Dennis Kucinich Investigates Treasury's Blank Check

I don't know about you, but by the time Hankie Paulson finished speaking Friday I was looking around for the federal marshals to start coming out of the woodwork to arrest the thieves and scoundrels who had just admitted that there was (essentially) no collapse of institutions at all (Surprise!) - except for the auto companies - which we don't much care about anyway , and that our "caretakers" now were going to use what was left of the paltry sum of $750 billion (just the first installment of absolutely necessary NOW taxpayer money) to finish the takeover of small banks by giving more of the stolen money to the big banks (formerly investment houses!). (And, once again, do not research the Goldman Sachs connections. Please! (You will not sleep well ever again.)) Or maybe I misunderstood what "not purchasing toxic assets" (the originally stated reason for the rapid raid of the public treasury) and doing other things with the moolah meant. (Right. And, of course, it turns out that a lot of these would have been very bad purchases indeed (which they knew about at the time - like the rest of us did).) Listen to our public servant "Kneel down and say 'please' Cash-and-Carry" explain it all to you. (And he got points from the Repugni-Cons for being polite as he made off with the cash!) His final red herring argument is particularly demeanor-ful. And don't believe for a moment that anyone still in charge (Cheney/Bush/Shelby Economic Rah-Rah Team) will do anything to stop the slide into Depression with an economic stimulus anytime soon. As a matter of fact, according to Richard Shelby this morning on Bob Schieffer's CBS Rethugli-Con lovefest, it seems that they are looking forward to it. As my Mother said to me some time ago, "Thank God for Dennis!" (Emphasis marks are mine - Ed.)

Dennis Kucinich Investigates Treasury's Blank Check (The House Committee on Oversight and Government Reform, which contains Kucinich's subcommittee, has been holding a series of hearings investigating the financial crisis. Mother Jones covered the hearings on Lehman Brothers, AIG, credit rating agencies, federal regulators, and hedge funds.) It looks like the Bush administration can create its own reality after all. Just this week Treasury Secretary Henry Paulson turned the $700 billion bailout from a program to purchase toxic assets from troubled financial institutions to one that will invest in banks. Understandably, this abrupt change of course angered members of Congress, who were now left to wonder if they'd been led astray in supporting the stimulus package. At a hearing on Friday, convened to examine the Treasury Department's use of the bailout funds, lawmakers on both sides of the aisle vented their outrage. The question is whether their displeasure will make a dime's worth of difference. Displaying the range of congressional discontent, both Rep. Dennis Kucinich (D-Ohio), the chair of domestic policy oversight subcommittee, and Rep. Darrell Issa (R-Calif.), its ranking member, accused the Treasury of a "bait-and-switch" and questioned Neel Kashkari, the 35-year-old former Goldman Sachs banker selected by Paulson to supervise the bailout, about the sudden reversal. In response, Kashkari explained that Treasury had "worked very hard with Congress" to negotiate the bailout bill, but as the financial crisis worsened in the weeks following the bailout's passage, Paulson felt he "had to take very aggressive action." And Kashkari assured the committee that his boss had only decided "late last week, earlier this week," that the plan had to change. Issa, who voted against the bailout, suggested that the agency had planned all along to ignore the specific provisions of the bailout and instead wield the broad authority Paulson had originally demanded. "Congress is feeling you played a bait and switch game," Issa said. Fuming that Treasury had ignored congressional provisions in the bailout bill to buy troubled mortgage assets and help homeowners in jeopardy of foreclosure, Kucinich charged, "The Secretary just took some scissors and cut it out." He also accused the administration of still relying on trickle-down economics to fix the financial crisis. "You have to get money into the grass roots. In your model you just have some trickle down and it never trickles down, everyone knows that." Kashkari, the interim assistant secretary for financial stability, remained remarkably calm and painstakingly polite in the face of tough questioning, often using phrases like "with deep respect" and "I understand your concern." His demeanor won him some points — Rep. Brian Bilbray (R-Calif.) called him "probably the best spokesman the administration has." Kashkari repeatedly stressed that if Treasury had spent the entire $700 billion buying home loans, they would have been able to buy about 3 million of them — a small fraction of America's 55 million outstanding. By injecting money into the banks instead, the Treasury "influenced almost every loan in America," Kashkari claimed. But the fundamental conflict remained. Congress had mandated one bailout, and Paulson and the Treasury Department are executing a different one. "The legislation we asked for was to prevent a complete financial collapse," Kashkari said. "We are every day trying to figure out how to stabilize the system so we can help everyone. My phone is ringing off the hook. But if we went out and helped everyone who needs it directly the $700 billion wouldn't go far enough." Kashkari said that's why Treasury has to work from the top-down, helping banks first. Kucinich, who voted against the bailout, said he was confident Congress would never have approved it if lawmakers had known Paulson would change the plan. But the fact remains: the bailout is law. Perhaps Paulson got his blank check after all.

(Dennis' home in Cleveland was attacked by vandals on November 11 almost simultaneous with the death of his younger sister. This has no connection, of course, with his trouble-stirring in Congress.) - - - - - - - - Happy days are here again (for the new big banks anyhow)? Suzan __________________________________

Paulson's Swindle Revealed - You'll Need A Hankie!

Once again we find that it's good to be king, even if you are not king. Ask Cheney/Bush/Greenspan/ Gramm/Rove/Hankie/et al. Bill Greider, a giant in plain-spoken circles, tried to fill us in (the week before the election) about what had been going on while we were busy looking the other way (as instructed) and working to elect a candidate of "change." Do you think it's like a game of "finders keepers" (in this case the finder found a shocked-and-awed populace that couldn't keep-er(!)), and that's it's too late to demand a recount (or at least a public accounting)? You're going to need a hankie. (Emphasis marks and some editing are mine - Ed.)

"I am sure that someone at Treasury saw the terms of Buffett's investment," the union president wrote. "In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal - 50 percent invested and 50 percent as a gift - is quite consistent with the Republican version of spread-the-wealth-around philosophy." Paulson's Swindle Revealed William Greider October 29, 2008 The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride - a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return. These are dynamite facts that demand immediate action to halt the bailout deal and correct its giveaway terms. Stop payment on the Treasury checks before the bankers can cash them. Open an immediate Congressional investigation into how Paulson and his staff determined such a sweetheart deal for leading players in the financial sector and for their own former employer. Paulson's bailout staff is heavily populated with Goldman Sachs veterans and individuals from other Wall Street firms. Yet we do not know whether these financiers have fully divested their own Wall Street holdings. Were they perhaps enriching themselves as they engineered this generous distribution of public wealth to embattled private banks and their shareholders? Leo W. Gerard, president of the United Steelworkers, raised these explosive questions in a stinging letter sent to Paulson this week. The union did what any private investor would do. Its finance experts vetted the terms of the bailout investment and calculated the real value of what Treasury bought with the public's money. In the case of Goldman Sachs, the analysis could conveniently rely on a comparable sale twenty days earlier. Billionaire Warren Buffett invested $5 billion in Goldman Sachs and bought the same types of securities - preferred stock and warrants to purchase common stock in the future. Only Buffett's preferred shares pay a 10 percent dividend, while the public gets only 5 percent. Dollar for dollar, Buffett "received at least seven and perhaps up to 14 times more warrants than Treasury did, and his warrants have more favorable terms" Gerard pointed out. "I am sure that someone at Treasury saw the terms of Buffett's investment," the union president wrote. "In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal - 50 percent invested and 50 percent as a gift - is quite consistent with the Republican version of spread-the-wealth-around philosophy." The Steelworkers' close analysis was done by Ron W. Bloom, director of the union's corporate research and a Wall Street veteran himself who worked at Lazard Freres, the investment house. Bloom applied standard valuation techniques to establish the market price Buffett paid per share compared to Treasury's price. "The analysis is based on the assumption that Warren Buffett is an intelligent third party investor who paid no more for his investment than he had to," Bloom's report explained. "It also assumes that Goldman Sachs' job is to protect its existing shareholders so that it extracted from Mr. Buffett the most that it could . . . . Further, it is assumed that Henry Paulson is likewise an intelligent man and that if he paid any more than Mr. Buffett - if he paid $1 for something for which Mr. Buffett would have paid 50 cents - that the difference is a gift from the taxpayers of the United States to the shareholders of Goldman Sachs." The implications are staggering. Leo Gerard told Paulson: "If the result of our analysis is applied to the deals that you made at the other eight institutions - which on average most would view as being less well positioned than Goldman and therefore requiring an even greater rate of return - you paid $125 billion for securities for which a disinterested party would have paid $62.5 billion. That means you gifted the other $62.5 billion to the shareholders of these nine institutions." If the same rule of thumb is applied to Paulson's grand $700 billion bailout fund, Gerard said this will constitute a gift of $350 billion from the American taxpayers "to reward the institutions that have driven our nation, and it now appears the whole world, into its most serious economic crisis in 75 years." Is anyone angry? Will anyone look into these very serious accusations? Congress is off campaigning. The financiers at Treasury probably assume any public outrage will be lost in the election returns. I hope they are mistaken. - - - - - - - - National affairs correspondent William Greider has been a political journalist for more than 35 years. A former Rolling Stone and Washington Post editor, he is the author of the national bestsellers One World, Ready or Not, Secrets of the Temple, Who Will Tell The People, The Soul of Capitalism (Simon & Schuster) and - due out in February from Rodale - Come Home, America.

Anyone else ready to hit the streets? Suzan _____________________________