HOUSE REJECTS $700 BLN FINANCIAL BAILOUT

HOUSE REJECTS $700 BLN FINANCIAL BAILOUT
The U.S. House rejected on Monday a proposed $700 billion financial bailout package supported by the Bush administration, the Federal Reserve and the congressional leadership of both parties. The vote was 205 for and 228 against. The rejection of the plan could mean disruption in financial markets and another attempt by officials to craft a compromise plan that will get a majority vote. The administration had been pushing for quick movement on the bailout, which officials have warned is necessary to avert serious consequences for markets and the economy. Some critics said the plan was a giveaway to the very companies that created the crisis, while others said it amounted to socialism

“Is this the United States Congress or the Board of Directors of Goldman Sachs?” Rep. Dennis Kucinich Rejects $700 Billion Bailout
The House is set to vote today on a $700 billion emergency bailout plan for the financial industry. The proposed legislation was forged during a marathon negotiating session over the weekend between lawmakers from both parties and Treasury Secretary Henry Paulson. The 110-page bill would authorize Paulson to initiate what is likely to become the biggest government bailout in US history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates.

REP. DENNIS KUCINICH: This is a copy of the bill which will provide for a $700 billion bailout of Wall Street. It has provisions in it where it talks about helping homeowners, but when you read the fine print, you see it has language like “may” instead of “shall” and “encouraging” instead of “mandating” help for the millions of homeowners who are worried right now about whether they’re going to lose their home. There’s no help for them in this.


So what we have here is a rescue plan that essentially gives all the speculators a bailout and puts the bad debts in the custody of the government. The president of the Dallas Federal Reserve Bank has said that this plan could create a fiscal chasm, says that the problem isn’t tight monetary policy, it’s the reckless behavior of some of these investors who have now found themselves in a position where a government bailout is going to help reward their bad behavior.


AMY GOODMAN: Is it any better than when it was first introduced by the Treasury Secretary, by Henry Paulson?


REP. DENNIS KUCINICH: Well, you know, that implies that you would accept the underlying premise. I reject the underlying premise that we needed this bill. And as a matter of fact, that we’re putting this up before an adjournment in an election season shows that Congress is being put under extraordinary pressure to bail out Wall Street. We haven’t looked at any alternatives, Amy. This is—you know, it isn’t as though, if you had a liquidity crisis, that—you know, a real one—that you’d start to look at all the alternatives. We haven’t done that. We have a bill here, a bill of more than a hundred pages, that we haven’t had a single hearing on the bill, you know—on the concept, yes, on what Paulson and Bernanke asked for initially. But, you know, we need to have hearings on this. There’s 400 economists and three Nobel Prize-winning economists who have said, “Whoa, wait a minute! What are you doing? Why are you rushing this?” You know, this thing doesn’t smell right, frankly.


AMY GOODMAN: What do you think has to happen right now?


REP. DENNIS KUCINICH: Well, you know, Congress better get ready with a plan B. If this thing goes down, we need to find a way to help Wall Street pay for its own problems. You can do that with a 20—.25 percent stock transfer tax, cancellation of dividends. You know, make the shareholders and the investors have to pay for the funny business that was going on on Wall Street. Why make the taxpayers pay? You know, the very underlying idea of this needs to be challenged, and frankly, there hasn’t been enough of that going on.


Well, what we have is a transfer of wealth, actually. It’s a continuation of a transfer of wealth. This whole government has become nothing more than a big machine that transfers the wealth upwards with our tax policies, our energy policies, with this fiscal policies, with the war. All the wealth of the country goes from the pockets of the people into the hands of a few. This is a very dangerous moment. You know, it’s the biggest amount of injection of capital by the government in a single time since the New Deal. And frankly, there is no trickle down here. There’s just rewarding bad behavior.


AMY GOODMAN: It sounds like it was mainly the House Republicans who balked, who revolted on Friday. Yet, you and a number of your colleagues are joining them. Do you believe this will pass today?


REP. DENNIS KUCINICH: It’s going to be a very close vote. And I don’t see this as a partisan issue, by the way. I mean, in a way, the debate that tries to make it a partisan issue is a diversion. This is really whether or not people will side with Main Street in a struggle with Wall Street, because, you know, this is not about left or right. This is about up or down, and it’s about the color green.


And frankly, Wall Street has put itself on a trajectory with now we have almost a quadrillion—half a quadrillion dollars of derivatives that are out there, floating out there. People have said that if this is intended to be a fix, it’s a joke, on one hand. On the other hand, who’s paying for it? Why are we rushing this? Everything about this, I think, is unacceptable.


AMY GOODMAN: Congressman Kucinich, what happens if this doesn’t pass?


REP. DENNIS KUCINICH: We need to be ready with plan B, which helps Wall Street restrain some of this bad conduct, which immediately, you know, puts—looks at some of the issues of liquidity that have to do with the policies of the Fed. We had a former head of the FDIC tell a group of congressmen yesterday that the Bush administration has been going around the last few weeks, actually, so tightening up on the practices of banks that they’re forcing them to have bigger reserves, which in a way would, you know, kind of create—help to create the kind of tight money policies that we’re saying we’re trying to alleviate with this bill. So, you know, there needs to be a deeper look at this.


It seems to me there’s a possibility that this crisis has a little bit of manufacture to it. And that really concerns me, because we haven’t had enough time to look at this in an in-depth way, to analyze the impact of it on the economy, to see if it’s going to do anything about a recession that we’re obviously headed into, to see if it’s going to handle the underlying concerns on Wall Street about the speculation and a lack of regulation. The bill doesn’t, by the way, address anything about the speculation, anything about the lack of regulation. The SEC has failed. The Fed has failed. And we’re essentially telling all the same actors, “Go for it. You know, here’s another opportunity,” except this time it’s with taxpayers’ money.

FDR in 1933: "There Must Be a Strict Supervision of All Banking and Credits and Investments. There Must Be an End to Speculation with Other People's Money."
We now move three-quarters of a century back in time to 1933. It was the middle of an era that our current moment is sometimes compared to: the Great Depression. When Franklin Delano Roosevelt took his oath of office in March of that year, over 10,000 banks had collapsed, following the stock market crash of 1929. One-quarter of American workers were unemployed, and people were fighting over scraps of food. We play an excerpt of FDR’s inaugural speech on March 4, 1933, and speak to Adam Cohen, author of the forthcoming book, Nothing to Fear: FDR’s Inner Circle and the Hundred Days that Created Modern America.

Special Prosecutor Named in Attorney Firings Case
Attorney General Michael B. Mukasey appointed a special prosecutor on Monday to investigate whether criminal charges should be brought against former Attorney General Alberto R. Gonzales and other Justice Dept. officials.
Probe: Politics Behind US Attorney Firings