E-mails Show Banks Pressured Into Taking Bailout Money
by AVI KLEIN
The Bush administration told major banks that it had no choice but to sign up for its financial industry bailout program, according to
documents released this week by a judicial oversight group.
In a set of talking points from a meeting with banking executives on Oct. 13, former Treasury Secretary Henry M. Paulson Jr. told them that the government did not believe that their balance sheets could remain viable without a capital infusion and that, if they refused, "your regulator will require it in any circumstance."
Whether or not banks were forced into the Troubled Asset Relief Program has been an outstanding question since the $700 billion bailout effort began. The talking points, which were released in response to a Freedom of Information Act request by the conservative watchdog group Judicial Watch, are the first evidence that Treasury leaned on the banks to participate.
"These documents show our government exercising unrestrained power over the private sector," said Judicial Watch President Tom Fitton in a statement accompanying the released documents.
The Treasury Department initially resisted releasing details of the October meeting, Judicial Watch said. Although it eventually relented, suggested edits of the talking points by Timothy F. Geithner, at the time the president of the New York Fed Reserve Bank, were withheld. Geithner now serves as treasury secretary.
Judicial Watch also released e-mails showing Bush administration officials scrambling to repair the damaged financial sector while at the same time struggling with the public relations aspects of handing over billions of dollars to the same financial institutions responsible for the meltdown.
On the day of the meeting with the nine largest financial institutions, for instance, James R. Wilkinson, the chief of staff for the Treasury Department, e-mailed staffers to ask "who the Big 9 are? What are the specific companies?"
According to Judicial Watch, the banks represented at the meeting were Citigroup Inc., JP Morgan Chase & Co., Wells Fargo & Co., Merrill Lynch & Co., Inc., Morgan Stanley, The Goldman Sachs Group, Inc., The Bank of New York, and State Street Corp.
That same day, another e-mail exchange shows Treasury officials wondering if the Secret Service can close off a sidewalk outside the meeting to help the banking officials evade a group of cameramen outside.
The released e-mails also show how attentive the White House was in keeping both presidential candidates informed of the ongoing bailout efforts. A message from Wilkinson that evening to White House staff shows that the government had succeeding in briefing Barack Obama on the meeting but had failed to connect with John McCain.
published May 14, 2009, 0 Comments