By guest author Laura Wilson, Information-Security-Resources.com Corporate Liability Editor

The plaint that credit default swap-promulgating AIG is contractually obligated to pay out millions in bonuses to the same pitted brass that led the company, the industry, and the entire economy off a cliff is a bunch of horse hooey.

Heartland Payment Systems (HPY), one of the largest credit card processors in North America, is finally being called to the carpet for the apparent lapses in Payment Card Industry Data Security Standards (PCI DSS) that contributed to the largest data breach of 2008, perhaps even the largest breach ever considering the full extent of the exposure has yet to be determined.

Called to the carpet sort of, anyway; the sanctions and guidance laid out by Visa (V) seem a little lackluster when weighed against the severity and duration of the breach.

By Scott J. Wilson

Is 60 Minutes the new propaganda department of the FDIC, or what? Again, they drop the ball in their coverage of the mortgage crisis, leaving viewers more misinformed than ever.

By “Plan Orange” Author Michael White

The euphemism “deleveraging” defines this crisis. A person or bank reduces debt by selling an asset. Deleveraging advances. If there is no asset, and no cash on hand, however, debt must still be reduced. A write-off is taken.

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Source: FDIC.gov

During Heartland Payment Systems (HPY) quarterly earnings conference call, CFO and President Robert Baldwin revealed that Heartland is indeed under SEC investigation, though the details of exactly why they are being investigated have not been released.

Company President and Chief Financial Officer Robert Baldwin Jr. disclosed the investigations during Heartland’s quarterly conference call with investigators (sic) Tuesday, saying that the SEC had launched an informal inquiry into the company and that there is also a related investigation by the Department of Justice. The U.S. Department of the Treasury’s Office of the Comptroller of the Currency (OCC), which regulates national banks and their service providers, has launched an inquiry, as has the FTC, he said.

Advocates of an open Government and transparent allocation of taxpayer funds celebrated the news late Friday afternoon (2-20-09) that the U.S. District court has moved to enforce a Freedom of Information Act (FOIA) request to release more details about exactly how TARP bailout funds have been and are being used.

The TARP was passed in early October, 2008, in an effort to stem the damage to the nation's financial industry incurred during a decade of lax risk-abatement that pervaded the banking culture after the legislative emasculation of the Glass-Steagall Act.

Reports are surfacing that there has been another major information security breach at a credit card payment processor, though the company has not yet been identified.

The breach news comes less than one month after Heartland Payment Systems announced it had suffered what is likely to be the biggest PCI breach to date, possibly bigger than the TJMAX (TJX) breach.

By Guest Author Michael White

We cannot start our recovery until we have completed our bankruptcy. Go ahead now and do the denial, anger, bargaining, and depression. Open the window and scream. Then put the fate of the world ahead of the obvious reasons we shouldn't do this. Yes, we will reward a carnival of bad behavior and make people believe they can get away with it. Should we choose massive global depression instead?

On Friday January 30, representatives of Heartland Payment Systems (HPY) contacted me via email regarding my recent article which had asked some tough questions regarding the timing and nature of multiple large stock sales during the months leading up the revelation that the company was the victim of a security breach.

In August 2008, Mr. Carr put in place a 10b5-1 plan to sell Heartland stock. The company publicly announced this plan by press release on August 8th, 2008, stating:

Heartland CEO Questionable Stock Trades

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Heartland Payment Systems' stock (HPY) was hit hard in the wake of what is being described as the biggest single breach of consumer and financial data security ever. The company issued statements Friday (1/23) in an effort at damage control in which the CEO compares the potential industry-wide impact of the breach to none other than that of the Tylenol poisonings of some twenty-five years ago that nearly brought down the drug maker.

Not the kind of association I would want to make for my company, but then it's not my company.

By Guest Author Michael White

The Treasury, the Federal Reserve Bank, and the new administration are making two fundamental mistakes. They are failing to concentrate their minds on the value of our homes. And they are dumbly underestimating the size of the correct response. The first error leads to the second. How could you know what weapon to use when you don’t know what war you are fighting?

Co-authored by Scott J. Wilson.

Since the United States Government has decided to go into the MBS business (Mortgage Backed Securities), I have noticed in all of the debate and coverage that there is a serious lack of knowledge on the part of our congressional membership and in the news media regarding the mechanics of such a plan, and no one has even come close to outlining the actual costs that will be incurred.

After being granted TARP bailout funds from good friend and former boss Hank Paulson, Secretary of the Treasury, it turns out Goldman Sachs (GS) is paying a whopping paying 1% on $2.3BB in profits for 2009, down from a more respectable 39% in 2008.

Although earnings were down and losses up in the end of 2008, Goldman sources reported that the astonishing tax windfall was more due to "changes in our geographic earnings mix."

On December 3, 2008, The New York Federal Reserve website reported that they will begin to purchase Asset Backed Securities (ABS) from failed mortgage giants Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks. They also hinted that they will stop there - everything seems to be on the table now, officially. Treasuries and stocks may see direct effects, with outcomes mixed.

Initially, the program will concentrate on non-callable, fixed-rate senior benchmark securities such as Mortgage Backed Securities (MBS), but there are indications in the language used that the program may expand to include other ABS such as privately issued MBS (non-GSE), bonds, stocks and other equities.

The "Wall Street Bailout" is quickly reaching into the trillions of dollars, and many analysts are speculating as to the current running total of the outlays thus far, while other financial experts like John Bogle, the founder of the Vanguard Group, are questioning the legitimacy and impact of the costs to maintain this overly-complicated system even when economic conditions are good.

Henry Paulson yesterday presented his latest in a series of bewildering press conferences, each of which seems to be orchestrated to reveal - in only an incremental fashion - the true extent of the damage to our financial system.

More Institutions Report Declining Earnings, Quarterly Losses: Troubled assets continued to mount at insured commercial banks and savings institutions in the third quarter of 2008, placing a growing burden on industry earnings. Expenses for credit losses topped $50 billion for a second consecutive quarter, absorbing one-third of the industry’s net operating revenue (net interest income plus total noninterest income). Third quarter net income totaled $1.7 billion, a decline of $27.0 billion (94.0 percent) from the third quarter of 2007.

More “Hope for Homeowners” facing foreclosure, or just more hot-air from Washington, DOA?  Well it appears that Fannie Mae (FNM) and Freddie Mac (FRE) - the semi-defunct, quasi-government holders of trillions in mortgage debt announced yesterday, November 20, 2008, that they will suspend foreclosure proceedings into January 2009, obviously the very, very least they could do. 

The suspension will affect as many as 16,000 families facing a Holiday heave-ho.

Two months ago, in late September, I penned a piece titled Liars, and the Lying Lies They Are Telling You, which examined just one single publicly available FDIC document from 2002 which shows beyond any doubt that the Feds were not only aware of the problems in the finance industry that have led to near economic collapse today, they were already convinced that there would soon be dire repercussions.

Yet yesterday we had Treasury Secretary Hank Paulson and his mini-me Neel Kashkari, as well as a host of other top Federal officials, testifying under oath that the threats to our economic security were not immediately apparent until just months ago - hence the gun-to-the-head threats that produced the biggest bailout of private industry in history, while prescribing less governance on the application of those funds than is required to redeem a typical twenty-cent manufacturers coupon for kitty-litter.