The truth behind the Wall Street bail-out
Dear Senator Christopher Dodd,
As chairman of the Senate Banking Committee, you proudly announced yesterday that all parties had reached a “fundamental agreement” on the principles of a deal to bailout Wall Street to the tune of $700 billion and claimed “we are prepared to act expeditiously … and send a message to the markets.” This is all very dramatic language, but the substance behind this media grab has not yet come through. The newspaper headlines today suggest that a deal is far from done, but the pressure to produce a workable, acceptable plan is immense. However, all the furore has rather clevely let you and several other people off the hook – until now.
The critics of the proposed bailout broadly fall into one of three camps. There are those who feel that the plan is simply too vague, which is undoubtedly is at present. Others think that Wall Street created this mess and should therefore get itself out if it, a position that it is easy to empathise with. Some are still refusing to accept government intervention on this phenomenal scale – calling the proposal ”financial socialism” and “un-American”. Having said that, the newspapers have not shown much interest in you and the other members of the Senate Banking Committee who are leading the charge to secure the bailout. Luckily for me, one of my highly esteemed blogging colleages Ambush Predator dig a little digging and dug up some absolutely astonishing numbers that bring the credibility of the entire bailout plan into question.
Allowt me to explain myself in the simplest possible terms – you are corrupt. To suggest that the Senate Banking Committee has ‘vested interests’ in the bailout would be the biggest understatement that I’ve ever made on this blog.
The above picture is of the members of the Senate Banking Committee, taken yesterday. From left to right, let me now present a list of those members who have received campaign donations from Freddie Mac and Fannie Mae since 1989:
Sen. Kent Conrad (D-ND) $64,491
Sen. Judd Gregg (R-NH) $0
Sen. Bob Corker (R-TN) $7,750
Rep. Spencer Bachus (R-AL) $103,300
Sen. Jack Reed (D-RI) $78,250
Rep. Barney Frank (D-MA) $42,350
You $165,400
Sen. Charles Schumer (D-NY) $24,250
Sen. Robert Bennett (R-UT) $107,999
So, in short, the people supposed to be acting in the best interests of the American economy and the American people have received hundreds of thousands of dollars from the very organisations that you are trying to lavish with $700 billion. In fact, current members of Congress have received a total of $4.8 million from Freddie and Fannie since 1989, which goes some way to explaining why so many American politicians are so desperate to push through the bailout.
And it gets worse: 28 members of Congress had up to $1.7 million of their own money invested in the same two companies last year (and possibly this year as well), either in stocks or bonds. The stocks are now worthless but the bonds certainly are not. The list of those who have recently owned stock or bonds in Freddie and Fannie include Sen. Kent Conrad ($15,000 worth) and Sen. Charles Schumer ($30,000) – both members of the Senate Banking Committee.
And it gets worse still. Barack Obama has received $126,349 from Freddie and Fannie while John McCain, who is so desperate to support the bailout, also had up to $10,000 invested in the two companies, most of which was in bonds and is therefore still worth a considerable amount to him.
My attitude towards people like you is very simple – you are scum. You are the kind of scum that would not survive in this country. Imagine if Mervyn King from the Bank of England was revealed to hold stock in Northern Rock before it was bailed out by UK taxpayers. He would become the most wanted men in the whole country. The fact that you are straining so hard to get the bailout through Congress appears to have little to do with what is in the best interests of the US and world economy while the astonishing lack of detail in the proposals is clearly not going to impress anyone (and is likely to make them more suspicious, with good reason). I have no doubt that the bailout will go through before weekend deadline because with this many crooks involved from both parties, it was never going to fail.
Yours sincerely,
A.Tory
Witanagemot Blogs
Oh, no digging required on my part – the link came from a comment thread at Protein Wisdom (can’t remember which one).
It’s been invaluable for a real US-centric look at the crisis, and the factors that led up to it. It’s pretty bipartisan on where blame lies too, some Repubs come in for a hammering for going along with it all…
Well it looks like the blame for this mess lies firmly in both camps, so thanks for the info.
I find it horrifying that a financial system can be so economically and morally bankrupt at the same time.
This is such a scandal, I agree.
There’s a few people who need to make their mind up if personal responsibility applies to the rich as well as the poor (and I’m saying this as a libertarian – I don’t blame the left for having a field-day over this)!
This whole saga is playing into the Left’s hands, which is why McCain is desperate to talk about a cross-party consensus to prevent Obama from having a field day. Personal responsibility is certainly a fundamental part of this, but no individuals seems to be getting any blame.
get a grip. the only thing that surprised me is how small the donations were. you are talking about a 20 year horizon. Obama taken over 2 years maybe but McCain $10,000 vs his reputed wifes $100m fortune. that is bs
Did you read Dominic Lawson? Although I generally find him obnoxious (tempered with not taking him too seriously as he’s such an obvious wind up merchant) he scored today:
http://tinyurl.com/4phjtb
Phil, I agree that the sums may not appear vast, but these are just donations from two organisations – don’t you start to wonder how many more similar ‘donations’ have been made?
I think this is the biggest rip off in the history of the USA
They say if we don’t bail them (who every that is) out then we will hit rock bottm. Hell, I been at rock bottom. And you know what, when your at rock bottom you have something to stand on. And when you have something to stand on then you can stand up and make something for yourself.
NO HAND OUT
NO BAIL OUT
How about a free market? Is a free market a new idea? I just don’t get it.
Mad as hell about government and it giving away my hard earned money.
Mike
Excellent stuff. This is why you are essential reading.
Your best post so far , brilliant ,and there was I wondering if you were losing your mojo a bit .
“This whole saga is playing into the Left’s hands, which is why McCain is desperate to talk about a cross-party consensus to prevent Obama from having a field day”
Yes and here too it is exceedingly important that we do not stop a silly and dangerous slide into protectinism and a new Nationalisation disaster. This is precisely where the British Conservative Party has been at its best moderating the mood of the day with its instinct that in any system there is value and we should keep it .It is just as possible to interpret this problem and due to over regulation and unreal markets as to free markets systems .
Anyway great stuff Bravo
Oops.. Post now resubmitted with slightly less ‘industrial’ language..
Some good points, but the $ 700 bn is surely related to ‘public limited corporations’, and NOT the now state-backed Fannie Mae and Freddie Mac ?
Or does the fact that FM*2 were ‘corporations’ before ‘conservatorship’ kicked in, means that they are involved in the bailout ?? Maybe I’m being thick, but I thought the whole point of, in effect, taking FM*2 in public ownership was to draw a line under that problem.
And when that wasn’t enough, they had to come up with ANOTHER plan to sort out ‘the rest’ of the problem ?? Maybe that is not the case, and I don’t resile from your view that this is a ‘foul-up’ of the first degree by these people on the Senate Banking Committe, but I think you may be firing your ammo at the wrong person.
The real villain of the piece for me is Phil Gramm who championed the reckless rush to de-regulate, which is now coming back to bite the Americans on the ‘derriere’. .
What does Freddie Mac and Fannie Mae have to do with the $700bn bailout? Answer – nothing. Fannie and Freddie are done, that money has gone already. McCain has had $116,000 from Fannie and Freddie’s directors and federal lobbyists. Whereas Obama’s money has come from the ordinary employees of Freddie and Fannie in small denominations as the FEC filings show (freely available to search on the web). The Mervyn King comparison has absolutely no relevance at all. You’d have to be talking about Ben Bernanke compared to Mervyn King. Dodds analogy would probably be to John McFall chairman of the Treasury select committee, though he has no real power. However that is beside the point because this is how the US system works. Just about every politician on every committee receives money from groups that have interests covered by the committees and their members. Make a case for the whole system being corrupt but don’t single out Dodd when on the scale of US political corruption he is one of the least corrupt politicians and a good man and public servant to boot IMO. The only thing that changed between the agreement between Bush, Democrats and the GOP on the modified bill and it all falling apart was the arrival of McCain. He deliberately spiked the whole thing so that he could showboat after his suspension stunt. Paulson’s plan was vague amounting to only 3 pages but the day after Dodd brought out his proposed bill which was 44 pages long including among other things judicial and legislative oversight as well as staggering the money as needed – currently bill is only giving $350bn and holding the rest in reserve should Paulson make a case for the extra money.
Bedd and Doug, apologies for giving the impression that Freddie and Fannie would be receiving this $700 billion, as you are right to say this bailout is not specifically aimed at them.
However, this post is about one set of firms and the scale of financial ’support’ they have given to the people now charged with bailing out their economic sector – and my underlying point is that this is clearly not a ‘one off’ and this is just one small part of the donations that have been received from organisations right in the thick of this mess.
For example, Obama and McCain have both received over $22 million from finance / insurance / real estate ‘donations’ during their 2008 campaign, and you’re trying to tell me that has nothing to do with their support of this bailout and will not influence them one bit? Please.
http://www.opensecrets.org/industries/recips.php?cycle=2008&ind=F
Dig around the Open Secrets blog and you’ll see that my point is entirely vindicated almost everywhere you look. For example, the 1999 Financial Services Modernization Act reveals that campaign contributions “may have influenced the votes of politicians who, a decade later, are now grappling with the implosion of the giant banks they helped to foster.” Those members of Congress who supported lifting Depression-era restrictions on commercial banks, investment banks and insurance companies received more than twice as much money from those interests than did those lawmakers who opposed the measure:
http://www.opensecrets.org/news/2008/09/money-and-votes-aligned-in-con.html
I’m happy to accept that my post only touches the tip of the financial iceberg that the US economy has already crashed into, but if you think that Dodd and co. are showing all their cards then you are clearly mistaken.
I still think there is a common misconception about political donations. Obama perhaps for the first time has a massive donor base of ordinary folk who give small denominations. Simply looking at the totals from particular sectors doesn’t represent this fact. The vast majority of Obama’s money comes from ordinary employees who state their employer and their position for the FEC submissions. If you look a the positions of Obama’s donors you’ll see they are janitors, cleaners, receptionists, office workers, sales people, etc. These people do not have a say in the policies of the companies they work for. However if you look at McCain’s submissions you will see the many chairmen, CEOs, CFOs, directors and federal lobbyists of the same companies. Obama certainly has had money from these people but if we’re making comparisons then McCain receives vastly more in contributions from the leaders of some of these companies than Obama does.
(from the FEC/NYT)
G. T. Boisi, Director, Freddie Mac – McCain $70,100, Obama $0
A. M. D’Amato, former Senator, Freddie Mac lobbyist – McCain $30,800, Obama $0
W. M. Lewis, Director, Freddie Mac – McCain $0, Obama $4600
H. M. Allison, President, Fannie Mae, former McCain (2000) finance director, McCain $0, Obama $2300
B. Gaines, Director, Fannie Mae – McCain $0, Obama $2300
J. P. Kenney, Director, Freddie Mac – McCain $2300, Obama $0
H. P. Swygert, Director, Fannie Mae – McCain $1000, Obama $1000
R. R. Glauber, Director, Freddie Mac – McCain $0, Obama $1000
D. H. Mudd, outgoing President, Fannie Mae – McCain $1000, Obama $0
J. C. Sites, Director, Fannie Mae – McCain $1000, Obama $0
L. Freeh, former FBI Director, Director, Fannie Mae – McCain $200, Obama $0
29 lobbyists, others – McCain $63,500, Obama $4,800
Total McCain $169,000, Obama $16,000
I think if people don’t look at this distinction then you basically come to the point where you’d have to ban everyone with a job giving political donations just in case the candidate is smeared by an association with a company, even if it is only the janitor who donated.
Send this link to others: http://Tinyurl.com/BailoutTruth
Presidential candidate Ralph Nader has a good video about the wall street bailout, I’ll play you a short clip and also a clip of Chomsky talking about capitalism in the real world .
Nader is right, the bailout is yet another example of socialism for the rich which has been the game that’s always been played.
I recommend this CD of Noam Chomsky talking at Harvard in 96.
Chomsky explains that the free market theory sold to the public is just a fantasy. He shows how in the real world, different rules apply to the rich. the rich make sure they have the nanny state to take care of themselves. We are being played for fools. Let’s get the word out. Send this link to others: http://Tinyurl.com/BailoutTruth
Never thought I’d say this, but I am ashamed to be an “American”.