September 26th, 2010

The Bonds of August:
Refinancing the Twin Towers
on the eve of destruction


James Bamford’s latest book, The Shadow Factory, about the National Security Agency shortly before and since the 9/11 attacks, leaves his first two re same (The Puzzle Palace and Body of Secrets) seeming quaint, jolly, the Good Old Days. That Obama has only elaborated what Bush-Cheney began means we are surely beyond the pale and point of return.

But for the moment, a look back, to the weeks preceding the attacks.

Mr Bamford writes that:

– Mohammed Atta & co bought their airline tickets August 25-29, 2001.

– Up until then, across the summer, Atta had been refusing pressure from his Al Qaeda contact to set the date of the attack and git it done.

The first point is in tune with the FBI’s public chronology of the alleged terrorists’ actions. But the second point is new to my eyes.

Mr Bamford writes that Atta, on July 8, with all his fellow hijackers now safely on US soil, flew to Spain to meet Ramzi Binalshibh — “his former roommate and the man who was helping bin Laden and Khalid Sheikh Mohammed coordinate the operation from his base in Germany.” (p59)

Binalshibh told Atta that bin laden wanted the attacks carried out as soon as possible because he was concerned about the large number of operatives in the US at the same time. But Atta said he was still unable to provide an exact date for the attacks because he was too busy organizing the arriving soldiers. In addition, he still needed to coordinate the timing of the flights so that the crashes would occur simultaneously. Atta said he needed about five to six more weeks before he could provide an accurate attack date. (p60)

The rationale for delay seems rather weak.

Note that Mr Bamford does not provide a single citation for the chapter in which he tells this story of how Atta finally came to select the date and set the attacks in motion. Given Bamford’s history, readers seem invited to assume the sources are NSA intercepts (phone calls and emails) and deep background interviews with the NSAyers who handled them.

This newly public story of the date’s selection folds into old thoughts about the leasing and securitization of the Twin Towers, a refinancing project with curious consequences which — in contrast to Atta — was racing across that summer toward the day of infamy in September.

So then.



Two things to note about the date of the attacks:

– The nexus of military exercises those early days of that week in September was such that most of the east coast was stripped of jet fighter protection. (Webster Tarpley’s book is perhaps the best source for this.)

– the complex deal that financed the long-term leasing of most of the Trade Center by Silverstein Properties Inc had only recently closed — on August 21 — when the Twin Towers were securitized in a bond issuance.

Housekeeping note: The leasing by SPI (agreed to in the spring and finalized on July 24) and the bond sale by its banker that followed in August, each encompassed WTC buildings 1 and 2 (the towers) and 4 and 5 — four of the seven that comprised the Trade Center complex. (References henceforth to “Twin Tower bonds” are to the whole package, ie, bonds based on the securitization of buildings 1, 2, 4, and 5.)

Not part of the deal were: Building 3 — a big hotel on site. Building 6 — the US Custom House. And building 7 — the Spook House, where about every police and secret police agency one might call to mind rented space.

WTC 7 is the odd man out for a number of reasons. It was not truly part of the WTC complex, having been built across the street during the 80s — by none other than Larry Silverstein, the principal of SPI. The building was then refinanced by a (separate) securitization and bond sale in 1999. And, of course, shortly after 5 pm on 9/11, the building, having suffered only minor damage in the attacks, suddenly collapsed in its footprint in what looks to have been a professional demolition.

And now, our featured presentation.

There are three details worth noting about the August securitization of WTC 1-2-4-5.


In particular, the insurance coverage for the buildings required by the securitization was inconsistent with the coverage required by the lease. And a good deal of the insurance coverage stipulated was not contracted before the securitization closed — even though such coverage was a precondition to the sale of the bonds.

And note that time just kept on flying: A big chunk of the stipulated insurance remained uncontracted when the jetliners arrived on 9/11.

All of this came out at the two insurance trials subsequent to the attacks. The insurance broker for SPI testified at gory length as to the chaos and unprecedented (in his experience) late summer rush to get the bond deal done without dotting Is and crossing Ts. (The best sources here are the insurance trade journals, which covered the trials in depth.)


When SPI finalized its 99-year managerial lease of 1-2-4-5 on July 24, it paid $491 million in cash to the Port Authority in key money.

SPI borrowed borrowed this key money (and more, $563 mm) the same day from its anchor banker, GMAC, the then-proud new-age investment bank run by General Motors. Henceforth much of the monthly rent paid by WTC tenants would go not to the PA or SPI but rather to GMAC, as interest on the loan.

EXCEPT that, a month later, GMAC got all its money back in a lump — by selling $563 million in Twin Tower bonds to institutional investors worldwide. Henceforth much of the monthly WTC rents would flow to these numerous, scattered investors, tagged as interest on their new bonds.

That is: The whole point of the securitization of 1-2-4-5 was to make GMAC whole by transferring the SPI key-money loan to the new bondholders.


That is, an unusually large amount of the proceeds of the bond sale were held in reserve by the bond trustee (Wells Fargo), rather than delivered to the issuer of the bonds (a new shell vehicle, more or less a “trust,” created to issue the bonds on behalf of GMAC).

This reserve fund came in handy when the business-basis of the bonds went up in smoke twenty days after they were sold — the most dramatic instance of “collateral decay” in finance history, one imagines. Despite that calamity, the reserve allowed the bonds to continue paying interest until insurance money started to dribble in.

Perhaps the import of the three points noted above is as clear as mud.

The gist is this: When the bonds were sold on August 21, it completed a two-step deal that:

(a) via the lease, took the Port Authority of NY & NJ — which owned the Trade Center and until July 2001 had always managed it — off the hook for a lot of headaches and for the next five years of rent on 1-2-4-5.

(b) via the August securitization, took GMAC — which had financed the leasing with (in essence) a bridge loan — off the hook.

The Port Authority was off the hook in two simple respects:

(i) The $491 million in key money it received at lease signing constituted over five years worth of rent on 1-2-4-5. If by chance the buildings were to disappear from the face of the earth tomorrow, well, the PA had five years to rebound. And as for the headaches …

(ii) The 99-year managerial lease transferred responsibility for rebuilding in case of mishap from the PA to SPI.

In short sum: The SPI lease had the effect of cushioning the Port Authority from the blast of 9/11.

And the bank that provided the financing to make it happen backed out of the deal twenty days before the jetliners arrived.

Readers of the news wondering or already persuaded that controlled demolition was employed on 9/11 might surmise that somebody wanted the Twin Towers to come down that day, but nobody wanted to destroy the Port Authority of New York and New Jersey in the process.

The leasing & securitization, willy nilly, served that end, by transferring the lion’s share of the risk of owning WTC 1-2-4-5 across the next five years from the PA to the bondholders, the insurance companies and SPI.

Funny — The first interest payment on the bonds was made on September 10. One imagines a proud bondholder, early the next morning, hanging up after confirming the payment with his broker and turning to his wife — “Honey, we got a piece of the Rock!” — while she aghast over the ironing board watches the North Tower burn.

And interesting — The Twin Tower bonds never defaulted. Interest continued to be paid out of the reserve fund, and then the bonds were called and cashed out early, when enough insurance money came in and was approved for the purpose. The bonds were built stronger than the towers, one might say.

To return, then, to the business of selecting a date.



As seen above, circa July 9 in Spain, Atta told Binalbshih he needed another five or six weeks to pick a date. In emails across the subsequent weeks (Bamford writes) Atta:

suggested that the attacks not happen until after the first week in September, when Congress reconvened. [ED: Again the rationale seems weak.] For months Binalbshih had been communicating bin Laden’s impatience and his desire for a date for the operation, and by mid-August Atta was ready to give it to him. (p71)

About three or five business days before closing a securitization, the “pricing” of the deal occurs. This is the final negotiation among the bankers, the rating agency analysts and (usually) the institutional investors who will buy the bulk of the bonds, which process, when complete, fills in all the blanks — dates, dollar amounts and percentage figures — in tune with current interest-rate and other market variables.

So — in Bamford’s “mid August,” when Atta was finally ready to give Binalbshih a date — the Twin Tower bonds were priced. And days later they were sold, on August 21, leaving GMAC whole and closing the two-step process of leasing the Trade Center for 99 years.

Then, Bamford writes:

With the date now set in stone, Atta again flew up to Newark [on August 23] to meet with Hazmi and begin coordinating the complex task of picking just the right seats on just the right flights on just the right type of aircraft … (p 71)

We all recall, I hope, Atta’s picture on the Able Danger corkboard in the Pentagon.

And anyone who has read Welcome to Terrorland by Daniel Hopsicker has reason to believe that Atta was playing at least two sides of the table in the so-called intelligence world.

So readers of the news may wonder:

– if the securitization was rushed and shabbily done because someone with the power to influence it, and with a wish to get GMAC off the hook, knew that the window in early September when the Air Force would be elsewhere was fast approaching; and

– if that same or a similar someone made sure that the reserve fund was fat enough to pay the interest on the Twin Tower bonds for a year or two; and

– if, in order to hit that window in September and to give GMAC time to close its deal, all across the summer the attacks were delayed — frustrating Al Qaeda central — by Atta’s colleagues/controllers somewhere within the world wide web of so-called intelligence operators. Maybe, for instance, the “Pentagon lawyers” who, we are told, turned off Able Danger in 2000 due to concerns for the civil rights of its targets.

Even if all those IFs are in fact counterfactual — it’s fascinating to learn (assuming Bamford is accurate) that Atta organized his calendar such that it fell into sync with those of the Air Force and the WTC leasing project, even as Al Qaeda Central pressed for attacks in summer.



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  1. ed says:

    I don’t mean to imply, by the way, that Mr Bamford’s account of the attacks and the months preceding them must be bible.

    Re actions of the alleged hijackers, for the most part (as he writes atop his notes) he relies on the FBI’s public chronology.

    And what we see of the Atta and Binalbshih dialog across the summer (presumably from NSA intercepts) is what those NSAyers for whom Mr Bamford is a trusted public voice want us to see.

    The account is perhaps best handled as sanitized, which doesn’t preclude its being largely accurate but advises reader beware.

    September 27th, 2010 at 10:26 pm

  2. ed says:

    A Facebook reader referenced this site:

    One of my reactions:

    Vornado Realty Trust (not Silverstein Props) was the original prospect to lease the WTC, but backed itself out of the deal in November 2000, due to “personal” problems (the PA press release said) that Vornado boss Steven Roth had with the PA chairman.

    It was an abrupt and odd reversal. Vornado is one of the biggest realty companies on the planet and Roth had seemed enthusiastic to get this trophy property.

    Thus, I’ve often wondered if in fact Roth backed out because he was informed of what was coming. He is very well connected with the American Likud lobby (aka the Neocons) and Israel’s leadership.

    Silverstein Properties was then found to take Vornado’s place, with the PA heaving a great sigh of relief.

    And months later, when the airliners arrived (as noted in the main post above), much of the insurance stipulated by Silverstein’s lease and the bond contracts had not yet been contracted. There is clear evidence of panic about this across the day of the attacks: faxes between Silverstein Props and their insurance broker, and testimony at the insurance trials

    There seems reason, then, to doubt that Silverstein was in on the Big Wedding. If he were, it seems he would have made sure the insurance was in place before the big day. Instead, in fact, his company had to undergo two very costly insurance trials, the most important of which it lost, losing much of the coverage that had been stipulated.

    SPI’s total insurance recovery was much less than the cost of rebuilding the WTC; after the trials it came in earmarked for WTC reconstruction; and most of it in as a result of the wrangling since was funneled from SPI to the State-City-Port Authority complex that, in practice, has been organizing (and funding with new bonds) the long-delayed reconstruction.

    In a nutshell: I don’t see — contrary to so much theorizing on the web — that Silverstein profited from the experience. He looks more like a Dupe.

    September 29th, 2010 at 10:55 am

  3. ed says:

    Another Facebook friend references a Third Explanation from a Controlled Demolition site as to the collapse of WTC 7 late in the afternoon at 9/11:


    A third explanation is less obvious but makes sense of the non-sequiturs in the above explanations: perhaps Silverstein’s statement was calculated to confuse the issue of what actually happened to Building 7. By suggesting that it was demolished by the FDNY as a safety measure, it provides an alternative to the only logical explanation — that it was rigged for demolition before the attack.

    The absurdity of the FDNY implementing a plan to “pull” Building 7 on the afternoon of 9/11/01 will escape most people, who neither grasp the technical complexity of engineering the controlled demolition of a skyscraper, nor its contradiction with FEMA’s account of the collapse, nor the thorough illegality of such an operation. Thus the idea that officials decided to “pull” Building 7 after the attack serves as a distraction from the inescapable logic that the building’s demolition was planned in advance of the attack, and was therefore part of an inside job to destroy the entire WTC complex.



    The Third Explanation has seemed the best guess ever since I saw Larry speak his piece (re “pull it”) in the PBS documentary. There’s no way the Fire Department did the engineering and labor to mine the building that day.

    WTC 7 was a Spook building of course. Solomon Brothers/Smith Barney aside, the tenants were mostly National Security types. (Name an agency, they probly had an office there.)

    1. Re the minor point of how common the terminology (“pull”) is in the demotion business:

    The same documentary in which the video of Larry using the term was first aired also supplies about five other clips of demolition engineers on other demo jobs using the term “pull” to mean bring the building down — including the demolition of what was left after the attacks of the US Customs House (aka World Trade Center 6) circa January 2002.

    Re the latter, the PBS doc shows video of an engineer on radio, with the crew, using the term as they prepare to blow the ruins of WTC 6.

    But I don’t even think Larry’s usage was arcane. Let 1000 native american speakers sans any special knowledge of demolition watch the clip then opine as to what he meant. That’s what Larry meant, IMHO. He’s not an engineer. He was casually echoing memories of chat with the Fire Dept engineers. Or, perhaps, carefully pretending to do so.

    In either case, the belated press release (more than a year after the storm broke) from his publicity man saying that “pull it” meant pull the guys out of the building is on its face ludicrous. Larry just didn’t say that.

    Finally, it’s apparent that the people with the rights to the documentary that was shown on PBS have had their silence bought. The obvious question — what was the broad context and surrounding video chat of the brief Pull It clip — has never to my knowledge been addressed. If the guy with the rights was free to do so, he would have, it seems to me.

    2. As for mining the Towers. I’ve nursed an Innocent theory all these years — not with any certainty, just curiosity. To wit:

    The 1993 bombing of the towers had hoped, by blowing up only the foundation, to topple the towers intact across many adjacent building, multiplying the damage.

    No idea how serious that idea might have been from an engineering standpoint.

    But if the Port Authority and NY City took that threat seriously, it’s conceivable that the towers were mined for controlled demolition after 1993 to foil any such future attack.

    And when I look at the collapse of the South Tower, what I see congrues. Because I see that large upper wedge of the tower begin to slide off and out, to the southeast. And then the purely vertical collapse begins, seconds later. And the flying wedge is lost in the great cloud.

    Conceivably the engineers were watching. From WTC 7. And when they saw that wedge begin to go, hit the switch to pull the building, igniting the final charges in computer-controlled sequence, to minimize the local damage. Despite the fact that firemen were inside.

    And then they simply gave up on the North Tower, fearing a similar wedgelike problem above. Had it fully evacuated. Then dropped it in its footprint.

    At that point, WTC 7, mostly undamaged, was a commercial loss. In a commercial death zone. It would have no tenants for years to come.

    And Silverstein Props had already discovered, by early afternoon, that a huge portion of their insurance coverage for 1-2-4-5 did not really exist. had not been contracted. Was in process.

    At that point blowing WTC 7 made commercial sense. ESP because the insurance there was intact and was actually more than the insurance Silverstein Props was contracted to receive for 1-2-4-5.

    I looked into all this years ago, while the insurance trials were going on and somewhat thereafter. It’s been a while, but I think the gross sketch I’ve provided here is accurate. The insurance trade journals covered the trials in detail. If their websites have not yet been purged of that coverage, one could fruitfully mine there for corroboration and more detail.

    September 29th, 2010 at 12:53 pm

  4. ed says:

    Anyone interested should read Eric Scott Douglas’s analysis (and destruction) of the final NIST report on the Twin Towers collapse.

    It’s available at the Journal of 9/11 Studies online. Eric is an architect and engineer.

    September 29th, 2010 at 12:58 pm

  5. ed says:

    General Hugh Shelton, chairman of the JCS during Clinton, writes in his new autobiography that on 9/11 it was Deputy Secretary of Defense Paul Wolfowitz who was evacuated to Site R in Pennsylvania to carry on as acting commander-in-chief should bad anything happen to Bush (wherever he was) and Cheney and Rumsfeld in Washington.

    October 23rd, 2010 at 4:03 pm

  6. ed says:

    A week or so before yesterday’s midterm US elections, the Democratic Party of Colorado added a plank to its platform calling for a Grand Jury investigation of the 9/11 attacks.


    November 3rd, 2010 at 9:22 pm

  7. ed says:

    Mike Gravel announces investigative initiative in California.

    November 3rd, 2010 at 9:24 pm

  8. ed says:

    Jesse Ventura’s extemporaneous chat, a while back, about 9/11 matters is worth hearing. Simple sense to complement the chemical engineers, physicists and architects …

    November 3rd, 2010 at 9:29 pm

  9. ed says:

    The day before the first post above, September 25, 2010, the Pentagon — having bought up all 9,500 first-run copies of Operation Dark Heart by Able Danger’s whistelblowing commander, Lt Colonel Anthony Shaffer — burnt them with permission of the White House.

    Quite a come down from Obama’s promise of sunlight.

    A heavily redacted edition has since been issued.

    Fox seems to have been the only news network to care. One report was linked in the first post above. Here’s another:

    November 4th, 2010 at 9:01 pm

  10. ed says:

    New interview out of A&E with a physicist working on the WTC dust

    November 4th, 2010 at 9:27 pm

  11. ed says:

    And here’s a chemical engineer re same. Excellent. Findings of high-tech nano-thermite (using nano aluminum), a substance controlled by the government.

    Both will be part of the upcoming documentary being produced by A&E for 9/11 Truth

    November 4th, 2010 at 9:59 pm

  12. ed says:

    A recent interview on the general theme and opening puzzle for most people:

    November 25th, 2010 at 8:37 pm

  13. ed says:

    Here is Bamford talking to Sibel Edmonds and Peter Collins at Boiling Frogs, soon after Shadow Factory was pub’d in 2009

    April 8th, 2011 at 12:15 pm

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  17. ed says:

    Larry’s ceaseless struggle to Get Whole … ongoing in summer 2013

    November 9th, 2013 at 10:08 am

  18. EyesWideOpen says:

    Another piece of information that people might like to know is that the RMBS (Residential Mortgage Backed Security) investment vehicle that was the beginning of the end for world finance and would usher in a new age of commercial vulture socialism was designed by Salomon Brothers (together with Bank of America), and one of their employees Lewis Ranieri. The fact Salomon Bros was ever able to climb the ladder to the point of occupying the prestigious WTC7 is entirely based on their ‘innovation’ of RMBS which were then packaged into CDOs and the rest is history. Ranieri is the one who coined the term ‘Securitization’, and he was also the lead author/engineer of the Secondary Mortgage Market Enhancement Act of 1984 (SMMEA), that was lobbied through Congress allowing the commercial sector to compete with Fannie, Freddie and Ginnie. This is the very piece of legislation that opened up the regulatory doors for the MBS/CDO Trojan Horse.

    So to me it is significant that the paperwork and records of the Firm that spearheaded the very investment vehicle (including any information about the lobbying efforts to pass the suicide Bill) which collapsed the world economy and led to the Bailouts of No Return, were all incinerated on 911 so as never to be part of any official investigative history of the RMBS and CDO business that Salomon pioneered.

    All just another little convenient pay off of the Spook House WTC7 being demolished. Together with the other sensitive documents that went down in Building 7 relating to other numerous scandals and intelligence operations, WTC7 makes WTC1 and WTC2 look like the MINOR EVENT of the day, but of course the general public don’t care about the intrinsic value of information, just the Hollywood style hegelian manipulative emotions of the day embodied by WTC1 and WTC2 stick in their mind and play on their reaction just as desired. Investigative journalism in the MSM is stone dead, because if this had all happened 50 years prior to 2001, these mega crooks would all have gotten the electric chair, but the MSM are now all whores to the banks that provide their operational capital and Shadow Revenue (aka, Editor Earnings/Censorship Income).

    November 10th, 2013 at 12:22 am

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