bank run blog

The private mercenary organization Blackwater has come under scrutiny for misrepresenting the size of its company in order to acquire federal contracts set aside for small businesses. The falsifications came to light in an audit performed by the Office of the Inspector General for the Small Business Administration that also found that Blackwater benefited from assessments made by the SBA that favored broad definitions of what it means to be an employee of Blackwater. Blackwater eventually received more than 130 SBA contracts worth over $100 million. Blackwater has received over $1.2 billion worth of government contracts since 2000.

The Inspector’s audit found that Blackwater gave conflicting information in its proposals and applications for federal loans and applied for contracts under the business names of companies that it owned in the effort to disguise the fact that the contracts would in reality be awarded to Blackwater.

The auditors also found that the Small Business Association accepted Back-water’s interpretation of which of its employees were “private contractors” allowing the company to assert that ithas far fewer employees than are actually paid by Blackwater. The auditors found, for example, that Blackwater said in its SBA applications that the number of employees of an affiliate, Presidential Airlines, was just over 700 and Blackwater reported to Dunn and Bradstreet that the company had more than 1500 employees. Presidential went on to receive a $107 million dollar SBA contract. The SBA’s policy is to not offer contracts to companies with over 1000 employees.

The falsifications, misrepresentations and favorable SBA rulings were uncovered by Congressional investigators who reported that Blackwater used its special designations of employees as “private contractors” to evade paying “millions in federal tax payments.” Chairman of the House Committee on Oversight and Government Reform, Henry Waxman (D-CA), concluded that the designation of employees as contractors also enabled the Blackwater to secure the SBA contracts unfairly.

The Inspector General said that the findings indicated that Blackwater might have used the same fakery to secure additional contracts from other federal agencies.

cross posted at

redstateupdate.net

The New York Post reports that managers of a sovereign wealth fund from an unknown country have hired an American real estate firm signaling the SWF’s intention to purchase hundreds if not thousands of foreclosed bank owned homes in California, Nevada, Arizona and across the US.

The Post writes that the wealth fund has set aside $29 billion to buy bank owned foreclosed homes in the US at half their original value. In fact, the Post writes that the fund has made an offer to purchase $2.5 billion of bank seized properties at 40 cents on the dollar recently and also negotiated an offer to purchase $2 billion worth of bank owned single family homes for 31 cents on the dollar.

The company hired by the foreign investment entity to research the market of foreclosed upon family homes in the US, Field Check Group, has refused to disclose the identity of the fund.

The Post reports that sovereign wealth funds of countries such as Abu Dhabi (with $875 billion in investable reserves) and Norway (with $391 billion in investable reserves) are positioned to “scoop up” thousands of bank owned properties because, “The depressed value of the US dollar makes the homes a bargain, and the funds have deeper pockets.”

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New York Post : Lost Sovereignty

A California construction company chosen by the US government for civil and military infrastructure projects worth hundreds of millions of dollars wasted millions on “incomplete, terminated and abandoned projects,” according to a report by Special Inspector General for Iraq Stuart Bowen. The report found that Pasadena-based Parsons Corp. received more than $142 million, or 43 percent of its total revenues under its Pentagon contract, for projects that were left unfinished or abandoned in various stages of completion. According to the Inspector General, Parsons completed only 18 of 53 construction projects under its contract, which was worth up to $900 million.

In one notable case detailed in the report, Parsons was paid $31 for its work on a prison before being fired from the job in 2006 for delays and shoddy work. Although the Pentagon subsequently paid another contractor a further $9 million to continue work at the site, it was finally abandoned and remains vacant.

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redstateupdate.net

The day after federal authorities seized Indymac Bank, Reuters provides interested readers with a bank-failures-so-far-this-year “factbox” that lists the 5 banks that federal regulators have closed this year, working backwards from the second largest bank failure in American history;

~July 11 - IndyMac Bancorp taken over by U.S. regulators. Total assets of $32.01 billion and total deposits of $19.06 billion as of March 31. Estimated cost to FDIC insurance fund between $4 billion and $8 billion.

~May 30 - First Integrity Bank closed by regulators. First International Bank and Trust takes over all of the Minnesota-based bank’s deposits. First Integrity held $54.7 million in assets and $50.3 million in total deposits.

~May 9 - ANB Financial NA closed by U.S. regulators. Pulaski Bank and Trust Co takes over the insured deposits. ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.

~March 7 - Hume Bank closed by U.S. regulators. Security Bank takes over insured deposits. Hume had total assets of $18.7 million and total deposits of $13.6 million.

~January 25 - Douglass National Bank closed by regulators. Liberty Bank and Trust Co takes over all deposits. Douglass had $58.5 million in total assets and $53.8 million in total deposits.

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Reuters : FactBox Bank failures in 2008

Reuters reports on the quickly rising price of basic foodstuffs, especially since the beginning of 2008. A total of 87 volunteer shoppers in 36 states participated in a survey conducted by the American Farm Bureau Federation, which found the cost of basic food supplies in the US have increased by 8.5 percent since last year;

“An informal survey conducted by the American Farm Bureau Federation in May showed much of the increase occurred during the second quarter, when the cost of 16 grocery items — including apples, pork chops and oat cereal — was $46.67, up about 3.5 percent, or $1.64, from the first quarter.”

The AFBF found that prices rose for 14 of the 16 items reviewed, “Cooking oil and bacon showed the largest retail price increases, with a 32-oz. bottle of corn oil up 47 cents at $3.48 and one pound of bacon increasing 22 cents to $3.57,” Reuters reports. The Farm Bureau predicts that food prices will continue to climb for foreseeable future, with food prices rising another five percent by the end of the year.

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Reuters : U.S. food prices up 8.5 percent from last year: AFBF

In a move that some, including presidential candidate Barack Obama, explain as a “compromise” and many have castigated as a stunning act of capitulation, the US House of Representatives approved an update of the Foreign Intelligence Surveillance Act. The measure allows the president to monitor the telephone conversations and e-mails of any person, including Americans and gives retroactive immunity to the telephone companies who helped the Bush administration implement a vast system of surveillance in the US with no judicial order or congressional oversight.

Over 40 civil lawsuits have been filed against some of the nation’s largest telecommunications companies by privacy rights organizations and individuals alleging that the companies cooperated with the Bush administration instituting a massive surveillance program that violated the privacy rights of Americans.

The measure passed by the House allows district courts to review the government’s requests of the phone companies to implement the spy program to determine their legitimacy. The review is understood by members of Congress to be a simple “formality”, one GOP member stating with confidence, “The lawsuits will be dismissed.”

The measure also increases the amount of time that the government can record phone and e-mail communications without seeking the approval of a judge. Wire-tapping can be performed for seven days before the government has to seek a warrant from a court. The agreement allows for information that is recorded during that time to be used as evidence in a trial.

Senator Chris Dodd (D-CT) said, “The president should not be above the rule of law, nor should the telecommunications companies who supported his quest to spy on American citizens.”

cross posted at

redstateupdate.net

Reports have surfaced that Iran has pulled billions of dollars out of European banks to protect these assets from being frozen under new threats of sanctions or should Iran be attacked by Israel or America in the near future.

An Iranian publication reported last week that Iran withdrew $75 billion from banks in Europe to be “wired back to Iran based on (President) Ahmadinejad’s order.” The Deputy Foreign Minister in charge of economic affairs said that the assets had been converted into cash and stocks, some of which had been deposited in banks in Asia.

Recently, when President Bush was visiting the UK, Prime Minister Gordon Brown vowed to freeze Iranian assets held in British banks. Within days, the Daily Telegraph reported that Iran had begun to withdraw assets using an agent in Dubai. The Iranian state bank denied the reports, saying, “there is no reason” for Iran to move its assets, and Iran doesn’t “have a problem with European banks.”

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redstateupdate.net

Based upon a deal being negotiated with the government oil ministry in Iraq, several of the world’s largest petroleum producing companies will gain exclusive access to Iran’s vast oil fields for thefirst time since oil production was nationalized by the former Iraqi regime more than 30 years ago.

When approved, the no-bid oil field servicing contracts will give Exxon, Shell and BP initial access to Iraq’s producing oil fields. It was these same companies who were members of a small cartel of companies that established the Iraq Petroleum Company that had exclusive control of oil production in Iraq between 1925 and 1961 and who lost oil production contracts when Iraq’s oil fields were placed under the control of a the state run Iraqi National Oil company. 36 companies were selected to receive contracts. Several companies from China, India and Russia were excluded from the deals.

The no-bid contracts are novel in the oil-producing world in that they are simple pay-for-service contracts as opposed to agreements held between the petroleum companies and other nations, which generally are licenses to drill for oil. The contracts are intended to be a stopgap measure to get Iraq’s oil fields producing as the Iraqi Oil Law is being debated by the Iraqi National Assembly. The oil companies would be paid directly in oil instead of cash.

The Iraqi government is negotiating the agreements, ostensibly, outside of the influence of the occupying US government, but as previously reported by redstateupdate.net, the Iraqi Oil Law was drafted in cooperation with the same oil companies now receiving no-bid contracts, and the US required that the Iraqi Oil Ministry include representatives of western oil production firms in its membership. Although the deals currently being negotiated will last for only one or two years, experts agree that being the first companies to have access to oil production in Iraq will certainly give the companies an advantage in consummating future deals with the government.

Iraq also awarded 6 service contracts to state owned oil companies from nations including Turkey and Pakistan. The ministry hopes to increase oil production by half over the next few years as new oil fields in the country are exploited. It is estimated that Iraq’s oil reserves exceed 300 billion barrels.

cross posted at

redstateupdate.net

The Stockholm International Peace Research Institute reported that global spending on weaponry and other military supplies has increased by 45 percent over the past ten years.

Worldwide military expenditures increase by six percent over last year with total expenditures reaching $1.339 trillion in 2007, or over two hundred dollars for each of the world’s 6.6 billion inhabitants.

The Institute said there were several reasons why military spending has risen, citing “countries’ foreign policy objectives, real or perceived threats (and) armed conflict,” among other factors.

The authors reported that the regions of North America, the Middle East, South Asia, Africa and East Asia saw increases in military spending by 50 percent and more over the past ten years, and military spending in Eastern Europe grew by 162 percent during that time.

The study’s authors said that in 2007, US military spending accounted for 45 percent of the world’s total spending, $547 billion, which is higher than any time since the Second World War. Researchers from the Institute also studied the global arms market focusing on the top 100 arms sellers, which sold $315 billion in weaponry in 2006. The authors found that 41 US firms sold 63 percent of the total weaponry sold by these 100 companies.

cross posted at

redstateupdate.net

The Associated Press reported that government official will advise thousands of American companies and organizations next week that they are considered to be high-risk terror targets. Some 7000 companies that manufacture, stockpile and utilize dangerous chemicals are considered to be potential targets for terrorist attacks here in the US.

Intelligence officials said that the sites “range from major chemical plants to universities, food processing centers (to) hospitals,” according to the AP. Government officials will require companies and organizations that have been deemed to be at an elevated risk for terrorist attack to complete a “vulnerability assessment” so that intelligence officers can revaluate security measures required to protect the locations. The AP said;

“US intelligence officials say terrorist organizations, including al-Qaida, favor chemical attack methods because of the severe consequences they can inflict.”

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Associated Press : Businesses advised to secure chemicals