Negotiations continue on Capitol Hill over the Bush administration’s plan to spend at least $700 billion to bailout the financial industry in what will become the largest corporate bailout in US history. As concern grew over the bailout, Wall Street witnessed one of its most volatile days ever. The stock market fell nearly 400 points, the price of oil shot up by a record $16 per barrel, and the dollar took its steepest one day drop since 2001. The Democratic leadership is pushing for tougher oversight over the bailout package and for the inclusion of assistance to homeowners facing foreclosure. But disagreements remain over whether the bailout should include limits on executive pay for banks that get bailed out. The White House is saying it opposes including any punitive measures in the bill.
Questions are also being raised over the legality of the Bush administration’s proposed bailout. Ross Sorkin of the New York Times writes Treasury Secretary Henry Paulson is asking for the financial equivalent of the PATRIOT Act. Sorkin writes that the proposed bill would give the Treasury Secretary "perhaps the most incredible powers ever bestowed on one person over the economic and financial life of the nation." Section 8 of Paulson’s plan states: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” Paulson, the former head of Goldman Sachs, is scheduled to testify today and tomorrow before House and Senate committees.
On the campaign trail, Barack Obama blamed the crisis in part on greed and irresponsibility on Wall Street.
Sen. Barack Obama: “They said they wanted to let the market run free, but instead they let it run wild, and in doing so, they trampled on our core values of fairness and balance and responsibility to one another. And as a result, we are facing a financial crisis as profound as anything that we’ve faced since the Great Depression. As a result, your jobs, your savings, your economic security are now at risk."
Senator John McCain has been campaigning to stop “multi-million dollar payouts to CEOs who have broken the public trust.” But on Monday, when asked on The Today Show about the compensation package that his senior economic adviser Carly Fiorina received after she was fired from Hewlett-Packard, McCain took a different stand.
Meredith Vieira, The Today Show: "But she left with a — I think it was a $45 million golden parachute, while 20,000 of her employees were laid off. She is an example of exactly the kind of person you say is at the root of the problem."
McCain: "I don’t think so."
Vieira: "The CEO — how can you say that?"
McCain: "Because I think she did a good job as CEO in many respects. I don’t know the details of her compensation package, but she’s one of many advisers that I have."
Vieira: "But she did get a $45 million golden parachute after being fired, while 20,000 of her employees were laid off."
McCain: "I have many of the people, and I do not know the details of what happened."
Economists estimate that the $700 billion bailout will cost every American $2,300. ABC News reports the bailout comes less than a year after Wall Street’s five biggest firms — Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley — paid a record $39 billion in bonuses to themselves. Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines. The bonuses paid by these five firms averaged over $200,000 per employee.
While Congress is preparing to bail out Wall Street, lawmakers are also expected to soon approve a $25 billion bailout package for US automakers. The bailout would come in the form of low-cost government loans.
A new poll by the Associated Press and Yahoo News has found that deep-seated racial misgivings could cost Barack Obama the White House if the election is close. The poll found one-third of white Democrats harbor negative views toward blacks. The polling suggests Obama would receive an estimated six percentage points more support if there were no racial prejudice.
The New York Times reports both Senators John McCain and Barack Obama have already set up transition teams so they will be ready to take up the reins of government if they win in November. Leading McCain’s transition team is William Timmons, a longtime Washington lobbyist whose clients have included the American Petroleum Institute and the mortgage company Freddie Mac. President Clinton’s former chief of staff John Podesta is heading up Obama’s team. Podesta is a former lobbyist and the president of the Center for American Progress.
With the first presidential debate just three days away, a coalition of groups are calling on the Commission on Presidential Debates to make public the secret debate contract negotiated by the Obama and McCain campaigns. The Commission has shut out all third party candidates from the debate. On Thursday, Ralph Nader’s campaign is sponsoring a National Day of Action to Open the Debates.
In other third party news, former Republican presidential candidate Ron Paul has endorsed Chuck Baldwin of the Constitution Party to be president.
In Iraq, the oil company Royal Dutch Shell has completed a multi-billion-dollar natural gas deal with the Iraqi government and opened an office at a secret location in Baghdad. Shell becomes the first foreign oil giant to open an office in Iraq in three decades. Shell was one of the original partners of the Iraq Petroleum Company before Saddam Hussein nationalized Iraq’s oil resources in the 1970s. Iraq’s Oil Minister Hussain al-Shahristani announced the deal with Shell.
Hussain al-Shahristani: “A delegation from Shell company headed by senior executive Linda Cook has visited us today to sign a deal for a joint venture between the Southern Gas Company and Shell. The deal includes the rehabilitation of gas facilities in Basra and constructing new facilities and also the capture of natural gas released as a byproduct of crude oil extraction in Basra province, which is being burnt now, regrettably"
In other Iraq news, a former Iraqi official told the Senate Democratic Policy Committee on Monday that more than $13 billion sent by the US for reconstruction projects in Iraq was wasted or stolen through elaborate fraud schemes.
US war resister Jeremy Hinzman and his family was granted a last-minute stay of deportation on Monday by a Canadian judge. Hinzman has been living in Canada since 2004, after he went AWOL to avoid being deployed to Iraq.
In Afghanistan, the US military has released an Afghan journalist who was held for eleven months in jail without charge. Jawed Ahmad was working as a videographer for the Canadian television network CTV when US forces detained him last October. The twenty-two-year-old journalist said US forces broke two of his ribs, deprived him of sleep and held him in a grave-like cell.
A federal court has ordered the Pentagon to release more photographs depicting the abuse of prisoners by US forces in Iraq and Afghanistan. The American Civil Liberties Union said the photographs will demonstrate that the abuse of prisoners held in US custody abroad was not confined to Abu Ghraib, but the result of policies adopted by high-ranking officials.
Pakistani troops and tribesmen reportedly opened fire on two US helicopters that crossed into the country from neighboring Afghanistan on Monday. This comes as reports emerge that the US, Afghanistan and Pakistan are discussing the creation of a joint military force to fight along the Afghan-Pakistani border.
Israel’s president Shimon Peres has asked Foreign Minister Tzipi Livni to form a new government in the wake of the resignation of Prime Minister Ehud Olmert over a corruption scandal. Livni said she aims to build a broad coalition of national unity.
Tzipi Livni: "During the talks I’ve had and in those I will hold, I’m calling on the parties to join a government headed by myself. I also call on the leader of the Likud party, Benjamin Netanyahu, to join a unity government led by myself in order to jointly deal with the urgent issues that he also knows we face."
The Inter-American Commission on Human Rights has condemned Venezuela’s decision to expel two senior officials from Human Rights Watch after the group issued a report criticizing Hugo Chavez’s human rights record. The group claimed that discrimination on political grounds has been a defining feature of the Chavez presidency.
In Somalia, at least forty-two people have died over the past two days in intense fighting as anti-government fighters battled Somali and Ethiopian troops in Mogadishu. On Monday, mortars hit a crowded market in the capital city, killing thirty. Fighting also erupted near the international airport and the presidential palace. An estimated 6,000 civilians have been killed in Somalia over the past year.
And the trial of Republican Senator Ted Stevens began on Monday. The Alaskan senator faces seven felony charges for receiving payments and gifts from the now-defunct oil services company VECO.
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