The Bush administration has announced a new plan to partially nationalize the US banking system by investing $250 billion in the country’s financial institutions. President Bush announced the move at the White House.
President Bush: “The federal government will use a portion of the $700 billion financial rescue plan to inject capital into banks by purchasing equity shares. This new capital will help healthy banks continue making loans to businesses and consumers, and this new capital will help struggling banks fill the hole created by losses during the financial crisis, so they can resume lending and help spur job creation and economic growth.”
Nine of the largest US banks will be forced to accept partial government ownership, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase. The government will insure deposits in non-interest-bearing accounts and certain types of bank debt. Treasury Secretary Henry Paulson said the step is necessary to revive the economy.
Treasury Secretary Henry Paulson: “Today, we are taking decisive actions to protect the US economy. We regret having to take these actions. Today’s actions are not what we ever wanted to do, but today’s actions are what we must do to restore confidence in our financial system.”
The latest bailout step comes amidst new disclosures of lavish executive compensation at failed Wall Street firms. The Times of London has revealed Lehman Brothers board members approved more than $100 million in bonuses to five top European and American executives just three days before the firm collapsed.
In other economic news, the White House has reported a record federal deficit of nearly $455 billion in fiscal 2008. That’s an increase of $162 billion over 2007. Economists are predicting an even higher number for fiscal year 2009, which began this month. Estimates say the deficit could reach as high as $1 trillion.
Campaigning in Ohio, Senator Barack Obama said he supported the latest banking bailout plan but with reservations.
Sen. Barack Obama: “I am concerned that — in the way that they structure this new mechanism. That we are cracking down on excessive CEO pay, that, I think, should be part of the deal. And I’m also concerned that taxpayers’ shares that they’re purchasing or they’re receiving as a consequence of this injection of equity is a good deal for taxpayers. I think that if taxpayers invest in Goldman Sachs, they shouldn’t get a worse deal than when Warren Buffett invests in Goldman Sachs.”
Obama and Republican rival Senator John McCain meet tonight at New York’s Hofstra University for their third and final debate. McCain unveiled new economic proposals at a campaign stop Tuesday in Pennsylvania.
Sen. John McCain: “We should also not penalize Americans who are forced to sell investments in today’s tough markets. I will increase the amount of capital losses from $3,000 to $15,000, which can be deducted from your ordinary income in tax years 2008 and 2009. And we will reduce the federal business tax rate from 35 percent — the second-highest in the world — to 25 percent. I’m also proposing today that for those who are between jobs, we eliminate all taxes on unemployment benefits. It is unclear to me why the government taxes money it has just sent you.”
McCain’s new tax breaks amount to $52 billion. Obama unveiled his own new economic proposals on Monday, a $60 billion plan that includes a ninety-day moratorium on most home foreclosures.
The McCain campaign, meanwhile, is facing new scrutiny over a top official’s ties to former Iraqi leader Saddam Hussein. The investigative journalist Murray Waas has revealed the head of McCain’s presidential transition team took part in a lobbying effort to lift the US-backed sanctions imposed on Iraq after the first Gulf War. The lobbyist, William Timmons, worked closely with two other lobbyists later convicted for acting as unregistered agents of Saddam Hussein’s government. Timmons helped the lobbyists on a deal that would have granted a contract to resell Iraqi oil. Timmons stood to share a $45 million windfall if the deal was approved. Timmons reportedly consulted on public talking points and lobbying strategies with top Iraqi officials, including former deputy Prime Minister Tariq Aziz.
The independent presidential hopeful Ralph Nader is in New York this week to promote a campaign to open the presidential debates to third party candidates. Speaking on Fox News, Nader also announced a rally tomorrow against the Wall Street bailout.
Ralph Nader: “Right now, people, working people, go into a store, and they pay six percent sales tax for necessities of life. A $100 million buy on a derivative of Exxon tomorrow, they don’t pay a cent sales tax. McCain and Obama have no guts. You know, they may have political courage in some ways, military courage, but they don’t have the moral courage, which is why we’re going to have a big rally on Wall Street October 16th of taxpayers, investors, pensioners and workers to confront Wall Street and, apropos Reagan and Berlin, we’re going to say, 'Tear down that wall.'”
Nader has been invited to take part in a third party presidential candidate debate this Sunday at New York’s Columbia University.
The Georgia death row prisoner Troy Anthony Davis has lost a Supreme Court appeal that could have spared his life. On Tuesday, the Court said it won’t hear Davis’s appeal of a death sentence for the 1989 killing of a police officer. The court gave Davis a last-minute reprieve less than two hours before his scheduled execution last month. Since the trial, seven of the nine non-police witnesses have recanted their testimony. There is no direct physical evidence tying Davis to the crime scene. And three witnesses claim another man later admitted to the killing. The court didn’t explain why it won’t hear Davis’s case. The ruling allows Georgia officials to obtain a new death warrant. Davis’s supporters are calling on the Georgia parole board to reconsider its own rejection of a new hearing.
President Bush has reasserted his administration’s refusal to abide by a congressional restriction on US attempts to control Iraq’s oil. On Tuesday, Bush issued a new signing statement that would allow him to ignore parts of the new military authorization act he signed into law. The New York Times reports Bush objected to one section of the bill barring attempts “to exercise United States control of the oil resources of Iraq.” Bush has declared similar exemptions to identical language within previous military authorization bills. In another signing statement, Bush declared the right to ignore sections of a bill meant to protect oversight at federal agencies. Bush rejected a provision that would allow inspectors general the right to their own counsel instead of politically appointed agency attorneys. He also rejected a section that would require the White House to tell lawmakers what each inspector general said about the administration’s budget proposals for their offices. Bush has issued more than 1,100 signing statements — nearly double all previous presidents combined.
Newly revealed documents show the Bush administration explicitly approved the use of interrogation techniques including waterboarding as early as 2003. The Washington Post reports the White House issued secret memos in 2003 and 2004 after intelligence officials voiced concern they would come under public scrutiny for their treatment of foreign prisoners. The content of the memos remains classified.
Meanwhile, the Justice Department has dropped a series of allegations against a Guantanamo Bay prisoner who’s said he was tortured in US custody. In May, military prosecutors accused British resident Binyam Mohammed of plotting to explode a radioactive “dirty bomb,” blow up apartment buildings here and release cyanide gas in nightclubs. But prosecutors now say they’re dropping the charges. Mohammed’s defense attorneys say the Justice Department is withdrawing the allegations to avoid having to turn over evidence Mohammed was abused. The lawyers say interrogators obtained Mohammed’s false confession through torture at a Morocco prison.
Meanwhile, the Cuban government has renewed calls for the closure of the US prison at Guantanamo Bay. Cuban Foreign Minister Felipe Perez Roque made the appeal on a visit to Spain. Roque says in addition to human rights concerns, the Guantanamo prison is a major barrier to Cuba’s economic growth by choking off one of its main ports. Roque also criticized the bailout of Wall Street and said Cuba is trying to pursue an independent path.
Cuban Foreign Minister Felipe Perez Roque: “We don’t intend to desert or abandon our road towards the construction of a socialist society, just, inclusive, all the time more and more democratic and more open, with more opportunities all the time. In this road, we have to know what not to copy. For example, we shouldn’t copy this model of speculative capitalism and financial. God forbid we do in Cuba the system dictated by Wall Street. We don’t want to imitate that.”
And in Canada, voters have re-elected Prime Minister Stephen Harper’s Conservative Party to the most seats in parliament. Harper has been a staunch ally of President Bush. Despite the win, Harper’s Conservatives again fell short of picking up a parliamentary majority, meaning it will again have to form a minority government. The center-left New Democratic Party picked up eight seats, from twenty-nine to thirty-seven.