Editilla, those links you sent weren’t in the can can; but, once I had time to read them, it was clear they merited a post so others could read them as well.
By way of introduction that few, if any readers need, the Editilla’s guest is an author – and, as noted below, a journalist and internationally syndicated columnist.
Naomi Klein is an award-winning journalist, syndicated columnist and author of the New York Times and international bestseller, The Shock Doctrine: The Rise of Disaster Capitalism. Published worldwide in September 2007, The Shock Doctrine is set to be translated into 20 languages to date. The six minute companion film, created by Alfonso Cuaron, director of Children of Men, was an Official Selection of the 2007 Venice and Toronto International Film Festivals and was a viral phenomenon, downloaded over a million times…
Here’s a sample from each of the three links Editilla sent today – starting with The Bailout Profiteer published on Halloween and still frightening, if not more so, here at Thanksgiving.
…As soon as the bailout was announced, it became clear that Treasury officials would hire outsiders to perform their jobs for them — at a profit. Private companies wanting to help manage the bailout were given just two days to apply for massive, multiyear contracts. Since it was such a mad rush — after all, the entire economy was about to implode — there was no time for an open bidding process. Nor was there time to draft rigorous rules to make sure that those applying don’t have serious conflicts of interest. Instead, applicants were asked to disclose their conflicts and to explain — and this is not a joke — their “philosophy in fulfilling your duty to the Treasury and the U.S. taxpayer in light of your proprietary interests and those of other clients.” In other words, an open invitation to bullshit about how much they love their country and how they can be trusted to regulate themselves.
The first major contract to be awarded in the bailout was for legal advice — and the choice Treasury made was Halliburton-esque in its audacity…the bidder who won the contract — Simpson Thacher & Bartlett…[is] a Wall Street heavy hitter…The first stage of the plan involves buying stakes in nine of the country’s top banks. Incredibly, Simpson Thacher has represented seven of the nine: JPMorgan, Bank of New York Mellon, Bank of America, Citigroup, Morgan Stanley, Goldman Sachs and Merrill Lynch…
Secretary Paulson promised that the banks won’t just “hoard” the money — they will quickly “deploy it” through the economy in the form of badly needed loans. There is just one hitch: Neither Paulson nor Simpson Thacher got that “deploy” part in writing — nor did they put in place any mechanism to require the banks to spend their taxpayer billions. Apparently, the part about lending the money to homeowners and small businesses was sort of implied...
No wonder it took just one hour for Paulson to convince all nine CEOs to accept his offer — less than seven minutes per bank. Not even the firms’ own lawyers could have drafted a sweeter deal.
The day after it met with the nation’s top banks, Treasury announced that it had selected the firm that would receive the juiciest contract of all: that of “master custodian.” The winning company will be to the bailout what Halliburton is to the military: the contractor of contractors…It will purchase toxic debts from Wall Street, service them and auction them off in the future — a so-called “end-to-end process.” The contract is for a minimum of three years.
Seventy firms applied for the gig; the winner was Bank of New York Mellon. Describing the scope of the megacontract, bank president Gerald Hassell said, “It’s the ultimate outsourcing — because the Federal Reserve and the Treasury do not have the mechanics to run the entire program, and we’re essentially the general contractor across the entire program. It’s going to cross our entire company.”
…Shortly after receiving the contract, Hassell told investors that his institution is now well-positioned to profit from the market meltdown. “There’s a lot of new business that’s going on even in this chaotic marketplace,” he said, “and so some of those things have been very positive to us.” Just how positive, we don’t know, because Treasury has blacked out the 10 lines of the “master custodian” contract that reveal how much Bank of New York Mellon will be paid. Though Treasury says it will release the information eventually, the secrecy goes beyond anything the Bush administration attempted in Iraq. Even Halliburton’s dodgy contracts came with price tags attached…
The real money at stake in the bailout lies not in payment for the work but in how the work is done. Think about it: If you’re the one selling your debts to the government, wouldn’t you also want to help decide which debts are eligible and how much they’re worth? “The financial firms with assets to sell are in many instances the same firms the Treasury will rely on to value and manage the assets it is buying,” The New York Times observed. “That is an invitation for these firms to set the price too high or to indulge in other mischief at the taxpayers’ expense.”
Bank of New York Mellon has a bad record for mischief...According to its most recent earnings report, Bank of New York Mellon holds $1.2 billion in subprime mortgage securities. That means that in addition to the $3 billion it will receive as part of the equity program, it will also be eligible to apply for taxpayer money from the program it is being paid to administer. Neither the bank nor Treasury would comment on this direct conflict of interest.
On the same day that he allocated the first $125 billion to the banks, Secretary Paulson announced the largest federal budget deficit in U.S. history. Buried in his statement was a preview of the next phase of the financial disaster. The deficit numbers, he declared, reinforce the need to “pursue policies that promote economic growth and fiscal responsibility, and address entitlement reform.” He was referring to Americans who feel entitled to receive Social Security in their old age and Medicaid when they are sick. Those programs, Paulson implied, might not be able to survive the budget crisis he is currently creating for the next administration.
…Unless we get a good deal, there will be nothing left…Because here is what George Bush and Henry Paulson are hoping we won’t figure out: When a society no longer has enough money to pay for its most pressing needs, there are worse things than discovering you own the banks. (all emphasis added)
Real Change Depends on Stopping the Bailout Profiteers was published on November 4, 2008.
To understand the meaning of the U.S. election results, it is worth looking back to the moment when everything changed for the Obama campaign. It was, without question, the moment when the economic crisis hit Wall Street.
Up to that point, things weren’t looking all that good for Barack Obama. The Democratic National Convention barely delivered a bump, while the appointment of Sara Palin seemed to have shifted the momentum decisively over to John McCain.
Then, Fannie Mae and Freddie Mac failed, followed by insurance giant AIG, then Lehman Brothers. It was in this moment of economic vertigo that Obama found a new language. With tremendous clarity, he turned his campaign into a referendum into the deregulation and trickle down policies that have dominated mainstream economic discourse since Ronald Reagan…
The question now is whether Obama will have the courage to take the ideas that won him this election and turn them into policy…Predictably, Obama is already coming under enormous pressure…All day on the business networks, we hear that, in light of the economic crisis, corporations need lower taxes, and fewer regulations—in other words, more of the same…
Now that the election has been won, this movement’s new missions should be clear: loudly holding Obama to his campaign promises, and letting the Democrats know that there will be consequences for betrayal.
The first order of business—and one that cannot wait until inauguration—must be halting the robbery-in-progress known as the “economic bailout.”
The third link from Editilla connects to The New Trough
The Wall Street bailout looks a lot like Iraq — a “free-fraud zone” where private contractors cash in on the mess they helped create.
…Under cover of an emergency, Treasury is rapidly turning into an economic Green Zone, overrun with private companies collecting lucrative contracts. Fittingly, one of the first to line up at the new trough was none other than the law firm of Bracewell & Giuliani — yes, that Giuliani. The firm’s chairman, Patrick Oxford, could scarcely conceal his glee over the prospect of cashing in on the bailout. “This one,” he told reporters, “is very, very big.” At least four times bigger, in fact, than the post-9/11 homeland-security bubble, from which Giuliani and his various outfits have profited so extravagantly. Even bigger, potentially, than the price tag for the Iraq War itself…
Thank you for the links, Editilla, always good to see you here and at the New Orleans Ladder; and, Ms. Klein, while I’m certain we’ll see you again here at SLABBED, I trust our readers will follow these direct links to you, read more and more often.