As the Bush administration intensifies its pressure for Congress to quickly approve a $700 billion bailout of the financial industry, we get reaction from Independent presidential candidate and consumer advocate Ralph Nader. Nader calls Democratic claims of White House concessions "wish fulfillment" and says the bailout might not be needed in the first place. [includes rush transcript]
JUAN GONZALEZ: The Bush administration is intensifying its pressure on Congress to quickly approve a $700 billion bailout of the financial industry, despite warnings from economists and some governmental officials that the bailout could worsen the financial crisis.
Last night, President Bush held a prime-time address to warn the nation’s entire economy is in danger if the bailout is not approved as soon as possible.
PRESIDENT GEORGE W. BUSH: The government’s top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold. More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession. Fellow citizens, we must not let this happen.
JUAN GONZALEZ: [Wednesday] night’s address was the first time in his presidency that Bush delivered a prime-time speech devoted exclusively to the economy. His dire scenario about the state of the economy stood in stark contrast to his comments at his last press conference two months ago.
PRESIDENT GEORGE W. BUSH: I think the system basically is sound. I truly do. And I understand there’s a lot of nervousness, and — but the economy is growing, productivity is high, trade’s up. People are working. It’s not as good as we would like, but — and to the extent that we find weakness, we’ll move. That’s one thing about this administration: we’re not afraid to making tough decisions.
AMY GOODMAN: Today, the President is holding an emergency summit at the White House with both John McCain and Barack Obama, as well as top leaders for Congress. The Wall Street Journal reports Democratic leaders are hoping to nail down details of the bailout measure early today.
On Wednesday, McCain said he would suspend his campaign to deal with the financial crisis. He called on Obama to postpone their debate Friday night, saying he would only attend if Congress approves a bailout package before then. Obama said the debate in Oxford, Mississippi at Ole Miss should go on as planned.
We’re joined on the phone right now by a presidential candidate who was not invited to Friday’s debate, Independent candidate Ralph Nader. The longtime consumer advocate has been a vocal critic of the Wall Street bailout.
Ralph Nader, welcome to Democracy Now! First, let’s start off with John McCain announcing that he is going to suspend his campaign and wants the debate cancelled.
RALPH NADER: Well, I think Senator McCain is showboating. I mean, what’s going on in Washington and Congress now is the Bush administration is trying to pull the Constitution out by its roots and demand that Congress give it a blank check, without any criteria, without any accountability, for $700 billion bailout of Wall Street. It’s not dependent on whether John McCain returns to Washington other than to vote. I think he’s turning his back on over 50 million American voters who expect him to show up in Ole Miss with Barack Obama and who have made arrangements to do so. He talks a lot about honor and commitment. I think he ought to change his mind and get down to Ole Miss.
JUAN GONZALEZ: Ralph, the Democrats are claiming that they’ve been able to get some key concessions from the administration on its original plan. They say now they’re going to be — they’re going to cap CEO pay for those who participate in this bailout and that they’re going to get some kind of government participation or investment in these firms, so that if they make profits later on, that — or these securities make profits later on, that the government will be able to participate. But your sense — are these real substantive changes, or is this basically cosmetics on a plan that shouldn’t be in place in the first place?
RALPH NADER: Well, so far, it’s wish fulfillment. If you watch what Barney Frank, the chairman of the House Banking Committee, said yesterday, nothing has really been decided.
And also, it’s not clear at all why a bailout is needed. That’s part of the stampede in the pack and the panic that Bush and Paulson and Bernanke are pushing Congress toward. You know, it’s eerily reminiscent, when you listen to Bush yesterday, of how he stampeded the Congress and the country into the criminal war invasion of Iraq in 2003. I mean, look at all his statements: this could do this, this would do that, farms failing, small business, tada, tada. The first question we have to ask as citizens is, why is there a need for a bailout?
The only conceivable purpose of Treasury intervention, said Roger Lowenstein in the New Republic recently, quote, "is to buoy the market using taxpayer funds by paying higher-than-market prices. After all, if the government merely intended to match the market, what would be the point?” end-quote. In other words, if these mortgage-backed securities are distressed, well, they’re going to fetch a lower price. There’s huge amount of money on the sidelines in Wall Street, everybody admits that. So, as a hedge fund manager basically said, look, if the price comes down lower than what the government is trying to keep elevated, we’ll buy this paper. Warren Buffett put $5 billion into Goldman Sachs this week. There’s a lot of money to go around.
It’s quite interesting how the Bush regime is creating its own panic. When the government keeps saying Chicken Little, Chicken Little, the market is going to react in a very nervous manner. It’s a reversal of what the government usually does, which is to counsel stability and patience, etc.
So, the first question Congress should ask in detailed hearings, which aren’t occurring, is simply, why is there need for a bailout? Second is, if there is a need for a bailout, why $700 billion? And third, if there is a need for a bailout, what kind of bailout? Taxpayer equity? So the taxpayer can recover if these companies make a profit, they can recover surplus, perhaps the way they did on the taxpayer bailout in 1979 with Chrysler, where Jimmy Carter demanded that Chrysler issue stock warrants to the Treasury, and Chrysler turned around, and the Treasury sold the warrants for a $400 million profit.
I don’t think the Democrats show any nerve that they are going to do anything but cave here. And the statements by Nancy Pelosi are not reassuring, which is, “Well, it’s the Republicans’ bill, you know. Let them take responsibility for it.” That doesn’t work. She’s the Speaker of the House. The Democrats have got to say, “Slow down. We’re not going to be stampeded into this bill by Friday or Saturday. We’re going to have very, very thorough hearings.” Otherwise, it’s another collapse, at constitutional levels, of the Congress before King George IV.
AMY GOODMAN: We’re talking to Independent presidential candidate Ralph Nader. We’ll come back to this discussion. We’ll also be joined by Arun Gupta, who is the editor of The Indypendent and put out a letter on the internet that has just set the internet on fire, calling for a major protest today on Wall Street. It has gained steam. Many groups have signed on. Stay with us.
AMY GOODMAN: Our guest on the phone with us from Pittsburgh, where he’s campaigning, is Ralph Nader, Independent presidential candidate. Juan?
JUAN GONZALEZ: Ralph, you mention how the Democrats themselves are being stampeded at this point by the Bush administration. In my column in the Daily News yesterday, I raised how another Democratic leader and another Democratic Congress handled a situation, even a more dire situation, in 1933, on the two days after Franklin Delano Roosevelt was inaugurated as president, with thousands of banks crashing at that point, and he immediately shut down all the banks on his second day in office, called Congress into an emergency session and, over the next hundred days, adopted incredible legislation, including the Glass-Steagall Act, that we’ve mentioned quite often, on federal deposit insurance, aid to homeowners, farm subsidies, created the Tennessee Valley Authority, all in the midst of a crisis, probably the most progressive amount of legislation in the nation’s history, in any period. That’s a quite different approach. And he specifically criticized the banks and Wall Street as being at the root of the crisis.
RALPH NADER: That’s right. In those days, they had a serious solvency problem for these banks, which they don’t have, by and large, today. And that was admitted by Bernanke yesterday. Basically, Bernanke is saying, “Well, we’re doing this because the banks are contracting their credit, and this is affecting the economy.” Well, you can deal with that problem in a far better way than an ill-defined $700 billion bailout with total authority to the Treasury Secretary, with no judicial review, with no criteria and no reforms.
In other words, the Democrats should say, if they’re going to concede this bailout, is to say, “Well, we want comprehensive regulation and disclosure of the financial industry to make sure this doesn’t happen again. We want criminal prosecution of the crooks on Wall Street and disgorgement of their ill-gotten gains. We want a securities derivative tax and higher margin requirements to make speculators use their money, more of their money than other people’s money, like worker pension funds, to keep down speculation, as well as to produce revenues, which might lighten the tax load on working families. And we want to give shareholders control over the corporations they own.”
And they’re not even talking about these kinds of reforms. And this is the best time to get these reforms, because this is called a must bill on Congress — in Congress, and if Bush wants his package, he’s going to have to sign them. So, there’s no reciprocity here. It’s the usual fairly good questions by the Democrats at the hearings, but because they don’t follow through, they don’t have adequate leadership, it becomes a kind of posturing. It’s just maddening to watch how vague Bernanke and Paulson are in answering one question after another. It’s just an evasion, where they keep saying, “We need to do it. We need to do it.” And their Chicken Little material is conducted in closed session with Harry Reid and Nancy Pelosi and the Republican leadership. It’s always in closed session.
AMY GOODMAN: Well, Ralph Nader, something that isn’t vague are the emerging rallies against Wall Street bailout that are being held today in over a hundred cities. In Washington, protesters are gathering outside the Treasury Department at 4:00 p.m. Here in New York, a protest is set for 4:00 p.m., as well, in Bowling Green Park near Wall Street.
The day of action has been partly inspired by an email sent out Monday by New York journalist Arun Gupta. In the email, Gupta described the bailout as the biggest robbery in world history. Arun Gupta is a reporter and editor at The Indypendent newspaper here in New York. He joins us in the firehouse.
You’ve just been written up in BusinessWeek. Talk about this letter. Talk about what you are putting out there.
ARUN GUPTA: Well, I do a good bit of economic writing, and I was trying to decipher the plan this weekend, and it became quickly apparent to me that this is a financial September 11th, that the Bush administration was trying to use the shock of this crisis, the self-induced crisis in this case, to ram through legislation that was highly ill-considered in terms of the actual economic merits, on the one hand, and then, on the other hand, it was this extreme power grab that would give these huge sweeping new powers to the Treasury Department.
So I wrote up this email. I sat on it overnight, because I was hesitant to send it out. I’m a journalist, not an organizer. But after talking with a few people, they felt I should send it out, so I sent it out to about 150 activists, organizers and media folks that I know in New York City. And it just exploded. You know, I don’t take any special credit for it. I was just tapping into this huge amount of anger and resentment that was out there.
JUAN GONZALEZ: Now, when you say “exploded,” what was the response?
ARUN GUPTA: Well, I talked to people who, within one hour of me sending it out and then them — I encouraged people, “Please forward widely.” They told me that within less than an hour, they had received it back from five or six different people. By the end of the day, apparently, a lot of big groups started jumping on it, including unions. By the next day, it was being endorsed and variations were being forwarded by True Majority, Code Pink, United for Peace and Justice. And so, it was just — it really showed the power of the internet in a particular moment.
AMY GOODMAN: So, talk about these protests that are taking place around the country.
ARUN GUPTA: Well, it started, as you know — the idea is like gather in Wall Street, and I thought maybe it would be a dozen people, and we’d be standing on the sidewalk. But now it looks like there will be hundreds, even possibly thousands. And then, True Majority picked up the call, along with United for Peace and Justice, one of the main antiwar groups, and they said, you know, “Let’s have these day of actions around the country.”
So, all over the country now, there are going to be protests in various financial centers. I’ve been getting emails from people, you know, from every single corner of the United States, asking, you know, “What’s going on? How do we plug in?” And so, we’re just trying to point them to these websites. It’s like, look, here’s a list of the protests, or you can plan your own event. And this is really coming from across the political spectrum.
JUAN GONZALEZ: And as you said in your email, this is leaderless, and no main organization is in charge or no individual is in charge. Everyone is just participating themselves.
ARUN GUPTA: That’s what’s great about it. You know, when people say, “Who’s organizing this?” I say, “No one and everyone.” This was just a call to self-organize. And, you know, it’s like I’m just going to show up there as just one more person who’s against this ridiculous bailout, this giveaway to the rich.
AMY GOODMAN: Ralph Nader, who is Henry Paulson? I mean, we know he worked for Nixon, was the aide to John Ehrlichman, the ex-con, the man who went to jail; then went off to Goldman Sachs; he and Alan Greenspan still being considered the economic wise men, even though this all happened under their watch.
RALPH NADER: That’s when you know the system is decayed and corrupt, that the people who brought us this disaster — Robert Rubin, with Bill Clinton pushing through the financial deregulation monster in 1999, which we opposed, which opened the gates for this kind of wild speculation and this casino capitalism, is still an adviser. He’s an adviser to Barack Obama. He’s an adviser to members of Congress. Henry Paulson cashed out at Goldman Sachs in 2006 a half-a-billion dollars. And now he goes to Washington to bail out his buddies.
The public outrage out there is really enormous. The calls coming into C-SPAN yesterday were overwhelmingly against this bailout, this outrageous inequity, this double standard between the guys at the top and the people who are going to have to pay the bills under this bailout, the taxpayers and the consumers.
Mr. Gupta is right in the sense that this is leaderless, but it’s got to be more than just a rally of protests. It’s got to demand something. It’s got to be focused. Otherwise, it will fritter away. We’ve had rallies on Wall Street. It’s a great place to have rallies. You can really congregate a lot of people, and the Wall Street guys look out the window, and they can see the people are coming.
But the first step is to slow down Congress. Once this bill is passed — and it’s a blanket bill. It’s only four pages, Amy, four pages of a $700 billion blank check, transferring congressional authority wholesale, and I think unconstitutionally, to the White House, King George IV at work again. Once it passes, then the chance for comprehensive regulation and all the other changes to make Wall Street accountable, instead of allow Wall Street to create a corporate state or what Franklin Delano Roosevelt called fascism, which is government controlled by private economic power, represented by people like Henry Paulson — once this happens, it’s not going to be reversible.
JUAN GONZALEZ: And Ralph, what about the homeowners who were at the center of this crisis in foreclosure? A million Americans have lost their homes in recent years. There seems to be still no clear sense that any kind of bill will actually provide clear relief for people facing the loss of their homes.
RALPH NADER: You’re absolutely right, because Barney Frank was asked about that last night after the hearing, and he said, “This is a money proposition, if you’re going to deal with the homeowners. It’s not my Banking Committee; it’s Charlie Rangel’s House Ways and Means.” In other words, there’s nothing in this bill for homeowners. There’s everything in this bill to bail out the bankers who actually created this problem with these out-of-control speculative financial instruments.
AMY GOODMAN: Cynthia McKinney has offered to debate Barack Obama if he’s the only one who shows up at Ole Miss tomorrow. Are you also going to make that offer? And, Ralph Nader, would you consider, given the stakes of this election, encouraging your supporters in swing states to vote for Barack Obama?
RALPH NADER: Well, first, I’d be very happy to sit in the seat emptied by John McCain. But I think the stage can handle the only — only six presidential candidates. There aren’t enough electoral colleges to theoretically win the election. And second, I’m not at all impressed by Barack Obama’s positions on this so-called bailout. It’s just rhetoric. His Senate record has not reflected that at all.
As we campaign around the country — we’re now in forty-five states plus the District of Columbia, and we’re running five, six, seven percent in the polls, which is equivalent to nine, ten million eligible voters — we are going to try to rouse the public in a specific way: laser-beam focus on their senators and representatives. When these senators and representatives, if they allow this bailout deal in this general, vague manner to pass, when they go back home, they’re going to hit hornets’ nest. This is a situation where it doesn’t matter whether the people back home are Republicans, Democrats, Greens, Libertarians, Nader-Gonzalez supporters. There’s such a deep sense of betrayal, of panic, of stampede, of surrender, of cowardliness in Congress, that it’s going to affect the election and the turnout.
I’d like Barack Obama, actually, to support the Nader-Gonzalez ticket.
AMY GOODMAN: Finally, Arun Gupta, people are bringing old junk to the protest today — records, old clothes, things they don’t want —- to symbolize...?
ARUN GUPTA: That’s one of the themes, cash for trash, which is how this bailout bill is being characterized -— in other words, that the government is giving the taxpayers’ good money for these worthless securities. So, many protesters are saying, well, let’s bring our own trash to Wall Street. We’ll create a junk pile and then ask the government to bail us out.
AMY GOODMAN: We’re going to leave it there. Arun Gupta is the reporter and editor of The Indypendent newspaper here in New York, organizer of today’s protest on Wall Street. There will be more than a hundred other protests around the country. We’ll report on them tomorrow. Ralph Nader, Independent candidate for president, speaking to us on the campaign trail in Pittsburgh.