Paul Simon
2008-11-14 18:43:12 UTC
Wall Street's Bailout is a Trillion-Dollar Crime Scene -- Why Aren't
the Dems Doing Something About It?
By Naomi Klein, Posted November 14, 2008.
Washington's handling of the bailout is not merely incompetent. It may
well be illegal.
The more details emerge, the clearer it becomes that Washington's
handling of the Wall Street bailout is not merely incompetent. It is
borderline criminal.
In a moment of high panic in late September, the U.S. Treasury
unilaterally pushed through a radical change in how bank mergers are
taxed -- a change long sought by the industry. Despite the fact that
this move will deprive the government of as much as $140 billion in
tax revenue, lawmakers found out only after the fact. According to the
Washington Post, more than a dozen tax attorneys agree that "Treasury
had no authority to issue the [tax change] notice."
Of equally dubious legality are the equity deals Treasury has
negotiated with many of the country's banks. According to Congressman
Barney Frank, one of the architects of the legislation that enables
the deals, "Any use of these funds for any purpose other than lending
-- for bonuses, for severance pay, for dividends, for acquisitions of
other institutions, etc. -- is a violation of the act." Yet this is
exactly how the funds are being used.
Then there is the nearly $2 trillion the Federal Reserve has handed
out in emergency loans. Incredibly, the Fed will not reveal which
corporations have received these loans or what it has accepted as
collateral. Bloomberg News believes that this secrecy violates the law
and has filed a federal suit demanding full disclosure.
Despite all of this potential lawlessness, the Democrats are either
openly defending the administration or refusing to intervene. "There
is only one president at a time," we hear from Barack Obama. That's
true. But every sweetheart deal the lame-duck Bush administration
makes threatens to hobble Obama's ability to make good on his promise
of change. To cite just one example, that $140 billion in missing tax
revenue is almost the same sum as Obama's renewable energy program.
Obama owes it to the people who elected him to call this what it is:
an attempt to undermine the electoral process by stealth.
Yes, there is only one president at a time, but that president needed
the support of powerful Democrats, including Obama, to get the bailout
passed. Now that it is clear that the Bush administration is violating
the terms to which both parties agreed, the Democrats have not just
the right but a grave responsibility to intervene forcefully.
I suspect that the real reason the Democrats are so far failing to act
has less to do with presidential protocol than with fear: fear that
the stock market, which has the temperament of an overindulged
2-year-old, will throw one of its world-shaking tantrums. Disclosing
the truth about who is receiving federal loans, we are told, could
cause the cranky market to bet against those banks. Question the
legality of equity deals and the same thing will happen. Challenge the
$140 billion tax giveaway and mergers could fall through. "None of us
wants to be blamed for ruining these mergers and creating a new Great
Depression," explained one unnamed Congressional aide.
More than that, the Democrats, including Obama, appear to believe that
the need to soothe the market should govern all key economic decisions
in the transition period. Which is why, just days after a euphoric
victory for "change," the mantra abruptly shifted to "smooth
transition" and "continuity."
the rest of the article: http://www.alternet.org/workplace/107000/
the Dems Doing Something About It?
By Naomi Klein, Posted November 14, 2008.
Washington's handling of the bailout is not merely incompetent. It may
well be illegal.
The more details emerge, the clearer it becomes that Washington's
handling of the Wall Street bailout is not merely incompetent. It is
borderline criminal.
In a moment of high panic in late September, the U.S. Treasury
unilaterally pushed through a radical change in how bank mergers are
taxed -- a change long sought by the industry. Despite the fact that
this move will deprive the government of as much as $140 billion in
tax revenue, lawmakers found out only after the fact. According to the
Washington Post, more than a dozen tax attorneys agree that "Treasury
had no authority to issue the [tax change] notice."
Of equally dubious legality are the equity deals Treasury has
negotiated with many of the country's banks. According to Congressman
Barney Frank, one of the architects of the legislation that enables
the deals, "Any use of these funds for any purpose other than lending
-- for bonuses, for severance pay, for dividends, for acquisitions of
other institutions, etc. -- is a violation of the act." Yet this is
exactly how the funds are being used.
Then there is the nearly $2 trillion the Federal Reserve has handed
out in emergency loans. Incredibly, the Fed will not reveal which
corporations have received these loans or what it has accepted as
collateral. Bloomberg News believes that this secrecy violates the law
and has filed a federal suit demanding full disclosure.
Despite all of this potential lawlessness, the Democrats are either
openly defending the administration or refusing to intervene. "There
is only one president at a time," we hear from Barack Obama. That's
true. But every sweetheart deal the lame-duck Bush administration
makes threatens to hobble Obama's ability to make good on his promise
of change. To cite just one example, that $140 billion in missing tax
revenue is almost the same sum as Obama's renewable energy program.
Obama owes it to the people who elected him to call this what it is:
an attempt to undermine the electoral process by stealth.
Yes, there is only one president at a time, but that president needed
the support of powerful Democrats, including Obama, to get the bailout
passed. Now that it is clear that the Bush administration is violating
the terms to which both parties agreed, the Democrats have not just
the right but a grave responsibility to intervene forcefully.
I suspect that the real reason the Democrats are so far failing to act
has less to do with presidential protocol than with fear: fear that
the stock market, which has the temperament of an overindulged
2-year-old, will throw one of its world-shaking tantrums. Disclosing
the truth about who is receiving federal loans, we are told, could
cause the cranky market to bet against those banks. Question the
legality of equity deals and the same thing will happen. Challenge the
$140 billion tax giveaway and mergers could fall through. "None of us
wants to be blamed for ruining these mergers and creating a new Great
Depression," explained one unnamed Congressional aide.
More than that, the Democrats, including Obama, appear to believe that
the need to soothe the market should govern all key economic decisions
in the transition period. Which is why, just days after a euphoric
victory for "change," the mantra abruptly shifted to "smooth
transition" and "continuity."
the rest of the article: http://www.alternet.org/workplace/107000/