The Other Plot to Wreck America

By GottaLaff

Frank Rich:

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses. [...]

Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldman’s Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.

If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Street’s status quo largely intact. That’s the ticking-bomb scenario that truly imperils us all.

Please read the whole thing here.

Arizona police: Military must prep for unrest; IMF warns of economic riots

By GottaLaff

Martial law much? Via CLG:

'Widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis.'

Ariz. police say they are prepared as War College warns military must prep for unrest

IMF warns of economic riots 17 Dec 2008 A new report by the U.S. Army War College talks about the possibility of Pentagon resources and troops being used should the economic crisis lead to civil unrest, such as protests against businesses and government or runs on beleaguered banks. "Widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security," said the War College report. The study says economic collapse, terrorism and loss of legal order are among possible domestic shocks that might require military action within the U.S. U.S. Sen. James Inhofe, R-Okla., and U.S. Rep. Brad Sherman, D-Calif., both said U.S. Treasury Secretary Henry Paulson brought up a worst-case scenario as he pushed for the Wall Street bailout in September. Paulson, former Goldman Sachs CEO, said that might even require a declaration of martial law, the two noted.

No, that's not disturbing at all. In fact, it's as reassuring as this was.

Newt Gingrich on Gramm-pa's Big Choice: Separate from Bush or lose

By GottaLaff

Newt Gingrich, in a word:

His advice: break with Paulson-Bush or die...

Read it here.

Um, Newt. It's too late. He's stuck to Bush like Rich Lowry on IWRC* Palin.

Bush III, Cheney II.

*"In What Respect, Charlie?"

Paulson to Hire Private Contractors to Handle Bailout Billions

By GottaLaff

Via CLG:

Paulson to Hire Private Contractors to Handle Bailout Billions --U.S. Treasury to Hire Asset Management Firms to Handle Bailout 03 Oct 2008 The U.S. plans to hire five to 10 asset-management firms as Secretary Henry Paulson establishes the government's new office for handling the financial bailout, a Treasury official said. The department will also add about two dozen new employees, a mix of bankers, lawyers, accountants and others, the official said today on condition of anonymity. Some of the Treasury's new employees will be on the government payroll, while others will be contractors, the official said.

Pelosi and Paulson blame Republicans

By GottaLaff

This speaks for itself:

The New York Times highlights the defining moment of yesterday's White House meeting on the bank bailout bill when Treasury Secretary Hank Paulson "got down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to 'blow it up' by withdrawing her party's support for the package over what Ms. Pelosi derided as a Republican betrayal."

Said Pelosi: "I didn't know you were Catholic. It's not me blowing this up, it's the Republicans."

Paulson sighed, "I know. I know."

VIDEO-- Jim McDermott: "We have a new King... King Henry" Paulson

By GottaLaff

Democratic representative form Washington state, Jim McDermott, suh-naps:

Mr Speaker,

The people in Washington State are very troubled by the fact that King George has been disposed of by King Henry.

We picked up Newsweek magazine today and we have a new King... King Henry?

We're supposed to give him 700 billion dollars of our money. He doesn't want any review. He wants to be able to do whatever he wants with it. He doesn't want any Congressional oversight. And worst of all, the new king is just like the old king: He doesn't want any sacrifice.

He says, "Oh we can't threaten the salares of the investment bankers who drove us into a ditch. We can't get anyone to pay for this."

"This is the third time we've done it with this bunch. First the war, that didn't get paid for. Then the tax cuts, that didn't get paid for, and now King Henry takes over to distribute 700 billion dollars. He's going to be there for four months. And in four months he will make deals and then he'll go out and he'll be able to catch a pass he threw to himself."

Nancy Pelosi not signing on to Paulson's power grab

By GottaLaff

This is a little more like it. Pelosi:

“Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers’ interests. The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.

“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.

“As we proceed to deal with this crisis, this is clear recognition that the party is over for the Bush Administration’s anything goes, failed economic policies that have damaged our economy, undermined the middle class and further pointed out the need for a New Direction.”

H/t: Firedoglake

Paulson’s Blank Check

By GottaLaff

See if this makes you as jumpy as it made me.

Via Firedoglake:

No one who foresaw the crisis, such as Krugman or Stiglitz, is involved in making the plan to fix it.

The man overseeing the bailout is the ex-CEO of Goldman Sachs, a Wall Street Company. He helped cause the crisis.

Paulson helped obtain the SEC exemption which allowed brokerages to increase leverage to 60:1 from 12:1.

The money is Paulson's to use for buying commercial and residential mortgages and mortgaged backed securities as he chooses. No one has any oversight over him, and he can pay any price he wants to, including face amount of the debt.

Courts cannot review his decisions, not can any regulators. He has to report to Congress once every six months.

He gets 700 Billion dollars to use as he sees fit, looking after the taxpayer is a "consideration" not a requirement.

Bet on that 700 Billion dollars being gone before January 20, 2009. Bet on Treasury asking for more.

That is $2,324 dollars per man, woman and child in America

There is no bailout for mortgage holders. Banks get bailed out, but not ordinary people.

Banks and brokerages made record profits these last eight years. Ordinary Americans barely broke even.

In 2007 Wall Street paid itself bonuses equal to the raises of 80 million Americans.

Banks bailed out by this plan need make no changes in how they do business.

Banks bailed out need not replace the management which drove them into insolvency.

Shareholders and bondholders of such banks do not lose a cent.

The securities which caused this crisis are still allowed.

Expect the 700 billion dollars to increase inflation, especially in oil.

Bush is asking you to trust his administration with 700 billion after spending 580 billion on the Iraq war. Do you trust him?

The text of the bill is here. As I've said before, I glaze over at this stuff, but from what I've read here, I'm not thrilled. I wasn't to begin with, but this is an easy-to-understand list, and it has increased my not-thrilledness.

H/t: One of our Anonymi

Pelosi orders wide Wall Street probe

By GottaLaff

Dust off that microscope, Nance:

House Speaker Nancy Pelosi has ordered a broad, swift investigation of Wall Street and will demand testimony from Bush administration officials and captains of finance, congressional officials said.

House Democrats plan to aggressively look at the administration’s role in the meltdown over the weekend and to explore further regulation and government structures that would be taken up under the new president.

And the trouble could run even deeper than has been clear so far — and get more expensive for the U.S. government. The Associated Press reports that the fund established to insure bank deposits is dwindling, with the taxpayer as the lender of last resort.

"The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said," The AP reported.

The hearings ordered by Pelosi will take place over the next few weeks, the officials said. Treasury Secretary Henry Paulson, who regularly appears on Capitol Hill, will be called to testify as part of the investigation.

As the main event, Rep. Henry Waxman (D-Calif.), chairman of the House oversight committee, wrote to Richard Fuld, chief executive of the imploded Lehman Brothers, to ask him to appear on Capitol Hill on Sept. 25.

The first presidential debate is September 26. Interesting juxtaposition.