CORPORATE CRIME REPORTER
Times
Reporter Morgenson Says Paulson, Bernanke Lied about Meltdown
22 Corporate Crime Reporter 36, September 24, 2008
New York Times reporter Gretchen Morgenson says Treasury Secretary
Henry Paulson and Federal Reserve Chairman Ben Bernanke just straight out lied
about the subprime meltdown.
“We were not told the truth in the beginning,” Morgenson told NPR’s Terry Gross yesterday. “Secretary Paulson, Ben Bernanke – a whole cast of characters rolled out through 2007, really up until September 2007 – saying this problem would be contained to subprime. Anybody with a brain, anybody with eyes in their head knew that it was not going to be contained because nothing ever is these days, because we are all so interrelated. So, that was a lie.”
As for the Bush bailout bill, Morgenson hit on the same theme – you can’t trust liars.
“You have very little integrity among these people,” Morgenson said. “Why should I now believe what they are saying – that I should hurry up and pass this (bailout) bill or support this bill or agree to its terms, which are not even really detailed, when these people weren’t telling me the truth five minutes ago?”
“If the taxpayer is going to put $700 billion toward this fund, they should have some upside,” she said. “It should not just be – here is my $700 billion, go save the banking world and maybe pay it back sometime. Why not give some upside profit potential to the taxpayer which is precisely what happened in the Chrysler bailout and it worked in that case? It seems to me outrageous that we are being asked to put up $700 billion and not get something in return than is more than just our money back. Let say these loans perform better than we expect right now in the doom and gloom era we are in. I want to see the taxpayer get some of those benefits.”
Morgenson said that the bailout plan “presents the typical conflict of interest that I find so constant on Wall Street.”
“I am a bank,” she explained. “My assets are losing value. I’m in trouble. I need the taxpayers’ help. I want to sell those assets at the best possible price that I can get for them. . . Now, look at it from the taxpayer’s point of view. Taxpayer says – I’m being asked to put up $700 billion. I want a good bargain. I don’t want to overpay for these bad assets. I want to pay what they are worth. What is the value? If it is 15 cents on the dollar, that’s what I’m paying. Not a penny more. So, you see the conflict. You see the problem. The bank wants the higher price. The buyer, the taxpayer in this case, wants the lower price. What’s the price going to be? Who is the favored party in the transaction? I have a feeling that with all of the lobbyists lining up in Washington that you or I are not going to be the favored party.”
“The
special pleaders have their audiences with the lawmakers,” Morgenson said.
“They get their audiences and they get their say. And it manipulates the
system. The taxpayer has no lobbyists and will be on the short end of the stick.”
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