Gee, and I thought I might be pushing the envelope on September 28 when I expressed concern that the "bailout" with the made-up $700 billion price tag that turned into the pork-loaded "bailout" with the made-up $850 billion price tag "blackmail" (though "extortion" may be the more appropriate word).
It is clear that this is indeed the case, at least twice over. First, there were the threats made by the Treasury Secretary, the President, and the Fed Chairman warning of a banking Armageddon if Congress didn't pass the bill.
Now there's clear evidence, reported with stunning casualness by CNBC, that Paulson & Co. threatened the big banks in some way to force them to "accept" Uncle Sam's preferred equity investments:
Even if they didn't want it?
Watch the video; the answer is "yes" -- thereby ensuring that the government has a stake in all the major banks. Here are key excerpts (all from the video's first two minutes):
Host Dylan Ratigan: Well we all know that obscene amounts of risk (were) taken inside of the banking system, leaving some banks crippled, some banks frozen, and other banks with huge opportunities.
Uh, many of the banks didn't want to be tainted with the government bailout funds because they didn't want to be mistaken for a fool when they actually felt that they were the smart one that didn't do it.
Well Hank Paulson said "The heck with that." He stuck all of them with some of the bailout money. And he said "Listen, we're going to reset the clock here and move forward." Charlie, how are the banks that felt they basically didn't commit the crime, as it were, of excess or reckless risk, uh, respond to the fact that even they will be stuck with this capital?
Charlie Gasparino: Well y'know they were all kind of stupid to some extent .....
..... the Treasury Secretary Hank Paulson put all these egos in the room, and basically put guns to their heads, forcing them to take the money to bolster the banking system.
Some of the firms say they didn't want the cash, but it's pretty clear that all of them did need to take the cash, given the continued upheaval in the banking system that crushed shares last week of Morgan as well as Goldman Sachs and just about everybody else.
So this is essentially, uh, Dylan, a case where, y'know, you can deny you have any problems. Even the best-capitalized banks have problems. They own this stuff. And Paulson at one point said, "Listen, if you don't want it, it doesn't matter, gun to your head, you gotta take it."
Ratigan: Yeah, whether you think you're sick or not, you're taking the medicine.
Gasparino: Because you're sick anyway.
Ratigan: Exactly.
So what did Paulson threaten to do if they said "no"? (Yes I know he wasn't holding real guns to their heads. Come on now.) We don't know, but whatever it is, the opening sections of the pork-loaded "bailout" bill with the made-up $850 billion price tag probably gave him the power to make the threats credible.
It was very unsettling to see the two CNBC reporters basically smile and smirk their way through the opening segment of the clip, with what I saw as an air of insufferable "we know it all" arrogance. Further, a larger group including Ratigan and Gasparino all seemed to agree that the solution for jump-starting the economy that Paulson has embarked on is Keynesian, and not supply side oriented. One of the panelists frequently invoked the name of "Andrew" Hamilton when explaining how nationalizing the banks might actually be a good thing.
This "bailout" was originally advertised as being targeted towards troubled loan situations, principally mortgages. Instead, Paulson, Bernanke, and Bush have turned it into a de facto, no good deed goes unpunished (i.e., responsible lending) tool for partial nationalization.
How many Congresspersons, or presidential candidates, thought this was what they were voting for, or that this is what the people wanted? Two weekends ago, I wrote that the whole saga shows that the whole saga proves that Washington doesn't really care what we think.
Where's the proof that this was needed?
Where's the outrage?
Finally, why is the threat element of the story only news on CNBC? The closest thing I could find came from a lightly-carried Associated Press story, which said that:
Executives of the country’s biggest banks were summoned to a remarkable meeting at the Treasury Department on Monday to be briefed on the plan. Paulson basically told the bank CEOs that they had to accept the government stock purchases for the good of the U.S. economy.
________________________ (Fill in your socialist of choice) would be proud, both of the move and the whitewashing that accompanied it.
Here's a final irony: The page containing the CNBC story has an embedded link to a Bankrate.com column called "Five Money Mistakes Even Smart People Make."
Mistake Number 5 is "Being out of touch."
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
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Comments Policy
Uh oh, Tom Blumer
October 15, 2008 - 14:25 ET by Mica the MagnificentHow many Congresspersons, or presidential candidates, thought this was what they were voting for, or that this is what the people wanted
Bush lied, capitalism died.
The line the libs will use under an Obama administration to cover up our rise to a complete socialist America.
Well if that's where it falls....
October 15, 2008 - 14:27 ET by Tom Blumer..... that's where it falls.
Bush and Paulson are making the bed of their legacy. That doesn't mean we have to sleep in it.
Unfortunately, it does.
October 15, 2008 - 15:05 ET by motherbeltShouldn't but unfortunately, it does. They will enact this "crap sandwich" (h/t Michelle Malkin) and then leave town with every American holding the bag.
I saw where they had taken
October 15, 2008 - 14:34 ET by Chris NormanI saw where they had taken Dylan Ratigan's show, Fast Money, off the CNBC schedule last week. Have they canceled it or relaunched it as Fast Bankruptcy?
McNotObama '08
Forced Socialism
October 15, 2008 - 14:35 ET by Jo5329Wells Fargo just bought my bank (Wachvoia) and was up today after the markets closed. They don't have the issues other banks have, but yet are forced down the throat a bail out they didn't need. Can they just turn around and give the money back? I understand banks have 5 years to pay back the bail out money, so why not just give it back in say a week?
Anyone ?
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"A government big enough to give you everything you want is a government big enough to take from you everything you have. " - President Gerald Ford, Presidential
You bank with ol'
October 15, 2008 - 14:49 ET by Chris NormanYou bank with ol' Walkalloverya? :)
This morning, The guys on CNBC were discussing that, by some measures, Wells Fargo wasn't doing as - er - well - as they claim. Not understanding much of these intricacies, I have no way of knowing or even relating these measurements in any kind of detail.
McNotObama '08
Wachovia
October 15, 2008 - 14:56 ET by Jo5329Yup. Hubby was with them when we married eons ago, so I switched because of the need for a joint account (he was active duty). We've had no issues with them at all. I even worked for them in a way for a few months when their insurance division bought the agency I worked for, then they sold it to another local agency.
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"A government big enough to give you everything you want is a government big enough to take from you everything you have. " - President Gerald Ford, Presidential
When I lived in North
October 15, 2008 - 15:04 ET by Chris NormanWhen I lived in North Carolina, I banked with BB&T, but all the locals called Wachovia by that nickname.
McNotObama '08
Need more helpful adults in government
October 15, 2008 - 14:46 ET by Lame CherryA few years ago I happened to read Gen. William Tecumseh Sherman's autobiography and in it he explained his entire life in complete detail.
What most people do not know is that after the 1849 Gold Rush there was a major banking problem in California. Sherman was at the time stationed there and working with the banks. It was worse than the situation now, but he helped fix the California economy.
Sherman stated though something which sort of troubled me as a Republican (someone who worships a Republic for a government.)
He stated that the world should be governed by those select few on top who know what to do and the masses can just live their lives.
His ego twin respectfully was Gen. George Patton who in his memoirs repeated Sherman's words almost exactly coming from the Depression and the war in Europe experience that some few should lead and the many should just go baa'ing about their business.
In light of the current "democracy" mess which is the plague of the world due to the fact America is now run by committee which is often thwarted by self centered gluteous maxiumus openings like Pelosi and Obama, I do agree with Sec. Paulson in his assessment of taking charge and fixing this situation which was caused by nation rapists who are not ever going to behave, but will plunder until they can not any more.
I know Sec. Paulson is talking to Paul Volcker and everyone in finance on the right and the left. I would prefer Volcker would come home from Obama's Stalin camp, but the point in this is a direct plea to Sec. Paulson.
Mr. Sec., You know very well that Nancy Pelosi destroyed the bailout and delayed it a second week to manipulate the election for Barack Obama.
Mr. Sec., You know very well who the nation rapists are in this. You had the intelligence to cut off short selling as you knew they were doing this in the Rothschild, Rockefeller, Chicago syndicates etc... to profit off of American misfortune, to fund this Obama scheme and to steal from small investors.
Mr. Sec., You know very well the markets have been deliberately plunged before all 3 Obama debates to help him in the polls.
Sec. Paulson, this is economic terrorism equal to the short selling on 9 11 by the same economic robber barons staging this for Obama.
It is your sworn duty Sec. Paulson to protect this nation and as Sec. of the Treasury, your duty in the executive controls the entire Secret Service which oversees money fraud.
Several trillion dollars have been extorted from the American government and trillions more from small investors. It is time you in your agency convene a grand jury and indict the principles behind this.
I would suggest that new regulations of Hamiliton bank charters could keep the Rothschilds and Rockefeller groups from this nation rape if they would loose their banks and be threatened with imprisonment. In some ways this nation needs these robber barons to continue our finance, put them on parole and make them honest.
BUT sir, they throw to you Warren Buffett, George Soros etc.... in your seizing their loot and you redistribute that wealth to all American families.
Sir, you also indict Nancy Pelosi, Barack Obama, Chris Dodd, Kent Conrad, Tim Johnson and all those Democrats who took donations in this and whoever else to be made an example of according to the Patriot Act as this has been economic terrorism and these crooks and flunkies must be punished.
You put a gun to the banker's heads to clean up this situation. Well put the gavel on the heads of these crooks and really put this sitatuation in order as a 3rd world economic rape is coming under Barack Obama after he rapes 2 trillion dollars out of the American poor enslaving them in bogus health care and a trillion dollar grant to the poor.
I believe Sec. Paulson you will find also that Barack Obama sent US funds and was making policy for the Marxists in Kenya to overthrow that government when he was elected. That is high crimes against the United States and a foreign government under your juridiction.
Do your job Sec. Paulson. Do your job!
agtG
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
Don't like it ... just don't like it ....
October 15, 2008 - 14:55 ET by KC MulvilleThis just smells. I'm not an economist or a banker, but every time they explain these things, bells go off in my head. Spider-sense is tingling. Pick your metaphor.
No one (outside of mere charity) gives money without strings attached. I can understand the unwise lenders being forced to accept, just to get enough cash to get moving again, but why impose those strings on lenders who don't have bad debts? I'm very worried about the strings on that cash. It made sense with bad lenders, but I don't understand why the government would want to control good lenders. Wouldn't the government want to leave the good lenders alone, and save the money that would have gone to them?
This is loan shark logic. They're imposing loans. What a racket that is! At least the mob waits for poor suckers to come to them on their own initiative. Here it looks like the loan sharks are forcing innocent bystanders to take loans they don't want.
I don't understand why the
October 15, 2008 - 15:09 ET by motherbeltI don't understand why the government would want to control good lenders.
You're kidding, right KC?
Right
October 15, 2008 - 16:31 ET by KC MulvilleGive me credit, I am from Philly. I may not know banking, but I know enough about the rackets to see one. LOLSomebody's got to make Paulson explain himself. Just to get it on the record. This is why we got rid of monarchy. By the way, Paulson's a Democrat, right?
Yes KC...last I heard he
October 15, 2008 - 16:58 ET by bigtimerYes KC...last I heard he was still a democrat.
"America isn't the problem...America is the solution." ~ Rush Limbaugh
Negotiations?
October 15, 2008 - 15:35 ET by Copperhead RidgeWe'll make an offer you can't refuse.
Isn't government grand?
Thank you Tom for this
October 15, 2008 - 16:04 ET by bigtimerThank you Tom for this information....I heard a little bit about this very thing on Rush today...he didn't go into to it, because he just saw/heard this too and said he didn't know if this was true....oh boy...
Anyway, you can bet he will be getting into this in more depth too...
I have been furious at Congress and McCain, the President, Paulson, Bernanke all of them, but more than any of the people that infuriated me about all of this on a daily basis are the talking heads...they insisted on this, as if they know what the heck they are talking about for the most part...I am speaking of the majority of them, there are some I like, but Cavuto is my favorite, I can't catch him all the time, but I wonder what he has said today regarding this blackmail for nationalizing our banks ect...
Anyway, thanks once again...and once again I am furious..I heard out of the nine bankers there was one hold-out but he even had to sign the paper that was prepared for them before the arrived in the meeting.
"America isn't the problem...America is the solution." ~ Rush Limbaugh
Two words I never thought I'd hear spoken in this country....
October 15, 2008 - 18:58 ET by Tailgunner..."Nationalization" and "Expropriation".
NOLI PUGNARE ME OCCIDERE
The two of them make me
October 15, 2008 - 20:04 ET by zfThe two of them make me sick. Bunch of no-it-alls. If those banks who didn't need the money had fought for it they would have cried "corporate welfare". Instead the banks refused and those two have the nerve to call them "egos" for doing the right thing and not taking the handout. And then they have the arrogance to pretend they know those companies better than their own leaders and make asinine statements like "Even the best-capitalized banks have problems," "they were all kind of stupid, " and "they all needed to take the cash." The answer to all three is no, the best-capitalized banks don't have problems (they is why they are the best capitalized, dolts) no, not all of them were "kind of stupid" and no, not all of them needed to take the cash. And they completely ignore how the "stupid" ones had their hands forced to make those stupid decisions by the government in the first place.
*They* are the ones with the egos, Gaspiratis and the appropiately named Ratigan. How would they like it if their orginization was the number one company in the world, but they had a "problem" that one show had the lowest ratings on TV and the government decided that meant they had "problems" and needed to be taken over? Asses.
If I understand it correctly....
October 16, 2008 - 04:27 ET by Tailgunner...the banks weren't 'forced' to take the money...the government forced these banks to sell stock to them. That's pure expropriation on top of nationalization.
NOLI PUGNARE ME OCCIDERE
Bush and Paulson should
October 15, 2008 - 20:40 ET by nadadhimmiBush and Paulson should both be tried for financial treason against the United States. This action was nothing less than a socialist takeover by force of the US economy. The oligarcy thinks they are omnipotent, I submit, they are not as long as the 2nd Amendment exists. It may well come to the people using force to protect themselves against the dictatorial Federal gov't.
CNBC says Paulson "put a
October 15, 2008 - 20:45 ET by nadadhimmiCNBC says Paulson "put a gun to the heads" of the banks to force them into this socialist coup. Perhaps Paulson will discover what it's like to have a gun put to HIS head, figuratively speaking only of course, lol.