Why the Bailout Stinks

From: Counterpunch

For nearly a year, we have been asking ourselves why the investors and foreign banks that bought up hundreds of billions of dollars of worthless mortgage-backed securities (MBS) from US investment banks have not taken legal action against these same banks or initiated a boycott of US financial products to prevent more people from getting ripped off?

Now we know the answer. It’s because, behind the scenes, Henry Paulson and Co. were working out a deal to dump the whole trillion dollar mess on the US taxpayer. That’s what this whole $700 billion boondoggle is all about; wiping out the massive debts that were generated in the biggest incident of fraud in history. Rep Brad Sherman explained it Wednesday night to Larry Kudlow:

“It (The bill) provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson’s power. There is a critique board but not really a board that can step in and change what he does. It’s a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries……. It’s very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn’t owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can’t buy it. It was rejected.

“The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20 that it can’t be sold to the Treasury. Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure it can happen.”

So, why hasn’t the Treasury Secretary explained the real purpose of the bailout to the American people? Could it be that he knows that his $700 billion bailout would end up like the Hindenburg, vanishing in sheets of flames?

This is a terrible bill, and it confers absolute authority on one of the central players in the scandal, Henry Paulson, who was the Chairman of Goldman Sachs at the time this MBS garbage was being peddled around the planet to credulous investors. Now Paulson will be in a position to buy up any “troubled asset” he that he believes could pose a threat to “financial market stability”. It is clear that Paulson will use his unchecked powers to wipe the slate clean and remove any possibility that foreign investors will take legal action against the perpetrators; the giant Wall Street investment banks.

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