“Why Is There
Need for a Bailout?”
By Ralph Nader
Now! -- As the Bush administration
intensifies its pressure for Congress to quickly approve a $700
billion bailout of the financial industry, we get reaction from
Independent presidential candidate and consumer advocate Ralph
Nader. Nader calls Democratic claims of White House concessions
“wish fulfillment” and says the bailout might not be needed in
the first place.
JUAN GONZALEZ: The Bush
administration is intensifying its pressure on Congress to
quickly approve a $700 billion bailout of the financial
industry, despite warnings from economists and some governmental
officials that the bailout could worsen the financial crisis.
Last night, President Bush held
a prime-time address to warn the nation’s entire economy is in
danger if the bailout is not approved as soon as possible.
PRESIDENT GEORGE W. BUSH:
The government’s top economic experts warn that without
immediate action by Congress, America could slip into a
financial panic, and a distressing scenario would unfold.
More banks could fail, including some in your community. The
stock market would drop even more, which would reduce the
value of your retirement account. The value of your home
could plummet. Foreclosures would rise dramatically. And if
you own a business or a farm, you would find it harder and
more expensive to get credit. More businesses would close
their doors, and millions of Americans could lose their
jobs. Even if you have good credit history, it would be more
difficult for you to get the loans you need to buy a car or
send your children to college. And ultimately, our country
could experience a long and painful recession. Fellow
citizens, we must not let this happen.
[Wednesday] night’s address was the first time in his presidency
that Bush delivered a prime-time speech devoted exclusively to
the economy. His dire scenario about the state of the economy
stood in stark contrast to his comments at his last press
conference two months ago.
PRESIDENT GEORGE W. BUSH:
I think the system basically is sound. I truly do. And I
understand there’s a lot of nervousness, and—but the economy
is growing, productivity is high, trade’s up. People are
working. It’s not as good as we would like, but—and to the
extent that we find weakness, we’ll move. That’s one thing
about this administration: we’re not afraid to making tough
AMY GOODMAN: Today, the
President is holding an emergency summit at the White House with
both John McCain and Barack Obama, as well as top leaders for
Congress. The Wall Street Journal reports Democratic
leaders are hoping to nail down details of the bailout measure
On Wednesday, McCain said he
would suspend his campaign to deal with the financial crisis. He
called on Obama to postpone their debate Friday night, saying he
would only attend if Congress approves a bailout package before
then. Obama said the debate in Oxford, Mississippi at Ole Miss
should go on as planned.
We’re joined on the phone right
now by a presidential candidate who was not invited to Friday’s
debate, Independent candidate Ralph Nader. The longtime consumer
advocate has been a vocal critic of the Wall Street bailout.
Ralph Nader, welcome to
Democracy Now! First, let’s start off with John McCain
announcing that he is going to suspend his campaign and wants
the debate cancelled.
RALPH NADER: Well, I
think Senator McCain is showboating. I mean, what’s going on in
Washington and Congress now is the Bush administration is trying
to pull the Constitution out by its roots and demand that
Congress give it a blank check, without any criteria, without
any accountability, for $700 billion bailout of Wall Street.
It’s not dependent on whether John McCain returns to Washington
other than to vote. I think he’s turning his back on over 50
million American voters who expect him to show up in Ole Miss
with Barack Obama and who have made arrangements to do so. He
talks a lot about honor and commitment. I think he ought to
change his mind and get down to Ole Miss.
JUAN GONZALEZ: Ralph, the
Democrats are claiming that they’ve been able to get some key
concessions from the administration on its original plan. They
say now they’re going to be—they’re going to cap CEO pay for
those who participate in this bailout and that they’re going to
get some kind of government participation or investment in these
firms, so that if they make profits later on, that—or these
securities make profits later on, that the government will be
able to participate. But your sense—are these real substantive
changes, or is this basically cosmetics on a plan that shouldn’t
be in place in the first place?
RALPH NADER: Well, so
far, it’s wish fulfillment. If you watch what Barney Frank, the
chairman of the House Banking Committee, said yesterday, nothing
has really been decided.
And also, it’s not clear at all
why a bailout is needed. That’s part of the stampede in the pack
and the panic that Bush and Paulson and Bernanke are pushing
Congress toward. You know, it’s eerily reminiscent, when you
listen to Bush yesterday, of how he stampeded the Congress and
the country into the criminal war invasion of Iraq in 2003. I
mean, look at all his statements: this could do this, this would
do that, farms failing, small business, tada, tada. The first
question we have to ask as citizens is, why is there a need for
The only conceivable purpose of
Treasury intervention, said Roger Lowenstein in the New
Republic recently, quote, "is to buoy the market using
taxpayer funds by paying higher-than-market prices. After all,
if the government merely intended to match the market, what
would be the point?” end-quote. In other words, if these
mortgage-backed securities are distressed, well, they’re going
to fetch a lower price. There’s huge amount of money on the
sidelines in Wall Street, everybody admits that. So, as a hedge
fund manager basically said, look, if the price comes down lower
than what the government is trying to keep elevated, we’ll buy
this paper. Warren Buffett put $5 billion into Goldman Sachs
this week. There’s a lot of money to go around.
It’s quite interesting how the
Bush regime is creating its own panic. When the government keeps
saying Chicken Little, Chicken Little, the market is going to
react in a very nervous manner. It’s a reversal of what the
government usually does, which is to counsel stability and
So, the first question Congress
should ask in detailed hearings, which aren’t occurring, is
simply, why is there need for a bailout? Second is, if there is
a need for a bailout, why $700 billion? And third, if there is a
need for a bailout, what kind of bailout? Taxpayer equity? So
the taxpayer can recover if these companies make a profit, they
can recover surplus, perhaps the way they did on the taxpayer
bailout in 1979 with Chrysler, where Jimmy Carter demanded that
Chrysler issue stock warrants to the Treasury, and Chrysler
turned around, and the Treasury sold the warrants for a $400
I don’t think the Democrats show
any nerve that they are going to do anything but cave here. And
the statements by Nancy Pelosi are not reassuring, which is,
“Well, it’s the Republicans’ bill, you know. Let them take
responsibility for it.” That doesn’t work. She’s the Speaker of
the House. The Democrats have got to say, “Slow down. We’re not
going to be stampeded into this bill by Friday or Saturday.
We’re going to have very, very thorough hearings.” Otherwise,
it’s another collapse, at constitutional levels, of the Congress
before King George IV.
AMY GOODMAN: We’re
talking to Independent presidential candidate Ralph Nader. We’ll
come back to this discussion. We’ll also be joined by Arun
Gupta, who is the editor of The Indypendent and put out a
letter on the internet that has just set the internet on fire,
calling for a major protest today on Wall Street. It has gained
steam. Many groups have signed on. Stay with us.
AMY GOODMAN: Our guest on
the phone with us from Pittsburgh, where he’s campaigning, is
Ralph Nader, Independent presidential candidate. Juan?
JUAN GONZALEZ: Ralph, you
mention how the Democrats themselves are being stampeded at this
point by the Bush administration. In my column in the Daily
News yesterday, I raised how another Democratic leader and
another Democratic Congress handled a situation, even a more
dire situation, in 1933, on the two days after Franklin Delano
Roosevelt was inaugurated as president, with thousands of banks
crashing at that point, and he immediately shut down all the
banks on his second day in office, called Congress into an
emergency session and, over the next hundred days, adopted
incredible legislation, including the Glass-Steagall Act, that
we’ve mentioned quite often, on federal deposit insurance, aid
to homeowners, farm subsidies, created the Tennessee Valley
Authority, all in the midst of a crisis, probably the most
progressive amount of legislation in the nation’s history, in
any period. That’s a quite different approach. And he
specifically criticized the banks and Wall Street as being at
the root of the crisis.
RALPH NADER: That’s
right. In those days, they had a serious solvency problem for
these banks, which they don’t have, by and large, today. And
that was admitted by Bernanke yesterday. Basically, Bernanke is
saying, “Well, we’re doing this because the banks are
contracting their credit, and this is affecting the economy.”
Well, you can deal with that problem in a far better way than an
ill-defined $700 billion bailout with total authority to the
Treasury Secretary, with no judicial review, with no criteria
and no reforms.
In other words, the Democrats
should say, if they’re going to concede this bailout, is to say,
“Well, we want comprehensive regulation and disclosure of the
financial industry to make sure this doesn’t happen again. We
want criminal prosecution of the crooks on Wall Street and
disgorgement of their ill-gotten gains. We want a securities
derivative tax and higher margin requirements to make
speculators use their money, more of their money than other
people’s money, like worker pension funds, to keep down
speculation, as well as to produce revenues, which might lighten
the tax load on working families. And we want to give
shareholders control over the corporations they own.”
And they’re not even talking
about these kinds of reforms. And this is the best time to get
these reforms, because this is called a must bill on Congress—in
Congress, and if Bush wants his package, he’s going to have to
sign them. So, there’s no reciprocity here. It’s the usual
fairly good questions by the Democrats at the hearings, but
because they don’t follow through, they don’t have adequate
leadership, it becomes a kind of posturing. It’s just maddening
to watch how vague Bernanke and Paulson are in answering one
question after another. It’s just an evasion, where they keep
saying, “We need to do it. We need to do it.” And their Chicken
Little material is conducted in closed session with Harry Reid
and Nancy Pelosi and the Republican leadership. It’s always in
AMY GOODMAN: Well, Ralph
Nader, something that isn’t vague are the emerging rallies
against Wall Street bailout that are being held today in over a
hundred cities. In Washington, protesters are gathering outside
the Treasury Department at 4:00 p.m. Here in New York, a protest
is set for 4:00 p.m., as well, in Bowling Green Park near Wall
The day of action has been
partly inspired by an email sent out Monday by New York
journalist Arun Gupta. In the email, Gupta described the bailout
as the biggest robbery in world history. Arun Gupta is a
reporter and editor at The Indypendent newspaper here in
New York. He joins us in the firehouse.
You’ve just been written up in
BusinessWeek. Talk about this letter. Talk about what you
are putting out there.
ARUN GUPTA: Well, I do a
good bit of economic writing, and I was trying to decipher the
plan this weekend, and it became quickly apparent to me that
this is a financial September 11th, that the Bush administration
was trying to use the shock of this crisis, the self-induced
crisis in this case, to ram through legislation that was highly
ill-considered in terms of the actual economic merits, on the
one hand, and then, on the other hand, it was this extreme power
grab that would give these huge sweeping new powers to the
So I wrote up this email. I sat
on it overnight, because I was hesitant to send it out. I’m a
journalist, not an organizer. But after talking with a few
people, they felt I should send it out, so I sent it out to
about 150 activists, organizers and media folks that I know in
New York City. And it just exploded. You know, I don’t take any
special credit for it. I was just tapping into this huge amount
of anger and resentment that was out there.
JUAN GONZALEZ: Now, when
you say “exploded,” what was the response?
ARUN GUPTA: Well, I
talked to people who, within one hour of me sending it out and
then them—I encouraged people, “Please forward widely.” They
told me that within less than an hour, they had received it back
from five or six different people. By the end of the day,
apparently, a lot of big groups started jumping on it, including
unions. By the next day, it was being endorsed and variations
were being forwarded by True Majority, Code Pink, United for
Peace and Justice. And so, it was just—it really showed the
power of the internet in a particular moment.
AMY GOODMAN: So, talk
about these protests that are taking place around the country.
ARUN GUPTA: Well, it
started, as you know—the idea is like gather in Wall Street, and
I thought maybe it would be a dozen people, and we’d be standing
on the sidewalk. But now it looks like there will be hundreds,
even possibly thousands. And then, True Majority picked up the
call, along with United for Peace and Justice, one of the main
antiwar groups, and they said, you know, “Let’s have these day
of actions around the country.”
So, all over the country now,
there are going to be protests in various financial centers.
I’ve been getting emails from people, you know, from every
single corner of the United States, asking, you know, “What’s
going on? How do we plug in?” And so, we’re just trying to point
them to these websites. It’s like, look, here’s a list of the
protests, or you can plan your own event. And this is really
coming from across the political spectrum.
JUAN GONZALEZ: And as you
said in your email, this is leaderless, and no main organization
is in charge or no individual is in charge. Everyone is just
ARUN GUPTA: That’s what’s
great about it. You know, when people say, “Who’s organizing
this?” I say, “No one and everyone.” This was just a call to
self-organize. And, you know, it’s like I’m just going to show
up there as just one more person who’s against this ridiculous
bailout, this giveaway to the rich.
AMY GOODMAN: Ralph Nader,
who is Henry Paulson? I mean, we know he worked for Nixon, was
the aide to John Ehrlichman, the ex-con, the man who went to
jail; then went off to Goldman Sachs; he and Alan Greenspan
still being considered the economic wise men, even though this
all happened under their watch.
RALPH NADER: That’s when
you know the system is decayed and corrupt, that the people who
brought us this disaster—Robert Rubin, with Bill Clinton pushing
through the financial deregulation monster in 1999, which we
opposed, which opened the gates for this kind of wild
speculation and this casino capitalism, is still an adviser.
He’s an adviser to Barack Obama. He’s an adviser to members of
Congress. Henry Paulson cashed out at Goldman Sachs in 2006 a
half-a-billion dollars. And now he goes to Washington to bail
out his buddies.
The public outrage out there is
really enormous. The calls coming into C-SPAN yesterday were
overwhelmingly against this bailout, this outrageous inequity,
this double standard between the guys at the top and the people
who are going to have to pay the bills under this bailout, the
taxpayers and the consumers.
Mr. Gupta is right in the sense
that this is leaderless, but it’s got to be more than just a
rally of protests. It’s got to demand something. It’s got to be
focused. Otherwise, it will fritter away. We’ve had rallies on
Wall Street. It’s a great place to have rallies. You can really
congregate a lot of people, and the Wall Street guys look out
the window, and they can see the people are coming.
But the first step is to slow
down Congress. Once this bill is passed—and it’s a blanket bill.
It’s only four pages, Amy, four pages of a $700 billion blank
check, transferring congressional authority wholesale, and I
think unconstitutionally, to the White House, King George IV at
work again. Once it passes, then the chance for comprehensive
regulation and all the other changes to make Wall Street
accountable, instead of allow Wall Street to create a corporate
state or what Franklin Delano Roosevelt called fascism, which is
government controlled by private economic power, represented by
people like Henry Paulson—once this happens, it’s not going to
JUAN GONZALEZ: And Ralph,
what about the homeowners who were at the center of this crisis
in foreclosure? A million Americans have lost their homes in
recent years. There seems to be still no clear sense that any
kind of bill will actually provide clear relief for people
facing the loss of their homes.
RALPH NADER: You’re
absolutely right, because Barney Frank was asked about that last
night after the hearing, and he said, “This is a money
proposition, if you’re going to deal with the homeowners. It’s
not my Banking Committee; it’s Charlie Rangel’s House Ways and
Means.” In other words, there’s nothing in this bill for
homeowners. There’s everything in this bill to bail out the
bankers who actually created this problem with these
out-of-control speculative financial instruments.
AMY GOODMAN: Cynthia
McKinney has offered to debate Barack Obama if he’s the only one
who shows up at Ole Miss tomorrow. Are you also going to make
that offer? And, Ralph Nader, would you consider, given the
stakes of this election, encouraging your supporters in swing
states to vote for Barack Obama?
RALPH NADER: Well, first,
I’d be very happy to sit in the seat emptied by John McCain. But
I think the stage can handle the only—only six presidential
candidates. There aren’t enough electoral colleges to
theoretically win the election. And second, I’m not at all
impressed by Barack Obama’s positions on this so-called bailout.
It’s just rhetoric. His Senate record has not reflected that at
As we campaign around the
country—we’re now in forty-five states plus the District of
Columbia, and we’re running five, six, seven percent in the
polls, which is equivalent to nine, ten million eligible
voters—we are going to try to rouse the public in a specific
way: laser-beam focus on their senators and representatives.
When these senators and representatives, if they allow this
bailout deal in this general, vague manner to pass, when they go
back home, they’re going to hit hornets’ nest. This is a
situation where it doesn’t matter whether the people back home
are Republicans, Democrats, Greens, Libertarians, Nader-Gonzalez
supporters. There’s such a deep sense of betrayal, of panic, of
stampede, of surrender, of cowardliness in Congress, that it’s
going to affect the election and the turnout.
I’d like Barack Obama, actually,
to support the Nader-Gonzalez ticket.
AMY GOODMAN: Finally,
Arun Gupta, people are bringing old junk to the protest
today—records, old clothes, things they don’t want— to
ARUN GUPTA: That’s one of
the themes, cash for trash, which is how this bailout bill is
being characterized—in other words, that the government is
giving the taxpayers’ good money for these worthless securities.
So, many protesters are saying, well, let’s bring our own trash
to Wall Street. We’ll create a junk pile and then ask the
government to bail us out.
AMY GOODMAN: We’re going
to leave it there. Arun Gupta is the reporter and editor of
The Indypendent newspaper here in New York, organizer of
today’s protest on Wall Street. There will be more than a
hundred other protests around the country. We’ll report on them
tomorrow. Ralph Nader, Independent candidate for president,
speaking to us on the campaign trail in Pittsburgh.
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