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Is Larry Summers Taking Kickbacks From the Banks He’s Bailing Out?
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Last month, a little-known company where Summers served on the board of directors received a $42 million investment from a group of investors, including three banks that Summers, Obama’s effective “economy czar,” has been doling out billions in bailout money to: Goldman Sachs, Citigroup and Morgan Stanley. The banks invested into the small startup company Revolution Money, right at the time when Summers was administering the “stress test” to these same banks.
A month after they invested in Summers’ former company, all three banks came out of the stress test much better than anyone expected—thanks to the fact that the banks themselves were allowed to help decide how bad their problems were. (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)
The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Summers onto your board, large banks will want to invest as a favor to a politically connected director.
Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Summers. It turns out now that those two banks have continued paying into Summers-related businesses.
According to filings obtained for this story, Summers first joined the board of directors of Revolution Money back in 2006 (when it was called GratisCard), the same year that Summers was forced to resign as president of Harvard after his disastrous tenure. Revolution Money/GratisCard was a startup headed by former AOL chief Steve Case. Revolution Money billed itself as the Next Big Thing in online payment, “PayPal meets MasterCard,” according to their own pitch.
In September 2007, Revolution Money announced that it had raised $50 million from a group of investors including Citigroup, Morgan Stanley and Deutsche Bank. Some found the investment strange even then, because normally big banks don’t get involved in seeding small startups—that’s the domain of venture capitalists, not mega-banks. Especially not in September 2007, when these same megabanks were Chernobyling their way into full-fledged balance-sheet meltdown.
What seems clear is that at least part of Revolution Money’s success in raising funds was due to their star-studded board of directors—which included not only Larry Summers, but also the notorious Frank Raines, the former Fannie Mae chief whom Time Magazine named to its “25 People to Blame for the Financial Crisis” list. Raines is still a board member.
Over the next year and a half, Revolution Money didn’t quite live up to its promise of competing with PayPal or Visa/MasterCard. At least some of this could be attributed to the difficulty of starting up an online credit card company in the middle of a triple-cluster credit crunch, banking crisis and recession. But there is also evidence that the company wasn’t run well. Another one of Steve Case’s “Revolution” brand startups, Revolution Health (which also features a star-studded board of directors including Carly Fiorina, Colin Powell and several future Obama administration officials), essentially folded when it was sold to Everyday Health last September and merged into that company’s operations.
In spite of all of this, on April 6, 2009, Revolution Money announced the happy news: it had just successfully raised $42 million in the most difficult market since the 1930s. The investors? Goldman Sachs, Citigroup and Morgan Stanley—bankrupt institutions that Larry Summers was transferring billions in bailout funds to.
- A d v e r t i s e m e n t
When the stress test results were finally released, the banks all came out with glowing reports that beat expectations and caused plenty of skepticism.
In an interview for this article, William Black, a former bank regulator who exposed the $160 billion savings and loan scandal and its ties to powerful U.S. senators, remarked: “Summers wasn’t hired [by Revolution Money] for his expertise, because he doesn’t have relevant expertise in this kind of credit card operation.”
“He’s not a techie. He doesn’t have business expertise,” Black said. “So this is solely someone hired for the name and contacts, because he’s politically active and politically connected. And that’s made all the more clear by the fact that Frank Raines was put on the board at a time when he was pushed out in disgrace from Fannie Mae. Why? Because of his political connections.”
And it worked, as the recent investment shows.
“That’s the pattern of this entity,” said Black, “which hasn’t been doing well financially and desperately needs to get money from others, and has been able to get money from banks at a time when [these same banks] largely stopped lending to productive enterprises. But with this politically connected entity [Revolution Money], they’re happy to dump money.”
According to a company spokesperson, Summers resigned from the board of directors at Revolution Money this past January, just three months before the banks invested. On one of Revolution Money’s main Web sites, Revolution Money Exchange, you could still see Summers’ name still listed as a director when this story was filed.
(Oddly, company filings obtained for this article show that Summers wasn’t even on Revolution Money’s board of directors in 2007-08, even though both he and Revolution Money repeatedly stated that he was on the board, and only served on GratisCard’s board in 2006.)
Whatever the case, Summers was pushing Revolution Money as recently as last September in an interview with Portfolio magazine:
“I’ve enjoyed being involved with a number of smaller companies such as the Revolution Money venture, which has a potentially very exciting credit-card technology, using credit and debit technology, using the Internet that, in a sense, brings together bricks and clicks by providing both a capacity for regular retail transactions and also for online.”
Whether or not Summers has a personal interest in the company, it still stinks that a company where the head of the National Economic Council served on the board until just a few months ago subsequently received millions in investment funds from banks that Summers bailed out. Taxpayer dollars went into these banks, and from the banks into the Summers-connected firm, a firm he was hired onto precisely because his connections could bring in this kind of money.
His involvement wasn’t just incidental. If you look at the press releases, Larry Summers’ name is always touted as part of the selling point. One press release in 2007 refers to Summers as “legendary.”
Moreover, Summers’ longtime chief of staff, Marne Levine, who also served as Summers’ chief of staff when he was in Treasury under Clinton and again at Harvard, joined Summers at Revolution Money, serving as “Director of Product Management.”
Black pointed out another sleazy aspect of Revolution Money’s pitch: it proudly boasted in late 2007 that it would make it easier than ever for people with low credit ratings to find access to lines of credit. In other words, Revolution Money billed itself as the ultimate ghetto loan shark.
That same 2007 press release that boasted of the “legendary” Larry Summers also said: “Unlike most bank credit card issuers who are limited to a narrow scope of credit approval guidelines specific to their bank, RevolutionCard seamlessly utilizes multiple partners to achieve unparalleled consumer approval rates.”
Nineteen months later, Summers, now in control of the economy, appeared on “Meet The Press” and declared: “We need to do things to stop the marketing of credit in ways that addicts people to it and so that our households are again saving, and families are again preparing to send their kids to college, for their retirement and so forth.”
So once again, Summers creates a problem that the rich profit from, then is put in charge of “fixing” it after vulnerable Americans have been picked clean.
Whether or not the three bailed-out banks’ investment in Revolution Money last month represents some kind of bribe or kickback or even the appearance of corruption is almost secondary, because shameless cronyism is the problem, and it’s the reason why America is in such a horrible mess today.
“Polite society was supposed to impose social pressures to make sure this wasn’t tolerated,” Black said. “Like the old phrase about hogs being slaughtered. But now the hogs get even wealthier, even fatter.”
Everything about Summers, from his horrible track record in the developing world in the 1990s to the sleaze and plunder he’s overseeing in the White House should make us terrified. Hell, he even looks like some old Batman villain: Summers, whose trademark bullfrog neck was enough of a distraction before Obama brought him into the White House, has seen his gelatinous layers of neck-fat swell up like an amphibian guarding its eggs ever since he took control of the economy.
Get this monster out of the White House now, before he devours us all.
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June 1st, 2009 at 2:30 pm
http://911essentials.com thinks that the time has finally come to arrest the criminal bankers.
911essentials is a primer portal introduction to the New World Order Corporate Banking Police State, its plans for one world government and their worship of the fake science Eugenics.
Dogfood Reply:
June 1st, 2009 at 4:45 pm
Larry Summers is a twat.
blowthewhistle Reply:
June 1st, 2009 at 4:52 pm
fuck larry summer like his name was susan or donna. i cant wait til we hang him and his boys high in court for fucking with us. TRUTH MOVEMENT; MUSIC FOR THE REVOLUTION http://polygraphradio.net/musicsite/?p=1299
Dogfood Reply:
June 1st, 2009 at 5:27 pm
You know what pisses me off, everytime I want to give Obama the benefit of the doubt I see this shit. At least he is working on Middle East peace and nuclear non-proliferation with Russia. Else I would freak the fuck out.
Unconquered Reply:
June 1st, 2009 at 7:28 pm
You should be freaking the eff out. Middle East peace? nuclear non-proliferation? Are you paying any attention to what’s going on? Denial ain’t just a river in Egypt.
Dogfood Reply:
June 1st, 2009 at 8:33 pm
Wow that was cliche. Did you make that up all by yourself?
x-man Reply:
June 1st, 2009 at 10:46 pm
Larry Summers is a theif and a financial terrorist! He needs to be tried for treason along with the others!
June 1st, 2009 at 3:10 pm
Gotta love the title of this one. Ha Ya Think?! Helllo!! Corruption o’plenty!
Here is video regarding a movement that will show you a pathway to freedom!
http://www.warnthepeople.org/be-prepared.html
STOP USING THEIR SYSTEM!!!
June 1st, 2009 at 3:17 pm
What thief wouldn’t???
June 1st, 2009 at 3:46 pm
” Asia flexes financial muscle at G20 summit ”
http://english.aljazeera.net/b.....64966.html
June 1st, 2009 at 3:51 pm
Nah not Larry…he wouldn’t think of taking kickbacks…Yea right, that spineless prick would pimp out his own mother to make a buck!
June 1st, 2009 at 3:54 pm
Everyone, let us be calm & reasonable. A crime has been alledged. Let it be fully investigated, by a non-partisan investigator. If needed, have a trial in full public view. And if the charges are proven, calmly & peacefully, haul him out onto the steps of the Treasuary and decapitate him on live TV. Make EVERY banker & corporate exec. watch. Gentley jam his severed head on a pike and mount it on Wall Street, where everyone in the financial district can see it. And bury his corpse in unsantifies ground. But be calm about it.
June 1st, 2009 at 3:54 pm
What an incestuous bunch of bull !!!
June 1st, 2009 at 4:37 pm
Larry,how about a job.I can carry the bags of loot you are getting.
Dogfood Reply:
June 1st, 2009 at 4:50 pm
He already has a partner, Tim Geithner.
http://www.youtube.com/watch?v=IiZ4C3k0Z4U
June 1st, 2009 at 4:45 pm
-HERE: Stream and Download ALL the best interviews and rants from the Alex Jones Show Archives:
http://alex-jones-archives.politicsfiles.info/
Backup your favorite episodes, don’t miss any!
June 1st, 2009 at 5:13 pm
Hay Larry can ya spair a million ? I,m so broke I can,t pay attintion !!! DAM
June 1st, 2009 at 7:29 pm
Does a bear s**t in the woods?
June 1st, 2009 at 8:32 pm
Shit, everyone in the government is an employee of the bankers!
June 1st, 2009 at 8:39 pm
The Financials sure do know how to show their appreciation!
Federal Reserve liars
AIPAC liars
911 liars
June 1st, 2009 at 9:32 pm
this sack of shit IS takeing kickbacks!!!!
June 1st, 2009 at 10:07 pm
It is already known that they are all crooks. Trillins have disapeared and never made it to the bail out funds. The bankers have our money and then we are on the hook to pay it back.
ITS ALMOST TIME PEOPLE !!!!!!!!!!!
Outrage Reply:
June 2nd, 2009 at 5:59 am
Why do we have to pay it back? The bastards stole fiat currency backed by future tax revenue. SO, STOP PAYING TAXES! Figure out a way to avoid taxes [the legal route] or just do like our government officials and JUST DON’T DO IT! Go on welfare & get a job that pays cash, then you are bleeding the system while you starve it! Keep your money out of the banks so it can’t be tracked, stuff it in a can & bury it [if you actually get any extra]!
Your government means to screw you over, do it to them instead!
June 2nd, 2009 at 11:25 am
it’s amazing how Obama had a lot of potential to turn this economy around when he put Volcker on his team, who’s no saint but at least he’s more sane, but stuck him in the background to handle tax reform, when instead he puts Larry Summers —the maggot, to help Wall Street loot what’s left of the American economy.
OBAMA SHOULD BE IMPEACHED ALREADY
June 2nd, 2009 at 12:03 pm
temporal coadjutor
June 2nd, 2009 at 12:50 pm
Man, does that sucker in the pic look
like a kid with his hand caught in the cookie jar
or WHAT?!
Crooked criminal MoFos!
June 2nd, 2009 at 2:55 pm
Once again Colonel Sanders is babysitting the chickens