September 19, 2008
The Nation

Paulson Bailout Plan a Historic Swindle

by William Greider

If Wall Street gets away with this, it will represent an historic swindle of the American public--all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion." If this deal succeeds, I predict it will become a transforming event in American politics--exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice. . . .

Let me be clear. The scandal is not that government is acting. The scandal is that government is not acting forcefully enough--using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system. The step-by-step rescues that the Federal Reserve and Treasury have executed to date have failed utterly to reverse the flight of investors and banks worldwide from lending or buying in doubtful times. There is no obvious reason to assume this bailout proposal will change their minds, though it will certainly feel good to the financial houses that get to dump their bad paper on the government.

A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply killer leverage to the financial players: accept our objectives and follow our instructions or you are left on your own--cut off from government lending spigots and ineligible for any direct assistance. If they decline to cooperate, the money guys are stuck with their own mess. If they resist the government's orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated, therefore doomed.

Only with these conditions, and some others, should the federal government be willing to take ownership--temporarily--of the rotten financial assets that are dragging down funds, banks and brokerages. . . .

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National affairs correspondent William Greider has been a political journalist for more than thirty-five 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.

U.S. NATIONAL DEBT CLOCK

Enver Masud, "Corporate Globalization Threatens World's Poor, Middle Class," The Wisdom Fund, October 10, 2000

"The Shock Doctrine: Free-Market Democracy," The Wisdom Fund, February 28, 2004

[Spitzer had become increasingly public in blaming the Bush administration for the subprime crisis.--"Bush's Real Problem with Eliot Spitzer," Project Censored, February 2008]

Daniel R. Amerman, "AIG's Dangerous Collapse & A Credit Derivatives Risk Primer," financialsense.com, September 17, 2008

[But under the current proposal, the government would go out and shop for bad loans. These come in all shapes and sizes, so the government would have to judge what type of loans it wants. They are illiquid, so it's hard to know how to value them. Bad loans are weighing down the financial system precisely because private-sector experts can't determine their worth. The government would have no better handle on the problem.

In practice this means the government would make subjective choices about which bad loans to buy, and it would pay more than fair value. Billions in taxpayer money would be transferred to the shareholders and creditors of banks, and the banks from which the government bought most loans would be subsidized more than their rivals. . . .

Raghuram Rajan and Luigi Zingales of the University of Chicago suggest ways to force the banks to raise capital without tapping the taxpayers. First, the government should tell banks to cancel all dividend payments. Banks don't do that on their own because it would signal weakness; if everyone knows the dividend has been canceled because of a government rule, the signaling issue would be removed. Second, the government should tell all healthy banks to issue new equity. Again, banks resist doing this because they don't want to signal weakness and they don't want to dilute existing shareholders. A government order could cut through these obstacles.

Meanwhile, Charles Calomiris of Columbia University and Douglas Elmendorf of the Brookings Institution have offered versions of another idea. The government should help not by buying banks' bad loans but by buying equity stakes in the banks themselves.--Sebastian Mallaby, "A Bad Bank Rescue," Washington Post, September 21, 2008]

Michael Gray, "ALMOST ARMAGEDDON: MARKETS WERE 500 TRADES FROM A MELTDOWN," New York Post, September 21, 2008

[As Kevin Phillips points out in his prophetic book, Bad Money, America's primary business became non-productive finance. Manufacturing fell to only 12% of GDP. Wall Street titans grew obscenely rich by simply passing around paper. Inflated or semi-worthless securities increased in bogus value at each stage of the trading process.

Wall Street was allowed to virtually print money and peddle toxic securities around the globe because the big financial houses and heads of hedge funds bought the politicians of both parties.

Equally important, the mammoth financial and housing bubble thus created was hailed by the Bush administration as proof positive of Republican free market philosophy and the true road to prosperity.--Eric Margolis, "US Empire: An Orgy of Debt," Toronto Sun, September 21, 2008]

[Goldman Sachs and Morgan Stanley sought shelter with the Federal Reserve to survive a financial storm that destroyed their rivals, effectively killing Wall Street's investment banking model of the past two decades.--Kevin Drawbaugh and Mark Felsenthal, "Goldman, Morgan Stanley flee into Fed's arms," Reuters, September 22, 2008]

[ROBERT SCHEER: Bush and McCain and Paulson, who was head of Goldman Sachs before he was head of the Treasury, say they don't know how this happened, they designed this system. We had a regulatory regime in place ever since the Great Depression to prevent this kind of meltdown, and that said that stockbrokers, insurance companies, banks, investment banks, commercial banks, could not merge. And in 1999, they passed legislation, the Gramm-Leach-Bliley Act. Gramm is the guy who McCain supported for president in '96. He was co-chair of his campaign until he complained about the whiners out there, meaning the public. And that legislation is what caused this. It allowed the swaps and everything else.

And then, in 2000, hours before the Christmas break, Gramm introduced legislation. I'm holding it in my hand. This smoking gun is available on the internet; you can read it. And what it said is that the swaps is defined in the Financial Service Modernization Act, meaning that instead of going into a bank and somebody said, "OK, we'll give you a loan, and we expect you to pay it over thirty years. We know your house has the equity. We know you have the means to pay it" - that was the traditional way - instead, they allowed these mergers, and as a result, they could buy insurance on it, they could do these swaps, they could do what they call hybrid instruments. And it is legislation that was never discussed, was - never had hearings or anything, says that all of this stuff is exempted from all previous regulation. . . .

SEN. BERNIE SANDERS: I was on the House Banking Committee in 1999, when Glass-Steagall legislation was done away with and the walls were broken down. And I think many of the things that I said and a number of other people said at that time about what would happen, in fact, has happened. So you've got to go back to re-regulating not only financial services, but you've also got to look at energy trading as well--"Sen. Bernie Sanders, Robert Scheer and Dean Baker on the Proposed $700 Billion Bailout of Wall Street, the Largest Government Bailout of Private Industry in US History," democracynow.org, September 22, 2008]

[ . . . what threatens to be even worse is the government's move to let the financial sector make even higher, unprecedented gains by working its way out of negative equity to "make taxpayers whole" by repaying the government's bailout by bleeding the economy at large.--Michael Hudson, "The Paulson-Bernanke Bank Bailout Plan," counterpunch.org, September 22, 2008]

[What Gingrich's wish list tells us is that the dumping of private debt into the public coffers is only stage one of the current shock. The second comes when the debt crisis currently being created by this bailout becomes the excuse to privatize social security, lower corporate taxes and cut spending on the poor. A President McCain would embrace these policies willingly. A President Obama would come under huge pressure from the think tanks and the corporate media to abandon his campaign promises and embrace austerity and "free-market stimulus."--Naomi Klein, "Now is the Time to Resist Wall Street's Shock Doctrine," Huffington Post, September 22, 2008]

[The audacity of Treasury Secretary Henry Paulson's bailout proposal is reflected in what it refuses to say: no explanations of how the bailout will work, no demands on the bankers in exchange for the public's money. The Treasury's opaque, three-page summary of plan includes this chilling statement:

"Section 8. Review. 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."--William Greider, "Goldman Sachs Socialism," Nation, September 23, 2008]

[The entire crisis is not a crisis of subprime mortgages, it is a crisis of the derivatives bubble which was launched by Wendy Gramm of the Commodities Futures Trading Commission and Greenspan of the Fed with the connivance of Robert Rubin of Goldman Sachs and Citibank, and others in the Clinton administration, some 15 years ago. . . .

It is of course true that the healthy functioning of the United States economy requires a viable and flexible system of commercial banks. No one should doubt the necessity of commercial banks. . . .

But when we look at institutions like J.P. Morgan Chase, Citibank, and Bank of America, we become aware that these large money center institutions have become detached from any conceivable connection to the world of production, wages, transportation, and all other useful and productive activities. These institutions are not commercial banks any more in any meaningful sense of the term.--Webster G. Tarpley, "NO! to the Paulson-Bernanke Derivatives Scam Bailout," rense.com, September 23, 2008 -- Note: Read article for the author's advice on what needs to be done.]

[The solution is not bailing out banks by eliminating "toxic" debts, but rather helping home owners renegotiate conditions of their mortgages.--"STIGLITZ CALLS BUSH BAILOUT PLAN 'MONSTROUS'," Santiago Times, September 24, 2008]

[Contrary to Paulson's claim, domestic credit is still expanding at a fast rate, at 9% per year as of July 2008, and the notion of frozen markets cannot be supported by Fed's published monetary data. Banks have excess liquidity and are still extending loans to safe customers. Certainly they are no longer in the mood of reigniting a new speculative euphoria by lending to speculator and impaired credit.

And contrary to Paulson's belief, the MFI will in the end cost American families more than other alternatives. As Philip Stephens from the Financial Times put it, it is horrifying to think that the huge liabilities of failing institutions have now been loaded on to the backs of taxpayers: a case, as far as speculators are concerned, of heads, we win, tails you lose.

Paulson and Bernanke, by designing the MFI to secure banks' assets, have enticed investors and speculators into buying financial stocks, made most attractive on expectations that all banks' assets will be secured by the government. With the MFI, banks can only make profits and will always be able to dump their nonperforming assets to the MFI.--Hossein Askari and Noureddine Krichene, "Paulson plan throws oil on fire," Asia Times, September 24, 2008]

[But as the cross-examination rolled on, and Mr Paulson just waffled - "we will ask experts to advise us", "we will get the best and brightest financiers to suggest ideas" - the terrible truth dawned. There was no such thing as a Paulson plan. Not only did Mr Paulson not know what he was doing. He did not know what he was talking about. When pressed to offer at least some basic principles for his rescue, Mr Paulson had no answers. When challenged about limits to executive remuneration and taxpayer stakes in future profits of participating banks, he brusquely rejected all such proposals - on the amazing ground that they might discourage some of the stronger banks from taking advantage of government support!

Could he really be so clueless? Surely not. Why, then, has Mr Paulson failed? His inability to think seriously about solutions to the present financial crisis probably has deep ideological roots. Just as Mr Rumsfeld could simply not believe that US foreign policy might be misguided, Mr Paulson simply cannot believe that markets can be fundamentally wrong. He therefore cannot imagine, for example, that government judgments about the value of bank securities may, in some circumstances, reflect economic realities more accurately than market prices. Since some such recognition of market failure is fundamental to any understanding of banking crises, it is not surprising that Mr Paulson finds it difficult to come up with a credible solution.--Anatole Kaletsky, "The staggering incompetence of the US Treasury Secretary is now acknowledged - and is a disaster for George Bush," Times, September 25, 2008]

[As Financial Times columnist Martin Wolf noted on Wednesday, Sept. 24, the problem is that the face value of mortgage loans and a raft of other bad loans far exceeds current market prices or prices that are likely to be realized this year, next year or the year after that. They are packaged into what the financial press rightly calls "toxic." The bailout is not efficient, he writes, "because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors." "The simplest way to recapitalize institutions," He concludes, is "by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system." This is the key: if debts cannot be paid, then creditors must take losses.--Michael Hudson, "The Insanity of the $700 Billion Giveaway," counterpunch.org, September 25, 2008]

[Once upon a time, a politician took campaign contributions and favors from a friendly constituent who happened to run a savings and loan association. The contributions were generous: They came to about $200,000 in today's dollars, and on top of that there were several free vacations for the politician and his family, along with private jet trips and other perks. The politician voted repeatedly against congressional efforts to tighten regulation of S&Ls, and in 1987, when he learned that his constituent's S&L was the target of a federal investigation, he met with regulators in an effort to get them to back off.

That politician was John McCain, and his generous friend was Charles Keating, head of Lincoln Savings & Loan. . . .

Eventually, the government spent about $125 billion in taxpayer dollars to bail out hundreds of failed S&Ls --Rosa Brooks, " Keating 5 ring a bell? McCain's past collides with the present Wall Street debacle!," Los Angeles Times, September 25, 2008]

To the Speaker of the House of Representatives and the President pro tempore of the Senate (signed by about 200 economists - including three recipients of the Nobel Prize)--Kevin G. Hall, "Economists Of The World, Unite!," New York Times, September 25, 2008

[Right now, banks and others with this toxic debt by law must write down losses every quarter. They are forced to put a present-day value on these assets. Yardeni thinks suspending this rule could do the job without taxpayer money.--"Is the bailout needed? Many economists say 'no'," McClatchy, September 25, 2008]

[Wall Street must be saved for the sake of Main Street, Secretary Paulson and Chairman Bernanke tell us. First, everyone has toxic financial instruments in their 401k's; and second, these instruments are clogging the credit system. But in fact neither claim is true.

The first claim is not true simply because the majority of Americans don't have any retirement accounts at all. And the claim that the credit system is clogged is not true because there is no object that can be removed in order to clear it. What is true is that the securities that Wall Street invented are toxic. But this is precisely why they should remain where they belong, in the vaults of those who created and pushed them. Otherwise they will poison the rest of us, the poorest among us the most. The government can and should stave off the increase in unemployment, but the only way the government can accomplish this is by hiring workers itself. A bailout will make matters worse.--Moshe Adler, "Bailing Out Wall Street Won't Save Main Street," counterpunch.org, September 26, 2008]

["We collect money from local savers, and we lend it in the local community," said William Dunkelberg, chairman of Liberty Bell Bank in Cherry Hill, N.J. "We're doing fine. There are 9,000 financial institutions out there, and most of them are small and most of them are doing fine."

Dunkelberg, a professor of economics at Temple University and chief economist for the National Federation of Independent Business, added that a recent survey of that group's members found that only 2 percent said getting a bank loan was the great challenge facing their businesses. . . .

Even some of the nation's largest banks, which have pushed hard for a federal bailout, deny that the current situation is forcing them to reduce lending. "The strength of our core businesses, capital and liquidity are enabling us to continue to support our customers," Bank of America, the nation's largest bank, said in a statement.--Binyamin Appelbaum, "Smaller Banks Thrive Out of the Fray of Crisis," Washington Post, September 26, 2008]

[In the case of AIG, the virus exploded from a freewheeling little 377-person unit in London, and flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models.--Gretchen Morgenson, "Behind AIG's crisis, a blind eye to a web of risk," International Herald Tribune, September 28, 2008]

[A system of regulated capitalism was in place and worked very well from World War II to 1980. . . . The fundamentalists of the economy are wrong.--Robert S. McElvaine, "Their Party Crashed. Ours May Too," Washington Post, September 28, 2008]

VIDEO: "'Is This the United States Congress or the Board of Directors of Goldman Sachs?' Rep. Dennis Kucinich Rejects $700 Billion Bailout," democracynow.org, September 29, 2008

VIDEO: "FDR in 1933: 'There Must Be A Strict Supervision Of All Banking and Credits and Investments. There Must Be An End To Speculation With Other PeopleÕs Money'," democracynow.org, September 29, 2008

[The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.--Jeffrey A. Miron, "Bankruptcy, not bailout, is the right answer," CNN, September 29, 2008]

VIDEO: "Nobel Laureate Joseph Stiglitz: Bail Out Wall Street Now, Change Terms Later," democracynow.org, October 2, 2008

[A bailout, however large, that maintains the mark-to-market rule and permits short-selling will pour money into a black hole. . . .

If foreign creditors are to finance the bailout, it must be credible. The best way to achieve credibility is to combine the bailout with a reduction in other forms of US foreign borrowing, specifically the US governmentÕs budget deficit and the US trade deficit.

. . . the government should declare an immediate end to the wars, thus reducing the budget deficit by at least $200 billion annually.

The government should then turn to the military budget, which at about $700 billion is larger than the combined military spending of the rest of the world combined.--Paul Craig Roberts, "Can a Bailout Succeed?," counterpunch.org, October 2, 2008]

[This current financial crisis is a major way-station on the way to the collapse of the American empire. . . .

Let's face a historical truth: we have never had a "free market", we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with "big government" when it served their needs. . . .

The alternative is simple and powerful. Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom "the free market" has not come through.--Howard Zinn, "From empire to democracy," Guardian, October 2, 2008]

[The first prescription for a cure is to formally strengthen the dollar and announce it publicly. . . . The Fed should declare that its goal for gold is around $500 to $550.

Also of immediate urgency is for regulators to suspend any mark-to-market rules for long-term assets. . . .

The SEC should immediately reverse its foolish decision to get rid of the so-called uptick rule in short-selling. That would provide a small road bump to the short-selling that's helping to destroy financial institutions.

At the same time the SEC should promulgate an emergency rule (which we thought was already the rule): No naked short-selling.--Steve Forbes, "How to Cure This Sick System," Forbes, October 6, 2008]

Michael S. Rosenwald, "The $700 Billion Man With an Engineer's Mind," Washington Post, October 9, 2008

Paul Craig Roberts, "A Possible Solution to the Economic Crisis," counterpunch.org, October 10, 2008

Noam Chomsky, "Exposing the Un-Democratic Face of Capitalism," counterpunch.org, October 10, 2008

[Soros blamed the turmoil on the faith in market forces that began under President Ronald Reagan and British Prime Minister Margaret Thatcher a generation ago.--David Morgan, "Soros sees end of US-led globalized market system," Reuters, October 12, 2008]

[From 1982 to 2000, the U.S. stock market went on the longest bull run ever, as share prices rose to dizzying heights. . . .

During this time of market mania, the Fed guts the Glass-Steagall Act, which was enacted during the Great Depression to prevent the type of banking activity that led to the 1929 stock market crash. In 1996, the Fed allows regular banks to become heavily involved in investment banking, which opens the door to conflicts of interest in banks pushing sketchy financial products on customers who poorly understood the risks. In 1999, under intense pressure from financial firms, Congress overturns Glass-Steagall, allowing banks to engage in any sort of activity from underwriting insurance to investment banking to commercial banking.--Arun Gupta, "Financial Meltdown 101," Indypendent, October 13, 2008]

Patrick J. Buchanan, "Liquidating the Empire," antiwar.com, October 14, 2008

[ . . . of the first $125 billion outlay from the emergency bailout fund, 76% is going to shore up Uncle Sam's brokers and $300,000 is going to retain one of Wall Street's favorite law firms.

In addition to the repeal of the depression era, investor protection legislation known as the Glass Steagall Act, the removal of credit default swaps from regulation by the Commodity Futures Modernization Act of 2000, various U.S. Supreme Court decisions upholding Wall Street's ability to run its own private justice system shrouded in darkness, there was one more key regulatory change that greased the tracks of this train wreck. On January 22, 1992 the Federal Reserve announced that its New York region would "discontinue the 'dealer surveillance' now exercised over Primary Dealers"--Pam Martens, "How the Banksters are Making a Killing Off the Bailout," counterpunch.org, October 17, 2008]

"Think the Bailout Is Radical? Just Wait," Washington Post, October 19, 2008

"Freddie Mac secretly paid Republican firm to kill regulation," Associated Press, October 20, 2008

[Insurers, automakers and American subsidiaries of foreign banks all want the Treasury Department to cut them a piece of the largest government rescue in U.S. history.--Martin Crutsinger, "Companies start competing for bailout money," Associated Press, October 25, 2008]

[U.S. Deputy Treasury Secretary Robert M. Kimmet, visiting Jiddah, said experts at his agency have been learning the features of Islamic banking.--Faiza Saleh Ambah, "Islamic Banking: Steady in Shaky Times," Washington Post, October 31, 2008]

[American taxpayers have gained no meaningful control over the banks, which is why the banks are free to spend the new money as they wish. At Morgan Stanley, it looks as if much of the windfall will cover this year's bonuses. Citigroup has been hinting it will use its $25bn buying other banks, while John Thain, the chief executive of Merrill Lynch, told analysts: "At least for the next quarter, it's just going to be a cushion." The US government, meanwhile, is reduced to pleading with the banks that they at least spend a portion of the taxpayer windfall for loans - officially, the reason for the entire programme.--Naomi Klein, "The Bush gang's parting gift: a final, frantic looting of public wealth ," Guardian, October 31, 2008]

Joseph E. Stiglitz, "Reversal of Fortune," Vanity Fair, November, 2008

[As soon as the bailout was announced, it became clear that Treasury officials would hire outsiders to perform their jobs for them - at a profit. Private companies wanting to help manage the bailout were given just two days to apply for massive, multiyear contracts.--Naomi Klein, "The New Trough," commondreams.org, November 9, 2008]

Mark Pittman, Bob Ivry and Alison Fitzgerald, "Fed Defies Transparency Aim in Refusal to Identify Bank Loans," bloomberg.com, November 10, 2008

[The decision to drop asset purchases marks a stunning reversal by Treasury Secretary Hank Paulson, who made the plan the centrepiece of his pitch for the $700bn troubled asset relief programme (Tarp), which passed only after a tumultuous battle in Congress.--Krishna Guha, "US drops plan to buy toxic assets," Financial Times, November 12, 2008]

Pam Martens, "A Credit Crisis or a Collapsing Ponzi Scheme?," counterpunch.org, November 13, 2008

[ . . . no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.--Amit R. Paley, "Bailout Lacks Oversight Despite Billions Pledged," Washington Post, November 13, 2008]

[Yes, we have all derided the explosion of leverage, the failure to regulate derivatives, the flood of subprime lending that was bound to default and the excesses of CEO compensation. But these are all mere manifestations of three deeper structural problems that require greater attention: misconceptions about what a "free market" really is, a continuing breakdown in corporate governance and an antiquated and incoherent federal financial regulatory framework.--Eliot L. Spitzer, "How to Ground The Street: The Former 'Enforcer' On the Best Way to Keep Financial Markets in Check," New York Times, November 16, 2008]

Asif Salahuddin, "The evil of the US dollar," Asia Times, November 21, 2008

[Investors around the world are counting the spiralling cost of the biggest fraud in history--Stephen Foley, "The man who conned the world," Independent, December 16, 2008]

Danny Schechter, "TARP This: Paulson's Bailout Plan Riddled With Deception," mediachannel.org, December 23, 2008

[Behind the debate over remaking U.S. financial policy will be a debate over who's to blame. It's crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes - under Reagan, Clinton, and Bush II - and one national delusion.--Joseph E. Stiglitz, "Capitalist Fools," Vanity Fair, January 2009]

[ . . . those combat-ready troops, purportedly stationed to protect Americans from the terrorists, would be conveniently positioned to suppress protests by angry and outraged citizens--Jacob G. Hornberger, "The Real Value of the Standing Army," fff.org, January 6, 2009]

Stephen Moore, "'Atlas Shrugged': From Fiction to Fact in 52 Years," wsj.com, January 9, 2009

Paul Krugman, "What Obama Must Do: A Letter to the New President," Rolling Stone, January 14, 2009

Julia Finch, Andrew Clark and David Teather, "Twenty-five people at the heart of the meltdown," Guardian, January 26, 2009

"Nationalized Banks Are 'Only Answer,' Economist Stiglitz Says," Deutsche Welle, February 6, 2009

Chris Adams, "Where did that bank bailout go? Watchdogs aren't entirely sure," McClatchy Newspapers, August 9, 2009

Kevin G. Hall, "Why haven't any Wall Street tycoons been sent to the slammer?," McClatchy Newspapers, August 20, 2009

Chris Hayes, "The Bailout in Under Ten Minutes," Nation, October 6, 2009

Kevin G. Hall, "How Moody's sold its ratings -- and sold out investors," McClatchy, October 18, 2009

Mike Whitney, "Lehman Brothers Scandal Rocks the Fed: Geithner and Bernanke's Possibly Criminal Roles," counterpunch.org, March 15, 2010

[Mr Moylan says the number is likely about $US60 trillion.--Gregory Bresiger, "US Government 'hiding true amount of debt'," NewsCore, September 20, 2010]

[The 21,000 transactions show that the Fed not only stretched the limits of its authority by lending tens of billions of dollars to Goldman Sachs and other giants of Wall Street, but that it also aided British, German and French banks, other big businesses and smaller banks from Puerto Rico to North Carolina and Washington State.--Greg Gordon and Kevin G. Hall, "Fed's massive fix sent trillions across the nation, globe," McClatchy, December 1, 2010]

Jia Lynn Yang, Neil Irwin and David S. Hilzenrath, "Fed aid in financial crisis went beyond U.S. banks to industry, foreign firms," Washington Post, December 2, 2010

Dale Kasler, "Phil Angelides: Financial crisis 'didn't need to happen'," mcclatchydc.com, January 28, 2011

"23 Things They Don't Tell You About Capitalism," The Real News, April 24, 2011

[Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market's collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

Fed Chairman Ben S. Bernanke's unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.--Bradley Keoun and Phil Kuntz, "Wall Street Aristocracy Got $1.2 Trillion in Secret Loans," bloomberg.com, August 22, 2011]

[Senator Sanders: "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world"--"The 16 Trillion Dollar Bailout The Federal Reserve Handed To The Too Big To Fail Banks," Global Research, December 2, 2011]

Charles Hugh Smith, "Cui Bono Fed: Who Benefits from the Federal Reserve," oftwominds.com, September 12, 2012

George Galloway, "Behind the hagiography who was Margaret Thatcher and what did she really do?," stopwar.org.uk, April 9, 2013

Lynn Stuart Parramore, "How Piketty's Bombshell Book Blows Up Libertarian Fantasies," alternet.org, April 27, 2014

[Assume a bank has a reserve of $100 in gold; eager to earn interest and commissions, it issues fictitious loans for $1,000 in gold. Evidently, $100 in gold cannot pay a fictitious amount of $1,000 in gold. . . . With paper money, the government prints $900 and bails out the bank. . . . Workers and poor people should suffer a $900 loss in real capital (food, clothing, energy) to pay the bank or its debtors--Noureddine Krichene, "Ron Paul on 'End the Fed'," atimes.com, June 30, 2014]

[The reality since World War I is that the United States has taken the lead in shaping the international financial system to promote gains for its own bankers, farm exporters, its oil and gas sector, and buyers of foreign resources - and most of all, to collect on debts owed to it.--Michael Hudson, "Monetary Imperialism," counterpunch.org, November 29, 2014]

Laurence Kotlikoff, "Has Our Government Spent $21 Trillion Of Our Money Without Telling Us?," forbes.com, December 8, 2017

Jonathan Cook, "Capitalism is Double-Billing Us: We Pay From Our Wallets Only to be Robbed of Our Future," counterpunch.org, October 28, 2020