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 __________________________________

"Buy America"

It's really nice to know that the Pentagon has given Boeing another chance to bid on the "$35 billion contract for midair refueling tankers, allowing Boeing to continue its effort to wrest the business from a partnership of Northrop Grumman and the European parent of its rival Airbus." Or so says The New York Times of today. My favorite sentence of this tasty military equipment (click here for a demonstration) report (how's that for irony?) is "Howard Rubel, an analyst at Jeffries & Company, said that the announcement meant 'that both companies will have an equal opportunity to abuse each other for a while longer.'" This is the same Boeing that was previously found with its hand in the candy jar of fraudulent contract bidding and jail time for its employees. Also the Boeing who has handily subsidized most of the candidates (and every Rethuglican) for the Presidency (and many, many congressional offices) of the US. And John McCain's championing of the Airbus team must have really hurt Boeing's feelings. Now I'm pretty sure that the Air Force wasn't trying to punish Boeing (one of its best customers) by giving the contract without reason to the Grumman-EADS consortium, only get the best (ahem!) deal. But still . . .

The Pentagon announced on Wednesday that it would reopen bidding on a $35 billion contract for midair refueling tankers, allowing Boeing to continue its effort to wrest the business from a partnership of Northrop Grumman and the European parent of its rival Airbus. Defense Secretary Robert M. Gates said that the tanker contract, which was won by the partners Northrop and the European Aeronautic Defense and Space Company in February, would not be awarded until the Pentagon reviewed the rival bids again. The companies have battled fiercely to land the Air Force’s largest contract, with a potential value of $100 billion. The struggle has been caught in issues of national pride, trans-Atlantic relations and even presidential politics. Mr. Gates’s action was a public rebuke to the Air Force, which had selected the offering of Northrop and EADS, the parent of Airbus. Shortly after the Air Force made its selection, the Government Accountability Office, acting on a protest from Boeing, said that the Air Force’s decision-making process was flawed and that the tanker contract should be reopened. In his announcement on Wednesday, Mr. Gates said that a special committee operating out of his office and headed by the Pentagon acquisitions under secretary, John J. Young Jr., would make the final contract selection, not the Air Force. “I’ve concluded that the contract cannot be awarded at present,” said Mr. Gates, citing the “significant issues” pointed out by the G.A.O. The contract, in its first phase alone, would provide for 179 aerial refueling tankers to replace the Air Force’s aging fleet, which is being strained by wars in Iraq and Afghanistan and has planes that date to the Eisenhower era. The Northrop team was offering a variation of its A330 plane, while Boeing was offering a modified 767. The tankers are used to refuel military planes while in the sky. There was no clear winner or loser between the two companies in Mr. Gates’s decision. But it was another blow to the Air Force, whose ability to manage huge weapons-buying programs has been questioned. Two of its top officials were recently fired because of security breaches. “Clearly, this is a vote of no confidence in the Air Force,” said Loren B. Thompson, a military analyst at the Lexington Institute, a Washington research group. Howard Rubel, an analyst at Jeffries & Company, said that the announcement meant “that both companies will have an equal opportunity to abuse each other for a while longer.” Mr. Rubel added that until the Pentagon issued a modified request for proposals from the two companies, it would be difficult to determine which might have an edge. The Pentagon will not reopen the entire contracting process, but will focus on eight problem areas cited in the G.A.O. report, and Mr. Gates said the final decision might be made by December. But many analysts said that timetable might be overly ambitious. Even Mr. Young, the acquisitions under secretary, said on Wednesday that the decision-making schedule might slip. Both Boeing and Northrop issued news releases praising Mr. Gates’s action. A Senate committee is to begin hearings into the tanker contract and the G.A.O. report on Thursday. . . . Northrop said that it applauded Mr. Gates’s decision and added that “the United States Air Force has already picked the best tanker, and we are confident that it will do so again.” Ralph D. Crosby Jr., chief executive of EADS North America, said the company welcomed the rebidding and said it was “ready and anxious to get back to work” on the project. One of the central players in the tanker contract is Senator John McCain, the presumptive Republican presidential nominee. Several years ago, Mr. McCain stopped the contract from being granted to Boeing, after the terms of a tanker lease arrangement between the Air Force and Boeing were revealed. Some have seen him as favoring a European company over an American one, an impression was not eased by the fact that several of his top campaign advisers had worked as lobbyists for Airbus. In a statement on Wednesday, Mr. McCain praised Mr. Gates’s decision as a step toward “full and open competition.” European military suppliers have long thought that the Pentagon has encouraged other nations to buy American military goods, while closing the door to purchases of military equipment made by European suppliers. And European countries thought the Airbus proposal finally gave them a shot at landing a major Pentagon contract, especially after both the British and Australian air forces picked the Airbus tanker. In London, Alexandra Ashbourne, who heads Ashbourne Strategic Consulting, an aerospace analysis firm, said Mr. Gates’s decision “was probably the best of all possible outcomes,” but added that EADS felt “very raw” over the whole process, given the amount of effort and expense that went in to putting in a bid, only to see it slip away. “On this side of the Atlantic,” she said, “there is concern that politics will be allowed to take hold and that Congress will get involved. Then you have pork barrel politics and it is an election year. The timing is very bad.” In Congress, “Buy America” sentiment fueled outrage at the initial selection of Airbus. But that was also tempered by a fierce political battle on behalf of the European supplier by the delegations of the States of Alabama and Mississippi, where EADS promised to build most of the tankers and create jobs. Members of Congress on both sides of the issue released statements on Wednesday praising Mr. Gates, but promoting their own positions. Representative Duncan Hunter, a California Republican who is an outspoken advocate for Boeing, said that he wanted to make sure the “mistakes made in the original competition are not repeated.” Senator Richard C. Shelby, an Alabama Republican who is in the Airbus camp, said that the Pentagon rebid decision was “an appropriate solution.”

So, back to business as usual. Or as a friend of mine says, "Nothing new here. Move along!" Suzan ____________________