Ralph Nader on the bailout

This is part of an interview to be found at Information Clearing House. Even though Nader is a presidential candidate you will be hard put to find his comments in the big mainstream media. He contrasts the policies now with those during the depression of Roosevelt and also he questions the need for the bailout. He suggests that Bush is managing to stamped a bailout which will see the US taxpayer paying more for distressed assets than they would ever fetch on a free market.


“Why Is There Need for a Bailout?”By Ralph Nader25/09/08 "Democracy Now! -- As the Bush administration intensifies its pressure for Congress to quickly approve a $700 billion bailout of the financial industry, we get reaction from Independent presidential candidate and consumer advocate Ralph Nader. Nader calls Democratic claims of White House concessions “wish fulfillment” and says the bailout might not be needed in the first place.
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JUAN GONZALEZ: The Bush administration is intensifying its pressure on Congress to quickly approve a $700 billion bailout of the financial industry, despite warnings from economists and some governmental officials that the bailout could worsen the financial crisis.
Last night, President Bush held a prime-time address to warn the nation’s entire economy is in danger if the bailout is not approved as soon as possible.
PRESIDENT GEORGE W. BUSH: The government’s top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold. More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession. Fellow citizens, we must not let this happen.
JUAN GONZALEZ: [Wednesday] night’s address was the first time in his presidency that Bush delivered a prime-time speech devoted exclusively to the economy. His dire scenario about the state of the economy stood in stark contrast to his comments at his last press conference two months ago.
PRESIDENT GEORGE W. BUSH: I think the system basically is sound. I truly do. And I understand there’s a lot of nervousness, and—but the economy is growing, productivity is high, trade’s up. People are working. It’s not as good as we would like, but—and to the extent that we find weakness, we’ll move. That’s one thing about this administration: we’re not afraid to making tough decisions.
AMY GOODMAN: Today, the President is holding an emergency summit at the White House with both John McCain and Barack Obama, as well as top leaders for Congress. The Wall Street Journal reports Democratic leaders are hoping to nail down details of the bailout measure early today.
On Wednesday, McCain said he would suspend his campaign to deal with the financial crisis. He called on Obama to postpone their debate Friday night, saying he would only attend if Congress approves a bailout package before then. Obama said the debate in Oxford, Mississippi at Ole Miss should go on as planned.
We’re joined on the phone right now by a presidential candidate who was not invited to Friday’s debate, Independent candidate Ralph Nader. The longtime consumer advocate has been a vocal critic of the Wall Street bailout.
Ralph Nader, welcome to Democracy Now! First, let’s start off with John McCain announcing that he is going to suspend his campaign and wants the debate cancelled.
RALPH NADER: Well, I think Senator McCain is showboating. I mean, what’s going on in Washington and Congress now is the Bush administration is trying to pull the Constitution out by its roots and demand that Congress give it a blank check, without any criteria, without any accountability, for $700 billion bailout of Wall Street. It’s not dependent on whether John McCain returns to Washington other than to vote. I think he’s turning his back on over 50 million American voters who expect him to show up in Ole Miss with Barack Obama and who have made arrangements to do so. He talks a lot about honor and commitment. I think he ought to change his mind and get down to Ole Miss.
JUAN GONZALEZ: Ralph, the Democrats are claiming that they’ve been able to get some key concessions from the administration on its original plan. They say now they’re going to be—they’re going to cap CEO pay for those who participate in this bailout and that they’re going to get some kind of government participation or investment in these firms, so that if they make profits later on, that—or these securities make profits later on, that the government will be able to participate. But your sense—are these real substantive changes, or is this basically cosmetics on a plan that shouldn’t be in place in the first place?
RALPH NADER: Well, so far, it’s wish fulfillment. If you watch what Barney Frank, the chairman of the House Banking Committee, said yesterday, nothing has really been decided.
And also, it’s not clear at all why a bailout is needed. That’s part of the stampede in the pack and the panic that Bush and Paulson and Bernanke are pushing Congress toward. You know, it’s eerily reminiscent, when you listen to Bush yesterday, of how he stampeded the Congress and the country into the criminal war invasion of Iraq in 2003. I mean, look at all his statements: this could do this, this would do that, farms failing, small business, tada, tada. The first question we have to ask as citizens is, why is there a need for a bailout?
The only conceivable purpose of Treasury intervention, said Roger Lowenstein in the New Republic recently, quote, "is to buoy the market using taxpayer funds by paying higher-than-market prices. After all, if the government merely intended to match the market, what would be the point?” end-quote. In other words, if these mortgage-backed securities are distressed, well, they’re going to fetch a lower price. There’s huge amount of money on the sidelines in Wall Street, everybody admits that. So, as a hedge fund manager basically said, look, if the price comes down lower than what the government is trying to keep elevated, we’ll buy this paper. Warren Buffett put $5 billion into Goldman Sachs this week. There’s a lot of money to go around.
It’s quite interesting how the Bush regime is creating its own panic. When the government keeps saying Chicken Little, Chicken Little, the market is going to react in a very nervous manner. It’s a reversal of what the government usually does, which is to counsel stability and patience, etc.
So, the first question Congress should ask in detailed hearings, which aren’t occurring, is simply, why is there need for a bailout? Second is, if there is a need for a bailout, why $700 billion? And third, if there is a need for a bailout, what kind of bailout? Taxpayer equity? So the taxpayer can recover if these companies make a profit, they can recover surplus, perhaps the way they did on the taxpayer bailout in 1979 with Chrysler, where Jimmy Carter demanded that Chrysler issue stock warrants to the Treasury, and Chrysler turned around, and the Treasury sold the warrants for a $400 million profit.
I don’t think the Democrats show any nerve that they are going to do anything but cave here. And the statements by Nancy Pelosi are not reassuring, which is, “Well, it’s the Republicans’ bill, you know. Let them take responsibility for it.” That doesn’t work. She’s the Speaker of the House. The Democrats have got to say, “Slow down. We’re not going to be stampeded into this bill by Friday or Saturday. We’re going to have very, very thorough hearings.” Otherwise, it’s another collapse, at constitutional levels, of the Congress before King George IV.
AMY GOODMAN: We’re talking to Independent presidential candidate Ralph Nader. We’ll come back to this discussion. We’ll also be joined by Arun Gupta, who is the editor of The Indypendent and put out a letter on the internet that has just set the internet on fire, calling for a major protest today on Wall Street. It has gained steam. Many groups have signed on. Stay with us.
[break]
AMY GOODMAN: Our guest on the phone with us from Pittsburgh, where he’s campaigning, is Ralph Nader, Independent presidential candidate. Juan?
JUAN GONZALEZ: Ralph, you mention how the Democrats themselves are being stampeded at this point by the Bush administration. In my column in the Daily News yesterday, I raised how another Democratic leader and another Democratic Congress handled a situation, even a more dire situation, in 1933, on the two days after Franklin Delano Roosevelt was inaugurated as president, with thousands of banks crashing at that point, and he immediately shut down all the banks on his second day in office, called Congress into an emergency session and, over the next hundred days, adopted incredible legislation, including the Glass-Steagall Act, that we’ve mentioned quite often, on federal deposit insurance, aid to homeowners, farm subsidies, created the Tennessee Valley Authority, all in the midst of a crisis, probably the most progressive amount of legislation in the nation’s history, in any period. That’s a quite different approach. And he specifically criticized the banks and Wall Street as being at the root of the crisis.
RALPH NADER: That’s right. In those days, they had a serious solvency problem for these banks, which they don’t have, by and large, today. And that was admitted by Bernanke yesterday. Basically, Bernanke is saying, “Well, we’re doing this because the banks are contracting their credit, and this is affecting the economy.” Well, you can deal with that problem in a far better way than an ill-defined $700 billion bailout with total authority to the Treasury Secretary, with no judicial review, with no criteria and no reforms.
In other words, the Democrats should say, if they’re going to concede this bailout, is to say, “Well, we want comprehensive regulation and disclosure of the financial industry to make sure this doesn’t happen again. We want criminal prosecution of the crooks on Wall Street and disgorgement of their ill-gotten gains. We want a securities derivative tax and higher margin requirements to make speculators use their money, more of their money than other people’s money, like worker pension funds, to keep down speculation, as well as to produce revenues, which might lighten the tax load on working families. And we want to give shareholders control over the corporations they own.”
And they’re not even talking about these kinds of reforms. And this is the best time to get these reforms, because this is called a must bill on Congress—in Congress, and if Bush wants his package, he’s going to have to sign them. So, there’s no reciprocity here. It’s the usual fairly good questions by the Democrats at the hearings, but because they don’t follow through, they don’t have adequate leadership, it becomes a kind of posturing. It’s just maddening to watch how vague Bernanke and Paulson are in answering one question after another. It’s just an evasion, where they keep saying, “We need to do it. We need to do it.” And their Chicken Little material is conducted in closed session with Harry Reid and Nancy Pelosi and the Republican leadership. It’s always in closed session.