Wall Street Robber Barons Ride Again

Why rush to throw another $350 billion of taxpayer money at the Wall Street bandits and their political cronies who created the biggest financial mess since the Great Depression? And why should we taxpayers be expected to double our debt exposure when the 10 still-secret bailout contracts made in the first round are being kept from the public?

We don't have time, President-elect Barack Obama's key economic adviser, Lawrence Summers, insisted in a letter to Congress on Monday, promising that the new infusion would not be squandered as was the first installment. But given that Summers is personally as responsible for this meltdown as anyone, why should we trust him on this? Yes, it sounds wonderfully bipartisan that Obama is backing President Bush's request for spending the money now, short-circuiting congressional inquiry, but it was just that sort of bipartisan politics that created this nightmare.

How insulting that we must now accept Summers' assurance that the Obama administration will "move quickly to reform a weak and outdated regulatory system to better protect consumers, investors and businesses." This from the guy who, as President Bill Clinton's treasury secretary, pushed the deregulation legislation making the subsequent financial crimes of Wall Street legal. The "toxic derivatives" that we taxpayers are now forced to purchase from the Wall Street hustlers were deliberately shielded from all government regulation, thanks to the Commodity Futures Modernization Act, which Summers got Congress to pass in the closing days of the Clinton administration with the same urgency that he now pushes for the new Wall Street handout.

Back then, Summers was a disciple of Robert Rubin, who just last week resigned from his director's position at Citigroup, the financial conglomerate that grew to unmanageable and corrupt proportions thanks to the empowering legislation that Rubin initiated when he was Clinton's first treasury secretary. Rubin has been paid more than $115 million plus stock options at Citigroup, and despite his horrid record is a close Obama adviser. It is one of the great swindles of U.S. financial history that Citigroup was bailed out with $45 billion in a deal that could eventually cost taxpayers an additional $269 billion to guarantee those toxic assets that would have been illegal if not for the legislation backed by Rubin and Summers.

How did Obama allow himself to become ensnared with the very same folks who are the most culpable? His treasury secretary nominee, Timothy Geithner, is another Rubin protégé, who, as head of the New York Fed, worked tirelessly with Rubin to concoct the Citigroup bailout. When candidate Obama gave his major economic address back on March 27, he couldn't have been clearer in condemning the deregulation that Rubin and Summers had engineered:

Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one -- aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner-take-all, anything-goes environment that helped foster devastating dislocations in our economy.

He was referring to the deregulation legislation that Summers hailed on the day that Clinton signed it into law as "a major step forward to the 21st century." Now Obama is relying on Summers to reverse a disaster of his own creation. It's like returning to the same surgeon who almost killed the patient in the first operation to once again cut open the body to repair the damage.

What we need is a second opinion.

Where is the openness and accountability that Obama promised? Why not pause for a few weeks for congressional hearings on how to spend the new money? We don't even know where the last batch went. On Monday, the Treasury Department finally agreed, and only after a subpoena threat, to turn over to Sen. Carl Levin and his Permanent Subcommittee on Investigations the 10 secret contracts that it signed with top Wall Street firms in the first round of the bailout. Unfortunately, the subcommittee has no plans to make those contracts public, according to a Levin aide quoted in The New York Times.

That is outrageous. This is our money we're talking about. Why don't we get to read the fine print in what will end up being trillions of dollars in taxpayer obligations? Because we are suckers, that's why, and the folks who swindled us into this disaster can count on it.

Robert Scheer is editor in chief of Truthdig and author of The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America.

Comments

[mjc]

Today the Bank of America got an obscene $20 billion as a bailout and now with Citigroup tanking and being divided up there will be more but still Obama said he wanted to do Bush and Paulson a favor and get the rest of the $700 billion out of Congress, and.....guess what, he did. Obama is looking a bit like the third of George Bush, unfortunately. These bank guys think that they are the only ones to be trusted with money, OUR money. Yes indeed, take it out of the Treasury which is where we taxpayers put it, give it to the credit institutions so that they will be "stabilized?", but God help the ordinaries and their instability.

[research]

"Obama said he wanted to do Bush and Paulson a favor "

NO. Obama and his folks will get that money.

Not Bush and Paulson.

[mjc]

Bush shouldn't be trusted to make decisions about money matters, but it looks as if Obama was the lone ranger in reverse and managed to get those bucks for his own purposes and for his own set of Wall St. robber barons.

[WeTellTheTruth]

Barak Obama would never have been elected without the approval of wall street and the criminal ruling class.

The American people have been betrayed..... again.

[PATina]

The most disappointing of Obama's advisers is his financial cabinet. The only way he could have done worse is to have chosen Phil Gramm.

[ProudLiberalDan]

I don't want to exchange one blank check President for another, even if it someone whom I largely agree with.

There is no reason why this money cannot wait the 15 days. And, there should be no more money until we are giving an accounting of where they previous money has already gone.

[research]

no strings attached.

Of COURSE Obama wants that money.

[joebhed]

Harry,
So true.
Very well said.
Very, very well said.
Obama's economic/financial team is the least change-oriented where need the MOST change for a democratic society to persevere.
Summers, Geithner and the lot, possibly excepting a reborn Volcker, will do nothing but get us into a deeper hole, and faster.
There is a solution to this debt-debacle that results from the private debt-money system.
If progressives can listen to and understand Dennis Kucinich's comments on the House floor last week here,

http://www.youtube.com/watch?v=AR2EtMteHCg&feature=channel_page00

we could possibly reverse not only the financial calamity that is the end game of debt-capitalism, but also restore the country to a sustainable debt-free future.
The real problem with progressive politics is that we do not have a clue about the monetary system, and the potential benefits of substantive reforms.
Monetary transformation.
Debt-free money.
Government-issue.
Franklin, Washington, Jefferson, Madison, Van Buren, Lincoln, Garfield.
All noble statesmen opposed to the private, quasi-central banking system of the day.
A monetary.economic revolution is ahead of us, if we can just comprehend our money system.
Visit monetary.org.
It's OUR money.

[mjc]

Andrew Jackson, the people's president, really started it, didn't he. But every president following him opposed it and "pet banks" died........for a while. We've had a president who seems to like special banks once again, but never thought Obama was going to follow in that path.

[Hiphopcrates]

Nothing to fear, the fox is guarding the hen house.

[unfoxworthy]

If, in fact, this additional bailout money goes down the same proverbial chute [as the first batch] with little improvement to the economy, then the new president will have expended a lion’s share of his domestic political capital. America is perched to watch their vote for change bear fruit. Any hint of this not being the case…will bring about a revolution.
The emotional tone Robert’s blog is, unfortunately America’s ambient attitude at present.
We are a country, numbed to the plight of others.
We don’t believe in providing healthcare to those who require it.
We don’t believe in securing our own future by investing in higher education.
We don’t believe in asserting that our public servants represent us. (The list is long.)
As Robert says, we are suckers. Let me add, we are gullible, passive, apathetic and incompetent.
We voted for Obama [for change].
This will not be Obama’s gov’t. This is a gov’t of the people, for the people, by the people…
Ain’t it time WE changed?

[TerrapinCB]

"We" have had to change. It's the US government that doesn't change. Both sides just back big money and get backed by big money.

[freelyb]

What a mess. Obama hooks up with someone who helped make this huge mess (Summers), but who still obviously doesn't know exactly what to do to fix it even if he were inclined to do so. In the face of this, Obama then threatens Congressional skepticism with a veto. Congress (including Obama, btw), having screwed the pooch once again with their gullibility at Bush's hands (blindly jumping into the bottomless TARP), also failed to understand the problem before they began "fixing" it, and didn't even implement the oversight they promised. Do citizens have any legal recourse in the face of such incompetency with our tax dollars? Seriously, do we? I think it's time to look into it. But who among the guilty would be willing to defend anyone who would cast the first stone? It's not just the pooch that's screwed...

[BARRISTER]

Plus ca change, plus c'est la memchose!