February 13, 2010

That Bailout Story, Something Like This
By James Quillian

The true story behind the bailout of October 2008 has never been told.  Just as there were financial organizations that were deemed too big to fail, there is a truth that is deemed too big for you to hear.  The bailout story is always packaged like a discrete event where heroic measures were taken to correct an unfortunate set of circumstances.  Actually, the bailout was only a small piece of an unofficial government assisted asset enhancement initiative that began long before October 2008 and continues today. The true story behind the bailout will be a scandal of Watergate proportions.

In the spring of 2006, this asset enhancement initiative had become a house of cards that was beginning to topple. Henry Paulson was brought on as Treasury Secretary and was given the job of keeping asset prices elevated. Despite his best efforts, the house of cards was falling down. Financial losses would be great but enough losses could be transferred to taxpayers if the bailout bill could be passed.  The TARP funds were used insure certain favored financial firms suffered as little as possible.

The Federal Reserve already had the authority to purchase as many troubled assets as they wished.  Instead, the bailout bill was passed, because a Federal Reserve based solution would have done little to allow Wall Street’s largest campaign contributors to maintain their superior profitability. Firms such as Goldman Sachs, Bank of America and Morgan Stanley are some of history’s largest campaign contributors.  Each of these firms has prospered greatly in the aftermath of the bailout.

Had the bailout not been passed there would have indeed been a financial meltdown, but the damage would have been largely contained to Wall Street. Instead, the negative sentiment generated by the nation’s leaders threw the rest of the country into a deep recession.

The true story of the bailout has never been told to the public. When the effort to pass the bill began, all of the news organizations became synchronized in their coverage of the controversy. Honest discussion was not allowed on air or in print. There was no investigative reporting. 

For the good of everyone in the country, the true story of the bailout must be told before the November2010 election.  Congress already robbed U.S. citizens of their authority by passing the law over their objections.   Regardless, voters are now burdened with financial obligations as a result of the law’s passage.  With an election coming up voters need to know the truth about the bailout in order to carry out their responsibility of overseeing lawmakers.