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Wall Street Robber Barons Ride Again

Posted on Jan 13, 2009
Geithner and Summers
AP photo / Lawrence Jackson

Treasury Secretary-designate Timothy Geithner, left, and National Economic Council Director-designate Lawrence Summers listen to President-elect Barack Obama’s speech on the American economy last week at George Mason University in Fairfax, Va.

By Robert Scheer

Why rush to throw another $350 billion of taxpayer money at the Wall Street bandits and their political cronies who created the biggest financial mess since the Great Depression? And why should we taxpayers be expected to double our debt exposure when the 10 still-secret bailout contracts made in the first round are being kept from the public?

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We don’t have time, President-elect Barack Obama’s key economic adviser, Lawrence Summers, insisted in a letter to Congress on Monday, promising that the new infusion would not be squandered as was the first installment. But given that Summers is personally as responsible for this meltdown as anyone, why should we trust him on this? Yes, it sounds wonderfully bipartisan that Obama is backing President Bush’s request for spending the money now, short-circuiting congressional inquiry, but it was just that sort of bipartisan politics that created this nightmare.

How insulting that we must now accept Summers’ assurance that the Obama administration will “move quickly to reform a weak and outdated regulatory system to better protect consumers, investors and businesses.” This from the guy who, as President Bill Clinton’s treasury secretary, pushed the deregulation legislation making the subsequent financial crimes of Wall Street legal. The “toxic derivatives” that we taxpayers are now forced to purchase from the Wall Street hustlers were deliberately shielded from all government regulation, thanks to the Commodity Futures Modernization Act, which Summers got Congress to pass in the closing days of the Clinton administration with the same urgency that he now pushes for the new Wall Street handout.

Back then, Summers was a disciple of Robert Rubin, who just last week resigned from his director’s position at Citigroup, the financial conglomerate that grew to unmanageable and corrupt proportions thanks to the empowering legislation that Rubin initiated when he was Clinton’s first treasury secretary. Rubin has been paid more than $115 million plus stock options at Citigroup, and despite his horrid record is a close Obama adviser. It is one of the great swindles of U.S. financial history that Citigroup was bailed out with $45 billion in a deal that could eventually cost taxpayers an additional $269 billion to guarantee those toxic assets that would have been illegal if not for the legislation backed by Rubin and Summers.

How did Obama allow himself to become ensnared with the very same folks who are the most culpable? His treasury secretary nominee, Timothy Geithner, is another Rubin protégé, who, as head of the New York Fed, worked tirelessly with Rubin to concoct the Citigroup bailout. When candidate Obama gave his major economic address back on March 27, he couldn’t have been clearer in condemning the deregulation that Rubin and Summers had engineered:


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“Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one—aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner-take-all, anything-goes environment that helped foster devastating dislocations in our economy.”

He was referring to the deregulation legislation that Summers hailed on the day that Clinton signed it into law as “a major step forward to the 21st century.” Now Obama is relying on Summers to reverse a disaster of his own creation. It’s like returning to the same surgeon who almost killed the patient in the first operation to once again cut open the body to repair the damage.

What we need is a second opinion.

Where is the openness and accountability that Obama promised? Why not pause for a few weeks for congressional hearings on how to spend the new money? We don’t even know where the last batch went. On Monday, the Treasury Department finally agreed, and only after a subpoena threat, to turn over to Sen. Carl Levin and his Permanent Subcommittee on Investigations the 10 secret contracts that it signed with top Wall Street firms in the first round of the bailout. Unfortunately, the subcommittee has no plans to make those contracts public, according to a Levin aide quoted in The New York Times.

That is outrageous. This is our money we’re talking about. Why don’t we get to read the fine print in what will end up being trillions of dollars in taxpayer obligations? Because we are suckers, that’s why, and the folks who swindled us into this disaster can count on it.

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Purple Girl's avatar

By Purple Girl, January 14, 2009 at 5:35 am Link to this comment

401K’s, Annuities, Pensions…All Gone.
What interests me is Who Called the “Marker” to begin with which caused this domino effect..China?
did they clean out all our accounts to pay off the Loan sharks? Were we on the Verge of getting our ‘knees broken’? Seems WallStreet was playing a Ponzi (Pyramid) Scam on all of US, and we were at the bottom of the heap.
Considering what the Wall streeters and the Multinationals who fly our flag (but provide no jobs here) have done to our economy, they should face execution for economic Treason.Freeze,Seize and start Hangin’ em High…every last one of them- top to bottom. Otherwise send them and their families over to the ‘Loan sharks’ as indentured slaves, since that is exactly what they have done to every citizen of this country for the next few generations.

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By mike112769, January 14, 2009 at 4:55 am Link to this comment

Meet the new boss, same as the old boss! I , for one, am not surprised by this. Why should the “new” administration be accountable to the Public? The last few old ones certainly weren’t. If we let the past administrations get away with lying to us and stealing from us, why should Obama’s group think they are different from them? Our “government” will continue to swindle us and lie to us until they are MADE to stop. Politicians can be compared to crack addicts, and the crack is taxpayers’ money. We are the abused spouse with no self respect, afraid of REAL change.

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By Cornerstone, January 14, 2009 at 4:53 am Link to this comment
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There were no controls on the first portion of this pig and now they are giving them more.  No accountability for the monies and the recipients don’t have to disclose where it is going.

This is a cover up on both sides of the isle for failed practices.  Dems for pushing the banks to make “alternative” loans to people who didn’t deserve it or were over extending themselves and the Repubs for backing the banks and big business in this mess without accountability.

This is what our instant gratification society gets us.  We want it now so we should be able to get it now.  Heaven forbid a person has to save for something they want, buy it on credit and worry about paying for it later.

Our children and grandchildren will be paying for this for years to come.

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By coloradokarl, January 14, 2009 at 3:25 am Link to this comment

The whole process,for the cover-up ahhh…I mean the tarp fund has from the beginning been fueled with a drum beat of the fear monger. The pretense of giving money to all of the financial institutions to give cover for weak ones is absurd. Illusion of this nature reeks of a Confidence scam and should be questioned with determination.  These guys on Wall Street are all “Players” by trade and should NEVER be trusted.

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