According to a database created by The International Consortium of Investigative Journalists containing files leaked from the law firm Appleby, Jeffrey Epstein, who is under indictment as a sex trafficker and assaulter of underage girls, was the Chairman of Liquid Funding Ltd. from November 9, 2001 to at least March 19, 2007. The offshore business had been incorporated in Bermuda on October 19, 2000 and according to the Fitch ratings firm, it had $6.7 billion in outstanding liabilities in 2006.
In a regulatory filing with the Securities and Exchange Commission in February 2003, Bear Stearns, the Wall Street investment bank that Epstein had resigned from under murky circumstances in 1981, confirmed that it was a 40 percent owner of Liquid Funding Ltd., writing as follows:
“At November 30, 2002, the Company had an approximate 40% equity interest in Liquid Funding, Ltd. (‘LFL’), a AAA-rated special purpose vehicle established to participate in the repurchase agreement and total return swap markets. A subsidiary of the Company acts as investment manager…”
The subsidiary that acted as investment manager for Liquid Funding Ltd. was Bear Stearns Bank Plc in Dublin, Ireland, which functioned outside of U.S. regulatory authority and was a wholly owned subsidiary of Bear Stearns Ireland Limited, which was wholly owned by the U.S.-regulated Bear Stearns Companies Inc.. The U.S.-based Bear Stearns was one of the myriad Wall Street banks that imploded during the financial crisis of 2008 and received both publicly-announced and secret bailouts from the Federal Reserve, the central bank of the United States, via its Wall Street compromised regional bank, the Federal Reserve Bank of New York.
Just who it was that owned the remaining 60 percent of Liquid Funding Ltd. is unknown at this time, but if the off-balance sheet structure follows the typical pattern, a number of those listed in the leaked documents as serving as a director or officer, including Epstein, are likely to have invested funds.
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The amount of toxic debris that had parked itself in supposedly safe money market funds in 2008 led to unprecedented action by the U.S. Treasury, which had to step in with a guarantee plan after a run commenced when it was learned that the bankrupt Lehman Brothers had sold its instruments to money market funds.
And that was just the beginning of bailing out the unprecedented greed and corruption that turned the Wall Street gambling casino into a ward of the U.S. taxpayer. If you were a hedge fund for billionaires or a foreign bank and the insolvent U.S. insurance company, AIG, owed you money because you failed to do your due-diligence in the selection of a derivatives counterparty, you got secretly bailed out at 100 cents on the dollar.
If you were Goldman Sachs and sold a billion dollar investment to clients after knowingly allowing John Paulson’s hedge fund to secretly stuff it with instruments designed to fail and then make $1 billion for the hedge fund by shorting the deal, you got off without any key executive going to jail. As for John Paulson, instead of being prosecuted, NYU’s Stern School of Business lauded him in their Alumni Magazine and named an auditorium after him after he sealed the deal with a $20 million donation.
If you were a completely insolvent bank like Citigroup, whose negligent board had allowed its former Chairman and CEO, Sandy Weill, to turn himself into a billionaire through Dracula stock options, you got an unprecedented taxpayer bailout plus a secret $2.5 trillion bailout from the Federal Reserve consisting of revolving loans made at close to a zero interest rate while the bank charged its struggling credit card customers over 19 percent interest. The Fed fought a multiple-year court battle to hide this outrage from the American people. And the guy who helped Citigroup at the New York Fed, Tim Geithner, moved up to become U.S. Treasury Secretary.
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When the GAO report came out, the secret $16 trillion feeding tube from the Federal Reserve was revealed, structured as revolving, low-cost loans to any bank, foreign or domestic, teetering or otherwise. Stunningly, the audit showed the Fed started the loans in December 2007 – long before the public knew there was a dangerous financial crisis – and it lasted until at least July 2010.
In addition to the publicly known support to Bear Stearns from the New York Fed, the GAO audit revealed that the Federal Reserve had provided another $853 billion in secret loans to Bear Stearns; $851 billion from its Primary Dealer Credit Facility and $2 billion from its Term Securities Lending Facility.
JPMorgan Chase closed its deal with Bear Stearns on May 31, 2008 but the GAO reported that Bear Stearns “was consistently the largest PDCF borrower until June 2008.” A download of the PDCF spreadsheet from the Fed shows that Bear Stearns continued to drink at its trough right up to June 23, 2008.
Was Liquid Funding Ltd., the entity chaired by Jeffrey Epstein long after he was already recognized as a sexual molester of minors, part of the Bear Stearns’ bailout by the Federal Reserve? It was reported to be 40 percent owned by Bear Stearns in multiple regulatory filings.
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