On Tuesday, October 7, a group of CODEPINK
pranksters pranced in front of the New York Stock
Exchange. One, wearing an oversized papier maché
head of Treasury Secretary Henry Paulson, grabbed
at the purses of the "chickens." "Give
me your money; give me your money," he cried.
"You might need a new house, but my buddies
and I need new yachts." Passersby, reading
the sign "Henry 'The Fox' Paulson' in the
People's Henhouse," heartily agreed.
Congress thought otherwise, entrusting Paulson-the
former CEO of Goldman Sachs--with $700 billion
of the people's money. On October 3, Speaker Nancy
Pelosi, smiling ear to ear, congratulated Congress
for passing a bill that gave Secretary Paulson
unprecedented control over our nation's economic
future. An hour later, President Bush and Secretary
Paulson appeared on the steps of the Treasury
Department signing the bill.
"This bailout bill does not deal with the
absurdity of the fox guarding the henhouse,"
Senator Bernie Sanders decried on the Senate floor.
But during the post-bailout hearings held by the
House Oversight Committee, Congressman Dennis
Kucinich was the lone voice raising questions
about Paulson's performance and his obvious conflict
asked the witnesses from AIG and Lehman Brothers
why one company-AIG-was bailed out by the Treasury
Secretary while Lehman Brothers was allowed to
go under. AIG owed Goldman Sachs $20 billion,
so their bailout meant that Paulson's buddies
at Goldman Sachs would get repaid in full. Goldman
Sachs also gained a competitive advantage from
the bankruptcy of its rival Lehman Brothers. One
would think that this maneuver alone, which happened
BEFORE the $700 billion taxpayer bailout, would
have immediately raised hackles in Congress and
disqualified Paulson as economic czar.
To see the absurdity
of Paulson in charge of the crisis, Congress need
only have looked at Paulson's past.
On the very day that Congress passed the bailout,
The New York Times published a shocking story
about how the SEC was lobbied in 2004 by the nation's
five largest investment banks to change a regulation
that limited the amount of debt they could take
on. The exemption unshackled billions of dollars
held in reserve as a cushion against losses on
their investments, and led to the unraveling of
the financial sector. Among the five banks leading
the charge to change the rule was Goldman Sachs,
which was headed by Henry Paulson. Translation:
Paulson was one of the architects of the crisis!
Paulson also benefited
personally from the casino economy he helped engineer.
After creating billions of dollars in bizarre
financial products that are now nearly worthless,
he left Goldman Sachs with a personal fortune
of over $700 million.
"It is remarkable that Congress would be
willing to give Secretary Paulson such enormous
power in running this bailout given his advocacy
of rule changes that played such an important
role in this financial disaster, and the extent
to which he personally profited from these changes,"
said Dean Baker, an economist who was one of the
first in the country to sound the alarm that the
housing bubble was about to burst. "This
would be like giving the bank robber who cleaned
out the vaults the opportunity to set the bank's
finances in order -- and letting him keep the
Paulson's job performance as Treasury Secretary
since July 2006 should be enough to have him fired,
as Paulson fiddled while our economy slowly burned.
When sub-prime mortgage losses set off a domino
effect in mid-2007, Paulson insisted that troubles
in the mortgage market were not likely to spread
throughout the economy. In a Jim Lehrer interview
in May 2007, he stated, "We're fortunate
that we have a diverse, healthy economy"
and insisted the housing problem was contained.
A year later, he told the Wall Street Journal,
"The worst is likely to be behind us,"
and stated on CNBC: "Our long-term fundamentals
in this economy are strong, and this is a strong,
competitive economy." As Cong. DeFazio stated,
"This guy has been consistently wrong and
out of touch or he's been lying to Congress and
the American people about how sound our fundamentals
When in September we found ourselves in the midst
of a full-blown crisis, Paulson's response was
to blackmail Congress. With the proverbial gun
to their heads, members of Congress were asked
to hand Paulson $700 billion-immediately-on the
basis of a three-page proposal and with no oversight,
no Congressional or Judicial review and no accountability!
Where did that $700 billion figure come from?
"It's not based on any particular data point,"
a Treasury spokeswoman told Forbes.com. "We
just wanted to choose a really large number."
Cong. Brad Sherman called Paulson's proposed legislation
an "awe-striking, mind-boggling power grab"
designed with only Wall Street in mind.
Instead of tossing out
Paulson and his plan in favor of a solution for
Main Street, Congress passed a bill giving Paulson
enormous power to decide which companies will
be bailed out and which will go under. "A
plan that relies on the former chairman of Goldman
Sachs disbursing hundreds of billions of dollars
to Wall Street is a terrible concept and inevitably
will lead to crony capitalism and the appearance
of-if not the actual existence of-corruption,"
said Newt Gingrich, who called on President Bush
to fire Paulson.
The people's ire over
the Wall Street bailout almost derailed the entire
plan, but the bankers prevailed. Paulson's plan,
however, has not calmed the markets and shouldn't
mute the public outcry. Join us in demanding that
the Fox stop raiding the henhouse. Join us in
insisting that Paulson must go! (go to www.paulsonmustgo.org
Medea Benjamin (firstname.lastname@example.org)
is cofounder of CODEPINK: Women for Peace (www.codepinkalert.org)
and Global Exchange (www.globalexchange.org).