I have a feature in the new issue of Rolling Stone called "Secrets and Lies of the Bailout," which focuses in large part on the seemingly intentional policy of deception in the government's rescue of the financial sector. The government didn't just bail out Wall Street with money: It also lied on Wall Street's behalf, calling unhealthy banks healthy, and helping banks cover up just how much aid they were getting in secret.

Proponents of the bailouts will say that whatever the government did, it worked. The economy didn't collapse as it appeared it might in late 2008, and the stock markets are puffed up all over again, as financial companies in particular are back making huge profits.

But in the course of researching the magazine piece, we discovered definite victims of the myriad deceptions that became a baked-in feature of the bailouts. One of those victims was a southern investment broker who lost lots of his own money, lost money for family members who'd invested with him, and (maybe worst of all) lost plenty of his clients' money, when he made investment decisions based on what turned out to be incomplete information.

If this particular broker had known exactly how far the bailouts reached, neither he nor his clients would ever have lost so much. But during the crisis it was decided, by people deemed more important than small-town investment advisers and their clients that the full story of the bailouts didn't need to be told.

As a result, George Hartzman and his clients got creamed. In recent years we've heard a lot about how the bailouts saved the world. This is the other side of the story.

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George Hartzman is easy to like. The easygoing North Carolinian has every salesman's ability to grab you from the first moment with humor and charm, but what makes him a little bit of a different kind of cat – and I suspect some of this change developed after he joined the growing population of financial crisis-era whistleblowers, dismissed from a Wells Fargo brokerage after making complaints about what he felt were bailout-related abuses – is that the humor is often self-directed. He loves to tell stories about all the goofy, sometimes-dicey sales jobs he's taken over the years, and the hard work he put in to get really good at each and every one of them.

"Hell, I even sold encyclopedias," he says, laughing. "You just look 'em in the eye and say, 'Listen, do you want your kids to go to college, or not?'" He laughs again. "What are they going to say?"

Now 45 years old, George as a younger man sold it all – copiers, above-ground aluminum swimming pools, even vinyl siding, a job which he describes as selling "relatively bad things to the relatively elderly." In down times, he waited tables and tended bar at a restaurant/nightclub in a tough section of Greensboro, where he said the rule was, "you don't take out the trash through the back door without somebody with a gun."

But throughout it all, he wanted to be in finance, wanted to buy stocks and bonds and actually make money for people, as opposed to just talking old folks into buying stuff they maybe didn't need. Eventually he got his chance, working at several national brokerage firms through the 2000s, paying his dues as the guy who sucked it up for the endless cold calls.

"Do you have any money, anywhere, that's earning less than 7 percent right now?" he says, chuckling as he quotes his old self. "I must have said that line, I shit you not, not less than 100,000 times."

Eventually, George found himself selling retirement and investment plans as a broker for the granddaddy of Carolinian megabanks, Wachovia. Working out of the Greensboro, North Carolina area, he handled dozens of clients, including himself and several of his family members, and by 2007 had settled in to what he thought was the good life working for Wachovia Advisors, managing tens of millions in assets for the huge national brokerage firm.

In hindsight, it's ironic – given that the vast federal bailouts were what ultimately sank George's career as a broker – that when Wachovia went belly-up in 2008, George's job was initially saved by a bailout. After its collapse (caused in large part by its disastrous 2006 acquisition of subprime-laden Golden West financial), the giant bank was swallowed up in a state-aided merger by Wells Fargo, which received as much as $36 billion in cash and special tax breaks as it was finishing the merger deal.

When the merger was finished, Wells Fargo was the fourth-largest commercial bank holding company in America, and George Hartzman found himself working essentially the same job, only with a new name on his letterhead – Wells Fargo Advisors.

While brokers in most places started taking the big bath in 2007 and 2008 as the subprime market collapsed, George was quietly killing it. In both those years he made very good money for his clients, his family and himself, mainly by shorting the very companies that had inflated the subprime bubble, firms with names like Goldman, Sachs, MBIA and Merrill Lynch.

"I saw it early," he says, a bit immodestly, but with perspective, too. "I was doing great, right up until the time I wasn't."

When I called former clients of George's to check his story, they confirmed that he took a much different and more aggressive approach than your average broker. George's clients seemed to like him a lot, and were impressed by how hard he worked at a job that a lot of storefront brokers just mail in.

"A lot of guys will just tell you that you just have to stay in the market, that in the long run, things always go up," says John Mandrano, a former CPA who trusted a sizable portion of his retirement fund with George. "George was different. He really put a lot of thought into what he was doing. And he invested his own money, and his family's money, so you know he had a stake in what he was doing."

Having made money betting against Wall Street in 2007 and 2008, George planned on continuing the same strategy in 2009, even after the bailouts. In early 2009, he placed a series of short bets against the market, among other things betting against an index of real estate trusts and the S&P 500. He explained to his clients that even though the government and the talking heads in the financial press kept insisting the worst was over, he still thought a lot of firms, particularly financial firms, were in deep trouble.

"I thought they were screwed," he says. "The numbers just didn't add up."

What happened instead is that the stock market went into a prolonged and seemingly miraculous rebound, with the NYSE soaring from the mid-6000s in February of 2009 to over 13,000 in recent months. George couldn't figure out how so many seemingly insolvent companies were doing it – where was the money coming from?

He and his clients started taking a beating in early 2009 as the stock market crept upward. He kept waiting for another crash to come, but a March 2009 news story freaked him out, leading him to worry if maybe he wasn't seeing the whole picture. 

George remembers reading about a remarkable incident in which President Barack Obama took time out in the middle of an Oval Office photo-op with British Prime Minister Gordon Brown to essentially urge Americans to buy stocks. This is from an old ABC News report:

"What you’re now seeing is … profit and earnings ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it," the president said on a day that trading continued to hover under 7,000.

When the president of the United States starts going out of his way to tell America to buy into the stock market, you have to wonder about any decision you might just have made to bet heavily against him.

"I was like, 'What the hell is that?'" George says. "That had me worried, for sure."

Sure enough, the markets rose, and George eventually pulled all of his short bets and "went to cash," taking his portfolio to money market accounts and other safe harbors, but the damage was done. As well as he'd done shorting Wall Street in 2007 and 2008, he did just as badly in the years afterward.

He lost personally, he lost his family's money, and he was heartbroken to lose money for his clients, with whom he'd consulted closely throughout, evangelically insisting that the fundamentals on Wall Street couldn't possibly hold up for long.

"I'm 68 years old," says one woman who invested a significant part of her retirement fund with George. "I should be retired right now, but I'm not."

George agonized over his mistake, poring over news reports as well as the SEC disclosures and annual reports of all the big banks in search of an explanation, but didn't find one. It wasn't until August of 2011 that George saw a partial explanation.

Bloomberg earlier that year had taken the Federal Reserve to the Supreme Court and won the right to have a historic Freedom of Information Act request honored. The news agency in its FOIA hunt had demanded access to the data from congressionally-mandated one-time audit of America's quasi-public Federal Reserve System.

When the Supreme Court rejected the Fed's demands for secrecy, Bloomberg was handed over the data. The news agency learned that Wall Street companies like Goldman, Citigroup and even Wachovia/Wells Fargo had collectively borrowed upwards of $7 trillion from the Fed through a variety of programs that were never intended to be disclosed to the public. This meant that the government had extended a secret lifeline to Wall Street upwards of ten times the size of the TARP program. The agency reported the sensational news in August 2011 and eventually shared all of its data with the public.

When George saw the Bloomberg story, he was floored. He felt like a fool, having bet against companies that essentially had limitless charge cards with the government all along. Had he known, he insists, he would never have stayed short so long.

Moreover, he believes that many companies that took that secret lending would have been saved if investors knew how much credit they had with the government. He points to his own former firm, Wachovia, which (for example) according to the Bloomberg data borrowed $3.5 billion from the Fed's TAF program on March 27, 2008, never announcing the move. The next day, Wachovia's stock plunged 4 percent.

"I believe that if Wachovia had announced the loan details at the time," George says, "the stock price might have gone up instead."

Even worse, when George checked the SEC disclosures and annual reports of other banks and financial companies, he found something interesting. Some banks, in particular smaller regional banks, did disclose their emergency financing from the Fed. He points as an example to the Carolina-based Union Bank and Trust, which announced its relatively small $5 million lifeline with the Federal Reserve on page 16 of its 2009 Annual Report.

"If some did disclose and some didn't, what the hell was going on?" he wondered.

George wasn't alone in asking that question. As I learned during the course of researching the "Secrets and Lies" piece, the SEC seemingly wondered the same thing when it saw the Bloomberg reporting in 2011. From the feature:

Two former high-ranking financial regulators tell Rolling Stone that the secret loans were likely subject to a 1989 guideline, issued by the Securities and Exchange Commission in the heat of the savings and loan crisis, which said that financial institutions should disclose the "nature, amounts and effects" of any government aid. At the end of 2011, in fact, the SEC sent letters to Citigroup, Chase, Goldman Sachs, Bank of America and Wells Fargo asking them why they hadn't fully disclosed their secret borrowing. All five megabanks essentially replied, to varying degrees of absurdity, that their massive borrowing from the Fed was not "material," or that the piecemeal disclosure they had engaged in was adequate.

In any case, when George thought about the issue, he suddenly realized he was in a bind ethically. He wanted to tell his clients about the non-disclosure problem, and how that might have helped cause their losses, but as the SEC's letters make plain, there was really no way to do that without pointing out that his own company, Wells Fargo, was one of the firms that had not disclosed its billions in secret borrowing.

He called the Wells Fargo ethics hotline for guidance, but says he got no help. George says the only response he got from his company was that they had conducted an investigation and months later, closed the matter. Wells Fargo, for its part, declined to address George's situation specifically other than to  say that "all Wells Fargo team members are encouraged to express their concerns and can expect that those concerns will be taken seriously, reviewed and addressed if appropriate."

As for George's concerns about the disclosure issue vis-a-vis Wells Fargo, the bank believes it was never obligated to disclose the borrowing highlighted in the Bloomberg piece. In its response to the SEC on the issue in December of 2011, the company insisted that "our participation in the referenced programs did not materially affect, and was not reasonably likely to have a material future effect upon our financial condition or results of operations."

In early 2009, Wells Fargo had a balance of over $45 billion with the Fed, but apparently even that sum of money fell short of being material.  

Anyway, George was eventually fired, for making noise about this issue and one other (more about that some other time). After his dismissal, he began a new life, familiar to many in the crisis era, as a perennially-frustrated whistleblower unable to elicit any serious response from either the authorities or the news media. He appealed to the self-regulating organization that governs investment advisers, FINRA, and also appealed to the SEC, but says he got no help in either place.

The real import of Hartzman's story is that he and his clients lost money when they made what in retrospect turned out to be poor investment decisions, because they were denied access to the same information many of America's leading banks (and, by extension, its leading bankers) had in the years after the crash.

Most galling of all to Hartzman was Bloomberg's analysis which showed that the banks receiving secret bailout monies earned some $13 billion in profits by taking advantage of the Fed's below-market rates.

It was one thing when he'd merely lost money betting against firms without all the data at his fingertips – it was another when companies like his very own former firm Wells Fargo could make (according to Bloomberg) $878 million in profits by availing itself of the secret aid.

"When I saw they made so much profit from this, that's when I got really angry," Hartzman says. "I was like, 'They made $878 million? Hell, no.'"

"That's the thing that really hurts," says the 68 year-old client of George's who lost retirement money. "It's that the banks made money on this, and it really came out of my pocket."

Mandrano, another of George's clients, runs a business restoring historic homes. "It's funny, all this talk about the small businessman, that's who I am," he says. "I've got crews out there. I'm paying people, I'm churning money through the economy, for cleaners, and plumbers, and haulers, and carpenters, and so on. I'm making my contribution. But when you sit there and you lose 20 percent of your retirement because there's no full disclosure, it's a real kick in the gut."

This is the real problem with the bailouts, and the issue we tried to underscore with the "Secrets and Lies" piece. With their hide-and-seek policies, bogus stress testing and stubborn insistence on calling failing banks healthy and publicly endorsing other such fibs, the architects of the federal rescue (from both the Bush and Obama administrations, as well as from the Federal Reserve) created a two-tiered market. The new economy has two classes of investors: those who know the real numbers, and those who don't.

So while the proponents of the bailout will argue they were a success, and the covert and overt federal support helped bring the Dow all the way back from below 7,000 to above 13,000 – seemingly a good thing no matter how you look at it – there's another bitter reality, which is that the bailouts officially created a sucker class.

When banks started making fortunes again in 2009 and beyond, it wasn't a victimless situation. There were losers in this trade, too. Hartzman and his clients are examples of the kind of people who lost when the government made decisions about who's entitled to the truth and who wasn't. As one former hedge fund manager put it to me recently, "Joe Sixpack has no chance in this market."