Did organized crime, Al Qaeda and hostile governments cause the financial crisis ? The Miscreants’ Global Bust-Out: Preface | Deep Capture There are folks in the government that believe there is a problem. "Admiral Dennis Blair, then Director of National Intelligence, articulated in his 2009 report to Congress. In that report, Admiral Blair stated that there was a “dangerous nexus” between organized crime, terrorist outfits, and some hostile governments. Admiral Blair also stated that organized crime had vastly increased its “penetration of legitimate financial and commercial markets…raising the risk of significant damage to the global financial system.” The cited source is basically a short book that along with the supporting links will take a good day to read. This is a summary of the points raised. The method used to wage this war was naked short selling, i.e. selling counterfeit securities, also called phantom stock to create an artificial supply to drive down the price of a targeted security. The SEC has been slow to address the issue and current remedies are still inadequate due to the revolving door between the industry that the SEC regulates and the regulators, which has caused the SEC to be a captured U.S. agency. The Depository Trust and Clearing Corp (DTCC) manages settlement for the entire U.S. capital market, the DTCC is privately owned. The DTCC is suppose to prohibit selling of shares not owned or borrowed, but has too many loop holes by which organized crime and/or even agents of foreign governments that are hostile to the United States use to create phantom stock. In addition the DTCC appears to be lax in enforcing its own rules and infractions have little or no penalties. The problem began with Michael Milken and his closest associates “willfully, deliberately, and systematically plundered certain S&Ls.” A principal feature of the Milken operation was a variation on what mobsters refer to as a “bust out.”, i.e. "obtain" a business, load it up with debt, siphon out the cash, and declare bankruptcy. Milken adopted the “bust out” for "the world of high finance." as follows: "Milken issued junk bonds to finance about a dozen of his closest associates," the bonds were used to finance the takeover of companies. The "new owners" would then extract the companies cash. Milken associates "traded their bonds amongst each other at stair-stepping prices, in an illegal process known as “daisy-chaining.” to give the appearance of a "liquid market", while Milken's brokerages and fund managers "traded on inside information about these companies" provided by the "new owners". After the "new owners" extracted all the cash, "Milken would cut off access to credit and other traders in his network would attack the companies with waves of short selling." , with no cash and no credit the companies went bankrupt, providing short sellers a fortune. The “bust out” was later evolved into the “death spiral” PIPEs finance to "finance a company, load it with debt, and then take it down.", but used variation called naked short selling. Some of Milken's closest associates were themselves members of organized crime or did business with organized crime members. These methods of stock manipulation were soon shared with other nations organized crime groups in conjunction with joint ventures and interests. Many rogue states and terrorist groups use the services of organized crime so the knowledge spread. Utilizing naked shorts does takes capital, creation or control of brokerage firms, market makers and other financial institutions, so most of the targets were small companies, but with the entry of rogue states, terrorist organizations and other well financed groups, this barrier was no longer a factor so large corporations could be targeted and were during the last financial crisis and continues to be a threat. These criminal/terrorist organizations have learned that naked shorting could be used because large "legitimate" financial institutions that own the DTCC and have captured the SEC use the same methods for their gain and exposure of those using naked shorts would lead to criminal prosecution.