When Goldman Sachs' golden boy - otherwise known as Bush's Treasury Secretary - floated his bank bailout plan on the Sunday talk shows, the heavy lead wasn't so much the $700 Billion price tag (we'll have spent more than that on the Iraq debacle before it finally ends). Although Senate Banking Committee chair Chris Dodd was entertaining the idea of a "clean" bill (ie. no help for homeowners, no check on executive compensation, no oversight whatsoever).
Just like our lending system, the phone lines to DC were clogged (I know first hand). Sam Donaldson's toupé postulated on Sunday that taxpayers would be so afraid of losing everything that they'd willingly give in to this giveaway. (I disagreed, but his skepticism may have been warranted. Most Americans don't seem bothered that the government now snoops in mail, invades homes, condones torture and engages in warrantless wiretapping.) Well, it seems folks are finally mad as hell and while they're certainly fearful for their 401k's, they're just as interested in seeing the corporate criminals brought to justice.
Paulson lays it on thick: "I share your frustration. I feel those frustrations."
I listened to the entire 5 hours of speechifying and testimony before Sen. Dodd's banking committee. On the hot seat were Treasury Secretary Paulson and Federal Reserve Chair Ben Bernanke. What follows are some augmented notes I scrawled as the proceeding went on (HP = Paulson, BB = Bernanke. Quotes are approximate).
8:00 HP "We need oversight." That represented a radical shift from his song, dance and loony toon when on Sunday he was pleading for all the money quick without any strings attached. He claims now his 3 page plan to save the economy didn't include any oversight provisions because that's Congress' job and it would have been presumptuous for him to have included that on his own. (At which bullshit futures on the NYSE went through the roof.)
8:10 BB Anything regarding executive compensation "can't be punitive." Paulson was saying the same thing since Sunday too and repeated it today. Evidently a corporate CEO would rather his or her firm go bankrupt than accept any kind of limit on salary or platinum parachute. I for one would like to test the theory.
8:15 SEC Chair Christopher Cox (whom McCain wanted to instinctively fire like a monarch call for a head on a pike. Anyone's head!) had this to say. "This type of voluntary regulation doesn't work. " Read it again... Let it sink in... "voluntary"... "regulation"... "voluntary regulation." Nope, I wouldn't expect that to work either, Einstein.
8:35 BB says the corporations in need of a taxpayer funded bailout are "not failing... they're contracting." And that my friends is how a business can turn a "negative profit" and still pay their executives millions.
8:40 HP "American people don't care who owns it..." Paulson has repeated his contention that Americans don't care if we bailout foreign owned banks if that's what's required to stabilize the system.All hail our new Chinese overlords.
8:35 Sen. Tim Johnson asked what punitive measures are there for the "bad actors." HP dissembled talking about how the situation is all our fault and even went on to blame "future administrations" psychically accusing them they "let [it] exist." I guess if we punish the greedy executives and dishonest brokers we'd have to punish ourselves.
8:55 BB "It's a reverse auction." This sounds interesting. He explained what it was and how it would somehow make us potentially rich. There seemed to be lingering confusion as to what all these "illiquid assets" might be worth but HP assured all "There will be a price discovery mechanism."
9:17 Chuck Schumer asked why the President needed the whole $700 Billion authorized at once. "Why not in trauches... $150 Billion at a time?" HP called this idea a "grave mistake" because the plan has to do with market confidence. I for one am reassured.
9:22 Again, reading the writing on the wall (etched with the pitchforks of the masses) Paulson agreed "there has to be oversight. We'll work with you on that," he promised.
9:51 "The taxpayer is already on the hook through no fault of his or her own." HP And Paulson often repeated how deeply sorry he felt for the American taxpayer and that this whole plan has us first and foremost in mind. Either we pony up the money or we'll lose our jobs, retirements, cars and homes.
10:25 Sen. Dodd found his spine and declared "Any plan that we come up with will talk about executive compensation."
10:35 Sen Evan Bayh seemed to be eating a peanut butter sandwich. Not very Presidential.
11:08 As to why we need to bailout foreign banks, Paulson pointed out "Our systems are integrated." Yes... and???
11:11 Sen. Dodd finally got around to addressing "Section 8"
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency - Section 8"
But then his spine gave out: "Maybe I'm speaking for myself here - this language cannot last." Maybe? Maybe?! It's labeled "Section 8" because it's certifiably insane to even consider giving ONE MAN sole discretion over $700 BILLION. And then Paulson tried to wiggle away. HP "This is not a position I wanted to be in. ... very easy to second guess it .. we need something that has strong oversight... we need the protections.... but I don't think we need that here." Sure, they'll get around to figuring out the oversight AFTER they've already authorized a Trillion dollar blank check.
11:15 Even the Republicans were less than enthused. Sen. Sheldon offered this cautious criticism: "Buying toxic securities from foreign banks... I think it's a bad, bad precedent." Did all these guys get their economic degrees along with Bush?
11:21 "Filibustering for Schumer" Our friend Chuck was supposed to have more camera time, but he was either in the bathroom or writing checks to his hand-picked candidates... I dunno. Members jibber jabbered for the TV camera but finally decided to call an end to the charade... for the day.
11:24 Just before the CNN feed went black, a woman stood up and shouted, "The fox is guarding the hen house!" Gawd bless you!
[Sign petition opposing Bush's bank & billionaire bailout]
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