The House is set to vote today on a $700 billion emergency bailout plan for the financial industry. The proposed legislation was forged during a marathon negotiating session over the weekend between lawmakers from both parties and Treasury Secretary Henry Paulson. The 110-page bill would authorize Paulson to initiate what is likely to become the biggest government bailout in US history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
JUAN GONZALEZ: The House is set to vote today on a $700 billion emergency bailout plan for the financial industry. The proposed legislation was forged during a marathon negotiating session over the weekend between lawmakers from both parties and Treasury Secretary Henry Paulson. The 110-page bill would authorize Paulson to initiate what is likely to become the biggest government bailout in US history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates.
While the legislation creates multiple levels of congressional oversight, Paulson would be granted broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them. The measure would also require federal officials to rein in excessive compensation for corporate executives who participate in the bailout.
Money for the program would be released in segments, with the Treasury Secretary receiving $250 billion immediately. Paulson has said he expects to spend about $50 billion a month on the program.
AMY GOODMAN: The Senate could take up the bill by Wednesday. The financial package looms as a final piece of business before lawmakers leave to campaign for the November elections.
Just before this broadcast, I caught up with Democratic Congress member Dennis Kucinich of Ohio. He was just headed to the House floor. I asked him about his thoughts on the bailout plan.
REP. DENNIS KUCINICH: This is a copy of the bill which will provide for a $700 billion bailout of Wall Street. It has provisions in it where it talks about helping homeowners, but when you read the fine print, you see it has language like "may" instead of "shall" and “encouraging” instead of “mandating” help for the millions of homeowners who are worried right now about whether they’re going to lose their home. There’s no help for them in this.
So what we have here is a rescue plan that essentially gives all the speculators a bailout and puts the bad debts in the custody of the government. The president of the Dallas Federal Reserve Bank has said that this plan could create a fiscal chasm, says that the problem isn’t tight monetary policy, it’s the reckless behavior of some of these investors who have now found themselves in a position where a government bailout is going to help reward their bad behavior.
AMY GOODMAN: Is it any better than when it was first introduced by the Treasury Secretary, by Henry Paulson?
REP. DENNIS KUCINICH: Well, you know, that implies that you would accept the underlying premise. I reject the underlying premise that we needed this bill. And as a matter of fact, that we’re putting this up before an adjournment in an election season shows that Congress is being put under extraordinary pressure to bail out Wall Street. We haven’t looked at any alternatives, Amy. This is — you know, it isn’t as though, if you had a liquidity crisis, that — you know, a real one — that you’d start to look at all the alternatives. We haven’t done that. We have a bill here, a bill of more than a hundred pages, that we haven’t had a single hearing on the bill, you know — on the concept, yes, on what Paulson and Bernanke asked for initially. But, you know, we need to have hearings on this. There’s 400 economists and three Nobel Prize-winning economists who have said, “Whoa, wait a minute! What are you doing? Why are you rushing this?” You know, this thing doesn’t smell right, frankly.
AMY GOODMAN: What do you think has to happen right now?
REP. DENNIS KUCINICH: Well, you know, Congress better get ready with a plan B. If this thing goes down, we need to find a way to help Wall Street pay for its own problems. You can do that with a 20 — .25 percent stock transfer tax, cancellation of dividends. You know, make the shareholders and the investors have to pay for the funny business that was going on on Wall Street. Why make the taxpayers pay? You know, the very underlying idea of this needs to be challenged, and frankly, there hasn’t been enough of that going on.
Well, what we have is a transfer of wealth, actually. It’s a continuation of a transfer of wealth. This whole government has become nothing more than a big machine that transfers the wealth upwards with our tax policies, our energy policies, with this fiscal policies, with the war. All the wealth of the country goes from the pockets of the people into the hands of a few. This is a very dangerous moment. You know, it’s the biggest amount of injection of capital by the government in a single time since the New Deal. And frankly, there is no trickle down here. There’s just rewarding bad behavior.
AMY GOODMAN: It sounds like it was mainly the House Republicans who balked, who revolted on Friday. Yet, you and a number of your colleagues are joining them. Do you believe this will pass today?
REP. DENNIS KUCINICH: It’s going to be a very close vote. And I don’t see this as a partisan issue, by the way. I mean, in a way, the debate that tries to make it a partisan issue is a diversion. This is really whether or not people will side with Main Street in a struggle with Wall Street, because, you know, this is not about left or right. This is about up or down, and it’s about the color green.
And frankly, Wall Street is — has put itself on a trajectory with now we have almost a quadrillion — half a quadrillion dollars of derivatives that are out there, floating out there. People have said that if this is intended to be a fix, it’s a joke, on one hand. On the other hand, who’s paying for it? Why are we rushing this? I don’t — you know, and everything about this, I think, is unacceptable.
AMY GOODMAN: Congressman Kucinich, what happens if this doesn’t pass?
REP. DENNIS KUCINICH: Well, that’s exactly right. I mean, we need to be ready with plan B, which helps Wall Street restrain some of this bad conduct, which immediately, you know, puts — looks at some of the issues of liquidity that have to do with the policies of the Fed. We had a former head of the FDIC tell a group of congressmen yesterday that the Bush administration has been going around the last few weeks, actually, so tightening up on the practices of banks that they’re forcing them to have bigger reserves, which in a way would, you know, kind of create — help to create the kind of tight money policies that we’re saying we’re trying to alleviate with this bill. So, you know, there needs to be a deeper look at this.
It seems to me there’s a possibility that this crisis has a little bit of manufacture to it. And that really concerns me, because we haven’t had enough time to look at this in an in-depth way, to analyze the impact of it on the economy, to see if it’s going to do anything about a recession that we’re obviously headed into, to see if it’s going to handle the underlying concerns on Wall Street about the speculation and a lack of regulation. The bill doesn’t, by the way, address anything about the speculation, anything about the lack of regulation. The SEC has failed. The Fed has failed. And we’re essentially telling all the same actors, “Go for it. You know, here’s another opportunity,” except this time it’s with taxpayers’ money.
AMY GOODMAN: We’ll come back to Democratic Congress member Dennis Kucinich after break.
AMY GOODMAN: We go back to my interview with Democratic Congress member Dennis Kucinich. I spoke to him just before the broadcast. He was headed to the House floor, and I asked him what he said on the House floor earlier, comparing the Congress to the board of Goldman Sachs.
REP. DENNIS KUCINICH: I said we’re the Congress of the United States; we’re not the board of Goldman Sachs. Goldman Sachs is struggling to survive. And, you know, their former chief is now the head of the US Treasury. He’s in a position to be able to direct assets in a way that would help enhance his own financial standing. I mean, that’s a clear conflict of interest. And, you know, that’s something that needs to be said. You know, why are we permitting the person who has essentially been in a position where he’s managed assets that — you know, many of which are now in trouble, and he can come back and help clear the books for a lot of his friends? This is wrong. It’s fundamentally wrong. And, you know, it’s one of the things that adds a degree of stench to this.
AMY GOODMAN: What concessions do you think right now are critical? For example, what do you think should happen to homeowners who have already been foreclosed on or are facing foreclosure?
REP. DENNIS KUCINICH: Well, you know, there’s been a number of suggestions about the homeowners, and, you know, one is by an economist by the name of Nouriel Roubini, who says that we should come up with a plan that’s very similar to what’s happened in the ’30s, where you have a home loan process called the HOLC, and this would enable homeowners to actually be protected, that people wouldn’t go out of their — wouldn’t find themselves in a position where they’re going to lose their homes. It’s called the Home Owners’ Mortgage Enterprise. And this would be a means of helping — several steps that would help assure that we address directly the issue of people losing their homes, often through no fault of their own, and finding themselves in a position where they’re not getting any help from the government, because one of the real conceits of this bill is that it has the word "homeowner" all over it, but when you look deeper at the fine print of the text, it does not provide any direct aid for homeowners and doesn’t even require that the government set itself on a path to help homeowners. This is not about homeowners. This bill is about bailing out Wall Street speculators with $700 billion of taxpayers’ money.
AMY GOODMAN: Federal Reserve Chair Ben Bernanke warned lawmakers that an imminent meltdown in financial markets threatens to destroy the wealth and jobs of millions of Americans, if this isn’t passed.
REP. DENNIS KUCINICH: Well, there’s many ways that you can stimulate the economy. One is that you can have massive infrastructure spending. You could get that started right away. It would have to go far beyond what Congress passed the other day. If you want to spend money into circulation and move the money in the economy, you can do that through spending on things that are tangible: bridges, water systems, sewer system. You can stimulate the economy by having a national healthcare plan. I mean, that would take a little bit longer to set up, but that would be a huge break for all these businesses that are having difficulties.
There are many ways that we could address this, but the plan that they’ve put to us, they said this is the only option. Isn’t it interesting that the only plan that we get up — you know, for an up or down vote is one that gives a complete bailout to Wall Street without any restraints or protections for the investors who might come into this now.
AMY GOODMAN: Congressman Kucinich, can you explain how it is that the Democrats are in charge, yet the Democrats back down on their demand to give bankruptcy judges authority to alter the terms of mortgages for homeowners facing foreclosure, that Democrats also failed in their attempt to steer a portion of any government profits from the package to affordable housing programs?
REP. DENNIS KUCINICH: Well, I mean, those are two of the most glaring deficiencies in this bill. And I would maintain there was never any intention to — you know, well, many members of Congress had the intention of helping people who were in foreclosure. You know, this — Wall Street doesn’t want to do that. Wall Street wants to grab whatever change they can and equity that’s left in these properties. So —-
AMY GOODMAN: Right, but the Democrats are in charge of this.
REP. DENNIS KUCINICH: Right. You know, I’ll tell you something that we were told in our caucus. We were told that our presidential candidate, when the negotiations started at the White House, said that he didn’t want this in this bill. Now, that’s what we were told.
AMY GOODMAN: You were told that Barack Obama did not want this in the bill?
REP. DENNIS KUCINICH: That he didn’t want the bankruptcy provisions in the bill. Now, you know, that’s what we were told. And I don’t understand why he would say that, if he did say that. And I think that there is a -— the fact that we didn’t put bankruptcy provisions in, that actually we removed any hope for judges to do any loan modifications or any forbearance. There’s no moratorium on mortgage foreclosures in here. So, who’s getting — who’s really getting helped by this bill? This is a bailout, pure and simple, of Wall Street interests who have been involved in speculation.
And I don’t, for the life of me, understand why this is going to do anything to address the underlying problems in the economy, which actually had to do with the recklessness. This is what the president of the Federal Reserve Bank in Dallas said, that — and, you know, I might have the actual quote here. Listen to this quote: he said, "The seizures and convulsions we’ve experienced in the debt and equity markets have been the consequences of a sustained orgy of excess and reckless behavior, not a too tight monetary policy." This is the Dallas Federal Reserve Bank president, Richard Fisher.
So, you know, we’re getting stampeded here to vote for something that doesn’t help homeowners, that doesn’t do anything about foreclosures, that doesn’t help those people who have been in bankruptcy and are looking for a way out. As a matter of fact, it made sure they can’t get out. So, who’s this for? It’s for speculators. It’s to play a game that provides some temporary help in the market, and, you know, you might see an uptick today if this passes the House. On the other hand, if it doesn’t, we need to be ready to find a way for Wall Street to address its problems without having to tap the increasingly diminishing resources of the federal taxpayers.
AMY GOODMAN: And the issue of oversight, Congressman Kucinich? Before, there was Section 8, saying there was no executive or legislative oversight here.
REP. DENNIS KUCINICH: Well, you know, the word "oversight" has new meaning here. You know, oversight could mean "I overlooked something." And frankly, the Securities and Exchange Commission looked the other way while all these — all this fast-paced trading was going in derivatives and derivatives of derivatives. We have about a four — $500 trillion, almost a half a quadrillion dollars of derivatives floating out there that no one really understands how that’s going to affect the underlying economy when some of these things start imploding.
You know, I think that — I think we’re looking at a situation here where it is precisely the lack of regulation and the lack of oversight by the administration that has caused this. Congress is going to have hearings next month, but frankly, we should be having hearings now, before we pass a bill. I mean, it’s just upside-down that you have hearings about the underlying problem after you pass a bill, because you have hearings first, you do the analysis, and then you come up with a fix that can protect investors, strengthen the economy.
We should be concerned about the strength of the FDIC. We’re told that there’s more than a hundred banks that are in trouble right now and could collapse. We have to make sure depositors’ money is protected. This bill doesn’t have anything to do with that.
AMY GOODMAN: The issue of corporate compensation? According to the Institute for Policy Studies, chief executives of large US companies made an average of $10.5 million last year, 344 times the pay of the average worker.
REP. DENNIS KUCINICH: Well, this is really a fundamental issue in our society. Again, it’s all about how the wealth accelerates to the top and how work is not respected or rewarded for its own intrinsic value. We’ve really moved, you know. We’ve made a transition in our economy from industrial capitalism to finance capitalism. And with this debt-based economy that we have, where we keep — this public and private debt keeps exploding, as it has under — as it did under Alan Greenspan, quadrupling in a period of twenty years, we see ourselves in a position where the debt just keeps building and building and building, and we’re calling that economic progress. It is not.
We need to challenge again the underlying assumptions about a debt-based economy, about whether or not we should revisit the 1913 Federal Reserve Act, which has an unfortunately privatized monetary system and created a system which includes banks having the ability to create money almost out of thin air with a fractional reserve. We have to look at the implications of that, maybe put the Federal Reserve under the Treasury and have the Treasury really be responsive to the interests of the American people and keeping the economy going.
You know, we’re looking at the potential here for some positive changes, if we address them directly. But what this bill does, unfortunately, it just kind of helps things keep going until the next trillion-dollar crisis, which is coming in a few months when the Alt-A or jumbo mortgages, which are being reset in ’09 and 2010, will find their maximum financial stress on marketplaces. So I think that you have to realize that this — what we’re doing today is not going to forestall a recession, it is not going to solve the problem of a collapse of mortgages, it’s not going to help homeowners.
When all is said and done and the jeweler’s eye is applied to this bill, this bill is about Wall Street. And unfortunately, you know, Goldman Sachs, with their man now as the Secretary of the Treasury, is going to be able to have some of its policies escape scrutiny. And this is probably a way to keep them afloat, I’m sure. Well, you know, I don’t want anybody to go down or out of business, but it seems to me that when the Secretary of the Treasury has massive holdings in Goldman Sachs and he’s going to be in a position of being able to direct investments and buy out bad investments, I think that we could easily conclude what that would do for his former firm.
AMY GOODMAN: Democratic Congress member Dennis Kucinich. He’s voting against the bailout today.