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Taxpayers to bailout Wall Street

VOICEOVER: Following the recent financial turmoil and a government bailout being pushed through Congress, news dissector Danny Schechter joined Reverend Jesse Jackson to rally against Wall Street on Monday.

DANNY SCHECHTER, MEDIA CRITIC AND AUTHOR: I used to think of Wall Street as a financial sector; I now think of it as a crime scene.

CARLO BASILONE, TRNN: We’re joined now by Danny Schechter, also known as the news dissector, and author of Plunder: Investigating the Economic Calamity—that’s what’s going on in the US right now. That’s what’s going on in the US right now. Danny, what is going on right now?

SCHECHTER: Well, right as we speak, the Senate has been holding hearings. So Ben Bernanke of the Federal Reserve Bank and Henry Paulson, the treasury secretary, have spoken to Congress, stressing the urgency of passing their proposed $700 billion bailout bill, which could rise to over $1 trillion. Nobody knows for sure. And there’s some push-back now in Congress, where people are calling this sort of the financial version of the Patriot Act, a kind of bid for power by the treasury secretary, who under the terms of his proposal would not be answerable to anyone. This is in a sense – a state of economic emergency is being proclaimed here. And the Congress is trying to get some changes, some alterations to it, but it’s likely they’re going to pass it. First they want to see some relief for homeowners who are facing foreclosure. They want to see some curb or limit on executive compensation, so that people who get bailed out don’t walk away with $60 million or higher, you know, of parachutes. And, finally, they’re looking for equity in the companies that the federal government is going to be investing in and buying from, so that the taxpayers end up with something at the end of the day. Basically, Bernanke and Paulson met with members of Congress leadership last Thursday, and they outlined basically an emergency. They were saying that there’s going to be a massive financial meltdown unless the Congress acts immediately. In a sense this is a page out of Naomi Klein’s Disaster Capitalism, basically creating a crisis or responding to a crisis with terms that basically preempt anyone from doing anything else, and basically transfer large amounts of money from the taxpayers, from the public, to private interests. And this is what this whole scandal’s been about from the very beginning. Predatory lending schemes, subcrime or subprime loans, and all the rest of this have transferred hundreds of billions of dollars of wealth from the poorest people in America to the richest institutions. Now the taxpayers are being asked to get into the act and underwrite up to a trillion dollars or more to bail out these companies that have made financial decisions in their own interests. A lot of the news coverage suggests that these are mistakes that were made, they were errors. But, actually, it was a very calculated plan that the investment banks were following and that the mortgage brokers were part of. It was a scheme, basically, a Ponzi scheme. And now the people who defrauded millions of people are being let off the hook, essentially, with a bailout. And the reason for the bailout is to try to prop up confidence in our financial system, because millions and millions of dollars are invested every day, or billions of dollars, from Asia, and they want that flow to continue—they want to be able to bail them out too. So there will be foreign banks benefiting in this bailout as well, because they’re the people we are dependent on for all sorts of loans, investments, and other trade arrangements that keep the American economy going.

BASILONE: What is the media telling the public about what’s going on?

SCHECHTER: Well, you know, look, the media does its thing, and it does it, unfortunately, often the same way. It follows the same playbook, crisis after crisis. It has its pundits; it uses those pundits over and over again. The people who are a little bit more intellectual get on PBS for a far smaller audience. But, you know, the people who go onto the CNN programs or the Fox News programs are generally pundits with ideological points of view that are very well known to the network and to the hosts. The journalists that are skeptical, the financial community that is skeptical, they are really sort of being pushed off to the side, because there’s a consensus that’s emerged between Democrats and Republicans and Henry Paulson that this has to be done in some way. Of course, a lot of the initial coverage was, “Don’t worry—we’ve got this under control.” The Federal Reserve cut interest rates seven times. Capital was injected. The crisis was supposed to be over. But, of course, it’s not over. It’s gotten a lot worse, to the point where now the government is proposing a $700 billion rescue, which could go up to over $1 trillion. And what we do know is that this will preempt any new administration in being able to follow through on any of their promises and proposals, ’cause there won’t be any money to do anything with. Already taxes are going up at the local and state level across the country, even as the two presidential candidates say they’re not going to raise taxes. There’s no question that taxes will go up, and there’s no question that the taxpayer is being hit here and will be hit hard, because this crisis is not going away. There are more crises coming up behind it.

BASILONE: So what do you think the media would be saying if the president right now was Bill Clinton or a Barack Obama, someone, even a small-L liberal Democrat?

SCHECHTER: Well, first of all, the right wing is saying this is socialism. Free-marketeers are saying the government is improperly interfering in the market—they will actually make things worse. And the Ron Paul people who were, you know, very popular among that constituency are leading the charge against this bailout. On the left, Jesse Jackson and other activists, trade unions, and some Democrats are also challenging it, because it’s so inequitable in many ways, and there are no protections for taxpayers in it. So that’s the battle taking place this week. But it seems likely that it will pass, and it will pass because the Democrats don’t have a credible alternative—they don’t know what else to do. And so, you know, we’re plummeting on here. In a curious way, this crisis was caused by a lack of oversight and regulation, yet that’s exactly what Henry Paulson wanted. He insisted on no oversight, no legal review of anything he was doing. And this has, of course, raised hackles in Congress, and so some changes are about to be made in that. But it’s still not clear that this can work, because the crisis is much deeper than most people realize, and our media has not helped us to understand just how deep.


Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.

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Danny Schechter, "The News Dissector," is a former network TV producer, radio newscaster, and edits He has written nine books on media themes. His latest, 'Plunder', was inspired by his latest film, In Debt We Trust: America Before The Bubble Bursts