Somehow Paulson has gone from "Our banking system is a safe and a sound one" (See You Know The Banking System Is Unsound When....) to Paulson telling Congress “That we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”
Inquiring minds may wish to consider a recap of things that have happened since Paulson made his "Our banking system is a safe and a sound one" speech.
- Paulson announced "Financial Institutions Must Be Allowed To Fail", arguably one of the most amazing financial lies in history.
- Fannie Mae and Freddie Mac were placed in Conservatorship putting taxpayers at risk to the tune of $200 Billion or more. Equity and preferred shareholders were wipe out while the treasury (taxpayer), guaranteed the agency bonds.
- Lehman went bankrupt after a long weekend poker party. See Fed Sponsored Poker Party Morphs Into "Old Maid" for more details.
- AIG was nationalized. The treasury took an 80% stake in AIG in return for $85 billion. Taxpayers are at risk of that $85 billion.
- Merrill Lynch (MER) merged with Bank of America (BAC) as noted in Another Shotgun Marriage: Bank of America and Merrill Lynch.
- 3 Month Treasury Yields Effectively Hit Zero in a systemic distrust of banks and money market funds.
- The Fed Intervenes In Money Markets with non-recourse funding of asset backed commercial paper.
- The US Taxpayer Becomes A Giant Dumpster For Illiquid Assets.
- In the biggest financial witch hunt in history the SEC banned short selling of financials. See Peak Insanity: SEC Plans to Temporarily Ban Short-Selling and Paulson's Shorting Ban Needs Revisions Already.
- Of course Congressional Leaders Are Stunned That Bernanke Finally Admits The Truth.
- Bush Administration Seeks "Dictatorial Power"
The implications are twofold.
1) Paulson and Bernanke are liars
2) Paulson and Bernanke are incompetent
There are no other choices except "both of the above"
Shouldn't Paulson and Bernanke have the obligation to explain how that happened, and most important what the Fed's role and Congress's role in that was?
Yet somehow Congress is supposed to rush through a package that is arguably unconstitutional, because two known liars and/or incompetents say there is an urgent need to do so.
Sadly, Congress is more concerned about getting something done quickly than getting something done right. In the corporate world one would expect to see overtime hours. Here we are in a global financial emergency and Congress is concerned about getting something done before recess.
Everyone Wants A Bailout
Mortgage lenders, banks, the auto industry, home builders, broker-dealers all are asking for handouts. Today I see Paulson saying Foreign banks may get help.
In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.Participation Not Voluntary
Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."
On “Fox News Sunday,” Paulson told Chris Wallace that he would resist the Democrats' desired limits on executive compensation.
"If we design it so it's punitive and institutions aren't going to participate, this won't work the way we need it to work," Paulson said. "Let's talk executive salaries: There have been excesses there. I agree with the American people. Pay should be for performance, not for failure. We've got work to do in that regard. We need to do that work. But we need this system to work. And so reforms need to come afterwards.
The proposed bill virtually give the Treasury dictatorial powers, yet Paulson has the gall to say
"If we design it so it's punitive and institutions aren't going to participate, this won't work the way we need it to work"!
That is yet another lie from Paulson.
Paulson resists calls for added help in bailout
It's interesting to note that Paulson resists calls for added help in bailout.
"The credit markets are still very fragile right now and frozen," Paulson said in an interview on NBC's Meet the Press. "We need to deal with this and deal with it quickly."Mother Of All Bailouts Is Correct
Paulson made the rounds of the television talk shows to stress the need for speed in getting the bailout package approved. The administration spent the weekend negotiating the details of the proposal with members of Congress with the expectation that it can be passed in the next week.
Paulson said that "it pains me tremendously to have the American taxpayer put in this position but it is better than the alternative."
Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said that what Congress was being asked to approve was the "mother of all bailouts" which Shelby said would end up costing more like $1 trillion rather than $700 billion when the costs of the government taking over mortgage giants Fannie Mae and Freddie Mac and insurance giant American International Group Inc. were added.
Notice that Paulson does not want Congress adding anything to the bill, yet he is willing to bailout foreign banks. In return for what?
What To Do
In Bush Administration Seeks "Dictatorial Power" I noted some actions you can take. After repeating the section, I wish to add to it. First a recap.
Contact Your Senator Today!Once Is Not Enough
It's time to contact your senator. Here is contact information for Senators of the 110th Congress.
Phone or Email your Senators today. Tell them in your own words
- Urge your senator to Filibuster any bailout legislation.
- Emphatically state you do not want a bailout of any kind for anyone.
- No Dictatorial power for Paulson or Bernanke
- Taxpayers should not have to bail out banks making bad loans
- Tell them that "The Fed" and Paulson are systemic risk".
Email AND Phone Senators Shelby, Bunning, Kyle, Ensign, Hagel
Whether Senator Shelby is your Senator or not, flood him with calls and emails asking for a filibuster and to stop the insanity. Senators Shelby, Bunning, Ensign, and Kyle might be sympathetic to the cause, based on past statements. I am taking a stab at Hagel.
Ask For A Filibuster
Please email and phone the following. Specifically ask for a filibuster and tell them to vote no to any bailout.
Tell them that anyone who votes for this bailout will never get your vote again.
Shelby, Richard C.- (R - AL)
110 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
Bunning, Jim- (R - KY)
316 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
Web Form: http://bunning.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm
Grassley, Chuck- (R - IA)
135 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
Web Form: grassley.senate.gov/contact.cfm#emailform
Kyl, Jon- (R - AZ)
730 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
Web Form: kyl.senate.gov/contact.cfm
Ensign, John- (R - NV)
Washington D.C. Office
119 Russell Senate Building
Washington, D.C. 20510
Phone: (202) 224-6244
Fax: (202) 228-2193
Web Form: ensign.senate.gov/forms/email_form.cfm
Hagel, Chuck (R - NE)
248 RUSSELL SENATE OFFICE BUILDING WASHINGTON DC 20510
Web Form: hagel.senate.gov/public/index.cfm?FuseAction=Contact.Home
Please email and phone both of your senators as well.
I want to emphasize that once is not enough. Here is what to do.
- Flood the senators with emails and phone calls.Tell them in no uncertain terms that if they vote for this bailout they will not get your vote, ever again.
- Send an email or call every day, preferably both.
- Put each message in your own words.
- Make the phone message sort and sweet.
- Use one of the following verbs: concerned, frightened, scared, afraid, mad rush to action
- Use one of the following themes: US dollar, unconstitutional, national debt, how do we pay for this?, printing money, lies, etc
- Vary each message so they do not all sound alike
I must be honest and state that this action is highly unlikely to work. However. It is the only shot we have.
Please read Phone And Fax Numbers For All US Senators; More On What To Do
Mike "Mish" Shedlock
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