living in your neighborhood there terrorists in your neighborhood because that's the only place you're ever going to find any real truth caught to finally of atlanta for foreign places and been arrested in other people bankers and never have problems so it looks like we're going to be in your financial situation here right now so it's rather interesting here so anyway i want to play a little bit about the financial crimes that have been happening here in the past and i think it's quite a good deal of coverage here for the next ten minutes i'm going to go into the americans have recently been victimized by the corporate tyrannies financial sector to an extent that confound credibility assessing the magnitude of this government facilitated crime requires background use of money as a medium of exchange is a recent development in history commerce was stamped metal is only a few thousand years old from earliest times autocrats an people and diminish their debt crime is over the money in early banking gold and silver were accepted in loan for interest bank drafts and letters of credit came into use then in a fantastically brazen act of financial who do fractional reserve banking discussions by this outrageous arrangement banks are required to keep on hand only a fraction of the value of the loans they make this loaning of far more money than they have jauntily referred to as money creation is universally legal sir josiah stamp once president of the bank of england said this in one nine hundred twenty seven quote banking was conceived in iniquity and was born in sin the bankers own the earth take it away from them but leave them the power to create money and with a flick of the pen they will create enough deposits to buy it back again however take it away from them and all the great fortunes like mine will disappear and they ought to disappear for this would be a happier and a better world to live in but if you wish to remain the slaves of bankers pay the cost of your own slavery let them continue with american banks historically operated on a fractional reserve system with minimal regulation the crash of one nine hundred twenty nine caused panic withdrawals exposed the deficiency of capital and sunk thousands of speculating banks the banking act of one nine hundred thirty three glass steagall was passed to limit speculation banks chipped away and got it repealed in one nine hundred ninety three effective limitation ended and the game became high stakes gambling by two thousand and eight there were so many speculative gimmicks that not one wall street trader fortunately it is not necessary to decode the complex details of the shell game to understand the intent and result of this financial flying circus the purpose of creating the vast menu of financial products was to enable banks and investment houses to use money from packaging and resale of gigantic mortgage blocks by betting with while they come pounded leverage for or against future outcomes in unrestricted off book shadow banking deals derivatives and credit default swaps were devised to supercharge leverage for high rollers in a capitalist casino was supposedly laying off risk and all limits to profit seemed abolished this game made fractional reserve banking with it so widely spread their mocking surance arrangements that the entire phony structure of american speculative banking imploded was faced with bankruptcy lawsuits and didn't mince and utter ruin is yes and no yes they had effectively bankrupted themselves but no it didn't matter they were u c too big to fail what can that mean if anything at all and how can we understand our people who have lost their jobs their homes their life savings their futures and their children's futures as a result of it to digest the idea of the giant banks which gambled enormous sums to make more and lost it all are not subject to the electable economic laws and their consequences the first question must be by whom was this paradoxical moral obscenity formulated it was done by the american government the second is how was this stunning conclusion reached the answer is that the massive banks which are the actual owners of our government insisted on so the banks that had failed decided they couldn't fail and notified their servant government to that effect it was charged with creating a plausible explanation pacifying the people and taking swift the federal reserve ultimate source of national money creation joined the congress a wholly owned subsidiary of the corporate tyranny and the president to do just that they gave banks hundreds of billions in relief money bought hundreds of billions more of their toxic mortgage junk and made four teen trillion dollars in loans available free to the monster derelicts they base just gigantic hustle on a bald faced lie that if those criminal banks failed america would melt down cease to function and be ruined there is no imaginable story that could have been further from the truth with the media propaganda machine fully behind it and sold out politicians and pundits unanimous in their wail the public blinked and far and away the greatest transfer of wealth in our history from the citizenry to the private hands of bankers hedgers investors and bondholders was perpetrated pathetically the vast majority of americans not had vacantly and accepted this colossal con the power of the american state to deceive its people is such that it can blatantly abuse them then ask for their support and get it this kind and degree of vicious betrayal of a people by its government is criminal your government has put you in massive debt using your credit to save the fortunes of its richest one tenth of one percent who caused a depression that shredded the middle class pauperize the huge underclass and crushed the hopes of the poor sick agent and young and who in their arrogance rigged the game to do it again soon and worse a cancer allowed to thrive destroys it's host americans must decide now whether they or the cancer of their predatory capitalist system will survive carlyle is a massive private equity firm and what a private equity firm does essentially raise money from wealthy individuals and companies and funds and then turns and invest that money in a slightly higher risk form of investing than say the stock market or the bond market what they do is they buy the stock directly from the company they take ownership shares and often controlling shares but they do not buy it on the public market and they often have control of the companies they buy which means that they do not have to because the companies are privately owned privately controlled they don't have to they don't they're not subject to the securities exchange laws in this country they'll purchase the company for a fraction of what it's really worth and then turn the company around and sell it off for a huge profit it's called the buyout practice the list of knowledgeable institutional investors an aerospace defense is a fairly short list and i think it would be widely acknowledged that the top of that list is the carl out group located here in washington d c and you considered by most people to be the myriad investor in aerospace defense well we're quite a number of years what is new about carlyle is the size and the mention of their success and my understanding is they are now the the slice of the buy related to that particular part of the best in history gets bigger the carlyle group plays in industries and in an area that are heavily influenced by politics and in order to do that effectively they hire some of the best known politicians from all over the world the first thing is you know where does the dollars go what is the defense budget and what does it look like this is the way it's commonly captured by  decontrol or and there's probably three hundred eighty billion dollars in the otherwise zero for defense budget that was recently submitted they hire defense experts like frank carlucci or frank fanelli they hire politicians like the art triangle the relationship of the pentagon with congress and industry so i'm a practitioner who has been on all three sides of this triangle over the last twenty five years or so and it really has been a lot of fun the iron triangle is in some ways uniquely american phenomenon it's the confluence of the military big business and politics and the combination of these three things is something that a number of u presidents in the past have warned against in particular dies and how are was very upfront about warning against the possibility of creating a military industrial complex by that he means a group of a business built around defense and military that becomes so large and so powerful that it's actually able to influence the politics of  personifies that that euphemism of the iron triangle better than the current group they have it all in one under one roof at a hotel in new york called the carlyle hotel and some on the upper east side to beautiful old plush hotel i always like carl's english and some of the old worldly it sounded it just seemed to have the right kind of ring to it so it was essentially you know the sort of fabricated legacy of sounding like like like they had a history of success and and and big money old money and ultimately at the end of the day no one had a better idea but they decided they made a very strange decision they decided to base the company in washington d c which at the time no one could really and because all private equity firms of this nature were based in new york but as we talk to people about it merchant bank a private equity investment firm that could take capital it or mediate that capital into of companies or real estate or venture capital at the outset we really didn't envision entirely where it might go we sought simply an opportunity to take advantage of washington and the people here and the access that people had to transactions so that to base a company in washington d c was a very strange decision but as it turned out it proved to be an extremely successful decision because of the direction that carlyle eventually went in which was to play in these very heavily government government regulated industries and to use x politicians to sort of pave the way for them we started buying a share as a company called fairchild which was here in the washington area because we thought it was very cheap and what kind of company was that it depends business they had a satellite business which we thought was very true attractive and undervalued and we invested in fairchild at one point we had think almost twenty five percent of the company and it was ultimately sold and we made an enormous amount of money and we began to see the opportunities in that area which is one of the reasons why at the end of the reagan administ defense this was a time bear in mind where defense properties were worth almost nothing because the cold war had just ended and this huge military buildup that had taken place during the eighty's had suddenly evaporated which marked a great opportunity and no one knew that or than frank carlucci who had been in the pentagon watching this whole trend happen firsthand so carlucci came on board and was able to take carlyle one hundred eighty degrees in another direction sure enough a year two years later the gulf war hit and everybody knows that war time is boom time for the defense industry so once the gulf war hit these properties skyrocketed again  carlyle made a ton of money and they did very very well they really cleaned up during that three or four year swing and after that carlyle said hang you know having these politicians on board is pretty great i mean they know things that nobody else knows in fact you know frank carlucci was setting up policies while he was in office as secretary defense that he's now capitalizing on as chairman of carlisle group you know it's a brilliant scheme if you think about it you set up the policies you leave office you go into business and then you explain those polic they picked up george bush james baker richard darman is over there who's a former budget director in the white house arthur levitt the former s e c chairman william canard former f c c chairman in europe you have former prime minister of carry a tremendous amount of influence and they are able to predict trends in global markets predict trends in political political chefs and in some ways and this is the of most insidious pardon if you if you want to be cynical about the carlyle group you have to be concerned about their ability to influence these trends and actually affect change in government policy which would positively affect their investments former government officials tended before karl to go to academic institutions where they tended some of this retired or many of them became lobbyists well for someone like jim baker who really had been at the pinnacle of american power for over ten years he's been chief of staff and sector the treasury ultimately secular state for jim baker to be a lobbyist or even to be a lawyer was not something that was terribly interesting if you're a republican and during a democratic administration in the white house for example  someone like james baker you're able to revolve out of the white house into the carlow group work there for a period of time and then when that democratic administration is through like clinton's was through in two thousand you're able to revolve right back into the white house colin powell did that hole in pal did a little consulting for the carlyle group he knows the guys very well he knows frank carlucci very well frank carlucci was his mentor as he came up through the ranks and i think his relationship with the carlyle group personifies the gray area that the carlyle group works within some of these guys are never officially hired you know some of them are only put on retainer some of them are paid in very ambiguous ways like through investments that they make through the carlyle group or the amount of money that they helped raise for that kind of thing so it's it's never really clear at any given time who exactly is working for the carlyle group no one really  knows unless you know they officially unless unless the carlyle group wants you to know if the carlow group wants you know then they put them up on the website and they put them in the brochures and that kind of thing but if you look on the carlisle website today you don't see george bush senior's name anywhere although he is working for the carlyle group george bush sr is a fund raiser he is the kind of guy who can go into kuwait or saudi arabia where they love him back the house and get these guys open up their wallets and give money to the carlyle group that's his role but if you look in over the history of this company george bush sr is clearly met with business leaders one on one that with political leaders in south korea and in saudi arabia and that would lead one to believe that he's doing much much more than just giving speeches for the carlow group but i got a call one day from from carlisle after i blasted them in the papers and they said that maybe we should get together and talk we had breakfast at the mayflower hotel everything was going very just fine we were eating our eggs and bacon and talking about the weather and and and then somewhere in the middle to the late part of the meal he said how come you're trashing former president bush and he said he's a very very good decent man and you know i think i think it's really unfair what you've been doing about former president bush and i said well you know all you have to do is tell the world what exactly he's doing for you and i said what is he doing for you and what's his position there how much money did he make last year and he said well i can't tell you how much he made he's he's not he's not has no no official position and i said yes he does you he was ahead of your business council in asia last i checked he still is and he is well that's that's just an advisory post and he said he just gives speeches and i go how much does he get a speech and i said i heard it's well over one hundred thousand dollars every time he opens his mouth and i said so if it's just a few speeches why you just tell us where and when and how much and people like me will go away and he said well that's not possible george bush sr after he left the presidency he was working for carlisle and made several swings through east asia and going to thailand going to south korea and other places sort of looking for investment opportunities for carlyle and carlyle family settled on and south korea  and then the way that overlaps with policy is under the during the asia crisis the international monetary fund you know came in with this rescue package for south korea the united states backed and the u s used the i m f crisis to push through deregulation and and changes and rules around foreign ownership changes that they've been unable to press through you know maybe twenty five or thirty years of trade policy in a matter of months under the psion f x they just ran and all these changes through and one of the changes was allowing foreign banks to take ownership shares controlling shares of korean banks and so carlyle has been right in there and they've bought one of the largest banks their commercial banks and so you can say that you know bush sr didn't cut the deal but when someone comes of that stature that gives a kind of stamp of approval for you know people wondering you know who this investment group is they say well it's backed by the former president of the united states and it carries a lot of weight i have said that it's the worst kind of conflict aventuras particularly when your son is the president i's date so while junior is talking to heads of state about war and other weighty matters papa was talking to them or having conversations with them about carl e you know it's it's just i find it disgusting one fateful day we were having a hearing on the upcoming defense authorization legislation which is going to authorize almost an unprecedented amount of money for defense spending four hundred billion dollars after september eleventh huge defense money was on earth our men and women you deserve the best weapon the best equipment and the best training and therefore i've asked congress for a one year increase of more than forty eight billion dollars for national defense the largest increase in a generation defense bill looked at the crusader weapon in one thousand nine hundred eighty eight and they determined that it was too big and too slow for the modern day warfare in the united states is likely to engage and and they the panel recommended that that that the gun be that the gun contract be terminated we need to be agile and mobile and therefore we need to replace aging aircraft and get ready to be able to defend freedom with the best equipment possible members of the pentagon had come and testified on capitol hill is a no no no no no we don't want the crusader because it doesn't fit in with our priorities but as a part of that forty eight point one billion dollars increase in the four hundred billion dollar the threats request that came down from the president there inside there was money for the crusader missile so then i started doing my research and i learned that was the crusader missile was manufactured by united defense industries and that that company was own by the carlyle group and that the president's father was on the payroll of the carlyle group and i said to myself now the ethics briefings that we've had in congress this is something that we're supposed to stay away from in our own personal conduct so when the time came for us to vote our committee to vote on the defense authorization bill i voted no and i also wrote a dissent and prominently featured in my dissent is mention of the carlyle group and its relationship to the crusader missile and then that's when everything began to fall apart what ended up happening was of sentiment against the crusader began to build on capitol hill and within the department of defense and this was something that the group didn't foresee and they began to wield their influence they sent people around to keep politicians representatives and senators began lobbying very heavily and were able was able to keep this gun program alive despite the overwhelming sentiment against it they didn't realize that there would be this instilling scrutiny of the request and therefore when a little bit of sunshine which is a great disinfectant was shed on this particular request and the relationship between the current president and the former president and this particular weapon system maybe at that point it was decided we'd better not deal with this and so they didn't eventually the noise around that got so strong that there was really nothing left to do but to cancel this gun program and dollar rumsfeld did cancel the program in a very public a public ceremony but not until the gun for the the gun had been kept alive long enough that the company united fans the fans was able to go and what happened to you well i would explore you a bit in the press i was vilified i was called unpatriotic and then a very strange thing happened  my election i'm a democrat what the republicans did was republicans went out and got a black woman who was a republican to run as a democrat in my democratic primary and forty seven thousand republicans crossed over and voted in my democratic primary and of course they had done their homework in their research and they realized that generally on average i would get about forty eight thousand votes on a primary generally on average you know give a take a hundred here a hundred there but generally is about forty eight thousand so what the republicans did and this this was not just a mere accident this of course was pliant and they made sure that at least forty seven thousand we can name them we have their names addresses telephone number so we know forty seven thousand to match the number of democrats it would generally turn out voted in my election and of course i couldn't of course in the circumstances like that come out the with a longer stick when the election tally was was had indeed people should ask questions about karl the problem is what member of congress democrat or republican wants to go and criticize a grandfatherly former u s president whose son happens to be the sitting president i mean why don't you just take a gun and shoot your leg off i mean you know it is not go very popular in washington d c you're not going to be invited to white house dinners you're going to be shot out on the hill when you deal with certain members who won't forget that you trashed my former president and  s son if you have an organization that is able to operate the high and the scenes without real accountability and that same organization has the ability to ruin political careers for people who are a little bit too inquisitive or little bit too honest or to shape public thinking then we have the means for a kind of control globally that is probably unprecedented it's sort of like shadow boxing with a  ghost you can't find the ghosts you can't read their reports because they're privately held and and there's no obvious litigation against them no one in congress has had a hearing about them they're so powerful no one wants to touch it because of the father and the son and the holy ghost just kidding and so so we have this problem here this is a mysterious immensely powerful company with virtually no scrutiny night september eleventh in somewhat of a horrible coincidence the carlyle group was holding their annual investor meeting here in washington d c at the risk carlton hotel george for seniors at the meeting the carlyle group said that he left the night before september eleventh a con and was on his way to some location in the midwest and i talked to someone who was at the meeting and they told me that the whole crew of carlisle including frank carlucci and james baker and david rubenstein along with shafique bin laden  who is a representative of the bin laden family and their fortunes were all in the same room together watching the events of september eleventh take place and i was totally shocked i just couldn't believe that the all of these people were in the same room watching these events happen you know it's just to see a confluence of international people of such political influence and intrigue  to be gathered the same place in the same time while something that affects all of them in completely different ways took place was just an amazing amazing scene in my mind one of the more embarrassing things that happened was after september eleventh it emerged that family construction company had some money in carlisle and after initially denying this that george herbert walker bush had met with legitimate way as a potential investor in one of our investment funds which they did invest in and in addition we offered up and did perform certain financial advisory work in connection with osama would go and do what he did so then you roll forward three or four years and all of a sudden nine eleven has happened and the first thing you know is what president bush is associated with carlo and carlo hasn't been lot of money well what's going on saudi arabian prince who loves the united states and loves to invest his money in the united states there was always a running joke you know there's always been periods where there were capital excess capital and people would try to figure out how to access that for a while with the japanese and it's always been the kuwaitis and so forth and now it was the city and that was the saudis and people would say let's try to find a prince to do something i mean it was a kind of thing you just said it was humorous and they were really sorry mum when i got a call from from from  at the time this was in the early ninety's citi group which is america's largest bank was faltering he was in serious trouble it was in danger of declared bankruptcy and steve was able to put together a deal between the prince and citi group in which the prince invested five hundred ninety million dollars into citi corp and an investment like this was enough to save the bank and it was it was a big deal it was the biggest deal the families and in fact as you as you know one of the families that was introduced to carlisle and then to me in those days was a very long family the reason that all of this was able to happen is that the united states had just completed the gulf war in i think hundred one and the saudi monarchy was eternally grateful for what united states had done it re stabilized the middle east the big spur was that it was the gulf war and people saying you bargain that was struck basically gave the united states preferred access to saudi energy in return for protection against foreign votes and when the requirement rose in  ninety the united states kept its end of the bargain step forward and help to defend the kingdom and then liberate kuwait and the result was that there was  enormous outburst of good feeling in both countries trade boom and the military relationship of course became stronger than ever before  the saudi people close to the saudi royal family as as as a kind of a as a favor to their benefactors bush and baker encouraged private saudi business people to that carlyle would be a good financial advisor carlyle managed this program for saudi arabia which essentially was a program that encouraged investment from foreign countries into the kingdom but the money that was made from those investments what had to be reinvested some percentage of it had to be reinvested in the kingdom you tell your highness look we have access at a higher level to the some of these companies who have offset obligations we think w be helpful to you in getting that interest generate another not going to go do something just because jim baker said want to do this now can you get a meeting yes can we going to make a presentation to the right operating group if it makes sense or they could take it yes that's what's in baker so carlyle is managing this program which made them in some ways a gatekeeper to the investment community in saudi arabia i mean they knew where the where the money was coming from and where it was going to  so they had a very unique position in saudi arabia and grew very close with the royal family with the bin laden family and they were they were able to really cozy up with the with the saudis and get a lot of lessons from there and this became a huge arena for corruption because instead of just paying a bribe to somebody in the royal family now you could set them up in business and you could say well this business is part of our offset commitment to you that goes with this harm still and so we're to take you know this son of this prince and create a little company for him it's going to be funded by boeing problems doing its recycling the money out of the arms deals they get nine billion they kick some of the back so carlyle i think was brought in to try to put some legitimacy on this process that was the foot in the door into saudi arabia from there they were able to expand their business in in the kingdom through they bought a company called  minow corporation is sensitive to the company five years to win the contract with the saudis and the negative interest displayed by some in congress and the media has made the company even less than enthusiastic about talking about the saudi agreement we've been in business i was on the board of directors of the now for about a year and a half carlyle really didn't own that company directly it was it was acquired by video which the company that we owned by h the saudi national guards main purpose is to defend the saudi monarchy against internal threats so this wasn't a case of a u s company helping them protect themselves from iran or another country it was it was if there is a challenge to saudi rule the saudi people this u s company is going to help the saudi national guard put down that rebellion as i recall there were four deaths this was attributed to saudis with connections to the movement backed by iran initially there was talk that iran might have been behind but since that time there's been discussion that it was fundamentalists linked to the network now known as al qaeda and when you see the kind of the protection and sustenance of the saudi regime it is it was an american presence there's no question about that it was an american presence and saudi and that that's been part of the whole bin laden theme is that you've got  on the saudi soil and i suspect that the now is an inviting target for those kinds of people i've spoken to people in the pentagon the services who think it was a huge blunder to keep so many u s forces in saudi arabia after the first gulf war but that was just a provocation that was just giving some of that kind of a big billboard to used to recruit people to say see the u s presence is not even hidden anymore you know certain countries have been targets of the united states with regard to terrorism yet the biggest country involved in terrorism is saudi arabia they financed it and we have treated them with kid gloves we have treated them as if they're not involved in terrorism at all is that because of groups like carlyle that have significant investments with saudi arabian interests is that because george w bush's father is in fact part of the carlyle group and is close to the bin laden family and that is why we asked george w bush to have his father remove himself from the carlyle group because it prevents it presents a conflict of interest or at least the appearance of a conflict of interest i believe the carla people of this when i was there and i know in my own situation we spent an awful lot of time thinking about that and worrying about thinking about what about the appearances of things about how something we do might be perceived and whether we care or not about it then obviously we said we simply believe that we had something to offer to the saudis and the kuwaitis and the other people with whom we invested in and that people quite legitimately had built up a portfolio of of  friends and acquaintances and business experience and and knowledge of how to deal in high pressure situations the tendencies of people what they might do we think that's a good thing as very few people in this country are talking about this no one really wants to go there that there have been a few sporadic news stories about carlyle and there have been a few skunks at the garden party like myself talking about the former president but generally speaking the glare of publicity and the spotlight of public attention has not been put on former president bush or his son about this problem if the american people knew all the connections between prominent republicans and democrats in our country with saudi arabia with all of these institutions that are saying relationships you talk yeah yeah business and personal relationships with these institutions that have far more to do with funding and sustaining terrorism that iraq does george w bush would not be reelected in two thousand and four this is george w bush the president of the united states at this moment the regime of saddam hussein is being removed from power and a long era of fear and cruelty is ending american and coalition forces are now operating inside