Why Obama Allowed Bailouts Without Indictments by Janet Tavakoli

The government’s bailout plan destroyed capitalism. In a capitalist system, those who stood to gain–and already made off with large gains—would have to bear the risk. The bailouts represented a corruption of capitalism. Crony capitalism violates the spirit of democracy established by the Founding Fathers of the republic known as the United States. I expressed these sentiments in a letter to the Financial Times on September 29, 2008.

– Janet Tavakoli

The following article by Janet Tavakoli is an excellent reminder of the extraordinarily destructive coup pulled off by financial oligarchs in fall of 2008, when the rule of law was suspended and total theft institutionalized. I have written many times about my experience on Wall Street when the bailouts happened. How I ranted and raved on the trading desk about how TARP marked the end of any semblance of free markets and that there was no turning back. How I was told to “take a walk around the block” to cool off.

All of the suffering and hardships the majority of Americans are experiencing today are directly related to the coup pulled off by the crony financial oligarchs in the fall of 2008, and all of the media and political minions that helped them do it. People realize we have become a Banana Republic and they have now lost all hope. That said, there should always be hope and we can certainly restore society to better days, but not until we remove our domestic cancers from their positions in the highest offices of government, finance and corporate America. That is what we must peacefully achieve.  Now here’s Janet Tavakoli:

In November 2008, President Obama was elected, and he was sworn in January 2009. The country was promised change and reform. Recently two democrats close to the top of President Obama’s administration made excuses to me for the lack of financial reform in the United States. Their separately related versions were remarkably similar, so similar they seemed scripted:

The administration made a bargain, and I’m not sure it was the right decision. The world was teetering on the edge of collapse. There was a crisis of confidence. There would have been unimaginable consequences. So bad even your imagination can’t handle the truth?

It was the lesser of two evils to let a lot of people get away scot free than to risk a collapse in confidence.  There were only two choices according to this narrative.

It was better to let a lot of people get away scot free than to have the first African American president take on the establishment while the country was deeply divided and he needed agreement on big things like ending wars, health care, Supreme Court nominees (and LGBT rights). There were lots of battles without taking on the financial establishment.  It seems to me that reforming our financial system is a big thing. As for at least two of the narrative’s big issues: health care costs are zooming up, and it looks as if we’re rattling our swords for another military conflict.

The president was elected in part on his promise to effect change on the really tough issues, and there was no better time than when the crisis was fresh, and he had a groundswell of popular support.

The most amusing thing about all of this is that people wanted President elect Obama to stick it to the financial oligarchs. Instead, he gave them trillions and offered immunity. More from Janet:

Instead of TARP, handing out money to cover banks’ losses, we could have forced creditors to accept a restructuring plan. This is what was done during the Great Depression. Creditors, i.e., debt holders including credit default swap counterparties, would have been compelled to accept a restructuring plan. That required partial forgiveness of debt in many cases and/or a debt for equity swap.

The government’s bailout plan destroyed capitalism. In a capitalist system, those who stood to gain–and already made off with large gains—would have to bear the risk. The bailouts represented a corruption of capitalism. Crony capitalism violates the spirit of democracy established by the Founding Fathers of the republic known as the United States. I expressed these sentiments in a letter to the Financial Times on September 29, 2008.

Treasury Secretary Henry Paulson Was a Section 8

All of this spells dark times for the future of the republic. On September 20, 2008, at the height of the crisis, Henry Paulson, former CEO of Goldman Sachs, and then the 74th U.S. Secretary of the Treasury, did not merely request immunity for actions he was about to take. In his original draft proposal of the Bailout Plan, he requested imperial powers:

“Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Paulson was not an elected official, yet he requested powers that surpassed those granted to any representative of the citizens of the United States.

Section 8 was formerly a type of discharge issued by the U.S. military that meant one was mentally unsuited for service. The spirit of Hank Paulson’s Section 8 continues to dominate the U.S. financial system.

Her full article is here.

In Liberty,

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 Add your comment
  1. This helps, too…

    What Is a ‘Credibility Trap’

    A credibility trap is when the lies and the corruption become so widespread and embedded in a system that they become self-sustaining to the point of moral bankruptcy.

    It is when almost half of all Congressmen remain in the Capitol after leaving office so that they can make many millions per year peddling influence and crafting loopholes for corporations who are offering huge sums to gain advantage through manipulating the tax and regulatory laws, or eliminating them altogether.

    It is when politicians leave office voluntarily once they have gained enough name recognition and contacts so they can cash in.

    It is when a ruling class forms, and becomes insulated from their constituents. It begins to act for itself, paying lip service to their oaths and obligations, with no consequence or shame.

    It is when the government by example breeds lawlessness.

    It is when officials from the Executive Branch move back and forth through a revolving door from corporate institutions in order to make the big payday for their public ‘service.’

    It is when the truth is led down a blind alley of greed and strangled by expediency. It is when lying and cheating is acceptable, even laudatory, if you are good at it. And goodness is measured in money.


  2. Mike, I got essentially the same message when I wrote my Senator (Gillibrand) to express my desire to not see Ben Bernanke affirmed as Obama’s FED chair… she acknowledged my concerns about the integrity of our money system.. but said that she had voted for, “stability”.

  3. Janet Tavakoli,

    is a cry baby for Obama.

    is a cry baby for wall street.

    just as all the cry babies Max keiser points out over 9/11

    USA is a country of cry babies.

    I love youre inside! Mike

    Please , stay out of the Cry babes.

    Love youre work and please keep up!

    Best regards Hugo.

  4. Mike,

    keep the facts cleare.

    Cry baby is a cry Baby.
    does not look for the facts just Milk.

    The facts are that Hank got a weaver under 8

    that is it!

  5. Keep the facts clear.

    Cry baby is a cry Baby.

    A cry baby only looks for the milk.

    The only fact in the story is that Hank got 8.

    Where is the rest of the records.,He takes the blame.

    Non, MBS,derivitates etc.

    Non, Obama The change and no prosecution!

    Thank miss Travakoli after 5 years!

    Janit read Thomas Pain and his live and you will

    have read a real book.

    Best Hugo Veening.

  6. I think it’s a mistake to turn this into a Republican vs Democrat issue. The bailout approach started under Bush, yet the article only mentions his treasury secretary, Paulson, an “unelected official”. Yes, he was an unelected official who had Bush behind him and eventually swayed Congress to cough up the 700 billion to avoid having “this sucker… go down” (Bush’s words, not Obama’s).

    In addition, while it is legitimate to complain about the protections and rewards afforded bankers who, like the politicians ON BOTH SIDES OF THE AISLE, created the mess, I think that bailout governments around the world are actually using the bailouts to stop “this sucker” from “going down”. So, it’s not an outrageous kick-back scheme, but an ill-fated attempt to stop a depression. Yes, big bankers have unfairly come out of it smelling like roses, and in some cases richer than they were in 2008. But that’s because our weak economy depends on the financial system to provide credit to keep things going. The banks were greasing the machine, and not just lining their own pockets. Fannie Mae exemplifies what went wrong. Generations of US politiicans (on both sides of the aisle, at all levels of government) were committed to turning the US into a nation of “homeowners” by simply letting everyone borrowed as much as they liked. It was Dick Cheney was speaking for the nation when he said “deficitis don’t matter”. The trouble today is that politicians still believe that, or they don’t see an alternative. The failure of political leadership has come in the inability to actually tackle our low-growth problems and instead simply keeping things ticking over by extending deficits.

  7. “I sometimes wonder of the people who are running our country are smart people who are putting us on, or imbeciles who really mean it.”
    – Mark Twain

    That being said, there are no legitimate, comprehensive plans to steer America out of this crisis. Except one.

    The Leviticus 25 Plan.


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