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Of Mosques And Men: Reflections On The Ground Zero Mosque

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Obama’s Support Mosque At Ground Zero

Obama “Ass To Kick” Transcript

The Audacity Of Hope Page 261
Obama Admitting He Is Muslim
Glenn Beck ‘Restoring Honor Rally’
The House Negro And The Field Negro

Palin: ‘I hope that Dr. King would be so proud of us’
Michelle Obama Chimp Image On Google
Rush Limbaugh: The Obamas Party Like Royalty
The Clintons, Jews And Niggers
Michelle Obama Called Ghetto Girl
Glenn Beck ‘Restoring Honor Rally’
Michelle Obama On Beach In Spain
Michelle Obama Monkey Faces
City Councilmen Fighting
Black People Don’t Like Black Conservatives

Michael Jackson Portrait Unveiled

Michael Jackson Last Video
This portrait – Michael Jackson’s Blue Eye – was taken by Arno Bani in 1999.
It was unveiled to mark today’s one-year anniversary of the singer’s death.

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Rand Paul Defends His Views On Race

U.S. Senate candidate Rand Paul answers whether or not he supports the 1964 Civil Rights Act.

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Barack And Michelle Obama Radical Cartoon
Health Clinic Fight
City Councilmen Fighting
If I help him, he’s going to help me
Michelle Obama Chimp Image On Google
Child Dies In House Fire, Aunt
Concerned About Her Food Stamps

The House Negro And The Field Negro

Michelle Obama Monkey Faces
The Race Card

Dalai Lama Fist Bump
Obama Kool Aid Drinkers
Woman Has Big Mack Attack And Trash McDonalds
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Goldman Sachs Lawsuit

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMPLAINT COMMISSION, [Securities Fraud]
Plaintiff, 10-CV-___________ ( ) v. ECF CASE GOLDMAN SACHS & CO. and Jury Trial Demanded FABRICE TOURRE, Defendants.

Plaintiff, the United States Securities and Exchange Commission (“Commission”), alleges as follows against the defendants named above:

OVERVIEW

1. The Commission brings this securities fraud action against Goldman, Sachs & Co. (“GS&Co”) and a GS&Co employee, Fabrice Tourre (“Tourre”), for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation (“CDO”) GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007AC1, was tied to the performance of subprime residential mortgage-backed securities (“RMBS”) and was structured and marketed by GS&Co in early 2007 when the United States housing market and related securities were beginning to show signs of distress. Synthetic CDOs like ABACUS 2007-AC1 contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market.

2. GS&Co marketing materials for ABACUS 2007-AC1 – including the term sheet, flip book and offering memorandum for the CDO – all represented that the reference portfolio of RMBS underlying the CDO was selected by ACA Management LLC (“ACA”), a third-party with experience analyzing credit risk in RMBS. Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. (“Paulson”), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio, Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (“CDS”) with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1 capital structure. Given its financial short interest, Paulson had an economic incentive to choose RMBS that it expected to experience credit events in the near future. GS&Co did not disclose Paulson’s adverse economic interests or its role in the portfolio selection process in the term sheet, flip book, offering memorandum or other marketing materials provided to investors.

3. In sum, GS&Co arranged a transaction at Paulson’s request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors, as part of the description of the portfolio selection process contained in the marketing materials used to promote the transaction, Paulson’s role in the portfolio selection process or its adverse economic interests.

4. Tourre was principally responsible for ABACUS 2007-AC1. Tourre devised the transaction, prepared the marketing materials and communicated directly with investors. Tourre knew of Paulson’s undisclosed short interest and its role in the collateral selection process. Tourre also misled ACA into believing that Paulson invested approximately $200 million in the equity of ABACUS 2007-AC1 (a long position) and, accordingly, that Paulson’s interests in the collateral section process were aligned with ACA’s when in reality Paulson’s interests were sharply conflicting.

5. The deal closed on April 26, 2007. Paulson paid GS&Co approximately $15 million for structuring and marketing ABACUS 2007-AC1. By October 24, 2007, 83% of the RMBS in the ABACUS 2007-AC1 portfolio had been downgraded and 17% were on negative watch. By January 29, 2008, 99% of the portfolio had been downgraded. As a result, investors in the ABACUS 2007-AC1 CDO lost over $1 billion. Paulson’s opposite CDS positions yielded a profit of approximately $1 billion for Paulson.

6. By engaging in the misconduct described herein, GS&Co and Tourre directly or indirectly engaged in transactions, acts, practices and a course of business that violated Section 17(a) of the Securities Act of 1933, 15 U.S.C. §77q(a) (“the Securities Act”), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. §78j(b) (“the Exchange Act”) and Exchange Act Rule 10b-5, 17 C.F.R. §240.10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, civil penalties and other appropriate and necessary equitable relief from both defendants.

JURISDICTION AND VENUE

7. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. Each defendant, directly or indirectly, made use of the means or instruments of interstate commerce, or of the mails, or the facilities of a national securities exchange in connection with the transactions, acts, practices, and courses of business alleged herein. Certain of the acts, practices, and courses of conduct constituting the violations of law alleged herein occurred within this judicial district.

DEFENDANTS

8. Goldman, Sachs & Co. is the principal United States broker-dealer of The Goldman Sachs Group, Inc., a global investment banking, securities and investment management firm headquartered in New York City. GS&Co structured and marketed ABACUS 2007-AC1.

9. Fabrice Tourre, age 31, is a registered representative with GS&Co. Tourre was the GS&Co employee principally responsible for the structuring and marketing of ABACUS 2007-AC1. Tourre worked as a Vice President on the structured product correlation trading desk at GS&Co headquarters in New York City during the relevant period. Tourre presently works in London as an Executive Director of Goldman Sachs International.

FACTS

A. GS&CO’S CORRELATION TRADING DESK

10. GS&Co’s structured product correlation trading desk was created in and around late 2004/early 2005. Among the services it provided was the structuring and marketing of a series of synthetic CDOs called “ABACUS” whose performance was tied to RMBS. GS&Co sought to protect and expand this profitable franchise in a competitive market throughout the relevant period. According to an internal GS&Co memorandum to the Goldman Sachs Mortgage Capital Committee (“MCC”) dated March 12, 2007, the “ability to structure and execute complicated transactions to meet multiple client’s needs and objectives is key for our franchise,” and “[e]xecuting this transaction [ABACUS 2007-AC1] and others like it helps position Goldman to compete more aggressively in the growing market for synthetics written on structured products.”

B. PAULSON’S INVESTMENT STRATEGY

11. Paulson & Co. Inc. (“Paulson”) is a hedge fund founded in 1994. Beginning in 2006, Paulson created two funds, known as the Paulson Credit Opportunity Funds, which took a bearish view on subprime mortgage loans by buying protection through CDS on various debt securities. A CDS is an over-the-counter derivative contract under which a protection buyer makes periodic premium payments and the protection seller makes a contingent payment if a reference obligation experiences a credit event.

12. RMBS are securities backed by residential mortgages. Investors receive payments out of the interest and principal on the underlying mortgages. Paulson developed an investment strategy based upon the belief that, for a variety of reasons, certain mid-andsubprime RMBS rated “Triple B,” meaning bonds rated “BBB” by S&P or “Baa2” by Moody’s, would experience credit events. The Triple B tranche is the lowest investment grade RMBS and, after equity, the first part of the capital structure to experience losses associated with a deterioration of the underlying mortgage loan portfolio.

13. CDOs are debt securities collateralized by debt obligations including RMBS. These securities are packaged and generally held by a special purpose vehicle (“SPV”) that issues notes entitling their holders to payments derived from the underlying assets. In a synthetic CDO, the SPV does not actually own a portfolio of fixed income assets, but rather enters into CDSs that reference the performance of a portfolio (the SPV does hold some collateral securities separate from the reference portfolio that it uses to make payment obligations).

14. Paulson came to believe that synthetic CDOs whose reference assets consisted of certain Triple B-rated mid-and-subprime RMBS would experience significant losses and, under certain circumstances, even the more senior AAA-rated tranches of these so-called “mezzanine” CDOs would become worthless.

C. GS&CO AND PAULSON DISCUSS A PROPOSED TRANSACTION

15. Paulson performed an analysis of recent-vintage Triple B-rated RMBS and identified various bonds it expected to experience credit events. Paulson then asked GS&Co to help it buy protection, through the use of CDS, on the RMBS it had adversely selected, meaning chosen in the belief that the bonds would experience credit events.

16. Paulson discussed with GS&Co possible transactions in which counterparties to its short positions might be found. Among the transactions considered were synthetic CDOs whose performance was tied to Triple B-rated RMBS. Paulson discussed with GS&Co the creation of a CDO that would allow Paulson to participate in selecting a portfolio of reference obligations and then effectively short the RMBS portfolio it helped select by entering into CDS with GS&Co to buy protection on specific layers of the synthetic CDO’s capital structure.

17. A Paulson employee explained the investment opportunity as of January 2007 as follows:

“It is true that the market is not pricing the subprime RMBS wipeout scenario. In my opinion this situation is due to the fact that rating agencies, CDO managers and underwriters have all the incentives to keep the game going, while ‘real money’ investors have neither the analytical tools nor the institutional framework to take action before the losses that one could anticipate based [on] the ‘news’ available everywhere are actually realized.”

18. At the same time, GS&Co recognized that market conditions were presenting challenges to the successful marketing of CDO transactions backed by mortgage-related securities. For example, portions of an email in French and English sent by Tourre to a friend on January 23, 2007 stated, in English translation where applicable: “More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!” Similarly, an email on February 11, 2007 to Tourre from the head of the GS&Co structured product correlation trading desk stated in part, “the cdo biz is dead we don’t have a lot of time left.”

D. INTRODUCTION OF ACA TO THE PROPOSED TRANSACTION

19. GS&Co and Tourre knew that it would be difficult, if not impossible, to place the liabilities of a synthetic CDO if they disclosed to investors that a short investor, such as Paulson, played a significant role in the collateral selection process. By contrast, they knew that the identification of an experienced and independent third-party collateral manager as having selected the portfolio would facilitate the placement of the CDO liabilities in a market that was beginning to show signs of distress.

20. GS&Co also knew that at least one significant potential investor, IKB Deutsche Industriebank AG (“IKB”), was unlikely to invest in the liabilities of a CDO that did not utilize a collateral manager to analyze and select the reference portfolio.

21. GS&Co therefore sought a collateral manager to play a role in the transaction proposed by Paulson. Contemporaneous internal correspondence reflects that GS&Co recognized that not every collateral manager would “agree to the type of names [of RMBS] Paulson want[s] to use” and put its “name at risk…on a weak quality portfolio.”

22. In or about January 2007, GS&Co approached ACA and proposed that it serve as the “Portfolio Selection Agent” for a CDO transaction sponsored by Paulson. ACA previously had constructed and managed numerous CDOs for a fee. As of December 31, 2006, ACA had closed on 22 CDO transactions with underlying portfolios consisting of $15.7 billion of assets.

23. Internal GS&Co communications emphasized the advantages from a marketing perspective of having ACA associated with the transaction. For example, an internal email from Tourre dated February 7, 2007, stated:

“One thing that we need to make sure ACA understands is that we want their name on this transaction. This is a transaction for which they are acting as portfolio selection agent, this will be important that we can use ACA’s branding to help distribute the bonds.”

24. Likewise, an internal GS&Co memorandum to the Goldman Sachs MCC dated March 12, 2007 described the marketing advantages of ACA’s “brand-name” and “credibility”:

“We expect the strong brand-name of ACA as well as our market-leading position in synthetic CDOs of structured products to result in a successful offering.”

“We expect that the role of ACA as Portfolio Selection Agent will broaden the investor base for this and future ABACUS offerings.”

“We intend to target suitable structured product investors who have previously participated in ACA-managed cashflow CDO transactions or who have previously participated in prior ABACUS transactions.”

“We expect to leverage ACA’s credibility and franchise to help distribute this Transaction.”

E. PAULSON’S PARTICIPATION IN THE COLLATERAL SELECTION PROCESS

25. In late 2006 and early 2007, Paulson performed an analysis of recent-vintage Triple B RMBS and identified over 100 bonds it expected to experience credit events in the near future. Paulson’s selection criteria favored RMBS that included a high percentage of adjustable rate mortgages, relatively low borrower FICO scores, and a high concentration of mortgages in states like Arizona, California, Florida and Nevada that had recently experienced high rates of home price appreciation. Paulson informed GS&Co that it wanted the reference portfolio for the contemplated transaction to include the RMBS it identified or bonds with similar characteristics.

26. On January 8, 2007, Tourre attended a meeting with representatives from Paulson and ACA at Paulson’s offices in New York City to discuss the proposed transaction.

27. On January 9, 2007, GS&Co sent an email to ACA with the subject line, “Paulson Portfolio.” Attached to the email was a list of 123 2006 RMBS rated Baa2. On January 9, 2007, ACA performed an “overlap analysis” and determined that it previously had purchased 62 of the 123 RMBS on Paulson’s list at the same or lower ratings.

28. On January 9, 2007, GS&Co informed ACA that Tourre was “very excited by the initial portfolio feedback.”

29. On January 10, 2007, Tourre sent an email to ACA with the subject line, “Transaction Summary.” The text of Tourre’s email began, “we wanted to summarize ACA’s proposed role as ‘Portfolio Selection Agent’ for the transaction that would be sponsored by Paulson (the ‘Transaction Sponsor’).” The email continued in relevant part, “[s]tarting portfolio would be ideally what the Transaction Sponsor shared, but there is flexibility around the names.”

30. On January 22, 2007, ACA sent an email to Tourre and others at GS&Co with the subject line, “Paulson Portfolio 1-22-10.xls.” The text of the email began, “Attached please find a worksheet with 86 sub-prime mortgage positions that we would recommend taking exposure to synthetically. Of the 123 names that were originally submitted to us for review, we have included only 55.”

31. On January 27, 2007, ACA met with a Paulson representative in Jackson Hole, Wyoming, and they discussed the proposed transaction and reference portfolio. The next day, on January 28, 2007, ACA summarized the meeting in an email to Tourre. Tourre responded via email later that day, “this is confirming my initial impression that [Paulson] wanted to proceed with you subject to agreement on portfolio and compensation structure.”

32. On February 2, 2007, Paulson, Tourre and ACA met at ACA’s offices in New York City to discuss the reference portfolio. Unbeknownst to ACA at the time, Paulson intended to effectively short the RMBS portfolio it helped select by entering into CDS with GS&Co to buy protection on specific layers of the synthetic CDO’s capital structure. Tourre and GS&Co, of course, were fully aware that Paulson’s economic interests with respect to the quality of the reference portfolio were directly adverse to CDO investors. During the meeting, Tourre sent an email to another GS&Co employee stating, “I am at this aca paulson meeting, this is surreal.” Later the same day, ACA emailed Paulson, Tourre, and others at GS&Co a list of 82 RMBS on which Paulson and ACA concurred, plus a list of 21 “replacement” RMBS. ACA sought Paulson’s approval of the revised list, asking, “Let me know if these work for you at the Baa2 level.”

33. On February 5, 2007, Paulson sent an email to ACA, with a copy to Tourre, deleting eight RMBS recommended by ACA, leaving the rest, and stating that Tourre agreed that 92 bonds were a sufficient portfolio.

34. On February 5, 2007, an internal ACA email asked, “Attached is the revised portfolio that Paulson would like us to commit to – all names are at the Baa2 level. The final portfolio will have between 80 and these 92 names. Are ‘we’ ok to say yes on this portfolio?” The response was, “Looks good to me. Did [Paulson] give a reason why they kicked out all the Wells [Fargo] deals?” Wells Fargo was generally perceived as one of the higher-quality subprime loan originators.

35. On or about February 26, 2007, after further discussion, Paulson and ACA came to an agreement on a reference portfolio of 90 RMBS for ABACUS 2007-AC1.

F. GS&CO MISLED INVESTORS BY REPRESENTING THAT ACA SELECTED THE PORTFOLIO WITHOUT DISCLOSING PAULSON’S SIGNIFICANT ROLE IN DETERMINING THE PORTFOLIO AND ITS ADVERSE ECONOMIC INTERESTS

36. GS&Co’s marketing materials for ABACUS 2007-AC1 were false and misleading because they represented that ACA selected the reference portfolio while omitting any mention that Paulson, a party with economic interests adverse to CDO investors, played a significant role in the selection of the reference portfolio.

37. For example, a 9-page term sheet for ABACUS 2007-AC1 finalized by GS&Co on or about February 26, 2007, described ACA as the “Portfolio Selection Agent” and stated in bold print at the top of the first page that the reference portfolio of RMBS had been “selected by ACA.” This document contained no mention of Paulson, its economic interests in the transaction, or its role in selecting the reference portfolio.

38. Similarly, a 65-page flip book for ABACUS 2007-AC1 finalized by GS&Co on or about February 26, 2007 represented on its cover page that the reference portfolio of RMBS had been “Selected by ACA Management, LLC.” The flip book included a 28-page overview of ACA describing its business strategy, senior management team, investment philosophy, expertise, track record and credit selection process, together with a 7-page section of biographical information on ACA officers and employees. Investors were assured that the party selecting the portfolio had an “alignment of economic interest” with investors. This document contained no mention of Paulson, its economic interests in the transaction, or its role in selecting the reference portfolio.

39. Tourre had primary responsibility for preparing the term sheet and flip book.

40. The Goldman Sachs MCC, which included senior-level management of GS&Co, approved the ABACUS 2007-AC1 on or about March 12, 2007. GS&Co expected to earn between $15-and-$20 million for structuring and marketing ABACUS 2007-AC1.

41. On or about April 26, 2007, GS&Co finalized a 178-page offering memorandum for ABACUS 2007-AC1. The cover page of the offering memorandum included a description of ACA as “Portfolio Selection Agent.” The Transaction Overview, Summary and Portfolio Selection Agent sections of the memorandum all represented that the reference portfolio of RMBS had been selected by ACA. This document contained no mention of Paulson, its economic interests in the transaction, or its role in selecting the reference portfolio.

42. Tourre reviewed at least the Summary section of the offering memorandum before it was sent to potential investors.

43. Although the marketing materials for ABACUS 2007-AC1 made no mention of Paulson or its role in the transaction, internal GS&Co communications clearly identified Paulson, its economic interests, and its role in the transaction. For example, the March 12, 2007 MCC memorandum describing the transaction stated, “Goldman is effectively working an order for Paulson to buy protection on specific layers of the [ABACUS 2007-]AC1 capital structure.”

G. GS&CO MISLED ACA INTO BELIEVING PAULSON WAS LONG EQUITY

44. GS&Co also misled ACA into believing that Paulson was investing in the equity of ABACUS 2007-AC1 and therefore shared a long interest with CDO investors. The equity tranche is at the bottom of the capital structure and the first to experience losses associated with deterioration in the performance of the underlying RMBS. Equity investors therefore have an economic interest in the successful performance of a reference RMBS portfolio. As of early 2007, ACA had participated in a number of CDO transactions involving hedge funds that invested in the equity tranche.

45. Had ACA been aware that Paulson was taking a short position against the CDO, ACA would have been reluctant to allow Paulson to occupy an influential role in the selection of the reference portfolio because it would present serious reputational risk to ACA, which was in effect endorsing the reference portfolio. In fact, it is unlikely that ACA would have served as portfolio selection agent had it known that Paulson was taking a significant short position instead of a long equity stake in ABACUS 2007-AC1. Tourre and GS&Co were responsible for ACA’s misimpression that Paulson had a long position, rather than a short position, with respect to the CDO.

46. On January 8, 2007, Tourre attended a meeting with representatives from Paulson and ACA at Paulson’s offices in New York City to discuss the proposed transaction. Paulson’s economic interest was unclear to ACA, which sought further clarification from GS&Co. Later that day, ACA sent a GS&Co sales representative an email with the subject line “Paulson meeting” that read:

“I have no idea how it went – I wouldn’t say it went poorly, not at all, but I think it didn’t help that we didn’t know exactly how they [Paulson] want to participate in the space. Can you get us some feedback?”

47. On January 10, 2007, Tourre emailed ACA a “Transaction Summary” that included a description of Paulson as the “Transaction Sponsor” and referenced a “Contemplated Capital Structure” with a “[0]% – [9]%: pre-committed first loss” as part of the Paulson deal structure. The description of this [0]% – [9]% tranche at the bottom of the capital structure was consistent with the description of an equity tranche and ACA reasonably believed it to be a reference to the equity tranche. In fact, GS&Co never intended to market to anyone a “[0]% – [9]%” first loss equity tranche in this transaction.

48. On January 12, 2007, Tourre spoke by telephone with ACA about the proposed transaction. Following that conversation, on January 14, 2007, ACA sent an email to the GS&Co sales representative raising questions about the proposed transaction and referring to Paulson’s equity interest. The email, which had the subject line “Call with Fabrice [Tourre] on Friday,” read in pertinent part:

“I certainly hope I didn’t come across too antagonistic on the call with Fabrice [Tourre] last week but the structure looks difficult from a debt investor perspective. I can understand Paulson’s equity perspective but for us to put our name on something, we have to be sure it enhances our reputation.”

49. On January 16, 2007, the GS&Co sales representative forwarded that email to Tourre. As of that date, Tourre knew, or was reckless in not knowing, that ACA had been misled into believing Paulson intended to invest in the equity of ABACUS 2007-AC1.

50. Based upon the January 10, 2007, “Transaction Summary” sent by Tourre, the January 12, 2007 telephone call with Tourre and continuing communications with Tourre and others at GS&Co, ACA continued to believe through the course of the transaction that Paulson would be an equity investor in ABACUS 2007-AC1.

51. On February 12, 2007, ACA’s Commitments Committee approved the firm’s participation in ABACUS as portfolio selection agent. The written approval memorandum described Paulson’s role as follows: “the hedge fund equity investor wanted to invest in the 09% tranche of a static mezzanine ABS CDO backed 100% by subprime residential mortgage securities.” Handwritten notes from the meeting reflect discussion of “portfolio selection work with the equity investor.”

H. ABACUS 2007-AC1 INVESTORS

1. IKB

52. IKB is a commercial bank headquartered in Dusseldorf, Germany. Historically, IKB specialized in lending to small and medium-sized companies. Beginning in and around 2002, IKB, for itself and as an advisor, was involved in the purchase of securitized assets referencing, or consisting of, consumer credit risk including RMBS CDOs backed by U.S. mid-and-subprime mortgages. IKB’s former subsidiary, IKB Credit Asset Management GmbH, provided investment advisory services to various purchasing entities participating in a commercial paper conduit known as the “Rhineland programme conduit.”

53. The identity and experience of those involved in the selection of CDO portfolios was an important investment factor for IKB. In late 2006 IKB informed a GS&Co sales representative and Tourre that it was no longer comfortable investing in the liabilities of CDOs that did not utilize a collateral manager, meaning an independent third-party with knowledge of the U.S. housing market and expertise in analyzing RMBS. Tourre and GS&Co knew that ACA was a collateral manager likely to be acceptable to IKB.

54. In February, March and April 2007, GS&Co sent IKB copies of the ABACUS 2007-AC1 term sheet, flip book and offering memorandum, all of which represented that the RMBS portfolio had been selected by ACA and omitted any reference to Paulson, its role in selecting the reference portfolio and its adverse economic interests. Those representations and omissions were materially false and misleading because,unbeknownst to IKB, Paulson played a significant role in the collateral selection process and had financial interests in the transaction directly adverse to IKB. Neither GS&Co nor Tourre informed IKB of Paulson’s participation in the collateral selection process and its adverse economic interests.

55. The first written marketing materials for ABACUS 2007-AC1 were distributed on February 15, 2007, when GS&Co emailed a preliminary term sheet and reference portfolio to the GS&Co sales representative covering IKB. Tourre was aware these materials would be delivered to IKB.

56. On February 19, 2007, the GS&Co sales representative forwarded the marketing materials to IKB, explaining via email: “Attached are details of the ACA trade we spoke about with Fabrice [Tourre] in which you thought the AAAs would be interesting.”

57. Tourre maintained direct and indirect contact with IKB in an effort to close the deal. This included a March 6, 2007 email to the GS&Co sales representative for IKB representing that, “This is a portfolio selected by ACA . . .” Tourre subsequently described the portfolio in an internal GS&Co email as having been “selected by ACA/Paulson.”

58. ABACUS 2007-AC1 closed on or about April 26, 2007. IKB bought $50 million worth of Class A-1 notes at face value. The Class A-1 Notes paid a variable interest rate equal to LIBOR plus 85 basis points and were rated Aaa by Moody’s Investors Services, Inc. (“Moody’s”) and AAA by Standard & Poor’s Ratings & Services (“S&P”). IKB bought $100 million worth of Class A-2 Notes at face value. The Class A-2 Notes paid a variable interest rate equal to LIBOR plus 110 basis points and were rated Aaa by Moody’s and AAA by S&P.

59. The fact that the portfolio had been selected by an independent third-party with experience and economic interests aligned with CDO investors was important to IKB. IKB would not have invested in the transaction had it known that Paulson played a significant role in the collateral selection process while intending to take a short position in ABACUS 2007AC1. Among other things, knowledge of Paulson’s role would have seriously undermined IKB’s confidence in the portfolio selection process and led senior IKB personnel to oppose the transaction.

60. Within months of closing, ABACUS 2007-AC1’s Class A-1 and A-2 Notes were nearly worthless. IKB lost almost all of its $150 million investment. Most of this money was ultimately paid to Paulson in a series of transactions between GS&Co and Paulson.

2. ACA/ABN AMRO

61. ACA’s parent company, ACA Capital Holdings, Inc. (“ACA Capital”), provided financial guaranty insurance on a variety of structured finance products including RMBS CDOs, through its wholly-owned subsidiary, ACA Financial Guaranty Corporation. On or about May 31, 2007, ACA Capital sold protection or “wrapped” the $909 million super senior tranche of ABACUS 2007-AC1, meaning that it assumed the credit risk associated with that portion of the capital structure via a CDS in exchange for premium payments of approximately 50 basis points per year.

62. ACA Capital was unaware of Paulson’s short position in the transaction. It is unlikely that ACA Capital would have written protection on the super senior tranche if it had known that Paulson, which played an influential role in selecting the reference portfolio, had taken a significant short position instead of a long equity stake in ABACUS 2007-AC1.

63. The super senior transaction with ACA Capital was intermediated by ABN AMRO Bank N.V. (“ABN”), which was one of the largest banks in Europe during the relevant period. This meant that, through a series of CDS between ABN and Goldman and between ABN and ACA that netted ABN premium payments of approximately 17 basis points per year, ABN assumed the credit risk associated with the super senior portion of ABACUS 2007AC1’s capital structure in the event ACA Capital was unable to pay.

64. GS&Co sent ABN copies of the ABACUS 2007-AC1 term sheet, flip book and offering memorandum, all of which represented that the RMBS portfolio had been selected by ACA and omitted any reference to Paulson’s role in the collateral selection process and its adverse economic interest. Tourre also told ABN in emails that ACA had selected the portfolio. These representations and omissions were materially false and misleading because, unbeknownst to ABN, Paulson played a significant role in the collateral selection process and had a financial interest in the transaction that was adverse to ACA Capital and ABN.

65. At the end of 2007, ACA Capital was experiencing severe financial difficulties. In early 2008, ACA Capital entered into a global settlement agreement with its counterparties to effectively unwind approximately $69 billion worth of CDSs, approximately $26 billion of which were related to 2005-06 vintage subprime RMBS. ACA Capital is currently operating as a run-off financial guaranty insurance company.

66. In late 2007, ABN was acquired by a consortium of banks that included the Royal Bank of Scotland (“RBS”). On or about August 7, 2008, RBS unwound ABN’s super senior position in ABACUS 2007-AC1 by paying GS&Co $840,909,090. Most of this money was subsequently paid by GS&Co to Paulson.

CLAIMS FOR RELIEF FIRST CLAIM
Section 17(a) of the Securities Act

67. Paragraphs 1-66 are realleged and incorporated herein by reference.

68. GS&Co and Tourre each violated Section 17(a)(1), (2) and (3) of the Exchange Act [15 U.S.C. § 77q(a)(1), (2) & (3)].

69. As set forth above, Goldman and Tourre, in the offer or sale of securities or securities-based swap agreements, by the use of means or instruments of interstate commerce or by the mails, directly or indirectly (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of untrue statements of material facts or omissions of material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers of securities.

70. GS&Co and Tourre knowingly, recklessly or negligently misrepresented in the term sheet, flip book and offering memorandum for ABACUS 2007-AC1 that the reference portfolio was selected by ACA without disclosing the significant role in the portfolio selection process played by Paulson, a hedge fund with financial interests in the transaction directly adverse to IKB, ACA Capital and ABN. GS&Co and Tourre also knowingly, recklessly or negligently misled ACA into believing that Paulson invested in the equity of ABACUS 2007AC1 and, accordingly, that Paulson’s interests in the collateral section process were closely aligned with ACA’s when in reality their interests were sharply conflicting.

SECOND CLAIM
Section 10(b) and Rule 10-b(5) of the Exchange Act

71. Paragraphs 1-70 are realleged and incorporated herein by reference.

72. GS&Co and Tourre each violated Section 10(b) of the Exchange Act [15 U.S.C § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5].

73. As set forth above, GS&Co and Tourre, in connection with the purchase or sale of securities or securities-based swap agreements, by the use of means or instrumentalities of interstate commerce or of the mails, directly or indirectly (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts or omissions of material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon persons.

74. GS&Co and Tourre knowingly or recklessly misrepresented in the term sheet, flip book and offering memorandum for ABACUS 2007-AC1 that the reference portfolio was selected by ACA without disclosing the significant role in the portfolio selection process played by Paulson, a hedge fund with financial interests in the transaction adverse to IKB, ACA Capital and ABN. GS&Co and Tourre also knowingly or recklessly misled ACA into believing that Paulson invested in the equity of ABACUS 2007-AC1 and, accordingly, that Paulson’s interests in the collateral section process were closely aligned with ACA’s when in reality their interests were sharply conflicting.

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court enter a judgment:

A. Finding that GS&Co and Tourre each violated the federal securities laws and the Commission rule alleged in this Complaint;

B. Permanently restraining and enjoining GS&Co and Tourre from violating Section 17(a) of the Securities Act [15 U.S.C. §77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5];

C. Ordering GS&Co and Tourre to disgorge all illegal profits that they obtained as a result of their fraudulent misconduct, acts or courses of conduct described in this Complaint, and to pay prejudgment interest thereon;

D. Imposing civil monetary penalties on GS&Co and Tourre pursuant to Section 20(d)(2) of the Securities Act [15 U.S.C. § 77t (d)(2)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and

E. Granting such equitable relief as may be appropriate or necessary for the benefit of investors pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)] .

Dated: Washington, D.C.

April 16, 2010
Respectfully submitted,

_________________________

Richard E. Simpson (RS 5859)
Reid A. Muoio (RM 2274)
Kenneth Lench
Cheryl J. Scarboro
James A. Kidney
Jeffrey Tao
Jason Anthony
Nicole C. Kelly
Jeff Leasure
Securities and Exchange Commission
100 F St., NE
Washington, D.C. 20549-4010
(202) 551-4492 (Simpson)
simpsonr@sec.gov

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Second Amendment Activists Swarms DC

Dozens of Second Amendment rights activists holstered their handguns and slung unloaded rifles over their shoulders Monday at a gun rights rally in northern Virginia, while hundreds of like-minded but unarmed counterparts converged in the nation’s capital.

Second Amendment: guarantees the right of individuals to possess firearms. The Second Amendment (Amendment II) to the United States Constitution is the part of the United States Bill of Rights that protects a right to keep and bear arms. The Second Amendment was adopted on December 15, 1791, along with the rest of the Bill of Rights. The American Bar Association has noted that there is more disagreement and less understanding about this right than of any other current issue regarding the Constitution.

The right to keep and bear arms, often referred as the right to bear arms or the right to have arms, is the assertion that people have a personal right to “weapon(s)” for individual use, or a collective right to bear arms in a militia, or both. In this context, “arms” refers to a variety of weapons and armor and to “bear arms” meant to wage war.

The phrase “right to keep and bear arms” was first used in the text of Second Amendment to the Constitution of the United States.

For almost a century following the ratification of the Bill of Rights, the intended meaning and application of the Second Amendment drew less interest than it does in modern times. The vast majority of regulation was done by states, and the first case law on weapons regulation dealt with state interpretations of the Second Amendment. The notable exception to this general rule was Houston v. Moore, 18 U.S. 1 (1820), where the Supreme Court mentioned the Second Amendment in an aside, but Justice Story “misidentified” it as the “5th Amendment.”

U.S. Supreme Court

The primary U.S. Supreme Court Second Amendment cases include United States v. Cruikshank (1875), Presser v. Illinois (1886), Miller v. Texas (1894), Robertson v. Baldwin (1897), United States v. Miller (1939) and District of Columbia v. Heller (2008). A key legal question is whether the Second Amendment is held to apply to state and local governments by way of the Fourteenth Amendment. Cruikshank and Presser predate the modern criteria by which it is determined whether a particular part of the Bill of Rights applies to state and local governments. Because Heller did not make such a determination, it remains an open question. McDonald v. Chicago, currently before the Court, addresses this question.

Dred Scott v. Sandford

In the case of Dred Scott v. Sandford, 60 U.S. 393 (1856), the Supreme Court’s decision denying citizenship to former slaves and their descendants included the following relevant wording:

[I]n no part of the country except Maine did the African race, in point of fact, participate equally with the whites in the exercise of civil and political rights….More especially, it cannot be believed that the large slaveholding states regarded them as included in the word citizens, or would have consented to a Constitution which might compel them to receive them in that character from another state. For if they were so received, and entitled to the privileges and immunities of citizens, it …. would give to persons of the Negro race, who were recognized as citizens in any one State of the Union, the right to … keep and carry arms wherever they went.[131]

The Court was referring to the Privileges and Immunities Clause, located in Article IV of the Constitution. This is to be distinguished from the Privileges or Immunities Clause, which was adopted as part of the Fourteenth Amendment in 1868.

United States v. Cruikshank

The Second Amendment attracted serious judicial attention with the Reconstruction era case of United States v. Cruikshank, 92 U.S. 542 (1875). In Cruikshank, the defendants were white men who had killed more than sixty blacks known as the Colfax massacre and had been charged with conspiring to prevent blacks from exercising their right to bear arms. The Court dismissed the charges, holding that the Bill of Rights restricted Congress but not private individuals. The Court concluded, “[f]or their protection in its enjoyment, the people must look to the States.”

The Court stated that “[t]he Second Amendment…has no other effect than to restrict the powers of the national government…”. Likewise, the Court held that there was no state action in this case, and therefore the Fourteenth Amendment was not applicable:

The fourteenth amendment prohibits a State from depriving any person of life, liberty, or property, without due process of law; but this adds nothing to the rights of one citizen as against another.

Thus, the Court held a federal anti-Ku-Klux-Klan statute to be unconstitutional as applied in that case.

Regarding the Second Amendment and the incorporation doctrine, the Supreme Court, in District of Columbia v. Heller, said in 2008:

With respect to Cruikshank’s continuing validity on incorporation, a question not presented by this case, we note that Cruikshank also said that the first amendment did not apply against the states and did not engage in the sort of Fourteenth Amendment inquiry required by our later cases. Our later decisions in Presser v. Illinois, 116 U.S. 252, 265 (1886) and Miller v. Texas, 153 U.S. 535, 538 (1894), reaffirmed that the Second Amendment applies only to the Federal Government.

Regarding the assertion in Heller that Cruikshank said the First Amendment did not apply to the states, Professor David Rabban wrote that the Cruikshank Court “never specified whether the First Amendment contains ‘fundamental rights’ protected by the Fourteenth Amendment against state action….”[136]

Presser v. Illinois

Main article: Presser v. Illinois

In Presser v. Illinois, 116 U.S. 252 (1886), Herman Presser headed a German-American paramilitary shooting organization and was arrested for leading a parade group of 400 men, training and drilling with military weapons with declared intention to fight, through the streets of Chicago as violation of Illinois law which prohibits the public drilling and parading in military style without a permit from the Governor.

At his trial, Presser argued that the state of Illinois had violated his Second Amendment rights. In rejecting his case the Supreme Court reaffirmed Cruikshank, holding that the Second Amendment restricts only the authority of the Congress to maintain the public security. This decision upheld the states authority to regulate the militia and that citizens had no right to create their own militias or to own weapons for semi-military purposes.

Miller v. Texas

In Miller v. Texas, 153 U.S. 535 (1894), Franklin Miller was convicted and sentenced to be executed for shooting a police officer to death using an unlicensed handgun, in violation of Texas law. Mr. Miller sought to have his conviction overturned, claiming his Second Amendment rights were violated and that the Bill of Rights should be incorporated to state law. The Supreme Court ruled in line with Presser and Cruikshank that the Second Amendment did not apply to state laws such as the Texas law for which Mr. Miller has been convicted.

Robertson v. Baldwin

In Robertson v. Baldwin, 165 U.S. 275 (1897), the Court stated that laws regulating concealed arms did not infringe upon the right to keep and bear arms, and thus were not a violation of the Second Amendment. Specifically, the Supreme Court stated:

“The law is perfectly well settled that the first ten amendments to the Constitution, commonly known as the “Bill of Rights,” were not intended to lay down any novel principles of government, but simply to embody certain guaranties and immunities which we had inherited from our English ancestors, and which had, from time immemorial, been subject to certain well recognized exceptions arising from the necessities of the case. In incorporating these principles into the fundamental law, there was no intention of disregarding the exceptions, which continued to be recognized as if they had been formally expressed. Thus, the freedom of speech and of the press (Art. I) does not permit the publication of libels, blasphemous or indecent articles, or other publications injurious to public morals or private reputation; the right of the people to keep and bear arms (Art. II) is not infringed by laws prohibiting the carrying of concealed weapons;…”

United States v. Miller

In United States v. Miller, 307 U.S. 174 (1939), the Supreme Court heard arguments from only the Solicitor General and rejected a Second Amendment challenge to the National Firearms Act prohibiting the interstate transportation of unregistered Title II weapons:

Jack Miller and Frank Layton “did unlawfully…transport in interstate commerce from…Claremore…Oklahoma to…Siloam Springs…Arkansas a certain firearm…a double barrel…shotgun having a barrel less than 18 inches in length…at the time of so transporting said firearm in interstate commerce…not having registered said firearm as required by Section 1132d of Title 26, United States Code, …and not having in their possession a stamp-affixed written order…as provided by Section 1132C…”

A demurrer had been filed, which alleged:

The National Firearms Act is not a revenue measure but an attempt to usurp police power reserved to the States, and is therefore unconstitutional. Also, it offends the inhibition of the Second Amendment to the Constitution, U.S.C.A. – ‘A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

A federal district court, ruled Section 11 of the National Firearms Act of 1934 to be in violation of the Second Amendment’s restriction forbidding such infringement and so it quashed the indictment.

In a unanimous opinion, authored by Justice McReynolds, the Supreme Court reversed the District Court decision stating that:

Considering Sonzinsky v. United States (1937), 300 U. S. 506, 300 U. S. 513, and what was ruled in sundry causes arising under the Harrison Narcotic Act — United States v. Jin Fuey Moy (1916), 241 U. S. 394, United States v. Doremus (1919), 249 U. S. 86, 249 U. S. 94; Linder v. United States (1925), 268 U. S. 5; Alston v. United States (1927), 274 U. S. 289; Nigro v. United States (1928), 276 U. S. 332 — the objection that the Act usurps police power reserved to the States is plainly untenable.

The Court further explained:

In the absence of any evidence tending to show that possession or use of a ‘shotgun having a barrel of less than eighteen inches in length’ at this time has some reasonable relationship to any preservation or efficiency of a well regulated militia, we cannot say that the Second Amendment guarantees the right to keep and bear such an instrument. Certainly it is not within judicial notice that this weapon is any part of the ordinary military equipment or that its use could contribute to the common defense.

Miller is cited by gun-rights advocates, because they claim that the Court ruled that the Second Amendment protected the right to keep arms that are part of “ordinary military equipment.” It has also been cited by gun control advocates because they claim that the Court did not consider the question of whether the sawed-off shotgun in the case would be an applicable weapon for personal defense, instead looking solely at the weapon’s suitability for the “common defense.” Law professor Andrew McClurg states, “The only certainty about Miller is that it failed to give either side a clear-cut victory. Most modern scholars recognize this fact.”

District of Columbia v. Heller

The Supreme Court, in a landmark decision, in District of Columbia v. Heller, 128 S.Ct. 2783 (2008) ruled that “[t]he Second Amendment protects an individual right to possess a firearm unconnected with service in a militia, and to use that arm for traditionally lawful purposes, such as self-defense within the home” and “that the District’s ban on handgun possession in the home violates the Second Amendment, as does its prohibition against rendering any lawful firearm in the home operable for the purpose of immediate self-defense.”

To clarify that its ruling does not invalidate a broad range of existing firearm laws, the Court said:

Although we do not undertake an exhaustive historical analysis today of the full scope of the Second Amendment, nothing in our opinion should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of arms.

The Court held that the amendment’s prefatory clause serves to clarify the operative clause, but does not limit or expand the scope of the operative clause.

The dissenting opinion, written by Justice Stevens, stated that:

The question presented by this case is not whether the Second Amendment protects a “collective right” or an “individual right.” Surely it protects a right that can be enforced by individuals. But a conclusion that the Second Amendment protects an individual right does not tell us anything about the scope of that right.

This dissent called the Opinion of the Court “strained and unpersuasive” and said that the right to possess a firearm exists only in relation to the militia and that the D.C. laws constitute permissible regulation.

Justice Scalia, in the Opinion of the Court, called Justice Stevens’ interpretation of the phrase “to keep and bear arms” incoherent and grotesque.

Justice Breyer, in his own dissent and speaking only for himself, stated:

I take as a starting point the following four propositions, based on our precedent and today’s opinions, to which I believe the entire Court subscribes: (1) The Amendment protects an “individual” right—i.e., one that is separately possessed, and may be separately enforced, by each person on whom it is conferred.

Regarding the term “well regulated”, the U.S. Supreme Court said in District of Columbia v. Heller:

[T]he adjective “well-regulated” implies nothing more than the imposition of proper discipline and training.

Justice Scalia, writing for the court, quoted Spooner from The Unconstitutionality of Slavery as saying that the right to bear arms was necessary for those who wanted to take a stand against slavery.

The majority opinion in Heller also stated that:

A purposive qualifying phrase that contradicts the word or phrase it modifies is unknown this side of the looking glass (except, apparently, in some courses on Linguistics). If “bear arms” means, as we think, simply the carrying of arms, a modifier can limit the purpose of the carriage (“for the purpose of self-defense” or “to make war against the King”). But if “bear arms” means, as the petitioners and the dissent think, the carrying of arms only for military purposes, one simply cannot add “for the purpose of killing game.” The right “to carry arms in the militia for the purpose of killing game” is worthy of the mad hatter.

The dissenting justices were unpersuaded by this argument.

McDonald v. Chicago

Main article: McDonald v. Chicago

On September 30, 2009, the Supreme Court granted certiorari in, and so decided to review, McDonald v. Chicago. This case closely parallels NRA v. Chicago. A central issue before the Court will be whether the Second Amendment applies to the states. Oral argument took place on March 2, 2010. A ruling is expected this June.

In the first couple decades following the adoption of the Second Amendment public opposition to a standing army persisted, a widely held opinion among the minority Anti-Federalists and to a lesser extent among the majority Federalists. This opinion also extended to opposition to a professional armed police force, with the responsibility to carry out local ordinances falling to sheriffs in counties and constables and night watchmen in cities and towns. These officials were sometimes compensated, but more often served as a civic duty without payment. In these early decades with rare exceptions these full time law enforcement officers were not armed with firearms, but rather were armed only with clubs. In large emergencies a call up was issued for the posse comitatus, militia companies, or vigilantes to assume law enforcement duties and these groups were much more likely to be armed with firearms. The Uniform Militia Act of 1792 obliged every free able-bodied white male citizen between the ages of 18 and 45 to be included in the national militia. It also required these men to provide their own arms and ammunition. In practice individual acquisition and maintenance of rifles and muskets to be held ready for militia duty proved problematic, with compliance estimates ranging between 10 and 65 percent of militiamen bringing their private arms to the militia musters. Additionally, compliance with the Uniform Militia Act of 1792 gradually fell into disfavor and disrepute. The State legislatures granted increasing numbers of exemptions to universal militia obligation, with exemptions granted to clergy, conscientious objectors, teachers, students, jurors, mariners and ferrymen. While in practice, the remainder of able bodied white men remained obligated for service, an increasing number of people simply did not or could not show up for militia duty. The penalty for failing to show up for duty was enforced only sporadically and selectively.

The first test of the militia system occurred in July 1794, when a group of disaffected Pennsylvania farmers rebelled against federal tax collectors whom they viewed as illegitimate tools of tyrannical power. Initial attempts of the four nearby states to raise a militia to be nationalized to suppress this insurrection proved inadequate. When officials resorted to drafting men, they faced resistance to a draft. The rank and file that resulted from this effort to raise a militia consisted mainly of draftees or paid substitutes and the poor of society who enlisted not out of duty but instead for the enlistment bonus payments. The officers who responded to the militia call up were of a higher quality and had responded out of a sense of civic duty and patriotism, but were generally critical of the rank and file. Most of the 13,000 rank and file lacked their own weapons and the war department had to provide nearly two-thirds of them with guns. In October, President George Washington and General Harry Lee marched on the 7,000 rebels who conceded without fighting. The aftermath of this experience using a militia for national defense led to criticism of the self-armed citizen concept to provide for arming of a universal militia system. Secretary of War Henry Knox and President John Adams in the following years lobbied the Congress to establish federal armories to hold weapons which were mostly imported and to encourage the domestic gunsmiths to increase local production. This degradation of the militia persisted, and within twenty years, the poor performance of the militia during the War of 1812 resulted in several wartime setbacks including being cited as the cause of the sacking of Washington, D.C. and the burning of the White House in 1814.

Barak On Gun Control:

Opposed bill okaying illegal gun us in home invasion

Hale DeMar, a 52-year-old Wilmette resident, was arrested and charged with misdemeanor violations for shooting, in the shoulder and leg, a burglar who broke into his home not once, but twice. Cook County prosecutors dropped all charges against DeMar.

In March 2004, the Illinois Senate passed Senate Bill 2165, a law introduced in response to DeMar’s case, with provisions designed to assert a right of citizens to protect themselves against home invasions, such that self-defense requirements would be viewed to take precedence over local ordinances against handgun possession. The measure passed the Illinois Senate by a vote of 38-20. Barack Obama was one of the 20 state senators voting against the measure.

Governor Rod Blagojevich vetoed the bill. On Nov. 9, 2004, the Illinois Senate voted 40-18 to override Blagojevich’s veto. Again, Obama acted against the bill.

On Nov. 17, the Illinois House voted overwhelmingly, 85-30, to override the governor’s veto and Senate Bill 2165 became law.

Source: Obama Nation, by Jerome Corsi, p.241-242 Aug 1, 2008

Ok for states & cities to determine local gun laws

Q: Is the D.C. law prohibiting ownership of handguns consistent with an individual’s right to bear arms?

A: As a general principle, I believe that the Constitution confers an individual right to bear arms. But just because you have an individual right does not mean that the state or local government can’t constrain the exercise of that right, in the same way that we have a right to private property but local governments can establish zoning ordinances that determine how you can use it.

Q: But do you still favor the registration & licensing of guns?

A: I think we can provide common-sense approaches to the issue of illegal guns that are ending up on the streets. We can make sure that criminals don’t have guns in their hands. We can make certain that those who are mentally deranged are not getting a hold of handguns. We can trace guns that have been used in crimes to unscrupulous gun dealers that may be selling to straw purchasers and dumping them on the streets.

Source: 2008 Philadelphia primary debate, on eve of PA primary Apr 16, 2008

FactCheck: Yes, Obama endorsed Illinois handgun ban

Obama was being misleading when he denied that his handwriting had been on a document endorsing a state ban on the sale and possession of handguns in Illinois. Obama responded, “No, my writing wasn’t on that particular questionnaire. As I said, I have never favored an all-out ban on handguns.”

Actually, Obama’s writing was on the 1996 document, which was filed when Obama was running for the Illinois state Senate. A Chicago nonprofit, Independent Voters of Illinois, had this question, and Obama took hard line:

35. Do you support state legislation to:
a. ban the manufacture, sale and possession of handguns? Yes.
b. ban assault weapons? Yes.
c. mandatory waiting periods and background checks? Yes.

Obama’s campaign said, “Sen. Obama didn’t fill out these state Senate questionnaires–a staffer did–and there are several answers that didn’t reflect his views then or now. He may have jotted some notes on the front page of the questionnaire, but some answers didn’t reflect his views.”

Source: FactCheck.org analysis of 2008 Philadelphia primary debate Apr 16, 2008

April 2008: “Bittergate” labeled Obama elitist

April 11th produced “Bittergate.” The Huffington Post website posted an explanation Obama gave at a private fundraiser in San Francisco of the challenges he faced with working-class voters in Pennsylvania and Indiana. “It’s not surprising they get bitter,” he said, referring to decades of constrained economic opportunities. “They cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”

Clinton said the remarks were “not reflective of the values and beliefs of Americans.” McCain said Obama showed “breathtaking” elitism. Obama challenged the accusations, and noted in response to the charge of elitism that he had been raised by a single mother who relied on food stamps, but conceded he could have been more diplomatic.

Source: Obama for Beginners, by Bob Neer, p. 61 Apr 1, 2008

Respect 2nd Amendment, but local gun bans ok

Q: You said recently, “I have no intention of taking away folks’ guns.” But you support the D.C. handgun ban, and you’ve said that it’s constitutional. How do you reconcile those two positions?

A: Because I think we have two conflicting traditions in this country. I think it’s important for us to recognize that we’ve got a tradition of handgun ownership and gun ownership generally. And a lot of law-abiding citizens use it for hunting, for sportsmanship, and for protecting their families. We also have a violence on the streets that is the result of illegal handgun usage. And so I think there is nothing wrong with a community saying we are going to take those illegal handguns off the streets. And cracking down on the various loopholes that exist in terms of background checks for children, the mentally ill. We can have reasonable, thoughtful gun control measure that I think respect the Second Amendment and people’s traditions.

Source: 2008 Politico pre-Potomac Primary interview Feb 11, 2008

Provide some common-sense enforcement on gun licensing

Q: When you were in the state senate, you talked about licensing and registering gun owners. Would you do that as president?

A: I don’t think that we can get that done. But what we can do is to provide just some common-sense enforcement. The efforts by law enforcement to obtain the information required to trace back guns that have been used in crimes to unscrupulous gun dealers. As president, I intend to make it happen. We essentially have two realities, when it comes to guns, in this country. You’ve got the tradition of lawful gun ownership. It is very important for many Americans to be able to hunt, fish, take their kids out, teach them how to shoot. Then you’ve got the reality of 34 Chicago public school students who get shot down on the streets of Chicago. We can reconcile those two realities by making sure the Second Amendment is respected and that people are able to lawfully own guns, but that we also start cracking down on the kinds of abuses of firearms that we see on the streets.

Source: 2008 Democratic debate in Las Vegas Jan 15, 2008

2000: cosponsored bill to limit purchases to 1 gun per month

Obama sought moderate gun control measures, such as a 2000 bill he cosponsored to limit handgun purchases to one per month (it did not pass). He voted against letting people violate local weapons bans in cases of self-defense, but also voted in2004 to let retired police officers carry concealed handguns. Source: The Improbable Quest, by John K. Wilson, p.148 Oct 30, 2007

Concealed carry OK for retired police officers

Obama voted for a bill in the Illinois senate that allowed retired law enforcement officers to carry concealed weapons. If there was any issue on which Obama rarely deviated, it was gun control. He was the most strident candidate when it came to enforcin and expanding gun control laws. So this vote jumped out as inconsistent.

When I queried him about the vote, he said, “I didn’t find that [vote] surprising. I am consistently on record and will continue to be on record as opposing concealed carry. This was a narrow exception in an exceptional circumstance where a retired police officer might find himself vulnerable as a consequence of the work he has previously done–and had been trained extensively in the proper use of firearms.“

It wasn’t until a few weeks later that another theory came forward about the uncharacteristic vote. Obama was battling with his GOP opponent to win the endorsement of the Fraternal Order of Police.

Source: From Promise to Power, by David Mendell, p.250-251 Aug 14, 2007

Stop unscrupulous gun dealers dumping guns in cities

Q: How would you address gun violence that continues to be the #1 cause of death among African-American men?

A: You know, when the massacre happened at Virginia Tech, I think all of us were grief stricken and shocked by the carnage. But in this year alone, in Chicago, we’ve had 34 Chicago public school students gunned down and killed. And for the most part, there has been silence. We know what to do. We’ve got to enforce the gun laws that are on the books. We’ve got to make sure that unscrupulous gun dealers aren’t loading up vans and dumping guns in our communities, because we know they’re not made in our communities. There aren’t any gun manufacturers here, right here in the middle of Detroit. But what we also have to do is to make sure that we change our politics so that we care just as much about those 30-some children in Chicago who’ve been shot as we do the children in Virginia Tech. That’s a mindset that we have to have in the White House and we don’t have it right now.

Source: 2007 NAACP Presidential Primary Forum Jul 12, 2007

Keep guns out of inner cities–but also problem of morality

I believe in keeping guns out of our inner cities, and that our leaders must say so in the face of the gun manfuacturer’s lobby. But I also believe that when a gangbanger shoots indiscriminately into a crowd because he feels someone disrespected him, we have a problem of morality. Not only do ew need to punish thatman for his crime, but we need to acknowledge that there’s a hole in his heart, one that government programs alone may not be able to repair. Source: The Audacity of Hope, by Barack Obama, p.215 Oct 1, 2006

Bush erred in failing to renew assault weapons ban

KEYES: [to Obama]: I am a strong believer in the second amendment. The gun control mentality is ruthlessly absurd. It suggests that we should pass a law that prevents law abiding citizens from carrying weapons. You end up with a situation where the crook have all the guns and the law abiding citizens cannot defend themselves. I guess that’s good enough for Senator Obama who voted against the bill that would have allowed homeowners to defend themselves if their homes were broken into.

OBAMA: Let’s be honest. Mr. Keyes does not believe in common gun control measures like the assault weapons bill. Mr. Keyes does not believe in any limits from what I can tell with respect to the possession of guns, including assault weapons that have only one purpose, to kill people. I think it is a scandal that this president did not authorize a renewal of the assault weapons ban.

Source: Illinois Senate Debate #3: Barack Obama vs. Alan Keyes Oct 21, 2004

Ban semi-automatics, and more possession restrictions

    Principles that Obama supports on gun issues:

  • Ban the sale or transfer of all forms of semi-automatic weapons.
  • Increase state restrictions on the purchase and possession of firearms.
  • Require manufacturers to provide child-safety locks with firearms.

Source: 1998 IL State Legislative National Political Awareness Test Jul 2, 1998

Voted NO on prohibiting lawsuits against gun manufacturers.

A bill to prohibit civil liability actions from being brought or continued against manufacturers, distributors, dealers, or importers of firearms or ammunition for damages, injunctive or other relief resulting from the misuse of their products by others. Voting YES would:

  • Exempt lawsuits brought against individuals who knowingly transfer a firearm that will be used to commit a violent or drug-trafficking crime
  • Exempt lawsuits against actions that result in death, physical injury or property damage due solely to a product defect
  • Call for the dismissal of all qualified civil liability actions pending on the date of enactment by the court in which the action was brought
  • Prohibit the manufacture, import, sale or delivery of armor piercing ammunition, and sets a minimum prison term of 15 years for violations
  • Require all licensed importers, manufacturers and dealers who engage in the transfer of handguns to provide secure gun storage or safety devices

Reference: Protection of Lawful Commerce in Arms Act; Bill S 397 ; vote number 2005-219 on Jul 29, 2005

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