Is Henry Paulson Stupid or A Robber Baron Doppleganger?

That is a rhetorical question because the overall effect of what Henry Paulson has done so far benefits the financial market and makes it pretty clear that he is not stupid. What it makes just as clear is that Paulson is not concerned with the common good of the people of America. If he is concerned, as he claims, about the taxpayers:

Why is it that Britain’s Gordon Brown got voting rights at the banks that they bailed out, seats on the boards, and 12 percent dividends for UK taxpayers, but Hank Paulson got no voting rights, no seats on the board, and only 5 percent for US taxpayers?

Why is it that Gordon Brown got it in writing that the banks had to start lending the money they got, but Henry Paulson, didn’t get it in writing, and the banks are not lending?

Why is it that we know investment in high risk complex financial instruments created this economic meltdown but Henry Paulson is not telling banks that the bailout money is contingent on their agreement to desist from such risky investments?

Why is it that we had to bailout some banks because they were too big to be allowed to fail, and then Henry Paulson pushed through a tax windfall for banks that encourages them to buy other banks which creates even bigger banks?

Why is it that Treasury is supposed to be handling the bailout but is actually outsourcing the job to the Bank of New York Mellon, essentially privatizing our Treasury?

Why is it that the taxpayers were promised transparency in the bailout but rather than making information available, things like the amount paid to the Bank of New York Mellon for handling the mechanics of the bailout and the hourly billing rate of the law firm contracted for the equity deals, are blacked out in documents available to the public?

Why is it that the law firm hired to advise Treasury on the equity deals isn’t a public interest law firm but is instead a banker’s law firm that has represented seven of the nine banks that got equity deals in the first stage of Paulson’s plan, the same deals on which they were advising Treasury?

Why is it that this banker’s law firm, Simpson Thacher & Bartlett, is allowed to continue its representation of the banks receiving equity deals, not in those deals, but in other areas of the bailout where they may apply, with the law firm policing its conflict of interests internally?

Why is it that the taxpayers were promised oversight but six weeks and $290 billion into the bailout process, the special inspector has just been named, still needs congressional approval plus a staff, and the first monitoring report is past due?

We need to stop Paulson and his cronies now – not in January but now. Some of what they have done is legally questionable and can be a starting point for forcing them to halt and possibly for undoing some of the deals they have made. The Democrats in Congress must stop worrying about what might happen if they make waves and take a hard look at what has already happened while they cowered in fear.

President-elect Obama needs to be sure that his new Secretary of the Treasury is not someone who will pick up where Paulson leaves off. We do not need a Larry Summers or Paul Volker who would be Wall Street’s new BFF.

Our new President needs to appoint someone who genuinely puts country first; Obama needs to be courageous enough to ride out the fit the Stock Market will throw at the appointment and then get on with the business of a real recovery.

There is worse to come if we do not use the same power we used to elect Obama to see that Paulson and his successor cannot sell us down the river. Because Paulson is already talking about the next phase of his plan that will address entitlement reform; Social Security, Medicare, and Medicaid, which have long been targets of Paulson and his ilk. They will fix it so we cannot afford to continue these programs, which help our most vulnerable citizens, all in the name of saving the economy.

We have been ruled by fear long enough. We allowed ourselves to be rushed into a war in fear of weapons of mass destruction, we continue to fight two wars in fear of terrorists, we were rushed into this bailout and now we are allowing ourselves to be held hostage in fear of furthering the economic decline.

Come on people! We are brighter than that, stronger than that, capable of more than that. Now is the time to show what we are made of and take our country back from the money grabbers while we still have something to take back.

And for the cynics who would shrug this off as an impossible task; cynicism may provide a sense of smugness in being above it all but it never changed anything or helped anyone.


Information in this blog came from two articles by Naomi Klein:
In Praise of a Rocky Transition (The Nation, December 1, 2008)
The Bailout Profiteers (Rolling Stone, October 31, 2008)