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Attn: Senator Our Ref: 07-A001-R Dated 26-09-08
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Sub: Defrauding the American Tax Payers with $700 Billion dollars! Paulson's Poison
Pill

Hello

Defrauding American Tax payers with $700 Billion dollars! Paulson's Poison Pill

Where is the protection of Tax payers under the $700 billion plans, if you read what Bernanke said
during the Congressional hearing?

Mr. Bernanke said he was not in favor of paying the price of “Fire sale”. Mr. Paulson said that he
was willing to buy the Bad Debts at substantial discount (about 35%), that is, paying $65 for
every $100 face value of the debt and holding them until maturity. To one question from the
Senator, how much the securities are really worth now, Mr. Bernanke said only a few cents! Wow!

Read them together, the Paulson – Bernanke plan foresees the payment of 65% of face value of
$100 for the Bad Debts currently trading at few cents (about 20 cents to 98 cents). What is the
Asset backing? Big Zero. Why? Because all derivative papers are secondary mortgage papers or
mortgage with second lien that gets paid only after primary lender is paid off. Since the primary
lender has foreclosed, seized and sold the mortgaged property, nothing is left for the secondary
mortgage holders who have to rely upon the mortgaged property alone. They have no other
recourse or option to realize their dues.

The question arises, why Bernanke and Paulson are bent upon paying $65 when the security
backing is ZERO and current market is just 20 cents. That is, they are willing to pay the premium
of 300 times or 30,000% more than the market value. As public servants, they have fundamental
responsibility to look after the interests of the American Tax Payers (ATP), and buy the assets at
the best bargain price or at least current prevailing price. Anything contrary to this dictate,
amount to betrayal of and defrauding the tax payers to the extent of $700 billion dollars”

Mr. Paulson said that he (treasury) would hold the securities until maturity to realize the full value.
There is no market for those securities at the moment, he said... Since the Treasury will have no
tangible security under the secondary mortgage paper and they too can not sue the borrowers due
to non recourse nature of the mortgage, the possible value realization is ZERO, whether he hold
them for one year, 10 years, 30 years or 100 years. That is, the entire amount of $700 billions will
turn to ZERO almost instantly when distributed or used to buy the bad debts.

Mr. Paulson and Bernanke also want clean passage of bill before this weekend, that is, before the
September end. Also, significant is the ending of ban on short selling of financial shares 2 days
later or October 2, 2008. Again read them together. What Mr. Paulson and Bernanke seek to
achieve by hustling agreement before September end? Here is the possible explanation.

September is the end of the quarter or Q3. The quarterly result or Q3 for the period ended
September 2008 will arrive in the market in second or third week of October. If the bad debts are
bought before September quarter, new market price will be established @ $65 against just 20
cents. Under the MTM or Mark to Market rule, the securities are marked to market price for
valuation purpose. By paying the price of $65 against just 20 cents, almost all banks will be
valuing their portfolio at newly established market price - $65 against 20 cents. This is nothing but
the manipulation of the market price by artificial means. All banks, investment banks, and brokers
will be re-valuing their portfolio based on concocted market price under MTM rules, and they will
start reporting bogus profits by reversing the excess provision in the past and providing less for
the future.

If the budget is passed before September quarter, there will be huge rally in financial shares.
When the short selling ban on 799 financial shares is lifted by SEC on October 2, there will be
fierce short covering rally that may see the financial shares choking up 20% to 60% gain in single
session. When the reporting season starts in mid October, all bank shares will show tremendous
improvement in their profit and balance sheet due to use of concocted market price that will fuel
further rally.

Who will be the loser? Of course, American Tax Payers who’s $700 Billions will be gone forever.
Their bonds have neither tangible security nor any other recourse to pursue the defaulting
borrowers. The next 5 American generations will never pardon the President Bush, Mr. Paulson,
the Treasury Secretary , Mr. Bernanke, FED chief and Mr. Cox, the SEC Chief for criminal waste of
$700 billions, misrepresentation and fraud for which they will never be tried - for ever.

Instead of manipulating and falsifying the entire debt market, and losing Tax payers’ $700 billions
in a flash, it is time to let the bankrupt banks to really go bankrupt and not spend even a single
good dollar after every bad dollar. The nation will be better off in granting $300 billions to
remaining good small regional banks to ease the credit crunch which will be more satisfying than
distributing largesse to bankrupt banks, investment banks and brokers.

Anil Selarka, Hong Kong

September 25, 2008
Thanking you,
ANIL M SELARKA
4F, 3 Wood Road, Wanchai
HONG KONG
Sender: Anil Selarka
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