The Offer They Couldn't Refuse: When Paulson Met With Big Bankers

WASHINGTON -- The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.

The chairman of JPMorgan Chase, Jamie Dimon, was receptive, saying he thought the deal looked pretty good once he ran the numbers through his head. The chairman of Wells Fargo, Richard M. Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout, according to people briefed on the meeting.

But by 6:30, all nine chief executives had signed -- setting in motion the largest government intervention in the American banking system since the Depression and retreating from the rescue plan Mr. Paulson had fought so hard to get through Congress only two weeks earlier.

Comments

[Mark Guest]

What happened to the original plan to use the $700 billion to buy up the "toxic securities"? Note, the toxicity is due to the fact that the securities have fallen out of favor, and thus are hard to value. They *are* pieces of mortgages belonging to me, you, and your neighbors. The US Treasury could actually make a tidy profit by holding them. So *why* did the bailout plan change so soon after it was whisked through Congress??

[PT6]

Lets Review TRICKLE DOWN ECONOMICS:


GRAMM/McCAIN DE-REGULATE = Crooks Run Wild and High Mortgage & Broker Profits

REGULATORS TURN BLIND EYE ON THEIR JOBS = "TRICKS" and High Corporate Profits

Block States with Lawsuits from Regulating = High Corporate Profits

WAR = High Corporate Profits We pay $75 to $150 for every soldier's breakfast in IRAQ!

"TRICK" MORTGAGES ALLOWED BY FED AND NO RULES = High Corporate Profits

BUNDLED "TRICK" MORTGAGES SOLD AS "AAA" = High Corporate Profits

ILLEGAL NAKED SHORTS = High Corporate Profits

LEVERAGED OIL = Highest Corporate Profits IN HISTORY!

JOBS SHIPPED OVERSEAS = High Corporate Profits

HUGE BONUSES and SEVERANCE PAY = High .1% Profits

BAILOUT = High Corporate Profits

LET THE MARKET FALL AND EVERYONE SELLS WITH NO MARKET DOWNTIME = High Broker Profits

MARKET REBOUND AND EVERYONE BUYS AGAIN = HIGHER BROKER PROFITS

BLAME Fannie and Freddie for IT - Deflect YOUR Culpability for THIS CRISIS
==========================================================================

What is left for the Middle Class? DIRT

This has been the WORST DESTRUCTION OF THE MIDDLE CLASS IN HISTORY!

BUSH, CHENEY, AND PAULSON MUST STEP DOWN IMMEDIATELY AFTER ELECTION OR BE IMPEACHED!

[PT6]

We have a CRISIS of CONFIDENCE in the BUSH-CHENEY-REPUBLICAN ADMINISTRATION!

We need a CHANGE immediately following the election! Even though Obama Needs a Rest!

It is time for thinking Independents and Republicans to come to the Obama Camp!

Lets unite as One: Independents, Republicans, and Democrats and get out of this Crisis of Confidence!

[PT6]

I watched Paulson drive the market down 240 points in a Half Hour!

I also Watched Obama Drive up the Market from -250 to +108 in a nationwide TV speech in Indiana!

[itstherealthing]

its nice to socialism in the us of a, try to deny it all y want but its gonna spread like a virus once its gets ahold of anything. kiss the free market good bye and bless the tax.

[munki]

In lieu of foreclosing homes, work out with homeowners...
We have reverse mortgage - we have balloon payments - we have all other kind of financial tools that can be applied temporarily to stop bleeding... meaning... for example, homeowner paid $500,000 qualify for $300,000 home with any down... keep up the mortgage payment by lowering monthly payment to where they really can qualify... split the loss between the bank and bank keep notes for gradual periodically additional payments back... instead of foreclosing it...

Well, in another word, like you pay monthly set mortgage and periodically pay additional amount against principal... quarterly or semi-annually... to reduce principal...

Work out loans and NO FORECLOSURES>... please let Capitol Hill, FRB, Treasury Department...

[one4obama]

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."

Thomas Jefferson 1802

[jsarets]

"In the colonies we issue our own money. It is called Colonial Script. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one."

Benjamin Franklin 1763

[jsarets]

"But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas the currency pays nobody but those who directly contribute in some useful way."

Thomas Edison 1921

[jsarets]

"You came, and I said to you, 'What can we do?' Said you, 'Why, issue Treasury notes bearing no interest, printed on the best banking paper. Issue enough to pay off the Army expenses, and declare it legal tender.' Chase thought it a hazardous thing, but we finally accomplished it, and gave to the people of this Republic the greatest blessing they ever had -- their own paper to pay their own debts, and I take great pleasure in making it known."

Abraham Lincoln 1864

[StephenBarry]

What a perfect quote. Thank you for that. I have already sent it to several friends.

[Erdgeist]

This goes back to the era of many unregulated state banks. The American economist Daniel Raymond (1766-1846) argued that a national bank (the Fed is not actually a national bank) would largely benefit society by permitting the federal government to regulate the money supply so that the cycle of boom and bust would be substantially mild.

In addition, Raymond pointed out that state banks, which were unregulated, lent out too much money (like Greenspan did for over a decade) thus creating a false boom that eventually turned into a severe depression (which might be our doom).

The problem with non-regulated banks took a new form prior to the Great Depression with the formation of so-called "commercial banks" under the Federal Reserve Act of 1914. Unlike "savings banks" commercial banks could engage in all kinds of risky schemes. And then came the Great Depression. Sound familiar?

[MyTake]

Paulson and Bernanke are agents for and are controlled by The Bilderberg Group.

What they are doing is prepping the U.S. banks to enable them to be controlled from a single global banking entity as mandated by the Bilderberg Group globalization engineers.

Time is short, you better get familiar with The Bilderbergs. They are taking your country down and the other "globalization shoe" is going to drop in the first year of Obama's term.

[funkalicious]

I don't know if any one else caught Paulson tonight gloating over the banks taking over our treasury..
He said I have 700 hundred billion at my disposal and if that isn't enough the president can just authorize more and if the congress doesn't like it they will have to pass legislation to stop it.

[JBS]

So, how much did Goldman Sachs have to give up?

[andyboy]

When you think about it what Paulson is doing is just like what Bush did to Iraq.

Too bad you can't just "seed" a democracy there by spending $10-$12 billion a month.

The 145,000 soldiers over there are analagous to the $700 billion that's being thrown down the sewer to crooked cronie bankers.

They are not nearly enough in number to accomplish the task they are charged with.

The $700 billion can't approach the 60 trillion in credit default swaps. The proverbial drop in the bucket.

In the end they are both just opportunistic grabs at free cash. Got a problem? Terrorism? Economy tanking? Make money off of it. Without risk. Without putting any of your own money in. Get filthy stinking rich. It's the best revenge.

Disaster capitalism. Your watching it. It's a disgusting display of naked greed clothed in false patriotism sold as a bunch of milionaires and billionaires valiently trying to "save" you Joe six pack.

They are liars. They are thieves. They don't have the "tools" to "save" the economy. They're just making money. Discipline and regulation are what makes a strong and just economy. Oversight is what keeps markets legit. You don't buy those things. They are intangible. They can't be created with a trillion dollars.

These people know exactly what they are doing. Gettin' paid!

[BlueZoo]

Of COURSE they signed! It was a sweetheart deal! The US government has no leverage whatsoever in this deal. The same thieves who got us in this mess are the same theives we're giving money to in ever greater quantities. How does that make any sense? You will note that these guys' salaries cannot include a golden parachute but says nothing about boardroom bonuses. It's a hijacking of the American people and we're going to be paying for it for years to come. Out with EVERY incumbent!

[CuriousCat]

Check out this Huffington Post article, it sums it up: THE AUDACITY OF GREED

http://www.huffingtonpost.com/robyn-o/the-audacity-of-greed_b_134559.html

[gillrajb]

Basically, if the bailout or these share purchases would not happen, America would go into a moderate recession for about a year. It would be bad, but manageable, people who deserve to go broke would go broke. But now, this huge problem is getting extended over 2 or 3 years. Expect things to level back up in 2011. Remember that the credit default swap market is worth 60 trillion $, not to say that needs bailing out, but all the CDOs (the toxic instruments) had default swaps attached to them. On top of all this, the credit card market hasnt felt the hit yet, expect that late next year. People in the US should put their head down, and adapt some tough, smart regulation. If there is anything the US learnt in the last 7 years is that any extreme is bad. Capitalism is good in some ways, and Socialism is good in some ways, a hybrid is best. Being highly regulated is good in some ways, deregulation is good in some ways, a hybrid is best. There are many other examples. Cummon, we Canadians had a election today that cost 200M$ and nothing happened! Show us once again how its done America, show us you're the best country in the world.

[leftLibertarian]

Commissar Paulson got his orders from Comrade Bush who got his orders from his Soviet Masters.

You MUST sign this or it off to the goulog.