This is a transcript from the Democracy Now program's discussion on the proposed bailout. Absolute must read.
Sen. Bernie Sanders, Robert Scheer and Dean Baker on the Proposed $700 Billion Bailout of Wall Street, the Largest Government Bailout of Private Industry in US History
Here's an excerpt, with Robert Scheer, veteran journalist, syndicated columnist at the San Francisco Chronicle, and editor of the political website, Truthdig. He is the author of several books, most recently, The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America:
Scheer: Yeah, well, the point is, when Bush and McCain and Paulson, who was
head of Goldman Sachs before he was head of the Treasury, say they
don’t know how this happened, they designed this system. We had a
regulatory regime in place ever since the Great Depression to prevent
this kind of meltdown, and that said that stockbrokers, insurance
companies, banks, investment banks, commercial banks, could not merge.
And in 1999, they passed legislation, the Gramm-Leach-Bliley Act. Gramm
is the guy who McCain supported for president in ’96. He was co-chair
of his campaign until he complained about the whiners out there,
meaning the public. And that legislation is what caused this. It
allowed the swaps and everything else.
And then, in 2000, hours before the Christmas break, Gramm
introduced legislation. I’m holding it in my hand. This smoking gun is
available on the internet; you can read it. And what it said is that
the swaps is defined in the Financial Service Modernization Act,
meaning that instead of going into a bank and somebody said, “OK, we’ll
give you a loan, and we expect you to pay it over thirty years. We know
your house has the equity. We know you have the means to pay it”—that
was the traditional way—instead, they allowed these mergers, and as a
result, they could buy insurance on it, they could do these swaps, they
could do what they call hybrid instruments. And it is legislation that
was never discussed, was—never had hearings or anything, says that all
of this stuff is exempted from all previous regulation. The SEC cannot
regulate it, the Commodity Futures Board cannot regulate it.
So they gave these institutions, of which Goldman Sachs was
critical—so was Citigroup, where Robert Rubin, who was Clinton’s
Treasury secretary, he had also come from Goldman Sachs. And, by the
way, even though this is Republican-led, there were plenty of
Democrats, in fact, a majority of Democrats, who voted for this. And
Robert Rubin, who unfortunately is advising Barack Obama—I don’t know
how this guy can wake up and—you know, and not be embarrassed and how
he can appear on television—and Lawrence Summers, these are the two
guys in the Clinton administration who teamed up with Phil Gramm to
pass that atrocious legislation.
And now, you know, it seems to me, in terms of the bailout, why
don’t they do what Hillary Clinton said during the primaries: just put
a freeze on foreclosures? Start out with helping the homeowners and
say, “OK, we’re not going to foreclose your house for the next year.
We’re going to force the banks to work out reasonable payments. We’ll
try to help you hold on to it.” That would have stopped the bleeding
here much more effectively than throwing $700 billion at these bandits.
Transcript >>
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