Posts Tagged ‘Henry Paulson’

Bush’s last 100 days the ones to watch

November 5, 2008

BY JESSE JACKSON | Chicago Sun-Times, Nov 4, 2008

The air crackles with anticipation. Fingers are crossed. It gets hard to breathe. Hope, for so long locked in a closet, begins pounding on the door.

And throwing caution to the wind, many already are talking about Barack Obama’s first 100 days. Will he move directly to the Apollo investment agenda, providing money to refit buildings, implement the use of renewable energy and generate jobs in the drive to reduce our dependence on foreign oil? Will he put forth a comprehensive health-care plan or begin by covering all children? Will workers finally be given the right to organize once more? How will he handle mortgage relief and/or help cities burdened by poverty?

But even as our minds, against all discipline, look beyond this day to the possible victory and change, we’d better start paying attention to another 100 days — President Bush’s last months in office.

Bush and Vice President Cheney represent a failed conservative era — and they know it. As the administration moves into its last 100 days, there seems to be a flurry of activity: regulations to forestall Obama’s new era of accountability; a flood of contracts to reward friends and lock in commitments; a Wall Street bailout that is pumping money out the door.

Consider: Treasury Secretary Henry Paulson is handing out $350 billion to the banks, drawing a special circle around nine banks — including Goldman Sachs, the firm he previously headed — as clearly too big to fail. The money apparently has no conditions, even though the entire purpose was to get the banks to start lending once more to one another and to companies and individuals.

Now it appears that banks plan to hoard the cash, to use it to help pay for mergers with other healthy banks (not weak ones), or to pay out dividends and bonuses. And Paulson, instead of publicly rebuking them, has let it be known that mergers would be a good thing.

Instead of getting the banking system working for small businesses and people again, our money is being used to consolidate the strength of a few megabanks.

There has been a rapid increase in military outlays over the last few months. Is the Pentagon being called on to help bolster the economy — and perhaps McCain — in these final weeks? Or, more likely, is the Pentagon pumping out money to reward its friends and lock in spending before the new sheriff gets to town?

The Washington Post reports that the White House is “working to enact an array of federal regulations, many of which would weaken rules aimed at protecting consumers and the environment, before President Bush leaves office in January.”

About 90 new rules are in the works, and at least nine are considered “economically significant” because they would impose costs or promote societal benefits that exceed $100 million annually. Many will make changes that the new administration will find it hard to reverse for years to come. More emissions from power plants; more exemptions from environmental-impact statements; permission to operate natural gas lines at higher levels of pressure — the changes could be the last calamities visited upon us by the Bush administration.

Congress — the old one, not the new one just elected — comes back into special session right after the election. Representatives Henry Waxman and John Conyers would be well advised to convene special hearings to try to curb what Bush has cooked up for his last 100 days. Let’s not let the new dawn that is possible be dimmed by clouds left over from an old era that has failed.

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Why not a bailout for the rest of us?

October 1, 2008

What’s really required in this crisis is an entirely different kind of government intervention in the economy.

Editorial

Socialist Worker,  October 1, 2008

Quickly organized protests around the U.S. drew opponents of the bailout for Wall Street (Joe Newman)Quickly organized protests around the U.S. drew opponents of the bailout for Wall Street (Joe Newman)

AS THE smoke cleared after Monday’s stunning House of Representatives vote against a $700 billion financial bailout for Wall Street, the politicians immediately got down to the business of blaming each other–and scheming about the next attempt to push through this rescue of the super-rich.

But for working people trying to figure out what the hell has happened to the U.S. financial system–and why the leaders of the U.S. government, apparently regardless of political party, are prepared to spend more than $2,000 for every man, woman and child in this country to save Wall Street–the reaction was different.

For one thing, there was sweet satisfaction to be taken in the fact that the bankers and stockbrokers didn’t get their way for once–especially since they’re out to steal $700 billion in taxpayers’ money to cover their bad investments, under a program devised by former Wall Street CEO and now Treasury Secretary Henry Paulson.

With the business world ratcheting up political pressure and Paulson predicting certain doom if no action was taken, the Bush administration and the leadership of both parties in both the House and Senate were all sure that the bailout bill would go through. Yet the legislation was derailed because members of Congress are feeling the heat from a growing popular outrage over the staggering scale of a giveaway to the very same people who led the economy to the edge of the abyss.

It was an all-too-rare turn of events for the U.S. political system–the opinions of ordinary Americans actually mattered in what happened.

At the same time, though, there’s a sense of foreboding. If the government can’t agree on a bailout, will Wall Street really crash and burn–and cause an economic catastrophe on Main Street, too?

After all, that’s the claim of “King Henry” Paulson and his nominal boss, George W. Bush. They’re basically extortionists, insisting that if Congress doesn’t agree to a king’s ransom for the banks, the economy gets it–in the form of a worldwide financial meltdown that would wipe out workers’ savings and eliminate millions of jobs overnight.

The stock market plunge that followed the House vote Monday will have reinforced such fears. Few workers have the resources to play the stock market, of course, but their lives are affected by its ups and downs, especially the downs–for example, the loss of retirement savings in 401(k) accounts that many workers rely on, now that defined benefit pension plans are going the way of the dinosaur.

So is it true? Are we all–the multi-millionaire bankers on Wall Street and the tens of millions of workers on every other street–in the same boat after all? Do we really need the Paulson bailout to avert a second Great Depression?

The answer is no.

The argument that a bailout of the banks is good of all us is an ideological smokescreen, to cover the specifics of the Paulson proposal, as sanctioned by the Democrats–which benefits the rich and powerful, at the expense of the rest of us.

There are plenty of ways that government intervention could alleviate the financial crisis and provide urgently needed relief to working people. But that would involve programs, policies and priorities that the bankers despise–and that political leaders in Washington want nothing to do with.

Paulson is right to say that Wall Street is facing its most severe crisis since the Great Depression–a catastrophe entirely of its own making–and that the U.S. government has to respond. But the form that response takes–a huge handout for the super-rich or a progressive plan to rein in the banks and help ordinary people–depends on whether workers organize to make their voices heard and felt in Washington.

Continued . . .

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ECONOMY-US: Bailout for Who?

September 27, 2008


By Adrianne Appel | Inter-Press Service


BOSTON, Sep 26 – U.S. lawmakers and the George W. Bush administration are continuing their closed-door meetings through the weekend to try and fashion a softer 700-billion-dollar deal for Wall Street that will appeal to citizens angry at the prospect of the mega-corporate bailout.

Treasury Secretary Henry Paulson brought the plan to Congress on Sep. 19 in a three-page outline, and said it was necessary to prevent the collapse of the finance market due to complex trades involving subprime mortgages.

The plan would have allowed Paulson, a former CEO of Goldman Sachs, complete control of the massive payout with no oversight, no auditing and no plan of a payback to the taxpayer.

ACORN president Maude Hurd captured the nation’s sentiment when she hinted at the potential electoral fallout in a speech this week: “There is a palpable populist revolt rolling through towns and cities across the country, and if Main Street doesn’t get any real help with the mortgage out of this deal, the American people only have to wait a few weeks for a constructive outlet for their anger.”

ACORN is the nation’s largest grassroots community organisation of low- and moderate-income people, with over 400,000 member families in 110 cities across the country.

At the Capitol, members of Congress attempted to convince taxpayers — and voters — that they had their best interests in mind, and that meant a big bailout for Wall Street.

“Hundreds of billions of dollars that Americans invested in retirement accounts and mutual funds have evaporated,” and more surely would, warned Democrat Chris Dodd, Senate Banking Committee chairman, while giving the impression that the income security of average people is at stake.

This couldn’t be further from the truth, say those who study stock ownership. The average U.S. citizen owns very little or no stock, and wouldn’t be helped directly by an up-market.

“I think the middle class are not going to be very affected at all by a bailout. It’s something that is going to affect the very wealthy. Changes in the stock market won’t make much difference to the middle class,” Edward Wolff, a New York University economist, told IPS.

“It’s just a political gambit to help the rich recover from the stock market collapse. If you claim that everyone is suffering, it’s easier to get a bailout from Washington,” Wolff said.

In 2001, the richest 10 percent of families owned 85 percent of all outstanding stocks, about 85 percent of all financial securities and 90 percent of all business assets, according to Wolff.

As for the rest of the country, only 32 percent of households owned more than 10,000 dollars of stock, and only 25 percent of households owned more than 25,000 dollars worth of stock, Wolff said.

A 2007 report by the Government Accountability Office found that in 2004, just 36 percent of workers had any savings at all in a retirement account. Most U.S. citizens will depend on Social Security in retirement, the government programme that provides 30-40 percent of what was earned in their lifetimes.

The bad practices of the mortgage lending industry targeted people of colour and the elderly, in particular, according to a report by United for a Fair Economy.

Only 11 percent of subprime loans went to first-time buyers last year. The vast majorities were refinancing that caused borrowers to owe more on their homes under the guise that they were saving money. Many borrowers were talked into refinancing their homes to gain additional cash for things like medical bills, the report says.

African American borrowers will lose between 71 billion and 92 billion dollars, and Latino borrowers will lose between 75 billion and 98 billion dollars as a result of bad subprime loans, according to the report.

“A couple decades of deregulation have allowed people at the top of the financial food chain to benefit from millions of people, through unscrupulous mortgage lending practices,” Michael Lapham of United for a Fair Economy told IPS.

“Who are we most concerned about helping? Homeowners facing foreclosure or people who’ve made millions and billions on subprime lending?” Lapham asked.

The U.S. public seems especially peeved at the idea of helping companies that pay exorbitant salaries to their bosses, at a time when many people have seen a decline in their standard of living.

According to the Institute for Policy Studies, CEOs of large U.S. companies last year made an average of 10.5 million dollars, while the top 50 private equity and hedge fund managers pocketed an average of 588 million dollars each.

The institute notes that draft proposals floated by the chairs of both the House and Senate banking committees would allow Paulson to determine what qualifies as “inappropriate or excessive” executive compensation under the bailout plan.

“Secretary Paulson amassed a personal stock stash worth over three-quarters of a billion dollars as the CEO at Goldman Sachs,” said analyst Sarah Anderson. “He hardly strikes us as the appropriate arbiter of what’s excessive and what’s not.”

In a statement, Anderson said the nation needs clear and strict limits on CEO pay “so that taxpayers won’t have to worry about their money flooding into the pockets of top executives and encouraging another round of reckless behaviour.”

On Thursday, unions, and anti-poverty and peace groups took to the streets, staging large demonstrations on Wall Street and in many cities chanting, “No bailouts for billionaires.”

At the end of the day Thursday, it was hard-line Republicans, including Sen. Richard Shelby and Rep. Spencer Bachus, who stood firm against the bailout. Bachus told reporters that the Republicans do not want the U.S. to buy the bad debts of the companies, but instead to loan the companies money.

Their argument that the market could do more to fix itself was bolstered later Thursday evening, when troubled Washington Mutual bank, riddled with bad mortgages, was bought by J.P. Morgan Chase.

The Democrats want the bailout, one that would meter out the billions in installments and somewhat restrict the pay of CEOs, Dodd said.

“I don’t understand why the Democrats in particular didn’t feel they have the leverage to get more out of this deal. Congress has squandered an opportunity to actually help homeowners facing foreclosure,” Brenda Muniz, legislative director for ACORN, told IPS.

According to an analysis of U.S. Census data by the Centre for Budget and Policy Priorities, 18 percent of U.S. children lived in poverty in 2007.

The willingness of Congress to consider a 700-billion-dollar payout makes clear that Congress could budget other large sums to help end homelessness and hunger, and improve public education.

“When people go to Congress to ask for more affordable housing funds and are told there isn’t money, then along comes Wall Street and they say, ‘Oh sure we have 700 billion dollars for your bailout.’ It definitely makes you question our nation’s priorities,” Lapham said.

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