November 17, 2008
On the weekend, senator Jim Inhofe admitted Congress was told lies about the bailout of the financial system – now revealed as a giveaway to the bankers — and said Congress should take back what is left of the $700 billion “blank check” it gave the Treasury and its coterie of ex-Goldman Sachs manipulators.
“It is just outrageous that the American people don’t know that Congress doesn’t know how much money he (Henry Paulson) has given away to anyone,” Inhofe told Tulsa World. “It could be to his friends. It could be to anybody else. We don’t know. There is no way of knowing.”
In September, Fed chairman Ben Bernanke and Treasury secretary Henry Paulson promised to comply with congressional demands for transparency. A key provision of the bailout was independent oversight and stringent monitoring reports with fixed deadlines. In the time since the bill was passed on a short timeline and under threat of martial law, the newly created post of Inspector General has gone wanting, Congress has yet to nominate a five member oversight panel, and Bush has not submitted a name for confirmation as spelled out in the bill. According to the Houston Chronicle, the Congressional Budget Office “is struggling to hire people who can understand the intensely complicated financial work involved.”
As Inhofe suggests, Paulson and Bernanke have exploited this situation to give away billions to their banker friends. The original Treasury plan called for the purchase of mortgage-backed securities under auction protocols to be determined by the Office of Financial Stability. Paulson and crew promised to work through the Department of Housing and Urban Development with distressed homeowners in an effort to keep them in their homes and avoid foreclosure. Instead, Paulson and Bush wasted little time announcing that the Treasury would leave homeowners out in the cold and buy equity stakes in banks including Goldman Sachs Group, Inc, Morgan Stanley, J.P. MorganChase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Company, Bank of New York Mellon and State Street Corp and smaller banks. In addition, the bailout money was slated to go for banker bonuses and exorbitant compensation packages.
Last week, Neel Kashkari, a former Goldman Sachs VP, acting as Interim Assistant Treasury Secretary for Financial Stability, went before the House Oversight and Government Reform subcommittee on domestic policy to answer for this change in policy. “It’s very clear that Treasury cannot and will not make the effort to keep people in their homes,” declared Rep. Darrell Issa, a California Republican. Rep. Dennis Kucinich, D-Ohio, chairman of the panel, went further, stating that the Treasury Department had “abdicated its responsibility” to prevent home foreclosures and accused Paulson breaking with congressional intent and contradicting public assurances previously made by Paulson and his former Goldman Sachs cronies.
Paulson “was able to get this authority from Congress predicated on what he was going to do, and then he didn’t do it,” Inhofe said. “I have learned a long time ago. When they come up and say this has to be done and has to be done immediately, there is no other way of doing it, you have to sit back and take a deep breath and nine times out of 10 they are not telling the truth,” he said.
“Congress abdicated its constitutional responsibility by signing a truly blank check over to the Treasury Secretary,” Inhofe added. “However, the lame duck session of Congress offers us a tremendous opportunity to change course. We should take it.” Inhofe wants a provision requiring an affirmative vote by Congress before the bankers can get their hands on the remaining $350 billion of bailout money.
The senator, however, is not optimistic the banker giveaway can be reversed. He is uncertain how much support he has among his Republican colleagues, and admits Democrat leaders could block any plan to reign in the Treasury. Senate Majority Leader Harry Reid wants to use the upcoming lame duck session to to extend unemployment benefits and award multinational automotive corporations for their failures.