A quick summary of events thus far:
Banks were forced to take TARP Money
Banks which took TARP money subjected themselves to far reaching govt control
As a result, the nine major banks were effectively nationalized.
Some argued that banks have only themselves to blame for taking TARP money as they knew the consequences. However, it has been widely speculated and indeed affirmed by many present at the meeting that the banks were forced to take TARP money.
Judicial Watch, a nonpartisan watchdog organization, used the Freedom of Information Act to obtain a copy of the internal Treasury Department “talking points” that were prepared for Paulson to use at his Oct. 13, 2008 meeting with the chief executive officers (CEOs) of the nine banks.
The nine CEOs present at the Oct. 13 meeting reportedly included Vikram Pandit of Citigroup, Jamie Dimon of JP Morgan, Richard Kovacevich of Wells Fargo, John Thain of Merrill Lynch, John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs, Robert Kelly of Bank of New York, Kenneth Lewis of Bank of America and Ronald Logue of State Street Bank.
What was the main gist of the talking points?
“(T)hrough our new TARP authority, Treasury will purchase up to $250 billion in preferred stock of banks and thrifts prior to year-end,”
“To encourage wide participation, the program is designed to provide an attractive source of capital, on identical terms, to all qualifying financial institutions,”
“We plan to announce the program tomorrow–and–that your nine firms will be the initial participants. We will state clearly that you are healthy institutions, participating in order to support the U.S. economy.
“This is a combined program (bank liability guarantee and capital purchase). Your firms need to agree to both,”
and the Coup de grâce
“We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed,”
“If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance.”
and thus, George W. Bush laid the foundation for the dismantling of the free market economy…
We filed a Freedom of Information Act (FOIA) request about the bankers meeting on October 16, 2008. After months of stonewalling, a FOIA lawsuit was filed against the Obama Treasury Department on January 27, 2009. Incredibly, on February 4, Treasury responded it had no documents about the historic meeting. Pressure from Judicial Watch forced Treasury to reevaluate its response, which resulted in this document release last month. Included in the new documents are:
Included in the new documents are:
- “CEO Talking Points” used by former Treasury Secretary Hank Paulson confirming that the nine bank CEOs present at the October 13 meeting had no choice but to accede to the government’s demands for equity stakes and the resulting government control. The talking points emphasize that “if a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance.” Suggested edits of the “talking points” by Tim Geithner, then-New York Fed President, were withheld by the Obama Treasury Department.
- “Major Financial Institution Participation Commitments” signed by the nine bankers on October 13. The CEOs not only hand wrote their institution’s names but also hand wrote multi-billion dollar amounts of “preferred shares” to be issued to the government.
- Email documenting that, on the very day of the meeting, the Chief of Staff to the Treasury Secretary and other top Treasury staff did not know the names of any of the banks that would be in attendance.
- Email showing Treasury officials wanted to use the Secret Service to help keep the press away from the CEOs arriving at the meeting.
- Email showing a public relations effort, run in part out of the Bush White House, to tamp down public concerns about “nationalizing the banks.”
- Email showing that Paulson was able to brief Barack Obama about the bankers meeting almost immediately, but could not reach Senator John McCain.
These documents show our government exercising unrestrained power over the private sector. Despite promises of transparency, the Obama administration tried to cover up the very existence of these smoking-gun documents. And the cover-up continues, as the Obama administration protects Timothy Geithner by withholding a key document about his role in this infamous bankers’ meeting.
