Bailout Bait And Switch
Henry Paulson (left) and the rest of the gang duped Congress ... again.
A little while back, we wrote about a teenie-weenie bit of lawyer-speak that the Bush administration managed to slip into the Wall Street bailout bill while Congress wasn’t watching. That little nugget allowed banks to spend their bailout billions buying other banks so they could use them as tax shelters. In other words, it took a crisis caused by too many “too big to fail” institutions and encouraged even more institutions to become … too big to fail–with our tax dollars. Not only that, it allowed them to use our tax dollars to avoid paying taxes.
And as it turns out, that wasn’t the only legislative legerdemain that Hank Paulson and his crew pulled on the slack-jawed yokels up on Capitol Hill.
You know that whole thing about limiting absurdly large salaries and golden parachutes for Wall Street executives who took bailout money? The thing that triumphant members of Congress bragged about after the bailout bill was passed, including a certain Senator who was running for President at the time? Well … let’s just say, not too many VPs or CEOs are going to have to worry about selling their summer homes in Montauk anytime soon, or their ski chalets in Vail, either. From the Washington Post:
Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.
But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.
Paulson told everybody he was going to use the $700 billion to buy up worthless subprime mortgage bonds. He swore up and down that this was how he was going to save Wall Street. Then, a short while after the bill was passed, he changed his mind and decided to nationalize our banking system instead. And thanks to that single sentence, “insisted on” by the Bush administration, Paulson’s switcheroo meant all the fat-cats got to keep their eight or nine figure paychecks. Only now, once again, we’re the ones signing those checks.
Gee … it’s almost like Paulson planned to dupe Congress all along so he could help his friends in the financial industry keep their yachts and penthouses. But that would be just too much wouldn’t it? Even for him, that would be just too slippery, too dastardly, right? He can’t be that brazenly villainous, can he?
Yep. He can. At the very bottom of the article, we find out that he did, in fact, go there:
Paulson repeatedly told lawmakers that he did not plan to use bailout funds to inject capital directly into financial institutions. Privately, however, his staff was developing plans to do just that, Paulson acknowledged in an interview.
So, to sum up, as he was telling Congress and the American people he would use the $700 billion for one specific purpose, all the while he was planning to use it for an entirely different purpose. Not only that, he and his gang were ‘insisting on’ language that just so happened to save millions for Paulson’s former cronies on Wall Street thanks to this premeditated reversal.
We have three questions. 1. Why did members of Congress give in to this provision? 2. Why didn’t they see through this sham and realize they were being sold a bill of goods, again?
3. Last but not least, why is this bombshell that Paulson knowingly deceived Congress buried at the bottom of the story?!
Once again, it appears the Washington Post–like the other beltway media outfits–is working overtime to protect our corrupt system. Here you have a government official, placed in charge of billions in public money, lying to Congress about how he plans to spend it. Does that seem like headline material to anyone else?
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