http://wsws.org/articles/2008/oct2008/pers-o27.shtml
The “dirty little secret” of the US bank bailout
27 October 2008
In an unusually frank article published in Saturday's New York Times, the newspaper's economic columnist, Joe Nocera, reveals what he calls "the dirty little secret of the banking industry"--namely, that "it has no intention of using the [government bailout] money to make new loans."
As Nocera explains, the plan announced October 13 by Treasury Secretary Henry Paulson to hand over $250 billion in taxpayer money to the biggest banks, in exchange for non-voting stock, was never really intended to get them to resume lending to businesses and consumers--the ostensible purpose of the bailout. Its essential aim was to engineer a rapid consolidation of the American banking system by subsidizing a wave of takeovers of smaller financial firms by the most powerful banks.
Nocera cites an employee-only conference call held October 17 by a top executive of JPMorgan Chase, the beneficiary of $25 billion in public funds. Nocera explains that he obtained the call-in number and was able to listen to a recording of the proceedings, unbeknownst to the executive, whom he declines to name.
Asked by one of the participants whether the $25 billion in federal funding will "change our strategic lending policy," the executive replies: "What we do think, it will help us to be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling."
Referring to JPMorgan's recent government-backed acquisition of two large competitors, the executive continues: "And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way, and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop."
As Nocera notes: "Read that answer as many times as you want--you are not going to find a single word in there about making loans to help the American economy."
Later in the conference call the same executive states, "We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side."
"It is starting to appear," the Times columnist writes, "as if one of the Treasury's key rationales for the recapitalization program--namely, that it will cause banks to start lending again--is a fig leaf.... In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation."
Early this month, he explains, "in a nearly unnoticed move," Paulson, the former CEO of Goldman Sachs, put in place a new tax break worth billions of dollars that is designed to encourage bank mergers. It allows the acquiring bank to immediately deduct any losses on the books of the acquired bank.
Paulson and other Treasury officials have made public statements calling on the banks that receive public funds to use them to increase their lending activities. That, however, is for public consumption. The bailout program imposes no lending requirements on the banks in return for government cash.
Already, the credit crisis has been used to engineer the takeover of Bear Stearns and Washington Mutual by JPMorgan, Merrill Lynch by Bank of America, Wachovia by Wells Fargo and, last Friday, National City by PNC.
What the Wall Street Journal on Saturday called the "strong-arm sale" of National City provides a taste of what is to come. The Treasury Department sealed the fate of the Cleveland-based bank by deciding not to include it among the regional banks that will receive government handouts. It then gave Pittsburgh-based PNC $7.7 billion from the bailout fund to help defray the costs of a takeover of National City. PNC will also benefit greatly from the tax write-off on mergers enacted by Treasury.
All of the claims that were made to justify the bank bailout have been exposed as lies. President Bush, Federal Reserve Chairman Ben Bernanke and Paulson were joined by the Democratic congressional leadership and Barack Obama in warning that the bailout had to be passed, and passed immediately, despite massive popular opposition. Those who opposed the plan were denounced for jeopardizing the well being of the American people.
In a nationally televised speech delivered September 24, in advance of the congressional vote on the bailout plan, Bush said it would "help American consumers and businessmen get credit to meet their daily needs and create jobs." If the bailout was not passed, he warned, "More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account.... More businesses would close their doors, and millions of Americans could lose their jobs ... ultimately, our country could experience a long and painful recession."
One month later, the bailout has been enacted, and all of the dire developments--banks and businesses disappearing, the stock market plunging, unemployment skyrocketing--which the American people were told it would prevent are unfolding with accelerating speed.
While Obama talks about the need for all Americans to "come together" in a spirit of "shared sacrifice"--meaning drastic cuts in Medicare, Medicaid, Social Security and other social programs--and the cost of the bailout is cited to justify fiscal austerity, the bankers proceed to ruthlessly prosecute their class interests.
As the World Socialist Web Site warned when it was first proposed in mid-September, the "economic rescue" plan has been revealed to be a scheme to plunder society for the benefit of the financial aristocracy. The American ruling elite, utilizing its domination of the state and the two-party political system, is exploiting a crisis of its own making to carry through an economic agenda, long in preparation, that could not be imposed under normal conditions.
The result will be greater economic hardship for ordinary Americans. The big banks will have even greater market power to set interest rates and control access to credit for workers, students and small businesses.
While no serious measures are being proposed, either by the Bush administration, the Republican presidential candidate or his Democratic opponent, to prevent a social catastrophe from overtaking working people, the government is organizing a restructuring of the financial system that will enable a handful of mega-banks to increase their power over society.
Barry Grey
Thursday, October 30, 2008
The “dirty little secret” of the US bank bailout
Labels:
Bank of America,
Barack Obama,
Bear Stearns,
Ben Bernanke,
Goldman Sachs,
Henry Paulson,
JP Morgan,
Merrill Lynch,
National City,
PNC,
Wachovia,
Washington Mutual,
Wells Fargo
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2 comments:
TROY DAVIS, PLEASE REMEMBER THAT AMERICA IS NOT THE OLD SOUTH ~ AFRICA !
A $TATE ECONOMIC BOYCOTT OF GEORGIA INTERNATIONALLY WILL OBVIOU$LY BE THE END RE$ULT OF GEORGIA DECIDING TO MURDER A PO$$IBLE INNOCENT TROY DAVI$ WITHOUT A NEW AND FAIR TRIAL ?
US CONGRESSIONAL MEMBERS WHO ARE ALSO LAWYERS BY TRADE, CONTINUE TO DENY poorer AMERICAN'S PROPER LEGAL REPRESENTATION !!!
THE INTERNATIONAL COMMUNITY NEEDS TO BEGIN A FORMAL INVESTIGATION INTO THESE US CONGRESSIONAL CRIMES AGAINST HUMANITY, AND HUMAN RIGHTS VIOLATIONS BEING INFLICTED ON poorer AMERICAN'S LIKE MR.TROY DAVIS OF GEORGIA !!!
HAVING BEEN DENIED APPEAL LAWYERS FOR THREE YEARS ON DEATH ROW IN GEORGIA MR. TROY DAVIS IS NOW BEING EXECUTED FOR A CRIME HE MIGHT NOT HAVE EVEN BEEN INVOLVED WITH !!!
SENATOR OBAMA PLEASE LET THIS COUNTRIES VOTERS KNOW YOUR FEELINGS AND THOUGHTS ABOUT A NEEDED FUTURE REPAIR AND RENOVATION OF OUR BROKEN JUDICIAL SYSTEM THAT CONTINUES TO ALLOW THE EXECUTION'S OF EVEN POSSIBLE INNOCENT AMERICAN’S LIKE TROY DAVIS OF GEORGIA ?????
BEING THE WEALTHIEST COUNTRY IN THE WORLD SENATOR OBAMA, DON'T WE NEED AS THE LEADERS OF THE FREE WORLD TO BEGIN ONCE AGAIN TO RE-INVEST THE PROPER MONIE$ IN OUR OWN US JUDICIAL SYSTEM, ASSURING ALL OF OUR CITIZENS THEIR RIGHTS TO FAIR TRIALS WITH PROPER LEGAL REPRESENTATION ???
DOES GOD NEED TO LOBBY OUR US CONGRESSIONAL LEADERS OF THE FREE WORLD ON BEHALF OF OUR poorer american’s SENATOR OBAMA,OR ARE YOU WATCHING OUT FOR THEM ??
***OUR US CONGRESS CONTINUES TO DENY MIDDLE CLASS AND WORKING POOR AMERICANS PROPER LEGAL REPRESENTATION EVEN THOUGH WRONGFUL EXECUTIONS & FALSE INCARCERATIONS CONTINUE ALL ACROSS AMERICA ???
*** 700 BILLION $$$ AVAILABLE FOR US BAILOUT, & NO $$$ FOR ALL POORER AMERICANS PROPER LEGAL REPRESENTATION ? SENATOR OBAMA, THIS JUDICIAL INJUSTICE HAS BECOME AN AMERICAN ART FORM, AND NO LONGER CAN BE KEPT HIDDEN OR SECRET FROM THE AMERICAN PEOPLE EVEN IF CERTAIN (501c3) U$ RELIGIOU$ LEADER$ HAVE BEEN $ILENCED ??
LETS ALL HOPE OUR MEDIA FRIENDS CONTINUE TO SHOW AN INTEREST IN REPORTING ON THIS AMERICAN HORROR FACING THESE (TENS OF THOUSANDS) FORGOTTEN AND TRAPPED POORER AMERICANS, AND HOW THIS PRESIDENTIAL CONTENDER HANDLES THIS VERY SERIOUS ISSUE FACING AMERICA’S LATINO AND BLACK AMERICAN COMMUNITIES ????
WITH 80% OF THE BLACK AMERICAN VOTERS SAYING THEY SUPPORT SENATOR OBAMA IN THIS PRESIDENTIAL ELECTION, IT IS ONLY FAIR FOR EVERYONE TO KNOW PRIOR BEING ELECTED OUR NEXT PRESIDENT OF THE UNITED STATES HOW THIS DEMOCRATIC SENATOR TRULY FEELS ABOUT THIS AMERICAN JUDICIAL INJUSTICE CONTINUING TO INFLICT GRAVE HARM ON THE BLACK & LATINO AMERICAN FAMILIES AND THEIR COMMUNITIES NATIONWIDE ??????
*** WHEN GOD’S FACE BECAME VERY RED *** THE US SUPREME COURT GAVE ENEMY COMBATANTS FEDERAL APPEAL HC RIGHTS LAWYERS AND PROPER ACCESS TO US FEDERAL COURTS,AND POORER AMERICANS (MANY EVEN ON DEATH ROW) ARE DENIED PROPER FEDERAL APPEAL LEGAL REPRESENTATION TO OUR US FEDERAL COURTS OF APPEAL, AND ROTTING IN AMERICAN PRISONS NATIONWIDE ?????????
**** INNOCENT AMERICANS ARE DENIED REAL HC RIGHTS WITH THEIR FEDERAL APPEALS ! THE AMERICAN PEOPLE ARE $LOWLY FINDING OUT HOW EA$Y IT I$ FOR MIDDLE CLA$$ AND WORKING POOR AMERICAN$ TO FALL VICTIM TO OUR U$ MONETARY JUDICIAL $Y$TEM.
****WHEN THE US INNOCENT WERE ABANDONED BY THE GUILTY **** The prison experts have reported that there are 100,000 innocent Americans currently being falsely imprisoned along with the 2,300,000 total US prison population nationwide.
***WHERE ARE AMERICA'S RELIGIOUS LEADERS ??????? Since our US Congress has never afforded poor prison inmates federal appeal legal counsel for their federal retrials,they have effectively closed the doors on these tens of thousands of innocent citizens ever being capable of possibly exonerating themselves to regain their freedom through being granted new retrials.
This same exact unjust situation was happening in our Southern States when poor and mostly uneducated Black Americans were being falsely imprisoned for endless decades without the needed educational skills to properly submit their own written federal trial appeals.
This devious and deceptive judicial process of making our poor and innocent prison inmates formulate and write their own federal appeal legal cases for possible retrials on their state criminal cases,is still in effect today even though everyone in our US judicial system knows that without proper legal representation, these tens of thousands of innocent prison inmates will be denied their rightful opportunities of ever being granted new trials from our federal appeal judges!!
Sadly, the true US *legal* Federal Appeal situation that occurs when any of our uneducated American prison inmates are forced to attempt to submit their own written Federal Appeals (from our prisons nationwide) without the assistance of proper legal counsel, is that they all are in reality being denied their legitimate rights for Habeas Corpus with our US FEDERAL COURTS and will win any future Supreme Court Case concerning this injustice!
For our judicial system and our US Congressional Leaders Of The Free World to continue to pretend that this is a real and fair opportunity for our American Middle Class and Working Poor Citizens, only delays the very needed future change of Federal Financing of all these Federal appeals becoming a normal formula of Our American judicial system.
It was not so very long ago that Public Defenders became a Reality in this country.Prior that legal reality taking place, their were also some who thought giving anyone charged with a crime a free lawyer was a waste of taxpayers $$.
This FACADE and HORROR of our Federal Appeal proce$$ is not worthy of the Greatest Country In The World! ***GREAT SOCIETIES THAT DO NOT PROTECT EVEN THEIR INNOCENT, BECOME THE GUILTY !
A MUST READ ABOUT AMERICAN INJUSTICE:
1) YAHOO 2) GOOGLE
(MANNY GONZALES THE KID THAT EVERYONE FORGOT IN THE CA PRISON SYSTEM.) ** A JUDICIAL RIDE OF ONES LIFE !
***Someone please tell our US Congress that the GED degree that Manny Gonzales acquired in prison is not a LAW DEGREE !!!!!!
lawyersforpooramericans@yahoo.com (424-247-2013)
Us Bank other wise know as (u ass bank) the enemy of the little man. Lets say you live pay check to pay check. Now there is a mistake on your a account that a merchant over charges, and you get a over draft charge. You can dispute this charge and get the money back in 10 days but not the $35 over draft charge, that you can get back in 90 days. Now back to the begenning the first over draft set off a snowball effect and now you have 6 or 7 over drafts and you have to pay them $8 dallors a day. So my question is how can you live?
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