PRESS RELEASE
LaRouche Again Demands New `Pecora Commission Hearings,' Says GMAC Bank Bailout Stinks of Corruption
Dec. 30, 2008 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).
Outraged that the bankrupt derivatives pile called General Motors Acceptance Corp. (GMAC) LLC has been annointed a "bank" by the Federal Reserve, and instantly bailed out by the Treasury, economist and statesman Lyndon LaRouche renewed his demand for "new Pecora Commission hearings" by Congress in January, to investigate the swindles which have triggered the greatest financial breakdown crisis in history.
The famous 1932-33 Congressional hearings in which New York City District Attorney Ferdinand Pecora was the chief investigator, into the swindles of the JPMorgan and Insull holding companies, helped make possible President Franklin Roosevelt's bank reorganization and New Deal. It exposed the criminality of the speculations which caused the financial collapse of 1929-32; Samuel Insull, and JPMorgan's Edward "Jock" Whitney, wound up in prison; and the American people knew what they were up against.
"This shows the need for an immediate creation of a 'Pecora Commission,' right now," LaRouche said. He denounced as blackmail, any idea that the GMAC bailout will "save a single auto sector job," and therefore has to be tolerated by Congress. "What you run up against in this auto thing, is people say, 'We need to save the jobs.' But there is no intent to save any jobs. There is only the intent to bail out financial interests. GMAC shows that luridly.
This is reason to reconstitute the Pecora Commission immediately. They're talking about a commitment of government funds, that the Congress doesn't know anything about.
The scandal of the GMAC bailout stinks to high Heaven, of trillions of fishy securities and derivatives that have collapsed the whole financial system.
The Treasury, having used up the $350 billion first two tranches of the so-called TARP funds authorized by Congress, is now capitalizing GMAC LLC "bank" with funds Congress has not agreed to, and which most Congressmen oppose authorizing. A Treasury anonymous source told the Detroit News—also quoted by Bloomberg News— "Congress will simply have to authorize the second $350 billion."
"That's blackmail against Congress," LaRouche noted, "and against their constituents who overwhelmingly oppose these bailouts.
This happened before. The Pecora Commission investigated it and stopped it. It's the same swindle. Pecora investigated Insull and Morgan. Today the GMAC/Cerberus swindle is just like that of Insull and Morgan. It's the same corruption in government today, by the outgoing Bush Administration.
GMAC LLC became a "bank" with $161 billion in debt, all of it junk debt, and losses of $8 billion over the last seven consecutive quarters. The Federal Reserve declared GMAC a "bank" on Dec. 26, despite its repeated failure for two months to meet Fed criteria which were specially tailored and promulgated to enable it to become a bank. And one weekend later, on Dec. 29, the Treasury capitalized GMAC as "a bank" with $6 billion—"The deal is concluded, and the GMAC bank already has the money," was the Treasury announcement on Dec. 30.
LaRouche spoke directly of local constituencies' strong interest in "Pecora hearings." "The swindling of states and municipalities around the country by these Wall Street banks—as in the case of Birmingham, sent into bankruptcy by financial derivatives sold to them by JP Morgan Chase—is another powerful reason for a new 'Pecora Commission' today. So also is the Madoff scandal.
The GMAC "bank" swindle, in fact, overlaps the scandal of Bernard Madoff's $50 billion Ponzi scheme. The head of GMAC the new "bank"—installed as CEO by Cerberus Capital Partners 30 months ago—is a hedge fund operator, Ezra Merkin, who threw more of his investors' money into Madoff's scheme than any other "investment manager." How much from derivatives dealing on GMAC's debt was skimmed into Madoff's black hole by Merkin since 2006?
LaRouche noted that his Lyndon LaRouche Political Action Committee (LPAC) had widespread constituency pressure on Congress in support of his Homeowners and Bank Protection Act (HBPA), which would have put a "firewall" protecting the economy from the banks' breakdown crisis. Congress was blocked at the brink of introduction of the HBPA, and panicked into completely futile bank bailouts instead. "Now the entire system is collapsed, the economy is facing ruin—we must mobilize those constituencies to get a Congressional 'Pecora hearing' going immediately. This is the way to break [Speaker Nancy] Pelosi's grip on the Congress."
