The "toxic derivatives" that we taxpayers are now forced to purchase from the Wall Street hustlers were deliberately shielded from all government regulation, thanks to the Commodity Futures Modernization Act, which Summers got Congress to pass in the closing days of the Clinton administration with the same urgency that he now pushes for the new Wall Street handout.
Back then, Summers was a disciple of Robert Rubin, who just last week resigned from his director's position at Citigroup, the financial conglomerate that grew to unmanageable and corrupt proportions thanks to the empowering legislation that Rubin initiated when he was Clinton's first treasury secretary. Rubin has been paid more than $115 million plus stock options at Citigroup, and despite his horrid record is still a close Obama adviser. It is one of the great swindles of U.S. financial history that Citigroup was bailed out with $45 billion in a deal that could eventually cost taxpayers an additional $269 billion to guarantee those toxic assets that would have been illegal if not for the legislation backed by Rubin and Summers.
How did Obama allow himself to become ensnared with the very same folks who are the most culpable? His Treasury secretary nominee, Timothy Geithner, is another Rubin protege who, as head of the New York Fed, worked tirelessly with Rubin to concoct the Citigroup bailout.
When candidate Obama gave his major economic address on March 27, he couldn't have been clearer in condemning the deregulation that Rubin and Summers had engineered:
"Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one -- aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner-take-all, anything-goes environment that helped foster devastating dislocations in our economy."
He was referring to the deregulation legislation that Summers hailed on the day that Clinton signed it into law as "a major step forward to the 21st century." Now he is relying on Summers to reverse a disaster of his own creation. It's like returning to the same surgeon who almost killed the patient in the first operation to once again cut open the body to repair the damage.
What we need is a second opinion.
Where is the openness and accountability that Obama promized? Why not pause for a few weeks for congressional hearings on how to spend the new money? We don't even know where the last batch went. On Monday, the Treasury Department finally agreed, only after a subpoena threat, to turn over to Sen. Carl Levin and his Permanent Subcommittee on Investigations the 10 secret contracts that it had signed with top Wall Street firms in the first round of the bailout. Unfortunately, an aide to Levin was quoted in The New York Times as saying the subcommittee has no plans to make those contracts public.
That is outrageous. This is our money we're talking about. Why don't we get to read the fine print in what will end up being trillions of dollars in our future obligations? Because we are suckers, that's why, and the folks who swindled us into this disaster can count on it.
© Creators Syndicate
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Albion Monitor January
18, 2009 (http://www.albionmonitor.com)
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