NAOMI KLEIN: BAILOUT IS "MULTI-TRILLION DOLLAR CRIME SCENE"

Naomi Klein: Bailout is ‘multi-trillion-dollar crime scene’

David Edwards and Muriel Kane
Raw Story
Wednesday, Nov 19, 2008

The Bush administration has already handed out almost half of the $700 billion in bank bailout money authorized by Congress but has not even filled the mandated oversight positions to review how it is being used.

Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, has described the handling of the bailout as “borderline criminal” because of this and other problems. Klein spoke to Amy Goodman of Democracy Now! on Monday to explain her accusations.

“We were all reassured that there was going to be transparency, accountability, legality,” Klein stated. “But now we’re finding out that, in fact, Henry Paulson has achieved his original goal by stealth, because there is no accountability, and lawmakers are very hesitant to challenge this. … Essentially, what the Bush administration has done is said, ‘We dare you to challenge us and be responsible for the Great Depression.’”

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Klein sees three areas of borderline illegality. The first is that rather than being used to get banks lending again, the bailout money “is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers.”

The second is that, without Congressional authorization, “the Treasury Department pushed through a tax windfall for the banks, a piece of legislation that allows the banks to save a huge amount of money when they merge with each other. And the estimate is that this represents a loss of $140 billion worth of tax revenue for the US government.”

The third problem, which dwarfs the $700 billion bailout itself, is that “there’s another $2 trillion that’s been handed out by the Federal Reserve in emergency loans to financial institutions, to banks, that actually we don’t really know who they’re handing the money out to, because, apparently, it’s a secret.”

“If the Fed has accepted distressed assets as collateral in exchange for these loans,” stated Klein, “there’s a very good chance the taxpayers aren’t going to be getting this money back. … So that’s why we’re calling this the ‘trillion-dollar crime scene’ or the ‘multi-trillion-dollar crime scene.’”

Klein argued that Congress should be challenging violations of the bailout legislation, but instead “what they’re saying is, we can’t afford to enforce the law … that somehow, because there’s an economic crisis, legality is a luxury that Congress can’t afford.”

“I’m quite concerned,” Klein stated, “that what we’re seeing from Obama’s team is an accepting of this logic that they need to give the market what it wants, which is continuity, smooth transition, which is really just code for more of the same. … I think we should question all of it. Across the board, I think the assumptions are faulty.”

Klein is also concerned that rather than using the crisis as a mandate to fix the underlying problems, the world leaders at the recent G20 summit were talking about propping up the old system.

“Think about what these leaders could do if they really wanted to,” Klein suggested. “When you have a crisis like this, which so clearly shows the need for those types of regulations, when you have an election like there just was in the United States, where people have said clearly that this is a priority, the leaders have an opportunity to act. … But they blew that opportunity, and they actually called for less regulation.”

“This crisis isn’t over,” Klein warned, “and the same people who justified this bailout, who clamored for this bailout, are the very people who are going to turn around and say to Barack Obama, ‘We can’t afford for you to make good on your election promises. We can’t afford universal healthcare.’”

“The money has been given to the people who needed it least, and it’s going to be used to justify austerity measures imposed against those who need it most,” Klein concluded. “It’s going to be used to justify cuts to food stamps. It’s going to be used to justify cuts to Social Security, to health care, let alone being used to justify why more ambitious plans for a national health care program, for green energy are not affordable. So people have to be ready for this. You know, the next shock is yet to come.”