and kept it on their books. We took all the rest.” When traders asked Frost why Wall Street was suddenly so eager to do business with A.I.G., says a trader, “he would explain that they liked us because we could act quickly.” Park put two and two together and guessed that the nature of these piles of consumer loans insured by A.I.G. F.P. was changing, that they contained a lot more subprime mortgages than anyone knew, and that if U.S. homeowners began to default in sharply greater numbers A.I.G. didn’t have anywhere near the capital required to cover the losses. He told Andy Forster, Cassano’s right-hand man in London, who brought this up at a meeting, but Cassano dismissed the concerns as overblown.

    Oddly, this dramatic increase in the amount of risk A.I.G. F.P. was assuming came at exactly the moment when it lost the reason for its existence. The day after Hank Greenberg was forced to resign, in March 2005, the credit-rating agencies downgraded A.I.G. from AAA to AA. The AAA rating was the competitive advantage; without it, the natural course of action would have been to close or dramatically shrink A.I.G. F.P.’s business. Instead, Cassano grew it.

    Toward the end of 2005, Cassano promoted Al Frost, then went looking for someone to replace him as the ambassador to Wall Street’s subprime-mortgage-bond desks. As a smart quant who understood abstruse securities, Gene Park was a likely candidate. That’s when Park decided to examine more closely the loans that A.I.G. F.P. had insured. He suspected Joe Cassano didn’t understand what he had done, but even so Park was shocked by the magnitude of the misunderstanding: these piles of consumer loans were now 95 percent U.S. subprime mortgages. Park then conducted a little survey, asking the people around A.I.G. F.P. most directly involved in insuring them how much subprime was in them. He asked Gary Gorton, a Yale professor who had helped build the model Cassano used to price the credit-default swaps. Gorton guessed that the piles were no more than 10 percent subprime. He asked a risk analyst in London, who guessed 20 percent. He asked Al Frost, who had no clue, but then, his job was to sell, not to trade. “None of them knew,” says one trader. Which sounds, in retrospect, incredible. But an entire financial system was premised on their not knowing-and paying them for their talent!

    By the time Joe Cassano invited Gene Park to London for the meeting in which he would be “promoted” to the job of creating even more of these ticking time bombs, Park knew he wanted no part of it. He announced that, if he was made to take the job, he’d quit. (Had he taken it he would now be a magazine cover.)

    This, naturally, infuriated Joe Cassano, who, says one trader, thought Park was being lazy, dreaming up reasons not to do the deals that would require work. Confronted with the new development-his company was insuring not consumer credit generally but subprime mortgages-Cassano didn’t blink. He simply claimed that the fact was irrelevant: for the bonds to default, U.S. house prices had to fall, and Cassano didn’t believe house prices could ever fall everywhere in the country at once. After all, Moody’s and S&P still rated this stuff AAA!

    Still, Cassano agreed to meet with all the big Wall Street firms and discuss the logic of their deals-to investigate how a bunch of shaky loans could be transformed into AAA-rated bonds. Together with Park and a few others, Cassano set out on a series of meetings with Morgan Stanley, Goldman Sachs, and the rest-all of whom argued how unlikely it was for housing prices to fall all at once. “They all said the same thing,” says one of the traders present. “They’d go back to historical real-estate prices over 60 years and say they had never fallen all at once.” (The lone exception, he said, was Goldman Sachs. Two months after their meeting with the investment bank, one of the A.I.G. F.P. traders bumped into the Goldman guy who had defended the bonds, who said, Between you and me, you’re right. These things are going to blow up.) The A.I.G. F.P. executives present were shocked by how little actual thought or analysis seemed to underpin the subprime-mortgage machine: it was simply a bet that U.S. home prices would never fall. Once he understood this, Joe Cassano actually changed his mind. He agreed with Gene Park: A.I.G. F.P. shouldn’t insure any more of these deals. And at the time it didn’t really seem like all that big of an issue. A.I.G. F.P. was generating around $2 billion year in profits. At the peak, the entire credit-default-swap business contributed only $180 million of that. He was upset, it seemed, mainly that he had been successfully contradicted.

    What no one realized was that it was too late. A.I.G. F.P.’s willingness to assume the vast majority of the risk of all the subprime-mortgage bonds created in 2004 and 2005 had created a machine that depended for its fuel on subprime-mortgage loans. “I’m convinced that our input into the system led to a substantial portion of the increase in housing prices in the U.S. We facilitated a trillion dollars in mortgages,” says one trader. “Just us.” Every firm on Wall Street was making fantastic sums of money from this machine, but for the machine to keep running the Wall Street firms needed someone to take the risk. When Gene Park informed them that A.I.G. F.P. would no longer do so-Hello, my name is Gene Park and I’m closing down your business-he became the most hated man on Wall Street.

    The big Wall Street firms solved the problem by taking the risk themselves. The hundreds of billions of dollars in subprime losses suffered by Merrill Lynch, Morgan Stanley, Lehman Brothers, Bear Stearns, and the others were hundreds of billions in losses that might otherwise have been suffered by A.I.G. F.P. Unwilling to take the risk of subprime-mortgage bonds in 2004 and 2005, the Wall Street firms swallowed the risk in 2006 and 2007. Lending standards had fallen, property values had risen, and the more recent loans were thus far riskier than the earlier ones, but still they gobbled them up-for if they didn’t, the machine would have ceased to function. The people inside the big Wall Street firms who ran the machine had made so much money for their firms that they were now, in effect, in charge. And they had no interest in anything but keeping it running. A.I.G. F.P. wasn’t an aberration; what happened at A.I.G. F.P. could have happened anywhere on Wall Street … and did.

    As recently as August 2007, A.I.G. F.P. traders were feeling almost smug: all these loans made in 2006 and 2007 were going bad, but the relatively more responsible 2005 vintage that they had insured didn’t look as if it would suffer any credit losses. They were, they thought, the smart guys at the poker table. Joe Cassano even went on an investor conference call and said, famously, “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 on any of those transactions.”

    Say It Ain’t So, Joe

    What no one realized is that Joe Cassano, in exchange for the privilege of selling credit-default swaps on subprime-mortgage bonds to Goldman Sachs and Merrill Lynch and all the rest, had agreed to change the traditional terms of trade between A.I.G. and Wall Street. In the beginning, A.I.G. F.P. had required its counter-parties simply to accept its AAA credit: it refused to post collateral. But in the case of the subprime-mortgage credit-default swaps, Cassano had agreed to several triggers, including A.I.G.’s losing its AAA credit rating, that would require the firm to post collateral. If the value of the underlying bonds fell, it would fork over cash, so that, for instance, Goldman Sachs would not need to be exposed for more than a day to A.I.G. Worse still, Goldman Sachs assigned the price to the underlying bonds-and thus could effectively demand as much collateral as it wanted. In the summer of 2007, the value of everything fell, but subprime fell fastest of all. The subsequent race by big Wall Street banks to obtain billions in collateral from A.I.G. was an upmarket version of a run on the bank. Goldman Sachs was the first to the door, with shockingly low prices for subprime-mortgage bonds-prices that Cassano wanted to dispute in court, but was prevented by A.I.G. from doing so when he was fired. A.I.G. couldn’t afford to pay Goldman off in March 2008, but that was O.K. The U.S. Treasury, led by the former head of Goldman Sachs, Hank Paulson, agreed to make good on A.I.G.’s gambling debts. One hundred cents on the dollar.

    A pair of ancient maples shade Joe Cassano’s London home. It’s a tasteful, almost inconspicuous place on a square, one of the best in London, just around the corner from Harrods. Only the living-room drapes are left open, to let in the spring light. Four black porcelain elephants decorate the windowsill. Behind them a shadow moves through the room.

    Cassano resigned from A.I.G. F.P. early last year, but he didn’t simply leave. He continued to turn up at his desk and spend the day staring at his Bloomberg TV. The traders thought it strange; only later did they learn that A.I.G. was still paying him $1 million a month to consult. As far as anyone could tell, he had nothing to do. And then one day he simply stopped showing up. From time to time they spotted him cycling past their Mayfair office. Every now and again some British newspaper snapped a picture of him exiting his house with his racing bike. Apart from that he had as good as vanished. His absence is as frustrating as it is expected-the people best positioned to explain this financial disaster have all similarly vanished from view. It would be nice if Joe Cassano came out of hiding and tried to explain what he did and why, but there is little chance of that.

    The people still left inside A.I.G. F.P. like to list just how many things had to go wrong for their business to implode. Any one of a number of things might have sufficed to avert their catastrophe: our political leaders might have decided against the Wall Street argument not to regulate credit-default swaps; the ratings agencies might have resisted the Wall Street argument to rate subprime bonds AAA; Wall Street banks, in 2006 and 2007, might have declined to replace A.I.G. F.P. in the role of subprime risktaker of last resort; and on and on. Their list is mostly a catalogue of large, impersonal forces. But impersonal forces require people to conspire with them. Joe Cassano was the perfect man for these times – as responsible for a series of disastrous trades as a person in a big company can be. He discouraged the dissent of subordinates who understood them better than he did. He acted with the approval of A.I.G., but he also must have known that A.I.G. wasn’t able to evaluate his trades. Once he was persuaded to stop insuring subprime-mortgage bonds, the logical course of action was to reverse the deals he had already done. In 2006 he might have found a way to do this, if he had been willing to accept the costs involved, but he wasn’t. Had he been, the machine he helped to create would have kept running – by then it had a life of its own – and the losses would have simply wound up more concentrated inside the big banks. But he’d have saved his company. No one would be blaming Jake DeSantis for blowing up the world.

    And yet the A.I.G. F.P. traders left behind, much as they despise him personally, refuse to believe Cassano was engaged in any kind of fraud. The problem is that they knew him. And they believe that his crime was not mere legal fraudulence but the deeper kind: a need for subservience in others and an unwillingness to acknowledge his own weaknesses. “When he said that he could not envision losses, that we wouldn’t lose a dime, I am positive that he believed that,” says one of the traders. The problem with Joe Cassano wasn’t that he knew he was wrong. It was that it was too important to him that he be right. More than anything, Joe Cassano wanted to be one of Wall Street’s big shots. He wound up being its perfect customer.


    Michael Lewis is a Vanity Fair contributing editor

I ran across this recently while doing some research.  It bears some thought.  -GFS



The Crooks Get Cash While the Poor Get Screwed


Monday 06 July 2009

by: Chris Hedges  |  Visit article original @ Truthdig
Jo Ann Gonzalez and her three children live in a common room at a homeless shelter in Ft. Worth, Texas. She was evicted from her home after being unable to find a job for six months. (Photo: Getty Images)

    Tearyan Brown became a father when he was 16. He did what a lot of inner-city kids desperate to make money do. He sold drugs. He was arrested and sent to jail three years later for dealing marijuana and PCP on the streets of Trenton, N.J., mostly to white kids driving in from the suburbs. It was a job which saw him robbed at gunpoint and stabbed in the chest. But it made him about $1,400 a week.

    Brown, when he got out after three and a half years, was done with street life. He got a job as a security guard and then as a fork lift operator. He eventually made about $30,000 a year. He shepherded his son through high school, then college and a master’s degree. His boy, now 24, is a high school teacher in Texas. Brown would not leave the streets of Trenton but his son would. It made him proud. It gave him hope.

    And then one morning in 2005 when he was visiting his mother’s house the cops showed up. He saw the cruiser and the officers standing on his mother’s porch. He hurried down the block toward the home to see what was wrong. What was wrong was him. On the basis of a police photograph, he had been identified by an 82-year-old woman as the man who had robbed her of $9 at gunpoint a few hours earlier. The only other witness to the crime insisted the elderly victim was confused. The witness told the police Brown was innocent. Brown’s friends said Brown was with them when the robbery took place.

    “Why would I rob a woman for $9” he asks me. “I had been paid the day before. I had not committed a crime in 20 years. It didn’t make any sense.”

    He was again sent to jail. But this time he was charged with armed robbery. If convicted, he would be locked away for many years. His grown son and his three young boys would live, as he had, without the presence of a father. The little ones-11-year-old twins and a 10-year-old-would be adults when he got out. When he met with his state-appointed attorney, the lawyer, like most state-appointed attorneys, pushed for accepting a plea bargain, one that would see him behind bars for at least the next decade. Brown pulled the pictures of his children out of his wallet, laid the pictures carefully on the table in front of the lawyer, looked at the faces of his children and broke down in tears. He shook and sobbed. It was a hard thing to do for a man who stands nearly 6 feet tall and weights 210 pounds and has coped with a lot in his life.

    “I didn’t do nothing,'” he choked out to the lawyer.

    He refused the plea bargain offer. He sat in jail for the next two years before getting a trial. It was a time of deep despair. Jail had changed since he had last been incarcerated. The facilities were overcrowded, with inmates sleeping in corridors and on the floor. The gangs taunted those who, like Brown, were not affiliated with a gang. Gang members knocked trays of food to the floor. They pissed on mattresses. They stole canteen items and commissary orders. And there was nothing the victims could do about it.

    “See this,” he says to me in a dimly lit coffee shop in downtown Trenton as he rolls up the right sleeve of his T-shirt. “It’s the grim reaper. I got it in jail. I was so scared. I was scared I wouldn’t get out this time. I was scared I would not see my kids grow up. They make their own tattoo guns in jail with a toothbrush, a staple and the motor of a Walkman. It cost me $15, well, not really dollars. I had to give him about 10 soups and a package of cigarettes. On the street this would be three or four hundred dollars.”

    Under the tattoo of the scythe-wielding, hooded figure are the words “Death Awaits.”

    He had a trial after two years in jail and was found not guilty. The sheriff’s deputies in the courtroom said as he was walking out that they “had never seen anything like this.” He reaches into his baggy jeans and pulls out his thin brown wallet. He opens it to show me a folded piece of paper. The paper says, “Verdict: Defendant found not guilty on all charges.” It is dated Jan. 31, 2008.

    But innocence and guilt are funny things in America. If you are rich and guilty, if you have defrauded banks and customers and investment firms of billions of dollars, as AIG or Citibank has, if you wear fancy suits and have degrees from elite universities that cost more per year than Brown used to make, you get taxpayer money. You get lots of it. You maintain the lavish lifestyle of jets and spas and million-dollar bonuses. You live a life of unchecked greed and have too much in a world where most have too little. If you are moral scum in America we take care of you. But if you are poor, if you are, say, Tearyan Brown and African-American and 39 years old with four kids and no job and you live in the inner city, you are in trouble. No one comes to help you. You don’t get a second chance. This is what being poor means.

    Brown found that life had changed when he got out. He had lost his job as a fork lift operator. And there were no new jobs to be found. He had faithfully paid child support until his arrest but, with no income, he could not pay from jail and now he was being hauled into court by the state every few weeks for being in arrears for $13,000. The mother of his three youngest boys goes to court with him. She explains that he paid regularly while he had work. She explains that when she works on the weekends Brown takes the kids. She asks that he be forgiven until he can get a job and begin paying again. But there are no jobs.

    “I would not be in arrears in child support if I had not been incarcerated for something I didn’t do,” he says. “I will never get above ground owing $13,000. How can I pay $120 a week when I don’t have a job?”

    Brown lives on $200 a month in food stamps and $40 in cash. Welfare will pay his apartment for another four months. He is barely making it. I ask him what he will do when he loses the rent subsidy.

    “I’ll be homeless,” he says.

    “My son says come down to Texas,” he adds. “Start a new life with me. But what about my three little boys? I can’t leave them. I can’t leave them in Trenton. They need a father.”

    Brown works out every day. He does calisthenics. He is a vegetarian. He volunteers at a food pantry. He attends the Jerusalem Baptist Church with his little boys. “They are church kids,” he tells me proudly. “They are pretty much raised by the church.”

    He is trying to keep himself together. But he lives in a world that is falling apart. The gangs on the streets of Trenton carry Glock 9-millimeter pistols and AK-47 assault rifles. When the Trenton police stop a car or raid a house filled with suspected gang members they approach with loaded M-16s. A local newspaper, The Trentonian, reports the daily chronicle of crime, decay and neglect. The lead story in the day’s paper, which Brown has with him, is about a young man named James Deonte James, whose street name is “Lurch.” James was charged in the death of a 13-year-old girl during a gang shooting. He is reputed to be a “five star general in the Sex Money Murder set of the Bloods street gang.” In another story an ex-con and reputed mobster, Michael “Mickey Rome” Dimattia, was arrested in his car after a woman behind the wheel was seen driving erratically. “Mickey Rome,” dressed in a black bathrobe with a red scarf around his neck, was found to be wearing a bulletproof vest, with three guns stuck in his waistband, and had a crack pipe, crack cocaine and prescription pills in his pockets. He had been convicted in 1990 of killing a 17-year-old boy with a shotgun blast to the head. He served less than three years for the murder. A feature story on Page 4 of the paper is about a man with AIDS who raped his girlfriend’s son 55 times and infected the boy with the virus. The boy was 9 when the rapes took place.

    “There are thousands more guns out there than when I was on the street,” Brown says. “It is easier to buy a gun than get liquor from a liquor store.”

    He says he rarely goes out at night, even to the corner store. It is too dangerous.

    The desperation is palpable. People don’t know where to turn. Benefits are running out. More and more people are out of work.

    “You see things getting worse and worse,” he says. “You see people who wonder how they are going to eat and take care of themselves and their kids. You see people starting to do anything to get food, to hustle or rob, to go back to doing things they do not want to do. Good people start doin’ bad things. People are getting eviler.”

    He pauses.

    “All things are better with God,” he says softly, looking down at the tabletop.

    He is reading a book about the Bible. It is about Jesus and God. It is about learning to trust in God’s help. In America that is about all the poor have left. And when God fails them, they are on their own.




Security Flaws Found at Federal Buildings

By Ed O’Keefe
Washington Post Staff Writer
Wednesday, July 8, 2009

Investigators from the Government Accountability Office over the past year successfully smuggled bomb-making materials into 10 high-security federal buildings, constructed bombs and walked around undetected, according to GAO testimony set to be delivered today.

The investigation uncovered critical weaknesses in protection provided to workers by the Federal Protective Service, the agency in charge of safeguarding federal buildings.

More than 1 million government employees work in 9,000 facilities nationwide tha t are guarded by the FPS, including at least 350,000 Washington area workers. The revelation comes as the administration prepares to reorganize the agency.

The GAO said security concerns prevent it from revealing the exact locations of the facilities. They included offices of lawmakers as well as offices for the Homeland Security, Justice and State departments.

In the past, security experts have criticized some GAO investigators for publicizing sensational findings that are not based on intelligence-driven risk assessments, but the GAO stressed that it followed generally accepted government standards.

Staff writer Spencer S. Hsu contributed to this report.

Rove Deposed in U.S. Attorney Probe


Wednesday 08 July 2009

by: John Bresnahan and Josh Gerstein   |  Visit article original @ The Politico
Karl Rove was questioned by the House Judiciary Committe as part of an investigation into the firing of several US attorneys by the Bush administration. (Photo: Getty Images)

    Former White House Deputy Chief of Staff Karl Rove was deposed Tuesday by attorneys for the House Judiciary Committee, according to Rep. John Conyers (D-Mich.), the panel’s chairman.

    Rove’s deposition began at 10 a.m. and ended around 6:30 p.m, with several breaks, Conyers said.

    Conyers would not comment on what Rove told congressional investigators, what the next step in the long-running Judiciary Committee investigation would be or whether Rove would face additional questioning.

    “He was deposed today,” Conyers said in an interview. “That’s all I can tell you.”

    Rove’s attorney, Robert Luskin, declined to confirm or deny that his client had appeared before the committee. Luskin said there was an agreement that the depositions would remain confidential until they were completed. However, in a court filing Monday, the Justice Department indicated that the deposition set for this week would be the committee’s last.

    Conyers’ panel had first subpoenaed Rove in 2007 as part of its probe into the firing of nine U.S. attorneys. But the Bush White House, citing executive privilege, refused to make Rove or White House Counsel Harriet Miers available for any deposition.

    Conyers’ panel responded by filing a civil lawsuit against the White House and prevailed in district court last year but the appeals court had yet to address the issue.

    With an agreement between the Obama White House, the Bush White House and House Judiciary Committee, the current Justice Department avoided having to choose sides in court and risk an appeals court precedent which could undercut executive privilege or Congress’s right to investigate alleged government malfeasance.

    Miers was interviewed by Judiciary Committee staffers in June.


I applaud Mr. O’Harrow’s concerns about non-competitive awarding of contracts, but encourage he and his readers to broaden their scope of concern to all contracts, which are, and have been awarded non-competitively.  (Think Halliburton/KBR and Blackwater, to start.) 


Alaska Native Corporations like other corporations are not required to limit their business to one small geographical area; they are free to seek contracts anywhere as any other corporation may.  Alaska Native Corporations are not limited in where they may place offices, headquarters or operating units any more than any other U.S. Corporation. 


As the once new and inexperienced Native Corporation’s expertise grew, following federal settlement of old issues with Native American groups across the country receiving settlement funds, they used what they learned to become better at seeking and winning contracts, and in seeing the niches they could develop expertise to fill.  One cannot blame them for that.  Generally, we are told by companies that successfully do business, that it is good business sense to do so.  The Alaska Native Corporations have become quite good at this process.


There are a number of legitimate concerns that do need to be scrutinized.  One of those areas is what appears to be a loophole in the original intent of providing a fair playing field to Alaska Native Corporations and that is the ability of an Alaska Native Corporation to spin off as many “8-a set aside legal entities” as they wish.  With the leveling of the playing field, it is now becoming abundantly clear that Alaska Native Corporations should be under the same or very similar constraints as other minority businesses. 


Another area that needs serious scrutiny is that of the large corporations, (look no further than the Boeing company), that are forming business ventures and partnerships with Alaska Native Corporations to join in on the wealth of available funding to these Native Corporations, through lucrative defense procurement contracts.  The law allows for large corporations such as Boeing to serve in a mentoring capacity to the Native Corporations under the “8-a set aside” program.  These mentoring roles create extremely lucrative opportunities to defense contractors that are not available across the board to other corporations. 


Another area that deserves close scrutiny is the influx of retired military personnel into the Alaska Corporations’ senior management levels.  These individuals, upon retiring from the military, often acquire lucrative positions in the senior management of the Alaska Native Corporations directly after leaving their military assignments at Alaska Military bases.


Another somewhat troubling problem is that the wealth of Alaska Native Corporations is not trickling down to those natives in their villages who were originally targeted to be helped.  For the most part, it remains within the upper echelons of the corporations.   -GFS



Alaska Native Corporations Under Scrutiny






Some long overdue scrutiny of ANCs is about to get intense.

Some of you may have seen some trend data recently. It came from the office of Sen.Claire McCaskill in anticipation of a hearing on July 16. Some of the salient points included in a statement her office released:

– “Between 2000 and 2008, contract awards to Alaska Native Corporations increased by $4.6 billion, from $508.4 million to $5.2 billion.”

– “In percentage terms, ANC contract spending increased 915 percent from 2000 to 2008, an average increase of 33.6 percent per year.”

– “In total, ANCs received $23.8 billion in federal contracts between 2000 and 2008.”

You may recall that ANCs occupy a very special place in the federal procurement universe. Formed with the idea of settling native Alaska claims against the federal government — and helping Native Alaskans to pull themselves out of poverty — the firms qualify for extraordinary set asides that transcend just about all others.

They’re considered “small businesses” but there’s no limit on the size of contracts they can receive without competition. They can operate anywhere, so many of them have operations in Washington and across the rest of the lower 48. They often subcontract work on intelligence, technology etc. to traditional Beltway companies. Critics say they’re used in effect as pass throughs.

It all adds up to a lot of questions about whether taxpayers are getting what they pay for — and whether all that money is really helping the people who need it in Alaska.

From the McCaskill press release:

“This information shows that federal government contracts to ANCs have increased dramatically and that ANCs have received a disproportionate share of small business loans. The preliminary analysis also indicates many ANCs are not based in Alaska and most of the work awarded to ANCs, which primarily contract through the Department of Defense, is not performed in Alaska at all.”

By Robert O'Harrow |  June 29, 2009; 12:32 PM ET